Sullivan v. Feldman
132 F.4th 315
5th Cir.2025Background
- Doctors Sullivan and Dellacroce, through various business entities, contracted with Feldman and his law firm to set up captive insurance arrangements, using an Engagement Letter containing an arbitration clause governed by Texas law.
- Multiple arbitrations arose following disputes about the formation, operation, and wind-down of these insurance structures, particularly after adverse tax judgments concerning the bona fides of the insurance pool involved (PoolRe).
- Parties initiated several overlapping arbitrations before different arbitrators; four of these arbitrators heard evidence jointly but issued inconsistent and disparate awards.
- The Engagement Letter delegated significant interpretive authority, including questions of arbitrability and contract enforceability, to the arbitrator(s), and allowed sequential or overlapping arbitrations if time deadlines lapsed.
- The district court confirmed all four conflicting awards but stayed further attempts to resolve the inconsistencies by arbitration; class arbitration and liability of a non-signatory (Carlson) were major disputed points.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides class arbitrability? | Arbitrator has exclusive authority | Court should decide; not delegated | Arbitrator decides—Engagement Letter unambiguously delegated. |
| Enforceability of 4-month deadline | Arbitrator decides unconscionability | Must be enforced strictly | Arbitrator decides; rejection of strict timeline is upheld. |
| Permissibility of overlapping arbitrations | Contract allows multiple "disputes" | Only one arbitrator per dispute | Arbitrator’s interpretation controls under deferential review. |
| Confirmation of inconsistent awards | District court should confirm all | Court must resolve inconsistency | Court cannot vacate for inconsistency—remanded for arbitration. |
| Jones award against non-signatory Carlson | Carlson is estopped from objecting | Not bound—did not sign/benefit | Carlson not bound; award against him is reversed. |
Key Cases Cited
- Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019) (arbitrators can decide arbitrability if the parties clearly delegate the issue)
- Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013) (arbitrator’s contract interpretation is highly deferential)
- Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662 (2010) (party cannot be compelled to class arbitration without explicit consent)
- Lamps Plus, Inc. v. Varela, 587 U.S. 176 (2019) (ambiguity or silence does not allow class arbitration)
- Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009) (scope of parties bound by arbitration agreement controlled by state law)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (federal policy favors arbitration; doubts resolved in its favor)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (clear and unmistakable evidence required to delegate arbitrability)
- John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964) (deference to arbitrator where he arguably interpreted the contract)
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010) (gateway issues of arbitrability can be delegated to arbitrator)