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Kabba v. Rent-A-Center

United States District Court, D. Maryland, Southern Division

June 21, 2019

PAUL A. KABBA, Plaintiff,
v.
RENT-A-CENTER, Defendant.

          MEMORANDUM OPINION AND ORDER

          Paul W. Grimm United States District Judge

         Defendant Rent-A-Center hired Plaintiff Paul A. Kabba (who previously had worked for Rent-A-Center and been injured on the job), in February 2013 but terminated his employment on March 1, 2013, his first day of work, when he informed the store manager of his “medical restrictions and limitations.” Compl. ¶¶ 17-20, ECF No. 1; see Kabba Dep. 69: 1-5, ECF No. 37-3. In response, Kabba sued Rent-A-Center, alleging that the termination was in violation of federal, state, and local law. Id. ¶ 1. Rent-A-Center filed a Motion to Dismiss or in the Alternative, to Stay Proceedings and Compel Arbitration (“First Motion”), based on the arbitration agreements that the parties both signed in 2002, during Kabba's first period of employment, and in 2012, when he applied for another position but was not hired (“2002 Arbitration Agreement” and “2012 Arbitration Agreement”). ECF No. 9.[1] I treated the motion as one for summary judgment and denied it because, on the record before me at that time, which included the earlier arbitration agreements and also the undisputed fact that Rent-A-Center presented Kabba with an arbitration agreement when he became a new hire in 2013 (“2013 Arbitration Agreement”)[2] and he declined to sign it, I could not determine as a matter of law that the parties intended to arbitrate the issue of whether Kabba's claims relating to his 2013 re-employment (without an arbitration agreement) are in fact arbitrable. Kabba v. Rent-A-Center, No. PWG-17-211, 2017 WL 1508829 (D. Md. Apr. 27, 2017). The dispute that prevented a ruling in Rent-A-Center's favor was whether, as a matter of contract interpretation under Maryland law, Kabba's refusal to sign the 2013 Arbitration Agreement modified the 2002 and 2012 Arbitration Agreements such that neither would apply to his one day of employment in 2013. Id. at *1, *6.

         The Fourth Circuit affirmed the April 27, 2017 decision by unpublished opinion, noting again that the issue was “whether the parties in this case manifested an intention to be bound by the [arbitration] agreement, ” an issue decided under “Mayland's principles of contract formation.” Kabba v. Rent-A-Center, Inc., 730 Fed.Appx. 141, 143 (Apr. 13, 2018). The Fourth Circuit concluded that “a reasonable juror could find from Kabba's and RAC's actions that the parties agreed to modify the 2002 and 2012 arbitration agreements at issue to exclude covering any disputes relating to Kabba's 2013 employment, ” and therefore it was the district court, and not an arbitrator, that “had the authority to determine the arbitrability of Kabba's dispute regarding his 2013 employment based on the 2002 and 2012 arbitration agreements.” Id.

         The parties proceeded with limited discovery targeted to the gateway issue of arbitrability, after which Rent-A-Center filed another Motion to Dismiss or in the Alternative, to Stay Proceedings and Compel Arbitration (“Second Motion”). ECF No. 37.[3] Because, on the record before me now, a reasonable trier of fact still could conclude that the parties agreed to modify the 2002 and 2012 Arbitration Agreements so that they would not apply to Kabba's 2013 employment, I will hold Rent-A-Center's Second Motion (treated as a motion for summary judgment) in abeyance while I hold an expedited bench trial on the agreement vel non to arbitrate.

         Standard of Review

         Rent-A-Center again moves to dismiss or to stay and compel arbitration under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1-15. I provided the standards of review for such motions and for motions for summary judgment in my April 27, 2017 Memorandum Opinion. Kabba, 2017 WL 1508829, at *2-3. In sum, under Fourth Circuit law, if the parties agree in writing to arbitrate their disputes, then the Court must dismiss any lawsuit in favor of arbitration “when all of the issues presented in a lawsuit are arbitrable.” Choice Hotels Int'l, Inc. v. BSR Tropicana Resort, Inc., 252 F.3d 707, 709-10 (4th Cir. 2001); see also 9 U.S.C. § 3. Although “‘arbitration has a favored place, there still must be an underlying agreement between the parties to arbitrate, '” and courts analyze the preliminary issue of “[w]hether a party agreed to arbitrate a particular dispute [as] a question of state law governing contract formation.” Adkins v. Labor Ready, Inc., 303 F.3d 496, 501 (4th Cir. 2002) (quoting Arrants v. Buck, 130 F.3d 636, 640 (4th Cir. 1997)); see also Kabba, 730 Fed.Appx. at 143.

