Court Opinion

ID: 814391
Source: CourtListenerOpinion
Date Created: 2012-12-27 18:03:50+00
Date Added: 2024-06-11T18:00:51.805870
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 12-1301

              PIUS AWUAH; DENISSE PINEDA; JAI PREM;
      RICHARD BARRIENTOS; ANTHONY GRAFFEO; MANUEL DA SILVA;
                and all others similarly situated,

                      Plaintiffs, Appellees,

  ALDIVAR BRANDAO; NILTON DOS SANTOS; GERALDO CORREIA; PHILLIP
   BEITZ; MARIAN LEWIS; STANLEY STEWART; BENECIRA CAVALCANTE,

                           Plaintiffs,

                                v.

                  COVERALL NORTH AMERICA, INC.,

                      Defendant, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

          [Hon. William G. Young, U.S. District Judge]

                              Before

                       Lynch, Chief Judge,
                Selya and Howard, Circuit Judges.

     Norman M. Leon, with whom Michael D. Vhay, Matthew J. Iverson,
and DLA Piper LLP were on brief, for appellant.
     Hillary Schwab, with whom Shannon Liss-Riordan, Claret Vargas,
and Lichten & Liss-Riordan, P.C. were on brief, for appellees.

                        December 27, 2012
            LYNCH,    Chief       Judge.       This   appeal    is    the    latest

development in long-running litigation1 between Coverall North

America, Inc., a company which contracts to provide commercial

janitorial cleaning services to building owners or operators in the

United States,       and    its   "franchisees,"      who do    the   cleaning.

Proceeding under federal diversity jurisdiction, the franchisees

assert a    variety    of state-law         claims    against   Coverall.       The

plaintiffs assert claims for breach of contract, misrepresentation,

deceptive   and unfair        business      practices,   misclassification       as

independent contractors, and failure to pay wages due to them

under, inter alia, Mass. Gen. Laws ch. 149, § 148.

            Which of the various plaintiffs are subject to the

arbitration provisions of the Franchise Agreement has been a

continuing source of dispute. See, e.g., Awuah v. Coverall N. Am.,

Inc. (Awuah I), 554 F.3d 7, 11-13 (1st Cir. 2009) (where plaintiffs

signed   franchise         agreements      containing    arbitration        clauses,

unconscionability of arbitration agreement should be decided by an

arbitrator, but whether arbitration remedy is illusory should be

decided by court).         A class has been certified of franchisees who

     1
       This case has an extensive history set forth in a number of
opinions. See Awuah v. Coverall N. Am., Inc., 563 F. Supp. 2d 312
(D. Mass. 2008); Awuah v. Coverall N. Am., Inc. (Awuah I), 554 F.3d
7 (1st Cir. 2009); Awuah v. Coverall N. Am., Inc., 585 F.3d 479
(1st Cir. 2009); Awuah v. Coverall N. Am., Inc., 707 F. Supp. 2d 80
(D. Mass. 2010); Awuah v. Coverall N. Am., Inc., 740 F. Supp. 2d
240 (D. Mass. 2010); Awuah v. Coverall N. Am., Inc., 791 F. Supp.
2d 284 (D. Mass. 2011); Awuah v. Coverall N. Am., Inc., 952 N.E.2d
890 (Mass. 2011).

                                         -2-
were not subject to arbitration, a portion of the much larger group

of plaintiffs.

              Appellees,   who    have   been   referred   to   as   "Unbound

Owners,"2 are a subgroup of the plaintiffs who became Coverall

franchisees    by   signing   Consent      to   Transfer   Agreements,      or

Guaranties to Coverall Janitorial Franchise Agreements, which did

not themselves contain arbitration clauses, but which by reference

incorporated    obligations      under   Franchise   Agreements      that   did

contain such clauses. These appellees never received copies of the

Franchise Agreement, but there is no suggestion in the record that

they ever asked for copies or were denied copies of this agreement.

          On February 10, 2012, the district court determined, in

the course of ruling on a motion to expand the class of plaintiffs

who could proceed in district court, that these plaintiff-appellees

did not have to arbitrate their claims against Coverall.             That was

because, in its view, as a matter of contract construction, they

did not have adequate notice of the arbitration clauses contained

in the Franchise Agreements and so were not obligated to arbitrate.

