Michael Reiterman v. Farah Ali Abid

26 F.4th 1226

• Court: Court of Appeals for the Eleventh Circuit
• Decided: March 2, 2022
• Docket: 20-11025
• Status: Published

Opinion

USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 1 of 14

[PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

____________________

No. 20-11025 ____________________

MICHAEL REITERMAN, Plaintiff-Appellee, versus FARAH ALI ABID,

Defendant-Appellant.

Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 8:19-cv-02282-WFJ-AAS ____________________ USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 2 of 14

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Before BRANCH, GRANT, and TJOFLAT, Circuit Judges. TJOFLAT, Circuit Judge: Farah Abid appeals under 9 U.S.C. § 16(a)(1) the District Court’s interlocutory order denying her motion to compel arbitra- tion. She argues that the parties should be required to arbitrate their dispute under the terms of a 2018 Settlement Agreement en- tered into between her and Michael Reiterman. Reiterman re- sponds that the District Court correctly denied the motion to com- pel arbitration after finding that the parties mutually rescinded the 2018 Settlement Agreement in 2019 under Florida law. As we agree with Reiterman that the District Court was correct to con- sider whether the parties later rescinded their arbitration agree- ment, we affirm. I. Abid and Reiterman first met in 2014 in Tampa, Florida. 1 At the time, Reiterman worked as an LSAT2 teacher for the test prep- aration company TestMasters. Abid was one of Reiterman’s stu- dents, and the two briefly dated. After the relationship ended, Abid accused Reiterman of sexual assault. This accusation resulted in an

1 We make no comment on the truth or falsity of any of the background facts of this case, as the merits of Reiterman’s claims are not before us on appeal. For context purposes only, we summarize the facts of the merits dispute as they have been presented by the parties to this Court on appeal. 2“LSAT” stands for “Law School Admission Test.” It is a standardized test commonly taken by aspiring law students applying to law schools. USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 3 of 14

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investigation by the Tampa Police Department, which ultimately declined to charge Reiterman. The Florida Attorney General’s Of- fice also declined to intervene after reviewing the case at Abid’s re- quest. Abid then allegedly engaged in a pervasive, anonymous in- ternet campaign to ruin Reiterman’s reputation by writing several blogposts accusing Reiterman of sexually assaulting multiple women. Each of these blogposts was ostensibly written by a dif- ferent woman. The District Court would later describe this cam- paign as “remarkably extensive and forceful, in effect seeking to de- stroy Reiterman by painting him in the most graphic terms as a racist and a serial rapist.” These allegations severely affected Reiterman’s reputation while attending Harvard Law School from 2015 to 2018 and continue to impair his ability to obtain gainful employment. On April 4, 2018, Reiterman sued Abid in the Middle District of Florida, claiming that she had defamed him by creating all or some of the anonymous blogposts. Abid denied involvement in the internet campaign, and so Reiterman and Abid quickly entered into settlement negotiations. In June 2018, the parties agreed to the 2018 Settlement Agreement disputed in this appeal. This agree- ment provided, inter alia, that the parties would exchange mutual releases for all claims they had against each other, that Reiterman would pay Abid a set amount of money in monthly installments, and that “[a]ny controversy or claim arising out of or relating to this contract, or breach thereof, shall be settled by arbitration.” USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 4 of 14

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After the parties agreed to the 2018 Settlement Agreement, Reiterman learned of evidence indicating that Abid was responsible for all or most of the blogposts, contrary to what she had stated during the settlement negotiations. Furthermore, three new blog- posts were posted after the agreement was made, which Reiterman suspected Abid was responsible for. As a result, Reiterman sent a letter to Abid on April 3, 2019, through his attorney.3 This letter stated that Abid’s conduct had rendered their 2018 Settlement Agreement “null and void” and that Reiterman was therefore re- lieved of his obligations under the agreement. Reiterman re- quested that Abid return the payments Reiterman had made so far and warned Abid that litigation would follow unless she agreed to Reiterman’s demands. Abid personally responded to Reiterman’s letter on April 10 by email. In her response, Abid stated that “[s]ince Mr. Reiterman is accusing me of having breached the settlement agreement and believes he no longer has an obligation to abide by the clauses set therein, I will mirror that belief and no longer honor the clauses set forth in the agreement either.” Abid then went on to describe the various actions she would take now that she was released from the 2018 Settlement Agreement, such as publishing a book she claimed to have written about Reiterman’s alleged sexual assault and

