SHIRLEY DOUGLAS, Successor in Interest of Schwartz & Associates, P.A. and Interstate Fire & Casualty Company, Plaintiff--Appellee,
REGIONS BANK, Defendant--Appellant
Appeal from the United States District Court for the Southern District of Mississippi.
For SHIRLEY DOUGLAS, Successor in interest of Schwartz & Associates, P.A. and Interstate Fire & Casualty Company, Plaintiff - Appellee: Philip William Thomas, Law Offices of Philip W. Thomas, P.A., Jackson, MS.
For Regions Bank, Defendant - Appellant: Emerson Barney Robinson III, Butler Snow, L.L.P., Ridgeland, MS.
Before SMITH, DENNIS, and HIGGINSON, Circuit Judges. JAMES L. DENNIS, Circuit Judge, dissenting.
JERRY E. SMITH, Circuit Judge:
In August 2002, Shirley Douglas opened a checking account with Union Planters Bank and signed a signature card binding her to arbitration. The arbitration provision included a clause (the " delegation provision" ) delegating the question of a dispute's arbitrability to an arbitrator. Douglas's account was closed less than a year later. Union Planters Bank (" Union Planters" ) merged with Regions Bank (" Regions" ) in June 2005.
In 2007, Douglas was injured in an automobile accident caused by the negligence of the driver of another vehicle. She retained a lawyer, settled the claim for $500,000, and hired a separate attorney, Vann Leonard, to get the settlement approved in bankruptcy court, where she had filed under Chapter 13. Leonard allegedly embezzled Douglas's portion of the settlement. Douglas sued Regions and Trustmark National Bank (" Trustmark" ), where Leonard had maintained accounts, for negligence and conversion on the ground that they had notice of the embezzlement and negligently failed to report that activity, make reasonable inquiries, or prevent further diversions.
Regions moved to compel arbitration based on the delegation provision in the arbitration agreement Douglas had entered into with Union Planters, Regions' predecessor-in-interest. The district court denied the motion, and Regions appealed. Although the district court applied the incorrect law, we affirm because the claim that this dispute is within the scope of the arbitration provision is groundless.
The district court denied Regions' motion to compel arbitration on the ground that no arbitration agreement existed between Douglas and Regions because under Mississippi law, Union Planters' successor-in-interest (Regions) was not a party to the arbitration agreement. Significantly, Douglas does not defend the district court's reasoning on appeal. She admits that Regions was a party to the original
arbitration agreement under Mississippi law, and indeed it appears that she never argued in response to the motion to compel that Regions' status as a successor did not bind it to the agreement. The district court apparently did not consider the applicable state law.
An agreement did, in other words, exist. Douglas signed a signature card with an arbitration agreement when she opened a checking account some number of years before the subject chain of events. The question is whether the arbitration agreement and its delegation provision have anything to do with the claim at issue here--that is, whether there is an arbitration agreement relevant to the dispute at hand.
A delegation provision is an " agree[ment] to arbitrate 'gateway' questions of 'arbitrability,' such as . . . whether [the parties'] agreement covers a particular controversy." Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 130 S.Ct. 2772, 2777, 177 L.Ed.2d 403 (2010). Parties may agree to arbitrate whether a particular claim is subject to arbitration so long as they clearly and unmistakably do so in their agreement. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Delegation provisions thus normally require an arbitrator to decide in the first instance whether a dispute falls within the scope of the arbitration provision. There is doubt that Douglas unmistakably intended to arbitrate gateway questions of arbitrability.
The mere existence of a delegation provision in the checking account's arbitration agreement, however, cannot possibly bind Douglas to arbitrate gateway questions of arbitrability in all future disputes with the other party, no matter their origin. Suppose the driver who injured Douglas was an employee of Regions who was conducting bank business. Douglas would not have to arbitrate the underlying tort, which is unrelated to her checking account and its accompanying contract, just because she happens to have a contract with Regions on a completely different matter. It follows that she does not have to send such a claim for " gateway arbitration" merely because there is a delegation provision in the completely unrelated contract.
If it were otherwise, then every case involving an arbitration agreement with a delegation provision must, with no exceptions, be submitted for such gateway arbitration; no matter how untenable the argument that there is some connection between the dispute and the agreement, an arbitrator must decide first. Douglas would have to go to the arbitrator, who would flatly tell her that this claim is not within the scope of the completely unrelated arbitration ...