United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
KINKEADE UNITED STATES DISTRICT JUDGE
9, 2019, the Court issued its Memorandum Opinion and Order in
this case, in which the Court confirmed the arbitration
award. In its Memorandum Opinion and Order, the Court
deferred ruling on whether it should award Gildan Activewear
SRL (“Gildan”) its attorneys' fees and costs
and ordered Gildan to file supplemental briefing on the
issue. Gildan timely filed its supplemental briefing on July
23, 2019. Pursuant to the Court's order, Ennis, Inc.
(“Ennis”) had until July 30, 2019 to file a
response to Gildan's supplemental briefing. Ennis filed
no response. Because the Court finds that the Unit Purchase
Agreement (the “Agreement”) serves as a basis for
an award of attorneys' fees and costs incurred by Gildan
in this action, and, alternatively, because the Court finds
that Ennis's challenge to the arbitration award was
without justification, the Court GRANTS
Gildan's request for its attorneys' fees and costs.
the “American Rule” concerning attorneys'
fees and litigation costs, “absent statute or
enforceable contract, litigants must pay their own
attorneys' fees.” Tex. A&M Research Found.
v. Magna Transp., Inc., 338 F.3d 394, 405 (5th Cir.
2003) (quoting Galveston Cty. Navigation Dist. No. 1 v.
Hopson Towing Co., Inc., 92 F.3d 353, 356 (5th Cir.
1996)). The Federal Arbitration Act (“FAA”) is
not a statutory basis for a prevailing party in an action to
confirm or vacate an arbitration award to receive
attorneys' fees and costs. Interstate Distrib. Co. v.
Ellis, Civ. Action No. H-15-1781, 2016 WL 3269709, at *2
(S.D. Tex. June 15, 2016). Gildan must therefore rely upon a
contractual provision or another, alternative basis under the
law in arguing that it is entitled to attorneys' fees.
supplemental briefing, Gildan directs this Court to the
Agreement as the basis for why Gildan is entitled to an award
of attorneys' fees and costs. Under the Agreement, Ennis
agreed to pay and reimburse Gildan for any Loss related to a
breach of the Agreement by Ennis. Agreement § 8.02(b).
The arbitration award in this case clearly establishes that
Ennis breached the Agreement by not indemnifying Gildan for
the Change of Control Severance Payment. A Loss includes the
reasonable attorneys' fees and costs incurred in
enforcing any right to indemnification under the Agreement.
In light of this language in the Agreement, and without a
response from Ennis pointing the Court to contrary authority,
the Court finds that an award of attorneys' fees and
litigation costs to Gildan is appropriate.
although “[t]he FAA does not provide for attorney's
fees to a party who is successful in confirming an
arbitration award in federal court, ” the party seeking
confirmation “may nevertheless be entitled to
attorney's fees . . . if the opponent's reasons for
challenging the award are ‘without merit' or
‘without justification.'” Interstate
Distrib., 2016 WL 3269709, at *2. “‘Without
justification' refers not to the strength of the
challenge but to the type.” Delek Ref., Ltd. v.
Local 202, United Steel, 891 F.3d 566, 573 (5th Cir.
2018). “On one side of the divide are challenges to an
arbitrator's jurisdiction or authority, which do not
result in a fee award even if they come up short.”
Id. “On the other are those that go to the
‘intrinsic merits' of a dispute, which justify fees
even if not frivolous.” Id.; see also
Int'l Ass'n of Machinists & Aerospace Workers,
Dist. 776 v. Tex. Steel Co., 639 F.2d 279, 283-84 (5th
Cir. Unit A Mar. 1981) (holding “that the district
court abused its discretion in refusing to award
attorneys' fees” when, “look[ing] to the
realities of the situation, ” the party challenging the
arbitration award objected “on a matter involving the
‘intrinsic merits' of the dispute”).
explained throughout this Court's July 9, 2019 Memorandum
Opinion and Order, Ennis's asserted bases for vacatur go
to the “intrinsic merits” of the arbitrator's
resolution of the contractual dispute. Ennis argued that the
arbitrator exceeded his authority by manifestly disregarding
the law in interpreting the contracts at issue in this case.
Such an argument is a quintessential challenge to the merits.
See Delek Ref., Ltd., 891 F.3d at 574
(“Delek's challenge goes to the merits as the
central issue it raises is whether the arbitrator correctly
interpreted and applied the exceptions in [a provision of the
collective bargaining agreement].”).
decision to award attorneys' fees to the party that
successfully defends a challenge to an arbitration award is
typically a matter of discretion for the district court, the
Fifth Circuit has explained “that fees should be
awarded when the challenge to the labor arbitration is
‘without justification.'” Id. at
573; see also Executone Info. Sys., Inc. v. Davis,
26 F.3d 1314, 1331 (5th Cir. 1994) (reciting the
“without merit” or “without
justification” rule in a case with a challenge to an
arbitration award that involved breach-of-contract claims
outside of the labor context). The Court therefore finds that
an award of attorneys' fees and costs to Gil dan is
appropriate on the alternative basis that Ennis's
challenge to the arbitration award was without justification.
the Agreement provides the basis for an award of Gildan's
attorneys' fees and litigation costs, and, alternatively,
because Ennis's challenge to the arbitration award was
without justification, the Court GRANTS
Gildan's request for its attorneys' fees and costs
incurred in this case. (As Gildan recognizes in its
supplemental briefing, Gildan is not seeking, and the Court
is not awarding in this Order, attorneys' fees and costs
related to the arbitration proceeding.) The Court
REFERS the issue of Gildan's reasonable
attorneys' fees and costs to be awarded in this case to
Magistrate Judge Rebecca Rutherford for a hearing, if
necessary, and determination.