IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-30977
SPECIALTY HEALTHCARE MANAGEMENT, INC.,
Plaintiff-Appellee,
versus
ST. MARY PARISH HOSPITAL, ETC., ET AL.,
Defendants,
ST. MARY PARISH HOSPITAL, ETC.,
Defendant-Appellant.
Appeal from the United States District Court
For the Western District of Louisiana
July 31, 2000
Before REYNALDO G. GARZA, JOLLY, and HIGGINBOTHAM, Circuit Judges.
HIGGINBOTHAM, Circuit Judge:
This diversity case arises out of an effort to enforce an
arbitral award by a federal order directed at a Parish hospital in
Louisiana. Franklin Foundation Hospital appeals the district
court’s grant of a writ of execution and an award of attorney fees
in favor of Specialty Healthcare Management, Inc. because the
Louisiana Constitution provides that “no public property or public
funds shall be subject to seizure.” We find that Louisiana law
here controls; that neither the hospital’s consent to binding
arbitration nor its contention in resisting a preliminary
injunction that Specialty’s injuries were not irreparable waived
its protections under the Louisiana Constitution. We VACATE the
grant of a writ of execution and the award of attorney fees.
I
In August 1993, St. Mary Parish Hospital Service District No.
1, d/b/a Franklin Foundation Hospital (“the hospital”), agreed with
NME Management Services, Inc. (“NMMS”) that NMMS would manage,
staff, and operate an inpatient rehabilitation treatment program at
the hospital, a small thirty-five bed facility. Approximately a
year later, the hospital agreed to NMMS’s assignment of its
management contract to Specialty Healthcare Management, Inc.
(“Specialty”). Specialty assumed all of NMMS’s obligations under
the agreement.
The relationship did not fare well. The hospital gave
Specialty notice in November 1996 that Specialty had not complied
with their agreement. Two months later the hospital terminated the
agreement.
Specialty sued the hospital in the United States District
Court, alleging diversity jurisdiction. It sought monetary
damages, as well as declaratory and injunctive relief. The
hospital demanded arbitration, which was mandatory under the
agreement. The hospital also successfully resisted a preliminary
injunction, urging that an injunction was inappropriate in part
because monetary damages were calculable and thus Specialty would
suffer no irreparable injury, a matter we will return to.
2
Specialty dismissed the suit, and the parties arbitrated in
accordance with the laws of Louisiana.
Specialty received an arbitration award of nearly $750,000
plus interest and sought confirmation of the award in the district
court, pursuant to 9 U.S.C. § 9.1 The court confirmed the award in
a judgment, requiring the hospital to pay the award within 30 days.
When the hospital refused to pay, Specialty sought a writ of
execution under Rule 69(a).2 The hospital argued that Louisiana’s
antiseizure provision controls. The district court granted
Specialty’s request for a writ of execution and attorney fees, and
this appeal ensued.
1
Section 9 provides, in part, that:
If the parties in their agreement have agreed that a judgment of the
court shall be entered upon the award made pursuant to the
arbitration, and shall specify the court, then at any time within
one year after the award is made any party to the arbitration may
apply to the court so specified for an order confirming the award
. . . . If no court is specified in the agreement of the parties,
then such application may be made to the United States court in and
for the district within which such award was made.
We note that the parties’ agreement to arbitrate did not include an explicit
agreement that a judgment could be entered upon an award. In the past, some
courts have held that this is fatal to a court’s jurisdiction to confirm the
award. See Lehigh Structural Steel Co. v. Rust Engineering Co., 59 F.2d 1038,
1039 (D.C. Cir. 1932).
More recently, however, this circuit has held that when the parties agree
to final and binding arbitration, invoke the district court’s jurisdiction before
arbitration, and then seek to confirm the award without objection by either
party, the parties’ implied consent to confirmation permits the district court’s
continued exercise of jurisdiction. See T & R Enterprises, Inc. v. Continental
Grain Co., 613 F.2d 1272, 1279 (5th Cir. 1980).
