Opinion ID: 201485
Heading Depth: 2
Heading Rank: 1

Heading: Who decides each issue: court or arbitrator?

Text: 28 The initial question is whether the court or the arbitrator is empowered to decide the issues of (1) waiver of Allied's right to arbitrate, and (2) compliance with the 60-day contractual provision. 6 We begin by considering relevant precedent in this area. 29 It does not resolve these division of labor issues merely to note that they are usually, ultimately, matters of contract interpretation. See Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 451-52, 123 S.Ct. 2402, 156 L.Ed.2d 414 (2003) (plurality opinion); First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Certain presumptions have been constructed to aid in the resolution of these issues of division of responsibility; these presumptions generally hold in the absence of clear and unmistakable evidence to the contrary. See Green Tree, 539 U.S. at 452, 123 S.Ct. 2402 (alterations, internal quotation marks, and citation omitted). These presumptions operate within the underlying framework that any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, given the pro-arbitration policy of the Federal Arbitration Act. 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). 30 The Supreme Court has most recently treated the issue of how these presumptions operate in Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002), and Green Tree, 539 U.S. at 444, 123 S.Ct. 2402, where much of the Court's precedent in this area was consolidated and simplified. In Howsam, the Court held that the issue of whether an arbitration claim was barred by a six-year limitations period embedded in the arbitration rules under which the parties had agreed to arbitrate was an issue for the arbitrator, and not for the court. Howsam, 537 U.S. at 85-86, 123 S.Ct. 588. The Court noted that at least two sorts of questions were presumptively for the court to decide: (1) whether the parties are bound by a given arbitration clause, and (2) whether a concededly binding arbitration clause applied to a particular type of controversy. Id. at 84, 123 S.Ct. 588. Many other types of claims, including even some gateway questions that might dispose of the entire claim, are presumptively left to the arbitrator. See id. at 84-85, 123 S.Ct. 588. This category includes procedural questions which grow out of the dispute and bear on its final disposition. Id. at 84, 123 S.Ct. 588 (internal quotation marks omitted). This distinction has employed the rough rubric that procedural issues, even if potentially dispositive, are left to the arbitrator; substantive questions about the kind of disputes intended for arbitration are reserved for the court, absent clear and unmistakable evidence to the contrary. 7 31 In Green Tree, the Court held that whether an arbitration agreement allowed for class arbitration was likewise an issue of contract interpretation for the arbitrator rather than the judge. Green Tree, 539 U.S. at 452-53, 123 S.Ct. 2402. The Court reaffirmed the basic framework of presumptions described in Howsam and held that the issue here, which went to what kind of arbitration proceeding the parties agreed to rather than  whether they agreed to arbitrate a matter,  was presumptively for the arbitrator. Id. at 452, 123 S.Ct. 2402. 32 The Court in both Howsam and Green Tree also stressed issues of comparative expertise. In the face of contractual silence, courts should presume that parties intend to give their disputes to the most able decisionmaker on a given issue, both for contractual and public policy reasons. Howsam, 537 U.S. at 85, 123 S.Ct. 588. The Howsam Court stated that the arbitrators were presumptively more expert in interpreting their own limitations rule, id., while the Green Tree Court noted that the class arbitration issue raised questions of contract interpretation and arbitration procedures, both of which an arbitrator was well suited to answer, Green Tree, 539 U.S. at 453, 123 S.Ct. 2402. 33 This circuit has had only two opportunities to consider the impact of Howsam and Green Tree on the division of issues between the court and the arbitrator. In Shaw's Supermarkets, Inc. v. United Food & Commercial Workers Union, 321 F.3d 251 (1st Cir.2003), we held that the question of whether three grievances being arbitrated separately should be consolidated into a single arbitration was a procedural matter that was presumptively for the arbitrator. Id. at 254. In Richard C. Young & Co. v. Leventhal, 389 F.3d 1 (1st Cir.2004), we held that a forum-selection clause in an arbitration agreement was likewise for the arbitrator, as a procedural question. Id. at 4-5. 