Court Opinion

ID: 4664719
Source: CourtListenerOpinion
Date Created: 2021-03-04 01:00:46.126668+00
Date Added: 2024-06-11T09:11:03.351671
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

 KONE INC.,

                Plaintiff,

        v.
                                                          No. 20-cv-999 (DLF)
 CHENEGA WORLDWIDE SUPPORT,
 LLC,

                Defendant.

                                 MEMORANDUM OPINION

       KONE Inc. (“KONE”) brings this action against Chenega Worldwide Support, LLC

(“Chenega”) for breach of contract and other claims related to a large construction project in the

Washington, D.C. area. Before the Court is Chenega’s Motion for Summary Judgment and to

Compel Arbitration, or in the alternative, Motion to Dismiss for Lack of Subject Matter

Jurisdiction, Dkt. 7. For the reasons that follow, the Court will grant Chenega’s motion in part

and stay the case pending arbitration.

I.     BACKGROUND

       KONE is a construction company incorporated in Delaware with its principal place of

business in Illinois. Compl. ¶ 4, Dkt. 1. Chenega is an Alaska-based limited liability company

and the general contractor leading the renovation of the General Services Administration’s

(“GSA”) headquarters in Washington, D.C. Id. ¶¶ 1, 5–6. In September 2018, KONE entered

into a subcontract (“Agreement”) with Chenega to provide elevator modernization services for

the GSA project. Id. ¶ 2; Pl.’s Counter-Statement of Material Facts (“PCSMF”) ¶ 2, Dkt. 8-1.
          In the subsequent months, the business relationship between KONE and Chenega soured

over disputes related to what KONE characterizes as a “failure to abate . . . hazardous materials.”

Compl. ¶¶ 54–55. According to KONE, its repeated requests that Chenega take steps to remove

hazardous materials, including lead and asbestos, from the project site either went unanswered or

were inadequately addressed. Id. ¶¶ 18–23, 26, 34, 53. On account of these hazards, KONE

requested “an extension of time to complete its work . . . , an equitable increase in the

subcontract price, and compensation for related impact costs.” Id. ¶ 22. When the parties were

unable to agree on a path forward, KONE eventually ceased work on the project, id. ¶¶ 30, 51,

PCSMF ¶ 12, and Chenega terminated the Agreement, Compl. ¶ 63. Based on claims for breach

of contract, quantum meruit, and account stated, KONE now seeks to recover $908,007.76 that it

claims it is owed for elevator equipment and other materials, as well as other costs incurred by

KONE on the GSA project. See id. ¶¶ 70–74, 84, 91, 98. KONE also seeks an unstated amount

of damages “not included in the $908,007.76 figure” for “storing material for Elevators,” id.

¶ 73, pre- and post-judgment interest, and attorneys’ fees, id. ¶ 84.

          Article 20.1 of the parties’ Agreement provides that “any dispute or controversy between

the Parties arising under or in connection with this Agreement” will be reviewed by an arbitrator

“in accordance with the Commercial Rules of the American Arbitration Association then in

effect.”1 Dkt. 7-2 at 17. The article also includes three carve-out provisions. The first two

1
    Article 20.1’s relevant clauses read:

          Except as otherwise expressly provided, the Parties agree that any dispute or controversy
          between the Parties arising under or in connection with this Agreement (“Dispute”) will
          be settled exclusively in accordance with the procedures set forth in this Article. The
          Parties agree that the procedures set forth in this Article shall not be applicable to
          disputes or controversies arising in connection with third-party claims against one or both
          of the Parties to this Agreement, or to any, claim, action, suit or proceeding seeking
          specific enforcement of the provisions of this Agreement. This Article shall also not

                                                   2
exempt from “the [arbitration] procedures set forth” in the article those “disputes or

controversies arising in connection with third-party claims” and “any claim, action, suit or

proceeding seeking specific enforcement.” Id. In addition, the Agreement provides that the

“Article shall also not apply to a Party’s pursuit of recovery of undisputed payments due and

owing under this Agreement.” Id. This last exception forms the basis of the parties’ arguments

in this case.

