Court Opinion

ID: 4691344
Source: CourtListenerOpinion
Date Created: 2021-05-29 00:00:29.291689+00
Date Added: 2024-06-11T08:05:07.796822
License: Public Domain

Case: 20-20221     Document: 00515880813        Page: 1   Date Filed: 05/28/2021

           United States Court of Appeals
                for the Fifth Circuit                       United States Court of Appeals
                                                                     Fifth Circuit

                                                                   FILED
                                                                 May 28, 2021
                                 No. 20-20221                    Lyle W. Cayce
                                                                      Clerk

   International Energy Ventures Management, L.L.C.,

                                                          Plaintiff—Appellee,

                                     versus

   United Energy Group, Limited,

                                                      Defendant—Appellant.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:17-CV-2262

   Before Haynes, Higginson, and Oldham, Circuit Judges.
   Andrew S. Oldham, Circuit Judge:
         International Energy Ventures Management (“IEVM”) sued United
   Energy Group (“UEG”) more than seven years ago. Since then, the dispute
   has bounced back and forth between three courts and two arbitrations. We
   now consider whether IEVM’s persistent pursuit of litigation prevents it
   from returning to arbitration once more. The district court said no with
   almost no analysis. We reverse.
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                                          I.
          IEVM is a consulting firm that specializes in oil and gas transactions.
   In 2010, it agreed to help UEG obtain British Petroleum’s (“BP”) Pakistani
   assets in exchange for a finder’s fee. UEG then submitted a bid to BP for $775
   million, which BP accepted. UEG reimbursed IEVM’s out-of-pocket
   expenses for its work on the deal. But according to IEVM, UEG never paid
   the agreed-upon finder’s fee.
          In March 2012, the parties entered into a supplemental agreement for
   additional consulting work on the BP assets. The agreement included UEG’s
   acknowledgment that it still owed IEVM payment for past services. It also
   contained the following arbitration clause:
          Governing Law, Arbitration. This Agreement shall be
          governed by and interpreted by the laws of the state of Texas.
          Any controversies arising out of this Agreement or its
          interpretation shall be settled by a single arbitrator in Houston,
          Texas in accordance with the rules of the American Arbitration
          Association, and the judgment upon award may be entered in
          any court having jurisdiction thereof.
          Without mentioning arbitration, IEVM sued UEG in Texas state
   court in July 2013. It alleged that despite the initial and supplemental
   agreements, UEG continued not to pay IEVM for services rendered. UEG
   responded by removing the case to federal court and filing a motion to dismiss
   for insufficient service of process and lack of personal jurisdiction. IEVM
   filed a motion to remand to state court in October 2013, and the parties
   submitted a joint case-management plan shortly thereafter. The plan
   proposed to stay all discovery until the court ruled on UEG’s motion to
   dismiss. It also included a statement that “in the event the Court denies [the]
   motion to remand and [the] motion to dismiss, IEVM anticipates filing a

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   motion to compel arbitration.” The district court denied IEVM’s motion to
   remand the next month. But UEG’s motion to dismiss remained pending.
          Three months into the case, IEVM moved to compel arbitration. The
   district court suspended all briefing on that motion and all other case
   deadlines pending resolution of UEG’s motion to dismiss. So IEVM filed a
   demand for arbitration with the American Arbitration Association (“AAA”)
   on its own. UEG promptly moved to dismiss the arbitration on the theory
   that IEVM had waived its right to arbitrate through its litigation conduct in
   state and federal court.
          Arbitrator Gary McGowan agreed. In his view, IEVM had
   substantially invoked the judicial process to UEG’s detriment. McGowan
   found substantial invocation based on IEVM’s “decision to seek substantive
   relief in court,” its opposition to UEG’s motion to dismiss, its motion to
   remand, and its participation in the parties’ joint case-management plan. And
   he found prejudice to UEG based on the “significant” time and attorney’s
   fees UEG spent filing and briefing the motion to dismiss, opposing the
   motion to remand, and preparing the case-management plan. So McGowan
   dismissed the arbitration.
          IEVM chose not to challenge the McGowan Award. Instead, it waited
   for the district court to resolve UEG’s jurisdictional challenge. When the
   district court held that Texas lacked personal jurisdiction over UEG, IEVM
   appealed that ruling along with the prior dismissal of its motion to remand.
   We initially affirmed the district court’s remand denial but reversed its
   jurisdictional holding. See Int’l Energy Ventures Mgmt. v. United Energy Grp.,
   800 F.3d 143, 150, 154 (5th Cir. 2015). We revisited that decision after UEG
   petitioned for rehearing, and we ultimately affirmed the district court on both
   issues. See Int’l Energy Ventures Mgmt. v. United Energy Grp., 818 F.3d 193,
   213 (5th Cir. 2016). Then IEVM filed a petition for rehearing, which we

