The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
DONALD PRIEBE CIVIL ACTION
VERSUS NO. 21-1274-WBV-DMD
ADVANCED STRUCTURAL SECTION: D (4)
TECHNOLOGIES, INC.
ORDER AND REASONS
Before the Court is a Motion to Dismiss and Compel Arbitration filed by
defendant, Advanced Structural Technologies, Inc.1 The Motion is opposed,2 and
Defendant has filed a Reply.3 After careful consideration of the parties’ memoranda
and the applicable law, the Motion is GRANTED in part.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 24, 2021, Donald Priebe filed a Petition to Rescind Contract or, in the
alternative, Petition for Declaratory Judgment in the 24th JDC against his employer,4
Advanced Structural Technologies, Inc (“Defendant”).5 Plaintiff alleges that he
entered into a written Employment Agreement with Defendant in 2015 for Plaintiff
to establish a Power Division of the company in Louisiana.6 Plaintiff asserts that the
Employment Agreement provided that he would become a 40% equity owner in a new
1 R. Doc. 7.
2 R. Doc. 10.
3 R. Doc. 39.
4 Plaintiff submitted his resignation to his employer following the filing of the lawsuit in state court.
5 R. Doc. 1-1. In his Opposition brief, Plaintiff states that he filed his Petition to Rescind Contract on
June 3, 2021 (R. Doc. 10 at p. 2). The Court’s review of the Petition reflects that it was filed May 24,
2021. The date of the filing of the state court petition is inconsequential for purposes of this analysis
6 R. Doc. 1-1 at ¶ VII.
company through a spin-off transaction upon certain work milestones being reached.7
Plaintiff further asserts that the milestones were reached, yet Defendant failed in its
obligation to form a new company through a spin-off transaction.8 Plaintiff contends
that the Employment Agreement has been vitiated by error and fraud and therefore
should be rescinded.9 Alternatively, Plaintiff seeks a declaratory judgment decreeing
that Plaintiff has a right to terminate the Employment Agreement at will, that
Plaintiff has no obligations to Defendant upon the termination of his employment,
and that the non-competition clause in the Employment Agreement is not valid,
including any restrictions on future solicitations of clients or any other restrictions
on future employment.10
Defendant removed the case to this Court on June 30, 2021 on the basis of
diversity jurisdiction, 28 U.S.C. § 1332.11
On August 3, 2021, Defendant filed the instant Motion, asserting that this
matter should be dismissed and that Plaintiff be compelled to arbitrate his claims
pursuant to the arbitration provision in the Employment Agreement that he signed
with the Defendant.12 Defendant further seeks dismissal of the lawsuit on the basis
that the arbitration provision encompasses all of the claims raised in Plaintiff’s
Petition.13 Attached to the Motion is a Declaration from David Buchanan, Chief
Executive Officer of Advanced Structural Technologies, Inc., in which Mr. Buchanan
7 Id. at ¶ VIII.
8 Id. at ¶ XII.
9 Id. at ¶ XIV.
10 Id. at ¶ XXXV.
11 R. Doc. 1.
12 R. Doc. 7.
13 Id.
advised that Plaintiff began his employment with Defendant on December 18, 2015.14
Mr. Buchanan asserts that Plaintiff signed an Employment Agreement at the
commencement of his employment, which is attached to the Declaration.15 Buchanan
further advises that two addendums were subsequently executed by Plaintiff and
Defendant, both of which are also attached to the Declaration.16
Defendant asserts that the Federal Arbitration Act (“FAA”) mandates
arbitration of Plaintiff’s claims as agreed to in the Employment Agreement.
