IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 09-30177

ANTHONY TODD

Plaintiff-Appellee

v.

STEAMSHIP MUTUAL UNDERWRITING ASSOCIATION (BERMUDA)

LIMITED

Defendant-Appellant

Appeal from the United States District Court 

for the Eastern District of Louisiana

Before GARWOOD, WIENER, BENAVIDES, Circuit Judges.

FORTUNATO P. BENAVIDES, Circuit Judge:

Appellant Steamship Mutual Underwriting Association (Bermuda)

Limited (“Steamship”) appeals from the district court’s denial of its motion to

compel Appellee Anthony Todd to arbitrate his claims against Steamship. The

district court premised its denial exclusively on our previous decision in

Zimmerman v. International Companies & Consulting, Inc., 107 F.3d 344 (5th

Cir. 1997). We conclude that the Supreme Court’s recent opinion in Arthur

Andersen LLP v. Carlisle, released after Steamship filed this appeal, has

effectively overruled Zimmerman. 129 S. Ct. 1896 (2009). As a result, we

United States Court of Appeals

Fifth Circuit

F I L E D

March 18, 2010

Charles R. Fulbruge III

Clerk

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Delta Queen appealed, but the Louisiana Fourth Circuit Court of 1

Appeal largely affirmed the judgment in favor of Todd. However, it remanded

the case to the civil district court for recalculation of the sum due Todd for wages

lost due to his injury. See Todd v. Delta Queen Steamboat Co., 15 So. 3d 107,

113-14 (La. App. 4th Cir. 2008), aff’d on reh’g, 15 So.3d 107 (La. App. 4th Cir.

2009).

Section 22:1269 arguably creates two distinct rights of action, but 2

Todd has not specified under which he is proceeding against Steamship. First,

section 22:1269(A) authorizes an injured individual to proceed against an insurer

after he or she has obtained an executory judgment against an insolvent insured.

Second, section 22:1269(B) allows an injured individual to proceed directly

against an insolvent tortfeasor’s insurer, even without a prior judgment against

the insured tortfeasor.

2

reverse the district court’s dismissal of Steamship’s motion and remand this case

for further proceedings to determine whether Todd can be compelled to arbitrate.

I.

Early in 2000, Todd was injured while serving as a chef onboard the M/V

AMERICAN QUEEN, a replica steamboat owned and operated by the Delta

Queen Steamboat Company (“Delta Queen”). When the injury occurred, the ship

was cruising along the Mississippi River in the state of Louisiana. In 2001,

Delta Queen filed for bankruptcy protection, but Todd won approval from the

bankruptcy court to proceed with a suit against Delta Queen. Eventually, Todd

won a judgment against Delta Queen in Louisiana state court in 2007, but Delta

Queen has yet to satisfy this judgment.1

At the time of Todd’s injury, Steamship insured Delta Queen against

liability for injuries to its employees. In 2008, Todd filed suit in Louisiana state

court against Steamship, attempting to collect on his judgment against Delta

Queen. Todd’s suit is authorized by Louisiana’s “direct action” statute, which

allows injured individuals to proceed directly against insurers when an insured

tortfeasor is insolvent. See La. Rev. Stat. Ann. § 22:1269 (2009). Todd raised 2

four causes of action against Steamship, asserting that (i) Steamship is liable to

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The clause provides that: 3

If any difference or dispute shall arise between a Member and the

Club concerning . . . the insurance afforded by the Club under these

Rules, or any amount due from the Club to the Member, such

difference or dispute shall in the first instance be referred to and

adjudicated by the Directors. . . . If the Member does not accept the

decision of the Directors the difference or dispute shall be referred

to the arbitration of two arbitrators, one to be appointed by each of

the parties, in London . . . .

3

Todd for his injuries onboard the M/V AMERICAN QUEEN, less any deductible,

(ii) Steamship failed to negotiate with Todd in good faith, (iii) Steamship failed

to make reasonable efforts to settle with Todd, and (iv) Steamship’s

“members”—i.e., other entities insured by Steamship—should be declared jointly

and severally liable to Todd.

In response, Steamship removed this suit to federal district court. It then

asked the district court to stay the proceedings and to compel Todd to arbitrate

his claims pursuant to the Convention on the Recognition and Enforcement of

Foreign Arbitral Awards (the “New York Convention”), June 10, 1958, 21 U.S.T.

