Eric Anderton and Jackson Key Practice Solutions, LLC v. The Practice-Monroeville, P.C.

Rel: 9/26/14

Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.

SUPREME COURT OF ALABAMA
SPECIAL TERM, 2014
____________________

1121417
____________________

Eric Anderton and Jackson Key Practice Solutions, LLC

v.

The Practice-Monroeville, P.C.

Appeal from Monroe Circuit Court
(CV-11-900084)

BRYAN, Justice.

Eric Anderton and Jackson Key Practice Solutions, LLC

("Jackson Key"), appeal from the Monroe Circuit Court's order

denying their motion to compel arbitration. We reverse and

remand.
1121417

The Practice-Monroeville, P.C. ("the Practice"), is a

medical-practice group located in Monroeville. Allscripts

Healthcare, LLC ("Allscripts"), sells health-care software to

health-care providers. Allscripts is a North Carolina company

and does not have an office in Alabama. Jackson Key is a

certified "sales-and-service partner" of Allscripts, selling

and servicing Allscripts software, and Anderton is an employee

and partial owner of Jackson Key. In May 2011, the Practice

and Allscripts entered into a written contract in which the

Practice purchased health-care software called "MyWay" from

Allscripts through Jackson Key ("the contract"). Although the

contract was between the Practice and Allscripts, Jackson Key

supported the transaction. The contract provides that

"Allscripts may subcontract its obligations hereunder to a

third party or affiliate." An addendum to the contract

further states that "Allscripts and [the Practice] agree that

the Allscripts MyWay Software shall be hosted by Jackson Key[,

and] that any backup, system performance, data recovery, [and]

service levels will be the responsibility of [Jackson Key]."

The contract contains an arbitration provision, which

states, in pertinent part: "Any dispute or claim arising out

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of, or in connection with, this Agreement shall be finally

settled by binding arbitration in Raleigh, NC, in accordance

with the then-current rules and procedures of the American

Arbitration Association ...."

The Practice became dissatisfied with the performance of

the MyWay software and unsuccessfully attempted to cancel its

contract with Allscripts. On September 12, 2011, the Practice

sued Jackson Key and Anderton, but not Allscripts, in the

circuit court. The Practice alleged that Jackson Key,

pursuant to the addendum to the contract, had undertaken sole

responsibility for "system performance" of the MyWay software

that it had implemented for the Practice. The complaint

further alleged that Jackson Key and Anderton were negligent

in establishing the system performance of that software. On

October 21, 2011, Jackson Key and Anderton moved to compel

arbitration based on the arbitration provision in the

contract.

In November 2011, Jackson Key, acting pro se, sued the

Practice in the Monroe District Court. In that action,

Jackson Key alleged that the Practice owed it money for

Microsoft Word software that Jackson Key had purchased for the

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Practice. Following a trial, the district court entered a

judgment in favor of the Practice on March 28, 2012. Jackson

Key subsequently appealed that judgment to the Monroe Circuit

Court. Over Jackson Key and Anderton's objection, the circuit

court consolidated that appeal with the action initiated by

the Practice regarding the contract.

The Practice opposed the motion to compel arbitration in

the circuit court. The Practice argued that the circuit court

–– not the arbitrator –– should decide the threshold issue of

whether the dispute over the MyWay software is arbitrable.

The Practice then argued that the circuit court should deny

Jackson Key and Anderton's motion to compel arbitration

because, it said, the dispute was not within the scope of the

arbitration provision. Additionally, the Practice argued that

Jackson Key and Anderton had waived any right to arbitrate by

substantially invoking the litigation process in the district

court.1 On July 31, 2013, the circuit court denied the motion

1
Although most of the Practice's argument below regarding
the waiver issue was in reference to Jackson Key, at times the
Practice referred to the actions in the district court by the
circuit court "defendants," i.e., both Jackson Key and
Anderton. Thus, it appears that the Practice argued that both
Jackson Key and Anderton waived their alleged right to
arbitrate through their conduct in the district court.
4
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to compel, without stating a reason. Jackson Key and Anderton

appealed pursuant to Rule 4(d), Ala. R. App. P., which

authorizes an appeal from an order either granting or denying

a motion to compel arbitration.