3 Reiterman first sent this letter to the attorney who represented Abid during the 2018 settlement negotiations. After that attorney informed Reiterman that she no longer represented Abid, Reiterman sent the letter directly to Abid. USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 5 of 14

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contacting politicians involved in the 2020 presidential race. In Sep- tember 2019, Reiterman brought this action against Abid in the Middle District of Florida. Once Abid obtained new counsel and waived service of pro- cess, she moved the District Court to issue an order compelling ar- bitration based on the arbitration clause in the 2018 Settlement Agreement. Reiterman opposed the motion, claiming that the par- ties had mutually agreed to rescind the 2018 Settlement Agreement through their April 2019 communications. The District Court or- dered an evidentiary hearing on the matter, which occurred on February 24, 2020. At the evidentiary hearing, the District Court heard testi- mony from both Abid and Reiterman’s lawyer, Krista Baughman, who wrote Reiterman’s April 2019 letter. Baughman’s testimony, which the Court found credible, established that the parties in- tended to rescind the 2018 Settlement Agreement in their 2019 communications. While Abid testified that she did not intend to rescind the 2018 Settlement Agreement in her 2019 email, the Court found her testimony to not be credible and instead found that she had intended to rescind the agreement in her 2019 email. Following the hearing, the Court entered an order denying Abid’s motion to compel arbitration as the parties had rescinded the 2018 Settlement Agreement. Abid timely appealed this order. USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 6 of 14

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II. “We review de novo a district court’s denial of a motion to compel arbitration.” Kroma Makeup Eu, LLC, v. Boldface Licens- ing & Branding, Inc., 845 F.3d 1351, 1354 (11th Cir. 2017). How- ever, we review a district court’s underlying findings of fact for clear error. Multi-Fin. Sec. Corp. v. King, 386 F.3d 1364, 1366 (11th Cir. 2004). III. A. A threshold question in any motion to compel arbitration under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., is which issues should be decided by the trial court and which issues should be decided by an arbitrator. To answer that question, courts have identified three distinct types of challenges to motions to compel arbitration: “(1) a challenge to the validity of the arbitra- tion clause standing alone, (2) a challenge to the validity of the con- tract as a whole, and (3) a challenge to the very existence of the contract.” Wiand v. Schneiderman, 778 F.3d 917, 924 (11th Cir. 2015) (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444–45 n.1, 126 S. Ct. 1204, 1208 n.1 (2006)). Courts must de- cide any challenges to the existence of the contract or to the validity of the arbitration clause standing alone before compelling arbitra- tion. Id. However, an arbitrator must decide any challenges to the validity of the contract as a whole should the trial court find that a contract containing a valid arbitration clause exists and that some USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 7 of 14

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or all of the claims in the lawsuit are contemplated by the arbitra- tion clause. Id. The parties’ central dispute is whether a subsequent mutual rescission of a contract containing an arbitration agreement im- pacts the existence of the contract, in which case any questions should be decided by the court, or the validity of the contract as a whole, in which case an arbitrator should decide any questions. Abid contends that parties may only challenge the existence of a contract in court under the FAA by challenging whether the parties ever formed a contract under state law. She asserts that all other challenges to the contract as a whole speak to the contract’s validity and cites in support the Supreme Court’s decision in Cardegna, 546 U.S. at 449, 126 S. Ct. at 1210, and our decision in Wiand, 778 F.3d at 924–25. After careful consideration of the binding precedent, we disagree. Abid is correct that courts must determine whether the par- ties formed a contract containing an arbitration clause before com- pelling arbitration and that this inquiry speaks to the existence of the contract. Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287, 296–97, 130 S. Ct. 2847, 2855–56 (2010); Wiand, 778 F.3d at 925 (holding that the appellant’s challenges to the existence of the con- tract failed as the district court “correctly determined that a con- tract had been formed”). Abid is also correct that an arbitrator must decide any questions about whether a contract containing an arbitration agreement is void or voidable under state law. Car- degna, 546 U.S. at 448, 126 S. Ct. at 1210. But Abid’s argument fails USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 8 of 14

