### FILED U.S. COURT OF APPEALS ELEVENTH CIRCUIT MARCH 28, 2003 THOMAS K. KAHN CLERK

* Honorable Jerome Farris, United States Circuit Judge for the Ninth Circuit, sitting by designation. [PUBLISH]

IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH

CIRCUIT

________________________ No. 02-12648

________________________ D.C. Docket No. 01-07865-C V-JAL

RUSSELL MUSNICK, Plaintiff-Appellee,

versus

KING MOTOR COMPANY OF FORT LAUDERDA

LE, d.b.a. King Auto Mall, Defendant-Appe llant.

________________________ Appeals from the United States District Court for the Southern District of Florida

_________________________ (March 28, 2003) Before CARNES, HILL and FARRIS * , Circuit Judges.2

HILL, Circuit Judge: King Motor Company of Fort Lauderdale appeals the district court’s order denying its m

otion to compel ar

bitration.I. Russell Musnick signed an agreement to arbitrate any discrimination claim he might bring aga

inst his employ

er, King Motor Com

pany of Fort La

uderdale (“King”). The Arbitration A greement (the

“Agreem ent”) provides, in p art: The prevailing par

ty shall be awa

rded costs including reasonable attorneys’ fees, filing fee, subpoena service and witness fee,

deposition and hearing

transcription costs and similar expenses, but not including expert fees unless the expert wa

s necessary to e stablishing or refuting liability. In cases wher e a party asser

ts any claim, positio

n or defense, whi

ch is not substantially justified by the

law or facts, th

e arbitrator shall

award to the opposing party that party’s reasonable attorney’s fees incurred as a result of that party’s defending any such claim, position or defen se. Some time

later, Musnick sue

d King in the district

court, claim

ing religious discrimination i

n violation of Title V

II and Florida Sta

tute § 760.10. Pursu

ant to the Agreement, King filed a motion to compel arbitration, a nd stay the judicial proceedings. Musnic

k opposed the motion

, arguing that the pr

ovision in the1 The district court’s reliance on Perez v. Globe Airport Sec. Services , 253 F.3d 1280,

1286 (11 th Cir. 2001) in support of its conclusion was misplaced. At the time of the district court’s decision, we had already vacated the Perez holding. 294 F.3d 1275 (11 th Cir. 2002). Similarly unavailing is Musnick’s continued reliance on this case. A vacated decision has no effect whatever. United States v. Sigma Int’l, Inc. , 300 F.3d 1278, 1280 (11 th Cir. 2002). 3 Agreement awarding costs and fees to the prevailing party rendered it unenforceable. The district court agreed with Musnick, holding that the Agreement’s “loser pays” provision de

nied Musnick a rem

edy he would have

under Title VII

if allowed to proceed under the statute. 1 We review the denial of the mo

tion to compel arbitr

ation de novo . Paladino v. Avnet Computer Technologies, Inc. , 134 F.3d 1054, 1057 (11 th Cir. 1998). II. Over the last deca

de or so, the Courts of Appeals were split on the enforceability

of fee-shifting pr

ovisions contained in ar

bitration agreem

ents providing for ma

ndatory arbitr

ation of employ

ment discrim

ination claims.At one point, the Court of A

ppeals for both the District of Colum bia and the Tenth Ci

rcuit refused to enforce

such agreeme

nts, holding that they

effectively denied the Title VII plaintiff a forum to vin dicate his claims. Cole v. Burns Int’l Sec. Services , 105 F.3d 1465, 1484-85 (D .C. Cir. 1997); Shankle v. B-G Maint. Mgmt., Inc. , 163 F.3d 1230, 1234-35 (10 th Cir. 1999). W

e, too, had refus ed to enforce an ar bitration agreement that potentially imposed “high costs” on the em ployee, holding that2 In Circuit City Stores, Inc. v. Adams , 532 U.S. 105 (2001), the Court also made clear that

the FAA applies to all arbitration agreements involving interstate commerce, including employment contracts, such as the one at issue here. 4 such an agreement “undermines the policies that support Title VII.” Paladino , 134 F.3d at 1062 (citi