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   denied. Nearly three years had passed since IEVM initially filed its lawsuit in
   state court.
          Having failed in arbitration and then in court, IEVM tried yet again.
   This time it initiated arbitration and litigation simultaneously. The parties
   drew Platt W. Davis III as their arbitrator. Davis held a preliminary hearing
   and concluded that “the dispute presented jurisdictional and arbitrability
   issues that should be addressed prior to . . . a merits determination.” He then
   invited UEG to move to dismiss. UEG did so, raising the same waiver defense
   on which it prevailed in the McGowan arbitration. IEVM countered that its
   potential waiver was a matter for a court to decide, not an arbitrator.
          The litigation proceeded on a parallel track. IEVM once again sued
   UEG in Texas state court—this time on the theory that doing so was
   necessary to compel arbitration. And UEG again removed the action to
   federal court. At that point, IEVM asked the district court to decide the
   waiver issue that was pending before Arbitrator Davis and to compel
   arbitration on everything else. The court held a hearing and decided to stay
   the case “pending completion of . . . arbitration.”
          Davis issued a final arbitration award a few months later. He first
   determined that Arbitrator McGowan’s decision did not bind him because
   McGowan lacked the authority to issue it. Davis pointed to “prevailing case
   law” holding that issues of litigation-conduct waiver are presumptively for
   the courts. And he found that IEVM and UEG had done nothing to contract
   around that presumption. Nevertheless, Davis went on to hold that he had
   authority to resolve the waiver dispute because the district court was aware
   of the issue and had approved the “completion of . . . arbitration” without
   any exceptions. Davis then held that IEVM had waived its right to arbitrate
   for many of the same reasons that persuaded McGowan. He added that
   IEVM’s decision to pursue a two-year appeal instead of challenging the

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   McGowan Award confirmed its waiver: “IEVM was undeniably looking
   solely to the appellate process, and a potentially favorable ruling on personal
   jurisdiction, for authority to pursue its claims in court and effectively
   abandoned and waived its right to arbitrate.”
          With round two of arbitration completed, IEVM returned to litigation
   yet again. It asked the district court to vacate the Davis Award and compel
   arbitration on grounds that Davis had exceeded his authority and UEG
   hadn’t established the elements of waiver. Two years later, the district court
   issued a five-page “Opinion on Arbitration.” It first held that Davis
   shouldn’t have reached the waiver issue because of the presumption that
   litigation conduct is an issue for the courts. Of course, Davis agreed on that
   point; he decided waiver despite the presumption because he thought the
   district court had told him to.
          The district court then held that UEG couldn’t show sufficient
   prejudice to justify holding IEVM to its waiver. It offered no citations and the
   following four sentences in support:
          [IEVM] may have first filed a lawsuit in state court in 2013, but
          merely filing a lawsuit and conducting a little discovery did not
          prejudice [UEG]. The bulk of the litigation’s activity arose
          from dismissals and appeals on jurisdictional grounds, never
          coming close to addressing the core issues. In other words, this
          case has mostly been a game of cat-and-mouse. Litigation of
          this sort does not waive arbitration.
   Accordingly, the district court vacated the Davis Award and granted IEVM’s
   motion to compel arbitration. It also vacated the McGowan Award—even
   though IEVM never asked for that.

