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Burch v. P.J. Cheese, Inc.

United States Court of Appeals, Eleventh Circuit

July 7, 2017

RYAN D. BURCH, Plaintiff - Appellant,
v.
P.J. CHEESE, INC., Defendant-Appellee.

         Appeal from the United States District Court for the Northern District of Alabama D.C. Docket No. 2:09-cv-01640-SLB

          Before TJOFLAT, JILL PRYOR, Circuit Judges, and MOODY, [*] District Judge.

          TJOFLAT, Circuit Judge

         "This is another arbitration dispute in which the parties are litigating whether or not they should be litigating." Anders v. Hometown Mortg. Servs., 346 F.3d 1024, 1026 (11th Cir. 2003). In this case, an employee sued his former employer for alleged discrimination in violation of several federal statutes. In response, the employer moved the District Court to submit the dispute to arbitration in accordance with an employment contract purportedly signed by the employee. The employee opposed the motion, denying that he signed the agreement. To resolve the factual dispute, the District Court held a bench trial and concluded that the signature was valid. Based on this finding, the Court granted the employer's motion to compel arbitration, and dismissed the employee's claims without prejudice.

         The principal issue on appeal is whether the District Court erred in concluding that a general jury demand in the employee's complaint failed to preserve his statutory right to a jury trial under Section 4 of the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. ("FAA"), on the disputed questions of fact related to the authenticity of his signature on the purported arbitration agreement. Because we hold that that the specific procedures provided in Section 4 of the FAA for demanding a jury trial on arbitrability issues displace the general procedures for demanding a jury trial under the Federal Rules of Civil Procedure, we find no error and affirm the District Court's order.

         I.

         Ryan D. Burch ("Burch") began working for P.J. Cheese, Inc. ("P.J. Cheese")-a franchisee of Papa Johns located in Alabama-in 1999. In September, 2004, Burch was promoted to general manager of P.J. Cheese's Fairfield, Alabama location. He worked there until October 14, 2007, when he was asked to turn in his keys.

         Roughly two years after the firing, on August 14, 2009, Burch brought this action against P.J. Cheese in the United States District Court for the Northern District of Alabama, seeking relief under an assortment of federal employment statutes. Specifically, Burch alleged that he was paid less than his female co-workers in violation of the Equal Pay Act of 1963, 29 U.S.C. § 206(d)(1) ("Equal Pay Act"), that he was discriminated against on account of his race in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. ("Title VII"), and 42 U.S.C. § 1981 ("Section 1981"), and that he was terminated in retaliation for filing an Equal Employment Opportunity Commission ("EEOC") Charge and applying for Family and Medical Leave Act ("FMLA") leave in violation of the preceding statutes and the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq. He demanded a jury trial on all claims so triable.

         In response, on October 29, 2009, P.J. Cheese moved the District Court pursuant to 9 U.S.C. § 3[1] and 9 U.S.C. § 4[2] to stay the proceedings and compel arbitration in accordance with the arbitration terms of an employment contract purportedly signed by Burch.[3] The Court ordered Burch to file any opposition to the motion by November 23, 2009. Burch complied, denying, in an affidavit filed with the court on November 23, that the signature on the alleged arbitration agreement belonged to him. He did not, however, specifically demand that the authenticity of the signature on the agreement should be decided by a jury.

         On December 11, 2009, the District Court denied P.J. Cheese's motion to compel arbitration, concluding that Burch's denial created a dispute of material fact over the authenticity of the arbitration agreement, and that he was therefore "entitled to a trial on the arbitrability question."[4] Rather than proceed immediately to trial on the signature issue, the Court moved forward with the pretrial proceedings on the merits of Burch's underlying claims. Specifically, the Court ordered P.J. Cheese to file an answer to Burch's complaint, and entered a Scheduling Order, setting, among other things, the deadline for the completion of discovery, and the dates for the final pretrial conference and trial of the case. P.J. Cheese complied with the Court's order, filing its answer on February 15, 2010, and proceeding with discovery.