ng Coleas suggesting a per serule against “f ee-shifting” in such arbitrations). On the other hand, the First, Fifth a nd Seventh Circuits t

ook the position that the presence of

a fee-sharing pro

vision did not automa

tically render

the agreement unenforceable. Rosenberg v. Mer rill Lynch, Pierc

e, Fenner &

Smith, Inc. , 170 F.3d 1, 15-16 (1 stCir. 1999); Williams v. Cigna Fin. Advisors Inc. , 197 F.3d 752, 764 (5 th Cir. 1999); Koveleskie v. SBC Capital Markets, Inc. , 167 F.3d 361, 366 (7 th Cir. 1999). Recently, how

ever, the Suprem

e Court, in review

ing a case from

this circuit, made clear that the strong federal preference for arbitration of disputes expressed by Congress in the Federal Arbitration Act (the “FAA”) m ust be enforced where possible. 2 In Green Tree Financ ial Corp.-Alabama v. Randolph , 531 U.S. 79, 1 21 S. Ct. 513 (2000),

the Court rejec

ted our conclusion that

an arbitration agr

eement that is silent as to fees and costs is unenforceable because the plaintiff “ might be required to bear substantial costs of the arbitration.” See Randolph v. Green Tree Fin. Corp.-Alabama , 178 F.3d 1149, 1158 ( 11 th Cir. 1999) (em phasis added). The5

Court concluded that “an arbitration agreement’s silence with respect to such matters does not render the agreement unenforceable.” Id. Although acknowledgi

ng that, “[i] t may wel

l be that the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating her federal statutory rights in the arbitral forum,” id. at 90, the Court hel d that the potential financial burden of the Green Tree plaintiff was “ too speculative” to invalidate the arbi tration agreement at issu e there. Id. at 91. The Court observed that not only was the agreement unclear as to who w

ould bear the arbitr

ation costs, but that the plaintiff

there supplied only

“unsupported sta

tements” rega

rding the costs involved. Id. at 91 n. 6. The Co urt made clea

r that it is the party

seeking to avoid arbitration w

ho has the burden to show the likelihood of prohi

bitive costs, and suggested that, upon a threshold showing, the burden of product

ion of evidence might shift to the party seeking arbitr ation to counter th at showing. Id. at 92. Since Green Tree , we have had occ asion to revisit this is sue. In Bess v. Check Express , 294 F.3d 1298 (11 th Cir. 2002), we recognized that, under Green Tree, a Title VII pla

intiff seeking to avoi

d his agreement

to arbitrate his discrimination c

laim by ar

guing that prohibitive a

rbitration costs wou

ld undermine his statutory re

medy has to demonstrate that he is likely

to bear such costs. 2946

F.3d at 1303. We

acknowledged that ou

r analysis in Green Tree , which relied on the mere possibility

of pro hibi tive a rbitr ation costs , was re jecte d by th e Supr eme Court, and that, a

bsent a record esta

blishing that the plaint

iff “likely will incur prohibitive cost s,” an agreement to arbitrate must be enforced. Id. at 1304. In Bess , the arbitration agree ment was silent on the matter of co sts and fees. Id. at 1303. We held t

hat, under that cir

cumstance, “

any discussion of [

plaintiff’s] potential costs . . . necessarily is based on speculation and cannot provide an adequate basis for c

oncluding that her cost

s likely would be prohibitively expensive.” Id. at 1304. Since Green Tree , all but one of the other Circuits that have reconsidered this issue have ap plied a similar case-by-case app roach. See Thompson v. Irwin Home Equity Corp. , 300 F.3d 88 (1 stCir. 2002) (adher ing to case-by- case approach predating Green Tree ); Blair v. Scott Specialty Gases , 283 F.3d 595, 610 (3d Cir. 2002) (“ [T]he mer e existence of a fe

e-splitting provision in

an agreement [does not] satisfy

the claimant’ s burden to prove the li kelihood of incurring prohibitive costs”); Primerica Life Ins. Co. v. Brown , 304 F.3d 469, 471 n. 6 (5 th Cir. 2002) (adher