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           UEG timely appealed that order under 9 U.S.C. § 16(a)(1)(E).1 Since
   then, IEVM initiated a third arbitration that remains pending. A panel of our
   court denied UEG’s motion to stay that proceeding.
                                                 II.
           Whether IEVM can continue with arbitration is a function of two
   questions. First, who did the parties agree would decide UEG’s waiver
   defense: an arbitrator or a court? Second, is UEG correct that IEVM waived
   its right to arbitrate through its litigation conduct? Our ability to answer the
   second question depends on our answer to the first. So we start there. We
   review the district court’s legal determinations de novo and its factual
   findings for clear error. See Forby v. One Techs., L.P., 909 F.3d 780, 783 (5th
   Cir. 2018).
                                                 A.
           Arbitrators McGowan and Davis both reached the issue of litigation-
   conduct waiver and resolved it in UEG’s favor. IEVM’s attempt to bypass

           1
                We agree with UEG that § 16(a)(1)(E) permits us to consider its appeal. That
   provision authorizes appellate jurisdiction over “an order” that “modif[ies], correct[s], or
   vacat[es]” an arbitration award. The district court’s order vacated both the Davis and the
   McGowan Awards. So § 16(a)(1)(E) unquestionably applies. And because it applies, we
   have jurisdiction to review the district court’s entire “order”—including the waiver
   discussion related to IEVM’s motion to compel. See BP P.L.C. v. Mayor & City Council of
   Balt., 141 S. Ct. 1532, 1538 (2021) (interpreting 28 U.S.C. § 1447(d) to permit appellate
   review of “each and every” issue in a district court’s remand order despite the fact that
   “§ 1447(d) extends . . . review only to some orders” because “the statute allows courts of
   appeals to examine the whole of a district court’s ‘order,’ not just some of its parts or
   pieces” (second emphasis added)); Yamaha Motor Corp., U.S.A. v. Calhoun, 516 U.S. 199,
   205 (1996) (adopting a similar interpretation of 28 U.S.C. § 1292(b) because “the text of
   § 1292(b) indicates [that] appellate jurisdiction applies to the order certified to the court of
   appeals[] and is not tied to the particular question formulated by the district court”); see
   also Murchison Cap. Partners v. Nuance Commc’ns, Inc., 760 F.3d 418, 420–21 (5th Cir. 2014)
   (“It is . . . well established that an order vacating an award and remanding the case back to
   arbitration for a rehearing is a final appealable order.”).

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   those determinations turns on whether the arbitrators “exceeded their
   powers” in violation of the Federal Arbitration Act (“FAA”). 9 U.S.C.
   § 10(a)(4). Because “[a]rbitration is a matter of contract,” the “power and
   authority of arbitrators in an arbitration proceeding is dependent on” the
   parties’ agreement. Brook v. Peak Int’l, Ltd., 294 F.3d 668, 672 (5th Cir.
   2002) (quotation omitted); accord BG Grp. v. Republic of Argentina, 572 U.S.
   25, 33–34 (2014). Here, the parties’ agreement is silent on the specific
   question of who should decide whether IEVM waived its right to arbitrate by
   pursuing litigation. So we must “determine the parties’ intent with the help
   of presumptions.” BG Grp., 572 U.S. at 34.
          Most circuits to consider the issue have held that litigation-conduct
   waiver is presumptively a judicial matter. See Martin v. Yasuda, 829 F.3d
   1118, 1123 (9th Cir. 2016) (“[T]he question before us is presumptively for a
   court and not an arbitrator to decide. Every circuit that has addressed this
   issue—whether a district court or an arbitrator should decide if a party
   waived its right to arbitrate through litigation conducted before the district
   court—has reached the same conclusion.” (citation omitted)). But see Nat’l
   Am. Ins. Co. v. Transamerica Occidental Life Ins. Co., 328 F.3d 462, 466 (8th
   Cir. 2003) (holding that all waiver challenges should be submitted to an
   arbitrator). We aligned with that majority in two recent unpublished
   decisions. See Sabatelli v. Baylor Scott & White Health, 832 F. App’x 843, 848
   n.3 (5th Cir. 2020) (per curiam); Vine v. PLS Fin. Servs., Inc., 689 F. App’x
   800, 802–03 (5th Cir. 2017) (per curiam). And we see no reason to change
   course here. As we explained in Vine, “parties would expect [a] court to
   decide litigation-conduct waiver” because the issue “implicates courts’
   authority to control judicial procedures or to resolve issues arising from
   judicial conduct.” 689 F. App’x at 803 (emphases omitted) (quoting Ehleiter
   v. Grapetree Shores, Inc., 482 F.3d 207, 219 (3d Cir. 2007)). Thus, a