The only arguable difference in the present case is that the parties’
agreement did not specifically agree to “final and binding” arbitration, but
instead stated that any dispute would be “determined and settled by arbitration.”
However, the hospital has never disputed Specialty’s assertion that the parties
agreed to binding arbitration. The hospital has only urged that such consent did
not waive reliance on state antiseizure provisions during execution. Thus, we
read “determined and settled” to mean “final and binding” – at least for the
purpose of applying T & R Enterprises.
2
FED. R. CIV. P. 69(a).
3
II
Federal Rule of Civil Procedure 69(a) provides that the
[p]rocess to enforce a judgment for the payment of money
shall be a writ of execution, unless the court directs
otherwise. The procedure on execution, in proceedings
supplementary and in aid of a judgment, and in
proceedings on and in aid of execution shall be in
accordance with the practice and procedure of the state
in which the district court is held, . . ., except that
any statute of the United States governs to the extent
that it is applicable.
Article 12, § 10 of the Louisiana Constitution permits suits
against the State and its political subdivisions, but subsection
(C) states that “no public property or public funds shall be
subject to seizure.” The hospital is a hospital service district
that was created by the St. Mary Parish Policy Jury. Thus, under
state law, the hospital is a political subdivision of Louisiana
whose assets are exempt from seizure.3
Under Rule 69(a), state procedure on execution would govern
unless a federal statute otherwise applied.4 The arbitral award
was confirmed under 9 U.S.C. § 9 of the Federal Arbitration Act.5
Neither § 9 nor any other portion of the FAA provides any
additional procedures for enforcing confirmed awards. Instead, §
13 of the FAA specifically provides that a confirmed arbitral award
“may be enforced as if it had been rendered in an action in the
3
See LA. REV. STAT. ANN. § 46:1072(2)(a) (West Supp. 1996); see also id. §
46:1051 et. seq. According to the hospital, it only has to pay the judgment
if it chooses to appropriate funds for that purpose. See LA. REV. STAT. ANN. §
13:5109 (B)(2) (West 1991).
4
See generally 13 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE ¶ 69.03[2] (3d
ed. 1999).
5
Since the FAA does not create federal jurisdiction, confirmation under §
9 requires an independent basis for federal jurisdiction, such as diversity
jurisdiction in the present case. See Moses H. Cone Memorial Hosp. v. Mercury
Constr. Corp., 103 S. Ct. 927, 942 n.32 (1983).
4
court in which it is entered.” Thus, for awards confirmed in
federal court, Rule 69(a) and its incorporation of state procedure
remains the governing rule, at least on the surface.
Nevertheless, federal interests sometimes trump the substance
of a state’s antiseizure provision by means other than Rule 69(a).
For example, in civil rights cases, this circuit has held that it
is within the scope of federal power to command state officials to
pay judgments from state funds, such as judgments for attorney fees
under 42 U.S.C. § 1983, despite the existence of state antiseizure
provisions, even though a writ of execution is not issued.6 One
justification for this result is that Congress under its section 5
powers of the Fourteenth Amendment chose to enact legislation to
permit all successful civil rights litigants to recover attorney
fees; thus, there is a federal interest in the monetary remedy.7
The Eastern District of Michigan, in City of Detroit v. City
of Highland Park,8 stated that “it is inconceivable that state and
local entities can thwart federal courts’ ability to enforce
6
See Collins v. Thomas, 649 F.2d 1203 (5th Cir. 1981); Gates v. Collier,
616 F.2d 1268 (5th Cir. 1980); Gary W. v. Louisiana, 622 F.2d 804 (5th Cir.
1980). In these cases, Rule 69(a) was not used; mandamuses issued under Rule 70.
Similarly, in Leroy v. City of Houston, 906 F.2d 1068 (5th Cir. 1990), this
circuit held that federal law allows recovery of attorney fees for violations of
voting rights guarantees. Despite the fact that there was a compelling federal
interest, this court held that Rule 69(a) did not permit execution against the
city of Houston because Texas law prohibited execution “on property belonging to
a city in its governmental or municipal character.” Id. at 1085. Because Texas
law permitted enforcement of a money judgment against a city by mandamus, Rule
70 authorized the district court to order the city to pay the judgment. See id.
at 1085-86.
