          United States Court of Appeals
                     For the First Circuit

No. 11-2300

              FANTASTIC SAMS FRANCHISE CORPORATION,

                      Plaintiff, Appellant,

                               v.

                 FSRO ASSOCIATION LTD., ET AL.,

                     Defendants, Appellees.



          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

         [Hon. Nathaniel M. Gorton, U.S. District Judge]




                             Before

                       Lynch, Chief Judge,
               Selya and Thompson, Circuit Judges.



          Gregg A. Rubenstein, with whom Arthur L. Pressman, Sara
E. Farber, and Nixon Peabody LLP were on brief, for appellant.
          W. Michael Garner, with whom Elliot R. Ginsburg and W.
Michael Garner, P.A. were on brief, for appellee.


                          June 27, 2012
               LYNCH, Chief Judge.       In 2011, Fantastic Sams Regional

Owners Association ("FSRO") filed a Demand for Arbitration against

Fantastic Sams Franchise Corporation ("FSFC") with the American

Arbitration Association ("AAA").           FSRO's Demand, made on behalf of

its members, who are franchisees of Fantastic Sams and who have

individual license agreements with FSFC, alleged that FSFC had

breached those license agreements.             FSFC then filed a petition in

federal district court pursuant to Section 4 of the Federal

Arbitration Act ("FAA"), 9 U.S.C. § 4, to stay FSRO's arbitration

and to compel FSRO's members to arbitrate their claims with FSFC on

an individual basis.

               The district court allowed FSFC's petition as to some of

the license agreements at issue, based on the terms of those

agreements, and that decision is not at issue in this appeal.

Fantastic Sams Franchise Corp. v. FSRO Ass'n, 824 F. Supp. 2d 221,

225-26 (D. Mass. 2011).        However, it denied relief as to ten other

agreements, which contained different language.1 FSFC appeals this

denial.       We affirm the judgment of the district court allowing

these       claims   to   proceed   to   arbitration.     We   leave   to   the

arbitrators the issue of whether FSRO may compel arbitration under

the terms of the agreements at issue, or whether its members must

proceed individually.


        1
          Several of these franchisees have settled their claims
with FSFC, reducing the remaining number of agreements at issue on
appeal from ten to six.

                                         -2-
                                    I.

          FSFC is the franchisor of the nationwide chain of hair

salons known as "Fantastic Sams."         FSFC licenses the rights to its

brand to twenty-five regional owners, who are organized into

designated geographic regions and who license and manage over 1,200

individual salons.   In return for the exclusive right to conduct

business under the "Fantastic Sams" brand, the regional owners,

among other things, pay FSFC a fee of fifteen percent of any amount

collected in royalties from their individual salons plus a weekly

advertising fee.

          The   regional   owners    have     entered   into    thirty-five

regional license agreements with FSFC; all thirty-five agreements

provide for resolution of disputes via arbitration.            The terms of

the arbitration clauses vary somewhat among the license agreements,

but for purposes of this case they may be grouped into two

categories.     Twenty-five of the agreements expressly prohibit

"class arbitration" in the following (or similar) terms: "any

arbitration between FSFC and [the regional licensee] shall be of

[regional licensee's] individual claim only" and "[n]o arbitration

shall be conducted on a class-wide basis."              These twenty-five

agreements were executed at various dates after 1988.

          In contrast, the remaining ten agreements, which were

executed at various dates before 1988, do not contain any express

prohibitions on class or collective arbitration. Beyond this, they


                                    -3-
set out in broad terms the matters as to which arbitration is

required: "Any controversy or claim arising out of or relating in

any   way   to     this   Agreement   or    with      regard    to   its   formation,

interpretation       or   breach    shall   be     settled      by   arbitration   in

accordance with the Commercial Arbitration Rules of the American

Arbitration Association."

             The     regional      owners      also     formed       the   non-profit

corporation FSRO, the appellee here, for the purpose of promoting

their business interests.             The owners comprise the exclusive

membership of FSRO, and each member is party to at least one

regional license agreement with FSFC.

