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Tex. Brine Co., L.L.C. v. Am. Arbitration Ass'n

United States Court of Appeals for the Fifth Circuit

April 7, 2020, Filed

No. 18-31184

Opinion

LESLIE H. SOUTHWICK, Circuit Judge:

One of the parties to an arbitration claimed that two of the arbitrators hid conflicts of interest. Those claims were the basis on which a Louisiana state court vacated the arbitral award. The aggrieved party then brought suit in Louisiana state court seeking substantial damages against [*2]  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 instate defendants were served. The plaintiff moved to remand. The district court held that this removal prior to service on the nondiverse defendants was proper and refused to remand. The district court then entered a judgment on the pleadings, dismissing the plaintiff's claims with prejudice. We AFFIRM.

FACTUAL AND PROCEDURAL BACKGROUND

] In reviewing an order granting judgment on the pleadings, we accept the factual allegations in the plaintiff's complaint as true. Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312-13 (5th Cir. 2002). What follows are therefore from the complaint.

In 1975, plaintiff Texas Brine Company, L.L.C., contracted with Vulcan Materials Company to supply brine. Among agreed-on amendments to the contract in 2000 was the addition of an arbitration clause. The clause provided that "[a]ny dispute, controversy or claim arising out of or relating to" the contract or its breach would be resolved by arbitration. The clause further provided that any arbitration would be conducted under the rules of the American Arbitration Association ("AAA") and would be governed by the [*3]  Federal Arbitration Act. In 2005, Vulcan assigned its rights under the contract to Occidental Chemical Corporation ("Oxy").

After a dispute arose between Texas Brine and Oxy in 2012, Texas Brine invoked the arbitration clause. Texas Brine and Oxy chose Anthony DiLeo, Charles Minyard, and Denise Pilié as arbitrators in 2014. The prospective arbitrators had to disclose potential conflicts of interest. After selection, the arbitrators signed an oath that recognized a continuing duty to disclose potential conflicts.

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2020 U.S. App. LEXIS 10849 *

TEXAS BRINE COMPANY, L.L.C., Plaintiff — Appellant v. AMERICAN ARBITRATION ASSOCIATION, INCORPORATED; ANTHONY M. DILEO; CHARLES R. MINYARD, Defendants — Appellees

Prior History:  [*1] Appeal from the United States District Court for the Eastern District of Louisiana.

Tex. Brine Co., LLC v. Am. Arbitration Ass'n, Inc., 2018 U.S. Dist. LEXIS 187972 (E.D. La., Nov. 2, 2018)

Disposition: AFFIRMED.

CORE TERMS

arbitration, Brine, removal, collateral attack, arbitration award, district court, snap, wrongdoing, properly join, absurdity, vacate, cases, state court, vacatur, alleged wrongdoing, impermissible, damages, conflicting interest, plaintiff's claim, plain language, forum-defendant, challenging, proceedings, purported, alleges, diverse

Civil Procedure, Judgments, Pretrial Judgments, Judgment on Pleadings, Appeals, Standards of Review, Removal, Postremoval Remands, Appellate Review, Governments, Legislation, Interpretation, Standards of Review, De Novo Review, Elements for Removal, Removability, Nonremovable Actions, Rule of Unanimity, Motions for Remand, Preliminary Considerations, Elements for Removal, Business & Corporate Compliance, Pretrial Matters, Alternative Dispute Resolution, Judicial Review