Court Opinion

ID: 35409
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:27:54+00
Date Added: 2024-06-11T11:50:07.390120
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
                       REVISED June 22, 2004
                                                               June 8, 2004
               IN THE UNITED STATES COURT OF APPEALS
                                                         Charles R. Fulbruge III
                       FOR THE FIFTH CIRCUIT                     Clerk

                       _____________________

                           No. 03-60759
                       _____________________

     AMANDA S MAY

                                    Plaintiff - Appellee

          v.

     HIGBEE COMPANY, doing business as Dillard’s; WILLIAM CARR

                                    Defendants - Appellants

_________________________________________________________________

           Appeal from the United States District Court
             for the Southern District of Mississippi
_________________________________________________________________

Before KING, Chief Judge, and REAVLEY and EMILIO M. GARZA,
Circuit Judges.

KING, Chief Judge:

     Plaintiff Amanda May sued her employer Higbee Co. (d/b/a

Dillard’s) and a supervisor for employment discrimination under

Title VII.   The defendants moved to compel arbitration and to

stay the judicial proceedings.   The district court denied the

motion, ruling that May had not assented to her employer’s

arbitration program.   Concluding that the district court should
have ordered arbitration pursuant to the parties’ binding

agreement, we reverse.

              I. FACTUAL AND PROCEDURAL BACKGROUND

     May began working at a Dillard’s department store in June

1990, and she later rose to become the sales manager of the

store’s men’s department.    May alleges that she was qualified to

be promoted to higher managerial positions but was repeatedly

passed over in favor of male employees.    The particular

employment action that precipitated this lawsuit occurred in

March 2002, when May was denied a promotion to the position of

assistant store manager.    According to May, her supervisor,

William Carr, refused to promote May into higher-level management

positions because she was a woman and a mother.    May filed suit

in the district court in June 2002, claiming that Dillard’s and

Carr had discriminated against her on the basis of her sex in

violation of Title VII, 42 U.S.C. § 2000e et seq. (2000).

     The defendants later filed a motion to compel arbitration

and to stay the judicial proceedings.    The motion was based on

the fact that, in June 2001, the company had instituted a

compulsory arbitration program for most employment-related

disputes.   May admits to receiving two documents relating to the

arbitration program.   One document, titled “Rules of Arbitration”

(the “Rules”), states that both the company and the employee

“agree that the procedures provided in these Rules will be the

                                  2
sole method used to resolve any covered dispute arising between

them.”   The Rules go on to list employment discrimination claims

as among the covered disputes.   Although the Rules state that

they apply to disputes that arise between employees and “the

Company,” the last page of the document defines “the Company”

broadly, so that the term includes the corporate entity and its

managers and employees, such as Carr.

     The second document that May received was a one-page form

titled “Acknowledgment of Receipt of Rules for Arbitration” (the

“Acknowledgment Form”).   The Acknowledgment Form included the

following language in readily legible type:

     Effective immediately, all employees . . . shall be
     subject to the RULES OF ARBITRATION (the “Rules”)
     described below. Employees are deemed to have agreed to
     the provisions of the Rules by virtue of accepting
     employment with the Company and/or continuing employment
     therewith.

Below this paragraph, and immediately above the signature line,

was text stating that “I acknowledge receipt of the agreement to

arbitrate certain claims and rules of arbitration.”   May admits

that she signed such an Acknowledgment Form.1   As a supervisory

employee, May was also involved in distributing the documents to

lower-level employees and in obtaining their signatures.

     1
          The actual form that May signed could not be located in
her personnel file and was not submitted in support of the
defendants’ motion. Nonetheless, May admitted in her deposition
that she signed a document titled “Acknowledgment of Receipt of
Rules for Arbitration,” and she did not offer any evidence
suggesting that the form she signed differed from the examples of
the Acknowledgment Form that appear in the record.

                                 3
     May filed a response to the defendants’ motion, in which she

claimed, inter alia, that she had not actually agreed to

arbitrate but had instead only acknowledged that she had received

certain documents.   Her response further stated that Carr had

told her that arbitration would be optional for employees like

her and had also told her that the Acknowledgment Form only

indicated that she had received the Rules, nothing more.

