Jin v. Parsons Corp.

Decision Date24 July 2020
Docket NumberNo. 19-7019,19-7019
Citation966 F.3d 821
Parties Jin O. JIN, Appellee v. PARSONS CORPORATION, Appellant
CourtU.S. Court of Appeals — District of Columbia Circuit

Joseph E. Schuler, Reston, VA, argued the cause and filed the briefs for appellant.

John Thomas Harrington, Washington, DC, argued the cause for appellee. With him on the brief was R. Scott Oswald, Washington, DC.

Before: Henderson, Garland and Pillard, Circuit Judges.

Karen LeCraft Henderson, Circuit Judge:

When a defendant is sued in federal court but maintains that he agreed to litigate disputes with the plaintiff through arbitration, the Federal Arbitration Act (FAA), 9 U.S.C. §§ 4 et seq. , allows the defendant to move the district court to compel the parties to arbitrate their dispute. But if arbitrability of the dispute itself is in issue, the FAA instructs the district court to proceed summarily to trial on that limited issue.1 Here, Jin O. Jin, a long-time employee of Parsons Corporation (Parsons), sued Parsons for employment discrimination. Parsons moved to compel arbitration. Concluding that genuine disputes of material fact existed as to whether Jin agreed to arbitrate, the district court denied the motion. Because § 4 of the FAA requires the district court to proceed "summarily to ... trial" on the issue of arbitrability if it is in dispute, we conclude that the district court erred by denying the motion before definitively resolving the issue via trial. Instead, on remand, the district court should hold the motion in abeyance pending its prompt resolution of whether the parties agreed to arbitrate.

I. BACKGROUND

The FAA provides that

A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2. "This text reflects the overarching principle that arbitration is a matter of contract." Am. Exp. Co. v. Italian Colors Rest. , 570 U.S. 228, 233, 133 S.Ct. 2304, 186 L.Ed.2d 417 (2013). "[C]onsistent with that text, courts must ‘rigorously enforce’ arbitration agreements according to their terms ...." Id. (citation omitted). But "[b]efore determining that the [FAA] applies, the court must decide that the [parties] ... agreed to arbitrate." Camara v. Mastro's Rests. LLC , 952 F.3d 372, 373 (D.C. Cir. 2020) (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) ); See also Howard v. Ferrellgas Partners, L.P. , 748 F.3d 975, 977 (10th Cir. 2014) ("[B]efore the [FAA's] heavy hand in favor of arbitration swings into play, the parties themselves must agree to have their disputes arbitrated.").

Here, Jin sued Parsons for employment discrimination but the parties disagree whether Jin agreed to arbitrate disputes with the company. Parsons asserts that in 1998 it instituted an Employee Dispute Resolution (EDR) program, which included an Agreement to Arbitrate (Agreement). In October 2012, Parsons updated its program and emailed its employees notifying them about the changes and asking them to complete a certification indicating that that they had received the Agreement. The email stated that "[i]f you do not sign the Agreement to Arbitrate, your continued employment with Parsons after the Effective Date will constitute your acceptance of the Agreement to Arbitrate." J.A. 26. Based on a sworn declaration by one of its human resources directors and its email records, Parsons maintains that it sent the email to Jin four times and that although he never signed the Agreement, he continued to work for the company for several years thereafter. In response, Jin submitted a declaration that he had no recollection of the initial 1998 EDR program or the Agreement, that he did not recall receiving any emails from Parsons about the Agreement in 2012 and that he had never reviewed the Agreement nor signed it.

Parsons moved to stay judicial proceedings and to compel arbitration on December 17, 2018. On January 29, 2019, the district court denied Parsons's motion, concluding that Jin's intent to be bound by the Agreement presented a genuine dispute of material fact. Jin v. Parsons Corp. , 366 F. Supp. 3d 104, 105 (D.D.C. 2019). Instead of holding a trial limited to resolving that factual dispute, as FAA § 4 commands, the district court ordered Parsons to answer Jin's complaint on the merits and directed the parties to confer regarding discovery pursuant to Federal Rule of Civil Procedure 26(f). With the litigation poised to proceed past arbitration and on to the merits, Parsons then timely appealed.

