David Casey v. Reinhart Foodservice LA, L.L.C

Case: 19-60746 Document: 00515478293 Page: 1 Date Filed: 07/06/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 19-60746
Fifth Circuit
FILED
July 6, 2020
DAVID SCOTT CASEY, Lyle W. Cayce
Clerk
Plaintiff - Appellant
v.
REINHART FOODSERVICE LOUISIANA, L.L.C.,
Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Mississippi
Before DENNIS, SOUTHWICK, and HO, Circuit Judges.
PER CURIAM:*
Plaintiff David Scott Casey appeals a district court order dismissing his
complaint and compelling the arbitration of his federal age discrimination
claims against his former employer, Reinhart Foodservice Louisiana, L.L.C.
We affirm.
I.
When Casey was sixty-one, he left his job of nine years to take a senior
executive position at Reinhart Foodservice Louisiana, L.L.C. Casey’s decision
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 19-60746 Document: 00515478293 Page: 2 Date Filed: 07/06/2020
No. 19-60746
to change jobs followed a months-long recruitment process. During that
recruitment process, Casey voiced concerns to Reinhart’s head of human
resources Vince Daniels about Reinhart’s apparent reputation for laying off
senior management. Daniels allegedly reassured Casey that the company was
changing its tact regarding senior management turnover. During that same
conversation, Daniels also told Casey that his employment would be contingent
on signing a non-compete agreement.
Two weeks after he began working at Reinhart, Reinhart informed Casey
that he also needed to sign an arbitration agreement. According to Casey,
Reinhart did not mention the arbitration agreement during the recruitment
process, but Casey also admits that he did not inquire. Casey claims that
despite his reservations about the arbitration agreement, he signed it because
Reinhart would have terminated him if he did not. The arbitration agreement
contained a delegation clause giving the arbitrator the “exclusive authority to
resolve any dispute relating to the interpretation, applicability, enforceability
or formation” of the arbitration agreement, including “any claim that all or any
part of” the arbitration agreement “is void or voidable.” 1
After working for Reinhart for two years, the company offered Casey a
retirement package. Casey claims that he did not want to retire but accepted
the retirement package because he “needed the money.”
Shortly after retiring, Casey filed an age discrimination charge with the
Equal Employment Opportunity Commission, alleging that Reinhart forced
him to retire and hired a younger person to replace him. The EEOC issued a
1 Notably, this clause is nearly identical to the arbitrability delegation clause the
Supreme Court held enforceable in Rent-A-Center, West, Inc. v. Jackson. See 561 U.S. 63, 66
(2010) (“The Arbitrator, and not any federal, state, or local court or agency, shall have
exclusive authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this [arbitration] Agreement including, but not limited to any
claim that all or any part of this [arbitration] Agreement is void or voidable.”).
2
Case: 19-60746 Document: 00515478293 Page: 3 Date Filed: 07/06/2020
No. 19-60746
right-to-sue letter on those charges, and Casey filed this action in federal court.
The district court granted Reinhart’s motion to compel arbitration based on
the contract’s arbitration clause. Casey appealed.
II.
We review the grant of a motion to compel arbitration de novo. Carey v.
24 Hour Fitness, USA, Inc., 669 F.3d 202, 205 (5th Cir. 2012). When a party
challenges the existence of a valid arbitration agreement, that “challenge is
always for the courts to decide.” Bowles v. OneMain Fin. Grp., L.L.C., 954 F.3d
722, 725 (5th Cir. 2020). “Once the arbitration contract itself has been
established,” if the contract contains an enforceable arbitrability delegation
clause, “then whether that contract may be enforced for or against the parties
in the particular case is for an arbitrator to decide.” Id. Courts apply state-
law contract principles to determine whether a challenge is to the formation or
enforcement of the arbitration agreement. Id.
Casey asserts that the district court erred in finding that he and
Reinhart entered into a valid arbitration agreement with an unambiguous
delegation clause, requiring the district court to compel arbitration. Casey
does not take issue with the text of the arbitration agreement and does not
dispute that he signed it. Instead, he argues that no valid arbitration
agreement existed because the agreement was procured by fraud and was
procedurally unconscionable.
Beginning with Casey’s argument that the agreement was obtained by
fraud, Casey asserts that Reinhart committed fraud when it failed to disclose
during the recruitment process that Casey’s employment was contingent on
signing an arbitration agreement. Under Mississippi law, the omission of a
material fact can constitute fraudulent inducement only when the parties are
in a fiduciary relationship or when one party takes affirmative actions to
conceal a material fact. See Morgan v. Green-Save, Inc., 2 So. 3d 648, 652–54
3
Case: 19-60746 Document: 00515478293 Page: 4 Date Filed: 07/06/2020
No. 19-60746
(Miss. Ct. App. 2008). Here, Reinhart and Casey were not in a fiduciary
relationship. See id. at 254. And Casey has not alleged that Reinhart took an
affirmative action to conceal that Casey would be required to sign an
arbitration agreement.
In short, Casey’s factual allegations, taken as true, do not lead to the
plausible inference that Reinhart procured the arbitration agreement by fraud.
The district court did not err in holding that the arbitration agreement was not
invalid based on fraud.
Casey also challenges the validity of the contract as procedurally
unconscionable. At the time Casey filed his appeal, we had not definitively
addressed whether under Mississippi law procedural unconscionability related
to contract formation or contract enforcement. Since then, this court
confronted this question in Bowles v. OneMain Financial Group, L.L.C., where
we determined that an unconscionability challenge goes to whether the
arbitration agreement should be enforced, not whether an agreement has been
formed. 954 F.3d at 728. Thus, unconscionability challenges are for the
arbitrator, not for the court, to decide. Id. The district court was correct to
hold that a party may not avoid arbitration on this ground.
Finally, Casey raises a constitutional claim, arguing that Section 2 of the
Federal Arbitration Act, 9 U.S.C. § 2, violates the due process clause of the
Fourteenth Amendment of the United States Constitution. He insists that
because the FAA allows arbitrators to decide issues of arbitrability, Henry
Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 529 (2019),
arbitrators have a financial incentive to decide that a case is arbitrable in order
to keep the case in arbitration. Casey argues that this financial incentive
prevents an arbitrator from resolving the gateway issue of arbitrability fairly
and thus violates his due process rights.
4
Case: 19-60746 Document: 00515478293 Page: 5 Date Filed: 07/06/2020
No. 19-60746
The Supreme Court “ha[s] held that parties may agree to have an
arbitrator decide not only the merits of a particular dispute but also ‘gateway
questions of arbitrability, such as whether the parties have agreed to arbitrate
or whether their agreement covers a particular controversy.’” Henry Schein,
Inc., 139 S. Ct. at 529 (quoting Rent-A-Ctr., 561 U.S. at 68–69). “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.”
Rent-A-Ctr., 561 U.S. at 70.
Furthermore, the Supreme Court has “decline[d] to indulge the
presumption that the parties and arbitral body conducting a proceeding will be
unable or unwilling to retain competent, conscientious, and impartial
arbitrators.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614, 634 (1985). And it has held that “there is no reason to assume at the
outset that arbitrators will not follow the law.” Shearson/Am. Express, Inc. v.
McMahon, 482 U.S. 220, 232 (1987).
* * *
For the foregoing reasons, we affirm.
5