Petition for Writ of Certiorari — Captain D's, LLC v. Smith (No. 07-799)

Supreme Court, U.8.

( ( ) FILED

No. ___ 07-799DEC12 2007

OFFICE OF THE CLERK

IN THE

Supreme Court of the Gnited States

CAPTAIN D’s, LLC

Petitioner,

Vv.

TAMMY SMITH, by and through her father and

next friend, ALVIN CHRISTOPHER SMITH,

Respondent.

On Petition for a Writ of Certiorari to the

Mississippi Supreme Court

PETITION FOR A WRIT OF CERTIORARI

BRADLEY F. HATHAWAY *

CAMPBELL DELONG, LLP

923 Washington Avenue

Greenville, MS 38701

(662) 335-6011

* Counsel of Record Counsel for Petitioner

ELST ns aC i a ek al

WicsSoOn-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D.C. 20002

QUESTIONS PRESENTED

Whether the Mississippi Supreme Court erred

when, after finding that a valid and enforceable

agreement to arbitrate existed between the

_ parties, it held that as a matter of law certain

common law tort claims arising out of an alleged

sexual assault incident on a minor in the

workplace are unsuitable for arbitration under

the Federal Arbitration Act (“FAA”).

Where a party’s federal rights under the FAA

turn on an antecedent application of state-law to

the arbitration clause itself; which is interwoven .

with federal substantive law, whether a state

court can nullify a party’s right to arbitration by

manipulating state-law principles in order to

single out particular types of grievances as being

unsuitable for arbitration.

Whether the Fourteenth Amendment’s proce-

dural protections extend to preclude a depri-

vation of rights afforded under the FAA without

due process being afforded.

(1)

il

RULE 14.1(b) STATEMENT

The following were parties to the proceedings

before the Mississippi Supreme Court:

1. Captain D’s, LLC; Defendant-Appellee; Peti-

tioner on Review.

2. Tammy Smith (by and through her father

and next friend, Alvin Christopher Smith);

Plaintiff-Appellant; Respondent on Review.

RULE 29.6 CORPORATE

DISCLOSURE STATEMENT

There is no parent corporation or publicly held

corporation owning 10% or more of the stock of

Captain D’s, LLC, Petitioner herein.

TABLE OF CONTENTS

QUESTIONS PRESENTED .....................00eeeeeeee

RULE 14.1(b) STATEMENT.........................ce0008

RULE 29.6 CORPORATE DISCLOSURE

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TABLE OF AUTHORITIES ......................ccseeseees

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OPINIONS BELOW. ....... ie saat cuehicneaahbn ina peiaasonin

BASIS FOR JURISDICTION ...............cccccceeeees |

RELEVANT CONSTITUTIONAL AND

STATUTORY PROVISIONS ............2000..00000.s¢s

STATEMENT OF THE CASE ......................cc000

A. Factual Backgroun .............0:.cccseeeeeeees

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REASONS FOR GRANTING THIS PETITION

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APPENDIX A - Mississippi Supreme Court

re ie a riceininnsdscdsincssasiseriindeaniceen

APPENDIX B - Mississippi Trial Court Judg-

APPENDIX C —- Mississippi Supreme Court

Order Denying Motion for Rehearing .............

APPENDIX D —- U.S.C.A. Const. Art. VI, cl. 2 ...

APPENDIX E - U.S. Const. Amend. XIV, § 1....

APPEL F ~ OU BCA, O Binccsnsesscscicccsenanecssees

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ao}; & WC

10

27

lV

TABLE OF CONTENTS—Continued

Page

APPENDIX G- Employment Dispute Resolu-

RR aR ea Eee en ee ee 29a

APPENDIX H - Motion of Appellee Captain

D’s, LLC, for Rehearing Before the Missis-

Ie Re I a haiicsicscicsinendisccssicescccncdarscns 32a

Vv

TABLE OF AUTHORITIES

CASES Page

Anglin v. Gulf Guaranty, 956 So. 2d 853

I Ts le 19

Armstrong v. Manzo, 380 U.S. 545, 550-

551, 85 S. Ct. 1187, 14 L. Ed. 2d 62

SO NEEETEES e ee 26

AT&T Technologies, Inc. v. Communi-

cations Workers of America, 475 U.S.

643, 106 S. Ct. 1415, 89. L. Ed. 2d 648

a ina ssn usiispnhecsnenaonan 21

Bank One, N.A. v. Shumake, 281 F.3d 507

is inc annknesenbenenasvesannsnes 13, 23

Bradley. v. Harris Research, Inc., 275 F.3d

LE 5 23

Braidfoot v. William Carey College, 793

So. 2d 642, 144 Lab. Cas. P 59,343, 157

Ed., Law Rep. 432 (Miss. App. 2001)....... 19

Buchman v. BASF Corp., 107 Fed. Appx.

ENE, MD sicsnasscnnssnsnyscadarsecanssasess 13

Buckeye Check Cashing, Inc. v. Cardegna,

546 U.S. 440, 126 S. Ct. 1204, 163 L. Ed.

seis bnccasicagedninsnaninsaanend 12, 14

Caley v. Gulfstream Aerospace Corp., 428

F.3d 1359 (11th Cir. 20085)...............0cssesee. 23

Centennial Ins. Co. v. Ryder Truck Rental,

Inc., 149 F.3d 378 (5th Cir. 1998) ............ 13

Chelsea Square Textiles, Inc. v. Bombay

Dyeing and Mfg. Co., Lid., 189 F.3d 289

SE CD 5s ssscandatnanancndodanensteuannendec 22

Cogswell v. Merrill Lynch, Pierce, Fenner

& Smith, Inc., 78 F.3d 474 (10th Cir.

vi

TABLE OF AUTHORITIES—Continued

Page

Cooper v. Lawson, 264 So. 2d 890 (Miss.

STI iicliatilnhdneidiubsnetaisinngnanansnideniasiecthésteisseace 18

Dean Witter Reynolds Inc. v. Byrd, 470

U.S. 213, 105 S. Ct. 1238, 84 L. Ed. 2d

TSE a a 16

Ekstrom v. Value Health, Inc., 68 F.3d

BE Is ME IID ccnscnsccncensvacasaccocesoncnse 23

Enterprise Irrigation District v. Farmers

Mutual Canal Co., 243 U.S. 157, 37 S.

Ct. 318, 61 L. Ed. 644 (1917).................... 18

Ferrara v. Walters, 919 So. 2d 876 (Miss.

a wnissananeninsese 22

Gibson v. Neighborhood Health Clinics,

Inc., 121 F.3d 1126 (7th Cir. 1997) .......... 23

Gilmer v. Interstate/Johnson Lane Corp,

500 U.S. 20, 111 S. Ct. 1647, 114 L. Ed.

Cee ceclane 14, 26

Goss v. Lopez, 419 U.S. 565, 95 S. Ct. 729,

I I a ccninvctacccesacevnccaseusocess 25

Green Tree Financial Corp.-Alabama uv.

