City of Laurel, Mississippi v. Cintas Corporation No. 2 ( 2023 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 6 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
CITY OF LAUREL, MISSISSIPPI, obo No. 22-15476
itself and all other similarly situated,
D.C. No.
Plaintiff-Appellee, 3:21-cv-00124-LRH-CLB
v.
MEMORANDUM*
CINTAS CORPORATION NO. 2,
Defendant-Appellant.
Appeal from the United States District Court
for the District of Nevada
Larry R. Hicks, District Judge, Presiding
Argued and Submitted February 14, 2023
San Francisco, California
Before: MILLER, SANCHEZ, and MENDOZA, Circuit Judges.
Dissent by Judge MILLER.
Cintas Corporation No. 2 (“Cintas”) appeals the district court’s order
denying Cintas’s motion to stay proceedings and compel arbitration of the City of
Laurel’s (the “City”) breach of contract claims. We have jurisdiction under 9
U.S.C. § 16(a)(1)(A) and, reviewing de novo, we affirm.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
The parties are familiar with the facts of this case, so we need not recite
them here other than to state that there are two contracts at issue. The first
contract, which incorporates an arbitration agreement, is the Master Agreement
between Cintas and the lead public agency. The second contract, the “piggyback”
agreement, is between Cintas and the City. Both contracts contain nearly identical
provisions delineating how Cintas will deal with participating public agencies such
as the City (collectively the “PPA Provisions”). Neither party disputes that a valid
arbitration agreement exists between Cintas and the lead public agency, only
whether the same agreement exists between Cintas and the City.
Under the Federal Arbitration Act, the court is limited to “determining (1)
whether a valid agreement to arbitrate exists, and, if it does, (2) whether the
agreement encompasses the dispute at issue.” Chiron Corp. v. Ortho Diagnostic
Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). “[A]rbitration is a matter of
contract,” Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 564 (9th Cir. 2014)
(quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)), and “a
party cannot be required to submit to arbitration any dispute which he has not
agreed so to submit,” United Steelworkers of Am. v. Warrior & Gulf Navigation
Co., 363 U.S. 574, 582 (1960). To determine whether an agreement to arbitrate
exists, we apply state contract law. Knutson, 771 F.3d at 565. Applying
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Mississippi contract law,1 we conclude there is no valid arbitration agreement
between Cintas and the City.
I.
First, we agree with the district court that the dispute resolution terms in the
PPA Provisions displace the arbitration agreement incorporated into the Master
Agreement. The PPA Provisions indicate an intent to allow Cintas and
participating public agencies to negotiate certain terms, such as inspection and
delivery. As to dispute resolution, the PPA Provisions do not mention arbitration
and instead state that Cintas and the City must resolve disputes “directly between
them in accordance with and governed by the laws of the State in which [the City]
exists.” If this language meant nothing more than arbitration, it would be
superfluous in light of the arbitration agreement incorporated into the Master
Agreement. See Jones v. Miss. Insts. of Higher Learning, 264 So. 3d 9, 22 (Miss.
Ct. App. 2018) (recognizing courts must avoid interpreting a contract in a way that
would render provisions “redundant and superfluous”). Had Cintas and the City
wished to submit their disputes to arbitration, they could have included language to
this effect in the piggyback agreement that directly governs their relations.
Instead, as the district court concluded, arbitration terms are notably absent from
1
Cintas argues that Maryland law governs the interpretation of the Master
Agreement, but both parties agree that the two states provide the same interpretive
rules for purposes here.
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this agreement. Cf. Chisom v. Roemer, 501 U.S. 380, 396 n.23 (1991) (“[S]ilence
in this regard can be likened to the dog that did not bark.”).
II.
Second, we cannot accept Cintas’s position that we must harmonize the
contract language by applying the arbitration agreement to the City’s dispute with
Cintas. The arbitration agreement lies within a disputes provision containing terms
that clearly apply only to Cintas and the lead public agency. Given this structure,
we decline to excise the arbitration agreement and apply it to the instant dispute.
