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
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 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.
In the Agreement, Dr. Belnap represented that he:
Id. at 63 (§ 4.2). If any of these representations ceased to be true, the Agreement
The Agreement contained the following dispute-resolution provision:
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.
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.
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
The Complaint asserts seven causes of action:
Defendants moved to stay the litigation and compel mediation and/or arbitration of 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']
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 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 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.
Defendants appeal from the portions of the district court's order denying their motion to stay litigation and to compel arbitration.
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 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.
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.
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. 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).
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, 103 S.Ct. 927, 74 L.Ed.2d 765 (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))).
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, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (citations omitted); see also Rent-A-Center, 561 U.S. at 69, 130 S.Ct. 2772 ("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, 106 S.Ct. 1415 (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 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, 130 S.Ct. 2772; accord BG Grp. PLC v. Republic of Arg., ___ U.S. ___, 134 S.Ct. 1198, 1206, 188 L.Ed.2d 220 (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, 123 S.Ct. 588, 154 L.Ed.2d 491 (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, 115 S.Ct. 1920; and (2) threshold disputes about "who should have the primary power to decide" whether a dispute is arbitrable, id. at 942, 115 S.Ct. 1920. When addressing the first type of dispute — whether a dispute is arbitrable — "any doubts concerning the scope of arbitrable issues
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.
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:
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:
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 Tribe of Okla., 532 U.S. 411, 415, 419 n.1, 121 S.Ct. 1589, 149 L.Ed.2d 623 (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 Fed.Appx. 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");
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, 174 Cal.App.4th 1185, 94 Cal.Rptr.3d 918 (2009), the court considered an arbitration clause that required arbitration to be "conducted in accordance with the Rules of the American
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 Fed. Appx. 3, 5 (2d Cir. 2013) (holding that incorporation of JAMS Rules "clearly and unmistakably delegated questions of arbitrability to the arbitrator"); Wynn Resorts, Ltd. v. Atl.-Pac. Capital, Inc., 497 Fed. Appx. 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))).
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 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.
To be sure, Dr. Belnap argues that "[c]ontrolling case law and fundamental
Notably, in Qualcomm, 466 F.3d 1366, the Federal Circuit established the following "wholly groundless" test:
Id. at 1371 (emphases added) (quoting AT & T Techs., 475 U.S. at 649, 106 S.Ct. 1415 (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:
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.
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:
Id. at 507 (emphasis added).
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 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.
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, 106 S.Ct. 1415, the Court instructed:
Id. at 649-50, 106 S.Ct. 1415 (quoting United Steelworkers of Am. v. Am. Mfg. Co., 363 U.S. 564, 568, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960)). In AT & T Techs., the Court therefore made clear that when parties agree to submit an issue to arbitration,
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, 130 S.Ct. 2772. 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, 130 S.Ct. 2772 (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, 130 S.Ct. 2772. 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 determine whether the dispute was frivolous — leaving that matter for an arbitrator to decide. See id. at 72, 130 S.Ct. 2772. 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.
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
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 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).
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 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
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 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").
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 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).
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).
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 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
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, 129 S.Ct. 1896, 173 L.Ed.2d 832 (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);
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 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.
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.
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.
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.
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, 775-76 (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, 887 (10th 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);
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 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.
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 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.
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 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
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.
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.
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.
Based on the foregoing, as to Dr. Belnap's claims against SLRMC, we