FILED

United States Court of Appeals

Tenth Circuit

April 19, 2010

Elisabeth A. Shumaker

Clerk of Court

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

PHILLIP HILL,

Plaintiff - Appellee,

v. No. 09-3182

RICOH AMERICAS

CORPORATION,

Defendant - Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF KANSAS

(D.C. NO. 2:08-CV-02548-KHV-DJW)

Kimberly S. King (Jeffrey D. Hanslick, with her on the briefs), Husch Blackwell

Sanders LLP, Kansas City, Missouri, for Defendant - Appellant.

Robert J. Wonnell (Carl A. Gallagher, with him on the brief), McAnany, Van

Cleave & Phillips, P.A., Kansas City, Kansas, for Plaintiff - Appellee.

Before HENRY, Chief Circuit Judge, BRISCOE, and HARTZ, Circuit Judges.

HARTZ, Circuit Judge.

Phillip Hill sued Ricoh Americas Corporation in the United States District

Court for the District of Kansas, alleging that he was terminated from his position

at Ricoh in violation of the Sarbanes-Oxley Act (SOX), see 18 U.S.C. § 1514A,

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The complaint alleged federal-question jurisdiction under 28 U.S.C.

§ 1331 based on the SOX claim and diversity jurisdiction under 28 U.S.C. § 1332.

2

The provision reads: 

If a legally cognizable dispute arises out of or relates to this

Agreement or the breach, termination, or validity hereof, or the

compensation, promotion, demotion, discipline, discharge or terms

and conditions of employment of [Hill], and if said dispute cannot be

resolved through direct discussions, the parties voluntarily agree to

settle the dispute by binding arbitration . . . . The arbitration shall

proceed in accordance with the Employment Dispute Resolution

(continued...)

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and Kansas common law prohibiting retaliatory discharge.1 Five months after suit

was filed, Ricoh moved to stay the case and compel arbitration under the

arbitration clause in its employment agreement with Mr. Hill. The district court

denied the motion on the ground that Ricoh’s delay in demanding arbitration after

engaging in the judicial proceedings had constituted a waiver of its right to

arbitrate. Ricoh appeals. We have jurisdiction under 9 U.S.C. § 16(a)(1)

(permitting immediate appeal of denial of motions to compel arbitration and to

stay proceedings pending arbitration). We reverse the district court’s order, and

remand with instructions to grant Ricoh’s motion to compel arbitration.

I. BACKGROUND

On September 18, 2000, Mr. Hill and Lanier Worldwide, Inc. (which later

merged into Ricoh) executed an employment agreement (the Employment

Agreement). An arbitration clause in the agreement was separately initialed by

both parties.2

 There is no dispute that Ricoh assumed Lanier’s rights and duties

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(...continued)

Rules of the [American Arbitration Association] in effect on the date

of the demand for arbitration . . . . Disputes subject to binding

arbitration pursuant to this section include all tort and contract

claims as well as claims brought under all applicable federal, state or

local statutes, laws, regulations or ordinances, including but not

limited to, Title VII of the Civil Rights Act of 1964, as amended; the

Family and Medical Leave Act; the Americans with Disabilities Act;

the Rehabilitation Act of 1973, as amended; the Fair Labor Standards

Act of 1938, as amended; the Age Discrimination in Employment

Act, as amended; the Equal Pay Act; the Civil Rights [Act] of 1866,

as amended; and the Employee Retirement Income Security Act of

1974. Disputes subject to binding arbitration pursuant to this section

also include claims against [Lanier’s] parent and subsidiaries, and

affiliated and successor companies . . . . Each party shall pay for

his/her/its own fees and expenses of arbitration except that the cost

of the arbitrator and any filing fee exceeding the applicable filing fee

in federal court shall be paid by [Lanier]; provided, however, that all

reasonable costs and fees necessarily incurred by any party are

subject to reimbursement from the other party at the discretion of the

arbitrator. This arbitration provision shall not apply to any claim

arising in a state that bars or prohibits the arbitration of such claims.

Aplt. App. at 90. 

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under the Employment Agreement. When Lanier merged into Ricoh, Mr. Hill and

Ricoh entered into a Retention Bonus Agreement on March 20, 2007. Under that

agreement, which contained no arbitration provision, Mr. Hill was to be paid a

$20,000 bonus if he maintained his employment with Ricoh through September

30, 2007, and satisfied other specified conditions. 

Ricoh terminated Mr. Hill on October 16, 2007. On December 31 he filed a

complaint with the Occupational Safety and Health Administration (OSHA),

alleging that he had been fired in retaliation for reporting evidence of fraud. 

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OSHA dismissed the action. Although ruling that Mr. Hill had engaged in

activities that were protected under SOX and that Ricoh had known of the

activities, it found that the activities had not been a factor in his termination. 

