Blanton v. Domino's Pizza Franchising LLC

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Citation: 962 F.3d 842
• Docket Number: No. 19-2388,19-2388
• Parties: Harley BLANTON, Plaintiff, Derek Piersing, on Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellant, v. DOMINO'S PIZZA FRANCHISING LLC; Domino's Pizza Master Issuer LLC; Domino's Pizza LLC; Domino's Pizza, Inc., Defendants-Appellees.
• Decision Date: 17 June 2020

962 F.3d 842

Harley BLANTON, Plaintiff,

Derek Piersing, on Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellant,
v.
DOMINO'S PIZZA FRANCHISING LLC; Domino's Pizza Master Issuer LLC; Domino's Pizza LLC; Domino's Pizza, Inc., Defendants-Appellees.

No. 19-2388

United States Court of Appeals, Sixth Circuit.

Argued: June 10, 2020
Decided and Filed: June 17, 2020

ARGUED: Anne B. Shaver, LIEFF CABRASER HEIMANN & BERNSTEIN, LLP, San Francisco, California, for Appellant. Norman M. Leon, DLA PIPER LLP (US), Chicago, Illinois, for Appellees. ON BRIEF: Anne B. Shaver, Dean M. Harvey, Lin Y. Chan, Yaman Salahi, Jeremy J. Pilaar, LIEFF CABRASER HEIMANN & BERNSTEIN, LLP, San Francisco, California, Derek Y. Brandt, Leigh M. Perica, MCCUNE WRIGHT AREVALO, LLP, Edwardsville, Illinois, Sharon S. Almonrode, Emily E. Hughes, Dennis A. Lienhardt, THE MILLER LAW FIRM, P.C., Rochester, Michigan, for Appellant. Norman M. Leon, J. Robert Robertson, John J. Hamill, Michael S. Pullos, Mary M. Shepro, DLA PIPER LLP (US), Chicago, Illinois, David H. Bamberger, DLA PIPER LLP (US), Washington, D.C., Edward J. Hood, CLARK HILL PLC, Detroit, Michigan, for Appellees.

Before: GRIFFIN, THAPAR, and READLER, Circuit Judges.

OPINION

THAPAR, Circuit Judge.

Derek Piersing and Domino's Pizza disagree about whether he should have to arbitrate his claims against the company. As in many arbitration cases, the question here is who should resolve their dispute: an arbitrator or a court. The district court held that an arbitrator should do so. We agree and affirm.

I.

Domino's has thousands of pizza restaurants across the country. Like other large chains, Domino's operates many of these restaurants through a franchise model. Each franchise is an independently owned and managed business with a separate legal identity. But Domino's still controls certain aspects of each franchise. Relevant here, Domino's allegedly required its franchises to agree not to solicit or hire employees from other franchises without the prior consent of their employer.

Piersing began working at a Domino's franchise in Washington state in the fall of 2014. Four years later, Piersing sought a second job from a different Domino's franchise in the area. When he was hired by the second franchise, Piersing signed an

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arbitration agreement, which requires him to arbitrate a wide array of issues related to his employment. The agreement also specifies that the arbitration will be conducted according to the American Arbitration Association National Rules for the Resolution of Employment Disputes ("AAA Rules").

Around the same time, Piersing learned that he had been fired from the first franchise. According to Piersing, the store fired him because it thought that its franchise agreement with Domino's required it to do so in order to allow him to work at the second franchise. Piersing worked at the second franchise for a few months until he left his job because of a medical condition.

Piersing and another plaintiff then filed a class action against Domino's, alleging that the company's franchise agreement violated federal antitrust law as well as state law. Domino's soon moved to compel arbitration under the Federal Arbitration Act. See 9 U.S.C. § 1 et seq . The plaintiffs opposed the motion, arguing that Domino's couldn't enforce the arbitration agreements because the company hadn't signed the agreements (only their franchises had). But the district court ordered the plaintiffs to go to arbitration anyway, finding that both Piersing and his co-plaintiff had agreed to arbitrate not only the merits of certain claims but also threshold questions about the agreements themselves. This appeal followed.

II.

