Court Opinion

ID: 4673087
Source: CourtListenerOpinion
Date Created: 2021-03-31 03:07:05.164491+00
Date Added: 2024-06-11T08:03:11.193446
License: Public Domain

Case: 20-20416      Document: 00515801783         Page: 1    Date Filed: 03/30/2021

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

                                                                              FILED
                                                                        March 30, 2021
                                   No. 20-20416                          Lyle W. Cayce
                                                                              Clerk

   Polyflow, L.L.C.,

                                                            Plaintiff—Appellant,

                                       versus

   Specialty RTP, L.L.C.; John R. Wright, Jr.,

                                                          Defendants—Appellees.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                            USDC No. 4:20-CV-683

   Before Jones, Clement, and Graves, Circuit Judges.
   Edith Brown Clement, Circuit Judge:
          Polyflow appeals the district court’s order denying its motion to
   compel arbitration with Specialty RTP and its president John Wright.
   Polyflow claims that Specialty and Wright violated a 2017 Settlement
   Agreement between the parties, which included a clause requiring arbitration
   of “any action arising out of” the agreement. Nevertheless, the district court
   denied Polyflow’s motion to compel arbitration in a single-sentence order
   without analysis. That was error. Applying the strong presumption in favor
   of arbitrability, we reverse and remand with instructions to order arbitration.
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                                         I.
                                         A.
          Polyflow manufactures a proprietary pipe called Thermoflex that it
   sells and installs for customers in the oil and gas industry. John Wright was
   Polyflow’s president from the company’s beginning in April 2011 until he
   resigned in October 2014 to form a competitor, Specialty RTP. In 2015,
   Polyflow sued Specialty RTP and Wright (collectively, “Specialty”) for a
   host of abuses, including that Specialty allegedly manufactured a pipe
   identical to Thermoflex and derived from Polyflow’s protected and
   confidential information. In February 2017, the parties settled that suit via
   the Settlement Agreement.
          The meat of that agreement imposed a two-year limitation on
   Specialty’s ability to manufacture any competing pipe of its own but allowed
   Specialty to purchase pipe from existing vendors. During and after that two-
   year manufacturing ban, the agreement imposed further limitations on
   Specialty’s use or disclosure of Polyflow’s trade secrets. So long as Specialty
   honored those restrictions, it remained free to independently design and
   manufacture a competing product. As a safeguard, the parties agreed to hire
   a neutral pipe expert to inspect Specialty’s proposed pipe, compare it with
   Polyflow’s, and adjudicate whether Specialty was, in fact, independently
   designing its own product.
          The agreement specified that the parties would engage the neutral
   expert from the effective date of the agreement in February 2017 until
   Christmas Eve 2019. Then, after that end date, the parties agreed to retain
   the expert to mediate any disputes, unless they mutually agreed to other
   mediation.
          The Settlement Agreement included an arbitration clause, in
   paragraph C.4, entitled “Governing Law, Arbitration and Jury Waiver.” It

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   said: “The sole and exclusive jurisdiction and venue for any action arising
   out of this Agreement shall be an arbitration in Harris County, Texas.”
   Additionally, the section of the agreement describing the neutral pipe expert,
   paragraph B.5.c, also addressed arbitration. There, the parties agreed that, if
   the expert (or another mediator) could not resolve any dispute, an arbitrator
   would “render a binding, unappealable decision regarding the Parties’
   dispute(s).” The agreement added: “For purposes of clarity, the Parties are
   agreeing that any disputes arising out of or related to this Agreement will be
   arbitrated and not litigated in a court of law. . . .”
                                           B.
          In September 2019, Polyflow gave notice to Specialty and to the
   neutral pipe expert that it was “terminating immediately” the expert, and
   that Polyflow would “no longer work with” the expert “under the terms of
   the Settlement Agreement.” In that termination letter, Polyflow claimed
   that the expert had breached his neutrality by writing a letter on behalf of
   Specialty that the expert knew “would be used to interfere in Polyflow’s
   existing contractual relationship with [a] customer.” Polyflow also claimed
   that the expert had failed to follow the process specified in the agreement in
   that he “never asked Polyflow for any information on prior projects
   submitted by Specialty.”
          On the same day that Polyflow sent the termination letter to the
   expert, it sent Wright an arbitration demand alleging fraudulent inducement,
   breach of the Settlement Agreement, trademark infringement, and other
   federal and Texas statutory and common law violations.
          When Specialty resisted arbitration, Polyflow filed this lawsuit in
   February 2020. Polyflow’s original complaint included just two counts:
   requests for an order compelling Specialty to arbitrate and for an order
   appointing an arbitrator. Polyflow followed that with a First Amended