On November 3, 2008, Mr. Hill filed suit alleging that his termination

violated SOX and Kansas common law. Ricoh answered on December 4. The

court set trial for March 1, 2010, and set summer 2009 deadlines for completion

of alternate dispute resolution (ADR) and completion of discovery. On April 3,

2009, a week after Mr. Hill had provided Ricoh with his initial disclosures under

Fed. R. Civ. P. 26(a)(1) and had served Ricoh with his first request for

production, Ricoh moved to stay the case and compel arbitration. 

Mr. Hill responded that arbitration was inappropriate on several grounds,

including (1) the Employment Agreement had been superseded by the Retention

Bonus Agreement, (2) the arbitration clause did not guarantee that his rights

under SOX would be vindicated in arbitration, and (3) Ricoh had waived its right

to arbitrate by its conduct in the dispute, including its failure to raise arbitration

as an affirmative defense in its answer. The district court rejected Mr. Hill’s

supersession argument but ruled that Ricoh had waived its right to arbitration. It

did not address Mr. Hill’s SOX argument.

On appeal Ricoh argues that the district court erred in holding that it had

waived its right to arbitrate. Mr. Hill contends that the district court’s waiver

decision was correct; and alternatively he argues that the court’s decision can be

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affirmed on the following grounds: (1) that Ricoh waived its right to arbitration

by failing to raise the issue as an affirmative defense, as required by Fed. R. Civ.

P. 8(c)(1); (2) that the Employment Agreement was superseded by the Retention

Bonus Agreement; and (3) that arbitration may not vindicate his rights under

SOX. After some preliminary remarks on the Federal Arbitration Act, we address

waiver and then turn to Mr. Hill’s supersession and SOX arguments. 

II. DISCUSSION

A. The Federal Arbitration Act (FAA)

The FAA provides that contractual agreements to arbitrate disputes “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. The purpose of the

Act is “to place an arbitration agreement upon the same footing as other contracts

and to overturn the judiciary’s longstanding refusal to enforce agreements to

arbitrate.” Glass v. Kidder Peabody & Co., Inc., 114 F.3d 446, 451 (4th Cir.

1997) (internal quotation marks omitted). The FAA is a “congressional

declaration of a liberal federal policy favoring arbitration agreements.” Moses H.

Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Section 3 of

the Act, 9 U.S.C. § 3, obliges courts to stay litigation on matters that the parties

have agreed to arbitrate; and Section 4, 9 U.S.C. § 4, authorizes a federal district

court to compel arbitration when it would have jurisdiction over a suit on the

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underlying dispute. See generally Moses H. Cone, 460 U.S. at 24–27 (discussing

scope and operation of FAA).

B. Waiver

The district court ruled that Ricoh had waived its right to arbitration by its

delay in demanding arbitration until after it had participated in the court litigation

for several months. Mr. Hill argues that we should affirm this ruling, and

alternatively he argues that Ricoh waived its right to arbitration by not raising

that claimed right in its answer to the complaint. We quickly dispose of this

alternative argument and then address the district court’s ruling.

1. Failure to Raise Arbitration in Answer

Mr. Hill contends that Ricoh forfeited its right to demand arbitration by not

asserting that right as an affirmative defense in its answer to his complaint. He

relies on Fed. R. Civ. P. 8(c)(1), which states: “In responding to a pleading, a

party must affirmatively state any avoidance or affirmative defense, including . . .

arbitration and award.”

Mr. Hill’s argument is based on a misunderstanding of the term arbitration

and award. The defense set forth in Rule 8(c)(1) is not that the claim should be

arbitrated rather than adjudicated in court; it is that the claim has already been

resolved by an award in arbitration. See Forms, Inc. v. Am. Standard, Inc., 550

F. Supp. 556, 557 (E.D. Pa. 1982) (party seeking arbitration did not waive its

right to arbitrate by not raising it as a defense in its answer), aff’d, 725 F.2d 667

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(3d Cir. 1983) (unpublished table decision); Mapes v. Chevron USA Prods Co. a

Div. of Chevron U.S.A., Inc., 237 F. Supp. 2d 739, 745 (S.D. Tex. 2002) (same);

Lee v. Grandcor Med. Sys., Inc., 702 F.Supp. 252, 254 (D. Colo. 1988) (same);

5 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and

Procedure § 1270 at 562 (3d ed. 2004) (arbitration-and-award provision in Rule

8(c)(1) applies only if “the dispute has already been resolved by an arbitration

and award.”). Thus, Ricoh was not required by Rule 8(c)(1) to demand

arbitration in its answer.

