[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 04-15679 September 21, 2005
________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 03-03104-CV-JOF-1
KRISTA JACKSON,
Plaintiff-Appellant,
versus
CINTAS CORPORATION,
RANDY HATFIELD,
Defendants-Appellees.
__________________________
Appeal from the United States District Court for the
Northern District of Georgia
_________________________
(September 21, 2005)
Before BIRCH, HULL and BOWMAN*, Circuit Judges.
PER CURIAM:
*
Honorable Pasco Bowman, II, United States Circuit Judge for the Eight Circuit, sitting by
designation.
This appeal by an employee who sued her former employer presents three
issues. The first issue is a jurisdictional question of first impression in our circuit:
whether an order compelling arbitration and dismissing a complaint, but retaining
jurisdiction over a motion for sanctions, is a final and appealable decision.
Because the dismissal disposes of the entire case on the merits and the motion for
sanctions raises only a collateral issue, we conclude that the dismissal is a final
and appealable order. The second issue is whether the district court erred when it
severed an invalid provision of the arbitration clause instead of refusing to enforce
the entire arbitration clause. Because the severability clause is enforceable under
Georgia law, we conclude that severance was proper. The final issue is whether
the district court abused its discretion when it denied discovery under Federal Rule
of Civil Procedure 56(f). Because the discovery sought by the employee could not
have affected the enforceability of the arbitration clause, we conclude that the
denial of discovery was not an abuse of discretion. Accordingly, we AFFIRM.
I. BACKGROUND
Krista Jackson worked as a sales representative for Cintas Corporation from
October 2001 until February 2003. As a condition of her employment, Jackson
signed an employment agreement that provided for arbitration as the exclusive
method for resolution of all claims of Jackson against Cintas. The agreement also
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contained a severability clause. Jackson read the agreement and noticed the
dispute resolution provisions, but contends that she did not understand the
meaning of arbitration. She asserts that she believed she was required to negotiate
all claims with Cintas, but that she retained the right to sue if negotiations failed.
After her employment with Cintas ended, Jackson sued Cintas and alleged
that Cintas discriminated against her in violation of Title VII of the Civil Rights
Act of 1964, the Pregnancy Discrimination Act, the Family Medical Leave Act,
the Fair Credit Reporting Act, the Fair Labor Standards Act, and 42 U.S.C. section
1981(a). Cintas moved to dismiss or, in the alternative, to stay Jackson’s lawsuit
pending arbitration under the employment agreement. In response, Jackson
argued that the agreement was unconscionable and, therefore, unenforceable.
Jackson also contended that the agreement was potentially unenforceable for lack
of consideration and moved for leave to conduct discovery under Federal Rule of
Civil Procedure 56(f) on this issue. Approximately five months later, Jackson
filed a motion to compel this discovery, and Cintas filed a motion for Rule 11
sanctions.
The district court ruled on three matters pertinent to this appeal. First,
although the district court concluded that the one-year limitations period in the
arbitration agreement was substantively unconscionable because it potentially
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deprived Jackson of her right to assert claims under the Fair Credit Reporting Act
and the Fair Labor Standards Act, which have longer limitations periods, the court
held that the limitations provision was severable. The district court, therefore,
enforced the remainder of the arbitration clause. Second, the court denied
Jackson’s request for discovery under Federal Rule of Civil Procedure 56(f).
Jackson sought discovery to establish that Cintas used the employment agreement
selectively and to establish that the agreement was illusory and lacked
consideration. The district court determined that the discovery was unnecessary
because it could not affect the enforceability of the arbitration clause in the
employment agreement. Third, the court compelled arbitration and dismissed the
complaint, but retained jurisdiction over the motion for sanctions. Jackson timely
appealed.
II. STANDARD OF REVIEW
We review de novo an order by a district court compelling arbitration. See
Employers Ins. of Wausau v. Bright Metal Specialties, Inc., 251 F.3d 1316, 1321
(11th Cir. 2001). We review a denial of discovery under Federal Rule of Civil
Procedure 56(f) for abuse of discretion. See Florida Power & Light Co. v. Allis
Chalmers Corp., 893 F.2d 1313, 1315 (11th Cir. 1990).
III. DISCUSSION
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Jackson challenges both the severance of the limitations period from the
arbitration clause, which she contends is wholly unenforceable, and the denial of
her discovery request. Before we consider the merits of Jackson’s appeal, we must
address a threshold issue of jurisdiction: whether an order dismissing a complaint
and compelling arbitration is a final decision when the district court retains
jurisdiction over a motion for sanctions under Rule 11. After we resolve that issue,
we turn to the severance of the limitations period from the arbitration clause and
then to the denial of the discovery requested by Jackson.
A. Final and Appealable Decision
The Federal Arbitration Act (FAA) allows an immediate appeal from any
“final decision with respect to arbitration.” 9 U.S.C. § 16(a)(3). A decision is
final within the meaning of Section 16(a)(3) where the court “dispose[s] of the
entire case on the merits and [leaves] no part of it pending before the court.”
Green Tree Financial Corp.-Ala. v. Randolph, 531 U.S. 79, 86, 121 S. Ct. 513, 519
(2000) (internal quotations omitted). When it compelled arbitration, dismissed the
complaint, and entered a judgment, the district court resolved “the entire case on
the merits” and left “no part of it pending before the court.” Id.
