Amoco D.T. Co. v. Occidental Petroleum Corp.
2011 Tex. App. LEXIS 3674
| Tex. App. | 2011Background
- Amoco and Shell appellants entered Altura venture and later sold it to Occidental under a PSA providing for binding arbitration by a three-arbitrator panel.
- Oxy initiated July 2006 arbitration over interpretation of an environmental-conditions provision; panel included Ratliff (appointed by Oxy), McDade (by appellants), and Chapman (by Ratliff/McDade).
- Arbitrators disclosed connections; in 2007 McDade left his firm to join Beck, Redden & Secrest, L.L.P. during the proceedings.
- Panel awarded in appellants’ favor in Aug. 2008 (2-1; Ratliff dissented).
- Oxy later learned undisclosed information: Beck Redden’s representation of BP Products North America (a BP Amoco subsidiary); McDade had knowledge of this and did not disclose; Oxy moved to vacate under 9 U.S.C.A. §10(a)(2).
- District court vacated the award, ruling evident partiality; the court denied confirmation. The Texas Court of Appeals affirmed, applying TUCO standard for evident partiality.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard for evident partiality under FAA/TAA | Oxy urges appearance/ substantial standard (Positive Software). | Appellants urge Black-White plurality standard. They seek no-disclosure rule. | Texas adopts TUCO standard: nondisclosure creating reasonable impression of partiality. |
| Waiver by failure to investigate background | Oxy did not investigate Beck Redden's BP Products representation; waiver not shown. | Oxy could have investigated and waived conflicts by not objecting. | Waiver not established based on reasonable investigation absent disclosure. |
| Materiality of BP Products representation | BP connection through BP Amoco and Lord Browne was material and nontrivial. | Relationships were indirect/remote; trivial nondisclosures should be excused. | BP Products representation material; nondisclosure created a reasonable impression of partiality. |
| McDade's role and disclosure duty | As Beck Redden “of counsel,” McDade had a disclosure duty; nondisclosure mattered. | McDade not financially connected; duty limited. | Nondisclosure by McDade or firm sufficed to show evident partiality. |
| Burden to show objection would have been raised | Oxy need not prove it would have objected; nondisclosure alone suffices. | Objection likelihood is an element. | Not required; nondisclosure alone supports evident partiality. |
Key Cases Cited
- Commonwealth Coatings Corp. v. Continental Casualty Co., 393 U.S. 145 (1968) (appearance of bias and disclosure standards in arbitration)
- Positive Software Sols., Inc. v. New Century Mortg. Corp., 476 F.3d 278 (5th Cir. 2007) (contracting standard for evident partiality (en banc))
- TUCO, Inc. v. Burlington Northern & Santa Fe Ry. Co., 960 S.W.2d 629 (Tex. 1997) (standard for evident partiality under FAA and TAA; up-front disclosure policy)
- Mariner Fin. Grp., Inc. v. Bossley, 79 S.W.3d 30 (Tex. 2002) (evident partiality standard; focus on nondisclosure)
- Falbaum v. Houston Village Builders, Inc., 105 S.W.3d 28 (Tex.App.-Houston [14th Dist.] 2003) (public policy of disclosure; application to arbitration)
- J.D. Edwards World Solutions Co. v. Estes, Inc., 91 S.W.3d 836 (Tex.App.-Fort Worth 2002) (duty to disclose relationships in arbitration)