Global Oil Tools, Inc. v. Barnhill et al
Filing
91
ORDER & REASONS denying 35 Motion to Compel Arbitration and Stay Proceedings. Signed by Judge Carl Barbier on 10/16/12. (sek, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
GLOBAL OIL TOOLS
CIVIL ACTION
VERSUS
NO: 12-1507
SECTION: "J” (4)
BARNHILL, ET AL.
ORDER AND REASONS
Before
the
Court
are
Defendants
Wilfred
Barnhill,
Brian
Barnhill, Diane Barnhill, Downhole-Surface Manufacturing, LLC,
and Barnhill Industries, Inc. d/b/a Global International Tools
(collectively,
“the
Barnhill
Defendants”)’s
Motion
to
Compel
Arbitration and Stay Proceedings (Rec. Doc. 35), Plaintiff Global
Oil Tools (“Global Oil”)’s opposition to same (Rec. Doc. 55),
Defendants’
reply
thereto
(Rec.
Doc.
60),
and
Plaintiff’s
surreply to same (Rec. Doc. 89). Defendants’ motion is set for
hearing
on
September
26,
2012,
on
the
briefs
without
oral
argument. Having considered the motions and legal memoranda, the
1
record, and the applicable law, the Court finds that Defendants’
motion should be DENIED for the reasons set forth more fully
below.
PROCEDURAL HISTORY AND BACKGROUND FACTS
This
action
arises
out
of
claims
under
the
Racketeer
Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 et
seq., the Lanham Act, 15 U.S.C. § 1125 et seq., state law claims
for breach of fiduciary duties, civil fraud, misappropriation and
conversion, tortious interference with business relations, and
claims under the Louisiana Unfair Trade Practices Act, La. Rev.
Stat. § 51:1401. On July 13, 2012, Plaintiff filed the instant
suit naming as Defendants Wilfred Barnhill, Brian Barnhill, Diane
Barnhill,
Downhole-Surface
Manufacturing,
LLC,
Global
International Tools, Denise Leblanc, and Daniel Triche.
Plaintiff’s complaint alleges that Global Oil is a company
that
manufactures
wireline
tools
and
downhole
flow
control
systems for the oil and gas industry. In 2005, Global Oil was
purchased by Grifco International, Inc. (“Grifco”). At that time,
Wilfred
Barnhill
shareholder.
reported
Global
Brian
was
Global
Barnhill,
vice-president,
Oil.
In
2007,
Oil’s
Wilfred
financial
Lyamec
Barnhill’s
officer,
Corp.,
2
reported
Inc.
and
president
son,
was
treasurer
(“Lyamec”)
and
the
of
acquired
ownership of Global Oil from Grifco. Wilfred and Brian Barnhill
(collectively,
“the
Barnhills”)
leadership/management
Shortly
thereafter,
remained
positions
Diane
in
following
Barnhill,
their
the
Wilfred
respective
acquisition.
Barnhill’s
wife,
reportedly became an employee of Global Oil as a part of the
administrative
remained
in
completely
remained
staff.
his
Wilfred
position
from
Global
employed
by
as
Oil
Barnhill
president
in
Global
January
Oil
until
is
reported
until
2012.
to
2011,
resigning
Brian
February
have
Barnhill
2012.
Diane
Barnhill resigned in January 2012.
The complaint reports that in 2005 the average sales of
Global Oil remained in the range of $4 million; however, by the
2009 - 2010 tax year, average sales had dropped to $2.5 million.
In the 2010 - 2011 tax year, average sales rose to $2.9 million
but were coupled with large operating losses. In conjunction, the
complaint
alleges
that
on
May
24,
2010,
Wilfred
and
Diane
Barnhill had their company, Barnhill Industries, register the
trade name Global International Tools (“GIT”), which, thereafter,
allegedly engaged in competing business with Global Oil. The
complaint further alleges that in January 2011, Wilfred Barnhill
also registered the trade name Downhole-Surface Manufacturing
(“DSM”), another competing company.
3
During the time period that the competing companies existed
(2010 - present), Plaintiff asserts that the Barnhill Defendants,
together with Denise Leblanc and Daniel Triche, engaged in a
scheme to defraud Global Oil. Specifically, the Plaintiff alleges
that the Defendants stole blueprints, tools, and customers from
Global Oil. It asserts that as part of their scheme, Defendants
engaged in act of wire fraud and mail fraud by sending various
misleading emails, disseminating misleading information over the
phone, and making shipments via the competing companies to Global
Oil’s customers. In the complaint, Plaintiff further avers that
DSM bought tools from Global Oil at steep discounts and that
Global Oil paid for expenses incurred by the competing companies.
