Charles Harold Bedgood v. Wyndham Vacation Resorts, Inc.
Citation88 F.4th 1355
Date Filed2023-12-19
Docket22-11504
Cited4 times
StatusPublished
Full Opinion (html_with_citations)
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 1 of 30
[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-11504
____________________
CHARLES HAROLD BEDGOOD,
individually and on behalf of all other
persons similarly situated,
JOEL WILSON BRANDON,
individually and on behalf of all other
persons similarly situated,
HANNAH LYN HEIL-BRANDON,
individually and on behalf of all other
persons similarly situated,
EDDIE MATHEWS JR.,
individually and on behalf of all other
persons similarly situated,
REENA T. SMITH, et al.,
individually and on behalf of all other
persons similarly situated,
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 2 of 30
2 Opinion of the Court 22-11504
PlaintiďŹs-Appellees,
versus
WYNDHAM VACATION RESORTS, INC.,
WORLDMARK, THE CLUB,
WYNDHAM RESORT DEVELOPMENT CORPORATION,
Defendants-Appellants.
____________________
Appeal from the United States District Court
for the Middle District of Florida
D.C. Docket No. 6:21-cv-00418-PGB-DCI
____________________
Before JORDAN, NEWSOM, Circuit Judges, and GRIMBERG, District
Judge.*
NEWSOM, Circuit Judge:
This is an odd case. The lead defendant here, Wyndham Va-
cation Resortsâwhich, to distinguish it from other Wyndham-re-
lated entities, weâll just call âResortsââentered into purchase
agreements with a number of timeshare owners. Those agree-
ments required parties to arbitrate their disputes in the American
* The Honorable Steven D. Grimberg, United States District Judge for the
Northern District of Georgia, sitting by designation.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 3 of 30
22-11504 Opinion of the Court 3
Arbitration Association rather than litigate them in court. So when
relationships soured, several purchasers ďŹled arbitration petitions
with the AAA. The AAA, though, dismissed each purchaserâs peti-
tion on the ground that Resorts had âfailed to comply with the
AAAâs policies.â In view of Resortsâ non-compliance, the AAA âde-
cline[d] to administer [each purchaserâs] claim and any other claims
between [Resorts] and its consumers at this timeâ and thus in-
structed the purchasers that they could âsubmit [their] dispute[s] to
the appropriate court for resolution.â
Thwarted in their eďŹorts to arbitrate, the purchasersâby
that point joined by similarly situated individuals proceeding
against other Wyndham-related entitiesâsued in federal court.
The defendantsâ response? You guessed it: They moved to stay the
litigation and direct arbitration before the AAAâthe very entity
that, on account of Resortsâ own noncompliance, had refused to
consider the original purchasersâ arbitration petitions.
The principal question here is whether, having seemingly
stymied the purchasersâ eďŹorts to arbitrate, Resorts and its co-de-
fendants can now prevent them from litigating on the ground that
their agreements require arbitration. For reasons weâll explain, we
hold as follows: (1) The three purchasers who originally sought to
arbitrate their claims against Resorts, only to see their petitions re-
jected on account of Resortsâ noncompliance with AAA policies,
may proceed to litigation; and (2) three other purchasers who never
formally submitted their claims against Resorts to the AAA, but
whose agreements with Resorts contained identical arbitration
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 4 of 30
4 Opinion of the Court 22-11504
provisions, may likewise proceed to litigation; but (3) two purchas-
ers who had an agreement with diďŹerent Wyndham-related entities
must return to the district court for further consideration of the
Federal Arbitration Actâs applicability to their dispute.
I
A
At the outset, it will help to get straight the Wyndham-re-
lated entities involved in this case. Wyndham Vacation Resorts
(again, âResortsâ), Wyndham Resorts Development Corporation
(hereinafter âDevelopmentâ), and WorldMark, The Club oďŹer
timeshare ownership interests across their respective portfolios of
properties. Resorts manages and sells interests at resorts and hotels
marketed and sold under the Club Wyndham name. Development
does the same for WorldMark-branded properties. And
WorldMark, The Club (hereinafter âWorldMarkâ) is the non-proďŹt
ownersâ association for WorldMark-branded resorts and hotels.
The three entities are aďŹliatedâeither through connection to their
common parent Travel + Leisure Co., in the case of Resorts and
Development, or through their inventory, in the case of Develop-
ment and WorldMarkâbut they maintain separate corporate iden-
tities.
To purchase a timeshare interest with Resorts, Develop-
ment, or WorldMark (collectively, âthe defendantsâ), interested
buyers must, of course, sign a contract. And thatâs exactly what
the eight named plaintiďŹs in this case did. Charles Bedgood, Joel
Brandon, Hannah Heil-Brandon, Eddie Mathews, Reena Smith,
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 5 of 30
22-11504 Opinion of the Court 5
and Roslind Harper contracted with Resorts; Justin Diaz and Can-
dice Clark contracted with Development and WorldMark.
All partiesâ agreements contain nearly identical arbitration
clauses. Those clauses provide that âany disputeâ between the par-
ties âbe determined exclusively and ďŹnally by individual arbitra-
tion[.]â The contracts are governed by the Federal Arbitration Act
(âFAAâ), and they designate the American Arbitration Association
(âAAAâ) as the administrator. The agreements further provide that,
in the event of a dispute, the AAA will appoint an independent ar-
bitrator âunder [the AAAâs] Consumer Arbitration Rules,â which,
in turn, incorporate the AAA Consumer Due Process Protocol. Fi-
nally, as relevant here, the contracts contain both (1) a forum selec-
tion clause specifying Orange County, Florida as the sole venue for
arbitration unless the parties otherwise agree or the independent
arbitrator authorizes a telephonic hearing, and (2) a damages pro-
vision limiting the sellerâs liability to the total amount paid under
the agreement.1
The Consumer Arbitration Rules and the Due Process Pro-
tocol articulate principles and policies that govern the ďŹling, con-
duct, and resolution of disputes within the AAAâs arbitral forum.
