Anders v. Hometown Mortgage Services, Inc.

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR TH E ELEV ENTH C IRCUIT FILED
________________________
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 02-14448 September 25, 2003
________________________ THOMAS K. KAHN
D. C. Docket No. 02-00070-CV -C-W CLERK
JON AH P . AND ERS ,
and all oth ers similar ly situated,
Plaintiff- Appe llant,
versus
HOM ETO WN MO RTG AGE SER VICE S, INC .,
MO RTG AGE BRO KER S GR OUP OF T USC ALO OSA ,
Defen dants-A ppellees.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(September 25, 2003)
Before EDMOND SON, Chief Judge, CARNES, Circuit Judge, and CARNES*,
District Judge.
_______________________
*Honorable Julie E. Carnes, United States District Judge for the Northern District of
Georgia, sitting by designation.
CARNE S, Circuit Judge:
This is another arbitration dispute in which the parties are litigating whether
or not th ey shou ld be litigatin g. The f amiliar sce nario is th at the partie s agree in
writing to arbitrate any disp utes betw een them , but then one par ty files a law suit
taking the position that the agreement to arbitrate is inapplicable, invalid, or
unenforceable for one reason or another. Here the plaintiff contends the agreement
to arbitrate does not cover his federal statutory claims, is unenforceable because he
cannot afford to arbitrate, and is invalid because it does not afford him the remedial
relief to w hich he is entitled un der the sta tutes.
Based on the agreement, the district court compelled arbitration and
dismissed the lawsuit. We conclude that the agreement is broad enough to cover
the dispute, any problem involving whether the plaintiff can afford the cost of
arbitration is no p roblem in ligh t of the defend ant’s stipulation to p ay the plaintiff’s
costs of arbitration, and because any impermissible restrictions on the remedies are
severable from the other parts the agreement itself is not invalid. As a result, we
affirm the district court’s decision to send the case to arbitration where, if the
plaintiff establishes his right to relief, the arbitrator will decide the remedies issues.
2
I.
To finance the purchase of his home, Anders borrowed funds from
Hometown M ortgage Services in a transaction brokered by Mortgage Brokers
Grou p of Tu scaloosa . At the clo sing, A nders sig ned a nu mber o f docum ents
includin g an arb itration ag reemen t.1 The agreement specifically refers all disputes
between Hometown Mortgage and Anders to arbitration. And it limits the
remedies available to Anders, stating that “the arbitrator(s) may not award punitive
damages, treble damages, penalties, or attorney’s fees.” Just in case that or some
other pa rt of the ag reemen t does no t hold up , the agree ment inc ludes a se verability
or savings clause specifying that if a court declares part of the agreement invalid or
unenforceable, the remainder of the agreement will not be affected.
Anders sued both Mortgage Brokers and Ho metown Mortgage alleging that
they viola ted the R eal Estate S ettlement P rocedu res Act ( RES PA) a nd the T ruth in
Lending Act (TILA). Mortgage Brokers failed to respond to the complaint, and the
district court issued a default against it. Hometown Mortgage, on the other hand,
filed a motion to compel arbitration based on the arbitration agreement. In
response, Anders asserted that he could not afford arbitration, to which Hometown
1
Anders actually signed two documents pertinent to this appeal: The arbitration
agreement and a mortgage rider. The documents include materially identical remedial
restrictions and severability clauses. For the sake of simplicity, we will generally refer to both of
those documents as the arbitration agreement.
3
Mortg age replie d with a stipulation that if the tria l court fo und A nders u nable to
afford the costs associated with arbitration and found that his inability to pay
voided the agreement, Hometown Mortgage would bear the costs of arbitration that
Ande rs otherw ise wou ld have h ad to pay . Based on that stipulation, the district
court issued an order compelling arbitration and dismissing the case without
prejudic e. Ande rs then b rough t this appe al.
II.
Ande rs presen ts three rea sons w hy he sh ould no t be force d to arbitr ate his
claims ag ainst Ho metow n Mo rtgage: th e agreem ent to arb itrate does not reach his
claims; the agreement is unenforceable because he cannot afford arbitration; and
the agreement is invalid because of its remedial restrictions. Each of these
contentio ns, throu gh wh ich An ders attem pts to avo id arbitratio n entirely, f alls
within the category of “gateway matters” which the Supreme Court has instructed
us that co urts and not arbitr ators sho uld decid e, Green Tree Financial Corp. v.
