Robert Keymer v. Mgt. Recruiters ( 1999 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
No. 98-1635EMSL
Robert Keymer, *
*
Appellee, *
* Appeal from the United States
vs. * District Court for the
* Eastern District of Missouri
Management Recruiters *
International Inc., *
*
Appellant. *
*
On the Court's own motion, the opinion of December 4, 1998, is
hereby vacated, and the attached opinion is entered in its stead.
The judgment entered December 4, 1998, is also vacated.
February 5, 1999
Order Entered at the Direction of the Court:
Clerk, U.S. Court of Appeals, Eighth Circuit.
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
_____________
No. 98-1635
_____________
Robert Keymer, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri.
Management Recruiters International, *
Inc., *
*
Appellant. *
_____________
Submitted: September 25, 1998
Filed: February 5, 1999
_____________
Before BOWMAN, Chief Judge, JOHN R. GIBSON, and MORRIS SHEPPARD
ARNOLD, Circuit Judges.
_____________
BOWMAN, Chief Judge.
Robert Keymer sued Management Recruiters International, Inc. (MRI) alleging
MRI terminated his employment because of his age. MRI moved for an order staying
all proceedings pending arbitration. The District Court1 denied the motion concluding
1
The Honorable Lawrence O. Davis, United States Magistrate Judge for the
Eastern District of Missouri, who presided with the consent of the parties pursuant to
28 U.S.C. § 636(c).
that the parties' employment agreement excluded the dispute from arbitration. MRI
appeals the denial of the motion to stay the action pending arbitration.
I.
Keymer was employed by MRI from approximately 1970 until November 30,
1995, when he was terminated at the age of 52. Keymer filed a complaint alleging
violations of his employment rights under the Age Discrimination in Employment Act
of 1967 (ADEA), 29 U.S.C. § 621-634 (1994), and the Missouri Human Rights Act,
Mo. Rev. Stat. § 213.010-.137 (1994).2 Keymer asserted that MRI terminated him on
2
Keymer filed his complaint on August 29, 1997, and MRI filed its motion to
stay proceedings pending arbitration on October 24, 1997. On October 15, 1997, MRI
filed a motion to compel arbitration with the United States District Court for the
Northern District of Ohio. The District Court in Missouri denied the motion to stay
on January 15, 1998. The district court in Ohio granted MRI's motion to compel
arbitration on April 8, 1998 and an appeal of that order is pending before the United
States Court of Appeals for the Sixth Circuit.
In cases of concurrent jurisdiction, the first court in which jurisdiction attaches
has priority to consider the case as a matter of federal comity. See Northwest Airlines,
Inc. v. American Airlines, Inc., 989 F.2d 1002, 1004-05 (8th Cir. 1993); see also Smith
v. SEC, 129 F.3d 356, 361 (6th Cir. 1997). The first-filed rule gives priority, when
parallel litigation has been instituted in separate courts, to the party who first
establishes jurisdiction in order to conserve judicial resources and avoid conflicting
rulings. See Northwest, 989 F.2d at 1006. Because the District Court in Missouri was
the first court in which jurisdiction attached, it had priority to consider this arbitrability
question as a matter of comity.
After the District Court in Missouri denied the stay on the ground that the
dispute was not arbitrable according to the Agreement, the district court in Ohio
proceeded to decide the same arbitrability question contrary to the principles
underlying the first-filed rule. MRI argues that the district court in Ohio should have
priority because only that court could order arbitration both within its district and in
compliance with the Agreement (which calls for arbitration in Cleveland, Ohio) as
required by 9 U.S.C. § 4 (1994). Even assuming MRI's contention is correct, it is
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account of his age and replaced him with a younger employee while retaining similarly
situated younger employees.
Keymer and MRI had executed a Manager's Employment Agreement on
November 13, 1974, and had renewed it on subsequent dates. Section 6 of the
Agreement provides, in relevant part, as follows:
MEDIATION AND ARBITRATION. (a) Except as provided in
Subsection 6(b) hereof, all controversies, claims, disputes and matters in
question arising out of, or relating to, this Agreement or the breach
thereof, shall be decided by mediation and/or arbitration in accordance
with the provisions of this Section 6. . . .
(b) Controversies, disputes and matters in question regarding
EMPLOYER'S right to terminate this Agreement shall be specifically
excluded from the foregoing mediation and arbitration procedure.