Standard of Review

"'This Court's review of an order
granting or denying a motion to compel
arbitration is de novo. ...'

"United Wisconsin Life Ins. Co. v. Tankersley, 880
So. 2d 385, 389 (Ala. 2003). Furthermore:

"'"A motion to compel arbitration
is analogous to a motion for
summary judgment. TranSouth Fin.
Corp. v. Bell, 739 So. 2d 1110,
1114 (Ala. 1999). The party
seeking to compel arbitration has
the burden of proving the
existence of a contract calling
for arbitration and proving that
that contract evidences a
transaction affecting interstate
commerce. Id. 'After a motion to
compel arbitration has been made
and supported, the burden is on
the non-movant to present
evidence that the supposed
arbitration agreement is not
valid or does not apply to the
dispute in question.'"

"'Fleetwood Enters., Inc. v. Bruno, 784 So.
2d 277, 280 (Ala. 2000) (quoting Jim Burke
Auto., Inc. v. Beavers, 674 So. 2d 1260,
1265 n. 1 (Ala. 1995) (emphasis omitted)).'

5
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"Vann v. First Cmty. Credit Corp., 834 So. 2d 751,
753 (Ala. 2002)."

Cartwright v. Maitland, 30 So. 3d 405, 408–09 (Ala. 2009).

Discussion

There is no dispute that a contract calling for

arbitration exists in this case and that that contract

evidences a transaction affecting interstate commerce. In the

circuit court, the parties disputed whether Jackson Key and

Anderton had waived any right they may have had to arbitration

and whether the Practice's claim falls within the scope of the

arbitration provision. The parties also disputed whether the

circuit court or the arbitrator should decide the issue of

arbitrability. The circuit court did not give a reason for

denying Jackson Key and Anderton's motion to compel

arbitration. We will examine the disputed issues to determine

whether the circuit court could have properly denied the

motion to compel.

I. Issues Relating to Waiver

We first address whether Jackson Key and Anderton waived

any right they may have to arbitration by substantially

invoking the litigation process in Jackson Key's action in the

district court. As a threshold matter, we address whether the

6
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waiver issue is one for the circuit court or the arbitrator to

decide. This Court has stated that "the issue whether a party

has waived the right to arbitration by its conduct during

litigation is a question for the court and not the

arbitrator." Ocwen Loan Servicing, LLC v. Washington, 939 So.

2d 6, 14 (Ala. 2006).2 However, the general rule that the

court and not the arbitrator decides whether a party has

waived the right to arbitration has an exception: issues

typically decided by the court will be decided by the

arbitrator instead when there is "'clear and unmistakable

evidence'" of such an agreement in the arbitration provision.

First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944

(1995) (quoting AT&T Techs., Inc. v. Communications Workers of

America, 475 U.S. 643, 649 (1986) (alterations omitted)); see

also Marie v. Allied Home Mortg. Corp., 402 F.3d 1, 14 (1st

2
In Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,
84–85 (2002), the United States Supreme Court stated that "the
presumption is that the arbitrator should decide
'allegation[s] of waiver, delay, or a like defense to
arbitrability.'" (Quoting Moses H. Cone Mem'l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24-25 (1983).) However, this
Court and some other courts have concluded that Howsam did not
intend to disturb the traditional rule that the issue whether
a party has waived the right to arbitration by its conduct
during litigation is a question for the court and not the
arbitrator. See Ocwen, 939 So. 2d at 12-14 (thoroughly
discussing the matter).
7
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Cir. 2005) (citing First Options). In this case, Jackson Key

and Anderton argue in their reply brief that the arbitration

provision, by incorporating the rules and procedures of the

American Arbitration Association ("the AAA"), clearly and

unmistakably indicates that the arbitrator, not the court,

should decide the waiver issue. However, Jackson Key and

Anderton first make that argument in their reply brief. "We

do not permit new matters to be raised for the first time in

a reply brief." Birmingham Bd. of Educ. v. Boyd, 877 So. 2d

592, 594 (Ala. 2003).

Although Jackson Key and Anderton argue in their

principal brief that the relevant incorporated AAA rule

provides for the arbitrator rather than the court to decide

whether the dispute falls within the scope of the arbitration

provision, see Part II, infra, they did not make a similar

argument about waiver until they filed their reply brief.

