Kabba v. Rent A Center
MEMORANDUM OPINION AND ORDER denying 9 MOTION to Dismiss or in the Alternative MOTION to Stay Proceedings and Compel Arbitration; directing the Defendant to file an answer by May 12, 2017. Signed by Judge Paul W. Grimm on 4/27/2017. (jf3s, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
PAUL A. KABBA,
Case No.: PWG-17-211
MEMORANDUM OPINION AND ORDER
Defendant Rent-A-Center hired Plaintiff Paul A. Kabba on March 26, 1996. He worked
for Defendant as a store manager until June 2, 2008, when he was violently assaulted and robbed
at gunpoint. After the assault, he no longer could work, due to his injuries, and he took medical
leave, following which Rent-A-Center “administratively terminated” his employment. Compl.
¶¶ 7, 12–17, ECF No. 1. Kabba sought re-employment with Rent-A-Center in 2012, but was not
hired. In February 2013 he again applied and Rent-A-Center hired him as a lead assistant
manager and directed him to report to work on March 1, 2013. Id. ¶ 17. But, when Kabba
informed the store manager toward the end of his first day that “he had medical restrictions and
limitations on heavy lifting” and provided the manager with his medical records, Rent-A-Center
terminated his employment. Id. ¶¶ 18–20. Kabba filed this lawsuit against Rent-A-Center,
alleging that “because of his disability due to serious injuries from armed robbers, race (African),
color (black), national origin (Sierra Leone) he was discharged from his position as manager,
rehired as a manager and then fired the same day,” in violation of the Americans with
Disabilities Act of 1990 (“ADA”), 42 U.S.C. §§ 12101 – 12213; Title VII of the Civil Rights Act
of 1964, 42 U.S.C. §§ 2000e et seq.; and state and local law. Compl. ¶ 1.
Pending is Rent-A-Center’s Motion to Dismiss or in the Alternative, to Stay Proceedings
and Compel Arbitration, 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 Kabba contends that the 2002 and 2012 Arbitration Agreements do not apply to his claims
because Rent-A-Center presented him with, and he declined to sign, an arbitration agreement
when he became a new hire in 2013. Kabba has clarified that his claims pertain only to his brief
period of employment in 2013, Pl.’s Opp’n 1–2, despite the reference to his 2008 discharge in
his Complaint, see Compl. ¶ 1. Because I find that, on the record before me and drawing all
reasonable inferences in favor of Kabba, the earlier arbitration agreements do not establish that
Kabba and Rent-A-Center intended to arbitrate the issue of whether Kabba’s claims relating to
his 2013 re-employment (without an arbitration agreement) are in fact arbitrable, I will deny
Rent-A-Center’s motion, treated as one for summary judgment, and order Rent-A-Center to
respond to Kabba’s Complaint.
The parties fully briefed this Motion. See ECF Nos. 9-1, 12, 13, 14. A hearing is not
necessary. See Loc. R. 105.6. Rent-A-Center attaches both agreements to its Motion, along with
a Declaration from its Human Resources Director, Marc Tuckey. ECF No. 9-2. Rent-ACenter’s request to strike Kabba’s response as untimely, Def.’s Reply 2, is denied. Kabba
explained that he filed his Opposition within fourteen days of serving Rent-A-Center, rather than
within fourteen days of receiving the Motion, because I ordered Defendant to file its Motion after
being served, see ECF No. 7. Pl.’s Surreply 1. Insofar as Plaintiff filed his Opposition more
than fourteen days after Defendant’s motion and then “pray[ed] for the Court’s forgiveness,”
which I construe as a motion to extend time, I find excusable neglect. See Fed. R. Civ. P. 1,
Standard of Review
Rent-A-Center moves to dismiss or to stay and compel arbitration under the Federal
Arbitration Act (“FAA”), 9 U.S.C. §§ 1–15.
Congress enacted the FAA “to promote the
enforceability of arbitration agreements and to make arbitration a more viable option to parties
weary of the ever-increasing ‘costliness and delays of litigation.’” Saturn Distrib. Corp. v.
Williams, 905 F.2d 719, 722 (4th Cir. 1990) (quoting Dean Witter Reynolds Inc. v. Byrd, 470
U.S. 213, 220 (1985) (quoting H.R. Rep. No. 96, 68th Cong., 1st Sess. 2 (1924) (quotation marks
omitted))). It “reflects ‘a liberal federal policy favoring arbitration agreements.’” Adkins v.
