### INTHE UNI TED S TATESCOU RT OFAPPEALS FORTHE FIFTH CIRCU IT

N o. 08- 40575

N AN G RA VE S; LI N D A G RA VE S; D U STI N G RA VE S; SAM G RA VE S; J ES S I CA GRAVES P ARKER P l ai n t i f fs - A pp el l ees

v. BP AM ERI CA I NC. ; BP P RODUCTS NORTH AM ERI CA, I NC. ; J V IN D U S T R IA L C O M P A N IE S L T D , f orm erl y kn ow n as JV P i pi n g, I n c. D efen da n t s - A pp el l an t s

A pp ealf

rom t h e U n i t ed S t ates D i st ri ctC ou rt f or t h e Sou t h ern D i st ri ctof T exas
B ef ore H IG G IN B O T H A M , G A R Z A , an d P R A D O , C i rcui t Ju dg es . P E R C U R I A M: T h e pl ai n t i f

fs i n t h i s c ase are t h e survi vi n g spou se, m ot h er, an d chil dren
o f d e c e d e n t R o n n ie G r a v e s , a n e m p lo y e e o f d e fe n d a n t J .V . P ip in g , w h o d ie d in
a w o rk -re la te d a cc id e n t a t d e fen d a n ts’ B P T e x a s C ityfac il ity
. T h e p la in tiffs United States Court of App eals

Fifth Circuit 

### F I L E D Ma y 6, 2009 Cha rl es R. F ulb ru g e II I ClerkN o. 08- 40575

T ex . C iv . Prac. & R em. C ode § 7 1.00 2. 1 T ex . C iv . Prac. & R em. C ode § 7 1.02 1. 2 Fleet wood En te rprises In c. v. Gaskam p , 2 8 0F .3 d 1 0 6 9 , 1 0 7 3( 5 thC ir
. 2 0 0 2 ). 3 2 0 0 9WL3 5 3 5 2 4(T ex . 2 0 0 9). 4 2 br o ugh t a di ve r s i t y ac t i o n, s ui ng unde r t he Te xa s w r o ngf ulde at h s t at ut e a nd 1 t h e T exas survi val st atute. Th e defen da n t s brou g h t m ot i on s t o com pel 2
ar bi t r at i o n pur s uant t o t he ar bi t r at i o n c l aus e i n Ronni e G r av e s’ em pl o ym e nt agr ee m ent
. The di st r i c tcour tgrant ed t he m ot i ons w i t h r es pec t t o t he s urvival cl ai m s, as i tf

ou n d those cl ai m s to be w h ol l y deri vati ve of t h e deceden t ’ s r i gh t s, butde ni e d t he m o t i o ns w i t h r e s pe c t t o t he w r o ngf ulde at h c l ai m s, a s i t f o und t h ose c l ai m s t o be persona l t o t h e pl ai n t i f fs. D efen da n t s ap pea l an d w e revi ew de no vo . 3 I A pp el l a n ts con t en d that non si gn ator i es s u i n g a deced en t ’ s em pl oyer unde rt he T e xa s w r o ngf uldea t h st at ut e a r e b o und bya n a r bi t r at i o n a gr e e m e nt b e t w e e n t h e e mp l o y e ra n d t h e d e c e d e n t
. T h e y p o i n t u s t o t h e T e x a s S u p r e me Co u r t ’ s r e c e n to p i n i o n i n In r e La b a t tFo o d Se r v i c e , L. P. , w h ere t h e court
ans w e r e d t hatpr e c i s e l e ga l que s t i o n: “ t he ar bi t r at i o n pr o vi s i o n i n a n a gr e e m e nt b etw ee n a d ece d en t an d h i s em p l oy er re q u i r e s th e em p l oy ee ' s w ron gfu lde a th ben ef i ci ari es t o arbi t rat e t h ei r w rongful dea t h cl ai m s agai n stt h e em pl oyer even th o u g h th e y d id n o t s ig n th e a g r e e m e n t.” A p p e lla n ts re a d th is a s d is p o s itiv e in 4 t h i s c ase. W e , ho w e ve r , a r e no ts o q ui c k t o a gr e e . Appe l l ant s fai l t o m e nt i o n t hatt he T exas S u prem e C ou rtexpl i ci t l y deci de d to a n sw er t h e qu est i on of w h et h er n on sign a tories are b o u n d by an arb i tration ag ree m en t by ap p l yin g sta te sub st an t i ve l aw , not fed e ra ll aw . B ef ore r el yi n g en t i rel y on t h e case, w e m u st f i r s tc o n s i d e rwh e t h e rt h i s wa s t h e c o r r e c t c h o i c e o f l a w.N o. 08- 40575

