Court Opinion

ID: 4423124
Source: CourtListenerOpinion
Date Created: 2019-08-06 17:00:18.824727+00
Date Added: 2024-06-11T14:51:17.194181
License: Public Domain

PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT
                  _____________

                      No. 16-3577
                     _____________

                  ABDUL A. JALUDI,
                          Appellant

                             v.

          CITIGROUP and company or one or
         more of its direct or indirect subsidiaries
                     _____________

     On Appeal from the United States District Court
           for the Middle District of Pennsylvania
              District Court No. 3-15-cv-02076
    District Judge: The Honorable Malachy E. Mannion

                   Argued June 4, 2019

   Before: SMITH, Chief Judge, JORDAN, and MATEY,
                    Circuit Judges

                 (Filed: August 6, 2019)

Adam Bluestein                    [ARGUED]
Richard H. Frankel
Sydney Melillo                [ARGUED]
Drexel University
Thomas R. Kline School of Law
3320 Market Street
Philadelphia, PA 19104
       Counsel for Appellant

Christen L. Casale
Morgan Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103

Thomas A. Linthorst               [ARGUED]
Morgan Lewis & Bockius
502 Carnegie Center
Princeton, NJ 08540
       Counsel for Appellee

Karla Gilbride
Public Justice
1620 L Street, N.W.
Suite 630
Washington, DC 20036
       Counsel for Amici Appellants

                    ________________

                OPINION OF THE COURT
                   ________________

                              2
SMITH, Chief Judge.

        Abdul A. Jaludi, a longtime Citigroup employee, was
laid off and terminated in 2013 after reporting certain
improprieties in Citigroup’s internal complaint monitoring
system. Jaludi, believing Citigroup had fired him in retaliation
for his reporting, sued Citigroup under the Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962
(“RICO”), and the Sarbanes–Oxley Act of 2002, 18 U.S.C.
§ 1514A. Citigroup moved to compel arbitration, relying on
two Employee Handbooks that contained arbitration
agreements. The first of those Handbooks, the 2009 Employee
Handbook, contained an arbitration agreement requiring
arbitration of all claims arising out of employment—including
Sarbanes–Oxley claims.

       In July 2010, Congress passed the Dodd–Frank Wall
Street Reform and Consumer Protection Act, which amended
Sarbanes–Oxley to prohibit pre-dispute agreements to arbitrate
whistleblower claims. Pub. L. No. 111-203, § 922, 124 Stat.
1376, 1848 (2010) (codified at 18 U.S.C. § 1514A(e)). In
2011, Citigroup and Jaludi agreed to the 2011 Employee
Handbook; the arbitration agreement appended to that
Handbook excluded “disputes which by statute are not
arbitrable” and deleted Sarbanes–Oxley from the list of
arbitrable claims. Suppl. App. 140. Nonetheless, the District
Court held that arbitration was required for all of Jaludi’s
claims.

       We disagree. Although Jaludi’s RICO claim falls
within the scope of either Handbook’s arbitration provision,
the operative 2011 arbitration agreement supersedes the 2009
                               3
arbitration agreement and prohibits the arbitration of
Sarbanes–Oxley claims. We will therefore affirm in part,
reverse in part, and remand for further proceedings.

                               I.

                              A. 1

       Jaludi began working for Citigroup Technology, Inc. in
     2
1985. Throughout his more than two decades with Citigroup,
Jaludi rose steadily through the ranks. Starting as an entry-
level tape operator, he eventually became a senior vice
president who managed a global team. Jaludi’s responsibilities
included troubleshooting complaint monitoring systems,
merging command centers, and streamlining an application for
customer statements.