All of the acts alleged in the complaint are reported to have
taken place between May 24, 2010 and February 2012. Plaintiff
further asserts that Defendants’ activities resulted in financial
injury to Global Oil, for which it seeks damages under the abovereferenced legal theories.
On August 3, 2012, the Barnhill Defendants and Daniel Triche
and Denise Leblanc each filed motions to dismiss (Rec. Docs. 21,
22). Plaintiffs replied to the Defendants’ motions on August 24,
2012 (Rec. Doc. 30). Subsequently, the Barnhill Defendants filed
a reply thereto (Rec. Doc. 34), asserting in the reply that the
4
Plaintiffs
were
existence
of
barred
an
from
bringing
an
action
agreement.1
arbitration
due
That
to
the
arbitration
agreement is the subject of the instant motion. Accordingly, on
August 31, 2012, the Barnhill Defendants filed the instant motion
requesting
that
the
Court
stay
this
matter
and
compel
the
Plaintiff to submit its claims to arbitration.
THE PARTIES’ ARGUMENTS
Defendants’ motion asserts that there are written agreements
between Wilfred Barnhill, Brian Barnhill, and Global Oil which
contain binding arbitration clauses that apply to all of the
claims
Global
Defendants’
Oil
motion
asserts
refers
in
to
its
two
complaint.
August
5,
Specifically,
2005
Executive
Employment Agreements (“Employment Agreements” or “Agreements”),
executed
by
Grifco
and
Wilfred
and
Brian
Barnhill.
Each
Agreement sets a three-year term of employment for the Barnhills
at Global Oil, commencing on August 5, 2005. Each Agreement
includes the same binding arbitration clause which states that,
1
It should be noted that the existence of an arbitration agreement was not
the subject of, nor was it mentioned in, the Barnhill Defendants’ original motion
to dismiss. Additionally, it was not mentioned in the Plaintiff’s reply. It was
mentioned for the first time in the Barnhill Defendants’ reply memorandum, and
then subsequently with the filing of the instant motion to compel arbitration.
The Court also notes that Plaintiff filed a surreply to the motion to dismiss on
September 17, 2012.
5
Any controversy, claim or dispute arising out of or
relating
to
this
Agreement
or
the
employment
relationship, either during the Existence [sic] of the
employment
[sic]
relationship
parties
or
hereto,
afterwards,
their
between
assignees,
The
their
affiliates, their attorneys or Agents [sic] shall be
settled by arbitration in Houston, Texas.
Defense Exhibit A, Rec. Doc. 35-2, p. 10, § 8.06; see also,
Defense Exhibit B, Rec. Doc. 35- 3, p. 10, § 8.06.
Defendants argue that all of the claims asserted in the
Plaintiff’s
Agreements
complaint
and/or
arise
the
from
employment
those
initial
relationship
Employment
between
the
Barnhills and Global Oil and, thus, must be arbitrated. In making
this
argument,
signatory)
contemplated
is
Defendants
bound
party
to
to
the
assert
arbitrate
that
Global
because
agreements,
(2)
Oil
(a
non-
it
was:
(1)
a
an
affiliate
of
Grifco, as defined by the Agreements,2 and/or (3) a party who
2
In their reply brief Defendants specifically argue that Global Oil is an
intended party to the arbitration agreement because the Employment Agreement was
contemporaneously executed with the Acquisition and Purchase Agreement between
Grifco and the shareholders of Global Oil. Specifically, Defendants contend that
the Employment Agreements were executed in consideration of the proposed
purchase. Defendants assert that because these documents were part of the same
6
benefitted from the Agreements and, thus, is required by law to
participate. Furthermore, Defendants argue that the arbitration
clause is still valid and binding upon the parties, despite the
fact that the Employment Agreements have expired. In support,
Defendants point to the language in the arbitration clause which
states that the clause applies to claims “arising out of or
relating to this Agreement or the employment relationship, either
during the Existence [sic] of the employment relationship or
afterwards.”
(emphasis
afterwards”
Defendants’
added).
Memorandum,
Defendants
indicates
that
Rec.
contend
the
Doc.
that
parties
the
35-1,
phrase
intended
for
p.