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   presumption that courts decide the consequences of litigation conduct best
   captures the intent of the typical contracting party.
                                           B.
          UEG recognizes the general proposition that litigation-conduct
   waiver is an issue that should be decided by a court. But it contends that the
   general rule does not apply here for three reasons. None is persuasive.
          First, UEG relies on the Supreme Court’s observation that parties can
   contract around presumptions about the proper decisionmaker by “clearly
   and unmistakably” coming to an alternative arrangement. BG Grp., 572 U.S.
   at 34 (quotation omitted). UEG asks us to find such an alternative in the
   parties’ agreement that “[a]ny controversies arising out of [their] Agreement
   or its interpretation shall be settled by a[n] . . . arbitrator . . . in accordance
   with the rules of the American Arbitration Association.” The AAA Rules in
   turn provide that the arbitrator “shall have the power to rule on its own
   jurisdiction, including any objections with respect to the existence, scope, or
   validity of the arbitration agreement[].” International Dispute
   Resolution Procedures art. 19(1) (Am. Arb. Ass’n 2014).
   Characterizing an arbitrator’s power to decide litigation-conduct waiver as a
   question of “jurisdiction,” UEG concludes that the parties’ contractual
   incorporation of the AAA rules clearly and unmistakably gave McGowan and
   Davis authority to resolve the issue.
          We disagree. The fact that language in an arbitration agreement is
   broad enough to cover a particular issue does not mean the language is clear
   and unmistakable. Thus, we held in Vine that an agreement requiring
   arbitration of “any claim or attempt to set aside this Arbitration Provision”
   did not rebut the presumption that courts decide litigation-conduct waiver.
   689 F. App’x at 803–04. And though we’ve held that “the express adoption
   of [AAA] rules” can sometimes provide “clear and unmistakable evidence

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   that the parties agreed to arbitrate” an issue, Petrofac, Inc. v. DynMcDermott
   Petroleum Operations Co., 687 F.3d 671, 675 (5th Cir. 2012), that case is readily
   distinguishable from this one. The issue in Petrofac was who should decide
   “the initial question of arbitrability, i.e. whether the claim is within the
   parties’ agreement to arbitrate.” Id. at 674–75. As noted above, AAA rules
   expressly give arbitrators the power to resolve that question. See
   International Dispute Resolution Procedures art. 19(1)
   (specifically listing the “scope” of an arbitration agreement as a jurisdictional
   issue that an arbitrator can decide). But the rules do not expressly give
   arbitrators the power to resolve questions of waiver through litigation. So
   incorporation of those rules cannot supply the clear and unmistakable
   agreement that is required here. See Marie v. Allied Home Mortg. Corp., 402
   F.3d 1, 15 (1st Cir. 2005) (“Neither party should be forced to arbitrate the
   issue of waiver by conduct without a clearer indication in the agreement that
   they have agreed to do so.”).
          Second, UEG contends that the parties agreed to arbitrate litigation-
   conduct waiver by “submission” if not by contract. See Executone Info. Sys.,
   Inc. v. Davis, 26 F.3d 1314, 1323 (5th Cir. 1994) (“If the parties go beyond
   their promise to arbitrate and actually submit an issue to the arbitrator, we
   look both to the contract and to the scope of the submissions to . . . determine
   the arbitrator’s authority.” (emphasis omitted)). UEG supports its
   submission argument by claiming that IEVM consented to McGowan
   deciding the waiver issue in the first arbitration.
          Again, no. IEVM expressly told Arbitrator Davis that UEG’s waiver
   defense was a “matter . . . for the District Court to resolve.” And while
   IEVM didn’t make that point in the McGowan arbitration, nothing in the
   record evinces a “joint arbitral submission” in which the parties “clearly and
   unmistakably” agreed to have McGowan decide the issue. Murchison Cap.
   Partners v. Nuance Commc’ns, Inc., 625 F. App’x 617, 624 (5th Cir. 2015); BG

