The opinion
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
REDHAWK MEDICAL PRODUCTS CIVIL DOCKET NO. 6:23-CV-01021
& SERVICES, LLC
VERSUS JUDGE DAVID C. JOSEPH
N95 SHIELD, LLC MAGISTRATE JUDGE CAROL B.
WHITEHURST
MEMORANDUM RULING
Before the Court is a MOTION TO VACATE ARBITRATION AWARD (the “Motion”)
filed by Defendant N95 Shield, LLC (hereinafter “N95 Shield”). [Doc. 25]. N95 Shield
seeks an order vacating the arbitration award of May 1, 2023 (the “Final Award”)
under 9 U.S.C. § 10(a)(4) and asks this Court to deny Redhawk Medical Products &
Services, LLC’s (“Redhawk”) “Petition to Confirm Arbitration Award” [Doc. 1] on the
same grounds. For the following reasons, N95’s Motion is DENIED.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This lawsuit arises from N95 Shield’s purchase of 500 million PPE products
(3M Masks) from Redhawk for a total purchase price of $950,000,000 pursuant to a
Sales and Purchase Agreement (the “Agreement”) executed on June 22, 2021, by Matt
Miller, CEO of N95 Shield, and Darcy Klug, CEO of Redhawk. The Agreement
describes the product purchased [Doc. 30-1, ¶ 1]; the purchase price [Doc. 30-1, ¶ 2];
the procedures for the transfer of funds and release of the product [Doc. 30-1, ¶ 3];
the occurrences giving rise to a default under the Agreement [Doc. 30-1, ¶ 10]; and
the remedies available to both parties in the event of a failure to cure a default [Doc.
30-1, ¶ 11].
Important here, the following provisions of the Agreement are relevant and
pertinent to the dispute between the parties:
SALES AND PURCHASE
AGREEMENT
…
This Sales and Purchase Agreement (“SPA”) is made as of this
22nd day of June, 2021 by and among N95 SHIELD, LLC, an Arizona
limited liability company with a principal address at 1635 E. Orange
Wood Street, Gilbert, AZ 85296 (“Purchaser”) and RedHawk Medical
Products & Services, LLC, a Louisiana limited liability company,
with a principal address at 100 Petroleum Dr., Suite 200, Lafayette, LA
70508 (“Seller”). This Agreement may also refer to Seller and Purchaser
collectively as, “Parties” and individually, as “Party.” [See Sales and
Purchase Agreement, attached as Exhibit 1 to Redhawk’s opposition
brief, Doc. 30-1].
…
15. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed properly served if delivered in person or by
reputable overnight courier service, or if sent by confirmed email,
registered or certified mail, with postage prepaid and return receipt
requested, to the addresses in the Agreement or to such addresses as a
party may designate from time to time pursuant to this Section 15. All
notices shall be deemed received on the date of delivery or attempted
delivery, if emailed, or if delivered in person, or if mailed, on the date
which is two (2) days after the date such notice is deposited in the United
State Postal Service mail.
IF TO SELLER:
RedHawk Medical Products & Services, LLC
Darcy Klug, CEO
100 Petroleum Dr., Suite 200
Lafayette, LA 70508
Office: 337-269-5933
Email: Darcy.klug@redhawkholdingscorp.com
www.redhawkmedicalproducts.com
WITH A SELLER COPY TO:
Samuel E. Masur, Esq.
Gordon Arata Montgomery Barnett
400 East Kaliste Saloom Road,
Suite 4200, Lafayette, LA 70508
Office: 337-237-0132
Email: smasur@gamb.com
IF TO PURCHASER:
N95 Shield, LLC
Matt Miller
14325 N. 79 Street, Suite C
Scottsdale, AZ 85260
Office: 480-329-4374
Email: matt@n95-shield.com
www.n95-shield.com
[Doc. 30-1, ¶ 15].
