DirecTV, LLC v. John Arndt

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-10033
________________________
D. C. Docket No. 1:12-cv-03233-JOF
DIRECTV, LLC,
Plaintiff-Appellee,
versus
JOHN ARNDT,
STEPHEN PEACOCK,
Defendants-Appellants,
JEREMY MCMICHEN,
Defendant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(October 22, 2013)
Before PRYOR and BLACK, Circuit Judges, and RESTANI, * Judge.
*
Honorable Jane A. Restani, United States Court of International Trade Judge, sitting by
designation.
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PER CURIAM:
Appellants John Arndt, Jeremy McMichen, and Stephen Peacock (the
Technicians) appeal the district court’s order granting Appellee DIRECTV, LLC’s,
(DIRECTV) petition to vacate an arbitration award under § 10(a)(4) of the Federal
Arbitration Act (FAA). After review of the record and consideration of the parties’
briefs, and having had the benefit of oral argument, we reverse.
I. BACKGROUND
The Technicians worked at DIRECTV, a provider of TV services, as satellite
installation and repair technicians. While employed by DIRECTV, the
Technicians each signed an arbitration agreement. In pertinent part, the
agreements required that “all claims or controversies . . . past, present or future,
arising out of an employee’s employment or termination” be submitted to binding
arbitration, including “claims for wages or other compensation due . . . and claims
for violation of any federal, state, or other governmental law, statute, regulation, or
ordinance.” The agreements further provided that:
By entering into this Agreement, Employee does not waive his/her
right to file an administrative claim or complaint with the appropriate
administrative agency, but does waive his/her right to file a civil
action and a jury trial, because the Agreement provides for an
adequate and equal opportunity for the vindication of claims and
complaints through this arbitration process.
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In November 2011, the Technicians filed a demand for collective or class
arbitration with the American Arbitration Association (AAA), alleging that
DIRECTV failed to pay them overtime wages in violation of the Fair Labor
Standards Act (FLSA). The Technicians sought to bring their case on behalf of
themselves and all other similarly situated employees.
On August 23, 2012, the arbitrator issued an order finding the agreements
provided for collective arbitration of the Technicians’ FLSA claims. Several
weeks later, on September 14, 2012, DIRECTV filed a petition in the district court
seeking to vacate the arbitrator’s award under 9 U.S.C. § 10(a)(4), on the basis that
she had exceeded her authority in finding the parties consented to collective
arbitration. The Technicians, in turn, filed a motion to dismiss DIRECTV’s
petition for lack of subject matter jurisdiction, or, in the alternative, to deny the
petition. After finding it possessed federal subject matter jurisdiction, the district
court granted DIRECTV’s petition to vacate the arbitration award and denied the
Technicians’ motion to dismiss. The district court also declined to direct rehearing
by the arbitrator and ordered the arbitration to proceed bilaterally.
II. STANDARD OF REVIEW
We review de novo the district court’s legal conclusions underlying an order
vacating an arbitration award while reviewing its findings of fact for clear error.
Offshore Marine Towing, Inc. v. MR23, 412 F.3d 1254, 1255 (11th Cir. 2005). We
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also review de novo the district court’s determination of whether it has subject
matter jurisdiction. Gupta v. McGahey, 709 F.3d 1062, 1064-65 (11th Cir. 2013).
III. DISCUSSION
A. District Court’s Jurisdiction
On appeal, the Technicians contend the district court lacked subject matter
jurisdiction over DIRECTV’s petition to vacate the arbitration award because
(1) the arbitrator’s award was an interim order; and (2) the AAA’s Employment
Rules do not provide for an interlocutory appeal of an arbitrator’s award finding
the parties consented to collective arbitration.
The Supreme Court has stated the FAA itself does not contain a grant of
jurisdiction to the federal courts. See Hall St. Assocs., L.L.C. v. Mattel, Inc., 552
U.S. 576, 581-82 (2008). Instead, an independent jurisdictional basis is required.