Randolph, 531 U.S. 79, 121 S. Ct. 513,

iid lass sdnceannacenconcee 14, 15

Gregory v. Interstate/Johnson Lane Corp.,

188 F.3d 501 (4th Cir. 1999)..................... 23

Grigson v. Creative Artists Agency, 210

ae ee Cites CAT. BGO)... ..ccccccccccccccccccesess 13

Gulf Ins. Co. v. Neel-Schaffer, 904 So. 2d

EAE CT 19

Indiana ex rel. Anderson v. Brand, 303

U.S. 95, 58 S. Ct. 443, 82 L. Ed. 685

a AIT ee a 12

Irving Trust Co. v. Day, 314 U.S. 556, 62

So. 2d 398, 86 L. Ed. 452 (1942)............... 12

Vil

TABLE OF AUTHORITIES—Continued

Leverett v. State, 197 So. 2d 889 (Miss.

Mastrobuono v. Shearson Lehman Hutton,

Inc., 514 U.S. 52, 115 S. Ct. 1212, 131 L.

as iat cca Bi a

Medtronic Ave, Inc. v. Advanced Cardio-

vascular Systems, Inc., 247 F.3d 44 (3rd

ice Nacdutadiitieclcek dadsbdeiateahicision

Meyer v. State of Nebraska, 262 U.S. 390,

43 S. Ct. 625, 67 L. Ed. 1042 (1923).........

Miss. Farm Bureau Mut. Ins. Co. uv.

Walters, 908 So. 2d 765 (Miss. 2005) .......

Mitsubishi Motors Corp., v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614, 105 S. Ct.

3346, 87 L. Ed. 2d 444 (1985).............. 11-12, 16

Moses H. Cone Memorial Hospital v.

Mercury Construction Corp., 460 U.S. 1,

103 S. Ct. 927, 74 L. Ed. 2d 765

(CN shibacssesteindtstnkincssunncensciaphntaddeiia 2,11,

Mullane v. Central Hanover Bank & Trust

Co., 339 U.S. 306, 70 S. Ct. 652, 94 L.

Ue

PaineWebber Inc. v. Elahi, 87 F.3d 589

CI I I aia a,

Perry v. Thomas, 482 U.S. 483, 107 S. Ct.

2520, 96 L. Ed. 2d 426 (1987)...................

Phelps v. Board of Education of West New

York, 300 U.S. 319, 57 S. Ct. 483, 81 L.

as

Phillips Petroleum Co. v. Shutts, 472 U.S.

797, 105 S. Ct. 2965, 2974-2975, 86 L.

Be ee I icaik ced edacsniciiias meena ctvccscakenus

14, 16

26

22

15

12

vill

TABLE OF AUTHORITIES—Continued

Page

Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395, 87 S. Ct. 1801,

18 L. Ed. 2d 1270 (1967)........... rte 8, 12, 15, 24

Qualcomm Inc. v. Nokia Corp., 466 F.3d

SE ks Bs UE wicsinsctnnsssvninesnnstacdaxeaas 23

Rodriguez de Quijas v. Shearson/American

Express, Inc., 490 U.S. 477, 109 S. Ct.

1917, 104 L. Ed. 526 (1989)....................... 15.

Rogers-Dabbs Chevrolet-Hummer, Inc. uv.

Blakeney, 950 So. 2d 170 (Miss. 2007)..... 20

Royer Homes of Miss., Inc. v. Chandeleur

Homes, Inc., 857 So. 2d 748 (Miss. 2003) . 22

Ryan’s Family Steak Houses, Inc. v.

Regelin, 735 So. 2d 454 (Ala. 1999).......... 23, 24

Salary Policy Employee Panel v. Tennessee

Valley Auth., 731 F.2d 325 (6th Cir.

Schroeder v. City of New York, 371 U.S.

208, 212-213, 83 S. Ct. 279, 282-283, 9

Fig EE iibtncitisicdcwwinidsntdedcencnanaias 26

Shearson/American Express Inc. _ v.

McMahon, 482 U.S. 220, 107 S. Ct.

2332, 96 L. Ed. 2d 185 (1987)................... 14

Southland Corp. v. Keating, 465 U.S. 1,

104 S. Ct. 852, 79 L. Ed. 2d 1

De iainicctidi cialis niealnebdunsdmonatihic 1, 12, 15, 24

Speedee Cash of Mississippi, Inc. v.

Williams, 915 So. 2d 1061 (Miss. 2005)... 19

Stark v. Sandberg, Phoenix & von

Gontard, P.C., 381 F.3d 793 (8th Cir.

State Auto. Mut. Ins. Co. v. Glover, 253

Miss. 477, 176 So. 2d 256 (1965).............. 22

ix

TABLE OF AUTHORITIES—Continued

Page

United Steel Workers of America ov.

Warrior & Gulf Navigation Co., 363 U.S.

574, 80 S. Ct. 1347, 4 L. Ed. 2d 1409

AERA ct ee Oa TE 18, 21

Volt Information Sciences, Inc. v. Board of

Trustees of Leland Stanford, Jr. Uni-

versity, 489 U.S. 468, 109 S. Ct. 1248,

103 L. Ed. 2d 488 (1989)............ 2, 11, 15, 24-25

Washington Mut. Fin. Group, LLC v.

Bailey, 364 F.2d 260 (5th Cir. 2004)........ 12, 13

Waters v. Gnemi, 907 So. 2d 307 (Miss.

er aveabeddadevedeuce 18

STATUTES

U.S. Const., art. VI, cl. 2......... Latte TN 3

U.S. Const. Amend. XIV, § 1........................ 4, 25

ee. sonnenecauenesed 4, 14, 24

ET SF MIPTEIID .. « ccccccossncséiscncccocsccnsccssocens 3

EE a en 3

OTHER AUTHORITIES

Wechsler, The Appellate Jurisdiction of the

Supreme Court: Reflections on the Law

and the Logistics of Direct Review, 34

Wash. & Lee L. Rev. 1043 (1977)............. 15-16

IN THE

Supreme Court of the United States

No.

CAPTAIN D’s, LLC

Petitioner,

Vv.

TAMMY SMITH, by and through her father and

next friend, ALVIN CHRISTOPHER SMITH,

Respondent.

On Petition for a Writ of Certiorari to the

Mississippi Supreme Court

PETITION FOR A WRIT OF CERTIORARI

INTRODUCTION

It is firmly-settled that the FAA, enacted pursuant

to the Commerce Clause, is substantive federal law

enforceable in state courts and applicable to state

common law causes of action. Southland Corp. v.

Keating, 465 U.S. 1, 11-12, 104 S. Ct. 852, 858-859,

79 L. Ed. 2d 1 (1984). Though the enforcement of

the federal rights granted under the FAA may, in

appropriate circumstances, involve state-law prin-

ciples of contract interpretation, protecting and pre-

serving these federal rights relies on an interwoven

and overarching application of federal substantive

law to ensure that the state-law principles are not

2

manipulated to disguise the singling out of arbitra-

tion for suspect status, thus nullifying the FAA. See

Moses H. Cone Memorial Hospital v. Mercury Con-

struction Corp., 460 U.S. 1, 24-25, 103 S. Ct. 927,

74 L. Ed. 2d 765 (1983) (cited in Volt Information

Sciences, Inc. v. Board of Trustees of Leland Stanford,

Jr. University, 489 U.S. 468, 475, 109 S. Ct. 1248, 103

L. Ed. 2d 488 (1989)). Indeed, it is this Court which

must provide protection against “a state court’s con-

struction of a contract in such a way as to preclude

enforcement of a federal right.” Volt, 489 U.S. at 482

(Brennan, J., dissenting).

