Belnap v. Iasis Healthcare

FILED
United States Court of Appeals
Tenth Circuit
January 5, 2017
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
LEGRAND P. BELNAP, M.D.,
Plaintiff - Appellee,
v. No. 15-4010
IASIS HEALTHCARE, a Delaware
corporation; SALT LAKE REGIONAL
MEDICAL CENTER, L.P., a Delaware
limited partnership, d/b/a Salt Lake
Regional Medical Center; BEN
HOWARD, M.D.; ALAN DAVIS, M.D.;
ANGELO CHACHAS, M.D.; WANDA
UPDIKE, M.D.; KATHY OLESON,
Defendants - Appellants.
Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:14-CV-00086-DN)
Juliette P. White of Parsons Behle & Latimer, Salt Lake City, Utah (Francis M. Wikstrom
and Alan S. Mouritsen of Parsons Behle & Latimer, Salt Lake City, Utah, with her on the
briefs), for Defendants-Appellants.
Peter Stirba of Stirba, P.C., Salt Lake City, Utah (Julia D. Kyte and Jeffrey D. Mann of
Stirba, P.C., Salt Lake City, Utah, with him on the brief), for Plaintiff-Appellee.
Before KELLY, BALDOCK, and HOLMES, Circuit Judges.
HOLMES, Circuit Judge.
LeGrand P. Belnap, M.D., is a surgeon at the Salt Lake Regional Medical Center
(“SLRMC”). Dr. Belnap and SLRMC entered into a Management Services Agreement
(“Agreement”) under which he would provide consulting services to help SLRMC
develop a new surgical center. The Agreement contained an arbitration provision,
including an agreement to arbitrate questions of arbitrability. SLRMC subsequently
disciplined Dr. Belnap for alleged misconduct and then reversed course and vacated the
discipline. As a result, Dr. Belnap brought various claims against SLRMC, its alleged
parent company, and several of its individual employees. These Defendants moved to
compel arbitration on the basis of the arbitration provision in the Agreement. The district
court determined that most of the claims fell outside the scope of the Agreement, and
granted in part and denied in part the motion. Exercising jurisdiction under the Federal
Arbitration Act (“FAA”), 9 U.S.C. § 16(a)(1)(A) and (C), we AFFIRM IN PART,
REVERSE IN PART, and REMAND for further proceedings.
I
A
Dr. Belnap is a general surgeon. In 2009, he joined the staff of the Salt Lake City
hospital, SLRMC. Dr. Belnap was appointed Surgical Director of SLRMC’s intensive-
care unit.
As an SLRMC staff member, Dr. Belnap’s relationship with the hospital is
governed by the SLRMC Bylaws of the Medical and Dental Staff (“Bylaws”). In
2
addition to governing the treatment and care of patients, the Bylaws provide rules for
investigating a physician, implementing a suspension, and guaranteeing due process
through fair hearing procedures. The Bylaws do not contain an arbitration provision.
On February 1, 2012, Dr. Belnap entered into the Agreement with SLRMC. It
related to the development of a “Hepatic Surgical department devoted to a[n] Abdominal
Treatment Program,” called the “Center.” Aplts.’ App. at 54. Specifically, the
Agreement engaged Dr. Belnap’s “management and consulting services” to develop and
operate the Center. Id. at 55.1 With respect to those services, the Agreement created an
“independent contractor” relationship between Dr. Belnap and SLRMC. Id. at 65 (§ 5.1).
In the Agreement, Dr. Belnap represented that he:
(i) holds a license to practice medicine in the State of Utah, and neither
that license nor any license to practice medicine in any other
jurisdiction has ever been denied, suspended, revoked, terminated,
voluntarily relinquished under threat of disciplinary action, or restricted
in any way; (ii) maintains an active surgery practice; (iii) holds medical
staff privileges at [SLRMC]; [and] (iv) has not had medical staff
privileges denied, suspended, revoked, terminated, voluntarily
relinquished under threat of disciplinary action, or made subject to
terms of probation or any other restriction at any health care facility[.]
Id. at 63 (§ 4.2). If any of these representations ceased to be true, the Agreement
1
In the Agreement, Dr. Belnap agreed to help establish the Center, to assist
in its day-to-day operations, to manage all non-SLRMC personnel working for the Center,
and to ensure that the Center maintained its status as an “advanced abdominal center of
excellence,” Aplts.’ App. at 61 (§ 1.4). In turn, SLRMC agreed to make facilities and
resources available to the Center, to develop “a strategic plan, budget, and proposed
timeline for financing, constructing, and obtaining appropriate regulatory approvals for
the Center,” id. at 62 (§ 3.2), to acquire necessary equipment, furniture, and furnishings
for the Center, and to provide the services of SLRMC personnel.
3
provided that SLRMC could “terminate th[e] Agreement effective immediately.” Id. at
66–67 (§ 8.3).
The Agreement contained the following dispute-resolution provision:
24. Dispute Resolution. The Parties shall initially attempt to settle
any dispute between them (as well as with all or any of the
Service Providers; each Party and any such Service Provider
being referred to individually in this Section 24 as a
“Disputant”) arising under or related to this Agreement
informally. If the Disputants are unable to resolve the dispute
informally, the Disputants shall seek to resolve the dispute
through mediation and if mediation fails, shall have the dispute
resolved by arbitration. No Disputant may prosecute any suit
until and unless the Disputants have submitted the issues to
mediation and, if necessary, to arbitration in Salt Lake County,
Utah, in accordance with the rules of JAMS and applying laws
of the United States and State of Utah, or another suitable
dispute resolution service agreeable to their respective
attorneys. [Dr. Belnap] will secure the agreement of each
Service Provider to be bound by the provisions of this Section
24. Notwithstanding the foregoing, [SLRMC] may at any point
bring action in a court of competent jurisdiction to enforce the
provisions of Section 10 [regarding confidentiality of health
information], 14 [regarding the noncompetition agreement] and
15 [regarding SLRMC’s confidential information] of this
Agreement.
24.1 Mediation. Mediation shall be initiated by a Disputant, and the
mediation shall be conducted, in accordance with the JAMS
mediation guidelines, except as herein provided otherwise. The
mediator shall be chosen by the Disputants, or if they are unable
to agree within fourteen (14) days, by the applicable
representative of JAMS. If the mediator chosen has not
succeeded in achieving a mediated settlement after ninety (90)
days, any Disputant may initiate resolution of the dispute
through arbitration.
24.2 Arbitration. If the Disputants are unable to resolve the dispute
informally or through mediation, any Disputant may within
4
thirty (30) days of completion of the failed mediation submit the
matter to final, binding arbitration, provided that the issue is
arbitrable under Utah law. The arbitration shall be
administered by JAMS and conducted in accordance with its
Streamlined Arbitration Rules and Procedures (the “Rules”),
except as provided otherwise herein. Selection of an arbitrator
shall be made on or before fourteen (14) days after the receipt of
the demand for arbitration. In the event the Disputants cannot
agree on the selection of an arbitrator within this time, the
arbitrator shall be selected pursuant to the Rules. A preliminary
conference shall be held as provided in the Rules. The
Disputants, the JAMS Case Manager and the arbitrator shall
maintain the substance of any proceedings hereunder in
confidence and the Case Manager and the arbitrator, prior to any
proceedings being held hereunder, shall sign an agreement
whereby they agree to keep the substance of any proceedings
hereunder in confidence. The arbitrator may award, wholly or
in such partial amount(s) as the arbitrator determines, any
Disputant its costs of the arbitration proceeding (including
attorneys fees) at the expense of the other Disputant(s).
Id. at 73, 75 (§ 24) (emphases added).
On March 18, 2013, SLRMC’s Medical Executive Committee (“MEC”) suspended
Dr. Belnap’s medical privileges. The suspension was based on allegations that Dr.
Belnap had sexually harassed an SLRMC employee, as well as “other allegations of prior
incidents.” Aplts.’ App. at 17. Dr. Belnap challenged the suspension by requesting a fair
hearing pursuant to the Bylaws. Id. at 18. SLRMC’s Fair Hearing Committee (“FHC”)
held a hearing and determined that “the MEC’s actions on the whole were not supported
by the evidence, and were arbitrary and capricious.” Id. at 19. As a result, the FHC
recommended that the MEC vacate Dr. Belnap’s suspension. When the MEC adopted the
FHC’s recommendations, the Board of Trustees vacated the suspension in full.
5
While Dr. Belnap was suspended, however, SLRMC sent a report to the National
Practitioner Data Bank regarding his suspension. Although SLRMC voided the report
after the suspension was vacated, SLRMC allegedly “failed to notify other organizations
that the report had been retracted, which triggered inquiries from various entities,” and it
also allegedly did not “adequately correct the factual record after the conclusion of the
Fair Hearing proceedings, which caused Dr. Belnap further harm and expense.” Id. at
21–22. Furthermore, after the suspension was lifted, SLRMC’s CEO issued a letter
indicating that Dr. Belnap’s reappointment to active medical staff, and the renewal of his
surgical privileges, had been “extended” for three months—rather than the customary
two-year renewal period. Id. at 22. According to Dr. Belnap, the letter “referenced the
Fair Hearing process [but] did not indicate that Dr. Belnap [had been] cleared of all
allegations of wrongdoing.” Id.
B
On February 7, 2014, Dr. Belnap filed a lawsuit in the United States District Court
for the District of Utah against: (1) SLRMC, (2) SLRMC’s alleged parent company, Iasis
Healthcare Corporation (“Iasis”),2 (3) four physician members of the MEC, (4) an
SLRMC Risk Manager, Kathy Oleson, and (5) Does 1–10 (collectively, “Defendants”).
The Complaint asserts seven causes of action:
2
The parties agree that Iasis is not, in fact, SLRMC’s parent company.
Apparently, SLRMC’s parent company is IASIS Healthcare Holdings, Inc. The parties
have offered to meet and confer to resolve this issue. This discrepancy is not material to
our resolution of this appeal and the parties do not argue to the contrary.
6
(1) combination and conspiracy in restraint of trade in violation of
federal antitrust laws by scheming “to eliminate Dr. Belnap as a
competitor” and “prevent the market entry of a new and more efficient
transplant or abdominal surgery specialty center in the marketplace,”
against all Defendants, Aplts.’ App. at 24–25 (alleging that Defendants
have “succeeded” in “not creating the Center promised to him”);
(2) breach of contract for violation of the Bylaws by, inter alia,
improperly suspending Dr. Belnap based on “personal animus and
desire to get Dr. Belnap ‘fired,’” against SLRMC, id. at 26;
(3) breach of implied covenant of good faith and fair dealing for
“actions made in bad faith and with malice to achieve the suspension
of Dr. Belnap, in violation of SLRMC’s Bylaws,” against SLRMC, id.
at 27;
(4) defamation for making false printed and oral statements that harmed
Dr. Belnap’s reputation and “may lead to his exclusion from
participation on . . . health insurance panels, effectively ending his
career,” against all Defendants, id. at 28;
(5) intentional infliction of emotional distress for suspending Dr.
