Petition for Writ of Certiorari — Stewart A. Feldman, et al., Petitioners v. Scott Sullivan, et al.

APPENDIX

TABLE OF CONTENTS

Page

APPENDIX A—Fifth Circuit Opinion

(Mar. 11, 2025) .................................................... 1a

APPENDIX B—District Court’s Memorandum

and Opinion (Dec. 20, 2022) ............................. 38a

APPENDIX C—Fifth Circuit Order Denying

Rehearing (Apr. 30, 2025) ................................. 95a

APPENDIX D—Arbitration Agreement

(Sept. 18, 2015) (excerpt from

attachment to client engagement letter) ......... 98a

i

1a

APPENDIX A

_________

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_________

No. 23-20140

_________

SCOTT SULLIVAN; FRANK DELLACROCE; ST. CHARLES

SURGICAL HOSPITAL, L.L.C.; ST. CHARLES HOLDINGS,

L.L.C.; CENTER FOR BREAST RESTORATIVE SURGERY,

L.L.C.; SIGMA DELTA BILLING, L.L.C.; CERBERUS

INSURANCE CORPORATION; JANUS INSURANCE

CORPORATION; ORION INSURANCE CORPORATION,

Plaintiffs-Appellees,

versus

STEWART A. FELDMAN; THE FELDMAN LAW FIRM,

L.L.P.; CAPSTONE ASSOCIATED SERVICES (WYOMING),

LIMITED PARTNERSHIP; CAPSTONE ASSOCIATED

SERVICES, LIMITED; CAPSTONE INSURANCE

MANAGEMENT, LIMITED; JEFF CARLSON,

Defendants-Appellants,

_________

SCOTT SULLIVAN; FRANK DELLACROCE; ST. CHARLES

SURGICAL HOSPITAL, L.L.C.; ST. CHARLES HOLDINGS,

L.L.C.; CENTER FOR BREAST RESTORATIVE SURGERY,

L.L.C.; SIGMA DELTA BILLING, L.L.C.; CERBERUS

INSURANCE CORPORATION; JANUS INSURANCE

CORPORATION; ORION INSURANCE CORPORATION,

2a

Defendants-Appellees,

versus

STEWART A. FELDMAN; THE FELDMAN LAW FIRM,

L.L.P.; CAPSTONE ASSOCIATED SERVICES (WYOMING),

LIMITED PARTNERSHIP; CAPSTONE ASSOCIATED

SERVICES, LIMITED; CAPSTONE INSURANCE

MANAGEMENT, LIMITED; JEFF CARLSON,

Plaintiffs-Appellants,

_________

SCOTT SULLIVAN; FRANK DELLACROCE; ST. CHARLES

SURGICAL HOSPITAL, L.L.C.; ST. CHARLES HOLDINGS,

L.L.C.; CENTER FOR BREAST RESTORATIVE SURGERY,

L.L.C.; SIGMA DELTA BILLING, L.L.C.; CERBERUS

INSURANCE CORPORATION; JANUS INSURANCE

CORPORATION; ORION INSURANCE CORPORATION,

Plaintiffs-Appellees,

versus

STEWART A. FELDMAN; THE FELDMAN LAW FIRM,

L.L.P.; CAPSTONE ASSOCIATED SERVICES (WYOMING),

LIMITED PARTNERSHIP; CAPSTONE ASSOCIATED

SERVICES, LIMITED; CAPSTONE INSURANCE

MANAGEMENT, LIMITED; JEFF CARLSON,

Defendants-Appellants,

_________

Appeal from the United States District Court

for the Southern District of Texas

USDC Nos. 4:20-CV-2236, 4:21-CV-658, 4:21-CV-682

_________

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Filed: March 11, 2025

_________

Before: JONES, SMITH, and HO, Circuit Judges.

EDITH H. JONES, Circuit Judge:

On appeal is a district court’s judgment confirming

four arbitration awards resulting from four

arbitrations between the same parties. The awards,

however, contradict one another, and each confirmed

award reflects a different amount owed by

Defendants-Appellants to the Appellees. We AFFIRM

in part, REVERSE in part, VACATE in part, and

REMAND.