Defendant claims that courts consider two factors in determining whether to compel
arbitration: (1) whether a valid agreement to arbitrate between the parties exist; and
(2) whether the dispute in question falls within the scope of that arbitration
agreement.17 Defendant argues that the requirements for a valid contract—capacity,
consent, a lawful cause, and a valid object—have all been met with respect to the
arbitration provision. Defendant contends that the arbitration provision is valid and
enforceable by, among other things, Plaintiff’s own admission in his Petition wherein
he states that he was presented with the Employment Agreement at the beginning of
his employment with Defendant, and that it was later amended for valuable
consideration.18 Defendant also points out that Louisiana law favors arbitration and
“[t]hus, the act of submitting disputes to arbitration is a valid contractual object.”19
14 R. Doc. 7-2.
15 Id. A copy of the Employment Agreement was also attached to Plaintiff’s state court Petition. See,
R. Doc. 1-1 at pp. 17-30.
16 R. Doc. 7-2.
17 R. Doc. 7-1 (quoting Painewebber Inc. v. Chase Manhattan Private Bank (Switz.), 260 F.3d 453, 462
(5th Cir. 2001)) (internal quotation marks omitted).
18 R. Doc. 7-1.
19 Id. (citing Henry v. New Orleans Louisiana. Saints, L.L.C., Civ. A. No. 15-5971, 2016 WL 2901774,
at *5 (E.D. La. May 18, 2016)).
As to the second inquiry—whether the dispute in question falls within the scope of
the arbitration provision—Defendant asserts that all of Plaintiff’s claims fall squarely
within the scope of the arbitration provision, pointing to specific language in
Plaintiff’s Petition wherein he claims that Defendant failed to comply with specific
provisions of the Employment Agreement.20 Defendant further directs the Court to
the remedy sought by Plaintiff, namely, a “determination of the validity and
enforceability of purported non-competition and non-solicitation of clients restrictive
covenants in the Employment Agreement.”21 Defendant further contends that any
doubt about whether the arbitration provision covers Plaintiff’s claims should be
resolved in favor of arbitration. Finally, Defendant asserts that Plaintiff’s lawsuit
should be dismissed rather than stayed, since all of Plaintiff’s claims are subject to
arbitration.22
Plaintiff opposes the Motion, asserting that Defendant is seeking to circumvent
clear Louisiana law and strong public policy to the detriment of a Louisiana resident,
further delaying Plaintiff’s employment and forcing Plaintiff to resolve these issues
thousands of miles away in Minnesota.23 Plaintiff argues that La. R.S. 23:921
invalidates the arbitration provision of the Employment Agreement since the
arbitration agreement contains a forum selection clause. Citing the specific language
of La. R.S. 23:921, Plaintiff contends that he has not “expressly, knowingly, and
20 R. Doc. 7-1.
21 Id. (citing R. Doc. 1-1 at ¶¶ III, IX-XIII).
22 R. Doc. 7-1 (citing Ruiz v. Donahoe, 784 F.3d 247, 249–50 (5th Cir. 2015)) (internal quotation marks
and citation omitted). Defendant also preemptively argues that La. R.S. 23:921(A)(2) does not operate
to invalidate the arbitration provision. Defendant’s argument on this point will be summarized later
in this Order in response to Plaintiff’s Opposition.
23 R. Doc. 10.
voluntarily agreed to and ratified” the clause “after the occurrence of the incident
which is the subject of the civil or administrative action.”24 Plaintiff further points
out that Defendant has not cite any Fifth Circuit decision addressing this argument.
Thus, Plaintiff contends that the forum selection clause contravenes Louisiana law
and renders the arbitration clause null and void.
In response, Defendant asserts that it did not cite a Fifth Circuit opinion
addressing this issue because: (1) it cited “scores” of district court cases that support
similar motions to dismiss and compel arbitration; (2) it is unlikely the Fifth Circuit
would ever be in the position to hear an appeal on this issue after a matter has been
correctly dismissed in favor of arbitration; and (3) the Fifth Circuit has analyzed this
issue in the context of a similar Louisiana statute and determined that the district
court properly compelled arbitration because the FAA preempted the Louisiana
statute.25 Defendant argues that there is no compelling argument for the Fifth Circuit
to reach a different conclusion if it were to analyze the FAA in relation to La. R.S.
