NOT RECOMMENDED F OR P UBLICATION File Na me: 12a0807n.06
No. 10-2660
UNITED STAT ES COURT OF AP P EALS F OR THE S IXTH CIRCUIT
KEITH DAWSON,
P laintif f-App ellee,

v. RENT-A-CENTER INC.,
Defendan t-Appellant. ) ) ) ) ) ) ) ) ) ON AP P EAL FROM THE U NI TED STATES DI STRI CT COURT FOR THE EASTERN DI STRI CT OF MI CHI GAN

BEFORE: MERRITT and ROGERS, Circ uit Jud ges; P OLS TER, District Judge. *

MERRITT, Circuit Judge. Def endant Rent-A-Cente r I nc. moved to compel arbitra tion of

an employ

ment law dispute betwee n Rent-A-Cente r and Plaintiff Keith Dawson. The district court denied this motion and Rent-A-Cente r a p p e a ls

. Dawson ag ree d to arbitra te with his former employ er Rent-Way , I nc., which subsequently merg ed with and beca me p art of Rent-A-Cente r. Dawson denies, howeve r, that the arbitra tion ag ree ment rema ined binding on either party afte r the merg er. The district cour

t ag ree d with Dawson be cause it found that there w as no “continuity of business” betwee n Rent-Way and Re n t -A -C en t er . We reve rse and rema nd to the district court to compel arbitra tion.

T h e H o n o r a b l e D a n A a r o n P o l s t e r , U n i t e d S t a t e s D i s t r i c t J u d g e f o r t h e N o r t h e r n D i s t r i c t o f O h i o , s i t t i n g b y * d e s i g n a t i o n .No. 10-2660

Dawson v. Rent-A -Center I. Background
Dawson worke d for Rent-Way , a rent-to- own company , beg inning in 2001. On November 15, 2006, Rent-Way merg ed with Re n t -A -C enter

. Dawson worke d in simil ar, though advanc ing,
capa cities for both companies. Rent-A-Cente r terminated him on J uly 21, 2009 for violating its “nocall, no-show” policy . Dawson c laims that in fact he w as terminate d on acc ount of his rac e. 1
I n September 2005, Rent-Way announce d a new arbitra tion ag ree ment called “ Soluti ons,” which was meant to provide a compre hensive proce dure for resolving disputes betwee n Rent-Way and its employ ees. The Soluti ons Ag ree ment was to take eff ect on October 1, 2005. Rent-Way notified its employ ees, including Dawson, of the Soluti ons Ag ree ment by : (1) sending a letter to eac h employ ee’ s house; (2) sendin g a memorandum that included the entire Ag ree ment to eac h store
manag er; (3) asking eac h store manag er to confirm that eac h employ ee rec eived a cop y o f t he
ag ree ment in the mail and to provide those who did not w ith a copy ; a nd (4) beg inning on October 1, 2005, posting the Soluti ons Ag ree ment on Rent-Way ’s intranet. The Soluti ons Ag ree ment stated that, afte r Oc t o b er 1, 2005, apply ing for employ ment, acc epting or continuing employ ment, or

acc epting any promotion, pay incre ase, transfe r, bonus, or other benef it of employ

ment would indicate c onsent to resolve w ork-r elated disputes e x clusively throug h arbitra tion. I n its overview, the Soluti ons Ag ree ment define d Rent-Way b ro adly as “Rent-Way , I nc., its prese nt and future
pare nts, subsidiarie s, aff

iliates, succe ssors and assig ns, and their direc tors and executive office rs.”