To be clear, we AFFIRM the Glasser, Baker, and

Kutcher arbitration awards because no grounds exist

under the Federal Arbitration Act to vacate them. We

AFFIRM in part the Jones arbitration award but

REVERSE in part insofar as the Jones award pertains

to defendant Jeff Carlson, because Carlson did not

sign the arbitration agreement and was not otherwise

bound by it. We VACATE and REMAND the district

court’s March 22, 2021, order staying further

arbitrations between the parties so that the

inconsistency among the awards can be arbitrated.

BACKGROUND

I. Underlying Facts

Doctors Scott Sullivan and Frank DellaCroce are

surgeons at the Center for Restorative Breast Surgery

in New Orleans, Louisiana. The Doctors own several

business entities (the “Doctor Entities”), including

Cerberus Insurance Corp., Janus Insurance Corp.,

and Orion Insurance Corp. (the “Captive Insurers”),

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as well as St. Charles Surgical Hospital, L.L.C., St.

Charles Holdings, L.L.C., Center for Breast

Restorative Surgery, L.L.C., and Sigma Delta Billing,

L.L.C. Seeking to pool their risks through certain

insurance arrangements, the Doctors entered a

turnkey agreement with Stewart Feldman and the

Feldman Law Firm, LLP (the “Feldman Parties”), by

way of an Engagement Letter dated October 22, 2015.

Attached to that Engagement Letter is a “Capstone

Services Agreement.” Allegedly at the direction of

Feldman, who also signed the Capstone Services

Agreement, the Doctors contracted with Capstone

Associated Services (Wyoming), LP, Capstone

Associated Services, Ltd., and Capstone Insurance

Management, Ltd. (the “Capstone Parties”).

The Doctors allege that Feldman encouraged them

to form the Captive Insurers and have them

participate in “third party insurance and reinsurance

through PoolRe.” The Engagement Letter describes

PoolRe as a “risk pooling arrangement involving sets

of generally similar policies covering generally similar

risks of closely held businesses, wherein each [Captive

Insurer] assumes reinsurance on policies covering

other clients of Capstone.” The Doctors claim that

Feldman did not disclose that he used the insurance

pool to underwrite malpractice and breach of fiduciary

duty claims against Feldman himself and Capstone.

The Doctors further allege that, although the

Engagement Letter entitled them to demand that

Feldman and Capstone wind down the Captive

Insurers at any time, Feldman and Capstone failed to

do so even after several requests by the Doctors. They

made these requests after learning of a United States

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Tax Court judgment holding “that PoolRe was not a

bona fide insurance company.” See Rsrv. Mech. Corp.

v. Comm’r, 115 T.C.M. (CCH) 1475 (T.C. 2018), aff’d

34 F.4th 881 (10th Cir. 2022).

II. The Arbitration Provision

The Engagement Letter contains an extensive

arbitration provision. The Engagement Letter

provides:

[E]ither party may submit the dispute to any

recognized, neutral . . . arbitrator for final

resolution in an arbitration proceeding to be

concluded within four months, except that the

American Arbitration Association (AAA) shall

not administer the arbitration. Submission of

the dispute under this agreement shall be the

sole and exclusive forum for resolving any and

all disputes between the parties, except for

attorneys’ fees for services previously rendered.

The Engagement Letter requires that all

arbitrations be conducted pursuant to Texas Law and

the Rules of the American Arbitration Association

(“AAA”), “with only a single arbitrator hearing the

dispute.” It further states that the arbitrator “shall

have the sole and exclusive ability to rule on all

aspects of the arbitrator’s appointment.” And it

provides that the “arbitration provision shall be

effective notwithstanding any actions that may later

take place.”

The Engagement Letter then discusses the issue of

arbitrability:

The parties agree that the issue of arbitrability

shall likewise be decided by the arbitrator, and

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not by any other person. That is, the question

of whether a dispute itself is arbitrable shall be

decided solely by the arbitrator and not, for

example, by any court. The parties agree that

the arbitrator has exclusive authority to resolve

all disputes and challenges to the enforceability

of the parties’ agreements as a whole. The

parties agree that their intent is to divest the

courts of all powers in disputes involving the

parties, except to compel arbitration, and to

confirm, vacate or enforce award.

