Drill Cutting Disposal Co L L C v. Lynn et al

Filing 50

ORDER GRANTING 42 MOTION to Confirm Clause Construction Award filed by Joseph Gutierrez, Kyle Lynn. Signed by Judge David A. Ezra. (aej)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
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DRILL CUTTINGS DISPOSAL
COMPANY LLC,
Plaintiff,
KYLE LYNN and JOSEPH
GUTIERREZ,
Defendants.

No. 5:16-CV-00860

ORDER CONFIRMING ARBITRATION CLAUSE CONSTRUCTION AWARD
Before the Court is a Motion to Confirm an Arbitration Clause
Construction Award filed by Defendants Kyle Lynn and Joseph Gutierrez
(collectively “Defendants”). (Dkt. # 42.) Pursuant to Local Rule CV-7(h), the
Court finds this matter suitable for disposition without a hearing. After careful
consideration of the memoranda filed in support of the instant Motion, the Court,
for the reasons that follow GRANTS the Motion and CONFIRMS the Arbitration
Clause Construction Award (Dkt. # 42).
BACKGROUND
Defendants are former employees of Plaintiff Drill Cuttings Disposal
Company LLC (“DCDC”). On July 1, 2014, Defendants filed a lawsuit in the
United States District Court for the Western District of Texas asserting individual

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and collective claims for failure to pay overtime compensation in violation of the
Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201 et seq., (“DCDC I”).
(Guttierrez et al. v. Drill Cuttings Disposal Co., No. 5:14-cv-17-DAE, Dkt. # 1
(W.D. Tex 2014).) On February 20, 2015, the parties filed a “Stipulation and
Proposed Order Re Arbitration.” (Id. at Dkt. # 33.) On February 23, 2015, the
Court entered an order compelling arbitration and ordering that “except[] the
limited judicial review permitted by the Federal Arbitration Act, Plaintiffs’ claims
in this case are dismissed with prejudice.” (Id. at Dkt. # 34.)
The matter proceeded to arbitration administered by an arbitrator from
the American Arbitration Association pursuant to the parties’ Employment
Agreement. On August 14, 2015, Arbitrator Thomas J. Brewer issued a reasoned
opinion entitled “Clause Construction Award” determining that the Employment
Agreement’s arbitration clause permitted the matter to proceed as a collective
action in arbitration, in much the same way FLSA claims in federal court may
proceed collectively pursuant to 29 U.S.C. § 216(b). (“Clause Construction
Award,” Dkt. # 42-2, Ex. A.) In making his determination, Arbitrator Brewer
solely considered the Employment Agreement’s express language and construed it
using Louisiana law. (Id. at 15.)
On September 14, 2015, DCDC filed a Petition to Vacate, Modify or
Correct the Arbitration Award in the 15th Judicial District Court in Lafayette
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Parish, Louisiana (“DCDC II”). (Dkt. # 1-2, Ex. A.) In its state court petition,
DCDC asserts that Arbitrator Brewer’s Clause Construction Award “was irrational,
arbitrary and/or capricious folly, in manifest disregard of the law . . . and/or
exceeded the powers, authority and/or jurisdiction granted to him.” (Id. ¶ 27.) On
October 14, 2015, Defendants removed DCDC II to the United States District
Court for the Western District of Louisiana. (Dkt. # 1.) The Western District of
Louisiana determined subject-matter jurisdiction existed based on 28 U.S.C.
§ 1331 pursuant to StoltNielson, S.A. v. Animal Feeds Int’l Corp., 559 U.S. 662
(2010). (Dkt. # 20.) On August 26, 2016, the Western District of Louisiana issued
an order granting a motion to transfer venue, resulting in the transfer of DCDC II
to this Court. (Dkt. # 40.)
On October 5, 2016, Defendants in DCDC II filed a Motion to
Confirm the Clause Construction Award. (Dkt. # 42.) On October 20, DCDC’s
President, Jeffrey Reddoch, filed a “Pro Se Motion for Extension of Time to File.”1
(Dkt. # 46.) The next day the Court denied that motion on the basis that Mr.
Reddoch was not a licensed attorney, noting that “[i]t is axiomatic and well-settled
law that ‘a corporation cannot appear in federal court unless represented by a
licensed attorney.’” (Dkt. # 45 (quoting Memon v. Allied Domecq QSR, 385 F.3d