See Awuah v. Coverall N. Am., Inc. (Awuah II), 843 F. Supp. 2d 172

(D. Mass. 2012).    Coverall has appealed this determination and the

     2
       Because Coverall uses the term "Unbound Owners" to refer to
these plaintiff-appellees, we will also use this term, though we
ultimately conclude that these plaintiffs are bound by the
Franchise Agreement's arbitration clause.

                                     -3-
court's refusal to stay proceedings as to these plaintiff-appellees

pending arbitration.

          We conclude that the district court erred. Massachusetts

law, which governs this dispute, does not impose any such special

notice requirement upon these commercial contractual provisions.

Such a requirement, in any event, would be preempted by the Federal

Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq., which requires

courts to place such arbitral agreements upon the same footing as

other contracts.

                                    I.

A.        Agreements Between Coverall and the Plaintiffs

          Many (but not all) of the plaintiffs signed Franchise

Agreements with Coverall providing that, with certain exceptions

not implicated here,

     all controversies, disputes or claims between Coverall,
     its officers, directors, agents and/or employees (in
     their respective capacities) and Franchisee (and
     Franchisee's owners, officers, directors and/or any
     guarantors of this Agreement) arising out of or related
     to the relationship of the parties, this Agreement, any
     related agreement between the parties, and/or any
     specification, standard or operating procedure of
     Coverall, including those set forth in the Coverall
     Policy and Procedure Manual, which controversies,
     disputes or claims are not resolved in accordance with
     Paragraph 20 [concerning informal dispute resolution],
     shall be submitted promptly for arbitration.

          Thirty-one other plaintiffs, including the appellees

here, became Coverall franchisees either by signing Consent to

Transfer Agreements    ("Transfer    Agreements") and   Guaranties to

                                -4-
Coverall Janitorial Franchise Agreements ("Guaranties"), or by

signing only the latter Guaranties.       The Franchise Agreements

permitted franchisees to "assign this Agreement to a person ('the

assignee') meeting the qualifications then established by Coverall

for granting new franchises, provided: . . . (ii) the assignee

enters into the franchise agreement then used by Coverall for

granting new franchises[.]"   These thirty-one plaintiffs, however,

did not sign the Franchise Agreements.    Moreover, sixteen of these

plaintiff-appellees, the Unbound Owners, never received a copy of

the Franchise Agreement, but did execute the Transfer Agreements

and/or the Guaranties.

          The Transfer Agreements were each signed by Coverall, the

(prior) franchisee, and the transferee.    The terms of the Transfer

Agreements, by which these plaintiffs became franchisees, varied.

Of the fifteen plaintiffs who signed Transfer Agreements but did

not receive copies of the Franchise Agreement, four plaintiffs --

Porfirio Aguilar, Marcelo Cardoso, Jose Santos, and Raimundo Lima

-- signed Transfer Agreements stating that

     Transferee acknowledges that upon execution of the
     Guaranty as required by ¶ 1(A) of this Consent that
     Transferee shall become personally liable to Coverall for
     the amount stated in ¶ [7 or 9] of this Consent, and
     shall succeed to all of Franchisee's rights and
     obligations under Franchisee's Janitorial Franchise
     Agreement.

                                -5-
Another   Unbound   Owner,   Givaldo    Maltaroli,   signed   a   Transfer

Agreement which transferred to him only a 50% interest in a

Coverall franchise, and provided that

     Transferee further acknowledges that upon execution of
     the Guarantee as required by ¶ 1(A) of this Consent, that
     Transferee shall likewise become personally liable to
     Coverall for the amount stated in ¶ 6(C) of this Consent,
     and shall become liable with the Franchisee for all of
     the obligations imposed by the Janitorial Franchise
     Agreement.

Ten other Unbound Owners signed Transfer Agreements stating that

     Transferee acknowledges that upon execution of the
     Guaranty as required by ¶ 1(A) of this Consent that
     Transferee shall become personally liable to Coverall for
     the amount stated in ¶ [6 or 8] of this Consent.

