Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Dish Network L.L.C v. Ray

United States Court of Appeals, Tenth Circuit

August 21, 2018

DISH NETWORK L.L.C. and ECHOSPHERE, L.L.C. Plaintiffs - Appellants,
v.
MATTHEW RAY, on behalf of himself and all similarly situated persons, Defendant-Appellee.

          Appeal from the United States District Court for the District of Colorado (D.C. No. 1:16-CV-00314-LTB)

          Meghan W. Martinez, Martinez Law Group, P.C., Denver, Colorado, (Dayna L. Dowdy, Martinez Law Group, P.C., Denver, Colorado, with her on the briefs) for Plaintiffs-Appellants.

          Brian D. Gonzales, The Law Offices of Brian D. Gonzales, PLLC, Fort Collins, Colorado, (Ryan F. Stephan, Stephan Zouras, LLP, Chicago, Illinois, with him on the brief) for Defendant-Appellee.

          Before TYMKOVICH, Chief Judge, SEYMOUR, and McHUGH, Circuit Judges.

          SEYMOUR, CIRCUIT JUDGE.

         This case involves an arbitration proceeding between DISH Network L.L.C. ("DISH") and Matthew Ray, a former employee who signed an arbitration agreement when he was employed. The arbitrator determined that the Arbitration Agreement between the two parties permitted classwide arbitration, and then stayed the arbitration to permit DISH to contest the issue in court. DISH filed a Petition to Vacate Clause Construction Arbitration Award, which the district court denied. We affirm.

         I.

         Matthew Ray worked as a sales associate for DISH until his termination in 2015. When he was employed, Mr. Ray signed an Arbitration Agreement drafted by DISH, which provided the following:

[T]he Employee and DISH agree that any claim, controversy and/or dispute between them, arising out of and/or in any way related to Employee's application for employment, employment and/or termination of employment, whenever and wherever brought, shall be resolved by arbitration. The Employee agrees that this Agreement is governed by the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., and is fully enforceable.
. . . The arbitration shall be governed by and construed in accordance with the substantive law of the State in which the Employee performs services for DISH as of the date of the demand for arbitration, or in the event the Employee is no longer employed by DISH, the substantive law of the State in which the Employee last performed services for DISH. A single arbitrator engaged in the practice of law from the American Arbitration Association ("AAA") shall conduct the arbitration under the then current procedures of the AAA's National Rules for the Resolution of Employment Disputes "Rules").

Aplt. App. at 51 (emphasis added).

         After his termination, Mr. Ray initially filed an action in the federal district court alleging violations of the Fair Labor Standards Act ("FLSA"), Colorado's Wage Claim Act, Colorado's Minimum Wage Act, and a common law claim for breach of contract. Dish moved to dismiss, demanding that Mr. Ray arbitrate his claims pursuant to the Agreement. Mr. Ray dismissed the lawsuit and filed with the American Arbitration Association ("AAA"), asserting the same four claims. In addition, and the focus of this case, Mr. Ray attempted to pursue his claims as a class action under Fed.R.Civ.P. 23 and a collective action under 29 U.S.C. § 216(b).

         One of the issues presented to the arbitrator was whether the Agreement permitted class arbitration. In his Clause Construction Award, the arbitrator first determined that he had jurisdiction to decide the issue. He reasoned that the determination of whether an arbitration agreement permits classwide arbitration was not a "gateway issue," an issue that is normally decided by courts rather than arbitrators. Gateway disputes include "whether the parties have a valid arbitration agreement at all or whether a concededly binding arbitration clause applies to a certain type of controversy." Green Tree Fin. Corp. v. Bazzle, 539 U.S. 444, 452 (2003) (plurality opinion) (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002)); John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 546-47 (1964) (a court should decide whether arbitration agreement survived corporate merger and bound resulting corporation); AT&T Techs., Inc. v. Communication Workers of America, 475 U.S. 643, 651-52 (a court should decide whether labor-management layoff controversy falls within arbitration clause of collective-bargaining agreement). The arbitrator reasoned that even if the issue presented was a "gateway issue," the parties had clearly and unmistakably expressed their intention in the Agreement that questions of arbitrability be resolved by the arbitrator rather than the courts.