34 The district court's holding in its two orders necessarily relied on two distinct points: (1) that Allied's demand for arbitration was untimely because it failed to abide by the sixty-day limitations period specified in the contract itself, and (2) that Allied waived its right to arbitration by not filing for arbitration during and after the EEOC proceeding. We address these two points in turn, finding that the contractual timeliness issue is for the arbitrator but that the issue of waiver by conduct is for the court. Contractual Time Limitation 35 The arbitration clause in the contract at issue states: Arbitration under this section must be initiated within sixty days of the action, inaction, or occurrence about which the party initiating the arbitration is complaining. The district court's conclusion that Allied's motion to stay proceedings was untimely rested, in part, on interpretation of this language. The court held that Allied had only sixty days from the conclusion of the EEOC proceedings in which to demand arbitration. We hold that the court erred in itself interpreting the contractual time limit clause and applying it to Allied. 36 Under Howsam, which itself dealt with a time limit provision, this is the sort of procedural prerequisite that is presumed to be for the arbitrator. See Howsam, 537 U.S. at 84-85, 123 S.Ct. 588; see also John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 556-59, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964) (issue of whether party failed to abide by procedural prerequisites to arbitration, including requirement that notice of any grievance be given within four weeks, was for arbitrator and not court). While the time limit in Howsam was in the arbitrator's own rules rather than in the contract itself, this makes no difference. 8 The arbitrator might be expected to have comparative expertise in determining the meaning of these sorts of contractual limitations provisions in light of the background norms in this employment area. And as in Wiley, consideration of this kind of procedural provision may entangle the court in issues that go properly to the merits of the dispute, which are for the arbitrator. See Wiley, 376 U.S. at 557, 84 S.Ct. 909. The presumption that the time limitation clause is for the arbitrator is not overcome by any of the language in the contract. Judicially Found Waiver 37 The court's holding also rested implicitly on broader notions of judicially implied waiver. The argument for waiver in this case is essentially that Allied's participation in the EEOC proceedings initiated by Marie without Allied having demanded arbitration during or after those proceedings constituted conduct inconsistent with the future desire to arbitrate its claims. See, e.g., Menorah Ins. Co. v. INX Reinsurance Corp., 72 F.3d 218, 220-21 (1st Cir.1995); 2 I.R. Macneil et al., Federal Arbitration Law § 21.3.1 (1994). This court has a long history of deciding such waiver claims itself; invariably, these cases involve the inquiry into whether, by choosing or allowing the litigation of its claims before a court rather than an arbitrator, a party has waived its right to arbitrate. See, e.g., Creative Solutions Group, Inc. v. Pentzer Corp., 252 F.3d 28, 32-34 (1st Cir.2001); Navieros Inter-Americanos, S.A. v. M/V Vasilia Express, 120 F.3d 304, 316 (1st Cir.1997); Menorah, 72 F.3d at 221-22; Sevinor v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 807 F.2d 16, 19 (1st Cir.1986); Jones Motor Co. v. Chauffeurs, Teamsters & Helpers Local Union No. 633 of N.H., 671 F.2d 38, 42-44 (1st Cir.1982). Further, in Menorah and Jones Motor Co., we held explicitly that the issue of waiver, at least where the alleged waiver was due to litigation-related activity, was presumptively for the judge and not the arbitrator. See Menorah, 72 F.3d at 222; Jones Motor Co., 671 F.2d at 43. This was in accord with the overwhelming weight of pre- Howsam authority, which held that waiver due to litigation conduct was generally for the court and not for the arbitrator. See generally 2 I.R. Macneil et al., Federal Arbitration Law § 21.3 (1994). 38 Few courts have had occasion to consider the impact of Howsam and Green Tree on the doctrine of waiver of arbitration by conduct, and they have disagreed. The Eight Circuit has held, with little discussion, that Howsam and Green Tree indicate that waiver is now presumptively an issue for the arbitrator, and not for the courts, at least where the conduct allegedly constituting waiver is due to litigation in some other court. See Nat'l Am. Ins. Co. v. Transamerica Occidental Life Ins. Co., 328 F.3d 462, 466 (8th Cir.2003); see also Bellevue Drug Co. v. Advance PCS, 333 F.Supp.2d 318, 324 (E.D.Pa.2004) (relying on Howsam for the proposition that it appears that ... the issue of whether the defendant, by litigating in this Court the present case, has waived the right to demand arbitration should properly be presented in the first instance to the arbitrator). The Transamerica court cited to language in Howsam stating that the presumption is that the arbitrator should decide `allegation[s] of waiver, delay, or a like defense to arbitrability.' Howsam, 537 U.S. at 84, 123 S.Ct. 588 (quoting 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) (alteration in Howsam )). 