           All sixteen plaintiffs who did not receive copies of the

Franchise Agreement -- including Marildo Eloi, who did not sign a

Transfer Agreement or a Franchise Agreement -- signed Guaranties

providing in part that

     In consideration of, and as an inducement to Coverall
     North America, Inc. dba Coverall of . . . ("Coverall"),
     entering into a Janitorial Franchise Agreement ("the
     Agreement") dated . . . with [plaintiff] ("Franchisee"),
     the undersigned ("the Guarantor(s)") does hereby
     unconditionally guaranty, personally, the obligations of
     the Franchisee under the Agreement, as follows:

     1.    Guarantor(s) jointly, severally and unconditionally
           guaranties   to   Coverall   performance   of   all
           responsibilities,    duties,    indebtedness    and
           obligations of the Franchisee under the Agreement,
           including, but not limited to (a) payment of any
           fees due under the Agreement, including, but not
           limited to, initial fee, royalties, management
           fees, assignment fees, interest or late fees,
           training fees (if any) and fees for products,
           supplies or services furnished by Coverall to
           Franchisee; (b) obligations to hold harmless,

                                  -6-
            defend and indemnify Coverall and related parties;
            and (c) any and all advances, debts, obligations,
            notes and liabilities of the Franchisee incurred in
            connection with or as a result of the Agreement,
            previously, now, or hereafter made, incurred, or
            created, voluntary or involuntary and, however
            arising.

B.          The District Court's Certification of a Class

            On September 22, 2011, the district court certified a

class consisting of "all individuals who have owned a Coverall

franchise    and     performed   work     for   Coverall   customers   in

Massachusetts at any time since February 15, 2004, who have not

signed an arbitration agreement or had their claims previously

adjudicated."      See Awuah II, 843 F. Supp. 2d at 174.   The effect of

this was to separate out those franchisees who were not subject to

arbitration "for the purposes . . . of calculating the . . .

damages for members of the class."         Status Conf. Tr. 3 (D. Mass.

Sep. 22, 2011) (Civ. No. 07-10287).

            On November 29, 2011, plaintiffs filed a motion for a

court ruling on the scope of the class, arguing that "those who

purchased their Coverall franchises through certain 'Consent to

Transfer' agreements[3] that do not contain arbitration clauses"

should be added to the class.           Citing to federal cases brought

under federal employment statutes, plaintiffs argued that "it is

black-letter law in the First Circuit that an individual may not be

     3
       Plaintiffs apparently did not realize at this time that
transferee plaintiff Eloi had signed neither a Franchise Agreement
nor a Transfer Agreement.

                                   -7-
bound to an arbitration clause if he does not have notice of it,"

and that "Coverall . . . has not produced any evidence that the

transferees were ever themselves shown the transferors' franchise

agreements or that they were in any other way informed about the

existence of an arbitration clause."                   Coverall responded that

"[p]laintiffs' assertion that some specific level of notice is

required      before    the     Transferee-Owners      may    be    bound    by    their

agreements to arbitrate is contrary to settled law."

              On     February    10,   2012,   the    district       court    granted

plaintiffs' motion in part and denied it in part.                     See Awuah II,

843 F. Supp. 2d at 181-82.             The court stated that "[t]he First

Circuit has repeatedly held that an individual may not be bound to

an arbitration clause if he does not have notice of it."                          Id. at

179.       As we discuss later, the cases that the court cited do not

support that broad proposition.            The court found that some of the

transferee         plaintiffs    had   received      copies    of    the     Franchise

Agreement and therefore had notice of the arbitration clause.                        Id.

at 180-81.      With respect to "Transferees who signed the Consent to

Transfer Agreements[4] and did not obtain a copy of Coverall's

       4
       The district court apparently also did not recognize at this
time that one transferee plaintiff, Eloi, had signed a Guaranty but
not a Transfer Agreement.     The district court's resolution of
plaintiffs' motion to expand the class relied not on whether
transferees had signed Transfer Agreements, but on whether they had
received copies of the Franchise Agreement. We will thus treat
Eloi, who did not receive a copy of the Franchise Agreement, as
included within the court's class expansion.

                                         -8-
Franchise Offering Circular," the court concluded that "Coverall

did not give the Transferees information sufficient to put a

reasonably prudent employee on adequate notice of the agreement to

arbitrate."   Id. at 180.        The court expanded the class to include

these new plaintiffs who had not been given copies of the Franchise

Agreement, referred to in the documents they did receive.               Id. at

181-82.