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   Grp., 572 U.S. at 34 (quotation omitted). To the contrary, UEG began its
   motion to dismiss by asserting that McGowan had an “obligati[on] . . . to
   abate” the arbitration because of IEVM’s pending lawsuit. And the parties’
   inattention to the “who decides” question prompted McGowan to invite a
   “federal court [to] revisit the waiver issue de novo” if his decision to address
   it was incorrect.
           Third, UEG contends that the presumption of a judicial
   decisionmaker should not apply to the unique facts of this case. As UEG sees
   it, issues of litigation-conduct waiver typically arise in court when one party
   wants to switch to arbitration and the other party objects. This case is
   meaningfully different, it says, because the waiver issue arose for the first
   time in an arbitration initiated by IEVM. UEG offers no citations to support
   its proposed distinction. Nor would we expect to find any. “Arbitration is a
   matter of contract,” plain and simple. Brook, 294 F.3d at 672. Extra-
   contractual factors—like where an issue first arises and who initiates
   arbitration—are not part of the interpretive analysis.2
           We therefore conclude that the parties failed to contract around the
   general rule that courts resolve litigation-conduct waivers. See Vine, 689 F.
   App’x at 802. That means that McGowan and Davis exceeded their authority
   in resolving the issue, and we must address it.3

           2
              This principle also explains why Arbitrator Davis was wrong to decide an issue
   on the theory that the district court had left it open. See supra Part I. Courts cannot delegate
   to an arbitrator in violation of a contract any more than Congress can delegate to an agency
   in violation of the Constitution. See U.S. Const. art. I, § 1.
           3
             UEG asserts that, even if McGowan exceeded his authority, IEVM’s failure to
   challenge the McGowan Award provides an independent basis for enforcing it. UEG may
   have a point. The FAA imposes a three-month statute of limitations that “governs the
   period of time within which a party must file a lawsuit in federal court asking the court to
   vacate, modify, or correct an arbitration award.” Brown v. Witco Corp., 340 F.3d 209, 218
   n.8 (5th Cir. 2003) (emphasis omitted) (citing 9 U.S.C. § 12). IEVM never asked the

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                                                 III.
           “[W]aiver of arbitration is a disfavored finding.” Nicholas v. KBR,
   Inc., 565 F.3d 904, 907 (5th Cir. 2009). But we will find it “when the party
   seeking arbitration substantially invokes the judicial process to the detriment
   or prejudice of the other party.” Ibid. (quotation omitted). Substantial
   invocation and prejudice are questions of federal law in every case where the
   FAA applies. See Miller Brewing Co. v. Fort Worth Distrib. Co., 781 F.2d 494,
   497 & n.4 (5th Cir. 1986); Vine v. PLS Fin. Servs., Inc., 807 F. App’x 320, 327
   (5th Cir. 2020) (per curiam). So they are federal questions here. See Circuit
   City Stores, Inc. v. Adams, 532 U.S. 105, 111 (2001) (explaining that the FAA’s
   coverage provision extends to all “contract[s] evidencing a transaction
   involving commerce to settle by arbitration a controversy thereafter arising
   out of such contract or transaction” (quoting 9 U.S.C. § 2)).4