39 By contrast, a panel of the Fifth Circuit has held that the issue of waiver by conduct is for the court, and not for the arbitrator, in situations where the alleged waiver occurred due to conduct before the district court. See Tristar Fin. Ins. Agency, Inc. v. Equicredit Corp. of Am., 97 Fed. Appx. 462, 464 (5th Cir.2004); see also Carbajal v. Household Bank, FSB, No. 00-C-0626, 2003 WL 22159473, at  (N.D.Ill. Sept.18, 2003). This was particularly so given the court's comparative expertise. See Tristar, 97 Fed. Appx. at 464. 40 In a stream of recent cases, the First Circuit has continued to decide waiver questions due to litigation-related activities without discussing the impact of Howsam, most likely because no party raised the issue. See In re Citigroup, Inc., 376 F.3d 23, 26-29 (1st Cir.2004); Rankin v. Allstate Ins. Co., 336 F.3d 8, 12-14 (1st Cir.2003); Restoration Pres. Masonry, Inc. v. Grove Europe Ltd., 325 F.3d 54, 60-62 (1st Cir.2003). It has been raised here. 41 We start our analysis of whether waiver by conduct in this context is a decision for the court or for the arbitrator by noting that textually under the FAA, a court is only permitted to stay a court action pending arbitration if the applicant for the stay is not in default in proceeding with such arbitration. 9 U.S.C. § 3 (emphasis added). A default has generally been viewed by courts as including a waiver. See, e.g., Patten Grading & Paving, Inc. v. Skanska USA Building, Inc., 380 F.3d 200, 204-05 (4th Cir.2004); Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1316 n. 17 (11th Cir.2002); MicroStrategy, Inc. v. Lauricia, 268 F.3d 244, 249 (4th Cir.2001); County of Middlesex v. Gevyn Constr. Corp., 450 F.2d 53, 56 n. 2 (1st Cir.1971) (only waiver due to the pursuit of legal remedy inconsistent with arbitration is a default under 9 U.S.C. § 3). This language would seem to place a statutory command on courts, in cases where a stay is sought, to decide the waiver issue themselves. It is true that the same language does not appear in section 4, the section dealing with attempts to compel arbitration, 9 U.S.C. § 4, but the Supreme Court has cautioned us to interpret sections 3 and 4 of the FAA together. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 403-04, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967); see also Doctor's Assocs., Inc. v. Distajo, 66 F.3d 438, 456-57 (2d Cir.1995). At any rate, Allied is moving for a stay of Marie's lawsuit against it under section 3. 42 Howsam also relies heavily on the Revised Uniform Arbitration Act of 2000 (RUAA). The RUAA, in turn, as quoted by the Howsam Court, establishes that procedural issues are generally for the arbitrator and substantive issues generally for the court. See RUAA § 6, cmt. 2, 7 U.L.A. 14-15 (Supp.2004). Another comment in the same section of the RUAA treats waiver as an issue for the court: Waiver is one area where courts, rather than arbitrators, often make the decision as to enforceability of an arbitration clause. RUAA § 6, cmt. 5, 7 U.L.A. 16 (Supp.2004). 43 As expressed in the commentary to the RUAA and elsewhere, there are important policy reasons why a court and not an arbitrator should decide waiver issues, at least where the waiver — as has generally been true in our cases — is due to litigation-related activity. Where the alleged waiver arises out of conduct within the very same litigation in which the party attempts to compel arbitration or stay proceedings, then the district court has power to control the course of proceedings before it and to correct abuses of those proceedings. See Jones Motor Co., 671 F.2d at 43; Doctor's Assocs., 66 F.3d at 456 & n. 12. 44 Also, the comparative expertise considerations stressed in Howsam and Green Tree argue for judges to decide this issue. See Howsam, 537 U.S. at 85, 123 S.Ct. 588; Green Tree, 539 U.S. at 452-53, 123 S.Ct. 2402. Judges are well-trained to recognize abusive forum shopping. See Tristar, 97 Fed. Appx. at 464; Bell v. Cendant Corp., 293 F.3d 563, 569 (2d. Cir.2002); Jones Motor Co., 671 F.2d at 43. As well, the inquiry heavily implicates  judicial procedures, which Green Tree suggests should be an important factor in presuming that an issue is for the court. See Green Tree, 539 U.S. at 452-53, 123 S.Ct. 2402 (emphasis added). Further, the procedural waiver issue is not likely to be intertwined with the merits of the dispute. See RUAA § 6 cmt. 5, 7 U.L.A. 16 (Supp.2004); see also Wiley, 376 U.S. at 557-58, 84 S.Ct. 909; Prima Paint Corp., 388 U.S. at 403-04, 87 S.Ct. 1801. 45 Finally, sending waiver claims to the arbitrator would be exceptionally inefficient. A waiver defense is raised by one party to a lawsuit in response to another party's motion to compel arbitration or stay judicial proceedings on the basis of an arbitration agreement signed by the parties. If the arbitrator were to find that the defendant had waived its right to arbitrate, then the case would inevitably end up back before the district court with the plaintiff again pressing his claims. The case would have bounced back and forth between tribunals without making any progress. See 2 I.R. Macneil et al., Federal Arbitration Law § 21.3 (1994); RUAA § 6 cmt. 5, 7 U.L.A. 16 (Supp.2004). 