USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 1 of 20

PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 22-1480

LASTEPHEN ROGERS, Individually and for others similarly situated,

Plaintiff - Appellant,

v.

TUG HILL OPERATING, LLC; RUSCO OPERATING, LLC,

Defendants - Appellees.

Appeal from the United States District Court for the Northern District of West Virginia, at Wheeling. John Preston Bailey, District Judge. (5:21-cv-00199-JPB)

Argued: May 3, 2023 Decided: August 7, 2023

Before NIEMEYER, KING, and HARRIS, Circuit Judges.

Reversed and remanded by published opinion. Judge Niemeyer wrote the opinion, in which Judge King and Judge Harris joined.

ARGUED: Richard Jennings Burch, BRUCKNER BURCH PLLC, Houston, Texas, for Appellant. John Barrick Bollman, MCDERMOTT WILL & EMERY, LLP, Chicago, Illinois; Christian Charles Antkowiak, BUCHANAN INGERSOLL & ROONEY PC, Pittsburgh, Pennsylvania, for Appellees. ON BRIEF: Anthony J. Majestro, POWELL & MAJESTRO PLLC, Charleston, West Virginia, for Appellant. Erin J. McLaughlin, BUCHANAN INGERSOLL & ROONEY PC, Pittsburgh, Pennsylvania, for Appellee Tug Hill Operating, LLC. Rachel B. Cowen, MCDERMOTT WILL & EMERY, LLP, Chicago, Illinois, for Appellee RUSCO Operating, LLC. USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 2 of 20

NIEMEYER, Circuit Judge:

Lastephen Rogers worked for Tug Hill Operating, LLC, a Texas-based oil and

natural gas exploration and production company, for approximately a year and a half at rig

sites in West Virginia. He commenced this action against Tug Hill under the Fair Labor

Standards Act (“FLSA”), alleging that while Tug Hill formally classified him as an

independent contractor, he actually qualified as an employee for purposes of the FLSA

based on the degree of control that Tug Hill exercised over his work. He therefore claimed

that Tug Hill was required to pay him overtime for those weeks in which he worked more

than 40 hours.

Tug Hill filed a motion to dismiss Rogers’ action on the ground that Rogers was

contractually required to arbitrate his claim against it. The arbitration clause, however,

was not in any contract between Rogers and Tug Hill, but rather in a contract between

Rogers and RigUp, Inc., 1 a third-party company that had helped Rogers find the position

with Tug Hill. RigUp was in the business of connecting skilled workers with oil and gas

companies for a fee.

In addition, RigUp itself filed a motion to intervene in order to seek the action’s

dismissal in favor of arbitration, despite language in RigUp’s contract with Rogers that the

arbitration specified in their contract related only to disputes between Rogers and RigUp

and that “RigUp will not be a party to disputes . . . between [Rogers] and [Tug Hill].”

1 RigUp, Inc., changed its name to Workrise Technologies, Inc., in 2021. That company, as well as its wholly owned subsidiary, RUSCO Operating, LLC, are referred to herein as “RigUp.” 2 USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 3 of 20

The district court granted both motions — allowing RigUp to intervene as a

defendant and granting Tug Hill’s motion to dismiss Rogers’ action and compel arbitration.

For the reasons that follow, we reverse both rulings and remand for further proceedings

between Rogers and Tug Hill.

I

Rogers had experience working as a foreman at oil rig sites — a position referred to

in the oil and gas industry as a “company man” — and he sought to find work with oil and

gas companies through RigUp, a company in the business of connecting skilled workers in

the industry with companies looking for such workers. To engage RigUp’s services,

Rogers executed an agreement with RigUp in January 2019 that governed their

relationship, entitled “Agreement Between Independent Professional & RigUp For Use Of

RigUp Service” (hereafter, “the Agreement”). The Agreement stated that it was “a binding

agreement between [Rogers], an independent professional (‘you’) and RUSCO Operating,

LLC, a wholly owned subsidiary of RigUp, Inc. . . . governing [Rogers’] use of the Service

(as defined in the RigUp Terms of Service . . .) to provide freelance services to third party

companies (each a ‘Company’ or collectively the ‘Companies’).”

