Court Opinion

ID: 9397317
Source: CourtListenerOpinion
Date Created: 2023-05-25 00:00:38.889056+00
Date Added: 2024-06-11T17:19:23.530692
License: Public Domain

Case: 22-60245          Document: 00516762289             Page: 1      Date Filed: 05/24/2023

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

                                       ____________                                      FILED
                                                                                       May 24, 2023
                                        No. 22-60245                                   Lyle W. Cayce
                                       ____________                                         Clerk

   Affordable Care, L.L.C.,

                                                                      Plaintiff—Appellant,

                                              versus

   Raeline K. McIntyre, DMD; Raeline K. McIntyre, DMD,
   P.C.,

                                                Defendants—Appellees.
                       ______________________________

                       Appeal from the United States District Court
                         for the Southern District of Mississippi
                                  USDC No. 1:21-CV-85
                       ______________________________

   Before Elrod and Haynes, Circuit Judges. †
   Per Curiam: *
           Affordable Care lost at arbitration. It now seeks vacatur of the
   resulting arbitration award because the arbitrator and an attorney for the
   other side both have connections to Duke University School of Law.

           _____________________
           †
            Judge Willett was a member of the panel that heard oral argument. He has since
   recused and has not participated in this decision. This case is being decided by a quorum.
   28 U.S.C. § 46(d).
           *
               This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 22-60245          Document: 00516762289               Page: 2      Date Filed: 05/24/2023

                                           No. 22-60245

          The district court correctly determined that these connections do not
   create a conflict. We therefore AFFIRM the district court’s denial of relief.
                                                  I
          Charles Holton was assigned to arbitrate a contract dispute between
   Affordable Care L.L.C., which provides non-clinical business services to
   affiliated dentists, and Dr. Raeline McIntyre and her dental practice. After
   Holton completed the ordinary conflict disclosure form, Dr. McIntyre added
   Paul Sun to her legal team. Holton made the following supplemental
   disclosure the day after Sun entered his appearance:
          I would disclose that I know Mr. Sun and probably have had
          one or more cases with him or against him during my career,
          but nothing in the last 10 years. I do not believe that I have seen
          or communicated with him in over 10 years. His involvement
          would not affect my judgment in the case. 1
   The American Arbitration Association requested objections to the
   disclosure, but none were made. The arbitration process then proceeded to
   its conclusion with Holton ultimately rejecting each of Affordable’s claims
   and awarding attorney fees to Dr. McIntyre.

          Affordable subsequently moved to vacate the award in the United
   States District Court for the Southern District of Mississippi, citing the
   Federal Arbitration Act’s four statutory grounds for relief. It also sought
   discovery related to Holton’s alleged bias and partiality.

          In support of its requests, Affordable submitted screenshots taken
   from the webpages of Duke’s law school and Sun’s firm, as well as a local
   news article. With this publicly available information, Affordable was able to

          _____________________
          1
              Thus, this is not a case involving a complete lack of disclosure.

                                                  2
Case: 22-60245        Document: 00516762289             Page: 3      Date Filed: 05/24/2023

                                         No. 22-60245

   ascertain that both Holton and Sun worked at Duke University School of
   Law: Holton as a full-time faculty member and Sun as a “2021
   Wintersession” adjunct. Affordable also determined that Holton served as
   the director of Duke’s Civil Justice Clinic, which partners with a local legal
   aid service that Sun’s firm also partners with, and that Sun has provided legal
   representation to Duke University. 2
           The district court reviewed this evidence and concluded that
   Affordable failed to establish grounds for vacatur under the FAA and that
   discovery was not warranted. It therefore denied Affordable’s motions and
   confirmed the award. Affordable now appeals.
                                               II
           Affordable maintains that Holton’s arbitration award must be vacated
   under the FAA due to “evident partiality or corruption in the arbitrator[].”
   9 U.S.C. § 10(a)(2). We disagree.
           The standard for establishing evident partiality is “stern.” OOGC
   America, L.L.C. v. Chesapeake Expl., L.L.C., 975 F.3d 449, 453 (5th Cir.
   2020) (quoting Positive Software Sols., Inc. v. New Century Mortg. Corp., 476
   F.3d 278, 281 (5th Cir. 2007) (en banc)). The challenger must show “a
   concrete, not speculative impression of bias” that “stem[s] from a
   significant,” not trivial, “compromising connection.” Id. (citation and
   quotation marks omitted). “[T]he party challenging the award ‘must
   produce specific facts from which a reasonable person would have to

           _____________________
           2
              Affordable also asserted that “Holton represented Duke University in many
   lawsuits from 1983 through 2005” and that “Sun and [his firm] took over representation
   of Duke University following Holton’s long representation.” But, as the district court
   noted, Affordable has not produced any evidence of Holton’s “long representation” of
   Duke. Nor did it provide any evidence to substantiate its assertion that Holton had handed
   litigation over to Sun or his firm.