             Invoking the provisions for arbitration in the regional

license agreements, on July 25, 2011, FSRO filed a Demand for

Arbitration against FSFC seeking declaratory and injunctive relief

on behalf of its members both for breach of contract and related

violations of the Massachusetts Consumer Protection Act, Mass. Gen.

Laws ch. 93A.       FSRO alleged that FSFC had "engaged in a pattern of

conduct     designed      to   depress     the   price     of    Regional     Owners'

businesses by making it impossible or impractical to offer or sell

such regions on the open market" and thus was in breach of the

regional license agreements.

             On August 22, 2011, FSFC filed a petition pursuant to

Section 4 of the FAA, 9 U.S.C. § 4, in federal district court

seeking both to stay FSRO's Demand for Arbitration and to compel


                                         -4-
FSRO's members to arbitrate their claims individually. FSFC argued

that   the   express   prohibitions   on   "class-wide"   arbitration   in

twenty-five of the regional license agreements at issue barred FSRO

from seeking to represent its members in arbitration under those

agreements.

             Although the remaining ten agreements are devoid of

similar class-wide arbitration prohibitions, FSFC argued that

FSRO's arbitration as to these ten was foreclosed under the Supreme

Court's decision on class arbitration in Stolt-Nielsen S.A. v.

AnimalFeeds International Corp., 130 S. Ct. 1758 (2010).             That

decision, FSFC contended, holds as a matter of law that no class or

collective arbitration may proceed unless the arbitration agreement

expressly authorizes those forms of proceedings.          Because the ten

agreements here do not contain such express consent to arbitration

by an association, FSFC argued, FSRO's representative action must

be barred.

             In its September 21, 2011, response in opposition, FSRO

argued that FSFC had misread Stolt-Nielsen, that the decision does

not require the express consent posited by FSFC, and that, in any

event, neither Stolt-Nielsen nor the prohibitions on "class-wide"

arbitration contained in some of the agreements applies to bar

associational arbitration, which, FSRO argued, is different in kind

from class arbitration.      FSRO also urged the court to send the

dispute to be decided by the arbitrators.


                                  -5-
           As said, the district court granted FSFC's petition as to

the twenty-five agreements expressly barring class arbitration,

finding that the requirements in those agreements "that arbitration

be of a licensee's individual claim only," foreclosed FSRO's

action.   Fantastic Sams Franchise Corp., 824 F. Supp. 2d at 225.

FSRO does not appeal this decision.

           The court denied FSFC's petition as to the remaining ten

agreements, on the grounds that "[t]he arbitration clause in those

contracts is very broad and applies, without qualification, to all

controversies or claims arising from or related to the contract,

including issues of interpretation and breach," and that the

contracts "incorporate[] by reference the rules of the AAA, which,

in turn, provide that the arbitrator shall have the power to rule

on his or her own jurisdiction, including any objections with

respect to the existence, scope or validity of the arbitration

agreement."   Id.   The court concluded that whether the agreements

preclude FSRO's action "is a matter of contract interpretation

which the parties have agreed to submit to arbitration."    Id.

                                 II.

           We review the district court's order denying FSFC's

petition to stay arbitration and compel individual arbitrations de

novo as it presents a pure question of law.     PowerShare, Inc. v.

Syntel, Inc., 597 F.3d 10, 15 (1st Cir. 2010).    We may affirm the

district court's order on any ground manifest in the record.


                                 -6-
Houlton Citizens' Coal. v. Town of Houlton, 175 F.3d 178, 184 (1st

Cir. 1999).

             As an initial matter, FSFC argues on appeal that because

the   agreements      at      issue    do        not   expressly     permit     FSRO's

associational       action,    under       the    Supreme   Court's    decision     in

Stolt-Nielsen, the action is prohibited outright.