     The district court denied the defendants’ motion in a

written opinion and order dated August 26, 2003.    The court

agreed with May that there was no binding agreement to arbitrate

because May never assented to be bound by the company’s

arbitration procedures.   While noting that parol evidence is

generally inadmissible to vary the terms of a written contract,

the district court concluded that parol evidence was allowable in

this case because the acknowledgment form was ambiguous.    The

form was ambiguous, in the district court’s view, because it was

internally inconsistent: The title of the form and the text

immediately above the signature line stated only that May

acknowledged receiving the Rules, but the language in the body of

the form (language that we quoted above) stated that May agreed

to be bound by the Rules.   To resolve the ambiguity regarding

what May had agreed to, the district court looked to May’s

evidence about Carr’s contemporaneous statements.    Since the

defendants had not denied May’s account of Carr’s statements, the

district court credited May’s evidence and concluded that May had

                                 4
not agreed to compulsory arbitration.    The court further held

that the defendants’ motion to compel arbitration should be

denied because an ambiguous agreement should be construed against

its drafter, here Dillard’s.

     The defendants timely filed a notice of appeal and, on the

same day, also filed a motion to certify the district court’s

decision for interlocutory appeal under 28 U.S.C. § 1292(b).2

The district court denied the motion to certify an interlocutory

appeal.   The defendants have argued that the motion to certify

was unnecessary and was undertaken only out of caution, since

(according to the defendants) they can pursue an interlocutory

appeal as of right under 9 U.S.C. § 16(a)(1).3    May has filed a

motion to dismiss the appeal for want of appellate jurisdiction.4

     2
           28 U.S.C. § 1292(b) provides, in pertinent part:

               When a district judge, in making in a civil
          action an order not otherwise appealable under this
          section, shall be of the opinion that such order
          involves a controlling question of law as to which
          there is substantial ground for difference of opinion
          and that an immediate appeal from the order may
          materially advance the ultimate termination of the
          litigation, he shall so state in writing in such
          order.
     3
          The defendants took the same position below, writing in
their motion to certify an appeal that certification was sought
only as a precautionary measure.
     4
          May also filed a motion to supplement the record on
appeal with certain discovery materials that were not presented
to the district court. Ordinarily, we will not permit a litigant
to supplement the record with material that was not before the
district court. See Peoples Nat’l Bank v. Comptroller of the
Currency, 362 F.3d 333, 338 n.3 (5th Cir. 2004). May’s motion

                                  5
                      II. APPELLATE JURISDICTION

     Perhaps the most hotly contested issue in this case is the

threshold question of whether we have jurisdiction to entertain

this appeal.   The defendants do not contend that the district

court’s decision to deny their arbitration motion is a decision

that would ordinarily be appealable as a final order.     The

defendants do point out, however, that Congress has expressly

authorized us to hear certain arbitration-related interlocutory

appeals.   The jurisdictional statute provides, in relevant part:

     (a) An appeal may be taken from--

           (1) an order--

                (A)   refusing a stay of any       action under
                      section 3 of this title,5

provides no explanation for why the items were not presented
below, and in any event we do not find them relevant to our
disposition of the case. We will therefore deny the motion.
     In addition, the defendants filed a motion to certify
certain questions to the Mississippi Supreme Court. We find,
however, that we are able to dispose of this case in a manner
that does not implicate any unsettled questions of state law that
would justify certification.
     5
          Section 3, which concerns stays of judicial proceedings
pending arbitration, provides as follows:

          If any suit or proceeding be brought in any of the
     courts of the United States upon any issue referable to
     arbitration under an agreement in writing for such
     arbitration, the court in which such suit is pending,
     upon being satisfied that the issue involved in such suit
     or proceeding is referable to arbitration under such an
     agreement, shall on application of one of the parties
     stay the trial of the action . . . .

                                6
                   (B)   denying a petition under section 4 of
                         this title to order arbitration to
                         proceed,6

           . . .

           (3)     a   final   decision   with   respect   to an
                   arbitration that is subject to this title.

     (b)   Except as otherwise provided in section 1292(b) of
           title 28, an appeal may not be taken from an
           interlocutory order--

           (1)     granting a stay of any action under section 3
                   of this title;

           (2)     directing arbitration to proceed under section
                   4 of this title . . . .

