Court Opinion

ID: 6345130
Source: CourtListenerOpinion
Date Created: 2022-05-30 00:00:29.118247+00
Date Added: 2024-06-11T09:12:51.853505
License: Public Domain

Case: 21-50905     Document: 00516336109        Page: 1     Date Filed: 05/27/2022

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

                                                                         FILED
                                                                     May 27, 2022
                                 No. 21-50905                       Lyle W. Cayce
                                                                         Clerk

   Troy Hinkle, Individually and for others similarly
   situated,

                                                            Plaintiff—Appellee,

                                     versus

   Phillips 66 Company,

                                                       Defendant—Appellant,

   Cypress Environmental Management-TIR, L.L.C.,

                                                          Intervenor—Appellant.

                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 4:20-CV-22

   Before Richman, Chief Judge, and Costa and Ho, Circuit Judges.
   Gregg Costa, Circuit Judge:
          This appeal is the latest in efforts by Cypress Environmental
   Management to force its employees to arbitrate with Cypress’s clients. See,
   e.g., Newman v. Plains All Am. Pipeline, L.P., 23 F.4th 393 (5th Cir. 2022)
   (Newman I); Newman v. Plains All Am. Pipeline, L.P., 2022 WL 1114407 (5th
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                                            No. 21-50905

   Cir. Apr. 14, 2022) (unpublished) (per curiam) (Newman II). We have
   rejected its previous attempts and do so again.
                                                  I
          Cypress is a pipeline-inspection company that hires inspectors and
   sends them to work for its clients. Troy Hinkle and his co-plaintiffs were
   some of those inspectors. 1 When Hinkle was hired, Cypress had him sign an
   Employment Agreement that contained an arbitration clause. That
   arbitration provision read, in relevant part, as follows: “[Hinkle] and
   [Cypress] agree to arbitrate all claims that have arisen or will arise out of
   [Hinkle’s] employment.” Only Cypress and Hinkle signed the agreement,
   and no other party was mentioned in the arbitration clause.
           One of Cypress’s customers is Phillips 66. Though probably most
   well-known for its gas stations, Phillips 66 is a diversified energy company
   that stores and transports natural gas and crude oil. Phillips 66 needed some
   inspectors for its energy facilities, so Cypress staffed Hinkle on the project.
   Hinkle worked at Phillips 66’s facilities for the next few months. During that
   time, Hinkle was paid a day rate with no overtime.
         Alleging that the Fair Labor Standards Act entitled him to overtime
   pay, Hinkle filed a collective action against Phillips 66 in the Western District
   of Texas. Hinkle sued only Phillips 66; he brought no claims against Cypress.
          Cypress soon moved to intervene. The magistrate judge granted that
   motion, explaining that Cypress met the criteria for both permissive
   intervention and intervention as of right. See Fed. R. Civ. P. 24(a)(2),
   (b)(1)(B). The district court affirmed the magistrate judge on permissive
   intervention but did not reach intervention as of right.
          Once Cypress was permitted to intervene, it moved to transfer the
   case to the Northern District of Oklahoma, citing the forum selection clause

          1
              This opinion will collectively refer to the plaintiffs as “Hinkle.”

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   in its arbitration agreement with Hinkle. Phillips 66 had already moved to
   transfer on the same basis. Cypress and Phillips 66 then both moved to
   compel arbitration. They argued that the delegation clause in Hinkle’s
   arbitration agreement required an arbitrator, not the court, to determine
   whether Hinkle’s claim against Phillips 66 was covered by the agreement.
   Phillips 66 further asserted that, even if arbitrability were a question for the
   court, it could enforce the arbitration agreement as a nonsignatory based on
   intertwined claims estoppel. Cypress alternatively claimed that it was an
   “aggrieved party” under Section 4 of the Federal Arbitration Act (FAA) and
   thus could compel arbitration.
           The magistrate judge rejected all the motions. The district court
   affirmed. It held that whether the delegation clause applied to Phillips 66 was
   a question for the court. The court then answered that question, holding that
   Phillips 66 could not enforce the agreement based on intertwined claims
   estoppel because it did not have a close relationship with Cypress. The
   district court also held that Cypress was not an “aggrieved party” under
   Section 4 of the FAA because Hinkle did not break his agreement to arbitrate
   with Cypress by suing Phillips 66. Phillips 66 and Cypress both appealed.
                                          II
         While this appeal was pending, we decided cases involving other
   Cypress inspectors (collectively referred to as Newman) suing a different
   Cypress client (Plains). See Newman I, 23 F.4th at 393; Newman II, 2022 WL
   1114407, at *1. Newman I and Newman II largely control this case.