2
“or
the
arbitration clause of survive the termination of the Agreements.
In addition, Defendants contend that Diane Barnhill, DSM, and
Barnhill Industries are the affiliates of the two Barnhills who
are
signatories
on
the
Agreements
and,
therefore,
are
also
included within the scope of the arbitration clause. Likewise,
they contend that under the theory of equitable estoppel, the
allegations
against
the
two
Barnhill
signatories
and
the
transaction, they must be interpreted together as forming one contract.
Defendants assert that a reading of the Acquisition and Purchase Agreement in
conjunction with the Employment Agreements demonstrates that it was Grifco and
the Barnhills’ intention to include Global Oil in the arbitration clause and/or
Employment Agreements as a party. Furthermore, Defendants argue that if they are
not a party to the contract, they are at least an affiliate to the Employment
Agreements. Defendants’ Reply, Rec. Doc. 60, 1-3.
7
nonsignatory
Defendants
are
“substantially
interdependent”
because
arise
the
same
facts,
they
from
operative
thereby
indicating that they must be heard together in an arbitration
proceeding.
In response, Plaintiff argues that the arbitration clauses
in the Agreements do not bind Global Oil because: (1) Global Oil
was
not
a
party
to
the
Agreements;
(2)
the
Agreements
have
expired; and (3) the claims asserted in the complaint do not
arise out of or relate to the Employment Agreements. First,
Plaintiff notes that the Employment Agreements were executed by
Grifco and the Barnhills, not Lyamec, the company that currently
owns Global Oil, or Global Oil itself.
there
are
multiple
examples
throughout
Plaintiff asserts that
the
Agreements
which
indicate that the Agreements and arbitration clauses were only
applicable as to Grifco.3
Second, Plaintiff asserts that the Agreements set out a
three year employment term which expired on August 5, 2008.
Plaintiff contends that the behavior referenced in the complaint
is alleged to have occurred between 2010 and 2012, after the
3
For example, Plaintiff points to Section 8.08, the Hold Harmless clause
of the Agreements, in which it states that the Executive (Wilfred and/or Brian
Barnhill) “will instead look solely to the Assets of the Company [Grifco] for
satisfaction of any debts arising out Of [sic] this Agreement.” Def. Ex. A, Rec.
Doc. 35-2, p. 9, § 8.08; see also, Def. Ex. B, Rec. Doc. 35-3, p.9, § 8.08.
8
expiration
of
the
Employment
Agreements.
Moreover,
Plaintiff
argues that the language “during the Existence [sic] of the
employment relationship or afterwards” should be construed to
apply only to conduct that occurred during the three year term of
the
Agreement.
Plaintiff’s
Opposition,
Rec.
Doc.
55,
p.
7.
Plaintiff contends that because the employment relationship could
have terminated before the three-year term ended, the language
was included to ensure that the directives in the Agreement would
still be in force during the term of the Agreement, even where
the employment relationship between the parties might have ended.
Third, Plaintiff argues that it is impossible for the claims
in the complaint to arise out of the Agreements, because the
complaint does not mention the Agreements. Moreover, Plaintiff
contends that the alleged conduct began at least two years after
the expiration of the Agreements. Furthermore, Plaintiff asserts
that even if the Agreements did apply, the arbitration clause
does not reference torts, intentional misconduct, and behavior
prohibited by statute as alleged in the complaint. Plaintiff
argues that the arbitration clause is limited to breaches of the
contractual obligations. Plaintiff contends that even without the
Employment
Agreements
its
claims
would
remain
intact
therefore, cannot be said to arise from the Agreements.
9
and,
Lastly, Plaintiff argues that the only two signatories to
the Agreements are Wilfred and Brian Barnhill. Plaintiff asserts
that neither it nor the other Defendants were a party to the
Agreements and, thus, they are not bound by them. In making this
argument,
Plaintiff
notes
that
in
many
cases
in
which
nonsignatories have been sent to arbitration, it was actually the
nonsignatory
who
was
seeking
to
compel
the
signatory
to
arbitrate. In particular, Plaintiff argues that the equitable
estoppel
rules
“‘appl[y]
only
to
prevent
a
signatory
from
avoiding arbitration with a nonsignatory when the issues the
nonsignatory is seeking to resolve in arbitration are intertwined
with the agreement that the estopped party has signed.’” P’s
Opp., Rec. Doc. 55, p. 12 (quoting Bridas S.A.P.I.C. v. Gov’t of
Turkmenistan,
345
F.3d
347,
361
(5th
Cir.