II.     LEGAL STANDARDS

        A.        Motion for Summary Judgment

        A court grants summary judgment if the moving party “shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.

R. Civ. P. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986). A

“material” fact is one with potential to change the substantive outcome of the litigation. See

Liberty Lobby, 477 U.S. at 248; Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). A

dispute is “genuine” if a reasonable jury could determine that the evidence warrants a verdict for

the nonmoving party. See Liberty Lobby, 477 U.S. at 248; Holcomb, 433 F.3d at 895. “If there

are no genuine issues of material fact, the moving party is entitled to judgment as a matter of law

if the nonmoving party ‘fails to make a showing sufficient to establish the existence of an

        apply to a Party’s pursuit of recovery of undisputed payments due and owing under this
        Agreement.

        ...

        Except as otherwise modified in this Article, the Arbitrator will review the Dispute in
        accordance with the Commercial Rules of the American Arbitration Association then in
        effect. The Arbitrator will decide all procedural and substantive issues relating to the
        Dispute. . . .

Dkt. 7-2 at 17.

                                                 3
element essential to that party’s case, and on which that party will bear the burden of proof at

trial.’” Holcomb, 433 F.3d at 895 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).

       In deciding a motion to compel arbitration, the court applies “‘the same standard [of

review] used in resolving summary judgment motions’ pursuant to Federal Rule of Civil

Procedure 56(c), ‘as if it were a request for summary disposition of the issue of whether or not

there had been a meeting of the minds on the agreement to arbitrate.’” Haire v. Smith, Currie &

Hancock LLP, 925 F. Supp. 2d 126, 129 (D.D.C. 2013) (quoting Aliron Int’l, Inc. v. Cherokee

Nation Indus., Inc., 531 F.3d 863, 865 (D.C. Cir. 2008)). “The party seeking to compel

arbitration must present evidence sufficient to demonstrate an enforceable agreement to

arbitrate.” Id. (internal quotation marks omitted). “The burden then shifts to plaintiffs to show

that there is a genuine issue of material fact as to the making of the agreement.” Id. “The Court

will compel arbitration if the pleadings and the evidence show that there is no genuine issue as to

any material fact and that the moving party is entitled to judgment as a matter of law.” Id.

(internal quotation marks omitted).

       B.      Motion to Dismiss for Lack of Subject Matter Jurisdiction

       Rule 12(b)(1) of the Federal Rules of Civil Procedure allows a defendant to move to

dismiss an action for lack of subject-matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Federal law

empowers federal district courts to hear only certain kinds of cases, and it is “presumed that a

cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins., 511 U.S. 375, 377

(1994). When deciding a Rule 12(b)(1) motion, the court must “assume the truth of all material

factual allegations in the complaint and construe the complaint liberally, granting plaintiff the

benefit of all inferences that can be derived from the facts alleged, and upon such facts determine

[the] jurisdictional questions.” Am. Nat. Ins. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir.

                                                 4
2011) (internal quotation marks omitted). But the court “may undertake an independent

investigation” that examines “facts developed in the record beyond the complaint” in order to

“assure itself of its own subject matter jurisdiction.” Settles v. U.S. Parole Comm’n, 429 F.3d

1098, 1107 (D.C. Cir. 2005) (internal quotation marks omitted). A court that lacks jurisdiction

must dismiss the action. Fed. R. Civ. P. 12(b)(1), 12(h)(3).

III.   ANALYSIS

       The parties disagree over whether the Agreement delegates the threshold question of

arbitrability to the arbitrator, and if so, whether KONE’s specific claims are covered by an

exemption from that delegation. Def.’s Mot. for Summ. J. at 5, 15–17; Pl.’s Opp’n at 2, 7–12,

Dkt. 8. The Court will compel arbitration because there is clear and unmistakable evidence that

the parties delegated the question of arbitrability to the arbitrator, and the Agreement’s carve-out

provisions do not limit the scope of that delegation.

       A.      The Question of Arbitrability

       “Arbitration agreements relating to interstate commerce, regardless of whether the

challenge is brought in state or federal court, are governed by the [Federal Arbitration Act].”

