Case: 09-31142 Document: 00511091271 Page: 1 Date Filed: 04/26/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
April 26, 2010
No. 09-31142 Lyle W. Cayce
Summary Calendar Clerk
TRINIDAD SUYAPA BARAHONA,
Plaintiff - Appellee
v.
DILLARD’S, INC., formerly known as Dillard Department Stores, Inc.,
Defendant - Appellant
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:05-cv-00152
Before KING, STEWART, and HAYNES, Circuit Judges.
PER CURIAM:*
Appellant Dillard’s, Inc. (“Dillard’s”) appeals the district court’s decision
to vacate an arbitration award for fraud under the Federal Arbitration Act
(“FAA”). Dillard’s argues that the district court erred in vacating the arbitration
award. We agree. Accordingly, we reverse the judgment of the district court and
remand.
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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No. 09-31142
I. FACTS AND PROCEDURAL HISTORY
Dillard’s is a department store chain with locations throughout the United
States, including Houma, Louisiana. Appellee Trinidad Suyapa Barahona was
a salesperson in Dillard’s Houma store until she was terminated by Patrick
Broussard, who was the Houma store manager. Ms. Barahona believed that she
was terminated in violation of Title VII, and she brought this suit against
Dillard’s, alleging that she was terminated either because of her race or in
retaliation for her complaints of discrimination.
Ms. Barahona’s employment contract with Dillard’s contained an
arbitration agreement, so the district court, with the parties’ consent, stayed her
case to allow the parties to arbitrate her claims. During the arbitration
proceedings, the parties conducted discovery, which included depositions and
document requests, and the parties participated in a three-day arbitration
hearing where they were given the opportunity to present their evidence and
arguments. On the third day of the hearing, Mr. Broussard appeared and
testified as a witness. Ms. Barahona’s counsel questioned Mr. Broussard on a
number of matters, including whether he ever communicated via e-mail with any
Dillard’s employee regarding Ms. Barahona. Mr. Broussard answered, “Yes.”
Dillard’s, however, had not produced Mr. Broussard’s e-mails during the
discovery phase of the arbitration. The reason for Dillard’s failure to produce the
e-mails was never elucidated, as neither party elicited any testimony as to why
the e-mails were either overlooked or intentionally not produced.
In response to Mr. Broussard’s testimony, Dillard’s counsel moved to
continue the arbitration proceeding so that Dillard’s could produce the e-mails.
Ms. Barahona’s counsel refused to consent to Dillard’s motion, stating that he
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was objecting to the continuance “about as much as anybody can” and that he
would “have to appeal if this thing was adjourned.” The arbitrator denied
Dillard’s motion to continue. The arbitrator penalized Dillard’s by drawing an
adverse inference against Dillard’s for its failure to produce Mr. Broussard’s e-
mails. The parties then completed the hearing and submitted the case to the
arbitrator for his determination. Despite the adverse inference, the arbitrator
ruled in favor of Dillard’s, finding that Ms. Barahona did not carry her burden
of proof on her discrimination and retaliation claims.
After the arbitrator announced his findings, Ms. Barahona moved the
district court to vacate the arbitration award due to Dillard’s failure to produce
Mr. Broussard’s e-mails. After Ms. Barahona moved to vacate, Dillard’s
produced Mr. Broussard’s e-mails and argued that the contents of the e-mails
showed that a vacatur was unwarranted. Dillard’s also moved to have the
arbitration award confirmed. The district court initially chose not to vacate the
arbitration award and instead remanded the case back to the arbitrator for
reconsideration in light of the newly produced e-mails. The arbitrator refused
to reconsider the arbitration award, finding that he lacked jurisdiction to
reconsider it. After the arbitrator refused to reconsider the award, the district
court granted Ms. Barahona’s motion, denied Dillard’s motion to confirm, and
vacated the arbitration award, finding that the award was procured by fraud as
a result of Dillard’s failure to produce Mr. Broussard’s e-mails. This appeal
followed.
