Simply Wireless, Inc. v. T-Mobile US, Inc., 16-1123

• Decision Date: 13 December 2017
• Docket Number: No. 16-1166,No. 16-1123,16-1123
• Citation: 877 F.3d 522
• Parties: SIMPLY WIRELESS, INC, Plaintiff–Appellant, v. T-MOBILE US, INC, f/k/a T-Mobile USA, Inc.; T-Mobile USA, Inc., Defendants–Appellees. Simply Wireless, Inc, Plaintiff–Appellant, v. T-Mobile US, Inc, f/k/a T-Mobile USA, Incorporated; T-Mobile USA, Incorporated, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

877 F.3d 522

SIMPLY WIRELESS, INC, Plaintiff–Appellant,

v.T-MOBILE US, INC, f/k/a T-Mobile USA, Inc.; T-Mobile USA, Inc., Defendants–Appellees.

Simply Wireless, Inc, Plaintiff–Appellant,

v.T-Mobile US, Inc, f/k/a T-Mobile USA, Incorporated; T-Mobile USA, Incorporated, Defendants–Appellees.

No. 16-1123

No. 16-1166

United States Court of Appeals, Fourth Circuit.

Argued: September 14, 2017

Decided: December 13, 2017

ARGUED: Sean Patrick Roche, CAMERON MCEVOY, PLLC, Fairfax, Virginia, for Appellant. Joseph Mark Lipner, IRELL & MANELLA LLP, Los Angeles, California, for Appellees. ON BRIEF: Robert A. Rowan, Sheryl L. De Luca, NIXON & VANDERHYE P.C., Arlington, Virginia, for Appellant. Charles B. Molster, III, WINSTON & STRAWN LLP, Washington, D.C.; Ellisen S. Turner, Adam M. Shapiro, IRELL & MANELLA LLP, Los Angeles, California, for Appellees.

Before WYNN, FLOYD, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge Wynn wrote the majority opinion, in which Judge Harris joined. Judge Floyd wrote a dissenting opinion.

WYNN, Circuit Judge:

Plaintiff Simply Wireless, Inc. ("Simply Wireless") appeals from an order of the United States District Court for the Eastern District of Virginia dismissing its complaint against Defendants T-Mobile US, Inc. and T-Mobile USA, Inc. (collectively, "T-Mobile"). Upon determining that the parties’ business relationship was governed by a written agreement containing a mandatory arbitration clause, the district court went on to determine that the scope of that arbitration clause included all of Simply Wireless’s claims against T-Mobile.

We conclude that the district court erred in determining the scope of the parties’ arbitration clause, as the parties clearly and unmistakably intended for an arbitrator—not the court—to resolve all arbitrability disputes. Nonetheless, because the parties intended for an arbitrator to resolve all arbitrability disputes, the district court’s ultimate dismissal of Simply Wireless’s complaint in favor of arbitration was proper. Accordingly, we affirm the district court’s dismissal on alternate grounds.

I.

We review a grant of a motion to dismiss a complaint by taking the facts in the light most favorable to the plaintiff. Cruz v. Maypa , 773 F.3d 138, 141 (4th Cir. 2014).

Simply Wireless sells cellular telephone goods and services to consumers and provides advertising, marketing, and distribution services to other businesses in the telecommunications industry. Simply Wireless is the registered owner of multiple trademarks using the name SIMPLY WIRELESS.¹ According to the complaint, Simply Wireless is also the originator and owner of the trademark SIMPLY PREPAID in connection with the sale of cellular telephone goods and services. Since 2002, Simply Wireless has sold hundreds of thousands of prepaid phone cards in connection with the SIMPLY PREPAID trademark, and it has used that mark to promote and market the goods and services of other telecommunications providers.

T-Mobile also provides cellular services. Although T-Mobile and Simply Wireless compete in the same industry, they have partnered on several projects since at least 2003. Pertinent to this appeal, on July 12, 2012, T-Mobile and Simply Wireless partnered on a project by executing a contract entitled "Amended & Restated Limited Purpose Co-Marketing and Distribution Agreement for Equipment Sold th[r]ough HSN & QVC" (the "HSN/QVC Agreement"). S.J.A. 502. The HSN/QVC Agreement allowed Simply Wireless "to use T-Mobile’s experience, Confidential Information, Marks² and goodwill to promote, market and sell T-Mobile’s Wireless Service and Equipment to Subscribers through [HSN and QVC] for various on-air promotions, ... subject to the terms and conditions of this Agreement." Id. The HSN/QVC Agreement included several provisions protecting T-Mobile’s trademarks:

18.1. Marks . [Simply Wireless] acknowledges that the Marks, along with all Intellectual Property Rights associated therewith are the property of T-Mobile.

....

18.5. Protection of T-Mobile Rights . [Simply Wireless] shall immediately notify T-Mobile of any infringement, misappropriation, or violation of any Marks and/or Intellectual Property Rights of T-Mobile ... that comes to [Simply Wireless’s] attention. [Simply Wireless] shall not infringe or violate, and shall use its best efforts to preserve and protect T-Mobile’s ... interest in, all such Marks and Intellectual Property Rights.

