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KELLY v. K12 INC (2021)

United States Court of Appeals, Tenth Circuit.2021-05-10No. No. 20-7046

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Opinion

ORDER AND JUDGMENT *

Plaintiff Eddie M. Kelly sued her former employer and others for discrimination, and the district court granted her employers motion to compel arbitration. The arbitrator granted summary judgment against Kelly, and the district court confirmed the award and dismissed Kellys claims against all the defendants. Exercising jurisdiction under 28 U.S.C. § 1291,

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we affirm.

I. BACKGROUND

Kelly was employed by K12 Inc. as a reading teacher at Oklahoma Virtual Charter Academy (OVCA),

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a public charter school. K12 provided services to OVCA, including providing teachers like Kelly. Kellys employment with K12 was subject to an arbitration agreement that required arbitration of all disputes “arising from or relating to [Kellys] employment or the termination of [her] employment.” R. at 42. The agreement further provided it was governed by the Federal Arbitration Act (FAA) and Virginia law.

K12 terminated Kellys employment in March 2016, and she filed a lawsuit alleging civil rights violations against K12, OVCA, and two of Kellys supervisors, Audra Plummer and Nicole Ellison. The district court granted K12s motion to compel arbitration, and Kelly proceeded to arbitration only against K12. The arbitrator granted summary judgment in K12s favor and dismissed Kellys claims with prejudice.

K12 then moved the district court to confirm the award and dismiss Kellys lawsuit. Kelly opposed the motion, and sought to amend her claims against OVCA, Plummer, and Ellison. Plummer and Ellison moved to dismiss Kellys claims against them on the merits and also argued the claims against them were foreclosed by the arbitrators decision.

The district court found no grounds to vacate, modify, or correct the arbitrators decision, and therefore confirmed the arbitration award. The district court also held the arbitration agreement applied to the claims against the remaining defendants and dismissed them as well. This appeal followed.

II. DISCUSSION

A. Arbitration Award

“Our review of the [arbitrators] decision under the FAA is strictly limited; this highly deferential standard has been described as among the narrowest known to the law.” Bowen v. Amoco Pipeline Co., 254 F.3d 925, 932 (10th Cir. 2001) (internal quotation marks omitted). A court may grant a motion to vacate an arbitration award only under very limited circumstances, including violation of public policy. Denver & Rio Grande W. R.R. v. Union Pac. R.R., 119 F.3d 847, 849 (10th Cir. 1997).

Kelly asserts the district court erred in confirming the arbitration award for two reasons. First, she contends the award violated public policy based on her allegation that K12 uses uncertified staff, thus impacting special education students. It is unclear, however, how this allegation connects to the arbitrators grant of summary judgment. The public policy exception applies “where the terms of the arbitration contract ․ violate public policy or where the award requires parties undertake some action in violation of public policy.” Bowles Fin. Group, Inc. v. Stifel, Nicolaus & Co., 22 F.3d 1010, 1012 n. 1 (10th Cir. 1994). Kelly makes no such allegation here and therefore has not shown that the public policy exception applies here.

Second, Kelly claims there was no valid contract because after the arbitration she found a second version of the arbitration agreement, suggesting that K12 secretly attempted to alter the agreement. But this alleged second version was never presented to the district court and is not part of the record on appeal. Although Kelly has attempted to supplement the record pursuant to Fed. App. R. 10(e), that rule “does not grant a license to build a new record” by supplementing the record on appeal with documents that were not before the district court. United States v. Kennedy, 225 F.3d 1187, 1191 (10th Cir. 2000) (internal quotations marks omitted). The district court did not err in finding there was a valid arbitration agreement.

In sum, we hold the district court correctly upheld the arbitrators grant of summary judgment against Kelly.

B. Nonsignatories to Arbitration Agreement

A nonsignatory to an arbitration agreement can enforce an arbitration clause under the doctrine of equitable estoppel. See Thomson-CSF, S.A. v. Am. Arbitration Assn, 64 F.3d 773, 778 (2d Cir. 1995). Under this theory, a signatory may be required to arbitrate with a nonsignatory when the signatory alleges substantially interdependent and concerted misconduct by both the nonsignatory and the signatory to the contract. See, e.g., MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947-48 (11th Cir. 1999). Here, Kellys claims against OVCA, Plummer, and Ellison were not merely interdependent, but based on the exact same operative facts as her claims against K12. It was therefore appropriate to require Kelly to arbitrate with the non-signatories to the arbitration agreement, and we affirm their dismissal on that ground.

III. CONCLUSION

For the foregoing reasons, we affirm the judgment of the district court. We deny Kellys motion to supplement the record.

FOOTNOTES

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.   We issued an order instructing Kelly and Defendant Oklahoma Skynet (d/b/a Oklahoma Virtual Charter Academy) to address whether the district courts order was final as to all parties and claims. See 28 U.S.C. § 1291 (granting courts of appeal jurisdiction “of appeals from all final decisions”). We conclude that the order was final, and we therefore have jurisdiction to address this appeal.

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.   OVCA is a trade name used by Oklahoma Skynet, which answered Kellys claims against OVCA. Because the district court used the trade name to refer to this defendant, we will do the same.