A pipeline-inspection firm hired some inspectors, The employment agreement contained an arbitration provision. The firm sent the inspectors to work for a client company. The inspectors eventually sued the client for alleged Fair Labor Standards Act violations. They did not sue the firm, just the client. The client moved to compel arbitration specified in the agreement between the inspectors and the firm. The trial court and Fifth Circuit denied a motion to compel arbitration reasoning the client was not a party to the arbitration agreement between the inspectors and their firm. Newman v. Cypress Environment Management – TIR, L.L.C. v Plains All American Pipeline, L.P. No. 21-50253 (January 7, 2022). While there are some circumstances where non-parties may enforce an arbitration provision, those circumstances were not applicable in this case.
Two parties initiated arbitration of their dispute. After a Partial Final Award was issued, one of the parties stopped paying the arbitration expenses. The arbitration provider terminated the arbitration for non-payment. No final hearing was held. Thereafter one of the parties filed a lawsuit against the other in court asserting the same claims that were claimed in the arbitration.. Reading the literal language of the Federal Arbitration Act, the court held an arbitration “has been had” and therefore denied a motion to compel the matter back to arbitration. Noble Capital Fund management, L.L.C. v US Capital Global Investment Management, L.L.C. No. 21-50609 (April 13, 2022). The Fifth Circuit notes prior authority on this issue in the Ninth, Tenth and Eleventh Circuits.
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