Haire, 925 F. Supp. 2d at 130 (first citing Southland Corp. v. Keating, 465 U.S. 1, 10 (1984) and

then citing Buckeye Check Cashing, Inc. v. Cardegna, 56 U.S. 440, 447–48 (2006)). The

“central purpose of the Federal Arbitration Act [is] to ensure that private agreements to arbitrate

are enforced according to their terms.” Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S.

52, 54–55 (1995) (internal quotation marks omitted). As a result, “[a]ny doubts regarding the

                                                 5
scope of arbitrable issues should be resolved in favor of arbitration.” Haire, 925 F. Supp. 2d at

130 (citing Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983)).

       This case raises the threshold question of “who has the primary power to decide

arbitrability.” See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995). As a

general matter, “the question of arbitrability—whether a [particular] agreement creates a duty for

the parties to arbitrate the particular grievance—is undeniably an issue for judicial

determination.” Tower Ins. Co. of N.Y. v. Davis/Gilford, 967 F. Supp. 2d 72, 78 (D.D.C. 2013)

(alteration in original) (quoting AT&T Techs., Inc. v. Comm’cns Workers of Am., 475 U.S. 643,

649 (1986)). But parties may include in their agreement a delegation provision that gives the

arbitrator the authority to determine arbitrability. Any such provision is “simply an additional,

antecedent agreement” about who should decide the gateway question of arbitrability. Rent-A-

Center, W., Inc. v. Jackson, 561 U.S 63, 70 (2010). If there is “clear and unmistakable evidence”

that the parties agreed to have an arbitrator decide this threshold question, see First Options, 514

U.S. at 944 (cleaned up), the Federal Arbitration Act “operates on this additional arbitration

agreement just as it does on any other,” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.

Ct. 524, 529 (2019) (quoting Rent-A-Center, 561 U.S. at 70).

       Here, the parties agree that the Agreement is enforceable and includes an arbitration

provision that applies to certain disputes arising under it. See Pl.’s Opp’n at 2–3; Def.’s Mot. for

Summ. J. at 12–13. But they disagree over who decides—a court or an arbitrator—the threshold

issue in this case: whether KONE’s claim is one made in “pursuit of recovery of undisputed

payments due and owing under [the] Agreement” such that it falls outside the scope of the

arbitration agreement. See Def.’s Mot. for Summ. J. at 15–17; Pl.’s Opp’n at 7–12.

                                                 6
                1.       The Agreement’s Incorporation of AAA Rules

        The plain language of the Agreement reveals the parties’ clear and unmistakable intent to

delegate the threshold issue of arbitrability to the arbitrator. Article 20.1 incorporates the

Commercial Rules of the American Arbitration Association (“AAA rules”), and it clarifies that

the arbitrator has broad authority to decide “all procedural and substantive issues.” See Dkt. 7-2

at 17. Together, these provisions reveal that the parties intended to delegate all questions of

arbitrability to the arbitrator.

        Paragraph four of Article 20.1 incorporates the AAA rules. It provides: “Except as

otherwise modified in this Article, the Arbitrator will review the Dispute in accordance with the

[AAA rules] then in effect.” Id. Rule 7 of the AAA rules expressly delegates to the arbitrator

the power to decide the question of arbitrability:

        R-7. Jurisdiction

        (a) The 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.

AAA Rules R-7(a).2

        To date, twelve circuits, including the D.C. Circuit, have held that the incorporation of

standard rules of arbitration that delegate arbitrability determinations to the arbitrator is “clear

and unmistakable” evidence that the parties intend for an arbitrator, rather than a court, to

determine whether a particular grievance is subject to arbitration. See, e.g., Chevron Corp. v.

Republic of Ecuador, 795 F.3d 200, 207–08 (D.C. Cir. 2015) (incorporating the United Nations

Commission on International Trade Law Rules (“UNCITRAL”)); see also Blanton v. Domino’s

2
 Commercial Arbitration Rules and Mediation Procedures, Am. Arb. Ass’n (Oct. 1, 2013),
https://www.adr.org/sites/default/files/CommercialRules-Web.pdf.