         When, as here, “matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d). Summary judgment is appropriate if Rent-A-Center demonstrates, through “particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations . . ., admissions, interrogatory answers, or other materials, ” that “there is no genuine dispute as to any material fact and [it] is entitled to judgment as a matter of law, ” Fed.R.Civ.P. 56(a), (c)(1)(A), and Kabba fails to identify more than a “scintilla of evidence” from which the finder of fact could reasonably find for him. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). “[T]his Court reviews the facts and all reasonable inferences in the light most favorable to the nonmoving party.” Downing v. Balt. City Bd. of Sch. Comm'rs, No. RDB-12-1047, 2015 WL 1186430, at *1 (D. Md. Mar. 13, 2015) (citing Scott v. Harris, 550 U.S. 372, 378 (2007)).

         Discussion

         The April 27, 2017 Memorandum Opinion described the 2002 and 2012 Arbitration Agreements in detail and summarized the other relevant evidence before the Court at the time, which need not be repeated at length here. See Kabba, 2017 WL 1508829, at *4-6. Relevantly, the parties agree that the 2002 and 2012 Arbitration Agreements are both valid agreements between the parties, and it is undisputed that Kabba worked for Rent-A-Center in 2013 without having signed the 2013 Arbitration Agreement. See 2002 Arb. Agr. 4 (signed Jan. 10, 2002), ECF No. 9-2, at 5-8; Application & 2012 Arb. Agr., ECF No. 9-2, at 10-13; Kabba Aff. ¶¶ 4-6, ECF No. 12-1, at 19-20. As for the earlier arbitration agreements, it is undisputed that the 2002 Arbitration Agreement provided that it covered “all claims or controversies” that the parties may have against each other, including discrimination claims, “past, present or future, whether or not arising out of [Kabba's] application for employment, assignment/employment, or the termination of [his] assignment/employment, ” 2002 Arb. Agr. 1, and the 2012 Arbitration Agreement included similar language, 2012 Arb. Agr. Additionally, the 2002 Arbitration Agreement explicitly stated that it would “survive the termination of [Kabba's] assignment/employment and the expiration of any benefit.” 2002 Arb. Agr. 3. Further, both agreements provided that they could “only be revoked or modified by a writing signed by the parties which specifically states an intent to revoke or modify th[e] Agreement.” 2002 Arb. Agr. 3; see 2012 Arb. Arg. (“Notwithstanding any contrary language, if any, in this application and/or in any Company policy or handbook, this Arbitration Agreement may not be modified, revised or terminated absent a writing signed by both parties.”).

         I previously concluded that Kabba's “refusal to sign the 2013 Arbitration Agreement is clearly a manifestation of his rejection of its terms, which are substantially the same as, if not identical to, the terms of the 2002 Arbitration Agreement with regard to the provisions at issue here.” Kabba, 2017 WL 1508829, at *8. I also concluded that a fact finder could reasonably infer from Rent-A-Center's actions in presenting the 2013 Arbitration Agreement to Kabba and then having him work after he refused to sign it that Rent-A-Center believed that, in order to compel arbitration of any employment disputes relating to Kabba's 2013 hiring or subsequent employment and termination, a newly executed arbitration agreement was required, and that it was willing to forego the arbitration requirement. Id. I denied the motion because I found that, on the record before me then, “the parties' conduct could evince a mutual intent to modify the [2002 and 2012] agreements such that they did not apply to Kabba's 2013 employment.” Id.

         In its Second Motion, Rent-A-Center relies on Rent-A-Center West, Inc. v. Jackson, 561 U.S. 63 (2010), as it did in its First Motion, insisting again that in Rent-A-Center West “[t]he United States Supreme Court found the exact delegation clause included in the parties' Arbitration Agreement to be enforceable.” Def.'s Mem. 2, 8. Yet in affirming the April 27, 2017 Memorandum Opinion and Order, the Fourth Circuit observed:

RAC's reliance on Rent-A-Center is misplaced, however, as the Supreme Court explicitly noted that that case concerned the validity of the arbitration agreement, not whether the parties manifested an intent to be bound by the arbitration agreement. See 561 U.S. at 70 n.2, 130 S.Ct. 2772 (“The issue of the agreement's validity is different from the issue whether any agreement between the parties was ever concluded, and ... we address only the former.” (citation and internal quotation marks omitted)). Thus, the mere fact that the Supreme Court upheld the exact agreement as valid in Rent-A-Center does not answer the question of whether the parties in this case manifested an intention to be bound by the same agreement. Instead, we must turn to Maryland's principles of contract formation.

Kabba, 730 Fed.Appx. at 143 (emphasis added).

         In its Notice of Supplemental Authority, ECF No. 40, Rent-A-Center also relies on the Supreme Court's more recent decision in Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S.Ct. 524 ...


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