Bazzle, 539 U.S. __, __ 1 23 S. Ct. 2402, 240 7 (2003) (holding that cou rts must
decide “ce rtain gatew ay matters , such as w hether th e parties h ave a valid
arbitration agreement at all or whether a conceded ly binding arbitration clause
applies to a certain typ e of con troversy ”); see also Howsam v. Dean W itter
Reynolds, Inc., 537 U .S. 79, 1 23 S. C t. 588, 59 2 (200 2) (“[A ] gatewa y dispute
4
about whether the parties are bound by a given arbitration clause raises a ‘question
of arbitra bility’ for a c ourt to d ecide.”).
Anders first contention is that because the agreement to arbitrate contains
remedial limitations, and because he is entitled to the full remedies afforded by the
federal statutes under which his claims arise, the agreement must not reach the
disputes involvin g his claim s. TILA and RESPA do provide for relief and
remedies that may be excluded by the agreement, which does not permit the
arbitrator to awar d punitiv e damag es, treble d amages , penalties, o r attorney ’s fees.
For example, Anders alleges that Hometown Mortgage paid referral fees or
kickbacks to Mortgage Brokers, in violation of Section 8 of RESPA, 12 U.S.C.
§ 2607 (a), for w hich the s tatute pro vides treb le damag es, id. § 2607(d). Anders
also alleges that Hometown Mortgage failed to disclose certain finance charges and
understated the annual percentage rate it charged, all in violation of TILA, 15
U.S.C . § 1638 , and Re gulation Z, 12 C .F.R. §§ 226.4, 2 26.18, a nd 226 .22. TILA
entitles suc cessful p laintiffs to s tatutory d amages as well as any actua l damag es.
15 U.S.C. § 1640(a). Anders seeks attorney’s fees, which both TILA and RESPA
allow prevailing plaintiffs to recover, TILA, 15 U.S.C. § 1640(a)(3); RESPA, 12
U.S.C. § 2607(d)(5).
5
Anders contends that because the arbitrator cannot award the full relief that
is permitted by the statutes, the parties must not have intended for the arbitration
agreem ent to cov er these sta tutory claim s. The cle ar wor ds of the agreem ent,
however, foreclose that position. It says:
[A]ny action, dispute, claim, counterclaim or controversy (“Dispute” or
“Disputes”), between us, including any claim based on or arising from an
alleged tort, shall be resolved in Birmingham, Alabama by ARBITRATION
as set forth below. The term “D isputes” shall include all actions, disputes,
claims, counterclaims or controversies arising in connection with the Loan,
Note o r the Sec urity Instr ument, a ny collectio n of any indebted ness ow ed to
Lender, any security or Collateral given to Lender, any action taken (or any
omissio n to take any action ) in conn ection w ith any of the abov e, any pas t,
present a nd futu re agreem ent betw een or am ong us (includin g the Se curity
Instrument), and any past, present or future transactions between or among
us.2
The agreement could n ot have been broader. A ny disputes means all disputes,
because “‘any’ means all.” Merrit v. Dillard Paper Co., 120 F .3d 118 1, 1186 (11th
Cir. 1997) (citing United States v. Gonzales, 520 U.S. 1, 5, 117 S. Ct. 1032, 1035
(1997 )). And so, of co urse, do es the w ord “all” itse lf. The ag reemen t reaches th is
dispute b ecause th e agreem ent reach es any an d all dispu tes.
Having decided that gateway issue against Anders, we turn to his next
contention, which is that the agreement should not be enforced because he cannot
afford th e costs of arbitration . It may be that an ag reemen t to arbitrate is
2
The quotation is from the arbitration agreement. The mortgage rider contains materially,
although not literally, identical language. See note 1, above.
6
unenforceable if the cost of arbitration precludes the effective vindication of
statutory r ights in ar bitration. Green Tree Fin. Corp. v. Randolph, 531 U.S. 79, 90,
121 S. Ct. 513, 522 (2000). But “where, as here, a party seeks to invalidate an
arbitration agreem ent on th e groun d that arb itration w ould be prohib itively
expensive, that party bears the burden of showing the likelihood of incurring such
costs.” Id. at 92, 121 S. Ct. at 522. Anders submitted an affidavit in which he said:
“I simply cannot afford to pay the $3,500.00 to $6,000.00 that I have determined
will be re quired to arbitrate m y claims,” a nd in tha t affidavit h e substan tiated his
inability to do so by detailing his assets, debts, income, and expenses; he even
attached a copy of his credit r eport. That is not enough, in view of the
circums tances.