Fleet wood En te rprises In c. , 2 8 0F .3 d at 1 0 7 3
. 5 FirstOpt ion of C

hicago, I

nc. v. Kaplan , 5 1 4U .S
. 9 3 8 , 9 4 4( 1 9 9 5). “Thu s s tatel aw, 6 wheth er of le gi slativeor ju dicial o rigin, is applicable if th at law arose to govern issues c once rningth e vali dity , revocab ility, and enfo rceabilityof contracts ge nerally .” P e r ryv . Tho mas , 4 8 2 U .S
. 4 8 3 , 4 9 2n .9( 1 9 8 7). Mitsu bish i Motors Cor p. v. Soler Ch rysler-Plymouth, I nc. , 47 3 U .S. 61 4, 6 26 (19 85) 7 (quo tin g Moses H. Co ne Mem’l Hosp. v. Mercu ry C onst r. C orp. , 4 6 0U .S
. 1 , 2 4( 1 9 8 3))
. Fleet wood En te rprises , 28 0 F .3d at 1 074
. 8 Sh erer v. Green Tree Ser vi ci n g, LLC, 548 F .3 d 3 7 9 , 3 8 1

– 8 3( 5 thC ir
. 2 0 0 8); 9 Washin gton Mut ual Finance Group LL C v. Bailey , 3 6 4F .3 d 2 6 0 , 2 6 7 n. 6 ( 5 thC ir
. 2 0 0 4); Bridas S.A.P.I

.C. v. Gov’tof Turk menistan , 3 4 5F .3 d 3 4 7 , 3 5 3( 5 thC ir
. 2 0 0 3). Bailey , 36 4 F .3da t2 67 n . 6 (“Howeve r, we also noteth ere is no re asonto think 10 Mi ssi ssipp i law wo uld co mp el a diff er ent re sult in this ca se. . . . ”) ; Inre Lab attF ood Service, LP, 20 09 WL 353 524(T ex . 20 09) (“Pe ndin g anan swer from the Unit ed S tates Supre me C ourt , we havedetermine d to applystat e substantive l aw and ende avor to kee p itcon sistentwith fe de ral law.”). 3 A Am ot i on t o com pel arbi t rat i on presents t w o qu estions. Fir st , w h et h er th e r e is a v a lid a g r e e m e n t t o a r b itr a te , a n d s e c o n d , w h e th e r th e d is p u te in que s t i o n fal l s w i t hi n t he s c o pe o f t he a r bi t r at i o n agr e e m e nt
. I n a ns w e r i ng t he 5 f i r stques t i on o f

c on trac tval i di t y w e a ppl y “ or di nary st at e- l aw pr i nci pl es t hat g o v e r n t h e fo r m a tio n o f c o n tr a c ts .” T h e s e c o n d q u e s tio n o f s c o p e , h o w e v e r , is 6
a n s w e r e d “b y a p p ly in gth e ‘ fe d e r a l s u b s ta n tiv e la w o f a r b itr a b ility
. . . .’” W h ile 7 t h i s i s c l ear, t h ere is l ess cert ai n t y over w h at l aw governs w h et h er a no ns i gna t o r y s ho ul d b e c o m pe l l e d t o a r bi t r at e — a que s t i o n s e e m i ngl y fal l i ng be t w e e n va l i di t y and s c o pe . And, i n fac t , w e ha ve c as e s a ppl yi ng s t at e l aw a nd 8
o th e r s a p p ly in gfe d e r a l la w to th is q u e s tio n . 9 B T h i s c ase d oes n otrequ i re u s to deci de t h e ch oi ce- of

- l aw is sue becau se w e, lik e o th e rco u r ts b e fo r e u s , ca n s im p ly n o te th a t fe d e r a l a n d s ta te la w d o v e ta il 10 t o p r o v i d e t h e s a me o u t c o me . R e g a r d i n gT e x a s l a w , t h e T e x a s S u p r e meN o. 08- 40575

In re Labatt Food Serv ic e, LP, 2 0 0 9WL3 5 3 5 2 4(T ex . 2 0 0 9). 11 Id
. Th e Tex as Supre me Court delive red this opinion subsequent to the district co urt’s 12 decision in th is c as e, which in large part relie d onnow-ove rrul ed T ex as appell ate court precede nt hol ding

th at wrongful death ben efici arie s are not b oun d bya decede nt’s agreement to arbitrate
.