   district court to vacate the McGowan Award, much less did it do so within three months.
   So it’s arguable that even though McGowan exceeded his authority in addressing UEG’s
   waiver defense, his pro-waiver resolution is still binding.
            Nevertheless, the issue is complicated by the fact that Arbitrator Davis determined
   the McGowan Award lacked binding effect. See New Orleans S.S. Ass’n v. Gen. Longshore
   Workers, 626 F.2d 455, 468 (5th Cir. 1980) (“Whether [an arbitration] award can be given
   [preclusive] effect [is for] . . . neither the district court nor this court [to] decide. If the
   parties do not agree, that issue itself is a proper subject for arbitration.”); Martel v. Ensco
   Offshore Co., 449 F. App’x 351, 355 n.1 (5th Cir. 2011) (per curiam) (holding that because
   the FAA only “directs the manner in which a district court may vacate, modify, or correct”
   an arbitration award, its limitations period “has no bearing on modification or clarification
   sought from an arbitrator”). We need not resolve this complication because we reach the
   same conclusion as McGowan: litigation-conduct waiver applies. See infra Part III. The
   district court committed reversible error when it held to the contrary. Whether it
   committed additional error in overturning the unchallenged McGowan Award makes no
   difference.
           4
              Federal standards continue to apply even though the parties agreed to a Texas
   choice-of-law provision. See Miller Brewing, 781 F.2d at 497 n.4 (“dismiss[ing] out of hand”
   a party’s citation to state waiver law in a case where the FAA applied); In re L&L Kempwood
   Assocs., 9 S.W.3d 125, 127–28 (Tex. 1999) (applying federal law under the FAA because

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                                               A.
           The substantial-invocation analysis in this case is straightforward.
   Substantial invocation occurs when a party performs an “overt act in [c]ourt
   that evinces a desire to resolve the arbitrable dispute through litigation rather
   than arbitration.” Nicholas, 565 F.3d at 907 (quotation omitted). “[I]t is
   difficult to see how a party could more clearly evince [such] a desire . . . than
   by filing a lawsuit going to the merits of an otherwise arbitrable dispute.” Id.
   at 908 (quotation omitted). So outside of the rare case in which initiating
   litigation “would not be inconsistent with seeking arbitration,” the “act of a
   plaintiff filing suit without asserting an arbitration clause constitutes
   substantial invocation of the judicial process.” Ibid.

           Here, IEVM sued UEG in state court without saying anything about
   arbitration. It demanded a jury trial and paid the required fee. It filed a motion
   to remand the action to state court and appealed the district court’s denial of
   that motion. It vigorously defended the existence of personal jurisdiction in
   Texas and appealed the district court’s personal jurisdiction dismissal. And
   it sought rehearing en banc after this court affirmed the district court’s
   removal and jurisdictional holdings. Only after we denied its rehearing
   petition did IEVM initiate the Davis arbitration. IEVM’s litigation conduct
   is therefore a paradigmatic example of what it means to “initially pursu[e]
   litigation of claims” and then “revers[e] course and attempt[] to arbitrate
   those claims.” Id. at 907. As Arbitrator Davis put it, “[o]nly when the path

   “[t]he choice-of-law provision did not specifically exclude [it]”); cf. Porter Hayden Co. v.
   Century Indem. Co., 136 F.3d 380, 383 n.5 (4th Cir. 1998) (“[C]hoice-of-law provisions
   typically embody the parties’ choice of one state’s laws over another’s, rather than express
   a preference between federal and state law.”).

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   to judicial resolution . . . was foreclosed did IEVM turn its attention back to
   the possibility of arbitration.” That easily constitutes substantial invocation.
                                         B.
          That leaves prejudice. Whether a party has been prejudiced is a “fact-
   dependent inquiry” that asks if the party suffered “delay, expense, or
   damage to [its] legal position” because of an opposing party’s pursuit of
   litigation. Id. at 910; Republic Ins. Co. v. PAICO Receivables, LLC, 383 F.3d
   341, 346 (5th Cir. 2004). UEG does not claim damage to its legal position. So
   we focus on delay and expense.
                                          1.
          Start with delay. “[A] party’s failure to timely assert its right to
   arbitrate is . . . relevant to the prejudice determination.” Republic Ins., 383
   F.3d at 346. While there is no hard-and-fast rule for how long is too long, we
   have found delays of 10 and 18 months to be sufficiently troubling. See
   Nicholas, 565 F.3d at 910 (10 months); MC Asset Recovery LLC v. Castex
   Energy, Inc. (In re Mirant Corp.), 613 F.3d 584, 591 (5th Cir. 2010) (18
   months). Delay coupled with extensive pretrial litigation is even more
   problematic because of the “inherent unfairness” that occurs when a party
   “forces it[s] [opponent] to litigate” a dispute “and later seeks to arbitrate”
   it. Republic Ins., 383 F.3d at 346 (quotation omitted); see also In re Mirant
   Corp., 613 F.3d at 590 (rejecting a litigant’s attempt to obtain “a second bite
   at the apple through arbitration” (quotation omitted)).
          These principles clearly establish that IEVM’s repeated delays in
   seeking arbitration were significant. IEVM filed its state-court lawsuit in July
   2013. It said nothing about arbitration until three months later—and only
   when it became apparent that IEVM might not get to proceed in state court
   like it wanted. The McGowan arbitration began in January 2014 and
   concluded in June when McGowan determined that IEVM had waived its