Labor Ready, Inc., 303 F.3d 496, 500 (4th Cir. 2002) (quoting Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). If an issue is “‘referable to arbitration under an
agreement in writing for such arbitration,’” then a stay is mandatory and a motion to compel
must be granted. Id. (quoting 9 U.S.C. § 3). “Notwithstanding the terms of § 3, however,
dismissal is a proper remedy 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).2
The Fourth Circuit has observed that “[t]here may be some tension between [its earlier]
decision in Hooters [of America v. Phillips, 173 F.3d 933 (4th Cir. 1999)]—indicating that a stay
is required when the arbitration agreement ‘covers the matter in dispute’—and Choice Hotels—
approving dismissal ‘when all of the issues presented . . . are arbitrable.’” Aggarao v. MOL Ship
Mgmt. Co., 675 F.3d 355, 376 (4th Cir. 2012) (declining to resolve dispute). Yet, this Court has
noted that, despite the “disagreement within the Fourth Circuit as to if dismissal is appropriate,
. . . district courts within the Fourth Circuit have continued to find dismissal appropriate.”
Taylor v. Santander Consumer USA, Inc., No. DKC 15-0442, 2015 WL 5178018, at *7 (D. Md.
Sept. 3, 2015) (dismissing case where all issues were arbitrable), appeal dismissed (Apr. 22,
2016); see, e.g., SC&H Grp., Inc. v. Altus Grp. U.S., Inc., No. WMN-16-1037, 2016 WL
3743055, at *4 (D. Md. July 13, 2016) (dismissing case where all issues were arbitrable); Doe v.
New Ritz, Inc., No. RDB-14-2367, 2016 WL 1642933, at *5 (D. Md. Apr. 26, 2016) (same); Bey
v. Midland Credit Mgmt., Inc., No. GJH-15-1329, 2016 WL 1226648, at *5 (D. Md. Mar. 23,
When a party moves to compel arbitration, or to dismiss on the basis of a governing
arbitration agreement, the Court first must “determine whether the parties agreed to arbitrate that
dispute.” Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc., 473 U.S. 614, 626 (1985).
The moving party must show
(1) the existence of a dispute between the parties, (2) a written agreement that
includes an arbitration provision which purports to cover the dispute, (3) the
relationship of the transaction, which is evidenced by the agreement, to interstate
or foreign commerce, and (4) the failure, neglect or refusal of the [plaintiff] to
arbitrate the dispute.
Adkins v. Labor Ready, Inc., 303 F.3d 496, 500–01 (4th Cir. 2002) (quoting Whiteside v. Teltech
Corp., 940 F.2d 99, 102 (4th Cir. 1991)). While the Court applies the “federal substantive law of
arbitrability,” id. (quoting Moses H. Cone Mem’l Hosp., 460 U.S. 1, 24 (1983)), it applies “state
law governing contract formation” to determine “[w]hether a party agreed to arbitrate a
particular dispute,” Adkins, 303 F.3d at 501.
Rent-A-Center styles its motion as one to dismiss Kabba’s Complaint but attaches to it
the 2002 and 2012 Arbitration Agreements, as well as the Declaration of its Human Resources
Director, Marc Tuckey, who provides additional information about Kabba’s 2012 employment
ECF No. 9-2, at 1–3. And, in response, Kabba attaches employment documents
and his own Affidavit. On a motion to dismiss, the Court only may consider attached documents
that are “integral to and explicitly relied on in the complaint,” and only when “the plaintiffs do
not challenge [their] authenticity. Phillips v. LCI Int’l, Inc., 190 F.3d 609, 618 (4th Cir. 1999).
While Kabba does not dispute the authenticity of the documents that Rent-A-Center filed (and
clearly also does not dispute the authenticity of the documents he himself attaches), he does not
rely on any of them in his Complaint and none is integral to it.
Nonetheless, the Court may consider this broader array of documents by treating Rent-ACenter’s motion to dismiss as a motion for summary judgment, which it may do pursuant to Fed.
