2012 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit

1-11-2012 

# Kim T ownse nd v . P inn a cle E n t P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al D ocke t N o . 11-1711

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w . v i l l a no va . e du/thir dc ir c uit_2012/1606NOT PRECEDENTIAL UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

____________ No. 11-1711

__________ KIM C. TOW

NSEND

v. PINNACLE ENTERTAINMENT, INC., Appellant.

____________ On Appeal f

rom the United States District Court f or the District of

New Jersey (D.C. No. 1:10-cv-06522) District Judge: Honorable Renée Marie Bumb

______________ Subm itted Under Third Circuit LAR 34.1(a)

Decem ber 9, 2011

________________ Bef ore: HARDIMAN, BARRY, Circuit Judges and RUFE*, District Judge

(Filed: January

11, 2012 )

______________ OPINION OF THE COURT

_____________

______________________ * The Honorable Cy

nthia M. Ruf

e, District Judge f

or the United States District Court f or the Eastern District of

Pennsylvania, sitting by

designation.RUFE, District Judge

.

Pinnacle Entertainm ent, Inc. (“Pinnacle”) appeals the District Court’s denial of its

m otion to com

pel arbitration. For the reasons that f ollow, we will vacate the decision of the District Court and rem and f or the entry

of an order consistent with this Opinion. I. Pinnacle develops, owns, and operates casinos and related f acilities throughout the United States. Appellee Kim Townsend worked f

or Pinnacle f

rom April 2002 to Novem ber 19, 2009. Ms. Townsend was initially em ployed by Pinnacle as Vice President of Marketing in Pinnacle’s Las Vegas, Nevada corporate headquarte rs. W ithin her f irst year of em ploy m ent, Ms. Townsend was prom oted to Senior Vice President of Marketing. Ms. Townsend was prom oted twice m ore, in October 2006, and again in September 2007, f irst to Executive Vice President and then to Chief Executive Of

f icer. In these positions, she oversaw the development of Pinnacle’s Atlantic City Project in New Jersey

. On April 2, 2007, Ms. Townsend entered into a two-year written Em ploy m ent Agreem ent (“the 2007 Agreement”) with Pinnacle. The 2007 Agreem ent contained, inter alia , an arbitration clause, which provided that “any controversy , dispute, or claim between the parties to this Agreement, including any claim arising out of

, in connection with, or in relation to the f orm ation, interpretation, perf orm ance or breach of

this Agreem ent shall be settled exclusively by arbitration.” (App. 97.) The clause f urther provided: “This agreement to arbitrate shall survive the expiration of this Agreement and 2shall cover all issues relevant to the employ m ent of the Executive by

Com pany .” ( Id. ) In February

2009, Pinnacle asked Ms. Townsend to serve as the Project Manager f or the developm ent of

a new casino, River City , in St. Louis, Missouri. Ms. Townsend accepted the position and began preparing f or her relocation f

rom Atlantic City

to St. Louis. In March 2009, Pinnacle presented Ms. Townsend with a new two-y ear
em ploy m ent agreement (“the Proposed Agreem ent”), which Pinnacle proposed would take ef f ect upon the expiration of the 2007 Agreem ent. The term s of the Proposed Agreem ent were nearly

identical to the term s of

the 2007 Agreem ent and the arbitration provisions contained in both agreements were, in fact, identical. The two-year term of the 2007 Agreement ended on April 2, 2009. At that tim e, the Proposed Agreement had not been finalized, and the parties continued to negotiate its term s. Ms. Townsend alleges that, by Septem ber 2009, she and Pinnacle’s Of f icers agreed to the terms of the Proposed Agreement, and the Agreem ent had been f inalized and needed only

to be presented to her f

or execution. However, on November 19, 2009, Pinnacle term inated her em ploy m ent. On Novem

ber 12, 2010, Ms. Townsend f iled a com

plaint in the Superior Court of New Jersey

which was tim ely

rem oved to the United States District Court f or the District of New Jersey

on Decem

ber 15, 2010. Ms. Townsend alleges, inter alia , that Pinnacle breached either the 2007 Agreement or the Proposed Agreem ent when it term inated her. She asserts that although the Proposed Agreement was never formally executed, the 3actions of

the parties evidence their intent to be bound by it. Alternatively , she asserts that the 2007 Agreem ent autom atically renewed based on the continuing employ m ent relationship of

the parties. Pinnacle m aintains that neither em ploy m ent agreement was in ef f ect at the tim e of