This circuit has approved asset seizure through a writ of fieri facias to
satisfy a judgment of attorney fees in the civil rights context, despite
Louisiana law prohibiting such seizure. See Bowman v. City of New Orleans, 747
F. Supp. 344 (E.D. La. 1989), aff’d, 914 F.2d 711 (5th Cir. 1990). Regardless of
the rule applied, the cases demonstrate no basis to override state antiseizure
provisions absent a federal interest.
7
See e.g., Gary W. v. Louisiana, 441 F. Supp. 1121, 1125-27 (E.D. La.
1977), aff’d, 622 F.2d 804 (5th Cir. 1980).
8
878 F. Supp. 87 (E.D. Mich. 1995).
5
judgments ‘through the adoption of immunizing procedures and vague
statutory schemes.’”9 In that case, the court upheld the use of a
writ of mandamus ordering Highland Park to pay money to Detroit for
Detroit’s provision of water services mandated by federal law: the
Clean Water Act.10
Assuming a federal court has the power to compel the payment
of money in contravention of state execution provisions so long as
there is a federal interest in the remedy, we must determine
whether such a federal interest exists in the current case.
Specialty argues that this case implicates a federal interest in
arbitration created by the FAA that includes an interest in
successful enforcement. The hospital argues that the FAA was
invoked solely as a procedure to confirm the award and that the FAA
expresses no federal interest in the scope or manner of execution.
Of course, even if the FAA was invoked solely to confirm the
award, this does not mean that the parties agreement to arbitrate
was not controlled by the FAA. The FAA is “applicable to any
arbitration agreement within the coverage of the Act”11 which
includes written agreements to arbitrate if the contract
“evidenc[es] a transaction involving commerce.”12 Assuming that the
parties’ management agreement involved “commerce,” a broadly
9
Id. at 90 (quoting Arnold v. BLaST Intermediate Unit 17, 843 F.2d 122, 128
(3d Cir. 1988)).
10
See City of Detroit, 878 F. Supp. at 90.
11
Moses H. Cone Memorial Hospital, 460 U.S. at 23.
12
9 U.S.C. § 2.
6
construed term under the FAA,13 the parties’ agreement to arbitrate
was governed by the FAA, a creature of federal law.
The FAA, however, does not preempt all state law related to
arbitration agreements. It “contains no express pre-emptive
provision, nor does it reflect a congressional intent to occupy the
entire field of arbitration.”14 Thus, the question is simply
whether Louisiana’s antiseizure provision “would undermine the
goals and policies of the FAA.”15
The FAA’s primary goal is to place agreements to arbitrate “on
the same footing as other contracts.”16 As such, the FAA “requires
courts to enforce privately negotiated agreements to arbitrate,
like other contracts, in accordance with their terms.”17 Moreover,
“[a]rbitration under the [FAA] is a matter of consent, not
coercion, and parties are generally free to structure their
arbitration agreements as they see fit.”18 Based on these
principles, an agreement to arbitrate under the laws of a
13
See Del E. Webb Constr. v. Richardson Hosp. Authority, 823 F.2d 145, 147
(5th Cir. 1987). Neither party has contended that their agreement did not relate
to interstate commerce, and we have no reason to say it did not: the agreement
involved the staffing and management of a Louisiana hospital by an out-of-state
corporation.
14
See Volt Information Sciences, Inc. v. Board of Trustees of Leland
Stanford Junior University, 489 U.S. 468, 477 (1989).
15
Id. at 478.
16
Id. (quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 511 (1974)
(quoting H.R. REP. NO. 96, 68th Cong., 1st Sess., 1, 2 (1924))) (internal
quotation marks omitted).
17
Id.
18
Id. at 479.