R. Civ. P. 12(d). See Syncrude Canada Ltd. v. Highland Consulting Grp., Inc., No. RDB-12318, 2013 WL 139194, at *2 (D. Md. Jan. 10, 2013). For the Court to convert the motion to
dismiss to one for summary judgment, both parties must have had “a reasonable opportunity to
present all the material that is pertinent to the motion.” Fed. R. Civ. P. 12(d). Notably, “the
Federal Rules do not prescribe that any particular notice be given before a Rule 12 motion is
converted to a Rule 56 motion.” Ridgell v. Astrue, DKC-10-3280, 2012 WL 707008, at *7 (D.
Md. Mar. 2, 2012). Thus, this requirement “can be satisfied when a party is ‘aware that material
outside the pleadings is before the court.’” Walker v. Univ. of Md. Med. Sys. Corp., No. CCB12-3151, 2013 WL 2370442, at *3 (D. Md. May 30, 2013) (quoting Gay v. Wall, 761 F.2d 175,
177 (4th Cir. 1985)). Indeed, while the Court “clearly has an obligation to notify parties
regarding any court-instituted changes in the pending proceedings, [it] does not have an
obligation to notify parties of the obvious.” Laughlin v. Metro. Wash. Airports Auth., 149 F.3d
253, 261 (4th Cir. 1998).
When a defendant attaches to its motion to dismiss materials that are not integral to the
Complaint, as Rent-A-Center did here, the plaintiff should be “alert . . . to the possibility” that
the Court may treat the motion as a motion for summary judgment. Ridgell, 2012 WL 707008, at
*7; see Laughlin, 149 F.2d at 260–61. Likewise, when a plaintiff attaches non-integral materials
to its opposition, as Kabba did here, this should alert the defendant that the Court may treat the
motion as a motion for summary judgment. See Ridgell, 2012 WL 707008, at *7. Thus, the
parties’ attachments and the Federal Rules of Civil Procedure provided adequate notice that the
Court could construe Rent-A-Center’s motion as one for summary judgment. See Laughlin, 149
F.2d at 260–61; Ridgell, 2012 WL 707008, at *7. And, each party had “a reasonable opportunity
to present all the material that is pertinent to the motion,” Kabba with his Opposition and RentA-Center with its Reply. See Fed. R. Civ. P. 12(d). I will treat Defendant’s motion as a motion
for summary judgment. See id.
Summary judgment is proper when the moving party 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 the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a), (c)(1)(A); see Baldwin v. City of
Greensboro, 714 F.3d 828, 833 (4th Cir. 2013).
If the party seeking summary judgment
demonstrates that there is no evidence to support the nonmoving party’s case, the burden shifts to
the nonmoving party to identify evidence that shows that a genuine dispute exists as to material
facts. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585–87 & n.10
(1986). The existence of only a “scintilla of evidence” is not enough to defeat a motion for
summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 (1986). Instead, the
evidentiary materials submitted must show facts from which the finder of fact reasonably could
find for the party opposing summary judgment. Id. The Court considers the undisputed facts,
and to the extent there is a genuine dispute of material fact, “this 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)).
During Kabba’s initial period of employment, the parties entered into the 2002
Arbitration Agreement. 2002 Arb. Agr. 4 (signed Jan. 10, 2002), ECF No. 9-2, at 5–8; see Pl.’s
Opp’n 1. Relevantly, it defined covered claims as follows:
CLAIMS COVERED BY THE AGREEMENT
The Company and I mutually consent to the resolution by arbitration of all
claims or controversies (“claims”), past, present or future, whether or not arising
out of my application for employment, assignment/employment, or the
termination of my assignment/employment that the Company may have against
me or that I may have against any of the following: (1) the Company, (2) its
officers, directors, employees, or agents in their capacity as such or otherwise, (3)
the Company’s parent, subsidiary, and affiliated entities, (4) the benefit plans or
the plans’ sponsors, fiduciaries, administrators, affiliates, and agents, and/or (5)
all successors and assigns of any of them.