II. DISCUSSION
We review the district court’s decision to vacate an arbitration award de
novo, “deferring greatly to the [arbitrator’s] decision.” Downer v. Siegel, 489 F.3d
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623, 626 (5th Cir. 2007). Pursuant to the FAA, the district court’s ability to
vacate an arbitration award is limited to the four grounds enumerated in 9
U.S.C. § 10(a). Id. Only one of those grounds is at issue here. The district court
vacated the arbitrator’s award under § 10(a)(1), which permits a district court
to vacate an award “where the award was procured by . . . fraud.” Dillard’s
argues that the district court’s decision was erroneous. We agree.
Under the FAA, a party who alleges that an arbitration award was
procured by fraud must demonstrate: (1) that the fraud occurred by clear and
convincing evidence; (2) that the fraud was not discoverable by due diligence
before or during the arbitration hearing; and (3) the fraud materially related to
an issue in the arbitration. Karaha Bodas Co. v. Perusahaan Pertambangan
Minyak Dan Gas Bumi Negra, 364 F.3d 274, 306 (5th Cir. 2004); Trans Chem.
Ltd. v. China Nat’l Mach. Imp. & Exp. Corp., 978 F. Supp. 266, 304-06 (S.D. Tex.
1997), aff’d and adopted by, 161 F.3d 314 (5th Cir. 1998) (“We agree with the
district court’s analysis of these issues and therefore adopt Parts I-V of its
careful and comprehensive opinion.”). A party, however, cannot meet its burden
of proof “[w]here the grounds for fraud ‘. . . is not only discoverable, but
discovered and brought to the attention of the arbitrators;’” in such a case, courts
will not give “‘a disappointed party . . . a second bite at the apple.’” Trans
Chem., 978 F. Supp. at 306 (quoting A.G. Edwards & Sons, Inc. v. McCollough,
967 F.2d 1401, 1404 (9th Cir. 1992)). Here, Dillard’s allegedly fraudulent
conduct was discovered during the arbitration hearing and brought to the
attention of the arbitrator, who addressed it by drawing an adverse inference
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No. 09-31142
against Dillard’s.1 As a consequence, Ms. Barahona cannot meet her burden of
proof under the FAA on this prong.2 See Trans Chem., 978 F. Supp. at 306;
Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.) (rejecting a
plaintiff’s motion to vacate an arbitration award when “the fraud claim was
presented in its entirety to, and ruled upon by, the arbitrator”), modified on
other grounds, 275 F.3d 1187, 1188 (9th Cir. 2001). Accordingly, we find that the
district court erred in vacating Dillard’s arbitration award. Because the facts
concerning whether or not the alleged “non-production fraud” was discovered
during the arbitration hearing are undisputed, further development of the record
would not alter the result. Thus, it is appropriate to direct the district court to
grant the motion to confirm rather than ordering further proceedings.
III. CONCLUSION
For the foregoing reasons, the district court’s order vacating the
arbitration award is REVERSED, and the case is REMANDED with instructions
to enter an order confirming the arbitration award.
1
Although Ms. Barahona discovered Dillard’s alleged fraud during the arbitration
proceeding and presented it to the arbitrator, the district court found that Ms. Barahona was
entitled to a vacatur because she could not have discovered the extent of Dillard’s fraud until
Dillard’s produced the e-mails at issue. Ms. Barahona, however, had an opportunity to
discover the e-mails during the arbitration proceeding and chose not to do so. By refusing to
seek discovery of the e-mails, Ms. Barahona cannot now complain about Dillard’s failure to
produce the e-mails. See Trans Chem., 978 F. Supp. at 306 (finding that an arbitration award
could not be vacated for fraud when the party moving to vacate the award discovered the
fraud, brought it to the attention of the arbitrator, and had an opportunity to discover the
extent of the fraud but chose not to do so).
2
As a result, we need not reach the other prongs. We note, however, the lack of any
proof that the non-production was intentional or otherwise “fraudulent.”
5