Petition for Writ of Certiorari — Affordable Care, L.L.C., Petitioner v. Raeline K. McIntyre, DMD, et al.

APPENDIX TABLE OF CONTENTS

OPINIONS AND ORDERS

Opinion, U.S. Court of Appeals for the

Fifth Circuit (May 24, 2023) .............................. 1a

Judgment, U.S. Court of Appeals for the

Fifth Circuit (May 24, 2023) .............................. 9a

Memorandum Opinion and Order, U.S. District

Court for the Southern District of Mississippi

(March 31, 2022) ............................................... 11a

REHEARING ORDER

Denial of Petition for Rehearing,

U.S. Court of Appeals for the Fifth Circuit

(June 22, 2023) ................................................. 51a

ARBITRATOR DECISION

Arbitrator Final Decision and Award

(March 19, 2021) ............................................... 53a

App.1a

OPINION, U.S. COURT OF APPEALS

FOR THE FIFTH CIRCUIT

(MAY 24, 2023)

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

________________________

AFFORDABLE CARE, L.L.C.,

Plaintiff-Appellant,

v.

RAELINE K. MCINTYRE, DMD;

RAELINE K. MCINTYRE, DMD, P.C.,

Defendants-Appellees.

________________________

No. 22-60245

Appeal from the United States District Court

for the Southern District of Mississippi

USDC No. 1:21-CV-85

Before: ELROD and HAYNES, Circuit Judges.†

PER CURIAM: *

† Judge Willett was a member of the panel that heard oral

argument. He has since recused and has not participated in this

decision. This case is being decided by a quorum. 28 U.S.C. § 46(d).

* This opinion is not designated for publication. See 5th Cir. R.

47.5.

App.2a

Affordable Care lost at arbitration. It now seeks

vacatur of the resulting arbitration award because the

arbitrator and an attorney for the other side both have

connections to Duke University School of Law.

The district court correctly determined that these

connections do not create a conflict. We therefore

AFFIRM the district court’s denial of relief.

I

Charles Holton was assigned to arbitrate a

contract dispute between Affordable Care L.L.C., which

provides non-clinical business services to affiliated

dentists, and Dr. Raeline McIntyre and her dental

practice. After Holton completed the ordinary conflict

disclosure form, Dr. McIntyre added Paul Sun to her

legal team. Holton made the following supplemental

disclosure the day after Sun entered his appearance:

I would disclose that I know Mr. Sun and

probably have had one or more cases with

him or against him during my career, but

nothing in the last 10 years. I do not believe

that I have seen or communicated with him

in over 10 years. His involvement would not

affect my judgment in the case.1

The American Arbitration Association requested objections to the disclosure, but none were made. The arbitration process then proceeded to its conclusion with

Holton ultimately rejecting each of Affordable’s claims

and awarding attorney fees to Dr. McIntyre.

Affordable subsequently moved to vacate the award

in the United States District Court for the Southern

1 Thus, this is not a case involving a complete lack of disclosure.

App.3a

District of Mississippi, citing the Federal Arbitration

Act’s four statutory grounds for relief. It also sought

discovery related to Holton’s alleged bias and partiality.

In support of its requests, Affordable submitted

screenshots taken from the webpages of Duke’s law

school and Sun’s firm, as well as a local news article.

With this publicly available information, Affordable

was able to ascertain that both Holton and Sun

worked at Duke University School of Law: Holton as

a full-time faculty member and Sun as a “2021 Wintersession” adjunct. Affordable also determined that

Holton served as the director of Duke’s Civil Justice

Clinic, which partners with a local legal aid service

that Sun’s firm also partners with, and that Sun has

provided legal representation to Duke University.2

The district court reviewed this evidence and

concluded that Affordable failed to establish grounds

for vacatur under the FAA and that discovery was not

warranted. It therefore denied Affordable’s motions and

confirmed the award. Affordable now appeals.

II

Affordable maintains that Holton’s arbitration

award must be vacated under the FAA due to “evident

2 Affordable also asserted that “Holton represented Duke

University in many lawsuits from 1983 through 2005” and that

“Sun and [his firm] took over representation of Duke University

following Holton’s long representation.” But, as the district court

noted, Affordable has not produced any evidence of Holton’s “long

representation” of Duke. Nor did it provide any evidence to

substantiate its assertion that Holton had handed litigation over

to Sun or his firm.

App.4a

partiality or corruption in the arbitrator[].” 9 U.S.C.

§ 10(a)(2). We disagree.

The standard for establishing evident partiality

is “stern.” OOGC America, L.L.C. v. Chesapeake Expl.,

L.L.C., 975 F.3d 449, 453 (5th Cir. 2020) (quoting

Positive Software Sols., Inc. v. New Century Mortg.

Corp., 476 F.3d 278, 281 (5th Cir. 2007) (en banc)). The

challenger must show “a concrete, not speculative

impression of bias” that “stem[s] from a significant,”

not trivial, “compromising connection.” Id. (citation

and quotation marks omitted). “[T]he party challenging

the award ‘must produce specific facts from which a

reasonable person would have to conclude that the

arbitrator was partial to’ its opponent.” Id. (quoting

Cooper v. WestEnd Cap. Mgmt., L.L.C., 832 F.3d 534,

545 (5th Cir. 2016)).

The connections derived from Affordable’s internet

research do not establish a conflict of the sort

contemplated by the FAA. To the contrary, they are

quintessential examples of the kind of “trivial past

association” our precedents have deemed insufficient

to warrant “the extreme remedy of vacatur.” Positive

Software, 476 F.3d at 279. Indeed, once separated

from Affordable’s inflammatory characterizations, the

evidence in the record reflects the kind of professional

intersections that one might expect to find between

any two attorneys working in the same geographical

location.

Affordable has shown that both Holton and Sun

served on the faculty of Duke’s law school—one as an

adjunct for the winter term and one as a full-time

faculty member—and that Holton and Sun were both

part of organizations that served the same legal aid

non-profit. This cannot, standing alone, cast Holton’s

App.5a

impartiality into doubt. It does not follow that Sun

and Holton had any kind of personal, professional, or

financial relationship. We also agree with the district

court that Affordable’s bald assertion that Sun and

Holton shared an attorney-c lient relationship through

Holton’s employment with Duke University is unsupported by the facts and the law.

This would be a different case if Affordable had

offered evidence that Holton and Sun worked closely

together. But we cannot, on this record, conclude that

Holton and Sun were even aware of their shared Duke

connection.

We have upheld arbitration awards in the face of

much stronger indicia of a potential conflict. See e.g.,

Positive Software, 476 F.3d at 283-84 (declining to

vacate award where prevailing party’s attorney had

previously litigated with the arbitrator); Cooper, 832

F.3d at 540 (declining to vacate award based on an

undisclosed relationship between the opposing party

and another arbitrator who worked for the same

arbitral organization that the presiding arbitrator

belonged to); OOGC, 975 F.3d at 451 (declining to

vacate award despite allegations that the arbitrator

had a financial incentive to rule a certain way).

In each of these cases, the unsuccessful party to

an arbitration identified an unremarkable professional

intersection between a party or attorney and an

arbitrator, then used speculation and conjecture in an

attempt to parlay that innocuous connection into a

conflict of interest. Affordable’s challenge is no different.

Affordable has not offered specific, concrete facts that

would cause a reasonable person to speculate—much

App.6a

less require a reasonable person to conclude—that

Holton was biased.3

III

In the event that we deem vacatur of the arbitration award unwarranted, as we now do, Affordable

asks that it be permitted to conduct limited discovery

to further probe the relationship between Holton and

Sun.

We review a district court’s order denying postarbitration discovery for abuse of discretion. Vantage

Deepwater Co. v. Petrobras Am., Inc., 966 F.3d 361,

373 (5th Cir. 2020). “District courts occasionally allow

discovery in vacatur and confirmation proceedings,”

and the Fifth Circuit has “endorsed a flexible inquiry

for district courts to use.” Id. at 372. Namely, “the court

must weigh the asserted need for hitherto undisclosed

information and assess the impact of granting such

discovery on the arbitral process.” Id. at 373 (citation

omitted). In doing so, the district court “should focus

on ‘specific issues raised by the party challenging the

award and the degree to which those issues implicated

factual questions that cannot be reliably resolved

without some further disclosure.’” Id. (citation omitted).

“The party seeking discovery bears the burden of showing its necessity.” Id. (citation omitted).

The district court’s analysis is entirely consistent

with this court’s flexible standard. Affordable has not

pointed to any compelling evidence of impropriety that

3 Even combining the Duke connections with the perceived procedural and substantive advantages that Affordable believes

Holton extended to Sun and his client, we cannot conclude that

Affordable has established evident partiality.

App.7a

might demonstrate the need for further discovery.

Permitting discovery in this situation would therefore

needlessly undermine the efficacy of the arbitral

process. See id. (observing that “the loser in arbitration

cannot freeze the confirmation proceedings in their

tracks and indefinitely postpone judgment by merely

requesting discovery” (citation omitted)).

***

Affordable has failed to satisfy the strict requirements for vacatur of an arbitration award set out by

the FAA.4 It has likewise failed to demonstrate that

4 Affordable’s challenges based on sections 10(a)(1), 10(a)(3), and

10(a)(4) of the FAA also fail. Affordable cannot satisfy the due

diligence prong of the section 10(a)(1) analysis because it was on

notice of a possible connection between Holton and Sun as soon

as Sun entered his appearance, yet it did not follow up on that

information until it had already lost at arbitration. See Morgan

Keegan & Co., Inc. v. Garrett, 495 F. App’x 443, 447 (5th Cir. 2017)

(quoting Barahona v. Dillard’s, Inc., 376 F. App’x 395, 397 (5th

Cir. 2010)). Affordable’s argument under section 10(a)(3), that

Holton engaged in misconduct by disregarding the ruling of a federal

district court in concurrent federal litigation also involving

Affordable and Dr. McIntyre, is contrary to the record. Holton

heard evidence on this ruling, received the ruling into the record,

and allowed oral argument on the issue after closing arguments

had been completed. Nor does Affordable provide any argument

to support its contention that Holton was bound by the ruling,

which involved a different contract from the one at issue in the

arbitration, different facts, and a different state’s law. Affordable’s

argument under section 10(a)(4), that Holton exceeded his powers

by granting unsolicited attorney fees to Dr. McIntyre, is also

contrary to the record. The services contract between Affordable

and Dr. McIntyre expressly incorporated American Arbitration

Association rules, which permit an award of attorney fees “if all

parties have requested such an award.” American Arbitration

Association, Commercial Arbitration Rules and Mediation

Procedures R-47(d)ii (2013). Both Affordable and Dr. McIntyre

requested an award of attorney fees in their arbitration pleadings

App.8a

the district court abused its discretion in denying postarbitration discovery. We therefore AFFIRM.

and reiterated that request in their proposed findings and

conclusions.

App.9a

JUDGMENT, U.S. COURT OF APPEALS

FOR THE FIFTH CIRCUIT

(MAY 24, 2023)

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

________________________

AFFORDABLE CARE, L.L.C.,

Plaintiff-Appellant,

v.

RAELINE K. MCINTYRE, DMD;

RAELINE K. MCINTYRE, DMD, P.C.,

Defendants-Appellees.

________________________

No. 22-60245

Appeal from the United States District Court

for the Southern District of Mississippi

USDC No. 1:21-CV-85

Before: ELROD and HAYNES, Circuit Judges.†

JUDGMENT

This cause was considered on the record on appeal

and was argued by counsel.

† Judge Willett was a member of the panel that heard oral

argument. He has since recused and has not participated in this

decision. This case is being decided by a quorum. 28 U.S.C. § 46(d).

App.10a

IT IS ORDERED and ADJUDGED that the

judgment of the District Court is AFFIRMED.

IT IS FURTHER ORDERED that each party bear

its own costs on appeal.

App.11a

MEMORANDUM OPINION AND ORDER,

U.S. DISTRICT COURT FOR THE SOUTHERN

DISTRICT OF MISSISSIPPI

(MARCH 31, 2022)

IN THE UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF MISSISSIPPI

SOUTHERN DIVISION

________________________

AFFORDABLE CARE, LLC,

Plaintiff,

v.

RAELINE K. MCINTYRE, DMD and

RAELINE K. MCINTYRE, DMD, P.C.,

Defendants.

________________________

Civil Action No. 21-cv-85-TBM-RPM

Before: Taylor B. MCNEEL,

United States District Judge.

MEMORANDUM OPINION AND ORDER

Affordable Care, LLC lost in arbitration. Affordable

Care now seeks to set aside the arbitration award

because it believes the arbitrator was partial to

Defendants. Affordable Care has not put forward

evidence to demonstrate that the draconian remedy of

vacatur is appropriate.

App.12a

Affordable Care is a North Carolina company that

prepared the governing contract with the Defendants.

That contract required any disputes to be resolved in

arbitration in Raleigh, North Carolina. Also, North

Carolina law governed the interpretation and performance of the contract. Affordable Care demanded arbitration. An arbitrator from North Carolina was chosen.

Unsurprisingly, the Defendants—who are from Mississippi—associated a Raleigh attorney as local counsel.

Upon the local counsel’s entry of appearance, the arbitrator disclosed that he “probably” has “had one or

more cases [either] with [Defendants’ local counsel] or

against him during my career, but nothing in the last

10 years.” He further clarified “I do not believe I have

seen or communicated with [Defendants’ local counsel]

in over 10 years.” Affordable Care does not dispute the

truthfulness of these statements. Instead, Affordable

Care complains that the arbitrator and Defendants’

local counsel had other mutual connections within the

North Carolina legal community and at Duke University,

and these mutual connections are sufficient to set

aside the award. The law does not support Affordable

Care’s position.

The Court denies Affordable Care’s Motion to

Vacate and Motion for Discovery. The Court grants

the Defendants’ Motion to Confirm. The Court finds

there is no evidence of fraud or evident partiality by

the arbitrator. Nor did the arbitrator engage in

misconduct or exceed his powers. Finally, Defendants’

Motion for Sanctions is denied. While Affordable Care’s

claims are weak, Defendants have not demonstrated

Affordable Care’s Motion was frivolous or filed for the

purpose of delay.

App.13a

I. BACKGROUND

Affordable Care, LLC, a dental practice management company, entered into a twenty-year management

services contract with Raeline K. McIntyre, DMD,

P.C., on November 1, 2002.1 On July 24, 2013, JNM

Office Property—a company owned by Dr. Raeline

McIntyre and her husband, Dr. Neil McIntyre—entered

into a lease agreement with Affordable Care to lease

property JNM had recently purchased in Gulfport,

Mississippi.

In September, 2019, the Defendants notified Affordable Care of their desire to terminate the management

services contract. On November 1, 2019, Affordable

Care filed its initial demand for arbitration against the

Defendants, in accordance with the mandatory arbitration provision in the management services agreement. On that same date, Affordable Care filed a federal

civil suit (1:19-cv-827-HSO-RPM) against JNM Office

Property, LLC, seeking a declaratory judgment that

Affordable Care was not in default on the lease of the

Gulfport property.

On June 3, 2020, Affordable Care filed an Amended

Demand for Arbitration, bringing seventeen grounds

for relief, including declaratory relief under the management services contract, attorneys’ fees and indemnification, and multiple breach of contract claims. Later

that month, the arbitrator who was originally selected

by the parties withdrew from the matter due to Covid1 Defendant Raeline K. McIntyre, DMD, is the sole owner of

Raeline K. McIntyre, DMD, P.C. Raeline K. McIntyre, DMD and

Raeline K. McIntyre, DMD, P.C. will collectively be referred to

as the “Defendants.”

App.14a

19 concerns. The parties selected Charles Holton,

using the AAA process, as the new arbitrator.

The Arbitration merits hearing was held over

the course of five days in December, 2020. Closing

arguments were made by the parties on February 11,

2021. On March 4, 2021, Affordable Care was granted

leave by Arbitrator Holton to present additional

arguments on the summary judgment decision entered

in the lawsuit pending between Affordable Care and

JNM Office Property. Finally, on March 22, 2021, the

parties were notified that Arbitrator Holton had

rendered his decision on March 19, 2021.

In his 115 page decision, Arbitrator Holton found

in favor of the Defendants on all seventeen counts,

and then awarded attorneys’ fees in the amount of

$379,168 and expenses in the amount of $14,430.75 to

the Defendants. [16-38] at 115.

On March 24, 2021, Affordable Care filed a

Complaint with this Court, seeking vacatur of the

arbitration award and requesting remand of the matter

to the AAA for a hearing on damages. Defendants

moved [13] to dismiss the Complaint, asserting that

the proper way to argue vacatur is by filing a motion

to vacate as opposed to a complaint. [14] at 7. Affordable Care filed a Motion [16] to Vacate on June 17,

2021, arguing that vacatur is proper on all four grounds

under 9 U.S.C. § 10. Additionally, Affordable Care

filed a Motion [17] for Discovery, seeking discovery on

Arbitrator

Holton and his relationship with Defendants’

local North Carolina attorney, Paul Sun. On June 18,

2021, the Defendants filed a Motion [20] to Confirm

App.15a

the Arbitration Award. Finally, on August 2, 2021,

Defendants filed a Motion [33] for Sanctions.

Affordable Care argues for vacatur on the grounds

that the arbitrator, Charles Holton, had an undisclosed

relationship with the Defendants’ counsel, Paul Sun

and the Winters Law Firm. Affordable Care contends

that because of that relationship, Arbitrator Holton

was partial to the Defendants throughout the proceedings resulting in an “egregious award.”

Based on its search of publicly available information, Affordable Care submits documents printed

off of websites to show that Arbitrator Holton is a full

time law professor at Duke University School of Law

and serves as the Director of Duke Law School’s Civil

Justice Clinic, which partners with the Legal Aid of

North Carolina. [16-43]. Th e Winters Firm, of which

Paul Sun is a founding partner, provides pro bono

services to the Legal Aid of North Carolina. [16-41]

and [16-42]. Before joining Duke Law, Arbitrator

Holton practiced in the private sector and represented

Duke University in “many lawsuits from 1983

through 2005.” Id. The Winters Firm allegedly took

over representation of Duke University, and Paul Sun

has represented Duke University in several cases since

then.2 Finally, Paul Sun taught a “Wintersession

2 Affordable Care does not produce documents to support the

statement that Arbitrator Holton Represented Duke University

from 1983 through 2005 or that the Winters Law Firm took over

representation of Duke University, except for a newspaper

article indicating that Paul Sun represented a Duke University

employee in 2018. [16-45]. Affordab le Care also does not allege

that the Winters Law Firm is the only firm representing Duke

University, as opposed to numerous firms representing a university

as large as Duke.

App.16a

2021” class at Duke Law School which occurred during

the arbitration proceedings. [16-44].

There is no suggestion that there is a financial

arrangement between Arbitrator Holton and Paul

Sun. However, Affordable Care argues that because

the Winters Law Firm and Paul Sun have previously

represented Duke University and some faculty

members in litigation, then there is an attorney-client

relationship between Arbitrator Holton and Paul Sun,

since Arbitrator Holton is a faculty member at Duke

Law School.

In response to Affordable Care’s motion to vacate

the arbitration award, the Defendants point to the

following disclosure made by Arbitrator Holton:

I would disclose that I know Mr. Sun [an

attorney with Ellis & Winters] and probably

have had one or more cases with him or

against him during my career, but nothing in

the last 10 years. I do not believe I have seen

or communicated with him in over 10 years.

