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

Doctors Scott Sullivan and Frank DellaCroce, along with their associated business entities, entered into a turnkey agreement with Stewart Feldman and his associated entities to pool their risks through certain insurance arrangements. The agreement included an arbitration provision. The doctors later alleged that Feldman and his entities misled them about the insurance arrangements and failed to wind down the insurance entities upon request, leading to multiple arbitration proceedings.The United States District Court for the Southern District of Texas was involved in compelling and managing these arbitrations. The court initially allowed multiple arbitrations to proceed simultaneously and later confirmed four arbitration awards, despite their inconsistencies. The district court also issued a stay order to prevent further arbitrations until the existing ones were resolved.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court affirmed the Glasser, Baker, and Kutcher arbitration awards, finding no grounds under the Federal Arbitration Act to vacate them. The court also affirmed in part the Jones arbitration award but reversed it in part concerning defendant Jeff Carlson, who was not bound by the arbitration agreement. The court vacated and remanded the district court’s order staying further arbitrations, allowing the parties to resolve the inconsistencies among the awards through additional arbitration if they choose. View "Sullivan v. Feldman" on Justia Law

In 2017, Baker Hughes Saudi Arabia Co., Ltd. (Baker Hughes) and Dynamic Industries Saudi Arabia, Ltd. (Dynamic) entered into a subcontract for an oil-and-gas project in Saudi Arabia. The subcontract included provisions for resolving disputes through arbitration, with Dynamic having the option to demand arbitration in Saudi Arabia. If Dynamic did not demand arbitration in Saudi Arabia, either party could initiate arbitration under the rules of the Dubai International Financial Centre’s joint partnership with the London Court of International Arbitration (DIFC-LCIA). In 2021, the United Arab Emirates abolished the DIFC-LCIA and created a new arbitral institution. A contract dispute arose, and Baker Hughes sued in state court, which was then removed to federal court. Dynamic moved to dismiss for forum non conveniens or to compel arbitration under Schedule E of the subcontract. The district court denied Dynamic’s motion, stating that the designated forum no longer existed, making the forum-selection clause unenforceable.The United States District Court for the Eastern District of Louisiana reviewed the case and denied Dynamic’s motion to dismiss or compel arbitration, reasoning that the DIFC-LCIA no longer existed, thus invalidating the forum-selection clause.The United States Court of Appeals for the Fifth Circuit reviewed the case and held that the district court erred in refusing to compel arbitration. The appellate court found that the subcontract’s Schedule E designated only the rules of arbitration, not a specific forum. Even if the DIFC-LCIA was considered the designated forum, the court concluded that the forum-selection clause was not integral to the subcontract. The court reversed the district court’s decision and remanded the case for further proceedings, instructing the district court to consider whether the DIFC-LCIA rules could be applied by another available forum, such as the LCIA, DIAC, or a forum in Saudi Arabia, and to compel arbitration accordingly. The court also partially granted and denied Baker Hughes’s motion to strike portions of Dynamic’s reply brief. View "Baker Hughes v. Dynamic Industries" on Justia Law

Karen Ashley, the former Chief Nursing Officer of Clay County Memorial Hospital (CCMH), raised concerns about patient safety issues, including missing fentanyl and procedural errors in blood transfusions. She reported these issues internally and publicly at a CCMH Board meeting. Ashley also advocated for CCMH to terminate its contract with Concord Medical Group PLLC and partner with ACPHealth. Following this advocacy, Ashley alleges that the County, CCMH, and the Foundation retaliated against her by terminating her employment, violating her First Amendment rights.Ashley filed suit against the County and Concord Medical Group, alleging retaliation under the Texas Occupations Code and 42 U.S.C. § 1983. The County moved to dismiss, asserting it was not Ashley’s employer and had taken no adverse actions against her. Ashley amended her complaint to add CCMH as a defendant and narrowed her claims against the County. The County maintained it was not Ashley’s employer and moved to dismiss on governmental immunity grounds. CCMH invoked an arbitration clause in Ashley’s employment agreement and moved to compel arbitration. The district court compelled the County to arbitration alongside CCMH and denied the County’s motion to dismiss as moot.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the district court erred by not addressing the County’s governmental immunity defense before compelling arbitration. The appellate court reversed the district court’s order compelling arbitration and remanded the case with instructions for the district court to resolve the issue of governmental immunity as it pertains to the County’s motion to dismiss before ruling on the motion to compel arbitration. View "Ashley v. Clay County" on Justia Law

