United States District Court, S.D. Texas, Galveston Division
CHANNING ALLEN Plaintiff.
W&T OFFSHORE, INC.; W&T ENERGY VI, LLC; and STABIL DRILL SPECIALTIES, LLC Defendants.
MEMORANDUM AND RECOMMENDATION 
M. EDISON UNITED STATES MAGISTRATE JUDGE
before the Court is Defendants W&T Offshore, Inc.'s
and W&T Energy VI, LLC's Motion to Compel Arbitration
and to Dismiss or Abate (“Motion to Compel
Arbitration”). See Dkt. 24. This motion was
referred to this Court by United States District Judge George
C. Hanks, Jr. See Dkt. 30. After careful
consideration of the Motion to Compel Arbitration, the
response, the reply, and applicable law, the Court
RECOMMENDS that the Motion to Compel
Arbitration be GRANTED.
Channing Allen (“Allen”) worked for Nabors
Offshore Corporation, a subsidiary of Nabors Industries, Inc.
(collectively “Nabors”). On June 26, 2018, while
working on a drilling platform owned and/or operated by
W&T Offshore, Inc. and W&T Energy VI, LLC
(collectively “W&T”), Allen alleges that he
suffered severe and debilitating injuries. Allen filed this
personal injury lawsuit against W&T and Stabil Drill
Specialties, LLC. In response, W&T has sought to compel
arbitration of the claims brought against it arising out of
this workplace accident.
has an arbitration agreement with its employees known as the
Nabors Dispute Resolution Program (“DRP”). On
August 8, 2017, Allen signed the DRP and agreed to submit all
claims in relation to or arising out of his employment with
Nabors to binding arbitration. See Dkt. 24-3. This
includes “any personal injury allegedly incurred in or
about a Company workplace or in the course and scope of an
Employee's employment.” Dkt. 24-1 at 2.
provides the exclusive mechanism for resolving disputes
between the “Company and Company's present and
former Employees.” Id. at 1. The DRP defines
“Company” to include Nabors as well as any
Electing Entity “to the extent provided in the Electing
Entity's agreement to be bound by the [DRP].”
Id. at 1. Electing Entity is broadly defined as
“any legal entity that has agreed to be bound by the
[DRP] as provided herein.” Id. at 2. In the
Offshore Drilling Contract between Nabors and W&T,
W&T agreed to abide by the DRP and become “an
Electing Entity as to all Disputes between [W&T] and the
present and former Employees and Applicants of Nabors
pursuant to the Nabors Dispute Resolution Program as it
currently exists.” Dkt. 24-2 at 22.
Federal Arbitration Act (“FAA”) provides that
“[a] written provision in . . . a contract evidencing a
transaction involving commerce to settle by arbitration a
controversy thereafter arising out of such contract . . .
shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of
any contract.” 9 U.S.C. § 2. The FAA permits a
party that has entered an arbitration agreement to request an
order compelling the parties to proceed with arbitration.
Id. at § 4. If the court is
“satisfied” that an action is subject to an
enforceable arbitration provision, the court must “stay
the trial of the action until such arbitration has been had
in accordance with the terms of the agreement.”
Id. at § 3.
is a matter of contract and a party cannot be required to
submit to arbitration any dispute which he has not agreed so
to submit.” Janvey v. Alguire, 847 F.3d 231,
240 (5th Cir. 2017) (quoting United Steelworkers of Am.
v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582
(1960)). The Fifth Circuit employs a two-step analysis to
determine whether a party can be compelled to arbitrate.
See Webb v. Investacorp, Inc., 89 F.3d 252, 257-58
(5th Cir. 1996). The court must ask: (1) whether the parties
agreed to arbitrate the dispute; and (2) whether the dispute
falls within the scope of that arbitration agreement. See
id. (collecting cases). If the party attempting to
compel arbitration establishes the existence of a valid
arbitration agreement, “a strong presumption favoring
arbitration arises, and the burden shifts to the party
opposing arbitration to raise an affirmative defense to the
agreement's enforcement.” Ellis v.
Schlimmer, 337 S.W.3d 860, 862 (Tex. 2011) (citation
deciding whether the parties agreed to arbitrate the dispute,
courts “should apply ordinary state-law principles that
govern the formation of contracts.” First Options
of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995)
(collecting cases). In the present case, the parties agree
that Texas state law governs matters that are not addressed
by the FAA.
question before the Court is whether W&T, a non-signatory
to the DRP, may compel Allen to arbitration pursuant to the
DRP. W&T argues that it has a right to compel arbitration
on a third-party beneficiary theory because the DRP applies
to all Electing Entities, and W&T is an Electing Entity.
the FAA, state contract law governs issues of validity,
revocability, and enforceability of an arbitration agreement.
See Arthur Andersen LLP v. Carlisle, 556 U.S. 624,
630 (2009). W&T may only enforce the arbitration
agreement as a third-party beneficiary if it qualifies as
such under Texas law. The Texas Supreme Court has held that a
third party may enforce a contract only if the parties
clearly intended to secure a benefit to that third party and
the contracting parties entered into the contract directly
for the third party's benefit. See Tawes v.
Barnes, 340 S.W.3d 419, 425 (Tex. 2011); Stine v.
Stewart, 80 S.W.3d 586, 589 (Tex. 2002). In determining
whether the parties to a contract intended to benefit a
third-party, courts look to the entire agreement, giving
effect to all of its provisions. See City of Houston v.
Williams, 353 S.W.3d 128, 145 (Tex. 2011) (citation
omitted). “Although a third party must be more than an
incidental beneficiary, a beneficiary is not required to show
that the parties executed the contract solely for its
benefit.” In re Citgo Petroleum Corp., 248
S.W.3d 769, 776 (Tex. App.-Beaumont 2008, pet. denied)
(citation omitted). A third-party beneficiary may be
identified by class or category of persons in the arbitration
agreement, all of whom may not be known to the parties at the
time of execution. See ConocoPhillips Co. v. Graham,
No. 01-11-00503-CV, 2012 WL 1059084, at *6 (Tex. App.-Houston
[1st Dist.] Mar. 29, 2012, no pet.).
argues that this case is extremely similar to
ConocoPhillips and In re Citgo, two Texas
appellate cases upholding the enforceability of arbitration
clauses involving non-signatory ...