                                                   7
Pizza Franchising LLC, 962 F.3d 842, 845–46 (6th Cir. 2020) (discussing cases incorporating

the AAA rules); Belnap v. Iasis Healthcare, 844 F.3d 1272, 1283–84 (10th Cir. 2017) (collecting

cases). The fact that the parties incorporated the AAA rules in their entirety, rather than the

“specific” arbitrability provision of the AAA rules, see Pl. Opp’n at 11, does not undermine the

parties’ clear intent. See Mercadante v. XE Servs., LLC, 78 F. Supp. 3d 131, 138–39 (D.D.C.

2015); 11 S. Williston, A Treatise on the Law of Contracts § 30.25 (4th ed. 2020) (“When a

writing refers to another document, that other document, or the portion to which reference is

made, becomes constructively a part of the writing, and in that respect the two form a single

instrument.”). Article 20.1 expressly incorporates the AAA Commercial Arbitration Rules, “a

readily-identifiable set of 58 rules,” as opposed to a “vague, general reference[] to AAA rules.”

See HealthplanCRM, LLC v. AvMed, Inc., 458 F. Supp. 3d 308, 324 (W.D. Pa. 2020). As courts

in this district have held, the wholesale incorporation of the AAA rules can itself constitute

“clear and unmistakable evidence of an agreement to delegate questions of arbitrability to an

arbitrator.”3 Mercadante, 78 F. Supp. 3d at 139 (collecting cases).

3
  Although state law governs the interpretation and formation of arbitration agreements, see
Haire, 925 F. Supp. 2d at 131, federal courts have split on the question of whether the “clear and
unmistakable” evidence standard presents a question of federal law or state contract law. See
Blanton, 962 F.3d at 846–47 (collecting cases and summarizing arguments). The Court need not
resolve this choice of law question because the parties agree that Virginia law governs the
interpretation of the Agreement, see Def.’s Mot. for Summ. J. at 12; Pl.’s Opp’n at 10 n.5, and
Virginia law dictates the same result as federal law, see Kay Jennings Family Ltd. P’ship v.
DAMN, LLC, 71 Va. Cir. 348, 2006 WL 2578366, at *2–3 (Va. Cir. Ct. 2006) (permitting
incorporation by reference of the AAA rules and holding that such incorporation constitutes clear
and unmistakable evidence that the parties intended to submit the question of arbitrability to the
arbitrator); see also Blanton, 962 F.3d at 847 (concluding that whether an agreement evinces
“clear and unmistakable” intent is a question of federal law, but noting the outcome was the
same under either federal or Washington state law).

                                                 8
       If there were any doubt as to the parties’ intent with regards to the delegation issue, they

clarified it with express language in Article 20.1. The sentence immediately following the AAA

rules’ incorporation provision provides: “The Arbitrator will decide all procedural and

substantive issues relating to the Dispute, including without limitation those issues relating to the

scheduling of, and rules and procedures applicable to, all hearings related to the Dispute.”4 Dkt.

7-2 at 17 (emphasis added); cf. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84–85

(2002) (characterizing the question of whether a dispute is subject to merits arbitration as a

question of substantive arbitrability). KONE flips this provision on its head, arguing that it

limits the AAA rules’ application “to matters like how hearings will be run and how various

arbitration deadlines might be set.” Pl. Opp’n at 11. But the plain language of this provision

makes clear that the arbitrator will decide all issues “relating to the Dispute.” Dkt. 7-2 at 17.

“The term ‘including’ shows that the [listed] issues . . . are meant to illustrate rather than

exhaust” the arbitrator’s jurisdiction. Blanton, 962 F.3d at 848; see also Rent-A-Center, 561

U.S.at 67 (explaining that “arbitration is a matter of contract” and arbitration agreements must be

enforced “according to their terms”). This broad language confirms that the parties manifested a

clear and unmistakable intent to delegate arbitrability determinations to an arbitrator.

                2.     The Carve-out Clause

       Article 20.1 contains a carve-out clause that exempts three types of disputes from

arbitration, but this clause does not limit the scope of the arbitrator’s authority to decide the

question of arbitrability. This too is evident from the plain language, as well as the structure of

Article 20.1.

4
 As explained, infra at 10, paragraph one of Article 20.1 defines “Disputes” broadly to include
“any dispute or controversy between the Parties arising under or in connection with this
Agreement.” Dkt. 7-2 at 17 (emphasis added).