          On February 23, 2012, Coverall filed a motion to stay

proceedings   as    to    the   new   class   members    pending   arbitration

pursuant to 9 U.S.C. § 3.         The district court denied this motion

the next day.      Coverall timely appealed the court's February 10,

2012 and February 24, 2012 rulings on March 7, 2012.               Proceedings

have continued in the district court during the pendency of this

appeal.

                                       II.

          The FAA provides that "[a]n appeal may be taken from

. . . an order . . . refusing a stay of any action under section 3

of this title[.]"        9 U.S.C. § 16(a)(1)(A).        "The arbitrability of

this dispute turns on the interpretation of contractual terms, a

question of law which we can determine in the first instance."

Commercial Union Ins. Co. v. Gilbane Bldg. Co., 992 F.2d 386, 388

(1st Cir. 1993).     We do so de novo.         See Shank/Balfour Beatty v.

Int'l Bhd. of Elec. Workers Local 99, 497 F.3d 83, 89 (1st Cir.

2007).

                                       -9-
A.         The Threshold Question of Arbitrability

           The FAA provides that "upon being satisfied that the

making of the agreement for arbitration or the failure to comply

therewith is not in issue, the court shall make an order directing

the parties to proceed to arbitration in accordance with the terms

of the agreement."     9 U.S.C. § 4.         "[A] gateway dispute about

whether the parties are bound by a given arbitration clause raises

a 'question of arbitrability' for a court to decide."           Howsam v.

Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002).           Parties may

delegate   questions   of    arbitrability    to   the    arbitrator,    but

"[u]nless the parties clearly and unmistakably provide otherwise,

the question of whether the parties agreed to arbitrate is to be

decided by the court, not the arbitrator."         AT&T Techs., Inc. v.

Commc'ns Workers of Am., 475 U.S. 643, 649 (1986).

           This case is different from the prior appeal to us in

Awuah I, where a different group of plaintiffs conceded that they

"had franchise agreements containing arbitration clauses," and

those   arbitration    clauses   incorporated      by    reference   rules

delegating certain issues to the arbitrator.            554 F.3d at 9.   In

Awuah I, we held that the arbitrator should decide whether the

arbitration clause was unconscionable, id. at 12, but that the

court should determine whether the arbitration remedy in this case

was illusory.   Id. at 13.    Here the district court was correct, as

to this different group of plaintiffs, to address the "predecessor

                                  -10-
question of whether there was an agreement at all to arbitrate."

Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d

1, 19 (1st Cir. 1999); see also Fantastic Sams Franchise Corp. v.

FSRO Ass'n Ltd., 683 F.3d 18, 25 (1st Cir. 2012) ("There is no

dispute here that the district court, quite appropriately, first

looked for whether there was a valid, contractual agreement to

arbitrate.").    The question of whether the Unbound Owners assumed

obligations     under    the   arbitration    clause    of    the   Franchise

Agreements is for the court.       See McCarthy v. Azure, 22 F.3d 351,

354-55 (1st     Cir.    1994) ("[A]   party   seeking   to    substitute an

arbitral forum for a judicial forum must show, at a bare minimum,

that the protagonists have agreed to arbitrate some claims. . . .

The federal policy presumes proof of a preexisting agreement to

arbitrate disputes arising between the protagonists.") (emphasis

omitted).     Nonetheless, the district court got the answer to the

question wrong, as a matter of both state and federal law.

B.          Incorporation by Reference of the Arbitration Clause

            "When deciding whether the parties agreed under the FAA

to arbitrate a certain matter, courts 'generally . . . should apply

ordinary    state-law    principles   that    govern    the    formation   of

contracts.'"     Rosenberg, 170 F.3d at 19 (alteration in original)

(quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944

(1995)).    The district court determined, and the parties do not

                                    -11-
dispute, that Massachusetts law governs this controversy.                     See

Awuah II, 843 F. Supp. 2d at 175.

