                               RECOMMENDED FOR PUBLICATION
                               Pursuant to Sixth Circuit I.O.P. 32.1(b)
                                      File Name: 20a0053p.06

                   UNITED STATES COURT OF APPEALS
                                 FOR THE SIXTH CIRCUIT



 IN RE: AUTOMOTIVE PARTS ANTITRUST LITIGATION.              ┐
  ___________________________________________               │
                                                            │
 VIP, INC.; PERFORMANCE INTERNET PARTS, LLC,
                                                            │
                               Plaintiffs-Appellees,        │
                                                             >        No. 19-1150
                                                            │
        v.                                                  │
                                                            │
 KYB CORPORATION; KYB AMERICAS CORPORATION,                 │
                         Defendants-Appellants.             │
                                                            │
                                                            ┘

                       Appeal from the United States District Court
                      for the Eastern District of Michigan at Detroit.
  Nos. 2:12-md-02311; 2:15-cv-03301; 2:16-cv-13616—Marianne O. Battani, District Judge.

                                 Argued: December 5, 2019

                            Decided and Filed: February 24, 2020

                Before: DAUGHTREY, CLAY, and GRIFFIN, Circuit Judges.
                               _________________

                                           COUNSEL

ARGUED: Bradley Love, BARNES & THORNBURG, LLP, Indianapolis, Indiana, for
Appellants. Thomas C. Bright, CERA LLP, San Francisco, California, for Appellees.
ON BRIEF:       Bradley Love, Kendall Millard, J. Alexander Barnstead, BARNES &
THORNBURG, LLP, Indianapolis, Indiana, for Appellants. Thomas C. Bright, CERA LLP, San
Francisco, California, David H. Fink, Nathan J. Fink, FINK BRESSACK, Bloomfield Hills,
Michigan, Michael S. Smith, PRETI, FLAHERTY, BELIVEAU & PACHIOS LLP, Portland,
Maine, for Appellees.
 No. 19-1150                    VIP, Inc., et al. v. KYB Corp., et al.                     Page 2


                                        _________________

                                              OPINION
                                        _________________

          GRIFFIN, Circuit Judge.

          The Supreme Court recently emphasized that “before referring a dispute to an arbitrator,
the court determines whether a valid arbitration agreement exists. But if a valid agreement
exists, and if the agreement delegates the arbitrability issue to an arbitrator, a court may not
decide the arbitrability issue.” Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524,
530 (2019) (internal citation omitted). The district court concluded the first “if” did not apply to
the present dispute, finding the parties did not form an agreement to arbitrate and therefore
denied defendants’ motion to compel arbitration. We agree and affirm.

                                                   I.

          Defendant KYB Corporation (KYB) manufactures and distributes car parts throughout
the United States through its subsidiary, defendant KYB Americas Corporation (KAC), to a
network of retailers. Plaintiffs Performance Internet Parts, LLC and VIP, LLC (Performance,
VIP, or, collectively, plaintiffs) stock and sell various replacement parts online and in retail
stores. Both purchase KYB’s shock absorbers from KAC, and then resell them to consumers.

          Plaintiffs purchase the shock absorbers through “buying groups.” These trade groups
negotiate the purchasing terms and conditions on behalf of the groups’ members, including
pricing, rebate programs, and warranty allowances. The buying group agreements themselves do
not contain an arbitration provision, nor for that matter is there an arbitration agreement
contained in invoices reflecting specific purchases between the members and KAC.

          Instead, we focus on the buying group agreements’ reference to a “Limited Warranty.”
Beginning in 2016, the applicable buying group agreements provided that individual members
agreed to accept an off-invoice rebate from KAC in exchange for servicing consumers’ warranty
issues.    The agreements stated:     “Distributor is responsible for warranty authentication of
covered KYB products. An off-invoice warranty program is available for credit. In exchange
 No. 19-1150                   VIP, Inc., et al. v. KYB Corp., et al.                       Page 3


for the warranty allowance, [KAC] requires that you honor the terms and conditions of the
current KYB Limited Warranty.” One of the terms of the Limited Warranty mandates arbitration
“in accordance with the Rules of the American Arbitration Association,” and AAA Commercial
Arbitration Rule 7(a), in turn, specifically delegates to the arbitrator the power to determine his
jurisdiction.