…
25. Arbitration of Disputes. If a claim or controversy arising out of
or relating to this Agreement, the performance or non-performance of
obligations, the quality or appropriateness of the Products, such dispute
shall be determined by final and binding arbitration.… The arbitration
will be conducted at a location determined by the Arbitrator in
Louisiana.… In rendering the award, the arbitrator shall determine the
rights and obligations of the Parties according to the substantive and
procedural laws of Louisiana. Neither Party, however, will be precluded
from obtaining provisional relief, including but not limited to
attachment, in any court of competent jurisdiction. Judgment may be
entered upon the arbitrator’s award by any court having jurisdiction.
Should either Party refuse or neglect to appear or participate in the
arbitration proceeding, the arbitrator is empowered to decide the claim
or controversy in accordance with the evidence presented. [Doc. 30-1, ¶
25].
Redhawk argues that the Agreement was breached on June 23, 2021, when
N95 Shield failed to transfer $9,500,000 into a designated escrow account as required
under Section 3.2 of the Agreement.1 Redhawk further contends that N95 Shield’s
default and failure to cure its default within ten (10) business days of notice gave rise
to Redhawk’s contractual right to seek remedy in arbitration for breach of contract.
On May 20, 2022, Redhawk filed a Request for Arbitration with Judicial
Arbitration and Mediation Service (“JAMS”). [See Final Award, Doc. 30-30, p. 4]. On
June 7, 2022, Redhawk served the Request for Arbitration on N95 Shield by mailing
a copy of the Request to N95 Shield at 1635 Orange Wood St., Gilbert, Arizona, 85296
(the “Gilbert Address”). [Id. at 4-5; see also Doc. 30-8]. An arbitration hearing was
conducted by retired judge Michael Massengale on February 22, 2023, [Doc. 30-30, p.
8], and an Interim Award and Order was issued on March 9, 2023. [Doc. 30-26]. No
appearance was made by or on behalf of N95 Shield during the entirety of the
arbitration proceedings. A Final Award, issued on May 1, 2023, awarded the
following amounts to Redhawk: (i) damages for breach of contract in the amount of
$44,950,000; (ii) attorneys’ fees and costs in the amount of $68,614.31; (iii) pre-award
interest in contract damages in the amount of $3,365,092.47; and (iv) post-award
interest on the sum awarded for contract damages, attorneys’ fees and costs in a total
amount to be determined at the time of payment or the entry of an order confirming
1 Section 3.2 provides:
3.2 Within one (1) business day following execution and exchange of this
Agreement, [N95 Shield] shall transfer … $9,500,000.00 into the Mosely &
Lester Escrow Account pursuant to the Mosely and Lester Escrow Account
Agreement, a copy of which is attached [to the Agreement].
[Doc. 30-1, ¶ 3].
the award. The Final Award was mailed to N95 Shield on May 1, 2023, at the Gilbert
Address. [Doc. 30-29].
On August 2, 2023, Redhawk filed the instant lawsuit, petitioning the Court
for confirmation of the Final Award and entry of judgment against N95 Shield in
conformity therewith. [Doc. 1]. N95 Shield filed the instant Motion on November 17,
2023, seeking to vacate the Final Award on grounds N95 Shield had no notice of the
arbitration proceedings and the arbitration was therefore improper. [Doc. 25].
Redhawk filed an Opposition [Doc. 30] on December 7, 2023 [Doc. 30], to which N95
Shield filed a Reply [Doc. 31] on December 12, 2023. Oral argument on the Motion
was conducted on January 17, 2024. [See Minutes, Doc. 36]. The Motion is now ripe
for ruling.
LAW AND ANALYSIS
I. The Federal Arbitration Act
Congress enacted the Federal Arbitration Act (“FAA”) “to replace judicial
indisposition to arbitration with a national policy favoring [it] and plac[ing]
arbitration agreements on equal footing with all other contracts.” 21st Fin. Servs.,
L.L.C. v. Manchester Fin. Bank, 747 F.3d 331, 335 (5th Cir. 2014), citing Hall St.
Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581, 128 S. Ct. 1396, 170 L.Ed.2d 254
(2008) (alterations in original, citations and internal quotation marks omitted). In
line with that policy, the FAA supplies “mechanisms for enforcing arbitration awards:
a judicial decree confirming an award, an order vacating it, or an order modifying or
correcting it.” 21st Fin. Servs., 747 F.3d at 335. The FAA provides the exclusive
remedy for challenging misconduct in the administration of an arbitration award. Id.
at 335, citing Ameser v. Nordstrom, Inc., 442 F. App'x 967, 970 (5th Cir. 2011). Under
the FAA, a court's review of an arbitration award is “extraordinarily narrow.” Collins
v. Nat'l Football League, 566 F. Supp. 3d 586, 595 (E.D. Tex. 2021), citing Int'l Chem.
Workers Union 683c v. Columbian Chems. Co., 331 F.3d 491, 495 (5th Cir. 2003).
A motion to vacate an arbitration award is governed by 9 U.S.C. § 10, which
provides:
(a) In any of the following cases the United States court in and for
the district wherein the award was made may make an order
vacating the award upon the application of any party to the
arbitration—
(1) where the award was procured by corruption, fraud, or undue
means;
(2) where there was evident partiality or corruption in the
arbitrators, or either of them;
(3) where the arbitrators were guilty of misconduct in refusing
to postpone the hearing, upon sufficient cause shown, or in
refusing to hear evidence pertinent and material to the
controversy; or of any other misbehavior by which the rights of
any party have been prejudiced; or
(4) where the arbitrators exceeded their powers, or so
imperfectly executed them that a mutual, final, and definite
award upon the subject matter submitted was not made.
9 U.S.C. § 10(a). See also Ameser v. Nordstrom, Inc., 442 F. App'x at 970. A Court
must confirm an arbitration award unless it should be vacated under Section 10 or
modified under Section 11 of the FAA. MPJ v. Aero Sky, L.L.C., 673 F. Supp. 2d 475,
480 (W.D. Tex. Nov. 30, 2009).
II. Analysis
As an initial matter, the Court notes that there is no pending motion to confirm
the final arbitration award. Although Redhawk filed the lawsuit as a summary
proceeding seeking enforcement of the arbitrator’s Final Award, the only motion
before the Court at this time is N95 Shield’s motion to vacate the award under 9
U.S.C. § 10(a)(4). In its Motion, N95 Shield has not asked the Court to review the
merits of the underlying arbitration proceeding – e.g., the sufficiency of the evidence
presented or the correctness of the findings – but rather, asks the Court to vacate the
Final Award on grounds N95 Shield was not properly served with notice of the
arbitration proceeding. Although Redhawk asks the Court in its opposition brief to
enforce the Final Award and enter judgment in its favor therewith, that request has
not been presented to the Court in the proper procedural posture. Considering the
foregoing, the only question before the Court at this time is whether N95 Shield is
entitled to have the Final Award vacated under 9 U.S.C. § 10(a)(4).
In its Motion, N95 Shield argues that vacating the Final Award is appropriate
under 9 U.S.C. § 10(a)(4) because N95 Shield did not have proper notice of the
arbitration proceedings and was therefore denied due process. Specifically, N95
Shield argues that the “Notices” section of the Agreement required that any notice
“required or permitted” under the Agreement be mailed to N95 Shield via U.S. mail
at the following address: 14325 N. 79th Street, Suite C, Scottsdale, Arizona 85260
(hereinafter, the “Scottsdale address”). N95 Shield argues that when Redhawk filed
its Request for Arbitration on May 20, 2022, notice was not sent to the Scottsdale
Address as required by the Agreement, but rather, was sent to the Gilbert Address.