Further, the record on appeal does not indicate that Jackson

Key and Anderton made such an argument about waiver before the

circuit court. Rather, in a filing submitted below, they

"agree[d] that the issue of waiver is for the Court to decide,

but dispute[d] that there has been any waiver." "This Court

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cannot consider arguments advanced for the purpose of

reversing the judgment of a trial court when those arguments

were never presented to the trial court for consideration

...." State Farm Mut. Auto. Ins. Co. v. Motley, 909 So. 2d

806, 821 (Ala. 2005). For these reasons, we do not further

discuss whether the AAA rule incorporated into the arbitration

provision clearly and unmistakably indicates that the

arbitrator instead of the court should decide the waiver

issue.

We next discuss the merits of the waiver issue.

"It is well settled under Alabama law that a
party may waive its right to arbitrate a dispute if
it substantially invokes the litigation process and
thereby substantially prejudices the party opposing
arbitration. Whether a party's participation in an
action amounts to an enforceable waiver of its right
to arbitrate depends on whether the participation
bespeaks an intention to abandon the right in favor
of the judicial process, and, if so, whether the
opposing party would be prejudiced by a subsequent
order requiring it to submit to arbitration. No
rigid rule exists for determining what constitutes
a waiver of the right to arbitrate; the
determination as to whether there has been a waiver
must, instead, be based on the particular facts of
each case."

Companion Life Ins. Co. v. Whitesell Mfg., Inc., 670 So. 2d

897, 899 (Ala. 1995).

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1121417

"In order to demonstrate that the right to
arbitrate a dispute has been waived, the party
opposing arbitration must demonstrate both (1) that
the party seeking arbitration substantially invoked
the litigation process, and (2) that the party
opposing arbitration would be substantially
prejudiced by an order requiring it to submit to
arbitration."

SouthTrust Bank v. Bowen, 959 So. 2d 624, 633 (Ala. 2006)

(some emphasis omitted). "Because there is a strong federal

policy favoring arbitration, waiver of the right to compel

arbitration is not lightly inferred, and the party seeking to

prove waiver has a 'heavy burden.'" Aurora Healthcare, Inc.

v. Ramsey, 83 So. 3d 495, 500 (Ala. 2011) (quoting Paragon

Ltd. v. Boles, 987 So. 2d 561, 564 (Ala. 2007)).

"Additionally, as this Court has consistently noted: '[T]here

is a presumption against a court's finding that a party has

waived the right to compel arbitration.'" Bowen, 959 So. 2d

at 633 (quoting Eastern Dredging & Constr., Inc. v. Parliament

House, L.L.C., 698 So. 2d 102, 103 (Ala. 1997)).

Before the circuit court, the Practice argued that

Jackson Key and Anderton had waived any right to arbitration

by litigating the district court action seeking reimbursement

for the Practice's purchase of Microsoft Word programs. As an

initial matter, we note that Jackson Key was the only

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plaintiff in the district court action; Anderton was not a

party in that action. Clearly, Anderton did not waive any

right he may have to arbitrate. After being sued in the

circuit court, Anderton's first action was to file, with

Jackson Key, a motion to compel arbitration. Merely filing a

motion to compel arbitration does not substantially invoke the

litigation process. See Ex parte Merrill Lynch, Pierce,

Fenner & Smith, Inc., 494 So. 2d 1, 3 (Ala. 1986) (concluding

that there was no waiver when the defendant merely filed a

motion to compel arbitration); and First Family Fin. Servs.

v. Jackson, 786 So. 2d 1121, 1128 (Ala. 2000) (same); see also

Kennamer v. Ford Motor Credit Co., [Ms. 1120689, February 28,

2014] ___ So. 3d ___ (Ala. 2014) (concluding that there was no

waiver of the right to arbitration when a car dealership

merely filed an answer and a motion to compel arbitration).