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   Complaint (“FAC”), which added seven substantive counts substantially
   like those in Polyflow’s arbitration demand from the previous September. In
   its FAC, Polyflow said that it “primarily seeks to compel arbitration as set
   forth in Counts One and Two, but to the extent that the Court finds any of
   the affirmative causes of action should not be sent to arbitration, alternatively
   affirmatively asserts, as applicable, Counts Three through Nine.”
          Specialty moved to dismiss, and Polyflow moved to compel arbitration
   and to dismiss Specialty’s counterclaims.          The district court denied
   Polyflow’s motion to compel arbitration without explanation, and Polyflow
   filed this interlocutory appeal. Our review is de novo. Bowles v. OneMain
   Fin. Grp., 954 F.3d 722, 725 (5th Cir. 2020).
                                         II.
          We first consider federal court jurisdiction, which Specialty disputes
   for the first time on appeal. Polyflow concedes that there is no diversity
   jurisdiction but maintains that the case presents a federal question. See 28
   U.S.C. §§ 1331–32. We agree.
          In Vaden v. Discover Bank, 556 U.S. 49 (2009), the Supreme Court
   explained the jurisdictional analysis in arbitrability disputes like this one. By
   way of background, the Court addressed a jurisdictional oddity in the Federal
   Arbitration Act, 9 U.S.C. §§ 1–16. On one hand, the Act established “a
   national policy favoring arbitration of claims that parties contract to settle in
   that matter,” and § 4 of the Act created the means to enforce an arbitration
   demand in the federal courts. Id. at 58 (internal quotations and citations
   omitted). Indeed, § 4 provides a federal-court remedy in arbitration disputes:
          A party aggrieved by the alleged failure, neglect, or refusal of
          another to arbitrate under a written agreement for arbitration
          may petition any United States district court which, save for
          such agreement, would have jurisdiction under title 28, . . . for

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          an order directing that such arbitration proceed in the manner
          provided for in such agreement.
          But Vaden then went on to point out a wrinkle. “As for jurisdiction
   over controversies touching arbitration, however, the Act is something of an
   anomaly in the realm of federal legislation: It bestows no federal jurisdiction
   but rather requires for access to a federal forum an independent jurisdictional
   basis over the parties’ dispute.” Vaden, 556 U.S. at 59 (cleaned up).
          Thus, based upon the text of § 4, which instructs courts to “assume
   the absence of the arbitration agreement and determine whether it would
   have jurisdiction under title 28 without it,” the Court endorsed a “look
   through” jurisdictional analysis. Id. at 62. (internal quotations omitted).
   When an arbitration demand is predicated on federal-question jurisdiction,
   as in this case, the “court may ‘look through’ a § 4 petition to determine
   whether it is predicated on an action that ‘arises under’ federal law,” as
   required by 28 U.S.C. § 1331. Id. That “look through” analysis does not
   depend upon the petition’s strict language, but upon “the controversy” or
   “substantive conflict between the parties.” Id. at 62–63. “If ‘looking
   through’ to the claims involved in the underlying dispute . . . shows that the
   dispute itself . . . could have been brought in federal court, then federal
   jurisdiction lies over the FAA petition.” Badgerow v. Walters, 975 F.3d 469,
   473 (5th Cir. 2020) (quoting Vaden, 556 U.S. at 62), petition for cert. filed, No.
   20-1143 (Feb 12, 2021).
          Under that “look through” analysis, we hold that this underlying
   dispute presents a federal question. Polyflow’s arbitration demand included
   at least three federal statutory claims under the Lanham Act, 15 U.S.C.
   §§ 1114 and 1125. Against that fact and the Vaden analysis, Specialty’s
   argument that Polyflow did not plead the federal claims until its FAC is
   unconvincing. What matters is that a federal question—the Lanham Act
   claims—animated the underlying dispute, not whether Polyflow listed them