According to N95 Shield, the first time any documentation related to the arbitration
proceedings was sent to the Scottsdale Address was in January 2023.2 But N95
Shield argues that it did not receive this notice, because on June 10, 2022, N95 Shield
filed Articles of Termination with the Arizona Corporation Commission. [See N95
Shield, LLC Articles of Termination, Doc. 25-2].
Because the crux of the parties’ dispute focuses on the interpretation of Section
15 of the Agreement, reference to the Louisiana Civil Code’s instructions regarding
the proper method of contract interpretation is appropriate. Arcadis U.S., Inc. v.
Stryker Demolition & Env't Servs., LLC, 2023 WL 4394156, at *3–4 (W.D. La. July 6,
2023), citing Landis Const. Co. v. St. Bernard Par., 151 So. 3d 959, 962–63 (La. App.
4th Cir. 10/22/14), writ denied, 159 So. 3d 467 (La. 2/13/15). “A contract constitutes
the law between the parties.” Id., citing La. Civil Code art. 1983. The interpretation
of a contract is the determination of the common intent of the parties. Id., citing La.
Civil Code art. 2045. “If the words of a contract are clear, unambiguous, and lead to
2 The record shows that on January 16, 2023, Redhawk mailed a “Second Amended
Claim” in Arbitration #5335000056 to N95 Shield at the Scottsdale Address. This document
contains the following language:
On or about June 7, 2022 RedHawk served notice of these arbitration
proceedings to N95 via Federal Express ... N95 has refused or neglected to
respond in any manner whatsoever to either JAMS or counsel for RedHawk.
A copy of the Amended Claim was sent to N95 via Federal Express …
on July 8, 2022. A copy of this Second Amended Complaint was served upon
N95 via Federal Express … on January 13, 2023.
RedHawk requests that the arbitration proceedings be commenced
immediately as it is apparent that N95 is refusing or otherwise failing to
participate in these proceedings.
[Doc. 30-12].
no absurd consequences, the court need not look beyond the contract language to
determine the parties’ true intent.” Id., citing La. Civil Code art. 2046. “Each
provision in a contract must be interpreted in light of the other provisions so that
each is given the meaning suggested by the contract as a whole.” Id., citing La. Civil
Code art. 2050. “When a contract is not ambiguous or does not lead to absurd
consequences, it will be enforced as written and its interpretation is a question of law
for a court to decide.” Id. “Meaning and intent of parties to a written instrument is
ordinarily determined from the instrument's four corners and extrinsic evidence is
inadmissible either to explain or to contradict the instrument's terms.” Id.
“[T]he determination of whether a contract is clear or is ambiguous is also a
question of law.” Id. “A contract is considered ambiguous on the issue of intent when
it lacks a provision bearing on that issue, the terms of the written contract are
susceptible to more than one interpretation, there is uncertainty or ambiguity as to
its provisions, or the intent of the parties cannot be ascertained from the language
employed.” Id.
Section 15 of the Agreement provides:
15. Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed properly served if delivered in person or by
reputable overnight courier service, or if sent by confirmed email,
registered or certified mail, with postage prepaid and return receipt
requested, to the addresses in the Agreement or to such addresses
as a party may designate from time to time pursuant to this
Section 15. All notices shall be deemed received on the date of delivery
or attempted delivery, if emailed, or if delivered in person, or if mailed,
on the date which is two (2) days after the date such notice is deposited
in the United State Postal Service mail.
…
IF TO PURCHASER:
N95 Shield, LLC
Matt Miller
14325 N. 79 Street, Suite C
Scottsdale, AZ 85260
Office: 480-329-4374
Email: matt@n95-shield.com
www.n95-shield.com
[Doc. 30-01, ¶ 15] (emphasis added).
