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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 17, 2008 Decided April 11, 2008

No. 07-7059

AZHAR ALI KHAN AND

ASMA AZHAR KHAN,

APPELLANTS

v.

PARSONS GLOBAL SERVICES, LTD., ET AL.,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 03cv01574)

Cyril V. Smith argued the cause for appellants. With him on

the briefs was Elaine Charlson Bredehoft.

Matthew D. McGill argued the cause for appellees. With

him on the brief was Eugene Scalia.

Before: GINSBURG, ROGERS and GRIFFITH, Circuit Judges.

USCA Case #07-7059 Document #1110404 Filed: 04/11/2008 Page 1 of 13
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Opinion for the Court by Circuit Judge ROGERS.

ROGERS, Circuit Judge: This is the second appeal by Azhar

Ali Khan and his wife, Asma Azhar Khan, from a judgment on

their claims against his employer and its agents (collectively

“Parsons”) to recover for injuries sustained as a result of

Parsons’ alleged mishandling of ransom demands by Mr. Khan’s

kidnappers. In the first appeal, the court reversed the grant of

summary judgment for Parsons, holding that the Khans’

recovery on their tort claims was not limited by Mr. Khan’s

employment contract to workers’ compensation insurance.

Khan v. Parsons Global Servs., Ltd., 428 F.3d 1079 (D.C. Cir.

2005) (“Khan I”). In this appeal, the Khans contend that the

district court erred in granting Parsons’ motion to compel

arbitration, denying their discovery requests for lack of

jurisdiction, and dismissing Mrs. Khan’s claim for intentional

infliction of emotional distress. We hold that Parsons waived its

right to enforce the arbitration clause in Mr. Khan’s employment

contract. We further hold that the complaint stated a cause of

action for Mrs. Khan’s claim of intentional infliction of

emotional distress. Accordingly, we reverse.

I.

The events underlying the Khans’ complaint arose during

Mr. Khan’s employment by Parsons in the Philippines. On one

of his days off, when Parsons’ offices were closed, he was

kidnaped and subsequently tortured. Parsons allegedly delayed

paying the ransom that was demanded until after Mr. Khan’s

kidnapers carried out their threat to cut off part of his ear. The

allegations in the complaint are set forth in Khan I, 428 F.3d at

1081-82. At the time of his kidnapping, the terms of Mr. Khan’s

employment contract (“the Agreement”) included a broadly

worded arbitration clause, applicable to “any controversy or

claim [arising] out of [the Agreement,] the breach hereof or in

USCA Case #07-7059 Document #1110404 Filed: 04/11/2008 Page 2 of 13
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any other way related hereto or otherwise related to or arising

out of employment by [Parsons].” Agreement at A-3. The

Agreement also included a separate clause specifying that the

“worker’s compensation insurance” carried by Parsons should

serve as “full and exclusive compensation for any compensable

bodily injury . . . arising out of and in the course of Employee’s

employment hereunder.” Id. at A-2. 

In May 2003, the Khans filed negligence and intentional

infliction of emotional distress claims against Parsons in the

D.C. Superior Court. Parsons removed the case to the federal

district court pursuant to the New York Convention on the

Recognition and Enforcement of Foreign Arbitral Awards

(“New York Convention”), opened for signature June 10, 1958,

21 U.S.T. 2517, 330 U.N.T.S. 38. See also 9 U.S.C. §§ 202-03;

205. On July 29, 2003 Parsons filed a single motion to dismiss

or, alternatively, for summary judgment or to compel arbitration.

Specifically, Parsons argued in its motion that all of the Khans’

claims were addressed by the workers’ compensation clause. In

support of its motion, Parsons submitted testimony on its behalf,

including two declarations by its employees, one of which stated

that workers compensation had covered part of Mr. Khan’s lost

wages, and an email from Parsons to Mrs. Khan on the

applicability of workers’ compensation, asserting that Parsons’

insurer agreed with its position that Mr. Khan’s injuries were

work related. The motion independently sought dismissal of the

complaint against four Parsons entities for alleged pleading

defects. The Khans filed an opposition, set forth material issues

of disputed fact, and submitted two declarations, one of which

outlined potential discovery pursuant to FED. R. CIV. P. 56(f).