                                               3
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                                    No. 22-60245

   conclude that the arbitrator was partial to’ its opponent.” Id. (quoting Cooper
   v. WestEnd Cap. Mgmt., L.L.C., 832 F.3d 534, 545 (5th Cir. 2016)).
          The connections derived from Affordable’s internet research do not
   establish a conflict of the sort contemplated by the FAA. To the contrary,
   they are quintessential examples of the kind of “trivial past association” our
   precedents have deemed insufficient to warrant “the extreme remedy of
   vacatur.” Positive Software, 476 F.3d at 279. Indeed, once separated from
   Affordable’s inflammatory characterizations, the evidence in the record
   reflects the kind of professional intersections that one might expect to find
   between any two attorneys working in the same geographical location.
          Affordable has shown that both Holton and Sun served on the faculty
   of Duke’s law school—one as an adjunct for the winter term and one as a full-
   time faculty member—and that Holton and Sun were both part of
   organizations that served the same legal aid non-profit. This cannot, standing
   alone, cast Holton’s impartiality into doubt. It does not follow that Sun and
   Holton had any kind of personal, professional, or financial relationship. We
   also agree with the district court that Affordable’s bald assertion that Sun and
   Holton shared an attorney-client relationship through Holton’s employment
   with Duke University is unsupported by the facts and the law.
          This would be a different case if Affordable had offered evidence that
   Holton and Sun worked closely together. But we cannot, on this record,
   conclude that Holton and Sun were even aware of their shared Duke
   connection.
          We have upheld arbitration awards in the face of much stronger
   indicia of a potential conflict. See e.g., Positive Software, 476 F.3d at 283–84
   (declining to vacate award where prevailing party’s attorney had previously
   litigated with the arbitrator); Cooper, 832 F.3d at 540 (declining to vacate
   award based on an undisclosed relationship between the opposing party and

                                          4
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                                        No. 22-60245

   another arbitrator who worked for the same arbitral organization that the
   presiding arbitrator belonged to); OOGC, 975 F.3d at 451 (declining to vacate
   award despite allegations that the arbitrator had a financial incentive to rule
   a certain way).
           In each of these cases, the unsuccessful party to an arbitration
   identified an unremarkable professional intersection between a party or
   attorney and an arbitrator, then used speculation and conjecture in an
   attempt to parlay that innocuous connection into a conflict of interest.
   Affordable’s challenge is no different. Affordable has not offered specific,
   concrete facts that would cause a reasonable person to speculate—much less
   require a reasonable person to conclude—that Holton was biased. 3
                                              III
           In the event that we deem vacatur of the arbitration award
   unwarranted, as we now do, Affordable asks that it be permitted to conduct
   limited discovery to further probe the relationship between Holton and Sun.
           We review a district court’s order denying post-arbitration discovery
   for abuse of discretion. Vantage Deepwater Co. v. Petrobras Am., Inc., 966 F.3d
   361, 373 (5th Cir. 2020). “District courts occasionally allow discovery in
   vacatur and confirmation proceedings,” and the Fifth Circuit has “endorsed
   a flexible inquiry for district courts to use.” Id. at 372. Namely, “the court
   must weigh the asserted need for hitherto undisclosed information and assess
   the impact of granting such discovery on the arbitral process.” Id. at 373
   (citation omitted). In doing so, the district court “should focus on ‘specific
   issues raised by the party challenging the award and the degree to which those

           _____________________
           3
             Even combining the Duke connections with the perceived procedural and
   substantive advantages that Affordable believes Holton extended to Sun and his client, we
   cannot conclude that Affordable has established evident partiality.

                                              5
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                                             No. 22-60245

   issues implicated factual questions that cannot be reliably resolved without
   some further disclosure.’” Id. (citation omitted). “The party seeking
   discovery bears the burden of showing its necessity.” Id. (citation omitted).
           The district court’s analysis is entirely consistent with this court’s
   flexible standard. Affordable has not pointed to any compelling evidence of
   impropriety that might demonstrate the need for further discovery.
   Permitting discovery in this situation would therefore needlessly undermine
   the efficacy of the arbitral process. See id. (observing that “the loser in
   arbitration cannot freeze the confirmation proceedings in their tracks and
   indefinitely postpone judgment by merely requesting discovery” (citation
   omitted)).
                                         *        *         *
           Affordable has failed to satisfy the strict requirements for vacatur of
   an arbitration award set out by the FAA. 4                     It has likewise failed to

           _____________________
           4
              Affordable’s challenges based on sections 10(a)(1), 10(a)(3), and 10(a)(4) of the
   FAA also fail. Affordable cannot satisfy the due diligence prong of the section 10(a)(1)
   analysis because it was on notice of a possible connection between Holton and Sun as soon
   as Sun entered his appearance, yet it did not follow up on that information until it had
   already lost at arbitration. See Morgan Keegan & Co., Inc. v. Garrett, 495 F. App’x 443, 447
   (5th Cir. 2017) (quoting Barahona v. Dillard’s, Inc., 376 F. App’x 395, 397 (5th Cir. 2010)).
   Affordable’s argument under section 10(a)(3), that Holton engaged in misconduct by
   disregarding the ruling of a federal district court in concurrent federal litigation also
   involving Affordable and Dr. McIntyre, is contrary to the record. Holton heard evidence
   on this ruling, received the ruling into the record, and allowed oral argument on the issue
   after closing arguments had been completed. Nor does Affordable provide any argument
   to support its contention that Holton was bound by the ruling, which involved a different
   contract from the one at issue in the arbitration, different facts, and a different state’s law.
   Affordable’s argument under section 10(a)(4), that Holton exceeded his powers by
   granting unsolicited attorney fees to Dr. McIntyre, is also contrary to the record. The
   services contract between Affordable and Dr. McIntyre expressly incorporated American
   Arbitration Association rules, which permit an award of attorney fees “if all parties have
   requested such an award.” American Arbitration Association, Commercial Arbitration
   Rules and Mediation Procedures R-47(d)ii (2013). Both Affordable and Dr. McIntyre

                                                  6
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                                          No. 22-60245

   demonstrate that the district court abused its discretion in denying post-
   arbitration discovery. We therefore AFFIRM.

           _____________________
   requested an award of attorney fees in their arbitration pleadings and reiterated that request
   in their proposed findings and conclusions.

                                                 7