His involvement would not affect my judgment in this case.

[28-1] at 1. This disclosu re was made July 23, 2020,

the day after Paul Sun and his firm were retained by

the Defendants, and was forwarded to all counsel of

record, along with the case manager’s request that

any objections to this disclosure be made by July 30,

2020. Id. Affordable Care did not raise any objections

or concerns with regard to this disclosure. [29] at 11.

And Affordable Care has not alleged that Arbitrator

Holton was untruthful in making this disclosure. Nor

has Affordable Care offered any evidence to contradict

this disclosure.

App.17a

The Defendants contend that they are entitled to

enforce the arbitral award and request an entry of a

judgment. Defendants contend that Affordable Care’s

assertions are nothing more than “rank speculation,

conjecture, and conclusory allegations” made in an

effort to have the Court vacate the award. [29] at 8.

II. LEGAL STANDARD

Under the Federal Arbitration Act, federal courts

are limited to a narrow review of arbitration awards.

See Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S.

576, 584, 128 S. Ct. 1396, 170 L. Ed. 2d 254 (2008)

(holding that §§ 10 and 11 of the Federal Arbitration

Act provide the exclusive grounds for expedited vacatur

and modification); Hamstein Cumberland Music Grp.

v. Williams, 532 F. App’x 538, 542 (5th Cir. 2013). “In

light of the strong federal policy favoring arbitration,

judicial review of an arbitration award is extraordinarily narrow” and “exceedingly deferential.” Cooper

v. WestEnd Cap. Mgmt., L.L.C., 832 F.3d 534, 543-44

(5th Cir. 2016) (citing Rain CII Carbon, LLC v.

ConocoPhillips Co., 674 F.3d 469, 471-72 (5th Cir.

2012)). Courts may vacate an arbitration award “only

in very unusual circumstances.” Oxford Health Plans

LLC v. Sutter, 569 U.S. 564, 568, 133 S. Ct. 2064, 186

L. Ed. 2d 113 (2013) (quoting First Options of Chicago,

Inc. v. Kaplan, 514 U.S. 938, 942, 115 S. Ct. 1920, 131

L. Ed. 2d 985 (1995)). In accordance with the Supreme

Court’s decision in Hall Street, the four grounds listed

in Section 10 of the FAA are the exclusive means by

which a party can vacate an arbitration award.

Citigroup Global Mkts., Inc. v. Bacon, 562 F. 3d 349,

352 (5th Cir. 2009).

App.18a

According to Section 10 of the FAA, an award can

be vacated:

(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

prejudice; 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.

Id. (citing 9 U.S.C. § 10). “The Court does not ‘conduct

a review of an arbitrator’s decision on the merits,’

therefore ‘arguments concerning the merits are irrelevant’ to the Court’s ‘determination of whether there

are statutory grounds within Section 10(a) under

which the arbitration award should be vacated.’”

Vantage Deepwater Co. v. Petrobras Am. Inc., 4:18-cv02246, 2019 WL 2161037, at *2 (S.D. Tex. May 17,

2019) (quoting Householder Grp. v. Caughran, 354 F.

App’x 848, 851 (5th Cir. 2009)). An arbitration award

“may not be set aside for a mere mistake of fact or

law.” WestEnd Cap. Mgmt., L.L.C., 832 F.3d at 546

(quoting Rain CII Carbon, L.L.C., 674 F.3d at 471-72).

The party moving to vacate an arbitration award has

the burden of proof, and any doubts or uncertainties

must be resolved in favor of upholding the award.

App.19a

WestEnd Cap. Mgmt., L.L.C., 832 F.3d at 544 (citing

Brabham v. A.G. Edwards & Sons Inc., 376 F.3d 377,

385 & n.9 (5th Cir. 2004)).

In seeking vacatur, Affordable Care raises all

four statutory grounds available in 9 U.S.C. § 10(a).

[18] at 16-26. Defendants mo ve to confirm the award,

disputing Affordable Care’s grounds for vacatur.3 [21] at

5-7; [29] at 5-11. Additional ly, Affordable Care requests

that it be allowed to conduct limited discovery of the

Arbitrator. [17]. Finally, Defendants seek sanctions in

the form of attorneys’ fees and costs associated with

defending this action. [33]. The Court will first address

each of Affordable Care’s proposed grounds for vacatur

and then consider the requests for discovery and

sanctions.

A. Fraud

Affordable Care first contends that the arbitral

award must be vacated because Arbitrator Holton had

a conflict of interest arising from his past and current

dealings with Defense counsel Paul Sun and his law

firm, and that the failure to disclose these past

dealings resulted in an award procured by fraud.

The FAA provides that a district court can refuse

to enforce an arbitral award when it has been

“procured by corruption, fraud, or undue means.” 9

U.S.C. § 10(a)(1). Under Section 10(a)(1), “a party who

alleges that an arbitration award was procured by

fraud must demonstrate: (1) that the fraud occurred

3 Defendants also filed a Motion [13] to Dismiss Plaintiff’s

Complaint [1], asserting that the filing of a Complaint was

procedurally improper. Given the Court’s ultimate decision in

this matter, the Motion to Dismiss is denied as moot.

App.20a

by clear and convincing evidence; (2) that the fraud

was not discoverable by due diligence before or during

the arbitration hearing; and (3) the fraud materially

related to an issue in the arbitration.” Morgan Keegan

& Co., Inc. v. Garrett, 495 F. App’x 443, 447 (5th Cir.

2012) (quoting Barahona v. Dillard’s, Inc., 376 F. App’x

395, 397 (5th Cir. 2010)); see also Karaha Bodas Co. v.

Perusahaan Pertambangan Minyak Dan Gas Bumi

Negara, 364 F.3d 274, 306 (5th Cir. 2004). With regard

to the third prong, “[i]t is not necessary to establish

that the result of the arbitration would have been

different if the fraud had not occurred.” Karaha Bodas,

364 F.3d at 306-07. However, Section 10(a)(1) does

require “a nexus between the alleged fraud and the

basis for the panel’s decision.” Morgan Keegan & Co.,

495 F. App’x at 447 (quoting Forsythe Int’l, S.A. v. Gibbs

Oil Co. of Tex., 915 F.2d 1017, 1022 (5th Cir. 1990)).

Under the FAA, Affordable Care must meet its

burden of proof on each of the three prongs. See

Barahona, 376 F. App’x at 398, n.2 (declining to reach

two of the prongs because failure to satisfy even one

of them was dispositive). Affordable Care makes a

blanket statement that the “undisclosed bias of an

arbitrator” can meet the required showing. [18] at 16.

Other than the conclusory statement that the “undisclosed bias of an arbitrator is an enumerated action

that will satisfy this [fraud] requirement,” Affordable

Care provides no support with the facts or case law to

demonstrate that any of the actions of the arbitrator

rise to the level of “clear and convincing evidence” of

fraud. Nor does Affordable Care even make a single

argument under Section 10(a)(1) to explain how any

one of the three prongs are met.

App.21a

Arbitrator Holton disclosed that he “had one or

more cases with [Paul Sun] or against him during [his]

career, but nothing in the last 10 years.” [28-1] at 1.

He also disclosed that “I do not believe I have seen or

communicated with him in over 10 years.” Id. All that

Affordable Care has demonstrated is that Paul Sun

and his law firm have provided legal representation

for Duke University and some of its employees in the

past. And Arbitrator Holton—as a full-time professor

at Duke Law School and the Director of Duke Law

School’s Civil Justice Clinic—does some work with

Legal Aid of North Carolina. Paul Sun’s firm lists the

Legal Aid of North Carolina as one of the seven

entities for which it provides pro bono services.

Finally, Affordable Care demonstrated that Paul Sun

was listed as a professor for a “2021 Wintersession”

class at Duke Law School. Notably, Arbitrator Holton

was not listed as a “2021 Wintersession” instructor.

There is no evidence, nor has there been any

allegation of such by Affordable Care, that Arbitrator

Holton had any kind of financial dealings or close,

personal relationships with Paul Sun or the Winters

Law Firm. And the relationships described—such as

the fact that both the Winters Law Firm and Arbitrator

Holton do work for the Legal Aid of North Carolina—

are the kind of professional relationships and contacts

one would expect of people working in the same locality

in the legal field. See Midwest Generation EME, LLC

v. Continuum Chem. Corp., 768 F. Supp. 2d 939, 94647 (N.D. Ill. 2010) (noting that interactions between

the arbitrator and one party’s law firm such as

lecturing at seminars and serving as past-presidents

of the same legal organization reveal nothing beyond

the kind of professional interactions one would expect

App.22a

of successful lawyers in a specialized field). And there

is no evidence of any interaction between Paul Sun

and Arbitrator Holton and any work with the Legal

Aid of North Carolina. In fact, Arbitrator Holton

disclosed that he did not think he had seen or spoken

with Paul Sun in over ten years. And all of these

“connections” could have been discovered through “due

diligence during the arbitration hearing,” after

Arbitrator Holton made the disclosure describing his

prior knowledge of Paul Sun. Morgan Keegan & Co.,

495 F. App’x at 447 (quoting Barahona, 376 F. App’x at

397); see also Uhl v. Komatsu Forklift Co., 466 F. Supp.

2d 899, 907 (E.D. Mich. 2006) (finding no evidence of

fraud where defendants knew of a relationship between

the arbitrator and opposing counsel and with the

exercise of due diligence could have uncovered the

relationships of which they now complain). Finally,

Affordable Care provides no basis, in fact or law, for

its position that an attorney-client relationship exists

between Arbitrator Holton and Paul Sun.

Affordable Care has not offered any arguments as

to why even the first prong required to prove fraud has

been met. As to the second prong, if Affordable Care

had performed its due diligence, all of these connections

were discoverable in the public domain during the

arbitration. See Morgan Keegan & Co., 495 F. App’x

at 447 (holding the plaintiff could not meet its “burden

of proof” under the second prong because the grounds

for fraud were discoverable by due diligence before or

during the arbitration); Matter of Arb. Between Trans

Chem. Ltd. and China Nat’l Machinery Import and

Export Corp., 978 F. Supp. 266, 305-06 (S.D. Tex. 1997)

(“CNMC also fails to meet . . . the three-part test for

showing fraud or undue means . . . because it has not

App.23a

shown that TCL’s allegedly improper behavior was

not discoverable by due diligence before or during the

arbitration hearing.”). Even if the evidence supported

a finding of fraud, which it does not, this prong is

unsatisfied and Affordable Care’s motion to vacate on

this ground is denied.

B. Evident Partiality

The Court next considers Affordable Care’s contention that the award must be vacated under § 10(a)(2)

based on the evident partiality of Arbitrator Holton.

Under the FAA, courts may vacate an arbitration

award “where there was evident partiality or corruption

in the arbitrators.” Citigroup Global Mkts., Inc. v.

Bacon, 562 F.3d 349, 352 (5th Cir. 2009) (quoting 9

U.S.C. § 10(a)(2)). “[A]n arbitrator’s nondisclosure must

involve a ‘reasonable impression of bias’ stemming

from ‘a significant compromising connection to the

parties’ in order for vacatur to be warranted under

§ 10(a)(2).” OOGC Am., L.L.C. v. Chesapeake Expl.,

L.L.C., 975 F.3d 449, 453 (5th Cir. 2020) (quoting

Positive Software Sols., Inc. v. New Century Mortg.

Corp., 476 F.3d 278, 282-83 (5th Cir. 2007) (en banc)).

However, the standard for assessing evident partiality

is not the mere appearance of bias. See Positive

Software Sols., Inc., 476 F.3d at 285 (“[T]he ‘mere

appearance’ standard would make it easier for a losing

party to challenge an arbitration award for nondisclosure than for actual bias . . . ” and “hold arbitrators

to a higher ethical standard than federal Article III

judges”).

“Evident partiality is a ‘stern standard.’” WestEnd

Cap. Mgmt., L.L.C., 832 F.3d at 545 (quoting Positive

Software Sols., Inc., 476 F.3d at 281). “The statutory

App.24a

language . . . seems to require upholding arbitral awards

unless bias was clearly evident in the decisionmakers.”

Id. Thus, for the arbitration award to be vacated,

Affordable Care “must produce specific facts from

which a reasonable person would have to conclude

that the arbitrator was partial to” the Defendants. See

Householder Grp. v. Caughran, 354 F. App’x 848, 852

(5th Cir. 2009) (citation and internal quotation marks

omitted). This is an “onerous burden,” because the

urging party must demonstrate that the “alleged

partiality was direct, definite, and capable of demonstration rather than remote, uncertain, or speculative.”

Householder Grp., 354 F. App’x at 852 (quoting Weber

v. Merrill Lynch Pierce Fenner & Smith, Inc., 455 F.

Supp. 2d 545, 550 (N.D. Tex. 2006)) (citation and

internal quotations omitted).

1. Relationship with Counsel

When challenging an arbitration award based

upon nondisclosure of an arbitrator’s relationship with

the parties, it must be shown that the arbitrator had

a “significant compromising connection to the parties.”

Ameser. v. Nordstrom, Inc., 442 F. App’x 967, 970 (5th

Cir. 2011). In nondisclosure cases, an award may not

be vacated because of a trivial or insubstantial prior

relationship between the arbitrator and the parties to

the proceeding. Positive Software Sols., Inc., 476 F. 3d

at 283. The “reasonable impression of bias” standard

is interpreted practically rather than with the utmost

rigor. Id.

The question before the Court is whether Affordable Care has sustained its burden to establish

“specific facts from which a reasonable person would

have to conclude that the arbitrator was partial to its

App.25a

opponent.” OOGC Am., L.L.C., 975 F.3d at 453 (citations omitted) (emphasis in original). The Court

concludes that it has not.

Affordable Care’s claim that there was “evident

partiality” fails for two reasons. First, Affordable Care

waived the objection because it waited until after the

arbitration award was issued to raise its claim of

evident partiality. See Dealer Computer Servs., Inc. v.

Michael Motor Co., 485 F. App’x 724, 727 (5th Cir.

2012) (“A party seeking to vacate an arbitration based

on an arbitrator’s evident partiality generally must

object during the arbitration proceedings. Its failure

to do so results in wavier of its right to object.”). And

what Affordable Care has shown are a few professional

connections, the existence of which were readily

discoverable to anyone who chose to look. See Fidelity

Fed. Bank, FSB v. Durga Ma Corp., 386 F.3d 1306,

1313 (9th Cir. 2004) (holding that a party waives later

challenges if it “either knew or should have known of

the facts indicating partiality”); Matter of Andros

Compania Maritima, S.A., 579 F.2d 691 (2d Cir. 1978)

(refusing to vacate the award where one party alleged

a “close personal and professional relationship” between

the arbitrator and the president of firm that owned

the vessel involved in the arbitration where basis of

relationship was that the arbitrator and the executive

had served together on 19 arbitration panels and no

other concrete support was given for the characterization that the two were “close personal friends”). All

the “connections” described by Affordable Care were

fairly discoverable. By waiting until the completion of

the arbitration proceedings—and after it received an

unfavorable ruling—Affordable Care waived its “objection” of evident partiality.

App.26a

Second, it is clear that neither the facts nor the

law support a finding of evident partiality on the part

of Arbitrator Holton. Significantly, Affordable Care

has not cited a single case that would support the

conclusions it draws from the professional connections

of Arbitrator Holton, Paul Sun, and the Winters Law

Firm. Nor does Affordable Care offer any specific facts

to contradict Arbitrator Holton’s disclosure that he

has not seen or had any communications with Paul

Sun in over ten years. The most Affordable Care does

is put forward conclusory assertions of partiality towards

the Defendants.

The cases that Affordable Care relies upon to argue

vacatur under Section 10(a)(2) involve business and

financial relationships between the arbitrator and one

of the parties. For example, in Thomas Kinkade Co. v.

White, 711 F.3d 719, 724 (6th Cir. 2013), the arbitration award was vacated because the neutral arbitrator’s law firm had accepted a business engagement

from one of the parties to the arbitration. And in

Schmitz v. Zilveti, 20 F.3d 1043 (9th Cir. 1994), the

Ninth Circuit reversed the district court’s judgment to

vacate the award where one of the arbitrators failed

to disclose that his law firm had represented the parent

company of a party to the arbitration in 19 cases over

35 years.

Affordable Care is correct that “[c]ourts have

found that a reasonable impression of partiality is

established when the arbitrator has had a direct

business or professional relationship with one of the

parties to an arbitration.” Weber v. Merrill Lynch Pierce

Fenner & Smith, Inc., 455 F. Supp. 2d 545, 552 (N. D.

Tex. 2006); see also Thomas Kinkade Co. v. White, 711

App.27a

F.3d 719, 724 (6th Cir. 2013) (“[w]hen the neutral arbitrator engages in or attempts to engage in mid-arbitration business relationships with non-neutral part icipants, it jeopardizes what is supposed to be a partystructured dispute resolution process.”).

However, there is no allegation or evidence of a

financial or business relationship between Arbitrator

Holton and Paul Sun or the Winters Law Firm. Also,

the unsubstantiated, conclusory allegation that an

attorney-client relationship exists between Arbitrator

Holton and Paul Sun is not supported by the evidence.

Affordable Care does not provide any relevant law to

support its conclusion that by virtue of Paul Sun and

the Winter Law Firm’s representation of Duke University, and on occasion some of its faculty members, an

attorney-client relationship exists between Paul Sun and

Arbitrator Holton, a professor at Duke Law School.4

While Affordable Care cites Rule 1.13 of the North

Carolina Rules of Professional Conduct in support, it

fails to cite the comment to that rule which states,

“[t]his does not mean, . . . , that constituents of an

organizational client are the clients of the lawyer.”

N.C. RULES OF PRO. CONDUCT R. 1.15 cmt. According to

Arbitrator Holton’s disclosure—which was not

objected to by Affordable Care—he had not seen or

communicated with Paul Sun in over ten years. And

4 In support of its claim that an attorney-client relationship exists

between Arbitrator Holton and Paul Sun, Affordable Care sites

to Rule 1.13 of North Carolina Rules of Professional Conduct and

an unpublished Connecticut district court case (Metcalf v. Yale

Univ., No. 15-cv-1696, (D. Conn. Dec. 27, 2017)—neither of which

are persuasive authority for this Court as neither suggest that

an attorney for an organization has an attorney-client relationship

with every employee of the organization it represents. [18] at 20.

App.28a

Affordable Care does not provide any legal support for

its contention that because Arbitrator Holton previously

did legal work for Duke University, and Paul Sun

currently does legal work for Duke University, there

is a conflict of interest. See Ormsbee Dev. Co. v. Grace,

668 F.2d 1140, 1149-50 (10t h Cir. 1982) (affirming

denial of vacatur where the arbitrator and law firm

representing a party had clients in common and

finding that requiring vacatur under such facts would

“request that potential neutral arbitrators sever all

their ties with the business world”). Nor is there any

authority to support Affordable Care’s position that

every attorney who has represented Duke University

has an attorney-client relationship with each of the

thousands of employees at Duke—including the faculty

of Duke Law School and Duke Medical School. See

Liquor Bike, LLC v. Iowa Dist. Ct. for Polk Cnty., 959

N.W.2d 693, 697 (Iowa 2021) (“[A] lawyer’s representation of an organization does not necessarily mean the

lawyer also represents the owners, employees, or other

constituents of the organization.”).