T h e f a c t s t h a t g i v e r i s e t o D a w s o n ’ s e m p l o y m e n t l a w c l a i m s a r e o n l y m a r g i n a l l y r e l e v a n t t o t h i s a p p e a l , w h i c h 1 d e a l s o n l y w i t h t h e m o t i o n t o c o m p e l a r b i t r a t i o n . A s a r e s u l t , w e w i l l f o r g o a f u l l r e c i t a t i o n o f

t h e f a c t s r e l a t e d t o t h e s e c l a i m s . F o r a f

u l l e r a c c o u n t , s e e D a w s o n v
. R e n t

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. -2-No. 10-2660

Dawson v. Rent-A -Center On November 15, 2006, Rent-Way beca me a subsidiary of Rent-A-Cente r East, I nc., which
in turn is a subsidiary of Rent-A-Cente r. Thus, beg inning in 2006, R en t -A -C enter employ ed
Dawson. After the merg er, Rent-A-Cente r opera ted in the same industry , continued to use RentWay ’s stores, an d continued to employ Rent-Way ’s employ ees in their same capa cities. Rent-ACenter did not, howeve r, decla re that the Soluti ons Ag ree ment rema ined in e ffe ct. Rent-A-Cente r also promulg ated new employ ee manuals and policies; repla ced Rent-Way ’s computer sy stem with its own; assig ned Dawson to a new HR representa tive; and installed new pricing , promotion, and adver tising sy stems. None of the new mate rials mentioned the Solutions Agr eeme nt. After he wa s terminated on July 21, 2009, Dawson f

iled an ac tion in st ate c ourt on J une 3,
2010 alleg ing that Rent-A-Cente r wrong fully discharg ed him beca use of his rac e in violation of Title
VII o f t h e C i v i l R i g hts Act of 1964, 42 U.S.C. § 2000e et s eq. ; 42 U.S.C. §§ 1981 and 1988; and Michig an’s Elliot-L arse n Civil Rights Acts, M.C.L

. § 37.2101 et seq. Rent-A-Cente r remove d the

ac t i o n t o the Easter

n District of Michig an on J uly 2, 2010 on the basis of fede ral question an d diversity jurisdiction. Rent-A-Cente r then filed a motion to compel arbitra tion under the Soluti ons Ag ree ment and to dismiss in lieu of an answe r on J uly 23, 2010. Dawson responde d on Aug ust 12,
2010. The district court denied the motion to compel arbitra tion and to dismiss pursuant to Fe dera l Rule of Civil Procedur e 12(b)( 6) or 56(a) on Dec ember 2, 2010. Rent-A-Cente r appea led. We have jurisdiction over t h i s i n t erlocutory appea l pursuant to 9 U.S.C. § 16(a) (1), which makes an order ref using to c ompel arbitra tion imm ediately appea lable.

-3-No. 10-2660

Dawson v. Rent-A -Center II. Stand ard of Review The district court held that Rent-A-Cente r had failed to pr ove as a matter of law that it was entitled to enfor ce the Soluti ons Ag ree ment and compel arbitra ti o n . B e c a u se the district court denied the motion to compel arbitra tion and to dismiss afte r it “re viewed the parties’ submi s s i o ns,” this court decides de novo whether the m oving party was entitl ed to judgme nt as a mat t er o f law. See
F E D
. R. C I V
. P. 56(a) ; Davis v. McCourt , 226 F.3d 506, 511 (6th Cir. 2000); Dawso n , 2 0 1 0 W L 4982806, at *1. For

summary judgme nt to be appropriate, the moving party must show that there is no dispute of materia l fac t. See F E D
. R. C I V
. P. 56(a)

. When making this decisi o n , t h e d i s t ri ct
court must resolve ambig uities and draw infere nces in favor of the nonmoving party

. See Matsushita Elec. I ndus. Co., Lt d. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986).
III. Discussion The que stion on appea l is whether any enfor cea ble agr eeme nt require s Rent-A-Cente r and
Dawson to arbitra te t heir disput e. I f so, the district cour t was re quired to stay

any litigation, see 9
U.S.C. § 3, and to compel arbitra tion if eit h er party ref used to comply with the ag ree ment, see 9
U.S.C. § 4. A court must keep in mind the “‘liber al fede ral policy favor ing arbitra tion ag ree ments.’”
See E.E.O.C. v. W

affle House, Inc. , 534 U.S. 279, 289 (2002) (quoting Moses H. Cone Mem ’l Hosp.

