IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-60877

SHIRLEY DOUGLAS, Successor in Interest of 

Schwartz & Associates, P.A. and Interstate Fire & Casualty Company,

 Plaintiff–Appellee,

versus

REGIONS BANK,

Defendant–Appellant.

Appeal from the United States District Court

for the Southern District of Mississippi

Before SMITH, DENNIS, and HIGGINSON, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

In August 2002, Shirley Douglas opened a checking account with Union 

Planters Bank and signed a signature card binding her to arbitration. The 

arbitration provision included a clause (the “delegation provision”) delegating 

the question of a dispute’s arbitrability to an arbitrator. Douglas’s account was 

closed less than a year later. Union Planters Bank (“Union Planters”) merged 

with Regions Bank (“Regions”) in June 2005. 

United States Court of Appeals

Fifth Circuit

FILED

July 7, 2014

Lyle W. Cayce

Clerk

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No. 12-60877

In 2007, Douglas was injured in an automobile accident caused by the 

negligence of the driver of another vehicle. She retained a lawyer, settled the 

claim for $500,000, and hired a separate attorney, Vann Leonard, to get the 

settlement approved in bankruptcy court, where she had filed under Chapter 13. Leonard allegedly embezzled Douglas’s portion of the settlement. 

Douglas sued Regions and Trustmark National Bank (“Trustmark”), where 

Leonard had maintained accounts, for negligence and conversion on the ground 

that they had notice of the embezzlement and negligently failed to report that 

activity, make reasonable inquiries, or prevent further diversions.

Regions moved to compel arbitration based on the delegation provision 

in the arbitration agreement Douglas had entered into with Union Planters, 

Regions’ predecessor-in-interest. The district court denied the motion, and 

Regions appealed.1 Although the district court applied the incorrect law, we 

affirm because the claim that this dispute is within the scope of the arbitration 

provision is groundless.

I.

The district court denied Regions’ motion to compel arbitration on the 

ground that no arbitration agreement existed between Douglas and Regions

because under Mississippi law, Union Planters’ successor-in-interest (Regions) 

was not a party to the arbitration agreement. Significantly, Douglas does not 

defend the district court’s reasoning on appeal. She admits that Regions was 

a party to the original arbitration agreement under Mississippi law, and 

indeed it appears that she never argued in response to the motion to compel 

that Regions’ status as a successor did not bind it to the agreement. The 

1 The district court stayed proceedings with Trustmark pending conclusion of any 

arbitration proceedings between Douglas and Regions.

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district court apparently did not consider the applicable state law.2

An agreement did, in other words, exist. Douglas signed a signature card 

with an arbitration agreement when she opened a checking account some number of years before the subject chain of events. The question is whether the

arbitration agreement and its delegation provision have anything to do with 

the claim at issue here―that is, whether there is an arbitration agreement 

relevant to the dispute at hand.

A delegation provision is an “agree[ment] to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as . . . whether [the parties’] agreement covers a 

particular controversy.” Rent-A-Center, W., Inc. v. Jackson, 130 S. Ct. 2772, 

2777 (2010). Parties may agree to arbitrate whether a particular claim is 

subject to arbitration so long as they clearly and unmistakably do so in their 

agreement. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995). 

Delegation provisions thus normally require an arbitrator to decide in the first 

instance whether a dispute falls within the scope of the arbitration provision. 

There is doubt that Douglas unmistakably intended to arbitrate gateway questions of arbitrability.3

2 “(a) When a merger becomes effective: . . . (3) All property owned by, and every contract right possessed by, each corporation or eligible entity that merges into the survivor is 

vested in the survivor without reversion or impairment[.]” MISS. CODE ANN. § 79-4-

11.07(a)(3); see also id. § 81-5-2 (“All the provisions of law relating to private corporations 

operating in this state which are not inconsistent with this chapter or Chapters 1 and 3 of 

Title 81, Mississippi Code of 1972, or with the proper business of depository institutions, shall 

be applicable to all state banks.”). 