             "'[T]raditional principles' of state law allow a contract

to be enforced by or against nonparties to the contract through

'assumption,[5]          piercing    the   corporate      veil,   alter   ego,

incorporation       by    reference,   third-party     beneficiary   theories,

waiver and estoppel[6] . . . .'"           Arthur Andersen LLP v. Carlisle,

556   U.S.   624,    631    (2009)   (quoting   21   R.   Lord,   Williston   on

Contracts § 57:19, at 183 (4th ed. 2001)).                Under Massachusetts

law, "'the language used in a contract to incorporate extrinsic

material by reference . . . must clearly communicate that the

purpose of the reference is to incorporate the referenced material

into the contract.'"         NSTAR Elec. Co. v. Dep't of Pub. Utils., 968

      5
       Coverall argues that the Transfer Agreements should be read
as assignments, and that the Unbound Owners therefore assumed all
of the prior franchisees' obligations under their Franchise
Agreements. The Transfer Agreements merely state that "Franchisee
executed a Janitorial Franchise Agreement and related documents
(the 'Franchise Agreement') on [date], under which the Franchisee
was to operate a Coverall janitorial franchise (the 'Franchise'),"
and that "Franchisee desires to sell the following assets of his
Franchise to Transferee, and Transferee desires to purchase the
following assets of the Franchise."       This language does not
accomplish an assignment of the prior franchisees' rights and
obligations under the Franchise Agreement.
      6
       Coverall also argues on appeal that because the Unbound
Owners enjoyed the benefits of the Franchise Agreement, they are
bound by the arbitration clause of this agreement under the
doctrine of equitable estoppel.     Coverall did not make this
argument before the district court and we do not address it.

                                       -12-
N.E.2d 895, 905 (Mass. 2012) (quoting Northrop Grumman Info. Tech.,

Inc. v. United States, 535 F.3d 1339, 1345 (Fed. Cir. 2008)).

           The Transfer Agreements, as we have described, do not all

use the traditional language of "incorporating by reference" the

arbitration clause of the Franchise Agreement.          But no such magic

terms are required.     For some Transfer Agreements at issue, other

language in the agreements clearly communicated the purpose of

incorporating the arbitration clause.         These agreements7 provided

that the transferees "succeed to all of Franchisee's rights and

obligations under Franchisee's Janitorial Franchise Agreement," or

"become liable with the Franchisee for all of the obligations

imposed   by   the   Janitorial   Franchise    Agreement."         Since    the

arbitration clause of the Franchise Agreement creates a right and

an obligation to submit "all controversies, disputes or claims

between Coverall . . . and Franchisee" for arbitration, these

Transfer Agreements sufficiently incorporated by reference the

arbitration clause.

           Moreover,    the   Transfer    Agreements   are   not    the    only

pertinent documents executed by the parties.           All of the Unbound

Owners also signed Guaranties under which they "jointly, severally

     7
       Other Transfer Agreements included no reference to the
arbitration clause or to general rights and obligations under the
Franchise Agreement, so those agreements do not of themselves
incorporate the arbitration clause and require referral to
arbitration.    But the Transfer Agreements are not the only
agreements which require interpretation.

                                   -13-
and unconditionally guarantie[d] to Coverall performance of all

responsibilities,   duties,   indebtedness    and   obligations   of   the

Franchisee under the [Franchise] Agreement" (emphasis added).          By

like reasoning, they incorporate the responsibilities, duties, and

obligations with respect to arbitration.

           Appellees argue, to the contrary, that:

     This provision, which does not mention the arbitration
     clause, cannot suffice to bind these workers to arbitrate
     their claims with Coverall. Indeed, it is clear from the
     examples that the Guaranty provides of what these
     “responsibilities, duties, indebtedness and obligations”
     are that they all relate to the workers’ substantive
     obligations to pay money and/or otherwise be financially
     indebted to Coverall in exchange for cleaning work.

We disagree.   "'"All" means "all," or if that is not clear, all,

when used before a plural noun . . . means "[t]he entire or

unabated amount or quantity of, the whole extent, substance, or

compass of, the whole."'" Instrument Indus. Trust ex rel. Roach v.

Danaher Corp., No. 033960BLS, 2005 WL 3670416, at *6 (Mass. Super.

Nov. 28, 2005) (quoting Hollinger, Inc. v. Hollinger Int'l, Inc.,

858 A.2d 342, 377 (Del. Ch. 2004)).          Moreover, the Guaranties'

explicit   references    to    "responsibilities,"      "duties,"      and

"obligations" undercut appellees' claim that the Guaranties only

concerned "obligations to pay money." Massachusetts case law leads

to this result.   See, e.g., Mass. Org. of State Eng'rs & Scientists

v. Labor Relations Comm'n, 452 N.E.2d 1117, 1122 (Mass. 1983)

(discussing "duty to arbitrate") (emphasis added); Norton v. Mass.

