Garcia Eleventh Circuit
Garcia Eleventh Circuit
Garcia Eleventh Circuit
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No. 18-13452
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Defendants-Appellees-
Cross Appellants.
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Flag Ship and $2,334.01 against Flag Service. They rejected all
other claims.
The Garcias returned to the district court and moved to va-
cate the arbitration award. They argued that the arbitrators exhib-
ited evident partiality and were guilty of misconduct. They also
moved for an evidentiary hearing on their motion to vacate. The
district court denied both motions.
II. STANDARDS OF REVIEW
Jurisdiction
This appeal presents two jurisdictional issues: (1) whether
the district court had subject-matter jurisdiction; and (2) whether
the district court’s order denying the Garcias’ motion to vacate the
arbitration award was a final decision. We address each in turn.
1. The District Court Had Subject-Matter Jurisdiction
When a plaintiff amends his complaint, a federal court must
look to the amended complaint to determine whether it has subject
matter jurisdiction. See Pintando v. Miami-Dade Hous. Agency,
501 F.3d 1241, 1243 (11th Cir. 2007). This rule applies whether ju-
risdiction rests on the presence of a federal question, see id. at 1242–
43, or, as here, on diversity of citizenship, see Soberay Mach. &
Equip. Co. v. MRF Ltd., 181 F.3d 759, 763 (6th Cir. 1999); Samaha
v. Presbyterian Hosp. in the City of N.Y., 757 F.2d 529, 531 (2d Cir.
1985). We will consider the Garcias’ amended complaint to deter-
mine whether the district court had diversity jurisdiction.
As a preliminary matter, the district court properly granted
leave to amend the complaint. The Garcias explained in their mo-
tion for leave to amend that they later determined that Flag Service
spearheaded the activities underlying their complaint and that the
nondiverse entities were dispensable. The district court did not
abuse its discretion by accepting this explanation and granting
leave to amend. See Fed. R. Civ. P. 15(a)(2).
The district court had diversity jurisdiction over the
amended complaint, which named only Flag Service and Flag Ship
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entities and the Garcias to arbitrate their dispute because it had di-
versity jurisdiction over the amended complaint. See PTA-FLA,
Inc. v. ZTE USA, Inc., 844 F.3d 1299, 1305 (11th Cir. 2016). And
diversity jurisdiction over the amended complaint “gave the dis-
trict court not only the power to compel arbitration, but also the
power to confirm [or vacate] the resulting arbitration award.” Id.
Under our precedent, it does not matter whether any additional
parties who participated in the arbitration were diverse or whether
the amount sought or awarded at the arbitration exceeded the re-
quired amount in controversy. See id. at 1305–06. Instead, if a dis-
trict court had the power to compel arbitration based on diversity
jurisdiction, “it retain[ed] jurisdiction to confirm or vacate the re-
sulting arbitration award under 9 U.S.C. [sections] 9–10.” Id. at
1305 (internal quotation marks omitted). The district court’s denial
of the motion to vacate on the merits was a valid use of that power.
2. The District Court’s Order Denying the Motion to Vacate Was
a Final Decision
We issued a jurisdictional question asking whether the de-
nial of the motion to vacate the arbitration award was a final deci-
sion. A motions panel held that it was. We agree and revisit the
issue here to explain why.
The Federal Arbitration Act allows an appeal from various
district court orders regarding arbitration. See 9 U.S.C. § 16(a); see
also Martinez v. Carnival Corp., 744 F.3d 1240, 1243 (11th Cir.
2014). An order denying a motion to vacate an arbitration award
is not one of the statutorily enumerated grounds allowing for
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appeal. But the Act does allow for an appeal from “a final decision
with respect to an arbitration that is subject to this title.” 9 U.S.C.
§ 16(a)(3). We have interpreted a “final decision” under the Act to
have the “well-developed and longstanding meaning of a final de-
cision,” which is a decision that “ends the litigation on the merits
and leaves nothing more for the court to do but execute the judg-
ment.” Managed Care Advisory Grp., LLC v. CIGNA Healthcare,
Inc., 939 F.3d 1145, 1154 (11th Cir. 2019) (citation and internal quo-
tation marks omitted); see also Jackson v. Cintas Corp., 425 F.3d
1313, 1316 (11th Cir. 2005) (“A decision is final within the meaning
of [section] 16(a)(3) where the court disposes of the entire case on
the merits and leaves no part of it pending before the court.” (in-
ternal quotation marks omitted and alterations adopted)). Under
this “functional test,” we look “to the practical effect of the district
court’s order, not to its form.” Martinez, 744 F.3d at 1243–44.