These principles play leading roles in this petition

as the Mississippi Supreme Court refused to give

“equal-footing” status to the parties’ valid agreement

to arbitrate and, in so doing, created a substantive

rule of law which stands in conflict with decisions of

this Court and which now must be followed by the

U.S. Court of Appeals for the 5th Circuit in diversity

cases; namely, that common law tort claims are non-

arbitrable where they arise out of a sexual assault

incident in the workplace, notwithstanding the plain

and unambiguous language of the arbitration agree-

ment.

OPINIONS BELOW

The Mississippi Supreme Court’s decision is re-

ported at 963 So. 2d 1116, 100 Fair Empl. Prac. Cas.

(BNA) 1745, 154 Lab. Cas. P. 60,433, 26 IER Cases

385. App., infra, la-17a. The Mississippi Supreme

Court handed down its original decision on June 14,

2007, and denied rehearing on September 13, 2007.

App., infra, 25a. The judgment of this state court

of last resort operated to reverse the December 13,

2005, decision of the Circuit Court of Alcorn County,

Mississippi. App., infra, 18a-24a.

3

BASIS FOR JURISDICTION

This petition comports with the conditions pre-

scribed by the governing statute for the Court's

acceptance of jurisdiction over an appeal; namely,

that the appeal be taken from a “[flinal judgment .. .

of the highest court of a State in which a decision

could be had.” 28 U.S.C. § 1257(a). The jurisdiction

of the United States Supreme Court is invoked in

a timely and proper manner. The order of the state

supreme court denying Petitioner’s motion for rehear-

ing was entered on September 13, 2007, and this

petition is being submitted within the ninety (90) day

time period allowed by the statute for the taking of

an appeal to this Court. 28 U.S.C. § 2101(c).

RELEVANT CONSTITUTIONAL AND

STATUTORY PROVISIONS

The constitutional and statutory provisions in-

volved in this case are the Supremacy Clause of the

United States Constitution; the Fourteenth Amend-

ment to the United States Constitution; and § 2 of

the Federal Arbitration Act (“FAA”) which provide,

respectively:

This Constitution, and the Laws of the United

States which shall be made in Pursuance thereof;

and all Treaties made, or which shall be made,

under the Authority of the United States, shall

be the supreme Law of the Land; and the Judges

in every State shall be bound thereby, any Thing

in the Constitution or Laws of any State to the

Contrary notwithstanding.

U.S. Const., art. VI, cl. 2 (App., infra, 26a);

No State shall . . . deprive any person of life,

liberty, or property, without due process of law;

a

nor deny to any person within its jurisdiction the

equal protection of the laws.

U.S. Const. Amend. XIV, § 1 (App., infra, 27a); and

A written provision in any.. . contract evidenc-

ing a transaction involving commerce to settle by

arbitration a controversy thereafter arising out

of such contract or transaction, or the refusal to

perform the whole or any part thereof, or an

agreement in writing to submit to arbitration

an existing controversy arising out of such a

contract, transaction, or refusal, shall be valid,

irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the

revocation of any contract.

9 U.S.C. § 2. App., infra, 28a.

STATEMENT OF THE CASE

The genesis of this appeal is the Mississippi

Supreme Court’s ad hoc singling out of certain claims

as being unsuitable for arbitration by refusing to

enforce the plain and unambiguous terms of a valid

arbitration agreement entered into by and between

employer and employee, where the employee’s com-

mon law tort claims against employer stemmed from

an alleged sexual assault by the employer’s manager.

The decision of the state court does violence to the

Constitution of the United States of America and to

the FAA. .

A. Factual Background

Petitioner Captain D’s, LLC, owns and operates

several hundred seafood restaurants across the United

States as well as in several countries. Throughout its

restaurants, Captain D’s and its employees univer-

sally enter into a stand-alone arbitration agreement,

5

conspicuously titled “EMPLOYEE DISPUTE RESO-

LUTION PLAN.”

On February 3, 2004, Respondent, Tammy Smith,

was a 17-year-old applicant for a job at a Captain D’s

restaurant in Corinth, Mississippi. In connection

with securing employment there, Smith executed the

stand-alone arbitration agreement, which provided in

relevant part:

[Bloth Captain D’s and I agree to settle any and

all previously unasserted claims, disputes,

or controversies arising out of or relating to

my application for employment, employment

and/or cessation of employment with Cap-

tain D’s, exclusively by final and binding

arbitration before a neutral arbitrator. By

way of example only, such claims include claims

under federal, state and local statutory or

common law, such as the Age Discrimination in

Employment Act, Title VII of the Civil Rights Act

of 1964, as amended, including the amendments

of the Civil Rights Act of 1991, the Americans

with Disabilities Act, the Family Medical Leave

Act, the law of contract and law of tort. |

App., infra, 29a-31a (emphasis added). Smith’s Grand-

mother, Pat. Spencer, also executed the Arbitration

Agreement as Smith’s guardian. Jd.

B. Proceedings Below

Unmoved by the covenant formed by the arbi-

tration agreement, on August 17, 2004, Smith filed

suit against Captain D’s and her supervising man-

ager Christopher Lee Howell in the Circuit Court of

Alcorn County, Mississippi. The significant allega-

tions of Smith’s lawsuit accused Howell of sexually

assaulting and raping her while on the restaurant

premises, while she was working and while she was

6

under his supervision as her manager. Separately,

Smith’s lawsuit charged Captain D’s with common

law tort claims of negligent hiring, negligent super-

vision and negligent retention of Howell, seeking a

judgment of compensatory and punitive damages

from Captain D’s on these claims.

In the state trial court, Captain-D’s promptly filed

a notice of election of binding arbitration and moved

to compel Smith’s claims against it to arbitration

consistent with the mandates of the FAA which

subjected Smith’s claims to that forum. Separate

Defendant Howell, proceeding pro se, answered the

lawsuit in the trial court but did not join in Captain

D’s motion or otherwise seek arbitration of the sepa-

rate claims against him.

Smith resisted arbitration by claiming, foremost,

that she was not bound to the agreement due to her

status as a minor and, secondarily, that the costs

of arbitration were prohibitive, rendering the agree-

ment unconscionable. Smith raised no challenge to

the scope of the arbitration clause. |

In December of 2005, the Mississippi trial court’

granted Captain D’s motion to compel arbitration and

directed the parties to arbitrate those claims which

Smith leveled at Captain D’s. The trial court—which

had received briefing, evidence and argument on

the issues presented—found that it was “apparent

[{Smith’s} real contention is that [she], due to her

minority status, should not be bound by the arbi-

tration agreement.” App., infra, 19a. The trial court

rejected this defense, reasoning that Congress’s dec-

' At that time, the trial court was presided over by the

Honorable Sharion R. Aycock. Judge Aycock is now a United

States District Judge in the Northern District of Mississippi.