Ms. Townsend’s term ination. Af ter rem oving the case to the District Court, Pinnacle f iled a m otion to dism iss or to com pel arbitration, asserting that Ms. Townsend was bound to arbitrate the dispute pursuant to the arbitration provision contained in both agreements. Ms. Townsend opposed the m otion. The District Court heard argument on the m otion on March 7, 2011. Af ter considering the parties’ arguments, the District Court denied the m otion on the record, f inding that f

actual disputes prevented it f rom determ ining whether there was an

em ploy m ent agreement in eff

ect at the tim e of

Ms. Townsend’s term ination, and that resolution of

this issue was necessary

to determ ine whether there was a binding agreem ent to arbitrate. On March 8, 2011, the District Court entered an Order denying the m otion. Pinnacle f

iled a tim ely

notice of appeal to this Court. Pinnacle asserts that the District Court erred in f

ailing to give ef

f ect to the survival language of the arbitration provision contained in the 2007 Agreement, which provides that the agreem ent to arbitrate survives the expiration of the Agreem ent.

4II.

The District Court had jurisdiction under 28 U.S.C. § 1332. W e have jurisdiction pursuant to § 16(a)(1)(B) of the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16. See 9 U.S.C. § 16(a)(1)(B) (“An appeal may be taken f

rom . . . an order . . . denying a petition under section 4 of

this title to order arbitration to proceed.”). “We exercise plenary review over questions of

law concerning the applicability and scope of

arbitration agreem ents. . . . W e review the District Court’s f actual f indings f or clear error.” Nino v. Jewelry Exch., Inc. , 609 F.3d 191, 200 (3d Cir. 2010) (quotations and citations om itted). III. “[ The FAA] creates a body of f ederal substantive law establishing and governing the duty to honor agreements t o arbitrate disputes.” Century Indem. Co. v. Certain Underwriters at Lloyd’s, London , 584 F.3d 513, 522 (3d Cir. 2009). Em ploy m ent contracts, except those regarding the employ m ent of transportation workers, are within the am bit of the FAA. Circuit City Stores, Inc. v. Adams , 532 U.S. 105, 119 (2001). The FAA provides that a clause in an employ m ent contract evidencing an intent to arbitrate disputes arising f rom that contract “shall be valid, irrevocable, and enf orceable, save upon such grounds as exist at law or in equity f or the revocation of

any contract.” 9 U.S.C. § 2. The Suprem e Court has held that this provision ref lects a “liberal f

ederal policy f avoring arbitration, and the f undam ental principle that arbitration is a matter of contract.” AT& T Mobility, LLC v. Concepcion , --- U.S. ----, 131 S. Ct. 1740, 1745 (2011) 5(internal quotation m arks and citation om itted). In accordance with these principles,