             FSFC reads Stolt-Nielsen too broadly.                 The Court granted

certiorari     in    that     case    to    decide     "whether     imposing    class

arbitration on parties whose arbitration clauses are 'silent' on

that issue is consistent with the [FAA]."                130 S. Ct. at 1764.      The

Court held that an arbitration panel had "exceeded its powers," id.

at 1770, under the FAA, state, and federal law, when it elected to

follow its own policy preferences and permit class arbitration to

go forward where the parties to an arbitration agreement had

reached "no agreement" on that subject, id. at 1776.

             The    parties    in     Stolt-Nielsen       stipulated     that    their

agreement was unambiguously "silent" on class arbitration, not

merely in the sense that the agreement made no express reference to

class arbitration, but because "they had not reached any agreement

on the issue."         Id. at 1768.              Although it acknowledged this

"silence," the arbitration panel nonetheless concluded that class

arbitration should be permitted for a variety of policy-related

reasons.   Id. at 1768-70 & n.7.             The panel stayed the arbitration




                                           -7-
to allow the parties to seek judicial review of its decision.                  Id.

at 1766.      On review, the Supreme Court reversed.

              The Court held that class arbitration may not be imposed

on    a    party   to   an   arbitration    agreement    "unless     there    is   a

contractual basis for concluding that the party agreed to" submit

to class arbitration.           Id. at 1775 (first emphasis added).            The

Court found no such contractual basis present on the facts before

it.       Although the arbitration panel had considered the language,

context, and usage of the agreement in that case, the Court held

that these considerations were "beside the point" in a case in

which the "parties were in complete agreement regarding their [lack

of] intent."       Id. at 1770.     Once the parties stipulated that they

had reached "no agreement" on class arbitration, id. at 1766, "the

only task . . . left for the panel . . . was to identify the

governing rule applicable" in the case, id. at 1770. "[I]nstead of

identifying and applying a rule of decision derived from the FAA or

either maritime or New York law, the arbitration panel imposed its

own policy choice and thus exceeded its powers."               Id.

              The Court had no occasion in Stolt-Nielsen to consider

what may constitute a "contractual basis" for class arbitration.

Id. at 1776 n.10. It did, however, reiterate the general rule that

a    court    or   arbitrator    tasked    with   construing   an    arbitration

agreement      "must    give    effect    to    the   contractual    rights    and

expectations of the parties;" id. at 1773-74 (quoting Volt Info.


                                          -8-
Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489

U.S. 468, 479 (1989)) (internal quotation marks omitted), "as with

any other contract, the parties' intentions control," id. at 1774

(quoting Mitsubishi Motors Corp. v. Soler Chrysler–Plymouth, Inc.,

473 U.S. 614, 626 (1985)) (internal quotation marks omitted).                The

Court acknowledged that "[i]n certain contexts, it is appropriate

to   presume"   that    the   parties    "implicitly     authorize[d]"   class

arbitration.     Id. at 1775.       However, this implicit authorization

may not be inferred from the mere "fact of the parties' agreement

to arbitrate."    Id.     For example, a finding that an agreement does

not preclude class arbitration is not enough to conclude that the

agreement authorizes it when the parties have said that they

reached no agreement on the subject.

           We thus reject the very different precept, on which

FSFC's argument depends, that there must be express contractual

language evincing the parties' intent to permit class or collective

arbitration.          Stolt-Nielsen     imposes   no    such    constraint    on

arbitration agreements.        The two other circuits to have addressed

this issue agree.       In Sutter v. Oxford Health Plans LLC, 675 F.3d

215 (3d Cir. 2012), the Third Circuit held that "Stolt–Nielsen did

not establish a bright line rule that class arbitration is allowed

only   under    an     arbitration      agreement      that    incants   'class

arbitration'     or     otherwise     expressly   provides      for   aggregate

procedures," id. at 222, and in Jock v. Sterling Jewelers Inc., 646


                                        -9-
F.3d 113 (2d Cir. 2011), cert denied, 132 S. Ct. 1742 (2012), the

Second Circuit found that "Stolt–Nielsen does not foreclose the

possibility that parties may reach an implicit -- rather than

express -- agreement to authorize class-action arbitration," id. at

123 (citation and internal quotation marks omitted).