In signing the Agreement, Rogers represented to RigUp that he was “an independent

professional and entrepreneur” who wanted to “be introduced to new clients by RigUp . . .

to provide [them] services . . . as an independent professional, and not as an employee.”

The Agreement explained to Rogers, however, that after RigUp helped match Rogers with

a company, he and that company would “solely negotiate and determine . . . when and

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where [he would] perform [p]rojects” and that “[a]ny interactions or disputes between

[him] and a Company [would be] solely between [him] and that Company.” The

Agreement provided further that “RigUp . . . shall have no liability, obligation or

responsibility for any interaction between you and any Company.” And it expressly stated

that “RIGUP WILL NOT BE A PARTY TO DISPUTES OR NEGOTIATIONS OF

DISPUTES, BETWEEN YOU AND COMPANIES.” The Agreement did provide,

however, that Rogers would “indemnify and hold the RigUp Parties and Company

harmless from and against all losses, damages, liabilities, . . . actions, [and] judgments . . .

arising out of or resulting from” several occurrences, one of which was “a determination

by a court or agency that [Rogers] [was] an employee of RigUp or a Company.”

The Agreement incorporated RigUp’s Terms of Service, and in a paragraph entitled

“Dispute Resolution,” it also specifically incorporated “Section 24 of the Terms.” That

section contained an arbitration provision, which stated:

In the interest of resolving disputes between you and RigUp in the most expedient and cost effective manner, you and RigUp agree that every dispute arising in connection with these Terms will be resolved by binding arbitration. . . . This agreement to arbitrate disputes includes all claims arising out of or relating to any aspect of these Terms, whether based in contract, tort, statute, fraud, misrepresentation, or any other legal theory, and regardless of whether a claim arises during or after the termination of these Terms. YOU UNDERSTAND AND AGREE THAT, BY ENTERING INTO THESE TERMS, YOU AND RIGUP ARE EACH WAIVING THE RIGHT TO A TRIAL BY JURY OR TO PARTICIPATE IN A CLASS ACTION.

(Emphasis added). Section 24 also provided that “[a]ny arbitration between you and RigUp

will be settled under the Federal Arbitration Act” and “administered by the [American

Arbitration Association]” and that “[t]he arbitrator has exclusive authority to resolve any

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dispute relating to the interpretation, applicability, or enforceability of this binding

arbitration agreement.” (Emphasis added).

In January 2019, pursuant to RigUp’s matchmaking, Rogers began work as a

“company man” at a rig site operated by Tug Hill in West Virginia. Tug Hill classified

Rogers as an independent contractor and assigned him to “oversee the rig site and make

sure the operations were being performed in accordance with Tug Hill’s procedures and

instructions.” Rogers continued work for Tug Hill through July 2020. According to

Rogers, during that year and a half, he worked exclusively for Tug Hill and was paid a

daily rate for his work.

In 2021, Rogers commenced this action against Tug Hill, alleging that it had

violated the FLSA by failing to pay him any overtime even though he “typically worked

more than 80 hours a week.” He alleged that he had been “misclassified as an independent

contractor by Tug Hill” when he actually performed his work as an employee, based on the

degree of control that “Tug Hill exercised . . . over all aspects of his job.” He brought the

action on behalf of himself and all other similarly situated workers, a class he defined as

“[a]ll company men employed by or performing work on behalf of Tug Hill classified as

independent contractors and paid a day-rate without overtime during the past three years.”

RigUp filed a motion to intervene in the action “as of right” pursuant to Federal

Rule of Civil Procedure 24(a)(2), or “by permission” pursuant to Rule 24(b)(1)(B), arguing

that it was “in the business of facilitating relationships between oil-and-gas operators and

independent contractors who contract to provide freelance services for those operators”

and that it had facilitated such a relationship between Tug Hill and Rogers. RigUp argued

5 USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 6 of 20

that intervention was warranted so that it could “represent . . . [its] unique interest in

preserving its business model by protecting the independent-contractor status of the

workers it serves.” It also alleged that if Rogers’ action succeeded, it might have some

liability to Tug Hill “as a potential indemnitor” under a contract it had with Tug Hill.

