Opinion ID: 176906
Heading Depth: 1
Heading Rank: 5

Heading: Adams Possessed Implied Actual Authority to Bind the Board to Arbitrate Disputes Under the Consulting Contract.

Text: We have explained that, as a matter of federal law, arbitration is a matter of consent, not coercion. World Rentals & Sales, LLC v. Volvo Constr. Equip. Rents, Inc., 517 F.3d 1240, 1244 (11th Cir.2008) (internal quotation marks omitted). Accordingly, a party ordinarily will not be compelled to arbitrate unless that party has entered into an agreement to do so. Id. (internal quotation marks omitted). [C]ommon law principles of contract and agency law allow a signatory... to bind a non-signatory ... to an arbitration agreement .... Id. (internal quotation marks omitted). This rule means that the Board, which has not signed an arbitration clause, may be compelled to arbitrate if a signatory executed the arbitration agreement as its agent. Id. at 1247. The determination whether a signatory like Adams had the authority to bind a non-signatory like the Board to arbitrate turns on the specific facts of each case. Id. at 1248. This issue is for us, not an arbitrator, to resolve, id., unless the parties have clearly delegated to the arbitrator responsibility for this determination, AT&T Techs., Inc. v. Commc'ns Workers, 475 U.S. 643, 649, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986). Contrary to the suggestion of Citigroup, we resolve this issue without a thumb on the scale in favor of arbitration because the federal policy favoring arbitration does not apply to the determination of whether there is a valid agreement to arbitrate between the parties. Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.2002). Citigroup contends that, under general principles of agency law, Adams had authority to execute the account agreements that contained a broad arbitration clause. It argues that, although the Board did not expressly authorize Adams to execute the account agreements, that power was implied in the express grant of authority to execute the NWQ contract. Citigroup maintains that the authority to execute the account agreements implied the authority to execute the arbitration clause contained in those agreements, which by its plain terms requires arbitration of the dispute at issue here. The Board does not argue that the account agreements are invalid or that the arbitration clause is ineffective as to any dispute arising under those account agreements, but the Board does argue that the arbitration clause is invalid with respect to the claims arising under the Pension Consultant Contract. The Board contends that it never provided Adams the authority to amend the Pension Consultant Contracts by subjecting them to arbitration. We disagree with the Board. Adams had implied authority to execute the account agreements. The Board expressly authorized Adams to execute the NWQ contract, and that grant of express authority implied the authority to do acts that are incidental to it, usually accompany it, or are reasonably necessary to accomplish it. 2 Fla. Jur.2d Agency & Employment § 47 (2005) (citing Restatement (Second) of Agency § 35 (1958)). In Florida, [i]t is well-established that an agent's authority may be inferred from acts, conduct and other circumstances. Bradley v. Waldrop, 611 So.2d 31, 32 (Fla.Dist.Ct.App.1992). Under Florida law, an agent charged with selling property in any way he could possesses the implied authority to buy surveying services on behalf of his principal, id. at 32-33, and a real estate agent possesses the implied authority to make representations concerning the description and characteristics of the property to be sold, Outlaw v. McMichael, 397 So.2d 1009, 1010 (Fla.Dist. Ct.App.1981). For similar reasons, the express authority to hire a named investment manager implies the authority to open an account through which that manager can perform the only job that it was hired to perform. See Eassa Props. v. Shearson Lehman Bros., Inc., 851 F.2d 1301, 1304 (11th Cir.1988). Adams's authority to execute the account agreements also implied the authority to execute an arbitration clause that requires arbitration of disputes arising under those and all other agreements. We have held that the express authority to select and purchase bonds and to trade commodities on margin implies the authority to execute account agreements through which those trades may be executed, which implies the authority to execute an arbitration clause contained in those account agreements that will bind the principal. Id. Public entities like the Board are subject to the same rule. E.g., City of Vista v. Sutro & Co., 52 Cal.App.4th 401, 409-10, 60 Cal.Rptr.2d 488, 492-93 (1997); see also City of Hartford v. Am. Arbitration Ass'n, 174 Conn. 472, 479, 391 A.2d 137, 140-41 (1978). Nothing suggests that a customer agreement containing an arbitration clause with a clearing house is unusual or out of the ordinary course of business for the securities investment world. 99 Commercial St., Inc. v. Goldberg, 811 F.Supp. 900, 907 (S.D.N.Y. 1993) (Sotomayor, J.). There also is nothing unusual about an arbitration clause, especially in an account agreement, that requires arbitration of all disputes between the parties to the agreement. We have enforced such a clause before because it evince[d] a clear intent to cover more than just those matters set forth in the contract. Belke v. Merrill Lynch, Pierce, Fenner & Smith, 693 F.2d 1023, 1028 (11th Cir.1982), overruled on other grounds by Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 217 & n. 3, 105 S.Ct. 1238, 1240-41 & n. 3, 84 L.Ed.2d 158 (1985); see also Coffey v. Dean Witter Reynolds, Inc., 891 F.2d 261, 262-63 (10th Cir.1989). The Board cannot avoid the same result because it acted through its agent. Adams acted for the Board, and the Board is bound by the plain meaning of the agreement that he signed. 99 Commercial St., 811 F.Supp. at 907 (binding principal to arbitrate disputes under a customer agreement that it signed because a customer agreement that its agent later signed with the same party included an arbitration clause covering all of a customer's accounts `whether entered prior to, on or subject to the date hereof'). Moreover, that the Board and Adams deny that Adams possessed the authority to agree to arbitrate disputes under the consulting contract does not determine the issue because an agency relationship may be found even though the principal and the agent deny the existence of such a relationship. Bradley, 611 So.2d at 33. The Board has offered no persuasive reason to conclude that it can avoid arbitration. The dissent erroneously contends that Adams lacked implied authority to bind the Board to an arbitration clause because it was clear that in the context of the consulting agreement to these parties such a clause was highly unusual. This argument overlooks a critical fact: the Board admits that Adams had the authority to execute the arbitration agreements and bind the Board to them. That is, the Board admits that it is contractually bound to resolve by arbitration any dispute arising out of the account agreements. The only argument of the Board is that we should ignore that half of the plain language of the arbitration agreements that also binds the Board to arbitrate disputes arising out of the earlier consulting agreement. What the dissent calls a highly unusual clause is instead nothing of the kind. We refuse to rewrite the terms of the agreements executed by Adams so as to allow the Board to escape its obligation to submit its entire dispute to arbitration.