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           Newman I holds that “deciding enforceability between the parties and
   an arbitration agreement’s existence are two sides of the same coin.” 23
   F.4th at 398. It is therefore up to us, not an arbitrator, to decide whether
   Phillips 66 can enforce the Hinkle-Cypress agreement. See id. at 399. We
   determine, for the same reasons as the Newman I court, that Phillips 66 as a
   nonsignatory cannot enforce the agreement. See id. at 405–06 (concluding
   that intertwined claims estoppel does not apply). 2
           Newman II extends Newman I’s reasoning to reject Cypress’s attempt
   to enforce the arbitration agreement in a suit where it has not been sued.
   2022 WL 1114407, at *1. Although Newman II is unpublished and thus
   nonbinding, we agree with it. Cypress attempts to repackage this as a new
   issue, but it is the same one resolved in Newman I—whether the arbitration
   agreement between Hinkle and Cypress was a promise by Hinkle to arbitrate
   its claims with Phillips 66. And that question depends on whether the
   agreement is enforceable between Hinkle and Phillips 66. That Cypress, the
   signatory to the agreement, is the one trying to compel arbitration makes no
   difference. The issue is not whether Hinkle has an arbitration agreement
   with anyone—it is whether he has an agreement to arbitrate with the party
   he is suing, Phillips 66. See 23 F.4th at 400 n.25 (“[J]ust because a signatory
   has agreed to arbitrate issues of arbitrability with another party does not mean
   that it must arbitrate with any non-signatory.” (alteration in original)
   (quoting Contec Corp. v. Remote Sol., Co., 398 F.3d 205, 209 (2d Cir. 2005))).
   Suing Phillips 66 rather than Cypress may pose obstacles for Hinkle, but an
   arbitration clause is not one of them.

           2
             Phillips also 66 argues that we should not apply Newman I because a petition for
   rehearing en banc is pending in that case. But Newman I remains good law. See 5th Cir.
   R. 41.3 (explaining that a panel opinion is vacated only after the granting of rehearing en
   banc); see Comer v. Murphy Oil USA, Inc., 718 F.3d 460, 468 (5th Cir. 2013) (noting that
   vacating an opinion is what rids it of precedential value).

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         Newman I and II do most of the work in this appeal. We nonetheless
   address a few points in more detail.
                                                A
          Phillips 66 argues that factual differences make Newman I
   “inapposite.” The first “difference” it claims is not a difference at all.
   Phillips 66 argues that, unlike in Newman I, here there is an “agency
   relationship” and therefore Brittania-U Nigeria, Ltd. v. Chevron USA, Inc.,
   866 F.3d 709 (5th Cir. 2017), applies. But the agency relationship it points to
   between Phillips 66 and Hinkle is the same relationship that existed in
   Newman I between Plains and Newman. And that relationship is not the same
   as the one in Brittania-U, where the nonsignatory defendant was an agent of
   the signatory. See Newman I, 23 F.4th at 399–400.
                                                B
          Cypress argues that it is an aggrieved party under Section 4 of the
   FAA 3 and therefore that the district court should have ordered arbitration.
          Cypress claims it is an aggrieved party because Hinkle “br[ought] his
   employment-related disputes in” court on a collective basis and now Cypress
   may be found jointly liable or be required to indemnify Phillips 66. But that
   is not what makes Cypress an aggrieved party: “It is only where the