The Agreement contains two physical addresses for N95 Shield, namely, the
Gilbert Address and the Scottsdale Address. The Gilbert Address – listed as N95
Shield’s principal address – is found on the first page of the Agreement. The
Scottsdale Address is found within Section 15 itself and is designated as N95 Shield’s
address for notice.3 But Section 15 does not restrict service to only those addresses
contained in Section 15, clearly indicating that all notices are considered properly
served if mailed “to the addresses in the Agreement.” Furthermore, Section 15
contemplates that the parties may designate different addresses for service as
needed. Thus, based on the clear, unambiguous language of Section 15, the Court
agrees with Redhawk that service was proper at either the Gilbert Address or the
Scottsdale Address, as both of these addresses are “in the Agreement.”
Here, Redhawk sent proper notice of the arbitration proceedings to N95 Shield
via FedEx on March 18, 2022, and again on June 7, 2022. [Docs. 30-6, 30-8]. Both of
those FedEx packages were delivered to N95 Shield prior to its dissolution on June
3 Section 15 also allows the parties to designate a different address for notice as
necessary.
10, 2022. Redhawk sent another 29 notices of the arbitration proceedings to N95
Shield, as follows:
DATE SUBJECT OF MATERIALS TYPE OF SERVICE
December 21, 2021 Litigation Hold Email to Matt Miller at
matt@n95-shield.com
[Doc. 30-2]
January 6, 2022 Default Email to Matt Miller at
matt@n95-shield.com
[Doc. 30-3]
January 20, 2022 Cure Defect Email to Matt Miller at
matt@n95-shield.com
[Doc. 30-4]
March 18, 2022 Duty to Arbitrate Email to Matt Miller at
matt@n95-shield.com
[Doc. 30-5]
March 18, 2022 Notice of Arbitration FedEx to E. 1635 Orange Wood
St., Gilbert, AZ 85296
[Doc. 30-6]
March 18, 2022 Text Stating “litigation” was Text to Matt Miller (who
Underway responded to the text, asserting
certain defenses, including
Redhawk’s breach of the
Agreement)
[Doc. 30-7]
June 7, 2022 Demand for Arbitration FedEx to E. 1635 Orange Wood
St., Gilbert, AZ 85296
[Doc. 30-8]
July 8, 2022 Amended Demand for FedEx to E. 1635 Orange Wood
Arbitration St., Gilbert, AZ 85296
[Doc. 30-9]
December 20, 2022 Notice of Appearance in the FedEx to E. 1635 Orange Wood
Arbitration St., Gilbert, AZ 85296
[Doc. 30-10]
January 13, 2023 Second Amended Demand for FedEx to E. 1635 Orange Wood
Arbitration St., Gilbert, AZ 85296
[Doc. 30-11]
January 13, 2023 Second Amended Demand for FedEx to 14325 N. 79th St.,
Arbitration Suite C, Scottsdale, AZ 85260
[Doc. 30-12]
January 26, 2023 Arbitration Pre-Hearing FedEx to E. 1635 Orange Wood
Information Exchange St., Gilbert, AZ 85296
[Doc. 30-13]
February 3, 2023 Six Separate Packages 1. Two packages (one sent via
Containing Redhawk’s FedEx and one sent via USPS)
Arbitration Proceeding were sent to Matt Miller at
Evidence and Testimony List 14325 N. 79th St., Suite C,
Scottsdale, AZ 85260.
2. Two packages (one sent via
FedEx and one sent via USPS)
were sent to Peter Reiss at
16124 Cinnabar Court,
Waddell, AZ 85355; and
3. Two Packages (one sent via
FedEx and one sent via USPS)
were sent to Browning
Holcombe at 20237 E. Sunset
Court, Queen Creek, AZ 85142
[Doc. 30-14]
February 17, 2023 Six Separate Packages 1. Two packages (one sent via
Containing Redhawk’s FedEx and one sent via USPS)
Supplemental Arbitration were sent to Matt Miller at
Proceeding Evidence and 14325 N. 79th St., Suite C,
Testimony List Scottsdale, AZ 85260.