2517, 330 U.N.T.S. 38. Steamship argued that since all of Todd’s causes of

action derive from Delta Queen’s policy with Steamship, he should be bound by

the clause in the policy requiring Delta Queen to arbitrate certain disputes with

Steamship. However, the district court ruled that it would not compel 3

arbitration, as it found that our decision in Zimmerman foreclosed referring this

case to arbitration. Indeed, the court found Zimmerman to be so dispositive that

it decided not to write an opinion explaining its decision, as it concluded that

writing anything at all would be merely “wasting trees.” Steamship has now

appealed the district court’s denial of its motion to stay this case and compel

arbitration.

II.

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Under the FAA, district courts may only refer cases to arbitration 4

within their own district. See 9 U.S.C. § 4 (“The hearing and proceedings, under

such agreement, shall be within the district in which the petition for an order

directing such arbitration is filed.”). However, the New York Convention’s

implementing legislation “authorizes district courts to order parties to proceed

with a Convention arbitration even outside the United States.” Sedco, Inc. v.

Petroleos Mexicanos Mexican Nat’l Oil Co., 767 F.2d 1140, 1146 (5th Cir. 1985).

4

We have appellate jurisdiction over this case under 9 U.S.C. §§ 16(a)(1)(A)

and 16(a)(1)(C), which allow us to hear interlocutory appeals from orders

“refusing a stay of any action under” the Federal Arbitration Act (“FAA”) and

orders “denying an application under [the New York Convention] to compel

arbitration.” See Carlisle, 129 S. Ct. at 1900 (“[A]ny litigant who asks for a stay

under [the FAA] is entitled to an immediate appeal from denial of that

motion—regardless of whether the litigant is in fact eligible for a stay.”). When

we exercise this jurisdiction, we review denials of motions to compel arbitration

de novo. Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.

2002).

Before we begin our analysis, we provide some brief background to help

orient the reader with respect to the relationship between the New York

Convention and the primary domestic source of federal arbitration law, the FAA,

9 U.S.C. §§ 1-16 (2006). In this case, Steamship must seek relief at least in part

under the New York Convention, as Steamship seeks to compel Todd to arbitrate

outside the United States. However, the FAA has some application to this case. 4

The Convention’s implementing legislation incorporates the entire FAA, at least

to the extent that the FAA does not conflict with the Convention. See 9 U.S.C.

§ 208; Yusuf Ahmed Alghanim & Sons v. Toys “R” Us, Inc., 126 F.3d 15, 20 (2d

Cir. 1997) (explaining that “the FAA and the Convention have ‘overlapping

coverage’ to the extent that they do not conflict” (quoting Bergesen v. Joseph

Muller Corp., 710 F.2d 928, 934 (2d Cir.1983)). For example, the Convention

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5

and its implementing legislation do not explicitly authorize staying litigation

pending arbitration, and thus parties whose arbitration agreements fall under

the Convention have had to seek authority for stays under 9 U.S.C. § 3, a

provision of the domestic FAA. See, e.g., DiMercurio v. Sphere Drake Ins., PLC,

202 F.3d 71, 77-78 (1st Cir. 2000); Energy Transp., Ltd. v. M.V. San Sebastian,

348 F. Supp. 2d 186, 201 (S.D.N.Y. 2004).

With this prologue complete, we now turn to the issues raised by this case.

As explained above, the district court found that our decision in Zimmerman

foreclosed ruling in favor of Steamship, and consequently it denied Steamship’s

motion to compel arbitration without authoring an opinion. However, after the

district court denied Steamship’s motion, the Supreme Court released its opinion

in Carlisle. We conclude that Carlisle effectively overrules Zimmerman, at least

insofar as Zimmerman would apply in this case to prevent Steamship from

compelling Todd to arbitrate his claims. Additionally, we find that Carlisle also

effectively overrules our earlier decision in In re Talbott Big Foot, Inc., which is

factually indistinguishable from Zimmerman. 887 F.2d 611 (5th Cir. 1989). As

a result, since we have not benefitted from a full airing below of the issues

presented by this case, we remand Todd’s action to the district court for a

determination of whether Todd can be compelled to arbitrate now that

Zimmerman has been displaced. Nevertheless, we write to provide guidance for

the district court on remand and to explain why we conclude that Carlisle

invalidates Zimmerman and Big Foot.

A.

In Zimmerman and Big Foot, injured seamen filed claims against their

employers’ foreign insurers under Louisiana’s direct action statute.

Zimmerman, 107 F.3d at 345; Big Foot, 887 F.2d at 612. As explained above, the

direct action statute allows injured individuals to proceed directly against

tortfeasors’ insurers in certain circumstances. See La. Rev. Stat. Ann. § 22:1269.

