NALCO COMPANY LLC

v.

BONDAY

It is well-established that “review of an arbitration decision itself is extremely limited, among the narrowest known to the law.” Corporacion AIC, SA v. Hidroelectrica Santa Rita S.A., 34 F. 4th 1290, 1293 (11th Cir. 2022) (quotation omitted). An arbitration award may therefore be vacated only on one of the four statutory grounds in section 10(a). Johnson v. Directory Assistants Inc., 797 F. 3d 1294, 1299 (11th Cir. 2015) (citing Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 586 (2008)).² One such ground is “where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a)(4).

Thus, an arbitrator exceeds his or her power by deciding an issue “not submitted to the arbitrator[].” Davis v. Prudential Sec., Inc., 59 F. 3d 1186, 1195 (11th Cir. 1995) (citing 9 U.S.C. § 10(a)(4)). Along those lines, “the question of arbitrability–whether [an arbitration agreement] creates a duty for the parties to arbitrate the particular grievance—is undeniably an issue for judicial determination . . . [u]nless the parties clearly and unmistakably provide otherwise, . . . not the arbitrator.” AT & T Techs., Inc., 475

U.S. at 649. While courts “should give considerable leeway to the arbitrator” when the parties have so agreed, if “the parties did not agree to submit the arbitrability question itself to arbitration, then the court should decide that question just as it would decide any other question that the parties did not submit to arbitration, namely, independently.” First Options of Chicago, Inc., 514 U.S. at 943 (emphasis in original). And federal courts “apply ordinary state-law principles that govern the formation of contracts” to guide their interpretations of arbitration agreements. Id. at 944. It follows, then, that while “the arbitrator [may decide] issues properly before him, it is the court’s task to determine what issues were originally submitted to the arbitrator.” Bakery, Confectionery & Tobacco Workers Loc. Union No. 362-T, AFL- CIO-CLC v. Brown & Williamson Tobacco Corp., 971 F. 2d 652, 655 (11th Cir. 1992); see also Iron Workers Loc. No. 272 v. Bowen, 624 F. 2d 1255, 1264 (5th Cir. 1980) (“[A]n arbitrator can only decide issues submitted to him, . . . [but] determining just what issues were submitted to an arbitrator is a task for the court.”).

In sum, “a district court is empowered to vacate arbitral awards where the ‘arbitrators exceeded their powers.’ If a dispute is nonarbitrable, then an arbitrator necessarily exceeds his powers in adjudicating it.” Klay v. United Healthgroup, Inc., 376 F. 3d 1092, 1112 n.20 (11th Cir. 2004) (quoting 9 U.S.C. § 10(a)(4)). When the parties “have actually submitted an issue to an arbiter, [courts] must look both to their [arbitration agreement] and to the submission of the issue to the arbitrator to determine his authority.” Piggly Wiggly Operators’

Warehouse, Inc. v. Piggly Wiggly Operators’ Warehouse Indep. Truck Drivers Union, Loc. No. 1, 611 F. 2d 580, 584 (5th Cir. 1980). But courts should not assume that the parties agreed to arbitrate arbitrability unless there is “clea[r] and unmistakabl[e]” evidence that they did so. First Options of Chicago, Inc., 514 U.S. at 944. Ultimately, therefore, the “question of whether a party can be compelled to arbitrate, as well as the question of what issues a party can be compelled to arbitrate, is an issue for [this Court] rather than the arbitrator to decide.” Executone Info. Sys., Inc. v. Davis, 26 F. 3d 1314, 1321 (5th Cir. 1994).

DISCUSSION

To begin, the Court finds that the parties did not clearly and unmistakably agree to let the arbitrator determine whether Mr. Bonday’s Demand was arbitrable in the first instance. Questions of arbitrability “include questions such as whether the parties are bound by a given arbitration clause, or whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.” Bamberger Rosenheim, Ltd., (Israel) v. OA Dev., Inc., (United States), 862 F. 3d

1284, 1288 (11th Cir. 2017) (quotation omitted). “Some arbitrability questions are about the ‘scope’ or ‘applicability’ of the parties’ arbitration agreement—i.e., what set of disputes the arbitration agreement covers, and whether it governs the particular dispute at hand.” Attix v. Carrington Mortg. Servs., LLC, 35 F. 4th 1284, 1299 (11th Cir. 2022). In Florida, “the intent of the parties to a contract, as manifested in the plain language of the arbitration provision and contract itself, determines whether a dispute is subject to arbitration.” Jackson v. Shakespeare