Id.
In Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 668-69
(2010), the Supreme Court addressed a party’s petition to vacate an arbitration
award finding that a clause in a maritime contract provided for class arbitration of
a price-fixing claim. The majority in Stolt-Nielsen, see id. at 670 n.2, rejected the
dissent’s arguments that federal jurisdiction did not exist to consider the case
because the arbitration award was “abstract and highly interlocutory,” id. at 690
(Ginsburg, J., dissenting). Instead, the issue was constitutionally ripe for judicial
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review because the arbitration award meant that the parties would have to submit
to class determination proceedings before arbitrators who might not have the
authority to require class arbitration, demonstrating sufficient hardship to render
the issue “fit for [the Court’s] review at [that] time.” Id. at 670 n.2 (majority
opinion).
Recently, in Southern Communications Services, Inc. v. Thomas, 720 F.3d
1352, 1354 (11th Cir. 2013), we addressed a petition to vacate arbitration awards
that construed an arbitration clause as allowing class litigation and certifying a
class. Although we did not extensively discuss the issue of the district court’s
subject matter jurisdiction, we noted the district court had both federal question
and diversity jurisdiction. See id. at 1357 n.5.
In this case, the district court had federal question jurisdiction under 28
U.S.C. § 1331 because the Technicians’ claims arose under a federal statute—the
FLSA. The Technicians’ arguments that the district court lacked subject matter
jurisdiction because the petition to vacate the arbitrator’s clause construction award
was an interim order simply echo the arguments rejected by the majority in
Stolt-Nielsen, and we need not revisit an issue squarely resolved by the Supreme
Court.
The Technicians’ assertion that the district court lacked jurisdiction because
this case was proceeding under the AAA’s Employment Rules also misses the
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mark. It is axiomatic that the district court’s jurisdiction is granted by Congress,
and may not be conferred by any act or agreement of the parties. See Morrison v.
Allstate Indem. Co., 228 F.3d 1255, 1260-61 (11th Cir. 2000) (explaining that
“Federal courts have limited subject matter jurisdiction,” and that “[s]ubject matter
jurisdiction is conferred and defined by statute. It cannot be created by the consent
of the parties, nor supplanted by considerations of convenience and efficiency”
(citation omitted)). That the parties submitted their dispute to a private
organization for resolution did not elevate that organization’s rules and procedures
into a congressional grant of federal jurisdiction. It is therefore irrelevant whether
the arbitration proceeded under the AAA’s Supplementary or Employment Rules.
B. District Court’s Order Vacating the Arbitration Award
The district court erred in vacating the arbitrator’s award. 1 The FAA
provides that a district court may vacate an arbitration award “where the arbitrators
exceeded their powers, or so imperfectly executed them that a mutual, final, and
definite award upon the subject matter submitted was not made.” 9 U.S.C.
§ 10(a)(4). Section 10 enumerates the exclusive grounds for vacatur of an
arbitration award. See Hall St. Assocs., 552 U.S. at 583.
1
We note the district court issued its order vacating the arbitrator’s award before the
Supreme Court decided Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (2013), and before
our decision in Thomas, and thus did not have the benefit of those opinions.
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The Supreme Court allows federal courts little leeway in determining
whether an arbitrator exceeded her powers within the meaning of § 10(a)(4). As
the Court has explained, “[u]nder the FAA, courts may vacate an arbitrator’s
decision only in very unusual circumstances.” Oxford Health Plans LLC v. Sutter,
133 S. Ct. 2064, 2068 (2013) (quotation omitted). “Because the parties bargained
for the arbitrator’s construction of their agreement, an arbitral decision even
arguably construing or applying the contract must stand, regardless of a court’s
view of its (de)merits.” Id. (quotation omitted). Thus, the sole question for a
federal court is “whether the arbitrator (even arguably) interpreted the parties’
contract, not whether [s]he got its meaning right or wrong.” Id.
