PAUL A. BONIN, Judge.
Together Byron Bolden and Rodney Reed filed a wide-ranging petition against FedEx Ground Package Systems, Inc., in which they sought damages and other relief based on a host of instances of wrongful conduct. They allege a variety of claims related to the execution, implementation, and termination of Operating Agreements they signed with FedEx Ground as well as provisions of those agreements relative to remedies. FedEx Ground filed a combination dilatory exception
The trial judge granted the exception and the stay, but did not expressly dismiss the suit. Mr. Bolden and Mr. Reed filed an appeal from the court's ruling.
First, because we find that the ruling is not an appealable judgment, we convert the plaintiffs' appeal to a writ application. Second, because we find that the scope of the arbitration provision is limited and that the trial judge failed to appropriately determine which issues in dispute are within the scope of the arbitration provision, we grant the writ application, reverse the trial court's ruling, and remand to the district court with instructions. We explain in detail our ruling.
In this Part we explain why the trial court's ruling is not an appealable judgment and why we can only review this matter under our supervisory jurisdiction. Our discussion of the procedural posture of the case presages the substantive discussion, which we will address in subsequent Parts.
In this case, the trial judge granted FedEx Ground's Exception of Prematurity as well as its Motion to stay without further explanation. In the judgment, the trial court ordered, adjudged and decreed "that Defendants' Exception of Prematurity/Motion to stay is
The Louisiana Constitution of 1974 provides for our appellate jurisdiction and our supervisory jurisdiction. See LA. CONST. ART. 5, § 10(A). "Appeal is the exercise of the right of a party to have a judgment of a trial court revised, modified, set aside, or reversed by an appellate court." LA. C.C.P. ART. 2082. As we have observed, "the difference between supervisory jurisdiction and appellate jurisdiction is that the former is discretionary on the part of the appellate court while the latter is invocable by the litigant as a matter of right." Livingston Downs Racing Ass'n, Inc. v. Louisiana State Racing Com'n, 96-1215 (La.App. 4 Cir. 6/5/96), 675 So.2d 1214, 1216.
"A final judgment is appealable in all cases in which appeals are given by law, whether rendered after hearing, by default, or by reformation under Article 1814." LA. C.C.P. ART. 2083 A. "A judgment that determines the merits in whole or in part is a final judgment." LA. C.C.P. ART. 1841. "No appeal may be taken from a partial final judgment under Article 1915(B) until the judgment has been designated a final judgment under Article 1915(B). An appeal may be taken from a final judgment under Article 1915(A) without the judgment being so designated." LA. C.C.P. ART. 1911.
"A judgment that does not determine the merits but only preliminary matters in the course of the action is an interlocutory judgment." LA. C.C.P. ART. 1841; Collins v. Prudential Ins. Co. of America, 99-1423, p. 6 (La.1/19/00), 752 So.2d 825, 829. "An interlocutory judgment is appealable only when expressly provided by law." LA. C.C.P. ART. 2083 C; see, e.g., LA. C.C.P. ART. 3612 B (relating to the denial or the granting of a preliminary injunction), or LA. C.C.P. ART. 592 A(3)(b) (relating to certification in class actions). If not expressly provided by law, there is no right to appeal an interlocutory judgment. See, e.g., LA. C.C.P. ART. 968 ("An appeal does
The judgment which Mr. Bolden and Mr. Reed "appeal" is not a final judgment. The judgment did not dismiss any party. See LA. C.C.P. ART. 1915 A(1). The judgment does not even purport to dismiss some, much less all, of the claims of the plaintiffs. See LA. C.C.P. ART. 1915 B(1). "If the dilatory exception pleading prematurity is sustained, the premature action, claim, demand, issue or theory shall be dismissed." LA. C.C.P. ART. 933 A (emphasis added). If the trial judge in this case had actually intended that all issues were arbitrable, the sustaining of FedEx Ground's dilatory exception of prematurity as to all of the plaintiffs' claims would have resulted in a final appealable judgment because it would have determined the whole of the merits. See LA. C.C.P. ART. 1911. But because he did not dismiss all claims, the judgment has only determined the merits "in part." The judgment does not qualify as a partial final judgment, which is appealable, because does not meet any of the requirements of LA. C.C.P. ART. 1915 A, and it has not received from the trial court a designation as a final judgment because "there is no just reason for delay." LA. C.C.P. ART. 1915 B(1).
