Tenth Circuit Clarifies Questions on Delegation of Arbitrability

In Belnap v. Iasis Healthcare Corp., the US Court of Appeals for the Tenth Circuit joined other circuit courts to hold that incorporation of the JAMS rules clearly and unmistakably delegates questions of arbitrability to an arbitrator, and that if a court finds evidence of clear and unmistakable intent to arbitrate arbitrability, it must allow an arbitrator to decide issues of arbitrability in the first instance. The Tenth Circuit also declined to adopt the "wholly groundless" approach to arbitrability.

Practical Law Litigation

On January 5, 2017, in Belnap v. Iasis Healthcare Corp., the US Court of Appeals for the Tenth Circuit joined other circuit courts to hold that incorporation of the JAMS rules clearly and unmistakably delegates questions of arbitrability to an arbitrator, and that if a court finds evidence of clear and unmistakable intent to arbitrate arbitrability, it must allow an arbitrator to decide issues of arbitrability in the first instance. The Tenth Circuit also declined to adopt the "wholly groundless" approach to arbitrability. (2017 WL 56277 (10th Cir. Jan. 5, 2017).)

The plaintiff, Dr. Belnap, entered into an agreement with his employer, Salt Lake Regional Medical Center (SLRMC) to help develop a new surgical center. The agreement contained an arbitration provision. After SLRMC disciplined Dr. Belnap for alleged misconduct and then vacated the discipline, Dr. Belnap brought various claims in the US District Court for the District of Utah against SLRMC, its parent company, and several of its individual employees. These defendants moved to compel arbitration, which the district court granted in part and denied in part. The defendants appealed.

The Tenth Circuit first held that by incorporating the JAMS rules into their agreement, Dr. Belnap and SLRMC clearly and unmistakably agreed to have an arbitrator, rather than a court, decide whether a dispute is arbitrable, because:

  • The JAMS rules provide for arbitration of arbitrability disputes.

  • The plain language of the agreement establishes the JAMS rules as the default rules.

  • Other circuits, including the US Courts of Appeals for the Second, Fifth, and Ninth Circuits, have held that incorporation of the JAMS rules clearly and unmistakably delegates questions of arbitrability to an arbitrator.

  • In an analogous context, other circuits have concluded that incorporation of the American Arbitration Association (AAA) rules constitutes clear and unmistakable evidence of an agreement to arbitrate.

In a matter of first impression for the court, the Tenth Circuit also concluded that a finding of clear and unmistakable intent to arbitrate arbitrability obliges a court to decline to reach the merits of an arbitrability dispute regarding the substantive claims at issue.

Additionally, the Tenth Circuit declined to adopt the "wholly groundless" approach of contract interpretation adopted by several circuits that requires a court to make a preliminary analysis of whether a dispute is within the scope of the contract. Notably, the court found that the "wholly groundless" approach is in tension with the US Supreme Court's express instruction that when parties have agreed to submit an issue to arbitration, courts must compel arbitration on that issue without regard to its merits.

 
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