RigUp indicated that if its motion to intervene were granted, it would thereafter file a

motion to compel arbitration and dismiss or stay the action.

After RigUp filed its motion to intervene, Tug Hill filed a motion to dismiss Rogers’

action under Federal Rules of Civil Procedure 12(b)(1), 12(b)(6), and 12(b)(7), contending

that “this action should be dismissed and [Rogers] should be compelled to individual

arbitration pursuant to the arbitration clause to which he is contractually bound” in his

contract with RigUp. Tug Hill claimed that in the Agreement between Rogers and RigUp,

Rogers had “entered into a valid and enforceable” agreement to arbitrate “every dispute

arising in connection with these Terms,” including “all claims arising out of or relating to

any aspect of these Terms,” and it maintained that this language covered Rogers’ FLSA

claim against it. Tug Hill asserted that the fact that it was “not a signatory to the . . .

Agreement” between Rogers and RigUp was “a red herring” because the arbitration clause

delegated to the arbitrator the “exclusive authority” to decide questions of arbitrability. It

argued alternatively that it could enforce the arbitration agreement either “as a third-party

beneficiary . . . or pursuant to estoppel principles.”

In response to RigUp’s motion to intervene, Rogers pointed to specific language in

his contract with RigUp and argued that “RigUp contractually disclaimed any right to be

[a] party to . . . disputes” between workers and operators and that his FLSA suit against

6 USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 7 of 20

Tug Hill was such a dispute. And with respect to Tug Hill’s motion to dismiss, Rogers

argued (1) that he never “agree[d] to arbitrate his claims against Tug Hill”; (2) that the

court, not an arbitrator, “decides existence, validity, and enforceability of arbitration

agreements”; and (3) that “Tug Hill cannot compel arbitration under the agreement” based

on either third-party beneficiary or estoppel principles.

In a memorandum opinion and order dated April 12, 2022, the district court granted

RigUp’s motion to intervene, concluding that RigUp was “entitled to intervene in this

matter by right” under Rule 24(a) because it had “significantly protectible” interests in the

litigation that “could potentially [be] impair[ed]” absent intervention. Rogers v. Tug Hill

Operating, LLC,

, 417, 421 (N.D. W. Va. 2022). It identified

(1) RigUp’s “purely economic interest[]” in its “business model,” (2) RigUp’s interest in

“seeking to enforce [its] arbitration agreement,” and (3) RigUp’s “potential liability” to

Tug Hill under an indemnity provision in the contract between RigUp and Tug Hill.

at

417–19, 421. The court concluded alternatively that RigUp “would be entitled to

permissive intervention” under Rule 24(b).

.

The court also granted Tug Hill’s motion to dismiss and compel arbitration,

concluding that the language in Rogers’ arbitration agreement with RigUp — providing

that “all claims arising out of or relating to any aspect of these Terms [of Service]” were

subject to arbitration — was broad enough to cover Rogers’ FLSA claim against Tug Hill.

The district court further concluded that “the fact [that] defendant Tug Hill [was] not a

signatory” to the RigUp Agreement was “of no moment” because any question of

arbitrability had to be decided by the arbitrator based on the “delegation clause” in the

7 USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 8 of 20

arbitration agreement. Rogers, 598 F. Supp. 3d at 425. Alternatively, the court concluded

that Tug Hill was “a third-party beneficiary” that was “permitted to enforce” Rogers’

arbitration agreement with RigUp. 2 Id. at 427.

From the district court’s judgment, Rogers filed this appeal, challenging both of the

district court’s rulings.