9 U.S.C. § 16 (2000) (emphasis added).      Enacted in 1988, section

16 reinforces the congressional policy in favor of arbitration by

making anti-arbitration decisions widely appealable even when

interlocutory, but making pro-arbitration decisions generally not

appealable unless final.7      See Green Tree Fin. Corp.-Ala. v.

Randolph, 531 U.S. 79, 86 (2000); Forsythe Int’l, S.A. v. Gibbs

     6
          Section 4, which involves requests to compel
arbitration, provides as follows:

          A party aggrieved by the alleged failure, neglect,
     or refusal of another to arbitrate under a written
     agreement for arbitration may petition any United States
     district court which, save for such agreement, would have
     jurisdiction under title 28, in a civil action or in
     admiralty of the subject matter of a suit arising out of
     the controversy between the parties, for an order
     directing that such arbitration proceed in the manner
     provided for in such agreement.
     7
          Section 16 was originally numbered § 15, but it was
renumbered in 1990.

                                    7
Oil Co. of Tex., 915 F.2d 1017, 1020 (5th Cir. 1990); 19 JAMES WM.

MOORE   ET AL.,   MOORE’S FEDERAL PRACTICE ¶ 201.31[3] (3d ed. 2004).

        The defendants moved the district court to compel

arbitration and stay the judicial proceedings under 9 U.S.C. §§ 3

and 4, but the district court denied their motion.           That denial

is the type of decision for which § 16(a)(1) would appear to

confer the right to bring an interlocutory appeal.           But May

contends that the district court’s decision is not immediately

appealable, via § 16(a)(1) or otherwise, and she cites in support

of her view the recent decision of this court in Cerveceria

Cuauhtemoc Moctezuma S.A. de C.V. v. Montana Beverage Co., 330
F.3d 284 (5th Cir. 2003) (per curiam).

        The parties in Cerveceria had entered into a distributorship

agreement.        The contract did not contain an arbitration clause,

though it did incorporate by reference the entirety of the Texas

Beer Industry Fair Dealing Law (BIFDL), TEX. ALCO. BEV. CODE ANN.

§§ 102.71-.81 (Vernon 1995).         One particular section of the BIFDL

provides that certain disputes “may, at the option of either

[party]” be submitted to an arbitration panel.           A dispute led one

of the parties to file suit in the district court, and in

response the other party moved the district court to stay the

proceedings and compel arbitration under 9 U.S.C. §§ 3 and 4.

The district court refused, finding that there was no binding

agreement to arbitrate.         This court agreed that there was no

binding agreement to arbitrate; the court concluded, moreover,

                                        8
that the absence of any such agreement deprived the court of

appellate jurisdiction to entertain the interlocutory appeal.
330 F.3d at 287.

     Cerveceria was an exceptional case.      It appears that there

is only one other published decision of this court that has

dismissed an appeal of an anti-arbitration ruling for failure to

satisfy the requisites of § 16(a)(1).      That case was Adams v.

Georgia Gulf Corp., 237 F.3d 538 (5th Cir. 2001) (per curiam), in

which a personal-injury plaintiff who was undisputedly not a

signatory to any arbitration agreement sought a stay of

litigation pursuant to 9 U.S.C. § 3, relying on an arbitration

agreement entered into between the defendant and the defendant’s

insurer.   The district court denied the plaintiff’s request for a

stay, and the plaintiff appealed.      We held that § 3’s mandatory

stay was unavailable to the plaintiff, as he was plainly not a

party to the arbitration agreement.      Id. at 540-41.   Since § 3

was inapplicable, we further reasoned that the plaintiff could

not avail himself of § 16’s right to an interlocutory appeal of

the district court’s order, and we accordingly dismissed the

appeal for want of jurisdiction.       Id. at 541-42; accord DSMC Inc.

v. Convera Corp., 349 F.3d 679, 684-85 (D.C. Cir. 2003).8

     8
          We observe that our cases have not uniformly endorsed
Adams’s view regarding whether § 3’s mandatory stay provision is
available in such a case. In Hill v. GE Power Sys., Inc., 282
F.3d 343 (5th Cir. 2002), we noted that § 3 generally applies
only as between parties to an arbitration agreement, but we
nonetheless held that a defendant who was not a party to an