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when it attempts to classify a subsequent mutual rescission as just another state law ground rendering a contract void or voidable. Rather, a subsequent mutual rescission is an agreement between the parties to not be bound by their former contract any longer. As arbitration is “simply a matter of contract between the parties,” the parties may of course voluntarily decide to release each other from their obligations after forming a contract, including their obligation to arbitrate certain disputes. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943, 115 S. Ct. 1920, 1924 (1995); Henderson v. Coral Springs Nissan, 757 So. 2d 577, 578 (Fla. 4th Dist. Ct. App. 2000) (holding that “there is no enforceable arbitration clause when a contract is rescinded prior to a motion to compel arbitration” as “[t]he effect of rescission is to render the contract abrogated and of no force and effect from the beginning”). Any disputes about whether the parties later agreed to rescind their earlier contract are disputes about whether a new agreement was formed—and courts decide contract formation disputes, not arbitrators. Granite Rock, 561 U.S. at 296–97, 130 S. Ct. at 2855–56; Wiand, 778 F.3d at 925. Furthermore, compelling arbitration after the parties have agreed to rescind their arbitration agreement would deprive the parties of the benefit of their subsequent bargain and encourage gamesman- ship. 4

4 Ifwe held otherwise, a party could agree to rescind an earlier contract con- taining an arbitration clause, allow the other party to file suit in court based on that agreement, and then move to compel arbitration per the earlier, re- scinded contract, considerably delaying the case’s resolution. USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 9 of 14

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We find our opinion in Dasher v. RBC Bank (USA), 745 F.3d 1111 (11th Cir. 2014), instructive in this matter. In Dasher, we held that arbitration could not be compelled based on an earlier agree- ment containing an arbitration clause when a subsequent agree- ment without an arbitration clause entirely superseded the earlier agreement under state law. Id. at 1113. The key to our decision in Dasher was the Supreme Court’s instruction to apply state law to determine whether a contract exists. Id. at 1116 (citing First Op- tions, 514 U.S. at 943–44, 115 S. Ct. at 1924). We held that when a subsequent agreement entirely supersedes an earlier agreement, “the existence of a ‘validly formed and enforceable arbitration agreement’ is called into question.” Id. at 1120 (quoting Granite Rock, 561 U.S. at 301, 130 S. Ct. at 2858) (emphasis added). While the parties in Dasher chose to replace their earlier agreement with a new one, the parties here chose to rescind their agreement en- tirely. We see no reason the two situations should be treated dif- ferently; in both cases, the existence of the earlier contract is called into doubt, not its validity. Accordingly, the matter is for the Dis- trict Court to decide before compelling arbitration. B. Alternatively, Abid makes several arguments against the District Court’s conduct of the evidentiary hearing and its findings of fact. She argues (1) that the Court should have applied a sum- mary judgment-like standard when deciding whether a contract ex- ists; (2) that if a summary judgment-like standard was inappropri- ate, the Court instead needed to conduct a trial on the question of USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 10 of 14

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the contract’s existence and failed to do so; (3) that the Court al- lowed inadmissible hearsay at the hearing; and (4) that the Court erred when making its factual findings. We address each argument in turn. Abid contends that district courts are required to determine whether a contract containing an arbitration clause exists using a summary judgment-like standard and so the District Court erred by failing to weigh the evidence in the light most favorable to Abid. She relies on our decision in Bazemore v. Jefferson Cap. Sys., LLC, 827 F.3d 1325, 1333 (11th Cir. 2016), for this assertion. In Bazemore, we stated that “a district court may conclude as a matter of law that parties did or did not enter into an arbitration agree- ment only if ‘there is no genuine dispute as to any material fact’ concerning the formation of such an agreement.” Id. (quoting Fed. R. Civ. P. 56(a)). Bazemore simply provides district courts with the option of deciding whether an arbitration agreement exists as a matter of law using a summary judgment-like standard. It does not preclude district courts from holding an evidentiary hearing to de- termine whether an arbitration agreement exists as a matter of fact, not as a matter of law. In fact, the FAA expressly provides that district courts may consider evidence when determining whether an arbitration agreement exists. 9 U.S.C. § 4 (“If the making of the arbitration agreement . . . be in issue, the court shall proceed sum- marily to the trial thereof. If no jury trial be demanded by the party alleged to be in default . . . the court shall hear and determine such issue.”). As the District Court here held an evidentiary hearing to USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 11 of 14

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determine whether an arbitration agreement existed, it was not re- quired to apply a summary judgment-like standard under Bazemore. Abid next contends that if a summary judgment-like stand- ard was inappropriate, then the District Court erred by failing to provide a trial; Abid never specifies whether the Court should have provided a jury or bench trial. To begin with, Abid never requested a “trial” below or otherwise objected to the use of an evidentiary hearing and so forfeited any objections she may have had to the process the Court used. Access Now, Inc., v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004). However, even on the merits her argument fails. The FAA only requires a jury trial to determine the existence of a contract containing an arbitration agreement if the party opposing arbitration requests one. 9 U.S.C. § 4. Otherwise, the issue is for the court to “hear and determine.” Id. Reiterman (and Abid) never requested a jury trial, and so the Court did not err by not providing one. Instead, the Court held an evidentiary hear- ing and then made findings of fact and conclusions of law. This was, for all intents and purposes, a bench trial, and we find unper- suasive Reiterman’s suggestion that the Court erred by labeling its proceeding as an evidentiary hearing. 5