2003)
(citation
omitted)).
DISCUSSION
A. Federal Framework
The Federal Arbitration Act, 9 U.S.C. § 1 et seq., provides
that
when
parties
engaged
in
commerce
enter
into
contracts
containing arbitration clauses, those clauses shall be deemed
valid and enforceable by the courts. 9 U.S.C. §§ 2, 3. When
evaluating a motion to compel arbitration under the Act, courts
10
conduct
a
parties
agreed
second,
two-step
to
inquiry
to
arbitrate
determine
the
dispute
first,
in
“whether
question,”
the
and,
“‘whether legal constraints external to the parties’
agreement foreclosed the arbitration of those claims.’” Webb v.
Investacorp, Inc., 89 F.3d 252, 257 (5th Cir. 1996) (quoting
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473
U.S. 614, 628 (1985)). In making the first determination, courts
consider (1) whether a valid arbitration agreement exists between
the parties, and (2) whether the dispute in question falls within
the scope of that agreement. Id. (citing Daisy Mfg. Co. v. NCR
Corp., 29 F.3d 389, 392 (8th Cir. 1994)). When deciding whether
parties agreed to arbitrate, courts “should apply ordinary statelaw principles that govern the formation of contracts.” First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995).
Although
ambiguities
are
generally
resolved
in
favor
of
arbitration, “this policy may only be used to tip the balance . .
. when determining the scope of the arbitration agreement—not
when determining whether an arbitration agreement exists.” BMA
Fin. Servs., Inc. v. Guin, 164 F. Supp. 2d 813, 818 (W.D. La.
2001) (citing Volt Info. Scis., Inc. v. Bd. of Trs. of Leland
Stanford, Jr. Univ., 489 U.S. 468, 475-76 (1989)).
11
B. State Law
Under Louisiana law, when a court interprets a contract it
makes a determination as to the intent of the parties thereto.
LA. CIV. CODE art. 2045. “When the words of a contract are clear
and explicit and lead to no absurd consequences, no further
interpretation may be made in search of the parties’ intent.” Id.
art. 2046. However, where words are ambiguous, they “must be
given their generally prevailing meaning.” Id. art. 2047. Where
they
are
“susceptible
to
different
meanings
[they]
must
be
interpreted as having the meaning that best conforms to the
object of the contract.” Id. art. 2048. “Each provision in a
contract must be interpreted in light of the other provisions so
that each is given the meaning suggested by the contract as a
whole.” Id. at 2050.
C. Analysis
The Court begins its analysis by determining whether a valid
arbitration
Barnhills.
issue
were
agreement
As
exists
previously
executed
between
noted,
between
the
Grifco
Global
Oil
Employment
and
and
the
Agreements
Wilfred
and
at
Brian
Barnhill. The plain language of the Agreements reads, “By this
employment Agreement (“Agreement”), Grifco International, Inc.,
(the
“Company”)
employs
W.J.
Barnhill
12
[and
Brian
Barnhill]
(“Executive”), who accepts employment on the following terms and
conditions[.]” Def. Ex.
A, Rec. Doc. 35-2, p. 2; see also Def.
Ex. B, Rec. Doc. 35-3, p. 2. The Agreements are signed by Jim
Dial, on behalf of Grifco, and Wilfred and Brian Barnhill on
their own behalf. Def. Ex. A., Rec. Doc. 35-2, p. 11; see also
Def. Ex. B, Rec. Doc. 35-3, p. 11. There is no other definition
of “parties” in the Agreements. Thus, the Court finds that per
the plain language of the Employment Agreements, Global Oil is
not a party.
Defendants argue that despite the language of the Employment
Agreements, Global Oil
is a party because the Agreements were
executed
day
on
the
Agreement
between
Defendants
cite
same
Grifco
to
as
Acquisition
and
the
and
the
Global
shareholders.
