Keith Russell v. Citigroup, Inc.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 14a0061p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
KEITH RUSSELL, on behalf of himself and all others ┐
who are similarly situated, │
Plaintiff-Appellee, │
│ No. 13-5994
│
v. >
│
│
CITIGROUP, INC. and CITICORP CREDIT SERVICES, │
INC., │
Defendants-Appellants. │
┘
Appeal from the United States District Court
for the Eastern District of Kentucky at Covington
No. 2:12-cv-00016—David L. Bunning, District Judge.
Argued: March 12, 2014
Decided and Filed: April 4, 2014
Before: MERRITT, SUTTON and GRIFFIN, Circuit Judges.
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COUNSEL
ARGUED: Samuel S. Shaulson, MORGAN, LEWIS & BOCKIUS LLP, New York, New York,
for Appellants. Richard M. Paul III, PAUL MCINNES LLP, Kansas City, Missouri, for
Appellee. ON BRIEF: Samuel S. Shaulson, MORGAN, LEWIS & BOCKIUS LLP, New
York, New York, Sari M. Alamuddin, Christopher J. Boran, Matthew A. Russell, MORGAN,
LEWIS & BOCKIUS LLP, Chicago, Illinois, for Appellants. Richard M. Paul III, PAUL
MCINNES LLP, Kansas City, Missouri, Franklin D. Azar, Keith R. Scranton, FRANKLIN D.
AZAR & ASSOCIATES, P.C., Aurora, Colorado, William H. Wilhoit, WILHOIT LAW
OFFICE, Grayson, Kentucky, for Appellee.
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13-5994 Russell v. Citigroup, Inc., et al. Page 2
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OPINION
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SUTTON, Circuit Judge. When Keith Russell accepted a job with Citicorp Credit
Services, he agreed to arbitrate “all employment-related disputes” with the company. Does that
mean he must arbitrate a case already pending in court when he signed the agreement? We think
not.
I.
From 2004 to 2009, Russell worked at Citicorp’s call center in Florence, Kentucky. As a
condition of employment, he signed a standard contract to arbitrate his disputes with the
company. The agreement covered individual claims but not class actions.
In January 2012, Russell filed a class action against the company. He claimed that the
company did not pay its employees for time spent logging into and out of their computers at the
beginning and end of each workday. Because the arbitration agreement with Russell did not
reach class claims, the company did not seek arbitration.
At this point, a confluence of improbable circumstances complicated this once-simple
case. In late 2012, with the lawsuit still in progress, Russell applied to work once more at
Citicorp’s call center in Florence. The call center agreed to rehire him. By this time, Citicorp
had updated its standard arbitration contract to cover class claims as well as individual ones.
Russell signed the new contract, and in January 2013 he began work in the call center.
Russell did not consult with his lawyers before signing the new contract. And the
lawyers directly representing Citicorp in this case, an outside law firm, did not know that Russell
had applied to work at the call center. About a month after Russell began his new job, they
found out. Relying on the new contract, Citicorp sought to compel Russell to arbitrate the class
action, which by then had begun discovery. The district court concluded that the new arbitration
agreement did not cover lawsuits commenced before the agreement was signed. Citicorp
13-5994 Russell v. Citigroup, Inc., et al. Page 3
appealed this interlocutory decision, as it may under 9 U.S.C. § 16(a). See Grain v. Trinity
Health, Mercy Health Servs., 551 F.3d 374, 377 (6th Cir. 2008).
II.
A section of the arbitration agreement, captioned “Scope of Policy,” provides:
This Policy applies to both you and to Citi, and makes arbitration the required and
exclusive forum for the resolution of all employment-related disputes (other than
disputes which by statute are not subject to arbitration) which are based on legally
protected rights (i.e., statutory, regulatory, contractual, or common-law rights)
and arise between you and Citi, its predecessors, successors and assigns, its
current and former parents, subsidiaries, and affiliates, and its and their current
and former officers, directors, employees, and agents . . . .
R. 52-7 at 2. The question is whether this language applies to the pending class action.
The text suggests that the agreement does not evict pending lawsuits from court. It
covers only disputes that “arise between [Russell] and Citi.” Id. The use of the present-tense
“arise,” rather than the past-tense “arose” or present-perfect “have arisen,” suggests that the
contract governs only disputes that begin—that arise—in the present or future. The present tense
usually does not refer to the past. See Carr v. United States, 560 U.S. 438, 448 (2010).
The preamble of the agreement—labeled “Statement of Intent”—adds force to what the
conjugation of this verb suggests. It explains, “Citi values each of its employees and looks
forward to good relations with, and among, all of its employees. Occasionally, however,
disagreements may arise between an individual employee and Citi . . . Citi believes that the
resolution of such disagreements will be best accomplished . . . by external arbitration.” R. 52-7
at 2. This language exudes prospectivity. It says that the company “looks forward” to a good
relationship with Russell, not that it looks back on their earlier relationship with fond memories.
It then acknowledges that disagreements “may arise,” not that disagreements “might have
arisen.” As used here, the auxiliary verb “may” signals a hazard that is yet to come rather than
an incident that has come to pass. See “may, v.1,” Oxford English Dictionary (3d ed. 2012).
Bringing the point home, the agreement explains that the resolution of these disputes “will be
best accomplished” by arbitration. So far as the text of the agreement and its preamble show, the
parties signed this agreement to head off future lawsuits, not to cut off existing ones.
