Hendricks v. Feldman Law Firm LLP, 1:14-cv-00826

OSI (Organizational Strategies, Inc.) and affiliated "Captives" contracted with Capstone entities and the Feldman Law Firm to form and administer captive insurance companies; PoolRe (not a party) administered a risk pool used by the Captives.
Dispute arose when OSI believed it overpaid PoolRe premiums for 2012; OSI reduced payments, was excluded from PoolRe, and later terminated the agreement with Capstone.
Contract required arbitration; Capstone initially initiated arbitration in Texas (PoolRe not a party). Texas arbitration produced an award later vacated by the S.D. Tex. court and affirmed by the Fifth Circuit.
This Court compelled arbitration in Delaware and the Delaware arbitrator issued an award ordering Capstone and the Firm to “arrange for” payment from PoolRe to OSI (even though PoolRe was not an arbitration party).
Capstone moved to vacate the Delaware Award; OSI petitioned to confirm. Capstone also sought injunctive relief arguing OSI waived arbitration by prior litigation conduct.
The Court granted vacatur of the Award (arbitrator exceeded powers by effectively imposing obligations on nonparty PoolRe), denied Capstone’s summary judgment on waiver, and held OSI did not waive its right to arbitrate.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Delaware arbitration award exceeded arbitrator's power by ordering Capstone to "arrange for" payment from nonparty PoolRe	The Award does not bind PoolRe; it only requires Capstone to exercise control it already had — thus no obligation is imposed on PoolRe	The Award effectively imposes an obligation on PoolRe (a nonparty) by directing Capstone to arrange payment, exceeding arbitrator authority	Court: Vacated Award under 9 U.S.C. § 10(a)(4); arbitrator exceeded powers by creating obligations that depend on a nonparty (PoolRe)
Whether OSI waived its contractual right to arbitrate by litigating in court first	OSI contends its litigation focused on whether arbitration was required, not the merits, and it promptly sought arbitration once court compelled Delaware arbitration	Capstone argues OSI litigated for a year and delayed arbitrating, prejudicing Capstone and thus waived the right	Court: As a matter of law, OSI did not waive arbitration under Hoxworth factors; denied Capstone summary judgment on waiver

Sutter v. Oxford Health Plans LLC, 675 F.3d 215 (3d Cir. 2012) (explains strong federal policy favoring enforcement of arbitration awards)
Hall St. Assocs. v. Mattel, 552 U.S. 576 (U.S. 2008) (limits vacatur to FAA § 10 grounds)
Freeman v. Pittsburgh Glass Works, 709 F.3d 240 (3d Cir. 2013) (discusses narrow circumstances for vacatur)
Dluhos v. Strasberg, 321 F.3d 365 (3d Cir. 2003) (vacatur standards and deference to awards)
Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912 (3d Cir. 1992) (sets multi‑factor test for waiver of arbitration)
Gray Holdco, Inc. v. Cassady, 654 F.3d 444 (3d Cir. 2011) (applies Hoxworth waiver factors)
Nino v. Jewelry Exchange, Inc., 609 F.3d 191 (3d Cir. 2010) (discusses inference of waiver where party extensively litigates merits before seeking arbitration)