Court Opinion

ID: 4566445
Source: CourtListenerOpinion
Date Created: 2020-09-17 18:00:36.363609+00
Date Added: 2024-06-11T09:22:45.325145
License: Public Domain

Case: 19-51121         Document: 00515568129             Page: 1      Date Filed: 09/17/2020

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

                                                                                   FILED
                                                                           September 17, 2020
                                       No. 19-51121                           Lyle W. Cayce
                                     Summary Calendar                              Clerk

   Diverse Enterprises, Limited Company, L.L.C.; Quick-
   Sol Global, L.L.C.; Lawrence P. Lancaster,

                                                                     Plaintiffs—Appellees,

                                             versus

   Beyond International, Incorporated; Pablo Gomez,

                                                                 Defendants—Appellants.

                      Appeal from the United States District Court
                           for the Western District of Texas
                                USDC No. 5:16-CV-1036

   Before Haynes, Willett, and Ho, Circuit Judges.
   Per Curiam:*
          Beyond International, Inc. and Pablo Gomez1 (collectively,
   “Beyond”) appeal the district court’s order granting Plaintiffs’ motion to

          *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
          1
              Pablo Gomez is the President of Beyond International, Inc.
Case: 19-51121       Document: 00515568129          Page: 2    Date Filed: 09/17/2020

                                     No. 19-51121

   confirm an arbitration award. For the following reasons, we AFFIRM the
   district court’s order.

                              I.    Background
          Diverse Enterprises, Ltd., Co., LLC, Quick-Sol Global, LLC
   (“QSG”), and Lawrence P. Lancaster (collectively, the “Plaintiffs”) entered
   into a distribution agreement (“Agreement”) with Beyond. It contained a
   clause requiring arbitration for “any claim or controversy arising out of or
   relating to [the] Agreement.” The Plaintiffs terminated the Agreement after
   Beyond breached it by failing to meet minimum sales requirements, and the
   parties entered arbitration to resolve their various business conflicts.
          The arbitration panel made findings in favor of the Plaintiffs on every
   substantial issue. The panel also awarded $432,135.60 in attorneys’ fees to
   the Plaintiffs.
          Beyond moved to modify the attorneys’ fee award, which was based,
   in part, on a $400 hourly rate for one of the Plaintiffs’ law firms. Though
   Beyond initially stipulated to the hourly rate, it later discovered that the firm
   in question only charged the Plaintiffs a rate of $225 per hour. Beyond
   acknowledged that the firm was also entitled to 2% of the gross sales price of
   QSG as additional compensation but remarked that it had “no information
   that QSG ha[d] been sold.” Beyond thus argued a modification was needed
   to correct this “computational error.” The panel denied Beyond’s motion.
          Beyond renewed its excessive fee argument in its response to the
   Plaintiffs’ motion to confirm the arbitration award in district court. Beyond
   argued that the panel “exceeded the authority conferred to it in the . . .
   Agreement to award attorneys’ fees” by ordering Beyond to “pay fees in
   excess of those actually charged.” Beyond then asked the district court to
   either: (1) vacate the award and remand back to arbitration for “proper

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   analysis on the issue of attorneys’ fees,” or alternatively, (2) modify and
   correct the award “consistent with the attorneys’ fees actually incurred by”
   the Plaintiffs because the award contained an “evident material
   miscalculation of figures or evident material mistake in the description of any
   person, thing or property referred to in the award” in violation of section
   11(a) of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 11(a).
          The district court rejected Beyond’s argument and confirmed the
   arbitration award. Diverse Enters. Co. v. Beyond Int’l, Inc., No. 5:16-CV-
   01036-RCL, 2019 WL 5927311, at *1 (W.D. Tex. Nov. 12, 2019).                 It
   concluded that the panel did not exceed its authority, noting the
   “exceedingly deferential” standard of review and the lack of limiting
   language concerning the arbitrator’s authority in the Agreement. Id. at *2.
   The district court also rejected Beyond’s argument that there was “an
   evident material miscalculation” or “mistake” in the award because the
   panel “reasonably relied on the parties’ stipulation that attorneys’ fees
   ranging from $200 to $400 would be reasonable.” Id. at *3. Accordingly,
   the district court adopted the panel’s findings and conclusions and granted
   the Plaintiffs’ motion to confirm the award. Id. Beyond timely appealed.

                       II.    Standard of review
          We review a district court’s confirmation of an arbitration award de
   novo, using the same standards of the district court. Brown v. Witco Corp.,
   340 F.3d 209, 216 (5th Cir. 2003). However, our review of an arbitration
   award is “extraordinarily narrow.” Glover v. IBP, Inc., 334 F.3d 471, 473–74
   (5th Cir. 2003). We may modify or vacate an arbitration award only if one of
   the grounds enumerated in FAA §§ 10 or 11, 9 U.S.C. §§ 10–11, is satisfied.
   See Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 584 (2008).
          Here, Beyond contends that the attorneys’ fee award constitutes an
   excess of authority, in violation of § 10(a)(4). Arbitrators exceed their power