The only claims that are arbitrable are those that, in the absence of this
Agreement, would have been justiciable under applicable state or federal law. The
claims covered by this Agreement include, but are not limited to: claims for
wages or other compensation due; claims for breach of any contract or covenant
(express or implied); tort claims; claims for discrimination (including, but not
limited to race, sex, sexual harassment, sexual orientation, religion, national
origin, age, workers’ compensation, marital status, medical condition, handicap or
disability); claims for benefits (except claims under an employee benefit or
pension plan that either (1) specifies that its claims procedure shall culminate in
an arbitration procedure different from this one, or (2) is underwritten by a
commercial insurer which decides claims); and claims tor violation of any federal,
state or other governmental law, statute, regulation, or ordinance, except claims
excluded in the section of this Agreement entitled “Claims Not Covered by the
CLAIMS NOT COVERED BY THE AGREEMENT
Claims I may have for workers’ compensation benefits and unemployment
compensation benefits are not covered by this Agreement. Also not covered are
claims by the Company for injunctive and/or other equitable relief for unfair
competition and/or the use and/or unauthorized disclosure of trade secrets or
confidential information, as to which either party may seek and obtain relief from
a court of competent jurisdiction.
Id. at 1. Additionally, it provides that “[t]he Arbitrator, and not any federal, state, or local court
or agency, shall have exclusive authority to resolve any dispute relating to the interpretation,
applicability, enforceability, or formation of this Agreement, including, but not limited to any
claim that all or part of this Agreement is void or voidable.” Id. at 2–3. The 2002 Arbitration
assignment/employment and the expiration of any benefit,” and significantly that it 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.” Id. at 3. By signing, Kabba “acknowledge[d] that [he]
carefully read this Agreement; that [he] underst[oo]d its terms” and that he was “giving up [his]
right to a jury trial”; this language appeared in all capital letters. Id. at 4.
Kabba took a medical leave of absence in 2008, following his injury. Ltr. to Kabba, Pl.’s
Opp’n Ex. 1, ECF No. 12-1, at 2. Because his absence “extend[ed] beyond six months[,] the
company perform[ed] an Administrative Termination of Employment,” effective December 19,
2008, informing him that when he was “released by [his] medical care provider to perform the
essential functions of [his] job, [he would] be considered for re-employment with the company,”
and Rent-A-Center would “attempt to find [him] an available, comparable position consistent
with [his] qualifications and experience.” Id.
Kabba sought re-employment with Rent-A-Center on December 4, 2012, filling out an
on-line application for a sales manager position; the application required his assent via esignature to another arbitration agreement (“2012 Arbitration Agreement”). Application & 2012
Arb. Agr., ECF No. 9-2, at 10–13; Def.’s Mem. 1 n.2; Pl.’s Opp’n 1; Tuckey Decl. ¶¶ 5–6. The
2012 Arbitration Agreement provided “any and all claims and/or disputes, past, present or future,
between [Kabba] and the Company, arising out of or related to [his] application for employment,
employment and/or the termination of [his] employment, shall be decided by an arbitrator
through arbitration and not by way of court or jury trial.” 2012 Arb. Agr. Similar to the 2002
Arbitration Agreement, it provided:
[T]his Arbitration Agreement applies to any and all claims and/or disputes
that the Company may have against me or that I may have against: (1) the
Company,(2) its officers, directors, employees, or agents in their capacity as such
or otherwise, and (3) all successors and assigns of any of them. Disputes subject
to this Arbitration Agreement include without limitation, claims for unfair
competition: claims for wages or other compensation due, overtime, breaks and
rest periods; claims for breach of any contract or covenant (express or
implied);tort or statutory claims for harassment, retaliation and discrimination
(including, but not limited to race, sex, sexual orientation, religion, national
origin, age, genetic trait, workers’ compensation, marital status, military service,
leave status, medical condition, handicap or disability); and claims for violation of
any federal, state or other governmental law, statute, regulation, or ordinance.
Further, covered claims and/or disputes include any claim or controversy
regarding this Arbitration Agreement or any portion of the Arbitration Agreement
or its interpretation, enforceability, applicability, unconscionability, arbitrability
or formation, or whether the Arbitration Agreement or any portion of it is void or
voidable, with the exception noted in the Class Action Waiver below. The
following claims and/or disputes are not covered under this Arbitration
Agreement: (i) Workers’ Compensation benefit claims:(ii) state unemployment or
disability insurance compensation claims:(iii) claims for benefits under employee
benefit plans covered by ERISA that contain an appeal procedure or other
exclusive and/or binding dispute resolution procedure in the respective plan;(iv)
claims under the National Labor Relations Act within the jurisdiction of the
National Labor Relations Board; (v) claims that the Dodd-Frank Wall Street
Reform and Consumer Protection Act or other controlling federal statutes bar
from the coverage of mandatory pre-dispute arbitration agreements.