Keymer asserts that subsection 6(b) excludes his claims from the agreement to
arbitrate. MRI responds that subsection 6(b) was not intended to limit the scope of the
arbitration clause in subsection 6(a). Instead, MRI argues that subsection 6(b) was
intended only to keep an arbitrator from determining that this was not an employment
at will relationship.
irrelevant because the arbitrability question is the same in a motion to compel
arbitration as in a motion to stay proceedings pending arbitration. We therefore reject
MRI's argument that the Northern District of Ohio should have priority.
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II.
MRI's motion for a stay of proceedings pending arbitration was filed pursuant
to the Federal Arbitration Act (FAA), 9 U.S.C. § 3 (1994), which states that the court,
"upon being satisfied that the issue involved in such suit or proceeding is referable to
arbitration under such an agreement, shall on application . . . stay the trial . . . until
arbitration has been had." Therefore, we must decide whether Keymer's age
discrimination claims are arbitrable under the Agreement. If the claims are arbitrable
according to the terms of the Agreement, the proceedings must be stayed pending
arbitration. See ITT Hartford Life & Annuity Ins. Co. v. Amerishare Investors, Inc.,
133 F.3d 664, 668 (8th Cir. 1998).
When the issue is the arbitrability of a dispute based on contract interpretation,
we are presented with a legal question that we review de novo. See Storey v. Shearson
Lehman Hutton, Inc., 949 F.2d 1039, 1040 (8th Cir. 1991); Nordin v. Nutri/System,
Inc., 897 F.2d 339, 344 (8th Cir. 1990). To the extent the order of the district court
concerning arbitrability is based on factual findings, we review using the clearly
erroneous standard. See Nordin, 897 F.2d at 344.
The purpose of the FAA was to reverse judicial hostility to arbitration
agreements and to place arbitration agreements on equal footing with other contracts.
See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991) (finding ADEA
claims are arbitrable). Thus we examine arbitration agreements in the same light as
any other contractual agreement. See ITT Hartford, 133 F.3d at 668. We apply
ordinary state law contract principles to decide whether parties have agreed to arbitrate
a particular matter. See First Options of Chicago, Inc. v. Kaplan, 115 S. Ct. 1920,
1924 (1995); Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 834 (8th Cir. 1997).
According to section 9 of the parties' Agreement, Ohio law governs in this case.
In deciding whether MRI and Keymer have agreed to submit this particular
dispute to arbitration, we must find that a valid agreement to arbitrate exists between
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the parties and, if so, that this dispute falls within the scope of the arbitration
agreement. See Daisy Mfg. Co. v. NCR Corp., 29 F.3d 389, 392 (8th Cir. 1994). The
parties do not dispute that a valid arbitration agreement exists, but they disagree as to
whether this particular dispute falls within that agreement.
MRI is correct in stating that arbitrability questions must be considered with a
"healthy regard for the federal policy favoring arbitration" and that "any doubts
concerning the scope of arbitrable issues should be resolved in favor of arbitration."
Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).
However, the FAA's pro-arbitration policy does not operate without regard to the intent
of the contracting parties, for arbitration is a matter of consent, not of coercion. See
Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 57 (1995). Thus, a party
cannot be forced to submit to arbitration any dispute that he has not agreed to submit.
See ITT Hartford, 133 F.3d at 668. Against this background, we must consider
whether by entering into the Agreement MRI and Keymer agreed to arbitrate these age
discrimination claims.
We agree with the District Court’s well-reasoned opinion that the language in
subsection 6(b) is clear and unambiguous. When a contract is clear and unambiguous,
we must give effect to the agreement's express terms and need not go beyond its plain
language to determine the rights of the parties. See Stone v. National City Bank, 665
N.E.2d 746, 752 (Ohio Ct. App. 1995). Thus, it is not necessary to consider MRI's
extrinsic evidence of its "true intent" in drafting subsection 6(b). After all, the intent
of the parties is presumed to reside in the language they chose to use in the agreement.