Louisiana
law
Oil
which
Purchase
states
that
contemporaneously executed documents should be construed together
when seeking to determine the parties’ intent. See, e.g., Li
Rocchi v. Keen, 134 So. 2d 893, 898 (La. 1961). The Court finds
that Defendants’ argument on this point is misplaced. While the
Court
may
look
to
contemporaneously
executed
documents
to
determine the parties’ intent in the event of ambiguity, the
13
language in the Employment Agreements at issue is not ambiguous.4
Not only does the language clearly state that Grifco and the
Barnhills are the parties to the contracts, but section 8.02 of
the Agreements also states that “[t]his Agreement contains the
entire
understanding
of
The
[sic]
parties
and
all
of
the
covenants and agreements between the Parties with respect to such
employment.”5 Therefore, the Court finds that it was not the
intent of the signatories to include Global Oil as a party to the
Agreements. Moreover, even if the Court were to look to the
Acquisition and Purchase Agreement, that contract specifically
states that the Barnhills and Grifco, not the shareholders of
Global Oil or Global Oil itself, were to execute the Employment
4
See Rick Norman, Louisiana Employment Law, in LOUISIANA PRACTICE SERIES § 3:6
(2011 - 2012 ed.) (citing Gebreyesus v. F.C. Schaffer & Assocs., Inc., 204 F.3d
639 (5th Cir. 2000) (holding that under Louisiana law, there is no need to look
to extrinsic materials where the contract terms are unambiguous)). The Court also
notes that all of the examples of this principle of contract interpretation cited
by the Barnhill Defendants are applied in the context of promissory notes and
mortgages, not employment contracts. Furthermore, in each of the cited cases, an
ambiguity in the execution of one of the instruments, or an error in the
execution of one of the instruments, resulted in the need for the court to look
at both documents. See, e.g., Mills’ Succession v. Manasseh, 147 So. 77 (La. 4
Ct. App. 1933) (looking at both the promissory note and the mortgage to determine
if a purchaser assumed liability on the mortgage where the deed was unavailable
and the mortgage contained inconsistent terms).
5
Def. Ex. A, Rec. Doc. 35-2, p. 9, § 8.02; see also, Def. Ex. B, Rec. Doc.
35-3, p.9, § 8.02. This same section also states that “[t]his Agreement
supersedes any and all prior agreements and Understandings [sic], either oral or
in writing, between the parties to this Agreement with respect to the employment
of the Executive by the Company.” Id.
14
Agreements
language
as
in
part
the
of
their
closing
Acquisition
and
obligations.6
Purchase
Thus,
Agreement
the
only
reinforces the Court’s finding.
As such, the Court now looks to the Defendants’ argument
that Global Oil is bound by the Employment Agreements because it
directly benefitted from them. The Fifth Circuit has found that
“[a]rbitration agreements apply to nonsignatories only in rare
circumstances.” Bridas, 345 F.3d at 358. Nevertheless, there are
times when “[o]rdinary principles of contract and agency law may
be called upon to bind a nonsignatory to an agreement.” Hellenic
Inv. Fund, Inc. v. Det Norske Veritas, 464 F.3d 514, 517 (5th
Cir. 2006). One theory that the court has recognized for binding
a nonsignatory to an arbitration agreement is the doctrine of
direct benefits estoppel. Id. “Direct benefits estoppel applies
when a nonsignatory to the agreement ‘knowingly exploits the
agreement containing the arbitration clause.’” Bridas, 345 F.3d
at 362 (quoting E.I. DuPont de Nemours & Co. v. Rhone Poulenc,
269 F.3d 187, 199 (3rd. Cir. 2001)). In order for direct benefits
estoppel to apply,
the third-party must directly benefit from
the agreement, and it must also bring “suit against a signatory
6
“1.4. Closing Obligations. At the Closing, the parties have presented .
. . (iii) Employment agreement in the form of Exhibit 1.4(a)(iv), executed by
W.J. Barnhill and Brian Barnhill. . . . (iii) The Employment Agreements executed
by Grifco.” Defendants’ Reply Exhibit 1, Rec. Doc. 60, p. 4.
15
premised in part upon the agreement.” Bridas, 345 F.3d at 362.
Defendants rely primarily on the Fifth Circuit’s decision in
Hellenic
Investment
Fund,
Inc.
v.
Det
Norske
Veritas.
In
Hellenic, Det Norske Veritas (“DNV”), a classification society,
contracted
with
Inlet,
a
ship
owning
consortium,
to
provide
class-related inspections and classifications of Inlet’s ship,
the
M/V
MARIANNA.
464
F.3d.
at
515-16.
As
a
classification
society, DNV operated under an established set of Rules, which
contained a mandatory forum selection clause that required all
disputes to be resolved by courts in Oslo, Norway. Id. at 516-17.
