Justia U.S. 5th Circuit Court of Appeals Opinion SummariesArticles Posted in Arbitration & Mediation
Quezada v. Bechtel OG & C Construction Services, Inc.
The Fifth Circuit affirmed the district court's confirmation of an arbitrator's award under the Federal Arbitration Act (FAA). Bechtel and its former employee entered arbitration on the employee's claims of disability discrimination, failure to accommodate, and retaliation. The court held that the district court correctly concluded it had jurisdiction to entertain the motions submitted by both parties. On the merits, the court held that Bechtel's first argument, that the arbitrator exceeded his authority by misapplying Fifth Circuit law, misunderstands the limited review of arbitration awards under the FAA. The court was also correct in denying vacatur based on Bechtel's claim that the arbitration rules agreed to by the parties required the arbitrator to follow the Federal Rules of Civil Procedure, which, according to Bechtel, did not authorize the arbitrator to reconsider its interim award that only granted $500 in nominal damages. The court explained that Bechtel's argument ignores the fact that the employee dispute resolution program also contains a provision stating that either party may file a motion for reconsideration with the arbitrator. View "Quezada v. Bechtel OG & C Construction Services, Inc." on Justia Law
Kemper Corporate Services, Inc. v. Computer Sciences Corp.
The Fifth Circuit affirmed the district court's confirmation of an arbitral award over the objection that the arbitrator had exceeded his authority. In the final award, the arbitrator found that CSC breached the Exceed Agreement and concluded that Kemper was entitled to damages. The magistrate judge recommended that the award be confirmed and the district court adopted the magistrate judge's report and recommendations. The court held that the final award was subject to a very deferential review where the arbitrator did not exceed the scope of his contractual authority by classifying and awarding damages to Kemper. The court also held that the arbitrator did arguably construe the parties' contract, and the arbitral award must stand. View "Kemper Corporate Services, Inc. v. Computer Sciences Corp." on Justia Law
Psara Energy, Ltd. v. Advantage Arrow Shipping, LLC
Psara Energy appealed the district court's order granting a motion to refer to arbitration this action alleging breach of contract, fraudulent transfer and corporate succession theories against the Advantage Defendants. The Fifth Circuit dismissed the appeal based on lack of appellate jurisdiction because the district court's order, which administratively closed the case, is not a final, appealable order under the Federal Arbitration Act. In this case, the collateral order doctrine does not apply to orders concerning arbitration governed by the FAA, and 28 U.S.C. 1292(a)(3) is inapplicable to referrals to arbitration in admiralty cases that do not determine a party's substantive rights or liabilities. View "Psara Energy, Ltd. v. Advantage Arrow Shipping, LLC" on Justia Law
Soaring Wind Energy, LLC v. Catic USA Inc.
Catic, a California corporation with Chinese corporate parentage, appealed the district court's confirmation of an adverse arbitral award. The arbitration panel awarded Soaring Wind Energy $62.9 million against Catic and ordered that Catic be divested of its shares in Soaring Wind Energy without compensation. The Fifth Circuit held that it had subject matter jurisdiction because this case related to an arbitration agreement or award falling under the NY Convention. In this case, a Chinese entity's actions on foreign soil could (and did) trigger breach for one of the Soaring Wind Energy's (domestic) members, and the arbitral award holds those Chinese affiliates jointly and severally liable for damages to the claimants. Therefore, such factors were enough for the agreement to bear a relation to China sufficient for federal jurisdiction under the NY Convention. The court held that whether Catic's non-signatory affiliates themselves be subject to the arbitration is irrelevant, because Catic assumed the obligation of its affiliates. Therefore, the district court did not err by confirming the award without first reviewing the arbitrators' power over Catic's Chinese affiliates. The court also held that the arbitration panel was not improperly constituted, and the award was not improper. The court rejected Catic's claims to the contrary and affirmed the arbitration award. View "Soaring Wind Energy, LLC v. Catic USA Inc." on Justia Law
Henry v. Educational Financial Service