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   when they “act contrary to express contractual provisions.” Rain CII
   Carbon, LLC v. ConocoPhillips Co., 674 F.3d 469, 472 (5th Cir. 2012) (internal
   quotation marks and citation omitted). We will vacate an award that ignores
   a plain contractual limitation on the authority of an arbitrator. Id. However,
   “limitations on an arbitrator’s authority must be plain and unambiguous.”
Id. (internal brackets and quotation marks omitted). If “there is ambiguity as
   to whether an arbitrator is acting within the scope of his authority, that
   ambiguity must be resolved in favor of the arbitrator.” Quezada v. Bechtel
   OG & C Constr. Servs., Inc., 946 F.3d 837, 844 (5th Cir. 2020) (quotation
   omitted); see Rain CII, 674 F.3d at 472 (“A reviewing court examining
   whether arbitrators exceeded their powers must resolve all doubts in favor of
   arbitration.” (quotation omitted)). If a rational interpretation exists that
   supports the award, the award will be upheld, even if there is more than one
   interpretation on how the arbitrator arrived at a final award. See Valentine
   Sugars, Inc. v. Donau Corp., 981 F.2d 210, 214 (5th Cir. 1993).

                                III.     Discussion
           Beyond argues that the panel exceeded its contractual authority by
   awarding the Plaintiffs attorneys’ fees that were based on a $400 hourly rate
   when the actual rate charged was $225 per hour. Beyond maintains that the
   panel was limited to awarding “reasonable fees” whereas “the authority to
   award fee multiples was absent and could not be awarded.” Beyond also
   maintains the panel violated Texas law by “awarding fees not actually
   incurred, which were based . . . on a withdrawn stipulation and a misleading
   billing summary.”2           Beyond characterizes the fees awarded as an

           2
            Beyond concedes that it stipulated to the $400 hourly rate, but it notes that it
   withdrew this stipulation prior to the entry of the fee award. This withdrawn stipulation is
   not a determinative factor in our analysis, so we do not address Beyond’s stipulation
   argument. Furthermore, we decline to address Beyond’s argument that the Plaintiffs

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   impermissible “windfall,” prohibited by the Supreme Court in Hensley v.
   Eckerhart, 461 U.S. 424, 455 (1983) (Brennan, J., concurring in part and
   dissenting in part). We disagree with Beyond’s efforts to treat the review of
   an arbitration award as if it is a regular appeal of a trial court decision. We
   thus affirm the district court’s confirmation of the attorneys’ fee award.
          On appeal, the single question we must answer is whether the
   arbitration panel exceeded its contractual authority.             To answer that
   question, we focus on “whether the award, however arrived at, is rationally
   inferable from the contract[,]” applying relevant (here, Texas) state law.
   Glover, 334 F.3d at 474-75 (quotation marks and citation omitted); see Gilbert
   Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126
   (Tex. 2010) (describing Texas rules of contract interpretation).
          Two contract provisions are particularly relevant. The first provision
   broadly authorizes arbitrators to settle “any claim or controversy arising out
   of or relating to” the Agreement. We note that “[b]oth the Supreme Court
   and this court have characterized similar arbitration clauses as broad
   arbitration clauses capable of expansive reach.” See Pennzoil Expl. & Prod. Co.
   v. Ramco Energy Ltd., 139 F.3d 1061, 1067 (5th Cir. 1998) (citing Prima Paint
   Corp. v. Flood & Conklin Mfg. Co., 288 U.S. 395, 406 (1967)). The second
   provision grants the prevailing party “reasonable attorneys’ fees (both trial
   and appellate) and related costs and expenses.” The word “reasonable”
   does not necessarily limit the parties to fees actually incurred. See Blanchard
   v. Bergeron, 489 U.S. 87, 96 (1989) (noting “[t]he trial judge should not be
   limited by the contractual fee agreement between plaintiff and counsel” in
   determining reasonable attorneys’ fees under 42 U.S.C. § 1983); La. Power

   “misrepresent[ed]” their fees. We observe that Beyond was provided the fee agreement,
   stating the $225 hourly rate, along with thousands of other pages of documentation.

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   & Light Co. v. Kellstrom, 50 F.3d 319, 328–29 (5th Cir. 1995) (noting “the
   actual amount paid in fees is not dispositive on the question of reasonable
   rates”). Because there is no other relevant language, we hold that the district
   court did not err in concluding that the Agreement creates no plain limitation
   on the authority of the arbitrators in awarding attorneys’ fees greater than
   those incurred by the Plaintiffs.
           Since the arbitration award did not exceed the arbitration panel’s
   contractual authority, we must sustain it.3 We do so without reaching the
   merits of Beyond’s excessive fee claim because that argument goes beyond
   our power to review the arbitration decision.4
           AFFIRMED.

           3
             Even assuming arguendo that the arbitration panel mistakenly applied the law,
   this error is not grounds for vacating or modifying an arbitral award. United Paperworkers
   Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 38 (1987) (“Courts . . . do not sit to hear
   claims of factual or legal error by an arbitrator as an appellate court does in reviewing
   decisions of lower courts.”).
           4
             We need not determine whether $400 per hour is a reasonable rate because that
   determination was within the power of the arbitration panel. Similarly, we lack the
   authority to address Beyond’s “windfall” claim.

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