The agreement provides that arbitration will be in accordance with the
Amer ican Ar bitration A ssociation Rules fo r Com mercial F inancial D isputes.
Those rules specify that “the AAA may, in the event of extreme hardship on the
part of any party, defer or reduce the administrative fees.” AAA Rules for
Comm ercial Fin ancial D isputes, R ule 46. They also provide that all other expenses
of the arbitration, including travel, costs of witnesses, and fees of the arbitrator,
while ordinarily “borne equally by the parties” may be assessed by the arbitrator
against an y specified party. Id. Rule 47. We need not decide if those provisions of
7
the AAA rules alone are enough to preclude a finding that arbitration would be
prohibitively expensive for Anders, because there is more.
The m ore is that H ometow n Mo rtgage stip ulated in th e district co urt that if
Anders was unable to pay for arbitration and his inability would preclude
arbitration, Hometown Mortgage “would agree to bear the administrative fees
which Anders would otherwise be required to pay in the institution of an
arbitration action.” At oral argument before us, Hometown Mortgage’s counsel
said the stip ulation m eans her client will p ay “wha t we nee d to pay to make it fa ir
for Mr. Anders,” and the arbitrator will decide how much Hometown Mortgage
should pay of And ers’ costs. Cou nsel agreed tha t Hometo wn M ortgage’s
stipulation should be cons trued ex pansive ly, and w e interpre t her repr esentation s to
us to me an that no declaratio n of inv alidity beca use of p rohibitiv e costs is
necessary before her client will help with A nders’ costs.3 Given Hometown
Mortg age’s w illingness to bear th e costs of arbitration that An ders is un able to
afford (as the arbitrator determines), it follows that Anders has not demonstrated
that arbitration would be prohibitively expensive for him.4
3
Counsel for Hometown Mortgage did say at oral argument that her client’s stipulation
does not cover Anders’ attorney’s fees, but that is not what the Green Tree issue which we are
discussing is about.
4
Our decision of this issue is consistent with our recent decision in Musnick v. King
Motor Co. of Ft. Lauderdale, 325 F.3d 1255 (11th Cir. 2003), where we rejected the plaintiff’s
contention that a “loser-pays” attorney’s fees provision invalidated an agreement to arbitrate. Id.8
Anders’ final contention is that the arbitration agreement cannot be enforced
since it contains provisions that are invalid because they cut down remedies
otherwise available to him under the federal statutes upon which his claims are
based. This contention implicates general principles of arbitration law, such as the
Federa l Arbitra tion Ac t’s prono uncem ent that w ritten arbitr ation agr eements “shall
be valid, ir revocab le, and en forceab le, save up on such groun ds as exis t at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2. The Supreme Court has
interpreted that statutory pronouncement as “a congressional declaration of a
liberal federal policy favoring arbitration agreements.” Moses H . Cone M em’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941 (1983). That
is entirely understandable since the FAA was enacted “‘to reverse the longstanding
judicial ho stility to arbitr ation agr eements . . . and to p lace arbitra tion agre ements
upon the same footing as other contracts.’” EEOC v. W affle House, Inc., 534 U.S.
279, 289, 122 S. Ct. 754, 761 (2002) (quoting Gilmer v. Interstate/Johnson Lane
Corp., 500 U .S. 20, 2 4, 111 S . Ct. 164 7, 1651 (1991 )).
at 1261-62. Applying Green Tree, we concluded that because the plaintiff might prevail in
arbitration and incur no attorney’s fees, he had not met his burden of showing prohibitive costs
of arbitration. In Musnick, as in this case, the Green Tree issue determined the enforceability of
the agreement to arbitrate and was therefore a gateway issue to be decided by the court and not
the arbitrator.
9
Agree ments to arbitrate ar e akin to f orum- selection c lauses. Cunningham v.
