Court Opinion

ID: 2723940
Source: CourtListenerOpinion
Date Created: 2014-09-05 14:00:27.332102+00
Date Added: 2024-06-11T09:15:59.520171
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                               File Name: 14a0693n.06

                                        No. 13-1974                                FILED
                                                                             Sep 05, 2014
                                                                         DEBORAH S. HUNT, Clerk
                         UNITED STATES COURTS OF APPEALS
                              FOR THE SIXTH CIRCUIT

ROBERT KAY,                                           )
                                                      )
       Plaintiff-Appellant,                           )
                                                      )
                                                             ON APPEAL FROM THE
v.                                                    )
                                                             UNITED STATES DISTRICT
                                                      )
                                                             COURT FOR THE EASTERN
THE MINACS GROUP (USA), INC.,                         )
                                                             DISTRICT OF MICHIGAN
                                                      )
                                                             OPINION
       Defendant-Appellee.                            )
                                                      )
                                                      )

       BEFORE:        MERRITT, COOK, and STRANCH, Circuit Judges

       JANE BRANSTETTER STRANCH, Circuit Judge: Based on an arbitration provision

in an employee handbook, the district court dismissed Robert Kay’s age discrimination suit and

ordered Kay and his employer to arbitrate the issue. The arbitration agreement, assuming it is

even valid and enforceable, does not apply to Kay’s claims. We REVERSE the district court.

                          I.    FACTS & PROCEDURAL HISTORY

       In 2011, The Minacs Group fired Robert Kay, who was sixty years old, and hired

someone much younger to replace him. Kay sued, alleging age discrimination under the Age

Discrimination in Employment Act (ADEA) and Michigan’s Elliot Larsen Civil Rights Act

(ELCRA). Kay had originally worked for the Phoenix Group, which hired him in 1995, but in

2001 Minacs purchased Phoenix’s assets; nevertheless, paragraph 10 of Kay’s complaint stated

that he “began working for defendant in 1995.” Minacs moved to dismiss the complaint and
No. 13-1974
Kay v. The Minacs Group

compel arbitration pursuant to the “Receipt of Policies and Procedures” issued by Phoenix and

signed by Kay in 1995. Minacs did not submit the Policies and Procedures document itself—just

the Receipt. The district court construed paragraph 10 as a judicial admission that Phoenix and

Minacs were the same employer and concluded that the Receipt was therefore still operative

despite the change in ownership. The court found that the Receipt required Kay to arbitrate his

age discrimination claim and dismissed the case and compelled arbitration. Kay moved for

reconsideration, requesting permission to amend his complaint and offering evidence that he had

been fired by Phoenix and then hired by Minacs and also that Minacs’s own employee policies

superseded the Receipt. The district court denied Kay’s motion. Kay appealed, arguing that the

arbitration provision in the Phoenix Receipt does not cover his claims and that the court erred in

construing Paragraph 10 of his complaint as a judicial admission that Phoenix and Minacs were

functionally the same entity.

          This appeal exists largely because of troubling litigation behavior by Minacs. Minacs

provided the court with the Phoenix Receipt but not Phoenix’s Policies and Procedures handbook

even though the Receipt’s arbitration provision applies only to claims “arising out of or relating

to these Policies and Procedures.” Due to Minacs’s omission, we have no idea what the Phoenix

handbook covers and so have no idea what kind of claims the arbitration clause covers. Minacs,

moreover, must have had copies of its own receipt and handbook, which suggests that Minacs

would have known that the Phoenix receipt had been superseded by its own and that Kay’s

claims were not subject to arbitration. This crucial information should have been a part of the

record.

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No. 13-1974
Kay v. The Minacs Group

                                II.     STANDARD OF REVIEW

       We review a district court’s decision to compel arbitration de novo, “but with a thumb”—

or at least a pinkie—“on the scale in favor of arbitration.” Solvay Pharm., Inc. v. Duramed

Pharm., Inc., 442 F.3d 471, 478 (6th Cir. 2006).        The question of whether there was an

enforceable agreement to arbitrate is reviewed de novo according to state contract law. Tillman

v. Macy’s, Inc., 735 F.3d 453, 456 (6th Cir. 2013); Floss v. Ryan’s Family Steak Houses, Inc.,

211 F.3d 306, 314 (6th Cir. 2000). A district court’s decision to treat a party’s statement as a

judicial admission is reviewed for abuse of discretion: the decision stands unless the panel is

“firmly convinced that a mistake has been made.” MacDonald v. Gen. Motors. Corp., 110 F.3d

337, 340 (6th Cir. 1997). A denial of a motion to reconsider is also reviewed for abuse of

discretion. Nat’l Ecological Found. v. Alexander, 496 F.3d 466, 476 (6th Cir. 2007).