        Plaintiffs assert in this putative class action that defendants and other shock absorber
manufacturers engaged in a myriad of anticompetitive activities in the auto parts industry.
Defendants moved to dismiss plaintiffs’ complaint pursuant to the Federal Arbitration Act
(FAA), 9 U.S.C. § 1 et seq., or, in the alternative, to dismiss all claims subject to arbitration and
stay the remaining claims pending arbitration. In their view, the applicable contracts mandate
that an arbitrator, not a court, decide the threshold question of arbitrability. Their argument is
built on several levels of incorporation: (1) plaintiffs agreed to “honor the terms and conditions”
of the Limited Warranty when they agreed to the buying group agreements; (2) one of the terms
and conditions of the Limited Warranty is an arbitration clause; and (3) the arbitration clause
incorporates AAA’s Commercial Arbitration Rules, including its delegation provision. The
district court disagreed, and defendants appeal.

                                                   II.

                                                   A.

        The FAA “embodies the national policy favoring arbitration and places arbitration
agreements on equal footing with all other contracts.”           Buckeye Check Cashing, Inc. v.
Cardegna, 546 U.S. 440, 443 (2006). It provides that a “written provision in . . . a contract
evidencing a transaction involving commerce to settle by arbitration a controversy thereafter
arising out of such contract or transaction, . . . or an agreement in writing to submit
to arbitration an existing controversy arising out of such a contract, . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. Courts must, consistent with this text, “‘rigorously
enforce’ arbitration agreements according to their terms.” Am. Express Co. v. Italian Colors
Rest., 570 U.S. 228, 233 (2013) (citation omitted). And we resolve “any doubts concerning the
 No. 19-1150                   VIP, Inc., et al. v. KYB Corp., et al.                       Page 4


scope of arbitral issues . . . in favor of arbitration.” Granite Rock Co. v. Int’l Bhd. of Teamsters,
561 U.S. 287, 298 (2010).

       “We review de novo a district court’s decisions regarding both the existence of a valid
arbitration agreement and the arbitrability of a particular dispute.” Floss v. Ryan’s Family Steak
Houses, Inc., 211 F.3d 306, 311 (6th Cir. 2000). We “apply ordinary state-law principles that
govern the formation of contracts.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944
(1995). The parties agree Indiana state law applies. And that law provides familiar parameters:
arbitration is a matter of contract, there is a presumption of arbitrability, and “parties are only
bound to arbitrate those issues that by clear language they have agreed to arbitrate.” Watts Water
Tech., Inc. v. State Farm Fire & Cas. Co., 66 N.E.3d 983, 989 (Ind. Ct. App. 2016). Moreover,
Indiana is receptive to arbitration provisions being incorporated by reference.         See Wilson
Fertilizer & Grain, Inc. v. ADM Milling Co., 654 N.E.2d 848, 853–54 (Ind. Ct. App. 1995).

                                                 B.

       Generally, “whether the parties are bound by a given arbitration clause raises a ‘question
of arbitrability’ for a court to decide.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84
(2002). “[P]arties may,” however, “agree to have an arbitrator decide not only the merits of a
particular dispute but also ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have
agreed to arbitrate or whether their agreement covers a particular controversy.” Henry Schein,
Inc., 139 S. Ct. at 529 (quoting Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63, 68–69 (2010)).
Known as a “delegation provision,” “[a]n agreement to arbitrate a gateway issue is simply an
additional, antecedent agreement the party seeking arbitration asks the federal court to enforce,
and the FAA operates on this additional arbitration agreement just as it does on any other.”
Rent-A-Center, 561 U.S. at 70. There is a “caveat” to enforcing delegation provisions: we
“should not assume that the parties agreed to arbitrate arbitrability unless there is clear and
unmistakable evidence that they did so.” Id. at 69 n.1 (internal quotation marks and brackets
omitted).