Bay Transp. Auth., 336 N.E.2d 854, 855 (Mass. 1975) (discussing

                                 -14-
"obligation      to   arbitrate")     (emphasis    added).        The    Guaranties

"clearly communicate[d] that the purpose of th[is] reference [was]

to incorporate" responsibilities, duties, and obligations under the

Franchise Agreement, NSTAR Elec. Co., 968 N.E.2d at 905, which

included those under the arbitration clause.

            At    oral   argument,     appellees    belatedly      raised       a    new

argument, citing Black's Law Dictionary to support the proposition

that "what the Guaranty says is, the franchisee has to do these

things, but if the franchisee doesn't do it, you're on the hook."

This is too late, so the argument is waived, see United States v.

Santiago-Pérez, 666 F.3d 57, 60 n.6 (1st Cir. 2012), but beyond

that, it does not work.         The Guaranties expressly identify the

transferees as both the "Franchisees" and the "Guarantors."

Plaintiff-appellees       are   not    just   guarantors,         they    are       also

franchisees.      They are like the other franchisees who signed the

Franchise   Agreement      directly     and   it   would     be    odd    in    these

circumstances to treat the two groups differently.                 The Guaranties

do not merely impose responsibilities upon transferees for the

obligations of other persons.

C.          The District Court's Erroneous Adoption of a Special
            Heightened Notice Requirement for Such Commercial
            Arbitration Clauses

            The district court's reasoning essentially adopted the

view that arbitration clauses cannot be enforced unless there is

heightened notice to the party sought to be bound.                       It did not

                                       -15-
purport to find this heightened notice requirement in state law,

but rather in a series of cases from this court, cases where the

underlying claim was based, unlike here, on special provisions in

federal employment statutes.

          Appellees argue not only that they did not enter into the

arbitration clause in the Franchise Agreement, but that "it would

be unconscionable to bind [them] to an arbitration clause that they

never even saw," citing Skirchak v. Dynamics Research Corp., 508

F.3d 49 (1st Cir. 2007).   Skirchak is clearly distinguishable from

this case, since in Skirchak "the parties . . . affirmatively

stated their intention that the court decide the unconscionability

. . . question[]."   Id. at 56.   There is no such agreement between

the parties here.    Instead, since we conclude that the Unbound

Owners effectively entered into an arbitration agreement with

Coverall, any claim of the unconscionability of this agreement is

for the arbitrator, as in Awuah I.       See 554 F.3d at 12.

          In Massachusetts courts, it has long been the rule that

"[t]ypically, one who signs a written agreement is bound by its

terms whether he reads and understands them or not."      St. Fleur v.

WPI Cable Sys./Mutron, 879 N.E.2d 27, 35 (Mass. 2008); see also

Haufler v. Zotos, 845 N.E.2d 322, 333 (Mass. 2006); Cohen v.

Santoianni, 112 N.E.2d 267, 271 (Mass. 1953); Wilkisius v. Sheehan,

155 N.E. 5, 6 (Mass. 1927); Atlas Shoe Co. v. Bloom, 95 N.E. 952,

953 (Mass. 1911); Rice v. Dwight Mfg. Co., 2 Cush. 80, 87 (Mass.

                                  -16-
1848).     Massachusetts law is explicit that it does not impose a

special notice requirement upon agreements containing arbitration

clauses.    See St. Fleur, 879 N.E.2d at 34-35 (error to conclude

that party "bore the risk of [counter-party's] ignorance of the

nature and contents of the arbitration agreement").

            Moreover, the FAA provides that arbitration agreements

"shall be valid, irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the revocation of any

contract." 9 U.S.C. § 2. This clause preempts state-law "defenses

that apply only to arbitration or that derive their meaning from

the fact that an agreement to arbitrate is at issue."         AT&T

Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1746 (2011).   Indeed,

the Supreme Court recently vacated a state supreme court decision

which applied a state law standard inconsistent with the FAA and

remanded for application of the FAA rule. Nitro-Lift Tech., LLC v.