Found., Inc., 108 So. 3d 587, 593 (Fla. 2013). The plain and ordinary reading of the Arbitration Agreement here readily shows that the parties did not intend to arbitrate arbitrability. The Arbitration Agreement first delineates what constitutes a “Dispute” subject to arbitration. (Doc. 36-3 at 2, ¶ 2.E.) Then it discusses what types of claims a “Dispute” does not include. (Id.) And, immediately after these exclusions, the Arbitration Agreement expressly states that it “does not apply to disputes regarding the enforceability, revocability or validity of the Agreement or any portion of the Agreement.” (Id. (emphasis added).) The enforceability, revocability, or validity of the Arbitration

Agreement concerns “whether the parties have entered into a legally operative arbitration agreement that is enforceable under law.” Attix, 35 F. 4th at 1299. But the parties also clarify in the Arbitration Agreement that it “does not apply to disputes regarding . . . any portion of the Agreement.” (Doc. 36-3 at ¶ 2.E.) Rather than agreeing to arbitrate those issues, “[s]uch disputes can only be resolved by a court of competent jurisdiction.” (Id.)

The parties also limited the arbitrator’s authority “to the resolution of Disputes between the parties,” not the resolution and determination of what constitutes Disputes. (Id. at ¶ 10.B.(5).) And Nalco’s actions cannot support an inference that it agreed to have the arbitrator to decide the question of arbitrability. “To the contrary, insofar as [Nalco] [was] forcefully objecting to the arbitrator[] deciding [its] dispute with [Mr. Bonday], one naturally would think that they did not want the arbitrator[] to have binding authority over [it].” First Options of

Chicago, Inc., 514 U.S. at 946 (emphasis in original). Based on careful review of the entire record, the Court finds that the parties did not delegate the question of arbitrability (i.e., whether Mr. Bonday’s Demand was arbitrable in the first instance) to the arbitrator. At the very least, there is no clear and unmistakable evidence of that delegation. Thus, that determination is for this Court, which therefore reviews the arbitrator’s determination of whether Mr. Bonday’s Demand was arbitrable “de novo.” Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 569 n.2 (2013) (quotation omitted). Still, the “language of arbitration demands should not be subjected to the same strict standards of construction that would be applied in formal court proceedings.” Kurt Orban Co. v. Angeles Metal Sys., 573 F. 2d 739, 740 (2d Cir. 1978). Indeed, “[f]ederal law . . . does not impose any requirements as to how specific a notice of arbitration must be.” Valentine Sugars, Inc. v. Donau Corp., 981 F. 2d 210, 213 (5th Cir. 1993). Be that as it may, once again, the “law is wellestablished that an arbitrator can bind the parties only on issues that they have agreed to submit to [arbitration],” and an arbitrator exceeds her power under section 10(a)(4) by deciding issues not submitted to her. Davis, 59 F. 3d at 1194– 95 (quotation omitted). Here, the Court finds Mr. Bonday’s Demand asserts “claims related to. . . unemployment compensation benefits” or “controversies over awards of benefits or incentives under [Nalco’s] . . . employee benefits plans or welfare plans that contain an appeal procedure or other procedure for the resolution of such controversies.” (Doc. 36-3 at ¶ 2.E.) Mr. Bonday specifically requested “arbitration for [Nalco] to follow the [Severance Plan]” and for the arbitrator to “award [him] 36 weeks salary per the policy.” (Doc. 36-1 at 3.) The only time Mr. Bonday referenced a “difference in treatment for severance packages” was in explaining why he contacted Nalco again attempting to secure severance pay under the Severance Plan. (Id. at 5.) Mr. Bonday also made a specific request for damages in the form of severance pay, not a broad request for damages stemming from general employment grievances. The Court therefore finds that Mr. Bonday did not submit a Demand for the arbitration of any ERISA discrimination claim. See Davis, 59 F. 3d at 1195 (holding that the issue of attorneys’ fees was not submitted for arbitration, in part, because a request for such fees was never made). And Mr. Bonday’s pro se status during arbitration notwithstanding, “the mere fact that the [arbitrator] was aware of a statute that provides for an award of [equitable damages under ERISA] does not constitute a submission of the issue by the parties for determination.” Id.