A union representing over 9,000 pilots employed by an airline alleged that the airline violated the Railway Labor Act (RLA) by intimidating and disciplining pilots who affiliated with the union. The union claimed that the airline had a history of isolating a special category of pilots known as "check pilots" and "standards check pilots," who are responsible for training and evaluating other pilots. The union alleged that the airline unilaterally established working conditions for check pilots without bargaining and that check pilots were threatened with losing their qualifications if they affiliated with the union. The union also claimed that the airline retaliated against a pilot, Captain Timothy Roebling, by stripping him of his check-pilot qualifications after he joined a union committee.The United States District Court for the Northern District of Texas dismissed the union's complaint, concluding that the dispute was subject to arbitration under the RLA and that no exception applied to vest the court with jurisdiction. The district court found that the airline had an arguable basis for its actions under the collective bargaining agreement, making the dispute a "minor" one subject to arbitration.The United States Court of Appeals for the Fifth Circuit reviewed the case and concluded that the union had sufficiently pleaded the anti-union animus exception to the RLA's arbitration requirement. The court found that the union's allegations, including threats and retaliatory actions against check pilots, supported the claim that the airline's actions were intended to weaken or destroy the union. The court reversed the district court's dismissal and remanded the case for further proceedings, holding that the union's complaint sufficiently alleged anti-union animus to warrant judicial intervention. View "Southwest Airlines Pilots Assn v. Southwest Airlines" on Justia Law

Ultra Deep Picasso Pte. Limited (Ultra Deep) is a contractor specializing in undersea vessel operations for marine construction. Dynamic Industries Saudi Arabia Ltd. (Dynamic) subcontracted Ultra Deep for a project related to a contract with Saudi Aramco. Ultra Deep completed work worth over ten million dollars but alleged that Dynamic failed to pay, breaching their agreement. Ultra Deep filed a complaint in the Southern District of Texas, seeking breach of contract damages and a maritime attachment and garnishment of Dynamic’s funds allegedly held by Riyad Bank.The district court granted Ultra Deep an ex parte order for attachment of Dynamic’s assets at Riyad Bank. Dynamic responded with motions to dismiss for lack of personal jurisdiction, improper venue, and to compel arbitration, which were denied. Dynamic and Riyad Bank then moved to vacate the attachment order, arguing that Ultra Deep failed to show Dynamic had property in the Southern District of Texas. The magistrate judge held a hearing and found that Ultra Deep did not present evidence that Dynamic’s property was within the district. The district court adopted the magistrate judge’s recommendation, vacated the attachment order, and dismissed the case with prejudice.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that for a valid Rule B attachment, the property must be found within the district. It concluded that a bank account is located where its funds can be withdrawn. Since Ultra Deep failed to show that Dynamic’s property was within the Southern District of Texas, the court affirmed the district court’s decision to vacate the attachment order and dismiss the case. View "Ultra Deep Picasso v. Dynamic Industries Saudi Arabia Ltd." on Justia Law