                                                   9
       Article 20.1 applies the AAA rules to the arbitrator’s review of the “Dispute,” and it

defines the term “Dispute” broadly to include “any dispute or controversy between the Parties

arising under or in connection with this Agreement.” Dkt. 7-2 at 17 (emphasis added). The three

exemptions specified in the carve-out clause do not narrow the definition of “Dispute,” as KONE

claims. Pl.s’ Opp’n at 9–10. Instead, the exemptions merely constitute a class of disputes and

controversies that the parties did not agree to subject to merits arbitration. Indeed, Article 20.1

characterizes the carved out claims as “disputes or controversies arising in connection with third-

party claims” or “any claim, action, suit or proceeding seeking specific enforcement.” Dkt7-2 at

17. And it plainly states that the “pursuit of recovery of undisputed payments” is a controversy

arising “under this Agreement.” Id.

       Though the delegation clause that incorporates the AAA rules also contains an

exception—“[e]xcept as otherwise modified in this Article”—it is clear, based on the full text of

Article 20.1, that this exception refers to modifications to the AAA rules, not the arbitrator’s

jurisdiction. See Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1077 (9th Cir. 2013)

(holding that a clause incorporating UNCITRAL rules “as modified herein” referred to specific

modifications of the rules, not the jurisdiction of the arbitrator); Wynn Resorts, Ltd. v. Atl.-Pac.

Cap., Inc., 497 F. App’x 740, 742 & n.1 (9th Cir. 2012) (interpreting a similar clause preceding

an incorporation clause—“[e]xcept as otherwise provided herein”—to refer to modifications of

the incorporated J.A.M.S. rules). For example, Article 20.1 modifies AAA rules relating to the

exchange of discovery, production of information, and time limits that apply to the parties’

efforts to resolve the dispute.5 Compare Dkt. 7-2 at 17–18 (setting strict numerical limits on

5
 And even if the parties’ agreement did not modify the AAA rules, interpreting the clause—
“[e]xcept as otherwise modified in this Article”—to refer to modifications of AAA rules, as

                                                 10
discovery requests and requiring the arbitrator to render a decision within ninety days “after the

selection of the Arbitrator and the Arbitrator’s receipt of the Defense Notice”), with AAA Rules

22, 45 (vesting authority and discretion in the arbitrator to “manage any necessary exchange of

information” and requiring the arbitrator issue an award “no later than 30 calendar days from the

date of closing the hearing”). None of these modifications address—let alone undermine—the

parties’ clear intent to adopt Rule 7’s specific delegation provision. See Condo. Servs., Inc. v.

First Owners’ Ass’n of Forty Six Hundred Condo., Inc., 709 S.E.2d 163, 170 (Va. 2011) (“[A]

specific provision of a contract governs over one that is more general in nature.”).

         Moreover, the structure of Article 20.1 reinforces what the plain text dictates. The first

paragraph, which includes the carve-out clause, addresses the scope of the arbitration agreement

itself, while the fourth paragraph addresses the gateway decision of arbitrability and procedures

of arbitration. See Dkt. 7-2 at 17. This structural separation suggests that the parties did not

intend for both clauses to be limited by the same qualifying language. Compare Arnold v.

Homeaway, Inc., 890 F.3d 546, 549, 553 (5th Cir. 2018) (rejecting the plaintiff’s argument that a

carve-out provision in a separate arbitration clause limited the scope of a delegation clause), with

Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d 274, 280–82 (5th Cir. 2019), cert.

dismissed as improvidently granted, 141 S. Ct. 656 (2021) (Mem.) (determining that a carve-out

provision affected the scope of delegation where the same qualifying language applied to a

combined arbitration and delegation clause).6 “[T]o the extent . . . [the] arbitration agreement

opposed to jurisdictional limitations on the arbitration clause, would not render the clause
meaningless. In that instance, the clause would guard against any future changes to the AAA
rules that could affect the specific arbitration procedures the parties included in the Agreement.
See Dkt. 7-2 at 17.
6
    The arbitration and delegation clause in Henry Schein read:

                                                  11
carves out certain claims from arbitration, it does so from the agreement in general, not from the

[specific] provision that incorporates the AAA Rules.” Blanton, 962 F.3d at 848.

