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Another Wrinkle in Questions Regarding Class Arbitration

by Henry Sivils

November 2020

Henry Sivils

Sun Coast Resources, Inc. v. Conrad 956 F.3d 335 (5th Cir. 2020).

Vacate under 10(a)(4) of the FAA?

Conrad brought a claim for himself and similarly situated employees to arbitration against Sun Coast for violation of the Fair Labor Standards Act.[1] During arbitration there was a dispute over the construction of a clause, and the arbitrator determined that “the agreement … clearly provides for collective actions.”[2] Sun Coast asked the district court to vacate the award pursuant to 9 U.S.C. § 10(a)(4) (FAA).[3] The district court held that the arbitrator interpreted the agreement and therefore did not exceed his powers.[4] The standard for review is de novo, “using the same standards employed by the district court.”[5]

The court gives the test as a sole question: whether the arbitrator interpreted the arbitration agreement.[6] The correctness of the interpretation is irrelevant as long as the determination made by the arbitrator was an interpretation.[7] The district court’s refusal to vacate the award is proper if the award has “some basis in the arbitration agreement.”[8]

“In determining whether the arbitrator exceeded her authority, district courts should consult the arbitrator’s award itself.”[9] The court does so and finds: (1) the arbitrator pointed to the breadth of the claims and found that “any claim arising out of the employment relationship feel within the agreement’s ambit;”[10] (2) The arbitrator noted that the arbitration agreement covered “all remedies which might be available in court, and the agreement did not “carve out” class proceedings;[11] and (3) the arbitrator noted that the parties agreed to be governed by the AAA rules for employment disputes, which allow for class proceedings.[12]

The court says that whether the arbitrator’s analysis is correct or not is not important; instead, what matters is that he “focused on the arbitration clause’s text, analyzing the scope of both what it barred from court and what it sent to arbitration.”[13] The court holds that section 10’s deferential review does not justify vacating the award.[14]

Was the issue of permitting class proceedings an issue for the court to decide?

Sun Coast Next argues that the issue of whether an arbitration agreement permits class proceedings is an issue for the courts not arbitrators.[15] In what appears to be dicta, the court states that here the issue of class proceedings seems to have been delegated to the arbitrator by the arbitration agreement.[16] The courts formal answer to this questions is that Sun Coast forfeited the issue twice: first by not presenting it to the arbitrator and second by not presenting it in a timely manner to the district court.[17] First, Sun Coast asked the arbitrator to sustain its objections against class proceedings, but Sun Coast did not contend that the arbitrator lacked power to make that determination.[18] Second, Sun Coast did not raise the issue of authority until its rule 59 motion.[19]

The rest of the opinion is dedicated to Sun Coast’s demand for oral argument, which was denied.[20] The opinion of the district court is affirmed.[21]

Sun Coast Res., Inc. v. Conrad, 958 F.3d 396 (5th Cir. 2020)

Grant Conrad’s sanctions?

In a later decision, the court of appeals denies a motion for sanctions against Sun Coast in regards to its “meritless appeal”.[22] The court takes the time to state, “[w]e hope that there will not be any further unnecessary delay in these proceedings—and that Conrad can take some comfort that we have warned Sun Coast about its behavior.”[23]


[1] Sun Coast Res., Inc. v. Conrad 956 F.3d 335, 336-37 (5th Cir. 2020).

[2] Id. at 337.

[3] Id. § 10(a)(4) states that a United States court in and for the same district in which the award was made may vacate that award “where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.” 9 U.S.C. § 10(a)(4)

[4] Sun Coast Res., 956 F.3d 337.

[5] Id. citing 21st Fin. Servs., L.L.C. v. Manchester Fin. Bank, 747 F.3d 331, 335 (5th Cir. 2014).

[6] Id. quoting in parenthetical BNSF Ry. Co. v. Alstom Transp., Inc., 777 F.3d 785, 789 (5th Cir. 2015).

[7] Id. citing Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 572 (2013).

[8] Id. citing Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 671 (2010).

[9] Id. quoting BNSF Ry. Co., 777 F.3d at 788.

[10] Id. at 337. Apparently the breadth of the claims covered compared to the few claims it exempted led the arbitrator to the conclusion that the parties made a “conscious choice” not to exclude class arbitration. Id.

[11] Id.

[12] Id.

[13] Id. at 338 quoting Oxford Health Plans LLC, 569 U.S. 568.

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id. Instead, the record shows that Sun Coast was more concerned about the arbitrator making the correct determination. Id.

[19] Id. at 340.

[20] Id.

[21] Id. at 341.

[22] Sun Coast Res., Inc. v. Conrad, 958 F.3d 396, 397-98 (5th Cir. 2020).

[23] Id. at 399.


Henry Sivils is a J.D. candidate at the University of Missouri School of Law and an Associate Member of the Journal of Dispute Resolution.

Website: law.

Additional articles by Henry Sivils
The views expressed by authors are their own and do not necessarily reflect the views of Resourceful Internet Solutions, Inc., or of reviewing editors.

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