And, finally, the Engagement Letter provides, if the

four-month timeline to complete an arbitration is not

met, “any party then may file another written demand

for arbitration of the dispute with another” arbitrator,

“with the prior arbitrator . . . then being immediately

divested of jurisdiction,” and the four-month timeline

starting afresh for the new arbitration. The Capstone

Services Agreement incorporates these provisions of

the Engagement Letter.

III. Bleak House

The numerous arbitrations that followed led the

district court to call this case “the Bleak House of

arbitration.” Sullivan v. Feldman (Dist. Ct. Op.), H20-2236, 2022 WL 17822451, at *4 (S.D. Tex. Dec. 20,

2022). In May 2020, the Feldman and Capstone

Parties initiated arbitration before former state

District Judge Grant Dorfman, who is now a judge of

the Texas Business Court. That arbitration only

concerned the winding up of the Captive Insurers. The

Doctors and the Doctor Entities (collectively, “the

Doctors”) then initiated arbitration in New Orleans

before retired United States District Judge Stanwood

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Duval. And in July 2020, the Feldman and Capstone

Parties initiated another arbitration before former

Texas state District Judge Caroline Baker. The

parties filed motions in federal court to compel their

respectively initiated arbitrations. In August 2020,

the district court granted the Feldman and Capstone

motions to compel the Dorfman 1 and Baker

arbitrations and, until their resolution, it stayed the

Duval arbitration. Sullivan v. Feldman, H-20-2236,

2020 WL 4734982 (S.D. Tex. Aug. 14, 2020). The

Doctors appealed but voluntarily withdrew their

appeal in February 2021.

In late July 2020, the Doctors initiated another

arbitration before arbitrator Robert Kutcher, another

in August 2020 before former Orleans Parish,

Louisiana, Civil District Court Judge Lloyd Medley,

and yet another in November 2020 before former

Orleans Parish Civil District Court Judge Carolyn

Gill-Jefferson.

In November 2020, the Feldman and Capstone

parties moved to stay the Kutcher, Medley, and GillJefferson arbitrations. Sullivan v. Feldman, H-202236, 2020 WL 7129879, at *10-11 (S.D. Tex. Dec. 4,

2020). The district court denied the motion to stay,

reasoning that nothing in the Engagement Letter

prohibited simultaneous arbitrations and that

inefficiency concerns were not within the court’s

purview but were instead for the arbitrators to

resolve. Id. at *9-10.

1

The Dorfman arbitration ended with an award, albeit after

the four-month deadline, and that award is no longer

challenged.

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In December 2020, the Feldman and Capstone

Parties initiated arbitration before arbitrator Mark

Glasser and the Doctors initiated arbitration before

former Louisiana Fourth Circuit Court of Appeal

Judge Charles Jones. The Feldman and Capstone

Parties also initiated an arbitration before arbitrator

James Doyle, although the record does not make clear

precisely when that occurred.

Then, in March 2021, the district court enjoined the

Feldman and Capstone Parties “from initiating yet

more state, federal, or arbitration proceedings

involving the same parties, underlying contract, or

the same or related disputes.” Sullivan v. Feldman,

No. 4:20-cv-02236 (S.D. Tex. Mar. 22, 2021) (order

consolidating

cases

and

enjoining

further

arbitrations).

In August 2021, Baker, Kutcher, Jones, and Glasser

together presided over a single evidentiary hearing,

where the same evidence and witnesses were

presented. The hearing took place at a five-star resort,

resulting in room fees in excess of $300,000. At

various points during the hearing, the arbitrators

issued conflicting evidentiary rulings. And on the

hotly disputed subject of class arbitrability, Judge

Jones and Arbitrator Glasser disagreed with each

other vocally from the bench.

IV. Final Four Awards

Only the four arbitrators who presided over the

shared evidentiary hearing issued final awards. The

district court summarized:

Judge Duval has stayed the arbitration

proceedings before him. Judge Medley

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determined that his jurisdiction had expired.

Judge Gill-Jefferson declined her appointment.

And the Feldman and Capstone Parties

voluntarily dismissed the arbitration they

initiated before Mr. Doyle. The remaining four

arbitrators (Judge Baker, Mr. Kutcher, Mr.

Glasser, and Judge Jones) issued the awards

that are disputed here. All four arbitrators

issued final awards in favor of the

Doctors . . . finding that Feldman and his

related entities breached their fiduciary duties,

committed malpractices, and converted funds

belonging to the Doctors.