Eileen Cure, a licensed investment advisor, entered into agreements with LPL Financial LLC (LPL) to act as a registered representative under LPL’s broker-dealer umbrella. These agreements included arbitration provisions. Cure, along with her companies, Cure & Associates, P.C. and Premier Wealth & Retirement Management, LLC, filed claims against LPL after LPL terminated its relationship with Cure, alleging she violated LPL’s policies. Cure’s companies, which were not signatories to the arbitration agreements, also alleged business disparagement and other claims against LPL.The United States District Court for the Eastern District of Texas granted LPL’s motion to compel arbitration for Cure but denied it for her companies, stating that the companies were not signatories to the arbitration agreements. The court also denied LPL’s request to stay the litigation pending arbitration. LPL appealed, arguing that under California and Texas law, equitable estoppel principles should compel Cure’s companies to arbitrate their claims.The United States Court of Appeals for the Fifth Circuit reviewed the case and concluded that Cure’s companies, although nonsignatories, were bound by the arbitration provisions due to equitable estoppel. The court found that the companies received direct benefits from Cure’s agreements with LPL, making them subject to the arbitration clauses. The Fifth Circuit reversed the district court’s denial of LPL’s motion to compel arbitration for the companies and vacated the order denying a stay of the litigation. The case was remanded for the district court to compel arbitration of the companies’ claims and to stay the action pending arbitration. View "Cure & Associates, P.C. v. LPL Financial" on Justia Law

In March 2013, Woodsboro Farmers Cooperative contracted with E.F. Erwin, Inc. to construct two grain silos. Erwin subcontracted AJ Constructors, Inc. (AJC) for the assembly. AJC completed its work by July 2013, and Erwin finished the project in November 2013. However, Woodsboro noticed defects causing leaks and signed an addendum with Erwin for repairs. Erwin's attempts to fix the silos failed, leading Woodsboro to hire Pitcock Supply, Inc. for repairs. Pitcock found numerous faults attributed to AJC's poor workmanship, necessitating complete deconstruction and reconstruction of the silos, costing Woodsboro $805,642.74.Woodsboro sued Erwin in Texas state court for breach of contract, and the case went to arbitration in 2017. The arbitration panel found AJC's construction was negligent, resulting in defective silos, and awarded Woodsboro $988,073.25 in damages. The Texas state court confirmed the award in September 2022. In December 2018, TIG Insurance Company, Erwin's insurer, sought declaratory relief in the United States District Court for the Southern District of Texas, questioning its duty to defend and indemnify Erwin. The district court granted TIG's motion for summary judgment on the duty to defend, finding no "property damage" under the policy, and later ruled there was no duty to indemnify, as the damage was due to defective construction.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court found that there were factual questions regarding whether the damage constituted "property damage" under the insurance policy, as the silos' metal parts were damaged by wind and weather due to AJC's poor workmanship. The court determined that the district court erred in granting summary judgment for TIG and concluded that additional factual development was needed. The Fifth Circuit reversed the district court's decision and remanded the case for further proceedings. View "TIG Insurance Company v. Woodsboro Farmers Coop" on Justia Law

In 2001, RSM Production Corporation (RSM) and the Republic of Cameroon signed a concession contract granting RSM the right to explore and develop hydrocarbons in the Logbaba Block. In 2005, RSM and Gaz du Cameroun (GdC) entered into a Farmin Agreement and a Joint Operating Agreement (JOA), with GdC becoming the project operator. The Farmin Agreement allowed GdC to recover its drilling costs from production revenues before sharing profits with RSM. A dispute arose over the Payout date, with RSM claiming it was February 1, 2016, and GdC asserting it was June 1, 2016.The dispute was submitted to arbitration under the International Chamber of Commerce (ICC) Rules. The arbitral tribunal ruled in favor of RSM, awarding $10,578,123.28 based on a February 1, 2016, Payout date. GdC requested corrections, arguing the tribunal included damages for claims not substantively addressed. The tribunal issued an Addendum Award, reducing RSM's award by $4,011,625.90, citing computational errors.RSM sought to vacate the Addendum Award in the United States District Court for the Southern District of Texas. The district court vacated the part of the Addendum Award that reduced RSM's recovery, concluding the tribunal exceeded its powers by reconsidering the merits of RSM's claims under the guise of correcting computational errors.The United States Court of Appeals for the Fifth Circuit reviewed the case. The court held that the tribunal had the authority to correct computational errors and to determine what constituted such errors under ICC Rule 36. The tribunal's interpretation of the rule and the parties' agreements was entitled to deference. The Fifth Circuit reversed the district court's judgment and remanded with instructions to confirm the Addendum Award. View "RSM Prod v. Gaz du Cameroun" on Justia Law