Belnap “with the intended purpose of denying [him] the opportunity to
perform the professional services for which he has been trained” and
“effectively barr[ing] the creation of a Center that was promised to Dr.
Belnap when he came to SLRMC,” against all Defendants, id. at 30;
(6) application for an injunction prohibiting Defendants from
restraining competition, defaming Dr. Belnap, and unreasonably
scrutinizing his practice, and requiring Defendants to circulate a
statement of support and retract all negative information regarding Dr.
Belnap, against all Defendants, see id. at 30–31; and
(7) request for a declaration that Defendants are not entitled to
immunity under the Health Care Quality Improvement Act because
“Defendants’ actions were taken to promote the improper goal of
terminating Dr. Belnap’s active staff membership at SLRMC and
removing him from the Hospital and marketplace,” against all
Defendants, id. at 32.
Defendants moved to stay the litigation and compel mediation and/or arbitration of
7
all of Dr. Belnap’s claims on April 1, 2014. They argued that the Agreement’s dispute-
resolution provision governs the instant dispute. They pointed to the Complaint’s
allegations that reference the Agreement and/or the Center, as well as the fact that each
cause of action “incorporates by reference all of the Complaint’s earlier factual
allegations . . . including those concerning the Center,” Aplts.’ App. at 41, and argued that
“[a]ll of the[] causes of action arise under or relate to the Agreement because all of them
are premised on the same alleged misconduct and resulting harm to Plaintiff,” id. at 43.
In addition, Defendants further argued that the litigation should be stayed in favor of
arbitration because the Agreement’s “arbitration clause evidences [the parties’] clear
intent that any question of arbitrability—i.e., whether a claim should be
arbitrated—should be determined by the arbitrator.” Id. at 48. Dr. Belnap opposed the
motion.
The district court ultimately granted in part and denied in part the motion. First,
the court asserted that “[w]hen one party alleges the dispute is subject to an agreement to
arbitrate, the court must first determine if the claims are within the scope of the contract
within which the agreement to arbitrate is nested.” Id. at 147 (Mem. Decision & Order,
filed Jan. 28, 2015). Then, the court observed that the arbitration clause in the Agreement
“is broad in the abstract and would likely cover the current causes of action.” Id. at 151.
Nevertheless, the court proceeded to “perform a preliminary analysis of all of the claims
to determine if they fall within the scope of the contract.” Id. at 152.
The court held that the first cause of action is within the scope of the Agreement
8
because it “makes numerous references to the Center,” Aplts.’ App. at 152, and because it
alleges that “SLRMC had a duty to create the Center, and the alleged anticompetitive
actions are in direct conflict with that duty,” id. at 153. Accordingly, the court granted
the motion to compel as to that cause of action against SLRMC. However, citing cases
that allowed arbitration to proceed only as to signatories to an agreement, the court did
not stay the claim as to the non-SLRMC Defendants who had not signed the Agreement.
Then, the court held that the remaining six causes of action are outside the scope of
the Agreement. The court reasoned that “[t]he plain language of the Agreement clarifies
that the Agreement is . . . . a contract with a specific and limited scope,” id. at 153, and
each of the remaining claims “centers on the investigation of an incident, ruling, and
subsequent punishment by the MEC wholly unrelated to the ‘Services’ contemplated
under the Agreement for the Center,” id. at 154.
Finally, the court rejected Defendants’ argument that the parties had agreed, in the
dispute-resolution provision of the Agreement, that questions of arbitrability should be
decided by an arbitrator. The court acknowledged that, in the Agreement, the parties
clearly and unmistakably intended to arbitrate arbitrability. Id. at 154–55 (“It is true that
incorporating ‘the JAMS rules demonstrates the parties’ clear and unmistakable intent to
submit questions of arbitrability to the arbitrator.’” (quoting the motion)). However, the
court reasoned that “[d]etermining whether the claims are within the scope of the contract
. . . necessarily precedes any question of arbitrability, and precedes the question of who
decides questions of arbitrability.” Id. at 155. In sum, therefore, the court stayed the first
9
cause of action as to SLRMC, ordered Dr. Belnap and SLRMC to proceed to arbitration
on the arbitrability of that claim, and denied the rest of the motion.
II
Defendants appeal from the portions of the district court’s order denying their
motion to stay litigation and to compel arbitration.3 Defendants present two arguments on
appeal. First, they argue that because the parties agreed to arbitrate arbitrability, the
district court erred when it failed to submit all questions of arbitrability to an arbitrator.
Second, Defendants argue that even if the parties did not agree to arbitrate arbitrability,
the district court erred when it found that any of Dr. Belnap’s claims fell outside the
scope of the Agreement, despite also finding that the Agreement’s dispute-resolution
provision was broad. Under our resolution of this appeal, we have no need to address this
second argument.
We begin by addressing the arbitrability of Dr. Belnap’s claims as they relate to
SLRMC, the only Defendant that signed the Agreement. We conclude that by
incorporating the JAMS Rules into the Agreement, Dr. Belnap and SLRMC evidenced a
clear and unmistakable intent to delegate questions of arbitrability to an arbitrator.
Consequently, in our view, the district court’s next step should have been to compel all of
3
“The Federal Arbitration Act [“FAA”] grants a party the right to file an
interlocutory appeal from the denial of a motion to compel arbitration.” McCauley v.
Halliburton Energy Servs., Inc., 413 F.3d 1158, 1160 (10th Cir. 2005) (citing 9 U.S.C.
§ 16(a)(1)(C)). On the filing of this appeal, the district court properly stayed the case.
See id. (“[U]pon the filing of a non-frivolous . . . appeal, the district court is divested of
jurisdiction until the appeal is resolved on the merits.”).
10
those claims against SLRMC to arbitration so that an arbitrator could decide arbitrability
in the first instance. The court’s decision to, instead, conduct its own analysis of the
arbitrability of Dr. Belnap’s claims against SLRMC was mistaken. Nevertheless, the
court reached the right outcome regarding Dr. Belnap’s first claim against
SLRMC—compelling that claim to arbitration—and we uphold that portion of its order.4
We are constrained, however, to reverse the order as to the remainder of the SLRMC
claims. We remand, instructing the court to compel all of Dr. Belnap’s claims against
SLRMC to arbitration.
Then, we address the arbitrability of Dr. Belnap’s claims against the Defendants
that did not sign the Agreement—namely, SLRMC’s alleged parent company and the
individual Defendants. We determine that these Defendants are not entitled to enforce the
arbitration provision of the Agreement. Thus, we affirm the district court’s order in this
respect; specifically, we conclude that it properly denied the motion as to all claims
against all non-SLRMC Defendants.
A
We review de novo the denial of a motion to stay litigation and to compel
arbitration. See, e.g., Ragab v. Howard, 841 F.3d 1134, 1137 (10th Cir. 2016); Sanchez v.
4
We may unquestionably affirm, under the circumstances present here, a
portion of the district court’s order—regarding the first claim—under an alternative legal
rationale that the record amply supports. See, e.g., A.M. v. Holmes, 830 F.3d 1123, 1146
n.11 (10th Cir. 2016); Jordan v. U.S. Dep’t of Justice, 668 F.3d 1188, 1200 (10th Cir.
2011).
11
Nitro-Lift Techs., L.L.C., 762 F.3d 1139, 1145 (10th Cir. 2014); Cummings v. FedEx
Ground Package Sys., Inc., 404 F.3d 1258, 1261 (10th Cir. 2005).
B
1
The parties agree that issues of arbitrability are governed by the Federal
Arbitration Act. See, e.g., Comanche Indian Tribe of Okla. v. 49, L.L.C., 391 F.3d 1129,
1131 (10th Cir. 2004) (stating that the FAA “applies to all arbitration agreements
‘involving commerce,’ and ‘create[s] a body of federal substantive law of arbitrability,
applicable to any arbitration agreement within the coverage of the Act.’” (alteration in
original) (first quoting 9 U.S.C. § 2; then quoting Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983))); see also id. at 1132 (“The requirement
that the underlying transaction involve commerce ‘is to be broadly construed so as to be
coextensive with congressional power to regulate under the Commerce Clause.’” (quoting
Foster v. C.F. Turley, Jr., 808 F.2d 38, 40 (10th Cir. 1986))).
Under the FAA, 9 U.S.C. § 1–16, “arbitration is a matter of contract,” and courts
must “place[] arbitration agreements on an equal footing with other contracts, and
. . . enforce them according to their terms.” Rent–A–Center, West, Inc. v. Jackson, 561
U.S. 63, 67 (2010) (citation omitted); accord AT & T Techs., Inc. v. Commc’ns Workers
of Am., 475 U.S. 643, 648 (1986). More specifically, the FAA’s “primary substantive
provision,” § 2, states that “[a] written provision in . . . a contract . . . to settle by
arbitration a controversy thereafter arising out of such contract . . . shall be valid,
12
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; accord Rent–A–Center, 561 U.S. at 67. To
“implement § 2’s substantive rule,” “a party may apply to a federal court for a stay of the
trial of an action ‘upon any issue referable to arbitration under an agreement in writing for
such arbitration’” pursuant to § 3 of the FAA, and “a party ‘aggrieved’ by the failure of
another party ‘to arbitrate under a written agreement for arbitration’ may petition a
federal court ‘for an order directing that such arbitration proceed in the manner provided
for in such agreement’” under § 4 of the FAA. Rent–A–Center, 561 U.S. at 68 (first
quoting 9 U.S.C. § 3; then quoting 9 U.S.C. § 4). Indeed, § 4 provides that a “court
‘shall’ order arbitration ‘upon being satisfied that the making of the agreement for
arbitration . . . is not in issue.’” Id. (quoting 9 U.S.C. § 4).
Because “arbitration is simply a matter of contract,” “[j]ust as the arbitrability of
the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute,
so the question ‘who has the primary power to decide arbitrability’ turns upon what the
parties agreed about that matter.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938,
943 (1995) (citations omitted); see also Rent–A–Center, 561 U.S. at 69 (“An agreement to
arbitrate a gateway issue is simply an additional, antecedent agreement the party seeking
arbitration asks the federal court to enforce, and the FAA operates on this additional
arbitration agreement just as it does on any other.”); AT & T Techs., 475 U.S. at 649
(stating that parties may agree to arbitrate arbitrability). Critically for our purposes, the
Supreme Court has held that when parties agree that an arbitrator should decide
13
arbitrability, they delegate to an arbitrator all threshold questions concerning
arbitrability—including “whether their agreement covers a particular controversy.”