       Defendants therefore frame this appeal as a delegation case, requesting that we do what
many of our sister circuits have done—generally hold that an arbitration clause’s incorporation
 No. 19-1150                        VIP, Inc., et al. v. KYB Corp., et al.                                   Page 5


of AAA’s Commercial Rules suffices as “clear and unmistakable evidence” to delegate
arbitrability to an arbitrator. See Dish Network L.L.C. v. Ray, 900 F.3d 1240, 1246 (10th Cir.
2018)1; Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015); Petrofac, Inc. v.
DynMcDermott Petroleum Ops. Co., 687 F.3d 671, 675 (5th Cir. 2012); Fallo v. High-Tech Inst.,
559 F.3d 874, 878 (8th Cir. 2009); Awuah v. Coverall N. Am., Inc., 554 F.3d 7, 11 (1st Cir.
2009); Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1373 (Fed. Cir. 2006); Terminix Int’l Co.
v. Palmer Ranch LP, 432 F.3d 1327, 1332 (11th Cir. 2005); Contec Corp. v. Remote Sol. Co.,
398 F.3d 205, 208 (2d Cir. 2005). We have also assumed as much. See Turi v. Main St.
Adoption Servs., LLP, 633 F.3d 496, 506 (6th Cir. 2011), abrogated on other grounds by Henry
Schein, Inc., 139 S. Ct. at 528–29. And we recently held nearly identical language in AAA’s
Employment Arbitration Rules and Mediation Procedures “shows that the parties ‘clearly and
unmistakably’ agreed that the arbitrator would decide questions of arbitrability.” McGee v.
Armstrong, 941 F.3d 859, 866 (6th Cir. 2019).

         With all that said, we need not entertain defendants’ request in order to resolve this
appeal, for it rests on an assumption that incorporation of AAA’s Commercial Rules alone
establishes that plaintiffs agreed to the arbitration clause in the first instance.                        However,
“arbitration is a matter of contract.” AT & T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S.
643, 648 (1986) (citation omitted). It is axiomatic that “arbitrators derive their authority to
resolve disputes only because the parties have agreed in advance to submit such grievances to
arbitration.” Id. “Arbitration under the [FAA] is a matter of consent, not coercion,” Volt Info.
Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989), and
“[a] court may order arbitration of a particular dispute only where the court is satisfied that the
parties agreed to arbitrate that dispute,” Granite Rock Co., 561 U.S. at 297. Stated another way,
“courts should order arbitration of a dispute only where the court is satisfied that neither the
formation of the parties’ arbitration agreement nor (absent a valid provision specifically
committing such disputes to an arbitrator) its enforceability or applicability to the dispute is in

         1
          Citing Riley Manufacturing Company v. Anchor Glass Container Corporation, 157 F.3d 775, 780 (10th
Cir. 1998), some of our sister circuits have suggested there is a circuit split on this issue. See, e.g., Petrofac, 687
F.3d at 675. But the Tenth Circuit’s decision in Dish Network makes clear that Riley “never addressed whether
incorporation of the Commercial Arbitration Rules of the AAA added clear and unmistakable evidence of
delegation, and there [wa]s no indication that either party raised [it] as an issue.” 900 F.3d at 1248 n.3.
 No. 19-1150                    VIP, Inc., et al. v. KYB Corp., et al.                          Page 6


issue. Where a party contests either or both matters, ‘the court’ must resolve the disagreement.”
Id. at 299–300.      Therefore, “no matter how strong the federal policy favors arbitration,
arbitration is a matter of contract between the parties, and one cannot be required to submit to
arbitration a dispute which it has not agreed to submit to arbitration.” Simon v. Pfizer Inc.,
398 F.3d 765, 775 (6th Cir. 2005) (internal quotation marks omitted). As set forth next, we agree
with the district court that the parties did not agree to arbitrate any dispute, let alone this one.

                                                   C.

        We begin with an admonishment regarding defendants’ disingenuous selective quotation
of the Limited Warranty. Their brief presented to us the following argument:

        KAC’s buying group agreements with VIP and Performance clearly and
        unmistakably include a valid delegation provision. VIP and Performance agreed
        to “honor the terms and conditions of the current Limited Warranty . . . available
        at kyb.com.” The Limited Warranty specifies that “[a]ny disagreement, dispute,
        controversy or claim arising out of or relating to . . . the KYB product(s) . . . shall
        be settled by binding bilateral arbitration located in Indiana before one arbitrator
        in accordance with the Rules of the American Arbitration Association (AAA) and
        the Federal Arbitration Act (FAA).”