See Epperson v. SOUTHBank, 93 So. 3d 10, 17 (Miss. 2012) (“[T]he courts do not
have the authority to modify, add to, or subtract from the terms of a contract . . . .”
(quoting Wallace v. United Miss. Bank, 726 So. 2d 578, 584 (Miss. 1998))); cf.
Morgan v. Sundance, Inc., 142 S. Ct. 1708, 1713 (2022) (“[A] court may not
devise novel rules to favor arbitration over litigation.”).
AFFIRMED.
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FILED
City of Laurel, Mississippi v. Cintas Corporation No. 2, No. 22-15476 MAR 6 2023
MOLLY C. DWYER, CLERK
MILLER, Circuit Judge, dissenting: U.S. COURT OF APPEALS
The parties’ agreement makes this dispute subject to arbitration. I would
therefore reverse the judgment of the district court and remand with instructions to
grant the motion to compel arbitration.
In interpreting a contract, we must “read the contract as a whole, so as to
give effect to all of its clauses.” Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 908
So. 2d 107, 111 (Miss. 2005). Here, the contract consists of three separate
documents. First, there is the 2017 Facilities Solutions Agreement (FSA) between
the City and Cintas, which the court refers to as the “piggyback” agreement.
Second, there is the 2012 Master Agreement. Although the City was not a party to
the Master Agreement, the FSA expressly incorporates it, in a section the court
refers to as the “PPA Provisions,” by stating that Cintas “agrees to extend the same
terms, covenants agreed to under the Master Agreement with Lead Public Agency
Harford County Public Schools to other government agencies . . . that, in their
discretion, desire to access the Master Agreement.” Third, the Master Agreement
in turn incorporates parts of a request for proposals (RFP) that was previously
issued by Harford County Public Schools. Specifically, it incorporates the RFP’s
dispute-resolution provision by stating that “[d]isputes will be settled as per the
stipulations contained within” that document.
1
The City emphasizes that the FSA contains its own dispute-resolution
provision: “Any disputes between a Participating Public Agency and Supplier will
be resolved directly between them in accordance with and governed by the laws of
the State in which the Participating Public Agency exists.” Based on that provision,
the City invites us to ignore the dispute-resolution provision of the RFP. But we
may not ignore any part of the contract. Rather, our obligation is to harmonize the
contract by giving effect to every part of it. And we can easily harmonize all of the
terms at issue.
The RFP’s dispute-resolution provision contains three parts. First, it says
that “[e]xcept as otherwise provided in these contractual documents,” disputes
“shall be referred to the Harford County Public Schools Supervisor of Purchasing.”
As the parties agree, that makes no sense as applied to an agreement with the City,
which has no relationship to Harford County Public Schools. Not surprisingly, the
FSA’s dispute-resolution provision expressly displaces it by specifying that
disputes “will be resolved directly between” the parties.
Second, the RFP says that the contract shall be governed by Maryland law. It
would be strange to apply Maryland law to an agreement between two parties
neither of which has any connection to Maryland. And here too, the FSA expressly
displaces the provision by stating that it is “governed by the laws of the State in
which the Participating Public Agency exists,” in this case, Mississippi.
2
Third, and crucially, the RFP provides for arbitration, stating that “[a]ll
disputes shall be decided by a single arbitrator” under the rules of the American
Arbitration Association. Unlike the other two parts of the RFP’s dispute-resolution
provision, there is nothing surprising about the City and Cintas deciding to resolve
disputes by arbitration. Nor is anything in the FSA inconsistent with their agreeing
to do so. In particular, the FSA’s statement that disputes “will be resolved directly
between them” is entirely consistent with resolving disputes through arbitration.
Had the parties wished to displace the RFP’s arbitration clause, they could easily
have written the FSA to say “resolved directly between them in any court having
jurisdiction,” but they did not. Because nothing in the FSA displaces the arbitration
clause that the parties agreed to incorporate, I would enforce it according to its
terms.
3