         After concluding that he had jurisdiction to decide the issue, the arbitrator analyzed the language of the Agreement to determine the parties' intent as to classwide arbitration. Examining six features relevant to that end, the arbitrator ultimately concluded that the Agreement permitted collective action covering Mr. Ray's FLSA and state law claims.

         DISH filed with the district court a Petition to Vacate Clause Construction Award, which the court denied. The court agreed with the arbitrator that he had jurisdiction to decide the issue. Although, unlike the arbitrator, the court concluded that the determination of classwide arbitrability was a "gateway issue" normally decided by the court, it nevertheless held that the Agreement clearly and unmistakably expressed the parties' intention to have the arbitrator resolve such questions. The court also held that the arbitrator did not manifestly disregard the law in interpreting the Agreement. DISH appeals.

         II.

         DISH first contends that the arbitrator exceeded his powers in determining the gateway issue of jurisdiction over the arbitrability of class and collective claims. It therefore asserts that the normal standard of review usually applicable to an arbitrator's decision, which is extremely deferential, does not apply to the arbitrator's ultimate conclusion here that the Agreement permits classwide arbitrations. DISH also argues that even if the arbitrator did not exceed his powers, his decision manifestly disregarded the applicable law and must therefore be vacated. We address each argument in turn.

          A. Class Arbitration as a Gateway Issue

         We review a district court's order to vacate or enforce an arbitration award de novo. U.S. Energy Corp. v. Nukem, Inc., 400 F.3d 822, 830 (10th Cir. 2005). "In doing so, however, we give 'great deference' to an arbitrator's decision." Chevron Mining Inc. v. United Mine Workers of America, Local 1307, 648 F.3d 1151, 1154 (10th Cir. 2011) (quoting U.S. Energy, 400 F.3d at 830). Under the Federal Arbitration Act ("FAA"), vacation of an award is only proper in a few instances that include fraud, corruption, arbitrator misconduct, and arbitrator overreach. 9 U.S.C. § 10(a). Various courts have determined that vacation is also appropriate when the arbitration award violates public policy, when the arbitrator did not conduct a fundamentally fair hearing, or when an arbitrator's decision is "based on a 'manifest disregard' of the law, defined as 'willful inattentiveness to the governing law.'" Chevron Mining, 648 F.3d at 1154 (quoting U.S. Energy, 400 F.3d at 830); see also Denver & Rio Grande W. R.R. v. Union Pac. R.R., 119 F.3d 847, 849 (10th Cir. 1997) (citing cases). Our powers of review have been described as "among the narrowest known to the law." Litvak Packing Co. v. United Food and Commercial Workers, Local Union No. 7, 886 F.2d 275, 276 (10th Cir. 1989). In fact, "[e]rrors in either the arbitrator's factual findings or his interpretation of the law (unless that interpretation shows a manifest disregard of controlling law) do not justify review or reversal on the merits of the controversy." Chevron Mining, 648 F.3d at 1154 (quoting Denver & Rio Grande, 119 F.3d at 849).

         But this level of deference only applies to disputes that the parties agreed to submit to arbitration. The Supreme Court has recognized that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." Howsam, 537 U.S. at 83 (2002) (quoting United Steelworkers of America v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)). "Accordingly, the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). In making this determination, the Court has "long recognized and enforced a 'liberal federal policy favoring arbitration agreements.'" Howsam, 537 U.S. at 83 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983)). But the Court "has made clear that there is an exception to this policy: The question whether the parties have submitted a particular dispute to arbitration, i.e., the 'question of arbitrability, ' is 'an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.'" Id. (quoting AT&T, 475 U.S. at 649).

         The Court has distinguished "questions of arbitrability" from what it refers to as mere "procedural questions," "which grow out of the dispute and bear on its final disposition." Id. at 84 (quoting John Wiley, 376 U.S. at 557). "They include, for example, issues related to 'waiver, delay,' or 'whether a condition precedent to arbitrability has been fulfilled.'" Reed Elsevier, Inc. ex rel. LexisNexis Div. v. Crockett, 734 F.3d 594, 597 (6th Cir. 2013) (quoting Howsam, 537 U.S. at 84-85). This distinction is not always easy to discern, however, and the question of whether an arbitration clause permits classwide arbitration is a gateway dispute for the courts to decide or a procedural question for an arbitrator is an especially baffling one.