       To be sure, at least one circuit has concluded that “where a broad arbitration clause is

subject to a qualifying provision that at least arguably covers the present dispute,” the carve-out

“delays application of the AAA rules until . . . arbitrability is decided,” regardless of whether the

carve-outs are placed within the delegation clause. See NASDAQ QMX Grp., Inc. v. UBS Sec.,

LLC, 770 F.3d 1010, 1031–32 (2d Cir. 2014); see also Armor All/STP Prods. Co. v. TSP Prods.,

Inc., 337 F. Supp. 3d 156, 165 (D. Conn. 2018). But other courts have rejected this approach,

warning that it “conflates the scope of the arbitration clause, i.e., which claims fall within the

carve-out provision, with the question of who decides arbitrability.” Oracle, 724 F.3d at 1076;

see Blanton, 962 F.3d at 847. And the D.C. Circuit has, at least implicitly, endorsed this

reasoning. See Chevron Corp., 795 F.3d at 207–08 (citing Oracle and holding the arbitrability

       Any dispute arising under or related to this Agreement (except for actions seeking
       injunctive relief and disputes related to trademarks, trade secrets, or other intellectual
       property of Pelton & Crane), shall be resolved by binding arbitration in accordance with
       the arbitration rules of the American Arbitration Association.

Id. at 280. By comparison, the arbitration and delegation clauses in Article 20.1 read:

       Except as otherwise expressly provided, the Parties agree that any dispute or controversy
       between the Parties arising under or in connection with this Agreement (“Dispute”) will
       be settled exclusively in accordance with the procedures set forth in this Article.

       ...

       Except as otherwise modified in this Article, the Arbitrator will review the Dispute in
       accordance with the Commercial Rules of the American Arbitration Association then in
       effect. The Arbitrator will decide all procedural and substantive issues relating to the
       Dispute. . . .

Dkt. 7-2 at 17.

                                                 12
determination was for the arbitrator even though the agreement carved out certain claims from

arbitration).

        Taken to its logical endpoint, conflating the issue of arbitrability with the scope of the

arbitration agreement would ultimately render the AAA rules’ delegation of arbitrability

meaningless. See Blanton, 962 F.3d at 847. “[E]ffect should be given to every part of [a

contract], . . . and no part thereof should be discarded as superfluous or meaningless.” Babcock

& Wilcox Co. v. Areva NP, Inc., 788 S.E.2d 237, 254 n.32 (Va. 2016) (internal quotation marks

omitted). Further, because AAA Rule 7 expressly provides that the scope of the arbitration

clause is itself subject to arbitration, it necessarily follows that the arbitrator’s jurisdiction

includes evaluating the arbitrability of claims that fall outside of its scope. See Ciccio v.

SmileDirectClub, LLC, 19-cv-00845, 2019 WL 8298262, *3 (M.D. Tenn. Dec. 2, 2019). And

“any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.”

Moses H. Cone Mem’l Hosp., 460 U.S. at 24–25.

        In its supplemental brief, KONE argues for the first time that the phrase—“[t]his Article

shall also not apply”—in the exemption for “undisputed payments due and owing” means that

neither Article 20.1’s procedures nor the Article itself applies to undisputed payments. See Pl.’s

Suppl. Mem. at 1–2, Dkt. 12. But someone—either a court or an arbitrator—must decide

whether a dispute is one for “undisputed payments due and owing,” and thus, whether Article

20.1 applies is itself an arbitrability decision. See AT&T Techs., 475 U.S. at 645–46, 651

(explaining that whether a specific arbitration article applies is itself a question of arbitrability).

