                                                                     NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                       No. 16-3725
                                      ____________

                          JOSHUA SILFEE, Individually and on
                           behalf of all others similarly situated

                                             v.

                      AUTOMATIC DATA PROCESSING, INC.;
                         ERG STAFFING SERVICE, LLP,
                                ____________

                     On Appeal from the United States District Court
                         for the Middle District of Pennsylvania
                                (D.C. No. 3-15-cv-00023)
                      District Judge: Honorable A. Richard Caputo
                                      ____________

                      Submitted Under Third Circuit L.A.R. 34.1(a)
                                    May 26, 2017

               Before: HARDIMAN, ROTH, and FISHER, Circuit Judges

                                  (Filed: June 13, 2017)
                                      ____________

                                        OPINION*
                                      ____________




       *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does
not constitute binding precedent.
HARDIMAN, Circuit Judge

       ERG Staffing Services, Inc. appeals the District Court’s order denying its motions

to compel arbitration and to dismiss. Because the District Court erroneously ruled on

ERG’s motion to dismiss before resolving its motion to compel arbitration, we will

vacate and remand.

                                             I

       Appellee Joshua Silfee sued ERG, his former employer, alleging that ERG’s

payroll practices violated Pennsylvania law. ERG filed a motion to compel arbitration

pursuant to Section 4 of the Federal Arbitration Act (FAA), arguing that the arbitration

agreement between Silfee and ERG’s payroll vendor precluded Silfee’s suit against ERG.

The District Court opted to “delay ruling” on ERG’s motion to compel arbitration, App.

9, and proceeded to deny ERG’s separately filed motion to dismiss based on the merits of

Silfee’s state law claim. ERG appealed.

                                            II1

       The Federal Arbitration Act manifests a “liberal federal policy favoring arbitration

agreements” and was passed with the purpose of moving litigants “out of court and into

arbitration as quickly and easily as possible.” Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 22–24 (1983). Section 4 of the FAA provides that “[a] party

       1
         The District Court had jurisdiction under 28 U.S.C. § 1332(d). We have
jurisdiction under 9 U.S.C. § 16(a)(1). “We exercise plenary review over questions
regarding the validity and enforceability of an agreement to arbitrate.” Puleo v. Chase
Bank USA, N.A., 605 F.3d 172, 177 (3d Cir. 2010).

                                             2
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 proceed in the manner provided for in such agreement.” 9

U.S.C. § 4. Because “arbitration is a matter of contract . . . [and is] predicated upon the

parties’ consent,” a court ruling on a motion to compel under § 4 must first determine if

the parties intended to arbitrate the dispute. Guidotti v. Legal Helpers Debt Resolution,

L.L.C., 716 F.3d 764, 771 (3d Cir. 2013) (citations and alterations omitted).

       The District Court erred in bypassing this § 4 inquiry to rule on ERG’s motion to

dismiss. Arbitrability is a “gateway” issue, so “a court should address the arbitrability of

the plaintiff’s claim at the outset of the litigation.” Reyna v. Int’l Bank of Commerce, 839

F.3d 373, 378 (5th Cir. 2016) (emphasis added). In deciding a motion to compel

arbitration, the role of the court “is strictly limited to determining arbitrability and

enforcing agreements to arbitrate, leaving the merits of the claim and any defenses to the

arbitrator.” Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 478 (9th Cir.

1991). Thus, after a motion to compel arbitration has been filed, the court must “refrain

from further action” until it determines arbitrability. Sharif v. Wellness Int’l Network,

Ltd., 376 F.3d 720, 726 (7th Cir. 2004) (citation omitted). District courts may not alter

this sequencing: “By its terms, the [FAA] leaves no place for the exercise of discretion by

a district court, but instead mandates that district courts shall direct the parties to proceed

to arbitration on issues as to which an arbitration agreement has been signed.” Dean

Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985).
                                               3
       The seeds of the District Court’s confusion may have been sown by our decision

in Guidotti, where we described “the standard for district courts to apply” when assessing

motions to compel arbitration. 716 F.3d at 771. In Guidotti, we explained that a district

court should apply one of two standards, depending on the circumstances. “[W]hen it is

apparent, based on the face of a complaint, and documents relied upon in the complaint,

that certain of a party’s claims are subject to an enforceable arbitration clause, a motion

to compel arbitration should be considered under a Rule 12(b)(6) standard without

discovery’s delay.” Id. at 776 (alterations and citation omitted). “But if the complaint and

its supporting documents are unclear regarding the agreement to arbitrate, or if the

plaintiff has responded to a motion to compel arbitration with additional facts sufficient

to place the agreement to arbitrate in issue,” the district court may order limited briefing

and discovery on the issue of arbitrability, then assess the question under the summary

judgment standard. Id.

       The District Court did not think that Guidotti provided “a clearly-articulated

standard of review” for this case. App. 9. It reasoned that “a disposition of a motion to

compel arbitration under the summary judgment standard would be premature in this

case,” but also thought that using “the 12(b)(6) standard would . . . run afoul of Guidotti

because such a standard is to be applied only in cases where a party does not question the

arbitrability or applicability of the arbitration agreement.” Id. Considering itself caught

between a rock and a hard place, the District Court opted to “delay ruling on [ERG’s]

motions to compel arbitration until a summary judgment stage when discovery is
                                              4
underway.” Id.

       The District Court committed two errors in this regard. First, it did not recognize

that the standards laid out in Guidotti are truly dichotomous. Because either the Rule

12(b)(6) or the Rule 56 standard will apply, there are no circumstances in which Guidotti

does not provide a “clearly-articulated standard of review.” App. 9. Second, the District

Court misstated the applicability of the Rule 12(b)(6) standard, reasoning that it “is to be

applied only in cases where a party does not question the arbitrability or applicability of

the arbitration agreement.” Id. But that interpretation would render the Rule 12(b)(6)

standard a nullity; if a party has filed a motion to compel arbitration, then the other party

necessarily questioned arbitrability. See 9 U.S.C. § 4 (explaining that a motion to compel

is filed after “the failure, neglect, or refusal of another to arbitrate”). Rather, if a party

moves to compel arbitration based on an authentic arbitration agreement that is attached

to the complaint, the Rule 12(b)(6) standard is appropriate unless “the plaintiff has

responded to a motion to compel arbitration with additional facts sufficient to place the

agreement to arbitrate in issue.” Guidotti, 716 F.3d at 776.

       Having clarified our holding in Guidotti, we now turn to the facts of this appeal. In

his complaint, Silfee alleged that ERG violated Pennsylvania law by paying his wages

through a debit card system that imposed various fees. ERG then submitted the terms and

conditions that Silfee received from the payroll vendor along with that card, which

included the arbitration clause at issue in this case. With a concededly authentic

arbitration agreement attached to the complaint, the Rule 12(b)(6) standard was
                                                5
appropriate unless Silfee produced “additional facts sufficient to place the agreement to

arbitrate in issue.” Guidotti, 716 F.3d at 776. He did not do so. Silfee neither denied

receipt of and assent to the terms and conditions, nor did he seek discovery. Instead, he

argued that the arbitration agreement was unenforceable by ERG for “pure legal”

reasons. Silfee Br. 4. Those legal questions—based entirely on documents attached to the

complaint—do not require additional discovery. Guidotti, 716 F.3d at 776. Thus, the

District Court should have applied the Rule 12(b)(6) standard and should do so on

remand.

                                              III

       Though both Silfee and ERG urge us to rule on arbitrability, we think it imprudent

to do so. “It is the general rule, of course, that a federal appellate court does not consider

an issue not passed upon below.” Singleton v. Wulff, 428 U.S. 106, 120 (1976). Here, the

District Court did not identify—much less analyze—any of the parties’ competing

arguments regarding arbitrability. Accordingly, we will remand to the District Court for

consideration of ERG’s motion to compel arbitration in the first instance.

                                       *      *       *

       For the foregoing reasons, we will vacate the order of the District Court and

remand for further proceedings consistent with this opinion.




                                               6