Id. And, like the earlier agreement, it limited the parties’ ability to modify or terminate the
agreement, stating: “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.” Id. The 2012 Arbitration Agreement
concluded with the following language, in all capital letters:
DO NOT SIGN UNTIL YOU HAVE CAREFULLY READ THE ABOVE
ARBITRATION AGREEMENT. BY ELECTRONICALLY SIGNING BELOW,
YOU ARE AGREEING THAT YOU HAVE CAREFULLY READ THIS
ARBITRATION AGREEMENT AND ARE YOU ARE GIVING UP YOUR
RIGHT TO A COURT OR JURY TRIAL, AND THAT PURSUANT TO THE
TERMS OF THIS ARBITRATION AGREEMENT, YOU AND THE
COMPANY ARE AGREEING TO ARBITRATE DISPUTES COVERED BY
THIS ARBITRATION AGREEMENT.
Id. Rent-A-Center did not hire, interview, or contact Kabba in response to his application.
Kabba Aff. ¶ 2, Pl.’s Opp’n Ex. 4, ECF No. 12-1, at 18–20.
Just over two months later, on February 15, 2013, Kabba walked into a Rent-A-Center
location and applied for lead assistant manager position. Id. ¶ 3. Rent-A-Center hired him, had
him complete an electronic application that “did not include an arbitration form,” Id. ¶¶ 3–4, and
provided him with documents to sign, including an arbitration agreement (“2013 Arbitration
Agreement”). Pl.’s Opp’n Ex. 2–3, ECF No. 12-1, at 4–16. Kabba signed the Employment
Eligibility Verification but elected not to sign the 2013 Arbitration Agreement. See id.; see also
Kabba Aff. ¶ 5.
The parties agree that they entered into valid agreements to arbitrate in 2002 and 2012,
and it is undisputed that Kabba did not sign the 2013 Arbitration Agreement.
It also 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. Kabba
asserts that he does not bring any claims related to his first period of employment or his
unsuccessful application for re-employment in 2012, which he concedes he would be required to
Pl.’s Opp’n 1–2.
Rather, the issue is whether Kabba’s rejection of the 2013
Arbitration Agreement, and Rent-A-Center’s hiring him without a signed arbitration agreement,
modified or revoked the 2002 and 2012 Arbitration Agreements such that they do not require
arbitration of Kabba’s pending claims against Rent-A-Center. In other words, are the claims
brought in this litigation within the scope of the only arbitration agreements between the parties?
This is a matter of contract interpretation, and Maryland law applies because the parties entered
into the 2002 and 2012 Arbitration Agreements in Maryland. See Def.’s Mem. 5; Adkins, 303
F.3d at 501.
Relying on Rent-A-Center West, Inc. v. Jackson, 561 U.S. 63 (2010), in which “[t]he
United States Supreme Court upheld the same Arbitration Agreement that Plaintiff signed,”
Rent-A-Center insists that, regardless whether Kabba’s claims are subject to arbitration, the
dispute regarding arbitrability was “clearly and unmistakable delegated . . . to the arbitrator.”
Def.’s Mem. 1. In Rent-A-Center West, a former employee of Rent-A-Center West sued the
company for employment discrimination and the company moved to dismiss based on an
arbitration agreement that included a clause identical to a clause in the 2002 Arbitration
Agreement at issue in this case, providing that “[t]he Arbitrator, and not any federal, state, or
local court or agency, shall have exclusive authority to resolve any dispute relating to the
interpretation, applicability, enforceability or formation of this Agreement including, but not
limited to any claim that all or any part of this Agreement is void or voidable.” 561 U.S. at 65–
66. The district court granted the motion, over the plaintiff’s objection that the agreement was
unconscionable, and, once the case reached it, the Supreme Court “consider[ed] whether, under
the [FAA], a district court may decide a claim that an arbitration agreement is unconscionable,
where the agreement explicitly assigns that decision to the arbitrator.” Id. at 65–67.