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   right to arbitrate. Rather than challenge that ruling, IEVM jumped right back
   to the pending litigation. The district court’s dismissal, IEVM’s appeal, our
   affirmance, and IEVM’s rehearing petition took the parties all the way to
   September 2016. That November—after stretching out the first round of
   litigation as long as it possibly could—IEVM filed a second lawsuit in state
   court and simultaneously initiated the Davis arbitration. More than three
   years had passed since IEVM first filed suit, and nearly two-and-a-half years
   had passed since the first arbitration concluded. That far surpasses the 10-
   and 18-month delays that concerned us in prior cases. In short, “[IEVM] was
   aware of its right to compel arbitration [from] the beginning . . . but chose
   instead to resolve as much of the case as possible [in] . . . court.” In re Mirant
   Corp., 613 F.3d at 592.
           Next consider expense. As with delay, there is no magic number as to
   how much expense is enough to show prejudice. Indeed, a party claiming
   prejudice need not submit a number at all. See Nicholas, 565 F.3d at 910–11
   (affirming the district court’s waiver holding even though the party seeking
   waiver “did not put on evidence in terms of dollars and cents of its litigation
   costs”). Rather, the party need only show that it was “forc[ed] . . . to expend
   substantial amounts of time and money defending itself” in court. Miller
   Brewing, 781 F.2d at 496; see also Nicholas, 565 F.3d at 910 (finding prejudice
   where the arbitration opponent’s “litigation activities were significant in the
   context of th[e] dispute”).
          UEG has made the requisite showing. Among other things, IEVM’s
   persistent pursuit of litigation required UEG to defend its interests by:

       • removing the case to federal court,
       • opposing IEVM’s motion to remand,
       • filing a motion to dismiss for lack of personal jurisdiction,
       • preparing a joint discovery and case-management plan,

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       • filing an appellate brief defending the district court’s dismissal,
       • traveling to New Orleans to participate in oral argument,
       • filing a petition for rehearing after we initially reversed the district
          court, and
       • responding to IEVM’s rehearing petition after we ultimately affirmed
          the district court.
   Little wonder that Arbitrators McGowan and Davis determined UEG
   incurred “significant attorney[’s] fees” and submitted “substantial
   briefing” to protect its interests. UEG easily suffered prejudice.
                                         2.
          The district court concluded otherwise—a holding we’d typically
   review for clear error. See, e.g., Nicholas, 565 F.3d at 911; Price v. Drexel
   Burnham Lambert, Inc., 791 F.2d 1156, 1159–60 (5th Cir. 1986). But clear-
   error review assumes there are “factual findings underlying” a district
   court’s determination. Forby, 909 F.3d at 783. And here the district court’s
   analysis contains no factfinding. Rather than carefully review the record for
   prejudice like McGowan and Davis did, the district court dismissed IEVM’s
   prejudicial litigation as a harmless jurisdictional “game of cat-and-mouse.”
   We owe no deference to such conclusory assertions. Cf. Univ. of Tex. M.D.
   Anderson Cancer Ctr. v. U.S. Dep’t of Health & Hum. Servs., 985 F.3d 472,
   475–76 (5th Cir. 2021) (reviewing an agency determination de novo when the
   agency refused to address a regulated party’s legal objections).
          IEVM advances three principal arguments to defend the district
   court’s no-prejudice holding. First, IEVM contends that it did not damage
   UEG’s legal position because it never litigated the merits of its claims in any
   court or tribunal, and the litigation never proceeded beyond threshold
   jurisdictional issues. That’s irrelevant because damage to UEG’s legal
   position is only one way IEVM could prejudice its opponent. See Republic Ins.,