Rent–A–Center, 561 U.S. at 68–69; accord BG Grp. PLC v. Republic of Arg., 134 S. Ct.
1198, 1206 (2014) (stating that arbitrability disputes “include questions such as ‘whether
the parties are bound by a given arbitration clause,’ or ‘whether an arbitration clause in a
concededly binding contract applies to a particular type of controversy’” (quoting
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002))).
Given that parties can agree to arbitrate arbitrability, as well as other issues,
questions of arbitrability encompass two types of disputes: (1) disputes about “whether a
particular merits-related dispute is arbitrable because it is within the scope of a valid
arbitration agreement,” First Options, 514 U.S. at 944–45; and (2) threshold disputes
about “who should have the primary power to decide” whether a dispute is arbitrable, id.
at 942. When addressing the first type of dispute—whether a dispute is arbitrable—“any
doubts concerning the scope of arbitrable issues should be resolved in favor of
arbitration.” Moses H. Cone Mem’l Hosp., 460 U.S. at 24–25. However, when
addressing the second type of dispute—that is, “when courts decide whether a party has
agreed that arbitrators should decide arbitrability”—courts “should not assume that the
parties agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e]’
evidence that they did so.” First Options, 514 U.S. at 944 (alteration in original)
(emphasis added) (quoting AT & T Techs., 475 U.S. at 649); accord Dean Witter
Reynolds, Inc. v. Howsam, 261 F.3d 956, 964 (10th Cir. 2001), overruled on other
14
grounds by Howsam, 537 U.S. 79.
Importantly, courts must address the second type of dispute first. In other words,
the question of who should decide arbitrability precedes the question of whether a dispute
is arbitrable. See Riley Mfg. Co. v. Anchor Glass Container Corp., 157 F.3d 775, 779
(10th Cir. 1998) (“Before we address the specific arbitrability of the claims raised . . . in
[this] federal suit, we must address the threshold issue of who decides arbitrability in the
first place—the courts or an arbitrator.”); cf. Commc’n Workers of Am. v. Avaya, Inc., 693
F.3d 1295, 1303 (10th Cir. 2012) (“The court should have begun its analysis by asking
whether the parties did or said anything to rebut the presumption that questions about the
arbitrability of an arbitration dispute will be resolved by the courts. Assuming the answer
was no, the court should have then determined whether there was a fact issue regarding
the parties’ consent to submit to arbitration the dispute . . . .” (emphases added)).
We begin, therefore, by addressing the issue of who should decide arbitrability. In
this regard, we conclude that there is clear and unmistakable evidence that Dr. Belnap and
SLRMC agreed that an arbitrator should decide all questions of arbitrability. Indeed, the
district court found as much. However, in the light of such evidence, the district court
should have stayed the litigation and compelled all claims against SLRMC to arbitration
so that an arbitrator could decide their arbitrability in the first instance. Then, we
conclude that the non-SLRMC defendants cannot compel Dr. Belnap to arbitrate his
claims against them based on the Agreement that they never signed.
15
2
In our view, Dr. Belnap and SLRMC clearly and unmistakably agreed to arbitrate
arbitrability when they incorporated the JAMS Rules into the Agreement. JAMS Rule
8(c) provides that:
Jurisdictional and arbitrability disputes, including disputes over the
formation, existence, validity, interpretation or scope of the agreement
under which Arbitration is sought, and who are proper Parties to the
Arbitration, shall be submitted and ruled on by the Arbitrator. The
Arbitrator has the authority to determine jurisdiction and arbitrability
issues as a preliminary matter.
Aplts.’ App. at 102 (JAMS Streamlined Arbitrations Rules & Procedures) (emphasis
added).
Dr. Belnap does not dispute that the JAMS Rules provide for the arbitration of
arbitrability disputes; rather, he argues that the parties did not actually incorporate the
JAMS Rules into the Agreement. He argues that the parties merely presented those Rules
as one option for dispute resolution. He points to the Agreement’s dispute-resolution
provision, which states:
24. Dispute Resolution. . . . No Disputant may prosecute any suit
until and unless the Disputants have submitted the issues to mediation
and, if necessary, to arbitration . . . in accordance with the rules of
JAMS . . . or another suitable dispute resolution service agreeable to
their respective attorneys.
....
24.2 Arbitration. . . . The arbitration shall be administered by JAMS
and conducted in accordance with its Streamlined Arbitration
Rules and Procedures (the “Rules”), except as provided
otherwise herein.
16
Aplts.’ App. at 73 (emphases added). According to Dr. Belnap, “[b]ecause the parties
were free to select and be governed by the rules of ‘another suitable dispute resolution
service,’ the parties did not know at the time of the agreement what rules they were
agreeing to govern any future arbitration.” Aplee.’s Resp. Br. at 6.
We are not persuaded by Dr. Belnap’s argument. The plain language of the
Agreement establishes the JAMS Rules as the default controlling rubric—a fact that
would have been quite evident to the parties entering the Agreement. In this regard, the
Agreement provides that any deviation from the JAMS Rules would require the mutual
assent of the parties. Specifically, the Agreement states that arbitration must be “in
accordance with the rules of JAMS . . . or another suitable dispute resolution service
agreeable to their respective attorneys.” Aplts.’ App. at 73 (emphasis added). According
to this plain language, therefore, if either party refuses to agree to another dispute-
resolution service—involving the use of that service’s rules—the resolution of disputes
would perforce be governed by the JAMS Rules. In this sense, the JAMS Rules are
incorporated into the Agreement as default rules, and no definite alternative is specified.
In other words, the Agreement’s language does not allow for more than an ill-defined
possibility that—with the Disputant attorneys’ agreement—the rules of another service
(i.e., non-JAMS Rules) would govern the resolution of the parties’ dispute. And such a
possibility is not enough for us to say that the JAMS Rules are not the Agreement’s
ordinary controlling standard. See C & L Enters., Inc. v. Citizen Band Potawatomi Indian
17
Tribe of Okla., 532 U.S. 411, 415, 419 n.1 (2001) (explaining that the parties expressly
incorporated the American Arbitration Association (“AAA”) rules into their agreement,
even though the agreement provided that they could “mutually agree otherwise”); see also
RW Dev., L.L.C. v. Cuningham Grp. Architecture, P.A., 562 F. App’x 224, 226 (5th Cir.
2014) (unpublished) (concluding that the parties “clearly and unmistakably agreed to
arbitrate arbitrability” by incorporating the AAA rules, despite the fact that the arbitration
provision explained that the AAA rules would apply, “unless the parties mutually
agree[d] otherwise”);5 Cong. Constr. Co. v. Geer Woods, Inc., No. 3:05CV1665, 2005
WL 3657933, at *2–5 (D. Conn. Dec. 29, 2005) (same).6
In arguing that the parties did not incorporate the JAMS Rules into the Agreement,
Dr. Belnap relies on a single case from the California Court of Appeals. In that case,
Gilbert Street Developers, LLC v. La Quinta Homes, LLC, 94 Cal. Rptr. 3d 918 (Cal. Ct.
App. 2009), the court considered an arbitration clause that required arbitration to be
“conducted in accordance with the Rules of the American Arbitration Association [AAA]
existing at the date thereof.” Id. at 919. At the time the agreement was signed, however,
the AAA had no rule providing that arbitrators had jurisdiction to rule on their own
5
See United States v. Willis, 826 F.3d 1265, 1274 n.2 (10th Cir. 2016)
(“Although not precedential, we find the reasoning of unpublished opinions, including
those from other jurisdictions, instructive.” (emphasis added)).
6
JAMS Rule 8(c) is substantively identical to AAA Rule 7, which states that
“[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any
objections with respect to the existence, scope, or validity of the arbitration agreement or
to the arbitrability of any claim or counterclaim.” AAA, Commercial Arbitration Rules
and Mediation Procedures ¶ R–7(a) (2013).
18
jurisdiction. Thus, not too surprisingly, the court held “that a contract which contains the
mere possibility that [AAA] rules might one day in the future provide that arbitrators
would have the power to decide their own jurisdiction d[id] not ‘clearly and
unmistakably’ provide that arbitrators will determine their own jurisdiction.” Id. In
contrast, the rule at issue here—JAMS Rule 8(c)—clearly answered the “who” question
by designating the arbitrator as the person to determine questions of arbitrability, and it
was already in effect when the parties executed the Agreement. Consequently, Gilbert
Street Developers is inapposite.
Having concluded that the parties incorporated the JAMS Rules into their
Agreement, we therefore determine that Dr. Belnap and SLRMC clearly and
unmistakably intended for an arbitrator to decide issues of arbitrability. The soundness of
our determination is confirmed by our survey of the limited caselaw in this area.
One of our sister circuits and panels in two other circuits (in unpublished
decisions) have specifically addressed whether incorporation of the JAMS Rules clearly
and unmistakably delegates questions of arbitrability to an arbitrator, and they have all
agreed that it does. See Cooper v. WestEnd Capital Mgmt., L.L.C., 832 F.3d 534, 546
(5th Cir. 2016) (concluding that the express adoption of the JAMS rules presented “clear
and unmistakable evidence that the parties agreed to arbitrate arbitrability” (quoting
Petrofac, Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir.
2012))); Emilio v. Sprint Spectrum L.P., 508 F. App’x 3, 5 (2d Cir. 2013) (holding that
incorporation of JAMS Rules “clearly and unmistakably delegated questions of
19
arbitrability to the arbitrator”); Wynn Resorts, Ltd. v. Atl.–Pac. Capital, Inc., 497 F.
App’x 740, 742 (9th Cir. 2012) (“By incorporating the JAMS rules, the parties
demonstrated their clear and unmistakable intent to have an arbitrator resolve the issue of
arbitrability.”).
In addition, in an analogous context, all of our sister circuits to address the issue
have unanimously concluded that incorporation of the substantively identical (as relevant
here) AAA Rules constitutes clear and unmistakable evidence of an agreement to arbitrate
arbitrability. See, e.g., Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015)
(observing that “[v]irtually every circuit to have considered the issue has determined that
incorporation of the [AAA] arbitration rules constitutes clear and unmistakable evidence
that the parties agreed to arbitrate arbitrability,” and that the court has “found this
consensus persuasive in holding that incorporation of the [United Nations Commission on
International Trade Law (“UNCITRAL”)] rules—which contain a jurisdictional provision
‘almost identical’ to the one in the AAA rules—constituted ‘clear and unmistakable
evidence that the parties agreed the arbitrator would decide arbitrability’” (first two
alterations in original) (quoting Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069,
1074–75 (9th Cir. 2013) (collecting cases))).7 see also Fallo v. High-Tech Inst., 559 F.3d
7
In Oracle, 724 F.3d at 1074, the Ninth Circuit cited the following cases to
support the proposition that “[v]irtually every circuit to have considered the issue has
determined that incorporation of the . . . AAA[] arbitration rules constitutes clear and
unmistakable evidence that the parties agreed to arbitrate arbitrability”: Petrofac, Inc. v.