See American Arbitration Association, Consumer Arbitration Rules
(amended and eďŹective Sept. 1, 2014), adr.org/sites/de-
fault/ďŹles/Consumer-Rules-Web.pdf; American Arbitration
1 The only difference is that Resortsâ arbitration provision contains an explicit
prohibition on class actions, whereas Developmentâs and WorldMarkâs
clauses donât.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 6 of 30
6 Opinion of the Court 22-11504
Association, Consumer Due Process Protocol (eďŹective Apr. 17, 1998),
https://www.adr.org/sites/default/ďŹles/document_reposi-
tory/Consumer%20Due%20Process%20Protocol%20(1).pdf. The
rules delegate ministerial tasks and administrative determinations
to the AAA administrator. See Consumer Arbitration Rules, supra at
6. Of particular importance here, Commercial Arbitration Rule 12
outlines the administratorâs arbitration-clause-vetting process and
attendant procedures. Id. at 16â17; 43. By contrast, the arbitra-
torânot the administratorâ-makes all merits-based decisions. Id.
at 44.
The contracts at issue here stipulate that â[i]n the event of
any conďŹict between the AAA Rules and this Agreement, the pro-
visions of this Agreement shall be controlling.â
B
DissatisďŹed with their timeshare programs, and pursuant to
the arbitration clause in their contracts, plaintiďŹs Bedgood, Bran-
don, and Heil-Brandon sought to arbitrate breach-of-contract and
fraudulent-inducement claims against Resorts. To that end, they
ďŹled arbitration petitions with the AAA.
After initial review but before appointing an arbitrator, the
AAA summarily rejected Bedgoodâs and the Brandonsâ petitions on
the ground that Resorts had âfailed to comply with the AAAâs poli-
cies.â2 The AAA explained that it would âdecline to administer this
2 The defendants insist that the record doesnât showâand indeed, that we
have no way of knowingâwhich AAA policies Resorts violated. But in their
reply brief in support of the motion to compel arbitration in the district court,
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 7 of 30
22-11504 Opinion of the Court 7
claim and any other claims between [Resorts] and its consumers at
this time.â3 But, it said, if Resorts âadvise[d] the AAA in the future
of its intention to comply with the AAAâs Consumer Arbitration
Rules . . . the AAA may consider at its sole discretion, accepting
newly ďŹled consumer cases going forward.â To regain access to the
AAA forum, the AAA said, Resorts would need, âat a minimum,
[to] register its [arbitration] clauseâ with the AAAâs Consumer
Clause Registry, a pre-arbitration vetting mechanism designed to
ensure that arbitration clauses meet the AAAâs minimum due-pro-
cess requirements. The record doesnât reďŹect, nor have we been
told, whether Resorts has submitted its arbitration clause to the
AAA for review or whether it otherwise intends to comply with the
the defendants represented that âthe AAA declined to administer arbitrations
because Wyndhamâs forum selection clause and damages clause were âat odds
with the AAAâs rules.ââ Defendantsâ Reply in Support of Motion to Compel
Arbitration, Doc. 19 at 1â2 (emphasis added). In any event and as weâll ex-
plain, knowing which particular AAA policies Resorts violated is irrelevant to
our analysis.
3 Bedgoodâs letter referred to âWyndham Vacation Club,â but the entityâs legal
name is âWyndham Vacation Resorts,â and Bedgoodâs contract was clearly
with âWyndham Vacation Resorts.â The Brandonsâ contract was also with
âWyndham Vacation Resorts,â but their AAA letter referred to âWyndham
Destinations,â which, the defendants have explained, is the âgeneral trade
name for Travel + Leisure Coâs timeshare business.â The defendants have
conceded that both AAA letters refer, at the very least, to Resorts. See Br. of
Appellants at C-1 (stating that all references to âWyndhamâ in the brief refer
to âWyndham Vacation Resortsâ); id. at 47 (stating explicitly that âthe record
is limited to the AAAâs refusal to administer arbitrations from Defendant
Wyndhamâ) (citing the Bedgood and Brandon AAA rejection letters) (emphasis
in original).
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 8 of 30
8 Opinion of the Court 22-11504
AAAâs Consumer Arbitration Rules (or even challenge the AAAâs
determination that its clause is noncompliant).
Having declined to administer Bedgoodâs and the Brandonsâ
arbitrations on account of Resortsâ failure to comply with the
AAAâs policies, the AAA informed the plaintiďŹs that they could
âsubmit [their] dispute[s] to the appropriate court for resolutionâ
pursuant to Rule 1(d) of the Consumer Arbitration Rules.
Bedgood, Brandon, and Heil-Brandon thus sued in the United
States District Court for the Middle District of Florida. They were
joined by plaintiďŹs Mathews, Harper, Smith, Diaz, and Clark in a
putative class action on behalf of similarly situated individuals.
After the AAA declined to adjudicate the plaintiďŹsâ attempts
to resolve the dispute in the arbitral forum that it had speciďŹed in
its timeshare contracts, Resorts then objected to the plaintiďŹsâ ef-
forts to litigate in federal district court. Pursuant to Sections 3 and
4 of the FAA, Resorts, together with Development and WorldMark,
moved to stay litigation and direct arbitration in the AAAâthe very
forum in which the plaintiďŹs had attempted to arbitrate their claims
in the ďŹrst place. In the alternative, the defendants requested that
the district court appoint a substitute arbitratorâi.e., one not aďŹl-
iated with the AAAâunder Section 5 of the FAA.