To understand this case, you first need a little background about federal arbitration law. The Federal Arbitration Act reflects the basic principles that "arbitration is a matter of contract" and that contracts must be enforced "according to their terms." Rent-A-Center, W., Inc. v. Jackson , 561 U.S. 63, 67, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010). As a corollary, the Supreme Court has recognized that "parties may agree to have an arbitrator decide not only the merits of a particular dispute but also ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy." Henry Schein, Inc. v. Archer & White Sales, Inc. , ––– U.S. ––––, 139 S. Ct. 524, 529, 202 L.Ed.2d 480 (2019) (cleaned up). After all, such an agreement is "simply an additional, antecedent agreement" about who should decide these questions. Rent-A-Center , 561 U.S. at 69, 130 S.Ct. 2772. And when parties have agreed to arbitrate "arbitrability," a court may not disregard their agreement—even if a particular argument for arbitration seems to be "wholly groundless." Henry Schein , 139 S. Ct. at 528–31.

That leaves the question of how to determine whether the parties have agreed to arbitrate "arbitrability." Usually, courts look to state law to interpret arbitration agreements. See, e.g. , Lamps Plus, Inc. v. Varela , ––– U.S. ––––, 139 S. Ct. 1407, 1414–15, 203 L.Ed.2d 636 (2019). (Here, all agree that Washington contract law applies.) But for questions of "arbitrability," the Supreme Court has adopted an additional interpretive rule: there must be "clear and unmistakable" evidence that the parties agreed to have an arbitrator decide such issues. First Options of Chi., Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (cleaned up); see also Rent-A-Center , 561 U.S. at 69 n.1, 130 S.Ct. 2772 (describing this "heightened standard"). In effect, this rule reverses the usual presumption in favor of arbitration when it comes to questions of "arbitrability." See First Options , 514 U.S. at 944–45, 115 S.Ct. 1920.

That brings us to the question in this case. In his arbitration agreement, Piersing agreed that "[t]he American Arbitration

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Association (‘AAA’) will administer the arbitration and the arbitration will be conducted in accordance with then-current [AAA Rules]." R. 61-4, Pg. ID 982. And those Rules provide that "[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement." R. 61-6, Pg. ID 989. The question for us is whether that's "clear and unmistakable" evidence that Piersing agreed to arbitrate "arbitrability."¹

There are good reasons to think it is. To start, the AAA Rules clearly empower an arbitrator to decide questions of "arbitrability"—for instance, questions about the "scope" of the agreement. And it's long been settled that parties can incorporate outside documents into a contract if their agreement says as much. See, e.g. , W. Wash. Corp. of Seventh-Day Adventists v. Ferrellgas, Inc. , 102 Wash.App. 488, 7 P.3d 861, 865 (2000) ; 11 Williston on Contracts § 30:25 (4th ed. 2012). Piersing's agreement says as much: it expressly incorporates the AAA Rules into the agreement and even helpfully includes a link to the AAA's website, from which one can easily access the Rules. On its own terms, that's pretty compelling evidence that Piersing agreed to arbitrate "arbitrability."

What the text suggests the case law confirms. The Supreme Court has itself said that the AAA Rules "provide that arbitrators have the power to resolve arbitrability questions." Henry Schein , 139 S. Ct. at 528. And the Court has itself relied on the incorporation of the AAA Rules to determine what the parties agreed to. See Preston v. Ferrer , 552 U.S. 346, 361–63, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008) ; C & L Enters., Inc. v. Citizen Band Potawatomi Indian Tribe of Okla. , 532 U.S. 411, 418–20, 121 S.Ct. 1589, 149 L.Ed.2d 623 (2001). It's true that the Court has yet to put these pieces together so as to resolve the question in this case. See Henry Schein , 139 S. Ct. at 531. But there's no reason for our court to wait to finish the puzzle. There's little doubt about the final picture.

Our own circuit's precedent counsels—and perhaps compels—the same outcome. In a recent decision, our court relied on the incorporation of the AAA Rules to find that the parties had "clearly and unmistakably" agreed to arbitrate "arbitrability." McGee v. Armstrong , 941 F.3d 859, 866 (6th Cir. 2019) (citation omitted). To be sure, our decision also pointed to another provision in the agreement during the course of its analysis. But that provision simply described the procedures by which the parties had to raise questions of "arbitrability" before the arbitrator; it didn't purport to expand the arbitrator's authority to decide such questions. See id. So it's

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unclear what (if anything) the provision added to the court's analysis. See In re: Auto. Parts Antitrust Litig. , 951 F.3d 377, 382 (6th Cir. 2020) (reading McGee as holding that the incorporation of the AAA Rules "shows that the parties ‘clearly and unmistakably’ agreed that the arbitrator would decide questions of arbitrability" (citation omitted)).

What's more, district courts in our circuit have long found that the incorporation of the AAA Rules provides "clear and unmistakable" evidence that...