v. Merc ury Co n s t r. Corp ., 460 U.S. 1, 24 (1983))

. All doubts reg arding arbitra bility must be resolved in favor of arbitra tion. See Highlands W ellmont Health Network, Inc. v. John Dee re Health Plan, Inc. , 350 F.3d 568, 573 (6th Cir. 2003). Be cause disputes over arbitra bility are usually questions of contra ct formation and interpre tation, f eder al courts should a

pply state law so long as

-4-No. 10-2660

Dawson v. Rent-A -Center it is g ener ally applicable to all contra cts. See Seawright v. Am. Gen. Fin. Servs. , I nc., 507 F.3d 967, 972 (6th Cir. 2007); Fazio v. Lehman Bros., Inc

. , 340 F.3d 386, 393 ( 6th Cir. 2003).
I n 2 0 0 5 , D a

w s o n c o n s e n te d , in th e So lu ti o ns Ag ree ment, to arbitra te disputes wi th Re n t- Wa y . A meeting of the minds, or mutual assent, is an essential element of contra ct formation in Michig an. See Kamalnath v. Mercy Mem’ l Hosp. Corp. , 487 N.W.2d 49 9 , 5 0 3 (M i ch. Ct. App. 1992). This does not require Dawson to have signe d the Soluti ons Ag ree ment; he demonstrated his assent by continuing to work for Rent-Way afte r Oc t o ber 1, 2005. Michig an law permits parties to acc ept offe rs throug h conduct. See Pakideh v. Franklin Commercial Mortg. Group, Inc. , 540 N.W.2d 777,
780 (Mich. Ct. App. 1995). A fede ral district court in Michig an has also found that continued employ ment, afte r not ice, was s u ff i cient to show assent to an arbitration ag ree ment. See Johns v. Sterling Jewe lers, Inc. , No. 06-14327, 2006 WL 3759905, at *1 (E.D. Mich. Dec

. 20, 2006). Finally , this court has held that, under Tenne ssee contra ct law, an employ ee who knowing ly continued employ ment validly assented to a new arbitra tion ag ree ment. See Seawright , 507 F.3d at 970. The Soluti ons Ag ree ment validly bound both Dawson a

nd Rent-Way

to arbitrate their disputes. The only rema ining question is whether the Soluti ons Ag ree ment al so forc es Dawson to arbitra te with Rent -A -Center

. By its terms, the ag ree ment bound Dawson, Rent-Way , and RentWay ’s “succ essors.” Rent-A-Cente r qualifies as a “succ essor” to Rent-Way under the plain meaning of the term. See Grosse Pointe Park v. Mich. Mun. Liab. & Prop

. P o o l , 7 0 2 N.W .2d 106, 113 (Mich. 2005). Bla ck’s L aw Dictionary define s “succ essor” as “[a] corpor ation that, throug h amalg amation, consolidation, or other assumption of i ntere sts, is vested with the rig hts and duties of an ear lier corpor ation.” B L A C K ’ S L A W D I C T I O N A R Y (9th ed. 2009). Rent-Way was consolidated
-5-No. 10-2660

Dawson v. Rent-A -Center by merg er into Rent-A-Cente r’s corpor ate structure, an d Michig an corpor ate law dictates that, beca use the transac tion was a merg er, the succe ssor assumed all of its prede cessor ’s liabiliti es–in th is

case Rent-Way ’s rig hts and obliga tions under the Soluti ons Ag ree ment. See Foster v. Cone-Blanchard Mach. Co. , 597 N.W.2d 506, 5 0 9 (Mich. 1999). The Michig an Business Corporation Act likewise require s that, in a merg er, the surviving corpor ation assume all rig hts and liabiliti es of the disappea

ring corpor ation. See M I C H
. C O M P
. L A W S § 450.1724(1)( d). Be cause RentA-Center qualifies as Rent-Way ’s “succ essor” by merg er, Dawson consented i n 2 0 0 5 to arbitra te with Rent-A-Center