Simply put, it was “anomalous for the [arbitrator] to award an unrequested item of damages . . . supported with an argument that the awarded item was naturally intertwined within the scope of the arbitration.” Totem Marine Tug & Barge, Inc. v. N. Am. Towing, Inc., 607 F. 2d 649, 651 (5th Cir. 1979) (vacating arbitrator’s award based on an issue not submitted to arbitration). With the issue submitted to arbitration decided, all that is left is for the Court to determine whether Mr. Bonday’s Demand was arbitrable in the first instance. When reviewing the scope of an arbitration agreement, “there is a presumption of arbitrability in the sense that” a “particular grievance” is arbitrable “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.” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 314 (2010) (quotation omitted). For example, when deciding whether to compel arbitration, courts are mindful that “[w]hether a claim falls within the scope of an arbitration agreement turns on the factual allegations in the complaint rather than the legal causes of action asserted.” Gregory v. Electro-Mech. Corp., 83 F. 3d

382, 384 (11th Cir. 1996). With respect to contractual language about whether an issue is arbitrable, the “addition of the words ‘relating to’ broadens the scope of an arbitration provision to include those claims that are described as having a ‘significant relationship’ to the contract.” Jackson, 108 So. 3d at 593 (quoting Seifert v. U.S. Home Corp., 750 So. 2d 633, 638 (Fla. 1999) (emphasis added)). “[A] significant relationship is described to exist between an arbitration provision and a claim . . . if it emanates from an inimitable duty created by the parties’ unique contractual relationship.” Id. Thus, an arbitration provision including claims “relating to” a contractual relationship necessarily encompasses those claims that are “inextricably intertwined with both the circumstances that surrounded the transaction from which the contract emanated and the contract itself.” Id. at 595. Based on the above principles, Mr. Bonday’s Demand—specifically, the grievance giving rise to the Demand—was nonarbitrable. The Arbitration Agreement expressly states that “Dispute[s] do[] not include claims related to . . . controversies over awards of benefits or incentives under [Nalco’s] . . . employee benefits plans . . . that contain an appeal procedure.” (Doc. 36-3 at ¶ 2.E.) Mr. Bonday submitted his Demand because Nalco did not follow the Severance Plan and he requested “36 weeks salary per the [Severance Plan].” (Doc. 36-1 at 3.) And the Severance Plan, which governs Mr. Bonday’s entitlement to an award of employee benefits in the form of severance pay, unquestionably contains an appeal procedure. (Doc. 36-2 at 9.) For these reasons, Mr. Bonday’s Demand was not a

“Dispute,” as that term is defined in the Arbitration Agreement, and therefore was not subject to arbitration. Additionally, even assuming Mr. Bonday submitted a claim for discrimination under ERISA as the arbitrator construed, the result would be no different because that claim is inextricably intertwined with the Severance Plan, which is not a “Dispute” subject to arbitration because, again, it includes an appeals process. Jackson, 108 So. 3d at 595. Turning to the Award, the arbitrator determined that Nalco had violated section 510 of ERISA. This anti-retaliation provision of ERISA provides that an employer may not “discriminate against” an employee “for exercising any right to which he is entitled under the provisions of an employee benefit plan . . . or for the purpose of interfering with the attainment of any right to which such [employee] may become entitled under the plan.” 29 U.S.C. § 1140 (emphasis added). Mr. Bonday’s entitlement to any severance pay,

and indeed damages for an ERISA violation, “emanates from the . . . execution and existence of the [Severance Plan] itself.” Jackson, 108 So. 3d at 595. The arbitrator’s decision demonstrates just why the construed ERISA claim arises from a nonarbitrable dispute as set forth in the Arbitration Agreement. In discussing why Mr. Bonday may be bringing claims not on the face of the Demand, the arbitrator reasoned that the Severance Plan “itself was created pursuant to [ERISA].” (Doc. 37-5 at 3.) Then, the arbitrator determined that Nalco “denied [Mr. Bonday] his right to take the [Severance] Plan.” (Doc. 25-1 at 4–5 (emphasis added).) The arbitrator even discussed Mr. Bonday’s “appeal” to Nalco’s Human