Although the district court retained jurisdiction to decide a motion for
sanctions under Rule 11, that motion raised a collateral issue. “A question
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remaining to be decided after an order ending litigation on the merits does not
prevent finality if its resolution will not alter the order or moot or revise decisions
embodied in the order.” Budinich v. Becton Dickinson & Co., 486 U.S. 196,
199-200, 108 S. Ct. 1717, 1720 (1988) (citing Brown Shoe Co. v. United States,
370 U.S. 294, 308-09, 82 S. Ct. 1502, 1514-15 (1962); Dickinson v. Petroleum
Conversion Corp., 338 U.S. 507, 513-16, 70 S. Ct. 322, 325-26 (1950)). We have
consistently held that motions for sanctions raise issues that are collateral to the
merits of an appeal. See Mahone v. Ray, 326 F.3d 1176, 1180-81 (11th Cir. 2003)
(citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395-96, 110 S. Ct. 2447,
2455-56 (1990); Baker v. Alderman, 158 F.3d 516, 523 (11th Cir. 1998); Didie v.
Howes, 988 F.2d 1097, 1103 (11th Cir. 1993)). In addition, every other circuit has
held that the pendency of a motion for sanctions after a dismissal on the merits
does not bar appellate jurisdiction. See Dyer v. Lindblade (In re Dyer), 322 F.3d
1178, 1186 (9th Cir. 2003); Brown v. Francis, 75 F.3d 860, 864 n.3 (3d Cir. 1996);
Turnbull v. Wilcken, 893 F.2d 256, 257 (10th Cir. 1990); Cleveland v. Berksen,
878 F.2d 1034, 1036 (7th Cir. 1989).
Although none of these precedents involved a dismissal accompanied by an
order compelling arbitration, that distinction is immaterial. The district court
entered a judgment and dismissed the entire case on the merits. That judgment
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was a final decision, even though the district court retained jurisdiction to decide a
motion for sanctions. We, therefore, have jurisdiction to decide the merits of this
appeal.
B. Severability of Illegal Provision of Arbitration Clause
It is undisputed that the arbitration clause contained an illegal provision that
purported to limit the time in which Jackson could bring claims against Cintas, but
the arbitration clause also contained a severability provision. Jackson argues that
the illegal provision invalidated the entire arbitration clause. Cintas argues that
the agreement provides for severance of the invalid provision, which means that
the remainder of the arbitration clause is still enforceable. We agree with Cintas.
We are guided by our precedent in Anders v. Hometown Mortgage Servs.,
Inc., 346 F.3d 1024 (11th Cir. 2003), which also involved a severability clause in
an arbitration agreement. We held that “[w]hether the severability provision is to
be given effect is a question of state law, because in placing arbitration agreements
on an even footing with all other contracts, the FAA makes general state contract
law controlling.” Id. at 1032. As we explained in Anders, the decision relied
upon by Jackson, Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054 (11th
Cir. 1995), is inapposite because there was no mention in that appeal of
severability as a possible remedy. See id.; see also Anders, 346 F.3d at 1031-32.
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Although Anders involved Alabama law, we must apply Georgia law regarding the
enforceability of severability provisions in contracts.
Under Georgia law, a contract may be either entire or severable. O.C.G.A.
§ 13-1-8(a). If a contract is severable, the part of the contract that is valid will not
be invalidated by a separate part that is unenforceable. Id. The intent of the
parties determines whether a contract is severable. Id. § 13-1-8(b).
Under Georgia law, “[t]he parties intent may be expressed directly, through
a severability clause, or indirectly . . . .” Vegesina v. Allied Informatics, Inc., 572
S.E.2d 51, 53 (Ga. App. 2002) (quotations and citation omitted). “A severability
clause indicates the intent of the parties where the remainder of the contract can
exist without the void portion.” Capricorn Sys., Inc. v. Pednekar, 546 S.E.2d 554,
559 (Ga. App. 2001); see also Primerica Fin. Servs., Inc. v. Wise, 456 S.E.2d 631,
635 (Ga. App. 1995); Circle Appliance Leasing, Inc. v. Appliance Warehouse,
Inc., 425 S.E.2d 339, 340 (Ga. App. 1992). Because severability clauses are
enforceable under Georgia law and the FAA requires that arbitration agreements
be treated no less favorably than other contracts under state law, the district court
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properly applied the severability clause to enforce the remainder of the arbitration
agreement.1
C. Rule 56(f) Discovery
Jackson argues that the district court abused its discretion when it denied
her motion for discovery under Federal Rule of Civil Procedure 56(f). She
contends that she was entitled to discovery regarding whether Cintas selectively
required employees to sign the employment agreement that contained the
arbitration clause. Jackson argues that this discovery would show that the
arbitration agreement lacked consideration and was, therefore, unenforceable.
The district court did not abuse its discretion when it denied this discovery
request. We agree with the district court that Jackson’s argument evidences a
misunderstanding of the concept of consideration. Under Georgia law, a mutual
exchange of promises constitutes adequate consideration. See Brown v. McGriff,
567 S.E.2d 374, 376 (Ga. App. 2002). Because Cintas promised to provide
Jackson a job as consideration for her assent to the employment agreement,
whether Cintas used an employment agreement with other employees has no
1
In her reply brief, Jackson cites several cases in support of the proposition that Georgia’s
policy of encouraging severability where the parties have expressed an intent to sever is more limited
in the context of employment contracts. However, these cases address the policy problems inherent
in severing unconscionable provisions in covenants not to compete rather than arbitration provisions.
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bearing on the enforceability of the arbitration agreement with Jackson. The
district court reasonably concluded that Jackson failed to show how the discovery
would have any impact on the enforceability of the arbitration clause.
IV. CONCLUSION
Although the district court retained jurisdiction over the motion for
sanctions, the dismissal and order compelling arbitration was a final appealable
decision. Because the district court properly severed the limitations provision and
enforced the remainder of the arbitration clause and the district court did not abuse
its discretion when it denied Jackson’s request for Rule 56(f) discovery, the
judgment of the district court is
AFFIRMED.
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