Opinion ID: 4529414
Heading Depth: 2
Heading Rank: 1

Heading: Arbitrability of Silva’s Claim Against Sujol

Text: We start with who decides, as the Defendants argue that the incorporation of the AAA Rules in Silva’s arbitration clause constitutes clear and unmistakable evidence that the parties agreed to delegate arbitrability. We agree. Silva’s agreement provides that “all controversies, disputes or claims between Coverall . . . and Franchisee . . . shall be submitted promptly for arbitration” and that “[a]rbitration shall be subject to . . . the then current Rules of the American Arbitration Association for Commercial Arbitration.” (App. at 94.) Clearly and unmistakably then, the AAA Rules govern the arbitration of any dispute 5 between Silva and Sujol. And Rule 7(a) of the AAA Rules states that “[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.” American Arbitration Association, Commercial Arbitration Rules and Mediation Procedures, Rule 7(a). That provision “is about as ‘clear and unmistakable’ as language can get.” Awuah v. Coverall N. Am., Inc., 554 F.3d 7, 11 (1st Cir. 2009). Nor is the rest of Silva’s contract so ambiguous or unclear that the meaning of the AAA Rules becomes murky.2 Silva responds that relying on incorporated rules is unreasonable in agreements involving “unsophisticated parties.”3 But that likely stretches too far and would disregard the “clear and unmistakable” standard and ignore even the plainest of delegations. See Brennan v. Opus Bank, 796 F.3d 1125, 1130–31 (9th Cir. 2015) (“Our holding today should 2 While “[v]irtually every circuit to have considered the issue has determined that incorporation of the [AAA] arbitration rules constitutes clear and unmistakable evidence that the parties agreed to arbitrate arbitrability,” we need not determine whether such a rule always applies. Chesapeake Appalachia, LLC v. Scout Petrol., LLC, 809 F.3d 746, 763–64 (3d Cir. 2016) (alterations in original) (quoting Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1074 (9th Cir. 2013)). Even where an agreement incorporates the AAA Rules, a contract might still otherwise muddy the clarity of the parties’ intent to delegate. For example, in Chesapeake Appalachia, we held that the mere incorporation of unspecified AAA rules did not demonstrate an intent to delegate arbitrability in a class action. We explained that finding clear and unmistakable evidence in that case required jumping from 1) the contract, to 2) the reference to unspecified AAA rules, to 3) the AAA Commercial Rules and, lastly, to 4) the AAA Supplementary rules, which ultimately vested an arbitrator with the authority to decide class arbitrability. 809 F.3d at 761. But Silva’s contract requires no such “daisy-chain” of inferences. Id. 3 Although it is not clear from the record that Silva lacks sophistication, we will assume as much. 6 not be interpreted to require that the contracting parties be sophisticated . . . before a court may conclude that incorporation of the AAA rules constitutes ‘clear and unmistakable’ evidence of the parties’ intent [to delegate arbitrability].”); see also McGee v. Armstrong, 941 F.3d 859, 863, 865–66 (6th Cir. 2019); Arnold v. Homeaway, Inc., 890 F.3d 546, 548– 49, 551–52 (5th Cir. 2018); Green v. SuperShuttle Int’l, Inc., 653 F.3d 766, 767–69 (8th Cir. 2011). Here, the clarity of Silva’s agreement shows the intent to delegate the arbitrability. So we will reverse the District Court’s contrary conclusion and remand. B. CNA’s Ability to Enforce the Arbitration Clauses The District Court held that CNA could not enforce Richardson’s arbitration clause, because it was not a third-party beneficiary of Richardson’s agreement with Sujol. CNA advances several interpretive arguments, paired with pleas for equitable estoppel, all aimed at allowing CNA to compel arbitration. Some of these issues arise for the first time on appeal; others arose before the District Court only in a cursory manner. All are best fully considered by the District Court in the first instance, a path that follows from our conclusions on the Silva agreement. Because we hold that Silva and Sujol agreed to delegate arbitrability, we likewise will vacate the District Court’s determination that Silva’s arbitration clause does not encompass his claim against Sujol. That leaves undecided whether CNA can also enforce Silva’s arbitration clause, an issue not raised in this appeal. And since CNA’s rights in both the Silva and Richardson agreements may benefit from discovery, see Guidotti v. Legal Helpers Debt Resolution, LLC, 716 F.3d 764, 774–76 (3d Cir. 2013), we will vacate the District Court’s Order regarding whether CNA is a third-party beneficiary of the Richardson contract. 7