Court Opinion

ID: 4561967
Source: CourtListenerOpinion
Date Created: 2020-09-01 18:00:33.647445+00
Date Added: 2024-06-11T11:52:09.259915
License: Public Domain

Case: 20-20123     Document: 00515548015         Page: 1    Date Filed: 09/01/2020

            United States Court of Appeals
                 for the Fifth Circuit                                United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                                                      September 1, 2020
                                No. 20-20123                            Lyle W. Cayce
                              Summary Calendar                               Clerk

 Manuel Mendoza, individually and on behalf of all
 others similarly situated,

                                                           Plaintiff—Appellee,

                                     versus

 Fred Haas Motors, Limited, a Texas Corporation,

                                                       Defendant—Appellant.

                 Appeal from the United States District Court
                     for the Southern District of Texas
                            USDC 4:19-CV-4119

 Before Higginbotham, Jones, and Costa, Circuit Judges.
 Per Curiam:*
        This appeal arises from a class action suit alleging violations of the
 Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. Fred
 Haas Motors, Ltd. (“Fred Haas”) moved to compel arbitration pursuant to

        *
          Pursuant to 5th Circuit Rule 47.5, the court has determined that this
 opinion should not be published and is not precedent except under the limited
 circumstances set forth in 5th Circuit Rule 47.5.4.
Case: 20-20123      Document: 00515548015         Page: 2     Date Filed: 09/01/2020

                                  No. 20-20123

 the agreement signed by Manuel Mendoza (“Mendoza”). The district court
 denied the motion. This court’s precedent requires respect for the parties’
 clear statement to delegate the question of arbitrability to an arbitrator.
 Accordingly, we REVERSE and REMAND the district court’s order.
                                        I
        In May 2015, Mendoza purchased a car from Fred Haas Toyota World
 in Spring, Texas. He signed two pertinent documents while finalizing this
 sale: an “Arbitration Agreement” and a “Personal Information Notice.” 1
 The Arbitration Agreement provides that:
        Buyer/lessee and dealer agree that all claims, demands,
        disputes, or controversies of every kind or nature that may arise
        between them concerning any of the negotiations leading to the
        sale, lease or financing of the vehicle, terms and provisions of
        the sale, lease or financing agreement, arrangements for
        financing, purchase or insurance, purchase of extended
        warranties or service contracts, the performance or condition
        of the vehicle, or any other aspect of the vehicle and its sale,
        lease or financing shall be settled by binding arbitration
        conducted pursuant to the provisions of 9 U.S.C. Section 1 et
        seq. and according to the Commercial Rules of the American
        Arbitration Association. Without limiting the generality of the
        foregoing, it is the intention of the buyer/lessee and the dealer
        to resolve by binding arbitration all disputes between them
        concerning the vehicle, its sale, lease or financing, and its
        condition, including disputes concerning the terms and
        conditions of the sale, lease or financing, the condition of the
        vehicle, and damage to the vehicle, the terms and meanings of
        any of the documents signed or given in connection with the
        sale, lease or financing, any representations, promises or

        1
         The Arbitration Agreement and Personal Information Notice are signed and
 dated May 18th, 2015 and May 19th, 2015, respectively.

                                        2
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                                   No. 20-20123

        omissions made in connection with negotiations for the sale,
        lease, or financing of the vehicle, or any terms, conditions, or
        representations made in connection with the financing, credit
        life insurance, disability insurance, and vehicle extended
        warranty or service contract purchased or obtained in
        connection with the vehicle. Buyer/lessee agree that this
        agreement also governs any and all claims, demands, disputes
        or controversy involving any trade vehicle in connection with
        the transaction involving the parties hereto. Buyer/lessee and
        dealer agree, covenant and contract that there shall be no class
        arbitration between the parties and that the only parties to any
        disputes or controversies to be arbitrated as more particularly
        described herein shall be the Buyer/lessee and the dealer.
        Beginning in the spring of 2019, Mendoza alleges that Fred Haas sent
 four prerecorded voicemail messages to his phone. Claiming that the calls
 were unsolicited marketing messages, Mendoza filed a class action suit in the
 Southern District of Texas asserting violations of the TCPA. Fred Haas
 moved to compel arbitration based on the Arbitration Agreement, arguing
 that the Personal Information Notice was prior written consent and any
 dispute over the meaning of the document is subject to arbitration.
 Furthermore, Fred Haas contends that the agreement delegates questions of
 arbitrability to the arbitrator. The district court denied the motion in an
 unelaborated order and Fred Haas filed this interlocutory appeal pursuant to
 9 U.S.C. § 16(a).
                                        II
        This Court reviews a ruling on a motion to compel arbitration de novo.
 Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016). The
 analysis proceeds in two steps. First is the question “whether the parties
 entered into any arbitration agreement at all.” Id. (italics in original). The
 second question is whether “this claim is covered by the arbitration
 agreement.”     Id. (italics in original).   The court typically makes both