Parsons filed a reply reiterating its argument regarding workers’

compensation. On March 22, 2004, the district court granted

summary judgment to Parsons on the ground that workers’

compensation was the Khans’ exclusive remedy; it denied

Parsons’ motion to compel arbitration as moot. The district

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court denied the Khans’ motion for reconsideration, which was

opposed by Parsons, on September 2, 2004.

This court, over Parsons’ objections, reversed the grant of

summary judgment. Khan I, 428 F.3d at 1081. Parsons then

filed with the district court a motion to compel arbitration with

a supporting memorandum on April 17, 2006. Over the Khans’

opposition, including their argument that Parsons had waived its

right to arbitrate by having engaged in litigation on the merits of

their claims, the district court granted the motion to compel,

ruling that all but one of the Khans’ claims were subject to

arbitration. Parsons Global Servs., Ltd., 480 F. Supp. 2d 327,

332-43 (D.D.C. 2007) (“Khan II”). The district court rejected

the Khans’ arguments that the arbitration clause was waived or

unenforceable or could not be invoked by defendants that had

not signed the Agreement. It also ruled that Mrs. Khan’s

negligence claim was subject to the arbitration clause and, sua

sponte, dismissed with prejudice her claim for intentional

infliction of emotional distress. The district court then denied

the Khans’ motion for discovery for lack of jurisdiction. The

Khans appeal, and our review is de novo. See Stewart v. Nat’l

Educ. Ass’n, 471 F.3d 169, 173 (D.C. Cir. 2006); Colbert v.

Potter, 471 F.3d 158, 164 (D.C. Cir. 2006). 

II.

The Supreme Court has held that “questions of arbitrability

must be addressed with a healthy regard for the federal policy

favoring arbitration . . . . whether the problem at hand is the

construction of the contract language itself or an allegation of

waiver, delay, or a like defense to arbitrability.” Moses H. Cone

Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25

(1983). However, consistent with arbitration’s contractual basis,

a party may waive its right to arbitration by acting

“inconsistently with the arbitration right.” National Foundation

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1

 While Moses H. Cone Memorial Hospital and National

Foundation for Cancer Research arose out of Chapter 1 of the Federal

Arbitration Act, and our case arises under the New York Convention,

Chapter 1 applies whenever not inconsistent with the New York

Convention. 9 U.S.C. § 208.

for Cancer Research v. A.G. Edwards & Sons, Inc., 821 F.2d

772, 774 (D.C. Cir. 1987).1 The Khans contend that because

Parsons actively participated in their lawsuit by seeking judicial

resolution of the substance of the arbitrable claims, it acted

inconsistently with its right to compel arbitration and thus

waived that right. In particular, they maintain that, by

definition, Parsons’ motion for summary judgment should

constitute a waiver. The Khans also contend that they suffered

delay and prejudice as a result of Parsons’ litigation activities,

and given that the gravamen of their claims concern Parsons’

conduct in responding to Mr. Khan’s kidnapping, imprisonment,

and torture, Parsons’ non-pursuit of discovery should not figure

in any waiver analysis because “discovery will likely focus

almost entirely on documents and testimony in the possession

and control of [Parsons].” Appellants’ Br. at 20. 

In this circuit, the court views “the totality of the

circumstances [in deciding whether] the defaulting party has

acted inconsistently with the arbitration right. . . . [O]ne example

of [such] conduct . . . is active participation in a lawsuit.”