Subsequently, Hellenic, a ship owning consortium, bought the M/V
MARIANNA from Inlet. Id. at 515-16. The sale contract between
Inlet and Hellenic designated that DNV would continue to act as
the classification society for the ship. Id. However, before
Hellenic would finalize the sale, it required that all class
inspections be completed on the M/V MARIANNA. Id.
After DNV
(under contract with Inlet, not Hellenic) completed the necessary
inspections, Hellenic finalized the purchase. Id.
Thereafter,
Hellenic discovered defects in the ship that prevented it from
making at least two voyages. Id. Hellenic claimed that DNV’s prepurchase inspection should have revealed the defects, and it sued
DNV on the grounds of negligent misrepresentation. Id. at 516-17.
16
Upon being sued, DNV sought to enforce the forum selection clause
contained in its Rules. Id. Hellenic claimed that at the time the
inspections were conducted, it had no contract with DNV and,
therefore, was not bound by the forum selection clause. Id. The
court, applying the theory of direct-benefits estoppel, found
that Hellenic was bound because it had benefitted from DNV’s
contract with Inlet, DNV’s inspection, and, thus, DNV’s Rules.
Id.
at
518-19.
In
particular,
the
court
noted
that
all
of
Hellenic’s claims were premised upon DNV’s failure to follow its
own Rules, the same Rules that contained the forum selection
clause. Id. at 518-20. Therefore, the court found that Hellenic
was
estopped
from
claiming
that
it
was
not
bound
by
the
arbitration clause. Id. at 520.
The Court finds that the instant case is distinguishable. In
Hellenic, the plaintiff’s claims were premised on the Rules that
contained the forum selection clause. In contrast,
raised
in
Employment
the
instant
Agreements.
complaint
In
the claims
are
not
premised
upon
the
particular,
the
complaint
does
not
reference the Employment Agreements, does not assert contractual
claims
and/or
Plaintiff’s
breach
claims
of
whether
contract
under
claims,
tort,
and
statue,
all
or
of
the
state
law
governing business entities stand on their own regardless of the
17
existence of the Agreements.7 In Hellenic, without DNV’s Rules,
the plaintiff had no claim against DNV. Here, the Plaintiff has
claims
against
the
Defendants
regardless
of
the
Employment
Agreements. Moreover, the complaint in this case is premised upon
incidents that occurred between 2010 and 2012. The Employment
Agreements
themselves
provide
a
clear
three-year
term
of
effectiveness which ended in August 2008.8 Thus, nothing alleged
in
the
complaint
could
possibly
arise
from
the
Agreements,
because the Agreements had expired by the time that the conduct
in question occurred.9
7
The Court notes that it is not finding that the claims in the complaint
must be contractual, or of a contractual nature, in order to arise out of the
Agreements. Indeed, the claims in Hellenic were for negligent misrepresentation,
not breach of contract. Rather, the Court is simply distinguishing between claims
that require the existence of the Employment Agreements, or are premised upon
them, and claims that do not require its existence.
8
By this Agreement, the Company [Grifco] employs the Executive
[Wilfred and Brian Barnhill], and the Executive accepts
employment with the Company, beginning on the 5 day of Aug,
2005. This Agreement shall be effective upon execution and
shall remain in effect for a period of 3 years from the
effective date hereof until terminated by either party in
accordance with the termination provisions set forth below.
Def. Ex. A, Rec. Doc. 35-2, p. 2, § 1.01; see also, Def. Ex. B, Rec.
Doc. 35-3, p. 2, § 1.01; infra, note 10.
9
The Court notes that Defendants have argued that the arbitration clause
survives the Employment Agreements. In making their argument, Defendants rely on
Municipal Energy Agency of Mississippi v. Big Rivers Electric Corp., 804 F.2d 338
(5th Cir. 1986), a case in which the Fifth Circuit held that where the express
language of the contract provides that an arbitration agreement shall survive the
termination of the contract, such language should control over more general
provisions. Id. at 343. In Big Rivers, the language referenced by the court
specifically stated that, “[t]his provision shall survive the termination of this
agreement.” Id. at 340. Thus, it is distinguishable from the words “or
18
Furthermore, in response to Defendants’ argument that Global
Oil is estopped because its claims arise out of the employment
relationship between the Barnhills and Global Oil, the Court
looks to the language of the Employment Agreements.10 In section
3.02 of the Agreements the parties define the nature of their
employment relationship as follows:
The relationship between the Company [Grifco] and the
Executive [Wilfred and/or Brian Barnhill] at all times
during the term of this agreement shall be that of an
exclusive
employee.