           As   a   fallback,   FSFC     argues   that   the   arbitration

agreements at issue here are "silent" on class arbitration, within

the meaning of the "silence" recognized in Stolt-Nielsen, and thus

preclude   FSRO's   action.     FSFC's    argument   fails     because   the

agreements at issue here are not "silent" in the same sense that

the agreement was silent in Stolt-Nielsen.               Furthermore, the

Supreme Court has not extended Stolt-Nielsen             to the type of

associational action brought by FSRO, which is different in many

respects from the class-action arbitration at issue in Stolt-

Nielsen.   We cannot conclude, under the auspices of Stolt-Nielsen,

that as a matter of law the broad arbitration clause at issue here

precludes arbitration of this issue.

           First, because the parties to the arbitration agreement

at issue in Stolt-Nielsen stipulated that they had reached "no

agreement" on class-wide arbitration, there was no occasion for any

inquiry into the parties' intent on that subject.         In contrast, in

this case, it is conceivable that an arbitrator could find more

than silence in the arbitration agreements on whether the "parties




                                  -10-
agreed to authorize" the type of associational action brought by

FSRO.   Stolt-Nielsen, 130 S. Ct. at 1776 n.10.

           In this case, the relevant language in the arbitration

agreements is quite broad and the parties vigorously dispute both

its meaning and the intentions underlying it.              For example,

additional evidence could reveal that the later change in language

reflects a conscious choice by the parties to exclude some forms of

arbitration, available prior to 1988, after that date.              That is,

there may have been no intent to exclude class arbitration, much

less associational arbitration, before 1988.        In addition, there

may be other evidence of intent presented to the arbitrators, such

as industry practice.    See id. at 1769 n.6 ("Under both New York

law and general maritime law, evidence of 'custom and usage' is

relevant   to   determining   the   parties'   intent   when   an    express

agreement is ambiguous.").      Thus, this is unlike Stolt-Nielsen,

where the language of the arbitration agreement and circumstances

surrounding its formation "left no room for an inquiry regarding

the parties' intent."    Id. at 1770.

           In addition, we cannot say as a matter of law that FSRO's

associational action in this case is equivalent to a class action.

In Stolt-Nielsen, the Court was concerned with the particular

features of class-action arbitrations and with the fundamental

changes those features work in the arbitration process.         The Court

held that an arbitrator may not infer an agreement to authorize


                                    -11-
class arbitration from the sole fact of the parties' agreement to

arbitrate because "class-action arbitration changes the nature of

arbitration to such a degree that it cannot be presumed the parties

consented to it by simply agreeing to submit their disputes to an

arbitrator."     Id. at 1775.

            The Court highlighted "just some of the fundamental

changes brought about by the shift from bilateral arbitration to

class-action arbitration."         Id. at 1776.      An arbitrator resolves

not a single dispute between the parties, but instead many disputes

between hundreds or thousands of parties, potentially including

non-domestic parties.        Id.    Further, the arbitrator's award no

longer binds just the parties to the arbitration agreement, but

adjudicates the rights of absent parties as well.                     Id.     The

"commercial stakes of class-action arbitration are comparable to

those of class-action litigation," but judicial review is limited.

Id. Finally, "the presumption of privacy and confidentiality" that

typically applies in many bilateral arbitration agreements may not

apply. Id. (quoting Am. Arbitration Ass'n, Supplementary Rules for

Class Arbitrations, Class Rule 9(a) (2003)) (internal quotation

marks omitted).