Drawing on Resortsâ conduct, its corporate relationship
with Development and WorldMark, and their nearly identical arbi-
tration clauses, the district court denied the motion to stay litiga-
tion and direct arbitration as to all parties. The court observed that
â[s]ections 3, 4, and 5 [of the FAA] create mechanisms for the courts
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 9 of 30
22-11504 Opinion of the Court 9
to be able to enforce arbitration agreements by, respectively, staying
litigation, compelling arbitration, and/or designating a substitute
arbitrator.â But, the court noted, it could âgrant the requested re-
lief only if it ha[d] the authority to act under the FAA.â
The district court held that it lacked this authority under
FAA Sections 3, 4, and 5. The impediment on all fronts, it held,
was the defendantsâ own failure to comply with the AAAâs rules.
Relying on the AAAâs determination that Resorts ďŹouted its poli-
cies, the district court concluded that all the defendants were âin
defaultâ with the forum, rendering stay relief under Section 3 of
the FAA unavailable. The court further held that the defendants
couldnât obtain an order directing the parties to arbitration under
Section 4 because the plaintiďŹs hadnât âfail[ed], neglect[ed], or re-
fus[ed]â to arbitrate. To the contrary, the court found that they
attempted to arbitrate but had been rebuďŹed by the AAA on ac-
count of the defendantsâ failure to comply with the forumâs poli-
cies. Finally, the court held that the defendants werenât entitled to
a substitute arbitrator under Section 5 because the AAA would be
an available forum âif it were not for [d]efendantsâ negligent failure
to follow the AAAâs rules.â â[The] defendantsâ actions,â the court
concluded, âforeclosed the arbitration of these claims under the
plain language of the FAA.â
Because it had lacked authority to stay the litigation, direct
arbitration, or substitute an arbitrator, the district court held that
all plaintiďŹs could proceed to litigation of their claims. The court
didnât proceed any furtherâfor instance, to address whether the
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 10 of 30
10 Opinion of the Court 22-11504
arbitration clause itself was valid and enforceable or whether the
underlying contract claims were arbitrable. Instead, it limited its
holding to the applicability of the FAAâs provisions given the de-
fendantsâ unusual litigating positions.
The defendants promptly ďŹled this interlocutory appeal pur-
suant to 9 U.S.C. § 16(a)(1)(A)â(B).
II
Collectively, the defendants raise four issues on appeal. First,
they assert that the district court erred in concluding that the de-
fendants were âin defaultâ within the meaning of Section 3 of the
FAA, and thus ineligible for a stay of litigation. Second, they con-
tend that the district court erred in declining to direct arbitration
because, they say, they are âpart[ies] aggrievedâ by plaintiďŹsâ âfail-
ure, neglect, or refusalâ to arbitrate within the meaning of Section
4 of the FAA and because, in any event, the AAA would administer
the arbitration if ordered to do so. Third, they argue that the dis-
trict court erred in refusing to appoint a substitute, non-AAA-
aďŹliated arbitrator under Section 5 of the FAA. And ďŹnally, they
contend that the district court shouldnât have determined the arbi-
trability of the underlying claims but should instead have referred
that question to an arbitrator.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 11 of 30
22-11504 Opinion of the Court 11
For simplicityâs sake, weâll work through each of the issues
with respect to Resorts, and then separately turn our attention to
Development and WorldMark. 4
A
For reasons weâll explain in this section, we hold that Re-
sortsâ failure to comply with the rules of its chosen arbitral forum
renders the remedies speciďŹed in Sections 3 and 4 of the FAA una-
vailable to it and, accordingly, that the plaintiďŹs who have contracts
with ResortsâBedgood, Brandon, Heil-Brandon, Mathews, Smith,
and Harperâmay proceed to litigation. Because we conclude that
we lack jurisdiction over it, we decline to review the district courtâs
interlocutory order denying Resortsâ motion for a substitute arbi-
trator under Section 5. And we reject Resortsâ ďŹnal argumentâ
that the district court exceeded its authority in determining the ar-
bitrability of the plaintiďŹsâ underlying claimsâbecause, in fact, the
court never addressed arbitrability.
1
Section 3 of the FAA entitles a party to stay the litigation of
an action that falls within an arbitration agreementâs terms unless
the party is âin default in proceeding with such arbitration.â
9 U.S.C. § 3 (emphasis added). In its letters to Bedgood and the
Brandons, the AAA declined to administer their claims on the
4 We review the denial of a motion to direct arbitration de novo. Attix v. Car-
rington Mortg. Servs., LLC, 35 F.4th 1284, 1293 (11th Cir. 2022). The district
courtâs factual findings are reviewed for clear error. White Springs Agric.
Chems., Inc. v. Glawson Inv. Corp., 660 F.3d 1277, 1280 (11th Cir. 2011).
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 12 of 30
12 Opinion of the Court 22-11504
ground that Resorts had âfailed to comply with the AAAâs policies
regarding consumer claims,â referring speciďŹcally to both the AAA
Consumer Arbitration Rules and the AAA Consumer Due Process
Protocol. Relying on the AAAâs determination to that eďŹect, the
district court concluded that Resorts was âin default with [its] con-
tractually chosen forumâ and accordingly refused to stay litigation
under Section 3.
Before us, Resorts argues that the district court erred in re-
lying on the AAAâs determination in deciding âdefaultâ because, it
says, the question whether its arbitration clause complies with AAA
policies is reserved to the arbitrator. According to Resorts, the AAA
exceeded its authority in making the default determination, and
the district court therefore erred in relying on that determination
to make its own conclusion regarding default.