3 The agreement states that

by using or maintaining your account, you agree that, in the event of any dispute, 

disagreement, claim or controversy . . . between you and us or any of our agents or 

employees, or our parent, subsidiary or sister corporations or their employees or 

agents, any such dispute will, at the election of you or us, be resolved through the 

process of binding arbitration . . . regardless of when the dispute arose.

It then defines “disputes” as follows (emphasis added):

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The mere existence of a delegation provision in the checking account’s 

arbitration agreement, however, cannot possibly bind Douglas to arbitrate 

gateway questions of arbitrability in all future disputes with the other party, 

no matter their origin. Suppose the driver who injured Douglas was an 

employee of Regions who was conducting bank business. Douglas would not 

have to arbitrate the underlying tort, which is unrelated to her checking 

account and its accompanying contract, just because she happens to have a 

contract with Regions on a completely different matter. It follows that she does 

not have to send such a claim for “gateway arbitration” merely because there 

is a delegation provision in the completely unrelated contract. 

If it were otherwise, then every case involving an arbitration agreement 

with a delegation provision must, with no exceptions, be submitted for such 

gateway arbitration; no matter how untenable the argument that there is some 

connection between the dispute and the agreement, an arbitrator must decide 

first. Douglas would have to go to the arbitrator, who would flatly tell her that 

this claim is not within the scope of the completely unrelated arbitration agreement she signed many years earlier when opening a checking account and that 

she must actually go to federal court after all.

The law of this circuit does not require all claims to be sent to gateway 

arbitration merely because there is a delegation provision. In Agere Systems, 

Inc. v. Samsung Electronics Co., 560 F.3d 337 (5th Cir. 2009), we sent a dispute 

to arbitration so the arbitrator could decide the gateway question of 

“Disputes” shall have the broadest possible meaning and shall include . . . any claim, 

controversy or dispute arising from or relating in any way to (i) this Agreement, (ii) 

any related agreement (iii) any agreement that this Agreement supercedes, [and] 

(iv) the relationships, accounts or balances on the accounts resulting from this Agreement or such other agreements, including the validity, enforceability, or scope of this 

Arbitration provision or any amendments or supplements to this Agreement[] . . . . 

Disputes include[] . . . any Disputes based on . . . tort . . . (including any claims of 

any injury or damage to person or property), claims for breach of fiduciary duty or 

wrongful acts.

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arbitrability because the agreement had a delegation provision. But we did so

only because there were plausible arguments that the dispute was covered by 

the agreement as well as plausible arguments that it was not: “We adopt no 

new standards of Fifth Circuit analysis of arbitration provisions today.” Id. 

“We simply conclude that there is a legitimate argument that this arbitration 

clause covers the present dispute, and, on the other hand, that it does not. The 

resolution of these plausible arguments is left for the arbitrator.” Id.

The Agere court cited the test established by another circuit to decide 

whether a particular dispute must go to gateway arbitration because of the 

presence of a delegation provision:

The Federal Circuit recently articulated an approach for handling such 

disputes, an approach the parties have addressed in this appeal. That 

court set out a two step process: (1) did the parties “unmistakably 

intend to delegate the power to decide arbitrability to an arbitrator,”

and if so, (2) is the assertion of arbitrability “wholly groundless.” 

Id. (citing Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1371 (Fed. Cir. 2006)). 

The Federal Circuit elaborated on this test in a more recent opinion:

In Qualcomm, we explained that the “wholly groundless” inquiry allows 

a court to stay an action based on an agreement among the parties to 

submit their disputes to arbitration, “while also preventing a party 

from asserting any claim at all, no matter how divorced from the parties’ agreement, to force an arbitration.” Accordingly, “even if the court 

finds that the parties’ intent was clear and unmistakable that they delegated arbitrability decisions to an arbitrator, the court may make a 

second more limited inquiry to determine whether a claim of arbitrability is ‘wholly groundless.’” Because the “wholly groundless” inquiry 

is supposed to be limited, a court performing the inquiry may simply 

“conclude that there is a legitimate argument that [the] arbitration 

clause covers the present dispute, and, on the other hand, that it does 

not” and, on that basis, leave “[t]he resolution of [those] plausible arguments . . . for the arbitrator.” Nevertheless, the “wholly groundless”

inquiry “necessarily requires the courts to examine and, to a limited 

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extent, construe the underlying agreement.”[4]

Although the Agere court did not explicitly adopt this two-part Qualcomm test, 

its holding implicitly relied on it. 