Dist. Ct. Op., 2022 WL 17822451, at *5. All four

awards were issued after the contractual four-month

deadline to complete arbitration had expired. In a

joint order, the arbitrators all agreed that the

deadline was unenforceable as unconscionable and

inconsistent with due process. But the amounts

awarded by each arbitrator differed:

Arbitrator

Merits

Fees & Costs

Total Award

Baker

$1,471,949.21

$126,383.75

$1,598,332.96

Kutcher

$4,415,847.63

$143,703.07*

$4,559,550.70

Glasser

$1,471.949.21

$0.00

$1,471.949.21

Jones

$70,336,224.60 $18,348,294.60 $88,684,519.20†

*

†

This amount includes $17,319.32 in unpaid sanctions.

This amount does not include the $31,090,964.45 in class

damages that Judge Jones granted in a second award issued

on November 1, 2022, nor does it include the additional fees

and costs Jones awarded in the second award. The district

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Id. at *6. Each award bears 5 percent pre- and postjudgment interest.

Besides differing in amounts awarded, the

arbitrators’ decisions do not agree on other significant

issues. Judge Jones permitted class arbitration,2 but

court explicitly “left the claims for damages of Class Members

still outstanding” until after this court’s judgment on appeal.

Sullivan v. Feldman, H-20-2236, 2023 WL 2392746, at *1

(S.D. Tex. Mar. 7, 2023); Sullivan v. Feldman, H-20-2236,

2023 WL 2391009, at *2 (S.D. Tex. Mar. 7, 2023). Accordingly,

the Jones arbitration's class damages award is not before this

court in this appeal.

2

Judge Jones adopted Judge Medley’s order certifying the

class after Judge Medley withdrew pursuant to the fourmonth provision. Judge Jones questionably used “opt-out

notices” to handle the certification of the class, even though

“where absent class members have not been required to opt

in, it is difficult to see how an arbitrator’s decision to conduct

class proceedings could bind absent class members who have

not authorized the arbitrator to decide on a classwide basis

which arbitration procedures are to be used.” Oxford Health

Plans LLC v. Sutter, 569 U.S. 564, 574-75, 133 S. Ct. 2064,

2071-72 (2013) (Alito, J., concurring.) Judge Jones’s approach

was also in tension with required federal court practices,

which protect the constitutional due process rights of

defendants. A class can only be certified in federal court when,

inter alia, “there are questions of law or fact common to the

class.” FED. R. CIV. P. 23(a)(2). Then, in cases like this one, the

prospective class must show that “questions of law or fact

common to class members predominate over any questions

affecting only individual members.” FED. R. CIV. P. 23(b)(3). A

prospective multi-state class bears the burden of refuting that

“the variations in the laws of the states… ‘may swamp any

common issues and defeat predominance.’ ” Spence v. Glock,

Ges.m.b.H., 227 F.3d 308, 311 (5th Cir. 2000) (quoting

Castano v. Am. Tobacco Co., 84 F.3d 734, 741 (5th Cir. 1996)).

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arbitrator Glasser, the only other arbitrator to

consider that issue, concluded that the Engagement

Letter did not permit class arbitration. 3 The Jones

arbitration held liable defendant Jeff Carlson, who

became President of Capstone Associated Services,

Ltd., after the Engagement Letter was signed by the

parties. But the Baker, Kutcher, and Glasser

arbitrations all dismissed individual claims against

Carlson.

Before the district court, the parties filed several

cross-motions to vacate and confirm the respective

awards. The district court confirmed all four awards.

The Feldman Parties, the Capstone Parties, and

Carlson moved for “clarification,” which the district

court characterized as a motion to reconsider and

denied. Sullivan v. Feldman, H-20-2236, 2023 WL

2391009 (S.D. Tex. Mar. 7, 2023). The district court

then entered a Partial Final Judgment embodying all

Accordingly, if this controversy had been litigated in federal

court, the class needed to provided “ ‘an extensive analysis of

state law variations’ so that the district court could ‘consider

how those variations affect[ed] predominance.’ ” Elson v.

Black, 56 F.4th 1002, 1006-07 (5th Cir. 2023) (quoting Cole v.

