Opinion ID: 758402
Heading Depth: 2
Heading Rank: 1

Heading: Existence of an agreement to arbitrate

Text: 27 This case presents a situation where two commercially sophisticated parties disagree over the arbitrability of their dispute in light of their contractual history, where they agreed at first to a broad arbitration clause and then arguably canceled or narrowed that arbitration clause in a subsequent agreement. Before we address the specific arbitrability of the claims raised by Riley in its federal suit, we must address the threshold issue of who decides arbitrability in the first place--the courts or an arbitrator. 28
29 Under the Federal Arbitration Act (FAA), courts have developed a federal common law of arbitrability that implements Congress' expression of a strong national policy favoring the resolution of commercial disputes through arbitration. See Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 270-71, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995). Under this law, the question of arbitrability--whether a [contract] creates a duty for the parties to arbitrate the particular grievance--is undeniably an issue for judicial determination. Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator. AT & T Technologies v. Communications Workers, 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986). 30 Unlike the general presumption that a particular issue is arbitrable when the existence of an arbitration agreement is not in dispute, see Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), when the dispute is whether there is a valid and enforceable arbitration agreement in the first place, the presumption of arbitrability falls away. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944-45, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). As the Court explained, 31 Courts should not assume that the parties agreed to arbitrate arbitrability unless there is clear and unmistakable evidence that they did so. In this manner, the law treats silence or ambiguity about the question who (primarily) should decide arbitrability differently from the way it treats silence or ambiguity about the question whether a particular merits-related dispute is arbitrable because it is within the scope of a valid arbitration agreement--for in respect to this latter question the law reverses the presumption. 32 Id. (citations omitted); see also Cogswell v. Merrill Lynch, Pierce, Fenner & Smith Inc., 78 F.3d 474, 480 (10th Cir.1996). Courts will not apply the traditional presumption in favor of arbitrability when the particular issue is whether the parties have agreed to allow an arbitrator to decide the existence of their putative agreement to arbitrate because doing so might ... force unwilling parties to arbitrate a matter they reasonably would have thought a judge, not an arbitrator, would decide. First Options, 514 U.S. at 945, 115 S.Ct. 1920. Furthermore, the issue is not whether it would be more convenient for courts or arbitrators to decide whether the parties have a valid and enforceable agreement to arbitrate, but rather whether the parties' agreement contains 'clear and unmistakable' evidence they intended the arbitrator to decide the issue. Cogswell, 78 F.3d at 481. 33
Riley-Anchor Glass arbitration clause 34 In light of the difficult arguments that Anchor Glass must present to support its initial arbitrability argument, we have no hesitation in concluding that Anchor Glass does not have clear and unmistakable evidence that the parties intended to have an arbitrator, rather than a court, decide whether an arbitration agreement exists or what the scope of that agreement is. Thus, the validity and enforceability of the Riley-Anchor Glass arbitration agreement is for the courts to decide. As a result, we conclude that there was no error in the district court's decision to resolve the arbitrability issue itself rather than to refer it to an arbitrator. 35 First, although the arbitration clause in the Manufacturing Agreement is broadly written, referring to any and all disputes arising out of or relating to the contract, there is no hint in the text of the clause or elsewhere in the contract that the parties expressed a specific intent to submit to an arbitrator the question whether an agreement to arbitrate exists or remained in existence after the Settlement Agreement. Furthermore, Riley and Anchor Glass negotiated against background principles of Florida and Kansas law, 5 where the issue of arbitrability has been determined, as a matter of law, to be a question for the courts and not an arbitrator. For example, in Florida, in a case involving one party's claim that a subsequent oral contract had superseded an earlier written arbitration agreement, the court held that the question of [w]hether or not a dispute should be submitted to arbitration is a question for the court to determine from the contract of the parties.... [T]he trial court cannot leave it to the arbitrators themselves to determine which claims are subject to arbitration when it has not established which agreement applies. Thomas W. Ward & Assoc., Inc. v. Spinks, 574 So.2d 169, 169-70 (Fla.Ct.App.1990) (emphasis added & citation omitted). Similarly, in Kansas, the law is long-established that whenever a motion to compel arbitration comes on for hearing, the threshold determination to be made by the court is whether an agreement to arbitrate exists and whether this agreement includes arbitration of the specific point at issue. City of Wamego v. L.R. Foy Constr. Co., 9 Kan.App.2d 168, 675 P.2d 912, 915 (1984) (emphasis added). We find no clear and unmistakable evidence within the four corners of the Manufacturing Agreement that the parties intended to submit the question of whether an agreement to arbitrate exists to an arbitrator. 36 Second, the existence of the merger clause in the Settlement Agreement raises at least an ambiguity on the question of the intent of the parties to allow an arbitrator to decide the validity of the 1991 arbitration clause. The merger clause expressly states that the Settlement Agreement cancels, terminates and supersedes any prior agreement relating to the subject matter of the Manufacturing Agreement. Although we conclude below that this language does not terminate the arbitration clause in the Manufacturing Agreement in toto, see Part II infra, we do believe that this language raises legitimate questions as to the continuing existence and scope of the arbitration clause in the Manufacturing Agreement. Furthermore, the Settlement Agreement is noteworthy for its lack of an arbitration clause. Thus, because the Settlement Agreement creates an ambiguity on the question of arbitrability--an ambiguity that the Settlement Agreement does not expressly delegate to an arbitrator for resolution--we find that the question of whether an agreement to arbitrate continues to exist for Riley and Anchor Glass is a question for the courts. 37