And Courts have refused vacatur where the

undisclosed connections are much stronger.5 For

5 See ANR Coal Co, Inc. v. Cogentrix of North Carolina, Inc., 173

F.3d 493 (4th Cir. 1999) (finding vacatur improper where arbitrator’s law firm represented company that indirectly caused the

dispute in the arbitration by buying less from the defendant, who

in turn sought to buy less from the plaintiff); Al-Harbi v.

Citibank, N.A., 85 F.3d 680, 682 (D.C. Cir. 1996) (denying

vacatur where arbitrator’s former law firm represented party to

the arbitration on unrelated matters); Lifecare Int’l, Inc. v. CD

Med. Inc., 68 F.3d 429, 432-34 & n.3 (11th Cir. 1995) (affirming

denial of vacatur where arbitrator failed to disclose that he became

“of counsel” to a law firm the prevailing party had interviewed

for the purpose of obtaining representation in the instant dispute

and finding that this, at best, showed a remote, uncertain, and

App.29a

example, in Peoples Sec. Life Ins. Co. v. Monumental

Life Ins. Co., 991 F.2d 141 (4th Cir. 1993), the arbitrator

failed to disclose his law partner’s representation of

one of the parties to the arbitration. Id. at 145. The

partner had done the work while working for a

different law firm and had not brought the client with

him when he joined the arbitrator’s firm. Id. The court

found that the partner’s prior representation of the

party was not sufficient grounds for finding evident

partiality by the arbitrator where the arbitrator was

not involved in the litigation between the parties. Id.

at 146. And in Lummus Global Amazonas, S.A. v.

Aguaytia Energy del Peru, 256 F. Supp. 2d 594 (S.D.

Tex. 2002), the arbitrator disclosed that his law firm

and a former law partner (Carolyn Goode) had done

work for a party to the arbitration and for a company

(El Paso Energy) that owned a minority interest in

that party. Lummus Global, 256 F. Supp. 2d at 620.

After the arbitrator issued his ruling, Lummus

discovered “new evidence” of the relationship between

the arbitrator’s law firm and El Paso Energy. Id. at

621. Another former law partner of the arbitrator

(John Hushon) left the law firm to become President

of El Paso Energy. Id. John Hushon retained his

former law firm and Carolyn Goode who did substantial

legal work on a financing project involving Aguaytia

Energy. Id. The court found that the arbitrator’s

alleged nondisclosure did not require vacatur, noting

that the disclosure put Lummus “‘on notice’ of the

speculative partiality); Health Services Mgm’t Corp. v. Hughes,

975 F.2d 1253, 1264 (7th Cir. 1992) (finding relationship “minimal”

and insufficient to vacate where arbitrator knew one of the

parties, had worked in the same office with him twenty years

ago, and saw him once a year since that time).

App.30a

circumstances they now

disqualifying.” Id. at 626.

allege

are

potentially

Unlike the arbitrators in Peoples and Lummus —

whose law partners actually did legal work for a party

to the arbitration—there is no allegation or evidence

that Arbitrator Holton or his law firm had ever done

legal work for the Defendants. Arbitrator Holton and

Paul Sun, as Arbitrator Holton disclosed to the

parties, had cases together in the past. And while the

arbitrator in Peoples did not make any disclosure

about the work his law partner had done for a party

to the arbitration, Arbitrator Holton disclosed that he

knew Paul Sun from previously having cases with or

against him. Affordable Care did not object to this

disclosure which put it “on notice.” See Lummus Global,

256 F. Supp. 2d at 626. And while both Arbitrator

Holton and Paul Sun represented Duke University at

different times, case law supports this Court’s finding

that denial of vacatur is appropriate because this is

the kind of “trivial former business” relationship, that

does not require disclosure. See Positive Software

Solutions, Inc. v. New Century Mortgage Corp., 476

F.3d 278 (5th Cir. 2007) (en banc) (holding that vacatur

was not warranted where arbitrator and counsel for a

party to the arbitration worked on the same litigation

for six years but had not spoken to each other prior to

the arbitration and describing this relationship as a

“trivial former business relationship”); Uhl v. Komatsu

Forklift Co., 512 F.3d 294 (6th Cir. 2008) (affirming

denial of vacatur where arbitrator did not disclose

that he had served as co-counsel with counsel for one

party on two occasions six years earlier); Apperson v.

Fleet Carrier Corp., 879 F.2d 1344, 1360 (6th Cir. 1989)

(declining to vacate where arbitrator adjudicated a

App.31a

case involving former law partners—whose practice

he had left two-and-ah

- alf years earlier—since there

was an absence of evidence of a personal interest in

the arbitration or prior knowledge of the substance of

the arbitration).

Finally, Affordable Care points to the fact that

Paul Sun taught a “Wintersession 2021” class at Duke

Law where Arbitrator Holton is a full-time law

professor. First, the Court notes that while Paul Sun

is listed as an instructor for “Wintersession 2021,”

Arbitrator Holton is not included in that list. As

Affordable Care points out in its brief, this class was

taught “during the weekends of Friday, February 19 –

Sunday, February 21, and Friday, March 12 – Sunday,

March 14.” [39] at 7. Affordable Care offers no

arguments or case law to support its conclusory claim

of evident partiality based on the fact that Paul Sun

taught a class as an adjunct professor at the same

university that employed Arbitrator Holton. In Midwest

Generation EME, LLC v. Continuum Chemical Corp.,

768 F. Supp. 2d 939 (N.D. Ill. 2010), Continuum’s

“evidence” of arbitrator bias included contacts between

the arbitrator and counsel for the prevailing party. Id.

at 949. These contacts included: (1) presenting together

at seminars for the College of Commercial Arbitrators,

(2) co-authoring various law journal articles, (3)

serving as past-presidents (at different times) of a

professional organization, (4) holding membership in

the ABA Real Estate Advisory Board, and (5) developing

continuing education programs. Id. at 949. The court

noted that “these particulars reveal nothing beyond

the kind of professional interactions that one would

expect of successful lawyers in the area where [the

arbitrator] and [plaintiff’s counsel] functioned.” Id.

App.32a

As the Sixth Circuit cautioned in Uhl:

We will not rush to conclude that an arbitrator is evidently partial. Arbitrators are

often chosen for their expertise and community involvement, so ‘[t]o disqualify any arbitrator who had professional dealings with

one of the parties (to say nothing of a social

acquaintanceship) would make it impossible,

in some circumstances, to find a qualified

arbitrator at all.’

Uhl, 512 F.3d at 308 (internal citations omitted). See

also Positive Software Sols., Inc., 476 F.3d at 286

(“Neither the FAA nor the Supreme Court, nor predominant case law, nor sound policy countenances

vacatur of FAA arbitral awards for nondisclosure by

an arbitrator unless it creates a concrete, not

speculative impression of bias.”); Merit Ins. Co. v.

Leatherby Ins. Co., 714 F.2d 673, 678 (7th Cir. 1983)

(“Notwithstanding the broad language of Section 18

[of the AAA’s Commercial Arbitration Rules], no one

supposes that either the Commercial Arbitration

Rules or the Code of Ethics for Arbitrators requires

disclosure of every former social or financial relationship with a party or a party’s principals.”).

Accordingly, Affordable Care has not met its burden

of showing a significant compromising connection

exists between Arbitrator Holton and Paul Sun that

would merit vacatur. Amser v. Nordstrom, Inc., 442 F.

Appx 967, 970 (5th Cir. 2011) (an arbitrator’s nondisclosure of prior service in an earlier arbitration

involving one of the parties did not meet the “high

threshold” necessary for vacating an award based on

evident partiality). “The draconian remedy of vacatur

is only warranted upon nondisclosure that involves a

App.33a

significant compromising relationship.” Positive Software Sols., Inc., 476 F.3d at 286. This case does not

come close to meeting that standard when Affordable

Care has not disputed that Arbitrator Holton and

Paul Sun have not seen each other or communicated

in over ten years. Affordable Care’s motion for vacatur

on this ground is denied.

2. Arbitrator Holton’s Actions During the

Arbitration Proceedings

Affordable Care further seeks vacatur of the award

under Section 10(a)(2) on the ground that Arbitrator

Holton displayed evident partiality and bias by granting

the Defendants certain procedural advantages.

First, Affordable Care asserts that the Defendants

were given an advantage by Arbitrator Holton granting

a continuance of the Arbitration hearing, seven weeks

before the hearing was scheduled to take place. As

Affordable Care points out in its brief, Paul Sun “had

been in an accident on July 31, 2020 and was

recovering from his injuries.” [18] at 10. Affordable

Care does not cite any case law to support its assertion

that Arbitrator Holton’s grant of a continuance to a

party whose attorney was injured in an accident is

evidence of a procedural advantage. Nor does Affordable Care assert or offer evidence that Paul Sun was

not actually injured in an accident. There is no merit

to the argument that the Arbitrator Holton was giving

the Defendants an advantage when a continuance was

granted because Paul Sun was recovering from

physical injuries sustained in an accident. Furthermore,

Arbitrator Holton allowed Affordable Care additional

time to present evidence and provide arguments after

the final arbitration hearing and closing arguments

App.34a

had been made. [16-38] at 2-3. Affordable Care appears

to argue that Arbitrator Holton’s grant of a continuance

based on physical injuries sustained by the Defendants’

attorney was more of “a procedural advantage” than

allowing Affordable Care to make arguments and

submit evidence after the final arbitration hearing.

Affordable Care is wrong.

Next, Affordable Care argues that Arbitrator

Holton gave the Defendants an advantage by allowing

Defendants to take a different position during the

arbitration than they took on a similar issue that was

raised in a separate federal civil action related to a

separate contract. To clarify, the Court notes that the

parties to the civil action (1:19-cv-827-HSO-RPM)

referred to by Affordable Care are Affordable Care

and JNM Office Property, LLC. JNM Office Property

is owned by Raeline McIntyre and her husband, Neil

McIntyre. In that action, Affordable Care sought a

declaratory judgment that it was not in default of a

lease agreement that the parties entered into in 2013.

The parties to the instant action are Affordable Care,

Raeline K. McIntyre, DMD, and Raeline K. McIntyre,

DMD, P.C., and the subject of this action is the

management services contract entered by the parties

in 2002. Affordable Care offers no legal support for its

position that Arbitrator Holton was bound by the

decision of a federal district court in a different state

in a different matter involving different contracts or

that failure to follow that district court ruling constitutes bias or misconduct justifying vacatur of the

arbitration award. Significantly, pursuant to the arbitration agreement, the interpretation and performance

of the contract were governed by North Carolina law.

App.35a

In Rainier DSC 1, L.L.C. v. Rainier Cap. Mgm’t,

L.P., 828 F.3d 362 (5th Cir. 2016), the Fifth Circuit

considered a claim of arbitrator bias where the arbitrator and the district court reached the same

conclusion on cases with similar issues and the same

parties. Id. at 364-65. The court st ated that “the fact

that the arbitrator and the district court reached the

same result regarding the meritlessness of the Investors’

claim is not itself evidence of improper bias,” noting

that the arbitrator’s award did not reference the

district court’s summary judgment and nothing in the

award suggested that it as not the product of an

independent evaluation by the arbitrator. Id.

Affordable Care has not shown that Arbitrator

Holton gave the Defendants such an advantage to

justify vacatur when deciding what weight to give a

ruling in an action in a different state that involved

different contracts. Therefore, vacatur is not appropriate on this ground under Section 10(a)(2).

C. Arbitrator’s Misconduct

Affordable Care argues that vacatur is merited

under Section 10(a)(3) because Arbitrator Holton

engaged in “misconduct” when he “refused to consider

evidence of the arguments and summary judgment on

the issue of waiver.” [18] at 22. The Defendants assert

that this “summary judgment evidence” is from a

separate civil action involving a lease between parties

who were not subject to this arbitration. [29] at 1-2.

The arbitrator accepted into the hearing record the

summary judgment ruling from that civil lawsuit

between Affordable Care and JNM Office Property, LLC,

1:19-cv-827-HSO-JCG, and allowed oral argument on

the matter. [1-2] at 2-3.

App.36a

Each of the parties to an arbitration must be

given an “adequate opportunity to present its evidence

and arguments.” Karaha Bodas Co. v. Perusahaan

Pertambangan Minyak Dan Gas Bumi Negara, 364

F.3d 274, 300 (5th Cir. 2004) (citations omitted).

However, “an arbitrator is not bound to hear all of the

evidence tendered by the parties.” Id. “Every failure of

an arbitrator to receive relevant evidence does not

constitute misconduct requiring vacatur of an arbitrator’s award.” Id. at 301. “A federal court may vacate

an arbitrator’s award only if the arbitrator’s refusal to

hear pertinent and material evidence prejudices the

rights of the parties to the arbitration proceedings”

such that “the exclusion of relevant evidence deprives

a party of a fair hearing.” Id.

Affordable Care alleges that Arbitrator Holton

did not consider the summary judgment ruling from a

separate civil action involving a lease agreement

between Affordable Care and JNM Property, LLC—

an entity that was not a party to the instant arbitration.

However, Affordable Care’s statement that the arbitrator did not “consider” the summary judgment ruling

from Civil Action No. 1:19-cv-827-HSO-JCG does not

line up with the record. In fact, oral arguments were

allowed on the matter—after closing arguments were

made—and the summary judgment ruling was received

into the record. [16-38] at 2-3. Clearly, Arbitrator

Holton did not refuse to hear or exclude this evidence.

And as the Court just stated, Affordable Care cites to

no authority that suggests that the arbitrator was

bound by a district court ruling in a separate action in

another state, involving different contracts, or that

failure to follow that ruling constitutes bias or

misconduct justifying vacatur of the arbitration award.

App.37a

Whether or not Arbitrator Holton decided to give

weight to a particular piece of admitted evidence has

no bearing on the issue of whether misconduct occurred

meriting vacatur. See Vantage Deepwater Co. v.

Petrobras Am. Inc., 4:18-CV-02246, 2019 WL 2161037,

at *8 (S.D. Tex. May 17, 2019).

On these facts, Affordable Care has not shown

that Arbitrator Holton denied it an adequate opportunity to present its evidence and arguments. Accordingly, the Court finds that Affordable Care did not

carry its burden of demonstrating that it was deprived

of a fair hearing. Therefore, vacatur is not appropriate

under Section 10(a)(3).

D. Arbitrator Exceeding His Powers

Finally, Affordable Care argues that the final

award, which included attorney’s fees and costs,

requires vacatur under Section 10(a)(4). [18] at 23.

The Defendants note that the arbitration hearing

lasted six days, including additional time granted to

Affordable Care to provide more evidence and to make

additional arguments. [29] at 4. Defendants further

argue that Arbitrator Holton’s 115 page opinion was

supported by the record and that vacatur of this

matter is not warranted. Id. at 5-6.

Section 10(a)(4) authorizes a federal court to set

aside an arbitration award “where the arbitrators

exceeded their powers.” BNSF R. Co. v. Alstom

Transp. Inc., 777 F.3d 785, 788 (5th Cir. 2015). “An

argument for vacatur under Section 10(a)(4) must be

balanced against the parties’ agreement to have the

arbitrators interpret their agreement, which means

that ‘an arbitral decision even arguably construing or

applying the contract must stand, regardless of a

App.38a

court’s views of its (de)merits.’” Vantage Deepwater

Co. v. Petrobras Am., Inc., 966 F.3d 361, 375 (5th Cir.

2020) (quoting Oxford Health Plans, LLC v. Sutter,

569 U.S. 564, 569, 133 S. Ct. 2064, 186 L. Ed. 2d 113

(2013)). “A party seeking relief under that provision

bears a heavy burden.” Oxford Health Plans, LLC, 569

U.S. at 569. “It is not enough . . . to show that the

[arbitrator] committed an error – or even a serious

error.” Id. (quoting Stolt-Nielson S.A. v. AnimalFeeds

Int’l Corp., 559 U.S. 662, 671, 130 S. Ct. 1758, 176 L.

Ed. 2d 605 (2010)). Under Section 10(a)(4), the Court

looks at “whether the arbitrator’s award was so

unfounded in reason and fact, so unconnected with the

wording and purpose of the [contract] as to manifest

an infidelity to the obligation of an arbitrator.” Timegate

Studios, Inc. v. Southpeak Interactive, L.L.C., 713 F.3d

797, 802-03 (5th Cir. 2013). “The substantive question

of whether an arbitrator has exceeded its powers is a

function of [a] highly deferential standard of review in

such cases: an arbitrator has not exceeded his powers

unless he has utterly contorted . . . the essence of the

contract.” Vantage Deepwater Co., 966 F.3d at 375

(quoting Timegate Studios, Inc., 713 F.3d at 802-03).

“In other words, the arbitrator exceeds his authority

where he acts ‘contrary to an express contractual

provision.’” Id. (quoting PoolRe Ins. Corp. v. Org.

Strategies, Inc., 783 F.3d 256, 265 (5th Cir. 2015)). The

Court “resolve[s] any doubts in favor of arbitration.”

Id. (citing Rain CII Carbon, LLC v. ConocoPhillips

Co., 674 F.3d 469, 472 (5th Cir. 2012)).

Affordable Care argues that Arbitrator Holton

exceeded his powers by granting an award of attorneys’

fees and costs, “which were never claimed by Defendants.” [18] at 23. Contrary to Affordable Care’s

App.39a

assertion that Defendants did not request costs and

attorneys’ fees, Defendants clearly sought such an

award in their Answer to Affordable Care’s Amended

Demand for Arbitration. See [16-29] at 34 (Respondents

“pray that the Amended Demand for Arbitration be

dismissed with prejudice, taxing all costs of this action

to Claimant and awarding Respondents reasonable

attorneys’ fees against Affordable, and that a judgment

be entered in the Respondents’ favor, together with

costs incurred herein”).

Further, the Final Award set forth the basis for

award, and that is all that is necessary. See Leeward

Constr. Co. v. Am. Univ. of Antigua-Coll. of Med. , 826

F.3d 634, 640 (2d Cir. 2016) (“A reasoned award sets

forth the basic reasoning of the arbitral panel on the

central issue or issues raised before it. It need not

delve into every argument made by the parties.”).

After analyzing each of Affordable Care’s seventeen

causes of action, Arbitrator Holton addressed “attorneys’

fees and expenses.” [16-38] at 110-114. At the outset,

the Final Award states:

AAA Commercial Rule 47(d)ii authorizes an

award of attorneys’ fees ‘if all parties have

requested such an award or it is authorized

by law or in their arbitration agreement.’

Both parties seek attorneys’ fees in this

matter. Rule 47 also provides that the arbitrator ‘shall assess’ fees and expenses.

Id. at 110.6 Arbitrator Holton outlined the factors

considered in determining what attorneys’ fees and

6 The Service Contract at issue expressly incorporates the rules

of the AAA. See [21-1] at 9 (“Any controversy or dispute . . . will be

settled by arbitration in Raleigh, North Carolina in accordance

App.40a

expenses to assess and the basis for the ultimate

award. Id. at 110-115. It is clear that Arbitrator

Holton concluded that the parties both requested

attorneys’ fees and expenses, and that he was required

by Rule 47 to award them.

Affordable Care has not met its burden to show

that “the arbitrator’s award was so unfounded in reason

and fact, so unconnected with the wording and purpose

of the [contract] as to manifest an infidelity to the

obligation of an arbitrator.” See Timegate Studios, 713

F.3d at 802; Forsythe Int’l, S.A. v. Gibbs Oil Co. of

Tex., 915 F.2d 1017, 1022 (5th Cir. 1990) (“Parties to

voluntary arbitration may not superimpose rigorous

procedural limitations on the very process designed to

avoid such limitations . . . Submission of disputes to

arbitration always risks an accumulation of procedural

and evidentiary shortcuts that would properly frustrate

counsel in a formal trial”). Arbitrator Holton did not

exceed his powers by issuing an award of attorneys’

fees and costs to the Defendants.