We also conclude that Jackson Key did not waive any right

it may have to arbitrate the MyWay dispute by litigating the

district court action. In the district court, Jackson Key

alleged that the Practice owed it money for Microsoft Word

software Jackson Key had sold to the Practice. At trial in

the district court, Albert Key, an employee of Jackson Key,

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testified that, while Jackson Key was providing training to

the Practice's personnel on the MyWay software, the Practice

asked Jackson Key to purchase and install 10 copies of

Microsoft Word. Key testified that Jackson Key purchased and

installed the Microsoft software but that the Practice failed

to reimburse Jackson Key for the software. Key further stated

that the Microsoft Word transaction was separate from the

contract in which the Practice purchased the MyWay software

from Allscripts. The record does not contain an arbitration

provision addressing the purchase of the Microsoft software.

The district court action presented a distinct issue from

the Practice's claim in the circuit court, i.e., that Jackson

Key and Anderton were negligent in establishing the system

performance of the MyWay software the Practice had purchased

from Allscripts. "Only prior litigation of the same legal and

factual issues as those the party now wants to arbitrate

results in waiver of the right to arbitrate." Larry E.

Edmonson, Domke on Commercial Arbitration § 23:6 (3d ed.

2014). See also Doctor's Assocs., Inc. v. Distajo, 107 F.3d

126, 133 (2d Cir. 1997) (stating that precedent in that

circuit "support[s] the view that only prior litigation of the

12
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same legal and factual issues as those the party now wants to

arbitrate results in waiver of the right to arbitrate" and

that "[o]ther circuits seem to agree that waiver can only

occur when a party has previously litigated the same claims it

now seeks to arbitrate"); Gingiss Int'l, Inc. v. Bormet, 58

F.3d 328, 330-32 (7th Cir. 1995) (stating that a franchisor

who brought an unlawful-detainer action against its franchisee

did not waive its right to arbitrate other claims brought by

the franchisee because the two suits involved different

issues); and Subway Equip. Leasing Corp. v. Forte, 169 F.3d

324, 328 (5th Cir. 1999) ("[A] party only invokes the judicial

process to the extent it litigates a specific claim it

subsequently seeks to arbitrate."). Compare Distajo, Gingiss,

and Subway with Kennamer, supra (concluding that, in an appeal

from a district court judgment to a circuit court, a credit

company had waived its right to arbitrate an issue after

litigating the same issue in the district court). Jackson

Key's conduct in pursuing its claim in the district court did

not constitute a waiver of any right it may have to arbitrate

a distinct claim brought against it in the circuit court.

Jackson Key's litigating its claim regarding Microsoft Word in

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the district court did not indicate an "intention to abandon,"

Companion Life, 670 So. 2d at 899, its alleged right to

arbitrate the claim in the circuit court regarding the system

performance of the MyWay software.

Because Jackson Key and Anderton did not substantially

invoke the litigation process, we need not address the element

of substantial prejudice. We conclude that the circuit court

could not have properly denied the motion to compel

arbitration on the ground that Jackson Key and Anderton had

waived any right to arbitration they may have.

II. Issues Relating to the Scope of the Arbitration
Provision

These issues concerns whether Jackson Key and Anderton,

nonsignatories to the contract containing the arbitration

provision, can compel arbitration of the dispute over the

MyWay software. "[G]enerally, a nonsignatory cannot compel

arbitration." Ex parte Stripling, 694 So. 2d 1281, 1283-84

(Ala. 1997). However, there are exceptions to this general

rule. Jackson Key and Anderton argue that they satisfy one of

those exceptions –– the equitable-estoppel exception –– which

allows a nonsignatory to enforce an arbitration provision

under certain circumstances. See Ex parte Stamey, 776 So. 2d

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85, 89 (Ala. 2000) (allowing nonsignatories to enforce an

arbitration provision if "(1) ... the scope of the arbitration

agreement signed by the party resisting arbitration [is] broad

enough to encompass those claims made by that party against

nonsignatories, or [if] those claims [are] 'intimately founded

in and intertwined with' the claims made by the party

resisting arbitration against an entity that is a party to the

contract, and (2) ... the description of the parties subject

to the arbitration agreement [is] not ... so restrictive as to

preclude arbitration by the party seeking it" (emphasis

omitted)).