2. Waiver by Delay in Demanding Arbitration

We now address the ground on which the district court denied Ricoh’s

motion to compel arbitration. Mr. Hill argues that Ricoh waived its right to

arbitration by participating in the court litigation for several months after

answering the complaint. The historical facts are not disputed. Therefore we

review de novo the district court’s denial of Ricoh’s motion, applying the same

legal standard that the district court should apply. See MidAmerica Fed. Sav. &

Loan Ass’n v. Shearson/Am. Express, Inc., 886 F.2d 1249, 1259–60 & n.5 (10th

Cir. 1989). We summarize the events in the litigation, then turn to the governing

law, and conclude with our application of the law to the facts before us.

a. Court Proceedings

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Mr. Hill filed suit on November 3, 2008. Ricoh answered on December 4. 

On January 27, 2009, a magistrate judge set a scheduling conference for

March 18, 2009, and ordered the following:

Pursuant to Fed. R. Civ. P. 26(f), no later than March 4, 2009,

the parties, in person and/or through counsel, shall confer to discuss

the nature and basis of their claims and defenses, to discuss the use

of mediation or other methods of alternative dispute resolution

(ADR), to develop a proposed discovery plan, and to make or arrange

for the disclosures required by Fed. R. Civ. P. 26(a)(1).

Aplee. Supp. App. at 7 (Initial Order Regarding Planning and Scheduling at 1,

Hill v. Ricoh, No. 08-2548-KHV-DJW (D. Kan. Jan. 27, 2009)). On March 19 the

court issued a scheduling order setting the deadline for completion of ADR at

June 10, 2009; the deadline for completion of discovery at September 18, 2009;

and the trial for March 1, 2010. The order also instructed each party to make a

good-faith effort to settle and to provide the court by April 10, 2009, with a report

summarizing the party’s settlement efforts. 

On March 27, 2009, Mr. Hill served a request for production of documents 

and both parties served their initial disclosures under Fed. R. Civ. P. 26(a)(1). A

week later, on April 3, 2009, Ricoh moved to stay the case and compel

arbitration. The district court denied the motions. 

b. Waiver of Arbitration in General

This circuit’s leading opinion on waiver of the right to arbitrate is Reid

Burton Construction, Inc. v. Carpenters District Council of Southern Colorado,

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614 F.2d 698 (10th Cir. 1980). On a prior appeal in that case, we had held that a

party, “because of conduct before the court, . . . may be deemed [to be] prevented

on the basis of some equitable principle from asserting a right to arbitration,”

Reid Burton Constr., Inc. v. Carpenters Dist. Council of S. Colo., 535 F.2d 598,

604 (10th Cir. 1976); and we had remanded to the district court to determine

whether the Carpenters District Council (the union) had waived its arbitration

rights. The district court found waiver and the union appealed. Affirming the

decision below, we stated that “the right to arbitration, like any other contract

right, can be waived.” Reid Burton, 614 F.2d at 702. But, we continued, “[t]here

is no set rule as to what constitutes a waiver or abandonment of the arbitration

agreement; the question depends upon the facts of each case . . . .” Id. We noted

several factors useful in making the assessment. These were later summarized as

follows in Peterson v. Shearson/American Express, Inc., 849 F.2d 464, 467–68

(10th Cir. 1988):

(1) whether the party’s actions are inconsistent with the right to

arbitrate; (2) whether “the litigation machinery has been substantially

invoked” and the parties “were well into preparation of a lawsuit”

before the party notified the opposing party of an intent to arbitrate;

(3) whether a party either requested arbitration enforcement close to

the trial date or delayed for a long period before seeking a stay; (4)

whether a defendant seeking arbitration filed a counterclaim without

asking for a stay of the proceedings; (5) “whether important

intervening steps [e.g., taking advantage of judicial discovery

procedures not available in arbitration] had taken place”; and (6)

whether the delay “affected, misled, or prejudiced” the opposing

party.

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(quoting Reid Burton, 614 F.2d at 702) (brackets in original). Of course, our

listing these factors—which we will call the Peterson factors—was not intended

to suggest a mechanical process in which each factor is assessed and the side with

the greater number of favorable factors prevails. Nor were we even suggesting

that the list of factors is exclusive. Rather, these factors reflect certain principles

that should guide courts in determining whether it is appropriate to deem that a

party has waived its right to demand arbitration. A review of those principles will

assist in resolving this case.

To begin with, a party should not be permitted to demand arbitration when

it has previously waived its right to arbitrate in the narrow sense of waiver

typically used in the criminal-law context, where a waiver is an “intentional

relinquishment or abandonment of a known right.” United States v. Olano, 507

U.S. 725, 733 (1993) (internal quotation marks omitted). A party’s conduct may

evince such an intentional relinquishment. Consider the facts alleged in Brown v.