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   in its original complaint. As we have said, Vaden “rejected the standard
   articulation of the well-pleaded complaint rule ordinarily used to analyze
   federal jurisdiction,” and substituted instead, “the so-called ‘look through’
   approach.” Quezada v. Bechtel OG & C Constr. Servs., 946 F.3d 837, 841 (5th
   Cir. 2020). Satisfied of our jurisdiction, we move on.
                                         III.
          Our arbitrability analysis is well settled. “First, the court must
   determine whether the parties agreed to arbitrate the dispute.” Will-Drill
   Res. v. Samson Res., 352 F.3d 211, 214 (5th Cir. 2003) (citation omitted). That
   question involves two considerations: “(1) whether there is a valid agreement
   to arbitrate between the parties; and (2) whether the dispute in question falls
   within the scope of that arbitration agreement.” Id. (citation omitted). If the
   court finds that the parties agreed to arbitrate, the court typically “must
   consider whether any federal statute or policy renders the claims
   nonarbitrable.” Id. (citation omitted).
          Here, though, Specialty does not dispute that there is a valid
   agreement. Therefore, we consider only whether the parties’ dispute is
   covered by the agreement. We begin with a review of the contract language
   itself and then conduct a claim-by-claim review.           Finally, we address
   Specialty’s alleged defenses.
                                          A.
          “[A] disagreement about whether an arbitration clause in a
   concededly binding contract applies to a particular type of controversy is for
   the court.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002).
   “When deciding whether the parties agreed to arbitrate the dispute in
   question, ‘courts generally . . . should apply ordinary state-law principles that
   govern the formation of contracts.’” Webb v. Investacorp, 89 F.3d 252, 258
   (5th Cir. 1996) (quoting First Options of Chi. v. Kaplan, 514 U.S. 938, 944

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   (1995)). In doing so, “due regard must be given to the federal policy favoring
   arbitration, and ambiguities as to the scope of the arbitration clause itself
   resolved in favor of arbitration.” Volt Info. Scis. v. Bd. of Trs. of Leland
   Stanford Jr. Univ., 489 U.S. 468, 475–46 (1989); Webb, 89 F.3d at 258.
          In other words, if the parties have contracted to arbitrate, there is a
   “presumption” that their disputes “will be deemed arbitrable unless it is
   clear that the arbitration clause has not included them.” First Options, 514
   U.S. at 945 (internal citations and quotations omitted). This is so because
   “when the parties have a contract that provides for arbitration of some
   issues,” courts recognize that “the parties likely gave at least some thought
   to the scope of arbitration.” Id. “And, given the law’s permissive policies in
   respect to arbitration . . . the law . . . insist[s] upon clarity before concluding
   that the parties did not want to arbitrate a related matter.” Id. (citations
   omitted). Specialty, as “the party resisting arbitration[,] shoulders the
   burden of proving that the dispute is not arbitrable.” Overstreet v. Contigroup
   Cos., 462 F.3d 409, 412 (5th Cir. 2006).
          Following those “ordinary state-law principles,” Webb, 89 F.3d at
   258, we begin with the language of the contract. Paragraph C.4 says that “any
   action arising out of this Agreement shall be an arbitration in Harris County,
   Texas.” And paragraph B.5.c says: “For purposes of clarity, the Parties are
   agreeing that any disputes arising out of or related to this Agreement will be
   arbitrated and not litigated in a court of law. . . .”
          We conclude that this is an action or a dispute arising out of or related
   to the Settlement Agreement. Polyflow accuses Specialty of “continu[ing]
   to use Polyflow information and materials” to “compete unfairly with
   Polyflow,” in violation of the Settlement Agreement.               Polyflow lists
   Specialty’s specific violations “less than a month after signing” the
   agreement. Count One of the arbitration demand accuses Specialty of