(Emphasis added and internal record citations omitted). The problem is the underlined third
ellipsis. The omitted language provides a key limiting provision of the arbitration agreement,
one that shows the arbitration agreement applies only to “original retail purchasers.” Here is the
text of the arbitration provision again, adding in the words defendants wish to disappear:

        Any disagreement, dispute, controversy or claim arising out of or relating to this
        Limited Warranty or the KYB product(s) must be brought in the original retail
        purchaser’s individual capacity and shall be settled by binding bilateral arbitration
        located in Indiana before one arbitrator in accordance with the Rules of the
        American Arbitration Association (AAA) and the Federal Arbitration Act (FAA).

(Emphasis added).

        Indiana law mandates that we “begin with the plain language of the contract, reading it in
context and, whenever possible, construing it so as to render each word, phrase, and term
meaningful, unambiguous, and harmonious with the whole.” Citimortgage, Inc. v. Barabas,
975 N.E.2d 805, 813 (Ind. 2012).         No plain language reading of this arbitration provision
 No. 19-1150                   VIP, Inc., et al. v. KYB Corp., et al.                       Page 7


evidences an intent to bind anyone to arbitration other than “original retail purchasers.” Indeed,
the remainder of the arbitration provision reinforces this point, using that phrase six more times.

       So, the question then becomes, are plaintiffs “original retail purchasers”? The terms of
the contracts answer this question.       The Limited Warranty clearly differentiates between
“original retail purchasers” and “authorized KYB product sellers.” Start with its scope:

       [KAC] warrants to the original retail purchaser that each new KYB product . . .
       purchased from an authorized KYB product seller shall be free from defects in
       material and workmanship . . . when used on private passenger cars and light
       trucks for personal use under normal operating conditions.

(Emphasis added). And consider its coverage of the parts defendants allegedly conspired to sell
in an anticompetitive manner. The Limited Warranty warrants “KYB Shock Absorbers” for a
“lifetime,” which it defines as “for as long as the original retail purchaser owns the vehicle on
which the KYB products were originally installed.” Plainly, an “original retail purchaser” is the
consumer who purchases a KYB shock absorber from a “distributor,” to be used on their own
personal vehicle. We put “distributor” in quotes because that is the exact way the buying group
agreements themselves refer to plaintiffs.           (“Distributor is responsible for warranty
authentication of covered KYB products.”) (Emphasis added).

       Because plaintiffs are not “original retail purchasers” under the terms of the arbitration
provision, the parties did not form an agreement to arbitrate. Cf. Crossville Med. Oncology, P.C.
v. Glenwood Sys., LLC, 485 F. App’x 821, 825 (6th Cir. 2012) (“[W]hen a party objects to the
arbitrator’s authority to decide the arbitrability issue in the first instance, AT & T Technologies
and First Options provide that he has a right to judicial determination of the issue unless he and
the other party have clearly and unmistakably agreed otherwise. That is, the analysis concerns
contract formation principles. . . . Only if the parties have agreed to arbitrate do the AAA’s rules
apply.” (internal citation omitted)).

       Defendants resist this conclusion on several grounds.

       They highlight that “[g]eneral rules of contract interpretation . . . direct [courts] to read
[incorporated documents] together so as to give effect to all words, phrases, and terms.” Bay
Colony Civic Corp. v. Pearl Gasper Tr., 984 N.E. 2d 231, 235 (Ind. Ct. App. 2013). As such,
 No. 19-1150                  VIP, Inc., et al. v. KYB Corp., et al.                        Page 8


they contend that “[i]n order for the agreement to ‘honor the terms and conditions of the current
KYB Limited Warranty’ to have meaning, provisions in the separate Limited Warranty must
apply to VIP and Performance.” We agree we must apply this principle but disagree with
defendants’ suggested application.

       For one, the buying group agreements make clear that “distributors [are] responsible for
warranty authentication of covered KYB products” in exchange for receiving a “warranty
allowance” from KAC. And in exchange for this warranty allowance, distributors agreed not
only to “honor” the Limited Warranty’s “terms and conditions,” but also to do several things that
clearly implicate their obligations in servicing warranty claims for consumers. For instance,
plaintiffs agreed to make the Limited Warranty available to “all purchasers . . . as required by the
Federal Trade Commission.”

       And for another, the plain terms of the Limited Warranty provide a way for distributors to
“honor” their commitment to defendants. Most telling is the Limited Warranty’s “how to make a
warranty claim” section. It details not only how consumers may return defective products, but
also sets forth KYB’s obligations to receive and process such products. Read together with the
buying group agreements’ language providing that plaintiffs stand in the shoes of KYB to service
some of KYB’s warranty obligations, the Limited Warranty mandates that consumers return
products they think are defective to distributors, which distributors must inspect, and upon
satisfaction that the products are covered under the warranty, the distributors must
replace/exchange the part for the consumer.

