Justia U.S. 5th Circuit Court of Appeals Opinion Summaries

Articles Posted in Arbitration & Mediation

By
This case stems from the collapse of Allen Stanford's Ponzi scheme. The court concluded that the Receiver cannot be compelled to arbitrate its claims against any of the defendants; the court did not reach the Receiver's argument that these particular arbitration agreements at issue are additionally unenforceable because they were instruments of the fraud inasmuch as the privacy they provided facilitated the fraud and because the Stanford entities were coerced into accepting them by Stanford as part of his Ponzi scheme; the court also did not reach the Receiver's similar but broader policy argument that the underlying purpose of the federal equity receivership statutes is at odds with the Federal Arbitration Act's, 9 U.S.C. 1 et seq., mandate in favor of arbitration; and the court rejected arguments raised by some of the defendants that the district court’s order exceeded the scope of the court's mandate in Alguire III. The court explained that, because the Receiver properly brings his Texas Uniform Fraudulent Transfer Act, Tex. Bus. & Comm. Code 24.009, claims on behalf of the Stanford International Bank, which did not consent to arbitration with any of the defendant employees, other than Luis Giusti, it cannot be compelled to arbitrate with those defendants. Moreover, because Giusti waived his right to arbitration, the Receiver cannot be compelled to arbitrate its claims against him either. Accordingly, the court affirmed the judgment. View "Janvey v. Alguire" on Justia Law

By
Plaintiff, individually and on behalf of other similarly situated individuals, filed suit against his former employer, IBC, contending that IBC violated the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq., by failing to pay proper overtime rates. The district court denied IBC's motion to compel arbitration. The court concluded that, upon a motion to compel arbitration, a court should address the arbitrability of the plaintiff’s claim at the outset of the litigation. Therefore, the district court was required to consider the arbitrability of plaintiff's claim before conditionally certifying the collective. The court further concluded that, because the arbitration agreement contains a delegation clause, any disputes about the arbitrability of plaintiff's claim or the scope of the arbitration agreement must be decided by the arbitrator, not the courts. Accordingly, the court concluded that the district court erred in denying the motion to compel arbitration and the court reversed and remanded. The court vacated the stay pending appeal. View "Reyna v. Int'l Bank of Commerce" on Justia Law

By
Plaintiff appealed the district court's orders refusing to enjoin arbitration and confirming an award in favor of the WestEnd Parties. The court concluded that it has jurisdiction to review the Injunction Order; the WestEnd Parties did not substantially invoke the judicial process and thus have not waived arbitration; and the district court did not err in refusing to enjoin arbitration based on res judicata where the temporary restraining order (TRO) suit and the arbitration claims do not arise from the same transaction. The court applied the vacatur standards of the Federal Arbitration Act (FAA), 9 U.S.C. 10(a)(2), and concluded that plaintiff points to no specific facts that lead to the conclusion that the Arbitrator was biased in the WestEnd Parties’ favor, and the Arbitrator did not exceed his powers in making the award. Accordingly, the court affirmed the judgment. View "Cooper v. WestEnd Capital Mgmt, LLC" on Justia Law

By
Plaintiff filed suit against his employer, Supreme, under the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq. After the action was filed but, according to Supreme, before it had learned of the suit, the company announced a new policy requiring employees to arbitrate employment disputes, including FLSA claims. The district court denied Supreme’s motion to dismiss or compel arbitration. The court reversed, concluding that the arbitration agreement is binding and contains a delegation clause transferring the power to decide threshold questions of arbitrability to the arbitrator. The court remanded and directed the district court to enter an order compelling arbitration. View "Kubala, Jr. v. Supreme Production Serv." on Justia Law

By
In this appeal stemming from a failed real estate investment, plaintiffs challenged the district court’s judgment confirming the arbitration award in favor of the Rainier parties involved in marketing the investment. The real estate transactions underlying this appeal have already been described in greater depth in Rainier DSC 1, L.L.C. v. Rainier Capital Management, L.P., 546 F. App’x 491, 492–93 (5th Cir. 2013). The court affirmed the district court's judgment confirming the arbitration award, concluding that plaintiffs have not identified any basis for vacating the arbitration award. View "Rainier DSC 1, LLC v. Rainier Capital Mgmt." on Justia Law