       As part of Jaludi’s role, he was responsible for ensuring
that problem tickets were created for system- and application-
related problems that could affect customers. Jaludi made sure
problems were tracked in the complaint management system,

         1
          Because the District Court compelled arbitration
shortly after Jaludi filed his complaint, we derive this
background from the allegations in the complaint. No facts
material to our decision today are in dispute.
        2
          Jaludi’s pro se complaint named “Citigroup and
company or one or more of its direct or indirect subsidiaries.”
Compl. p. 2, ¶ 2. Jaludi’s employer was Citigroup Technology,
Inc., a subsidiary of Citigroup, Inc. Like the parties, we refer
to the defendant as Citigroup.
                               4
resolved, and prevented from recurring. Citigroup was
obligated to report severity level one problem tickets to the
Office of the Comptroller of the Currency. 3 In early 2010,
Jaludi discovered that problem tickets were being mishandled.
Jaludi observed that Citigroup was not reporting hundreds of
level one tickets; instead, Citigroup was deleting these tickets
or reclassifying them to a lower level to avoid reporting
obligations. To make matters worse, Citigroup’s help desks
refused to even open a level one ticket “unless they absolutely
had to.” Compl. ¶ 12.

       Jaludi repeatedly reported these issues to management,
escalating his complaints up the chain of command. In early
2010, Jaludi emailed Citigroup’s then-CEO, Vikram Pandit, to
complain. Shortly thereafter, Jaludi was summoned to meet
with Tony DiSanto, the head of the North America Data
Center. DiSanto expressed his displeasure with Jaludi’s
repeated complaints. Citigroup management warned Jaludi to
“keep his mouth shut.” Id. ¶ 17. One of Jaludi’s former
managers told him that DiSanto “hated [Jaludi’s] guts for
refusing to keep his mouth shut and wanted him fired.” Id.

       In the second quarter of 2010, Jaludi was demoted.
Jaludi’s then-supervisor told him that he was more qualified
than the person who would be supervising him “but that her
hands were tied.” Id. ¶ 18. Jaludi complained about his
demotion. Thereafter, in the third quarter of 2010, Jaludi’s

       3
        These tickets involve problems affecting large dollar
amounts or numerous customers. For example, a level one
ticket might report a problem that prevents a large number of
customers from withdrawing funds or accessing their accounts.
                              5
teams were taken away from him. For a period of two months
“Jaludi had no staff reporting to him nor was he given any work
to do.” Id. ¶ 21.

       Late in the fourth quarter of 2010, Jaludi was transferred
from the division where he had worked for twenty-two years.
Jaludi’s new supervisor had been “told to take Jaludi and did
not know what to do with him.” Id. Two months later, a new
manager was added to work between Jaludi and his supervisor.
In May 2011, Jaludi was further demoted to an entry-level
position.

       In the third quarter of 2011, Citigroup held the
Citigroup Challenge contest to find the best idea for the future
of banking. Jaludi’s idea, Family Banking, was selected as the
co-winner out of 2,500 ideas from 65,000 participants. Jaludi,
along with others, presented the winning idea to the CEO in
New York.       Shortly afterwards, Jaludi was given an
unsatisfactory performance review for failing to meet the
company’s expectations.

        In 2012, one of the judges from the Citigroup Challenge
sought Jaludi’s assistance in reducing customer problems at
one of the bank’s command centers. Jaludi reviewed the
command center’s incident management process and
discovered that employees were improperly opening and
categorizing trouble tickets. Despite Jaludi’s suggestions, the
leaders of the command center were not amenable to change.
One manager told Jaludi that the command center would not
alter its policy because doing so would make metrics look bad
and require reporting to federal regulators. In the fourth
quarter of 2012, Jaludi told a supervisor about the problem and
                               6
made suggestions for resolving it. The supervisor ultimately
refused to discuss the issue with Jaludi, telling him in
December 2012 that he was wasting everyone’s time.

       On February 20, 2013, Citigroup told Jaludi that he was
being laid off “due to deteriorating business conditions and
budget constraints.” Id. ¶ 39. Jaludi complained that his layoff
was retaliatory. On April 21, 2013, Jaludi was terminated. 4

                              B.