Fleetwood Homes of Ga., Inc., 253 F.3d 611, 617 (11th Cir. 2001) (citing Scherk
v. Alberto-Culver Co., 417 U .S. 506 , 519, 94 S. Ct. 24 49, 245 7 (197 4)). A p arty
agreeing to arbitrate statutory c laims “do es not fo rgo the s ubstantiv e rights
afforded by the statute; it only submits to their resolution in an arbitral, rather than
a judicial, forum.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473
U.S. 6 14, 628 , 105 S . Ct. 334 6, 3354 (1985 ). Feder al statutory claims are as a rule
arbitrable , see Gilmer, 500 U.S. at 28, 111 S. Ct. at 1653, and claims under TILA
and RE SPA are no ex ception, see Bowen v. First Family Fin. Servs. Inc., 233 F.3d
1331, 1338 (11th Cir. 2000) (concluding that nothing in the text or legislative
history of TILA establishes that plaintiffs have a non-waivable right to pursue an
individu al lawsu it as disting uished f rom pu rsuing a rbitration ); Blount v. N at’l
Lending Corp., 108 F. Supp. 2d 666, 669 (S.D. Miss. 2000) (holding that RESPA
claims are arbitrable). The parties in this case do not disagree about TILA and
RESPA claims being arbitrable but about whether the arbitration agreement they
signed is invalid on the ground that it contains provisions which would defeat the
remedia l purpo ses of R ESP A and TILA .
10
Anders relies upon Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054(11th Cir. 1998).5 That decision involved an employer’s ap peal of a district cou rt’s
denial of its motion to comp el arbitratio n in an em ployme nt discrim ination ac tion.
The agreement in that case referred to arbitration all employment disputes, but
specified that “[t]he arbitrator is authorized to award damages for breach of
contract only, and shall have no authority whatsoever to make an award of other
damages.” Id. at 1060. Because Title VII damages are not contract damages, we
concluded that the arbitration clause denied the employee “the possibility of
meaningful relief in an arbitration proceeding.” Id. at 1062. The arbitration clause
was invalid, we said, because “the arbitrability of [statutory] claims rests on the
assumption that the arbitration clause permits relief equivalent to court remedies.”
Id. (citing Gilmer, 500 U .S. at 28, 1 11 S. C t. at 1653 ). The ar bitration c lause in
Paladino did not d o that, so w e prono unced it in valid. W ith no va lid agreem ent to
arbitrate, th e parties w ere left to fig ht it out in c ourt.
Other c ircuits hav e handle d issues in volving remedy restriction provisio ns in
arbitration agreements differently than we did in Paladino. They let the arbitrator
decide in the first ins tance w hether re medial lim itations are permiss ible. See, e.g.,
5
Anders’ additional reliance upon Perez v. Globe Airport Sec. Servs., 253 F.3d 1280(11th Cir. 2001), is misplaced, because we have vacated our decision in that case, 294 F.3d 1275(11th Cir. 2002), and a vacated decision has no effect whatsoever, United States v. Sigma Int’l,
300 F.3d 1278, 1280 (11th Cir. 2002).
11
Hawkins v. Aid Association For Lutherans, 338 F.3d 801, 807 (7th Cir.
2003) (“Becau se the ade quacy o f arbitratio n remed ies has no thing to d o with
whether the parties agreed to arbitrate or if the claims are within the scope of that
agreem ent, these c hallenge s must fir st be con sidered b y the arbitr ator.”); Bob
Schultz Motors, Inc. v. Kawasaki Motors Corp., 334 F.3d 721, 726 (8th Cir. 2003)
(“[T]he party seeking to void the provisions [in an arbitration agreement] waiving
punitive damages and other relief ha[s] to address those arguments to the
arbitrator .”); Larry’s United Super, Inc. v. Werries, 253 F.3d 1083, 1086 (8th Cir.
2001) (declining to follow Paladino, and stating “[w]hether federal public policy
prohibits an individual from waiving certain statutory remedies is an issue that may
be raised when challeng ing an ar bitrator’s a ward” ); MCI Telecomms. Corp. v.
Matrix Comms. Corp., 135 F.3d 27, 33 n.12 (1st Cir. 1998) (holding that an
argum ent that an arbitration agreem ent is inva lid becau se it foreclo ses certain
remedies otherwise available “must be brought to the arbitrator because it does not
go to the arbitrability of the claims but only to the nature of available relief”);
Great Western Mortgage Corp. v. Peacock, 110 F.3d 222, 232 (3d Cir. 1997) (“The
availability of punitive damages is not relevant to the nature of the forum in which
the complaint will be heard. Thus, availability of punitive damages cannot enter
into a dec ision to co mpel arb itration.”). But see Ingle v. Circuit City Stores, Inc.,
328 F.3d 1165, 1179 (9th Cir. 2003) (affirming the denial of a motion to compel
12
arbitration and stating that: “[b]ecause the remedies limitation [in the arbitration
agreem ent] impr operly p roscribe s available statutory r emedies , . . . it is
substantively unconscionable”).