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   383 F.3d at 346 (“Prejudice refers to . . . inherent unfairness in terms of delay,
   expense, or damage to a party’s legal position . . . .” (emphasis added)
   (quotation omitted)). And there can be little doubt that IEVM’s litigation
   conduct resulted in significant delay and expense to UEG. See supra Part
   III.B.1. That the delay and expense stemmed from a jurisdictional dispute
   instead of a “merits” one is beside the point.5
           Second, IEVM argues that its three-plus years of litigation did not
   prejudice UEG because all discovery was stayed. Once again, IEVM mistakes
   a prejudice indicator for a prejudice requirement. Discovery is a prejudice
   indicator because it can lead to delays, it can generate expenses, and it can
   damage a party’s legal position by revealing information that would not be
   discoverable in arbitration. See Frye v. Paine, Webber, Jackson & Curtis, Inc.,
   877 F.2d 396, 399 (5th Cir. 1989). But that does not mean discovery is always
   necessary to find prejudice. Cf. Walker v. J.C. Bradford & Co., 938 F.2d 575,
   578 (5th Cir. 1991) (holding that a court “should not ordinarily infer waiver
   based upon prejudice” when “only a minimal amount of discovery has been
   conducted” (quotation omitted)). A three-year dispute over personal and
   subject-matter jurisdiction spanning three courts, two arbitrators, and
   hundreds of pages of briefing generates prejudice—regardless of the amount
   of discovery.

           5
             We’re also unpersuaded by IEVM’s contention that it needed to litigate personal
   jurisdiction over UEG to secure its right to arbitrate. IEVM knew about the parties’ Texas
   arbitration clause from the beginning. And that arbitration clause standing alone justified
   arbitration in Texas, even if personal jurisdiction over UEG was otherwise absent. See Int’l
   Energy Ventures Mgmt., 818 F.3d at 212 (applying the longstanding rule that an agreement
   to arbitrate a case in a state permits district courts in that state to “exercise personal
   jurisdiction over the parties for the limited purpose of compelling arbitration,” even if
   personal jurisdiction is otherwise lacking (quotation omitted)).

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          Finally, IEVM protests that the three-year delay was not its fault. It
   reasons that “much of that time was simply spent waiting on [the district
   court] to rule and then for the first appeal to be briefed and then decided.”
   Red Br. 36. And it insists that “[UEG] caused the problem” by “cho[osing]
   to remove the case to federal court” and then “mov[ing] to dismiss based on
   personal jurisdiction.” Ibid. Those arguments fail too. With respect to our
   court and the district court’s decision time, IEVM had the option to
   challenge Arbitrator McGowan’s waiver determination within three months
   if it wanted to remain in arbitration. See 9 U.S.C. § 12; supra note 3. It never
   did so. As for IEVM’s allegation that UEG caused the problem by noticing
   its removal and moving to dismiss, we have already rejected that argument.
   See Miller Brewing, 781 F.2d at 497 (finding prejudice where the arbitration
   proponent “busily pursu[ed] its legal remedies” for three-and-a-half years,
   then noting that its opponent “[o]f course . . . had to participate and defend
   its interests in all these actions”). IEVM filed suit and thereby forced UEG
   to respond or lose its rights. UEG’s decision to defend itself in litigation does
   not discount the prejudice it suffered.

                                   *        *         *
          We hold that IEVM substantially invoked the judicial process to
   UEG’s detriment. We therefore REVERSE and REMAND with
   instructions to deny IEVM’s motion to compel arbitration and to enter
   judgment for UEG.

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