“courts m ust place arbitration agreements on an equal footing with other contracts, and enf orce them according to their terms.” Id. at 1745-46 (internal citation om itted). Further, “any

doubts concerning the scope of arbitrable issues should be resolved in f avor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 24-25 (1983). Pursuant to the FAA, “a f ederal court is authorized to compel arbitration if a party to an arbitration agreement institut es an action that involves an arbitrable issue and one party to the agreem ent has f

ailed to enter arbitration.” Harris v. Green Tree Fin. Corp. , 183 F.3d 173, 178-79 (3d Cir. 1999). In addressing a mot ion to com pel arbitration, a court m ay not resolve the m erits of

the underlying dispute. Gay v. CreditInform , 511 F.3d 369, 386-87 (3d Cir. 2007). A district court need only “engage in a lim ited review to ensure that the dispute is arbitrable.” John Hancock Mut. Life Ins. Co. v. Olick, 151 F.3d 132, 137 (3d Cir. 1998) (internal quotation om itted). This review is lim ited to determ ining (1) whether “a valid agreement to arbitrate exists between the parties,” and (2) whether “the specif

ic dispute f

alls within the substantive scope of that agreem ent.” Id. (internal quotation om itted). If a court determines that an arbitration clause is valid and enf orceable, “it must

ref er questions regarding the enf orceability

of the term s of

the underlying contract to an arbitrator.” Harris , 183 F.3d at 179. Here, the District Court denied the motion t o com pel arbitration, f

inding that
6Pinnacle was trying “to have it both way s,” by arguing on the one hand that neither Agreem ent was in ef

f ect at the tim e of

Ms. Townsend’s term ination, while at the sam e tim e asserting that Ms. Townsend should be compelled to arbitrate under one or both of the Agreem ents. (App. 28-29.) The District Court reasoned that although the dispute 1 here was within the scope of the arbitration provisions of both Agreem ents, contested issues of f act precluded the Court f

rom determ ining whether any em ploy m ent agreement Pinnacle advances an additional argument in support of its appeal. According 1 to Pinnacle, Ms. Townsend’s claim s in this case are dependent upon a f inding that Ms. Townsend was subject to an employ m ent agreement (either the 2007 Agreem ent or the Proposed Agreem ent) at the tim e of her term ination. Ms. Townsend concedes that both the 2007 Agreem ent and the Proposed Agreement contain a valid and enforceable arbitration provision that covers the underlying dispute between the parties. In opposing the Motion to Com

pel, however, Ms. Townsend argued that there was a dispute as to which (if any) agreement was in eff ect at the tim e of

her term ination and that this issue of f act prevented the District Court f rom determ ining whether there was a valid agreement to arbitrate at the tim e of

Ms. Townsend’s term ination. Pinnacle asserts that the District Court erred in f

ailing to give appropriate weight to Ms. Townsend’s contradictory positions in light of

f ederal policy

f avoring arbitration. The District Court f

ocused only

on Pinnacle’s apparent contradictory positions without discussing the likewise contradictory position of

Ms. Townsend. Both parties seek to “have it both way s” here. Ms. Townsend claims that either the 2007 Agreem ent or the Proposed Agreement was in eff ect that the tim e of

her term ination, yet also argues that she is not required to arbitrate under the valid arbitration provision contained in both Agreem ents. Pinnacle denies that either Agreement was in eff ect at the tim e of

Ms. Townsend’s term ination, yet argues that Ms. Townsend should be held to the terms of the Agreem ents, which com

pel arbitration. Pinnacle’s duality

of positions is not necessarily inconsistent, however. If the arbitration provision contained in the 2007 Agreement extends beyond the expiration of the Agreem ent itself

, the parties are required to arbitrate the dispute regardless of whether the term s of

either agreement were otherwise in eff ect. Since we f

ind that the survival language of

the arbitration provision contained in the 2007 Agreement com pels arbitration, we need not address the apparent paradox presented by the parties’ seemingl y contradictory

positions here. 7was in ef

f ect at the tim e of

Ms. Townsend’s term ination and theref ore, whether an agreem ent to arbitrate was in f orce. (App. 27-28.) We disagree. The arbitration clause contained in the 2007 Agreement provides: “[A]ny controversy , dispute, or claim between the parties to this Agreement, including any claim arising out of