       Congress enacted Sarbanes–Oxley “[t]o safeguard
investors in public companies and restore trust in the financial
markets following the collapse of Enron Corporation.” Dig.
Realty Tr., Inc. v. Somers, 138 S. Ct. 767, 773 (2018).
Sarbanes–Oxley protects whistleblowers of publicly traded
companies. See 18 U.S.C. § 1514A(a). Under the Act,
companies cannot “discharge, demote, suspend, threaten,
harass, or in any other manner discriminate against an

       4
          Jaludi alleges that Citigroup’s retaliatory conduct
persisted after his termination in that Citigroup employees
have prevented him from finding other employment. For
example, in November 2014, a retired co-worker told Jaludi
that he knew someone at Citigroup who had several job
openings. The Citigroup hiring manager—who was unaware
of the circumstances surrounding Jaludi’s termination—said
that he would “see about a position for Jaludi.” Id. ¶ 48. Then,
the retired co-worker told Jaludi that the Citigroup hiring
manager was not permitted to consider Jaludi. In all, Jaludi
applied for over a dozen positions within Citigroup but never
received a response.
                               7
employee in the terms and conditions of employment” in
retaliation for an employee’s protected conduct. Id. Protected
conduct includes providing information to a supervisor
“regarding any conduct which the employee reasonably
believes constitutes a violation” of certain criminal fraud
statutes, U.S. Securities and Exchange Commission rules and
regulations, or statutes prohibiting fraud against shareholders.
Id. § 1514A(a)(1). Prior to Dodd–Frank, employers and
employees could agree to arbitrate any future Sarbanes–Oxley
claims.

       Throughout Jaludi’s time at Citigroup, he received
many iterations of the company’s Employee Handbook, which
enumerates its policies and guidelines. In late 2008, Citigroup
issued the 2009 Employee Handbook, which Jaludi
acknowledged receiving in December 2008. The 2009
Handbook contained an arbitration agreement, which was set
forth in an appendix. The 2009 arbitration agreement
expressly identifies Sarbanes–Oxley claims as arbitrable
disputes and requires their referral to arbitration.

        On July 21, 2010, Congress enacted Dodd–Frank.
“Passed in the wake of the 2008 financial crisis, Dodd–Frank
aimed to promote the financial stability of the United States by
improving accountability and transparency in the financial
system.” Dig. Realty Tr., Inc., 138 S. Ct. at 773 (internal
quotation marks omitted). Dodd–Frank amended Sarbanes–
Oxley’s whistleblower provision to prohibit pre-dispute
arbitration agreements.       See 18 U.S.C. § 1514A(e)(2)
(providing that “[n]o predispute arbitration agreement shall be
valid or enforceable, if the agreement requires arbitration of a
dispute arising under this section”).
                                8
       After Dodd–Frank was enacted, Citigroup revised its
Employee Handbook. The 2011 Handbook, which Jaludi
acknowledged in December 2010, also includes an arbitration
agreement, set forth in an appendix, that excludes “disputes
which by statute are not arbitrable.” Suppl. App. 140. In
addition, the 2011 arbitration agreement neither identifies
Sarbanes–Oxley claims by name nor mandates, as its
predecessor did, the arbitration of such claims. The 2011
Handbook expressly provides that it supersedes any prior,
inconsistent policies or Handbooks.

                              C.

        In October 2015, Jaludi filed a pro se complaint in the
United States District Court for the Middle District of
Pennsylvania asserting claims under RICO and Sarbanes–
Oxley. In January 2016, Citigroup moved to compel
arbitration of both claims. 5

      In June 2016, the Magistrate Judge to whom the case
was referred entered a report and recommendation (“R&R”);
the R&R recommended that the District Court compel

       5
         Shortly after the motion to compel arbitration was
fully briefed, Jaludi filed a motion for summary judgment.
Citigroup moved to strike the motion for summary judgment,
which the Magistrate Judge granted because the motion was
premature. Jaludi appealed the Magistrate Judge’s order
striking his motion for summary judgment. A panel of this
Court dismissed that appeal for lack of appellate jurisdiction.
Order at 1, Jaludi v. Citigroup, No. 16-3167 (3d Cir. Oct. 5,
2016).
                              9
arbitration of Jaludi’s RICO claim but not of his Sarbanes–
Oxley claim. The Magistrate Judge believed that the 2011
arbitration agreement did not supersede the 2009 arbitration
agreement; instead, both policies applied. The Magistrate
Judge reasoned that Jaludi’s Sarbanes–Oxley claim was not
subject to arbitration because it accrued after the effective date
of Dodd–Frank. Both parties objected to the R&R.

