Robertson v. Intratek Computer, Inc.

• Decision Date: 02 October 2020
• Docket Number: No. 19-50792,19-50792
• Citation: 976 F.3d 575
• Parties: James W. ROBERTSON, Sr., Plaintiff—Appellant, Robertson Technologies, Incorporated, Appellant, v. INTRATEK COMPUTER, INCORPORATED; Allan Fahami; Roger Hayes Rininger, Defendants—Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

976 F.3d 575

James W. ROBERTSON, Sr., Plaintiff—Appellant,Robertson Technologies, Incorporated, Appellant,

v.INTRATEK COMPUTER, INCORPORATED; Allan Fahami; Roger Hayes Rininger, Defendants—Appellees.

No. 19-50792

United States Court of Appeals, Fifth Circuit.

FILED October 2, 2020

Colin William Walsh, Wiley Walsh, P.C., Austin, TX, Austin Patrick Campbell, Rob Wiley, P.C., Dallas, TX, for Plaintiff-Appellants.

Heidi J. Gumienny, Senior Counsel, Laura E. De Santos, Esq., Gordon & Rees, L.L.P., Houston, TX, for Defendants-Appellees Intratek Computer, Incorporated, Allan Fahami.

Heidi J. Gumienny, Senior Counsel, Gordon & Rees, L.L.P., Houston, TX, Stephen J. Van Stempvoort, Jason M. Crow, Miller Johnson, Grand Rapids, MI, Lessie C. Gilstrap, Fritz, Byrne, Head & Gilstrap, P.L.L.C., Austin, TX, for Defendant-Appellee Roger Hayes Rininger.

Before Wiener, Engelhardt, and Oldham, Circuit Judges.

Andrew S. Oldham, Circuit Judge:

The question presented is whether a federal whistleblower statute, 41 U.S.C. § 4712, renders unenforceable an arbitration agreement between James Robertson and his former employer, Intratek. It does not. The district court therefore correctly enforced the arbitration agreement between Robertson and Intratek. But the district court erred in compelling arbitration of claims not covered by that agreement. So we affirm in part, reverse in part, and remand for further proceedings.

I.

Intratek conditioned Robertson's employment on his willingness to sign an arbitration agreement. That agreement said:

I hereby agree, pursuant to the policy, to submit to binding arbitration any employment related controversy, dispute or claim between me and the Company, its officers, agents or other employees, including but not limited to ... tort claims ... and claims for violation of any federal, state, or other government law, statute, regulation, or ordinance, except claims for workers’ compensation and unemployment insurance benefits.

I understand that by agreeing to arbitration, I am waiving the right to a trial by jury of the matters covered by the Arbitration policy.

The "Arbitration policy," in turn, covered "[a]ny controversy, dispute or claim between any employee and the Company, or its officers, agents or other employees related to employment." Robertson signed the agreement on June 17, 2011, and began working on July 11. While at Intratek, Robertson provided various information and technology services to the United States Department of Veterans Affairs ("VA").

Intratek fired Robertson in September 2015. Not long after, Robertson filed a whistleblower complaint with the Office of the Inspector General for the VA. Robertson alleged that Allan Fahami, Intratek's CEO, bribed VA officials to secure lucrative government contracts. According to the whistleblower complaint, a VA employee named Roger Rininger accepted bribes from Fahami and Intratek. An investigation followed. At the time Robertson filed suit, it remained ongoing.

On May 7, 2018, Robertson filed suit in federal district court against Intratek, Fahami, and Rininger. Robertson alleged that Intratek violated 41 U.S.C. § 4712 by firing him for reporting misconduct. Robertson further alleged that the defendants tortiously interfered with Robertson's business relationships.

Intratek and Fahami moved to stay the suit and compel arbitration of the claims against them. Rininger—who worked for the VA—obviously was not a party to the Intratek-Robertson arbitration agreement. So Rininger and Robertson "agreed to effectively stay the case as it pertained to Mr. Rininger" until the court ruled on the motion to compel arbitration.

The district court referred the matter to a magistrate judge. The magistrate judge decided that 41 U.S.C. § 4712 didn't bar arbitration of the whistleblower claim. It also found that all of Robertson's claims (including, apparently, those against Rininger) fell within the scope of the arbitration agreement. Furthermore, the magistrate judge determined that the case should be dismissed instead of stayed, as "each of Plaintiff's claims is subject to arbitration."

Robertson filed objections to the magistrate judge's recommendation on December 20, 2018. Then, on January 29, 2019, Robertson moved to amend his complaint and add his company, Robertson Technologies, Inc. ("Robertsontek"), as a plaintiff. Intratek and Fahami filed their opposition to Robertson's objections and his motion to amend his complaint. Meanwhile, Rininger and Robertson stipulated that Rininger could wait until 21 days after any ruling on the motion to compel arbitration before filing an answer to the original complaint.