7

laration of a national policy favoring arbitration,

together with ordinary principles at law or in equity

for the revocation of any contract, commanded a find-

ing of arbitrability. Jd. at 19a and 23a.

Smith perfected an appeal from the trial court’s

decision to the Mississippi Supreme Court. Smith’s

“rape claim” against Howell was not part of the trial

court’s ruling and neither Howell nor Smith’s claims

against him were joined in her appeal. On appeal,

Smith attacked the validity of her arbitration agree-

ment on three limited grounds: 1) her minority status

permitted her to disavow the arbitration agreement;

2) the arbitration agreement was unconscionable;

and 3) Captain D’s had waived its right to arbitra-

tion.” Again, Smith raised no challenge to the scope

of the arbitration clause.

The Mississippi Supreme Court, in a divided

ruling, reversed the trial court’s decision compelling

arbitration and directed that Smith’s claims against

Captain D’s would be tried in a court of law. App.,

infra, la-17a. Significantly, the majority of the court

readily determined a valid, binding arbitration

agreement did in fact exist between the parties. Not

ending its analysis with the issues raised by the

party resisting arbitration, however—and taking an

unprecedented measure—the court presumed to

consider, sua sponte, whether Smith’s claims -were

within the scope of the arbitration agreement, despite

the critical fact that Smith never raised such a

defense to arbitration and, accordingly, the trial

court had never considered or passed upon such a

defense—much less had Captain D’s been afforded

? Smith raised the defense of waiver for the first time or

appeal.

8

the right to meet and rebut the defense. See Leverett

v. State, 197 So. 2d 889, 890 (Miss. 1967) (hold-

ing, “[t]he [Mississippi] Supreme Court is a court of

appeals, it has no original jurisdiction; it can only try

questions that have been tried and passed upon by

the court from which the appeal is taken. Whatever

remedy appellant has is in the trial court, not in this

court. This court can only pass on the question after

the trial court has done so.”) (quoting Collins v. State,

159 So. 865 (1935)).

Even so, the Mississippi Supreme Court correctly

found that the language of the arbitration agree-

ment—namely, the language: “any and all previously

unasserted claims, disputes, or controversies arising

out of or relating to my . . . employment”—made it a

broad arbitration provision under federal substantive

law (citing Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395, 406, 87 S. Ct. 1801, 18 L. Ed.

2d 1270 (1967)), “capable of expansive reach.” Still,

the majority summarily concluded from there that

“(w)hile recognizing the breadth of the language in

the arbitration provision, we unquestionably find

that a claim of sexual assault neither pertains to nor

has as connection with [Smith’s] employment.”

Recognizing the violence done to Captain D’s

rights by the majority, Justice Dickinson, in dissent,

observed:

The majority and I are in agreement that

Tammy Smith and Captain D’s entered a valid,

binding arbitration agreement. There were no

other issues raised by the parties and briefed to

the trial court or to this Court on appeal. Thus,

the majority today takes the unusual step of

deciding an . . . appeal on an issue never raised

or briefed by either party, and not discussed by

the trial court.

9

The Mississippi Supreme Court was never called

upon, Justice Dickinson pointed out, to decide the

issue vel non of whether a “rape claim” arises out of

or relates to employment, and noted that “in its zeal

to separate what it calls “[Smith’s] rape claim” from

the scope of her arbitration agreement, the majority

fails to absorb the fact that [Smith] filed no rape

claim against Captain D’s.” Smith’s claims against

Captain D’s sounded in common law tort theories of

“negligent hiring, negligent supervision, and negligent

retention.” A fortiori, Justice Dickinson quipped that

“[ilt could be argued that (Smith’s] claims against

Captain D’s so clearly related to her employment that

[Smith’s] counsel didn’t even bother raising the issue

with the trial court or here. One would think that if

[Smith’s] counsel concluded the argument had any

merit whatsoever, it would have at least been raised

and argued.” Justice Dickinson concluded, “[b]ecause

the majority decides this appeal on an issue never

raised; ignores the need for a factual determination;

and simply decides as a matter of law that [Smith’s]

claims do not relate to her employment, I respectfully

dissent.” App., infra, 12a-17a (emphasis added).

Captain D’s moved for rehearing by the Mississippi

Supreme Court. On rehearing, Captain D’s asserted:

1) the court arbitrarily singled out Smith’s claims as

being suspect for the arbitration process by judicially

creating an ad hoc exception to ordinary rules of

state-law which denied Captain D’s its federal rights

under the FAA; 2) the court, in conflict with decisions

of this Court, eschewed applicable federal substan-

tive laws of arbitrability:in declaring that, notwith-

standing the unambiguous language of the arbi-

tration agreement, certain types of claims, in its

judgment, were simply unsuitable for arbitration;

and 3) the court decided an important federal ques-

10

tion in a way that conflicted with the decision of.

other state and federal courts, including at least one

state court of last resort. App., infra, 32a-52a.

Captain D’s motion for rehearing was denied on

September 13, 2007, without a written opinion. Peti-

tion for writ of certiorari now follows.

REASONS FOR GRANTING THIS

PETITION FOR WRIT

The Mississippi Supreme Court, in conflict with

decisions of this Court and at least one state

court of final resort, violated the Moses H. Cone

principle by singling out certain types of griev-

ances as being unsuitable for arbitration, with-

out regard for federal policy to the contrary,

thereby displaying suspicion for that forum and

deepening the uncertainty in the 5th Circuit

Court of Appeals as to the extent to which state-

law must be followed where it has been manipu-

lated or used as a pretense to deny a party’s

federal rights to arbitration.

Further, the instant ruling is the most recent

in a developing line of cases in which the

Mississippi Supreme Court has substituted its

judgment for that. of Congress in passing the

FAA by declaring certain types of claims as being

unsuitable for arbitration, displaying suspicion

for arbitration as being an appropriate forum for

dispute resolution.

Finally, the Mississippi Supreme Court violated

Captain D’s Fourteenth Amendment guarantees

of due process.

There exists no controversy to the fact that the

FAA governs this case and would mandate arbi-

tration of the parties’ dispute if its application had

not been thwarted by the Mississippi Supreme

11

Court’s creation of a rule of law that common law tort

claims arising out of an alleged sexual assault

incident involving a minor in the workplace are

not suitable for arbitration. As a threshold matter, it

is respectfully submitted that the Moses H. Cone

principle of due regard being given “to the federal

policy favoring arbitration and that ambiguities as to

the scope of the arbitration clause itself are to be

resolved in favor of arbitration” makes this Court’s

review plain, notwithstanding that the decision at

issue ostensibly turned on judicial construction of

an arbitration agreement. See Volt Information

Sciences, Inc. v. Board of Trustees of Leland Stanford,

Jr. University, 489 U.S. 468, 475-476, 109 S. Ct.