            In   contrast,   in    this   case,   FSRO   does   not    seek    to

represent   any    absent    parties,     or   any   parties    who    are    not

signatories of the agreements at issue.              Nor does FSRO seek to

bring any claims or obtain any relief not arising directly out of


                                     -12-
the agreements.    In this action, FSRO's members cannot, for

example, obtain individualized damage awards, as in some class

actions.   In addition, the arbitrators do not have to certify a

class, or provide public notice of the arbitration, and the

proceedings accordingly may remain confidential.

           It is conceivable that some associational actions in

arbitration would seek to do these things and so raise some of the

same concerns that animated the Court's decision in Stolt-Nielsen.

However, FSRO's action in this case does not appear to raise any of

those concerns.2

           The question devolves into whether the court or the

arbitration panel should decide the merits of the parties' dispute

-- whether FSRO may bring its associational action -- in this case.

FSFC argues that the dispute is one for the courts to decide under

the Supreme Court's decision in Stolt-Nielsen and under a separate


     2
          In contrast, in this case, although it did not itself
sign the arbitration agreements with FSFC, FSRO is composed
exclusively of the twenty-five regional owners who make up the
Fantastic Sams franchise, each of whom have signed an arbitration
agreement with FSFC. FSRO's action, which it has brought under
these agreements, exclusively on behalf of the signatories of those
agreements, seeks declaratory and injunctive relief from what it
alleges is FSFC's breach of the agreements. FSRO is not a third
party beneficiary, which would raise different issues. See, e.g.,
Republic of Iraq v. BNP Paribas USA, No. 11-1356, 2012 WL 1021032,
at *1-2 (2d Cir. Mar. 28, 2012) (holding that whether the Republic
of Iraq may arbitrate breach of contract and fiduciary duty claims
as a purported third-party beneficiary of a contract between the
United Nations and BNP Paribas in connection with a 1995 United
Nations resolution creating an exception to economic sanctions on
Iraq for the "Oil-for-Food Program" presented a question of
arbitrability for the courts).

                               -13-
line of cases which deal more directly with that question.             See,

e.g., Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002);

First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 942 (1995);

John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 546-47 (1964).

We reject FSFC's arguments.

             First, the question before the Supreme Court in Stolt-

Nielsen was whether the arbitrators had exceeded their powers in

permitting arbitration;3 it was not whether the court or the

arbitration    panel   should   decide   the   issue   of   whether   class

arbitration can go forward when the contract is silent on the

question.4    The parties in Stolt-Nielsen expressly assigned that

issue to the arbitration panel, and no party argued that the

assignment was impermissible.      130 S. Ct. at 1772 ("[W]e need not

revisit [the question of whether the court or arbitrator should

decide whether a contract permits class arbitration] here because

the parties' supplemental agreement expressly assigned this issue

to the arbitration panel, and no party argues that this assignment

was impermissible.").    FSFC's argument that Stolt-Nielsen disposes

of this question thus fails.



     3
          The Court reserved the question of whether the "manifest
disregard" standard of review for arbitral awards survived Hall
Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008).
Stolt-Nielsen, 130 S. Ct. 1758, 1768 n.3 (2010).
     4
          The Stolt-Nielsen majority concluded that Green Tree
Financial Corp. v. Bazzle, 539 U.S. 444 (2003), had left that
question open. 130 S. Ct. at 1771-72.

                                  -14-
           FSFC also argues that the parties' dispute presents a

"substantive question of arbitrability" which must be decided by

the courts under the Supreme Court's decisions on arbitrability in

First Options of Chicago, Inc. v. Kaplan, and other related cases.

See, e.g., Howsam, 537 U.S. 79; AT&T Techs., Inc. v. Commc'ns

Workers of Am., 475 U.S. 643 (1986); John Wiley & Sons, 376 U.S.

543.