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The only reference to the Convention in either case is in a brief 5

footnote in Big Foot. We noted that “[t]he convention on the recognition and

enforcement of foreign arbitral awards may have some application [to this case],

but that convention simply adopts the provisions of the Federal Arbitration Act.”

887 F.2d at 614 n.3. As both Zimmerman and Big Foot involved foreign

insurers, it is probable that the Convention did have some application in both

cases. See Lim v. Offshore Specialty Fabricators, Inc., 404 F.3d 898, 903 (5th

Cir. 2005) (explaining that “[t]he Convention applies to international arbitration

clauses when,” among other factors, “‘a party to the agreement is not an

American citizen’” (quoting Francisco v. Stolt Achievement MT, 293 F.3d 270,

272-73 (5th Cir. 2002)). However, we likely did not focus on the Convention in

either case because the foreign insurers were not seeking to compel arbitration

with the direct action plaintiffs, but rather to stay their lawsuits until the

insurer had completed arbitration with its insured. As explained above, there

is no explicit provision authorizing stays in the Convention or its implementing

legislation; consequently, parties have had to turn to 9 U.S.C. § 3, a provision of

the domestic FAA, for such relief.

In Big Foot, we left open the question of whether the insurer was 6

entitled to a discretionary stay, as opposed to a mandatory stay pursuant to § 3

of the FAA. 887 F.2d at 614.

6

In response to the direct actions, the insurers sought to stay the seamen’s suits

until the insurers had exercised their contractual right to arbitrate with the

seamen’s employers. Zimmerman, 107 F.3d at 345; Big Foot, 887 F.2d at 612.

In both cases, we engaged in an analysis that largely focused on the FAA, and 5

we found that a stay was inappropriate.6

The facts before us in this case are somewhat different. Unlike

Zimmerman and Big Foot, a foreign insurer is not merely seeking to stay a direct

action plaintiff’s lawsuit until the conclusion of arbitration with its insured.

Instead, Steamship is seeking to compel a direct action plaintiff to arbitrate.

Another distinction is that unlike the direct action plaintiffs in Big Foot and

Zimmerman, Todd has already won a judgment against Steamship’s insured and

is suing Steamship to collect on it. Despite these differences, however, if

Zimmerman and Big Foot were still valid, their reasoning would sweep broadly

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Similarly, in Big Foot, we held that the direct action plaintiffs’ 7

actions should not be stayed because the plaintiffs were “not parties” to their

employer’s insurance policy. 887 F.2d at 614. 

7

enough to rule out arbitration under the facts of this case. Specifically, in

Zimmerman, we determined that staying an injured worker’s direct action would

be inappropriate because:

The FAA does not require arbitration unless the parties to a dispute

have agreed to refer it to arbitration. Likewise, the mandatory stay

provision of the FAA does not apply to those who are not

contractually bound by the arbitration agreement. Thus, the FAA,

the source of the federal policy favoring arbitration, has no

application to require direct action plaintiffs to arbitrate or to stay

their lawsuits during arbitration.

107 F.3d at 346 (citations omitted). If Zimmerman were correct that the federal 7

policy favoring arbitration has no application to direct action plaintiffs, then

Steamship could not compel Todd to arbitrate.

In Carlisle, however, the Supreme Court rejected the reasoning in

Zimmerman and Big Foot, concluding instead that nonsignatories to arbitration

agreements (such as direct action plaintiffs) may sometimes be compelled to

arbitrate. It clarified that while the FAA “creates substantive federal law

regarding the enforceability of arbitration agreements, . . . background principles

of state contract law” control the interpretation of the scope of such agreements,

“including the question of who is bound by them.” 129 S. Ct. at 1901-02. The

Supreme Court then explained that “‘traditional principles’ of state law allow a

contract to be enforced by or against nonparties to the contract through

‘assumption, piercing the corporate veil, alter ego, incorporation by reference,

third-party beneficiary theories, waiver and estoppel.’” Id. at 1902 (quoting 21

R. Lord, Williston on Contracts § 57:19 (4th ed. 2001)). As such, Carlisle

overrules our determination in Zimmerman and Big Foot that direct action

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Since we decided Zimmerman, a number of Fifth Circuit panels have 8

recognized that nonsignatories may be bound to arbitrate in certain

circumstances. See, e.g., Bridas S.A.P.I.C. v. Turkmenistan, 345 F.3d 347, 355-

56 (5th Cir. 2003) (listing principles of contract and agency law that may bind

nonsignatories to arbitrate); Fleetwood, 280 F.3d at 1076 (same). However, “[a]s

a general rule, one panel may not overrule the decision of a prior panel, right or

wrong, in the absence of an intervening contrary or superseding decision by this

court sitting en banc or by the United States Supreme Court.” Billiot v. Puckett,

135 F.3d 311, 316 (5th Cir. 1998). While none of our previous panel decisions

could have overruled Zimmerman and Big Foot, the Supreme Court’s decision

in Carlisle has.