The Qualcomm test is an attractive one and most accurately reflects the 

law—that what must be arbitrated is a matter of the parties’ intent. See RentA-Ctr., 561 U.S. at 80. When Douglas signed the arbitration agreement containing a delegation provision, did she intend to go through the rigmaroles of 

arbitration just so the arbitrator can tell her in the first instance that her claim 

has nothing whatsoever to do with her arbitration agreement, and she should 

now feel free to file in federal court? Obviously not. 

If the argument that the claim at hand is within the scope of the arbitration agreement is “wholly groundless,” surely Douglas never intended that 

such arguments would see the light of day at an unnecessary and needlessly 

expensive gateway arbitration. We conclude that when she agreed to arbitrate 

“the validity, enforceability, or scope of this Arbitration provision,” Douglas did 

not intend to bind herself for life to gateway arbitration for any and all claims 

that ever might exist between her and Regions. She meant only to bind herself 

to arbitrate gateway questions of arbitrability if the argument that the dispute 

falls within the scope of the agreement is not wholly groundless.

Because the events leading to Douglas’s claim—a car accident, a 

settlement, and embezzlement of the funds through an account that a third 

party held with the bank—have nothing to do with her checking account 

opened years earlier for only a brief time, the notion that her claim falls within 

the scope of the arbitration agreement is “wholly groundless.” Regions’ only

theory that its claim of arbitrability is not wholly groundless is that there is a 

4 InterDigital Commc’ns, LLC v. Int’l Trade Comm’n, 718 F.3d 1336, 1346–47 (Fed. 

Cir. 2013) (internal citations omitted) (brackets and ellipses in original), vacated on other 

grounds, 134 S. Ct. 1876 (2014) (vacating on mootness grounds).

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delegation provision. That is circular: The two-part Qualcomm/Agere test 

demands that even if there is a delegation provision (step one), the court must 

ask whether the averment that the claim falls within the scope of the arbitration agreement is wholly groundless (step two). Merely restating that there is 

a delegation provision brings us back to step one. 

Because this matter should not be sent to gateway arbitration, the judgment denying the motion to compel arbitration is AFFIRMED.

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JAMES L. DENNIS, Circuit Judge, dissenting:

The majority adopts the “wholly groundless” test put forth by the Federal 

Circuit, which has not been adopted by this circuit and appears to be contrary 

to Supreme Court authority. Although I am sympathetic to the plight of 

ordinary persons caught in the throes of commercial arbitration, I do not think 

the Supreme Court’s decisions allow us this innovation. Accordingly, I 

respectfully dissent.

I agree with the majority’s decision that an agreement to arbitrate 

existed between the parties and that this agreement contained a delegation 

provision. Douglas previously signed a “signature card” for a checking account 

with Union Planters, which was later acquired by Regions. By signing the 

card, Douglas indicated her consent to the Deposit Account Agreement and 

Disclosure (“the Agreement”) and that she had been provided at least one copy 

of this document. As the majority acknowledges, the Agreement provides that 

disputes “including the validity, enforceability, or scope of this Arbitration 

provision” are to be decided through arbitration. Specifically, the Agreement 

states that

by using or maintaining your account, you agree that, in the event 

of any dispute, disagreement, claim or controversy . . . between you 

and us or any of our agents or employees, or our parent, subsidiary 

or sister corporations or their employees or agents, any such 

dispute will, at the election of you or us, be resolved through the 

process of binding arbitration . . . regardless of when the dispute 

arose.

The Agreement defines “disputes” as follows:

“Disputes” shall have the broadest possible meaning and 

shall include . . . any claim, controversy or dispute arising from or 

relating in any way to (i) this Agreement, (ii) any related 

agreement (iii) any agreement that this Agreement supercedes, 

[and] (iv) the relationships, accounts or balances on the accounts 

resulting from this Agreement or such other agreements, 

including the validity, enforceability, or scope of this Arbitration 

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provision or any amendments or supplements to this Agreement[] 

. . . . Disputes include[] . . . any Disputes based on . . . tort . . . 