DynMcDermott Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir. 2012); Fallo v.
High-Tech Inst., 559 F.3d 874, 878 (8th Cir. 2009); Qualcomm Inc. v. Nokia Corp., 466
20
874, 878 (8th Cir. 2009) (“Most of our sister circuits that have considered this issue agree
with our conclusion that an arbitration provision’s incorporation of the AAA Rules—or
other rules giving arbitrators the authority to determine their own jurisdiction—is a clear
and unmistakable expression of the parties’ intent to reserve the question of arbitrability
for the arbitrator and not the court.”); Awuah v. Coverall N. Am., Inc., 554 F.3d 7, 11 (1st
Cir. 2009) (stating that incorporation of the AAA Rules “is about as ‘clear and
unmistakable’ as language can get”); Contec Corp., 398 F.3d at 208 (“[W]hen . . . parties
explicitly incorporate rules that empower an arbitrator to decide issues of arbitrability, the
incorporation serves as clear and unmistakable evidence of the parties’ intent to delegate
such issues to an arbitrator.”); cf. Chevron Corp. v. Ecuador, 795 F.3d 200, 207–08 (D.C.
Cir. 2015) (holding that incorporation by reference of the UNCITRAL rules constitutes
clear and unmistakable evidence that the parties agreed to arbitrate arbitrability).
Some courts have suggested that the Tenth Circuit is the only federal appellate
court that has deviated from this consensus, in Riley, 157 F.3d 775. See Oracle Am., Inc.,
724 F.3d at 1074; Fallo, 559 F.3d at 878. We disagree, however, with this reading of our
precedent. It is true that in Riley, we did not find clear and unmistakable evidence of
intent to arbitrate arbitrability—even though the agreement incorporated the AAA Rules.
See Riley, 157 F.3d at 777 n.1, 780. Riley, however, is distinguishable because
F.3d 1366, 1373 (Fed. Cir. 2006); Terminix Int’l Co. v. Palmer Ranch Ltd., 432 F.3d
1327, 1332 (11th Cir. 2005); Contec Corp. v. Remote Sol. Co., 398 F.3d 205, 208 (2d Cir.
2005). All of these cases remain good law.
21
there—like in Gilbert Street Developers, supra—the version of the AAA Rules that was
incorporated into the agreement did not include a provision concerning the arbitration of
arbitrability. Thus, Riley does not guide, much less control, our analysis regarding the
significance of the Agreement’s incorporation of the JAMS Rules.
In sum, we conclude that by incorporating the JAMS Rules into the Agreement,
Dr. Belnap and SLRMC clearly and unmistakably agreed to submit arbitrability issues to
an arbitrator, “including disputes over the . . . interpretation or scope of the agreement
under which Arbitration is sought.” Aplts.’ App. at 102 (JAMS Rule 8(c)). And, because
Dr. Belnap and SLRMC clearly and unmistakably agreed to arbitrate arbitrability, we
further hold that the district court erred when it determined the arbitrability of Dr.
Belnap’s claims instead of deferring that determination to an arbitrator.8 In other words,
we conclude that when the parties clearly and unmistakably agreed to arbitrate
arbitrability, all questions of arbitrability—including the question of whether claims fall
within the scope of the agreement to arbitrate—had to be resolved by an arbitrator.
8
Recall that the district court mistakenly never decided the threshold
question of who should decide arbitrability. Instead, it asserted that because “[a]rbitration
clauses are still creatures of the contracts in which they are embedded,” “[d]etermining
whether the claims are within the scope of the contract . . . necessarily precedes any
question of arbitrability, and precedes the question of who decides questions of
arbitrability.” Aplts.’ App. at 155. Then, based on its own determination of whether the
claims were within the scope of the Agreement—i.e., its own determination of
arbitrability—the court granted in part and denied in part the motion to compel
arbitration.
22
3
a
To be sure, Dr. Belnap argues that “[c]ontrolling case law and fundamental
principles of contract interpretation require a court to make a preliminary analysis of
whether the dispute is within the scope of the contract.” Aplee.’s Resp. Br. at 7. More
specifically, Dr. Belnap urges us to adopt the “wholly groundless” approach of the Fifth,
Sixth, and Federal Circuits in, respectively, Douglas v. Regions Bank, 757 F.3d 460 (5th
Cir. 2014), Turi v. Main Street Adoption Services, LLP, 633 F.3d 496 (6th Cir. 2011), and
Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366 (Fed. Cir. 2006).
Notably, in Qualcomm, 466 F.3d 1366, the Federal Circuit established the
following “wholly groundless” test:
We conclude that in order to be “satisfied” of the arbitrability of an
issue pursuant to [9 U.S.C. § 3], the district court should first inquire as
to who has the primary power to decide arbitrability under the parties’
agreement. If the court concludes that the parties did not clearly and
unmistakably intend to delegate arbitrability decisions to an arbitrator,
the general rule that the “question of arbitrability . . . is . . . for judicial
determination” applies and the court should undertake a full
arbitrability inquiry in order to be “satisfied” that the issue involved is
referable to arbitration. If, however, the court concludes that the parties
to the agreement did clearly and unmistakably intend to delegate the
power to decide arbitrability to an arbitrator, then the court should
perform a second, more limited inquiry to determine whether the
assertion of arbitrability is “wholly groundless.” If the court finds that
the assertion of arbitrability is not “wholly groundless,” then it should
stay the trial of the action pending a ruling on arbitrability by an
arbitrator. If the district court finds that the assertion of arbitrability
is “wholly groundless,” then it may conclude that it is not “satisfied”
under section 3, and deny the moving party’s request for a stay.
23
Id. at 1371 (emphases added) (quoting AT & T Techs., 475 U.S. at 649 (source of second
quotation)). But see id. at 1375 (Newman, J., dissenting without elaboration).
In Douglas, 757 F.3d 460, the Fifth Circuit adopted the Federal Circuit’s “wholly
groundless” test. The court explained:
The mere existence of a delegation provision in the . . . arbitration
agreement, however, cannot possibly bind [the plaintiff] Douglas to
arbitrate gateway questions of arbitrability in all future disputes with
the other party, no matter their origin.
....
If it were otherwise, then every case involving an arbitration agreement
with a delegation provision must, with no exceptions, be submitted for
such gateway arbitration; no matter how untenable the argument that
there is some connection between the dispute and the agreement, an
arbitrator must decide first. Douglas would have to go to the arbitrator,
who would flatly tell her that this claim is not within the scope of the
completely unrelated arbitration agreement she signed many years
earlier when opening a checking account and that she must actually go
to federal court after all.
Id. at 462–63. Concluding, therefore, that “[t]he law of [the Fifth Circuit] does not
require all claims to be sent to gateway arbitration merely because there is a delegation
provision,” id. at 463, the court held that when the plaintiff agreed to arbitrate
arbitrability, she “meant only to bind herself to arbitrate gateway questions of arbitrability
if the argument that the dispute falls within the scope of the agreement is not wholly
groundless,” id. at 464.9 But see id. at 464–68 (Dennis, J., dissenting).
9
Notably, since Douglas, the Fifth Circuit has deferred an arbitrability
question to an arbitrator after finding clear and unmistakable intent to arbitrate
arbitrability. Specifically, in Robinson v. J & K Administrative Management Services,
Inc., 817 F.3d 193 (5th Cir. 2016), the Fifth Circuit held that the question of whether class
or collective arbitration is available under an arbitration agreement is the same as any
24
And in Turi, 633 F.3d 496, the Sixth Circuit adopted a similar approach when it
held that “even where the parties expressly delegate to the arbitrator the authority to
decide the arbitrability of the claims related to the parties’ arbitration agreement, this
delegation applies only to claims that are at least arguably covered by the agreement.”
633 F.3d at 511. The court reasoned:
Even if we assume that the parties in the present case delegated to the
arbitrator the authority to decide the scope of their arbitration clause,
the plaintiffs correctly point out that this delegation would not be
unlimited. A dispute that plainly has nothing to do with the subject
matter of an arbitration agreement, for example, would not give the
arbitrator the authority to decide the arbitrability of this wholly
unrelated claim. Otherwise, the delegation of authority to the arbitrator
to decide the scope of an arbitration agreement would require the
parties to take all issues—no matter how unrelated these issues are to
the parties’ arbitration agreement—to the arbitrator for a threshold
determination regarding arbitrability before such issues could
properly be brought in court.
Id. at 507 (emphasis added).
b
Having thoroughly considered its merits, we decline to adopt the “wholly
groundless” approach. Neither the Supreme Court nor our court has spelled out the next
other threshold question of arbitrability, and like any other threshold question of
arbitrability, the question “is deferred to arbitration where the agreement espouses the
parties[’] intent to do so.” Id. at 195. The court explained: “the issue before the court. . .
. is who decides if the arbitration agreement permits class or collective procedures.” Id.
at 198 (emphasis added). Because the court found “unambiguous evidence of the
parties[’] intention to submit arbitrability disputes to arbitration,” id. at 198, it held that
“the availability of class or collective arbitration [wa]s a question for the arbitrator instead
of the court,” id. at 197. Significantly, in Robinson, the Fifth Circuit did not mention the
“wholly groundless” test or Douglas.
25
steps for a court when it finds clear and unmistakable intent to arbitrate arbitrability.
However, the message that we glean from the language of the Court’s opinions and our
own, as well as the holdings of our sister circuits, is that courts in that situation must
compel the arbitration of arbitrability issues in all instances in order to effectuate the
parties’ intent regarding arbitration.
i
For starters, the “wholly groundless” approach that Dr. Belnap urges us to adopt
appears to be in tension with language of the Supreme Court’s arbitration decisions—in
particular, with the Court’s express instruction that when parties have agreed to submit an
issue to arbitration, courts must compel that issue to arbitration without regard to its
merits. In AT & T Techs., 475 U.S. 643, the Court instructed:
in deciding whether the parties have agreed to submit a particular
grievance to arbitration, a court is not to rule on the potential merits of
the underlying claims. Whether “arguable” or not, indeed even if it
appears to the court to be frivolous, the union’s claim that the employer
has violated the collective-bargaining agreement is to be decided, not
by the court asked to order arbitration, but as the parties have agreed,
by the arbitrator. “The courts, therefore, have no business weighing the
merits of the grievance, considering whether there is equity in a
particular claim, or determining whether there is particular language in
the written instrument which will support the claim. The agreement is
to submit all grievances to arbitration, not merely those which the court
will deem meritorious.”
