Court Opinion

ID: 2793622
Source: CourtListenerOpinion
Date Created: 2015-04-14 18:01:19.601498+00
Date Added: 2024-06-11T07:48:57.111253
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                To be cited only in accordance with Fed. R. App. P. 32.1

                United States Court of Appeals
                                For the Seventh Circuit
                                Chicago, Illinois 60604

                               Submitted April 14, 2015 *
                                Decided April 14, 2015

                                         Before

                           RICHARD A. POSNER, Circuit Judge

                           JOEL M. FLAUM, Circuit Judge

                           ILANA DIAMOND ROVNER, Circuit Judge

No. 14-3183

CYNTHIA JOHNSON,                               Appeal from the United States District
    Plaintiff-Appellant,                       Court for the Southern District of Indiana,
                                               Indianapolis Division.
      v.
                                               No. 1:13-cv-01659-SEB-DKL
WESTERN & SOUTHERN LIFE
INSURANCE COMPANY,                             Sarah Evans Barker,
     Defendant-Appellee.                       Judge.

                                       ORDER

       Cynthia Johnson appeals the district court’s order compelling arbitration and
dismissing her employment-discrimination suit against Western & Southern Life
Insurance Company, her former employer. We conclude that Johnson’s suit was
properly dismissed on the ground that the arbitration agreement bars the litigation of
her claims in federal court. We affirm the judgment but modify the dismissal to be
without prejudice.

      *
        After examining the briefs and the record, we have concluded that oral
argument is unnecessary. Thus the appeal is submitted on the briefs and the record.
See FED. R. APP. P. 34(a)(2)(C).
No. 14-3183                                                                           Page 2

       When Johnson (who worked for Western & Southern for six years) was promoted
from agent to sales manager and again when she later became a sales representative, she
signed an agreement titled “Agreement and Receipt for Dispute Resolution Program.”
That agreement requires her to submit “all legal claims or disputes . . . to binding
arbitration” as set forth in the company’s Dispute Resolution Program (DPR) booklet. By
signing the agreement, Johnson acknowledged that she had “received a copy” of the
dispute-resolution booklet and “read and understood its contents.” The DPR booklet
provides that “[c]laims and disputes subject to arbitration include”—with a few
exceptions irrelevant to this appeal—“all those legal claims you may now or in the future
have against the Company.” The DPR booklet also contains a delegation provision that
grants the arbitrator “exclusive authority to resolve any dispute relating to the
interpretation, arbitrability, applicability, enforceability or formation of the agreement to
arbitrate including, but not limited to, any claim that all or any part of the agreement is
void and voidable.” A related document signed by Johnson states that she may not
“commence any arbitration or action under the DRP or otherwise relating to [her]
employment . . . more than six months after the date of termination of such
employment.”

       Johnson resigned from her position as sales representative in March 2013 and
then sued Western & Southern, claiming that the company had discriminated against
her based on race (African-American) and gender in violation of Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000e-2(a), and asserting state-law contract and tort
claims. (She also sued other defendants, but they are not parties to this appeal.)

       Western & Southern moved to compel arbitration and to dismiss Johnson’s suit
for improper venue under Federal Rule of Civil Procedure 12(b)(3). In support of its
motion, the company submitted copies of the DRP booklet and the agreements Johnson
had signed. Johnson contended that the arbitration agreement was unenforceable
because, she maintained, it was unconscionable, she had had “no opportunity to
bargain” before signing it, and she did not “remember ever being given the dispute
resolution program booklet.” She did not, however, challenge the validity of the
delegation provision.

       The district court granted the company’s motion to dismiss and to compel
arbitration. The court reasoned that it could not even consider Johnson’s challenges to
the validity of the arbitration agreement because its delegation provision—materially
identical to the one enforced by the Supreme Court in Rent-A-Center, West, Inc. v. Jackson,
561 U.S. 63, 65–66, 72 (2010)—confers exclusive authority on the arbitrator to decide
No. 14-3183                                                                           Page 3

whether the arbitration agreement is enforceable. Dismissal also was warranted, the
court continued, because Johnson had not commenced arbitration within the six-month
time limit contained in her employment agreement, and thus she was “time-barred
from . . . attempting to pursue arbitration.”

       On appeal, Johnson generally argues that the district court was wrong to
conclude that her claims against Western & Southern are subject to arbitration. But in her
brief she does not contest—or even mention—the validity of the delegation provision.
The district court was therefore required to do as the Supreme Court directed in
Rent-A-Center: treat the delegation provision as valid and enforce it, thereby letting the
arbitrator decide Johnson’s challenges to the validity of the arbitration agreement.
See Rent-A-Center, 561 U.S. at 72, 75–76.

        The district court’s order does contain one misstep that we must address: By
concluding that Johnson is “time-barred from now attempting to pursue arbitration,” the
district court improperly ruled on a matter that is presumptively reserved for the
arbitrator. See BG Group plc v. Republic of Argentina, 134 S. Ct. 1198, 1206–07 (2014);
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 85–86 (2002); Employers Ins. Co. of
Wausau v. Century Indem. Co., 443 F.3d 573, 577 (7th Cir. 2006); Citigroup, Inc. v. Abu Dhabi
Inv. Auth., 776 F.3d 126, 128–30 (2d Cir. 2015). Western & Southern contends that the
district court properly reached the issue of timeliness, relying on the Supreme Court’s
decision in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964), for the proposition
that a court may reach this and other “procedural” issues when doing so would operate
as a complete bar to arbitration. But the company’s reliance on that decision is
misplaced. In that case the Supreme Court adopted the rule that, “[o]nce it is
determined . . . that the parties are obligated to submit the subject matter of a dispute to
arbitration, ‘procedural’ questions which grow out of the dispute and bear on its final
disposition should be left to the arbitrator.” Id. at 557 (emphasis added). The Supreme Court
has applied this rule consistently, making clear in more recent decisions that federal
courts must presume that the parties intended arbitrators to decide whether a party has
complied with time limits and other arbitrational prerequisites. See BG Group, 134 S. Ct.
at 1206–07; Howsam, 537 U.S. at 85–86. Western & Southern has offered no reason to
upset that presumption here.

       And so the district court should not have dismissed Johnson’s suit on the ground
that her claims were untimely. By dismissing the suit on timeliness grounds, the court
dismissed it on the merits and thus with prejudice. Pavlovsky v. VanNatta, 431 F.3d 1063,
1064 (7th Cir. 2005). The district court’s dismissal, however, should have been without
No. 14-3183                                                                             Page 4

prejudice. The company moved to compel arbitration and to dismiss for improper venue
under Federal Rule of Civil Procedure 12(b)(3), which we note is the correct rule to
invoke in these circumstances, see Auto. Mechs. Local 701 Welfare & Pension Funds v.
Vanguard Car Rental USA, Inc., 502 F.3d 740, 746 (7th Cir. 2007). And a dismissal for
improper venue is without prejudice because it is not an adjudication on the merits.
FED. R. CIV. P. 41(b); see In re IFC Credit Corp., 663 F.3d 315, 320 (7th Cir. 2011); Rollins v.
Wackenhut Servs., Inc., 703 F.3d 122, 132 (D.C. Cir. 2012). Accordingly, we MODIFY the
district court’s dismissal to be without prejudice. As so modified, the judgment of the
district court is

                                                                                  AFFIRMED.