           3
               Section 4 of the FAA provides:
                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 . . . of the
       subject matter of a suit arising out of the controversy between the parties, for an
       order directing that such arbitration proceed in the manner provided for in such
       agreement. . . . The court shall hear the parties, and upon being satisfied that the
       making of the agreement for arbitration or the failure to comply therewith is not
       in issue, the court shall make an order directing the parties to proceed to
       arbitration in accordance with the terms of the agreement.
   9 U.S.C. § 4.

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   arbitration may not proceed under the provisions of the contract without a
   court order that the other party is really aggrieved.” Standard Magnesium
   Corp. v. Fuchs, 251 F.2d 455, 458 (10th Cir. 1957); see also Encompass Power
   Servs., Inc. v. Eng’g & Constr. Co., 2005 WL 3019740, at *2 (S.D. Tex. Nov.
   10, 2005), aff’d, 224 F. App’x 329 (5th Cir. 2007) (unpublished) (per curiam)
   (“ECCO has refused to arbitrate under that [arbitration agreement with
   EDG]. Consequently . . . EDG [qualifies] as a ‘party aggrieved’ for purposes
   of filing a § 4 motion to compel arbitration.”); Vainqueur Corp. v. Lamborn &
   Co., 305 F. Supp. 1007, 1008 (S.D.N.Y. 1969). As we have explained, Hinkle
   only promised to arbitrate claims brought against Cypress. Claiming that
   Hinkle did not arbitrate its claims with Phillips 66 is therefore not an
   allegation that he violated his agreement with Cypress. See Newman II, 2022
   WL 1114407, at *1 (“Because Newman’s FLSA claims are against Plains, the
   Plaintiffs have not violated the arbitration agreement and Cypress is not an
   aggrieved party.”). Cypress is not an aggrieved party under Section 4 of the
   FAA and cannot compel arbitration.
                                          C
          Lastly, Cypress appeals from the district court’s denial of its motion
   to transfer venue. Although the FAA makes orders denying motions to
   compel arbitration immediately appealable, see 9 U.S.C. § 16, no statute
   allows interlocutory appeals of orders deciding motions to transfer venue, see
   In re Rolls Royce Corp., 775 F.3d 671, 676 (5th Cir. 2014) (“[T]ransfer orders
   do not fall within the scope of [the collateral order] doctrine.”); In re
   Volkswagen of Am., Inc., 545 F.3d 304, 309, 318–19 (5th Cir. 2008) (en banc)
   (holding that mandamus is available for challenging transfer motions because
   appeals are unavailable).
          We recently noted this difference in our jurisdiction over appeals of
   arbitration rulings versus venue rulings. Noble Cap. Fund Mgmt., L.L.C. v.
   US Cap. Glob. Inv. Mgmt., L.L.C., 31 F.4th 333 (5th Cir. 2022). After
   recognizing that “no statute specifically grants appellate jurisdiction” for the
   appeal of a venue transfer ruling, we also declined to exercise pendent

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   appellate jurisdiction because doing so “is only proper in rare and unique
   circumstances where a final appealable order is ‘inextricably intertwined’
   with an unappealable order.” Id. at *3 (quoting Thornton v. Gen. Motors
   Corp., 136 F.3d 450, 453 (5th Cir. 1998) (per curiam)). That standard was
   not met in Noble. The court did not need to “consider the motion to transfer
   venue in order to address the motion to compel arbitration” and the issues
   were “not so related as to where resolving them together would promote
   judicial economy.” Id.
         The same is true here. We thus lack jurisdiction over the denial of the
   motion to transfer venue.
                                       ***
           We DISMISS for lack of jurisdiction Cypress’s appeal of the denial
   of its motion to transfer and AFFIRM on all other grounds.

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