1248, 103 L. Ed. 2d 488 (1989) (citing Moses H. Cone

Memorial Hospital v. Mercury Construction Corp.,

460 U.S. 1, 24-25, 103 S. Ct. 927, 74 L. Ed. 2d 765

(1983)). In contrast to this Court’s resolution in Volt

that it would not revisit a lower court’s judicial

interpretation of a choice-of-law provision in an arbi-

tration agreement as “[t]here is no federal policy

favoring arbitration under a certain set of rules,” the

case sub judice involves the arbitration clause itself

and thus unquestionably invokes the clearly-favored

federal policy of ensuring “the enforceability, according

to their terms, of private agreements to arbitrate.”

_ Id. at 476.

Captain D’s concedes, as it must, that the in-

terpretation of private agreements is generally

regarded as being within the domain of state-law.

Overarching that general proposition, however, is the

federal directive that courts—indeed, state courts—in

determining whether parties agreed to arbitrate a

dispute, must apply the “federal substantive law of

arbitrability.”. Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S. Ct.

12

3346, 87 L. Ed. 2d 444 (1985) (citing Moses H. Cone

Mem. Hosp., 460 U.S. at 24, 103 S. Ct., at 941; Prima

Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S.

395, 400-404, 87 S. Ct. 1801, 1804-1806, 18 L. Ed. 2d

1270 (1967); Southland Corp. v. Keating, 465 U.S. 1,

12, 104 S. Ct. 852, 859, 79: L. Ed. 2d 1 (1984)). The

“equal-footing” guaranty of § 2 of the FAA—namely,

that arbitration agreements be treated like all other

contracts—is, above all, a federal substantive com-

mand. Buckeye Check Cashing, Inc. v. Cardegna, 546

U.S. 440, 447, 126 S. Ct. 1204, 163 L. Ed. 2d 1038

(2006).

As the case below represents, where “the existence

or the application of a federal right turns on a

logically antecedent finding on a matter of state law,”

(Volt, 489 U.S. at 484 (Brennan, J., dissenting)), it

enables a so-inclined court to mask disfavor for

arbitration under the guise of “state-law.” Where

that occurs, higher scrutiny cannot be escaped. A

state court’s emasculation of federal rights com-

mands ancillary review “in order that the consti-

tutional mandate may not become a dead letter.”

Indiana ex rel. Anderson v. Brand, 303 U.S. 95, 100,

58 S. Ct. 443, 82 L. Ed. 685 (1938); see also Phelps v.

Board of Education of West New York, 300 U.S. 319,

322-323, 57 S. Ct. 483, 484-485, 81 L. Ed. 674 (1937);

Irving Trust Co. v. Day, 314 U.S. 556, 561, 62 So. 2d

398, 401, 86 L. Ed. 452 (1942).

It is this dance between principles of federal

substantive law and those of state-law in the

arbitration context which has created uncertainty in

the U.S. Court of Appeals for the 5th Circuit (the

federal circuit for Mississippi), which cries out to

be settled. See Washington Mut. Fin. Group, LLC

v. Bailey, 364 F.3d 260 (5th Cir. 2004) (Miss.). In

13

Bailey, Judge Jolly, writing for the 5th Circuit, noted

that “[iln determining whether a party should be

compelled to arbitrate its claims against another, we

acknowledge that whether a court should apply state

law or ‘the federal law of arbitrability,’ (citation

omitted), is often an uncertain question.” Bailey, 364

F.3d at 267 n.6.

The call to quiet the uncertainty within the

equation is underscored by the Mississippi Supreme

Court effectively creating a state rule of law which

singles out certain grievances as being unsuitable for

arbitration—despite the validity of the agreement

to arbitrate—which the 5th Circuit, sitting in diver-~

sity, will now be required to follow under the Erie

doctrine. See Bailey, 364 F.3d at 264 (holding, “in

determining whether the parties agreed to arbitrate

a certain matter, courts apply the contract law of the

particular state that governs the agreement... .

[meaning] Mississippi law applies here.”); Buchman

v. BASF Corp., 107 Fed. Appx. 378 (5th Cir. 2004)

(Miss.) (holding, Mississippi substantive lew applies

to breach of contract dispute where court is sitting

in diversity); Centennial Ins. Co. v. Ryder Truck

Rental, Inc., 149 F.3d 378, 382 (5th Cir. 1998) (Miss.)

(holding, in diversity case involving interpretation of

contract, “we start four resolution of the case] by

determining whether or not any final decisions of

the Mississippi Supreme Court are dispositive.”).

Superimposed, however, on the 5th Circuit’s Erie

obligations are the intertwined considerations of

federal substantive law for which the federal court

is also required to account. See Bank One, N.A. v.

Shumake, 281 F.3d 507, 513 (5th Cir. 2002) (“the

FAA reflects a strong policy favoring the enforcement

of arbitration clauses”); Grigson v. Creative Artists

Agency, 210 F.3d 524, 526 (5th Cir. 2000) (“Arbi-

14

tration is favored in the law.”) (citing Moses H. Cone

Memorial Hospital v. Mercury Construction, 460 U.S.

1, 24-25, 103 S. Ct. at 942, 74 L. Ed. 2d 765 (1983)).

Conflict and uncertainty are thus deepened where

unchecked state-law says one thing, but federal

substantive law would compel a differe at.

It has been established, for example, that it is a

rule of federal substantive law which places the

burden of proving certain claims are unsuitable for

arbitration squarely on the shoulders of the party

resisting arbitration. Gilmer v. Interstate/Johnson

Lane Corp, 500 U.S. 20, 26, 111 S. Ct. 1647, 114

L.Ed.2d 26 (1991); Shearson/American Express Inc.

v. McMahon, 482 U.S. 220, 227, 107 S.Ct. 2332, 96

L.Ed.2d 185 (1987); see also Green Tree Financial

Corp.-Alabama, supra, 531 U.S. at 92, 121 S. Ct. at

522 (“We have held that the party seeking to avoid

arbitration bears the burden of establishing that

Congress intended to preclude arbitration of the statu-

tory claims at issue.”). The Mississippi Supreme

Court relieved Smith altogether of this burden as she

never claimed (much less proved) that her claims

were not contemplated for arbitration by the terms of

the agreement.

It is also a rule of federal substantive law—

universally applied—that courts may not invalidate

arbitration agreements under state laws applicable

only to arbitration provisions. Buckeye Check Cash-

ing, Inc. v. Cardegna, 546 U.S. 440, 447, 126 S. Ct.

1204, 163 L. Ed. 2d 1038 (2006); 9 U.S.C. §2. A

necessary extension of this federal substantive rule

is the preemption of discriminatory or pretextual

application of ordinary principles of state-law to the

interpretation of arbitration agreements. This Court

has consistently “rejected generalized attacks on

15

arbitration that rest on ‘suspicion of arbitration as a

method of weakening the protections afforded in the

substantive law to would-be complainants.” Green

Tree Financial Corp.-Alabama v. Randolph, 531 U.S.

79, 90, 121 S. Ct. 513, 521, 148 L. Ed. 2d 373 (citing

Rodriguez de Quijas v. Shearson/American Express,

Inc., 490 U.S. 477, 481, 109 S. Ct. 1917, 104 L. Ed.