The district court adopted the report and recommendation of the magistrate judge and denied Robertson's motion to amend his complaint. On the motion to amend, the district court found that "Robertson's proposal to add his alter ego, Robertson Technologies, Inc., amounts to a tactical maneuver to avert the real possibility that this action will be compelled to arbitration." As for the magistrate judge's recommendation, the court overruled all of Robertson's objections. The court also explained that "all of Robertson's claims are subject to arbitration." Thus the court granted the motion to compel arbitration and dismissed the case without prejudice. The court entered final judgment. Robertson timely appealed.

We review a grant of a motion to compel arbitration de novo , Dealer Comput. Servs., Inc. v. Old Colony Motors, Inc. , 588 F.3d 884, 886 (5th Cir. 2009), and a denial of leave to amend pleadings for abuse of discretion, Filgueira v. U.S. Bank Nat'l Ass'n , 734 F.3d 420, 422 (5th Cir. 2013).

II.

The principal question on appeal is one of first impression in our Circuit: whether Robertson can use 41 U.S.C. § 4712 to escape the arbitration agreement he signed. Statutory text says no. So does Supreme Court precedent. And the legislative history is irrelevant.

A.

In general, federal law requires federal courts to enforce arbitration agreements. In 1925, Congress enacted the Federal Arbitration Act ("FAA") "as a response to judicial hostility to arbitration." CompuCredit Corp. v. Greenwood , 565 U.S. 95, 97, 132 S.Ct. 665, 181 L.Ed.2d 586 (2012). Section 2 of the FAA provides that written arbitration agreements are generally "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. Section 2 thus obligates courts to enforce arbitration agreements according to their terms "unless the FAA's mandate has been overridden by a contrary congressional command." CompuCredit , 565 U.S. at 98, 132 S.Ct. 665 (quotation omitted).

To show a "contrary statutory command," the party opposing arbitration must show that "Congress intended to preclude a waiver of a judicial forum" for the claims at issue. Gilmer v. Interstate/Johnson Lane Corp. , 500 U.S. 20, 26, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). If "Congress intended the substantive protection afforded by a given statute to include protection against waiver of the right to a judicial forum," the Supreme Court has said "that intention will be deducible from text or legislative history." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985).¹ Throughout this inquiry, courts should keep "in mind that ‘questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration.’ " Gilmer , 500 U.S. at 26, 111 S.Ct. 1647 (quotation omitted).

The Court recently "stressed that the absence of any specific statutory discussion of arbitration or class actions is an important and telling clue that Congress has not displaced the Arbitration Act." Epic Sys. Corp. v. Lewis , ––– U.S. ––––, 138 S. Ct. 1612, 1627, 200 L.Ed.2d 889 (2018). The Court explained:

In many cases over many years, this Court has heard and rejected efforts to conjure conflicts between the Arbitration Act and other federal statutes. In fact, this Court has rejected every such effort to date (save one temporary exception since overruled), with statutes ranging from the Sherman and Clayton Acts to the Age Discrimination in Employment Act, the Credit Repair Organizations Act, the Securities Act of 1933, the Securities Exchange Act of 1934, and the Racketeer Influenced and Corrupt Organizations Act.

Ibid. (collecting cases). Thus, the party opposing arbitration—and urging a congressional command contrary to the FAA—faces a high bar.

Robertson cannot hurdle it with 41 U.S.C. § 4712. We start, as always, with the statutory text. See Whitlock v. Lowe (In re DeBerry) , 945 F.3d 943, 947 (5th Cir. 2019). Section 4712 requires a complainant like Robertson to exhaust administrative remedies before filing suit. See 41 U.S.C. § 4712(b), (c)(1). And § 4712 further specifies that administrative remedies are exhausted when the agency acts or fails to act for specified time periods:

(2) Exhaustion of remedies. —If the head of an executive agency issues an order denying relief under [ (c) ](1) or has not issued an order within 210 days after the submission of a complaint under subsection (b), or in the case of an extension of time under paragraph (b)(2)(B), not later than 30 days after the expiration of the extension of time, and there is no showing that such delay is due to the bad faith of the complainant, the complainant shall be deemed to have exhausted all administrative remedies with respect to the complaint, and the complainant may bring a de novo action at law or equity against the contractor or grantee to seek compensatory damages and other relief available under this section in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy. Such an action shall, at the request of either party to the action, be tried by the court with a jury. An action under this paragraph may not be brought more than two years after the date

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