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

Plaintiff filed suit in Louisiana state court seeking substantial damages against one out-of-state defendant and two in-state defendants. The out-of-state defendant was served with process and immediately removed the case to federal court before the in-state defendants were served. The district court denied plaintiff's motion to remand and entered judgment on the pleadings, dismissing plaintiff's claims with prejudice.The Fifth Circuit affirmed, holding that a non-forum defendant may remove an otherwise removable case even when a named defendant who has yet to be "properly joined and served" is a citizen of the forum state. Therefore, the case was properly retained in federal court. The court also held that the relief, purported harm, and alleged wrongdoing here show that plaintiff's claims, at heart, are in fact an unauthorized collateral attack on the arbitration. Accordingly, the district court correctly dismissed the challenge. Finally, the court denied plaintiff's motion to supplement the record, because the evidence would not change that Section 10 of the Federal Arbitration Act was the appropriate means of challenging the arbitrators' acts, and collateral attacks are not allowed. View "Texas Brine Co., LLC v. American Arbitration Ass'n, Inc." on Justia Law

In an international oil and gas dispute, this appeal challenges the order confirming a private tribunal award of $147 million. At issue was whether an allegedly undisclosed change in the place of incorporation of one party from Texas to Delaware means there was never an agreement to arbitrate.After determining that the district court had jurisdiction to resolve the lawsuit, the Fifth Circuit upheld the order confirming the arbitration award and rejected Ukrnafta's defenses under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The court held that Ukrnafta consented to the arbitration despite Carpatsky's twice identifying itself as a Delaware company, and thus its capacity defense under Article V(1)(a) failed; Ukrnafta's argument, under Article V(1)(b), that American courts cannot enforce the award because it was unable to present its case failed, where Ukrnafta has not identified anything about the arbitration that was fundamentally unfair; Ukrnafta's claims under Article V(1)(c) that the award exceeded the terms of submission were rejected; Ukrnafta's claims under the Article V nonrecognition factors were waived; enforcing the award would further American policy, rather than be contrary to public policy under Article V(2)(b); and Ukrnafta's manifest disregard defense failed. Likewise, the doctrine of claim preclusion would reach the same result with state law claims. View "OJSC Ukrnafta v. Carpatsky Petroleum Corp." on Justia Law

The Fifth Circuit affirmed the district court's order compelling arbitration of plaintiff's age discrimination suit against OneMain. The court held that the district court correctly rejected plaintiff's meeting of the minds argument on the merits based on Mississippi law. In this case, the district court found that the electronic communications transmitting the Arbitration Agreement clearly identified an arbitration agreement as the subject of the communications, and that plaintiff was given the opportunity to reach the Agreement and certified that she had done so. Furthermore, the district court correctly held that plaintiff's procedural unconscionability challenge was a challenge to the the Agreement's enforceability and therefore must be decided by an arbitrator rather than the courts. View "Bowles v. OneMain Financial Group, LLC" on Justia Law

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

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 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

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

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

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

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