While
Employed
under
this
Agreement, the Executive [Wilfred and Brian Barnhill]
shall
at
all
times
devote
his
Full
[sic]
time,
afterwards,” which are referenced by the Defendants as requiring that the
arbitration clause survive. Moreover, reading the Employment Agreement as a
whole, the Court notes that in section 6:01, Confidential Information and
Invention Assignments, the parties expressly state that “[t]he obligation under
[this section] shall survive the termination of this Agreement for any reason.”
Def. Ex. A, Rec. Doc. 35-2, p. 5, § 6:0; see also, Def. Ex. B., Rec. Doc. 35-3,
p. 5,§ 6:0. This leads the Court to believe that if the parties to the Employment
Agreement had desired to have the arbitration clause survive the Agreements, they
certainly could have done so as they made express provisions to do just that in
another section of the Agreement. Accordingly, the Court is not persuaded by
Defendants’ arguments.
10
Defendants specifically argue that as long as Plaintiff brings a claim
related to the Barnhills’ employment at Global Oil, it is covered by the
arbitration clause because the arbitration clause states that it is applicable
to “[a]ny controversy, claim or dispute arising out of or relating to this
Agreement or the employment relationship, . . .” Def. Reply, Rec. Doc. 60, pp.56.
19
attention, and best efforts on behalf of the Company
[Grifco], and shall Perform [sic] all services, acts
and duties connected with his position in such a Manner
[sic] as the Company [Grifco] from time to time may
direct. The Executive [Wilfred and/or Brian Barnhill]
shall, For [sic] all purposes of this Agreement, be
deemed to be an employee of the Company [Grifco] or
that subsidiary or affiliate to which he is assigned,
and
all
Payments
[sic]
and
distributions
hereunder
shall be reported for tax purpose in The [sic] same
manner as compensation paid to other employees.
Def. Ex. A, Rec. Doc. 35-2, p. 3, § 3.02; see also, Def. Ex. B,
Rec. Doc. 35-3, p. 3, § 3.02
The employment relationship as defined by the Employment
Agreements always includes two entities/individuals: Grifco and
Wilfred Barnhill and/or Grifco and Brian Barnhill. Sometimes, the
employment relationship may include a subsidiary or affiliate,
i.e. Global Oil.11 However, at all times, Grifco remains a part
11
Section 3.0, Scope of Duties, explains that Grifco employs the Barnhills
to serve in executive positions at Global Oil for a term of three years. Def. Ex.
A, Rec. Doc. 35-2, pp.2-3, § 3.01; see also, Def. Ex. B, Rec. Doc. 35-3, pp.2-3,
§ 3.01. Thus, it is evident that Global Oil is the subsidiary referred to in
20
of that relationship. Thus, the employment relationship referred
to in the arbitration clause would necessarily include Grifco,
not just the Barnhills and
Global Oil. As such, because none of
the claims alleged by the Plaintiff arise out of the employment
relationship
between
Grifco,
the
Barnhills,
and
Global
Oil,
unlike the plaintiff in Hellenic, Global Oil is not bound to
arbitrate under the clause.
Because
the
Court
has
determined
neither a party to nor a beneficiary of
that
the
Plaintiff
is
the Agreements, it ends
its inquiry here. However, the Court notes that even if Global
Oil could be found to be a party to or to be bound by the
Employment Agreements, the preceding analysis also indicates that
the Plaintiff’s claims would not fall within the scope of the
arbitration
clause.
Therefore,
Defendants’
arguments
on
that
point would fail as well. In particular, the Court notes that the
scope of the arbitration clause requires that the claims be
related
to
relationship
the
employment
between
agreement
Grifco,
the
and/or
Barnhills,
the
and
employment
Global
Oil.
Because the claims alleged in the complaint reference a time
period after the termination of the Agreements and do not involve
Grifco, they would not fall within the scope of the arbitration
section 3.02, Nature of Relationship.
21
clause. Thus, the parties did not agree to arbitrate the dispute
in question. Accordingly,
IT IS ORDERED that Defendants’ motion is DENIED.
New Orleans, Louisiana this 16th day of October, 2012.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
22
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