Dillard’s, Inc., 430 F.3d 1004, 1005 (9th Cir. 2005). After Dillard’s fired Brown,

she filed a notice of intent to arbitrate a wrongful-termination claim and paid her

share of the filing fee. Dillard’s did not reply to multiple requests from the

American Arbitration Association (AAA) for information. See id. at 1008–09. 

For more than two months Brown attempted to contact Dillard’s about its silence;

but Dillard’s refused to arbitrate. Brown then filed suit in court, at which point

Dillard’s moved to compel arbitration. See id. at 1009. In our view, one could

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reasonably conclude that Dillard’s had waived its right to arbitrate in the narrow

sense of waiver. Expressing this in terms of the first Peterson factor, Dillard’s

actions were so “inconsistent with the right to arbitrate,” Peterson, 849 F.2d at

467, that they showed that it had intentionally relinquished its contractual right to

arbitration. (Peterson factor (4)—filing a counterclaim without seeking a stay for

arbitration—may also indicate an intentional relinquishment of the right to

arbitration.)

But Reid Burton and Peterson hardly limit the concept of waiver to

intentional relinquishment of a known right. Indeed, Reid Burton affirmed the

determination of waiver in that case even though the district court had explicitly

stated that it could not tell whether the conduct at issue was intentional or

negligent. See Reid Burton, 614 F.2d at 701. 

An important consideration in assessing waiver is whether the party now

seeking arbitration is improperly manipulating the judicial process. An

instructive example is Hooper v. Advance America, Cash Advance Centers of

Missouri, Inc., 589 F.3d 917, 919 (8th Cir. 2009), which concerned payday-loan

agreements containing mandatory arbitration clauses. The class-action plaintiffs’

complaint included one count asking the court to declare the arbitration clauses

invalid because they were unconscionable and six counts challenging Advance

America’s various lending practices. Advance America moved to dismiss the

complaint on several grounds. See id. “In the last sentence of its brief, Advance

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America purported to ‘reserve[ ] the right’ to enforce the arbitration clauses in

Plaintiffs’ loan agreements, if the court denied its motion to dismiss.” Id. After

the district court rejected the motion to dismiss with respect to five of the

lending-practices counts, Advance America moved to stay the case and compel

arbitration. See id. at 920. The district court dismissed the motion, and Advance

America appealed. Noting that Advance America, in seeking a decision on the

merits on each count, had sought “an immediate and total victory in the parties’

dispute,” the Eighth Circuit said that Advance America “wanted to see how the

case was going in federal district court before deciding whether it would be better

off there or in arbitration.” Id. at 922 (internal quotation marks omitted). It

agreed with the district court that “‘want[ing] to play heads I win, tails you lose .

. . is the worst possible reason’ for [a party’s] failing to move for arbitration

sooner than it did.” Id. Thus, although Advance America had not intentionally

relinquished its right to arbitration, to send the case to arbitration would allow

manipulation of the judicial process.

Khan v. Parsons Global Services, Ltd., 521 F.3d 421 (D.C. Cir. 2008), is a

similar case. In response to Khan’s complaint, “Parsons filed a single motion to

dismiss or, alternatively, for summary judgment or to compel arbitration.” Id. at

424. The district court granted summary judgment, and the D.C. Circuit reversed. 

See id. On return to the district court Parsons successfully moved to compel

arbitration. See id. The D.C. Circuit again reversed. It stated that a summary

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judgment motion by its nature “goes to the merits of the case,” id. at 426 (internal

quotation marks omitted), and that Parsons thus had made “a conscious decision

to have the substance of the Khans’ claims decided by a court,” id. at 427

(ellipses, brackets, and internal quotation marks omitted). The appellate court did

not wish to “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.” Id. (internal quotation marks

omitted).

A court may look to several of the Peterson factors in finding waiver on the

ground that ordering arbitration would permit a party to manipulate the judicial

process—for example, by allowing it to take a mulligan if the court proceeding is

progressing unfavorably or by allowing it to use the courts to obtain discovery

unavailable in arbitration. Evidence of manipulation could include a delay in

suggesting arbitration until substantial discovery has been completed (which may

be considered under Peterson factors (2) and (5)) or until the eve of trial (factor

(3)).

Another important consideration is maintenance of the combined efficiency

of the public and private dispute-resolution systems. See Menorah Ins. Co., Ltd.

v. INX Reinsurance Corp., 72 F.3d 218, 223 (1st Cir. 1995) (“[n]either efficiency

nor economy [would be] served” by allowing party to invoke its right to arbitrate

after refusing to arbitrate, permitting default judgment to be rendered against it in

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a foreign jurisdiction, and invoking its arbitration agreement only when judgment

holder sought judicial enforcement of the foreign judgment); Cabinetree of Wis.,

Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388, 391 (7th Cir. 1995) (“Selection of

a forum in which to resolve a legal dispute should be made at the earliest possible

opportunity in order to economize on the resources, both public and private,

consumed in dispute resolution.”) Three of the Peterson factors—(2) substantial

progress in the litigation, (3) an imminent trial, and (5) substantial use of

discovery procedures—can be significant in deciding whether the court should

find waiver because of the inefficiencies that would result from ordering

arbitration.