We hold that an order denying a motion to vacate an arbi-
tration award is a final decision. In denying the motion to vacate
here, the district court had nothing left to decide. No motions re-
mained pending nor does the record indicate that the district court
“contemplate[d] any further action on this case.” Id. at 1244. Of-
ten after an arbitration, one party will file a motion to vacate the
award while the other party will file a motion to confirm the
award. See, e.g., Schmidt v. Finberg, 942 F.2d 1571, 1573 (11th Cir.
1991). Here, the Flag entities did not file a motion to confirm, but
that does not preclude finality. For “an arbitrator’s order is binding
on the parties unless they expressly agree otherwise, and does not
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(11th Cir. 2009). In that same brief, they contended that Scientol-
ogy allowed civil court actions against suppressive persons, but
with no reference to the mutuality legal doctrine, that is nothing
more than a “mere recitation of the underlying facts.” See Ledford,
657 F.3d at 1258.
The district court also discussed the lack of mutuality with
defense counsel, who perhaps conceded that the arbitration provi-
sion here lacked mutuality, but at no point in that hearing did the
Garcias themselves raise the lack of mutuality. After the colloquy
with defense counsel, the district court inquired about the Garcias’
opposition, but counsel responded that they would rely on their
filed opposition, which did not discuss mutuality. That colloquy
does not meet the standard either because “if a party hopes to pre-
serve” an issue “she must first clearly present it to the district
court.” See Ruckh, 963 F.3d at 1111 (emphasis added) (internal
quotation marks omitted). In their brief before the hearing, the
Garcias again made no reference to mutuality but, rather, cited the
testimony of the International Justice Chief that the church is not
required to arbitrate a claim it brings—another “mere recitation of
the underlying facts.” See Ledford, 657 F.3d at 1258. And the tes-
timony of the Justice Chief does nothing to show that the Garcias
presented this issue to the district court. The Garcias gave the dis-
trict court no opportunity “to recognize and rule on” the mutuality
issue and therefore have forfeited that issue as a basis for substan-
tive unconscionability. See Ruckh, 963 F.3d at 1111 (internal quo-
tation marks omitted).
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1The parties assume that the First Amendment’s religion clauses apply to the
Church of Scientology. We do the same.
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***
To complete the unconscionability analysis under Florida
law, a court is required to balance both procedural and substantive
unconscionability. See Basulto, 141 So. 3d at 1159. Florida courts
employ a sliding-scale approach, which means that “the more sub-
stantively oppressive the contract term, the less evidence of proce-
dural unconscionability is required to come to the conclusion that
the term is unenforceable, and vice versa.” Id. (internal quotation
marks omitted). Here, the Garcias have not presented evidence,
other than the adhesive nature of the contract, to establish proce-
dural unconscionability. But adhesiveness alone is insufficient to
prove “any degree of procedural unconscionability.” Kendall
Imps., LLC v. Diaz, 215 So. 3d 95, 110 (Fla. Dist. Ct. App. 2017); see
also Hobby Lobby Stores, Inc. v. Cole, 287 So. 3d 1272, 1276 (Fla.
Dist. Ct. App. 2020) (concluding that “the trial court erred in find-
ing the Agreement procedurally unconscionable” despite the adhe-
sive nature of the arbitration agreement).
Without any other evidence of substantive unconscionabil-
ity and no degree of procedural unconscionability, the Garcias have
not met their burden to prove the arbitration agreements uncon-
scionable. See Basulto, 141 So. 3d at 1159 (“[P]rocedural and sub-
stantive unconscionability must be established to avoid enforce-
ment of the terms within an arbitration agreement.”); Palm Beach
Motor Cars Ltd. v. Jeffries, 885 So. 2d 990, 992–93 (Fla. Dist. Ct.
App. 2004) (requiring evidence of procedural unconscionability to
invalidate an arbitration provision lacking mutuality).