Referring to the clause at issue as “the delegation provision,” the Supreme Court
The delegation provision is an agreement to arbitrate threshold issues concerning
the arbitration agreement. We have recognized that parties can agree to arbitrate
“gateway” questions of “arbitrability,” such as whether the parties have agreed to
arbitrate or whether their agreement covers a particular controversy. See, e.g.,
Howsam, 537 U.S., at 83–85 [ ]; Green Tree Financial Corp. v. Bazzle, 539 U.S.
444, 452 [ ] (2003) (plurality opinion). This line of cases merely reflects the
principle that arbitration is a matter of contract. See First Options of Chicago, Inc.
v. Kaplan, 514 U.S. 938, 943 [ ] (1995). An agreement to arbitrate a gateway
issue is simply an additional, antecedent agreement the party seeking arbitration
asks the federal court to enforce, and the FAA operates on this additional
arbitration agreement just as it does on any other. The additional agreement is
valid under § 2 “save upon such grounds as exist at law or in equity for the
revocation of any contract,” and federal courts can enforce the agreement by
staying federal litigation under § 3 and compelling arbitration under § 4. The
question before us, then, is whether the delegation provision is valid under § 2.
Id. at 68–70 (footnote omitted). But, in a footnote, the Supreme Court noted that “[t]here is one
caveat.” Id. at 69 n.1. It explained:
First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 [ ] (1995), held that
“[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless
there is ‘clea[r] and unmistakabl[e]’ evidence that they did so.”
[T]he First Options “clear and unmistakable” requirement . . . pertains to the
parties’ manifestation of intent, not the agreement’s validity. As explained in
Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 [ ] (2002), it is an
“interpretive rule,” based on an assumption about the parties’ expectations. In
“circumstance[s] where contracting parties would likely have expected a court to
have decided the gateway matter,” ibid., we assume that is what they agreed to.
Thus, “[u]nless the parties clearly and unmistakably provide otherwise, the
question of whether the parties agreed to arbitrate is to be decided by the court,
not the arbitrator.” AT & T Technologies, Inc. v. Communications Workers, 475
U.S. 643, 649 [ ] (1986).
Rent-A-Ctr., W., 561 U.S. at 69 n.1.
The threshold issue, therefore, is whether the parties intended to arbitrate the arbitrability
of the claims Kabba brings in this lawsuit that relate to his brief re-employment in 2013,
following a more than four-year break in his initial employment with Rent-A-Center. See id.
Clearly, when they signed the 2002 Arbitration Agreement, they intended to arbitrate “any
dispute relating to the interpretation, applicability, enforceability, or formation of th[at]
Agreement.” 2002 Arb. Agr. 2–3. And, when they signed the 2012 Arbitration Agreement, they
similarly intended to arbitrate “any claim or controversy regarding [the 2012] Arbitration
Agreement or any portion of the Arbitration Agreement or its interpretation, enforceability,
applicability, unconscionability, arbitrability or formation.” 2012 Arb. Agr. But, “arbitration is
a matter of contract,” Rent-A-Ctr., W., 561 U.S. at 69, and parties can modify a contract,
Galloway v. Santander Consumer USA, Inc., 819 F.3d 79, 88 (4th Cir. 2016).
Certainly, the 2002 Arbitration Agreement explicitly stated that it 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. The 2012 Arbitration Agreement also required “a
writing signed by both parties” to modify, revise, or terminate it. 2012 Arb. Agr. Yet, such
language is disfavored and not enforced under Maryland law. See Galloway, 819 F.3d at 88.
Indeed, “under Maryland law, contractual limitations on future modifications are not effective to
prevent parties from entering into new agreements orally or by performance; rather, they only
provide context for interpreting subsequent conduct.” Id. (citing Hovnanian Land Inv. Grp., LLC
v. Annapolis Towne Ctr. at Parole, LLC, 25 A.3d 967, 978–83 (Md. 2011)). The Maryland
courts have “show[n] a persistent unwillingness to give dispositive and preclusive effect to
contractual limitations on future changes to that contract . . . whether it is mutual modification,
novation, waiver of remedies, or . . . a waiver of condition precedent.” Id. (quoting Hovnanian,
25 A.3d at 978–83). Thus, “parties may modify their original agreement by their conduct
‘notwithstanding a written agreement that any change to a contract must be in writing.’” Id.