       In August 2016, the District Court sustained Citigroup’s
objections to the R&R and overruled those of Jaludi. The
Court granted the motion to compel arbitration as to both of
Jaludi’s claims. The District Court found no error in the
Magistrate Judge’s determination that the 2011 agreement “did
not supersede” the 2009 agreement and that, “instead, the
Policies are mutually exclusive with [Jaludi’s] claims subject
to arbitration under either or both.” App. 13. The Court
concluded that applying Dodd–Frank to Jaludi’s Sarbanes–
Oxley claim would be impermissibly retroactive.

       Jaludi timely appealed. 6 The District Court had
jurisdiction pursuant to 28 U.S.C. § 1331, and we exercise
jurisdiction under 28 U.S.C. § 1291.

       6
        Initially, Jaludi pursued his appeal pro se. In May
2017, a panel of this Court directed the Clerk to appoint pro
bono counsel for Jaludi. We express our appreciation to pro
bono counsel for their very able representation of Mr. Jaludi.
                              10
                               II. 7

                               A.

        On appeal, Jaludi challenges only the District Court’s
decision compelling arbitration of the Sarbanes–Oxley claim.
Yet in his pro se complaint, Jaludi also pleaded a claim under
RICO. Jaludi’s RICO claim is subject to arbitration under
either the 2009 or 2011 arbitration agreement. See Suppl. App.
71 (2009 arbitration agreement, providing that “all disputes
arising out of or in any way related to employment” are
arbitrable); see id. at 140 (2011 arbitration agreement,
including “all disputes (other than disputes which by statute are
not arbitrable) arising out of or in any way related to
employment”). Because Dodd–Frank did not limit Citigroup’s
authority to enter into a pre-dispute agreement to arbitrate

       7
          We exercise plenary review over a district court’s
order on a motion to compel arbitration. White v. Sunoco, Inc.,
870 F.3d 257, 262 (3d Cir. 2017). When reviewing a motion
to compel arbitration, we use the standard for summary
judgment under Federal Rule of Civil Procedure 56(a)
“because the district court’s order . . . is in effect a summary
disposition of the issue of whether or not there had been a
meeting of the minds on the agreement to arbitrate.” Id. The
district court should only grant a motion to compel arbitration
“if there is no genuine dispute as to any material fact and, after
viewing facts and drawing inferences in favor of the non-
moving party, the party moving to compel is entitled to
judgment as a matter of law.” Id.
                               11
RICO claims, we will affirm the District Court’s judgment as
to the RICO claim.

                               B.

        Jaludi’s Sarbanes–Oxley claim is a different story.
Simply because “the parties have agreed to arbitrate some
disputes does not necessarily manifest an intent to arbitrate
every dispute that might arise between the parties.” CardioNet,
Inc. v. Cigna Health Corp., 751 F.3d 165, 172 (3d Cir. 2014).

        Jaludi contends that the District Court’s decision
compelling arbitration of the Sarbanes–Oxley claim is
incorrect because the 2011 arbitration agreement—the
operative contract at the time of Citigroup’s allegedly
retaliatory acts—precludes arbitration of Sarbanes–Oxley
claims. He explains that the 2011 arbitration agreement is
contained within the 2011 Employee Handbook, which, by its
own terms, supersedes the 2009 Handbook. Jaludi also relies
on Pennsylvania law, arguing that a subsequent arbitration
agreement supersedes a prior arbitration agreement between
the same parties covering the same subject matter. See Collier
v. Nat’l Penn Bank, 128 A.3d 307, 311 (Pa. Super. Ct. 2015).

        For its part, Citigroup contends that the 2009 arbitration
agreement applies because it indisputably mandates the
arbitration of Sarbanes–Oxley claims. Citigroup attempts to
cast the arbitration agreements as separate from the Handbooks
to which they are appended, arguing that the 2011 arbitration
agreement does not say that it supersedes the 2009 arbitration
agreement. According to Citigroup, both the 2009 and 2011
arbitration agreements can remain in effect because they are
                               12
consistent:   “the 2009 Arbitration Agreement requires
arbitration of [Sarbanes–Oxley] claims and the 2011
Arbitration Agreement requires arbitration of other claims but
does nothing to disturb the obligation in the 2009 Arbitration
Agreement.” Appellee’s Br. 25.