As a threshold issue, Jackson Key and Anderton argue that

the arbitrator –– not the circuit court –– should decide

whether the arbitration provision may be used to compel

arbitration of the dispute here. This Court has explained

the threshold issue of "who decides" the issue of

"arbitrability":

"In ruling on a motion to stay judicial
proceedings following a request for arbitration, the
court is required to decide matters of 'substantive
arbitrability,' that is, (1) whether a valid
agreement to arbitrate exists and, if so, (2)
whether the specific dispute falls within the scope
of that agreement. Dean Witter[ Reynolds, Inc. v.
McDonald], 758 So. 2d [539,] 542 [(Ala. 1999)].

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'Procedural arbitrability,' on the other hand,
involves questions that grow out of the dispute and
bear on its final disposition, e.g., defenses such
as notice, laches, estoppel, and other similar
compliance defenses; such questions are for an
arbitrator to decide. See Howsam v. Dean Witter
Reynolds, Inc., 537 U.S. 79, 84, 123 S. Ct. 588, 154
L. Ed. 2d 491 (2002) ('"'procedural' questions which
grow out of the dispute and bear on its final
disposition are presumptively not for the judge, but
for an arbitrator, to decide"'); John Wiley & Sons,
Inc. v. Livingston, 376 U.S. 543, 84 S. Ct. 909, 11
L. Ed. 2d 898 (1964)(holding that an arbitrator
should decide whether the steps of a grievance
procedure were completed, where those steps were
prerequisites to arbitration)."

Brasfield & Gorrie, L.L.C. v. Soho Partners, L.L.C., 35 So.

3d 601, 604-05 (Ala. 2009). To clarify, we note that the

United States Supreme Court has referred to questions of

"substantive arbitrability" as simply "questions of

arbitrability" and questions of "procedural arbitrability" as

"procedural questions." Howsam, 537 U.S. at 83. A court

decides issues of substantive arbitrability "[u]nless the

parties clearly and unmistakably provide otherwise." AT&T,

475 U.S. at 649.

The question whether an arbitration provision may be used

to compel arbitration of a dispute between a nonsignatory and

a signatory is a question of substantive arbitrability (or,

under the Supreme Court's terminology, simply

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"arbitrability"). In First Options, 514 U.S. at 943-46, the

Supreme Court analyzed the question whether an arbitration

agreement binds a nonsignatory as a question of arbitrability.

See also Howsam, 537 U.S. at 84 (noting that in First Options

the Supreme Court held that the question "whether the

arbitration contract bound parties who did not sign the

agreement" is a question of arbitrability for a court to

decide). More recently, the United States Court of Appeals

for the Eighth Circuit succinctly addressed the threshold

issue before us. In Eckert/Wordell Architects, Inc. v. FJM

Properties of Willmar, LLC, 756 F.3d 1098 (8th Cir. 2014), a

nonsignatory sought to compel arbitration of a dispute with a

signatory, as in this case. The court stated:

"Whether a particular arbitration provision may
be used to compel arbitration between a signatory
and a nonsignatory is a threshold question of
arbitrability. See Howsam v. Dean Witter Reynolds,
Inc., 537 U.S. 79, 84–85, 123 S. Ct. 588, 154 L. Ed.
2d 491 (2002) (delineating potentially dispositive
threshold issues between 'questions of
arbitrability' and 'procedural questions'). We
presume threshold questions of arbitrability are for
a court to decide, unless there is clear and
unmistakable evidence the parties intended to commit
questions of arbitrability to an arbitrator. Id. at
83, 123 S. Ct. 588; Express Scripts, Inc. v. Aegon
Direct Mktg. Servs., Inc., 516 F.3d 695, 701 (8th
Cir. 2008). We have previously held the
incorporation of the AAA Rules into a contract

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requiring arbitration to be a clear and unmistakable
indication the parties intended for the arbitrator
to decide threshold questions of arbitrability. ...
Eckert Wordell's drafting of the architectural
services contract here to incorporate the AAA Rules
requires the same result."

756 F.3d at 1100. See also Knowles v. Community Loans of

America, Inc., (No. 12-0464-WS-B, Nov. 20, 2012) (S.D. Ala.

2012) (not reported in F. Supp. 2d) ("A question as to

'whether the arbitration contract bound parties who did not

sign the agreement' is one that 'raises a "question of

arbitrability" for a court to decide.'" (quoting Howsam, 537

U.S. at 84)).