National Foundation, 821 F.2d at 774-75 (citing Cornell & Co.

v. Barber & Ross Co., 360 F.2d 512, 513 (D.C. Cir. 1966)). A

finding of prejudice is not necessary in order to conclude that a

right to compel arbitration has been waived, although “a court

may consider prejudice to the objecting party as a relevant

factor” in its waiver analysis. Id. at 777. The facts of Parsons’

pretrial participation in the litigation of the Khans’ claims are

undisputed; the only question is whether that participation

waived its right to compel arbitration. “The question of waiver

USCA Case #07-7059 Document #1110404 Filed: 04/11/2008 Page 5 of 13
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is one of law, which we review de novo.” Id. at 774. 

A.

As an initial matter, Parsons’ contention that its right to

compel arbitration was originally “unknown or inchoate” and

thus could not be waived until this court’s decision in Khan I

clarified that the Khans’ claims were arbitrable because

workers’ compensation did not apply, Appellees’ Br. at 18, is

not credible. Parsons understood that it possessed a potential

right to arbitration prior to Khan I. Its removal of the Khans’

lawsuit to federal court was based on the New York Convention

addressing foreign arbitration, and its motion in the district court

included arbitration as an alternative to summary judgment and

dismissal. In addition, before the district court ruled on its

motion, Parsons’ counsel proposed that the Khans submit to

arbitration, advising that the Agreement specified “arbitration of

disputes related to [Mr. Khan’s] employment.” Letter from

Eugene Scalia, Esq., to Cyril V. Smith, Esq. (July 21, 2003).

These actions do not suggest any confusion over the right to

compel arbitration.

The court has not previously held that a motion for

summary judgment, standing alone, suffices to constitute a

waiver of colorably arbitrable claims. In National Foundation

the court held that a motion for summary judgment, pursued

until denied by the district court despite intervening legal

decisions clarifying that arbitration was possible, 821 F.2d at

776-77, constituted a demand for “resolution on the merits” and

was the final indicator of “a conscious decision to exploit the

benefits of pretrial discovery and motion practice, . . . [an]

election [] wholly inconsistent with an intent to arbitrate and

constitut[ing] an abandonment of the right to seek arbitration,”

id. at 776. However, this holding arose in a context of long

delay before invocation of the right to arbitration, extensive

pretrial discovery, and both economic and tactical prejudice to

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the non-moving party. Id. at 775-78. Other circuit courts of

appeals have been more direct in assessing the relationship

between summary judgment and waiver of the right to compel

arbitration. The Second Circuit has stated that any motion for

summary judgment would constitute waiver of the right to

compel arbitration. Sweater Bee by Banff, Ltd. v. Manhattan

Indus., Inc., 754 F.2d 457, 465 (2d Cir. 1985) (dictum). The

Seventh Circuit has similarly stated that a motion to dismiss or

in the alternative for summary judgment is an “[e]specially

telling” factor in assessing whether a party waived a right to

arbitration. St. Mary’s Med. Ctr. of Evansville, Inc. v. Disco

Aluminum Prods. Co., 969 F.2d 585, 589 (7th Cir. 1992) (citing

Sweater Bee by Banff, Ltd., 754 F.2d at 465). Even circuits

requiring evidence of prejudice before finding waiver of a right

to compel arbitration have observed that a motion for summary

judgment, in view of the time and expense associated with such

litigation activity, “could not have caused anything but

substantial prejudice to the [plaintiffs].” Price v. Drexel

Burnham Lambert, Inc., 791 F.2d 1156, 1162 (5th Cir. 1986)

(citation omitted); accord Ehleiter v. Grapetree Shores, Inc.,

482 F.3d 207, 224 (3d Cir. 2007). 

Parsons maintains that it “sought dismissal of the Khans’

claims not because [they] were meritless but rather because . . .

workers’ compensation provided the exclusive relief.”

Appellees’ Br. at 18. Further, Parsons maintains, under the

standard in National Foundation, its involvement in litigation of

the Khans’ claims was too limited in scope to constitute waiver.