         Discovery lasted for approximately ten months. At its conclusion, P.J. Cheese moved for summary judgment on all claims brought in the complaint.[5]

         On March 27, 2013, the District Court ruled on P.J. Cheese's motion, granting summary judgment on Burch's Family Medical Leave Act and Title VII and Section 1981 claims, but denying it as to Burch's Equal Pay Act claim.[6]

         Following the Court's ruling on the summary judgment motion, the parties prepared for litigation on Burch's remaining claim. At the final pretrial conference, held on July 11, 2013, the parties returned to the question that had been festering in the background for almost four years-should they be litigating the merits of the case at all? Distilled down to its essence, if Burch's signature on the arbitration agreement was valid, the answer was no; litigation should be halted, and the proceedings should be referred to arbitration. If the signature was invalid, the answer was yes; the proceedings should continue to a trial on the merits.

         Back in 2009, the Court had already ruled that Burch was "entitled to a trial" on this signature question. All that remained to be decided in advance of such a trial was who would resolve the question: a jury or the court. The District Court asked the parties to brief the issue.[7]

         Burch argued that the issue should be tried to a jury. Specifically, he contended that Section 4 of FAA grants the party alleged to be in default-in this case, Burch-with a statutory right to a jury trial on disputed issues of fact concerning the "making of [an] arbitration agreement, " and that he invoked this right with the general jury demand in his complaint. His demand was ample, he argued, because Federal Rule of Civil Procedure 38 provides that a general demand preserves the party's right to a jury trial on any issues triable to a jury under the Seventh Amendment or a federal statute.

         In response, P.J. Cheese argued that the signature issue should be tried to the bench. Although it agreed that Section 4 of the FAA provided Burch with a statutory right to a jury trial on any disputed facts related to the validity of his signature, it contended that Burch waived this right by failing to timely file a specific jury demand on the issue as Section 4 of the FAA requires. Further, Burch's general jury demand under the Federal Rules of Civil Procedure was inapplicable, P.J. Cheese contended, because Section 4 speaks to the specific procedures required to request jury trial on the "making of an arbitration agreement" and the Federal Rules of Civil Procedure become applicable only where the FAA is silent.[8]

         The District Court agreed with P.J. Cheese, holding that Burch's failure to request a jury trial on the signature issue "on or before the return day of the notice of application" in accordance with Section 4 of the FAA operated as a waiver of his right to a jury trial on that issue. Following the District Court's decision, Burch filed an additional motion contending that P.J. Cheese had waived its right to compel arbitration by failing to demand arbitration prior to the commencement of Burch's suit against it and by failing to argue arbitrability in its motion for summary judgment.[9] The District Court rejected Burch's arguments, concluding that P.J. Cheese only participated in litigation on the merits of Burch's claims after being required to do so by court order, and that it had thus not acted "inconsistently with the arbitration right."[10]

         On September 17, 2013, the District Court tried the signature issue before the bench. After receiving the relevant testimony from the parties, it concluded that Burch had signed the agreement. Based on this finding, it granted P.J. Cheese's motion to compel arbitration and dismissed the case without prejudice.

         Burch now appeals the dismissal of his complaint, [11] contending that the District Court erred by (1) conducting a bench trial on the issue of arbitrability; (2) concluding that P.J. Cheese had not waived its right to arbitration; and (3) failing to proceed to the trial on arbitrability in a timely manner. We affirm the District Court's dismissal, and address each of these arguments in turn.[12]

         II.