Accordingly, the Court finds that vacatur under

Section 10(a)(4) is not appropriate.

III. MOTION FOR DISCOVERY

Affordable Care additionally requests a period of

“limited discovery related to the Arbitrators’ bias,

partiality, and conflicts of interest, specifically related

to Arbitrator Holton’s relationship with Paul Sun and

the Winters Firm.” [17-2] at 8. The Defendants

contend that post-arbitration discovery, including deposing Arbitrator Holton is improper. The Defendants

with the then existing rules of the American Arbitration

Association applicable to commercial arbitration.”).

App.41a

also argue that Arbitrator Holton’s disclosure with

regard to his connection to Paul Sun was not objected

to by the Plaintiffs, and Affordable Care’s late request

for discovery on the arbitrator is an attempt to “freeze

the confirmation proceedings.” [25] at 3.

“District courts occasionally allow discovery in

vacatur and confirmation proceedings.” Vantage Deepwater Co. v. Petrobras Am., Inc., 966 F.3d 361, 372

(5th Cir. 2020) (citing Fed. R. Civ. P. 81(a)(6)(B)). The

Fifth Circuit has endorsed “a flexible inquiry for

district courts to use when assessing discovery requests

in the context of such proceedings: ‘the court must weigh

the asserted need for hitherto undisclosed information

and assess the impact of granting such discovery on

the arbitral process.’” Id. (quoting Karaha Bodas Co.,

L.L.C. v. Perusahaan Pertambangan Minyak Dan Gas

Bimi Negara, 364 F.3d 274, 305 (5th Cir. 2004)

(internal citations omitted)). The Court should focus

on “specific issues raised by the party challenging the

award and the degree to which those issues implicated

factual questions that cannot be reliably resolved

without some further disclosure.” Id. “The party

seeking discovery bears the burden of showing its

necessity.” Id. (quoting Freeman v. United States, 556

F.3d 326, 341 (5th Cir. 2009)). “Moreover, ‘[t]he loser

in arbitration cannot freeze the confirmation proceedings in their tracks and indefinitely postpone judgment

by merely requesting discovery.’” Id. (quoting Imperial

Ethiopian Gov’t v. Baruch-Foster Corp. , 535 F.2d 334,

337 (5th Cir. 1976)).

It has been observed that the deposition of

arbitrators has been “repeatedly condemned” by courts.

Legion Ins. Co. v. Ins. General Agency, Inc., 822 F.2d

541, 543 (5th Cir. 1987). See Hoeft v. MVL Group, Inc.,

App.42a

343 F.3d 57, 68 (2nd Cir. 2003), abrogated on other

grounds by Hall Street Assocs., L.L.C. v. Mattel, Inc.,

552 U.S. 576, 128 S. Ct. 1396, 170 L. Ed. 2d 254 (2008);

Woods v. Saturn Dist. Corp., 78 F.3d 424, 430 (9th Cir.

1996); O.R. Securities, Inc. v. Pro. Plan. Assocs., Inc.

857 F.2d 742, 748 (11th Cir. 1988). See also Lyeth v.

Chrysler Corp., 929 F.2d 891, 899 (2nd Cir. 1991)

(affirming district court’s denial of Chrysler’s request

to depose the individual arbitrator where Chrysler did

not present any clear evidence of impropriety and

finding district court did not err in its finding that

Chrysler was simply “engaging in a fishing expedition

in an attempt to determine if there is some basis,

however farfetched, to prosecute a claim of bias.”).

In support of its request to conduct discovery,

Affordable Care cites district court cases out of New

Jersey and New York where courts held that discovery

requests may be granted where the “discovery is

plainly relevant to colorable claims of arbitral bias.”

See Nat’l Hockey League Players’ Ass’n v. Bettman, No.

93-CIV-5769, 1994 WL 38130, at *2 (S.D. N.Y. Feb. 4,

1994); Hamilton Park Health Care Ctr., LTD, v. 1199

SEIU United Healthcare Workers East, Civ. Act. No. 130621 (DMC), 2013 WL 6050138, at *5 (D. N.J. Nov. 13,

2013); Cable Sys. Installations Corp. v. Int’l Brotherhood

of Electrical Workers, Local Union No. 351 , Civ. No.

12-7407-JHR-KMW, 2014 WL 1291926 6, at *3 (D. NJ.

Jun. 6, 2014). As stated above, the standard in the

Fifth Circuit for assessing “evident partiality” is not

the “mere appearance of bias.” Positive Software Sols.,

Inc., 476 F.3d at 285. Rather, Affordable Care must

establish that “a reasonable person would have to

conclude that the arbitrator was partial” to the

App.43a

Defendants. Householder Grp., 354 F. App’x at 852

(quoting Weber, 455 F. Supp. 2d at 550).

Not only do the cases cited by Affordable Care

apply a different standard than that of the Fifth

Circuit, but they are further distinguishable by their

facts and holdings. For example, in both Cable Sys.

Installations and Nat’l Hockey League Players’ Ass’n,

the courts found that the plaintiffs had set forth some

basis for supporting the requests for discovery where

there was evidence that the arbitrator had decided the

outcome of the case prior to the hearing. See Cable

Sys. Installations, 2014 WL 12919266, at *4; Nat’l

Hockey League Players’ Ass’n, 1994 WL 38130, at *4.

Affordable Care has only presented mutual connections

in the legal community between Arbitrator Holton and

Paul Sun that were discoverable during the arbitration.

And Affordable Care has offered no evidence to refute

Arbitrator Holton’s disclosure that he has not seen or

communicated with Paul Sun in at least ten years.

Nor has Affordable Care even suggested that Arbitrator

Holton was being dishonest in his disclosure. Certainly,

no evidence has been offered to suggest that the

matter was determined prior to the arbitration hearings.

Finally, in Hamilton Park Health Care Center, LTD.,

the court found that the plaintiff “failed to make a

showing sufficient to justify an order compelling

discovery.” Hamilton Park Health Care Ctr., LTD.,

2013 WL 6050138, at *6.

Affordable Care has provided no evidence that a

reasonable person would have to conclude that

Arbitrator Holton was partial to the Defendants. See

Uhl v. Komatsu Forklift Co., 512 F.3d 294 (6th Cir.

2008) (denying discovery on arbitrator after denying

vacatur on the basis of evident partiality where plaintiff

App.44a

failed to provide evidence that a reasonable person

would have to conclude that the arbitrator was partial

based on the fact that the arbitrator’s former law

partner was counsel in the arbitration). Both Arbitrator

Holton’s timely disclosure as well as the evidence

provided by Affordable Care suggest that the relationship between Arbitrator Holton and Paul Sun was

purely professional and more than ten years ago. See

Matter of Andros Compania Maritima, S.A., 579 F.2d

691, 701-02 (2nd Cir. 1978) (affirming denial of

discovery into relationship between arbitrator and

principal where record showed extent of relationship

was purely professional); Lyeth v. Chrysler Corp., 929

F.2d 891, 899 (2nd Cir. 1991) (affirming denial of

discovery where party had failed to show that arbitrator had any financial or personal stake in the

outcome); Lummus Global Amazonas, S.A. v. Aguaytia

Energy del Peru, 256 F. Supp. 2d 594, 626-27 (S.D.

Tex. 2002) (denying discovery for alleged bias of arbitrator based on arbitrator’s former law partners’

representation of owner and investor in owner where

record was adequate to permit court to determine the

issue); Midwest Generation EME, LLC v. Continuum

Chem. Corp., 768 F. Supp. 2d 939, 946-47 (N.D. Ill.

2010) (holding that sufficient evidence that would

justify subjecting the arbitrator to discovery was not

presented where all that was shown was “a series of

public, almost exclusively parallel contacts involving

lecturing and writing on construction related matters”

and “these endeavors were ‘no secret,’” and their

existence . . . was readily available to anyone who chose

to look”).

Accordingly, Affordable Care’s motion for discovery

is denied.

App.45a

IV. MOTION FOR SANCTIONS

Defendants have also asked the Court to sanction

[33] Affordable Care for filing a motion to vacate “for

the purpose of delay.” [34] at 2. Affordable Care’s

Response includes emails between counsel and a

seventeen page brief. Affordable Care requests reasonable expenses, including attorneys’ fees, associated

with responding to the motion, in accordance with Rule

11(c)(2) of the Federal Rules of Civil Procedure. [38]

at 1.

Rule 11 authorizes a court to impose sanctions on

a party who files a pleading if the claims or defenses

of the signer are not supported by existing law or by a

good faith argument for an extension or change in

existing law, Fed. R. Civ. P. 11 (b)(2); or the allegations

and other factual statements lack evidentiary support

or are unlikely to do so after a reasonable opportunity

for investigation. Fed. R. Civ. P. 11 (b)(3). The purpose

of the rule is to “deter baseless filings in district

court,” Cooter & Gell v. Hartmarx Corp, 496 U.S. 384,

404, 110 S. Ct. 2447, 110 L. Ed. 2d 359 (1990), and to

ensure that “victims of frivolous lawsuits do not pay

expensive legal fees associated with defending such

lawsuits.” Thomas v. Capital Sec. Servs., Inc., 836

F.2d 866, 879 (5th Cir. 1988). After notice and

opportunity to respond, courts finding a Rule 11(b)

violation may impose appropriate sanctions. Fed. R.

Civ. P. 11 (c)(1). These may include monetary and

injunctive sanctions, Farguson v. MBank Houston,

N.A., 808 F.2d 358, 359-60 (5th Cir. 1986), and even

dismissal, see Jimenez v. Madison Area Technical

Coll., 321 F.3d 652, 657 (7th Cir. 2003). Courts have a

duty to impose the least severe sanction that is

sufficient to deter future conduct. Mendoza v. Lynaugh,

App.46a

989 F.2d 191, 196 (5th Cir. 1993); Fed. R. Civ. P. 11

(c)(4).

The Fifth Circuit has noted that “[a]n attorney

may escape sanctions under [R]ule 11 if he had to rely

on a client for information about the facts underlying

the pleadings.” St. Amant v. Bernard, 859 F.2d 379,

383, n.15 (5th Cir. 1988). In St. Amant, the court

summarized the three duties that Rule 11 places on

attorneys:

(1) counsel must make reasonable inquiry

into the factual basis of any pleading, motion,

or other paper; (2) counsel must make a

reasonable inquiry into the law; and (3)

counsel must not file a pleading, motion, or

other paper intended to delay proceedings,

harass another party, or increase the cost of

litigation.

Id. at 382 (citing Thomas, 836 F.2d at 874).

The Court is within its discretion to deny the

Defendants’ request for sanctions. See Cooter & Gell

v. Hartmarx Corp, 496 U.S. 384, 404, 110 S. Ct. 2447,

110 L. Ed. 2d 359 (1990) (stating that a district court

has broad discretion in determining whether any

sanction is warranted and, if so, what it should be);

Lulirama, Ltd. v. Axcess Broadcast Servs., Inc., 128 F.3d

872, 884 (5th Cir. 1997) (affirming district court’s

refusal to impose sanctions); Matta v. May, 118 F.3d

410, 416 (5th Cir. 1997) (reversing district court’s order

imposing sanctions because plaintiff’s libel claims

were well grounded in fact and law).

Rule 11 requires the movant to “describe the

specific conduct that allegedly violates Rule 11(b).”

Fed. R. Civ. P. 11 (c)(2). “Under Rule 11(b)(2), [s]anctions

App.47a

are appropriate if counsel submits a legally indefensible

filing, and [a] filing is legally indefensible if it is not

warranted by existing law or by a nonfrivolous

argument.” M2 Techn., Inc. v. M2 Software, Inc., 748 F.

App’x 588, 589 (5th Cir. 2018) (citing Snow Ingredients,

Inc. v. SnoWizard, Inc., 833 F.3d 512, 528 (5th Cir.

2016)) (internal quotations omitted). Defendants assert

that Affordable Care’s motion to vacate is frivolous

and that it should be sanctioned for its bad conduct.

[34] at 3, 7.

However, Defendants have failed to meet their

burden under Rule 11 of showing that these claims

were frivolous. While Affordable Care’s case is weak

and the Court ultimately denied the motion to vacate,

Defendants have not shown that the filings were

“legally indefensible.” M2 Techn., 748 F. App’x at 589

(citing Snow Ingredients, Inc., 833 F.3d at 528) (internal

quotations omitted). See Greenblatt v. Richard Potasky

Jeweler, Inc., 19 F. App’x 307, 310 (6th Cir. 2001)

(denying costs where the plaintiff’s appeal “though

weak, is not frivolous”); Brandt v. Magnificent Quality

Florals Corp., 371 F. App’x 994, 995 (11th Cir. 2010)

(affirming denial of sanctions where “Plaintiffs’ case

[was] weak at best”); We Shall Overcome Fdn. v.

Richmond Org., Inc., 330 F. Supp. 3d 960, 968 (S.D.

N.Y. 2018) (holding that while defense proffered was

weak, it was not frivolous).

In support of its Motion to Vacate, Affordable

Care filed a twenty-seven page brief citing cases in an

effort to support its arguments. See Auto Mech. Local

0

7 1 v. Joe Mitchell Buick, Inc. , 930 F.2d 576, 579 (7th

Cir. 1991) (cross motions for sanctions denied because

arguments made were not “devoid of arguable merit”).

While the Court finds that all of Affordable Care’s

App.48a

bases for vacatur are unavailing, the Court cannot say

that bringing forward these grounds was frivolous or

done in bad faith. See Teamsters Local Union No. 430

v. Cement Express, Inc., 841 F.2d 66, 68 (3rd Cir. 1988)

(reversing monetary sanctions because while legal

theory espoused was novel, it was not plainly unreasonable); Allied Indus. Workers of Am. Local 232 v.

Briggs & Stratton Corp., 837 F.2d 782, 788-89 (7th

Cir. 1988) (affirming district court’s denial of sanctions

because Briggs & Stratton had not resisted arbitration in bad faith).

In its seventeen page memorandum in Response

to Defendants’ motion for sanctions, Affordable Care

describes its efforts to comply with Rule 11’s

requirement to make reasonable inquiry into the facts

supporting its claims. [39] at 10-14. Affordable Care

outlines its discovery of connections of which it claimed

showed “evident partiality” as well as its efforts to

ascertain more about the contacts between Arbitrator

Holton and Paul Sun. Affordable Care researched the

issues and attempted to find some case law to support

its position. And while this Court finds those cases

distinguishable from this case and Affordable Care’s

position in moving to vacate is unpersuasive and quite

weak, the Court does not find their arguments were

so frivolous as to warrant Rule 11 sanctions. Similarly,

there is a lack of evidence of “improper purpose, such

as harassment or delay.” Uhl v. Komatsu Forklift Co.,

512 F.3d 294, 308 (6th Cir. 2008) (denying sanctions

where, although Komatsu’s case was weak, there was

no evidence of improper purpose or delay behind the

appeal).

Accordingly, the Defendants’ motion for sanctions

is denied. The Court further denies Affordable Care’s

App.49a

request for attorney’s fees associated with the motion.

See Fed. R. Civ. P. 11(c)(2) (“If warranted, the court

may award to the prevailing party the reasonable

expenses, including attorney’s fees, incurred for the

motion). Affordable Care’s case is flimsy, and the Court

declines to award sanctions to either side. See Walker

v. City of Bogalusa, 168 F.3d 237, 241 (5th Cir. 1999)

(motions for sanctions by both parties denied because

both parties contributed to “disharmony in the

proceedings” and filed briefs that “were long on hyperbole and personal attacks”).

V.

CONCLUSION

IT IS, THEREFORE, ORDERED AND ADJUDGED that Plaintiff’s [16] Motion to Vacate

Arbitration Award is DENIED and Defendants’ [20]

Motion to Confirm Arbitration Award is GRANTED.

The Defendants are entitled to recover attorneys’ fees

in the amount of $379,168 plus costs in the amount of

$14,430.75 from the Plaintiff as provided in the

Arbitration Award entered on March 19, 2021. The

Court rules as follows with respect to the remaining

motions:

1. Plaintiff’s [17] Motion for Discovery is DENIED;

2. Defendants’ [33] Motion for Sanctions is

DENIED;

3. Plaintiff’s [12] Ex Parte Motion for Case

Management Conference is DENIED AS MOOT;

4. Defendants’ [13] Motion to Dismiss is DENIED

AS MOOT;

5. Plaintiff’s [26] Motion for Leave to File

Substitute Exhibit 28 is GRANTED; and

App.50a

6. Plaintiff’s [35] Motion for Leave to File Supplemental Memorandum and Motion to Conduct Limited

Discovery is GRANTED in part and DENIED in part.

The motion is GRANTED to the extent the Court

allows the filing of the Motion and considered it in its

rulings but DENIES the motion as to the relief

requested.

SO ORDERED AND ADJUDGED this the 31st

day of March, 2022.

/s/ Taylor B. McNeel

United States District Judge

App.51a

DENIAL OF PETITION FOR REHEARING,

U.S. COURT OF APPEALS

FOR THE FIFTH CIRCUIT

(JUNE 22, 2023)

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

________________________

AFFORDABLE CARE, L.L.C.,

Plaintiff-Appellant,

v.

RAELINE K. MCINTYRE, DMD;

RAELINE K. MCINTYRE, DMD, P.C.,

Defendants-Appellees.

________________________

No. 22-60245

Appeal from the United States District Court

for the Southern District of Mississippi

USDC No. 1:21-CV-85

ON PETITION FOR REHEARING EN BANC

Before: ELROD and HAYNES, Circuit Judges.

PER CURIAM:

Treating the petition for rehearing en banc as a

petition for panel rehearing (5TH CIR. R. 35 I.O.P.), the

petition for panel rehearing is DENIED. Because no

member of the panel or judge in regular active service

App.52a

requested that the court be polled on rehearing en banc

(FED. R. APP. P. 35 and 5TH CIR. R. 35), the petition for

rehearing en banc is DENIED.

App.53a

ARBITRATOR FINAL DECISION AND AWARD

(MARCH 19, 2021)

AMERICAN ARBITRATION ASSOCIATION

COMMERCIAL ARBITRATION TRIBUNAL

RALEIGH, NORTH CAROLINA

________________________

AFFORDABLE CARE, LLC,

Claimant,

v.

RAELINE K. MCINTYRE, DMD AND

RAELINE K. MCINTYRE, DMD, P.C.,

Respondents.

________________________

AAA NO. 01-19-0003-4957

Arbitrator: Charles R. Holton

FINAL DECISION AND AWARD

1. This matter comes before the undersigned

Arbitrator after a final hearing in the above-captioned

matter.

2. Claimant Affordable Care, LLC (“Affordable”)

filed its initial Demand for Arbitration on November

1, 2019, against Respondents Raeline K. McIntyre,

DMD, and Raeline K. McIntyre, DMD, PC (the “PC”).

Affordable later filed an Amended Demand for

Arbitration (the “Demand”), asserting seventeen claims

for relief against Respondents, and seeking damages

and attorneys’ fees. Respondents denied that Affordable

App.54a

is entitled to any relief. Respondents also contend that

they are entitled to set off sums due to the PC against

any award to Affordable, and that they are entitled to

recover attorneys’ fees and costs.

