Cooper v. Westend Capital Management, L.L.C.

832 F.3d 534, 2016 U.S. App. LEXIS 14640, 2016 WL 4204799
CourtCourt of Appeals for the Fifth Circuit
DecidedAugust 9, 2016
DocketNo. 15-31068
StatusPublished
Cited by90 cases

This text of 832 F.3d 534 (Cooper v. Westend Capital Management, L.L.C.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cooper v. Westend Capital Management, L.L.C., 832 F.3d 534, 2016 U.S. App. LEXIS 14640, 2016 WL 4204799 (5th Cir. 2016).

Opinion

CARL E. STEWART, Chief Judge:

Plaintiff-Appellant Sean Cooper challenges the district court’s orders refusing to enjoin arbitration and confirming an award in favor of WestEnd Capital Management, L.L.C. (‘WestEnd”), George Bolton Holdings, L.L.C. (“Bolton”), and Robert Ozag (together, the “WestEnd Parties”). We AFFIRM.

I.

On September 15, 2009, Bolton, Ozag, and Cooper entered into the “First [540]*540Amended and Restated Operating Agreement” (the “Operating Agreement”) for WestEnd as its members and managers. The Operating Agreement allows for the expulsion of a manager from WestEnd upon the unanimous consent of the other managers if the expulsion is for cause. Further, the Operating Agreement requires the parties to submit all disputes to binding arbitration.

On August 3, 2012, George Bolton informed Cooper that Ozag and Bolton had voted to expel him from WestEnd for, inter alia, misappropriating WestEnd’s assets, breaching various fiduciary duties, and instructing WestEnd employees to impede an SEC investigation. Bolton also informed Cooper that he was banned from WestEnd’s business premises under penalty of arrest. WestEnd then sought and was granted a temporary restraining order against Cooper in Louisiana state court (the “TRO suit”), alleging that Cooper had engaged in harassing behavior after his expulsion from WestEnd. On September 27, WestEnd commenced arbitration and requested an arbitration hearing in San Francisco. The next month, WestEnd voluntarily dismissed the TRO suit. Though Cooper objected to arbitration in San Francisco, JAMS ultimately appointed a retired California state court judge, Judge William Cahill (the “Arbitrator”), to serve as arbitrator.

Cooper filed this lawsuit in Louisiana federal district court, seeking to enjoin arbitration. In support of his injunction request, Cooper argued that the WestEnd Parties’ arbitration claims were barred by res judicata and waiver because WestEnd filed the TRO suit against Cooper. The district court refused to enjoin the arbitration proceedings, concluding that the Wes-tEnd Parties had not waived their right to arbitration and that res judicata did not apply (the “Injunction Order”).

Over the course of arbitration, Cooper discovered a relationship between George Bolton and John Bates, a JAMS arbitrator who was not involved in'the WestEnd arbitration proceedings. After discovering this relationship, Cooper requested that JAMS make additional disclosures regarding whether any JAMS mediators or arbitrators had social or business connections to any of the WestEnd Parties. In response, JAMS explained that it had already made all necessary disclosures. Ultimately, the Arbitrator ruled against Cooper and in favor of the WestEnd Parties. In the final arbitration award, the Arbitrator found Cooper liable to Bolton for $346,247.28, to Ozag for $940,140.57, and to WestEnd for $130,166.64, and also awarded attorney’s fees, interest, and costs.

The parties then returned to the district court, where the WestEnd Parties moved to confirm the arbitration award. Cooper opposed this motion and argued that the award should be vacated because JAMS failed to make necessary disclosures and because the Arbitrator exceeded his powers in making awards to Ozag and Bolton. The district court confirmed the award in favor of the WestEnd Parties. Cooper now appeals the district court’s orders refusing to enjoin arbitration and confirming the award.

II.

Cooper first challenges the order refusing to enjoin arbitration, arguing that because of the TRO suit, the WestEnd Parties’ claims were barred by res judicata and the WestEnd Parties waived their right to arbitration. We review the district court’s order denying the injunction for abuse of discretion, but the underlying legal issues are reviewed de novo. See Empacadora de Carnes de Fresnillo, S.A. de C.V. v. Curry, 476 F.3d 326, 329 (5th Cir. 2007).

[541]*541A.

The WestEnd Parties contend that we lack jurisdiction to review the Injunction Order because Cooper failed to file a timely appeal. Before turning to the merits of Cooper’s argument, “we are obligated to satisfy ourselves that appellate jurisdiction is proper.” Thornton v. Gen. Motors Corp., 136 F.3d 450, 453 (5th Cir. 1998).

The WestEnd Parties assert that the Injunction Order was immediately appealable. It was not. “Section 16 of the Federal Arbitration Act (“FAA”) ... governs appellate review of arbitration orders.” Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 309 (5th Cir. 2003). “The provisions relevant to this dispute vest the courts of appeals with jurisdiction over ‘final decision[s] with respect to an arbitration,’ while specifically denying appellate jurisdiction over nonfinal orders staying proceedings pending arbitration.” Id. (alteration in original) (internal citations omitted). Accordingly, the question here is whether the Injunction Order constituted a final decision.

“A final decision is one that ‘ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment.’” Id. (quoting Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 86, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000)). While “a dismissal is a final decision” under this definition, “[a]n arbitration order entering a stay” is not. Id. Here, the district court explicitly denied the WestEnd Parties’ motion “to the extent it seeks complete dismissal, rather than a stay” and ordered the action “STAYED pending completion of the pending JAMS arbitration and/or further order of the Court.” Because the district court stayed the proceedings instead of dismissing them, the Injunction Order was not an appealable final decision. See id.

Our decision in American Heritage Life Insurance Co. v. Orr, 294 F.3d 702 (5th Cir. 2002), on which the WestEnd Parties rely, is not to the contrary. There, we explained that “where a district court with nothing before it but whether to compel arbitration and stay state court proceedings issues an order compelling arbitration, staying the underlying state court proceedings, and closing the case, thereby effectively ending the entire matter on its merits and leaving nothing more for the district court to do but execute the judgment, appellate jurisdiction lies, as the decision is ‘final’ within the contemplation of § 16(a)(3) of the FAA.” Id. at 707. The WestEnd Parties argue that here, as in Orr, the district court referred all matters to arbitration and had nothing more to do but “execute the judgment” after the completion of arbitration. But, in Orr, the district court closed the case instead of entering a stay, a critical distinction for purposes of § 16(a)(3).. See id.

Further, in Apache Bohai, we rejected the very argument that the WestEnd Parties now make.

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Bluebook (online)
832 F.3d 534, 2016 U.S. App. LEXIS 14640, 2016 WL 4204799, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cooper-v-westend-capital-management-llc-ca5-2016.