Noting that it did not move for discovery, nor file an answer

asserting affirmative defenses, Parsons contends that “at most

. . . [only] a motion for summary judgment on the merits of an

arbitrable claim, filed after substantial discovery, can waive the

movant’s right to arbitrate that claim.” Id. at 19 (emphasis

omitted).

USCA Case #07-7059 Document #1110404 Filed: 04/11/2008 Page 7 of 13
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Parsons’ position that its motion did not address the merits

of the Khans’ claims is unpersuasive. The motion sought not

just dismissal, but also summary judgment; the district court

granted summary judgment; Parsons opposed the Khans’ motion

for reconsideration; and Parsons reaffirmed its desire that

summary judgment be upheld as late as the oral argument before

the court in Khan I, see Oral Arg. Transcript (No. 04-7162, Oct.

6, 2005) at 25. This record allows no ambiguity concerning

Parsons’ involvement in litigation on the merits. A summary

judgment motion by definition “goes to the merits of the case.”

10A CHARLES A. WRIGHT, ARTHUR R. MILLER & MARY K.

KANE, FEDERAL PRACTICE AND PROCEDURE § 2712 (3d ed.

2007); accord Prakash v. Am. Univ., 727 F.2d 1174, 1181-82

(D.C. Cir. 1984) (citations omitted). 

Parsons’ suggestion that the merits of its workers’

compensation argument are completely separated from the

merits of the Khans’ claims is also unconvincing. Parsons

insisted on reserving the right to present its workers’

compensation argument to any future arbitration panel

considering the Khans’ claims — suggesting a close relationship

between the merits issues it asserts are independent of each

other. See Memorandum in Support of Defendants’ Motion to

Compel Arbitration at 5 n.2, Khan II, 480 F. Supp. 2d. 327

(D.D.C. 2007) (No. 03-1574) (“2006 Motion to Compel”);

Defendants’ Statement Regarding Proposed Scheduling Order

at 3 n.1, Khan II, 480 F. Supp. 2d. 327 (D.D.C. 2007) (No. 03-

1574) (“2006 Proposal”). More fundamentally, Parsons’ claim

that the Agreement mandated coverage under workers’

compensation was, in fact, an affirmative defense, and by

arguing that the Khans’ claims were of a type addressed by a

particular category of compensation, Parsons’ motion

necessarily addressed these claims’ merits. Had Parsons

succeeded on appeal in Khan I in obtaining affirmance of

summary judgment, then the Khans’ remedies would have been

USCA Case #07-7059 Document #1110404 Filed: 04/11/2008 Page 8 of 13
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limited to the workers’ compensation insurance carried by

Parsons. Cf. Howard Delivery Serv., Inc. v. Zurich Am. Ins. Co.,

547 U.S. 651, 663 (2006); WMATA v. Johnson, 467 U.S. 925,

931-32 (1984). 

B.

It is true that Parsons submitted its motion for summary

judgment as an alternative to dismissal or compelled arbitration.

In addition, unlike the brokerage firm seeking arbitration in

National Foundation, 821 F.2d at 773, 775, Parsons did not

undertake discovery from the Khans, and more broadly, its

engagement with the litigation process was limited apart from its

motion and its subsequent appellate argument. Nonetheless,

Parsons’ pursuit of summary judgment was the signifier of “a

conscious decision . . . to have the substance of [the Khans’] . .

. claims decided by a court.” Id. at 776. 

Firstly, we do not find probative Parsons’ characterization

of its motion as one for dismissal of the complaint, or, in the

alternative, for summary judgment. Admittedly a motion to

dismiss may not be inconsistent with the intent to arbitrate, as

where a party seeks the dismissal of a frivolous claim. See St.

Mary’s Med. Ctr. of Evansville, Inc., 969 F.2d at 589; Sweater

Bee by Banff, Ltd., 754 F.2d at 465. But where, as here, a party

moves for summary judgment through a motion including or

referring to “matters outside the pleading[],” see FED. R. CIV. P.