See Shere r v. Gre en Tre e Serv ic ing LLC, 548 F.3 d 379 , 381 –82 (5th Cir. 2 008) (citing 13 Bridas S.A.P.I

.C. v. Gov’tof Turk menistan , 3 4 5F .3 d 3 4 7 , 3 5 6( 5 thC ir
. 2 0 0 3))
. Id
. at36 1–6 2. 14 In re Labatt Food Serv ic e, LP, 2 0 0 9WL3 5 3 5 2 4(T ex . 2 0 0 9). 15 4 C ou rt

— exp l i ci t l y ap pl yi n g T exas l aw — h el d that “ [ w ] h i l e i t i s t rue that dam ages f o ra w r o ngf

ulde at h ac t i o n ar e fo r t he ex c l us i ve be ne f i t of t he b e ne f

i c i ar i e s a nd
are m ean tt o com pen sa te th e m fort h ei r ow n persona ll oss, t h e cause of act i on i s s t i l lenti rel y deri vati ve of t h e deceden t ' s ri gh t s. ” B ecau se t h e non si gn ator y 11 p la in tiffs “s ta n d in [th e d e c e d e n t’s ] le g a l s h o e s ,” th e y a r e b o u n d b y h is 12
a gr ee m en t. Reg ar di ng fe de r all aw, t he f e de r alc o m m o n l aw of c o nt r ac t s b i nds
no ns i gna t o r i e s t o a r bi t r at i o n agr e e m e nt s unde r var i o us t he o r i e s o f c o nt r ac ta nd
a g e n c y la w , in c lu d in gin c o r p o r a tio n b y re fe r e n c e , a s s u m p tio n , a g e n c y , v e il pi erci n g or al t er ego, est o p p e l, an d thi rd- pa rt y ben ef i ci ary. Th e “ di rect

13 ben ef i t s” versi on of

estoppel ap pl i es i n this case; itpreven t s a non si gn ator y f rom kn ow i n gl y exp l oi t i n g an a greem en t contai n i n g t h e arbi t rat i on cl au se. I n ot h er 14
w o r d s , a n o n s i g n a t o r y c a n n o ts u e u n d e ra n a g r e e me n t w h i l e a t t h e s a me t i me avoidi n g i t s arbi t rat i on cl au se. H ere , the n , w e m u st de ci d e if the A p p ell ee s’statu tory w ron gfu lde a th
ac t i o ns a r e pr e m i s e d, at l e as ti n pa r t , o n t he de c e de nt ’ s e m pl o ym e nta gr e e m e nt
w i t h t he s i gna t o r y de fe nda nt s . W r o ngf ul de at h be i ng a s t at e c aus e o f a c t i o n, t he
n a tu r e o f th e s u it is d e fin e d b y T e x a s la w . In re L a b a tt de f i ne d a Te xa s w r o ngf

ul dea t h act i on as “ en t i rel y deri vati ve of t h e deceden t ’ s r i gh t s. ” A ccor di n gl y, j u st 15
as an y sui tby R on n i e G raves againsthi s em pl oyer f or a w ork- rel ated i nj u ryN o. 08- 40575

5 w o ul d b e pr em i s e d o n hi s e m pl o ym e nta gr e e m e nt , t he w r o ngf ulde at h a c t i o ns br ought by hi s st at ut ory b en efi c i ar i es m ustal so be pr em i se d on t hat agreem en t

— w h i ch i s t he a gr e e m en t beari n g t h e arbi t rat i on cl au se. Th u s, un der t he fe de r alc o m m o n l aw of c o nt r ac t s, the s t at ut o r y be ne f i c i ar i e s o f

a w r o ngf

ul de at h a c t i o n i n Te xa s a r e b o und bya n a r bi t rat i on a gr e e m e ntb e t w e e n t he deceden tan d h i s em pl oyer. T h e ju d g m en t of

the distri ct cou rt w i th resp ect to the w ron gfu lde a th
c la im s is R E V E R S E D
.