         In Bazzle, a plurality of the Court stated that whether an agreement permits class arbitration was a procedural question for an arbitrator because "it concerns neither the validity of the arbitration clause nor its applicability to the underlying dispute between the parties." 539 U.S. at 452. But the Court subsequently noted the non-binding nature of Bazzle in Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 680 (2010) ("In fact, however, only the plurality decided [the classwide arbitrability] question."). As the Court described in Stolt-Nielsen, bilateral arbitration allows "parties [to] forgo the procedural rigor and appellate review of the courts in order to realize" benefits like "lower costs, greater efficiency and speed, and the ability to choose expert adjudicators to resolve specialized disputes." Id. at 685. But these benefits are not realized in classwide arbitration, which gives "reason to doubt the parties' mutual consent to resolve disputes through [it]." Id.; see also AT&T Mobility L.L.C. v. Concepcion, 563 U.S. 333, 348 (2011) ("[T]he switch from bilateral to class arbitration sacrifices the principal advantage of arbitration-its informality-and makes the process slower, more costly, and more likely to generate procedural morass than final judgment.").

         Moreover, "[u]nder the Class Rules, 'the presumption of privacy and confidentiality' that applies in many bilateral arbitrations 'shall not apply in class arbitrations,' thus potentially frustrating the parties' assumptions when they agreed to arbitrate." Stolt-Nielsen, 559 U.S. at 686 (citations omitted). The Court also pointed out that the "commercial stakes of class-action arbitration are comparable to those of class-action litigation," but "the scope of judicial review is much more limited." Id. at 686-87 (citing Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 588 (2008)). As the Court emphasized in Concepcion, 563 U.S. at 350:

The absence of multilayered review makes it more likely that errors will go uncorrected. Defendants are willing to accept the costs of these errors in arbitration, since their impact is limited to the size of individual disputes, and presumably outweighed by savings from avoiding the courts. But when damages allegedly owed to tens of thousands of potential claimants are aggregated and decided at once, the risk of an error will often become unacceptable. Faced with even a small chance of a devastating loss, defendants will be pressured into settling questionable claims.

         In light of these Supreme Court cases, many circuits have concluded that whether an arbitration clause permits classwide arbitration is a gateway dispute for the courts to decide. See, e.g., Catamaran Corp. v. Towncrest Pharmacy, 864 F.3d 966, 972 (8th Cir. 2017) (holding classwide arbitration determination to be a gateway dispute); Dell Webb Communities, Inc. v. Carlson, 817 F.3d 867, 873 (4th Cir. 2016) (same); Opalinski v. Robert Half Int'l Inc., 761 F.3d 326, 334-35 (3d Cir. 2014) (same); Reed Elsevier, 734 F.3d at 598 (stating "the Court has given every indication, short of an outright holding, that classwide arbitrability is a gateway question rather than a subsidiary one.")

         While this issue certainly appears to be advancing in the opposite direction of the concurrence's well-reasoned opinion, we need not resolve it today. Because we conclude below that the parties showed clear and unmistakable evidence of their intention to delegate questions of arbitrability to the arbitrator, "we assume without deciding that one of these gateway matters is whether an arbitration clause authorizes class arbitration." Wells Fargo Advisors, L.L.C. v. Sappington, 884 F.3d 392, 395 (2d Cir. 2018).

         B. Clear and Unmistakable Evidence of Delegation

         We therefore turn to whether Mr. Ray has shown by clear and unmistakable evidence that the parties intended to delegate this question to an arbitrator. See Howsam, 537 U.S. at 83 ("The question whether the parties have submitted a particular dispute to arbitration, i.e., the 'question of arbitrability,' is 'an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.'" (alteration in original) (emphasis added) (quoting AT&T, 475 U.S. at 649). "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.'" Belnap v. Iasis Healthcare, 844 F.3d 1272, 1280 (10th Cir. 2017) (alteration in original) (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995) (citations omitted)). For the reasons set out below, we conclude that there was clear and unmistakable evidence of delegation here.

         Under the parties' broad Agreement, which DISH drafted and required its employees to sign,

any claim, controversy and/or dispute between them, arising out of and/or in any way related to Employee's application for employment, employment and/or termination of employment, whenever and wherever brought, shall be resolved by arbitration. . . . A single arbitrator engaged in the practice of law from the American Arbitration Association ("AAA") shall conduct the arbitration under the then current procedures of the ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.