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The Court’s docket reflects that DCDC is represented by Joseph L. Lemoine Jr.,
from Lafayette, Louisiana. However, official court documents indicate that Mr.
Lemoine is not admitted to practice in the Western District of Texas.
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871, 873 (5th Cir. 2004)).) On October 27, 2016, DCDC, while represented by
counsel, filed a Response.2 (Dkt. # 48.)
LEGAL STANDARD
“Courts may vacate an arbitrator’s decision ‘only in very unusual
circumstances.’” Oxford Health Plans LLC v. Sutter, --- U.S. ---, 133 S. Ct. 2064,
2068 (2013). By statute, a United States court may only vacate an arbitral award in
four instances:
(1) Where the award was procured by corruption, fraud, or undue
means;
(2) Where there was evident partiality or corruption in the arbitrators,
or either of them;
(3) Where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing
to hear evidence pertinent and material to the controversy; or of
any other misbehavior by which the rights of any party have been
prejudiced; or
(4) Where the arbitrators exceeded their powers, or so imperfectly
executed them that a mutual, final, and definite award upon the
subject matter submitted was not made.
9 U.S.C. §
arbitrator “exceeded their powers,” the scope of the Court’s review is limited and

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Pursuant to Local Rule CV-7(e)(2), “a response to a dispositive motion shall be
filed not later than 14 days after the filing of the motion.” DCDC’s response was
filed 22 days after the filing of the instant motion. Accordingly, the Court need not
consider the response, especially in light of the fact that DCDC failed to
appropriately seek leave for an extension of time.
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well-settled. “[T]he Supreme Court has made clear that district courts’ review of
arbitrators’ awards under § 10(a)(4) is limited to the ‘sole question . . . [of] whether
the arbitrator (even arguably) interpreted the parties’ contract.’” BNSF R.R Co. v.
Alstom Transp., Inc., 777 F.3d 785, 788 (5th Cir. 2015) (quoting Oxford
Health,133 S. Ct. at 2068).) The question is “not whether [the arbitrator] got its
meaning right or wrong.” Oxford Health, 133 S. Ct. at 2068. In other words, “the
task of an arbitrator is to interpret and enforce the contract, not to make public
policy.” Stolt-Nielsen, 559 U.S. at 671. “This is an objective test.” BNSF R.R.
Co., 777 F.3d at 78877 (citing Stolt-Nielsen, 559 U.S. at 676).) “Thus a party
challenging an arbitration award need not adduce hard-to-obtain evidence
concerning the arbitrator[’s] true intent. Id. However, the Court “must resolve all
doubts in favor of arbitration.” Id. (quoting Brook v. Peak Int’l, Ltd., 294 F.3d
668, 672 (5th Cir. 2002).) Accordingly, the party challenging an arbitration award
under § 10(a)(4) carries a “heavy burden.” Oxford Health, 133 S. Ct. at 2068.
To determine whether an arbitrator exceeded his or her authority, the
Court “should consult the arbitrator’s award itself [because] [t]he award will often
suggest on its face that the arbitrator was arguably interpreting the contract.”
BNSF R.R. Co., 777 F.3d at 788. In reviewing the award, the Court should
consider the following pieces of relevant evidence: (1) whether the arbitrator
identifies [his or] her task as interpreting the contract; (2) whether she cites and
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analyzes the text of the contract; and (3) whether [his or] her conclusions are
framed in terms of the contract’s meaning. Id. (citing Oxford Health, 133 S. Ct. at
2069).
In terms of collective or class arbitration, “a party may not be
compelled under the [Federal Arbitration Act (“FAA”)] to submit to class
arbitration unless there is a contractual basis concluding that the party agreed to do
so.” Stolt-Nielsen, 559 U.S. at 684. This is so because “[a]rbitrators derive their
authority to resolve disputes only because the parties have agreed in advance to
submit such grievances to arbitration.” AT&T Tech., Inc. v. Commc’n Workers,
Arbitrator’s may not presume “that the parties’
mere silence on the issue of class-action arbitration constitutes consent to resolve
their disputes in class proceedings.” Stolt-Nielsen, 559 U.S. at 687. Accordingly,
a party may not be compelled to submit to class arbitration unless there is a
contractual basis for concluding that the party agreed to do so.
DISCUSSION
Defendants argue that Arbitrator Brewer appropriately restricted his
analysis to solely interpreting the Employment Agreement under applicable