           The Supreme Court has held that in certain limited

circumstances, "[u]nless the parties clearly and unmistakably

provide otherwise," AT&T Techs., 475 U.S. at 649, courts should

assume that the parties to an arbitration agreement intended the

courts to decide "dispositive gateway . . . 'question[s] of

arbitrability,'" Howsam, 537 U.S. at 83.         The Court has cautioned

that this interpretive rule must be construed narrowly, for any

number    of   non-merits    questions   could       be   characterized   as

"dispositive" or "gateway" questions in the sense that their

"answer will determine whether the underlying controversy will

proceed to arbitration on the merits."        Id.

           The scope of "the phrase 'question of arbitrability'" is

"far more limited."    Id.    It includes questions about whether the

parties have a valid arbitration agreement at all, Green Tree Fin.

Corp. v. Bazzle, 539 U.S. 444, 452 (2003), and whether a concededly

valid    arbitration   clause   encompasses      a    particular   type   of

controversy, Howsam, 537 U.S. at 84. Thus, the Court has held that


                                  -15-
a court should decide whether an arbitration agreement survived a

corporate merger, John Wiley & Sons, 376 U.S. at 546-47, whether a

party to an arbitration agreement could force a nonparty into

arbitration, First Options of Chi., 514 U.S. at 942-43, and whether

a particular labor-management dispute falls within the arbitration

clause of a collective bargaining agreement, AT&T Techs., 475 U.S.

at 649.

             The   Court    has   distinguished     this   narrow     class   of

"questions of arbitrability" from "'procedural' questions which

grow out of [a] dispute and bear on its final disposition," Howsam,

537 U.S. at 84 (quoting John Wiley & Sons, 376 U.S. at 557)

(internal quotation marks omitted), and which, presumptively are

for the arbitrator to decide, id.

             Unlike   a    "question   of     arbitrability,"   the   parties'

dispute in this case does not implicate the validity of the

arbitration agreement or present any question of whether FSRO's

particular claims come under the arbitration agreement.               There is

no dispute here that the district court, quite appropriately, first

looked for whether there was a valid, contractual agreement to

arbitrate.     See First Options of Chi., 514 U.S. at 943.              Neither

party disputes the conclusion that there is such an agreement here.

FSFC also concedes that "the parties agree that FSRO's claims are

subject to the franchise agreements' arbitration requirement."




                                       -16-
            The more limited question here is of the kind that an

arbitrator would typically decide, and does not raise an issue of

"arbitrability."          Under the Arbitration Rules of the American

Arbitration Association, arbitrators typically decide questions

which concern the scope of their own jurisdiction.                     This may

include questions concerning allegations of waiver, defenses to

arbitrability, and whether conditions precedent to arbitrability

have been fulfilled. Howsam, 537 U.S. at 84. Arbitrators may also

decide such questions as whether to consolidate arbitrations into

a single proceeding.        See, e.g., Blue Cross Blue Shield of Mass.,

Inc.   v.   BCS    Ins.    Co.,    671   F.3d   635,   640   (7th   Cir.     2011)

("Consolidation of suits that are going to proceed anyway poses

none of the[] potential problems [posed by class arbitration] . .

. . Just as consolidation under Rule 42(a) does not change the

fundamental       nature    of    litigation,    so    consolidation    of    the

[parties'] claims would not change the fundamental nature of

arbitration.").       Here, FSFC has conceded that FSRO's underlying

claims fall within the arbitration agreements.

            Our conclusion that the parties' associational dispute

should be decided by the arbitrators is reinforced by the sweeping

language of the arbitration clauses at issue here and by the

conscious    change    in    language     subsequently.      The    arbitration

provision in the agreements reads, "Any controversy or claim

arising out of or relating in any way to this Agreement or with


                                         -17-
regard to its formation, interpretation or breach shall be settled

by arbitration in accordance with the Commercial Arbitration Rules

of the American Arbitration Association."       The question of whether

the parties to this arbitration agreement "agreed to authorize" an

action like FSRO's, Stolt-Nielsen, 130 S. Ct. at 1776 n.10, is one

for the arbitrators to decide.

                                  III.

            The   district   court's   denial   of   FSFC's   petition   is

affirmed.




                                  -18-