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307 F.3d at 1289; Scott v. Prudential Sec., Inc., 141 F.3d 1007, 1015
(11th Cir. 1998), abrogated on other grounds by Hall Street Assocs.,
L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008).
The Garcias do not base their claim of evident partiality on
a conflict of interest, but rather on comments made by one of the
arbitrators during the arbitration and the purported tension inher-
ent in requiring Scientologists in good standing to arbitrate a dis-
pute between the church and former members of that church—
“suppressive persons.” In response to similar challenges, we have
said that “[a]n arbitrator appointed by a party is a partisan only one
step removed from the controversy and need not be impartial.”
Lozano v. Md. Cas. Co., 850 F.2d 1470, 1472 (11th Cir. 1988),
quoted in Sunkist Soft Drinks, Inc. v. Sunkist Growers, Inc., 10 F.3d
753, 759 (11th Cir. 1993), abrogated on other grounds by Arthur
Anderson LLP v. Carlisle, 556 U.S. 624 (2009). In Sunkist Soft
Drinks, the party-appointed arbitrator, after his appointment but
before the arbitration, “assisted [the party] in preparing its case by
attending and participating in meetings with [the party’s] wit-
nesses”; “suggested lines or areas of testimony”; “helped select one
of [the party’s] consultants”; and “advised an expert witness on
how to improve a chart related to the expert’s testimony.” 10 F.3d
at 759. But we noted that none of the witnesses “gave testimony
in any sense of the word” to the arbitrator; that no evidence indi-
cated the arbitrator shared what he learned with the other arbitra-
tors; and that nothing showed the arbitrators “based their deliber-
ations and award on anything other than the evidence of record.”
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evidence, they have not identified any witnesses they wished to call
or submitted the 900 pages of evidence. Nor have they explained
what those witnesses might have said or how the documentary ev-
idence was relevant to their claims. So they have failed to establish
that this evidence was pertinent and material to their claims or that
its exclusion prejudiced their rights.
Nor have the Garcias established misconduct based on
ex parte submissions of documentary evidence by the International
Justice Chief. The Justice Chief submitted documentary evidence
from both the church and the Garcias in advance of the arbitration
hearing to allow the arbitrators to prepare. And he provided the
Garcias with copies of the documentary evidence he submitted to
the arbitrators. It was not misconduct for the arbitrators to receive
documentary evidence outside the presence of the parties in ad-
vance of the arbitration hearing.
We also reject the argument that vacatur is warranted on
the grounds that Luis’s reading assistant and attorney were barred
from attending the arbitration. Although a security guard denied
the reading assistant entry, the International Justice Chief offered
to provide Luis a different person to read for him. And in any
event, Luis has not explained how the lack of a reading assistant
prejudiced him. To the contrary, his affidavit states that he read
twenty-eight pages of church policies in about twenty minutes on
the first day of the arbitration. And as the district court found,
“[t]here is no evidence that [the Garcias’] attorney attempted to at-
tend [the arbitration] but was turned away.” Instead, after learning
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I.
I reprint the entirety of the relevant language of the arbitra-
tion agreement, since that is what governed the “arbitration” here.
It provided,
d. In accordance with the discipline, faith, internal or-
ganization, and ecclesiastical rule, custom, and law of
the Scientology religion, and in accordance with the
constitutional prohibitions which forbit governmen-
tal interference with religious services or dispute res-
olution procedures, should any dispute, claim or con-
troversy arise between me and the Church, any other
Scientology church, any other organization which es-
pouses, presents, propagates or practices the Scientol-
ogy religion, or any person employed by any such en-
tity, which cannot be resolved informally by direct
communication, I will pursue resolution of that dis-
pute, claim or controversy solely and exclusively
through Scientology’s Internal Ethics, Justice and
binding religious arbitration procedures, which in-
clude application to senior ecclesiastical bodies, in-
cluding, as necessary, final submission of the dispute
to the International Justice Chief of the Mother
Church of the Scientology religion, Church of Scien-
tology International (“IJC”) or his or her designee.