contract law.
Upon review, the Clause Construction Award shows on its face that
Arbitrator Brewer was interpreting the Employment Agreement. First, Arbitrator
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Brewer correctly identified his task as interpreting the contract by appropriately
applying Louisiana law and the legal standards set forth above.
(Clause
analyzed the relevant contractual provisions. (Id. at 6.) He specifically cited the
clause stating “you agree that any controversy or claim arising out of or relating to
your employment with [DCDC] shall be settled by arbitration.” (Id.) Finally, his
conclusion is framed in terms of the contract’s meaning. (Id.
Specifically, Arbitrator Brewer concluded that “construing the particular
contractual language used by the parties as required under general principles of
Louisiana law governing interpretation of contracts generally, I conclude that these
agreements do authorize collective action arbitration of [Defendants] FLSA
claims.” (Id. at 15.)
In so concluding, Arbitrator Brewer’s analysis initially focused solely
on interpreting the Employment Agreement’s plain text and attempting to
determine the parties’ intent. He determined that the plain “language employed by
the parties creates substantial and legitimate doubt as to whether these
Employment Agreements were intended to permit or to preclude collective
arbitration.” (Id. at 13.) Upon making this determination, the arbitrator turned to
Louisiana law to interpret this ambiguity. The arbitrator found Article 2056 of the
Louisiana Civil Code applicable because the face of the contract was ambiguous.
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(Clause Construction Award.) Article 2056 states “[i]n case of doubt that cannot
be otherwise resolved, a provision in a contract must be interpreted against the
party who furnished its text.” La. Civ. Code. art. 2056. He concluded that because
DCDC furnished the Employment Agreement, Louisiana contract law required the
ambiguity about whether the parties’ intended to consent to collective arbitration
be interpreted against DCDC. (Clause Construction Award at 15.)
While the Court need not address DCDC’s Response, the Court notes
that its arguments are without merit. For example, DCDC’s Response begins by
arguing that the arbitrator started from a false premise because he “viewed his task
as to only construe the contract from the four corners of the contract, and from
those four corners, to determine only whether the parties had agreed to ‘permit’ or
‘preclude’ collective action.” (Dkt. # 48 at 4.) This argument is incredulous
because Supreme Court precedent requires the arbitrator to only construe the
contract from its four corners. Oxford Health, 133 S. Ct. at 2068 (“[A]n arbitral
decision even arguably construing or applying the contract must stand, regardless
of the court’s view of its (de)merits.” (internal quotation omitted)). DCDC’s
argument that the arbitrator’s decision was made in manifest disregard of the law is
also without merit. (Dkt. # 48 at 7.) DCDC argues that the arbitrator disregarded
Articles 2048, 2051, and 2054 of the Louisiana Civil Code regarding interpretation
of contracts. However, the arbitrator expressly noted these provisions as relevant
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law to his analysis. (See Clause Construction Award at 5.) Therefore, the Court
finds that the arbitrator did not reach his determination in manifest disregard of
law.
Accordingly, the Court finds the arbitrator focused on the
Employment Agreement’s text and analyzed (whether correctly or not makes no
difference) whether it demonstrated the parties’ intent to submit to collective
arbitration. This suffices to show that the arbitrator did not “exceed[] [his]
powers.” 9 U.S.C. § 10(a)(4). This is so because § 10(a)(4) “permits courts to
vacate an arbitral decision only when the arbitrator strayed from his delegated
tasks of interpreting a contract, not when he performed that task poorly.” Oxford
Health, 133 S. Ct. 2070.
CONCLUSION
For the reasons explained, the Court GRANTS the Motion to Confirm
the Clause Construction Award (Dkt. # 42). The Court ORDERS that except for
the limited judicial review permitted by the Federal Arbitration Act, DCDC’s
claims in this case are DISMISSED WITH PREJUDICE. The Court ORDERS
the hearing scheduled for December 28, 2016, cancelled.
IT IS SO ORDERED.
DATE: San Antonio, Texas, November 1, 2016.

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DAVID ALAN EZRA
UNITED STATES DISTRICT JUDGE