7
particular state will be enforced as written, even if that state’s
arbitration laws differ from federal arbitration law.19
In this case, the parties’ agreement included a Louisiana
choice of law provision and an arbitration clause that required
binding arbitration under the laws of Louisiana. Specialty
contends that such an agreement waived reliance on state
antiseizure provisions. The hospital responds that while it agreed
to binding arbitration, such an agreement only meant that liability
and damage findings would be binding, not that Specialty could
enforce the award through any means of execution.
Under Louisiana law, arbitration is defined as “bind[ing] [the
parties] reciprocally to perform what shall be arbitrated.”20 At
19
See id. The FAA would preempt the application of state laws that
frustrate its primary purpose of enforcing agreements to arbitrate according to
their terms, such as laws making such agreements unenforceable. See id. at 471.
Of course, state antiseizure laws limit the enforceability of the resulting
judgment, but that is a separate question from the enforceability of the original
agreement to arbitrate. As noted, § 13 of the FAA specifically envisions that
a confirmed arbitral award will have no greater power in its enforcement than a
judgment in a comparable action.
After Volt Informational Sciences was decided, this circuit held that a
federal court is also not bound by the parties’ choice of law in other limited
circumstances not at issue here. See Atlantic Aviation, Inc. v. EBM Group, Inc.,
11 F.3d 1276, 1279 (5th Cir. 1994) (holding that parties’ choice of law cannot
determine scope of judicial review); see also Ford v. NYLCare Health Plans of
Gulf Coast, Inc., 141 F.3d 243, 248 n.6 (5th Cir. 1998) (discussing implied
limitation on Atlantic Aviation in view of Volt Information Sciences).
Regardless of the power of a federal court to ignore the parties’ choice
of law clause and apply federal law in its place, we have no occasion to do so
here. The parties stand by their choice of Louisiana law, and we find no
conflicting federal interests.
20
LA. CIV. CODE ANN. art. 3099. Specialty cites no cases applying or
interpreting this general definition. Specialty also cites article 3129, which
states that the “formality [of judicial confirmation] is only intended to invest
the award with a sufficient authority to ensure its execution.” The most
reasonable interpretation of this language, however, is simply that judicial
confirmation allows execution upon an arbitral award in conformity with state law
like any other judgment, not that it imbues arbitral awards with greater powers
than other judgments.
Specialty also cites Lander Co., Inc. v. MMP Investments, Inc., 107 F.3d
476 (7th Cir. 1997), in which the issue was whether a plaintiff’s failure to
explicitly allege jurisdiction under the FAA forfeited its right to confirm an
arbitral award in federal court. See id. at 477-79. The court found that the
defendant’s consent to binding arbitration waived any argument regarding the
plaintiff’s failure to explicitly invoke the FAA when requesting judicial
8
best, this definition might be interpreted to require a party who
consents to binding arbitration to perform an arbitral award of
specific performance. However, we do not read this general
definition to invalidate Louisiana’s specific antiseizure
provisions in all agreements to arbitrate.21 There is no evidence
suggesting that Louisiana intended arbitration agreements to
automatically strip political subdivisions of the background
protections they would otherwise enjoy.
Because we find that Louisiana’s antiseizure provisions
remained part of the law under which the parties agreed to
confirmation. See id. at 480.
Here, however, it is undisputed that Specialty invoked the FAA and federal
court diversity jurisdiction to confirm its arbitral award. More importantly,
we do not read Lander to stand for the broader proposition that consent to
binding arbitration also waives reliance on state antiseizure protections where,
as here, those protections were already part of the law which the parties chose
to govern their agreement. In other words, consent to binding arbitration may
properly imply consent to confirmation, yet not imply consent to execution beyond
the scope of the chosen law.
21
As additional support for its position, Specialty cites Mastrobuono v.
Shearson Lehman Hutton Inc., 115 S. Ct. 1212 (1995), in which the Supreme Court
affirmed an arbitral award of punitive damages despite the fact that state case
law did not allow an arbitrator to award punitive damages. In Mastrobuono, the
agreement between the parties was ambiguous as to whether the parties had chosen
to be governed by state decisional law; it was also ambiguous as to whether the
parties had agreed to allow arbitration under other rules which would have
allowed awards of punitive damages. See id. at 1216-19. Construing these
ambiguities against the drafter, the Supreme Court affirmed the award. See id.
at 1219.