We disagree for several reasons, which weâll explain in turn.
First, the contracts at issue are governed by the AAAâs Consumer
Arbitration Rules, which expressly delegate policy-compliance de-
terminations to the AAA administrator. Second, no provision of
the partiesâ contracts reallocates that authority to the arbitrator.
Third, the mere fact that the AAAâs determination lacked speciďŹc-
ityâinasmuch as it didnât identify precisely which policies Resorts
had violatedâdoesnât undermine its legitimacy. Accordingly, we
hold that the AAA was empowered to conclude that Resortsâ arbi-
tration clause violated its policies, and that the district court didnât
err in relying on the AAAâs determination to conclude that Resorts
was âin defaultâ within the meaning of Section 3.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 13 of 30
22-11504 Opinion of the Court 13
a
Resortsâ primary argument turns on whether the partiesâ
contracts delegate the power to determine whether their arbitra-
tion clauses comply with AAA policies to a AAA administrator or,
instead, to an independent arbitrator. We think itâs the former.
As already explained, the contracts at issue here specify that
the AAA will conduct arbitrations in accordance with its Consumer
Arbitration Rules. Those rules require arbitration clauses to meet
certain minimum due-process standardsâconcerning, for exam-
ple, the availability of fora and the adequacy of remediesâbefore
the AAA will agree to administer an arbitration between the parties
to the contract.
Those rules also prescribe distinct roles for the administrator
and arbitrator. âThe administratorâs role is to manage the admin-
istrative aspects of the arbitration, such as the appointment of the
arbitrator.â Consumer Arbitration Rules, supra, at 6. â[The] admin-
istrator,â however, âdoes not decide the merits of a case or make
any rulings on issues such as what documents must be shared with
each side.â Id. By contrast, the rules state that â[a]rbitrators are
neutral and independent decision makersâ who âmake the ďŹnal,
binding decision . . . on the dispute.â Id. at 7. In short, the admin-
istratorâas the name would suggestâmakes administrative deter-
minations, while the arbitrator decides the merits.
Importantly here, the Consumer Arbitration Rules make
clear that the determination whether a party has complied with the
AAAâs policies is an administrative decision that can and should be
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 14 of 30
14 Opinion of the Court 22-11504
made by the AAA before it refers the case to an arbitrator. The
rules describe the AAAâs review of an entityâs consumer arbitration
clause âfor material compliance with due process standardsâ and
the resulting âdetermination whether or not to administer arbitra-
tions pursuant to that clauseâ as âadministrative determination[s]
by the AAA.â Id. at 16â17. While that determination âcannot be
relied upon or construed as a legal opinion or advice regarding the
enforceabilityâ of the agreement, there is no reason, we think, why
it canât underlie a district courtâs conclusion that an entity is âin
defaultâ with the arbitral forum under FAA Section 3. Id.
Thus, the AAA administrator was within its prerogative to
determine that Resorts was out of compliance with its policies.
The district courtâs ensuing reliance on that determination to con-
clude that Resorts was âin defaultâ with the forum was not im-
proper. 5
5 Resorts points to one of our unpublished decisions and a Sixth Circuit deci-
sion that, it says, require us to hold otherwise. We disagree. Kaspers v. Comcast
Corp., 631 F. Appâx 779 (11th Cir. 2015), is both non-binding and oďŹ-point.
There, we held, unremarkably, that â[the] AAAâs administrative determination
is not binding on this Courtâ and rejected the plaintiďŹsâ argument âthat [the]
AAAâs refusal to arbitrate claims . . . because of a non-compliant damages pro-
vision renders the arbitration provision invalid or unenforceable.â Id. at 783.
But of course; an arbitration clauseâs validity and enforceability are merits-
based issues reserved to the arbitrator, issues over which the administrator re-
tains no authority. This case is diďŹerent: The AAA and the district court
didnâtâand we donâtâaddress Resortsâ clauseâs validity or enforceability. Cic-
cio v. SmileDirectClub, LLC, 2 F.4th 577 (6th Cir. 2021), is likewise distinguishable.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 15 of 30
22-11504 Opinion of the Court 15
b
Resorts separately points to two provisions of the arbitra-
tion agreement that, it says, require resolution of the clause-com-
pliance question by an arbitrator.
First, it cites the so-called delegation clause, which reserves
questions of âenforcement, interpretation, or validityâ of the
agreement to an arbitrator. Resorts insists that this clause covers
the question whether its arbitration clause complies with AAA pol-
icies. But Resorts misunderstands the nature of the AAAâs deter-
mination. The AAA didnât opine on the arbitration clauseâs âen-
forcement, interpretation, or validity.â It made no attempt to com-
pel (or forbid) the partiesâ compliance with the contractâs provi-
sions, nor did it declare that the contract itself was (or wasnât) in
force and eďŹect. See Enforcement, Blackâs Law Dictionary (11th ed.
2019) (â[t]he act or process of compelling compliance with a law,
mandate, command, decree, or agreementâ); Contract, id. (noting
that a âvalidâ contract is one that is âfully operative in accordance
with the partiesâ intentâ). Nor did it apply law to fact or otherwise
determine whether or how the text covers the partiesâ dispute. See
Interpretation, id. (âascertainment of a textâs meaning; specif., the
There, the Sixth Circuit determined that an arbitratorârather than an admin-
istratorâhad to determine whether the underlying claim was arbitrable. See
id. at 579â80. But that, too, is a merits issue, quite unlike the administrative
determination that an arbitration clause violates the forumâs generally appli-
cable policies.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 16 of 30
16 Opinion of the Court 22-11504
determination of how a text most ďŹttingly applies to particular
factsâ). Instead, the AAA merely determined that the arbitration
clauseâirrespective of its âenforcement, interpretation, or valid-
ityââviolated AAA policies and thus declined to open its forum to
the parties. The AAAâs determination thus falls outside the delega-
tion clauseâs purview.