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                                       No. 20-20123

 determinations. Id. (citing Will-Drill Res., Inc. v. Samson Res. Co., 352 F.3d
 211, 214 (5th Cir. 2003)). The analysis changes when the parties include a
 delegation clause giving the arbitrator primary authority to rule whether a
 specific claim is subject to arbitration. First Options of Chi., Inc. v. Kaplan,
 514 U.S. 938, 942, 115 S. Ct. 1920, 1923 (1995). “[P]arties can agree to
 arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties
 have agreed to arbitrate or whether their agreement covers a particular
 controversy.” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 68–69,
 130 S. Ct. 2772, 2777 (2010).
         When delegation is concerned, the second step of analysis shifts and
 the inquiry becomes “whether the purported delegation clause is in fact a
 delegation clause—that is, if it evinces an intent to have the arbitrator decide
 whether a given claim must be arbitrated.” Archer & White Sales, Inc. v.
 Henry Schein, Inc., 935 F.3d 274, 279 (5th Cir. 2019), cert. granted, 2020 WL
 3146679 (June 15, 2020) (quoting Kubala, 830 F.3d at 202). Courts should
 not assume intent “unless there is ‘clear and unmistakable’ evidence.” First
 Options, 514 U.S. at 944, 115 S. Ct. at 1924. Incorporating the American
 Arbitration Association (“AAA”) rules 2 into the agreement “presents clear
 and unmistakable evidence that the parties agreed to arbitrate arbitrability.”
 Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 675
 (5th Cir. 2012). When the delegation is valid, the court must grant the
 motion to compel. Archer & White, 935 F.3d at 279 (citing Kubala, 830 F.3d
 at 202).

         2
           Rule 7(a) states that “[t]he 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.” AM.
 ARBITRATION ASS’N, COMMERCIAL ARBITRATION RULES AND MEDIATION
 PROCEDURES 13 (2013), https://www.adr.org/sites/default/files/Commercial%20Rules.
 pdf.

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                                          No. 20-20123

         It is undisputed that both Fred Haas and Mendoza are parties to the
 Arbitration Agreement and the Agreement states “all claims . . . shall be
 settled by binding arbitration conducted pursuant to the provisions of
 9 U.S.C. Section 1 et seq. and according to the Commercial Rules of the
 American Arbitration Association.”                  This language follows a similar
 structure of other agreements found to incorporate the AAA Rules. 3 With
 both steps of the analysis satisfied, the motion to compel arbitration must be
 granted.
         Mendoza’s arguments to the contrary are unconvincing.                            First,
 Mendoza misstates this Circuit’s rule on who decides the question of
 arbitrability.      Generally, the question of arbitrability is a judicial
 determination for the court, “[u]nless the parties clearly and unmistakably
 provide otherwise”. AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S.
 643, 649, 106 S. Ct. 1415, 1418 (1986) (emphasis added). As noted above, the
 parties here did, clearly and unmistakably, provide otherwise, thus removing
 the decision from the court.
         Second, Mendoza argues that Fred Haas limited the delegation to
 “claims regarding the sale, lease, financing of the vehicle, performance, or
 condition of the vehicle.” Mendoza raises this “carve-out” argument in the
 first instance on appeal. This Court “‘may affirm the district court’s
 decision on any basis presented to the district court’ and argued in the district
 court.” U.S. Sec. & Exch. Comm’n v. Kahlon, 873 F.3d 500, 504 (5th Cir.
 2017) (quoting Am. Family Life Assurance Co. of Columbus v. Biles, 714 F.3d

         3
           In Crawford, the Court found the clause “all disputes . . . will be exclusively settled
 by arbitration before a single arbitrator in accordance with the Rules of the American
 Arbitration Association” sufficient to incorporate the AAA Rules for delegation purposes.
 Crawford Prof’l Drugs, Inc. v. CVS Caremark Corp., 748 F.3d 249, 256, 262–63 (5th Cir.
 2014).

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                                        No. 20-20123

 887, 896 (5th Cir. 2013)). Mendoza waived this argument by failing to
 present it to the district court. Nonetheless, it fails. To the extent the
 “carve-out” exception exists,4 the language in Archer & White expressly
 attempted to exempt certain claims by stating “[a]ny dispute . . . (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.” Archer & White, 935 F.3d at 277. Here,
 Mendoza argues that including “terms and meanings of any of the
 documents” in the second sentence of the agreement excludes it from the
 first. This reading is contrary to the language used by the parties. The second
 sentence opens “Without limiting the generality of the foregoing,”
 indicating the parties’ intention that certain enumerated claims be included
 in the first sentence, not exempted from arbitration.
         In granting Fred Haas’s motion to compel arbitration, we express no
 views on the scope of the arbitration agreement or the merits of the
 underlying dispute. We are simply respecting the parties’ decision to
 delegate the threshold question of arbitrability to the arbitrator. The order of
 the district court is REVERSED and this matter is REMANDED with
 direction for the district court to refer the dispute to arbitration.

         4
           The Supreme Court granted certiorari for Archer & White Sales, Inc. v. Henry
 Schein, Inc. on the issue whether a provision in an arbitration agreement that exempts
 certain claims form arbitration negates an otherwise clear and unmistakable delegation of
 questions of arbitrability to an arbitrator. Henry Schein, Inc. v. Archer & White Sales, Inc.,
 2020 WL 3146679 (June 15, 2020); 935 F.3d 274 (5th Cir. 2019).

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