                                         III.   ANALYSIS

   A. Construing the Receipt

       The Federal Arbitration Act directs a court to stay litigation and refer an issue to

arbitration once it determines that there is (1) an “agreement in writing for such arbitration” and

(2) that the issue in question “is referable to arbitration under such agreement.” 9 U.S.C. § 3.

The threshold question, then, is “whether the dispute is arbitrable, meaning that a valid

agreement to arbitrate exists between the parties and that the specific dispute falls within the

substantive scope of the agreement.” Mazera v. Varsity Ford Mgmt. Servs., LLC, 565 F.3d 997,

1001 (6th Cir. 2009) (quoting Landis v. Pinnacle Eye Care, LLC, 537 F.3d 559, 561 (6th Cir.

2008)). Both parts of this question—whether there was an “agreement” to arbitrate and whether

an issue falls within the scope of that agreement (“is referable,” to use the Arbitration Act’s

wording)—are primarily governed by state contract law. Hergenreder v. Bickford Senior Living

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No. 13-1974
Kay v. The Minacs Group

Grp., LLC, 656 F.3d 411, 416–17 (6th Cir. 2011). We say “primarily” because the Arbitration

Act preempts any state law rule “singling out arbitration provisions for suspect status,” Doctor’s

Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996), and thus requires courts to “place

arbitration agreements on an equal footing with other contracts and enforce them according to

their terms,” AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011) (citation

omitted). But with that caveat thus made, whether Kay and Phoenix had an “agreement” to

arbitrate is really a question of contract formation and whether Kay’s civil rights claims are

within the scope of that agreement is a question of contract construction, both of which are

governed by Michigan law.

       We assume for argument’s sake that Kay and Phoenix had agreed to arbitrate some

disputes; the question is whether they had agreed to arbitrate this kind of dispute—a civil rights

claim. The relevant portion of the Receipt provides:

       I also acknowledge that any and all controversies or claims arising out of, or
       relating to these Policies and Procedures shall be resolved by submitting the
       dispute to arbitration . . . .

Note that “Policies and Procedures” are capitalized in this sentence, which indicates that the

arbitration provision only applies to claims connected to the employee handbook titled “Policies

and Procedures” rather than all of Phoenix’s policies and procedures. In other places, the Receipt

mentions “policies and procedures” with no capitalization when referring to something other

than the handbook itself. The Receipt, moreover, appears to be itself part of the Policies and

Procedures handbook. Note the header to the Receipt:

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No. 13-1974
Kay v. The Minacs Group

       On its face, then, the scope of the arbitration provision is easy to discern: Kay and

Phoenix agreed to arbitrate only those disputes that arise from or relate to whatever is in the

Policies and Procedures handbook. Minacs did not put the rest of the handbook into the record,

so we have no way of knowing whether civil rights claims are covered by the handbook.

Arbitration provisions, like any other provision, must be interpreted in the context of the whole

contract. See Huffman v. Hilltop Cos., LLC, 747 F.3d 391, 397–98 (6th Cir. 2014); see also

Heurtebise v. Reliable Bus. Computers, Inc., 550 N.W.2d 243, 246–47 (Mich. 1996).

       Given Minacs’s omission, we construe the provision literally and conclude that the

arbitration provision does not cover Kay’s civil rights claims because there is no contract

language indicating that his claims arise from or relate to the employee handbook. Further,

Kay’s complaint does not allege a “policy or procedure,” it alleges age discrimination on the part

of Kay’s immediate supervisor. The provision is certainly not “ambiguous” as we normally

understand the word: “Contract language is ambiguous if it ‘is capable of more than one meaning

when viewed objectively by a reasonably intelligent person who has examined the context of the

entire integrated agreement . . . .’” Preferred RX, Inc. v. Am. Prescription Plan, Inc., 46 F.3d

535, 543 (6th Cir. 1995) (quoting Walk–In Medical Ctrs., Inc. v. Breuer Capital Corp., 818 F.2d

260, 263 (2d Cir. 1987)) (emphasis added). Rather, the provision is “ambiguous” because

Minacs chose not to provide the court with the portion of the contract that would clear up the

“ambiguity.” Remarkably, Minacs argues that the presumption of arbitrability compels the court

to resolve this “ambiguity” in favor of arbitration. Presumptions and canons of construction do

not relieve a party of its responsibility to provide the court with the entire contract at issue and do

not supplant a lawyer’s duty of candor owed to the court.