Id. at 649–50 (quoting United Steelworkers of Am. v. Am. Mfg. Co., 363 U.S. 564, 568
(1960)). In AT & T Techs., the Court therefore made clear that when parties agree to
26
submit an issue to arbitration,10 courts are bound to effectuate the parties’ intent by
compelling arbitration—no matter what the court thinks about the merits of the issue.
For example, consistent with this precedent, the Court has held that because an
arbitration agreement clearly and unmistakably delegated to an arbitrator the issue of
whether it was enforceable, challenges to the agreement’s enforceability were for an
arbitrator—not a court—to decide. See Rent–A–Center, 561 U.S. at 66. The agreement
at issue in Rent–A–Center contained a provision stating that “[t]he Arbitrator . . . shall
have exclusive authority to resolve any dispute relating to the . . . enforceability . . . of
this Agreement.” Id. at 68 (first alteration in original) (omissions in original) (quoting the
record). The Court stated that “the FAA operates on this additional arbitration agreement
just as it does on any other.” Id. at 70. And because the plaintiff was challenging the
enforceability of the agreement as a whole—not the delegation provision in
particular—the Court held that the issue of the agreement’s enforceability was, as the
parties had instructed, for an arbitrator to decide. See id. (“[A] party’s challenge to
another provision of the contract, or to the contract as a whole, does not prevent a court
from enforcing a specific agreement to arbitrate.”). The Court therefore refused to reach
the merits of the enforceability dispute—viz., it declined (among other things) to
10
In that case, the issue that the parties agreed to submit to arbitration was
whether an employer violated a collective-bargaining agreement. In this case, the issue is
whether Dr. Belnap’s claims against SLRMC are arbitrable. Because delegation
provisions are as enforceable as any other provision in an arbitration agreement, see
Rent–A–Center, 561 U.S. at 69, the quoted passage applies to issues of arbitrability just as
much as to any other issue that parties agree to arbitrate.
27
determine whether the dispute was frivolous—leaving that matter for an arbitrator to
decide. See id. at 72. In doing so, the Court reinforced that when parties clearly and
unmistakably delegate an issue to an arbitrator, courts must compel arbitration of that
issue.
ii
Furthermore, language in several of our cases—although arguably dicta—strongly
suggests that courts in that delegation situation must compel the arbitration of arbitrability
issues in order to effectuate the parties’ intent. More specifically, we have repeatedly
stated that courts reviewing arbitrability claims must first ask who should decide
arbitrability, and suggested that only if the parties did not delegate questions of
arbitrability to an arbitrator may courts reach the merits of arbitrability questions
themselves. See Riley, 157 F.3d at 779 (“Before we address the specific arbitrability of
the claims raised . . . in [this] federal suit, we must address the threshold issue of who
decides arbitrability in the first place—the courts or an arbitrator.” (emphasis added)); see
also Burlington N. & Santa Fe Ry. Co. v. Pub. Serv. Co. of Okla., 636 F.3d 562, 568
(10th Cir. 2010) (“So long as the parties have not specifically agreed to submit the
arbitrability[] question itself to arbitration (i.e., to arbitrate arbitrability), a court will
decide independently whether the merits of the parties’ dispute is arbitrable.” (emphasis
added)); cf. Avaya, Inc., 693 F.3d at 1303 (“The court should have begun its analysis by
asking whether the parties did or said anything to rebut the presumption that questions
about the arbitrability of an arbitration dispute will be resolved by the courts. Assuming
28
the answer was no, the court should have then determined whether there was a fact issue
regarding the parties’ consent to submit to arbitration the dispute . . . .”); id. (stating that
disputes concerning arbitration “are to be resolved by the courts unless the parties have
agreed, in ‘clear and unmistakable’ terms, to submit them to arbitration” (emphasis
added) (quoting Rent–A–Center, 561 U.S. at 79)). Moreover, we have stated that if a
court concludes that parties agreed to arbitrate an issue, the court must stay litigation in
favor of arbitration. See Williams v. Imhoff, 203 F.3d 758, 764 (10th Cir. 2000) (“Under
the FAA, a ‘court must stay proceedings if satisfied that the parties have agreed in writing
to arbitrate an issue or issues underlying the district court proceeding.’” (quoting
McMahan Sec. Co. v. Forum Capital Mkts. L.P., 35 F.3d 82, 85 (2d Cir. 1994))).
However, Dr. Belnap points to two cases in which, according to him, we have held
to the contrary. Yet, critically, the threshold question of who should decide arbitrability
was not raised in either case—that is, it was not disputed that arbitrability was for the
court to decide. First, in Sanchez, 762 F.3d 1139, we addressed “a dispute concerning the
scope of an arbitration clause between Nitro-Lift Technologies, L.L.C. (“Nitro-Lift”), and
three of its former employees.” Id. at 1141. Each employee had signed a
“Confidentiality/Non-Compete Agreement” with Nitro-Lift at the start of his
employment, id. at 1141, and each agreement included an arbitration clause providing
that “[a]ny dispute, difference or unresolved question between Nitro-Lift and the
Employee . . . shall be settled by arbitration . . . in accordance with the [AAA] rules,” id.
at 1142 (emphasis omitted). When the employees sued Nitro-Lift for failure to pay
29
overtime wages, Nitro-Lift moved to compel arbitration on the basis of this arbitration
clause. Id. at 1143. The district court denied the motion.
We began our opinion by stating that “[w]hen both parties dispute whether an
arbitration clause in a contract ‘applies to a particular type of controversy, [the question]
is for the court.’” Id. at 1145 (quoting Cummings, 404 F.3d at 1261). Then, we analyzed
“whether plaintiffs agreed to submit their . . . wage disputes to binding arbitration” by
“determining whether [the wage disputes] fall[] within the scope of an arbitration clause.”
Id. at 1145. Significantly, we never attempted in Sanchez to discern whether the parties
clearly and unmistakably agreed to submit questions of arbitrability to an arbitrator. This
can perhaps be explained by the lack of evidence that the parties in Sanchez ever
contested this issue and put it before the court for decision.
More specifically, our review of the briefing in Sanchez confirms that the parties
never challenged whether a court should decide arbitrability. In other words, in Nitro-
Lift’s appellate briefs in support of its motion to compel, it never argued that arbitrability
was for an arbitrator to decide—indeed, it never mentioned the words “clear and
unmistakable.” See Aplts.’ Opening Br., Nos. 12-7046 & 12-7057, 2012 WL 5178142
(filed Oct. 10, 2012); Aplts.’ Reply Br., Nos. 12-7046 & 12-7057, 2013 WL 4401213
(filed Aug. 8, 2013).11 And, in the employees’ response brief, they argued only that their
11
“Although we are not obliged to do so, we may exercise our discretion to
take judicial notice of publicly-filed records in our court and certain other courts
concerning matters that bear directly upon the disposition of the case at hand.” United
States v. Ahidley, 486 F.3d 1184, 1192 n.5 (10th Cir. 2007); accord St. Louis Baptist
30
claims did not fall within the scope of the agreement. See Aplees.’ Resp. Br., No. 12-
7057, 2013 WL 3597853 (filed July 8, 2013). In sum, in Sanchez, the parties never raised
the issue of who should decide arbitrability. Accordingly, we cannot reasonably infer that
the Sanchez court considered and resolved the issue. See Cone v. Bell, 556 U.S. 449, 482
(2009) (“Appellate courts generally do not reach out to decide issues not raised by the
appellant.”); Webster v. Fall, 266 U.S. 507, 511 (1925) (declining to find earlier decisions
dispositive, because “in none of them was the [relevant] point . . . suggested or decided”
and thus “[t]he most that [could] be said is that the point was in the cases if any one had
seen fit to raise it”); see also United States v. Taylor, 514 F.3d 1092, 1099 (10th Cir.
2008) (“Questions which merely lurk in the record, neither brought to the attention of the
court nor ruled upon, are not to be considered as having been so decided as to constitute
precedents.” (quoting United Food & Commercial Workers Union, Local 1564, 207 F.3d
1193, 1199 (10th Cir. 2000))); cf. New York v. United States, 505 U.S. 144, 203 (1992)
(White, J., concurring in part and dissenting in part) (“Silence by this Court on a subject
is not authority for anything.”). Thus, Dr. Belnap’s reliance on Sanchez is misplaced.
Dr. Belnap also argues that a second Tenth Circuit case, Coors Brewing Co. v.
Molson Breweries, 51 F.3d 1511 (10th Cir. 1995), supports his position. In Coors, Coors
Brewing Company entered into a licensing agreement with Molson Breweries under
which Molson would brew and distribute Coors products in Canada. The agreement
Temple v. Fed. Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir. 1979).
31
contained an arbitration clause stating, “Any dispute arising in connection with the
implementation, interpretation or enforcement of this Agreement, . . . shall be finally
settled under the Rules of the [AAA].” Id. at 1513. When Molson subsequently
partnered with Miller Brewing Company to distribute Miller products in Canada, Coors
sued both Molson and Miller for antitrust violations. See id. Molson moved to compel
arbitration based on the arbitration clause in its agreement with Coors. See id. The
district court denied the motion.
On appeal, we decided only whether Coors’s substantive claims fell within the
scope of the agreement, and never engaged (or even mentioned) the distinct, antecedent
question of who was charged under the agreement with deciding arbitrability. See id. at
1513–18. Rather, we proceeded on the uncontested premise that questions of arbitrability
remained with the court. Yet, like Sanchez, the Coors briefing reveals that the parties
never questioned whether the arbitrability question was reserved in the agreement for the
arbitrator; instead, they quarreled only over whether Coors’s antitrust claim fell within the
scope of the arbitration agreement, and then whether the claims of non-arbitrating parties
should be stayed pending arbitration. See Aplts.’ Opening Br., No. 94-1217 (filed June
30, 1994); Aplee.’s Resp. Br., No. 94-1217 (filed Aug. 1, 1994); Aplts.’ Reply Br., No.
94-1217 (filed Aug. 12, 1994). Like Sanchez, because the parties never briefed it and the
court did not expressly address it, we cannot infer from Coors’s analysis that the court
considered, much less resolved the who question—viz., whether, under the agreement, the
contracting parties’ clear and unmistakable intent was that arbitrability questions be
32
delegated to the arbitrator. See, e.g., Webster, 266 U.S. at 511; Taylor, 514 F.3d at 1099.