       The 2009 and 2011 arbitration agreements are strikingly
similar, save for their treatment of Sarbanes–Oxley claims.
The 2009 arbitration agreement explicitly includes Sarbanes–
Oxley claims:

      The Policy makes arbitration the required and
      exclusive forum for the resolution of all disputes
      arising out of or in any way related to
      employment based on legally protected rights
      (i.e., statutory, regulatory, contractual, or
      common-law rights) that may arise between an
      employee         or   former    employee      and
      Citi . . . including, without limitation, claims,
      demands, or actions under . . . the Sarbanes–
      Oxley Act of 2002, and all amendments thereto[.]

Suppl. App. 71 (emphasis added). Thus, if the 2009 arbitration
agreement applies, a Sarbanes–Oxley claim that arose before
Dodd–Frank would be subject to arbitration.

      The 2011 arbitration agreement—adopted after Dodd–
Frank—eliminates any reference by name to the Sarbanes–
Oxley Act:

      The Policy makes arbitration the required and
      exclusive forum for the resolution of all disputes

                             13
      (other than disputes which by statute are not
      arbitrable) arising out of or in any way related to
      employment based on legally protected rights
      (i.e., statutory, regulatory, contractual, or
      common-law rights) that may arise between an
      employee or former employee and Citi . . . .

Id. at 140 (emphasis added). Citigroup does not dispute that,
after Dodd–Frank, Sarbanes–Oxley claims cannot be included
in pre-dispute arbitration agreements. Thus, if the 2011
arbitration agreement applies, Jaludi’s Sarbanes–Oxley claim
is not subject to arbitration. 8

                              1.

      Turning first to the plain language of the 2011
Employee Handbook, we conclude that the 2011 arbitration
agreement supersedes the 2009 arbitration agreement. The
2011 Handbook provides:

      This Handbook supersedes any Employee
      Handbooks or Human Resources policies,
      practices or procedures that may have applied to
      you and that are inconsistent with and prior to
      this Handbook’s distribution.

Id. at 96 (emphasis added); see also id. at 31 (2009 Handbook,
containing almost identical language). The 2011 arbitration

      8
        As pleaded in his pro se complaint, Jaludi’s Sarbanes–
Oxley claim arises from his termination—which occurred on
April 21, 2013, after Dodd–Frank was enacted in July 2010.
                              14
agreement, which deletes the prior reference to Sarbanes–
Oxley claims and excludes claims that are not arbitrable by
statute, is patently inconsistent with the prior 2009 agreement,
which requires arbitration of Sarbanes–Oxley claims. The
2011 Employee Handbook thus by its plain language
supersedes the 2009 Employee Handbook, at least as to the
arbitration agreements. 9

       The textual inconsistency between the agreements is not
the only reason the 2011 arbitration agreement supersedes the
2009 agreement. After July 2010, arbitration of a Sarbanes–
Oxley claim that arose post-Dodd–Frank would violate the
law. The 2011 Handbook itself makes clear that when a
conflict exists between the Handbook and applicable law, the
law prevails. See id. at 96 (“[T]he provisions of this Handbook
don’t supersede any applicable law.”). If the same language
about the arbitrability of Sarbanes–Oxley claims were
contained in the 2011 Handbook as is in the 2009 Handbook,
it would violate the law insofar as it would amount to a pre-
dispute agreement to arbitrate Sarbanes–Oxley claims that
arose after the passage of Dodd–Frank.