Howard, 133 S. Ct. 500 (2012) (per curiam).   Even if the district

court had identified a principle of state law that imposed a

special notice requirement before parties such as these could enter

into an arbitration agreement, as it did not, such a principle

would be preempted by the FAA.      See Doctor's Assocs., Inc. v.

Casarotto, 517 U.S. 681, 687 (1996) (holding that FAA displaces

Montana statute that "conditions the enforceability of arbitration

agreements on compliance with a special notice requirement not

applicable to contracts generally"); Morales v. Sun Constructors,

                                -17-
Inc., 541 F.3d 218, 224 (3d Cir. 2008) ("[A]pplying a heightened

'knowing and voluntary' standard to arbitration agreements would be

inconsistent with the FAA.").

          In addition, the cases from which the district court

purported to find a special notice requirement for these contracts

do not impose such a requirement.      To begin, the district court

erred in consulting cases arising under federal law rather than

Massachusetts law, which governs here.    State law imposes no such

heightened notice requirement upon contracts, including arbitration

agreements.   Moreover, two of the three cases from this court that

the district court cited -- McCarthy, 22 F.3d at 354-55, and

Brennan v. King, 139 F.3d 258, 264 (1st Cir. 1998) -- stood not for

the proposition that a special notice requirement applied to

arbitration agreements, but only for the unremarkable principle

that "a party seeking to substitute an arbitral forum for a

judicial forum must show, at a bare minimum, that the protagonists

have agreed to arbitrate some claims." McCarthy, 22 F.3d at 354-55

(emphasis omitted); see also Brennan, 139 F.3d at 264 (quoting

McCarthy, 22 F.3d at 354-55).

          The district court also cited Campbell v. Gen. Dynamics

Gov't Sys. Corp., 407 F.3d 546 (1st Cir. 2005), which involved

claims of violation of federal statutes whose terms and language

provide particular protections for claimants.     Campbell concerns

language in the ADA which provides that “[w]here appropriate and to

                                -18-
the extent authorized by law, the use of alternative means of

dispute resolution, including . . . arbitration, is encouraged to

resolve disputes arising under this chapter.”    42 U.S.C. § 12212.

Campbell interpreted this language, 407 F.3d at 553-55, as did

Rosenberg, a prior case addressing identical language in the Civil

Rights Act of 1991.   170 F.3d at 18-19.   These cases construed this

language to require "minimally sufficient notice," Campbell, 407

F.3d at 559, or "some minimal level of notice," Rosenberg, 170 F.3d

at 21, that those statutory claims are subject to arbitration.

Campbell limited its holding to "purported waiver[s] of the right

to litigate ADA [Americans with Disabilities Act] claims."       407

F.3d at 559.   In turn, Rosenberg expressly stated that "this case

does not implicate any broader questions of enforceability of the

arbitration clause when the 1991 CRA [Civil Rights Act] or ADEA

[Age Discrimination in Employment Act] are not involved." 170 F.3d

at 19.

          The Supreme Judicial Court of Massachusetts has reached

the same conclusion that we do.        It has stated that "[t]he

Rosenberg court explicitly limited its holding to claims brought

under Federal civil rights laws" and held that "the Rosenberg

holding does not apply" in the absence of "the precise wording of

Federal civil rights statutes."   St. Fleur, 879 N.E.2d at 35.   The

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district court erred in applying the requirements of Campbell and

Rosenberg to appellees' state-law claims.8

                                  III.

           We reverse the district court's February 10, 2012 order

granting plaintiffs' motion for ruling on scope of class to the

extent it expanded the class certified on September 22, 2011 to

include the Unbound Owners, and its February 24, 2012 order denying

Coverall's motion to stay proceedings pending arbitration.              We

remand   for   further   proceedings   consistent   with   this   opinion,

including issuance of a stay of the Unbound Owners' claims pending

arbitration.

           So ordered.    No costs are awarded.

     8
        "The appropriateness analysis is case-specific" and
"fact-dependent." Campbell, 407 F.3d at 554. The circumstances of
this case differ markedly from those in Campbell and Rosenberg. If
the test described in those cases were applicable here -- which it
is not -- we do not suggest that Coverall failed to provide
minimally sufficient notice to the Unbound Owners.

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