Like the Eighth Circuit, we have held "that an

arbitration provision that incorporates rules that provide for

the arbitrator to decide issues of arbitrability clearly and

unmistakably evidences the parties' intent to arbitrate the

scope of the arbitration provision." CitiFinancial Corp. v.

Peoples, 973 So. 2d 332, 340 (Ala. 2007). See also Joe Hudson

Collision Ctr. v. Dymond, 40 So. 3d 704, 710 (Ala. 2009)

(concluding that an arbitrator decides issues of substantive

arbitrability when the arbitration provision incorporated the

same AAA rule as in the present case); and Wells Fargo Bank,

N.A. v. Chapman, 90 So. 3d 774, 783 (Ala. Civ. App. 2012)

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(same). The relevant AAA rule incorporated by the arbitration

provision provides: "The arbitrator shall have the power to

rule on his or her own jurisdiction, including any objections

with respect to the existence, scope or validity of the

arbitration agreement." Thus, although the question whether

an arbitration provision may be used to compel arbitration

between a signatory and a nonsignatory is a threshold question

of arbitrability usually decided by the court, here that

question has been delegated to the arbitrator. The

arbitrator, not the court, must decide that threshold issue.

Conclusion

Jackson Key and Anderton did not waive any right to

arbitration they may have. The question whether Jackson Key

and Anderton, as nonsignatories to the contract containing the

arbitration provision, can compel arbitration of the dispute

over the MyWay software is a question for the arbitrator, not

the court, pursuant to the arbitration provision in the

contract. The circuit court erred in denying Jackson Key and

Anderton's motion to compel arbitration. We therefore reverse

the order and remand the case for further proceedings

consistent with this opinion.

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REVERSED AND REMANDED.

Stuart, Bolin, Main, and Wise, JJ., concur.

Shaw, J., concurs in part and concurs in the result.

Moore, C.J., and Parker and Murdock, JJ., dissent.

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SHAW, Justice (concurring in part and concurring in the

result).

I concur as to Part I of the main opinion. As to Part

II, I concur in the result.

The Practice-Monroeville, P.C. ("the Practice"), agreed

that "any dispute or claim arising out of, or in connection

with," the contract it entered into with Allscripts

Healthcare, LLC ("Allscripts"), would be settled in

arbitration under the rules of the American Arbitration

Association. As part of that agreement, the Practice also

agreed that issues of arbitrability, which include whether a

nonsignatory to the contract can enforce the arbitration

provision included in the agreement, would be decided by an

arbitrator. See Eckert/Wordell Architects, Inc. v. FJM Props.

of Willmar, LLC, 756 F.3d 1098 (8th Cir. 2014).

Eric Anderton and Jackson Key Practice Solutions, LLC,

argue that their dispute with the Practice is a "dispute or

claim" under the Practice's contract with Allscripts. The

court must first perform a necessary "gate-keeping function"

before compelling arbitration: it must determine whether the

party resisting arbitration has agreed in its contract to

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allow the arbitrator to decide whether a nonsignatory to the

contract can enforce its arbitration provision. Here, it is

the function of the court to determine whether the Practice

agreed that an arbitrator could decide whether Anderton and

Jackson Key could take their claims against the Practice to

arbitration. The Practice has the freedom to enter into a

contract that calls for the arbitrator, instead of the trial

court, to make this decision.

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MURDOCK, Justice (dissenting).

It is axiomatic that, before a party to a dispute must

submit to the views of some arbitrator as to either the merits

of the dispute or whether the subject of the dispute falls

within the scope of disputes to be decided on the merits by

the arbitrator, a court must first determine whether that

arbitration agreement is in fact one that governs as between

that party and the opposing party to the dispute. By logic

and of necessity, only a court can play this gate-keeping

function.3 Were it otherwise, then, by logical extension, any

party to any dispute could insist on appearing before an

arbitrator, and the opposing party, even one who in fact has

never signed as a party to an arbitration agreement and who

3
See, e.g., Smith v. Mark Dodge, Inc., 934 So. 2d 375,
(Ala. 2006). Smith v. Mark Dodge was a case postured just
like the present case, i.e., where a nonsignatory sought to
force a signatory into arbitration under the terms of an
arbitration agreement containing a clause expressing an
"agree[ment] to arbitrate the arbitrability of any
controversy." This Court made the decision whether the
arbitration agreement governed as between two parties on the
basis of the same equitable-estoppel theory asserted in the
present case. 934 So. 2d at 379, 380-84. A separate dispute
as to whether the subject matter of the dispute fell within
the intended scope of the arbitration agreement was sent to
the arbitrator for decision under the same "arbitrate-the-
arbitrability" clause. Id. at 378-80.