3. A final arbitration hearing was held by

videoconference from December 1, 2020, to December

4, 2020, and on December 14 and 15, 2020. Affordable

and Respondents were each represented by counsel.

4. Affordable and Respondents each presented

an opening statement. In its case, Affordable called as

witnesses Karol Twilla, Affordable’s senior vice

president for field operations, 12/1/2020 Tr. 75:10-13,

Respondent Dr. Raeline McIntyre, her husband Dr.

Neil McIntyre, 12/14/2020 Tr. 5:11-13, and Kevin

Hudi, vice president of Affordable Dentures Dental

Laboratories, Inc. (“ADDL”), 12/4/2020 Tr. 392:45

- .

Respondents called Dr. Raeline McIntyre and Dr. Neil

McIntyre to testify in their case. Affordable called Ms.

Twilla and Mr. Hudi as rebuttal witnesses. Both sides

offered documentary exhibits.1 Following the hearing,

Affordable and Respondents each submitted a posthearing brief, as well as proposed findings of fact and

conclusions of law.2 After receiving the post-hearing

submissions of the parties, the Arbitrator heard

closing arguments.

5. On March 4, 2021, Affordable filed a Request

for Judicial Notice of the Summary Judgment Decision

1 Joint Exhibits are referred to as “Joint. Ex.” and the exhibit

number; Affordable’s exhibits are re ferred to as “Cl. Ex.” and the

exhibit number; and Respondents’ exhibits are referred to as

“Resp. Ex.” and the exhibit number.

2 Affordable’s post-hearing brief is referred to as “Cl. Br.”;

Respondents’ post-heari ng brief is referred to as “Resp. Br.”

App.55a

and Transcript of a lawsuit pending in the Southern

District of Mississippi between Affordable Care and

JNM Office Property LLC, 1:19-cv-827-HSO-JCG and,

thereafter, requested further oral argument regarding

the significance of that decision to this arbitration.

Additional oral argument was held on March 11, 2021.

At that time the undersigned Arbitrator accepted into

the arbitration hearing record said Summary

Judgment Decision and Hearing Transcript, along

with Affordable Care’s Second Motion for Partial

Summary Judgment and JNM’s Second Amended and

Supplemental Complaint, all filed in that case.

The Arbitrator, having been designated in

accordance with the arbitration agreement of the

parties and having been duly sworn makes the

following Findings of Fact and Conclusions of law

based on the evidence and authorities presented at

the final hearings along with the legal briefs and

arguments of counsel.

FINDINGS OF FACT:

The Parties:

6. Affordable is a dental practice management

company, also known as a dental support organization.

12/1/2020 Tr. 76:81

- 4. Affordable enters into contractual

affiliations to manage dental practices across the

country, and has affiliated practices in forty different

states. Id. 82:12-17. Affordable owns Affordable

Dentures Dental Laboratories, Inc. (“ADDL”). Id.

76:15-19. Through ADDL, Affordable provides in-house

dental laboratory services to each affiliated practice.

Id. 76:42

- 2; 12/4/2020 Tr. 390 :12-391:19. Affordable

and ADDL provide what Affordable calls “economy

App.56a

denture” services. 12/1/2020 Tr. 76:23-77:13. Affordableaffiliated dental practices provide extractions, dentures,

and implants. 12/3/2020 Tr. 43:91

- 2. Affordable advertises that its affiliated practices provide same-day

service, meaning that a patient can have teeth extracted

and receive a denture on the same day. 12/4/2020 Tr.

323:20-21; id. 397:22-398:2.

7. Respondent Raeline K. McIntyre, DMD, is a

dentist licensed to practice in Mississippi. 12/14/2020

Tr. 4:21-23.

8. Dr. Raeline McIntyre is the sole shareholder

and president of Raeline K. McIntyre, DMD, PC.

12/2/2020 Tr. 210:71

- 0.

Affiliation Between the PC and Affordable:

9. In 2001, as she was finishing dental school at

the University of Mississippi Medical Center Dental

School in Jackson, Mississippi, Dr. Raeline McIntyre

received several calls from a recruiter associated with

Affordable.3 12/14/2020 Tr. 4:15-20;

id. 5:17-61

: 2.

Although Affordable managed dental practices,

Affordable did not own practices—only a licensed

dentist could own a practice. See 12/2/2020 Tr.127:212. The recruiter encouraged Dr. McIntyre to consider

owning an Affordable-affiliated dental practice.

12/14/2020 Tr. 6:51

- 2.

10. While she was not initially interested in

Affordable’s offer, eventually Dr. Raeline McIntyre

3 On October 22, 2015, Affordable Care, Inc., converted to a

limited liability company and became Affordable Care, LLC. See

Cl. Ex. 40. References to “Affordable” in these findings and

conclusions mean Affordable Care, Inc., prior to its conversion,

and Affordable Care, LLC, after the conversion.

App.57a

agreed to travel to North Carolina to meet with representatives of Affordable. 12/14/2020 Tr. 6:13-75

: .

Affordable explained that it could handle the management of the dental practice, such as human resources,

taxes, payroll, marketing, and advertising, while she

could focus on practicing dentistry. Id. 9:11-21. Dr.

Raeline McIntyre would be a general dentist, but her

practice would be limited to extractions, dentures, and

implants. Id. 11:71

- 4.

11. During the recruiting process, Affordable

asked Dr. Raeline McIntyre if she could “fill in” at an

Affordable-affiliated dental practice in Gulfport,

Mississippi, while Affordable was working to get a

licensed dentist to purchase the practice. 12/14/2020

Tr. 13:61

- 6. She agreed, and began working at the

practice in Gulfport in or around February 2002. Id.

13:17-23.

12. Dr. Raeline McIntyre continued to work at

the Affordable-affiliated prac tice in Gulfport on a

temporary basis until around August 2002. 12/14/2020

Tr. 19:38

- . After working as a temporary employee,

Dr. Raeline McIntyre agreed to own a dental practice

managed by Affordable. Id. 19:91

- 2.

13. Affordable sent Dr. Raeline McIntyre a packet

of materials to sign to set up a professional corporation

in her name. 12/14/2020 Tr. 22:51

- 6. Dr. Raeline

McIntyre signed the papers, and Affordable set up the

PC, with Dr. Raeline McIntyre as the sole owner of the

PC. Id. 22:17-22.

Professional Assets Purchase Agreement:

14. On November 1, 2002, pursuant to a Professional Assets Purchase Agreement (Joint Ex. 6), the

App.58a

PC purchased the assets of James A. Poe, DDS, P.C.

(the “Poe PC”), a dental practice owned by Dr. James

Poe and managed by Affordable. 12/1/2020 Tr. 95:1217.

15. Either Affordable or its outside legal counsel

drafted the Professional Assets Purchase Agreement.

12/2/2020 Tr. 177:15-21.

Services Agreement:

16. Also on November 1, 2002, the PC entered

into a Management Services Agreement (the “Agreement” or “MSA”) (Joint Ex. 3) with Affordable. 12/14/

2020 Tr. 20:23-21.6. Affordable also drafted this Agreement. Id. 21:78

- . Dr. Raeline McIntyre did not think

that the standard terms of the Agreement were negotiable; however, she was able to negotiate her salary

from the PC, 12/4/2020 Tr. 457:92

- 0, which was reflected

in the Managing Dentist Employment Agreement

(Joint Ex. 5).

17. Under the MSA, Affordable agreed to act as

the PC’s agent to “manage the business aspects of the

Practice on PC’s behalf and in the PC’s name.” MSA

§ I(A); id. § VI(B). According to the MSA, Affordable

was “granted all necessary authority and discretion to

that end, understanding that at all times [Affordable]

is obligated to manage the Practice with the PC’s best

interest in mind.” Id. § I(A). Affordable also agreed to

perform the services listed in Exhibit B to the MSA.

Id. § I(C).

18. Under Exhibit B, Affordable agreed to lease

office space and equipment to the PC under a separate

lease, provide an in-center dental laboratory through

ADDL, assist the PC with recruitment, staffing, and

App.59a

pay, provide a centralized purchasing system for supplies, assist the PC in obtaining legal services, develop

and implement marketing plans, provide financial

services, and procure certain insurance. See id.

19. Pursuant to the “Financial Services” section

of Exhibit B, Affordable established a checking account

in the PC’s name, called the “[d]epository checking

account.” MSA at 17. The PC was required to deposit

all money received from its operations into the

depository checking account. Id. According to the Agreement, withdrawals could be made only by employees

of the PC after notice to Affordable, or “by [Affordable’s]

transfers from this account to the operating checking

account.” Id.

20. Also under Exhibit B, Affordable established

another account, called the “[o]perating checking

account.” MSA at 17. Affordable deposited funds from

the depository checking account into the operating

checking account. Id. Affordable agreed that “[a]ll

expenses incurred in the operation of the PC and

approved by the PC shall be paid by checks drawn on

this account by [Affordable’s] designated employees.”

Id.

21. The PC and Affordable also agreed on certain

business policies and procedures, set forth in Exhibit

A to the MSA. MSA § I(B) & MSA Ex. A. The PC

adopted the policies outlined in Exhibit A to the MSA,

and reserved the right to “delete, supplement or

modify any of the business policy guidelines” with

advance written notice to Affordable. MSA § I(B).

22. The parties agreed that the PC would pay

Affordable the fees set forth in Exhibit C to the Agreement. MSA § III(A).

App.60a

23. Exhibit C to the MSA is the “Summary of

Management Fees.” Exhibit C states that the PC

“shall pay to [Affordable] the listed fees “[m]onthly.”

MSA at 19.

24. Pursuant to Exhibit C, the PC was required

to pay to Affordable each month the “actual cost,

including an allocation of related overhead, of Practice

Expenses purchased by [Affordable] from unaffiliated

vendors.” MSA Ex. C ¶ 1. “Practice Expenses” are

defined in Exhibit C to the Agreement. Id. at 20-21.

25. Pursuant to Exhibit C, the PC was required

to pay to Affordable each month a “Central Office

Services Fee,” defined to include certain “specific

services.” MSA Ex. C ¶ 2. The Agreement permits

Affordable to modify the “Central Office Services Fee”

on a prospective basis upon notice to the PC. Id. Ex. C

¶ 4. If the PC notifies Affordable that it objects to the

modification, Affordable must reinstate the “Central

Office Services Fee” previously in effect. Id. The

evidence shows that over time, Affordable did increase

the “Central Office Services Fee.” Compare id. Ex. C ¶ 2

(monthly “Central Office Services Fee” total of $1,680)

with Cl. Ex. 9 at 34 (reflecting “Management Service

Fees” for December 2017 of $2,250).

26. Pursuant to Exhibit C, the PC was required

to pay to Affordable a “Management Services Fee.”

MSA Ex. C ¶ 3.

4 Affordable offered the PC’s financial statements from 2017, 2018,

and 2019 into evidence as Claimant’s Exhibits 9, 10, and 11. The

financial statements do not have page numbers. Pinpoint citations are to the page cited counting from the first page of the

exhibit.

App.61a

27. The “Management Services Fee” includes a

one-time payment of $100,000 by the PC upon execution

of the Agreement. Id. ¶ 3.1. Dr. Raeline McIntyre

testified that the PC paid this fee. 12/14/2020 Tr.

39:22-40:6.

28. The “Management Services Fee” section of

Exhibit C requires the PC to pay one-half of the “Net

Operating Margin,” “[b]eginning the first month after

all accounts payable to [Affordable] from PC under

Section III(C) are repaid.” MSA Ex. C ¶ 3.2. “Net

Operating Margin” is defined in Exhibit C as “Net

Collected Patient Fees less Practice Expenses.” Id. at

21. “Net Collected Patient Fees” is defined in Exhibit

C as “the total fees charged to patients less any

uncollected amounts and refunds.” Id. at 20.

29. The “Management Services Fee” section of

Exhibit C requires the PC to pay “in addition” to the

other Management Services Fees listed, “$25,000 plus

50% of net operating margin annually” once, in the

first calendar year after all accounts payable to

Affordable from the PC under section III(C) of the

Agreement have been repaid. MSA Ex. C ¶ 3.3. For

each year after the year when the PC was required to

pay $25,000 plus one-half of the net operating margin,

the PC was required to pay “annually” “$50,000 plus

50% of net operating margin.” Id. Affordable paid

itself this “Management Services Fee” monthly, and

not annually. 12/3/2020 Tr. 104:13-105:10; 12/15/2020

Tr. 108:22-109:20.

30. Exhibit C to the MSA defined “Practice Expenses” as “costs, accounted for on a cash basis, directly

related to the operation of the Practice.” MSA at 20.

These costs included “[f]acility and equipment lease

expenses under the Lease Agreement and related

App.62a

maintenance and repair expenses,” dental laboratory

expenses, marketing expenses, clinical and office supplies expenses, employee compensation, utilities, professional fees, insurance, and other expenses. Id. at

20-21.

31. Section III(B) of the MSA is entitled

“MINIMUM CASH BALANCE.” This section provided:

At all times during the term hereof, a minimum cash balance shall be maintained in

the PC checking account equal to (1) sum of

all current and unpaid invoices (both those

received and those pending), note or installment payments, payrolls, rents, expenses,

and other charges incident to the operation

of the PC which are currently due or will

become due over the next thirty (30) day

period, plus (2) an amount deemed necessary

by Manager to be adequate for contingencies.

Should the cash balance fall below the minimum amount as set forth in this section at

any time for any reason, Manager shall

notify PC and PC shall agree to payment of

Practice Expenses (defined in Exhibit C) by

Manager in accordance with the terms of

Section (C) following or PC’s shareholder(s)

shall provide a loan or a capital contribution

sufficient to pay Practice Expenses and

restore the minimum cash balance. If PC and

Manager do not agree to one of the foregoing

options, either party may terminate this

Agreement immediately in which case

Manager shall use all remaining funds to

pay unpaid obligations.

MSA § III(B).

App.63a

32. Section III(B) is silent as to which party to

the MSA was responsible for maintaining the minimum

cash balance. MSA § III(B). It is also unclear where

that balance is to be maintained. The term “PC

checking account” is not defined in section III(B) or

elsewhere in the MSA.

33. Section III(C) of the MSA is entitled “DISCRETIONARY MANAGER PAYMENTS.” This

section provided:

If the PC’s Net Collected Patient Fees (as

defined in Exhibit C) are insufficient to pay

Practice Expenses and maintain the minimum

cash balance referenced in (B) above, Manager

may, in its discretion, with the approval of

the PC, pay up to Three Hundred Thousand

Dollars ($300,000.00) of Practice Expenses

on behalf of the PC. PC shall record such

payments by Manager as accounts payable

to Manager and use all, if any, future Net

Collected Patient Fees in excess of Practice

Expenses to pay such accounts payable to

Manager until same are paid in full.

MSA § III(C).

34. The MSA also contained an indemnification

provision regarding acts or omissions occurring during

the term of the MSA:

The PC shall indemnify, hold harmless and

defend Manager, its officers, directors, shareholders and employees, from and against any

and all liability, loss, damage, claim, causes

of action, and expenses (including reasonable attorneys’ fees), whether or not covered

by insurance, caused or asserted to have been

App.64a

caused (directly or indirectly) by, resulted

from, or arisen out of the performance of

medical or dental services or the performance of any intentional acts, negligent acts or

omissions by the PC and/or its affiliates, its

shareholders, agents, employees and/or subcontractors (other than Manager) during the

term hereof. Manager shall indemnify, hold

harmless and defend the PC, its directors,

shareholders and employees, from and against

any and all liability, loss, damage, claim,

causes of action, and expenses (including

reasonable attorneys’ fees), caused or asserted

to have been caused (directly or indirectly)

by, resulted from, or arisen out of the performance of any intentional acts, negligent acts or

omissions by Manager and/or its shareholders,

agents, employees and/or subcontractors

during the term of this Agreement.

MSA § IV(B).

35. The parties agreed that the term of the MSA

would be twenty years from the date of execution on

November 1, 2002, “unless sooner terminated pursuant to the provisions” of the MSA. MSA § V(A).

Section V(B) of the MSA provided that either party

could terminate the Agreement “for cause,” as defined

in section V(B). Cause for termination included the

following occurrences:

(2) A breach by either party of any material

provision of this Agreement or any other

agreement between PC and Manager or an

affiliate of Manager; provided, that, if such

breach is subject to cure, the breaching party

shall have a reasonable period (not to exceed

App.65a

thirty (30) days) after notice of such breach

from the other party to cure such breach, and

if such breach is cured, then such breach

shall not be grounds for termination unless

repeated;

***

(9) Any termination of any lease between

Manager and PC or the Agreement To Provide

Dental Laboratory Services between PC and

Affordable Dentures Dental Laboratories,

Inc.

MSA § V(B)(2), (5), (9).

36. The parties further agreed that “[i]n the event

of the termination of this Agreement for any reason,”

the PC would “not solicit for employment any employees

of Manager or any affiliate of Manager, including

employees of Affordable Dentures Dental Laboratories,

Inc.” MSA § V(C). There is no time limitation on the

non-solicitation covenant. Ther e is also no geographic

limitation.

37. The MSA contained the following provision

regarding confidential information:

The PC and its shareholders agree not to use

or disclose any confidential information or

trade secrets of Manager except in connection with operating the Practice during the

term of this Agreement. Such confidential

information and trade secrets are agreed to

include all procedures used by Manager in

the operation of the business aspects of the

Practice, all business and patient forms supplied by Manager and used by the Practice,

App.66a

all software supplied by the Manager and used

by the Practice, and any other materials or

proprietary knowledge which the Manager

treats as confidential. Such confidential information shall not include any material in the

public domain (whether or not listed above)

or any patient records. The PC further

agrees: (i) to keep stri ctly confidential and

hold in trust all confidential information and

not disclose confidential information to any

third party, including its affiliates without

the express prior written consent of Manager;

and (ii) to impose this obligation of confidentiality on its affiliates, partners, shareholders, employees and independent contractors. The PC acknowledges that the disclosure

of confidential information to it by Manager

is done in reliance upon its representations

and covenants in this Agreement. Upon

expiration or termination of this Agreement

by either party for any reason whatsoever,

the PC shall immediately return and shall

cause its affiliates, partners, shareholders,

employees and independent contractors to

immediately return to Manager all confidential information, and the PC will not, and

will cause its affiliates, partners, shareholders,

employees and independent contractors not

to, thereafter use, appropriate, or reproduce

such confidential information.

MSA § II(B).

38. Dr. Raeline McIntyre, as the sole shareholder

of the PC, agreed to guarantee the PC’s performance

of its obligations in the MSA, “except for PC’s financial

App.67a

obligations to Manager for loans and management

fees, which obligations shall be nonrecourse to shareholder(s) except to the extent of the assets and income

generated by the Practice.” MSA § VI(A).

39. The parties also agreed that “[t]his Agreement

contains the entire agreement between the parties in

regard to the subject matter hereof. This Agreement

may not be modified, or any provisions hereof waived,

except by a written instrument executed by the parties

hereto.” MSA § VI(E).

40. The parties agreed that the validity, interpretation, and performance of the MSA would be

governed by North Carolina law, “except that issues

concerning the practice of dentistry shall be governed

by the laws of the State where the Center is located.”

MSA § V(G).

The 2002 Lease:

41. Also on November 2, 2002, Affordable and

the PC entered into a lease agreement (the “2002

Lease”) (Joint Ex. 2). The 2002 Lease stated that

Affordable “owns or leases the premises located at

15441 Orange Grove Road, Highway 49 North,

Gulfport, Mississippi 39502, comprised of a fully

furnished and equipped Affordable Dentures Center

(the ‘Premises’).” 2002 Lease at 1.