II

With respect to the district court’s dismissal order, Rogers contends that he never

agreed to arbitrate anything with Tug Hill and that, as a result, the district court erred in

dismissing his action and ordering him to arbitrate with Tug Hill on the ground that his

arbitration agreement with RigUp contained a delegation clause authorizing the arbitrator

to determine arbitrability. It cannot be, he maintains, that a person like him who has

“execut[ed] an arbitration agreement containing a delegation clause” with one party

(RigUp) is required to arbitrate whether he must arbitrate with a different party (Tug Hill).

In defending the district court’s ruling, Tug Hill contends that Rogers’ contract with

RigUp contained “a valid arbitration agreement”; that Rogers’ FLSA claim against Tug

Hill falls within the scope of that arbitration agreement because Rogers agreed to serve “as

an independent professional, and not as an employee”; and that the arbitration agreement

contained a delegation clause giving the arbitrator “exclusive authority” over arbitrability

2 Because the district court concluded that Tug Hill was a third-party beneficiary, it did not address Tug Hill’s alternative argument that it was entitled to enforce the RigUp arbitration agreement under estoppel principles. See Rogers, 598 F. Supp. 3d at 427 n.7. Tug Hill has not raised estoppel on appeal, and the issue therefore is not before us. 8 USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 9 of 20

issues, a category that should be understood to include whether the arbitration agreement

is enforceable by a third party. In other words, according to Tug Hill, because Rogers and

RigUp delegated “threshold questions to the arbitrator (not a court),” the arbitrator is the

one “who must decide whether Rogers must arbitrate his [FLSA] claim[] against Tug Hill.”

The parties’ positions thus present us with the issue of whether a court or an

arbitrator must decide whether Tug Hill can enforce the arbitration clause in the contract

between Rogers and RigUp given that the arbitration clause has a delegation provision.

As a foundational principle, the Federal Arbitration Act (“FAA”) provides for the

enforcement of agreements to arbitrate when they are created by contract, and such

contracts must be treated like any other contract under applicable state law. Thus, as

relevant to the issue presented in this case, the Supreme Court has held that “[b]ecause

‘traditional principles’ of state law allow a contract to be enforced by or against nonparties

to the contract through ‘assumption, piercing the corporate veil, alter ego, incorporation by

reference, third-party beneficiary theories, waiver and estoppel,’” “those who are not

parties to a written arbitration agreement” may be eligible for relief under the FAA. Arthur

Andersen LLP v. Carlisle,

(2009) (quoting 21 Richard A. Lord,

Williston on Contracts § 57:19, at 183 (4th ed. 2001)). What Arthur Andersen also makes

clear, however, is that it is a court, not an arbitrator, that must initially decide whether a

nonparty to an arbitration agreement is entitled to enforce it. See id. at 630–32. This

emanates from the requirements of the FAA.

The FAA grounds arbitration obligations in contract law, as § 2 provides:

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A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract . . . .

. And consistent with that proposition, § 4 provides that a party “aggrieved”

by the failure “of another to arbitrate under a written agreement for arbitration may

petition” a federal court “for an order directing that such arbitration proceed in the manner

provided for in such agreement.” Id. § 4 (emphasis added). That section adds that the

court “shall” order arbitration “upon being satisfied that the making of the agreement for

arbitration or the failure to comply therewith is not in issue.” Id. (emphasis added); see

also id. § 3 (directing a court to stay a civil action if the claim is “referable to arbitration

under an agreement in writing for such arbitration” (emphasis added)).

The Supreme Court has recognized explicitly and repeatedly that arbitration

obligations are grounded in contract law, including by emphasizing recently that under the

FAA, “arbitration agreements [are] as enforceable as other contracts, but not more so.”

Morgan v. Sundance, Inc.,

(2022) (cleaned up); see

(explaining

that the Court’s prior recognition of a federal “policy favoring arbitration” was “merely an

acknowledgment of the FAA’s commitment to overrule the judiciary’s longstanding

refusal to enforce agreements to arbitrate” and that “the federal policy is about treating

arbitration contracts like all others, not about fostering arbitration” (cleaned up)).