                                                 -5-
No. 13-1974
Kay v. The Minacs Group

   B. The Judicial Admission

       In order to ensure that the case will proceed properly on remand, we pause to address the

court’s ruling that Kay had made a judicial admission. Paragraph 10 of Kay’s complaint states:

“Plaintiff began working for defendant in 1995 as an assistant controller.” The district court read

this sentence to mean that “Plaintiff admits in his Complaint that Phoenix and Defendant [i.e.,

Minacs] are the same. This is a judicial admission that Phoenix and Defendant have substantial

similarities of operation and continuity, thus the arbitration agreement is binding on the parties.”

We disagree.

       “[U]nder federal law, stipulations and admissions in the pleadings are generally binding

on the parties and the Court. Not only are such admissions and stipulations binding before the

trial court, but they are binding on appeal as well.” Ferguson v. Neighborhood Hous. Servs.,

780 F.2d 549, 551 (6th Cir. 1986) (citation omitted). “Factual assertions in pleadings . . . , unless

amended, are considered judicial admissions conclusively binding on the party who made them.”

Am. Title Ins. Co. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988); see also Barnes v.

Owens-Corning Fiberglas Corp., 201 F.3d 815, 829 (6th Cir. 2000) (quoting Lacelaw, 861 F.2d

at 226). However, a statement must be “deliberate, clear and unambiguous” and “‘expressly

concede . . . an alleged fact’” in order to be treated as a judicial admission. MacDonald v. Gen.

Motors Corp., 110 F.3d 337, 340 (6th Cir. 1997) (quoting United States v. Belculfine, 527 F.2d

941, 944 (1st Cir. 1975)).

       The requirements for a judicial admission are not satisfied by the record. Even under a

deferential standard of review, “Plaintiff began working for Defendant in 1995 as an assistant

controller,” is not sufficiently deliberate or clear to qualify as an express concession that

“Phoenix and [Minacs] are the same.” The briefing and record before the district court made

                                                -6-
No. 13-1974
Kay v. The Minacs Group

clear that Kay did not work for Minacs in 1995, that he worked for Phoenix, that Phoenix and

Minacs are not “the same” as a matter of fact, and Kay that did not intend to concede this “fact.”

The court abused its discretion when it treated Paragraph 10 of Kay’s complaint as a judicial

admission. See MacDonald, 110 F.3d at 340.

                                      IV.     CONCLUSION

        Kay’s claims are not arbitrable under the terms of the Receipt and Kay is therefore

entitled to pursue his case in federal court. We REVERSE the district court’s order compelling

arbitration and dismissing the case, and REMAND the case for further proceedings on Kay’s

civil rights claims.

                                               -7-
No. 13-1974
Kay v. The Minacs Group

       COOK, Circuit Judge, concurring separately. I concur with the majority’s decision to

reverse the judgment of the district court and remand for further proceedings on a single, narrow

ground: Minacs fails to show that the Receipt entitles it to dismissal.

       In granting Minacs’s motion to dismiss, the district court relied on the Receipt’s

seemingly broad language—“any and all controversies or claims arising out of, or relating to”—

without grappling with the next phrase, “these Policies and Procedures.” As the majority notes,

this phrase limits the scope of the arbitration provision to those disputes arising from or relating

to Phoenix’s 1995 Policies and Procedures handbook. And though we have previously construed

arbitration clauses to apply broadly to employment disputes, we have done so only when the

provisions included broader language than the Receipt’s language here. See, e.g., Morrison v.

Circuit City Stores, Inc., 317 F.3d 646, 654 (6th Cir. 2003) (arbitration provision covering “any

legal dispute relating to [employee’s] employment with Circuit City, including all state and

federal statutory claims, contract claims, and tort claims (emphasis added)); EEOC v. Frank’s

Nursery & Crafts, Inc., 177 F.3d 448, 452 (6th Cir. 1998) (arbitration provision covering “any

claim . . . relative to [employee’s] employment or termination of employment (including but not

limited to any claim for any tort, discrimination, breach of contract, violation of public policy or

statutory claim)” (emphasis added)).

       Here, Minacs labeled the Receipt a “stand-alone” document and provided no evidence

that Kay’s discrimination claim “aris[es] out of or relat[es] to [the Phoenix] Policies and

Procedures.” On this record, the district court erred in concluding that Kay’s dispute falls within

the scope of the arbitration provision. I therefore concur with the majority’s decision to reverse

the district court’s judgment and remand for further proceedings.

                                                 -8-