. I nstead of stopping its analy sis o n ce i t deter mined that Rent-A-Cente r was Rent-Way ’s

succe ssor under the Soluti on’s Ag ree ment, the district court asked whe t h er t h er e was a sufficie nt “continuity of the enter

prise” betwee n Rent-Way and Rent-A-Cente r so that it would be fair to burden Rent-A-Cente r with Rent-Way ’s contra ctual obliga ti o n s . S e e Turner v. Bituminous Cas. Co. , 244 N.W.2d 873, 881, 884 ( Mich. 1976). This a naly sis wa s superf

luous be cause the continuity of
enter prise test applies only to consolidations acc omplished by a purcha se of assets rathe r than by a
merg er. Under Michig an law, the n at u re o f the transac tion deter mines the succe ssor’s liability

. 2
When the transac tion is a merg er, the surviving c orpora tion ge nera lly assumes the liabilities of its prede cessor . See Foster , 597 N.W.2d at 509. On the other hand, when the succe ssor purcha ses the

asse t s o f an other corpor ation, the succe ssor usually rema ins unencumbe red by its prede cessor ’s

T h e c o u r t b e l o w m a y h a v e a p p l i e d t h e c o n t i n u i t y o f e n t e r p r i s e t e s t b e c a u s e a d i s t r i c t c o u r t i n t h e W e s t e r n 2 D i s t r i c t o f M i c h i g a n a p p l i e d i t u n d e r v e r y s i m i l a r f a c t u a l c i r c u m s t a n c e s . S e e K e t t l e s v
. R e n t

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. -6-No. 10-2660

Dawson v. Rent-A -Center obliga tions. See id. Recog nizi ng that this test sometimes eleva tes form over function, the Michig an Supreme Court cr eate d the continuity of ente rprise test as a “depa rture f rom the traditional rule of nonliability for corpor ate succe ssors who acquir e the prede cessor throug h a purcha se of assets.” Id.
I n other words, the continuity of enter prise test expanded succe ssor liability when the surviving
corpor ation purcha sed the a ssets of its predec essor. But Rent-A-Cente r acquir ed Rent-Way by merg er, and the tradi t i o n al merg er rule alre ady forc es R en t -A -Center to acc ept Rent-Way ’s contra ctual liabiliti es along with its benef its. See
Turner , 244 N.W.2d at 875 (“Where the corpor ate transfe r involves

. . . a merg er . . . the law is clea r that liability

attache s to the consolidated or a cquiring corpor ation.”); see also M I C H
. C O M P
. L A W S § 450.1724(1)( d). Neither the di strict court nor Dawson sugg ests that the continui ty of ent erprise
t est somehow repla ced the traditional rule for merg ers. The new test is mere ly an expansion to

succe ssor liability when consolidation is acc omplished by asset purcha se. See Oliver v. Perry , No. 296871, 2011 WL 2204128, at *6 (Mich. Ct. App. J une 7, 2011). Be cause Rent-A-Cente r beca me Rent-Way ’s succe ssor in a merg er, the district court should have applied the traditional rule and held that Rent-A-Cente r assumed Rent- Way ’s rig hts and liabiliti es under the Solutions Ag ree ment. 3
Dawson larg ely ignor es the issue of whether Rent-A-Cente r qualifies as Rent-Way ’s

succe ssor, under any test, within the meaning of the Soluti ons Ag ree ment. I nstead he arg ues that he

E v e n i f t h e d i s t r i c t c o u r t w a s c o r r e c t t o a p p l y t h e c o n t i n u i t y o f e n t e r p r i s e t e s t , i t s c o n c l u s i o n i s q u e s t i o n a b l e 3 t h a t c h a n g e s i n “ p r i c i n g , p r o m o t i o n s , a n d a d v e r t i s i n g . . . a s w e l l a s t h e c o m p u t e r p r o g r a m s ” a l o n g w i t h D a w s o n ’ s “ n e w H R r e p r e s e n t a t i v e . . . n e w e m p l o y e e h a n d b o o k a n d o n l i n e p o l i c i e s ” m e a n t t h a t t h e r e w a s n o c o n t i n u i t y o f e n t e r p r i s e b e t w e e n R e n t