(including any claims of any injury or damage to person or 

property), claims for breach of fiduciary duty or wrongful acts.

The Agreement includes a separability provision; provides that “[t]his 

Agreement shall be governed by and construed in accordance with all 

applicable federal laws and all applicable substantive laws of the State of 

Mississippi”; provides that “[t]his Arbitration Provision . . . shall be governed 

by the Federal Arbitration Act” (“FAA”); and states that it “will remain in effect 

if you close your account or accounts with us and is irrevocable.” Finally, the 

Agreement provides that arbitration “will be administered according to this 

agreement and the rules of the American Arbitration Association (‘AAA’) in 

effect at the time of filing.”

Douglas asserts, and the majority agrees, that her negligence and 

conversion claims against Regions are not within the scope of the arbitration 

clause because they do not relate to the Agreement’s arbitration provision. 

Regardless of the merit of her argument, however, the issue is not for us to 

decide. The Agreement contains a delegation clause, or, stated differently, an 

“agree[ment] to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as . . . 

whether [the parties’] agreement covers a particular controversy.” Rent-ACenter, W., Inc. v. Jackson, 130 S. Ct. 2772, 2777 (2010). Consequently, 

Douglas’s argument that her claims do not relate to the Agreement’s 

arbitration provision—in essence, a scope-of-coverage dispute—must be 

decided in the first instance by the arbitrator, not a court.

I.

Ordinarily, whether a claim is subject to arbitration must be decided in 

the first instance by a court, not an arbitrator. AT&T Techs., Inc. v. Commc’ns 

Workers of Am., 475 U.S. 643, 649 (1986). Parties may agree, however, to 

arbitrate whether a particular claim is subject to arbitration so long as they 

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clearly and unmistakably do so in their agreement. First Options of Chi., Inc. 

v. Kaplan, 514 U.S. 938, 943-44 (1995). In this case, that standard is satisfied.

First, the Agreement, by defining the claims subject to arbitration to 

include “the validity, enforceability, or scope of th[e] Arbitration provision,” 

includes what the Supreme Court has described as a delegation clause. See 

Rent-A-Center, 130 S. Ct. at 2777. The Court explained that a delegation 

clause “is an agreement to arbitrate threshold issues concerning the 

arbitration agreement.” Id. The Court “ha[s] recognized that parties can agree 

to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties 

have agreed to arbitrate or whether their agreement covers a particular 

controversy.” Id. The Supreme Court has also held that the existence of such 

a delegation clause, by defining the claims subject to arbitration to include any 

challenge to the validity, enforceability, or scope of the parties’ agreement to 

arbitrate, is sufficiently clear and unmistakable evidence that the parties 

agreed to arbitrate arbitrability. See id. Second, the Agreement incorporates 

the AAA Rules—including the rule empowering the arbitrator “to rule on his 

or her own jurisdiction, including any objections with respect to the existence, 

scope or validity of the arbitration agreement”—which this court has deemed 

sufficient to satisfy First Option’s test. See Petrofac, Inc. v. DynMcDermott 

Petrol. Operations Co., 687 F.3d 671, 675 (5th Cir. 2012). I therefore would 

conclude that there is clear and unmistakable evidence that the parties to the 

Agreement agreed to arbitrate arbitrability.

Accordingly, Douglas’s argument that her negligence and conversion 

claims against Regions are outside the scope of the Agreement raises “the 

question ‘who has the primary power to decide arbitrability’ [which] turns upon 

what the parties agreed about that matter.” See First Options, 513 U.S. at 943.