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otherwise is not properly governed by any arbitration

agreement under applicable legal principles, nonetheless will

be subjected to the decision of an arbitrator as to whether

this is in fact true or not. Until such a condition is

determined to be true, however, no party is, or should be,

under any obligation to appear before, or to subject himself

or herself to the authority of, some arbitrator, rather than

a court.4

4
If, as suggested by the main opinion, the recent decision
of the United States Court of Appeals for the Eighth Circuit
in Eckert/Wordell Architects, Inc. v. FJM Properties of
Willmar, LLC, 756 F.3d 1098, 1098 (8th Cir. 2014), is to the
contrary, then, in all logic and necessity, I respectfully
submit that it was decided in error. In point of fact, the
opinion in Eckert offers no meaningful exploration of the
issue before us. In a relatively short paragraph, a three-
judge panel limits the analysis in that case to the narrow
issue whether, as a matter of contractual form, the reference
to American Arbitration Association rules in an arbitration
agreement would satisfy the requirement announced by the
Supreme Court in Howsam v. Dean Witter Reynolds, Inc., 537
U.S. 79, 83 (2002), that there must be "a clear and
unmistakable indication" in the written contract containing
the arbitration provision that the arbitrator is to decide the
scope of the arbitration agreement. After identifying this as
the issue to be addressed by it, the panel cites a single
Eighth Circuit case as precedent for an affirmative answer and
then ends the opinion. 756 F.3d at 1100.

At least one law review article has highlighted why there
may be confusion on this issue: the use of the term
"arbitrability" for two separate ideas. As the author
explains:

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"Whether a party is required to submit a
particular dispute to arbitration may contain within
it two completely distinct legal issues. First, a
party may be objecting to arbitration on the ground
that no valid, enforceable arbitration agreement
exists between the parties. Second, and
alternatively, a party may be arguing that the
particular dispute does not fall within the scope of
the arbitration agreement. The distinction between
these two objections to arbitration is critical,
because each is governed by its own separate set of
legal rules that govern 'who,' meaning which forum
-- the court or the arbitrator -- is to adjudicate
such objection to arbitration.

"Courts repeatedly recognize that the issue of
who has the jurisdiction to decide the 'question of
arbitrability' is a threshold issue. However, the
use of the term 'arbitrability' in the framing of
this question has introduced and is the source of
substantial confusion. This is because the term
'arbitrability,' as used by courts and commentators
alike, can refer to both of the two above-noted very
different objections to arbitration."

Steven H. Reisberg, The Rules Governing Who Decides
Jurisdictional Issues: First Options v. Kaplan Revisited, 20
Am. Rev. Int'l Arb. 159, 159 (2009).

One federal court not confused about the issue has put it
this way: "The existence of an agreement to arbitrate is
paramount. ... Once the existence of an agreement is
established, courts turn to the question of the 'scope' of the
arbitration agreement, unless the parties have 'clearly and
unmistakeably' delegated the issue of 'scope' to an
arbitrator." Sleeper Farms v. Agway, Inc., 211 F. Supp. 2d
197, 200 (D. Me. 2002) aff'd, 506 F.3d 98 (1st Cir. 2007).
"Thus, if the Court finds that an agreement to arbitrate
exists between the parties, it will leave the second
arbitrability question to an arbitrator." 211 F. Supp. 2d at
200 (emphasis added).
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On an even more fundamental level, however, I would add

that today's case is a corollary and natural successor to this

Court's decision in Auto Owners Insurance, Inc. v. Blackmon

Insurance Agency, Inc., 99 So. 3d 1193 (Ala. 2012). The

comments in my dissent in that case, 99 So. 2d at 1199-1203,

are equally applicable to the similar question in this case,

and I incorporate them herein by this reference.