ing to case-by- case approach pre dating Green Tree ); Bradford v. Rockwell Semiconductor Systems, Inc. , 238 F.3d 549, 556 (4 th Cir. 2001) (“appropriat

e inquiry is one th

at evaluates whet

her the arbitral f

orum in a3 Only one circuit has enunciated a per serule follo wing Green Tree

. Circuit City Stores,

Inc. v. Adams , 279 F.3d 889, 894 n.5 (9 th Cir. 2002) (mere presence of fee-shifting provision invalidates agreement). The Seventh Circuit, which reconsidered the issue in McCaskell v. SCI Mgmt. Corp. , 298 F.3d 677, 680 (7 th Cir. 2002), did not de cide it, holding th

at the defendan

temployer was bound by its statement during or al argument that the denial of attorney’s fees to a preva ilin g plai ntiff

would be “in consi stent ” with Titl e VII. 7 particular case is an ad equate and accessibl e substitute to li tigation, i.e., a case-b ycase analysis that focuses, among other things, upon the claimant’s ability to pay the arbitration fees and costs, the exp ected cost differ ential between ar

bitration and litigation in court

, and whether tha

t cost differentia

l is so substantial as to deter the bringing of claims”); Burden v. Check into Cash, LLC, 267 F.3d 483, 492 (6 th Cir. 2001) ( Green Tree requires party resisting arbitrat

ion to show likelihood of prohibitive expense s); Gannon v. Circuit City Stores, Inc. , 262 F.3d 677, 683 (8 th Cir. 2001) (on rem

and, district court

should consider the pla

intiff’s argum

ents in light of Green Tree which requires her to show the likelihood o f incurring prohibitive expenses i

n arbitration); LaPrade v. Kidder, Peabo dy & Co., Inc., 246 F.3d 702, 708 (D.C. Cir. 2001) (upholding arbitration award requiring the plaintiff to pay a portion of

the fees and costs,

noting that the plaintif

f had failed to establish her burden under Green Tree that the award had prevented her fro

m attempting to vind

icate her rights).

In all of these cas es, the Court of A ppeals either enforced t

he arbitration agr

eement, or r

emanded the ca

se for further fa

ctfinding regarding pla

intiff’s claim

of prohibitive costs. 34 Even the Tenth Circuit’s decision in Shankle can be said to supp

ort a case-by

-case approach since, despite articulating what sounds like a per se rule that mandatory fee-splitting “clearly undermines the remedial and deterrent func tions of the federal anti-discrimination laws,” the court then went on to examine the facts and circumstances of that plaintiff’s ability to pay the costs of arbitrat

ion and invalidate

d the agreeme

nt because he co

uld not afford to pa

y for acce ss to the arbitral forum. See Shankle , 163 F.3d at 1235; see also Bradford , 238 F.3d at 555. 8 In view of Bess and the overwhelm ing consensus amon

g the Circuits, 4 it is clear that the distr

ict court erred in holding that Musnick ca nnot be compelle

d to arbitrate because

the “loser pay

s” provision of the Ag

reement denie s him his statutory rights under Title VII. After Green Tree , an arbitration a greement is not unenforceable m

erely because

it may involv

e some “f ee-shifting.” T

he party seeking to avoid arbitr

ation under such an agr

eement has the

burden of establishing that enf

orcement of th

e agreement w

ould “preclude”

him from “effectivel

y vindicating [his ] federal statu tory right in the a

rbitral forum . " 532 U.S. at 90. Absent such a sh owing, the agreement may be enforced. Id. at 91 Thus, the question in this case is whether Musnick met his burden under Green Tree and Bess to demonstrate that he faces such “high costs” if compelled to arbitrate his cla

im against King that he is effecti vely precluded f

rom vindicating his Title VII rights in the arbitral forum. Green Tree , 532 U.S. at 90; Bess , 294 F.3d at 1304. We

hold that he did not. Under Green Tree , Musnick has an obliga tion to offer evidence of the amount of fees he is likel y to incur, as well as of his i nability to pay those fees.9