       Citigroup strains to reach the opposite conclusion—that
the 2009 arbitration agreement applies. Citigroup argues that
we should consider the arbitration agreements separately from
the Handbooks to which they are appended. This argument is

       9
         This conclusion is reinforced elsewhere in the 2011
Employee Handbook. The 2011 Handbook provides that it
does not supersede Citigroup’s Code of Conduct. Citigroup
could have chosen to preserve the 2009 arbitration agreement
in a similar manner but declined to do so.
                              15
unpersuasive because the Handbooks explicitly integrate the
arbitration agreements. See id. at 31, 96 (“This Handbook
contains a policy that requires you to submit employment-
related disputes to binding arbitration (see Appendix A).”); see
also Standard Bent Glass Corp. v. Glassrobots Oy, 333 F.3d
440, 443–44, 446–49 (3d Cir. 2003) (holding, under
Pennsylvania’s Uniform Commercial Code, that an appended
arbitration agreement was incorporated by reference into the
contract even though one of the contracting parties had never
received the appendix).

       In a further attempt to convince us that the arbitration
agreements are separate from the Handbooks, Citigroup points
to the fact that the arbitration agreements have their own
procedures for amendment. The 2009 and 2011 Handbooks
contain a clause indicating that the arbitration agreements are
governed by their own amendment provisions:

       Except for the Employment Arbitration Policy,
       which contains its own unique provisions, to
       meet the changing needs of both Citi and its
       employees, Citi reserves the right at any time to
       create, amend, supplement, modify, or rescind,
       in whole or in part, any policy, procedure,
       benefit, or provision of this Handbook, or the
       Handbook itself, as it deems appropriate, with or
       without notice.

Suppl. App. 31 (emphasis added); see also id. at 96 (2011
Handbook, containing almost identical language). This
language does not help Citigroup. That the arbitration
agreements contain their own amendment provisions does not
                              16
mean that the agreements are separate from the Handbooks in
which they are contained.

        Moreover, the only amendment provision unique to the
arbitration agreements is a thirty-day grace period before any
amendments take effect:

       Citi reserves the right to revise, amend, modify,
       or discontinue the Policy at any time in its sole
       discretion with 30 [calendar] days’ written
       notice. Such amendments may be made by
       publishing them in the Handbook or by separate
       release to employees and shall be effective 30
       calendar days after such amendments are
       provided to employees and will apply
       prospectively only.       Your continuation of
       employment after receiving such amendments
       shall be deemed acceptance of the amended
       terms.

Id. at 75, 144 (alteration in 2011 policy only). In other words,
an amendment to the Employee Handbook goes into effect
immediately, whereas an amendment to the arbitration
agreement goes into effect after thirty days.

      We fail to see how this difference helps Citigroup,
which indisputably followed the thirty-day amendment
procedure here. Citigroup published the 2011 arbitration
agreement in the 2011 Handbook with instructions for
employees to sign or acknowledge the Handbook within thirty
days. Jaludi dutifully did so; his continued employment was
dependent upon acceptance of the revised terms. Amendments
                              17
to the arbitration agreement were prospective only, and Jaludi
was fired in April 2013—over two years after he
acknowledged the 2011 Handbook.

        In short, Citigroup’s assertion that the 2009 and 2011
arbitration agreements were meant to exist alongside one
another strains credulity. We conclude that the 2011
arbitration agreement superseded the 2009 arbitration
agreement and thus applies to this dispute.

                                2.

        Our conclusion that the 2011 Employee Handbook, by
its own terms, supersedes the 2009 Handbook is supported by
both federal and state law. But the parties disagree as to what
body of law applies. Citigroup urges us to apply federal law—
particularly the presumption of arbitrability—in an attempt to
override the plain language of the Handbooks. According to
Jaludi, we should apply Pennsylvania law.

        We agree with Jaludi that state law applies. Deciding
whether arbitration is required is a two-step process: in the first
step, the court determines whether “there is an agreement to
arbitrate,” and then in the second step, the court decides
whether “the dispute at issue falls within the scope of that
agreement.” Century Indem. Co. v. Certain Underwriters at
Lloyd’s, London, 584 F.3d 513, 523 (3d Cir. 2009). The first
step is governed by state law. Id. at 524.

