Huffman v. Hilltop Cos.

• Decision Date: 27 March 2014
• Docket Number: No. 13–3938.,13–3938.
• Citation: 747 F.3d 391
• Parties: Cynthia HUFFMAN, et al., Plaintiffs–Appellees, v. The HILLTOP COMPANIES, LLC, Defendant–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

747 F.3d 391

Cynthia HUFFMAN, et al., Plaintiffs–Appellees,

v.The HILLTOP COMPANIES, LLC, Defendant–Appellant.

No. 13–3938.

United States Court of Appeals, Sixth Circuit.

Argued: March 19, 2014.

Decided and Filed: March 27, 2014.

ARGUED:Matthew C. Blickensderfer, Frost Brown Todd LLC, Cincinnati, Ohio, for Appellant. Adam W. Hansen, Nichols Kaster, LLP, San Francisco, California, for Appellees. ON BRIEF:Matthew C. Blickensderfer, Eugene Droder III, Frost Brown Todd LLC, Cincinnati, Ohio, for Appellant. Adam W. Hansen, Nichols Kaster, LLP, San Francisco, California, Rachhana T. Srey, Nichols Kaster, PLLP, Minneapolis, Minnesota, for Appellees.

Before: GILMAN, COOK, and McKEAGUE, Circuit Judges.

OPINION

McKEAGUE, Circuit Judge.

This case involves multiple individuals who were once employed by The Hilltop Companies. Each individual executed an employment agreement with Hilltop that contained both an arbitration clause and a survival clause, but the survival clause did not list the arbitration clause. At the heart of this dispute is whether the strong presumption in favor of arbitration controls, or whether the omission of the arbitration clause from the survival clause in the agreement constitutes a “clear implication” that the parties intended the arbitration clause to expire with the agreement. The district court denied Hilltop's Motion to Dismiss and Compel Arbitration on the basis that the strong presumption in favor of arbitration was rebutted. For the reasons that follow, we reverse.

I.

In October 2011, Hilltop hired Cynthia Huffman as well as the other plaintiffs in this action to review the files of mortgage loans originated by PNC Bank. In this position, the plaintiffs reviewed the loan files to determine whether lawful procedures were followed during foreclosure and other proceedings. Until the end of their employment in January 2013, the plaintiffs regularly worked in excess of forty hours per week, but were not compensated at the overtime rate because Hilltop classified them as independent contractors. The plaintiffs assert that Hilltop's classification was in error, and that in not compensating them at the applicable overtime rate, Hilltop violated the Fair Labor Standards Act and the Ohio Minimum Fair Wage Standards Act.

The manner in which the plaintiffs may pursue their claims against Hilltop turns on an issue of contract interpretation. Each employment relationship was governed by a now-expired Professional Services Contract Agreement. The agreement contained twenty-four clauses, including an arbitration clause and a survival clause. The arbitration clause read in relevant part as follows:

21. ARBITRATION. Any Claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding arbitration administered by the American Arbitration Association (“AAA”) in accordance with its Commercial Arbitration Rules and its Optional Procedures for Large, Complex Commercial Disputes. The ... arbitration and all related proceedings and discovery shall take place pursuant to a protective order entered by the arbitrators that adequately protects the confidential nature of the parties' proprietary and confidential information.

R.10–1, Agreement at 11. The survival clause read as follows:

22. SURVIVAL. Paragraphs 4, 5, 6, 7, 8, 9, 10. 11, 12, 14, 17, and 22 shall survive the expiration or earlier termination of this Agreement.

Id. at 12 (emphasis added). The clauses listed in the survival clause correspond to ones detailing services essential to the job, the term of employment, compensation, termination, and client confidentiality. Importantly, while the survival clause listed half of the agreement's twenty-four clauses, it did not list the arbitration clause. Other noteworthy unlisted clauses included the non-compete clause—which provided that the contractors would not provide their services to select clients for twelve months after termination of the agreement, the severability clause—which provided that in the event any provision was held to be invalid, the remainder of the agreement would still be enforceable, and the integration clause—which provided that the agreement superseded the parties' prior communications and constituted their entire understanding.