Mastrobuono is inapplicable to the present case. Here, it is undisputed
that the damage award was within the scope of the arbitrator’s power. What it
at issue is whether the hospital, by agreeing to binding arbitration, waived the
protection of Louisiana’s antiseizure provisions with respect to execution. Even
if Mastrobuono were somehow applicable, these state protections were part of
Louisiana statutory law by which the parties clearly agreed to be bound. And, as
noted, we did not read Louisiana’s general definition of arbitration to imply
that the hospital waived state protections by consenting to arbitration.
It might be argued that it is pointless to agree to binding arbitration if
the result would be a nonenforceable award. While that may sometimes be true,
the fact that arbitration is less expensive than court litigation may be reason
enough for two parties to agree to arbitration in the event of a dispute, even
if one party has a means of avoiding execution on any resulting judgment. If
that result seems unfair in the present case, it is not because the parties
agreed to arbitration, but rather because the law the parties chose to govern
their dispute was inherently one-sided when providing protections against certain
forms of judgment satisfaction.
9
arbitrate, we see that the primary policy of the FAA is furthered
rather than frustrated when those provisions are applied to the
execution of a confirmed arbitral award. This conclusion is
buttressed by the fact that under § 13, a judgment resulting from
a confirmed arbitral award
shall have the same force and effect, in all respects,
as, and be subject to all provisions of law relating to,
a judgment in an action.22
Thus, unless the parties have otherwise agreed, the FAA expresses
no separate interest in making confirmed arbitral award more
powerful than comparable court judgments. Had the current state
contract dispute been litigated in federal court under diversity
jurisdiction, the resulting judgment would have been enforceable
according to Rule 69(a), which incorporates state exemptions unless
federal law otherwise applied.23 To allow the confirmed arbitral
award to be enforced with greater power would contradict § 13.
In sum, the FAA encourages the enforcement of agreements to
arbitrate according to their terms and expresses no additional
federal interest in either the particular method or scope of
execution of arbitral awards. We therefore find no inherent
conflict between the FAA and state antiseizure provisions when the
parties have agreed to arbitrate according to state law and their
agreement does not waive reliance on state protections. While the
FAA clearly encourages the creation of binding liability
determinations, the manner of execution once liability has been
determined is a concern the FAA simply does not touch. Thus, while
the parties’ agreement to arbitrate was in an important sense
22
9 U.S.C. § 13 (emphasis added).
23
See, e.g., First Nat’l Bank of Boston v. Santisteban, 285 F.2d 855 (1st
Cir. 1961); United States v. Miller, 229 F.2d 839 (3d Cir. 1956).
10
controlled by federal law, there was nevertheless no conflict
between federal and state law justifying a writ of execution or an
order commanding hospital officials to pay the judgment.24
III
Specialty alternatively argues that the hospital’s prior
conduct constitutes a waiver of resort to Louisiana’s antiseizure
provision. Under Louisiana law, “conduct so inconsistent with the
intent to enforce [a] right as to induce a reasonable belief that
[the right] has been relinquished” constitutes a waiver.25
According to Specialty, the hospital resisted a preliminary
injunction by insinuating that monetary damages would be available
to Specialty if Specialty prevailed at arbitration.26 Thus, the
hospital waived any reliance on the antiseizure provision. The
hospital responds by stating that it never said that damages would
be “collectable” but only that they were “calculable” and therefore
not irreparable.
Specially initially requested preliminary injunctive relief
that would have enjoined the hospital from terminating the
agreement or employing Specialty’s current and former employees.
The hospital argued that such relief was inappropriate in part
24
See FED. R. CIV. P. 70.
25
Steptore v. Masco Constr. Co., 643 So.2d 1213, 1216 (La. 1994).