Had the trial judge in this case granted the exception of prematurity and entered the dismissal as required by Article 933 as to some of the plaintiffs' claims, we would be faced with a partial judgment which has not been designated as final. A partial judgment which requires designation as a final judgment by the trial court but does not receive such a designation is not an appealable judgment. See LA. C.C.P. ART. 1915 B(2) ("In the absence of such a determination and designation, [any such order or decision] ... shall not constitute a final judgment for the purpose of an immediate appeal.") Such an undesignated judgment, like an interlocutory judgment, "may be revised at any time prior to rendition of the judgment adjudicating all the claims and the rights and liabilities of all the parties." LA. C.C.P. ART. 1915 B(2); see, e.g., Regions Bank v. Weber, 10-1169, p. 1 (La.App. 4 Cir. 12/15/10), 53 So.3d 1284 ("An interlocutory judgment may be reconsidered or revised upon proper motion at any time until the rendition of a final judgment."), citing to Magallanes v. Norfolk Southern Railway Co., 09-0605, p. 4 (La.App. 4 Cir. 10/14/09), 23 So.3d 985, 988. See also Roger A. Stetter, LOUISIANA CIVIL APPELLATE PROCEDURE, § 3:20 (2010-2011 ed.) ("Any partial judgment that does not dismiss a party and that is not expressly authorized by Article 1915 is interlocutory in character rather than final.").
In Collins, the Louisiana Supreme Court explained the review of interlocutory judgments as they pertain to arbitration orders:
Collins, 99-1423, p. 6, 752 So.2d at 829, n. 8 (citations omitted). The court noted that although an interlocutory judgment ordering arbitration is not subject to an immediate appeal, an aggrieved party under these circumstances is not entirely barred from relief. "In a case where the trial judge has committed a clear error in ordering arbitration, supervisory relief might be appropriate based upon the facts and circumstances of a particular case." Collins, 99-1423, p. 9, 752 So.2d at 831. The court concluded, however, that "in keeping with our policy favoring arbitration, such relief should be granted only sparingly." Id.
Thus, the proper procedural vehicle to seek review of this judgment, whether denominated a partial judgment which is not designated as final or an interlocutory judgment which is not immediately appealable, is by an application for supervisory relief. See Lalla v. Calamar, N.V., 08-0952, p. 6 (La.App. 4 Cir. 2/11/09), 5 So.3d 927, 931. "A court of appeal has plenary power to exercise supervisory jurisdiction over district courts and may do so at any time, according to the discretion of the court." Herlitz Const. Co., Inc. v. Hotel Investors of New Iberia, Inc., 396 So.2d 878 (La.1981).
Thus, we can exercise our discretion to consider this judgment under our supervisory authority. We have converted appeals of nonappealable interlocutory judgments to applications for supervisory writs in cases where the motions for appeal were filed within the thirty-day period allowed for the filing of applications for supervisory writs. See, e.g., Ordoyne v. Ordoyne, 07-0235 (La.App. 4 Cir. 4/2/08), 982 So.2d 899; Ganier v. Inglewood Homes, Inc., 06-0642 (La.App. 4 Cir. 11/8/06), 944 So.2d 753; Rule 4-3, Uniform Rules-Courts of Appeal.
Judgment in this case was rendered on March 4, 2010, and the plaintiffs filed their motion for appeal on March 16, 2010; accordingly we convert their appeal to a timely-filed application for supervisory relief. We now turn to the particular facts giving rise to the claims in this case.