46 This is different in kind from the arbitrator's normal resolution of a gateway issue: normally, the resolution of such an issue would bar not only arbitration but any sort of litigation on the issues by either side. Thus, allowing courts to decide waiver issues — at least when due to litigation-related activity — furthers a key purpose of the FAA: to permit speedy resolution of disputes. See, e.g., Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218-20, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985); Moses H. Cone Mem'l Hosp., 460 U.S. at 22-23, 103 S.Ct. 927; see also Menorah Ins. Co., 72 F.3d at 222 (observing in context of international, non-FAA arbitration case that [a]rbitration clauses were not meant to be another weapon in the arsenal for imposing delay and costs in the dispute resolution process). Moreover, the Howsam and Green Tree rules exist partly to avoid ... delay. Shaw's Supermarkets, Inc., 321 F.3d at 255. We hold that the Supreme Court in Howsam and Green Tree did not intend to disturb the traditional rule that waiver by conduct, at least where due to litigation-related activity, is presumptively an issue for the court. 9 47 The waiver here is somewhat unusual in that the claim is of litigation activity before the EEOC that is inconsistent with a right to arbitrate, as opposed to activity before a court. But this makes no difference. Courts are still well suited to determine the sort of forum-shopping and procedural issues that are likely to arise in litigation before the EEOC, and sending the waiver issue to the arbitrator would still be inefficient. The proper presumption in this case is that the waiver issue is for the court and not the arbitrator. 48 Allied, seeking reversal on any available ground, argues that this presumption is overcome because of specific language in the arbitration agreement. There is no merit to Allied's contention. 10 A shifting of the issue to the arbitrator will only be found where there is clear and unmistakable evidence of such an intent in the arbitration agreement. No such evidence exists here. First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (quoting AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (alterations omitted)). The standard in First Options is meant to be a high one, and the normal presumptions in favor of arbitration do not apply. See, e.g., Coady v. Ashcraft & Gerel, 223 F.3d 1, 9-10 (1st Cir.2000). 49 Allied focuses on the following language in the agreement: Employer and employee agree to submit to final and binding arbitration any and all disputes, claims (whether in tort, contract, statutory, or otherwise), and disagreements concerning the interpretation or application of this Agreement... including the arbitrability of any such controversy or claim .... (emphasis added). Specifically, Allied focuses on the clause stating that questions of arbitrability are for the arbitrator. Arbitrability itself encompasses a variety of possible meanings, but the most obvious meaning focuses on certain substantive issues, and particularly the question of whether a particular kind of dispute at issue falls within the scope of the arbitration clause. Most cases that discuss arbitrability focus on these substantive issues. See, e.g., First Options, 514 U.S. at 942, 115 S.Ct. 1920; AT & T, 475 U.S. at 645, 106 S.Ct. 1415; Coady, 223 F.3d at 9; see also Johnson v. Polaris Sales, Inc., 257 F.Supp.2d 300, 308-09 (D.Me.2003) (interpreting arbitrability language in arbitration agreement to throw issues of substantive scope to the arbitrator); 1 Domke on Commercial Arbitration § 15 (3d ed.2003) (discussing arbitrability question as an issue of the scope of the arbitration agreement). The context of the agreement suggests that this sort of substantive meaning is intended for the term arbitrability here; the reference to arbitrability is surrounded by references to which types of claims should be arbitrated and which should not be. We cannot say that the use of the term here evinces a clear and unmistakable intent to have waiver issues decided by the arbitrator. There are no references to waiver or similar terms anywhere in the arbitration agreement. Neither party should be forced to arbitrate the issue of waiver by conduct without a clearer indication in the agreement that they have agreed to do so. The issue of who would decide such a question is an arcane one that employees are unlikely to have considered unless clearly spelled out by the employer. See First Options, 514 U.S. at 945, 115 S.Ct. 1920. 50 We hold that the question of waiver of Allied's right to arbitrate due to its participation in EEOC proceedings is properly for the judge, and we turn now to the merits of that question.