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LeJeune v. Cobra Acquisitions LLC

United States District Court, W.D. Texas, San Antonio Division

January 16, 2020

EJ LEJEUNE, individually and on behalf of all others similarly situated, Plaintiffs,
v.
COBRA ACQUISITIONS LLC, et al., Defendants.

          ORDER

          JASON PULLIAM, UNITED STATES DISTRICT JUDGE.

         The Court has under consideration Defendant Espada Logistics and Security Group, LLC's (“Espada”) Objections to Magistrate's Order on Defendant's Motion to Stay and Request for Modifications (ECF No. 69).[1] Through counsel, Plaintiff EJ LeJeune and the putative class members have filed a response to the objections. See ECF No. 71. Espada has filed a reply brief. See ECF No. 74.

         The objections relate to an order dated December 2, 2019, (ECF No. 64) that denied a Motion to Stay Proceedings in light of Currently Pending Arbitration (ECF No. 53). The parties agree that it was proper for the Magistrate Judge to rule on the filing as a non-dispositive matter.

         I. AUTHORITY OF MAGISTRATE JUDGE AND STANDARD OF REVIEW

         Section 636(b)(1)(A) of Title 28 of the United States Code permits district judges to “des-ignate a magistrate judge to hear and determine any pretrial matter pending before the court, ” except for specifically listed motions that are not at issue here. The district judge may review and reconsider any pretrial matter decided by a magistrate judge under the authority of subparagraph (A) when “it has been shown that the magistrate judge's order is clearly erroneous or contrary to law.” 28 U.S.C. § 636(b)(1)(A).

         Rule 72(a) of the Federal Rules of Civil Procedure provides further guidance as to reviewing non-dispositive pretrial orders of magistrate judges. It establishes a fourteen-day period for parties to object to such orders. And it mandates that the district judge “consider timely objections and modify or set aside any part of the order that is clearly erroneous or is contrary to law.” Rule 72(a) and § 636(b)(1)(A) set out a “highly deferential standard [that] requires the court to affirm the decision of the magistrate judge unless ‘on the entire evidence [the court] is left with a definite and firm conviction that a mistake has been committed.'” Baylor Health Care Sys. v. Equitable Plan Servs., Inc., 955 F.Supp.2d 678, 689 (N.D. Tex. 2013) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)); accord Gomez v. Ford Motor Co., No. 5:15-CV-866-DAE, 2017 WL 5201797, at *2 (W.D. Tex. Apr. 27, 2017) (same). With respect to reviewing a non-dispositive order of a magistrate judge, the following principles apply:

The clearly erroneous standard applies to the factual components of the magistrate judge's decision. The district court may not disturb a factual finding of the magis-trate judge unless, although there is evidence to support it, the reviewing court is left with the definite and firm conviction that a mistake has been committed. If a magistrate judge's account of the evidence is plausible in light of the record viewed in its entirety, a district judge may not reverse it. The legal conclusions of the magistrate judge are reviewable de novo, and the district judge reverses if the magistrate judge erred in some respect in [his or her] legal conclusions. [T]he abuse of discretion standard governs review of that vast area of choice that remains to the [magistrate judge] who has properly applied the law to fact findings that are not clearly erroneous.

Baylor Health Care Sys., 955 F.Supp.2d at 689 (omitting citations and internal quotation marks while quoting Arters v. Univision Radio Broadcasting TX, L.P., No. 3:07-CV-0957-D, 2009 WL 1313285, at *2 (N.D. Tex. May 12, 2009)). The clearly erroneous standard of review “does not entitle the court to reverse or reconsider the order simply because it would or could decide the matter differently.” Gomez, 2017 WL 5201797, at *2 (citing Guzman v. Hacienda Records & Recording Studio, Inc., 808 F.3d 1031, 1036 (5th Cir. 2015)). To the contrary, “the great deference owed to the [magistrate] judge's findings compels the conclusion that [w]here there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous.” Guzman, 808 F.3d at 1036 (citations and internal quotation marks omitted).

         Consistent with § 636(b)(1) and Rule 72(a), the Court reviews the order entered by the Magistrate Judge and the objections thereto.

         II. MAGISTRATE JUDGE ORDER

         Pursuant to the Federal Arbitration Act, 9 U.S.C. § 3, and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 208, Espada moved to stay the proceedings in this case pending resolution of currently pending arbitration it commenced against LeJeune in London, England. See Mot. Stay at 1-3. Citing § 3, it argues that, “[b]ecause there exists an issue referable to arbitration under a written arbitration agreement, the Court must stay the trial of this action and all proceedings herein until the arbitration has been had in accordance with the terms of the agreement.” Id. at 4.

         On December 2, 2019, the Magistrate Judge denied the motion for stay after a hearing. See Order (ECF No. 64). She recognized that “Espada moves for an order staying all proceedings in this case so that an arbitrator in London can adjudicate the overtime claims raised in this suit.” Id. at 4. She further recognized that (1) LeJeune is a Louisiana resident, (2) Espada is a Texas-based company, (3) those parties executed two Independent Contractor Service Agreements that both contain identical arbitration provisions, (4) those agreements require that arbitration be conducted in accordance with terms of the London Maritime Arbitrators Association (“LMAA”) current at the commencement of arbitration proceedings; (5) Espada commenced arbitration proceedings in London, (6) the motion to stay relies on the enforceability of the arbitration provision, (7) the Federal Arbitration Act (“FAA”) imposes a presumption favoring arbitration but such presumption arises only after the party seeking arbitration proves that a valid arbitration agreement exists, and (8) the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 governs arbitration agreements designating an international forum. Id. at 4-5.

         The Magistrate Judge found the arbitration agreement unenforceable as currently written because it violates 9 U.S.C. § 202 in that it bears no reasonable relation to a foreign state, independent of the arbitration clause itself. Id. at 5-8. She next found that the Court lacks authority to rewrite the international arbitration clause at issue because Espada had not shown that the contractual arbitration location was merely a minor consideration and that the essence of the bargain was to engage in arbitration. Id. at 9-10. In making that finding, the Magistrate Judge relied on and applied National Iranian Oil Co. v. Ashland Oil, Inc. [hereinafter NIOC], 817 F.2d 326 (5th Cir. 1987). See id.

         As stated in NIOC, whether an “agreement to arbitrate is entire or severable turns on the parties' intent at the time of the agreement was executed, as determined from the language of the contract and the surrounding circumstances.” 817 F.2d at 333. The party seeking to arbitrate must “show that the essence, the essential term, of the bargain was to arbitrate, while the situs of the arbitration was merely a minor consideration.” Id. In addition, even if a clause is ...


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