Resources, which is difficult for the Court to reconcile. (Id. at 5.) Ultimately, the arbitrator issued the Award by finding that Nalco had “interfere[ed] with [Mr. Bonday’s] attainment of rights under the [Severance] Plan to which he would have been entitled.” (Id. at 6.) This plainly constitutes a claim related to “controversies over awards of benefits or incentives under [Nalco’s] . . . employee benefits plans . . . that contain an appeal procedure”—a nonarbitrable claim, in other words. (Doc. 36-3 at ¶ 2.E.) Further, Mr. Bonday’s entitlement to any such benefits is contingent on him being an “Eligible Employee” and not an “Excluded Employee[]” or an “Employee who loses employment with [Nalco] . . . in an ‘Ineligible Termination’” as those terms are defined in the Severance Plan. (Doc. 36-2 at 3–4.)³ Thus, regardless of the legal label that the arbitrator attached to Mr. Bonday’s Demand, his grievance simply does not constitute a “Dispute” under the parties’ Arbitration Agreement, and the Award is therefore due to be vacated.4

CONCLUSION

Ultimately, “a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration.” First Options of Chicago, Inc., 514 U.S. at

945. Based on the plain and ordinary language of the Arbitration Agreement, Nalco and Mr. Bonday did not agree to allow the arbitrator to determine whether Mr. Bonday’s Demand was arbitrable in the first place. And the Court finds that Mr. Bonday submitted, and the arbitrator decided, a nonarbitrable issue. In doing so, the arbitrator exceeded her power under the Arbitration Agreement and Mr. Bonday’s Demand. Therefore, the arbitrator’s award must be vacated and Nalco is entitled to declaratory judgment.

to summary judgment on its Second Amended Complaint. (Docs. 18, 36.) While Nalco amended its pleading after moving for summary judgment, the relief it seeks has not changed. (Compare Doc. 36 with Doc. 12.) Accordingly, to delay resolution of Nalco’s motion would serve no purpose other than “exalt[ing] form over substance.” 6 C. Wright & A. Miller, Federal Practice & Procedure § 1476 (3d ed. 2020). And though Mr. Bonday has not specifically responded to Nalco’s motion for summary judgment, that motion raises the same arguments in Nalco’s pleadings and motion to vacate arbitration to which Mr. Bonday has responded. (Compare Doc. 18 with Doc. 26.) Accordingly, the Court is “convinced that [it has] before [it] . . . all of the facts and arguments that [Mr. Bonday] would have or could have presented had [Mr. Bonday]” responded to Nalco’s summary judgment motion. Restigouche, Inc. v. Town of Jupiter, 59 F. 3d 1208, 1213 (11th Cir. 1995). Thus, “permitting [Mr. Bonday] to respond [specifically] to the motion for summary judgment in light of [Nalco’s] second amended complaint would not [affect] [this] [C]ourt’s decision on the motion for summary judgment.” Cf. Reflectone, Inc. v. Farrand Optical Co., 862 F. 2d 841, 845 (11th Cir. 1989) (holding that “the district court [did not err] when it carried over appellee’s pending motion for summary judgment to [appellant’s] second amended complaint”). Accordingly, itis ORDERED: 1. Mr. Bonday’s motions to dismiss (Docs. 15, 37) are DENIED for the reasons stated in this Order. 2. Nalco’s Motion to Vacate Arbitration Award (Doc. 25) is GRANTED, and the Final Award of the Arbitrator (Doc. 25-1) is VACATED. 3. Nalco’s motion for summary judgment (Doc. 18) is GRANTED. 4. Nalco is entitled to declaratory judgment on its Second Amended Complaint (Doc. 36) and the Court decrees as follows: Mr. Bonday’s Demand (Doc. 36-1) was and is not arbitrable under the parties’ Arbitration Agreement (Doc. 36-3). 5. The Clerk is DIRECTED to enter judgment accordingly, terminate any pending motions and deadlines, and close the file. ORDERED at Fort Myers, Florida, on September 22, 2022.

PLD ChabelbraLe

JOHN L. BADALAMENTI

UNITED STATES DISTRICT JUDGE