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   making material misrepresentations that fraudulently induced Polyflow to
   enter into the Settlement Agreement. 1 Count Two alleges a material breach
   of the Settlement Agreement. And the remaining counts in the arbitration
   demand incorporate those allegations into common law and statutory claims.
   So too with the counts in the FAC.
            The weight of our precedent supports the finding that paragraph C.4
   is a “broad” arbitration clause that encompasses these claims. See Explo v.
   S. Nat. Gas Co., 788 F.2d 1096, 1098–99 (5th Cir. 1986) (comparing
   “narrower ‘arises under’ language” with “broader ‘arising out of’
   language”); Sedco v. Pemex, 767 F.2d 1140, 1144 n.8, 1145 (5th Cir. 1985)
   (holding that clause with “arising out of” language is “broad”); The Rice Co.
   (Suisse) v. Precious Flowers, 523 F.3d 528, 532 (5th Cir. 2008) (same); see also
   9 U.S.C. § 2 (“[A]n agreement in writing to submit to arbitration an existing
   controversy arising out of . . . a contract . . . shall be valid, irrevocable, and
   enforceable, save upon such grounds as exist at law or in equity for the
   revocation of any contract.” (emphasis added)).
            To be sure, in Pennzoil Exploration v. Ramco Energy, 139 F.3d 1061,
   1067 (5th Cir. 1998), we distinguished the “broad” arbitration clauses at
   issue there from “arising out of” clauses that we described as narrow. But
   that classification in Pennzoil was in dicta; it opined on contract language not
   at issue in the case. See id. Moreover, Pennzoil stands alone in this court’s
   jurisprudence compared to our consistent “broad” holdings both before and
   after.

            1
               Polyflow alleges fraudulent inducement of the contract generally, not of the
   arbitration provision. The distinction can be important because of its impact on the court’s
   ability to adjudicate the question. See Prima Paint Corp. v. Flood & Conklin Mfg., 388 U.S.
   395, 403–04 (1967); Dillard v. Merrill Lynch, 961 F.2d 1148, 1154 n.9 (5th Cir. 1992). Since
   it is not in issue, the court need not explore Prima Paint’s distinction.

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          We hold that the arbitration language in paragraph C.4 is broad.
   Similarly, the language in B.5.c is assuredly a “broad arbitration clause[]
   capable of expansive reach.” Pennzoil, 139 F.3d at 1067; see Prima Paint Corp.
   v. Flood & Conklin Mfg., 388 U.S. 395, 398 (1967) (characterizing “arising out
   of or relating to” language as a “broad arbitration clause”).
          Specialty’s arguments to the contrary are simply unconvincing. For
   instance, Specialty relies on cases interpreting “arising under” clauses. But
   that language is not at issue here, so the comparison is spurious. See Explo,
   788 F.2d at 1099. Likewise, Specialty argues that the two arbitration clauses
   would be redundant if both are read broadly. To the contrary, they coexist
   harmoniously. Paragraph B.5.c says that “any disputes arising out of or
   related to this Agreement will be arbitrated.” That language references the
   entire agreement, not only the specific disputes that might arise from the
   neutral pipe expert’s judgment. And, Polyflow points out, “placement [of
   that provision] in Section B.5 was sensible: Lest anyone think that by
   establishing particular procedures for arbitrating [certain disputes,] the
   parties were limiting the substance of what they would arbitrate to those
   issues, the parties ‘clari[fied]’ that they would arbitrate ‘any disputes arising
   out of or related to this Agreement.’” As Polyflow urged at oral argument,
   broad plus broad equals broad.
                                          B.
          A claim-by-claim review reinforces the contract’s general proposition.
   “Whether a claim falls within the scope of an arbitration agreement under
   Texas law depends on the factual allegations of the complaint instead of the
   legal causes of action asserted.” Ford v. NYLCare Health Plans, 141 F.3d 243,
   250 (5th Cir. 1998). “A tort claim . . . is arbitrable if it is so interwoven with
   the contract that it could not stand alone, but is not arbitrable if it is
   completely independent of the contract and could be maintained without