                                   9
     We conclude that the instant case provides no occasion to

deviate from the general, congressionally mandated rule that

anti-arbitration decisions are immediately appealable under

§ 16(a)(1).   In particular, unlike the situation in Cerveceria,

here the proponents of arbitration have produced documents, which

the plaintiff admits she signed, that purport to be an agreement

between the parties to arbitrate their dispute.   The district

court simply ruled that the documents, due to a purported lack of

mutual assent, did not constitute a binding agreement as a matter

of state law.   In Cerveceria, by contrast, the proponent of

arbitration could point to nothing more than a general cross-

reference to a state code, which code itself did not even

contemplate mandatory arbitration of the parties’ dispute. 330
F.3d at 286-87.   To be sure, a party cannot conjure up

interlocutory appellate jurisdiction merely by incanting the

words “arbitration agreement.”   Thus, there may well be cases in

which an attempt to compel arbitration is so meritless that it

arbitration agreement could invoke § 3’s mandatory stay in
certain cases in which the plaintiff’s claims against that
defendant were inseparable from the plaintiff’s claims against a
defendant with whom the plaintiff had entered into a binding
arbitration agreement. Id. at 346-48. Hill also specifically
addressed the issue of appellate jurisdiction and held that the
non-signatory defendant could use § 16(a)(1) to bring an appeal.
Id. at 348. As the arbitration agreement at issue in today’s
case explicitly covers May’s claims against Carr, as well as her
claims against Dillard’s, we have no occasion to resolve any
disharmony in our circuit’s cases regarding the rights of
litigants who are not actually parties to an arbitration
agreement.

                                 10
fails to trigger the advantages of the statute authorizing the

interlocutory appeal.   But any such cases would be the exception,

the rare exception, and today’s case--which allows an appeal of

the denial of a motion made under 9 U.S.C. §§ 3 and 4--represents

the rule that Congress created by enacting 9 U.S.C. § 16(a)(1).

     Although the circumstances of today’s case are very

different from the unusual situation in Cerveceria, May

nonetheless directs us to certain broad language in Cerveceria

that seems to suggest that our appellate jurisdiction under § 16

turns wholly on whether the district court thought that the

parties had entered into a clear, binding agreement to arbitrate.

See 330 F.3d at 286-87.9   That is, we would lack jurisdiction to

review the district court’s denial of a motion to compel

arbitration except in cases where the district court determines

that there is a clear agreement to arbitrate but denies the

motion for some other reason.   Whether that is what Cerveceria is

saying is at least doubtful; it does not cite any authority for

such a proposition, and indeed such a view would conflict with

prior decisions of this circuit, as well as the text of the

statute authorizing interlocutory appeals.   The law of this

circuit has long been that the question whether the parties have

     9
          Despite this language, Cerveceria still in fact
reviewed the merits of the district court’s decision that there
was no agreement to arbitrate, albeit as a round-about way to
determine whether there was appellate jurisdiction. See 330 F.3d
at 286.

                                11
entered into a binding agreement to arbitrate is one of the

inquiries that we undertake in an interlocutory appeal of the

denial of a motion to compel arbitration.   See, e.g., Am.

Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 536-39 (5th Cir.

2003) (noting jurisdiction under § 16(a)(1) and proceeding to

consider whether the parties had entered into a valid arbitration

agreement); Chailland v. Brown & Root, Inc., 45 F.3d 947, 949 &

n.5 (5th Cir. 1995) (invoking jurisdiction under § 16(a)(1)

despite the court’s subsequent conclusion that there was no

agreement to arbitrate); Tays v. Covenant Life Ins. Co., 964 F.2d
501 (5th Cir. 1992) (exercising interlocutory jurisdiction and

ruling on whether the defendant was a party to an agreement to

arbitrate).10   Cerveceria could not overrule those decisions.