531 U.S. at 96. See also Blair , 283 F.3d at 607 (“Green Tree placed the initial burden of proof on the party resisting arbitration to dem

onstrate that arbit

ration would be prohibitively expensive by showing ‘the likelihood of incurring such costs’”). This Musnick did not do. His affidavit, to which no supplementary documentation is attached, me rely recites

that: I genuinely fea

r the imposition of

attorney’s f

ees from Fisher & Phillips,

as I am fam

iliar with their bi

lling sent to King Motors. Fish

er & Phillips’ hour

ly rate is high, and I imagine it will be higher when billed to an opponent. . . . I am fearful of a potential attorney’ s fee award ag ainst me . . . . I will be unab le to pa y. This showing is wholly

inadequate

to establish that the a

rbitration would re sult in prohibitive costs that

force him to r

elinquish his claim under Title VII. See Blair , 283 F.3d at 610 (“[

M]ere existenc e of a fee-splitti ng provision in an agree

ment [does not] satisfy the cla

imant’s burde

n to prove the likelihood of incurrin g prohibitive costs under Gr een T

ree ”). He has adduc ed no evidence what soever to support this claim. As a result, the risk alleged by Musnick is simply too “speculative” to render his agreement to arbitrat e unenforceable. Green Tree, 531 U.S. at 91. Atleast one Cou

r t of Appeals as we

ll as a number of

district courts have enforced mandatory

arbitration of Tit

le VII claim

s where the agree

ment contained a similar “loser pay

s” provision, hold

ing the claim of prohibitive costs too5 There was an issue as to whether the claimant had signed the agreement in Bess . Our

direction to grant the motion to compel was contingent upon the district court’s finding that he had. 294 F.3d 1309. 10 “speculative.” See Thompson , 300 F.3d at 91-92 ; Goodman v. ESPE America, Inc. , 84 Fair Empl. Prac. Cas. 1629 (E.D. Pa. 200 1) (citations omit ted) ; DeGroff v. MascoTech Forming

Technologies Fort Wayne, Inc. , 179 F. Supp. 2d 896, 910 (N.D. Ind. 2001); Dowling v. Anthony Crane Int’l , 2001 WL 378838 (D. Virgin Isla nds 2001); Rajjak

v. McFrank and Williams , 86 Fair Empl. Prac. Cas. 737, 4 (S.D.N.Y. 2001); Witz v. Apps , 2000 WL 1720434 (N .D. Ill 2000). As one of thes e courts explained: [A] tthis point Plaintiff has not been assessed with an y

fees, nor is it cert ai n that he ever will be. Given these facts, we canno t conclude that the ar bitration agreem

ent constitutes a barrier to vindication of Plaintiff ’s ri ghts. Plaintiff ’s speculation about proh ibitive costs is just t

hat – speculation; this is not enough to invalidate a n otherwise enforceable arbi

tration provision. Goodman , 84 Fair Empl. Prac. Cas. at 64749. W e agree. The sole remaining issue to be resolved is wheth er we should remand this case to the district court f

or fact-finding

on the issue of “prohib itive costs.” We think not. First, Musnick has had his opportunity to make a record on this issue and he did not. See Bess , 294 F.3d at 1309 (di recting district courtto grant motion to compel since plaintiff failed to made a record as to costs). 56 There are othe r possible outcome

s of a “loser pay

s”arbitration tha

t would mirror those under Title VII in district court. See Rajjak v. McFrank and Williams , 2001 WL 799766 (S.D.N.Y. 2001).