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   reference to a contract.” Id. (quotation omitted). We take each of Polyflow’s
   statutory and common law claims in turn.
          Fraudulent inducement.      “Fraudulent inducement is a particular
   species of fraud that arises only in the context of a contract and requires the
   existence of a contract as part of its proof.” Siddiqui v. Fancy Bites, 504
   S.W.3d 349, 369 (Tex. App.—Houston [14th Dist.] 2016, pet. denied). The
   Texas Supreme Court has found claims of fraudulent inducement to be
   arbitrable under a narrower “involving” arbitration clause, In re J.D.
   Edwards World Sols., 87 S.W.3d 546, 551 (Tex. 2002), and a broader “arising
   from or relating to” clause, In re Kaplan Higher Educ., 235 S.W.3d 206, 208–
   09 (Tex. 2007) (per curiam). As such, this claim surely falls within the
   parties’ arbitration agreement; indeed, Polyflow claims that Specialty made
   “false representations and promises in the Settlement Agreement itself.”
   The fraudulent inducement claim is arbitrable.
          Trade secrets. “A trade secret misappropriation in Texas requires:
   (a) the existence of a trade secret; (b) a breach of a confidential relationship
   or improper discovery of the trade secret; (c) use of the trade secret; and
   (d) damages.” Taco Cabana Int’l v. Two Pesos, 932 F.2d 1113, 1123 (5th Cir.
   1991). “A trade secret is any formula, pattern, device or compilation of
   information used in one’s business, and which gives an opportunity to obtain
   an advantage over competitors who do not know or use it.” Id. Polyflow
   argues that its trade secret claim similarly falls within the scope of the
   Settlement Agreement because the agreement helps to establish breach of
   Specialty’s duty. Just so. The Settlement Agreement prohibits Specialty
   from using or disclosing “Polyflow testing data, . . . models, . . . braid
   construction model and manufacturing parameters, . . . Case studies and
   manuals, . . . recipe cards, . . . coupling designs,” and a half-dozen other
   categories of information and materials. These prohibitions constituted a

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   material part of the consideration that Polyflow received for entering the
   Settlement Agreement. The trade secret allegations are arbitrable.
          Trademark dilution. As to Polyflow’s trademark claim, Specialty
   contends there is no provision in the agreement “regarding trademarks or
   their usage.”    But this is easily dispatched.      Although the Settlement
   Agreement may not have used the term “trademark,” it required Specialty
   to return “all hard-copy Polyflow information and materials to Polyflow . . .
   including but not limited to case studies, drawings, testing data, models,
   model output, presentations, marketing materials, and manuals.” And the
   agreement prevented Specialty from using or disclosing those and other
   materials “during and after the two-year manufacturing ban.” Polyflow has
   alleged that, in contravention of those terms, Specialty “pass[ed] Polyflow
   information and products off as [its] own.”          The trademark claim is
   arbitrable.
          Unfair competition. Next, Specialty argues that the unfair competition
   claims are independent of the Settlement Agreement because they fail the
   court’s standard that arbitrability “depends on the factual allegations of the
   complaint instead of the legal causes of action asserted.” Ford, 141 F.3d at
   250. But Polyflow points to the Settlement Agreement’s prohibition against
   Specialty “publicly claim[ing] to have any current operational, contractual,
   or other business relationship with Polyflow.” Polyflow alleges that Specialty
   violated that term by “misrepresenting the Settlement Agreement’s terms in
   the marketplace, and misrepresenting [its] relationship with Polyflow.” To
   that, Specialty offers no rebuttal. Indeed, Specialty cannot point us to a single
   case outside a lone citation to Ford, 141 F.3d at 251. As the party opposing
   arbitration, Specialty’s unsupported argument is fatal to its burden. See
   Overstreet, 462 F.3d at 412.      As a result, the federal and state unfair
   competition claims are arbitrable.