The final consideration in waiver analysis is prejudice to the party opposing

arbitration—the sixth Peterson factor. See Peterson, 849 F.2d at 468. Other

circuits agree on the importance of showing prejudice as an element of waiver. 

See, e.g., Brown, 430 F.3d at 1013 (“[T]he delay and costs incurred by Brown are

prejudicial for the purpose of waiver analysis.”) Com-Tech Assocs. v. Computer

Assocs. Intern., Inc., 938 F.2d 1574, 1578 (2d Cir. 1991) (“[T]he contractual right

to arbitration has been waived because of the prejudice the opposing parties have

suffered as a result of the defendants’ delay in seeking arbitration.”); Stone v.

E.F. Hutton & Co., Inc., 898 F.2d 1542, 1544 (11th Cir. 1990), (party waived

right to arbitrate because “[s]ignificant prejudice to Plaintiff’s legal position may

be inferred from the extent of discovery conducted in this case”); see also Ian R.

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MacNeil, Richard E. Speidel, & Thomas J. Stipanowich, 2 Federal Arbitration

Law: Agreements, Awards, and Remedies under the Federal Arbitration Act

§ 21.3.2 at 21:27 (1999) (describing prejudice as “The Key to Waiver”).

The burden of persuasion lies with the party claiming that the right to

demand arbitration has been waived. See Peterson, 849 F.2d at 466 (“A party

asserting a waiver of arbitration has a heavy burden of proof.”). And in assessing

whether that burden has been met, we give substantial weight to the “strong

federal policy encouraging the expeditious and inexpensive resolution of disputes

through arbitration.” Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 39

F.3d 1482, 1488 (10th Cir. 1994); see Moses H. Cone, 460 U.S. at 24 (“questions

of arbitrability must be addressed with a healthy regard for the federal policy

favoring arbitration.”)

c. Application to this Case

Assessing the specifics of the case before us, we hold that there was no

waiver. True, Ricoh did not demand arbitration until four months after answering

the complaint. But that length of time in itself does not establish waiver. This

circuit has no published opinion ruling that there was waiver because of the delay

in making a demand for arbitration when the delay was four months or less after

the answer. Cf. Metz, 39 F.3d at 1486 (defendant moved to compel arbitration

three weeks after complaint was filed, but it waived the right to arbitrate certain

claims by its later conduct in the litigation.) Other circuits have held that there

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was no waiver despite delays of four months or more after answering the

complaint. See, e.g., Patten Grading & Paving, Inc. v. Skanska USA Bldg., Inc.,

380 F.3d 200, 203, 205 (4th Cir. 2004) (seven-month delay; four-month delay

after party learned of arbitration agreement); J & S Const. Co., Inc. v. Travelers

Indem. Co., 520 F.2d 809, 809–10 (1st Cir. 1975) (13-month delay after suit

filed). 

The critical question is what was happening in this litigation during the

four months between the answer to the complaint and the demand for arbitration. 

The answer is, very little. The most important activity shown by the record was

the magistrate judge’s setting the schedule for the litigation. When Ricoh

requested an order compelling arbitration, the trial was not to take place for

another 11 months, discovery could continue for another five-and-a-half months,

and the deadline for completing ADR was still more than two months ahead. The

only discovery that had been initiated consisted of Mr. Hill’s request for

production of documents and the parties’ disclosures under Rule 26(a)(1)

(Mr. Hill asserts that he disclosed his witnesses, exhibits, and itemization of

damages); both Mr. Hill’s request and his disclosure were only a week before

Ricoh’s demand. 

Mr. Hill has failed to show any substantial prejudice from Ricoh’s delay in

seeking arbitration. To be sure, he may benefit from timely resolution of his

claims, and arbitration proceedings could have begun four months earlier if Ricoh

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had requested arbitration when it answered the complaint. But one would expect

(and Mr. Hill has not suggested otherwise) that the dispute would still have been

resolved in arbitration before the date set for trial (had Mr. Hill not opposed

arbitration). Nor has he shown that he has been burdened by discovery

significantly more than he would have been if the dispute had gone to arbitration

at the outset. We note that the arbitration rules applicable at the time of Ricoh’s

demand would allow the arbitrator to order discovery. See AAA, Employment

Arbitration Rules and Mediation Procedures, Rule 9 (2006) (“The arbitrator shall

have the authority to order such discovery, by way of deposition, interrogatory,

document production, or otherwise, as the arbitrator considers necessary to a full

and fair exploration of the issues in dispute, consistent with the expedited nature

of arbitration.”). And those rules also require the parties to attend an arbitration

management conference at which they must consider “the exchange of

stipulations and declarations regarding facts, exhibits, witnesses, and other

issues.” Id. Rule 8(e). Mr. Hill has not satisfied his burden to show that the

contents of his initial disclosures under Rule 26 would not likewise have to be

disclosed in arbitration proceedings. 