e. Any dispute, claim or controversy which still re-
mains unresolved after review by the IJC shall be
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2 At the “arbitration,” the IJC did, in fact, make up the rules—and change
them—as the proceedings went on. For example, before arbitration, the IJC
testified in his deposition that the attorney for the Garcias could be present at
the arbitration, but could not “represent” them. Once it was time to actually
arbitrate, though, the Garcias were told that the procedures “[did] not con-
template participation by an attorney” and that civil lawyers “[had] no role to
play at the arbitration.” The IJC also testified that the Garcias would be per-
mitted to testify at the arbitration, but the arbitrators consistently cut Mr. Gar-
cia off when he tried to present his case and told him he could not submit any
“entheta,” a Scientology term for material that is critical of Scientology. Sim-
ilarly, pre-arbitration, the IJC testified that the Garcias would be able to “pre-
sent [their] side of the story” and “originate whatever [they] wanted to.” But
then at the arbitration, the IJC prohibited the Garcias from bringing witnesses
because “their testimony could not possibly be confirmed,” and he heavily re-
dacted the Garcias’ evidence for entheta before giving it to the arbitrators.
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counsel for the Church conceded in his letter referenced above, the
IJC simply made things up as the “arbitration” proceeded.
We review the district court’s factual findings for clear error.
Smith v. Owens, 13 F.4th 1319, 1325 (11th Cir. 2021). As we have
explained, “[a] factual finding is clearly erroneous if the record lacks
substantial evidence to support it or we are otherwise left with the
impression it is not the truth and right of the case—a definite and
firm conviction that a mistake has been committed.” Knight v.
Thompson, 797 F.3d 934, 942 (11th Cir. 2015) (cleaned up). On this
record, I see no basis for concluding that the district court’s factual
findings in these regards were clearly erroneous. Nor has the
Church even suggested they are. So our legal analysis must ac-
count for these facts.
II.
As the Majority Opinion notes, under the Federal Arbitra-
tion Act, a federal court must stay or dismiss a lawsuit and compel
arbitration when “the plaintiff entered into a written arbitration
agreement that is enforceable under ordinary state-law contract
principles,” and “the claims before the court fall within the scope
of that agreement.” Lambert v. Austin Ind., 544 F.3d 1192, 1195
(11th Cir. 2008) (internal quotation marks omitted) (citing 9 U.S.C.
§§ 2-4). Here, the “ordinary state-law contract principles” we must
apply are those of Florida. 3
choice-of-law principles, the rule of lex loci contractus applies. Doc. 189 at 5
(citing State Farm Mut. Auto. Ins. Co. v. Roach, 945 So. 2d 1160, 1163 (Fla.
2006)). That rule provides that the law of the place where the contract was
executed—meaning “where the last act necessary to complete the contract
was done”—controls. Prime Ins. Syndicate, Inc. v. B.J. Handley Trucking,
Inc., 363 F.3d 1089, 1093 (11th Cir. 2004) (citation and internal quotation marks
omitted). Here, the district court found that was Florida. The parties do not
challenge this finding on appeal.
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of the district court’s analysis shows that to be the case. See United
States v. Steed, 548 F.3d 961, 966 (11th Cir. 2008) (holding that ap-
plication of the law to facts determined by the district court pre-
sents a mixed question of law and fact). So the district court’s con-
clusion is subject to de novo review. See id.
For the reasons I have discussed, though, the district court’s
conclusion that the Garcias had “some idea” of the form and pro-
cedures of the arbitration was not correct, based on the district
court’s own factual findings, which were not clearly erroneous.
The problem with concluding that Luis Garcia must have had
“some idea” of the form and procedure for the arbitration based on
his testimony that he completed the “Ethics Specialist Course,”
where he studied the Committee on Evidence and its procedures
and the Scientology Justice System is that that district court ex-
pressly found that the Committee on Evidence did not provide any
procedures for arbitration. And as I have noted, the district court
likewise determined that the Church could point to nothing—in-
cluding the Scientology Justice System—to identify any procedures
for arbitration. So again, it is not clear to me how Garcia’s study of
the Committee on Evidence and the Scientology Justice System—
neither of which refers to any procedures of arbitration because,
again, none existed at the time Garcia studied the Committee on
Evidence and the Scientology Justice System—could have given
the Garcias any idea of the procedures of arbitration.
Indeed, the Church could point to nothing that the court
found would advise the Garcias of the arbitration rules and
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