The dif ference b etween those de cisions o f the Firs t, Third, S eventh,
and Eighth Circuits and our Paladino decision is that in those circuits an agreement
containing a provision that impermissibly precludes or limits statutorily authorized
remedie s is still a valid agreem ent purs uant to w hich the c ase is to be sent to
arbitration, where the arbitrator decides the remedies issues along with all the
others. Under Paladino, it is not an issue for the arbitrator, at least not under the
facts and circumstances of that decision.
Of cou rse we h ave no n eed to de cide wh ether, in th e circum stances it
involve d, Paladino is the better approa ch; that de cision is th e law of this Circu it
regardle ss of ou r view o f it. See Smith v. GTE Corp., 236 F.3d 1292, 1301-02
(11th C ir. 2001 ); United States v. S teele, 147 F.3d 1316, 1317-18 (11th Cir. 1998)
(en banc). However, while we must apply the Paladino decision to facts and
circumstances sufficiently similar to those under which it arose, we are not
obligated to extend the decisio n to diffe rent situatio ns. See Watts v . BellSo uth
Telecomms., Inc., 316 F.3d 1203, 1207 (11th Cir. 2003) (“[J]udicial decisions
cannot make law beyond the facts of the cases in which those decisions are
announced.”). The prior panel precedent rule obligates us to follow the holdings of
13
an earlier d ecision, United States v. S mith, 122 F.3d 1355, 1359 (11th Cir. 1997)
(per curiam), but “[t]he holdings of a prior decision can reach only as far as the
facts and circumstances presented to the court in the case which produced that
decision,” United States v. Aguillard, 217 F.3d 1319, 1321 (11th Cir. 2000) (per
curiam) (citation an d interna l marks o mitted).
This case is different from Paladino in a way that leads us to conclude that
even if the remedial restrictions within the arbitration agreement in this case are
invalid, as Anders argues, the parties must still arbitrate. Necessarily implicit in the
Paladino decision is the proposition that the invalid remedial restrictions were not
severable from the remainder of the arbitration agreement in that case. Otherwise,
this Court would not have struck down the entire agreement as it did in affirming
the district’s court’s re fusal to o rder arb itration. Nothing in the Paladino decision
indicates that there was a severability provision in that agreement to arbitrate;
severab ility is not ev en men tioned in the opin ion of th e Cour t.6
By con trast, the arb itration ag reemen t in this case contains a severab ility
provision that evidences the parties’ intention to enforce the remainder of the
6
The opinions in Paladino are presented in a confusing way. Chief Judge Hatchett’s
opinion is presented first, but no other member of the panel joined it, 134 F.3d at 1055. The
opinion of the Court is that of Judge Cox, joined as it was by Judge Tjoflat, id. at 1060; cf.
McMahan v. Toto, 311 F.3d 1077, 1080 (11th Cir. 2002) (“Two is a majority of three, and a
majority of participating judges controls a court’s decision.”).
14
agreement in the event any portion of it is deemed invalid.7 If the sev erability
provision is given effect, it means that in this case, unlike in Paladino, the
remainder of the arbitration agreement survives any invalidity of its remedial
restrictions. Whether the severability provision is to be given effect is a question of
state law, b ecause in placing a rbitration agreements on a n even f ooting w ith all
other co ntracts, the FAA makes g eneral state contract la w con trolling. See
Paladino, 134 F.3d at 1061. That means in this case that the effect given the
severability clause – if the provisions restricting remedies are invalid – is to be
decided under th e law of Alabam a, which is the state law applicab le to this
agreem ent.
Alabam a law fav ors seve rability, and it gives fu ll force an d effect to
severability clauses. Two recent decisions of the Supreme Court of Alabama –
which happen to be in arbitration cases – illustrate. In Ex Pa rte Thick lin, 824 So.
2d 723 (Ala. 200 2), the Court concluded that a prov ision in an arbitration clause
7
The arbitration agreement in this case states:
If for any reason a court of competent jurisdiction should declare all or any part of
this Agreement invalid or unenforceable, then the remainder of this Agreement,
or the application of such provision or provisions to persons, entities or
circumstances other than those as to whom or which it is held invalid or
unenforceable, shall not be affected thereby, and every provision of this
Agreement shall be valid and enforceable to the fullest extent permitted by
law . . . .
The mortgage rider contains a materially, though not literally, identical provision.