526 (1989); Prima Paint, 388 U.S. at 404; Southland

Corp. v. Keating, 465 U.S. at 16-17, n. 11, 104 S. Ct.

at 862, n. 11.

- As Justice Brennan noted in his dissent in Volt, “in

order to guard against arbitrary denials of federal

claims, a state court’s construction of a contract in

such a way as to preclude enforcement of a federal

right is not immune from review in this Court as-to

its ‘adequacy.” Volt, 489 U.S. at 468, 482 (Brennan,

J., dissenting). This is consistent with the holding in

Perry v. Thomas, wherein this Court observed “[a]

court may not, then, in assessing the rights of liti-

gants to enforce an arbitration agreement, construe

that agreement in a manner different from that in

which it otherwise construes nonarbitration agree-

ments under state law. Nor may a court rely on the

uniqueness of an agreement to arbitrate as a basis

for a state-law holding that enforcement would be

unconscionable, for this would enable the court to

affect what we hold today the state legislature can-

not.” Perry v. Thomas, 482 U.S. 483, 492, n. 9, 107 S.

Ct. 2520, 96 L. Ed. 2d 426 (1987).

The instant case therefore calls for review to

preclude ad hoc applications of state-law rules from

being used as an artificial aegis to scrutiny and to

ensure that federal rights are not “nullified by the

manipulation of state law.” Volt, 489 U.S. at 484

(citing Wechsler, The Appellate Jurisdiction of the

16

Supreme Court: Reflections on the Law and the

Logistics of Direct Review, 34 Wash. & Lee L. Rev.

1043, 1052 (1977)). The Moses H. Cone principle

should be applied to resolve this matter; for that

principle limits state-law by paying full homage to

the fact that arbitration is strictly a matter of private

contract, the interpretation of which is ordinarily a

question of state-law, while insisting that state-law is

not manipulated to denude a party of its federal

rights to arbitration. Moses H. Cone, 460 U.S. at 24.

In other words, the analysis cannot begin and end

with state-law. The Supremacy Clause reserves

no room for state rule of law to remain wholly

unchecked. U.S. Const., art. VI, cl. 2. Indeed, “[t]he

FAA requires that a court determining a question of

arbitrability not stop at the application of state-law

rules for construing the parties’ intentions, but that it

also take account of the command of federal law that

‘those intentions [be] generously construed as to the

issues of arbitrability.” Volt, 489 U.S. at 468, 487

(Brennan, J., dissenting) (quoting Mitsubishi Motors,

supra, 473 U. S. at 626, 105 S. Ct. at 3354) ee

added).

In the case below, Smith, the party resisting

arbitration, made narrow. and limited challenges

to the validity of the agreement to arbitrate. The

Mississippi Supreme Court in fact found, favorably to

Captain D’s, that Smith entered into a valid, binding

arbitration agreement—thereby rejecting her claim

that the contract could be invalidated. At this point,

the Mississippi Supreme Court was required to

rigorously enforce the agreement. See Dean Witter

Reynolds Inc. v. Byrd, 470 U.S. 213, 221, 105 S. Ct.

1238, 1242, 84 L. Ed. 2d 158 (1985). Instead,

the court presumed to undertake consideration of

whether Smith’s common law tort claims were out-

17

side the scope of the arbitration agreement, not-

withstanding that 1) Smith never challenged the

scope of the arbitration agreement;’ and 2) Smith had

implicitly taken the position at the trial court level

that her claims against Captain D’s were within the

scope of the arbitration agreement.* To get there, the

Mississippi Supreme Court jettisoned stare decisis

and took the unprecedented step of refusing to

enferce ordinary state-law principles, granting Smith

dispensation which weakened—indeed, eviscerated—

the protections afforded to Captain D’s under §2 of

the FAA. Demonstrating judicial disfavor (or, per-

haps, distrust) toward the arbitration process for

Smith’s claims in this case, the Mississippi Supreme

Court created a principle of state-law which flowed

directly from the fact that a contract to arbitrate was

at issue. It cannot escape observation, either, that:

the underlying incident from which Smith’s claims

were taken involved a shocking allegation of rape of a

*The corollary to this was that Captain D’s was never

afforded the fundamental opportunity to meet, defend and rebut

such a challenge.

* At the trial court level, Smith had argued that “but for the

intentional tort exclusion, this case would fall under the

[Mississippi] Workers’ Compensation Act.” For a claim to “fall

under the [Mississippi] Workers’ Compensation Act” it must

“arise out of and in the course of employment.” Miss. Code.

Ann. § 71-3-7. Much more, then, than simply not contesting

that her claims fell outside the scope of the arbitration agree-

ment, Smith actually conceded the point that her claims “arose

out of” her employment—a position totally consistent with not

challenging the scope of the agreement. As the subject arbitra-

tion agreement unambiguously covered all “claims, disputes, or

controversies arising out of or relating to [Smith’s] .. .

employment . .. with Captain’s D’s,” there was never a case

or controversy concerning the scope of the agreement. App.,

infra, 36a-37a.

18

minor. That notwithstanding, “a motion to compel

arbitration 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.” United Steel Workers of

America v. Warrior & Gulf Navigation Co., 363 U.S.

574, 582-83, 80 S. Ct. 1347, 4 L. Ed. 2d 1409 (1960).

When Justice Dickinson outed the majority for

taking “the unusual step of deciding an . . . appeal

on an issue never raised,” what he was observing

was the over-reaching but calculated desire of the

majority to “separate . . . [Smith’s] rape claim from

the scope of the arbitration agreement.” This sin-

gular observation reveals the arbitrary reluctance of

the majority to submit Smith’s claims to arbitration

and belies any assertion that the Mississippi Supreme

Court’s decision rested on a non-federal and inde-

pendent state ground. See Enterprise Irrigation

District v. Farmers Mutual Canal Co., 243 U.S. 157,

164, 37 S. Ct. 318, 61 L.Ed. 644 (1917).

Prior to taking on the arbitrability of Smith’s

claims, no other state rule of law had been applied

more consistently or rigorously by the Mississippi

Supreme Court than the rule that an issue not raised

before the lower court and only raised for the first

time on appeal is deemed waived and procedurally

barred. See, e.g,, Waters v. Gnemi, 907 So. 2d 307,

{ 39 (Miss. 2005) (holding, “[w]e have been consistent

in holding that we need not consider matters raised

for the first time on appeal, which practice would

have the practical effect of depriving the trial court of

the opportunity to first rule on the issue, so that we

can then review such trial court ruling under the

appropriate standard of review); Cooper v. Lawson,

264 So. 2d 890, 890 (Miss. 1972) (applying procedural

19

bar, refusing to consider matters not raised by

appellant); Leverett v. State, 197 So. 2d 889, 890

(Miss. 1967) (holding, “[t]he Supreme Court is a court

of appeals, it has no original jurisdiction; it can only

try questions that have been tried and passed upon

by the court from which the appeal is taken.

Whatever remedy appellant has is in the trial court,

not in this court. This court can only pass on the

question after the trial court has done so.”) (quoting

Collins v. State, 159 So. 865 (1935)).