5 And to the extent any error did occur, it was harmless. Were we to reverse and remand for a “bench trial” on rescission, the District Court would simply provide the parties with the same process it did here and just label it a “bench trial.” This would be an enormous waste of time and judicial resources with no benefit to the parties or the public. USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 12 of 14

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Abid further contends that the District Court erred by ad- mitting hearsay as evidence during the evidentiary hearing. 6 Near the beginning of the evidentiary hearing, Baughman testified about the contents of an affidavit provided by a private investigator hired by Reiterman. This affidavit contained information indicating Abid created several of the blogposts accusing Reiterman of sexual as- sault. This affidavit was also attached to Reiterman’s complaint as an exhibit. Abid objected to Baughman’s testimony and the affida- vit as hearsay, and the Court overruled her objection. However, we need not decide whether the District Court erred by overruling Abid’s objection, as any error would be harm- less. Appellate courts presume that district judges “will rely only upon properly admitted and relevant evidence” during bench trials. Tampa Bay Shipbldg. & Repair Co. v. Cedar Shipping Co., 320 F.3d 1213, 1216 (11th Cir. 2003). So, the “prejudicial impact of errone- ously admitted evidence is thus presumed to be substantially less” in a bench trial. United States v. Hughes, 542 F.2d 246, 248 (5th

6 Abid also objected below to the admittance of the April 2019 communica- tions, claiming they were protected settlement negotiations under Federal Rule of Civil Procedure 408. While she briefly notes that she made this argu- ment to the District Court in the facts section of her opening brief, she does not renew this argument on appeal, instead opting to focus exclusively on her hearsay argument. Accordingly, she abandons her Rule 408 argument on ap- peal. Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 680 (11th Cir. 2014) (holding that parties abandon arguments that are not “plainly and promi- nently” raised on appeal (quoting United States v. Willis, 649 F.3d 1248, 1254 (11th Cir. 2011))). USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 13 of 14

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Cir. 1976) (quoting United States v. Nicholson, 492 F.2d 124 (5th Cir. 1974)). The evidence from the private investigator concerned whether Abid created the disputed blogposts, and the Court ex- pressly stated in its order denying arbitration that it made “no find- ings at this time as to whether Ms. Abid or her agent created the offensive postings.” Instead, the Court stated that it relied on the testimonies of Baughman and Abid and on its credibility findings to determine whether rescission occurred. And the Court was en- titled to use the evidence from the affidavit to impeach Abid’s cred- ibility. See Macuba v. Deboer, 193 F.3d 1316, 1323–24 (11th Cir. 1999) (noting that statements that would otherwise be hearsay may be used “solely for impeachment purposes”). Accordingly, we may safely rely on the District Court’s statements and on our presump- tions recognizing the ability of district courts to distinguish be- tween proper and improper evidence to conclude that any error related to this hearsay objection was harmless. Lastly, the District Court did not clearly err in concluding that the parties intended to mutually rescind their 2018 Settlement Agreement through their April 2019 communications. The Court based its findings of fact in large part on its credibility determina- tions of the two witnesses: it found Baughman to be credible and Abid to not be credible. Federal Rule of Civil Procedure 52(a) al- lows reviewing courts to set aside trial court findings of fact only when they are clearly erroneous. But “[w]hen findings are based on determinations regarding the credibility of witnesses, Rule 52(a) demands even greater deference to the trial court's findings; for USCA11 Case: 20-11025 Date Filed: 03/02/2022 Page: 14 of 14

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only the trial judge can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener's understanding of and belief in what is said.” Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 575, 105 S. Ct. 1504, 1512 (1985). While docu- ments or other objective evidence may contradict a witness’s testi- mony regardless of the trial judge’s credibility findings, it can “vir- tually never be clear error” when multiple witnesses tell a “coher- ent and facially plausible story that is not contradicted by extrinsic evidence” and the trial judge credits one witness over another. Id. The District Court’s credibility determinations are supported, not contradicted, by the objective evidence in this case, and so its find- ings of fact are untouchable on appeal. IV. Accordingly, we affirm the District Court’s interlocutory or- der denying Abid’s motion to compel arbitration for the reasons set forth above. AFFIRMED.