Moreover, it is well established that when a challenge to the existence of a contractual

obligation is properly raised, “the court determines whether a valid arbitration agreement

exists” “before referring a dispute to an arbitrator.” Henry Schein, Inc. v. Archer & White

10 USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 11 of 20

Sales, Inc.,

(2019) (emphasis added); see also Rent-A-Center, West,

Inc. v. Jackson,

(2010) (“If a party challenges the validity under § 2 of the

precise agreement to arbitrate at issue, the federal court must consider the challenge before

ordering compliance with that agreement under § 4” (emphasis added)).

Thus, as a general matter, the relevant threshold question that a court must address

when being asked to compel arbitration is whether “an arbitration agreement exists between

the parties.” Hightower v. GMRI, Inc.,

(4th Cir. 2001) (emphasis

added). But, as noted, there are circumstances in which a nonparty to a contract may

nonetheless be entitled to enforce it under standard contract principles, such as “through

assumption, piercing the corporate veil, alter ego, incorporation by reference, third-party

beneficiary theories, waiver and estoppel.” Arthur Andersen,

(cleaned up).

Therefore, when an objection is properly raised that the party seeking to enforce an

arbitration agreement is not itself a party to that agreement, the district court must

determine — as a condition precedent to the entry of any § 3 stay or § 4 order compelling

arbitration — whether that party is entitled to enforce the arbitration agreement under state

contract law. Otherwise, a party with no contractual right to compel arbitration might be

permitted to do just that. And nothing in the FAA, or the Supreme Court’s jurisprudence

interpreting it, allows such a counterintuitive result — a result that would undermine the

contractual foundation of the order compelling arbitration.

This principle finds direct support in the Supreme Court’s decision in Arthur

Andersen. In that case, after an accounting firm and others were sued by a group of former

clients, those defendants “moved to stay the action, invoking § 3 of the FAA and arguing

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that the principles of equitable estoppel demanded that [the plaintiffs] arbitrate their

claims” based on an arbitration agreement the plaintiffs had entered into with another

defendant. Arthur Andersen, 556 U.S. at 626–27. While the Sixth Circuit had determined

“that those who are not parties to a written arbitration agreement are categorically

ineligible for relief” under the FAA, the Supreme Court concluded that that holding was

incorrect. Id. at 629, 631 (emphasis added). It reasoned that while § 2 “creates substantive

federal law regarding the enforceability of arbitration agreements, requiring courts to place

such agreements upon the same footing as other contracts,” neither it nor § 3 “purports to

alter background principles of state contract law regarding the scope of agreements” —

including the questions of “who is bound by them” and who can enforce them. Id. at 630

(cleaned up). Thus, “a litigant who was not a party to the relevant arbitration agreement

may invoke § 3” to obtain a stay from the district court “if the relevant state contract law

allows him to enforce the agreement.” Id. at 632 (emphasis added). The Court explained

that this was so because “[i]f a written arbitration provision is made enforceable against (or

for the benefit of) a third party under state contract law, [§3’s] terms are fulfilled,” such

that the court would then be “require[d]” to grant a § 3 stay to the third party. Id. at 631–

32 (emphasis added).

Arthur Andersen thus stands for the principle that if state contract law allows a

person who was not a party to an arbitration agreement to nonetheless enforce it, then that

nonparty is entitled to invoke the FAA’s enforcement mechanisms in federal court. See

556 U.S. at 631–32; see also GE Energy Power Conversion France SAS, Corp. v.

Outokumpu Stainless USA, LLC,

(2020). And the necessary

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corollary to this principle is that when a nonparty to an arbitration agreement seeks to

enforce it with a stay under § 3 or an order to compel arbitration under § 4, it is the court

that must first determine that “the relevant state contract law allows [that nonparty] to

enforce the agreement” so as to assure itself that the FAA’s “terms are fulfilled.” Arthur

Andersen, 556 U.S. at 631–32; see also GE Energy Power,

(recognizing

that “Chapter 1 of the [FAA] permits courts to apply state-law doctrines related to the

enforcement of arbitration agreements,” including “doctrines that authorize the

enforcement of a contract by a nonsignatory” (emphasis added)).