In other contract cases reviewed by the Mississippi

Supreme Court, it has without fail refused to en-

tertain defenses which were not asserted at the trial

court level. See, e.g., Braidfoot v. William Carey

College, 793 So. 2d 642, | 47, 144 Lab. Cas. P 59,343,

157 Ed., Law Rep. 432 (Miss. App. 2001) (holding

“it is a rule of almost universal application that

questions of whatever nature not raised in the

trial court and preserved for review will not be

noticed on appeal); Anglin v. Gulf Guaranty, 956 So.

2d 853, I 26 (Miss. 2007) (the Mississippi Supreme

Court refused to consider a defense to a contract of

insurance which was raised for the first time on

appeal, proclaiming, [t]his Court has been consistent

in holding that we need not consider matters raised

for the first time on appeal.”).

The Mississippi Supreme Court has heretofore even

applied the procedural bar when reviewing grants or

denials of arbitration. See, e.g., Gulf Ins. Co. v. Neel-

Schaffer, 904 So. 2d 1036, J 32 (Miss. 2004) (firmly

stating that defense to arbitration on grounds of

substantive unconscionability was barred based on

fact that it was raised for first time during appeal);

Speedee Cash of Mississippi, Inc. v. Williams, 915 So.

2d 1061, J 6 and 7 7 (Miss. 2005) (holding, in review

20

of. party's defense to arbitration on grounds of

unconscionability, “there is absolutely nothing in the

record to show that this claim was raised before the

[trial] court... [t]herefore, we must treat the issue of

unconscionability as one never presented to the

circuit court and apply the procedural bar.”).

Thus, the conclusion flowing from the case at hand

is that this is not so much a case of categorical

hostility toward the arbitration process as it is a case

of disfavor for arbitrating certain types of claims,

which is equally offensive to the FAA. By refusing to

apply the procedural bar “on an issue never raised”

by Smith, the Mississippi Supreme Court displayed a

peculiar bias against arbitration of certain types of

claims, substituting its judgment for the parties’

consent to arbitration. See Mastrobuono v. Shearson

Lehman Hutton, Inc., 514 U.S. 52, 57-58, 115 S. Ct.

1212, 131 L. Ed. 2d 76 (1995) (FAA assures that

parties’ agreements to arbitrate will be enforced

according to their terms “even if a rule of state law

would otherwise exclude such claims from

arbitration” (emphasis added)).

This case is not the first in which the Mississippi

Supreme Court has determined that certain claims

are, in its judgment, not suitable for arbitration. See

Rogers-Dabbs Chevrolet-Hummer, Inc. v. Blakeney,

950 So. 2d 170 (Miss. 2007). There, the state

supreme court, despite the plain language of the

agreement, denied arbitration of certain types of

claims by resolving that “no reasonable person”

would have agreed to submit claims to arbitration

where the underlying incident involved a fraudulent.

scheme. Rogers-Dabbs, 950 So. 2d at 177. One can

only conclude from the Rogers-Dabbs case and the

instant case that the more alarming the underlying

21

incident at issue is, the less suitable the case is

for arbitration in the judgment of the Mississippi

Supreme Court. This is a perilous precedent if

left unchecked and a prelude to what is to come of

arbitration in this state. The inclination and oppor-

tunity to judicially legislate what types of claims

should and should not be arbitrated, without regard

to ordinary state-law principles of contract inter-

pretation, represents a clear and present danger that

arbitration in Mississippi will not be given “equal-

footing” with other private agreements.

In addition to removing the procedural bar and

relieving Smith of her federally mandated burden of

proving a defense (raised for her by the court) to

arbitration, the Mississippi Supreme Court disre-

garded federal substantive law relative to the scope

of the arbitration agreement at issue. Where parties

have entered into an agreement to arbitrate, the

court must afford a presumption of arbitrability and

“[aln 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. Commu-

nications Workers of America, 475 U.S. 643, 650, 106

S. Ct. 1415, 89 L. Ed. 2d 648 (1986). This presump-

tion has been said to be “particularly applicable”

where the arbitration clause is found to be broad—

just as the Mississippi Supreme Court found the

clause to be in the instant matter. In such cases,

“liln the absence of any express provision exclud-

ing a particular grievance from arbitration, . .

only the most forceful evidence of a purpose to

exclude the claim from arbitration can prevail.”

Id. (citing Warrior & Gulf Navigation Co., supra,

22

363 U.S. at 584-85 (emphasis added). As Justice

Dickinson aptly pointed out in regard to the major-

ity’s exclusion of Smith’s grievances from arbitration,

“[t]his Court, of course, never examined the facts

because we .. . were given no facts to examine.”

Nor did the Mississippi Supreme Court’s decision

include any of the ordinary state-law tenets of con-

tract construction in excluding Smith’s claims from

arbitration. Under Mississippi law, when interpret-

ing any contract—regardless of whether it contains

an arbitration clause—the court must “accept the

plain meaning of [it] as the intent of the parties

where no ambiguity exists.” Ferrara v. Walters, 919

So. 2d 876, 882 (Miss. 2005). It has further been

written that the court is not to be concerned with

what the parties may have intended, “but with what

they said, since the words employed are by far the

best resource for ascertaining the intent and assign-

ing meaning with fairness and accuracy.” Royer

Homes of Miss., Inc. v. Chandeleur Homes, Inc., 857

So. 2d 748, 752 (Miss.2003) (also holding that “[t}]he

reviewing court is not at liberty to infer intent con-

trary to that emanating from the text at issue.”); see

also, Miss. Farm Bureau Mut. Ins. Co. v. Walters, 908

So. 2d 765, 769 (Miss. 2005); State Auto. Mut. Ins. Co.

v. Glover, 253 Miss. 477, 176 So. 2d 256, 258 (1965)). -

By declining to appraise Captain D’s FAA rights with

general state-law principles and in a manner which

also honored the federal policy favoring arbitration,

the decision of the Mississippi Supreme Court stands

in conflict with every U.S. Circuit Court of Appeals.

See, e.g., PaineWebber Inc. v. Elahi, 87 F.3d 589 (1st

Cir. 1996); Chelsea Square Textiles, Inc. v. Bombay

Dyeing and Mfg. Co., Ltd., 189 F.3d 289 (2nd Cir.

1999); Medtronic: Ave, Inc. v. Advanced Cardio-

vascular Systems, Inc., 247 F.3d 44 (3rd Cir. 2001);

23 -

Gregory v. Interstate/Johnson Lane Corp., 188 F.3d

501 (4th Cir. 1999); Bank One, N.A. v. Shumake, 281

F.3d 507 (5th Cir. 2002); Salary Policy Employee

Panel v. Tennessee Valley Auth., 731 F.2d 325 (6th

Cir. 1984); Gibson v. Neighborhood Health Clinics,

Inc., 121 F.3d 1126 (7th Cir. 1997); Stark v. Sandberg,

Phoenix & von Gontard, P.C., 381 F.3d 793 (8th Cir.