For example, in the years since we decided Zimmerman and Big 9

Foot, we have held that the McCarran-Ferguson Act allows state regulation of

insurance to “reverse preempt” the FAA. See Am. Bankers Ins. Co. of Fla. v.

Inman, 436 F.3d 490, 492 (5th Cir. 2006). However, even more recently, we have

held that state insurance law cannot reverse preempt the New York Convention

and its implementing legislation. See Safety Nat’l Cas. Corp. v. Certain

Underwriters at Lloyd’s, London, 587 F.3d 714, 717 (5th Cir. 2009) (en banc).

Compare Century Indem. Co. v. Certain Underwriters at Lloyd’s, 10

London, 584 F.3d 513, 520 n.5, 534-35 & n.18 (3d Cir. 2009) (in Convention case,

referring to contract law principles to determine whether nonsignatory must

arbitrate), and Sarhank Group v. Oracle Corp., 404 F.3d 657, 659, 662 (2d Cir.

2005) (same), and Int’l Paper Co. v. Schwabedissen Maschinen & Anlagen

GMBH, 206 F.3d 411, 417 (4th Cir. 2000) (same), with Carlisle, 129 S. Ct. at

1899, 1902 (in domestic FAA case, referring to contract law principles to

determine whether nonsignatory must arbitrate), and Fleetwood, 280 F.3d at

1073-74 (same).

8

plaintiffs need never arbitrate under federal law because they are not parties to

the insurance policies creating an obligation to arbitrate.8

That said, one might question whether Zimmerman, Big Foot, and Carlisle

are relevant at all in this case, since they all primarily focus on the FAA and not

the New York Convention. It is true that the Convention and the FAA differ in

certain important respects. However, in both FAA and Convention cases, courts 9

have largely relied on the same common law contract and agency principles to

determine whether nonsignatories must arbitrate, and not law derived from 10

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The Convention does have some bearing on whether nonsignatories 11

can be compelled to arbitrate, as it only applies when “an agreement in writing”

provides a basis for arbitration. See New York Convention art. II, §§ 1-2.

However, we have previously held that an arbitration clause in a contract

provides an “agreement in writing” that satisfies the Convention, even when the

party being forced to arbitrate has not signed the contract. See Sphere Drake

Ins. PLC v. Marine Towing, Inc., 16 F.3d 666, 669-70 (5th Cir. 1994). Similarly,

other courts have held that as long as there is some “agreement in writing,” the

Convention may require a nonsignatory to arbitrate. See Int’l Paper, 206 F.3d

at 418 n.7; Interested Underwriters at Lloyd’s v. M/T San Sebastian, 508 F.

Supp. 2d 1243, 1250-51 (N.D. Ga. 2007). In this respect, the Convention is

much like the FAA; in Carlisle, the Supreme Court held that “[i]f a written

arbitration provision is made enforceable against . . . a third party under state

contract law, the [FAA’s] terms are fulfilled.” 129 S.Ct. at 1902. 

9

statute or treaty. Consequently, Carlisle and other cases discussing whether 11

nonsignatories can be compelled to arbitrate under the FAA are relevant for this

case governed by the New York Convention. 

B.

In Zimmerman, in addition to holding that the FAA does not apply to

nonsignatories, we also stated that direct action plaintiffs cannot be forced to

arbitrate as third party beneficiaries of insurance contracts because “the direct

action statute grants a personal injury claimant a right of direct action against

the tortfeasor’s insurer on the policy regardless of any provision in the policy

forbidding an immediate direct action.” 107 F.3d at 346. In this case, Steamship

has asserted that Todd must arbitrate his claims because, among other reasons,

he is purportedly a third party beneficiary of Delta Queen’s insurance policy. We

conclude that on remand, the district court is not bound by our statement in

Zimmerman that direct action plaintiffs cannot be required to arbitrate as third

party beneficiaries, as this conclusion was necessarily contingent on our now

discredited view that federal arbitration law has no application to

nonsignatories.

