Int'l Bancshares Corp. v. Ochoa
Int'l Bancshares Corp. v. Ochoa
Opinion of the Court
Plaintiff International Bancshares Corporation ("IBC") brings this motion to compel arbitration, challenging the conduct of arbitration proceedings between itself and one of its employees, Defendant Ochoa ("Ochoa"). (Dkt. 1.) IBC asserts that the arbitration is improperly proceeding before a single arbitrator, despite an arbitration agreement requiring a panel of three arbitrators.
Ochoa initiated the arbitration underlying this action in 2014. (Dkt. 2 at 3.) Ochoa, like other IBC employees, is subject to IBC's "Open Door Policy for Dispute Resolution" (the "Arbitration Policy"), which requires employment claims to be arbitrated. (Id. ) Under the Arbitration Policy, disputes involving $100,000 or less must be conducted before a single arbitrator, while disputes in excess of $100,000 must be conducted before a panel of three arbitrators. (Dkt. 1, Attach. 4 at 7.) Ochoa brought a collective action under the Arbitration Policy against IBC, alleging that IBC had failed to pay her and her colleagues overtime wages in violation of the Fair Labor Standards Act. (Id. ) Ochoa's initial "Submission of Dispute Resolution" claimed damages of "$50,000+ (exclusive of opt-ins)." (Dkt. 1, Attach. 3.) Thus, because the amount in controversy was less than $100,000, the American Arbitration Association ("AAA") named a single arbitrator, Thomas Cipolla. (Dkt. 2 at 3.)
After nearly a year of arbitration (as well as litigation before this Court),
IBC then filed the pending motion to compel arbitration. (Dkt. 1.) IBC asks the Court to hold that three arbitrators are required and to appoint two additional arbitrators. Ochoa opposes this motion, making three arguments: (1) the arbitration is properly held before a single arbitrator; (2) IBC has waived its right to demand a *878three-member panel; and (3) the Court lacks jurisdiction to intervene at this stage of the arbitration.
Having carefully considered the papers submitted, the Court finds that it lacks jurisdiction to intervene at this stage of the arbitration because there has been no "mechanical breakdown" in the arbitration process. The Court therefore need not reach Ochoa's first or second argument, and IBC's motion to compel arbitration is denied.
Discussion
The Federal Arbitration Act ("FAA") grants federal courts very limited jurisdiction to intervene in an arbitration before an award is issued. Gulf Guar. Life Ins. Co. v. Conn. Gen. Life Ins. Co. ,
Here, IBC does not dispute that there is a binding arbitration agreement. Nor does it argue that the agreement does not provide a method for selecting arbitrators or that a party to the agreement has failed to follow that method. Rather, IBC's claims rest on the third ground for jurisdiction-a lapse in naming arbitrators. (Dkt. 1 at 4.) Specifically, IBC argues that because two additional arbitrators should have been appointed but were not, there has been a "lapse" in naming arbitrators, and the Court has jurisdiction to intervene to complete the three-member panel. (Id. )
IBC relies heavily on BP Exploration to support its position. In BP Exploration , the Fifth Circuit held that an "impenetrable deadlock over the appointment of arbitrators" caused a "lapse" that gave the court jurisdiction to intervene.
But IBC's reliance on this case is misplaced. In BP Exploration , no arbitrators could be appointed and arbitration never got underway. Here, an arbitrator has *879been appointed, and arbitration has been proceeding before him for nearly three years. (See Dkt. 1 at 4; Dkt. 2 at 3.) There has been no "mechanical breakdown" or "impenetrable deadlock" preventing the parties from moving forward with the arbitration.
IBC is not attempting to cure an impasse delaying the arbitration, but is instead challenging the process used to select arbitrators. That is, IBC disputes whether the arbitration agreement is being enforced properly, not whether the agreement can be enforced at all. This is a procedural challenge, and "[t]he law presumes that 'procedural questions' are for an arbitrator to decide." Adam Techs. Int'l S.A. de C.V. v. Sutherland Glob. Servs., Inc. ,
Conclusion
For the foregoing reasons, Plaintiff's motion to compel arbitration (Dkt. 1) is hereby DENIED for lack of jurisdiction. This case is hereby DISMISSED with PREJUDICE. The Clerk of Court is DIRECTED to TERMINATE this case.
IT IS SO ORDERED.
See International Bancshares Corporation v. Ochoa , Civil Action No. 5:15-CV-172. In that case, IBC sought to vacate Cipolla's grant of certification of Ochoa's collective action, arguing that the arbitrator had exceeded his authority. Judge Kazen found that because the Arbitration Policy allowed for collective action claims an interlocutory appeal of the grant of certification was barred and IBC's motion was therefore denied.
Reference
- Full Case Name
- INTERNATIONAL BANCSHARES CORPORATION v. Paola OCHOA
- Cited By
- 2 cases
- Status
- Published