Ascension Data & Analytics, Rocktop Partners, and Rocktop Holdings II (collectively, "Ascension") entered into a contract with Pairprep, Inc. for data extraction services. The contract was terminated due to an alleged data breach and Pairprep's failure to extract reliable data. Ascension then contracted with another vendor, Altada Technologies Solutions, but that contract was also terminated early due to Altada's financial crisis. Ascension initiated arbitration proceedings against Pairprep to recover remediation costs incurred as a result of the data breach. Pairprep counterclaimed, alleging breach of contract and violation of the federal Defend Trade Secrets Act. The arbitration panel rejected Ascension's defenses and granted Pairprep a monetary award.Ascension filed an application in the Northern District of Texas to vacate the arbitration award, arguing that Pairprep's counterclaims were barred by res judicata due to a previous dismissal of identical claims against Altada. Pairprep filed an application to confirm the arbitral award in a Texas state court, which was granted. The district court dismissed Ascension's application for lack of subject matter jurisdiction and denied its motion for preliminary injunctive relief.The United States Court of Appeals for the Fifth Circuit affirmed the district court's decision. The court applied the Supreme Court's decision in Badgerow v. Walters, which held that a district court must have an independent jurisdictional basis to consider applications to confirm, modify, or vacate arbitral awards under the Federal Arbitration Act. The court found that Ascension had not established an independent basis for subject matter jurisdiction, as the parties were not diverse and Ascension did not identify any federal law entitling it to relief. Therefore, the court concluded that the dispute over the enforceability of the arbitral award must be litigated in state court. View "Ascension Data v. Pairprep" on Justia Law

The case involves SKAV, L.L.C., the owner of a Best Western hotel in Abbeville, Louisiana, and Independent Specialty Insurance Company. The hotel was damaged by Hurricane Laura in August 2020, and SKAV filed a claim on a surplus lines insurance policy it had purchased from Independent Specialty. The policy contained an arbitration clause requiring all disputes to be settled by arbitration. However, SKAV sued Independent Specialty in the Western District of Louisiana, alleging that the insurance company had failed to adequately cover the hotel's hurricane damage under the policy's terms. Independent Specialty moved to compel arbitration, but the district court denied the motion, citing a prior decision that concluded that § 22:868 of the Louisiana Revised Statutes voids an arbitration provision in a contract for surplus lines insurance.The case was appealed to the United States Court of Appeals for the Fifth Circuit. The main dispute was the effect of § 22:868 of the Louisiana Revised Statutes on the insurance policy's arbitration clause. The statute bars insurance policies from depriving Louisiana courts of jurisdiction and permits, in limited circumstances, forum- and venue-selection provisions. The court noted that there were conflicting decisions on this issue from district courts in Louisiana and New York.The Fifth Circuit Court of Appeals affirmed the district court's decision. The court concluded that the arbitration clause in the surplus lines insurance policy was void under § 22:868. The court reasoned that the Louisiana Legislature's 2020 amendments to the statute did not reverse the state's longstanding anti-arbitration policy. The court also rejected Independent Specialty's argument that the issue of the arbitration clause's validity must itself go to arbitration, stating that when a statute prevents the valid formation of an arbitration agreement, the court cannot compel arbitration, even on threshold questions of arbitrability. View "S. K. A. V. v. Independent Specialty Insurance Co." on Justia Law