Gen. Motors Corp., 484 F.3d 717, 724 (5th Cir. 2007)). Not so

in Judge Jones’s arbitration. In stark contrast, Judge

Medley’s order certifying the class, which was adopted by

Judge Jones, was a mere eight pages, including his analysis

of whether the agreement even allowed class arbitration, and

with only two conclusory paragraphs addressing

predominance.

3

In June 2021, before issuing an award, Judge Jones ordered

another arbitration to resolve the conflict between him and

Arbitrator Glasser on the subject of class arbitrability. No

such arbitration took place.

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four awards in their riotously varying glory. Sullivan

v. Feldman (Partial Final Judgment), H-20-2236,

2023 WL 2392746 (S.D. Tex. Mar. 7, 2023). The

district court also entered judgment against Carlson

jointly and severally with other defendants based on

the Jones award, which amounted at that date to

$94,542,659.80, with daily accruing post-judgment

interest of nearly $13,000.

The district court certified the Partial Final

Judgment pursuant to Federal Rule of Civil Procedure

54(b). This court has appellate jurisdiction. The

district court retained jurisdiction separately to

confirm and enforce the class damages award that

resulted from the Jones arbitration. The Feldman and

Capstone Parties and Carlson appealed.

V. Post-Appeal Attempt to Initiate a Tenth

Arbitration

In July 2023, after filing their appeal, the Feldman

and Capstone Parties initiated another arbitration

before arbitrator Jay Madrid. They argued that

another arbitration could resolve the conflicting

confirmed awards because the district court stated

that the “arbitrators are authorized to determine

whether and when earlier decisions or awards have

preclusive effects.” Dist. Ct. Op., 2022 WL 17822451,

at *16. The Doctors promptly requested the district

court to enforce its earlier injunction barring further

arbitration and to issue another injunction

prohibiting any further activity in the post-judgment

arbitration. See Sullivan v. Feldman, No. 4:20-cv02236 (S.D. Tex. Mar. 22, 2021) (order consolidating

cases and enjoining further arbitrations). Following

an emergency hearing on the motion on July 20, 2023,

13a

the court maintained that there were to be no further

attempts to arbitrate until a decision from the court.

The court further suggested that it would be best to

prevent any further arbitration until a decision issued

from this court. After additional briefing, on

November 30, 2023, the district court formally took

the parties’ respective motions under advisement.

Thus far, the parties’ cross-motions are unresolved.

STANDARD OF REVIEW

“Appellate review of an order confirming an

arbitration award proceeds de novo, using the same

standards that apply to the district court.” 21st Fin.

Servs., L.L.C. v. Manchester Fin. Bank, 747 F.3d 331,

335 (5th Cir. 2014) (quoting Brown v. Witco Corp., 340

F.3d 209, 216 (5th Cir. 2003)).

DISCUSSION

On appeal, the Feldman and Capstone Parties levy

numerous challenges against the district court’s

judgment. 4 First, they dispute whether the

4

One is the mistaken assertion that this case lacks diversity

jurisdiction. “A federal court may entertain an action brought

under the [Federal Arbitration Act (“FAA”)] only if the action

has an independent jurisdictional basis.” Badgerow v.

Walters, 596 U.S. 1, 8, 142 S. Ct. 1310,1316 (2022) (quotation

marks and citations omitted). Badgerow holds that, when

dealing with sections 9 and 10 of the FAA, courts cannot “look

through . . . to the underlying substantive dispute” to find

jurisdiction, but instead must apply “the usual jurisdictional

rules” to the “face of the FAA application itself.” Id. at 1517,142 S. Ct. at 1320-21. Here, diversity of citizenship is

complete because the Doctors and Captive Insurers are all

citizens of Louisiana or Delaware while none of the Feldman

14a

Engagement Letter delegated to the arbitrators the

right to decide whether the Engagement Letter

permitted class arbitration. Second, they contend that

the district court erred in permitting multiple

arbitrations to proceed simultaneously. Third, they

argue that the district court erred in confirming

multiple, inconsistent arbitration awards. Finally,

they assert that the district court erred in confirming

an arbitration award against Carlson individually.

