Texas Brine Company, L.L.C. v. Amer Arbitration As
955 F.3d 482
5th Cir.2020Background
- Texas Brine (TX LLC) and Vulcan/Oxy had a contract with an AAA arbitration clause; disputes led to AAA arbitration beginning in 2014.
- Two arbitrators (DiLeo and Minyard) failed to disclose conflicts; AAA removed one arbitrator and later DiLeo and the remaining arbitrator resigned after challenges.
- A Louisiana state court vacated the arbitration awards under 9 U.S.C. § 10(a)(2); AAA continued to appoint replacements.
- Texas Brine sued AAA, DiLeo, and Minyard in state court for >$12 million alleging fraud, nondisclosure, and related torts; AAA removed the case to federal court before the Louisiana-resident arbitrators were served ("snap removal").
- Texas Brine moved to remand; the district court denied remand and later granted judgment on the pleadings for defendants, dismissing the suit with prejudice as an improper collateral attack on the arbitral process and/or because FAA provided the exclusive remedy.
- Fifth Circuit affirmed denial of remand (snap removal allowed) and affirmed dismissal on the ground that the FAA’s Section 10 provides the exclusive remedy for the alleged arbitrator misconduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "snap removal" (removal before in-state defendants served) is barred by 28 U.S.C. § 1441(b)(2) forum-defendant rule | Section 1441(b)(2) should bar removal when a forum defendant is named, even if not yet served; Congress intended to prevent diversity destruction by forum defendants | The statute bars removal only if a forum defendant is "properly joined and served" at the time of removal; because in-state defendants were unserved, removal was proper | Snap removal is permitted: §1441(b)(2) is inapplicable until a forum defendant is properly joined and served; text is unambiguous and not absurd |
| Whether equitable doctrines or exceptions (e.g., abuse of process) require remand despite plain statutory language | Removal here is abusive/game-playing and Congress intended to curb that; court should construe statute to prevent misuse | No statutory basis to rewrite §1441(b)(2); equitable tolling/exception not warranted to override plain text | Court declined to insert exceptions; remand denied |
| Whether Texas Brine’s tort and equitable claims against AAA and arbitrators constitute an impermissible collateral attack on the arbitration award | Claims seek independent relief (reimbursement, disgorgement, tort damages) and are not limited to vacatur; vacatur in state court demonstrates §10 insufficiency | Claims attack the same wrongful conduct that Section 10 of the FAA was designed to remedy (evident partiality, nondisclosure); such claims are collateral attacks | Claims are an unauthorized collateral attack and thus barred; dismissal on pleadings affirmed on exclusive-remedy grounds |
| Whether supplemental state-court documents justify keeping suit or altering the outcome | New evidence about AAA administration changes the analysis and may show independent claims | Even if admitted, documents would not change that Section 10 is the appropriate and exclusive remedy | Motion to supplement denied; outcome unchanged |
Key Cases Cited
- Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699 (2d Cir. 2019) (upholding snap removal; "properly joined and served" applies at time of service)
- Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. 2018) (adopting same plain-text reading allowing snap removal)
- Hall St. Assocs. L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (FAA provides exclusive statutory grounds for vacatur/modification)
- Gulf Petro Trading Co. v. Nigerian Nat’l Petroleum Corp., 512 F.3d 742 (5th Cir. 2008) (claims alleging arbitrator bias that seek damages constitute collateral attack addressed by §10)
- Decker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 205 F.3d 906 (6th Cir. 2000) (tort claims based on alleged arbitration prejudice are collateral attacks)
- Corey v. New York Stock Exch., 691 F.2d 1205 (6th Cir. 1982) (FAA is exclusive remedy; suit against arbitrators/sponsor was collateral attack)
- In re 1994 Exxon Chem. Fire, 558 F.3d 378 (5th Cir. 2009) (forum-defendant rule is procedural, not jurisdictional)