(quoting University Nat’l Bank v. Wolfe, 369 A.2d 570, 576 (Md. 1977)).
Moreover, it is clear that Kabba, having signed the 2002 and 2012 Arbitration
Agreements, for which his signature acknowledged that he “carefully read” the agreements, 2002
Arb. Agr. 4; 2012 Arb. Agr., was aware of their contents and aware that Rent-A-Center’s
employment documents included arbitration agreements. See Walther v. Sovereign Bank, 872
A.2d 735, 745 (Md. 2005) (“[T]he law presumes that a person knows the contents of a document
that he executes and understands at least the literal meaning of its terms.” (quoting Merit Music
Serv., Inc. v. Sonneborn, 225 A.2d 470, 474 (Md. 1967))). Consequently, his 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.
When Rent-A-Center was presented with Kabba’s application for re-employment in
2013, but no signed arbitration agreement, it had a choice. It could have refused to hire him, or it
could have hired him without the signed arbitration agreement. Its choice has consequences.
Clearly, a reasonable inference could be drawn 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. If not, it had
no reason to include one in the employment application.3 The fact that Rent-A-Center elected to
hire Kabba in 2013 without a new arbitration agreement could result in a reasonable inference
that it, too, was willing to forego this requirement.
Unlike Kabba’s 2012 online application, to which Rent-A-Center appended an arbitration
agreement as a matter of course without knowing the identity of the applicant, the 2013
employment application was presented to Kabba in person for him to complete, after Rent-ACenter agreed to hire him. Kabba Aff. ¶¶ 2–5.
Thus, to the extent that the 2002 and 2012 Arbitration Agreements, including the
delegation provision, otherwise would apply to claims arising from Kabba’s 2013 employment,4
the parties’ conduct could evince a mutual intent to modify the agreements such that they do not
apply to Kabba’s 2013 employment. See Galloway, 819 F.3d at 88; University Nat’l Bank, 369
A.2d at 576. As a result, it is neither clear nor unmistakable that the parties agreed to arbitrate
the arbitrability of Kabba’s claims before this Court pertaining to his 2013 employment. Thus,
the gateway issue of arbitrability is not subject to arbitration, and this Court, not an arbitrator,
must determine whether the parties agreed to arbitrate the claims. See Rent-A-Ctr., W., 561 U.S.
at 69 n.1; First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); AT & T Techs.,
Inc. v. Comm’cns Workers, 475 U.S. 643, 649 (1986).
As for whether Kabba’s pending claims (which arise only out of Kabba’s 2013
employment with Rent-A-Center, see Pl.’s Opp’n 1–2) are subject to arbitration, it is undisputed
that the parties chose to proceed with Kabba’s employment after he did not sign the 2013
Arbitration Agreement. But, a genuine dispute exists on the record before me regarding whether
that conduct modified the 2002 and 2012 Arbitration Agreements such that neither would apply
to his later, brief period of employment in 2013. Therefore, I cannot determine this issue as a
matter of law. See Fed. R. Civ. P. 56(a). Accordingly, I will deny Defendant’s motion to
dismiss or stay proceedings and compel arbitration, treated as a motion for summary judgment.
This case will proceed to determine the gateway issue of arbitrability. After Defendant
has filed an answer, I will issue a scheduling order and set in a telephone conference call, in
On the record before me, the application of the earlier agreements to Kabba’s 2013
employment is attenuated at best, given that he began employment in 2013 as a “new hire,” after
his employment had been terminated for more than four years, and he was hired in 2013 as a lead
assistant manager, not for the store manager position that he held in 2008 or for the sales
manager position for which he applied in 2012.
which I will address the scope of discovery, which will focus on arbitrability and not the broader
issues of liability and damages.
Accordingly, it is, this 27th day of April, 2017, hereby ORDERED that
1. Defendant’s Motion to Dismiss or in the Alternative, to Stay Proceedings and Compel
Arbitration, ECF No. 9, treated as a motion for summary judgment, IS DENIED; and
2. By May 12, 2017, Defendant SHALL FILE an Answer to Plaintiff’s Complaint,
which alleges federal, state and local statutory violations based solely on Kabba’s
2013 employment with Rent-A-Center.
Paul W. Grimm
United States District Judge
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