42. Affordable did not own the Premises.

12/1/2020 Tr. 164:33-165:1. Rath er, Affordable leased

the Premises from Ship Island Properties, Inc.,

pursuant to a lease agreement dated October 23, 2000

(the “Ship Island Lease”) (Joint Ex. 1). The Ship

Island Lease had a five-year term, commencing on

November 1, 2005, and terminating on October 31,

App.68a

2005, unless terminated sooner pursuant to the lease

terms. Ship Island Lease § II.

43. In the 2002 Lease, Affordable agreed to lease

the Premises to the PC. Regarding the term of the

lease, the 2002 Lease provided:

The term of this Lease shall commence on

November 1, 2002, and shall continue for a

period of twenty (20) years unless and until

earlier terminated. Absent a default hereunder, neither Landlord nor Tenant may

terminate this Lease except in connection with

the termination of that certain Agreement to

Provide Management Services to a Dental

Practice between Landlord and Tenant of

even date herewith. Termination of said

Agreement will result in automatic termination of this Lease. In addition, if Landlord

does not own the Premises, this Lease shall

terminate automatically when Landlord’s

lease of the Premises expires or is terminated.

In the event that this Lease is terminated

pursuant to the immediately preceding

sentence, Landlord shall use its reasonable

best efforts to obtain equivalent office space

and lease such premises to Tenant under

terms and conditions (including, without

limitation, rental terms) substantially identical to those of this Lease.

2002 Lease § 2. Nothing in the 2002 Lease required

the PC to agree to lease office space from Affordable if

Affordable obtained “equivalent office space.” See id.

App.69a

Managing Dentist Employment Agreement:

44. Also on November 1, 2002, Dr. Raeline McIntyre entered into a Managing Dentist Employment

Agreement (“Employment Agreement” or “MDEA”)

with the PC, under which she agreed to work for the

PC. Joint Ex. 5. Affordable is not a party to the

Employment Agreement. See Joint Ex. 5 at 1 (listing

parties). Although the Employment Agreement was

between the PC and Dr. Raeline McIntyre, Dr. Raeline

McIntyre testified that she negotiated with Affordable

over two provisions of the Employment Agreement:

her salary and her ability to work for her husband’s

practice in Mendenhall, Mississippi. 12/4/2020 Tr.

458:24

- 60:1; see 12/3/2020 Tr. 180:18-181:3.

45. The Employment Agreement contained a nonsolicitation provision stating that “[i]n the event of

termination of the Agreement for any reason, the

Dentist agrees that he or she will not solicit for

employment any employees of the [PC], Affordable

Care, Inc., or its subsidiaries or affiliates.” MDEA ¶ 8.

46. There is no time limitation on the nonsolicitation covenant in paragraph 8 of the Employment

Agreement. See MDEA ¶ 8. There is also no geographic

limitation on the non-solicitation covenant in paragraph

8 of the Employment Agreement. See id.

47. According to paragraph 11 of the Employment

Agreement, the parties acknowledged that Affordable

was a third-party beneficiary “of certain provisions of

this Agreement.” MDEA ¶ 11. Nothing in the

Employment Agreement specified which provisions

were intended to benefit Affordable. See id.

48. Mississippi law applies to the Employment

Agreement. MDEA ¶ 10.

App.70a

The ADDL Agreement:

49. On November 1, 2002, the PC and ADDL

entered into an Agreement to Provide Dental Laboratory Services (the “ADDL Agreement”) (Joint Ex.

4).

50. In the ADDL Agreement, ADDL agreed to

perform laboratory work for the PC at an in-house

laboratory within the PC’s office. Joint Ex. 4.

Operation of the PC from 2002 to 2019:

51. Following the execution of the MSA in 2002,

the PC operated an Affordable-affiliated dental practice.

12/1/2020 Tr. 79:36

- ; 12/14/202 0 Tr. 20:19-21:6. At

that time, the Affordable practice in Gulfport had a

potentially wide geographic market: the closest

Affordable practices were in Jackson, Mississippi,

New Orleans, Louisiana, and Mobile, Alabama.

12/14/2020 Tr. 13-22.

52. Dr. Raeline McIntyre and her husband Dr.

Neil McIntyre, also a licensed dentist, practiced

dentistry at the PC. 12/3/2020 Tr. 177:16-21;

id.

179:13-180:17; 12/ 4/2020 Tr. 517: 17-20; 12/14/2020

Tr. 5:11-13. The PC also hi red an oral surgeon, Dr.

Carroll Palmore, who practiced dentistry at the PC.

12/4/2020 Tr. 517:21-23.

53. Dr. Raeline McIntyre was a general dentist

when she was affiliated with Affordable, but her

practice was limited to extractions, dentures (including

partial dentures), and implants. 12/14/2020 Tr. 11:714. Affordable appeals to patients who may be reluctant

to visit, or generally do not have a relationship with a

dentist, but have a particular dental problem they need

addressed, and getting the need addressed through

App.71a

the necessary extractions and dentures in one day is

important. 12/14/2020 Tr. 8: 24-91

: 0; 12/15/2020 Tr.

88:15-89:14. Dr. McIntyre explained how she would

treat a patient that came to Affordable’s Gulfport

location, treating the “whole patient,” determining the

patient’s chief complaint, presenting treatment options,

and upon the patient’s selection of a treatment option,

beginning the work with the patient that would lead

to the patient getting dentures the same day. 12/14/2020

Tr. 15:17-19:2. Dr. McIntyr e further explained how

she interacted with the dental lab at the Gulfport

location and why the relationship with the lab was

critical to the success of the practice. 12/14/2020 Tr.

16:18-19:2; id. 26:9-27:22.

54. The practice grew under Dr. Raeline McIntyre’s leadership, and served more than 37,000

patients. 12/14/2020 Tr. 42:24-43:11; id. 109:13-18. As

the practice grew, the PC’s revenues grew. See

12/14/2020 Tr. 65:71

- 8. In 2017, the PC’s revenue

peaked at $3.2 million. Cl. Ex. 11A.

Affordable’s Financial Control Over the PC:

55. Affordable exercised significant control and

influence over the PC’s business. Among other things,

Affordable controlled all monies received by the PC.

56. The PC deposited all monies collected from

patients into the depository checking account on a

daily basis. 12/14/2020 Tr. 32:21-33:14. The PC did

not withdraw money from the account. Id. 33:15-34:3.

Affordable swept money out of the depository checking

account on a daily or near-daily basis. Id. 34:41

- 2. The

bank statements for the depository checking account

were addressed to Affordable. Id. 34:13-35:4.

App.72a

57. Affordable was entrusted to pay its own

management fees, to pay invoices approved by the PC,

to handle the PC’s payroll, to prepare budgets and

financial reports, and to coordinate the preparation of

tax returns. MSA Ex. B; id. Ex. C.

58. During the time the PC was an affiliated

practice, Affordable produced monthly and year-end

financial statements. E.g., Cl. Exs. 9, 10, 11. The

financial statements for the PC reflect the payment of

Management Fees. Id.

59. Affordable introduced the PC’s financial

statements in evidence through the testimony of Karol

Twilla. 12/1/2020 Tr. 131:71

- 39:7. Ms. Twilla testified

that in her position at Affordable and in discharging

her duties, she would have received the financial statements of the PC, as well as the financial statements of

other affiliated practices. Id. 137:22-138:2.

60. Ms. Twilla testified that the PC was a “very,

very successful practice.” 12/1/2020 Tr. 89:22-23. Ms.

Twilla identified 2017, 2018, and 2019 as the “really

good years for Dr. McIntyre.” Id. 89:23-24. According

to Ms. Twilla, “[t]owards the end of about the fourth

quarter of 2019 is when her practice really started to

suffer from a revenue standpoint.” Id. 89:24-90:1. She

described the PC as a “growing practice.” Id. 167:3.

Ms. Twilla described 2019 as “a good year up until the

fourth quarter, and then the fourth quarter the

revenues started to really decline, which put it into a

negative cash balance position.” Id. 168:1-6. She

identified the fourth quarter as October, November, and

December 2019. Id. 168:71

- 0. Ms. Twilla testified that

after “the initial communication from Dr. McIntyre”

terminating the Agreement took place, “[t]hat’s when

the [PC’s] revenue started to decline,” and a minimum

App.73a

cash balance deficiency started to grow. 12/2/2020 Tr.

99:61

- 1. Ms. Twilla attributed this decline to Dr.

McIntyre’s attention being diverted to starting a new

practice. Id. 99:12-25. Ms. Twilla testified that Affordable’s expectation for Dr. Raeline McIntyre’s practice

in 2020 was that “she could continue to grow.” Id.

103:2.

61. As described above, 2017 was the PC’s best

year financially, with revenue in the amount of $3.2

million, but the PC’s revenue declined in 2018 to $2.9

million, Cl. Ex. 10, and further declined in 2019 to

$2.2 million, Cl. Ex. 11. See 12/3/2020 Tr. 88:19-23.

62. The PC’s revenue in 2019 declined as compared to its 2018 revenue throughout most of the year;

May 2019 was the only month in which the PC earned

more revenue than it did in the corresponding month

in 2018. Cl. Ex. 11 at 5.5 By the end of the third

quarter of 2019, before the time period during which

Ms. Twilla said the PC’s revenue started to decline,

the PC’s revenue was already 18.93% less than the

PC’s revenue for 2018 for the first three quarters of

the year. Id.; see 12/3/2020 Tr. 90:11-18. By the end of

2019, the PC’s revenue was 23.38% less than the

revenue the PC earned in 2018; contrary to Ms.

Twilla’s testimony, most of the loss occurred in the

first three quarters of the year, as opposed to the

fourth quarter of the year. Cl. Ex. 11. The PC’s revenue

did decline significantly in the fourth quarter of 2019

as compared to the fourth quarter of 2018, but the

PC’s revenue was less in each quarter of 2019 than the

5 The financial statements that Affordable prepared are not

paginated, but the information discussed is on the fifth page of

Claimant’s Exhibit 11.

App.74a

respective quarter of 2018, and decline accelerated

from the first to the second quarter, and from the

second to the third quarter, which was comparatively

the worst quarter of 2019 for the PC. Id.

63. As discussed above, pursuant to Exhibit C of

the Agreement, Affordable was entitled to 50% of the

PC’s Net Operating Margin; Dr. Raeline McIntyre as

the PC’s sole shareholder, was entitled to the PC’s

profit that was not payable to Affordable, and thus she

was entitled to the other 50% of the Net Operating

Margin.

64. The financial statements reflect a figure called

“Practice Owner Bonus.” See Cl. Exs. 9, 10, 11. The

“Practice Owner Bonus” reflects the payment by

Affordable to Dr. Raeline McIntyre of an amount for

her share of the PC’s operating profit. 12/1/2020 Tr.

126:18-127:22; 12/2/2 020 Tr. 139:13-140:1.

65. The financial statements reflect a figure called

“Variable Bonus Fee.” See Cl. Exs. 9, 10, 11. The

“Variable Bonus Fee” reflects the payment to Affordable

of its share of the PC’s operating profit. Cl. Exs. 9, 10,

11.

66. In the financial statements 2017, 2018, and

2019 that were admitted in evidence at the final

hearing, the amounts for “Practice Owner Bonus”

(paid to Dr. Raeline McIntyre) and “Variable Bonus

Fee” (paid to Affordable) are not equal. In each of those

years, the “Variable Bonus Fee” paid to Affordable, as

reflected in the financial statements, is greater than

the “Practice Owner Bonus.” Cl. Exs. 9, 10, 11.

67. Dr. Neil McIntyre testified that the pattern

that the amount of the “Variable Bonus Fee” exceeded

the amount of the “Practice Owner Bonus” was

App.75a

reflected in the financial statements for the PC for

years other than 2017, 2018, and 2019. 12/14/2020 Tr.

226:92

- 27:14. Dr. McIntyre test ified that this pattern

existed in every year for which he reviewed the

financial statements. Id. 226:17-227:14. The Arbitrator

finds that Affordable failed to provide a satisfactory

explanation for these discrepancies.

68. Further, as noted hereinabove, Karol Twilla

testified that Affordable pays out its Variable Bonus

Fee solely on a monthly basis notwithstanding that

part of Exhibit C 3.3 that references payment of the

Variable Bonus Fee on an annualized basis. 12/3/2020

Tr. 105:21

- 0; 12/15/ 2020 Tr. 108:31

- 09:20;

id. 113:919. The predictable result of this practice is that if the

PC has one or more months during a year when it is

not profitable, Affordable will pay itself more than

50% of the Net Operating Margin for the year: In

months when the PC is profitable, Affordable pays

itself 50% of the Net Operating Margin, but in months

when the PC is not profitable, there is no evidence

that Affordable pays or returns any amount of money

to the practice. According to Ms. Twilla, Affordable

does not on an annual basis reconcile or “true up” the

amount Affordable is entitled to under the terms of the

Agreement. 12/3/2020 Tr. 104: 13-105:10. This financial

management practice of Affordable is contrary to its

duty to manage the Practice with the PC’s best

interest in mind, as per Art. I (A) of the MSA.

69. Affordable’s financial control of the PC and

its cash management had an additional predictable

and consequential effect. Affordable could effectively

determine for itself whether the PC could pay for

equipment, itself, or would have to use Affordable’s

cash for equipment purchases, with the result that

App.76a

Affordable would own the equipment and lease it to

the PC. After payment of the PC’s regular monthly

expenses, Affordable paid out available cash so it

received on a monthly basis its Variable Bonus Fee,

and Dr. Raeline McIntyre received her Practice Owner

Bonus. 12/1/2020 Tr. 127:71

- 4. According to Karol

Twilla, Affordable’s regular practice was to use its

cash to pay for an affiliated practice’s equipment, and

then lease that equipment to the practice. 12/1/2020 Tr.

125:51

- 1. Although Afford able would amortize the

cost of any equipment leased to a practice over five

years, the PC did not “rent to own” the equipment;

rather, through the equipment’s useful life, Affordable

owned the equipment. 12/2/2020 Tr. 187:13-17; id.

188:51

- 0. Upon questioning from the Arbitrator, Ms.

Twilla agreed it might be possible for a practice like

the PC to accumulate enough cash at some point during

a given month to purchase costly equipment, id.

203:22

- 05:2, but that was not Affordable’s regular

practice. In the absence of an arrrangement like the

Agreement, a business owner like Dr. Raeline McIntyre

would have the choice whether to use available cash

to make an equipment purchase, which would leave

less cash available to be paid out to herself as the

business owner, or instead lease equipment, which

would mean that the PC would not own the equipment

and would pay some regular amount as a lease

payment, but would have more cash available to pay

out to herself as the business owner. Under the Agreement, as Ms. Twilla agreed, the PC retained the right

to purchase equipment if it chose to do so. 12/1/2020

Tr. 125:22-24; 12/2/2020 Tr. 188:21-25. But Affordable’s financial control and cash management limited

if not precluded Dr. Raeline McIntyre from making

that choice.

App.77a

70. Other business practices of Affordable also

disadvantaged the PC. Affordable produced promotional

mailers for affiliated practices that advertised services

available, prices, and offered discounts available at a

specific Affordable location or locations. E.g., Resp.

Exs. 4, 5; 12/14/2020 Tr. 58:96

- 0:23;

id. 84:31

- 0. The

evidence at the final hearing showed that Affordable

sent promotional mailers to patients of the PC that

identified not the Gulfport location, but rather a

different Affordable practice in Covington, Louisiana.

Resp. Ex. 4; 12/14/2020 Tr. 84 3

: 2

- 4; 12/15/2020 Tr. 8:2411:12. Affordable explained that it sent promotional

mailers for a particular practice to residents within

certain identified zip codes rather than sorting the

mailing list so that patients of a given Affordable

practice would receive promotional mailers for that

practice. 12/15/2020 Tr. 10:3 2

- 4. Affordable’s approach

would disadvantage a practice like the PC that had

drawn patients from a geographic area that, based on

Affordable’s decision to later open another affiliated

practice, would be closer to the new Affordable practice.

Affordable benefitted from the profit-sharing arrangement with its affiliated practices whether a former

patient of the PC returned for more dental care to the

PC or went to a different affiliated practice, but the

PC would lose potential revenue of a former patient

seeking additional dental services who was enticed to

go to a different practice based on the promotions

Affordable was marketing for that different practice.

Affordable chose a marketing approach that did not

honor the dentist-patient relationship for the PC and

was contrary to the PC’s financial interest, but would

make it easier for Affordable to avoid sorting the

mailing list and would support Affordable’s financial

interest.

App.78a

71. Using its financial control, Affordable repeatedly attempted to interfere with Dr. Raeline McIntyre’s

professional decision making, by trying to discourage

the PC from spending money on appropriate equipment

and dentist salaries. Although Ms. Twilla admitted

that the PC always had the right under the Agreement to purchase whatever equipment Dr. McIntyre

requested, 12/1/2020 Tr. 172:20-23; 12/2/2020 Tr. 131:24133:1, Affordable refused to honor that right. When Dr.

Raeline McIntyre requested that Affordable purchase

imaging equipment necessary for patient care, Affordable refused for three years to allow the PC to make

the purchase. 12/4/2020 Tr. 486:18- 487:20; id. 487:25488:6. As outlined above, Affordable had a financial

interest in minimizing the PC’s costs, and thus

maximizing Affordable’s management fees based on

the PC’s net operating margin.

72. The Agreement gave the PC the sole authority

to set salaries for associate dentists. MSA at 15

(Staffing). Ms. Twilla admitted that the PC could pay

associate dentists “anything that they want.” 12/1/2020

Tr. 174:21-22. However, when Dr. Raeline McIntyre

informed Affordable of desired salary increases,

Affordable refused and/or delayed putting increases

into effect. 12/4/2020 Tr. 488:91

- 3. Dr. Raeline McIntyre

testified that this occurred multiple times throughout

the PC’s affiliation with Affordable. Id. Dr. Raeline

McIntyre also testified that she did not remember a

time that she requested an increase when it was

granted in the amount and within the time that she

requested. Id. 488:18-21. Again, Affordable had a

financial incentive to suppress associate dentist

salaries, because those salaries were practice expenses

App.79a

that would reduce the net operating margin, and in

turn reduce Affordable’s management fees.

73. The MSA required Affordable to provide a

centralized purchasing system for the PC to purchase

supplies. MSA at 15 (Inventory and Supplies). However,

Affordable failed to maintain current paid-up accounts

with suppliers necessary to allow the PC to purchase

supplies. 12/4/2020 Tr. 489:31

- 0. In the late summer

or early fall of 2019, Dr. Raeline McIntyre attempted

on several occasions to purchase dental implants; she

was told that Affordable had not paid its account, and

that she could not purchase the implants on her own

credit card. Id. 489:31

- 7. Affordable’s failure to promptly

pay bills interfered with Dr. Raeline McIntyre’s efforts

to obtain implants necessary to care for a patient. See

id.

Termination of 2002 Lease and the PC’s move to

505 Cowan Road:

74. As required under the Agreement and the

2002 Lease, Affordable also leased office space to the

PC. See MSA at 15. The PC operated at the Premises

beginning in 2002. 12/1/2020 Tr. 164:8-10. There is no

evidence that, after October 31, 2005, Affordable

extended its lease of the Premises. See 12/2/2020 Tr.