       In an effort to avoid this natural reading, defendants attempt to draw a contrast between
the arbitration agreement’s broad what-kind-of-claim language (“Any disagreement, dispute,
controversy or claim arising out of or relating to this Limited Warranty or the KYB product(s)”)
and the “original retail purchaser” limitation by arguing the latter “does not restrict the scope of
the agreement.” That is nonsensical, as the two provisions operate independently: One defines
the “what” (disagreement, dispute, controversy or claim) and one defines the “who” (original
retail purchasers). To give effect to the arbitration agreement, we must read both restrictions, not
just one. Cf. Solvay Pharm., Inc. v. Duramed Pharm., Inc., 442 F.3d 471, 478 (6th Cir. 2006)
(“If [a] limitation [on an arbitrator’s power] appears in close proximity to the arbitration clause,
 No. 19-1150                         VIP, Inc., et al. v. KYB Corp., et al.                                    Page 9


there is good reason to believe that the parties considered it to be a limitation on the proper
subjects for arbitration.”).         Accordingly, it is defendants’ interpretation that would render
contractual terms—i.e., the “brought in the original retail purchaser’s individual capacity”
limitation—meaningless.2

         Defendants additionally note that delegation clauses are separate, severable arbitration
provisions, see, e.g., Rent-A-Center, 561 U.S. at 70–72, and ask us to enforce the delegation
provision independent from the arbitration provision. Id. at 72 (“[U]nless [a party seeking to
avoid arbitration] challenge[s] the delegation provision specifically, we must treat it as valid . . . ,
and must enforce it . . . , [and] leav[e] any challenge to the validity of the Agreement as a whole
for the arbitrator.”). But Rent-A-Center also makes clear “that [just because] agreements to
arbitrate are severable does not mean that they are unassailable.” Id. at 71. The Court continued:
“If a party challenges the validity . . . of the precise agreement to arbitrate at issue, the federal
court must consider the challenge before ordering compliance with that agreement.” Id.; see also
New Prime Inc. v. Oliveira, 139 S. Ct. 532, 538 (2019) (similar).

         We therefore refuse defendants’ invitation for us to merge challenges to the validity of an
agreement (“whether it is legally binding”) with challenges to the existence of an agreement in
the first instance (“whether it was in fact agreed to” or “was ever concluded”). See, e.g., Rent-A-
Center, 561 U.S. at 69 n.1, 71 & n.2; see also Granite Rock, 561 U.S. at 299–300 (“[C]ourts
should order arbitration of a dispute only where the court is satisfied that neither the formation of
the parties’ arbitration agreement nor (absent a valid provision specifically committing such
disputes to an arbitrator) its enforceability or applicability to the dispute is in issue. Where a
party contests either or both matters, ‘the court’ must resolve the disagreement.”); Solymar Invs.,
Ltd. v. Banco Santander S.A., 672 F.3d 981, 990 (11th Cir. 2012) (agreeing that Granite Rock’s




         2
           Nor does the Indiana state court case of Wilson control the outcome of this case as defendants insist.
There, the parties agreed to a contract for the purchase of grains, and then the defendant sent the plaintiffs additional
terms in its purchase confirmation providing the contract was “subject to the Trade Rules of the National Grain and
Feed Association,” which in turn mandated arbitration. 654 N.E.2d at 849. Wilson thus turned on whether these
additional terms “materially alter[ed] the agreement,” and the Indiana Court of Appeals held they did not. Id. at 850.
There being no additional terms unagreed to here, Wilson is inapposite.
 No. 19-1150                      VIP, Inc., et al. v. KYB Corp., et al.                             Page 10


formation inquiry precedes the arbitrability question).3 Because plaintiffs did not consent to any
type of arbitration, we will not coerce them otherwise. See Volt, 489 U.S. at 479; AT & T Techs.,
475 U.S. at 648; Simon, 398 F.3d at 775.

                                                      III.

        For these reasons, we affirm the district court’s judgment.




        3
           Given this, we need not address VIP’s argument that because it stopped purchasing KYB shock absorbers
in 2010, it did not agree to the buying group agreements.