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The Supreme Court has explained that 12

An agreement to arbitrate is valid, irrevocable, and enforceable, as

a matter of federal law, save upon such grounds as exist at law or

in equity for the revocation of any contract. Thus state law, whether

of legislative or judicial origin, is applicable if that law arose to

govern issues concerning the validity, revocability, and

enforceability of contracts generally. [However, a] state-law

principle that takes its meaning precisely from the fact that a

contract to arbitrate is at issue does not comport with [the FAA].

Perry v. Thomas, 482 U.S. 483, 492 n.9 (1987) (citations and internal quotation

marks omitted). Like the FAA, the Convention also creates “a body of federal

substantive law of arbitrability,” displacing inconsistent state law. Int’l Paper,

206 F.3d at 417 n.4 (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 24 (1983)).

Since Louisiana’s direct action statute is arguably a state law 13

regulating insurance, the McCarran-Ferguson Act may allow it to trump federal

law in cases governed solely by the domestic FAA and not the New York

Convention. See Safety Nat’l, 587 F.3d at 720 n.21; Inman, 436 F.3d at 492. 

10

In Zimmerman, when we stated that direct action plaintiffs could not be

compelled to arbitrate as third party beneficiaries, we justified this conclusion

by finding that Louisiana law allows them to proceed without submitting to

arbitration. 107 F.3d at 346 (explaining that “the direct action statute grants

a personal injury claimant a right of direct action . . . regardless of any provision

in the policy forbidding an immediate direct action”). However, if we had found

the FAA applicable in Zimmerman, we would have had to engage in a deeper

analysis: Although state contract law principles control whether nonsignatories

can be bound to arbitrate, see Carlisle, 129 S. Ct. at 1901-02, state law usually

cannot invalidate an otherwise enforceable agreement simply because it is an

agreement to arbitrate. Consequently, we would have had to address whether 12

Louisiana’s direct action statute can permissibly render nonarbitrable a claim

that could possibly be arbitrable otherwise under state contract law principles.13

Of course, at the time, we did not need to engage in this analysis, as we had

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found the FAA wholly inapplicable to nonsignatories, a position that has now

been repudiated by the Supreme Court in Carlisle. Id. at 1902. As such,

Carlisle has called into question our statement in Zimmerman that direct action

plaintiffs cannot be required to arbitrate as third party beneficiaries of insurance

contracts. Therefore, the district court is not bound by it on remand. At this

stage, however, we take no position on whether Louisiana’s direct action statute

would run afoul of the New York Convention in this case. We leave this to be

determined on remand. 

C.

Since the district court, prior to Carlisle, properly held that Zimmerman

controlled the outcome of this case, many of the issues raised by this case were

not fully fleshed out in the proceedings below. Therefore, we now remand this

case to the district court and suggest several issues, among others, that should

likely be considered below. 

First, we note that the record does not include a complete copy of

Steamship’s 1999/2000 Rules, which contain the arbitration clause that

Steamship asserts binds Todd. Access to a complete copy on remand would be

helpful, since if the terms of an agreement clearly address whether a

nonsignatory can be bound to arbitrate, then courts need not inquire whether

nonsignatories can be bound under third party beneficiary theory or other

doctrines. See Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 382 (5th Cir.

2008). Certainly, Todd should have the opportunity to review the full Rules and

bring to the district court’s attention any provisions suggesting that the

arbitration clause does not apply to nonsignatories like Todd. 

Second, during this appeal, the parties have not addressed what law

should apply to determine whether Todd must arbitrate as a nonsignatory. In

Carlisle, the Supreme Court made clear that state law controls whether an

arbitration clause can apply to nonsignatories. 129 S. Ct. at 1902. In particular,

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on remand, the parties should address the effect of the clause in the Delta Queen

policy selecting English law to govern “contractual or other substantive or

procedural rights and obligations.” 

Third, the parties have not extensively addressed in their briefing on

appeal whether all of Todd’s causes of action fall within the scope of the

arbitration clause in the Delta Queen’s policy with Steamship. See Graves v. BP

Am., Inc., 568 F.3d 221, 222-23 (5th Cir. 2009) (per curiam) (explaining that

motion to compel arbitration presents the question of whether “the dispute in

question falls within the scope of the arbitration agreement”). Specifically, the

district court may wish to consider whether the existence of Todd’s judgment

against Delta Queen has any bearing on whether he must arbitrate with

Steamship to collect on this judgment. In conclusion, we stress that the issues

raised above are nonexhaustive; we only suggest that these issues should be

considered within the framework of a full analysis of whether Todd can be bound

to arbitrate.

III.

Consequently, we REVERSE the district court’s denial of Steamship’s

motion to compel arbitration and REMAND this case to the district court for

further proceedings consistent with this opinion.

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