         In 1925, Congress enacted the FAA "[t]o overcome judicial resistance to arbitration, " Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443, 126 S.Ct. 1204, 1207, 163 L.Ed.2d 1038 (2006), and to declare a "'national policy favoring arbitration' of claims that parties contract to settle in that manner." Preston v. Ferrer, 552 U.S. 346, 353, 128 S.Ct. 978, 983, 169 L.Ed.2d 917 (2008) (quoting Southland Corp. v. Keating, 465 U.S. 1, 10, 104 S.Ct. 852, 858, 79 L.Ed.2d 1 (1984). Three sections of the FAA play particularly important roles in achieving that purpose. 9 U.S.C. § 2-the "primary substantive provision" of the FAA, Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 94174 L.Ed.2d 765 (1983)-provides that arbitration agreements in contracts "involving commerce" are "valid, irrevocable, and enforceable."[13] 9 U.S.C. § 3 directs courts to stay their proceedings in any case raising a dispute on an issue referable to arbitration. And 9 U.S.C. § 4 "authorizes a federal district court to issue an order compelling arbitration if there has been a 'failure, neglect, or refusal' to comply with [an] arbitration agreement." Shearson/Am. Exp., Inc. v. McMahon, 482 U.S. 220, 226, 107 S.Ct. 2332, 2337, 96 L.Ed.2d 185 (1987) (quoting 9 U.S.C. § 4).

         As these provisions embody the "liberal federal policy favoring arbitration agreements, " Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir. 2005) (citation and quotation marks omitted), "doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration." Bazemore v. Jefferson Capital Sys., LLC, 827 F.3d 1325, 1329 (11th Cir. 2016) (emphasis added). This "presumption, " however, "does not apply to disputes concerning whether an agreement to arbitrate has been made." Id. (citation omitted).

         When, as in this case, a party moves a district court to compel arbitration under the FAA, the court must first determine whether "the making of the agreement for arbitration or the failure to comply therewith is . . . in issue." 9 U.S.C. § 4. If, under a "summary judgment-like standard, " the district court concludes that there "is no genuine dispute as to any material fact concerning the formation of such an agreement, " it "may conclude as a matter of law that [the] parties did or did not enter into an arbitration agreement." Bazemore, 827 F.3d at 1333 (citation and quotation marks omitted). If, on the other hand, the making of the agreement is in issue, "the court shall proceed summarily to the trial thereof." 9 U.S.C. § 4.

         As in a traditional summary judgment motion, an examination of substantive law determines which facts are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). The "threshold question of whether an arbitration agreement exists at all is 'simply a matter of contract.'" Bazemore, 827 F.3d at 1329 (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 1924, 131 L.Ed.2d 985 (1995)). Thus, just as "state law generally governs whether an enforceable contract" exists, state law generally governs whether an enforceable "agreement to arbitrate exists" as well. Caley, 428 F.3d at 1368. To prove the existence of a contract under Alabama law, the party seeking to enforce the contract must prove by a preponderance of the evidence: "an offer[, ] an acceptance, consideration, and mutual assent to terms essential to the formation of a contract." Shaffer v. Regions Fin. Corp., 29 So.3d 872, 880 (Ala. 2009).

         In this case, the District Court applied this standard and concluded that there was a disputed question of material fact over the existence of an authentic arbitration agreement. In light of this conclusion, it then properly determined that the Court was required-under 9 U.S.C. § 4-to proceed summarily to trial to resolve the disputed fact.

         A.

         The primary issue on appeal is whether the District Court erred in holding a bench trial on the signature issue in spite of Burch's general demand for a jury trial in his complaint. We conclude that that the District Court did not err.[14]

         In a civil case, a right to trial by jury may arise either by the Seventh Amendment to the U.S. Constitution or via a federal statute. Curtis v. Loether, 415 U.S. 189, 191-92, 94 S.Ct. 1005, 1007, 39 L.Ed.2d 260 (1974). The Seventh Amendment provides: "In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved. . . ." As evidenced by the Amendment's text, the Constitution does not a "create" a right to a jury trial in civil cases; instead it preserves the right in the federal courts as it existed at common law in 1791, when the Amendment was ratified. Waldrop v. S. Co. Servs., 24 F.3d 152, 156 (11th Cir. 1994). Thus, to determine whether a party has constitutional right to a jury trial, a historical test is applied.[15] If the issue, in the context in which it arises today, would have been heard at ...


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