Klein v. Nabors Drilling USA L.P.

• Decision Date: 26 February 2013
• Docket Number: No. 11–30824.,11–30824.
• Parties: Gary W. KLEIN, Plaintiff–Appellee v. NABORS DRILLING USA L.P., Defendant–Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

710 F.3d 234

Gary W. KLEIN, Plaintiff–Appellee

v.NABORS DRILLING USA L.P., Defendant–Appellant.

No. 11–30824.

United States Court of Appeals,Fifth Circuit.

Feb. 26, 2013.

Daniel E. Broussard, Jr., Broussard, Halcomb & Vizzier, Alexandria, LA, for Plaintiff–Appellee.

Levon G. Hovnatanian, James Michael Cleary, Jr., Martin, Disiere, Jefferson & Wisdom, L.L.P., Houston, TX, for Defendant–Appellant.

Appeal from the United States District Court for the Western District of Louisiana.

Before JONES, GARZA, and PRADO, Circuit Judges.

EDWARD C. PRADO, Circuit Judge:

Nabors Drilling USA L.P. (“Nabors”) appeals the district court's denial of its motion to compel the arbitration of Gary Klein's age discrimination claim. Because we find that Klein agreed to conclusively resolve this dispute through arbitration, we REVERSE the district court's order and REMAND for entry of an order compelling arbitration.

Background

In 2008, Klein began working for Nabors as a floor hand on a drilling rig. As a condition of employment, Klein was asked to sign an Employee Acknowledgment Form (the “Acknowledgment”), indicating his agreement to resolve disputes through the Nabors Dispute Resolution Program (the “Program”). The Acknowledgment provided that the Program was not a contract for employment and that nothing in the Program was “intended to violate or restrict any rights of employees guaranteed by state or federal laws.” It also provided that Klein would be required to adhere to the Program and its requirement for submission of disputes to a process that could involve “mediation and/or arbitration.” Klein signed the Acknowledgment.

Nabors eventually terminated Klein's employment. Believing he was fired because of his age, Klein sued Nabors in the Western District of Louisiana, alleging that Nabors had violated the Age Discrimination in Employment Act and the Louisiana Employment Discrimination Law. Relying on Klein's agreement to adhere to the Program, Nabors moved to compel arbitration and to stay the proceedings.

The district court found, however, that neither the Program nor the Acknowledgment “contain[ed] an arbitration agreement or any other language indicating the parties were agreeing, ultimately and exclusively, to arbitrate their disputes.” Instead, the court recognized that the Acknowledgment explicitly stated that the Program was not intended to violate or restrict any of Klein's rights, which the court read to include the right to a jury trial. Given this conflicting language, the court declined to find that a party could waive the right to a jury trial through a document that explicitly stated that it was not restricting any of that party's legal rights.

The court also noted that the Acknowledgment included permissive rather than mandatory language by stating that Klein would be required to submit his disputes “to a process that may include mediation and/or arbitration.” The court looked to the Program for clarification of the permissive language but found no evidence of an arbitration agreement. Because the Acknowledgment contained both permissive language as to arbitration and language indicating that the Program was not intended to restrict Klein's rights, the court found “that the most faithful interpretation of the documents is that they create a Dispute Resolution Program which explicitly provides for pre-dispute mediation and/or arbitration ... but without excluding the options that already existed, including resolution through judicial proceedings.” Because the Program did not prevent Klein from seeking a judicial remedy, the court denied the motion to compel. Nabors timely appealed.

Discussion

This court reviews de novo a district court's ruling on a motion to compel arbitration. Garrett v. Circuit City Stores, Inc., 449 F.3d 672, 674 (5th Cir.2006). Our first task is to determine whether the parties agreed to arbitrate the dispute. Jolley v. Welch, 904 F.2d 988, 994 (5th Cir.1990). Two questions guide this analysis: “(1) is there a valid agreement to arbitrate the claims and (2) does the dispute in question fall within the scope of that arbitration agreement”? Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir.2008). Because “arbitration is simply a matter of contract between the parties,” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995), the strong federal policy favoring arbitration does not apply to the initial determination of whether there is a valid agreement to arbitrate, Will–Drill Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214 (5th Cir.2003). That inquiry is governed by ordinary state-law contract principles. Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir.2002). It is only in step two of the analysis, determining the scope of a valid arbitration agreement, that we apply the federal policy and resolve ambiguities in favor of arbitration. Id. at 1073–74. Thus, the question we address affects our method of interpretation.

This case blurs the line between the two steps of our general framework. For example, the initial question of whether there is a valid agreement to arbitrate usually concerns matters of contract formation. See, e.g., Sherer, 548 F.3d at 381 (addressing whether a valid arbitration agreement existed between a party to the agreement and a nonsignatory). Here, Klein willingly signed the agreement and is undoubtedly bound by its terms.¹ But this case also does not turn on whether this type of dispute is covered by the agreement. Klein's age discrimination claim fits squarely within the Program's definition of “dispute.” Instead, the question presented here is whether the Program, which Klein agreed to adhere to, requires him to resolve his dispute through arbitration.

Though this question may not fall naturally into either step, the nature of the inquiry indicates that it is more appropriately analyzed under step one. “Arbitration is strictly a matter of consent.” Granite Rock Co. v. Int'l Bhd. of Teamsters, ––– U.S. ––––, 130 S.Ct. 2847, 2857, 177 L.Ed.2d 567 (2010) (internal quotation marks omitted). It is thus a method “to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration.” First Options of Chi., Inc., 514 U.S. at 943, 115 S.Ct. 1920. An agreement that allows for disputes to be resolved through either an arbitral or a judicial forum can hardly be considered a “valid agreement to arbitrate” because the parties would not have agreed to submit any dispute to arbitration—they would have simply agreed that they had the option available. Thus, our analysis of whether the Program requires arbitration is guided by Louisiana contract principles.²

Under Louisiana law, “[i]nterpretation of a contract is the determination of the common intent of the parties.” La. Civ.Code Ann. art. 2045; see also Prejean v. Guillory, 38 So.3d 274, 279 (La.2010). To determine intent, courts must first look to a contract's plain language. See Prejean, 38 So.3d at 279 (“The reasonable intention of the parties to a contract is to be sought by examining the words of the contract itself, and not assumed.”). The words of a contract must be given their generally prevailing meaning, La. Civ.Code Ann. art. 2047, and if they are susceptible to different meanings, they “must be interpreted as having the meaning that best conforms to the object of the contract,” id. art. 2048; see also Amend v. McCabe, 664 So.2d 1183, 1187 (La.1995). Additionally, each provision must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole. La. Civ.Code Ann. art. 2050. When a contract's terms are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. Id. art. 2046. But “[i]n case of doubt that cannot be otherwise resolved, a provision in a contract must be interpreted against the party who furnished its text.” Id. art. 2056.

Here, the agreement includes both the Acknowledgment and the Program. The Acknowledgment provides that Klein received a copy of the Program and understood that it was not a contract of employment. The Acknowledgment also explains that nothing in the Program is intended to violate or restrict any rights guaranteed to Klein by state or federal law. By signing the Acknowledgment, Klein agreed to adhere to the Program “and its requirement for submission of disputes to a process that may include mediation and/or arbitration.”

The Program itself contains two parts. The first part addresses administrative matters, such as the Program's intended purpose and its scope, while the second part details the Nabors Dispute Resolution Rules (the “Rules”). According to the first part, Nabors designed the Program “to provide a means for the quick, fair, accessible,...