Second, Resorts points to the conďŹicts clause, which states
that âin the event of any conďŹict between the AAA Rules and this
Agreement, the provisions of this Agreement shall be controlling.â
Under that provision, Resorts says, the contract requires the AAA
to administer the arbitration according to the agreementsâ terms.
But the AAA isnât a party to the contract. And, at least in this con-
text, we can say it âgoes without saying that a contract cannot bind
a nonparty.â E.E.O.C. v. Waffle House, Inc., 534 U.S. 279, 294 (2002).
So Resortsâ argumentâas with any that would force an entity to
adhere to a contract it never agreed toâis a non-starter. 6
c
Finally, Resorts assails the generality of AAAâs determination
that it was out of compliance. The AAA, Resorts insists, was re-
quired to specify precisely which policies it had violated. The rea-
son, weâre told, is that while the AAA administrator can make
6 To be clear, our analysis is based in part on the fact that we arenât considering
a record where a nonsignatory is seeking to enforce an arbitration agreement.
Cf. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 632 (2009) (â[A] litigant who
was not a party to the relevant arbitration agreement may invoke § 3 if the
relevant state contract law allows him to enforce the agreement.â).
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 17 of 30
22-11504 Opinion of the Court 17
âempiricalâ determinationsâlike, say, whether required ďŹling fees
have been paidâit cannot make âsubjectiveâ determinations of the
sort that would underlie a conclusion that a party was out of com-
pliance with AAA policy. See Oral Arg. at 14:53â15:07.
We disagree. According to the Consumer Arbitration Rules,
the AAA is empowered to make all policy-compliance determina-
tions. Rule 12, in particular, explains that the AAA vets arbitration
clauses for âmaterial compliance with due process standardsâ up
front, long before an arbitration petition is ďŹled, fees are paid, or
an arbitrator is appointed. See Consumer Arbitration Rules, supra at
16â17. That vetting process covers all arbitration clauses and, so
far as we can tell, tests for compliance with all AAA policies. Be-
cause the Consumer Arbitration Rules donât draw the âempiricalâ-
âsubjectiveâ distinction that Resorts posits, we wonât either. Again,
Resortsâ contracts prescribe arbitration in the AAA and in compli-
ance with the AAAâs Commercial Arbitration Rules. And again,
those rules, in turn, empower the AAA to answer the âsubjectiveâ
questions that go to whether a partyâs arbitration clause complies
with AAA policies.7
d
Having concluded that the AAA was empowered to deter-
mine whether Resorts violated AAA policies, we turn to the
7 In any event, as already noted, Resorts told the district court that the AAA
found it noncompliant in two speciďŹc respects: â[T]he AAA declined to ad-
minister arbitrations because Wyndhamâs forum selection clause and damages
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 18 of 30
18 Opinion of the Court 22-11504
question whether the district court erred in concluding that Resorts
was âin defaultâ within the meaning of Section 3. It did not. In its
rejection letters to Bedgood and the Brandons, the AAA stated that
Resorts had âfailed to comply with the AAAâs policies.â To be sure,
the AAAâs determination that Resortsâ arbitration clause violated
AAA policies wasnât binding on the district court. The district court
could have discredited or ignored it. But the court didnât reversibly
err in accepting it as the basis for its own conclusion that Resorts
was âin default with the arbitration proceedings.â Thatâs especially
true given that Resorts has made no eďŹort to investigateâlet alone
remedyâits noncompliance before the AAA. See Oral Arg. at 2:56â
3:48. The district court thus didnât err in concluding that Resorts
was in âdefaultâ with the AAA.
2
Resorts next contends that the district court erred in refus-
ing to direct arbitration in the AAA. Orders staying litigation and
directing arbitration are âparallel devices.â Moses H. Cone Memâl
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22 (1983). Even so, they
are governed by separate statutory sections and attendant stand-
ards. Section 4 of the FAA provides that â[a] party aggrieved by the
alleged failure, neglect, or refusal of another to arbitrate under a
written agreement for arbitration may petition any United States
district court . . . for an order directing that such arbitration
clause were âat odds with the AAAâs rules.ââ Defendantsâ Reply in Support of
Motion to Compel Arbitration, Doc. 19 at 1â2.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 19 of 30
22-11504 Opinion of the Court 19
proceed in the manner provided for in such agreement.â 9 U.S.C.
§ 4. The district court held that Resorts wasnât a âparty aggrieved
by [any] alleged failure, neglect, or refusalâ of plaintiďŹs Bedgood,
Brandon, and Heil-Brandon, all of whom attempted to arbitrate
pursuant to their agreements. The court further concluded that
the plaintiďŹs who hadnât formally sought to arbitrate didnât have to
because their contracts contained nearly identical arbitration
clauses and, therefore, that their attempts to arbitrate would have
been âfutile.â
Section 4 prescribes two conditions to relief. They are sepa-
rate, but they are causally related: ďŹrst, the party resisting arbitra-
tion must have âfail[ed], neglect[ed], or refus[ed]â to arbitrate; and
second, the party seeking to direct arbitration must have been âag-
grievedâ by that failure, neglect, or refusal. See Cmty. State Bank v.
Strong, 651 F.3d 1241, 1256 (11th Cir. 2011) (âAfter all, FAA § 4 is
only triggered when one party has expressed a ârefusalâ[, failure, or
neglect] to arbitrate, and the other party has been thereby âag-
grieved.ââ (emphasis added)).