23:921. Defendant further asserts that it “footnoted a compendium of district court
cases from within the fifth Circuit which have specifically held that the FAA
preempts the forum selection prohibition in Louisiana Revised Statute 23:921. (R.
Doc. 7-1, p. 3, n.1).”26
24 Id.
25 R. Doc. 13 at pp. 2-3 (citing Ope Int’l LP v. Chet Morrison Contractors, Inc., 258 F.3d 443, 447-48
(5th Cir. 2001)).
26 R. Doc. 13 at p. 2.
II. LEGAL STANDARD
A. Motion to Compel Arbitration
The Federal Arbitration Act, 9 U.S.C. §1, et seq. (the “FAA”), governs the
enforceability of arbitration agreements in federal court. According to the Supreme
Court, the FAA “embodies the national policy favoring arbitration and places
arbitration agreements on equal footing with all other contracts[.]”27 The FAA
provides that an arbitration agreement in writing “shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity for the revocation of
any contract.”28 “The underlying purpose of the FAA was to create a policy in favor
of arbitration, such that ‘any doubts concerning the scope of arbitrable issues should
be resolved in favor of arbitration.’”29 The FAA provides that a party to an arbitration
agreement “may petition any United States district court . . . for an order directing
that such arbitration proceed in the manner provided for in such agreement.”30 “By
its terms, the Act leaves no place for the exercise of discretion by a district court, but
instead mandates that district courts shall direct the parties to proceed to arbitration
on issues as to which an arbitration agreement has been signed.”31
27 Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006).
28 9 U.S.C. § 2.
29 Iheanacho v. Air Liquide Large Industries U.S. L.P., Civ. A. No. 19-532-SDD-SDJ, 2020 WL 3451689,
at *2 (M.D. La. June 24, 2020) (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S.
1, 24-25 (1983); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991); Primerica Life Ins.
Co. v. Brown, 304 F.3d 469, 471 (5th Cir. 2002); D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 360 (5th Cir.
2013)).
30 9 U.S.C. § 4.
31 Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S. Ct. 1238, 1241, 84 L. Ed. 2d 158 (1985)
(citation omitted).
The FAA further provides that, “[U]pon being satisfied that the issue involved
in [a] suit or proceeding is referable to arbitration under such an agreement, [the
court] shall on application of one of the parties stay the trial of the action until such
arbitration has been had in accordance with the terms of the agreement . . . .”32 The
Fifth Circuit has construed this provision as providing for a mandatory stay of
litigation.33 While a court may not deny a stay in such a situation, the Fifth Circuit
has clarified that, “This rule, however, was not intended to limit dismissal of a case
in the proper circumstances.”34 Thus, a district court has discretion to dismiss the
case when all of the claims asserted are subject to arbitration.35
In determining whether a party should be compelled to arbitrate, the Court’s
inquiry consists of three steps.36 First, the Court must determine whether a valid
agreement to arbitrate exists between the parties.37 The Court must then determine
whether the dispute in question falls within the scope of the arbitration clause.38 If
the first two steps are answered affirmatively, the Court must determine “whether
any federal statute or policy renders the claims nonarbitrable.”39 “If the dispute is
32 9 U.S.C. § 3.
33 Waste Management, Inc. v. Residuos Industriales Multiquim, S.A. de C.V., 372 F.3d 339, 342 (5th
Cir. 2004) (quoting 9 U.S.C. § 3).
34 Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992).
35 Alford, 975 F.2d at 1164; see Fedmet Corp. v. M/V BUYALYK, 194 F.3d 674, 676 (5th Cir. 1999
(interpreting Alford to mean “district courts have discretion to dismiss cases in favor of arbitration”).