United States v. Walker, 302 F.3d 322, 325 (5th Cir. 2002).      In

light of the preexisting authority, we cannot and do not accept

     10
          May’s proffered limitation on § 16(a)(1) would also
conflict with the views of other circuits, which recognize that
the inquiry on interlocutory appeal includes the question whether
there exists a binding contract. See, e.g., Specht v. Netscape
Communications Corp., 306 F.3d 17, 25-26, 28-30 (2d Cir. 2002);
TechnoSteel, LLC v. Beers Constr. Co., 271 F.3d 151, 161-64 (4th
Cir. 2001); PCS Nitrogen Fertilizer, L.P. v. Christy
Refractories, L.L.C., 225 F.3d 974, 976, 978 (8th Cir. 2000);
Sandvik AB v. Advent Int’l Corp., 220 F.3d 99, 102-04 (3d Cir.
2000); see also Telecom Italia, SpA v. Wholesale Telecom Corp.,
248 F.3d 1109, 1114 (11th Cir. 2001) (“[The argument against
jurisdiction] is unavailing because it confuses the reason for
the District Court’s ruling against arbitration with the
appealability of the ruling. Whether or not the District Court
was correct in ruling against arbitration, its ruling denied a
requested stay of the action pending arbitration and was for that
reason appealable.”).

                                 12
May’s reading of Cerveceria in this respect.   We will therefore

deny May’s motion to dismiss the appeal.

                          III. MERITS

     Satisfied of our jurisdiction, we turn now to the question

whether the district court erred in denying the defendants’

motion to compel arbitration and to stay the judicial

proceedings.   Our guiding principle in this inquiry is the rule

that “arbitration is a matter of contract and a party cannot be

required to submit to arbitration any dispute which he has not

agreed so to submit.”   AT&T Techs., Inc. v. Communications

Workers of Am., 475 U.S. 643, 648 (1986) (internal quotation

marks omitted).   The district court rejected the defendants’

effort to compel arbitration because it concluded that there was

no binding contract, May having never assented to be bound to the

terms of the arbitration program.

     In reaching its decision, the district court held as a

matter of law that the Acknowledgment Form was ambiguous with

regard to whether May’s signature indicated that she agreed to be

bound by the Rules or only that she agreed that she had received

the Rules.   Resolving that ambiguity with parol evidence of

Carr’s statements, the district court held that May had not in

fact assented to binding arbitration but had only agreed that she

had received certain forms.   On appeal, May defends the district

                                13
court’s decision on the same basis.11   For their part, the

defendants argue that the district court fundamentally

misunderstood the nature and purpose of the Acknowledgment Form.

May’s signing the Acknowledgment Form, according to the

defendants, was not meant to be a manifestation of assent to be

bound by the Rules.   Rather, they contend, the Acknowledgment

Form merely put May on notice that continued employment would

constitute assent, and May in fact manifested that assent by

remaining employed at the Dillard’s store.

     As the district court correctly recognized, the question

whether the parties formed a valid agreement to arbitrate is a

matter governed by principles of state contract law, see Wash.

Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260, 264 (5th Cir.

2004), in this case the contract law of Mississippi.   The

district court’s determination that the writings that form the

basis of the alleged contract are ambiguous is a question of law

that we review de novo.   Exxon Corp. v. Crosby-Miss. Res., Ltd.,

154 F.3d 202, 209 (5th Cir. 1998); see also Cargill Ferrous Int’l

v. SEA PHOENIX MV, 325 F.3d 695, 697 (5th Cir. 2003) (stating the

     11
          Although the district court’s reliance on May’s
evidence regarding her supervisor’s comments was primarily based
on the court’s determination that the documents were ambiguous,
the court also deemed it proper to consider such evidence because
the actual form that May signed had been lost. Yet there is no
genuine dispute on this record as to the contents of the form
that May signed, see supra note 1, and May’s brief does not argue
that the unavailability of the actual form justified the use of
parol evidence. Our analysis, like May’s, will confine itself to
the question whether the agreement was ambiguous.

                                14
overarching rule that the district court’s denial of a motion to

compel arbitration is reviewed de novo).

     Having considered the parties’ arguments and the record, we

conclude that the district court erred in its reading of the

relevant documents and misunderstood how the documents worked

together to create a binding agreement to arbitrate.   The

district court concluded that the Acknowledgment Form was

internally inconsistent because, in the court’s view, the form

announced itself as both a mere acknowledgment that May had

received documents and at the same time purported to bind May to

arbitration.   Properly construed, however, the Acknowledgment

Form and May’s signature thereon did not by themselves constitute

May’s assent to arbitration.   By signing the Acknowledgment Form,

May indicated that she had received the Rules, but the signature

did not all by itself bind May to the arbitration program.