Douglas admits that she entered into an agreement to arbitrate with Union 

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interest, admitting that she cannot defend the district court’s ruling on this 

point. Nor does she dispute that the Agreement contains a delegation clause 

and incorporates the AAA Rules. Nor does she specifically challenge the 

delegation provision.1 As such, whether particular claims—namely, her 

negligence and conversion claims against Regions—are subject to arbitration 

is a question of the arbitration clause’s scope and, under both the delegation 

clause and the AAA rules, one for the arbitrator, not a court, to decide in the 

first instance. Although she could ultimately persuade the arbitrator to 

conclude that her claim against Regions falls outside the scope of the 

arbitration agreement, that dispute must be submitted in the first instance to 

the arbitrator.

II.

Douglas’s arguments to the contrary are unavailing. First, she argues 

that the text of the FAA requires a connection between her dispute with 

Regions and the Agreement’s arbitration provision. FAA § 2 provides:

A written provision in any . . . contract evidencing a 

transaction involving commerce to settle by arbitration a 

controversy thereafter arising out of such contract or transaction, 

or the refusal to perform the whole or any part thereof[] . . . shall 

be valid, irrevocable, and enforceable, save upon such grounds as 

exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2 (emphasis added). By comparison, Douglas asserts that New 

York’s arbitration statute, on which the FAA was modeled, Hall St. Assocs., 

L.L.C. v. Mattel, Inc., 552 U.S. 576, 589 n.7 (2008), authorizes arbitration of 

any subsequent dispute between the parties regardless of whether it is 

connected to the contract containing the parties’ agreement to arbitrate, see

1 If she had specifically challenged the validity of the Agreement’s delegation 

provision, her challenge would have been for the court, and not the arbitrator, to decide. See 

Rent-A-Center, 130 S. Ct. at 2779.

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N.Y. C.P.L.R. § 7501. On this basis, Douglas asserts that whereas the New 

York law applies to any subsequent dispute between the parties, the FAA 

requires that for a dispute to be arbitrable it must arise out of the contract 

containing the parties’ agreement to arbitrate.

Beyond citing the texts of the FAA and New York’s arbitration statute, 

however, Douglas cites no authority for her interpretation and, moreover, 

wholly ignores the Supreme Court’s interpretation of the FAA in cases such as 

Rent-A-Center and First Options. More fundamentally, Douglas’s argument is 

that, based on the language of the Agreement’s arbitration clause, her dispute 

with Regions is not subject to arbitration. However, we are not authorized to 

decide whether her dispute with Regions is arbitrable; rather, such a question 

must be decided in the first instance by the arbitrator because she did not 

specifically challenge the validity of the Agreement’s delegation provision. See 

Rent-A-Center, 130 S. Ct. at 2779; First Options, 514 U.S. at 943-44.

Douglas’s objection to the conclusion that she must direct her scope-ofcoverage argument to the arbitrator in the first instance misapprehends the 

relevant analysis. She complains that Regions’ argument is, essentially, that 

if two parties ever agree to arbitration, then they are bound to arbitrate any 

later dispute regardless of whether the dispute is related to the parties’ 

agreement to arbitrate. That is not the case. The foregoing analysis does not 

require that parties arbitrate disputes unrelated to their agreement to 

arbitrate. After all, such a dispute may well fall outside the scope of the 

parties’ agreement. Rather, when the parties clearly and unmistakably agree 

to arbitrate arbitrability, questions regarding the scope of the parties’ 

agreement to arbitrate must be addressed in the first instance by the 

arbitrator, not a court. See Rent-A-Center, 130 S. Ct. at 2779; First Options, 

514 U.S. at 943-4.

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III.

Despite the Agreement’s uncontested provision that questions of the 

Agreement’s scope are to be decided by an arbitrator, the majority holds that 

“the notion that [Douglas’s] claim falls within the scope of the arbitration 

agreement is ‘wholly groundless.’” Although the majority refers to the “wholly 

groundless” test as the “Qualcomm/Agere test,” it has not hitherto been the 

law of this circuit, see Agere Sys., Inc. v. Samsung Elecs. Co. Ltd., 560 F.3d 337, 

340 (5th Cir. 2009) (“We adopt no new standards of Fifth Circuit analysis of 

arbitration provisions today.”). 

In Agere Systems, Agere sued Samsung, alleging a breach of a patent 

licensing agreement, and Samsung moved to compel arbitration. Id. at 338. 