The Fifth Circuit withdrew its previously filed opinion and substituted the following opinion. The court held that its holding in In re Nat'l Gypsum Co., 118 F.3d 1059, 1069 (5th Cir. 1997), that bankruptcy courts have discretion to refuse to compel arbitration in proceedings seeking enforcement of a discharge injunction, remains good law following the Supreme Court's decision in Epic Sys., 138 S. Ct. at 1623-24. In this case, the court affirmed the bankruptcy court's denial of Wells Fargo's motion to compel arbitration of a dispute over whether debtor's discharge applied to a student loan. View "Henry v. Educational Financial Service" on Justia Law
Tower Loan of Mississippi, LLC v. Willis
In adversary bankruptcy proceedings, debtor filed suit against Tower Loan for allegedly violating the Truth in Lending Act (TILA). The district court affirmed the bankruptcy court's denial of Tower Loan's motion to dismiss or compel arbitration. The Fifth Circuit reversed, holding that the parties reached a valid agreement to arbitrate and delegated threshold arbitrability issues to the arbitrator. Applying the two analytical steps in Kubala v. Supreme Prod. Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016), the court applied Mississippi state law to determine that the parties' two arbitration agreements should be construed as one contract. The court also held that the parties entered into a valid contract to arbitrate despite inconsistencies in the non-essential contractual terms. Finally, the court held that the arbitrator should decide whether debtor's TILA claim was arbitrable and remanded. View "Tower Loan of Mississippi, LLC v. Willis" on Justia Law
Henry v. Educational Financial Service
Debtor filed an adversary proceeding in bankruptcy court raising the issue of whether her bankruptcy discharge applied to a student loan. The Fifth Circuit affirmed the bankruptcy court's denial of Wells Fargo's motion to compel arbitration. The court held that its holding In re Nat'l Gypsum Co., 118 F.3d 1059, 1069 (5th Cir. 1997), -- that bankruptcy courts have discretion to refuse to compel arbitration in proceedings seeking enforcement of a discharge injunction -- remains good law following the Supreme Court's decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018). The court held that Epic Systems shows that National Gypsum's doctrinal foundation remains sound. View "Henry v. Educational Financial Service" on Justia Law
Archer and White Sales, Inc. v. Henry Schein, Inc.
On remand from the Supreme Court, the Fifth Circuit held that the district court correctly determined that this case was not subject to the arbitration clause at issue and affirmed the judgment. The Supreme Court held that the "wholly groundless" exception was inconsistent with the Federal Arbitration Act and declined to opine on whether the contract here in fact delegated the threshold arbitrability question to an arbitrator, remanding for this court to make that determination in the first instance. The court held that the parties have not clearly and unmistakably delegated the question of arbitrability to an arbitrator. Because this action was not subject to mandatory arbitration, the court did not reach Archer's alternative argument that third parties to the arbitration clause cannot enforce such an arbitration clause. View "Archer and White Sales, Inc. v. Henry Schein, Inc." on Justia Law
20/20 Communications, Inc. v. Crawford
Class arbitration is a "gateway" issue that must be decided by courts, not arbitrators—absent clear and unmistakable language in the arbitration clause to the contrary. In this case, there was no such contrary language. Rather, the arbitration permitted individual arbitration only and it explicitly prohibited arbitrators from commencing class arbitration to the maximum extent permitted by law. The court held that this language, at best, was in substantial tension with the notion that the parties authorized the arbitrator to decide the gateway issue of class arbitration. Accordingly, the court held that courts, not arbitrators, must decide the gateway issue of class arbitration presented here and therefore remanded for further proceedings. View "20/20 Communications, Inc. v. Crawford" on Justia Law
Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar
On a second rehearing, the Fifth Circuit certified a question to the Louisiana Supreme Court regarding whether a suit seeking to compel arbitration is an "action for a money judgment" under Louisiana's non-resident attachment statute, La. Code Civ. Proc. art. 3542. The state court answered the certified question and held that Louisiana Code of Civil Procedure article 3542 allows for attachment in aid of arbitration if the origin of the underlying arbitration claim is one pursuing money damages and the arbitral party has satisfied the statutory requirements necessary to obtain a writ of attachment. In this case, the court held that the district court erred in finding that the Louisiana nonresident attachment statute was not available to Daewoo. The underlying action seeking to compel arbitration here was clearly an action for a money judgment under Louisiana's non-resident attachment statute. View "Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar" on Justia Law