26
Specialty stated below that its request for preliminary relief had been
denied, and the hospital has not stated otherwise. The record, however, does not
affirmatively indicate that Specialty’s request was ruled upon before the case
was sent to arbitration. A hearing was scheduled on the matter, but that hearing
was canceled because Specialty dismissed the case and proceeded with arbitration.
Even if the district court never ruled upon Specialty’s request for injunctive
relief, that would not prevent us from deciding the hospital’s arguments before
the court waived reliance on Louisiana’s antiseizure provision.
11
because Specialty’s damages were not irreparable since this was a
contract dispute with easily quantifiable damages.
However, the hospital’s argument regarding the quantifiable
nature of Specialty’s contract damages was only a small part of the
hospital’s opposition to Specialty’s request for preliminary
relief. The hospital’s primary contention was that injunctive
relief was inappropriate pending mandatory arbitration except in
limited circumstances to preserve the status quo. According to the
hospital, the status quo was already being preserved because the
hospital had retained Specialty’s former employees to staff the
rehabilitation unit. The only difference was that the staff was
paid by the hospital rather than Specialty.
The hospital also argued that Specialty would be unable to
prevail on the merits, which counseled against the imposition of an
injunction. The hospital contended that it was within its rights
to terminate the management agreement because Specialty breached
the agreement in numerous ways. Additionally, the hospital argued
that the staff hiring prohibition, which prevented the hospital
from hiring certain employees or former employees of Specialty, was
unenforceable under Louisiana law.
Even when the hospital argued that Specialty would suffer no
irreparable injuries, Specialty’s argument that contract damages
were easily quantifiable was only one part of the argument. In
addition to damages under the contract, Specialty alleged several
other injuries, including loss of reputation and goodwill and the
disclosure of trade secrets. The hospital countered that
irreparable injury in the form of loss of goodwill or reputation
was impossible because no patients even knew that the hospital
12
staff had worked for Specialty rather than the hospital, since
patients were billed through the hospital.
With regard to the disclosure of trade secrets, the hospital
claimed that the requested injunction would not prevent such
disclosure because even if the hospital were prohibited from
employing Specialty’s former employees, those employees would not
be enjoined from leaking Specialty’s trade secrets in other
contexts.
Finally, the hospital argued that the equities did not merit
the imposition of an injunction since this was not a case where
staff members quit working for Specialty only to hire on with the
hospital, but instead it was a case where Specialty fired its staff
after it breached the management agreement and failed to relocate
them, leaving them stranded and unemployed. As such, Specialty had
only itself to blame for the fact that the hospital rehired them.
Moreover, issuing an injunction would actually cause irreparable
injury to the community, since it would result in continued
inadequate staffing by Specialty, and such injury to the community
outweighed any benefit Specialty would receive from the issuance of
an injunction.
We recount these arguments not to express any view on their
merits, but to highlight the fact that the hospital’s argument
regarding Specialty’s contract damages was a minor part of the
hospital’s overall opposition to Specialty’s motion. Of course,
one might argue that the hospital’s precise use of the terms
“calculable” and “quantifiable” demonstrates that the hospital
intended to imply that Specialty’s injuries were not irreparable
because monetary damages would be available to make Specialty whole
in the event that Specialty prevailed at arbitration. If that is
13
was what the hospital clearly implied, it might be a basis for
waiver or estoppel. The hospital’s precise language, however, is
equally consistent with the theory that the hospital was arguing
within but not beyond the boundaries of the relevant law.
There is some authority, however, for the proposition that an
inability to actually collect on a money judgment may suffice to
make an injury irreparable.27 Thus, it may have been insufficient
for the hospital to argue that Specialty’s damages were calculable
in order to show they were not irreparable. That the hospital may
have made an ultimately losing argument, however, does not entail
that it intentionally misrepresented the standard for irreparable
injury; it is equally conceivable that the hospital was unaware of
such contrary authority.
In sum, while we are sympathetic to Specialty’s position, we
cannot find that the hospital’s circumscribed arguments constitute
conduct that is “so inconsistent with the intent to enforce [a]
right as to induce a reasonable belief that [the right] has been
relinquished.”28 For all of these reasons, we VACATE the district
court’s order issuing a writ of execution.