        The dispute here—whether Jaludi and Citigroup agreed
to arbitrate Sarbanes–Oxley claims—centers on the first step.
See id. at 523; see also First Options of Chi. v. Kaplan, 514
                                18
U.S. 938, 944 (1995) (“When deciding whether the parties
agreed to arbitrate a certain matter (including arbitrability),
courts generally . . . should apply ordinary state-law principles
that govern the formation of contracts.”). We thus apply
“ordinary state-law principles that govern the formation of
contracts” to determine whether the subsequent arbitration
agreement supersedes a prior agreement. Century Indem. Co.,
584 F.3d at 524 (quoting First Options, 514 U.S. at 944); see,
e.g., Dasher v. RBC Bank (USA), 745 F.3d 1111, 1122 (11th
Cir. 2014); Applied Energetics, Inc. v. NewOak Capital Mkts.,
LLC, 645 F.3d 522, 526 (2d Cir. 2011). In applying state law
at step one, we do not invoke the presumption of arbitrability.
See Century Indem. Co., 584 F.3d at 526–27; see also Dasher,
745 F.3d at 1122; Applied Energetics, Inc., 645 F.3d at 526.
At step two, however, “in applying general state-law principles
of contract interpretation to the interpretation of an arbitration
agreement . . . due regard must be given to the federal policy
favoring arbitration.” Volt Info. Scis., Inc. v. Bd. of Trs., 489
U.S. 468, 475 (1989).

        The presumption of arbitrability enters at the second
step—it applies to disputes about the scope of an existing
arbitration clause. Century Indem. Co., 584 F.3d at 526–27;
see White v. Sunoco, Inc., 870 F.3d 257, 262 (3d Cir. 2017)
(“[T]he presumption of arbitrability applies only where an
arbitration agreement is ambiguous about whether it covers the
dispute at hand. Otherwise, the plain language of the contract
holds.”). Here, the parties agree about the scope of the
arbitration agreements—Jaludi is required to arbitrate his
Sarbanes–Oxley claim under the 2009 arbitration agreement,
but not under the 2011 agreement. Applying the presumption

                               19
would thus put the cart before the horse. See Granite Rock Co.
v. Int’l Bhd. of Teamsters, 561 U.S. 287, 303 (2010) (“We have
applied the presumption favoring arbitration . . . only where it
reflects, and derives its legitimacy from, a judicial conclusion
that arbitration of a particular dispute is what the parties
intended because their express agreement to arbitrate was
validly formed and . . . is . . . best construed to encompass the
dispute.”).

        Citigroup relies heavily on First Liberty Investment
Group v. Nicholsberg, in which we quoted the Fourth Circuit’s
statement that “[w]hen a party seeking to avoid arbitration
contends that the clause providing for arbitration has been
superseded by some other agreement, the presumptions
favoring arbitrability must be negated expressly or by clear
implication.” 145 F.3d 647, 650 (3d Cir. 1998) (quoting
Zandford v. Prudential-Bache Sec., Inc., 112 F.3d 723, 727
(4th Cir. 1997)). Although this language at first blush seems
to cut in Citigroup’s favor, it ultimately does not. In
Nicholsberg, we did not need to decide whether a later
agreement superseded an earlier one because, in that case, both
agreements obligated the parties to arbitrate their dispute. See
id. at 649–50. Accordingly, because there was an agreement
to arbitrate, the presumption in favor of arbitrability applied
only to determine whether the dispute at hand fell within the
scope of that agreement to arbitrate. See id. at 653. To the
extent Citigroup’s preferred language from Nicholsberg could
apply in a case such as this one, in which the existence of an
agreement to arbitrate the dispute at hand depends on whether
the later agreement superseded the prior agreement, that
language is merely dicta. Further, our post-Nicholsberg

                               20
precedent has made clear that we apply state law when
determining whether there is an agreement to arbitrate. See
Century Indem. Co., 584 F.3d at 523–24. We continue to do
so here.

        Although our holding is merely an application of our
prior precedent, see id. at 523, we make clear today that the
question of whether a later agreement supersedes a prior
arbitration agreement is tantamount to whether there is an
agreement to arbitrate. It is therefore a question to which state
law, not federal law, applies. Accord Dasher, 745 F.3d at
1115–16 (applying state law to determine whether a later
arbitration agreement superseded an earlier one because the
dispute was about whether a contract had been made, not about
scope); Applied Energetics, Inc., 645 F.3d at 526 (same).