12(d) (2008); see also FED.R.CIV. P. 12(b)(6) (2008), that party

has made a decision to take advantage of the judicial system and

should not be able thereafter to seek compelled arbitration. A

less rigorous approach to summary judgment based on materials

outside the pleadings would encourage parties to attempt repeat

litigation of merits issues not resolved to their satisfaction,

undermining the “policy that arbitration may not be used as a

strategy to manipulate the legal process.” National Foundation,

821 F.2d at 776. Parsons’ conduct well illustrates this point.

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After failing to persuade this court in Khan I that workers’

compensation insurance was the Khans’ exclusive remedy,

Parsons on remand to the district court reserved the right to raise

the issue of workers’ compensation insurance again at

arbitration, see 2006 Motion to Compel at 5 n.2; 2006 Proposal

at 3 n.1, thus indulging in “a second bite at the very questions

presented to the court for disposition,” National Foundation, 821

F.2d at 776.

Secondly, Parsons cannot salvage its right to seek

arbitration, upon prevailing on its motion for summary judgment

but losing on appeal, solely because it sought arbitration in the

alternative to summary judgment. Parsons’ motion effectively

requested that the district court decide either to retain the case or

to send the dispute to another forum. The first alternative

presupposed that the district court was the appropriate forum for

the adjudication of the Khans’ claims, whereas the second

proceeded from the opposite premise. Having ceded the choice

of forum to the district court, Parsons cannot avoid the

consequences of that court’s decision to rule on its motion for

summary judgment, which relied on sources outside of the

pleadings in engaging the merits of the Khans’ claims. Just as

“[t]he defendant who files [a Rule] 12(b)(6) motion takes the

risk” that the court will dispose of the motion under Rule 56,

Sweater Bee by Banff, Ltd., 754 F.2d at 465, so too a defendant

who seeks arbitration only as an alternative to summary

judgment “takes the risk” that the court will rule on the merits of

the plaintiff’s claims, thereby precluding the defendant from

seeking arbitration subsequently.

Consequently, the limited extent of Parsons’ litigation

activity is of no moment. Had Parsons prevailed on appeal in

Khan I, then it would have secured all that it could have obtained

in arbitration on the basis of a substantial defense on the merits.

Moreover, even if filing a motion for summary judgment alone

USCA Case #07-7059 Document #1110404 Filed: 04/11/2008 Page 10 of 13
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did not definitively waive Parsons’ right to compel arbitration,

independent of other litigation activity, two additional

considerations would render waiver appropriate here. First, the

specifics of Parsons’ litigation posture allowed for fewer indicia

of litigation activity than in cases like National Foundation and

St. Mary’s Medical Center of Evansville, Inc. Parsons’

non-pursuit of discovery is unsurprising given that “discovery

w[ould] likely focus almost entirely on documents and testimony

in the possession and control of [Parsons].” Appellants’ Br. at

20. In addition, once its first motion resulted in a favorable

judgment on the merits, Parsons had achieved its litigation aims,

making further litigation activity unnecessary. Second, the

Khans have suffered significant prejudice. They have been

forced to expend time and resources to oppose two motions in

the district court and to brief two appeals in this court. As the

court held in National Foundation, “[b]y moving for summary

judgment, [Parsons] forced [the Khans] to litigate the substantive

issues in the case[;] . . . [b]eing compelled to bear the expense of

this proceeding constitutes prejudice.” 821 F.2d at 777. 