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- W a y . D a w s o n , 2 0 1 0 W L 4 9 8 2 8 0 6 , a t * 8

. C o n t i n u i t i e s i n “ m a n a g e m e n t , p e r s o n n e l , p h y s i c a l l o c a t i o n [ s ] , a s s e t s , a n d g e n e r a l b u s i n e s s o p e r a t i o n s . . . . ” a p p e a r m o r e s i g n i f i c a n t t h a n t h e l a r g e l y i n t e r n a l d i s c r e p a n c i e s r e l i e d o n b y t h e d i s t r i c t c o u r t

. -7-No. 10-2660

Dawson v. Rent-A -Center

ca n n o t b e require d to arbitra te with Rent-A-Cente r beca use it never notified him of its offe r t o arbitra te future disputes or stipulated the form of acc eptanc e. As a result, his continued employ ment with Rent-A-Cente r cannot act as consent. I n eff ect, Dawson is arg uing that only a new arbitra tion
ag ree ment that identified Rent-A-Cente r by name as a party would have be en enf

orce able. But he
cannot esca

pe the Soluti ons Ag ree ment simply beca use the prec ise identities of all parties bound by it could not be deter

mined at execution. I n other contexts, Michig an state courts rea d the lang uag e of arbitra tion contra cts broadly to encour ag e arbitra tion betwee n disputants that wer e not identified by name at the time of the ag ree ment. See Lyddy v. Dow Chem. Co. , No. 290052, 2010 WL 173643,
at *2 (Mich. Ct. App. J an. 19, 2010) (compe lling arbitra tion bet we en a p l ai n tiff and third party benef iciary of the arbitra tion ag ree ment beca use the latter was a “com p an y . . . for whom or with whom [pl aintiff’s employ er] has done or may be doing work.” ); Rooyak ker & Sitz, PLLC v. Plante
& Moran, PL LC , 742 N.W.2d 409, 421 (Mich. C t. App. 2007) (requiring arbitra tion of pl aintiff’s “dispute or c ontroversy

arising out of or re lating to” his past employ ment even though de fenda nts

wer e not named in the arbitra tion contra ct). I n 2005, Dawson consente d in the Soluti ons Ag ree ment
to arbitra te with Ren t -W ay and its future succe ssors. I n 2006, Rent-A-Cente r beca me such a

succe ssor by

merg er a nd was e ntitled to enforce the Solutions Ag ree ment without further a ction. 4

D a w s o n a l s o a r g u e s o n a p p e a l t h a t b e c a u s e h e d i d n o t r e c e i v e n o t i c e o f a p o t e n t i a l a r b i t r a t i o n a g r e e m e n t 4 b e t w e e n R e n t

- A

- C e n t e r a n d i t s e m p l o y e e s t h a t c o n t a i n e d a j u r y t r i a l w a i v e r , a n y w a i v e r o f h i s r i g h t t o a j u r y t r i a l c o u l d n o t p o s s i b l y h a v e b e e n “ k n o w i n g a n d v o l u n t a r y . ” S e e H i g h v
. C a p i t a l S e n i o r L i v i n g , 5 9 4 F

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. T h e r e w a s a c l e a r w a i v e r , h o w e v e r , i n t h e S o l u t i o n s A g r e e m e n t , w h i c h c o n t i n u e d t o r e q u i r e a r b i t r a t i o n b e t w e e n D a w s o n a n d h i s e m p l o y e r e v e n a f t e r t h e m e r g e r . T h u s , t h e j u r y t r i a l w a i v e r a l s o a p p l i e d t o a l l f u t u r e d i s p u t e s b e t w e e n D a w s o n a n d R e n t