2. Two packages (one sent via
FedEx and one sent via USPS)
were sent to Peter Reiss at
16124 Cinnabar Court,
Waddell, AZ 85355; and
3. Two Packages (one sent via
FedEx and one sent via USPS)
were sent to Browning
Holcombe at 20237 E. Sunset
Court, Queen Creek, AZ 85142
[Doc. 30-15]
February 24, 2023 Six Separate Packages 1. Two packages (one sent via
Containing Redhawk’s FedEx and one sent via USPS)
Post-Arbitration Hearing Brief were sent to Matt Miller at
14325 N. 79th St., Suite C,
Scottsdale, AZ 85260.
2. Two packages (one sent via
FedEx and one sent via USPS)
were sent to Peter Reiss at
16124 Cinnabar Court,
Waddell, AZ 85355; and
3. Two Packages (one sent via
FedEx and one sent via USPS)
were sent to Browning
Holcombe at 20237 E. Sunset
Court, Queen Creek, AZ 85142
[Doc. 30-16]
March 31, 2023 Six Separate Packages 1. Two packages (one sent via
Containing Redhawk’s FedEx and one sent via USPS)
Lodestar Calculations for were sent to Matt Miller at
Attorneys’ Fees 14325 N. 79th St., Suite C,
Scottsdale, AZ 85260.
2. Two packages (one sent via
FedEx and one sent via USPS)
were sent to Peter Reiss at
16124 Cinnabar Court,
Waddell, AZ 85355; and
3. Two Packages (one sent via
FedEx and one sent via USPS)
were sent to Browning
Holcombe at 20237 E. Sunset
Court, Queen Creek, AZ 85142
[Doc. 30-17]
In Bernstein Seawell & Kove v. Bosarge, defendant argued that an “arbitration
award [was] unenforceable because he was not informed of the arbitration
proceedings until after the hearing had been held, and the arbitrators had reached a
final decision.” 813 F.2d 726, 729 (5th Cir.1987). There, the district court determined
that: (1) plaintiff had provided notice under the terms of the partnership agreement,
and (2) defendant had actual notice of the proceedings, and the Fifth Circuit affirmed
on appeal. Id. at 729-30. Discussing the Bernstein decision ruling in a later decision,
21st Fin. Servs., L.L.C. v. Manchester Fin. Bank, the Fifth Circuit explained:
... all parties in an arbitration proceeding are entitled to notice and an
opportunity to be heard. For vacatur of an arbitration award, however,
the court require[s] the absence of actual or constructive notice.
Regardless of whether Bernstein had complied with the partnership
agreement, we enforced the award because the record contained
‘sufficient evidence to support the conclusion that Bosarge received
actual or constructive notice of the arbitration hearing.’
747 F.3d 331, 339 (5th Cir. 2014).
In addition to the properly served notices to the addresses contained in the
Agreement, Redhawk argues that N95 Shield had actual notice of the arbitration
proceedings via a text message sent from Darcy Klug to Matt Miller of N95 on March
18, 2022, informing Mr. Miller that “litigation” was underway. [Doc. 30-7]. N95
Shield argues that text messages are not proper notice under the Agreement and that
the text message in question did not specifically request or demand arbitration.
While it is not clear that this text message alone is sufficient to constitute actual or
constructive notice, the Court need not decide that issue.
Considering the foregoing, N95 Shield fails to support its argument that
vacatur of the arbitrator’s Final Award is appropriate under 9 U.S.C. § 10(a)(4). Itis
therefore this Court’s finding that service of all arbitration documentation was
properly made on N95 Shield at the addresses contained in the Agreement. N95
Shield had notice of the arbitration proceedings and was not denied due process.
CONCLUSION
For the reasons stated herein, N95 Shield’s MOTION TO VACATE ARBITRATION
AWARD [Doc. 25] is DENIED.
THUS, DONE AND SIGNED in Chambers on this 24 day of January 2024.
Cb wi < foot
DAVID C. JOSEPH
UNITED STATES DISTRICT JUDGE
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