Accordingly, Coors lends Dr. Belnap no succor.
iii
Finally, although this is a question of first impression in our court, a majority of
our sister circuits have concluded that a finding of clear and unmistakable intent to
arbitrate arbitrability—which may be inferred from the parties’ incorporation in their
agreement of rules that make arbitrability subject to arbitration—obliges a court to
decline to reach the merits of an arbitrability dispute regarding the substantive claims at
issue. For example, in Apollo Computer, Inc. v. Berg, 886 F.2d 469 (1st Cir. 1989), the
First Circuit affirmed a district court order permitting arbitration before the International
Chamber of Commerce (“ICC”) to proceed; specifically, the court affirmed the district
court’s decision to reject plaintiff-appellee Apollo’s attempt to permanently stay
arbitration. Id. at 473–74.
Notably, the First Circuit ruled under an alternative rationale. The district court
had recognized that “the parties contracted to submit issues of arbitrability to the
arbitrator,” but it nevertheless “proceeded to analyze the issue of arbitrability itself” and
arrived at a conclusion favorable to arbitration. Id. at 472. In contrast, the First Circuit
reasoned that “[b]y contracting to have all disputes resolved according to the Rules of the
ICC, . . . Apollo agreed to be bound by . . . . Rules [that] clearly and unmistakably allow
the arbitrator to determine her own jurisdiction.” Id. at 473. Unlike the district court, the
First Circuit understood that the ineluctable directive stemming from this determination
33
as to the who issue was that it must not go forward to examine whether the substantive
claims at issue were arbitrable. See id. at 472 (“We do not reach any of [the arbitrability]
arguments because we find that the parties contracted to submit issues of arbitrability to
the arbitrator.”) Instead, “without expressing any opinion on the merits of the issues
raised by Apollo,” the court affirmed the district court’s order denying a permanent stay
of arbitration and left such issues to the arbitrator. Id. at 474.
The Second Circuit took the same approach when it, for example, stated that “a
court must begin by deciding whether the parties before it clearly and unmistakably
committed to arbitrate questions regarding the scope of their arbitration agreement,” and
“[i]f—but only if—the answer is no, the court must then proceed to determine on its own
whether the parties’ dispute falls within the scope of their agreement to arbitrate.” VRG
Linhas Aereas S.A. v. MatlinPatterson Glob. Opportunities Partners II L.P., 717 F.3d
322, 326 (2d Cir. 2013) (adding that “[t]he question of who is to decide whether a dispute
is arbitrable is one that must necessarily precede the question of whether a dispute is
arbitrable,” stating that when a court finds that the parties clearly and unmistakably
agreed to arbitrate questions of arbitrability, its “work [is] done,” and remanding for the
district court to decide “who—the court or the Arbitral Tribunal—has the power to
determine the scope of the alleged arbitration agreement”).12
12
The Second Circuit has reached this conclusion many times. See, e.g.,
Republic of Ecuador v. Chevron Corp., 638 F.3d 384, 395 (2d Cir. 2011) (“Because both
parties [clearly and unmistakably agreed] to having questions of arbitrability[] . . .
determined by the arbitral panel in the first instance, we do not reach their merits here.”);
34
The Fourth Circuit has also held that “[a]rbitrability disputes often necessitate a
two-step inquiry. First, we determine who decides whether a particular dispute is
arbitrable: the arbitrator or the court. Second, if we conclude that the court is the proper
forum in which to adjudicate arbitrability, we then decide whether the dispute is, in fact,
arbitrable.” Peabody Holding Co. v. United Mine Workers of Am., Int’l Union, 665 F.3d
96, 101 (4th Cir. 2012) (citation omitted). In Peabody Holding, after the Fourth Circuit
concluded that the parties had not clearly and unmistakably delegated arbitrability
questions to an arbitrator, it observed the following: “Accordingly, we must proceed to
decide whether this dispute is arbitrable”; and, in a nod to the antecedent who issue, it
later reiterated, “Finding that the parties have committed to the court the authority to
determine whether this dispute is arbitrable, we turn to that inquiry.” Id. at 103.
In addition, the Eighth Circuit has held that because parties clearly and
unmistakably intended to arbitrate arbitrability, a district court erred in denying a motion
to compel arbitration. See Fallo, 559 F.3d at 880. Significantly, after reaching this
conclusion, the Eighth Circuit stated that it did not have to reach the issue of whether “the
district court erred in finding that the . . . claims were not within the scope of the
All. Bernstein Inv. Research & Mgmt., Inc. v. Schaffran, 445 F.3d 121, 127 (2d Cir. 2006)
(affirming dismissal of complaint because agreement to arbitrate “clearly and
unmistakably evinces the parties’ intent to submit to arbitration disputes over
arbitrability”); Shaw Grp. Inc. v. Triplefine Int’l Corp., 322 F.3d 115, 125 (2d. Cir. 2003)
(concluding that, because “the agreement clearly and unmistakably evidences the parties’
intent to arbitrate questions of arbitrability[,] . . . . the district court should have deferred
to the arbitrator on the parties’ dispute about the arbitrability of that claim”).
35
arbitration provision.” Id. at 880 n.1. And in another case, the Eighth Circuit similarly
held that because the parties clearly and unmistakably “‘inten[ded] to leave the question
of arbitrability to an arbitrator[,]’ . . . the district court did not err in declining to rule on
the arbitrability of the [agreement’s] arbitration provision.” Wootten v. Fisher Invs., Inc.,
688 F.3d 487, 494 (8th Cir. 2012) (quoting Fallo, 559 F.3d at 878).
Furthermore, the Ninth Circuit has held that because parties clearly and
unmistakably intended to arbitrate arbitrability, a “district court therefore erred in . . .
failing to stay judicial proceedings under . . . the FAA.” Momot v. Mastro, 652 F.3d 982,
983–84 (9th Cir. 2011).13 Indeed, the Ninth Circuit has expressly declined to follow one
of the cases on which Dr. Belnap relies, Turi, 633 F.3d 496, in part because the court was
not “persuaded by the reasoning of Turi.” Oracle Am., Inc., 724 F.3d at 1076. In Oracle
Am., Inc., the Ninth Circuit explained that it was not persuaded by Turi because “when a
13
The Ninth Circuit has consistently adhered to this view. See, e.g., Brennan,
796 F.3d at 1132–34 (stating that “[b]ecause a court must enforce an agreement that, as
here, clearly and unmistakably delegates arbitrability questions to the arbitrator, the only
remaining question is whether the particular agreement to delegate arbitrability—the
Delegation Provision—is itself unconscionable,” and upon concluding that the Delegation
Provision was not unconscionable, affirming the dismissal of the complaint); Oracle Am.,
Inc,, 724 F.3d at 1071 (concluding that the parties clearly and unmistakably intended to
delegate questions of arbitrability to the arbitrator, and therefore reversing the district
court’s partial denial of the motion to compel arbitration); S. Cal. Dist. Council of
Laborers v. Berry Constr., Inc., 984 F.2d 340, 344 (9th Cir. 1993) (“In general, the
resolution of whether a dispute is subject to arbitration is a task for the courts. ‘However,
the courts will be divested of that authority if the parties “clearly and unmistakably
provide” that an arbitrator is to decide whether a dispute is subject to arbitration.’”
(quoting New England Mech., Inc. v. Laborers Local Union 294, 909 F.2d 1339, 1344–45
(9th Cir. 1990))).
36
tribunal decides that a claim falls within the scope of a carve-out provision [from the
delegation provision], it necessarily decides arbitrability”; thus, “Turi’s reasoning
collapses two separate questions into one.” Id. at 1076. In other words, Turi’s
methodology does not give independent, antecedent significance to the who issue.
The Eleventh Circuit has also held that because parties clearly and unmistakably
agreed to arbitrate whether a plaintiff’s claims fall “within the scope of the arbitration
agreement,” “the decision of whether [the plaintiff’s] claims are within the scope of the
arbitration agreement is a decision for an arbitrator, and the district court erred in making
that decision itself.” In Re Checking Account Overdraft Litig. MDL No. 2036, 674 F.3d
1252, 1255, 1256–57 (11th Cir. 2012).14 And, finally, the D.C. Circuit has held that a
14
Like the Second and Ninth Circuits, see supra notes 12–13, the Eleventh
Circuit has reached this conclusion many times. See, e.g., Parnell v. Cashcall, Inc., 804
F.3d 1142, 1146 (11th Cir. 2015) (“We hold that the Loan Agreement contains a
delegation provision and, though Parnell challenged the validity of the arbitration
provision, he did not articulate a challenge to the delegation provision specifically.
Therefore, the FAA requires that we treat the delegation provision as valid, enforce the
terms of the Loan Agreement, and leave to the arbitrator the determination of whether the
Loan Agreement’s arbitration provision is enforceable.”); id. at 1148 (“Because the Loan
Agreement contains a delegation provision, we only retain jurisdiction to review a
challenge to that particular provision. Absent a direct challenge, we must treat the
delegation provision as valid and allow the arbitrator to determine the issue of
arbitrability.”); id. at 1149 (“[T]he result in this case merely follows the directive set forth
in Rent–A–Center and emphasizes that when a would-be plaintiff seeks to challenge an
arbitration agreement containing a delegation provision, he or she must challenge the
delegation provision directly.”); Terminix Int’l Co., 432 F.3d at 1333 (concluding that
because the parties clearly and unmistakably agreed that an arbitrator should decide
gateway questions including whether the arbitration clause is valid, it was “unnecessary
for [the court] to reach those issues,” and remanding with instructions to grant the motion
to compel arbitration).
37
district court “did not need to reach the question of whether [the plaintiff’s] lawsuits fell
within the terms of submission to arbitration because the [relevant treaty] allow[ed] the
arbitration tribunal to make that determination.” Chevron Corp., 795 F.3d at 207. In
Chevron, a party to the treaty argued that the district court erred in confirming an
arbitration award because the plaintiff’s claims fell under an exception to the treaty’s
arbitration provision. However, the D.C. Circuit concluded that the district court had
correctly declined to address whether the plaintiff’s claims fell within the scope of that
exception because the treaty was “not silent on who decides arbitrability.” Id. (emphasis
added). Specifically, the court reasoned that because the treaty incorporated by reference
the UNCITRAL rules—which constituted clear and unmistakable evidence that the
parties agreed to arbitrate arbitrability—“[t]here was no need for the District Court to
independently determine that [the plaintiff’s] suits satisfied the [treaty’s] parameters once
it had concluded that the parties had delegated this task to the arbitrator.” Id. at 208.
iv
In sum, the First, Second, Fourth, Eighth, Ninth, Eleventh, and D.C. Circuits have
all held that if a court finds evidence of clear and unmistakable intent to arbitrate
arbitrability, it must allow an arbitrator to decide issues of arbitrability in the first
instance. And these holdings are consistent with more general language from the
Supreme Court and our court, as discussed above. We are persuaded by these authorities.