FedEx Ground operates through a system of independent contractors who contract to pick up and deliver packages shipped by FedEx Ground customers. Mr. Bolden and Mr. Reed, operating out of FedEx Ground's terminal in St. Rose, Louisiana, contracted with FedEx Ground to provide pickup and delivery services. In order to commence work as drivers for FedEx Ground, prospective drivers must sign an Operating Agreement, obtain a delivery truck that meets FedEx Ground's specifications, and either purchase a delivery route from another driver or obtain a route directly from FedEx Ground. Mr. Bolden and Mr. Reed each signed one-year Operating Agreements, which automatically renew each year, subject to the possibility of non-renewal or termination under specified conditions. Section 11.2 of each Operating Agreement provides:
Both plaintiffs' Operating Agreements provide that issues of termination or constructive termination of the Agreement shall be submitted to arbitration. Each plaintiffs' Operating Agreement contains the following clause:
Additionally, each Operating Agreement contains a choice of law provision stating: "This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania." Mr. Bolden and Mr. Reed ask that we find that this arbitration clause is "unconscionable" under Pennsylvania law. However, because of a dearth of evidence and confusion of findings in the lower court, we are unable to reach this question. We instead examine the factual circumstances surrounding the plaintiffs' claims in order to review the action of the trial court in subsequent Parts.
As the facts giving rise to the claims of Mr. Bolden are distinct from those of Mr. Reed, we discuss each plaintiff's circumstances in some detail.
Mr. Bolden signed an Operating Agreement with FedEx Ground on October 10, 2007, authorizing him to work as a contract driver for FedEx Ground for a one-year term. Prior to the expiration of the term, Joey Joubert of FedEx Ground informed Mr. Bolden that his contract would not be renewed at the end of the term. Mr. Bolden then sold his route to his wife, Valerie Bolden, and he arranged to begin driving for other contract drivers, including Mrs. Bolden, after the expiration of his contract. Mr. Bolden was soon informed that his name had been removed from the approved driver list and he would not be able to drive for other contract drivers.
Mr. Reed purchased a ground route and signed an Operating Agreement with FedEx Ground on April 8, 2008, authorizing him to work as a contract driver for a term of one year. Mr. Reed's contract, like Mr. Bolden's, provided that the Agreement would automatically renew for successive one-year terms unless certain conditions were met. Mr. Reed's contract was terminated on August 24, 2009, his route was redistributed to another driver, and his name was removed from the list of approved drivers. FedEx Ground's brief asserts that, prior to initiating this lawsuit, Mr. Reed filed for arbitration.
During a short trial of FedEx Ground's Exception of Prematurity/Motion to Stay, on February 26, 2010, the district judge informed the parties that the claims would need to go to arbitration and that no live testimony would be necessary because both parties had submitted affidavits. The judge ruled on March 4, 2010, to stay the district court proceedings pending the results of arbitration. Although the judge issued written reasons for judgment on March 11, 2010, he noted only that he was adopting FedEx Ground's Memorandum in Support of the Exception of Prematurity and Alternative Motion to Stay as well as its Reply Memorandum in response to Plaintiff's Opposition to that exception and motion in toto.
Federal, Louisiana, and Pennsylvania law favor arbitration. See discussion, Part IV B, post. On the one hand, FedEx Ground is entitled to enforce a valid arbitration clause. On the other hand, Mr.
The trial judge here seems to have made inconsistent rulings. If the judge has sent all issues to arbitration, he should have said so and subsequently dismissed the case as required By LA. C.C.P. ART. 933 A. If the trial judge has instead stayed some of the issues pending resolution of other, arbitrable issues, he should delineate those issues which are arbitrable and those which are not.
Neither party suggests that we resolve this issue under George Engine Co., Inc. v. Southern Shipbuilding Corp., 350 So.2d 881 (La.1977). George Engine, which has been questioned but never overruled, held that a party may attack the validity of a contract that contains an arbitration clause on the grounds that the contract was void ab initio. Id. at 885.