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          Tortious interference. Finally, the elements of this claim are “the
   existence of a contract subject to interference, an act of interference that was
   wilful and intentional, proximately causing plaintiff’s damages, with actual
   damage or loss to plaintiff.” Fridl v. Cook, 908 S.W.2d 507, 513 (Tex. App.—
   El Paso 1995, writ dism’d w.o.j.). In Fridl, the court held claims not arbitrable
   because the plaintiff “could [have brought] the same tortious interference
   claims against a wholly unrelated party.” Id. And, in Ford, this court cited
   Fridl approvingly in finding that a “tort action did not depend, as a legal
   matter, on the contract, and, therefore, was not ‘related to’ the contract
   within the meaning of the arbitration clause.” Ford, 141 F.3d at 251.
          In its arbitration demand and FAC, Polyflow alleged that Specialty
   interfered with its relationships with business partners including Petronas
   and Exxon. Polyflow alleged several specific instances that predated the
   parties’ Settlement Agreement, including that “within days after Wright left
   Polyflow,” he told “market participants, such as Petronas, Oxy, and Exxon
   that Polyflow was lacking talent for the installation of pipe, but that
   [Specialty] had such talents.” Similarly, before the Settlement Agreement,
   Polyflow accused Specialty of misleading industry members that Specialty
   has “some type of agreed relationship with Polyflow.” As for more recent
   conduct, the FAC says that Specialty has “continued this conduct since the
   Settlement Agreement with Polyflow’s actual and potential customers.”
   The FAC cites an example in August 2019, when Specialty allegedly sent a
   letter “to Polyflow’s largest customer . . . ma[king] a number of
   misrepresentations in attempting to improperly interfere with Polyflow’s
   business relationship.”
          Fridl demands that those allegations establish a claim “so interwoven
   with the contract that it could not stand alone.” 908 S.W.2d at 511. Polyflow
   says they are, because they “arise from breaches of the Settlement
   Agreement’s provisions prohibiting . . . misrepresentations about the

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   relationship between Polyflow and [Specialty], and misrepresentations about
   the Settlement Agreement.” Although the relative lack of specifically
   pleaded facts makes this a close question, we conclude that this claim, too, is
   arbitrable. Polyflow could bring a similar claim against “a wholly unrelated
   party,” id. at 513, but it could not bring the same claim without reference to
   Specialty’s obligations under the Settlement Agreement. On this score, we
   are reminded too that Polyflow’s arbitration demand was spurred, in part, by
   the expert’s alleged “interfer[ence] in Polyflow’s existing contractual
   relationship with [a] customer.” Considering these facts within the standard
   that “courts must indulge every reasonable presumption in favor of
   arbitration,” id. at 511, we find that this claim, like the others, is arbitrable.
          In short, our claim-by-claim review reinforces the contract language.
   Polyflow’s entire arbitration demand is arbitrable. We now consider whether
   any of Specialty’s alleged defenses nonetheless bar arbitration.
                                           C.
          Specialty has a myriad of responses to the assertion of arbitrability. It
   argues that Polyflow seeks to arbitrate matters that the parties agreed to
   dismiss by the Settlement Agreement; that mediation is a condition
   precedent to arbitration; that Polyflow materially breached the agreement by
   dismissing or attempting to dismiss the neutral pipe expert; and that Polyflow
   waived arbitration by invoking the judicial process.
          Before considering these, we must decide whether the court or an
   arbitrator should address them. We have said that “where the existence of
   the contract is not in question, the court must examine whether the
   allegations made by the party resisting arbitration challenge the making of the
   agreement to arbitrate itself as opposed to allegations regarding the contract
   as a whole.” Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 430 (5th Cir.
   2004) (internal quotation and citation omitted). A defense that “does not