In Patten Grading, 380 F.3d at 200, the Fourth Circuit held that there had

been no waiver despite more discovery than occurred in this case. The parties

“exchanged written discovery, including interrogatories and requests for

production of documents.” Id. at 203. They also participated in court-ordered

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mediation. Patten then received permission to add another claim, and discovery

was reopened for another month. Only at that point did the opposing party,

Skanska, move to stay the proceedings and compel arbitration. See id. The

Fourth Circuit characterized the conduct of discovery as “minimal” and noted that

there was no evidence that such discovery was unavailable in arbitration, or that

Skanska had “gained a strategic advantage through its discovery requests.” Id. at

206–07. See also Williams v. Cigna Fin. Advisors Inc., 56 F.3d 656, 661 (5th Cir.

1995) (the parties had “exchanged Rule 26 discovery”); Gabriel M. Wilner,

1 Domke on Commercial Arbitration § 19:07 at 10 (rev. ed. 2002) (“conducting

discovery prior to seeking to compel arbitration does not constitute prejudice

where the documents produced by discovery are also discoverable in arbitration”)

We recognize that the prior conduct of discovery was a factor in finding

waiver in our decision in MidAmerica; but discovery had actually been completed

and a number of other factors (including completion of one trial) also supported

waiver. See MidAmerica, 886 F.2d at 1261.

The minimal litigation activity before Ricoh demanded arbitration also

compels the conclusion that granting Ricoh’s demand would lead to minimal

inefficiency (from duplication of effort in court and in arbitration) and would not

result in any improper manipulation of the judicial process by Ricoh. And there

is no evidence in the record that Ricoh intentionally and knowingly relinquished

its right to demand arbitration. 

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Mr. Hill’s appellate brief notes that in April 2007, after execution of the

Retention Bonus Agreement, Ricoh presented Mr. Hill with a proposed

employment agreement containing an arbitration clause that explicitly

encompassed disputes under SOX (which had been enacted after execution of the

Employment Agreement), but he refused to sign. We see no legal significance to

Mr. Hill’s refusal; and his brief suggests none.

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Thus, the circumstances of this case, particularly in light of the federal

policy favoring arbitration, convince us that the district court should not have

found waiver and should have ordered arbitration and stayed judicial proceedings.

C. Supersession by Retention Bonus Agreement

Mr. Hill’s first argument for affirmance other than waiver is that the

arbitration provision in the Employment Agreement is not enforceable because

that agreement was superseded by the Retention Bonus Agreement, which has no

arbitration provision.3

 Although the FAA strongly favors enforcement of

agreements to arbitrate, “a party cannot be required to submit to arbitration any

dispute which [it] has not agreed so to submit.” United Steelworkers of Am. v.

Warrior & Gulf Navigavtion Co., 363 U.S. 574, 582 (1960). Whether there is an

enforceable contract to arbitrate is a matter of contract law to be decided by the

court. See Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83–84 (2002). 

State law governs. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,

944 (1995) (“When deciding whether the parties agreed to arbitrate a certain

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matter . . . , courts generally . . . should apply ordinary state-law principles that

govern the formation of contracts.”); Perry v. Thomas, 482 U.S. 483, 492 n.9

(1987). The district court and the parties have relied on Kansas law in addressing

the contract-law issues before us; and we have no reason to believe that any other

state’s law is applicable. See Mastrobuono v. Shearson Lehman Hutton, Inc., 514

U.S. 52, 62–63 & n.9 (1995). 

Under Kansas law a “written contract may be varied, modified, waived,

annulled, or wholly set aside by any subsequent executed contract.” Owens v.

City of Bartlett, Labette County, 528 P.2d 1235, 1240 (Kan. 1974). If two

successive contracts are in conflict, the later supersedes the earlier one. See

Fleetwood Enters., Inc. v. Coleman Co., Inc., 161 P.3d 765, 774 (Kan. Ct. App.

2007). The parties do not dispute the historical facts. Therefore, we review de

novo the district court’s decision that the Retention Bonus Agreement did not

supersede the Employment Agreement. See Isaac v. Temex Energy, Inc. (In re

Amarex), 853 F.2d 1526, 1529–30 (10th Cir. 1988). 