Consequently, the trial court stayed the proceedings and ordered the case to arbitration without specifying which issues are subject to the stay and which issues are arbitrable. This gives rise to a question of the arbitrability of the claims that the district court failed to consider.
We are presented with what has been termed a "substantive" question of arbitrability that is appropriately decided by the trial court—as opposed to a "procedural" question of arbitrability, which is to be decided by the arbitrator. See Lakeland Anesthesia, Inc. v. United Healthcare of La., Inc., 03-1662, p. 9 (La.App. 4 Cir. 3/17/04), 871 So.2d 380, 390 ("[A] disagreement about whether an arbitration clause in a concededly binding contract applies to a particular type of controversy is for the court ... `[P]rocedural' 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.").
The determination as to whether to stay the proceedings and/or to compel arbitration is a question of law. Billieson v. City of New Orleans, 02-1993, p. 3 (La.App. 4 Cir. 9/17/03), 863 So.2d 557, 560, citing Hennecke v. Canepa, 96-0772 (La.App. 4 Cir. 5/21/97), 700 So.2d 521. Review of questions of law is simply to determine whether the trial court was legally correct or incorrect. Cangelosi v. Allstate Ins. Co., 96 0159, p. 3 (La.App. 1 Cir. 9/27/96), 680 So.2d 1358, 1360.
In Howsam v. Dean Witter Reynolds, Inc., the United States Supreme Court explained the proper mode of resolving the "question of arbitrability." "The question of whether the parties have submitted a particular dispute to arbitration, i.e., the `question of arbitrability,' is an issue for judicial determination unless the parties clearly and unmistakably provide otherwise." Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002) (emphasis and internal citations omitted). In explaining that the phrase "question of arbitrability" has a limited scope, the Supreme Court stated:
Howsam, 537 U.S. at 83-84, 123 S.Ct. 588 (emphasis added).
The Louisiana Supreme Court, in Breaux v. Stewart Enterprises, Inc., reiterated the precept from Collins, supra, that the trial courts are the proper entities to determine arbitrable matters:
Breaux v. Stewart Enterprises, Inc., 04-1706, p. 1 (La. 10/08/04), 883 So.2d 983, 983 (emphasis added; quoting Collins, 99-1423, pp. 9-10, 752 So.2d 825, 831. On review, a trial court's judgment which compels arbitration is reviewed under the same two-prong test: 1) whether there is a valid arbitration agreement and 2) whether the dispute falls "within the scope" of the agreement. Lakeland, 03-1662, p. 9, 871 So.2d 380, 388.
The district court stayed the proceedings and indiscriminately ordered the parties to proceed to arbitration. The issue is whether the trial judge acted prematurely in staying and ordering to arbitration all issues in the proceedings without first determining which issues were arbitrable under this limited arbitration clause.
In this case, the trial judge issued the stay and ordered arbitration, stating:
It is difficult for us to discern what the trial court has ordered to proceed to arbitration and what has been stayed. The judge appears to have stayed some of the issues while simultaneously sending "everything [the plaintiffs] raise" to arbitration. Compounding this confusion is the fact that the trial court adopted two of FedEx Ground's memoranda in toto as its reasons for judgment. These memoranda provide various assertions upon which the trial court made no specific ruling: for example, FedEx Ground claims that Mr. Reed, who has already instituted arbitration proceedings, is barred from now disputing the validity of the arbitration agreement. FedEx Ground also asserts in its memoranda that the plaintiffs have been improperly cumulated. When the attorney for FedEx Ground requested that the trial judge rule on the Exception of Improper Cumulation, the judge said, "But I think all that's stayed until the arbitrator comes back." The judge's language suggests that he contemplated that not all issues in the matter were arbitrable, and yet he did not specify which of the plaintiffs' claims fell within the scope of the arbitration agreement.