We hold that, irrespective of other indicators of involvement

in litigation, filing a motion for summary judgment based on

matters outside of the pleadings is inconsistent with preserving

the right to compel arbitration; if the motion is accompanied by

a motion to compel arbitration in the alternative, the movant

takes the risk that the district court will choose to rule on the

motion for summary judgment, thereby preventing the movant

from subsequently seeking arbitration. Parsons’ motion invited

the district court to consider the merits of the Khans’ claims and

the district court’s grant of summary judgment signified

acceptance of the invitation. Parsons must now accept the result

of its chosen litigation strategy: waiver of its right to compel

arbitration. Because Parsons waived its right to any arbitration,

the court need not address the Khans’ challenges to the

enforceability and applicability of the arbitration clause.

USCA Case #07-7059 Document #1110404 Filed: 04/11/2008 Page 11 of 13
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III.

Under District of Columbia law, a claim of intentional

infliction of emotional distress requires a showing of “(1)

extreme and outrageous conduct on the part of the defendant

which (2) intentionally or recklessly (3) causes the plaintiff

severe emotional distress.” Darrow v. Dillingham & Murphy,

LLP, 902 A.2d 135, 139 (D.C. 2006) (internal quotations

omitted). Whether conduct is “extreme and outrageous” depends

on “applicable contemporary community standards of

offensiveness and decency, and [] the specific context in which

the conduct took place.” King v. Kidd, 640 A.2d 656, 668 (D.C.

1993) (citations omitted). More specifically, the conduct must,

as Parsons notes, constitute behavior that is “‘atrocious’ and

‘utterly intolerable.’” Appellee’s Br. at 46 (citing Stevenson v.

Bluhm, No. 06-0632, 2006 WL 3096688, at *2 (D.D.C. Oct. 31,

2006) (internal quotations omitted)). Although this standard is

demanding, the allegations in the Khans’ complaint are sufficient

to state a claim, especially given that inferences derived from

these allegations should be drawn in Mrs. Khan’s favor. Broudy

v. Mather, 460 F.3d 106, 116-17 (D.C. Cir. 2006).

The district court, acting sua sponte, reasoned that Parsons

had not engaged in “extreme or outrageous” conduct and that

“there is no evidence that this situation was caused either directly

or indirectly by [Parsons].” Khan II, 480 F. Supp. 2d at 342. As

to the former, the Khans alleged, among other things, that

Parsons had disregarded Mr. Khan’s safety in favor of

minimizing future corporate kidnappings, thereby provoking Mr.

Khan’s kidnappers to torture him, to cut off a piece of his ear,

and to send a videotape of the event to Parsons, causing the

Khans severe mental distress. Mrs. Khan certainly can allege

facts, consistent with the complaint, that are “so outrageous in

character, and so extreme in degree, as to go beyond all possible

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bounds of decency.” Hill v. Medlantic Health Care Group, 933

A.2d 314, 334 (D.C. 2007) (internal quotations omitted). For

example, Parsons’ alleged successful efforts to prevent Mrs.

Khan from privately paying the ransom, despite threats of torture

and mutilation, may have exposed Mrs. Khan to the guilt of

knowing that she could have prevented Mr. Khan’s suffering and

disfigurement if she had been able to convince Parsons to

provide the ransom details that they withheld from her. In the

context of Mr. Khan’s employment by Parsons, this could

certainly be considered “atrocious” conduct. The complaint also

alleges that Parsons’ actions were intentional and that Mrs. Khan

suffered severe emotional distress. The absence of evidence is

hardly surprising; the Khans have done nothing more than file a

complaint and defend against Parsons’ motions and the grant of

summary judgment. We hold that the Khans’ allegations are

sufficient to meet the criteria for intentional infliction of

emotional distress under Darrow, rendering dismissal

inappropriate. Cf. Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955,

1969 (2007).

Accordingly, we reverse the order and judgment granting

Parsons’ motion to compel arbitration, denying the Khans’

discovery requests, and dismissing Mrs. Khan’s claim for

intentional infliction of emotional distress, and we remand the

case to the district court. Now that the arbitration predicate for

removal will no longer obtain, the district court might consider

whether to remand the case to the D.C. Superior Court.

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