        KONE’s narrow interpretation of Article 20.1’s delegation provision would have far-

reaching implications. Under KONE’s theory, a party who agreed to delegate questions of

arbitrability to an arbitrator could deprive the arbitrator of jurisdiction simply by raising any

                                                   13
argument about the scope of the arbitration provision in an opposition to a motion to compel

arbitration. See Ciccio, 2019 WL 8298262, at *3. A court would then need to determine

arbitrability before the arbitrator had an opportunity to do so. Not only would that undermine the

parties’ intent, such a “duplicative process would run counter to the policy of economy embodied

in the Federal Arbitration Act and the more general principle that the rules governing who

decides should be simple and clear.” Armor All, 337 F. Supp. 3d at 166; see also id. (first citing

Direct Mktg Ass’n v. Brohl, 575 U.S. 1, 14 (2015) (“[J]urisdictional rules should be clear.”), and

then citing Navarro Sav. Ass’n v. Lee, 466 U.S. 458, 464 n.13 (1980) (“Jurisdiction should be as

self-regulated as breathing; . . . litigation over whether the case is in the right court is essentially

a waste of time and resources.”)). This is especially true here, where the relevant carve-out

provision is coterminous with the merits of the underlying dispute. That is, in order for the Court

to determine whether it has the power to decide the question of arbitrability, it would necessarily

have to decide the merits of the dispute—whether KONE is entitled to “undisputed payments due

and owing.” Yet “in deciding whether the parties have agreed to submit a particular grievance to

arbitration, a court is not to rule on the potential merits of the underlying claims.” See AT&T

Techs., 475 U.S. at 649.

        Finally, KONE’s contention that it would not have delegated the decision of arbitrability

to the arbitrator because the “arbitrator [is] likely to have (or [be] motivated to have) an over-

expansive view of his or her jurisdiction” is beside the point. Pl. Opp’n at 12. Where there is a

clear and unmistakable delegation, a court may not decide the threshold question of arbitrability,

even when the argument that a dispute is subject to arbitration appears “wholly groundless.” See

Henry Schein, 139 S. Ct. at 529. And here, KONE had the benefit of a score of “judicial

precedent . . . telling [it] that the incorporation of arbitral rules can provide ‘clear and

                                                   14
unmistakable’ evidence that that the parties agreed to arbitrate ‘arbitrability.’” Blanton, 962 F.3d

at 851. Parties “bargain in the shadow of the law,” and in this instance, the Court sees no reason

to deny two sophisticated parties “the benefit of their bargain.” See id. at 850; Grynberg v. BP

P.L.C., 585 F. Supp. 2d 50, 55 (D.D.C. 2008) (finding clear and unmistakable evidence of intent

to arbitrate arbitrability where “sophisticated parties” incorporated AAA rules).

       In sum, whether a party is pursuing the “recovery of undisputed payments due and owing

under this Agreement” is an arbitrability determination, which the parties have clearly and

unmistakably delegated to the arbitrator. See Oracle, 724 F.3d at 1076. Thus, the Court will

grant Chenega’s motion to compel arbitration.7

       B.      Stay or Dismissal

       The Court will also deny Chenega’s motion to dismiss this case for lack of jurisdiction,

Def.’s Mot. for Summ. J. at 1, and stay this action pending arbitration. Dismissal of this action

would be premature because “it remains plausible that the Court may yet be required to consider

some or all of the claims in this action on the merits.” Mercadante, 78 F. Supp. 3d at 147; see

also Choice Hotels Int’l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709–10 (4th Cir.

2001) (“[D]ismissal is a proper remedy when all of the issues presented in a lawsuit are

arbitrable.”). Chenega may “seek[] dismissal of this action if an arbitrator determines that all the

issues in this case are, indeed, arbitrable.” See Mercadante, 78 F. Supp. 3d at 147.

7
 Because the parties have delegated the question of arbitrability to the arbitrator, the Court need
not address whether KONE’s specific claims are covered by the exemption to the arbitration
agreement. See Wash.-Balt. Newspaper Guild, Local 35 v. Wash. Post, 959 F.2d 288, 292 (D.C.
Cir. 1992).

                                                 15
                                         CONCLUSION

       For the foregoing reasons, Chenega’s motion for summary judgment and to compel

arbitration is granted and its motion to dismiss for lack of jurisdiction is denied. A separate order

consistent with this decision accompanies this memorandum opinion.

                                                              ________________________
                                                              DABNEY L. FRIEDRICH
March 3, 2021                                                 United States District Judge

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