Our court has rejected the notion that simply because an arbitration clause appears
This statement was echoed in Lorusso v. Landrieu, 02-2346, pp. 5-6 (La.App. 4 Cir. 5/21/03), 848 So.2d 656, 659 (citing Metro Riverboat):
But in Lorusso, in contrast with Metro Riverboat, we found that the trial judge erred in failing to order arbitration because the arbitration clause stated that it covered dispute resolution of "any other grievance" arising out of the agreement. Lorusso, 02-2346, p. 6, 848 So.2d at 659. Under the narrower arbitration clause in Metro Riverboat, we found that because the arbitration clause covered only specific disputes that may arise under the agreement, the district court must first determine what particular issues lie within the scope of the arbitration clause. Metro Riverboat, 97-1672, p. 6, 706 So.2d at 557.
The distinction between broad and narrow arbitration clauses is important here. The FedEx Ground arbitration clause at issue is a narrow one—covering only issues of termination or constructive termination "but no others." The clause does not require that all issues arising under the Operating Agreement be submitted to arbitration. Moreover, the plaintiffs' claims arise out of two distinct sets of circumstances. Mr. Bolden's claim arises out of the non-renewal of his contract, whereas Mr. Reed's claim arises out of the termination of his contract. Both plaintiffs, however, assert claims that could reasonably be interpreted as falling within the arbitration clause as issues of termination or constructive termination. Both plaintiffs allege in the petition that they were fraudulently induced into signing the Operating Agreement, and they both claim breach of contract and intentional/negligent interference with contract. Mr. Joubert, the other named defendant, was not a party to the contracts at issue. Additionally,
We acknowledge that the United States Supreme Court has set forth a presumption of arbitrability. In AT & T Technologies, Inc. v. Communications Workers of America, the Court explained that "where the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that [a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).
But as one commentator has noted:
Larry E. Edmonson, Domke on Commercial Arbitration § 8:14 (3d ed.2010) (emphasis added).
We recognize our duty to defer to the trial judge. However, the trial judge in this case simply ordered that "everything else" was stayed pending arbitration and also found that all of the issues raised by the plaintiffs could be considered by the arbitrator. Without more, we are unable to reconcile these statements. Accordingly, we reverse and remand this matter in order for the trial judge to make specific findings according to the terms of the arbitration clause and the admissible evidence, and to rule on the exception and motion in a manner consistent with this opinion.
The trial court is directed to conduct the hearing on the defendants' combined Exception of Prematurity/Motion for Stay anew. The trial judge shall consider the evidence offered and, before ruling, shall make specific findings with respect to the issues we set forth. The trial judge shall make individualized findings respecting the claims raised by Mr. Bolden and respecting the claims raised by Mr. Reed.
With regard to each plaintiff and his claims, the trial judge shall determine by the application of Pennsylvania law: (1) whether there exists in the Operating Agreement a valid arbitration agreement between the plaintiff and the defendants, (2) which of the individual plaintiff's claims fall within the scope of the arbitration clause, and (3) whether the individual plaintiff's claims against Mr. Joubert are within the scope of the arbitration clause even though Mr. Joubert is not signatory to the Operating Agreement.
After the trial judge has made all findings necessary, he shall make an appropriate ruling. If the trial court determines that all of an individual plaintiff's claims are arbitrable, it shall order arbitration, deny the stay, grant the exception of prematurity, and dismiss the proceedings as to that plaintiff. If the trial court determines that none of an individual plaintiff's claims are arbitrable, it shall deny the exception of prematurity and the motion to stay. If the trial court determines that some but not all of an individual plaintiff's claims are arbitrable, then it shall identify which claims are arbitrable and which are not, order the arbitration of the identified arbitrable claims, sustain the exception of prematurity as to those claims and deny it as to all others, and grant a stay of the proceedings as to the non-arbitrable claims pending conclusion of arbitration.
We convert the appeal of Mr. Bolden and Mr. Reed to an application for supervisory relief. We grant the writ and we reverse the trial court's ruling of March 4, 2010, and remand the matter with instructions to the trial court.