In Thomas, we explained “Sutter instructs us that, under § 10(a)(4), if the
arbitrator (even arguably) interpreted the parties’ contract, a court must end its
inquiry and deny a § 10(a) motion for vacatur.” Thomas, 720 F.3d at 1359
(quotation omitted). We elaborated:
It is only in the rare instance where a court finds that a contract lacks
any contractual basis for ordering class procedures that it must
proceed to the analysis directed by Stolt-Nielsen and ask whether the
arbitrator identified and applied a rule of decision derived from the
FAA or other applicable body of law or, alternatively, merely imposed
its own policy choice and thus exceeded its powers.
Id. (quotations, citations, and brackets omitted).
As in Thomas, “the briefest glance” at the arbitrator’s award reveals that she
arguably interpreted the agreements. See id. The arbitrator stated that “[t]he
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pivotal issue is whether, under the terms of the Arbitration Agreements, [the
Technicians] may maintain this action for alleged violations of the FLSA as a
collective arbitration,” and “[w]hether the Agreement precludes arbitration of
collective claims, or what kind of proceeding the parties agreed to is the first
inquiry that must be determined by the arbitrator before the arbitration may
proceed as a collective action.” The arbitrator also explicitly acknowledged that
her duty was “to examine the terms of the Agreement, and to determine if there
exists a contractual basis for concluding that [the parties] agreed to or did not agree
to arbitrate FLSA collective actions.” Consonant with those statements, the
arbitrator quoted specific language in the agreements and explained that the
agreements were worded broadly, encompassing all past, present, and future claims
or controversies relating to wages and compensation. According to the arbitrator,
the plain language of the agreements explicitly allowed the Technicians to assert
their rights on a collective basis. Furthermore, the language relied on by
DIRECTV to demonstrate the agreements provided only for bilateral arbitration
was not sufficiently compelling to override the Technicians’ statutory rights
guaranteed by the agreements. In closing, the arbitrator stated “I find that the
Agreements expressly and implicitly provide for collective arbitration of FLSA
claims and by terms of the Agreements the parties consented to the collective
arbitration.”
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Because the arbitrator arguably interpreted the parties’ agreements, the
district court should have ended its inquiry and denied DIRECTV’s petition for
vacatur. Thomas, 720 F.3d at 1359. Although Sutter and Thomas involved class
arbitration while this case involves collective arbitration, that difference does not
matter in resolving this appeal. The Supreme Court’s construction of § 10(a)(4) in
Sutter was broader than the class action context, and articulates a rule for all
§ 10(a)(4) petitions for vacatur of an arbitration award. 2
The arbitrator’s award may have been ugly, and could have been mistaken,
incorrect, or in manifest disregard of the law, but those are not grounds for
vacating the award under § 10(a)(4). See Sutter, 133 S. Ct. at 2071 (“The
arbitrator’s construction holds, however good, bad, or ugly.”); Thomas, 720 F.3d at
1360 (“[I]n our circuit, we recognize neither an incorrect legal conclusion, nor a
manifest disregard of the law as grounds for vacating or modifying an award.”
(quotations omitted)). Accordingly, the district court’s order is REVERSED.
2
DIRECTV’s reliance on Stolt-Nielsen is also unavailing. The parties in this case did not
enter a stipulation agreeing that they had reached no consensus in the agreements regarding
collective arbitration, as did the parties in Stolt-Nielsen. See 559 U.S. at 668, 673.
Consequently, the agreements in this case could plausibly afford a basis for divining the parties’
intent, and the arbitrator did not abandon her interpretive role in finding consent to collective
arbitration based on the text of the agreements. See Sutter, 133 S. Ct. at 2069-70; Thomas, 720
F.3d at 1359. We note this is the same distinction relied on by the Supreme Court itself in Sutter.
See 133 S. Ct. at 2069-70.
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