- A

- C e n t e r . -8-No. 10-2660

Dawson v. Rent-A -Center Dawson also arg ues that, even if a new contra ct with offe r and acc eptanc e was not require d befor e Rent-A-Cente r could forc e him to arbi t ra te, he was at least entitled to notice of Rent-ACenter’ s intent to arbitra te future disputes as require d by Michig an employ ment l aw. Dawson
compar es the curr ent situation to case s d i s cussi ng employ ers’ decisions to chang e employ ment rela tionships from “just cause ” termination to te rmination at will. These c ases hold that, althoug h the employ er can chang e its employ ment policies at any time, for the chang e to be eff ective, the employ er m u s t g ive its employ ees notice of the chang e. See In re Certified Question ( Banke y v. Storer Broad. Co.) , 443 N.W.2d 112 (Mich. 1989); Ferris v. Trini ty Health Corp. , No. 258122, 2006
WL 2271307 (Mich. Ct. App. Aug

. 8, 2006). This rule applies whether the employ er is the same one that issued the just cause discharg e policy , see Banke y , 443 N.W.2d at 113, or whether the employ er is a succe ssor by merg er or by a purcha se of the assets of the issuing en t i t y , see Ferris , 2006 WL 2271307, at *3. Dawson submits that there is no differ ence betwee n these employ ment policies and the S olutions Ag ree ment, and, by promulg ating its own employ ment policies, Rent-A-Cente r was notify ing Dawson that it planned to depar t from Rent-Way ’s policies, including its policy requiring arbitra tion of disputes.
Dawson overlooks the cruc ial differ ence betwee n employ ment policies and contra cts to arbitra te. Employ ers can g ener ally unilatera lly modify the former , see Banke y , 443 N.W.2d at 121, while neither employ er nor employ ee can unilatera lly alter the terms of arbitra tion ag ree ments, see 9 U.S.C. § 2. Be cause employ ers can modify their employ ment policies at any time, Michig an courts require them to notify their employ ees befor e any chang e. This not i ce i s t h e s ole protec tion an employ ee rec eives from a detrimental chang e in his or her status. See Banke y , 443 N.W.2d at 120. -9-No. 10-2660

Dawson v. Rent-A -Center On the other hand, notice of an arbitra tion ag ree ment’s continued eff ect is not require d beca

use the employ ee aff

irmatively as s en ted to its terms. He or she g ains the benef its of arbitra tion and is protec ted by what the employ er also g ave up in the same ag ree ment, the rig ht to litigate. See Circuit City Stores, Inc. v. A dams , 532 U.S. 105, 122-123 (2001). The distinction betwee n these two conce pts is rec og nized by the Michig an Supreme Court,

see Heurtebise v. Reliable Bus. Computers , 550 N.W. 2d 243 (Mich. 1996), and is likely the rea son that Rent-Way ’s employ

ment policies and the Soluti ons Ag ree ment wer e sep ar at ed i nto differ ent documents from the beg inning. Rent-Way prob ab l y wanted to avoid confusing its arbitra tion
ag ree ment, which must be contra ctual, and its employ ment poli ci es , whi ch fre quently are not
contra ctual. See id. at 247. By separ ating the two, Rent-Way reta in ed t h e fre edom to modify its employ ment policies without having to follow the more restric tive proce dures require d for contra ct modification. Dawson is incorre ct to say that Rent-A-Cente r, reg ardle ss of its status as Rent-Way ’s

succe ssor, was require d to notify him of the co n tinuing viability of the Soluti ons Ag ree ment.
Be cause he was not entitled to rene wed notice, it is also irrele vant that Dawson did not understand the structure of t he transaction between R ent-Way and R ent-A- Center. The Solutions Agr eeme nt

was a valid contra ct tha

t b o u n d D a w s o n , Re n t- Wa

y , and Rent-Way ’s succe ssors to arbitra te disputes.
I t remaine d binding a fter Re nt-A-Cente r bec ame Rent-Way ’s succ essor by merg er w ithout formal assumption or notification of its continuing eff ect. Rent-A-Cente r is entitled to compel arbitra tion.
We reve rse a

nd rema nd to the district court to compel a rbitration.

-10-