, [ or] in connection with . . . this Agreement shall be settled exclusively by arbitration . . . . This agreement to arbitrate shall survive the expiration of this Agreement and shall cover all issues relevant to the employment of the Executive by Company .” (App. 97) (emphasis added). W hen phrases such as “any

claim arising out of ” appear in an arbitration provision, they are given a broad construction, and ty pically suggest that a given dispute is within the scope of an arbitration provision. See, e.g. , Battaglia v. McKendry , 233 F.3d 720, 727 (3d Cir. 2000). The underlying em

ploy m ent dispute between the parties here f alls within the scope of the arbitration provision. Counsel f or Ms. Townsend readily

adm itted at oral argum ent bef ore the District Court: “If the Court f

inds that the [ 2007 Agreem ent] autom atically renewed, then I would have agreed to arbitrate it, y es. . . . And we were prepared to -- we would have been prepared to go to arbitration and never f iled this lawsuit if

while we were talking af

ter the term ination [ Pinnacle] said yes, okay , well, the contract’s renewed, you have to go to arbitration.” (App. 21-22.) The District Court also acknowledged the general arbitrability

of this dispute. (App. 27-28.) Because the employ m ent dispute f

alls within the scope of

the arbitration provision, we need only determ ine whether a valid
8agreem ent to arbitrate existed at the tim e of Ms. Townsend’s term ination. While an agreement to arbitrate does not usually continue in ef

f ect af ter the underlying contract expires, a provision relating to dispute resolution may , in som e instances, survive the expiration of the contract. See Litton Fin. Printing Div. v. NLRB , 501 U.S. 190, 208 (1991); Luden’s Inc. v. Local Union No. 6, Bakery, Confectionery & Tobacco W

orkers Int’l Union , 28 F.3d 347, 363-64 (3d Cir. 1994). In Litton , the Suprem e Court held that the parties to a collective bargaining agreement could be required to arbitrate disputes arising out of the agreement, even after the agreement expired. In so holding, the Suprem e Court applied the general rule of contract interpretation that the intention of the parties controls the interpretation of the contract. Litton , 501 U.S. at 208. 2 Here, the arbitration provision in the 2007 Agreement explicitly provides that the “agreement to arbitrate shall survive the expiration of this Agreement,” and shall cover

In Litton the Suprem e Court addressed whether the parties to a collective 2 bargaining agreement could be required to arbitrate disputes arising out of the agreement, even af ter the agreement expired. The Court held that an agreem ent to arbitrate m ay survive the expiration of

the agreement if post-term disputes “arise under the contract.” Litton , 501 U.S. at 206-07. Whether a post-termination di spute “arises under the contract” depends upon whether there is a link between the post-termination dispute and the underlying agreem ent. Id. at 207-08. “Rights which accrued or vested under the agreem ent will, as a general rule, survive termination of the agreement. And of course, if a collective-bargaining agreement provides in explicit term s that certain benef its continue af ter the agreement’s expiration, disputes as to such continuing benefits may be f ound to arise under the agreement, and so becom e subject to the contract’s arbitration provisions.” Id. 9“all issues” related to Ms. Townsend’s employ m ent. This provision evidences the intent of the parties to arbitrate all disputes arising out of the em ploy m ent relationship between Ms. Townsend and Pinnacle, not sim ply those which arise during the term of the 2007 Agreem ent. Theref

ore, we conclude that the agreement to arbitrate an em ploy m ent 3 dispute was valid at the tim e of Ms. Townsend’s term ination, without regard to which agreem ent, if

any , was otherwise in ef

f ect. IV. For the f oregoing reasons, we vacate the order of the District Court and rem and the

m atter to the District Court f or the entry

of an order consistent with this Opinion.

The District Court brief ly addressed the survival language, f inding that it did not 3 apply because “there were no disputed f acts or f acts that really

are relevant because the em ploy m ent dispute did not occur during the two-year period while the 2007 contract indisputably

was in ef f ect.” (App. 23-24) (emphasis added). This reading is contrary to the explicit language of

the Agreem ent. 10