In this case, Tug Hill nonetheless contends that under the terms of the arbitration

clause — particularly its delegation provision — the arbitrator, not the court, must be the

one to decide whether Tug Hill can enforce the arbitration clause, even though it is in a

contract between Rogers and RigUp. It notes that under the language of the delegation

provision, “[t]he arbitrator has exclusive authority to resolve any dispute relating to the

interpretation, applicability, or enforceability” of the arbitration agreement. In making that

argument, however, Tug Hill fails to address the contractual source of the arbitrator’s

authority. When the delegation provision is read in the context of the arbitration clause as

a whole, it is plain that Rogers agreed to arbitrate issues — including threshold issues —

arising between him and RigUp. But he did not enter into any agreement that allows an

arbitrator to decide whether a third party like Tug Hill has rights under the arbitration

agreement. See Rent-A-Center, 561 U.S. at 68–70 (recognizing that a delegation provision

is simply “an agreement to arbitrate threshold issues concerning the arbitration agreement”

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and that “the FAA operates on this additional[,] [antecedent] agreement just as it does on

any other”).

Of course, the fact that Tug Hill was not itself a party to the arbitration agreement

does not categorically mean that Tug Hill is ineligible to obtain relief from the district court

under the FAA. See Arthur Andersen, 556 U.S. at 629–32. But it does mean that, as a

precondition to granting Tug Hill the right to enforce any portion of an arbitration clause

to which it was not a party, the district court was required, when that right was challenged,

to determine whether “the relevant state contract law allow[ed] [Tug Hill] to enforce [that]

agreement,” so as to ensure that the FAA’s terms “are fulfilled.”

at 631–32; cf. New

Prime Inc. v. Oliveira,

, 536–38 (2019) (holding that even “[w]hen a contract

delegates questions of arbitrability to an arbitrator,” “a court should decide for itself

whether [the FAA’s] ‘contracts of employment’ exclusion applies before ordering

arbitration” because “to invoke its statutory powers under §§ 3 and 4 to stay litigation and

compel arbitration according to a contract’s terms, a court must first” resolve that

“necessarily antecedent statutory inquiry”).

Accordingly, we conclude that the district court erred in ruling that it could use its

statutory powers under the FAA to grant Tug Hill’s motion to compel arbitration without

first resolving whether, as a matter of state contract law, Tug Hill was authorized to enforce

the arbitration agreement between RigUp and Rogers. Accord Newman v. Plains All Am.

Pipeline, L.P.,

, 398–99 (5th Cir. 2022) (holding that it is for the court, not an

arbitrator, to decide whether a litigant can enforce an arbitration agreement between two

other parties); see also CCC Intelligent Solutions Inc. v. Tractable Inc.,

, 723–

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24 (7th Cir. 2022) (affirming the district court’s application of “the rule that a judge must

decide whether the parties have agreed to arbitrate” and concluding that an exception to

the “dominant rule” that generally “C [cannot] claim rights under a contract that has only

A and B as parties” was not applicable). But see, e.g., Becker v. Delek US Energy, Inc.,

, 355–56 (6th Cir. 2022) (holding that the question of whether a third party could

enforce a delegation provision in an arbitration clause was for the arbitrator, not the court).

III

While the district court simply allowed Tug Hill to enforce the RigUp-Rogers

arbitration agreement without determining Tug Hill’s contractual authority to do so, it also

concluded alternatively that it would apply West Virginia law and find that the RigUp

Agreement “demonstrates an intent to make . . . Tug Hill a third-party beneficiary” by

“provid[ing] specific — and significant — benefits to . . . Tug Hill.” Rogers, 598 F. Supp.

3d at 427. Based on this, the court concluded that “Tug Hill should be permitted to enforce

[Rogers’] agreement” to arbitrate “every dispute” arising in connection with the

Agreement. Id. The court also explained that while it had found that West Virginia law

governed, it would reach the same result under Texas law. Id. at 427 n.5.