We first address the questions of class arbitrability,

the four-month deadline, and whether simultaneous

arbitrations were permissible. These issues all turn

on the interplay between federal courts’ scope of

review and arbitrators’ delegated authority under

arbitration contracts. Here, the appropriate

deferential standards compel us to reject all three of

these challenges. Next, we examine the district court’s

judgment that purports to confirm all four awards,

while entering an amount that reflects the single

highest award. We conclude that the district court

misapplied a years-old stay order in an overbroad

manner to prevent the parties from arbitrating the

remaining two awards’ irreconcilability. Finally, we

agree with Carlson’s objections to the district court’s

confirmation of the Jones award and vacate the

judgment against him.

I. Class Arbitrability, the Four-Month Deadline,

and Simultaneous Overlapping Arbitrations

The Feldman and Capstone Parties contend that the

Engagement Letter did not authorize Judge Jones to

or Capstone Parties are. The amount in controversy

requirement is satisfied. Federal courts have jurisdiction.

15a

proceed with class arbitration; the arbitrators could

not conclude that the four-month time limit to

complete the arbitrations was unconscionable; and

the arbitrations could not proceed simultaneously to

adjudicate the same controversies. These issues

depend on the interplay between federal courts’

review of agreements to arbitrate under the Federal

Arbitration Act (“FAA”), 9 U.S.C. §§ 1-16, and the

scope of authority committed to arbitrators.

Overarching this discussion is the express intent

stated in the Engagement Letter (drafted by

Feldman) “to divest the courts of all powers in

disputes involving the parties, except to compel

arbitration and confirm, vacate or enforce the award.”

“Under the Federal Arbitration Act, parties to a

contract may agree that an arbitrator rather than a

court will resolve disputes arising out of the contract.”

Henry Schein, Inc. v. Archer & White Sales, Inc., 586

U.S. 63, 65, 139 S. Ct. 524, 527 (2019). On issues that

“grow out of the dispute and bear on its final

disposition,” courts “will sustain an arbitration award

as long as the arbitrator’s decision ‘draws its essence’

from the contract—even if we disagree with the

arbitrator’s interpretation of the contract.” John Wiley

& Sons., Inc. v. Livingston, 376 U.S. 543, 557, 84 S.

Ct. 909, 918 (1964) (first quote); Timegate Studios.,

Inc. v. Southpeak Interactive., L.L.C., 713 F.3d 797,

802 (5th Cir. 2013) (quoting Executone Info. Sys., Inc.

v. Davis, 26 F.3d 1314, 1320 (5th Cir. 1994)) (second

quote). In those cases, “the sole question for us is

whether the arbitrator (even arguably) interpreted

the parties’ contract, not whether he got its meaning

16a

right or wrong.” Oxford Health Plans LLC v. Sutter,

569 U.S. 564, 569, 133 S. Ct. 2064, 2067 (2013).

In addition, the Supreme Court has “held that

parties may agree to have an arbitrator decide not

only the merits of a particular dispute but also

‘gateway questions of arbitrability, such as whether

the parties have agreed to arbitrate or whether their

agreement covers a particular controversy.’ ” Henry

Schein, 586 U.S. at 67-68, 138 S. Ct. at 529 (quoting

Rent-A- Center, W., Inc. v. Jackson, 561 U.S. 63, 6869,130 S. Ct. 2772, 2777 (2010)). But “[c]ourts should

not assume that the parties agreed to arbitrate

arbitrability unless there is clear and unmistakable

evidence that they did so.” First Options of Chicago.,

Inc. v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920,

1924 (1995) (quotations and alterations omitted).

“[A]ny doubts concerning the scope of arbitrable

issues should be resolved in favor of arbitration.”

Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,

460 U.S. 1, 24-25, 103 S. Ct. 927, 941 (1983); see also

Timegate Studios, 713 F.3d at 802. But once a court

finds that the parties did agree to arbitrate questions

of arbitrability, the arbitrator’s answers to those

questions are reviewed under the deferential FAA

standard and will be affirmed if “the arbitrator (even

arguably) interpreted the parties’ contract.” Oxford

Health Plans, 569 U.S. at 569, 133 S. Ct. at 2067.

A. The Engagement Letter

Arbitrability to the Arbitrator.

Left

Class

1.

Whether an arbitration agreement permits classaction-style claims to be arbitrated requires

additional background. The foundational principle is

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that “courts may not . . . reshape traditional

individualized arbitration by mandating classwide

arbitration procedures without the parties’ consent.”