The district court denied Samsung’s motion, reasoning that although the 

parties had agreed to arbitrate in a 2000 contract, that agreement was no 

longer in effect because it had been superseded by a 2006 contract that did not 

contain an arbitration clause. Id. at 339. Based on the terms of the parties’ 

2000 agreement, the court determined that the parties had agreed to “confer 

upon an arbitrator the power of determining what [disputes] ‘arise[] out of or 

relate[] to’ the [relevant agreement to arbitrate].” Id. at 340. That is, the court 

concluded that the parties had agreed to arbitrate arbitrability. See id. 

Because the court concluded that there was both a legitimate argument that 

the arbitration clause does and does not cover the dispute, it remanded the 

case with instructions to allow an arbitrator to determine the arbitrability 

issue. Id. at 340-41. The Agere court recited the Federal Circuit’s “wholly 

groundless” test, but it did so merely to acknowledge that the parties had 

addressed the approach in their appeals and to note that the district court had 

not applied the test. See id. at 340. Thus, the “wholly groundless” test has 

never before been adopted by this court and, as in Agere, it was not considered 

by the district court in this case. 

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Moreover, the “wholly groundless” test appears to be contrary to 

Supreme Court precedent. In AT&T, a labor arbitration case, the Court 

reaffirmed the rule that, absent clear and unmistakable evidence to the 

contrary, arbitrability is for the court to decide. 475 U.S. at 649. The Court 

admonished, however, that

in deciding whether the parties have agreed to submit a particular 

grievance to arbitration, a court is not to rule on the potential 

merits of the underlying claims. Whether “arguable” or not, indeed 

even if it appears to the court to be frivolous, the union’s claim that 

the employer has violated the collective-bargaining agreement is 

to be decided, not by the court asked to order arbitration, but as 

the parties have agreed, by the arbitrator. The courts, therefore, 

have no business weighing the merits of the grievance, considering 

whether there is equity in a particular claim, or determining 

whether there is particular language in the written instrument 

which will support the claim. The agreement is to submit all 

grievances to arbitration, not merely those which the court will 

deem meritorious.

Id. at 649-50 (internal quotation marks omitted). In First Options, the Court 

relied on AT&T by analogy in stating that district courts must defer to an 

arbitrator’s arbitrability decision upon finding clear and unmistakable 

evidence that the parties so intended. 514 U.S. at 943-44. 

In AT&T, arbitrability was for the court to decide, but the merits were 

for the arbitrator, so the Supreme Court explained that a court deciding 

arbitrability should leave the merits of the underlying dispute for the 

arbitrator. 475 U.S. at 649-50. In other words, if a court decides that a dispute 

is arbitrable but believes it to be completely frivolous, the court must still order 

the parties to arbitrate the claim. See id. Similarly, if there is clear and 

unmistakable evidence that the parties agreed to arbitrate arbitrability, the 

court must direct the parties to submit arbitrability questions to the arbitrator 

and may not pass on “the merits” of the dispute, which, in this posture, is 

whether Douglas’s dispute with Regions is subject to arbitration. The “wholly 

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groundless” test, however, requires a court to delve into the merits of the 

dispute, which the AT&T Court said a district court may not do. Under the 

reasoning of AT&T and First Options, if a court determines that there is clear 

and unmistakable evidence that the parties agreed to arbitrate arbitrability 

but nevertheless believes that an underlying claim is almost certainly not 

subject to arbitration, the court must still order the parties to arbitrate 

arbitrability. See AT&T, 475 U.S. at 649-50; First Options, 514 U.S. at 943-44. 

Similarly, First Options and Rent-A-Center provide that an arbitration 

agreement’s delegation provision requires sending questions of arbitrability to 

the arbitrator absent a specific challenge to the validity of that provision 

(which Douglas has not here asserted). See Rent-A-Center, 130 S. Ct. at 2779; 

First Options, 514 U.S. at 943-44. These decisions further support the 

conclusion that the Supreme Court would likely reject the majority’s approach 

as being contrary to its previous decisions. 

For these reasons, I respectfully dissent.

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