While the parties dispute whether West Virginia or Texas law applies, they agree

that with respect to the third-party beneficiary issue, the law in the two states does not

materially differ. Consequently, we need not decide which law applies in resolving

whether Tug Hill may enforce the RigUp arbitration agreement as a third-party beneficiary.

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Both Texas and West Virginia apply a presumption against finding that a contract

confers third-party beneficiary status. See First Bank v. Brumitt,

(Tex.

2017) (“We must begin with the presumption that the parties contracted solely for

themselves, and only a clear expression of the intent to create a third-party beneficiary can

overcome that presumption” (cleaned up)); Eastern Steel Constructors, Inc. v. City of

Salem,

(W. Va. 2001) (“In the absence of a provision in a contract

specifically stating that such contract shall inure to the benefit of a third person, there is a

presumption that the contracting parties did not so intend and in order to overcome such

presumption the implication from the contract as a whole and the surrounding

circumstances must be so strong as to be tantamount to an express declaration” (quoting

Syl. pt. 2, Ison v. Daniel Crisp Corp.,

, 553–54 (W. Va. 1961))). And both

Texas and West Virginia law similarly include a requirement that the parties must have

intended to secure a benefit to a third party. Under West Virginia law, “[a] third-party

beneficiary may enforce a contract only if it is made for its sole benefit.” Donna S. v.

Travis S.,

, 755 (W. Va. 2022) (emphasis added) (citing

-

8-12). And Texas law provides that “a person seeking to establish third-party-beneficiary

status must demonstrate” not only “that the contracting parties intended to secure a benefit

to that third party” but also that they “entered into the contract directly for the third party’s

benefit.” First Bank,

(emphasis added) (cleaned up).

In this case, the Agreement between Rogers and RigUp contains no provision stating

specifically that it was entered into for the sole benefit of Tug Hill or directly for its benefit.

Indeed, the language of the Agreement indicates to the contrary. The Agreement provides

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that its purpose was to govern only the legal relationship between RigUp and Rogers.

While RigUp’s matchmaking service enabled Rogers to connect with Tug Hill, the

Agreement anticipated that Rogers and Tug Hill would have to separately “negotiate and

determine . . . when and where [Rogers would] perform Projects” for Tug Hill, as well as

how much Tug Hill would pay Rogers. Moreover, the Agreement expressly disclaimed

any “responsibility for any interaction between [Rogers] and [Tug Hill]” and distanced

itself from any arrangement that Rogers might reach with Tug Hill by providing that “[a]ny

interactions or disputes between [Rogers] and [Tug Hill] are solely between [Rogers] and

[Tug Hill].” The Agreement also provided that “RigUp is not responsible or liable for the

actions or inactions of [Tug Hill] or other third party in relation to Projects as completed

by [Rogers]” and that RigUp “will not be a party to disputes or negotiations of disputes,

between [Rogers] and [Tug Hill].”

Finally, and perhaps most tellingly, the arbitration clause itself limits its

applicability to disputes between Rogers and RigUp. It provides that “[i]n the interest of

resolving disputes between [Rogers] and RigUp in the most expedient and cost effective

manner, [Rogers] and RigUp agree” to arbitrate disputes, such that “by entering into these

terms, [Rogers] and RigUp are each waiving the right to a trial by jury.” (Emphasis added).

The remaining provisions of the arbitration clause similarly contemplate arbitration only

between Rogers and RigUp, not between Rogers and any company for whom Rogers

performed projects (here, Tug Hill). Thus, it provided that “[a]ny arbitration between

[Rogers] and RigUp will be settled under the Federal Arbitration Act,” and it included

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additional details of how arbitration would proceed between “[Rogers] and RigUp.”

(Emphasis added).

These numerous provisions in the Agreement preclude any conclusion that the

Agreement was entered into solely or directly for the benefit of Tug Hill, such that Tug Hill

could enforce it as a third-party beneficiary. Accordingly, the district court erred in

granting Tug Hill’s motion to dismiss and compelling Rogers, under the arbitration

agreement between him and RigUp, to proceed to arbitration with respect to his FLSA

claim against Tug Hill.