The plaintiďŹs who had contracts with Resorts are properly
sorted into two groups: (1) Bedgood, Brandon, and Heil-Brandon,
who petitioned the AAA to arbitrate; and (2) Mathews, Smith, and
Harper who didnât. With respect to Group (1)âplaintiďŹs who con-
tracted with Resorts and tried to arbitrateâResorts isnât a â[a]
party aggrieved by the alleged failure, neglect, or refusal of another
to arbitrate.â 9 U.S.C. § 4. To put the matter plainly, because each
of the Group (1) plaintiďŹs attempted to arbitrate, there was no
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 20 of 30
20 Opinion of the Court 22-11504
âfailure, neglect, or refusalâ by which Resorts could have been âag-
grieved.â Bedgood and the Brandons ďŹled petitions with the AAA
to pursue their claims in accordance with their contracts, and their
actions and representations in this Court evince a genuine desire to
arbitrate. They were thwarted in that pursuit by Resortsâ own con-
duct.
Before us, Resorts asserts that the AAA âwill comply with
any court orders issued from litigation involving the parties to the
disputeââthe point apparently being that a court need only issue
an order demanding that the AAA administer the arbitration. But
Resorts is missing the point. It is ineligible to move to direct arbitra-
tion under Section 4 because it hasnât been âaggrievedâ by any âfail-
ure, neglect, or refusalâ on the part of Bedgood, Brandon, or Heil-
Brandon to arbitrate.
Group (2)âcomprising plaintiďŹs who contracted with Re-
sorts but who didnât formally seek to arbitrateâpresents a closer
call. Groups (1) and (2) have identical arbitration agreements with
Resorts. Group (1) received AAA rejection letters expressly stating
that â[p]rior to the ďŹling of this arbitration, [Resorts] failed to com-
ply with the AAAâs policies regarding consumer claimsâ and that,
â[a]ccordingly, we must decline to administer this claim and any
other claims between [Resorts] and its consumers at this time . . . .â
Doc. 1-2 at 2â3 (emphasis added). To be sure, the Group (2) plain-
tiďŹs âfail[ed], neglect[ed], or refus[ed]â to arbitrate, so the ďŹrst con-
dition to Section 4 relief is met. But the second, causal condition
isnât, because Resorts canât demonstrate that it has been âthereby
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 21 of 30
22-11504 Opinion of the Court 21
aggrieved.â Strong, 651 F.3d at 1256. To the extent that Resorts is
aggrieved, it was aggrieved either by its own failure to bring its ar-
bitration clause into compliance with AAA policies or, at the very
least, by the AAAâs decision to that eďŹect, not the Group (2) plain-
tiďŹsâ conduct. Without any indication that Resorts has brought or
intends to bring its arbitration agreements into line with AAA pol-
icies, it canât claim to have been âaggrievedâ by the Group (2) plain-
tiďŹsâ failure or refusal to arbitrate.
3
Resorts separately argues that even if the district court was
correct to conclude that Resorts couldnât invoke Sections 3 and 4
of the FAA, it erred in refusing to appoint a substitute, non-AAA-
aďŹliated arbitrator under Section 5. We conclude that we lack ju-
risdiction to consider Resortsâ substitute-arbitrator argument.
Weâre âgenerally precluded from hearing interlocutory ap-
peals under the ďŹnal judgment rule.â Wajnstat v. Oceania Cruises,
Inc., 684 F.3d 1153, 1155 (11th Cir. 2012); see also Jenkins v. Prime Ins.
Co., 32 F.4th 1343, 1347 (11th Cir. 2022) (âCongress has not given
us the power to review interlocutory orders at will.â) (quoting Cor-
ley v. Long-Lewis, Inc., 965 F.3d 1222, 1231 (11th Cir. 2020)). The FAA
âcarves out exceptions to the general rule allowing review of
someââbut, importantly, not allââinterlocutory orders.â Hamrick
v. PartsďŹeet, LLC, 1 F.4th 1337, 1352 (11th Cir. 2021). In particular,
the FAA provides for immediate appeals of orders ârefusing a stay
of any action under section 3â and those âdenying a petition under
section 4 . . . to order arbitration to proceed.â 9 U.S.C. § 16(a)(1)(Aâ
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 22 of 30
22 Opinion of the Court 22-11504
B). By contrast, the Act says nothing one way or the other about
whether a party may immediately appeal an order refusing to ap-
point a substitute arbitrator under Section 5. Because the statute
speciďŹcally authorizes interlocutory appeals of Section 3 and Sec-
tion 4 orders but doesnât mention Section 5 orders, we conclude
that we lack jurisdiction over the district courtâs substitute-arbitra-
tor decision. See Hamrick, 1 F.4th at 1352. 8
Nor do we have pendent jurisdiction. âPendent appellate ju-
risdiction is present when a nonappealable decision is âinextricably
intertwinedâ with the appealable decision or when âreview of the
former decision [is] necessary to ensure meaningful review of the
latter.ââ King v. Cessna Aircraft Co., 562 F.3d 1374, 1379 (11th Cir.
2009) (quoting Swint v. Chambers Cnty. Commân, 514 U.S. 35, 51
(1995)). âIssues are not inextricably intertwined with the question
on appeal when the appealable issue can be resolved without reach-
ing the merits of the nonappealable issues.â Paez v. Mulvey, 915 F.3d
1276, 1291 (11th Cir. 2019) (internal quotation marks omitted). We
neednât resolve the Section 5 issue to reject Resortsâ contentions
with respect to Sections 3 and 4, both of which are resolvable by
8 Because this case is already on interlocutory appeal from the district courtâs
order refusing to stay litigation and direct the parties to arbitration, Resorts
canât rely on the principle that an appeal from a final judgment brings up all
interlocutory orders that led to the judgment. See, e.g., Mickles on behalf of her-
self v. Country Club Inc., 887 F.3d 1270, 1278 (11th Cir. 2018).