15
prohib iting pun itive dam ages w as invalid , but seve red it out, s ending the case to
arbitration . Id. at 735. Then in Ex parte Celtic Life Ins. Co., 834 So. 2d 766 (Ala.
2002), the Court explained that there is a “general ‘duty of the co urt to preserve so
much of a contract as may properly sur vive its invalid and ineffective prov isions’”
and enforced the arbitration agreement minus the invalid provision excluding
punitive damag es. Id. at 769 (q uoting 1 7A C .J.S. Contra cts § 297 (1999)). Like the
agreement in this case, the agreements in Thicklin and Celtic Life included
severab ility clauses. Celtic Life, 834 S o. 2d at 7 68, Thicklin , 824 So. 2d at 734. In
view of the clear and settled Alabama law favoring severability, as well as the
FAA’s requirement that arbitration agreements be treated no less favorably than
other contracts under state law, the severability clause in this case should be applied
to preve nt any inv alid prov isions fro m destro ying the e ntire agre ement to arbitrate.
The decision in Paladino, in which the invalid portion of the arbitration
agreement was not severed, is distinguishable. 134 F.3d at 1062. As we have
mentioned, the opinion in Paladino says nothing about a severability clause and
there may not have been one. Also, the agreement in Paladino, a Florida case, was
not to be constru ed and a pplied in light of A labama la w, id. at 1061 n.1, which
favors s everability . Wheth er we co rrectly app lied the ap plicable sta te law in
Paladino, we hav e an oblig ation to ap ply Alab ama law correctly in this case.
16
The severability determination decides the arbitration question. Because any
invalid provisions are severable, the underlying claims are to be arbitrated
regardless of the validity of the remedial restrictions. With or without those
provisions, the case goes to arbitration. Whether the agreement is valid as written
or suffers invalid provisions that must be removed under the forgiving eye of the
severan ce clause, th ere is a valid agreem ent to arb itrate in plac e.
Since th e case is go ing to arb itration, an arbitrator and no t a court sh ould
decide the validity of the remedial restriction provisions, because “[a] court
compelling arbitration should decide only such issues as are essential to defining
the nature of the forum in which a dispute will be decided.” Musnick v. King
Moto r Co. of Ft. Lau derdale, 325 F.3d 1255, 1261 (11th Cir. 2003) (quotation
marks a nd citation omitted) . Our d ecision in this respe ct aligns u s with th e majority
of circuits that have answered this question. See, e.g., Bob Schultz Motors, Inc. v.
Kawasaki Motors Corp., 334 F.3d 721, 726 (8th Cir. 2003); MCI Telecomms. Corp.
v. Matrix Comms. Corp., 135 F .3d 27, 3 3 n.12 ( 1st Cir. 1 998); Great Western
Mortgage Corp. v. Peacock, 110 F.3d 222, 232 (3d Cir. 1997).
We realize that the Supreme Court of Alabama in Thicklin and Celtic Life
did decide the validity of the challenged remedial restrictions in those cases before
sending the disputes to arbitration. If it were a matter of general contract law, we
would follow the Thicklin and Celtic Life approach here, because Alabama law
17
applies to the general contract questions in this case. How ever, unlike severability,
whether a court or arbitrator is to decide particular issues is not a question of
contract law, but is instead governed by the FAA; it is a federal law issue to be
decided under the “body of federal substantive law of arbitrability, applicable to any
arbitration agreement within the coverage of the [FAA],” Moses H. Cone, 460 U.S.
at 24, 10 3 S. Ct. a t 941. State and federal courts are free to decide federal law
issues for themselves (unless and until the United States Supreme Court settles the
matter). We have done so, concluding that the arbitrator should decide whether the
remedial provisions of the arbitration agreement are invalid, if the arbitrator decides
that An ders’ claim s have m erit. 8
III.
We have decided all the gateway issues: whether the arbitration agreement
covers this dispute; whether it is unenforceable because prohibitively expensive;
and whether any invalid provisions are severable. Our decision of those issues
compe ls the con clusion th at arbitratio n is the pr oper fo rum fo r settling th e dispute
between these parties. Having decided the issues “essential to defining the nature of
the forum in which a dispute will be decided,” Musnick, 325 F.3d at 1261(quotatio n mark s and citatio n omitted ), we sh ould no t and w ill not decid e any mo re.
The dis trict court p roperly c ompelle d arbitratio n.
8
We have no occasion at this time to decide the extent to which that decision of the
arbitrator about the validity of the remedial provisions will be reviewable in court.
18
AFFIRMED.
19