In line with them, because we conclude (as the district court itself found) that Dr. Belnap
and SLRMC clearly and unmistakably agreed to arbitrate arbitrability, we must hold that
38
the district court was obliged to eschew consideration of the arbitrability of the claims and
to grant the motion to compel arbitration as to all of the claims against SLRMC—not just
the first one (i.e., antitrust conspiracy).
C
Next, we address the arbitrability of the claims against the Defendants that did not
sign the Agreement, the “non-SLRMC” or “nonsignatory” defendants. These Defendants
are: (1) SLRMC’s alleged parent company, “Iasis”; (2) four physician members of the
MEC; (3) an SLRMC Risk Manager; and (4) Does 1–10.
To determine whether these Defendants can compel Dr. Belnap to arbitrate based
on the arbitration provision of the Agreement—an agreement that they never signed—we
look to Utah law. See Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630–31 (2009)
(holding that the issue of whether a nonsignatory can be bound by or compel arbitration
under an arbitration agreement is governed by state law);15 see also Aplts.’ App. at 72
(§ 18) (“This Agreement shall be construed in accordance with and governed by the laws
of the State of Utah.”). Below, we conclude that the Defendants have not asserted a
theory under Utah law under which the nonsignatory Defendants can compel Dr. Belnap
15
See also Nueterra Healthcare Mgmt., LLC v. Parry, 835 F. Supp. 2d 1156,
1160–61 (D. Utah 2011) (stating that the Supreme Court held in Arthur Andersen that
“‘litigants who were not parties to the relevant arbitration agreement’ can seek a stay
under the FAA” because the FAA does not mandate stays “only for disputes between
parties to a written arbitration agreement,” and concluding that “[t]he issue before the
Court is whether under Utah law the Defendants and the nonsignatory . . . entities may
enforce, or be bound by, the arbitration agreement” (quoting Arthur Andersen, 556 U.S. at
626, 631)).
39
to arbitrate his claims against them. Thus, we conclude that the district court correctly
denied the motion to compel with respect to all of Dr. Belnap’s claims against all of the
nonsignatory Defendants.
1
The district court dealt with the nonsignatory Defendants on a claim-by-claim
basis. First, it concluded that the first cause of action fell within the scope of the
Agreement; however, it summarily stated that only signatories to the Agreement could
compel Dr. Belnap to arbitrate that claim. Then, the court concluded that the remaining
six causes of action fell outside the scope of the Agreement, and thus, no Defendant could
compel Dr. Belnap to arbitrate those claims.
The nonsignatory Defendants now argue that the district court erred when it
refused to compel Dr. Belnap to arbitrate any of his claims against them. Although they
did not sign the Agreement, they argue that as principals and agents of SLRMC, they too
are entitled to the protection of the Agreement’s arbitration provision. More specifically,
they argue that “Utah law recognizes at least five theories under which a nonsignatory to
an arbitration agreement may be bound.” Aplts.’ Opening Br. at 34 (citing Ellsworth v.
AAA, 148 P.3d 983, 989 n.11 (Utah 2006)). They argue, first, that Iasis (i.e., SLRMC’s
alleged parent company) can invoke a parent-subsidiary estoppel theory. And they argue,
second, that the individual Defendants can invoke the theory of agency because they
“have been named in this lawsuit based solely on their conduct as members of the MEC
and representatives of SLRMC,” “their alleged actions were taken as members of
40
SLRMC’s MEC acting pursuant to SLRMC’s Bylaws,” and their “alleged misconduct
occurred in [their] capacit[ies] as . . . employee[s] and representative[s] of the Hospital.”
Id. at 35–36.16
In response, Dr. Belnap argues that he “did not agree to arbitrate disputes
regarding the . . . Agreement with anyone other than SLRMC by specifically limiting
arbitration to ‘any dispute between them,’ i.e. between the parties to the contract.”
Aplee.’s Resp. Br. at 17. Dr. Belnap acknowledges that “there are five exceptions” to the
general rule that “only parties to a contract may enforce the rights and obligations created
by the contract,” but he argues that the estoppel and agency exceptions that the
nonsignatory Defendants rely on do not apply here. Id. at 18. He explains that estoppel
only applies “when the non-signatory seeks to benefit from some portions of the contract
but avoid the arbitration provisions,” or “when the non-signatory sues the signatory on the
agreement after receiving ‘direct benefits’ but seeks to avoid arbitration”—and he
contends that neither of these circumstances applies to Iasis. Id. at 18 (quoting Ellsworth,
148 P.3d at 989). And Dr. Belnap further argues that the individual Defendants cannot
invoke an agency theory because “the Complaint alleges that the individual Defendants
16
In their reply brief, Defendants argue for the first time—in one footnote and
without substantiation—that “[g]iven the parties’ ‘clear and unmistakable’ intent to
arbitrate arbitrability, the question of who was covered by the arbitration provision, along
with who was entitled to invoke it, were questions for the arbitrator, not the court.”
Aplts.’ Reply Br. at n.5. Because Defendants raised this argument for the first time in
their reply brief, we consider it waived and decline to address it. See, e.g., United States
v. Wayne, 591 F.3d 1326, 1332 n.4 (10th Cir. 2010) (“Because [the appellant] raised this
argument for the first time in her reply brief, she has waived it on appeal.”).
41
acted on behalf of themselves,” and because, regardless, “[a]n agency relationship with a
principal to a contract does not give the agent the authority to enforce a contractual term
for the agent’s own benefit.” Id. at 19 (quoting Fericks v. Lucy Ann Soffe Tr., 100 P.3d
1200, 1206 (Utah 2004)).
2
The Utah Supreme Court has held that “as a general rule, only parties to the
contract may enforce the rights and obligations created by the contract.” Fericks, 100
P.3d at 1205–06 (quoting Wagner v. Clifton, 62 P.3d 440, 442 (Utah 2002)). However,
that court has stated that “under certain circumstances, a nonsignatory to an arbitration
agreement can enforce or be bound by an agreement between other parties.” Ellsworth,
148 P.3d at 989; accord CollegeAmerica Servs., Inc. v. W. Benefit Sols., LLC, No.
2:11CV01208 DS, 2012 WL 1559745, at *2 (D. Utah May 2, 2012). Specifically, “five
theories for binding a nonsignatory to an arbitration agreement have been recognized: (1)
incorporation by reference; (2) assumption; (3) agency; (4) veil-piercing/alter-ego; and
(5) estoppel.” Ellsworth, 148 P.3d at 989 n.11; accord Nueterra Healthcare Mgmt., LLC
v. Parry, 835 F. Supp. 2d 1156, 1162 (D. Utah 2011). We conclude that the nonsignatory
Defendants cannot compel Dr. Belnap to arbitrate under the two theories that they
advance here—i.e., estoppel and agency.
a
First, we conclude that Iasis has failed to demonstrate that, under Utah law, it may
estop Dr. Belnap from avoiding arbitration because it is SLRMC’s parent company.
42
The Utah Supreme Court has recognized three circumstances in which
nonsignatory estoppel applies. Only one conceivably is relevant here; it applies when a
nonsignatory defendant employs estoppel against a signatory plaintiff, instead of the
obverse, where a signatory defendant seeks to estop a nonsignatory plaintiff.17 See
CollegeAmerica Servs., Inc., 2012 WL 1559745, at *2 (explaining that the first two
theories of nonsignatory estoppel do not apply because the nonsignatories “[we]re not
suing on [the] Agreement and they did not directly benefit from that Contract”). More
specifically, the one theory that is conceivably implicated by these facts is the “variety of
nonsignatory estoppel [that is] enforced by a nonsignatory when the signatory plaintiff
sues a nonsignatory defendant on the contract but seeks to avoid the contract-mandated
arbitration by relying on the fact that the defendant is a nonsignatory.” Ellsworth, 148
P.3d at 989 n.12; accord CollegeAmerica Servs., Inc., 2012 WL 1559745, at *2.
Critically, however, Defendants do not seek relief under that theory of nonsignatory
estoppel. Instead, they argue that yet a fourth theory applies—parent-subsidiary
nonsignatory estoppel.
17
In the other two circumstances, “a nonsignatory should be estopped from
avoiding arbitration when the nonsignatory seeks to benefit from some portions of the
contract but avoid the arbitration provisions,” meaning when “the nonsignatory has sued a
signatory on the contract to his benefit but sought to avoid the arbitration provision of the
same contract”; and “[a] nonsignatory will also be estopped when it receives a ‘direct
benefit’ from the contract which contains the arbitration clause,” meaning “when the
nonsignatory sued the signatory on the agreement after receiving ‘direct benefits’ but
seeks to avoid arbitration.” Ellsworth, 148 P.3d at 989 (quoting Am. Bureau of Shipping
v. Tencara Shipyard S.P.A., 170 F.3d 349, 353 (2d Cir. 1999)).
43
Whether Utah law would recognize such a theory is an unsettled question.
Significantly, when an appeal presents an unsettled question of state law, we must
ordinarily “attempt to predict how [the] highest court would interpret [the issue].”
Cornhusker Cas. Co. v. Skaj, 786 F.3d 842, 852 (10th Cir. 2015) (second alteration in
original) (quoting Squires v. Breckenridge Outdoor Educ. Ctr., 715 F.3d 867, 875 (10th
Cir. 2013)); see Johnson v. Riddle, 305 F.3d 1107, 1118 (10th Cir. 2002) (“When the
federal courts are called upon to interpret state law, the federal court must look to the
rulings of the highest state court, and, if no such rulings exist, must endeavor to predict
how that high court would rule.”); accord Hays v. HCA Holdings, Inc., 838 F.3d 605, 611
(5th Cir. 2016) (“Because no decision of the Texas Supreme Court precisely recognizes
intertwined claims estoppel, we ‘must make an Erie guess and determine as best we can
what the Supreme Court of Texas would decide.’” (quoting Harris Cty. v. MERSCORP
Inc., 791 F.3d 545, 551 (5th Cir. 2015))); In re Wholesale Grocery Prod. Antitrust Litig.,
707 F.3d 917, 927 (8th Cir. 2013) (“Because the Minnesota Supreme Court has not
addressed how to apply equitable estoppel, this court must predict how the court would
rule.”); see also Hardin v. First Cash Fin. Servs., Inc., 465 F.3d 470, 745–76 (10th Cir.
2006) (“Here, [in the arbitration context] because it is undisputed that Oklahoma contract
principles guide our analysis . . . . We begin with an examination of case law from
Oklahoma’s highest court.” (citations omitted)). Further, “we are generally reticent to
expand state law without clear guidance from its highest court.” Schrock v. Wyeth, Inc.,
727 F.3d 1273, 1284 (10th Cir. 2013) (quoting Taylor v. Phelan, 9 F.3d 882, 878 (10th
44
Cir. 1993)).