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 23 of 30
22-11504 Opinion of the Court 23
reference to statutory language and the AAA Consumer Arbitra-
tion Rules alone.
4
Finally, Resorts argues that the district court erred in deter-
mining the question of arbitrability rather than referring that issue
to an arbitratorâas, it says, our decision Attix v. Carrington Mortg.
Servs., LLC, 35 F.4th 1284 (11th Cir. 2022), required it to. In partic-
ular, Resorts seems to contend that an arbitrator should have de-
cided the arbitrability of the plaintiďŹsâ underlying breach-of-con-
tract and fraudulent-inducement claims, as well as (perhaps) the
arbitration agreementâs enforceability. Even if Resorts properly
presented that argument in the district courtâweâre dubiousâthe
argument fails because the district court didnât need to, and didnât,
decide the arbitrability issue.
The district court never decided whether the arbitrability
question was itself arbitrable. Instead, it decided the case on
threshold procedural grounds. Attix was very diďŹerent in that im-
portant respect. It held that the parties had unmistakably delegated
âthe arbitrability dispute in th[at] caseâi.e., whether the partiesâ
agreement to arbitrate Attixâs claims is enforceable under the
Dodd-Frank Actââto an arbitrator. Id. at 1293. We thus held that
âthe district court erred in [] deciding whetherâ the dispute was ar-
bitrable under the Dodd-Frank Act. Id. at 1289. The court should
have stopped, we said, at deciding who was empowered to decide
the arbitrability question.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 24 of 30
24 Opinion of the Court 22-11504
The district court here, by contrast, never determined
whether the plaintiďŹsâ breach-of-contract and fraudulent-induce-
ment claims were arbitrable, nor did it resolve those claims on the
merits. Nor, for that matter, did the court opine on the âenforce-
ment, interpretation or validity of [the partiesâ] [a]greementâ more
generally. Thus, it never decided whether the arbitrability of the
claims themselves or the agreementâs enforceability was a question
for arbitration. Indeed, the district court had no reason to decide
the arbitrability issue because it answered antecedent questions
about (1) âwhether the parties agreed to arbitrate the claims at is-
sueâ and (2) âwhether legal constraints external to the partiesâ
agreement foreclosed the arbitration of those claims.â As to the
ďŹrst question, it held that the parties had agreed to arbitrate the
underlying dispute. And as to the second, it found that the AAA
had closed its doors to the purchasers because of Resortsâ refusal
to comply with AAA policies. The district court thus held on pro-
cedural grounds that the defendants couldnât avail themselves of
the FAAâs tools, and it accordingly directed the parties to litigation.
Attix is inapplicable here.
* * *
For the foregoing reasons, we aďŹrm the district courtâs de-
nial of Resortsâ motion to stay litigation and direct arbitration as to
plaintiďŹs Bedgood, Brandon, Heil-Brandon, Mathews, Smith, and
Harper. These plaintiďŹs may proceed to litigation of their claims
against Resorts.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 25 of 30
22-11504 Opinion of the Court 25
B
Development and WorldMark raise the same four issues as
Resorts: The district court, they contend, erred in (1) relying on
the AAAâs determination that the defendants were out of compli-
ance with the AAAâs policies to conclude that they were âin defaultâ
within the meaning of FAA Section 3, (2) refusing to direct arbitra-
tion under Section 4, (3) declining to appoint a substitute arbitrator
under Section 5, and (4) determining the arbitrability of the under-
lying claims and/or the arbitration agreementâs enforceability.
The district court lumped all three Wyndham-related de-
fendants together, holding that their noncompliance with AAA pol-
icies precluded them from invoking the FAAâs procedural protec-
tions. But we conclude that the court painted with too broad a
brush. Although common sense suggests that the AAA would re-
ject Diazâs and Clarkâs claims against Development and WorldMark
on the same grounds that it rejected Bedgoodâs, Brandonâs, and
Heil-Brandonâs claims against Resorts, there is no solid evidence to
that eďŹect. Accordingly, we vacate the district courtâs order regard-
ing Development and WorldMark and remand for proceedings, re-
garding those two defendants, consistent with this opinion.
1
For reasons already explained, the AAA had the authority to
determine whether Development and WorldMark were out of
compliance with its policies, and the district court was entitled to
rely on that determination to conclude that those entities were âin
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 26 of 30
26 Opinion of the Court 22-11504
defaultâ within the meaning of Section 3 of the FAA. See supra at
11â18. As it pertains to Development and WorldMark, though, we
conclude that the district courtâs determination to that eďŹect lacks
a suďŹcient foundation, at least on the current record.
To determine whether a party has defaulted for Section 3
purposes, a court must âdecide if, under the totality of the circum-
stances, the party has acted inconsistently with the arbitration
right.â Ivax Corp. v. B. Braun of Am., Inc., 286 F.3d 1309, 1315â16
(11th Cir. 2002) (internal quotation marks omitted). Diaz and Clark
are the only two plaintiďŹs who have a contract with Development
and WorldMark. Neither of them sought to arbitrate before ďŹling
suit in federal court. The district court inferred that the AAA
would likely reject Diazâs and Clarkâs arbitration petition because it
had declined to administer âany other claims between [Resorts] and
its consumers at this time.â Invoking futility, the district court held
that Diaz and Clark could proceed straight to litigation.