36 Hill v. Hornbeck Offshore Services, Inc., 799 F. Supp. 2d 658, 661 (E.D. La. 2011) (citing Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626, 105 S.Ct. 3346, 3353-54, 87 L.Ed.2d
444 (1985); Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1073 (5th Cir. 2002)).
37 JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007) (quoting Will–Drill
Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214 (5th Cir. 2003)) (internal quotation marks omitted);
Hill, 799 F. Supp. 2d at 661 (citing Gaskamp, 280 F.3d at 1073).
38 Conegie ex rel. Lee, 492 F.3d at 597 (quoting Will–Drill Res., Inc., 352 F.3d at 214).
39 Hill, 799 F.3d at 661 (quoting Jones v. Halliburton Co., 583 F.3d 228, 234 (5th Cir. 2009)) (internal
quotation marks omitted); Washington Mut. Fin. v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004).
referred to arbitration, the FAA requires the court to stay or dismiss the
proceedings,40 and the Court ‘shall make an order directing the parties to proceed to
arbitration in accordance with the terms of the agreement.’”41
III. ANALYSIS
A. The parties agreed to arbitrate the issues in dispute.
In determining the first prong, whether there is an agreement to arbitrate the
dispute at issue, the Court must consider: (1) whether there is a valid agreement to
arbitrate between the parties; and (2) whether the dispute in question falls within
the scope of that arbitration agreement.42 Ordinarily, the court determines both
questions.43 However, “where the arbitration agreement contains a delegation clause
giving the arbitrator the primary power to rule on the arbitrability of a specific claim,
the analysis changes.”44 The Fifth Circuit has instructed that, “If there is a delegation
clause, the motion to compel arbitration should be granted in almost all cases.”45
1. The Employment Agreement contains a valid arbitration
provision.
The Fifth Circuit has held that, “Because arbitration is simply a matter of
contract between the parties, the strong federal policy favoring arbitration does not
apply to the initial determination of whether there is a valid agreement to
40 Iheanacho v. Air Liquide Large Industries U.S. L.P., No. 19-532-SDD-SDJ, 2020 WL 3451689, at *2
(M.D. La. June 24, 2020) (citing Holts v. TNT Cable Contractors, Inc., No. 19-13546 2020 WL 1046337,
at *2 (E.D. La. Mar. 4, 2020); Alford, 975 F.2d at 1164).
41 Iheanacho, Civ. A. No. 19-532-SDD-SDJ, 2020 WL 3451689 at *2 (citing 9 U.S.C. § 4).
42 Klein v. Nabors Drilling USA L.P., 710 F.3d 234, 236 (5th Cir. 2013) (citing Sherer, 548 F.3d at 381).
43 Kubala v. Supreme Production Services, Inc., 830 F.3d 199, 201 (5th Cir. 2016) (citing Will-Drill
Res., Inc. v. Samson Res. Co., 352 F.3d 211, 214 (5th Cir. 2003)).
44 Kubala, 830 F.3d at 201 (citation omitted).
45 Id. (citations omitted).
arbitrate.”46 Instead, ordinary state-law contract principles govern the inquiry of
whether there is a valid agreement to arbitrate the claims.47 Under Louisiana law,
the formation of a valid contract requires: (1) capacity to contract; (2) mutual consent;
(3) a certain object; and (4) a lawful purpose.48 Plaintiff has not raised any argument
that he did not enter into a valid Employment Agreement. Indeed, his Petition avers
that “Priebe, a professional engineer, entered into a written Employment Agreement
with AST in 2015 pursuant to which AST employed Priebe as the Vice President of
the Power Division.”49 The facts as asserted by Plaintiff further evince a valid
contract, including Plaintiff’s continued employment with Defendant for several
years after the initial Employment Agreement and Plaintiff’s subsequent signing of
two addendums to the Employment Agreement. The Court also finds the fact that
Plaintiff was a professional engineer provides further support for his capacity to
contract and his mutual consent. Finally, the Court notes that the Employment
Agreement’s concluding paragraph states:
Employee has read this Agreement carefully and understands each of
its terms and conditions. Employee has sought, or had the opportunity
to seek, independent legal counsel of Employee’s choice to the extent
Employee deemed such advice necessary in connection with the review
and execution of this agreement.50
In light of the evidence before the Court, the Court finds that the Employment
Agreement contains a valid arbitration provision. Plaintiff’s argument regarding the