As I concluded in Auto Owners, this Court's approach to

"traditional" arbitrability cases, i.e., those concerning the

substantive scope of an arbitration clause, is "paradoxical."

99 So. 3d at 1201. Specifically, I considered the typical

case, by which I meant a case where the arbitration clause

does not describe a universe of types of disputes whose merits

are to be arbitrated that is any narrower than the universe of

types of disputes within which the arbitrator is to decide if

the particular dispute is of a type whose merits are to be

arbitrated. 99 So. 3d at 1201-02. In such cases, there

logically is no room for decision by the arbitrator -- or, as

I put it in Auto Owners, we "meet ourselves coming" -- on the

threshold question whether the arbitration agreement in

question governs as to the subject matter of the dispute (the

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question in Auto Owners). It is the court that of necessity

must answer the threshold question of whether the dispute

falls within the universe of cases as to which the arbitrator

is to decide the question of arbitrability because, until the

court does so, and does so in the affirmative, it has no basis

to send the case to the arbitrator for any purpose. Once it

does so, however, the parameters of the universe of cases in

question have been decided and there logically is no room left

for the arbitrator to define this universe any differently.

Id. at 1201, 1203. "Paradoxically," if the arbitrator were to

take a more narrow view of the universe of cases subject to

arbitration on the merits so as, in turn, to find that the

particular dispute before the arbitrator does not fall within

that universe, then the arbitrator will have made a decision

that conflicts with the view of that universe held by the

court that sent the case to the arbitrator and of necessity

deprives the arbitrator of the authority to make that decision

in the first place. The same would be true in all cases in

which the threshold question is whether the arbitration

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agreement is one that governs as between the parties in

question –- the question in the present case.5

5
Since this Court's decision in Auto Owners, it has come
to my attention that the views I expressed therein are
embodied in writings by other commentators and courts, some of
whom frame their criticism of the subject approach to
"arbitrability" in terms of a "circularity" of reasoning.

"[A]ttempts to find a source of arbitral power in
the rules of arbitral institutions alone must be
circular. For example, the [Interstate Commerce
Commission's] practice of referring cases to
arbitration once the Court of Arbitration is 'prima
facie satisfied' that an arbitration agreement 'may
exist' is undoubtedly 'a useful administrative line
for an institution's bureaucracy, but such a
standard in itself says nothing about the true
presence of consent.' Whatever may be the 'true
construction' of the institution's rules 'as they
stand without reference to any particular system of
law,' no rational regime of contract law could
countenance that an arbitrator arrogate to himself
the power to determine his own jurisdiction in the
absence of a valid agreement giving him the
authority to do so. A functional analysis is
possible in terms of our desire not to see a matter
entrusted to arbitrators whose own self-interest is
likely to skew the result. But the prevention of
bootstrapping alone provides an adequate account."

Alan Scott Rau, The Arbitrability Question Itself, 10 Am. Rev.
Int'l Arb. 287, 304-06 (1999) (footnotes omitted). See
Sphere Drake Ins. Ltd. v. All Am. Ins. Co., 256 F.3d 587, 591
(7th Cir. 2001) ("[A] person who has not consented ... can't
be packed off to a private forum. Courts have jurisdiction to
determine their jurisdiction not only out of necessity (how
else would jurisdictional disputes be resolved?) but also
because their authority depends on statutes rather than the
parties' permission. Arbitrators lack a comparable authority
to determine their own authority because there is a
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non-circular alternative (the judiciary) and because the
parties do control the existence and limits of an arbitrator's
power. No contract, no power."). See also, e.g., China
Minmetals Materials Imp. & Exp. Co. v. Chi Mei Corp., 334 F.3d
274, 288 (3d Cir. 2003) (reasoning that "a contract cannot
give an arbitral body any power, much less the power to
determine its own jurisdiction, if the parties never entered
into it"). Cf. Matterhorn, Inc. v. NCR Corp., 763 F.2d 866,
869 (7th Cir. 1985) ("There would however be a severe problem
of bootstrapping if a party to a contract could be forced to
arbitrate the question whether he had been coerced or deceived
into agreeing to arbitrate disputes arising under the
contract.").

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