S.J.A. 513–14 (emphasis added). It also included an arbitration clause that provided, in pertinent part:

19.1.1. Submission to Arbitration . Any claims or controversies ... arising out of or relating to this Agreement ("Dispute") shall be resolved by submission to binding arbitration. The arbitration shall be administered and hearings shall be held in Seattle, Washington before a single neutral arbitrator from the offices of Judicial Arbitration & Mediation Services. The arbitration shall be administered pursuant to the JAMS Comprehensive Rules and Procedures then in effect.... Notwithstanding any choice of law provision in this Agreement, the parties agree that the Federal Arbitration Act, 9 U.S.C. §§ 1 – 15, not state law, shall govern the arbitrability of all disputes under this Agreement.

S.J.A. 514 (emphasis added).

Over two years after the execution of the HSN/QVC Agreement, in August and September 2014, T-Mobile filed several trademark applications with the United States Patent and Trademark Office ("USPTO") to trademark SIMPLY PREPAID. At the same time, T-Mobile commenced use of SIMPLY PREPAID in connection with its products and services.

In March 2015, Simply Wireless filed with the USPTO Trademark Trial and Appeal Board (the "Trademark Board") a Notice of Opposition to all of T-Mobile’s SIMPLY PREPAID trademark applications. In response, T-Mobile filed an answer and asserted counterclaims seeking cancellation of Simply Wireless’s various registrations of the SIMPLY WIRELESS trademark. During the subsequent proceedings before the Trademark Board, neither party demanded arbitration. Instead, both parties engaged in extensive discovery, with Simply Wireless producing over 30,000 pages of documents in response to discovery requests from T-Mobile.

In October 2015, Simply Wireless brought this action in federal court, seeking relief on five grounds: (1) trademark infringement under Section 32 of the Lanham Act, 15 U.S.C. § 1114 ; (2) trademark infringement under Va. Code. Ann. § 59.1–92.12 ; (3) unfair competition, passing off, trade name infringement, trademark infringement, and false designation of origin under Section 43(a)(1) of the Lanham Act, 15 U.S.C. § 1125(a) ; (4) common law trademark infringement, trade name infringement, unfair competition, and passing off under the common law of the Commonwealth of Virginia; and (5) trademark dilution under Section 43(c) of the Lanham Act, 15 U.S.C. § 1125(c).

Soon thereafter, T–Mobile filed a Notice of Intent to Seek Arbitration.³ T-Mobile also moved to dismiss Simply Wireless’s complaint on two separate grounds: First, T-Mobile argued that, based upon provisions in the HSN/QVC Agreement, Simply Wireless’s failure to provide contractually required notice of its claims and to initiate arbitration in a timely manner warranted dismissal with prejudice under Federal Rule of Civil Procedure 12(b)(6). Second, and alternatively, T-Mobile argued that the HSN/QVC Agreement’s express incorporation of JAMS Comprehensive Rules and Procedures ("JAMS Rules") "clearly and unmistakably" endowed an arbitrator—as opposed to the court—with the authority to resolve all arbitrability disputes. Accordingly, T-Mobile asked the district court to dismiss the case without prejudice for an arbitrator to determine whether the dispute at issue falls within the scope of the HSN/QVC Agreement’s mandatory arbitration provision.

In response, Simply Wireless principally argues, both below and now on appeal, that the various claims asserted in its complaint neither "arise out of" nor "relate to" the HSN/QVC Agreement. Therefore, according to Simply Wireless, its claims against T-Mobile are neither barred by the HSN/QVC Agreement nor subject to mandatory arbitration pursuant to the agreement.

On January 14, 2016, the district court issued a two-page order granting T-Mobile’s motion to dismiss Simply Wireless’s complaint. Notwithstanding T-Mobile’s argument that the HSN/QVC Agreement expressly left questions of arbitrability to the arbitrator, the court concluded "that Plaintiff’s claims are arbitrable because they fall within the scope of the [HSN/QVC Agreement]," and therefore dismissed the action without prejudice to allow the parties to pursue arbitration. J.A. 493. Simply Wireless timely appealed.

II.

From the outset, we point out that neither party disputes the validity of the HSN/QVC Agreement, which included the arbitration clause. Instead, the issue in this matter arises from an arbitrability dispute that necessitates the two-step inquiry we outlined in Peabody Holding Co. v. United Mine Workers of Am., Int’l Union , 665 F.3d 96 (4th Cir. 2012). "First, we determine who decides whether a particular dispute is arbitrable: the arbitrator or the court. Second, if we conclude that the court is the proper forum in which to adjudicate arbitrability, we then decide whether the dispute is, in fact, arbitrable. We review de novo the district court’s ruling as to both prongs." Id. at 101.

Under Peabody , we first must determine who decides whether Simply Wireless’s claims are arbitrable: the arbitrator or the court. "While arbitration serves important public interests, an agreement to arbitrate—like any other contract—is fundamentally about private choice." Carson v. Giant Food, Inc. , 175 F.3d 325, 328 (4th Cir. 1999). Thus, consistent with arbitration’s contractual nature, parties may choose "to arbitrate gateway questions of arbitrability, such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy."...