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The common expectations of the parties reinforce the point. In re AmTrust Fin. Corp.,
694 F.3d 741, 756 (6th Cir. 2012). Russell for one says that he expected the contract to apply
only to future lawsuits. Citicorp does not question his state of mind, and in any event the
circumstances corroborate it. Russell’s behavior—signing the contract without consulting
counsel and carrying on with the lawsuit as before—would make little sense if Russell
understood the contract to cover the case at hand.
As for Citicorp, it seems doubly improbable that the company expected the contract to
govern pending lawsuits. In the first place, the company entered into this contract—binding
itself to arbitrate its disputes with Russell—without first consulting its lawyers in this case.
Would a sophisticated company allow a supervisor at a local call center to sign away rights in a
pending case without first speaking to the lawyers representing it in that case? Not likely.
In the second place, the company sent the contract to Russell rather than to his lawyer.
One party’s lawyer may not communicate about a pending case with an opposing litigant he
knows has legal representation. Ky. Sup. Ct. R. 3.130; see also Model Rules of Professional
Conduct R. 4.2 (1983). If Citicorp’s in-house counsel prepared a contract, expecting it to be
given to a represented litigant but also expecting it to govern existing cases, they might find
themselves near the edge of this rule. It makes no difference who handed Russell the arbitration
agreement, whether a member of the legal department or a supervisor at the call center. The
canons preclude a lawyer not only from communicating with a represented adversary but also
(for the most part) from helping his client do so. See Restatement (Third) of the Law Governing
Lawyers § 99, cmt. k (2000). And it makes no difference who prompted the dialogue, whether
Russell or Citicorp. The lawyer’s obligations remain in place either way. See Ky. Sup. Ct. R.
3.130, cmt. (3).
To be sure, we do not mean to suggest that Citicorp’s in-house counsel violated the rules
of ethics. Perhaps they did not participate in the drafting of this contract. Or perhaps they did
not know that the company planned to give the contract to represented employees. But we do
mean to ask: Did Citicorp expect the contract to bear a meaning that would even raise these
questions? Again, not likely.
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Against all of this, Citicorp offers no evidence that it did expect the contract to govern
pending lawsuits. In the final analysis, that leaves a situation in which one party (Russell)
certainly and the other party (Citicorp) likely expected the contract to govern only lawsuits still
to come. This common understanding fixes the meaning of the contract. See Restatement
(Second) of Contracts § 201(1) (1981).
No matter, Citicorp claims: The provision before us—“This Policy [covers] all
employment-related disputes . . . which . . . arise between [Russell] and Citi”—still proclaims
with a clear throat that the arbitrator will decide pending and impending cases alike. But milieu
limits the reach of general words like “all.” See United States v. Palmer, 3 Wheat. 610, 631–32
(1818) (Marshall, C.J.). If the poissonier tells the chef, “I have marinated all the salmon,” we
know from context that he means all the salmon on the kitchen counter, not all the salmon in the
universe. So too here. We know from context—from the use of “arise,” from the preamble and
from the parties’ probable expectations—that the contract refers to all future lawsuits, not all
lawsuits from the beginning of time to the end.
Citicorp persists that our interpretation nullifies language extending the contract to
disputes between Russell and the company’s “predecessors, successors and assigns, its current
and former parents, subsidiaries, and affiliates, and its and their current and former officers,
directors, employees, and agents.” R. 52-7 at 2 (emphasis added). Not so. Imagine that
yesterday a supervisor suspended Russell because of his sex, today the company fires the
supervisor for her misconduct, and tomorrow Russell sues the company and the supervisor for
discrimination. The phrase “former officers, directors, employees, and agents” brings this
hypothetical dispute within the agreement’s grasp, even though the supervisor no longer works
for the company. The references to past employees and past affiliates do not establish that the
agreement governs past cases.
That brings us to Citicorp’s last and best contention: The Federal Arbitration Act
requires us to resolve “any doubts concerning the scope of arbitrable issues . . . in favor of
arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983).
This is a fair point—in the abstract. In the context of this case, however, the arbitration
agreement leaves no doubt about its scope. Russell expected the agreement to cover only future
13-5994 Russell v. Citigroup, Inc., et al. Page 6
lawsuits, and we must presume Citicorp expected it to cover only future lawsuits. That means
the agreement covers only future lawsuits. In arbitration contracts, “as with any other contract,
the parties’ intentions control.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 682
(2010).
A court must interpret a provision in a contract not in isolation, but against the backdrop
of “the contract as a whole, . . . the situation of the parties and the conditions under which the
contract was written.” Frear v. P.T.A. Indus., Inc., 103 S.W.3d 99, 106 (Ky. 2003). The Federal
Arbitration Act’s presumption of arbitrability does not cut this process short. It is a presumption,
not a clear-statement rule. That is why one of two things—either “an express provision
excluding a specific dispute” or “forceful evidence of a purpose to exclude the claim”—may take
a case beyond the domain of an arbitration clause. Watson Wyatt & Co. v. SBC Holdings, Inc.,
513 F.3d 646, 650 (6th Cir. 2008). “Forceful evidence” describes just what we have here.
All in all, “arbitration is a matter of consent, not coercion.” Stolt-Nielsen, 559 U.S. at
681. A court deciding whether to order arbitration must determine whether the parties agreed to
arbitrate the case at hand. Context shows that they did not in this instance. Using the
presumption of arbitrability to extend the contract to this class action, even though neither
Russell nor Citicorp expected the contract to stretch that far, means “los[ing] sight of the purpose
of the exercise: to give effect to the intent of the parties.” Id. at 684.
For these reasons, we affirm.