II. DISCUSSION
A. Jurisdiction

We have jurisdiction of the district court's denial of Parsons's motion to compel arbitration under 9 U.S.C. § 16(a).2 At oral argument, see Oral Arg. Rec. 31:35–31:55, a question arose regarding our jurisdiction, comparing Parsons's appeal to the interlocutory appeal of a district court's denial of summary judgment. See Chaplaincy of Full Gospel Churches v. England , 454 F.3d 290, 296 (D.C. Cir. 2006) ("[A]s a general rule, we lack jurisdiction to hear an appeal of a district court's denial of summary judgment."). But we are confident of our jurisdiction of this appeal. First, the plain language of § 16(a) states that "[a]n appeal may be taken from ... an order ... refusing a stay of any action under section 3 of this title ... [or] denying a petition under section 4 of this title to order arbitration to proceed." 9 U.S.C. § 16(a)(1)(A)(B). Indeed, our precedent assumes our jurisdiction of such a denial, including a denial based on the existence of a genuine dispute of material fact, if the district court opens the door for the case to proceed to the merits.3 See Camara , 952 F.3d at 373 ("This is an interlocutory appeal from an order of the district court denying a motion to compel arbitration." (citing 9 U.S.C. § 16(a)(1) )). Here, as in Camara , the district court's denial of the motion to stay proceedings and compel arbitration purported to conclude the gateway inquiry into whether the dispute should be arbitrated and signaled the beginning of the merits litigation. Section 16(a)(1) supports our jurisdiction of an immediate appeal in these circumstances.

Second, precedent of our sister circuits supports our jurisdiction of such a denial. See Microchip Tech. Inc. v. U.S. Philips Corp. , 367 F.3d 1350, 1355 (Fed. Cir. 2004) ("We agree with our sister circuits that section 16 allows for appeal of orders denying motions to compel arbitration even when the issue of arbitrability has not been finally decided."); Boomer v. AT & T Corp. , 309 F.3d 404, 412 (7th Cir. 2002) ("We acknowledge that the district court intended to reconsider the question of arbitrability following further fact-finding and possibly a trial. However, that does not defeat this court's jurisdiction. The plain language of Section 16(a)(1) provides for an appeal from ‘an order refusing a stay’ or ‘denying a petition to order arbitration to proceed,’ and the district court in this case expressly did both."); Snowden v. CheckPoint Check Cashing , 290 F.3d 631, 635–36 (4th Cir. 2002) ("plain language of § 16(a)(1)(A)(B) of the FAA" grants appellate jurisdiction of order denying motion to compel arbitration); Sandvik AB v. Advent Int'l Corp. , 220 F.3d 99, 102 (3d Cir. 2000) ("The language of § 16 provides for appeals of orders denying arbitration, and it makes no distinction between orders denying arbitration and ‘final orders’ that accomplish the same end."). Granted, in those cases, on denying a motion to compel arbitration, the district court also signaled its intention to consider the arbitrability question further before reaching the merits. Here, however, we need not address that factual scenario because the district court denied Parsons's motion outright without any indication of further proceedings on the question of whether Jin agreed to arbitrate. Our guidance to district courts as explained below should avoid such a scenario in the future.

Third, unlike a denial of summary judgment which is generally not a final order under 28 U.S.C. § 1291, our review of a denial of a motion to compel arbitration under § 16(a) of the FAA is not limited to a final order. See Bombardier Corp. v. Nat'l R.R. Passenger Corp. , 333 F.3d 250, 253 (D.C. Cir. 2003) ("[Section 16 of the FAA] authorizes not only appellate jurisdiction, but in some cases, interlocutory appeals which constitute exceptions to the final decision rule of Section 1291."); See also Sandvik AB , 220 F.3d at 103 ("Congress decided to use the word ‘final’ in one part of [ section 16 ], but declined to do so in the section that declares that orders denying motions to compel arbitration are indeed appealable.").

B. Section 4 ’s Trial Provision

Notwithstanding our conclusion that we have jurisdiction to hear Parsons's appeal, 9 U.S.C. § 4 makes plain that the district court, once it concluded that a genuine dispute of material fact existed as to whether Jin assented to the arbitration agreement, should have proceeded to try the issue of arbitrability.

Section 4 of the FAA provides that if, in considering a motion to compel arbitration, the district court determines that "the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof." 9 U.S.C. § 4. If the jury—or the court in a bench trial—finds no arbitration agreement was made, the case must proceed to the merits. Id. If it finds a valid agreement was made, the court then orders the parties to arbitrate. Id.

Interpreting § 4, then-Judge Gorsuch, writing for the Tenth Circuit, explained that:

Having found unresolved questions of material fact precluded it from deciding definitively whether the parties agreed to arbitrate, the district court was in
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