46 Klein v. Nabors Drilling USA L.P., 710 F.3d 234, 236 (5th Cir. 2013) (quotation and citation omitted).
47 Id. (citation omitted).
48 La. Civ. Code arts. 1918, 1927, 1966 & 1971; Wallace v. Shreve Memorial Library, 79 F.3d 427, 430
n.4 (5th Cir. 1996).
49 R. Doc. 1-1 at ¶ VII.
50 R. Doc. 7-3 at p. 12.
invalidity of the Employment Agreement rests solely on La. R.S. 23:921, which
Plaintiff contends is contrary to the arbitration provision of the Employment
Agreement. Plaintiff’s argument on this point will be discussed in Section D below.
B. Plaintiff’s claims fall within the arbitration provision of the
Employment Agreement.
The second inquiry to determine whether Plaintiff should be compelled to
arbitrate his claims requires a determination as to whether Plaintiff’s claims fall
within the arbitration provision of the Employment Agreement. Pointing to the
specific language of Plaintiff’s state court Petition, Defendant asserts that all of
Plaintiff’s claims fall within the arbitration provision. Plaintiff does not address this
issue in his Opposition brief.
The arbitration provision provides, in part, “Any dispute or controversy arising
out of or relating to this Agreement or the relationship between Employee and the
Company shall be settled by binding arbitration. . .”51 Plaintiff’s Petition seeks
redress for error and fraud pursuant to the Employment Agreement. Further,
Plaintiff seeks relief in the form of a declaratory judgment that various provisions of
the Employment Agreement are null and void, and Plaintiff asks the Court to conduct
a proceeding to determine Plaintiff’s obligations “under the Employment
Agreement.”52 The Court agrees with Defendant that Plaintiff’s claims, by his own
assertions, fall within the arbitration provision.
51 R. Doc. 1-1.
52 Id. at ¶¶ XXXV and XXXVII.
C. No federal statute or policy render Plaintiff’s claims non-arbitrable.
Turning to the third inquiry in determining whether the Court should compel
arbitration of this matter, the Court finds that the parties have not identified a
federal statute or policy that renders Plaintiff’s claims non-arbitrable, and the Court
knows of none. Instead, Plaintiff relies solely on a Louisiana law which he contends
is contrary to the arbitration provision at issue. Thus, the third factor weighs in favor
of compelling arbitration.
D. The FAA preempts La. R.S. 23:921(A)(2).
The Court next addresses Plaintiff’s sole argument in opposition to Defendant’s
Motion to Dismiss and Compel Arbitration—that La. R.S. 23:921(A)(2) invalidates
the arbitration clause contained in the Employment Agreement. The arbitration
provision provides, in pertinent part, the following:
Arbitration of Disputes.
Except as otherwise provided herein, any dispute or controversy arising
out of or relating to this Agreement or the relationship between
Employee and the Company shall be settled by binding arbitration to be
held in Hennepin County, Minnesota and conducted in accordance with
the commercial arbitration rules of the American Arbitration
Association then in effect. . .53
Plaintiff contends that the inclusion of a form selection clause in the arbitration
provision contravenes Louisiana law. Citing several Louisiana cases, Defendant
asserts that, “such an argument has been flatly rejected by numerous courts in
Louisiana on federal preemption grounds.”54 Further, in its Reply brief, Defendant