In our view, the arbitration clause of the five-and-a-half-page Employment

Agreement survived the execution of the two-page Retention Bonus Agreement on

March 20, 2007. The Retention Bonus Agreement had a limited purpose—to

encourage Lanier employees to remain with Ricoh during a transition period. It

was not a “Transition Employment Agreement,” but a supplement to the already

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Although Mr. Hill’s employment with Ricoh continued until October 16,

2007, Ricoh has not argued that the Retention Bonus Agreement therefore

expired.

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effective Employment Agreement. A comparison of the terms of the two

agreements makes this clear.

The Retention Bonus Agreement required Mr. Hill to remain with Ricoh

until September 30, 2007, unless Ricoh deemed his services unnecessary before

that time. If he were retained by Ricoh beyond that date, the Retention Bonus

Agreement would “expire and be of no force and effect.” Aplt. App. at 92.4

Otherwise, however, he would be paid a $20,000 bonus upon termination of

employment once he signed a release of all claims against Ricoh and Lanier. He

would not receive the bonus, however, if he were terminated for cause; and For

Cause is defined in the agreement (to include, among other things, breach of the

obligations in the agreement’s “Confidentiality” paragraph). 

To be sure, the Retention Bonus Agreement governs certain aspects of

Mr. Hill’s relationship with Ricoh. But it does not explicitly state that his earlier

Employment Agreement is nullified, unlike the Employment Agreement, which

states that “[a]ll prior contracts, agreements, or promises of any kind relating to

the employment relationship of the parties are hereby canceled and discharged

and are of no further effect whatsoever,” id. at 91. Nor is such nullification

implicit. On the contrary, the Retention Bonus Agreement’s failure to mention

some matters addressed in the Employment Agreement and its treating other

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matters in significantly less detail suggests that the parties would continue to look

to the Employment Agreement insofar as it was not inconsistent with the

Retention Bonus Agreement. 

For example, the Employment Agreement sets forth Mr. Hill’s territory,

and it requires him to “hold in trust all money collected for [Ricoh] and . . . report

or remit such money to [Ricoh] within forty-eight (48) hours of the date of such

collection.” Id. at 87. Because the Retention Bonus Agreement says nothing

about territory or handling of funds, and because these are undoubtedly matters of

importance to the employment relationship, one can infer that the Employment

Agreement still covers these matters. 

As for subjects treated in both agreements, Mr. Hill suggests that the

Confidentiality paragraph of the Retention Bonus Agreement replaces the oneand-a-half pages devoted to trade secrets and the like in the Employment

Agreement. But we find that implausible. The first two sentences of the

Confidentiality paragraph state that the terms of the agreement must be kept

confidential. The next two sentences say: “Additionally, you are required to

keep confidential any trade secret, business or proprietary information, which you

acquired during your employment with the Company. This is intended to cover

any information of a nature not normally disclosed by the Company to the general

public.” Aplt. App. at 93. The paragraph then concludes with a sentence warning

that Mr. Hill can be terminated immediately for breach of the agreement. We can

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If Mr. Hill had signed the release necessary to obtain his $20,000 bonus,

perhaps the arbitration clause of the Employment Agreement would have been

mooted (because there would be no dispute to arbitrate); but Mr. Hill does not

raise this argument. 

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think of no reason why Ricoh would have wanted to, or agreed to, replace the

Employment Agreement’s detailed language regarding confidentiality by the

summary treatment in the Retention Bonus Agreement. The common-sense

conclusion is that the purpose of the Confidentiality paragraph in the Retention

Bonus Agreement was not to replace the Employment Agreement provisions but

to specify that breach of confidentiality would forfeit the $20,000 bonus and to

make the terms of the Retention Bonus Agreement confidential. 

Similarly, the Employment Agreement is more specific than the Retention

Bonus Agreement regarding the terms of compensation (the Retention Bonus

Agreement addresses only the bonus and mentions the severance-pay policy) and

enumerates company policy manuals that must be obeyed.

In short, there is every reason to conclude that the Retention Bonus

Agreement was intended to operate within the legal context of the earlier

Employment Agreement. In particular, the arbitration clause of the Employment

Agreement is not “in conflict” with the Retention Bonus Agreement and therefore

is not superseded by it. Fleetwood Enters., 161 P.3d at 774.5

 

D. SOX Enforcement

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Finally, Mr. Hill claims that the arbitration clause in the Employment

Agreement is unenforceable in this dispute because he may not be able to

vindicate his rights under SOX through arbitration in accordance with the clause. 

We disagree. 

SOX forbids employers from retaliating against “[w]histleblower”

employees who report fraud in certain circumstances. 18 U.S.C. § 1514A. A

discharged employee who prevails in an enforcement action is entitled to

reinstatement, lost wages, and reimbursement of other expenses, including

reasonable attorney fees. See id. § 1514A(c)(2). Mr. Hill’s district-court

complaint claims that he was fired in violation of SOX after he reported the

fraudulent double booking of sales and other misconduct by fellow employees.