By
In this appeal stemming from a failed real estate investment, plaintiffs challenged the district court's judgments in favor of the non-arbitrating defendants. The real estate transactions underlying this appeal have already been described in greater depth in Rainier DSC 1, L.L.C. v. Rainier Capital Management, L.P., 546 F. App’x 491, 492–93 (5th Cir. 2013). The court affirmed the district court's grant of summary judgment, concluding that plaintiffs have not shown that the district court erred in not staying the litigation of the non-arbitrating parties during the arbitration or in granting summary judgment in favor of FSA and the physicians. View "Rainier DSC 1, LLC v. Rainier Capital Mgmt." on Justia Law

By
Petitioners challenged the dismissal of their petition to compel arbitration under 9 U.S.C. 4, arguing that the district court erred in holding that their petition was barred by collateral estoppel. The Arizon Entities argue that the district court properly concluded that the prior Missouri Circuit Court’s judgment denying arbitration precluded the district court from considering the question of arbitrability in this case. The court concluded that the district court incorrectly held that petitioners were in privity with the party to the Missouri Circuit Court's judgment. Accordingly, the court reversed and remanded. View "Wills v. Arizon Structures" on Justia Law

By
Appellants, investors who suffered financial losses as a result of R. Allen Stanford’s Ponzi scheme, alleged that Appellee, a clearing broker for Stanford Group Company, failed to disclose adverse financial information. A FINRA panel rejected appellants' claims but awarded them $10,000 in compensation for certain arbitration-related expenses. In this interlocutory appeal, appellants challenge the district court's denial of their motion to dismiss, for lack of subject matter jurisdiction, appellee's motion to confirm an arbitration award. At issue was whether the amount in controversy for establishing diversity jurisdiction over a petition to confirm an arbitration award is the amount awarded by the arbitration panel or the amount previously sought in the arbitration proceeding. The court affirmed the judgment and adopted the better reasoned approach to the amount in controversy under these circumstances. The court held that monetary amount sought in the underlying arbitration is the amount in controversy for purposes of diversity jurisdiction. View "Pershing, LLC v. Kiebach" on Justia Law

By
Plaintiff, a former employee of J&K, filed suit claiming unpaid overtime wages. On appeal, defendants challenged the district court's order compelling collective arbitration of plaintiff's complaint. After disposing of preliminary arguments, the court concluded that the district court correctly applied Pedcor Management Co. Inc. Welfare Benefit Plan v. Nations Personnel of Texas, Inc. In Pedcor, the court concluded that a clause submitting any dispute in connection with the agreement included determinations of class or collective arbitration. In this case, the court concluded that section (g) of the arbitration agreement is unambiguous evidence of the parties' intention to submit arbitrability disputes to arbitration and that arbitration was properly compelled. Accordingly, the court affirmed the judgment. Arbitration of plaintiff's claims, including whether class procedures are permissible, should proceed as ordered with JAMS as the arbitral forum. View "Robinson v. J & K Admin. Mgmt. Servs." on Justia Law

By
After Pauline Tillman Wagner and Ida Roberson died in Mississippi nursing homes run by Golden Living Southaven and Golding Living Center Batesville, Wagner's son (Sammy Gross) and Roberson's daughter (Shirley Cotton) filed suit against the nursing homes. After removal to federal court, the district court subsequently denied Southaven and Batesville's motion to compel arbitration based on arbitration agreements that the adult children had signed for their mothers when admitting them to the homes. The court held that the Mississippi Supreme Court would not adopt the district court’s formal device requirement and would instead permit parties to establish the existence of an agency relationship with other types of evidence. The court concluded that Gross's sworn testimony is competent evidence on the question of Gross’s agency and its scope. Because the existence and scope of an actual agency relationship is a question of fact the district court did not reach, the court could not decide the actual agency issue as a matter of law. Therefore, the court remanded for the district court for a factual finding on this issue in the first instance. Likewise, the same situation applies to Cotton, and the court remanded for the district court for a factual finding on this issue in the first instance. The court rejected defendant's estoppel argument. Finally, the court concluded that Batesville's apparent authority argument fails because it failed to put forth evidence of detrimental reliance; the district court properly rejected Batesville's ratification theory based on insufficient evidence; and the court declined to address the forum issue. Accordingly, the court vacated and remanded. View "Gross v. GGNSC Southaven, LLC" on Justia Law