The problem, we think, is that on this record, itâs not clear
that Development and WorldMark have acted inconsistently with
the arbitration right. The AAA rejected present and future claims
only against Resorts. It said nothing about claims against Develop-
ment and WorldMark. And that diďŹerence matters. To be sure,
Resorts, Development, and WorldMark use similar arbitration
clauses, but they arenât identical. And to be sure, the companies
are aďŹliated with one another, but they maintain separate corpo-
rate identities. Accordingly, there is no deďŹnitive indication in the
record that the AAA actually determined that Development and
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 27 of 30
22-11504 Opinion of the Court 27
WorldMark had violated AAA policies as relevant to these plaintiďŹs.
Although itâs tempting to assume, as the district court seemed to,
that the AAA would reject Diazâs and Clarkâs petition against De-
velopment and WorldMark, there is no evidentiary basisâin the
form, say, of an actual rejection letterâto conclude that those two
entities are in default as to Diaz and Clark. In contrast to Resortsâ
failure to investigate or remedy its noncompliance after the AAAâs
rejection, Developmentâs and WorldMarkâs actions have thus far
apparently evinced a willingness to arbitrate.
Given the Supreme Courtâs emphasis on the liberal enforce-
ment of arbitration agreements, see, e.g., Mitsubishi Motors, 473 U.S.
at 626 (â[A]s with any other contract, the partiesâ intentions con-
trol, but those intentions are generously construed as to issues of
arbitrability.â), we conclude that the district court erred in denying
Development and WorldMarkâs motion to stay litigation under Sec-
tion 3 on the present record.
2
For similar reasons, we hold that Development and
WorldMark are âpart[ies] aggrieved by the alleged failure, neglect,
or refusal of another to arbitrateâ under Section 4 of the FAA. 9
U.S.C. § 4. As weâve explained, to obtain relief under Section 4, a
movant must show (1) that the party resisting arbitration must have
âfail[ed], neglect[ed], or refus[ed]â to arbitrate and (2) that the mo-
vant was âaggrievedâ by that failure, neglect, or refusal. Neither
Diaz nor Clark attempted to arbitrate in accordance with their con-
tracts, so the ďŹrst condition is clearly satisďŹed. And because thereâs
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 28 of 30
28 Opinion of the Court 22-11504
no hard evidence in this record that the AAA would refuse to con-
sider Diazâs and Clarkâs claims against Development and
WorldMark, those entities can be said to be aggrieved by Diazâs and
Clarkâs failure to arbitrate, thus satisfying the second condition.
Accordingly, on the current record, we conclude that the dis-
trict court erred in denying Development and WorldMarkâs motion
to compel arbitration under Section 4. 9
3
Perhaps anticipating the AAAâs possible rejection, Develop-
ment and WorldMark next argue that the district court erred in re-
fusing to appoint a substitute arbitrator per Section 5 of the FAA.
9 Even after supplemental briefing, it remains unclear to us exactly how Re-
sorts, Development, and WorldMark relate to one anotherâand, in particu-
lar, whether Development falls, as we think Resorts plainly does, under the
âWyndham Destinationsâ umbrella. On the one hand, Development and Re-
sorts are separate legal entities, and neither Diaz nor Clark has sought to arbi-
trate his or her claims, respectively, against Development in the AAA. On the
other hand, the Brandonsâ AAA rejection letter âdeclined to administer this
claim and any other claims between Wyndham Destinations and its consumers.â
âWyndham Destinationsâ is the âgeneral trade name for Travel + Leisure Coâs
timeshare business,â Travel + Leisure Co. is Developmentâs parent company,
and Developmentâs and Resortsâ arbitration clauses are nearly identical. Based
on our read of the partiesâ supplemental briefing, it appears to us that Devel-
opment might be properly looped in with Resorts by way of the AAAâs rejec-
tion letter regarding âWyndham Destinations,â but we have no firm record
evidence to that effect. Accordingly, we will remand to the district court for
proceedings consistent with this opinion, in part to clear up Developmentâs
relationship to Resorts and Wyndham Destinations and determine how that
relationship might affect Developmentâs ability to avail itself of Sections 3 and
4 of the FAA.
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 29 of 30
22-11504 Opinion of the Court 29
As already explained, we conclude that we lack appellate jurisdic-
tion to consider this issue. See supra at 21â23.
4
Finally, Development and WorldMarkâs argument that the
district court erroneously determined the arbitrability of Diazâs
and Clarkâs underlying claims and the enforceability of the con-
tractârather than, they say, leaving that issue to an arbitratorâ
fails for the same reason that Resortsâ identical argument did: The
district court never decided the arbitrability question; rather, it re-
jected Development and WorldMarkâs motion on threshold proce-
dural grounds. See supra at 23â24. We neednât say anything more.
III
Given the FAAâs text, we cannot say that the district court
erred in concluding that Resortsâ refusal to comply with the AAAâs
generally applicable policies disqualiďŹed it from seeking a stay of
litigation or an order directing the parties to arbitration. But the
courtâs decision swept too broadly. Absent rejection letters (or
other record evidence) directed to Development and WorldMark
of the sort we have for Resorts, or a demonstrated evidentiary con-
nection between the defendants, we cannot currently discernâat
least on the record as it exists before usâa suďŹcient basis for refus-
ing similar relief to those entities.
Therefore, as to plaintiďŹs Bedgood, Brandon, Heil-Brandon,
Mathews, Smith, and Harper, all of whom had contract with Re-
sorts, we AFFIRM. With respect to plaintiďŹs Diaz and Clark, who
USCA11 Case: 22-11504 Document: 35-1 Date Filed: 12/19/2023 Page: 30 of 30
30 Opinion of the Court 22-11504
had contracts with Development and WorldMark, we VACATE
AND REMAND for proceedings consistent with this opinion.
AFFIRMED IN PART, VACATED AND REMANDED IN
PART.