Mr. Hill’s specific concerns about arbitration are that he may not be

awarded attorney fees if he prevails, and he may be ordered to pay attorney fees if

he loses. He points to the following provision in the arbitration clause: 

Each party shall pay for his/her/its own fees and expenses of

arbitration except that the cost of the arbitrator and any filing fee

exceeding the applicable filing fee in federal court shall be paid by

the Company; provided, however, that all reasonable costs and fees

necessarily incurred by any party are subject to reimbursement from

the other party at the discretion of the arbitrator. 

Aplt. App. at 90 (emphasis added). “The mere possibility that a Plaintiff may be

unable to vindicate his or her statutory rights,” he argues, “is sufficient to render

a contractual arbitration agreement unenforceable.” Aplee. Br. at 39–40.

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Mr. Hill relies on two appellate decisions to support his argument, Shankle

v. B-G Maintenance Management of Colorado, Inc., 163 F.3d 1230 (10th Cir.

1999), and Randolph v. Green Tree Financial Corp.-Alabama, 178 F.3d 1149

(11th Cir. 1999). In the first case, Shankle signed an arbitration agreement as a

condition of his ongoing employment. See Shankle, 163 F.3d at 1232, 1233,

1235. The agreement covered all claims between the parties, including federal

statutory claims, and explicitly required that Shankle pay one-half of the

arbitrator’s fees. See id. at 1232. When Shankle filed a discrimination suit, B-G

invoked the arbitration agreement. We noted that agreements requiring

arbitration of statutory claims are enforceable if the arbitral forum is an effective

alternative to a judicial one. See id. at 1231, 1233–34. For Shankle to pursue

arbitration, however, he would have had to pay an arbitrator between $1,875 and

$5,000, which he could not afford. Thus, he was effectively unable to vindicate

his federal statutory rights. We held that the district court correctly declined to

compel arbitration. See id. at 1234–36. In Randolph the Eleventh Circuit held

that an arbitration provision was unenforceable because it was silent regarding the

payment of arbitration expenses, thus posing an unacceptable risk that Randolph

would not be able to afford to vindicate her federal statutory rights. See

Randolph, 178 F.3d at 1157–58.

We reject Mr. Hill’s argument. Unlike in Shankle, nothing in the

Employment Agreement’s arbitration clause requires the arbitrator to deny

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Mr. Hill his rights under SOX. The clause gives the arbitrator discretion to award

him attorney fees if he prevails on his SOX claim. And assuming, without

deciding, that Mr. Hill is correct that SOX prohibits imposing attorney fees on an

unsuccessful plaintiff, nothing in the arbitration clause requires the arbitrator to

compel him to pay Ricoh’s attorney fees if he loses. Thus, the arbitrator has full

authority to grant Mr. Hill the same SOX relief that he would receive in court.

Randolph would be more difficult for us to distinguish, but we need not

bother. It was reversed by the Supreme Court in Green Tree Financial

Corp.-Alabama v. Randolph, 531 U.S. 79, 91–92 (2000). The Court rejected

Randolph’s argument that the risk of her having to pay high arbitration costs

prevented her from vindicating her statutory rights. See id. at 90. The Court held

that in light of the “liberal federal policy favoring arbitration agreements,” such

risk was “too speculative to justify the invalidation of an arbitration agreement” 

Id. at 91 (internal quotation marks omitted). It said: “[W]here . . . a party seeks

to invalidate an arbitration agreement on the ground that arbitration would be

prohibitively expensive, that party bears the burden of showing the likelihood of

incurring such costs.” Id. at 92.

Here, too, Mr. Hill’s fear that his SOX rights would not be vindicated is

mere speculation. This fear is based on an unsupported assumption that the

arbitrator will be hostile to the substantive rights created by SOX. As the

Supreme Court has made clear, such an assumption is inappropriate. See 14 Penn

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Plaza LLC v. Pyett, 129 S. Ct. 1456, 1470–71 (2009); Rodriguez de Quijas v.

Shearson/Am. Express, Inc., 490 U.S. 477, 481 (1989) (enforcing agreement to

arbitrate claims under Securities Act of 1933; rejecting the “suspicion of

arbitration as a method of weakening the protections afforded in the substantive

law to would-be complainants”); Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 634 (1985) (agreement to arbitrate

Sherman Act claim is enforceable; “we . . . reject the proposition that an

arbitration panel will pose too great a danger of innate hostility to the constraints

on business conduct that antitrust law imposes.”)

Accordingly, SOX does not render the arbitration clause unenforceable in

this case.

III. CONCLUSION

We REVERSE the district court’s order denying Ricoh’s motion to compel

arbitration and REMAND with instructions to grant Ricoh’s motion and order the

parties to arbitrate.

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