IV

Rogers also contends that the district court abused its discretion in granting RigUp’s

motion to intervene under Federal Rule of Civil Procedure 24. We agree.

Rogers’ suit against Tug Hill is a claim for overtime wages under the FLSA, which

brings to issue the terms and conditions under which Rogers actually worked for Tug Hill

over a period of some 18 months. While RigUp acted as matchmaker in initially connecting

Rogers with Tug Hill, their subsequent arrangement, as stated in the Agreement, was

independent of Rogers’ contract with RigUp. Indeed, the Rogers-RigUp Agreement went

to great lengths to distance RigUp’s matchmaking service from the work that Rogers would

thereafter perform for the company with which he was matched. And in its motion to

intervene, RigUp only claimed that its interest in Rogers’ suit against Tug Hill was to

protect its own business model and to avoid or mitigate liability to Tug Hill under the

agreement governing their business relationship. We might well question, simply on that

18 USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 19 of 20

basis, whether RigUp has articulated a sufficient interest under Rule 24 to justify

intervention in Rogers’ FLSA action.

Instead, however, we conclude that the district court abused its discretion in

allowing RigUp’s intervention because it failed to recognize, as Rogers had specifically

argued, that “RigUp contractually disclaimed any right to be [a] party to . . . disputes” like

this one.

In several specific provisions of the Agreement, Rogers and RigUp agreed that

RigUp would not be a party to disputes between Rogers and the oil and gas operator for

whom he would work, which ended up being Tug Hill. For example, the Agreement stated

broadly that “[a]ny interactions or disputes between [Rogers] and [Tug Hill] [were] solely

between [Rogers] and [Tug Hill]” and that “RigUp and its licensors shall have no liability,

obligation or responsibility for any interaction between [Rogers] and [Tug Hill].”

Elsewhere, the Agreement stated that “RigUp [was] not responsible or liable for the actions

or inactions of [Tug Hill],” and Rogers agreed to “waive and release RigUp from any and

all liability, claims or damages arising from or in any way related to projects or companies.”

The Agreement then provided, “RIGUP WILL NOT BE A PARTY TO DISPUTES OR

NEGOTIATIONS OF DISPUTES, BETWEEN [ROGERS] AND COMPANIES.”

RigUp thus expressly agreed with Rogers that it would “not be a party to disputes”

between Rogers and any third-party company, such as Tug Hill. By doing so, RigUp

waived whatever right it might otherwise have had to be a party to Rogers’ action against

Tug Hill, thus precluding its intervention under Rule 24. Indeed, one of the requirements

for intervention as of right under Rule 24(a)(2) is that the would-be intervenor be “situated

19 USCA4 Appeal: 22-1480 Doc: 45 Filed: 08/07/2023 Pg: 20 of 20

[such] that disposing of the action may as a practical matter impair or impede the movant’s

ability to protect its interest.” Fed. R. Civ. P. 24(a)(2). Because RigUp’s agreement with

Rogers expressly disclaimed any interest in any litigation Rogers might have with a

company in Tug Hill’s position, making clear that RigUp would not be involved in such

disputes as a third party, RigUp cannot now opportunistically claim that intervention is

necessary to protect its interest. Similarly, before permitting a party to intervene under

Rule 24(b), a district court is required to “consider whether the intervention will unduly

delay or prejudice the adjudication of the original parties’ rights,” Fed. R. Civ. P. 24(b)(3),

an inquiry that here required consideration of the Agreement’s provision that Rogers would

litigate any dispute he had with a company like Tug Hill without RigUp’s being “a party

to [that] dispute[].”

The district court accordingly abused its discretion by allowing RigUp’s

intervention notwithstanding the Agreement’s plain terms.

* * *

The judgment of the district court is reversed, and the case is remanded for further

proceedings between Rogers and Tug Hill, consistent with this opinion.

REVERSED AND REMANDED

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