As noted, the Utah Supreme Court has recognized three specific varieties of
nonsignatory estoppel, none of which include the parent-subsidiary theory that
Defendants urge us to consider here. See Ellsworth, 148 P.3d at 989 & n.12. Absent a
strong showing to the contrary, we are disinclined to predict that the Utah Supreme Court
would recognize another variety; “it is not our place to expand Utah state law beyond the
bounds set by the Utah Supreme Court.” Proctor & Gamble Co. v. Haugen, 222 F.3d
1262, 1280 (10th Cir. 2000) (rejecting the plaintiffs’ effort to expand “the tort of unfair
competition” beyond the two paradigmatic scenarios that the Utah Supreme Court
addressed); see also Aclys Int’l v. Equifax, 438 F. App’x 689, 692–93 (10th Cir. 2011)
(unpublished) (declining to expand “Utah’s law on negligent misrepresentation” to
include a third duty, where the Utah Supreme Court had only described two “duties
giving rise to negligent misrepresentation claims”); Orr v. Brigham Young Univ., 108
F.3d 1388, at *2 (10th Cir. 1997) (unpublished) (finding no indication that Utah courts
would “recogniz[e] a special relationship between a university or college and its student-
athletes,” where the then-existing “boundaries of Utah law” rejected the notion that
“colleges and universities owe a special duty to their adult students”). And Defendants
fail to make such a strong showing. Accordingly, we predict that the Utah Supreme
Court would not expand the doctrine of nonsignatory estoppel beyond the three varieties
that it has explicitly defined to embrace a theory of parent-subsidiary nonsignatory
estoppel. See, e.g., Proctor & Gamble Co., 222 F.3d at 1280.
45
Defendants’ showing for the parent-subsidiary theory is especially weak because it
has no footing in Utah law. Defendants allege only that the theory was recognized by the
federal district court in Nueterra, 835 F. Supp. 2d at 1161–63. In Nueterra, the United
States District Court for the District of Utah held that, even though a parent company
plaintiff had not signed an arbitration agreement with the defendants, it nevertheless had
to arbitrate its claims against the defendants because the defendants had signed the
arbitration agreement at issue with the parent plaintiff’s subsidiary. Id. at 1163. The
court reasoned that the nonsignatory parent’s relationship with its “wholly owned
subsidiary” was “close” and that its claims were “intertwined” with the contract
containing the arbitration agreement. Id. As to the latter point, the court observed in
particular that the nonsignatory parent had sued the signatory defendants based on the
contract and that the nonsignatory parent’s claims were predicated on its subsidiary’s
“success in enforcing its rights under the [contract containing the arbitration agreement].”
Id. The court consequently concluded that the nonsignatory parent had “manifested an
intent to be bound by the [contract]”—and, thus, by its arbitration agreement. Id.
Defendants claim that Nueterra shows that Utah law recognizes a parent-
subsidiary theory of nonsignatory estoppel, apparently distinct from the three theories of
nonsignatory estoppel that the Utah Supreme Court recognized in Ellsworth. We
disagree. At the outset, we state the obvious: Nueterra—a federal trial court decision—is
not binding on us, irrespective of its view of Utah law. See Salt Lake Tribune Publ’g Co.
v. Mgmt. Planning, Inc., 454 F.3d 1128, 1134 (10th Cir. 2006) ( “No deference is given to
46
the federal district court’s views of state law, which we review de novo.” (quoting Colo.
Visionary Acad. v. Medtronic, Inc., 397 F.3d 867, 871 (10th Cir. 2005))). In addition,
Nueterra does not clearly rest its relevant holding on decisions of Utah appellate courts.18
Specifically, in articulating its parent-subsidiary theory of nonsignatory estoppel, the
Nueterra court does not rely on decisions of the Utah Supreme Court, or any other Utah
appellate court for that matter. Rather, it places its principal reliance on a solitary federal
district court decision, I–Link Inc. v. Red Cube Int’l AG, No. 2:01CV049K, 2001 WL
741315 (D. Utah Feb. 5, 2001). And that case does not even rely on Utah law.
In I–Link Inc., the federal district court turned exclusively to federal decisions
from our sister circuits in concluding that the nonsignatory defendant—a “wholly-owned
subsidiary” of the codefendant signatory parent, id. at *1—had a “sufficiently close”
relationship with its parent, and the claims against the subsidiary were “sufficiently
18
To be sure, Nueterra does discuss Ellsworth. 835 F. Supp. 2d at 1163. But
it appears to do so, not as a material part of its parent-subsidiary analysis, but rather to
bolster its ultimate estoppel conclusion by demonstrating its consistency with one of the
theories of estoppel that Ellsworth previously recognized: that is, where “[a] nonsignatory
will also be estopped when it receives a ‘direct benefit’ from the contract which contains
the arbitration clause,” meaning “when the nonsignatory sued the signatory on the
agreement after receiving ‘direct benefits’ but seeks to avoid arbitration.” Ellsworth, 148
P.3d at 989 (quoting Am. Bureau of Shipping, 170 F.3d at 353). In this regard, Nueterra’s
facts are arguably congruent with that Ellsworth theory because it involved a
nonsignatory plaintiff claiming benefits under a contract providing for arbitration through
a lawsuit against a signatory defendant. See Nueterra, 835 F. Supp. 2d at 1162–63. The
facts here, on the other hand, are not congruent with this Ellsworth theory—viz., this case
involves a nonsignatory defendant seeking to enforce the arbitration agreement against a
signatory plaintiff. Thus, not surprisingly, in relying on Nueterra, Defendants have not
suggested that the parent-subsidiary theory it espouses turns on state law embodied in this
Ellsworth theory.
47
intertwined with” the contract containing the arbitration agreement, which the signatory
parent had executed, that the signatory plaintiff also should be compelled to arbitrate with
the nonsignatory subsidiary defendant, along with the codefendant signatory parent, id. at
*5. But, notably, I–Link does not even suggest that it is announcing or applying Utah
law. Accordingly, Nueterra’s reliance on I–Link does not ground that decision’s parent-
subsidiary holding in Utah law.
Thus, we conclude that Defendants— who have placed their reliance on
Nueterra—have not persuasively demonstrated that Utah law recognizes a parent-
subsidiary theory of nonsignatory estoppel. More specifically, for the reasons explicated
supra, we predict that the Utah Supreme Court would not adopt such a parent-subsidiary
theory. Accordingly, because that is the only estoppel theory that they have advanced
here, Defendants’ estoppel argument necessarily fails.
b
Next, we conclude that the individual Defendants have failed to demonstrate that
under Utah law, they may require Dr. Belnap to arbitrate with them, as SLRMC’s agents.
Dr. Belnap does not dispute that the individual Defendants are agents of SLRMC.
Instead, he disputes whether Utah law allows nonsignatory agents to enforce contracts for
their own benefit, as undisputedly would be the case here. Dr. Belnap relies on the Utah
Supreme Court’s express statement that “an agency relationship with a principal to a
contract does not give the agent the authority to enforce a contractual term for the agent’s
own benefit.” Fericks, 100 P.3d at 1206 (emphasis added). Defendants respond that the
48
Utah Supreme Court announced an exception to the general rule stated in Fericks in its
subsequent case Ellsworth, 148 P.3d 983.
In Fericks, 100 P.3d 1200, prospective real estate buyers appealed from the
dismissal of their claims against the sellers’ agents, as well as the award of attorney’s fees
to those agents. After reversing the dismissal of the plaintiffs’ claims, the Utah Supreme
Court addressed the attorney-fee issue to provide guidance to the district court. With
respect to the attorney-fee issue, the defendants argued that as agents of the sellers, they
were entitled to enforce an attorney-fee provision in the purchase contract that the sellers
had signed. The plaintiffs countered that because the agents were not parties to the
contract, they could not recover fees under that provision. The Utah Supreme Court held
that the defendants were not entitled to attorney’s fees—even though they were agents of
the signatory sellers—because “an agency relationship with a principal to a contract does
not give the agent the authority to enforce a contractual term for the agent’s own benefit.”
Id. at 1206.
Two years after handing down Fericks, the Utah Supreme Court again applied
nonsignatory agency theory in Ellsworth, 148 P.3d 983. In Ellsworth, a construction
company filed an arbitration demand against Mr. Ellsworth and his ex-wife for claims
involving a contract that only she had signed. The Utah Supreme Court held that agency
theory did not bind Mr. Ellsworth to the arbitration clause in the contract because there
was no evidence of an agency relationship between Mr. Ellsworth and his ex-wife. See
Ellsworth, 148 P.3d at 989.
49
We conclude that Ellsworth left unscathed Fericks’s express statement that “an
agency relationship with a principal to a contract does not give the agent the authority to
enforce a contractual term for the agent’s own benefit.” Fericks, 100 P.3d at 1206.
Ellsworth and Fericks dealt with fundamentally different issues and do not conflict. In
Ellsworth, the alleged agent—the nonsignatory defendant Mr. Ellsworth—never
attempted to enforce contractual terms for his own benefit. Instead, the signatory plaintiff
did, and so the (alleged) agent sought to avoid the enforcement of contractual terms
against himself. As a result, the Utah Supreme Court never addressed in Ellsworth
whether an agent can enforce a contractual term for the agent’s own benefit; indeed, the
Ellsworth opinion did not even mention Fericks. Thus, we remain bound by Fericks’s
express statement that an agent acting for its own benefit cannot enforce such a term. As
applied here, because Defendants do not dispute that they seek to enforce the
Agreement’s arbitration provision for their own benefit, we conclude that they cannot
compel Dr. Belnap to arbitrate.
c
In sum, neither the estoppel nor the agency exception permits the nonsignatory
Defendants to compel Dr. Belnap to arbitrate based on the arbitration provision in the
Agreement they never signed. We therefore conclude that the district court correctly
denied the motion to compel arbitration with respect to all of the claims against all of the
non-SLRMC defendants.
50
III
Based on the foregoing, as to Dr. Belnap’s claims against SLRMC, we AFFIRM
in part (albeit on alternative grounds) the district court’s order insofar as it granted the
motion to compel arbitration as to Dr. Belnap’s first claim (i.e., antitrust conspiracy), and
REVERSE in part to the extent that the district court denied the motion to compel
arbitration as to the remainder of the claims against SLRMC; consequently, we
REMAND the case, instructing the district court to grant the motion to compel as to all
of the claims against SLRMC, so that an arbitrator can determine the arbitrability of the
claims in the first instance. As to Dr. Belnap’s claims against all of the non-SLRMC
Defendants, we AFFIRM the district court’s order denying the motion to compel
arbitration.
51