IV
This circuit applies state law in determining whether attorney
fees should be awarded in state-based claims.29 Under Louisiana
law, fee awards are allowed only when authorized by contract or
27
See Alvenus Shipping Co. v. Delta Petroleum (USA) Ltd., 876 F. Supp. 482,
487 (S.D.N.Y. 1994).
28
Steptore, 643 So.2d at 1216.
29
See U.S. ex rel. Varco Pruden Bldgs. v. Reid & Gary Strickland Co., 161
F.3d 915 (5th Cir. 1998).
14
statute.30 It is undisputed that there is no Louisiana statutory
basis for the fee award in this case.
Nevertheless, federal courts have the power to award attorney
fees for vexatious behavior including the refusal to abide by an
arbitral award without justification,31 which is the precise reason
that the district court awarded attorney fees to Specialty. Because
the hospital’s arguments against issuing a writ of execution were
supported by legal justification, the award of attorney fees must
also be VACATED as an abuse of discretion.32
WRIT VACATED; FEE AWARD VACATED.
ENDRECORD
30
Steptore, 643 So.2d at 1218.
31
See International Ass’n of Machinists & Aerospace Workers v. Texas Steel
Co., 639 F.2d 279, 283 (5th Cir. 1981); see also Chambers v. NASCO, Inc., 501
U.S. 32, 45-46 (1991).
32
See Chambers, 501 U.S. at 50 (applying abuse of discretion standard when
reviewing fee award based on district court’s inherent power to police itself).
15
REYNALDO G. GARZA, Circuit Judge, dissenting:
I respectfully dissent. Any reasonable person would believe
that an agreement to “binding” arbitration means that any
resulting damages would be enforceable and collectable.
Otherwise, why agree to arbitrate? Moreover, when the other side
argues below that there will be no irreparable injury because
damages will be sufficient, any reasonable person would take this
as indicating that damages will be collectable. For how can it
be that damages which cannot be collected repair any injury?
Because the majority reaches a conclusion contrary to such
reasonable expectations, I dissent.
What the majority forgets to note is that the purpose of
arbitration is to provide participants with a speedy and
effective alternative to the courts, which in turn relieves
courts of some of the burden of their ever increasing caseload.
Today’s decision will provide a disincentive to enter into
arbitration, which will mean that cases such as these must be
tried in state and federal court. I repeat: who will enter into
binding arbitration if it is not truly binding? The Hospital’s
consent to binding arbitration would lead any reasonable party to
believe that any resulting award could be enforced, including,
through the seizure of assets upon the hospital’s refusal to pay.
What is more, the Hospital failed to argue below that state law
prevented any such seizure. Instead the Hospital, quite to the
16
contrary, argued that monetary damages alone would be adequate,
not that an arbitral award could not be enforced. This
reinforced the reasonable assumption the parties were clearly
operating under, namely that the arbitral award could be
enforced. Under these circumstances, I would find that the state
anti-seizure law argument was waived.
This is all particularly troubling where it is the Hospital
that demanded arbitration, perhaps knowing full well that any
agreement would not be enforced. The Hospital makes a mockery of
the arbitration proceedings by, after reaching an arbitral
agreement, raising the state law defense to avoid paying the
agreed-upon amount.
I also find that the Hospital’s conduct was so inconsistent
with the intent to enforce the anti-seizure provisions as to
induce the reasonable belief that the right had been
relinquished. This would be a waiver under Louisiana law. The
majority notes that all the Hospital argued was that any contract
damages would be easily quantifiable, and therefore not
irreparable, not that any such damages would be enforceable or
collectable. I would find, as the majority hints, that an
inability to collect on a money judgment would suffice to make an
injury irreparable. Therefore, when the Hospital argued below
that the injuries in question were not irreparable, any
reasonable party would take this as a statement that any damages
would be collectable.
17
To conclude, I note that a Louisiana lawyer sitting as a
federal judge decided this issue of Louisiana law, and I would
defer to his judgment on this matter.
18