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   specifically relate to the arbitration agreement . . . must be submitted to the
   arbitrator as part of the underlying dispute.” Id.
          Accordingly, we find that the bulk of Specialty’s arguments are for an
   arbitrator, not the court. Specialty’s defenses predicated on pre-Arbitration
   Agreement conduct, material breach, and mediation do not “attack the
   ‘making’ of the agreement to arbitrate itself.” Banc One, 367 F.3d at 429
   (quoting Prima Paint, 388 U.S. at 404). Instead, its defenses go right to the
   heart of the parties’ obligations under the Settlement Agreement. These
   questions implicate the enforceability of the agreement, not its “very
   existence.” Will-Drill, 352 F.3d at 215. Specialty concedes an arbitrator’s
   authority to resolve certain disputes under the Settlement Agreement. Its
   attack on the scope of that authority means an arbitrator, not the court,
   should address these defenses. See Gen. Warehousemen & Helpers Union Loc.
   767 v. Albertson’s Distrib., 331 F.3d 485, 488 (5th Cir. 2003) (“[W]e do not
   decide for ourselves these questions of procedural arbitrability; rather, we
   concentrate on what a rational mind could decide.”).
          In contrast, whether Polyflow waived arbitration by availing itself of
   the judicial process is a question of law. Sedillo v. Campbell, 5 S.W.3d 824,
   826 (Tex. App.—Houston [14th Dist.] 1999, no writ). The standard for
   determining waiver in this context is the same under Texas law or the FAA.
   Id. “Courts will not find that a party has waived its right to enforce an
   arbitration clause merely by taking part in litigation unless it has substantially
   invoked the judicial process to its opponent’s detriment.” Id. at 827.
   “Actions that raise the specter of waiver may include the applicant’s
   engaging in some combination of filing an answer, setting up a counterclaim,
   pursuing extensive discovery, moving for a continuance and failing to timely
   request arbitration.” Id. Specialty bears the burden of proving waiver, and
   its burden is “heavy.” Id. “Moreover, where, as here, the party seeking
   arbitration has made a timely demand for arbitration at or before the

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   commencement of judicial proceedings in the trial court, the burden of
   proving waiver falls even more heavily on the shoulders of the party seeking
   to prove waiver.” Sw. Indus. Imp. & Exp. v. Wilmod, 524 F.2d 468, 470 (5th
   Cir. 1975) (cleaned up).
          Polyflow did not waive its right to arbitration. Indeed, Specialty’s
   argument borders on frivolous. Specialty argues that forcing Specialty to file
   a motion to dismiss and an answer evinces “clear” prejudice. And it adds
   that Polyflow “affirmatively brought claims that it seeks by later-filed motion
   to compel into arbitration.” But Polyflow said consistently at the district
   court that its primary bid for relief was an order compelling arbitration.
   Polyflow amended its complaint to include substantive claims only as an
   alternative “to the extent that the Court finds any of the affirmative causes
   of action should not be sent to arbitration.”
          Nor did Polyflow change course when it moved to compel arbitration;
   that course was set when it filed the original complaint. Instead, it was
   Specialty, not Polyflow, that resisted arbitration. Polyflow has not engaged
   in any action that is “inconsistent with its right to arbitrate.” Sedillo, 5 S.W.
   3d at 829. This court has declined to find waiver even when a party engages
   in litigation for far longer before moving to compel arbitration. See Tenneco
   Resins v. Davy Int’l, 770 F.2d 416, 420–21 (5th Cir. 1985) (collecting cases).
   Specialty has not even approached—much less met—its heavy burden. See
   Wilmod, 524 F.2d at 470.
                                   *        *         *
          In assessing this appeal, we have done nothing more than hold the
   parties to their contractual obligation. Polyflow and Specialty contracted to
   arbitrate disputes arising out of their Settlement Agreement. Polyflow
   alleged claims that meet that test. And Specialty offers no justiciable
   defenses to overcome the presumption in favor of arbitrability. We therefore

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Case: 20-20416     Document: 00515801783           Page: 16   Date Filed: 03/30/2021

                                    No. 20-20416

   REVERSE the district court and REMAND with instructions that the
   parties be ordered into arbitration.

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