163:11-14; 12/3/2020 Tr. 131:1517. However, the PC

continued to operate at the Premises, and pay rent to

Affordable until 2013 or 2014. Id. 253:21-254:5.

75. In 2013, JNM Office Property, LLC (“JNM”),

a company ultimately owned by Dr. Raeline McIntyre

and Dr. Neil McIntyre, purchased property at 505

Cowan Road. 12/3/2020 Tr. 287:13

- .

App.80a

76. On July 24, 2013, JNM entered into a lease

agreement with Affordable to lease 505 Cowan Road

to Affordable (the “JNM Lease”) (Joint Ex. 7). See

12/3/2020 Tr. 255:71

- 6.

77. JNM constructed an office building at 505

Cowan Road. 12/14/2020 Tr. 68:81

- 3.

78. Meanwhile, the owner of the Premises sold

the property, and in 2014, the Premises were destroyed.

12/3/2020 Tr. 254:19-255:1. Th e Ship Island Lease

terminated. See 12/2/2020 Tr. 165:92

- 3. According to

its terms, the 2002 Lease terminated automatically

when Affordable’s lease of the Premises terminated,

and no later than 2014. See 2002 Lease § 2.

79. In August 2014, the PC moved its operations

to 505 Cowan Road. 12/3/2020 Tr. 255:26

- . Affordable

entered into a written lease with JNM for the Cowan

Road property. Affordable then subleased the Cowan

Road property to the PC, but there was no written

sublease and no identifiable terms and conditions for

the sublease other than the payment of agreed-upon

rent. The PC began paying monthly rent to Affordable

for office space at 505 Cowan Road. 12/1/2020 Tr.

162:14-18.

Maintenance and Upkeep of 505 Cowan Road:

80. According to the JNM Lease, Affordable was

responsible for maintaining the building and the

grounds at 505 Cowan Road. See JNM Lease ¶ 6(B)(1);

12/4/2020 Tr. 361:16

- . However, Affordable did not

properly maintain grounds to the satisfaction of the

PC. 12/4/2020 Tr. 362:59

- . The PC took on the work of

landscaping and maintaining the grounds at the 505

App.81a

Cowan Road office without any objection from

Affordable. Id. 361:83

- 62:4; id. 363:12-16.

81. The PC engaged Bravo Lawn and Design LLC

(“Bravo Lawn”) to manage and perform landscaping

and related services at 505 Cowan Road. See 12/2/2020

Tr. 45:31

- 0; 12/4/2020 Tr. 361: 8-12. Bravo Lawn is

ultimately owned by the McIntyres. 12/3/2020 Tr.

286:19-287:3. Dr. Raeline McIntyre approved invoices

from Bravo Lawn and forwarded them for Affordable

to cause the invoices to be paid as practice expenses.

12/2/2020 Tr. 35:18-36:2. Dr. Neil McIntyre testified

that Affordable operations consultants who visited

505 Cowan Road would have seen that outside

maintenance work was being performed. 12/4/2020

Tr. 386:13-387:20. Although Affordable influenced

and often resisted decisions by the PC to incur expenses,

Affordable never raised a question about the invoices

for Bravo Lawn, 12/4/2020 Tr. 388:21

- 0. Affordable

never asked Dr. Raeline McIntyre concerning the

ownership of Bravo Lawn, and never suggested that

the invoices were too high for the services provided.

See id. 386:13-18; id. 388:21

- 0. Nothing in the Agreement prevented the PC from retaining a landscaping

service and paying for the service as a practice expense.

Nothing in the Agreement prevented the PC from

selecting a landscaping service ultimately owned by

the McIntyres.

82. The PC engaged SparklePro LLC (“SparklePro”) to manage and provide cleaning services at 505

Cowan Road. See 12/2/2020 Tr. 45:31

- 0. SparklePro is

ultimately owned by the McIntyres. 12/3/2020 Tr.

286:19-287:3. Dr. Raeline McIntyre approved invoices

from SparklePro and forwarded them for Affordable

to cause the invoices to be paid as practice expenses.

App.82a

12/2/2020 Tr. 26:20-27:1;

see 12/1/2020 Tr. 118:11-19.

Jan Boatright, an operations consultant for Affordable,

knew that the PC had hired an outside cleaning

service. 12/4/2020 Tr. 387:18- 388:1. Although Affordable influenced and often resisted decisions by the PC

to incur expenses, Affordable never raised a question

about the invoices from SparklePro. 12/3/2020 Tr.

145:13-18. Affordable never asked Dr. Raeline McIntyre

concerning the ownership of SparklePro, and never

suggested that the invoices were too high for the

services provided. 12/4/2020 Tr. 388:21

- 0. Nothing in

the Agreement prevented the PC from retaining a

cleaning service and paying for the service as a

practice expense. While the Business Policy Guidelines

Exhibit A to the Agreement stated that the practice

facility would be cleaned by the PC’s employees each

day, and that “[o]utside cleaning services should be

utilized only for periodic carpet shampoos, waxing,

etc.,” MSA at 13, the PC had the unilateral right to

modify the Business Policy Guidelines, id. § I(B).

Further, Affordable offered no credible evidence that

SparklePro provided more than “periodic” services.

See id. When directed to the provision in the Business

Policy Guidelines specifically referring to outside

cleaning services, Ms. Twilla testified that she thought

periodic meant on a quarterly basis, “or at least every

other month.” 12/3/2020 Tr. 144:25-12. However, she

admitted that until she learned of the ownership of

SparklePro, Affordable never raised any concern about

the frequency of billings for cleaning services. See id.

145:13-18. Finally, the PC agreed to give notice to

Affordable of any changes to the Business Policy

Guidelines. MSA § I(B). To the extent that retaining

SparklePro represents a change to the Guidelines,

Affordable received written notice every time it received

App.83a

and caused to be paid an invoice for cleaning services.

See 12/2/2020 Tr. 31:31

- 4; id. 33:19-34:22.

83. Karol Twilla testified that she first learned

that SparklePro and Bravo Lawn were owned by the

McIntyres in late February or early March of 2020.

12/2/2020 Tr. 55:81

- 7. Affordable offered no evidence

that it had any concerns about the PC making

payments for cleaning and landscaping services, or

the amounts of those payments, before Affordable

learned of the ownership of SparklePro and Bravo

Lawn. E.g., 12/3/2020 Tr. 145:13-18.

Property and equipment at 505 Cowan Road:

84. At the hearing, Karol Twilla testified that

when Affordable affiliates with a dental practice,

“Affordable Care would own the property, would own

the equipment, the furnishings, and the dental space.”

12/1/2020 Tr. 86:19-21. She also testified that Affordable’s practice was to lease the equipment to the

practice. Id. 86:12-87:11. Affordable introduced no

documentation of any lease of any equipment.

85. Ms. Twilla first testified that “[t]here is a

sublease” between Affordable and the PC regarding

the alleged lease of furnishings and equipment. 12/1/

2020 Tr. 129:25-130:7. However, Affordable’s counsel

later acknowledged that “[t]here was no written sublease.” Id. 159:17. Ms. Twilla then testified that Affordable’s position was that when the PC moved to 505

Cowan Road, “[t]hat the lease continue[d] as it’s written

in” the 2002 Lease. 12/2/2020 Tr. 10:10-15. Although

the 2002 Lease terminated automatically when

Affordable’s lease of the Premises ended, Ms. Twilla

App.84a

testified that the 2002 Lease was the controlling sublease for the 505 Cowan Road property. 12/2/2020 Tr.

157:81

- 5.

86. Through Ms. Twilla’s testimony, Affordable

introduced a list of equipment that Ms. Twilla said

represented items at 505 Cowan Road that Affordable

owned. See 12/3/2020 Tr. 123:23-124:14; Cl. Ex. 36.

Ms. Twilla later admitted that she did not prepare the

list and had no other knowledge of its specific contents.

12/3/2020 Tr. 156:17- 157:8. Affordable offered no

documentation to support the list, such as invoices or

receipts to show that it purchased the listed property

with its funds.

87. Dr. Neil McIntyre testified that he and Dr.

Raeline McIntyre purchased furnishings and equipment

for the 505 Cowan Road office with the McIntyres’

personal funds. 12/14/2020 Tr. 213:10-214: 18. Evidence

produced in discovery and introduced at the hearing

showed that the McIntyres purchased at least $124,853

in property for the 505 Cowan Road office with

personal funds. 12/14/2020 Tr. 215:17-22; Resp. Ex. 8. 6

88. Although Ms. Twilla testified in response to

Affordable’s counsel’s questions that Affordable owns

all the property and equipment at affiliated practices,

12/1/2020 Tr. 86:19-21, Ms. Tw illa admitted on crossexamination that she had no personal knowledge of

what equipment Affordable owned at 505 Cowan Road.

12/3/2020 Tr. 101:2-10. Ms. Twilla also testified that

she did not know whether any of the equipment set up

6 Respondents’ Exhibit 8 is misidentified in some parts of the

hearing transcript as Exhibit A. See 12/14/2020 Tr. 215:10; id.

216:15.

App.85a

at the Premises was moved to 505 Cowan Road. Id.

132:23-133:5.

89. Ms. Twilla’s testimony that Affordable owns

all the property and equipment at 505 Cowan Road

was not credible and does not support a finding that

Affordable owned the property and equipment.

90. Other than Ms. Twilla’s testimony, which

the Arbitrator does not credit, Affordable offered no

evidence that it purchased the property and equipment

located at 505 Cowan Road. Instead, the credible

evidence showed that the McIntyres and the PC

purchased and owned the property and equipment.

Affordable failed to show that it owned any particular

piece of property or equipment located at 505 Cowan

Road. Further, by failing to ever provide a lease or

leases regarding the furnishings and equipment at the

Cowan Road property, Affordable violated its contract

duties under Exbibit B 1 of the MSA.

ADDL laboratory staffing issues:

91. Under the Agreement, Affordable agreed to

provide an in-house dental laboratory to serve the

needs of the PC’s patients. MSA at 15.

92. An adequately staffed laboratory was critical

to the PC’s ability to provide timely patient care, and

essential to the financial success of the PC. See

12/14/2020 Tr. 93:14-94:4; see also 12/15/2020 Tr. 97:2098:3 (Mr. Hudi’s testimony th at number of lab employees

varies in relation to practice’s revenue). Affordable

advertised both to the managing dentists who owned

practices managed by Affordable, and to patients, that

it provided same-day dent ure service. 12/14/2020 Tr.

App.86a

81:25-92:12. The in-house ADDL laboratory was essen tial to providing same-day service. 12/3/2020 Tr. 118:1624.

93. Affordable and ADDL mismanaged the

Gulfport laboratory. ADDL Gulfport laboratory employees were overworked and underpaid, resulting in

significant staff attrition. 12/4/2020 Tr. 383:384:25;

12/14/2020 Tr. 85:7-13. When the PC had its most

profitable years, the laboratory was staffed with four

full technicians to timely meet patient needs. 12/14/

2020 Tr. 94:24-95:1. However, by 2019, only one full

technician remained in the laboratory. Id. 94:21-95:3;

Resp. Ex. 7. In many cases, the PC could no longer

offer same-day denture servic e due to the deficiencies

in laboratory staffing. 12/14/2020 Tr. 81:19-24; id.

86:9-16; id. 109:19-22; id. 208:22

- 10:10.

94. When problems in dental laboratory staffing

negatively impacted the PC’s patient service and

productivity, Affordable failed to adequately address

the problems. Dr. Raeline McIntyre raised the

laboratory staffing issues with Affordable and ADDL,

making clear that the practice was in dire need of a

fully staffed laboratory. 12/14/2020 Tr. 90:11-95:3;

Resp. Ex. 7. Rather than listen to Dr. Raeline McIntyre’s

concerns about the laboratory, Affordable tried to

force the PC to make do with the laboratory staffing it

had, refused to increase pay for overworked laboratory

staff, and failed to recruit and hire adequate staff.

12/14/2020 Tr. 88:27

- ;

id. 97:16-98:2. Ms. Twilla

admitted that Dr. Raeline McIntyre raised concerns

about the staffing of the ADDL laboratory prior to the

termination letter in September 2019. Id. 181:4-22.

95. Kevin Hudi testified that in February 2019,

Dr. Raeline McIntyre declined to allow ADDL to

App.87a

require Gulfport laboratory staff to participate in a

productivity data collection program that ADDL

implemented, known as “Smart sheet.” 12/4/2020 Tr.

414:13-415:5; 12/15/2020 Tr. 53 9

: 5

- 5:3. Dr. McIntyre

told Mr. Hudi that her laboratory manager, Russell

Dukes, was already too busy, and the laboratory was

understaffed. 12/4/2020 Tr. 415: 6-15. She also told Mr.

Hudi that she did not think the data collection effort

would be useful. Id. 415:12-15. Mr. Hudi admitted that

ADDL discontinued the “Smart sheet” program after

realizing that “[i]t turned out to be more work, on our

side, capturing data and running reports.” 12/15/2020

Tr. 76:39

- . Mr. Hudi testified that “the labor was more

than the data was providing.” Id. 76:10-13.

96. Consistent with Mr. Hudi’s testimony, Dr.

Raeline McIntyre testified that she called Mr. Hudi

and said that the laboratory employees were overwhelmed, and adding another requirement would be

more than they could handle. 12/4/2020 Tr. 502:15503:3. Dr. Raeline McIntyre testified that the ADDL

employees were already submitting the same data

ADDL was requesting, but in a different format. Id.

503:4-9.

Termination of the Services Agreement:

97. After repeatedly complaining to Affordable

about its mismanagement of the PC, and particularly

the problems caused by the inadequate laboratory

staffing, Dr. Raeline McIntyre decided to terminate

the Agreement between Affordable and the PC. See

12/14/2020 Tr. 101:19-104:10.

98. On September 18, 2019, Dr. Raeline McIntyre,

on behalf of the PC, sent a letter to Affordable

terminating the Agreement for cause. Joint Ex. 8 at 1-

App.88a

2. Dr. McIntyre explained in the letter that there were

at least two grounds to terminate for cause: (1) Affordable’s breach of its promise to manage in the best

interests of the PC was a breach of a material term,

giving rise to cause for termination under section

V(B)(2) of the Agreement; and (2) the termination of

the 2002 Lease gave rise to cause for termination

under section V(B)(9) of the Agreement. Id. Dr.

McIntyre requested that Affordable respond and

provide “its plan for an orderly disaffiliation within 10

days so that we can make the necessary and appropriate

decisions related to our practice, and the continuing

care of our patients, following disaffiliation from

Affordable.” Id. at 2; 12/14/2020 Tr . 104:21-105:9. Dr.

McIntyre proposed that disaffiliation be completed by

November 4, 2019. Joint Ex. 8; 12/14/2020 Tr. 106:1418.

99. Also on September 18, 2019, the PC sent a

letter to Affordable and ADDL giving notice that the

PC was terminating the ADDL Agreement. Joint Ex.

8 at 3-4; 12/14/2020 Tr. 106: 5-20. In the letter, Dr.

Raeline McIntyre explained that ADDL was in breach

of the ADDL Agreement because it was no longer

performing the work contemplated under the ADDL

Agreement in the time and manner required. Joint Ex.

8 at 3. Dr. McIntyre also explained that the ADDL

Agreement was automatically terminated because of

the PC’s termination of the Services Agreement. Id. at

3-4.

100. Dr. Neil McIntyre met with the staff of the

PC and the Gulfport ADDL laboratory on September

18, 2019 to inform them that the PC had terminated

its Agreement with Affordable. 12/3/2020 Tr. 276:1525. After the meeting, staff members, including ADDL

App.89a

employees, approached Dr. Neil McIntyre to ask for

employment following the disaffiliation from Affordable.

Id. 277:14-18; id. 278:11-13. Dr. Neil McIntyre told

the employees who asked that he did not know what

the future held, but he would do his best to employ

them. Id. 277:61

- 2.

101. Karol Twilla responded to the September 18,

2019 termination letters by letter dated September 27,

2019. Joint Ex. 9. Ms. Twilla denied that there was

cause to terminate the Agreement, and asserted that

Affordable had complied with the Agreement and had

not interfered with the PC’s professional decision

making. Id. Ms. Twilla did not offer a plan for disaffiliation. Id.; see 12/14/2020 Tr. 107:23-108:2.

102. Affordable never provided a plan for disaffiliation from the PC. 12/14/2020 Tr. 105:19-25; id.

106:24-25.

Initiation of Arbitration and Court Proceedings:

103. Instead, on November 1, 2019, Affordable filed

its initial Demand for Arbitration. Joint Ex. 10.

Affordable alleged that there was no cause for termination of the Agreement, and sought declaratory

judgment that the Agreement was not terminated. See

id.

104. Also on November 1, 2019, Affordable sued

JNM in federal court seeking declaratory judgment

that Affordable was not in default on the lease

between JNM and Affordable for the 505 Cowan Road

office, as a result of Affordable’s failure to make

certain rent payments to JNM. Cl. Ex. 14.

105. On November 20, 2019, Respondents answered the Demand and denied Affordable’s allegations,

App.90a

thus reasserting that the PC had terminated the

Agreement for cause. Joint Ex. 11.

106. On November 24, 2019, Karol Twilla sent

another letter to the PC, this time notifying the PC

that Affordable believed there was a minimum cash

balance deficiency based on October 31, 2019 financial

statements. Joint Ex. 12. Ms. Twilla stated that the

PC had two options to remedy the deficiency and, if

the parties did not agree on either option, either party

could terminate the Agreement immediately. Id. In

the letter, Ms. Twilla purported to enclose the financial

statement on which she relied to calculate a minimum

cash balance deficiency. Id. The copy of Ms. Twilla’s

letter introduced at the hearing has no enclosures. Id.

Although Ms. Twilla testified about the letter, she did

not explain whether an enclosure was missing or what

it contained. 12/2/2020 Tr. 50:92

- 2.

107. Prior to the November 25, 2019 letter, Affordable had never given the PC notice of a minimum cash

balance deficiency. 12/14/2020 Tr. 108:15-18.

108. By February 2020, Affordable still failed to

cooperate in disaffiliation from the PC.

109. Because Affordable retained control of all

revenues of the PC and refused to relinquish that

control despite the termination of the Agreement, the

PC could not disaffiliate from Affordable. See 12/14/2020

Tr. 170:51

- 8. In order to set up a bank account that

Affordable did not control, so that Affordable could not

continue to sweep revenues earned after the termination

of the Agreement, Dr. Raeline McIntyre formed a new

entity, Dr. Raeline K. McIntyre, DMD, PLLC (“Raeline

PLLC”), and set up a bank account in the name of the

new entity. 12/3/2020 Tr. 252:36

- ; 12/14/2020 Tr.

App.91a

170:51

- 8. Dr. Raeline McIntyr e was the sole owner of

Raeline PLLC. 12/4/2020 Tr. 471:10.

February 24, 2020 Letter and Further Litigation:

110. On or about February 24, 2020, the PC

delivered a second letter to Affordable, stating that

the PC was terminating the Agreement immediately

under section III(B). Joint Ex. 13. In the letter, Dr.

Raeline McIntyre explained that the PC did not agree

to either option to remedy the cash balance deficiency,

and therefore invoked its right to terminate the Agreement immediately. Id. Again, in the interest of

continuity of patient care, Dr. McIntyre asked Affordable to work with the PC to provide “an orderly

transition.” Id.