53 R. Doc. 7-3 at p. 11.
54 R. Doc. 7-1 at p. 3, n.1 (citing authority).
points out that the Fifth Circuit has addressed this issue in the context of a similar
Louisiana statute and it, too, has rejected the argument.55
In Southland Corp. v. Keating, the Supreme Court noted that, “In creating a
substantive rule applicable in state as well as federal courts [the Federal Arbitration
Act], Congress intended to foreclose state legislative attempts to undercut the
enforceability of arbitration agreements.”56 Further, in the case cited by Defendant
in its Reply brief, Ope Int’l LP v. Chet Morrison Contractors, Inc., the Fifth Circuit
held that the FAA preempted another Louisiana statute, La. R.S. 9:2779. The Fifth
Circuit reasoned, “Although the Fifth Circuit has never determined whether the FAA
preempts section 9:2779, we have held that the FAA preempts other state laws that
preclude parties from enforcing arbitration agreements.”57 Those “other state laws”
included provisions of the Texas Deceptive Trade Practices Act, as well as provisions
of the Texas Labor Code. The Fifth Circuit then addressed La. R.S. 9:2779, which,
“declares null and void and unenforceable as against public policy any provision in
[certain construction subcontracts] . . . which [] [r]equires a suit or arbitration
proceeding to be brought in a forum or jurisdiction outside of [Louisiana],”58 and
determined that the FAA preempted that Louisiana statute.59 This Court has no
reason to believe that the Fifth Circuit would reach a different conclusion regarding
55 R. Doc. 13 at pp. 2-3 (citing Ope Int’l LP v. Chet Morrison Contractors, Inc., 258 F.3d 443, 447-48
(5th Cir. 2001)).
56 465 U.S. 1 (1984).
57 Ope Int’l LP, 258 F.3d at 447-48.
58 Id. at 447 (quoting La. R.S. 9:2779(B)(1)).
59 Ope Int’l LP, 258 F.3d at 447.
La. R.S. 23:921, which includes statutory language very similar to La. R.S. 9:2779.
Thus, the Court agrees with Defendant that the FAA preempts La. R.S. 23:921(A)(2).
E. A stay of the proceedings is appropriate in this case.
In its Motion, Defendant seeks a dismissal of this case, rather than a stay, if
the matter is referred to arbitration. Though not addressed in Plaintiff’s Opposition
brief, in a status conference with the Court on October 14, 2021, Plaintiff specifically
requested a stay if the Court grants Defendant’s Motion. The Court recognizes that
under the FAA, a stay pending arbitration is mandatory upon a showing that the
opposing party has commenced suit “upon any issue referable to arbitration under an
agreement in writing for such arbitration . . . .”60 Relying on 9 U.S.C. § 3 which allows
for a stay at the request of a party if the dispute is referred to arbitration, and noting
Plaintiff’s specific request that the matter be stayed, the Court determines that a stay
is most appropriate in this case.
IV. CONCLUSION
For the foregoing reasons, IT IS ORDERED that Defendant Advanced
Structural Technologies, Inc.’s Motion to Dismiss and Compel Arbitration61 is
GRANTED in part and DENIED in part. The motion is GRANTED to the extent
that Defendant seeks to compel arbitration of this matter, but DENIED to the extent
that Defendant seeks a dismissal with prejudice of Plaintiff’s claims.
60 9 U.S.C. § 3.
61 R. Doc. 39.
IT IS FURTHER ORDERED that this civil matter is STAYED in its entirety
pending arbitration of Mr. Priebe’s claims against Advanced Structural Technology,
Inc. arising out of his Employment Agreement.
IT IS FURTHER ORDERED that the Clerk of Court CLOSE the above-
captioned civil case for administrative and statistical purposes, pending further order
from the Court. The Court shall retain jurisdiction and the case shall be restored to
the trial docket upon motion of a party if circumstances change, so that Plaintiffs
claims may be heard to final disposition.
New Orleans, Louisiana, October 20, 2021.
Ody Vottic
WENDY B. YITTER
United States District Judge