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

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

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

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

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

Plaintiff appealed the district court's order compelling arbitration of her federal age discrimination action against OneMain. The Fifth Circuit held that, although the district court correctly rejected plaintiff's meeting of the minds argument, it erroneously referred her procedural unconscionability challenge to the arbitrator. In this case, procedural unconscionability goes to contract formation under Mississippi law, and thus the district court should have ruled on this objection. Therefore, the court reversed and vacated the order, remanding for the district court to decide on the merits of the procedural unconscionability claim. View "Bowles v. OneMain Financial Group, LLC" on Justia Law

When the parties to a contract agree to arbitrate, rather than litigate, certain disputes that might later unfold, Congress directs federal courts to honor the parties' wishes. Under the Federal Arbitration Act, courts generally enforce any resulting arbitration award, barring specific circumstances—such as when the arbitrator exceeds his legal authority or otherwise jeopardizes the fair arbitration process. In this case, the Fifth Circuit affirmed the district court's confirmation of the arbitration award and rejected Apache's challenges to the contrary. The court held that KPMG issued a "reasoned award" here where it noted that it based its analysis on the parties' statements and accounting records, pointed to its finding on the accrual of liabilities, and explained what documentation it found relevant in evaluating the proper refund amount. View "YPF S.A. v. Apache Overseas, Inc." on Justia Law

After insurers denied McDonnel's claim, McDonnel initiated a declaratory and breach of contract action. The Fifth Circuit affirmed the district court's dismissal of the action in favor of arbitration and held that the insurance policy's conformity provision did not negate the agreement to arbitrate. The court held that the state statute, La. Rev. Stat. Ann. 22:868, was preempted by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and thus the statute did not and could not apply to McDonnel's policy. Consequently, there was no conflict between the policy and the state statute. Therefore, the court held that the conformity provision was not triggered, and its inapplicability leads only to the conclusion that the arbitration provision survives, undiminished by state law. View "McDonnel Group, LLC v. Great Lakes Insurance SE" on Justia Law

Light-Age petitioned the district court to vacate an arbitration panel award, arguing that the panel was improperly constituted. The Fifth Circuit affirmed the district court's judgment, holding that Light-Age waived its challenge to the constitution of the panel by failing to object at the time of the arbitration hearing. In this case, Light-Age had constructive knowledge that one of the "non-lawyer" arbitrators worked for a law firm as a payroll manager at the time of the arbitration hearing because it could have discovered that Jackson Walker, LLC was a law firm simply by clicking on the link provided by the arbitrator's email signature or running a brief internet search. View "Light-Age, Inc. v. Ashcroft-Smith" on Justia Law