111. In response to the February 24, 2020 letter,

Affordable took immediate action to interfere with the

McIntyres’ ability to continue to practice dentistry. On

or about February 26, 2020, Affordable cut off the

computer system in the office so that the McIntyres

could not access their patient records or take X-rays

or images. 12/4/2020 Tr. 526:25-527:10; id. 526:12-21.

Affordable also directed ADDL employees not to return

to work. 12/2/2020 Tr. 108:19-20.

112. All of the ADDL employees at the Gulfport

laboratory resigned from employment with ADDL.

12/2/2020 Tr. 108:20-22.

113. Although the evidence showed that Affordable

ceased performing services for the PC on February 24,

2020, supra, Ms. Twilla testified that the current

status of the Agreement between the PC and Affordable

is “[t]hat it is still in existence, that we still have

affiliation.” 12/1/2020 Tr. 110:14-15.

App.92a

114. During the week of February 24, 2020, Raeline

PLLC began to operate a dental practice at 505 Cowan

Road. 12/4/2020 Tr. 464:36

- . Dr. Raeline McIntyre, Dr.

Neil McIntyre, and Dr. Palmore practiced under

Raeline PLLC. Id. 471:24-472:6;

id. 517:17-23. The

McIntyres removed signage and indications that the

practice was affiliated with Affordable. 12/4/2020 Tr.

522:12-20; id. 524:21

- 1; id. 525:11-13. Raeline PLLC

hired the former ADDL Gulfport laboratory employees,

after they contacted Dr. Neil McIntyre to ask for

employment. 12/3/2020 Tr. 277:14-24; id. 278:14-22;

12/4/2020 Tr. 517:12-16.

115. On February 27, 2020, Respondents secured

a temporary restraining order that prohibited Affordable from interfering with their ability to practice

dentistry. Cl. Ex. 17.

116. On February 28, 2020, Affordable sought leave

to amend its Demand for Arbitration. Cl. Ex. 45.7

117. In its Amended Demand for Arbitration

(“Demand”) (Joint Ex. 14), Affordable brought seventeen

claims for relief: (1) declaratory relief pursuant to the

Agreement; (2) attorneys’ fees and indemnification

pursuant to the Agreement; (3) declaratory relief

pursuant to the 2002 Lease and “the sublease”; (4)

breach of contract—“minimum cash balance”; (5)

breach of contract—“failure to vacate the premises”;

(6) breach of contract—“failure to pay all debts”; (7)

7 Affordable was granted to leave file its Amended Demand for

Arbitration. AAA Scheduling Order 2

# . Although Affordable did

not actually file the Amended Demand for Arbitration until June

3, 2020, Joint Ex. 14, the Amended Demand it ultimately filed

was submitted with its motion for leave on February 28, 2020,

Cl. Ex. 45.

App.93a

breach of contract—confidentiality; (8) breach of

contract—“solicitation of Claimant’s employees”; (9)

breach of contract—“taking of Claimant’s property

and equipment”; (10) breach of contract—“failure to

allow Claimant access to the Premises”; (11) misappropriation of trade secrets; (12) tortious interference

with “business relations”; (13) tortious interference with

“business relationships”; (14) unfair acts or practices

in violation of N.C. Gen. Stat. § 75-1.1; (15) unjust

enrichment—“Claimant’s property and equipment”;

(16) unjust enrichment—“the Premises”; and (17)

conversion. Demand ¶¶ 95-261. Affordable alleged

that there was no cause for the PC to terminate the

Agreement. Id. ¶ 20. Affordable also alleged that the

PC breached the Agreement by failing to remedy the

alleged minimum cash balance deficiency, id. ¶ 138;

failing to vacate 505 Cowan Road upon termination of

the Agreement, id. ¶¶ 148-69; allegedly taking Affordable’s property and equipment, id. ¶¶ 191-92; soliciting

ADDL employees, id. ¶¶ 181-82, and using Affordable’s confidential information, id. ¶ 172. Affordable’s

tort and statutory claims arise from the same facts as

the breach of contract claims. See id. ¶¶ 204-61.

118. Raeline PLLC continued to operate at 505

Cowan Road, and continued to serve the McIntyres’

patients. 12/3/2020 Tr. 272: 23-273:19. Respondents

did not pay rent during the month of March 2020. Id.

273:17-274:8. Affordable offered no evidence of the fair

market value of the 505 Cowan Road property during

that time.

119. Affordable filed a motion in federal court in

the JNM case seeking to enforce a joint stipulation

between JNM and Affordable that was intended to

preserve the status quo during litigation. Cl. Ex. 43 at

App.94a

9; Cl. Ex. 44. At the hearing on the motion to enforce

the stipulation, Affordable asked the court to order

the McIntyres to vacate 505 Cowan Road. 12/14/2020

Tr. 236:81

- 0. Affordable represented to the court that

it was ready to start operating with a new affiliated

practice immediately. Id. 236:11-17. On March 17,

2020, Affordable obtained a court order requiring the

McIntyres and their practice to vacate 505 Cowan

Road no later than March 27, 2020. Cl. Ex. 1.

120. The next day, on March 18, 2020, Dr. Neil

McIntyre set up Neil McIntyre, DMD, PLLC (“Neil

PLLC”). Cl. Ex. 46. Dr. Neil McIntyre is the sole owner

of Neil PLLC. 12/4/2020 Tr. 537:5-10.

Events Following March 27, 2020:

121. The McIntyres complied with the court order

and vacated 505 Cowan Road on March 27, 2020.

12/2/2020 Tr. 83:68

- . Raeline PLLC ceased operating

on March 27, 2020. 12/3/2020 Tr. 273:11-13. Dr. Raeline

McIntyre stopped practicing dentistry at that time.

12/3/2020 Tr. 281:24-282:2; 12/4/2020 Tr. 536:25-4.

122. Despite Affordable’s representation in federal

court, supra, an Affordable-affiliated practice did not

begin operating at 505 Cowan Road until October 5,

2020. 12/14/2020 Tr. 237:31

- 1.

123. Upon leaving 505 Cowan Road, the McIntyres

did not take any dental equipment. 12/3/2020 Tr.

280:8-10. They did not take any property owned by

Affordable. Id. 280:11-14; see 12/2/2020 Tr. 83:25

- . Dr.

Neil McIntyre took only some of his personal

belongings. 12/3/2020 Tr. 280:15-281:5. The McIntyres

left behind property and equipment that they purchased

in order to avoid any question that they had fully

App.95a

complied with the federal court’s order. 12/4/2020 Tr.

348:81

- 3.

124. Dr. Neil McIntyre continued to practice

dentistry under Neil PLLC at 382 Courthouse Road in

Gulfport. 12/14/2020 Tr. 237:12-15. Neil PLLC hired

the former ADDL employees who had worked for

Raeline PLLC and set up a dental laboratory. 12/4/

2020 Tr. 538:31

- 2.

125. Neil PLLC continues to operate a dental

practice in Gulfport, Mississippi. 12/4/2020 Tr. 324:1719; 12/14/2020 Tr. 237:12-15; id. 239:18-23.

126. In its Demand and at the hearing, Affordable

raised a variety of complaints about the events

following the termination of the Agreement in

September 2019, and the events following the February

24, 2020 letter.

Access to 505 Cowan Road:

127. On examination by Affordable’s counsel, Ms.

Twilla testified that Affordable was denied access to

505 Cowan Road after February 24, 2020. 12/3/2020

Tr. 149:71

- 0. On cross-examination Ms. Twilla admitted

that she was never denied access to 505 Cowan Road,

and she was not aware that Affordable actually sent

anyone to the building to attempt to access it. Id.

167:11-168:4.

128. The Arbitrator does not credit Ms. Twilla’s

testimony that Affordable was denied access to 505

Cowan Road. She appeared to agree with Affordable’s

litigation position, despite her admitted lack of knowledge to support that position.

App.96a

129. Affordable did not offer any evidence to

support the allegations in its Demand that “Respondents have locked Claimant out of the Premises,”

Demand ¶ 199, even assuming that Affordable is

referring to 505 Cowan Road rather than the

Premises. There is no credible evidence that Affordable was denied access to 505 Cowan Road at any

time.

Competition by Neil PLLC:

130. Ms. Twilla testified that the PC had the

ability to stop Dr. Neil McIntyre from competing with

the PC, and to seek an injunction and/or damages.

12/2/2020 Tr. 93:51

- 6. However, Dr. Neil McIntyre

testified that he had no employment agreement with

the PC. 12/3/2020 Tr. 187:12-13; id. 189:59

- . Affordable

offered as evidence a document purporting to amend

an employment agreement between Dr. Neil McIntyre

and the PC. Id. 188:11

- 3; Cl. Ex. 5. Dr. Neil McIntyre

explained that he signed the amendment in 2006

because he was at an Affordable seminar with other

dentists, and the “corporate people” from Affordable

had a table of amendments at the front door to the

room. 12/3/2020 Tr. 189:13-190:1. The Affordable

corporate personnel said all the dentists had to sign

the amendments before they left; Dr. Neil McIntyre

testified that he signed the amendment so he could

leave. Id. Affordable failed to prove that Dr. Neil

McIntyre had a written employment agreement with

the PC and failed to offer any evidence that Dr. Neil

McIntyre was subject to a restrictive covenant with

the PC. Affordable also offered no evidence that Dr.

Neil McIntyre was a party to any agreement with

Affordable.

App.97a

131. Ms. Twilla testified that the Agreement

requires associate dentists of the PC to sign employment agreements, and that the Agreement sets minimum requirements for those employment agreements.

12/1/2020 Tr. 145:11-21; id. 155:14-18. Ms. Twilla

testified that the Agreement required Dr. Raeline

McIntyre to have Dr. Neil McIntyre execute an employment agreement with the PC. Id. 154:48

- .

132. In the Agreement, the PC agreed to enter

into an employment agreement with “each dentist who

is a shareholder in the PC.” MSA § II(D). Regarding the

employment of other dentists, the Agreement stated:

The terms and conditions of an Employment

Agreement with a dentist who is not a

shareholder in the PC may be such as the PC

determines to be prudent, provided, however

that all such Employment Agreements must

contain provisions substantially identical to

those of Paragraphs 6 (Prohibited Marketing

Practices), 7 (Confidential Information), 8

(Nonsolicitation of Employees) and 11 (Third

Party Beneficiary) of the sample Associate

Dentist Employment Agreement attached

hereto as Exhibit D-2.

Id. Nothing in the Agreement required the PC to enter

into an employment agreement with a dentist who

was not a shareholder. See id. Affordable did not offer

evidence that a sample Associate Dentist Employment Agreement was attached to the Agreement.

133. The terms of the Agreement contradict Ms.

Twilla’s testimony that the PC was required to have

Dr. Neil McIntyre sign an employment agreement. Ms.

Twilla’s interpretation of the Agreement, unsupported

App.98a

by the plain language of the Agreement, has no evidentiary weight.

134. On August 5, 2002, Dr. Neil McIntyre signed

a temporary employment agreement with the Poe PC.

12/3/2020 Tr. 192:11-24; Cl. Ex. 4. The temporary

employment agreement contained a covenant not to

compete with the practice for two years after the

termination of the agreement. Cl. Ex. 4 ¶ 5. As noted

above, the PC purchased the assets of the Poe PC on

November 1, 2002. In the bill of sale, the Poe PC agreed

to assign to the PC its “rights, benefits and interest

under those certain contracts and agreements, written

or oral, relating to the operations of the Practice

defined as ‘Assigned Contracts’ under the Professional

Assets Purchase Agreement.” Joint Ex. 6 at 9-10.

However, nothing in the Professional Assets Purchase

Agreement lists “Assigned Contracts.” See id. at 1-6.

Therefore, there is no evidence that Dr. Neil McIntyre’s

temporary employment agreement with the Poe PC

was assigned to the PC.

Hiring of Former ADDL Employees:

135. Ms. Twilla testified that as of February 2020,

ADDL employed Caleb Cantrell, Rachel Dykes, Russell

Dykes, and Christina Hodge at the Gulfport location.

12/2/2020 Tr. 109:15-110:8. Ms. Twilla testified that

these four employees resigned on or about February

24, 2020 and were hired by Dr. Raeline McIntyre. Id.

110:91

- 5.

136. Ms. Twilla also testified that Dr. Raeline

McIntyre and Dr. Neil McIntyre were prohibited by

contract from soliciting ADDL employees. 12/2/2020

Tr. 107:24-108:6. Ms. Twilla te stified that Affordable

and ADDL had a non-solicitation provision because

App.99a

there was “a lot of work” that goes into recruiting and

training laboratory staff members. Id. 112:17-113:4.

137. Ms. Twilla testified that Affordable has affiliated locations in about forty states across the United

States. 12/2/2020 Tr. 126:69

- . She also testified that

ADDL has a laboratory at each affiliated location, and

therefore ADDL had laboratories in about forty states.

Id. 126:10-15.

138. As noted hereinabove, the non-solicitation

provision in the MSA contains no time limitation. It

prohibits solicitation of any employees of Affordable

and all its affiliates. Therefore, on its face, the nonsolicitation provision prevents solicitation for employment of employees who work in approximately forty

states.

139. Dr. Neil McIntyre testified that in February

2020, he hired former ADDL employees to work for

Raeline PLLC, when those employees asked him for a

job. 12/3/2020 Tr. 277:14-24; id. 278:14-22. He also

testified that he later hired former ADDL employees

to work for Neil PLLC. Id. 197:16-199:11.

Alleged Confidential Information and Trade

Secrets:

140. Ms. Twilla also testified that Affordable

maintained confidential information and trade secrets.

12/2/2020 Tr. 111:22

- 0; id. 113:14-114:12. She testified

that the confidential information at issue in Affordable’s

breach of contract claim was the same information

Affordable contended was a trade secret. 12/3/2020 Tr.

55:21-58:4.

141. In response to questions about what Affordable considered a trade secret, Karol Twilla testified:

App.100a

So as a support service that we offer, you

know, when you think about a business asset

and you think about servicing patients, in this

instance there are forms that are created and

recommended.

Now, the doctor has the ability to say no, that

they don’t want to use them or to alter them;

but the templates of those forms, the format

of those forms, how those forms are communicated to patients, how those forms are

processed throughout the patient’s visit, you

know, the office, how the office runs, how they

answer phones, how they utilize the Dentrix,

the operating system and, you know, making

sure that a schedule is optimized, all of those

are certainly, you know, trade secrets.

12/2/2020 Tr. 113:21-114:10. Ms. Twilla also testified

that “the manner in which we train office staff” was a

trade secret. 12/3/2020 Tr. 54:11-21. Ms. Twilla

testified that if an unaffiliated practice hired former

employees of an affiliated practice, the employees

would be “light years ahead as far as the way that they

talk to patients, the way they schedule patients, the

way that they, you know, create ASAP lists.”

12/2/2020 Tr. 115:62

- 4.

142. On cross-examination , Ms. Twilla admitted

that the Affordable template patient form was

accessible to tens of thousands of patients who were

under no obligation to keep the form confidential.

12/3/2020 Tr. 58:56

- 2:7. Immediately after acknowledging this fact, she persisted in testifying that the

form was secret. Id. 61:20-23.

App.101a

143. Ms. Twilla also admitted that patients and

other visitors to the practice, as well as ADDL and PC

staff members, had the opportunity to observe how the

office operated, including how staff answered the

phones and how patients were scheduled. 12/3/2020 Tr.

58:75

- 9:4. Affordable offered no evidence that any of

the PC staff members who observed how the PC

operated were restricted from disclosing that

information, or subject to post-employment covenants.

144. Ms. Twilla testified that the Dentrix operating

system was customized for Affordable’s affiliated

practices, and that the operating system is considered

confidential and is a trade secret. 12/3/2020 Tr.

120:10-18. However, Dr. Raeline McIntyre testified that

Dentrix was not a proprietary program of Affordable;

rather, it was a third-party provider that licensed

software to dental practices. 12/4/2020 Tr. 522:15

- ; id.

556:3-6; see id. 557:71

- 4. The Arbitrator does not

credit Ms. Twilla’s conclusory testimony that the

Dentrix operating system is proprietary to Affordable.

145. Affordable also did not offer evidence that

Respondents used or disclosed any aspect of the

customized Affordable Dentrix system. Dr. Raeline

McIntyre testified that after February 24, 2020, her

new practice used the computer system only to identify

the number associated with a patient’s hard copy file.

12/4/2020 Tr. 526:12-21. Dr. Ra eline McIntyre explained

that the hard copy files were organized by numbers;

in order to locate a hard copy file, staff had to search

in the computer to find the patient number associated

with a patient’s name. Id. 531:91

- 6. Dr. Raeline

McIntyre testified that they did not use the Dentrix

software system. Id. 527:11-14.

App.102a

146. When asked what Affordable considered a

trade secret “with respect to the laboratory,” Ms.

Twilla responded:

If you compare an ADDL laboratory with a

commercial lab, the processes and even the

materials used and how they’re used in an

ADDL lab are significantly different and they

are done so in order to still have a quality

product in a quicker time frame, enabling

the client dentist to service their patients in

a same day service.

12/2/2020 Tr. 111:82

- 0.

147. ADDL employees and the PC’s staff could

also observe the materials and processes used in the

laboratory, and there was no evidence that those

employees were subject to confidentiality agreements

or post-employment rest rictions. 12/4/2020 Tr. 439:316. Instead, there was evidence that ADDL employees

left to work for competitors. 12/14/2020 Tr. 85:16-24.

148. Although Ms. Twilla testified that providing

same-day denture service wa s “unique,” she admitted

that she was not saying that ADDL was the only dental

laboratory offering same-day service. 12/3/2020 Tr.

153:11-15. Ms. Twilla admi tted that there were

competitors in the market and testified she did not

know whether they provided same-day service. See id.

153:16-154:25. She acknowledg ed knowing of at least

one company that advertised same-day denture

service. Id. 154:59

- .

149. Kevin Hudi testified that the ADDL

employees had valuable training. See 12/4/2020 Tr.

399:13-400:9. However, Mr. Hudi later admitted that

he lacked knowledge of any training that Affordable

App.103a

or ADDL provided to Caleb Cantrell, Rachel Dykes,

Russell Dykes, or Christina Hodge. Id. 440:25-442:3.

150. On the fourth day of the hearing, Dr. Neil

McIntyre testified that when he was setting up the

laboratory at Neil PLLC, he consulted with Russell

Dykes, and looked at a list of equipment provided to

him in 2013 or 2014 by Affordable’s director of

purchasing. 12/4/2020 Tr. 328:22-330:1. The Affordable

employee who provided the list did not ask Dr. Neil

McIntyre to keep the list confidential. Id. 330:19-20.

Dr. Neil McIntyre also testified that the dental

laboratory at Neil PLLC did not have the same layout

as the laboratory at 505 Cowan Road. 12/14/2020 Tr.

238:16-239:7.

151. After Dr. Neil McIntyre testified, Kevin Hudi

testified that ADDL had a “standard equipment order”

and a particular layout for its laboratories, and that

the equipment list was “extremely valuable.” 12/4/2020

Tr. 400:10-401:8. Affordable di d not introduce a copy

of the equipment list during this testimony. See id.

152. After the hearing recessed on December 4,

2020, and before it resumed on December 14, 2020, Dr.

Neil McIntyre searched his files and located the list to

which he had referred in his testimony. 12/14/2020 Tr.

218:72

- 21:9; Resp. Ex. 9. Dr . McIntyre testified that

the list he had referred to in his prior testimony was

a series of six items in an email from Minnie Whaley

forwarded to Dr. McIntyre by T.J. Thomas. 12/14/2

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