2004); Bradley v. Harris Research, Inc., 275 F.3d 884 -

(9th Cir. 2001); Cogswell v. Merrill Lynch, Pierce,

Fenner & Smith, Inc., 78 F.3d 474 (10th Cir. 1996);

Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359

‘(11th Cir. 2005); Ekstrom v. Value Health, Inc., 68

F.3d 1391 (D.C. Cir. 1995); Qualcomm Inc. v. Nokia

Corp., 466 F.3d 1366 (Fed. Cir. 2006).

The Mississippi Supreme Court, instead, “skillfully

and smoothly” resolved that “the question of ‘scope’ is

narrowed to whether [Smith’s] rape claim arises out

of or relates to ‘[Smith’s] application for employment

with Captain D’s,’ so as to subject [her] sexual

assault claim to arbitration,” ruling that it did

not. This holding represented an inappropriate co-

mingling of Smith’s claims against Captain D’s with

her claims of sexual assault, which were stated inde-

pendently against Captain D’s manager, Christopher

Howell. In addition to the deepening tension this

ruling (together with the ruling in Rogers-Dabbs,

supra) will create within the 5th Circuit when it is

called upon to follow Mississippi law, the Mississippi

Supreme Court’s refusal to distinguish the common

law tort claims flowing between the parties to the

arbitration agreement (Smith and Captain D’s) from

the independent claims of rape and sexual assault

flowing between non-parties to the agreement (Smith

and Howell), stands in conflict with the Alabama

Supreme Court’s decision in Ryan’s Family Steak

Houses, Inc. v. Regelin, 735 So. 2d 454 (Ala. 1999).

24

There, the parties—a restaurant-employer and six (6)

of its employees—had agreed in writing to resolve

any “employment-related disputes” by arbitration.

Regelin, 735 So. 2d at 455. Subsequently,.the em-

ployees sued their employer for, inter alia, negligent

training and supervision. Id. These claims arose out

of sexually inappropriate conduct which occurred in

the workplace. Id. The restaurant-employer moved

to compel arbitration and the plaintiffs resisted it.

Id. at 456-57. The Alabama Supreme Court properly

reviewed the arbitrability issue under 9 U.S.C. §2

and federal substantive law applicable thereto, find-

ing that the employees had agreed to submit all

“employment-related disputes”’ to arbitration and

thus the claims were directed to arbitration. Id. 457.

Accordingly, in Alabama, where Captain D’s has

restaurants, Smith’s claims would be arbitrable

under the FAA, but not in Mississippi. The con-

flicting results in the different states cannot be

attributed to differing principles of state-law. It can

only be said that the conflict arises directly from a

state-law principle that takes its meaning precisely

from the fact that a contract to arbitrate is at issue.

This does not comport with the requirement of § 2 of

the FAA. See Prima Paint, 388 U.S. at 404, 87 S. Ct.

at 1806; Southland Corp. v. Keating, 465 U.S. at 16-

17, n. 11, 104S. Ct. at 862, n. 11.

The FAA was specifically enacted “to overrule the

judiciary’s long-standing refusal to enforce agree-

ments to arbitrate,” (citation omitted) and to place

such agreements “upon the same footing as other

contracts” (citation omitted). Volt, supra, 489 US.

* This is substantially similar language to the Captain D’s-

Smith arbitration agreement, i.e., “arising out of or relating to

... employment.” '

25

468 at 478. With a proper application of federal law

in this case, the state court’s judgment would have

been different.

Finally, Captain D’s had a legitimate claim of

entitlement to freely contract with Smith to have

claims between them arbitrated without worry or

danger that the state would infringe on that right

without procedural due process being afforded. Meyer

vu. State of Nebraska, 262 U.S. 390, 399 43 S. Ct. 625,

67 L. Ed. 1042 (1923) (recognizing the right of the

individual to contract as a liberty guaranteed by the

Fourteenth Amendment to the Constitution); U.S.

Const. Amend. XIV, § 1. The Due Process Clause of

the Fourteenth Amendment thus required that any

deprivation of Captain D’s rights to contract for

arbitration with Smith be preceded by adequate

notice and an opportunity to be heard on same so

that it could fully enjoy such rights. See Goss v.

Lopez, 419 U.S. 565, 95 S. Ct. 729, 42 L. Ed. 725

(1975). The Mississippi Supreme Court acted in

derogation to the guarantees of due process by taking

away Captain D’s contract rights based on “an issue

never raised or briefed by [Smith] and not discussed

by the trial court.” (Dickinson, J., dissenting) App.,

infra 14a. Heretofore, the Mississippi Supreme Court

had assured litigants that it would not consider

“questions of whatever nature” which had not been

timely raised at the trial court level. See cases on the

procedural bar, supra. Without any notice to Captain

D’s and after the parties had fully litigated the

narrow issues joined in the case, the Mississippi

Supreme Court changed the rules mid-game and took

away Captain D’s contract rights without advance

notice that the scope of the arbitration agreement

would be called into question such that Captain D’s

could come in and duly defend.

26

As this Court wrote in Mullane v. Central Hanover

Bank & Trust Co., 339 U.S. 306, 70 S. Ct. 652, 94 L.

Ed. 865 (1950), the right to be heard ensured by the |

guarantee of due process “has little reality or worth

unless one is informed that the matter is pending and

can choose for himself whether to appear or default,

acquiesce or contest.” Id. at 314; Phillips Petroleum

Co. v. Shutts, 472 U.S. 797, 812, 105 S. Ct. 2965,

2974-2975, 86 L. Ed. 2d 628 (1985); Schroeder v. City

of New York, 371 U.S. 208, 212-213, 83 S. Ct. 279,

282-283, 9 L. Ed. 2d 255 (1962).

That Captain D’s—after the fact of the ruling—

filed a motion seeking reconsideration of the Mis-

sissippi Supreme Court’s decision and challenged the

basis thereof did not cure the deprivation of due

process which had already occurred. Had due process

been afforded as the Constitution requires, Smith

would have had the burden of proving she did not

agree to arbitrate the claims at issue (see Gilmer,

supra, 500 U.S. at 26) and Captain D’s would have

had fair opportunity to meet, defend and rebut the

challenge. See Armstrong v. Manzo, 380 U.S. 545,

550-551, 85 S. Ct. 1187, 14 L. Ed. 2d 62 (1965) (hold-

ing that “whatever constitutional infirmity resulted

from the failure to give the petitioner notice [was not]

cured by the hearing subsequently afforded to him

upon his motion to set aside the decree.”). Merely

having the chance to convince the majority to re-

examine their already fixed view of the case on

rehearing is not due process. The right of a party to

protect its freedom to contract under § 2 of the FAA is

wholly devalued unless fair notice is given ahead of

time that the right is imperilled. The Mississippi

Supreme Court’s decision flies in the face of this

paramount guarantee.

27

CONCLUSION

For the foregoing reasons, the Court should grant

this petition for writ of certiorari.

Respectfully submitted,

BRADLEY F. HATHAWAY *

CAMPBELL DELONG, LLP

923 Washington Avenue

Greenville, MS 38701

(662) 335-6011

* Counsel of Record Counsel for Petitioner