OOGC America, L.L.C. v. Chesapeake Exploration, L.
975 F.3d 449
5th Cir.2020Background
- Chesapeake (Oklahoma LLC) and OOGC (Delaware LLC) entered mirrored Development and Joint Operating Agreements that required arbitration of disputes and barred arbitrators who had done material work for an affiliate within five years.
- OOGC alleged Chesapeake overbilled the joint account by paying affiliates/related parties (notably FTS) above prevailing market rates and demanded arbitration; OOGC selected Beatty, Chesapeake selected Long, and the two selected Schultz as chairman.
- Long initially disclosed no ties to non-party FTS; after OOGC complained, Long disclosed prior business ties to FTS’s chairman (Goh) and that FTS’s general counsel (Keefe) had worked with him; the AAA removed Long and the panel continued with a two-arbitrator quorum for remaining claims.
- The three-arbitrator panel ruled Chesapeake breached certain reporting duties but rejected OOGC’s overbilling claim; OOGC then sued to vacate the awards in state court, alleging Long’s nondisclosure showed evident partiality; Chesapeake removed to federal court.
- The district court vacated the awards, finding Long lied and exhibited evident partiality; Long moved to intervene to protect his reputation, the district court denied intervention, and Chesapeake and Long appealed.
Issues
| Issue | Plaintiff's Argument (OOGC) | Defendant's Argument (Chesapeake/Long) | Held |
|---|---|---|---|
| Whether awards must be vacated for evident partiality under 9 U.S.C. § 10(a)(2) due to Long’s nondisclosure of ties to FTS and related persons | Long’s ties to FTS and former colleagues created a significant compromising connection and incentive to rule for Chesapeake/FTS | Long’s ties were to a non-party with no stake; connections were indirect/speculative and insufficient under Fifth Circuit nondisclosure standard | Vacatur reversed: no evident partiality—OOGC’s theories were speculative and did not meet Positive Software’s stern standard |
| Whether vacatur is proper under 9 U.S.C. § 10(a)(4) because Long allegedly failed contractual neutrality/qualification requirements | Long’s prior representation of FTS made him unqualified per the Agreements, so arbitrator exceeded powers | This is an qualifications complaint, not a defective selection like PoolRe; panel reasonably found FTS not an affiliate so Long met contractual neutrality | Vacatur under § 10(a)(4) denied: OOGC failed to show panel erred or that Long exceeded powers |
| Whether the district court erred in denying Long’s motion to intervene in district court after notice of appeal was filed | Long sought to intervene to protect reputation and correct factual statements | Chesapeake opposed; district court denied intervention on merits but did so after appeal was filed | Affirmed: district court lacked jurisdiction to act after timely appeal was filed, so denial affirmed on that ground |
| Whether Long may intervene in this Court on appeal to defend his reputation | Long sought intervention to correct district-court findings | Appellate intervention unnecessary because remedy here vacates the district opinion | Denied as moot: this Court vacates the district-court vacatur, eliminating need to correct the opinion |
Key Cases Cited
- Positive Software Solutions, Inc. v. New Century Mortgage Corp., 476 F.3d 278 (5th Cir. 2007) (en banc) (sets stern nondisclosure/evident-partiality standard requiring concrete compromising connection)
- Cooper v. WestEnd Capital Mgmt., L.L.C., 832 F.3d 534 (5th Cir. 2016) (burden on party seeking vacatur; doubts resolved in favor of upholding award)
- PoolRe Ins. v. Organizational Strategies, Inc., 783 F.3d 256 (5th Cir. 2015) (distinguishes defective arbitrator-selection from arbitrator-qualification under § 10(a)(4))
- 21st Financial Services, L.L.C. v. Manchester Financial Bank, 747 F.3d 331 (5th Cir. 2014) (standard of review for appeals of arbitration confirmation/vacatur)
- Pitta v. Hotel Ass'n of New York City, 806 F.2d 419 (2d Cir. 1986) (rare case where arbitrator asked to decide his own employment validity; discussed but distinguished)
- Commonwealth Coatings Corp. v. Continental Cas. Co., 393 U.S. 145 (1968) (background on arbitration impartiality concerns)