       Under Pennsylvania law, 10 the later of two agreements
between the same parties as to the same subject matter
generally supersedes the prior agreement. See, e.g., In re
Klugh’s Estate, 66 A.2d 822, 825 (Pa. 1949) (holding that the
appellant had abandoned an option contained in the first lease

       10
          Although Citigroup contends that federal law applies,
it does not dispute that, if we were to apply state law, the law
of Pennsylvania is applicable. Cf. Century Indem. Co. v.
Certain Underwriters at Lloyd’s, London, 584 F.3d 513, 533
(3d Cir. 2009) (“Though neither party explicitly states that
Pennsylvania law applies to the question whether there is a
valid arbitration agreement, they seem to agree that
Pennsylvania law does apply, because, apart from federal
cases, each predominantly cites Pennsylvania state court cases
on the issues in this case.”).
                                21
by agreeing to three subsequent leases that lacked an option).
This is true even if the first agreement includes an arbitration
clause and the second agreement does not. See Collier, 128
A.3d at 311.

        In Collier, a customer sued a bank for improperly
assessing overdraft fees. Id. at 308. The bank attempted to
compel arbitration. Id. at 309. The trial court denied the
bank’s petition to compel arbitration, holding that the later
2010 Account Agreement controlled, rather than the 2008
Account Agreement. Id. at 309–11. The Superior Court of
Pennsylvania affirmed, explaining that the 2010 Agreement
had superseded the 2008 Agreement. Id. at 311. Unlike the
2008 Agreement, the 2010 Agreement did not contain an
arbitration clause; instead, the 2010 Agreement provided that
disputes would be resolved either by the bank or through
litigation. Id. The Superior Court reasoned that the 2010
Agreement “addresses the same subject matter as the 2008
Agreement and is similarly comprehensive in its terms.” Id.
As such, the parties intended the 2010 Agreement to supersede
the 2008 Agreement, “certainly with regard to judicial
resolution of disputes in lieu of arbitration.” Id. The parties
therefore had no agreement to arbitrate. Id.

        So too here. Reading the arbitration agreements in their
entirety, the only reasonable conclusion is that Citigroup
intended the 2011 arbitration agreement to supersede the 2009
arbitration agreement. The 2011 arbitration agreement largely
tracks the 2009 arbitration agreement—except as to Sarbanes–
Oxley claims. As discussed supra, the 2011 arbitration
agreement removes its predecessor’s reference to Sarbanes–
Oxley claims and prohibits arbitration of claims that are not
                               22
arbitrable by statute; after July 2010, this prohibition included
Sarbanes–Oxley claims. See Applied Energetics, Inc., 645
F.3d at 525 (holding that a later agreement that is silent on
arbitration supersedes an earlier agreement providing for
arbitration because “[b]oth provisions are all-inclusive, both
are mandatory, and neither admits the possibility of the other”).
We therefore hold that the 2011 arbitration agreement
supersedes the 2009 agreement, that the 2011 agreement
excludes Sarbanes–Oxley claims, and that the District Court
thus erred by compelling arbitration of Jaludi’s Sarbanes–
Oxley claim. 11

                                III.

       The 2011 arbitration agreement, which excludes
Sarbanes–Oxley claims, applies to Jaludi’s claims and
supersedes the 2009 arbitration agreement. The District Court
erred in compelling arbitration of Jaludi’s Sarbanes–Oxley

       11
           Citigroup also contends that we should uphold the
decision compelling arbitration so that an arbitrator may decide
questions of arbitrability. In its reply brief in the District Court,
Citigroup first invoked a provision in the 2011 and 2009
arbitration agreements requiring an arbitrator to decide
arbitrability. Even on appeal, Citigroup concedes “that the
District Court was authorized to decide the questions of the
arbitrability of the RICO and [Sarbanes–Oxley] claims, and
that this Court may decide whether the District Court erred in
compelling Jaludi’s claims to arbitration.” Appellee’s Br. 43.
Because Citigroup failed to invoke the provision until its reply
brief in the District Court, we deem this argument waived.
                                 23
claim. We will therefore affirm in part, reverse in part, and
remand for further proceedings.

                             24