7 The Agreement provides that the arbitrator “shall” award costs and fees to the pre vailing party. Nevertheless, at least three circuits have held that the a rbitrator may determine whether contractual limitations on remedies are enforceable. Great Western Mortg. Corp. v. Peacock, 110 F.3d 222, 230-31 (3d Cir. 1997) (“Any argument that the provisions of the Arbitration Agreement invo

lve a waiver of s

ubstantive right

s afforded by

the . . . statute may

be presented in the arbitral forum”); accord Larry’s United Super, Inc. v. Werries , 253 F.3d 1083, 1085-86 (8 th Cir. 2001); MCI Telecommunications Corp. v. Matrix Communications Corp., 135 F.3d 27, 33 n. 12 (1 st Cir. 1998). Once a dispute is determined to be validly arbitrable, all other issues are to be decided at arbitration. Peacock , 110 F.3d at 230. See also Metro E. Center for Conditioning and Health v. Qwest Communications Int’l, Inc. , 294 F.3d 924, 929 (7 th Cir. 2002)

. 11 More importantly, however, there is no record t hat could be made

at this point. See Blair , 283 F.3d at 610 (r emand appropri

ate where claim

ant required

to pay onehalf of the arbitrator’s fees but not where agreement silent as to fees, rende

ring risk that claimant will incur prohibitive costs too speculative). Whether Musnick will, in fact, incur attorneys’ fe es in this matter de pends entirely on

whether he preva

ils in arbitration. If he does, he will incur no fees at all under

the agreemen

t’s “loser pa

ys” provision. In this event,obviously, he wi ll not have been depri

ved of any

statutory right or remed

y by the m

andatory arbitr

ation. 6 Should he not prevail, he m

ay incur liabili

ty for costs

and fees. 7 If he believes that liability is exce ssive or that it deprives him of

his statutory remedy, he m ay seek judicial review. Agreement at 12; see also First Optio ns of Chicago, Inc. v. Kaplan , 514 U.S. 938 (1995) (

arbitration awar

ds may be va

cated if they are in “

manifest disregardof

the law”); Koveleskie , 167 F.3d at 366 (“[J]udici

al review of arbi

tration12

awards is sufficient to pro tect statutory rights ”). At that point, the district court may make an informed j udgment on whether the Agreement deprived him of a statutory remedy by conditioning the exercise of his statutory r

ight on the paym

ent of excessive costs. See DeGaetano

v. Smith Barney, Inc. , 983 F. Supp. 459, 461 (S.D.N.Y . 1997) (sending claim to arbit

ration, but su bsequently vaca ting arbitrator’ s denial of attorney’s fees after DeG

aetano provided specific evidence that s he suffered too much of a transaction cost by substituting an arbitral forum for court). In the meantime, we dec line to decide the validity of the attorney’s fees provision. “A cou

rt co mpelling arbitration should decide only such issues as are

ess ential to def

ining the nature o f the forum in which a dispu te will be decided.” Larry’s United Super, Inc. v. Werries , 253 F. 3d 1083, 1 085-86 (8 th Cir. 2001) (quoting Gr eat West

ern Mortg. Corp. v. Peacoc k, 110 F.3d 222, 230-31 (3d Cir. 1997)(internal quotation

marks omitted); Thompson , 300 F.3d at 91. If the arbitrator awards attorney ’s fees to King, Musnick may

challenge this awa

rd in federal cour

t. Werries , 253 F.3d at 1086 (“Whether federal public policy prohibits an individual from waiving certai n statutory remedies is an issue that may be raised when challenging an arbit

rator’s awar

d”). That issue is

not before us now. In reaching a similar result

the Seventh Circui

t said:13 Arbitration

is the correct init

ial forum for the [plaintiffs] to air their o bject ion to the [loser pays] attorney’s fees provision in the arbitration a greement. If an arbitrator does award attorney’s fe es against the [plaintiffs] the district courtwould then be in a position to hear their a rgu ment that the challenged provi sion on attorney’ s fe es is unenforceable

because it deprives them

of a statutory r

ight. Thompson , 300 F.3d at 92. We agree. Once the

arbitrator has re

ached the issues of costs and fees, those ite

ms will no l onger be speculative, and any issue presented thereby will be

ripe for decision. III. Musnick has not me

t his burden to show tha

t mandatory

arbitration of his claim would re sult in prohibitive cost s to him. Accordingly, the de cision of the district court to deny

King’s motion

to compel arbit

ration is reversed

and the case is remanded w

ith instructions to gra

nt the motion and st

ay these proceedings. REVERSED AND REMANDED