Rather, May became bound through her subsequent conduct, for the

Acknowledgment Form unambiguously notified May that “[e]mployees

are deemed to have agreed to the provisions of the Rules by

virtue of . . . continuing employment [with Dillard’s].”     In

other words, the Acknowledgment Form notified May of how she

would manifest her assent to be bound.   She undisputedly

continued her employment at Dillard’s, thus manifesting assent in

the requested manner.   The district court should not have looked

to May’s evidence regarding Carr’s statements to vary the terms

of the unambiguous writings that were before it.   See United

                                15
States Small Bus. Admin. v. Guar. Bank & Trust Co. (In re

Whatley), 874 F.2d 997, 1004 n.11 (5th Cir. 1989); HeartSouth,

PLLC v. Boyd, 865 So. 2d 1095, 1107-08 (Miss. 2003).12

     Continuing one’s employment after receiving notice that

continued employment will constitute assent is a recognized

manner of forming a contract.   As a general matter, Mississippi

courts have long held that a party’s conduct may manifest assent

to an agreement.   See Edwards v. Wurster Oil Co., 688 So. 2d 772,

775 (Miss. 1997); Misso v. Nat’l Bank of Commerce, Memphis,

Tenn., 95 So. 2d 124, 126 (Miss. 1957) (observing that “an offer

and acceptance may be expressed by acts as well as by words”).

Although the defendants have not directed us to a Mississippi

case that specifically addresses whether a party can manifest

assent through continued employment, we see no reason to think

that the Mississippi courts would reject the general rule when it

comes to this particular species of assent-manifesting conduct.13

Indeed, a great many courts have held under the law of various

states that a party may manifest assent through continued

employment.   See, e.g., Gutman v. Baldwin Corp., No. Civ.A. 02-

     12
          As her counsel admitted during oral argument in this
court, May has not contended that she was fraudulently induced
into entering into the arbitration agreement, which might have
provided a reason to examine Carr’s statements.
     13
          Moreover, a state would not be permitted to employ
special rules of contract formation that apply only to
arbitration agreements. See 9 U.S.C. § 2 (2000); Doctor’s
Assocs. v. Casarotto, 517 U.S. 681, 687 (1996); Perry v. Thomas,
482 U.S. 483, 492 n.9 (1987).

                                16
CV-7971, 2002 WL 32107938, at *4 (E.D. Pa. Nov. 22, 2002); Lang

v. Burlington N. R.R. Co., 835 F. Supp. 1104, 1105-06 (D. Minn.

1993); Baptist Health Sys., Inc. v. Mack, 860 So. 2d 1265, 1273-

74 (Ala. 2003); In re Halliburton Co., 80 S.W.3d 566, 568-69

(Tex. 2002), cert. denied, 537 U.S. 1112 (2003); Asmus v. Pac.

Bell, 999 P.2d 71, 79 (Cal. 2000).

     In addition to arguing that she had not assented to the

arbitration program, May’s submissions in the district court also

contended that the arbitration agreement would be unconscionable

and that there was no consideration for her promise to arbitrate.

May’s brief on appeal does not offer any argument on those

theories, and we express no opinion on whether the arbitration

agreement could be challenged on those grounds.   We hold only

that the district court erred in determining that the parties’

putative contract lacked the element of mutual assent.

                          IV. CONCLUSION

     For the foregoing reasons, May’s motion to dismiss the

appeal is DENIED, the district court’s judgment is REVERSED, and

the cause is REMANDED to the district court for entry of an

appropriate order granting the defendants’ request for

arbitration.14   Costs shall be borne by May.

     14
          We also dispose of the following outstanding motions as
follows: May’s motion to supplement the record on appeal is
DENIED, the defendants’ motion to order May to file corrected
record excerpts is DENIED AS MOOT, and the defendants’ motion to
certify questions to the Mississippi Supreme Court is DENIED.
See supra note 4.

                                17