The plaintiffs' work-related grievances led them to file a class action in federal court. Hilltop filed a Motion to Dismiss and Compel Arbitration, arguing that the agreement provided for the arbitration of all disputes. Hilltop also argued that the plaintiffs must arbitrate their claims individually rather than as a class because the agreement did not permit classwide arbitration. The district court denied Hilltop's motion, stating that the arbitration clause had no post-expiration effect because the “more specific survival clause that excludes arbitration from survival trumps the more general arbitration clause in the contract,” and because the plaintiffs did not agree “that the arbitration provision would survive termination of the contract.” R. 16, Dist. Ct. Opn. at 2–3. The doctrines of expressio unius est exclusio alterius, which provides that the express mention of certain contractual provisions is tantamount to intentional exclusion of the others, and contra proferentem, which provides that ambiguous terms should be interpreted against the drafter's (Hilltop's) interests, influenced the district court's decision. The district court did not reach the second issue of whether the agreement permitted classwide arbitration. This appeal followed.

II.

We first determine whether the agreement's arbitration clause had post-expiration effect. “A district court's decision whether to compel arbitration under the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., is reviewed de novo. Similarly, the district court's decisions regarding the arbitrability of a particular dispute are reviewed de novo.” Nestle Waters N. Am., Inc. v. Bollman, 505 F.3d 498, 501–02 (6th Cir.2007) (internal citation omitted).

Central to the resolution of this issue is the strong federal policy in favor of arbitration. In Litton Financial Printing Division, Litton Business Systems, Inc. v. NLRB, the Supreme Court recognized a “presumption in favor of post-expiration arbitration of matters unless negated expressly or by clear implication [for] matters and disputes arising out of the relationgoverned by contract.” 501 U.S. 190, 204, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991) (emphasis added) (internal quotation marks and citation omitted). This court has since observed that the need for an arbitration provision to have post-expiration effect is intuitive, because if “the duty to arbitrate automatically terminated upon expiration of the contract, a party could avoid his contractual duty to arbitrate by simply waiting until the day after the contract expired to bring an action regarding a dispute that arose while the contract was in effect.” Zucker v. After Six, Inc., 174 Fed.Appx. 944, 947–48 (6th Cir.2006).

The Supreme Court in Litton went on to note that, with respect to agreements containing broadly-worded arbitration clauses, “there is a presumption of arbitrability in the sense that an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” 501 U.S. at 209, 111 S.Ct. 2215 (internal quotation marks and brackets omitted). Under this circuit's precedent, the arbitration clause in this case is fairly described as being broadly-worded because its language indicating that “[a]ny Claim arising out of or relating to this Agreement, or the breach thereof” will be submitted to arbitration is not only far-reaching but also very similar to other arbitration clauses that this court has described as “broad.” See, e.g., Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 625 (6th Cir.2004) (describing as “broad” a provision providing that “[a]ny dispute arising out of the interpretation, performance or alleged breach of this agreement, shall be submitted to arbitration”).

The fact that the plaintiffs face a difficult task in rebutting the strong presumption in favor of arbitration “by clear implication” and with “positive assurance” is further confirmed by controlling precedent. See Litton, 501 U.S. at 204, 209, 111 S.Ct. 2215. This court examines “arbitration language in a contract in light of the strong federal policy in favor of arbitration, resolving any doubts as to the parties' intentions in favor of arbitration.” Nestle, 505 F.3d at 503 (emphasis added); see also Stout v. J.D. Byrider, 228 F.3d 709, 715 (6th Cir.2000) ( “It is settled authority that doubt regarding the applicability of an arbitration clause should be resolved in favor of arbitration.”). “Likewise, any ambiguities in the contract ... should be resolved in favor of arbitration.” Id. at 714 (internal citations omitted). “Moreover, ‘[i]n the absence of any express provision excluding a particular grievance from arbitration ... only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.’ ” Nestle, 505 F.3d at 503 (emphasis added) (quoting AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986)). For example, this court has found that a party's explicit rejection of a contract-extension agreement that contained an arbitration clause did “not constitute an express or clearly implied rejection of the presumption in favor of arbitration” where the original agreement included an arbitration clause. S. Cent. Power Co. v. Int'l Bhd. of Elec. Workers, Local Union 2359, 186 F.3d 733, 742 (6th Cir.1999); see also Nestle, 505 F.3d at 500 (applying the presumption in favor of arbitration where the parties' original agreement included an arbitration clause and their subsequent agreement was silent as to arbitration).

Although the plaintiffs' task is difficult, it...