See Foster Wheeler Enviresponse, Inc. v. Franklin County Convention Facilities
Auth., 678 N.E.2d 519, 526 (Ohio 1997). The Agreement expressly states that
"[c]ontroversies, disputes and matters in question regarding EMPLOYER'S right to
terminate this Agreement shall be specifically excluded from the foregoing mediation
and arbitration procedure," and the ADEA clearly limits MRI's right to terminate
employment. Therefore, Keymer's ADEA challenge to the termination of his
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employment is excluded from the agreement to arbitrate by the plain language of the
parties' Agreement.
MRI argues that the exclusionary clause is ambiguous, but MRI cannot create
ambiguity merely by so stating in an affidavit. When the contractual language is
unambiguous, we will not find ambiguity based on extrinsic evidence as to "true
intent." Furthermore, if any ambiguity were to be found, MRI drafted the Agreement
and it cannot now claim the benefit of the doubt. See Graham v. Drydock Coal Co.,
667 N.E.2d 949, 952 (Ohio 1996) (stating that ambiguity is to be construed against the
party who drafted the contract).3
MRI asserts that arbitration should not be denied in this case "unless it may be
said with positive assurance that the arbitration clause is not susceptible of an
interpretation that covers the asserted dispute." AT&T Techs., Inc. v. Communications
Workers of Am., 475 U.S. 643, 650 (1986) (internal quotation omitted).4 The
arbitration clause in subsection 6(a) is very broad. But the arbitration clause, by its
own terms, is made subject to the limitations set forth in the exclusionary clause in
subsection 6(b). This clause clearly would exclude the issue of whether Keymer was
an employee at will as MRI suggests, but it is not limited to that narrow question. To
the contrary, the language of subsection 6(b) is quite sweeping and does not state (or
even hint) that other sorts of disputes regarding MRI's right to terminate Keymer's
3
MRI argues that Keymer's age discrimination complaint alleges only
termination of employment and not termination of the employment agreement, so the
exclusion should not apply. This is a new argument, made for the first time after the
case has come to us on appeal. It never was raised in the District Court. In any event,
we regard this as a frivolous argument.
4
The Supreme Court recently has held that this presumption of arbitrability in
collective bargaining agreements does not extend to statutory claims of employment
discrimination. See Wright v. Universal Maritime Serv. Corp., 119 S. Ct. 391, 395-96
(1998). The Court further held that any collective bargaining agreement requirement
to arbitrate employment discrimination claims must be "particularly clear." Id. at 396.
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employment are not covered by the exclusionary clause. Linguistically, the scope of
subsection 6(b) is not susceptible of the limited interpretation for which MRI contends.
MRI suggests that the exclusionary clause at issue here is substantially the same
as that in Management Recruiters International, Inc. v. Zeck, No. 1:91CV1043, at 4
(N.D. Ohio 1994) (order compelling arbitration) ("The right of the Company to
terminate this agreement shall not be subject to arbitration."). In Zeck, the district
court held that the just-quoted language did not exclude the plaintiff's wrongful
termination claim from arbitration. First, we note our respectful disagreement with the
holding in Zeck. Second, although the language of the exclusionary clause in Zeck
may be somewhat similar to the language of the exclusionary clause in this case, there
are important differences. The exclusionary clause in the present Agreement states that
"[c]ontroversies, disputes and matters in question regarding EMPLOYER'S right to
terminate this agreement" shall be excluded from arbitration. "Controversies, disputes,
and matters in question" cannot be mere surplusage as MRI contends, because
contracts must be interpreted to give effect to every provision. See Prudential Ins. Co.
of Am. v. Corporate Circle, Ltd., 658 N.E.2d 1066, 1069 (Ohio Ct. App. 1995). The
plain language of the exclusionary clause in the Agreement before us clearly
encompasses all disputes regarding MRI's right to terminate and entirely withdraws
such matters from the arbitration process.
The FAA's primary purpose is to ensure that agreements to arbitrate are enforced
according to their terms and that parties are free to structure their arbitration
agreements as they wish. See Mastrobuono, 514 U.S. at 57. Although federal policy
favors arbitration, it does not disregard the intent of the contracting parties as
evidenced by their agreement. We are bound to interpret this Agreement in accordance
with the intentions of both MRI and Keymer as expressed in the Agreement, even if
the result is to preclude arbitration. We agree with the District Court that Keymer,
never having agreed to arbitrate his age discrimination claims, is entitled to pursue his
lawsuit.
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The judgment of the District Court is affirmed.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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