Epic Sys. Corp. v. Lewis, 584 U.S. 497, 509, 138 S. Ct.

1612, 1623 (2018). Accordingly, “a party may not be

compelled under the FAA to submit to class

arbitration unless there is a contractual basis for

concluding that the party agreed to do so.” StoltNielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662,

684, 130 S. Ct. 1758, 1775 (2010). Because of “the

differences between bilateral and class-action

arbitration,” it cannot be “that the parties’ mere

silence on the issue of class-action arbitration

constitutes consent to resolve their disputes in class

proceedings.” Id. at 687, 130 S. Ct. at 1776. Moreover,

as the Supreme Court explained recently, “[l]ike

silence, ambiguity does not provide a sufficient basis

to conclude that parties to an arbitration agreement

agreed to” class arbitration. Lamps Plus., Inc. v.

Varela, 587 U.S. 176, 185-86, 139 S. Ct. 1407, 1416-17

(2019).

In light of Lamps Plus, this court concluded that

class arbitrability is a gateway issue that courts leave

to arbitrators only when the agreement evinces that

the parties “clearly and unmistakably” intended that

result. 20/20 Commc’ns, Inc. v. Crawford, 930 F.3d

715, 718-19 (5th Cir. 2019). Neither silence nor

ambiguity satisfies that standard. Id.; see also StoltNielsen, 559 U.S. at 684, 130 S. Ct. at 1775; Lamps

Plus, 587 U.S. at 185-86, 139 S. Ct. at 1416-17.

However, as with other gateway questions, when a

court determines that the delegation of class

arbitrability to the arbitrator was clear and

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unmistakable, then the arbitrator’s determination as

to whether to certify a class is reviewed deferentially

pursuant to the FAA. Oxford Health Plans, 569 U.S.

at 573, 133 S. Ct. at 2070-71.

2.

Based on this court’s application of the above

authorities, we are reluctantly bound to conclude that

the Engagement Letter’s mere incorporation of the

AAA Commercial Arbitration Rules constitutes

sufficiently clear and unmistakable evidence that the

parties intended to delegate class-wide arbitrability to

the arbitrator.

When an arbitration agreement “explicitly refers to

the AAA rules, those rules become ‘incorporated’ into

the agreement between the parties.” Commc’ns

Workers of Am., AFL-CIO v. Sw. Bell Tel. Co., 953 F.3d

822, 827 (5th Cir. 2020) (quoting Petrofac, Inc. v.

DynMcDermott Petroleum Operations Co., 687 F.3d

671, 675 (5th Cir. 2012)). And an “agreement to the

AAA’s Commercial Rules also constitutes consent to

the Supplementary Rules.” Reed v. Fla. Metro. Univ.,

Inc., 681 F.3d 630, 635 (5th Cir. 2012), abrogated on

other grounds by Oxford Health Plans, 569 U.S. at

568, 133 S. Ct. at 2068. One of the Supplementary

Rules provides that “the arbitrator shall determine as

a threshold matter . . . whether the applicable

arbitration clause permits the arbitration to proceed

on behalf of or against a class.”

This court recently held that an arbitration

agreement’s incorporation of a generic rule can be

sufficiently clear and unmistakable under 20/20

Communications to delegate class arbitrability

inquiries to the arbitrator. See Work v. Intertek Res.

19a

Sols., Inc., 102 F.4th 769 (5th Cir. 2024). In Work, this

court considered an incorporated JAMS rule providing

that “[j]urisdictional and arbitrability disputes,

including disputes over the . . . interpretation or scope

of the agreement under which Arbitration is sought,

and who are proper Parties to the Arbitration, shall

be submitted to and ruled on by the Arbitrator.” Id. at

772. Language in the JAMS Employment Rules that

broadly referenced the arbitrator’s duties was thus

held sufficient to commit the arbitration of a collective

action, an employment claim similar to a class action,

to the arbitrator. In contrast with the generic

language in Work, the AAA Supplemental Rule

incorporated here specifically delegates the question

of class arbitrability. Therefore, because the AAA

Supplemental Rule is clearer than that found in Work

to satisfy 20/20 Communications, we must hold that

the Engagement Letter unambiguously 5 delegated

5

The Feldman and Capstone Parties attempt to engineer

ambiguity by citing to other agreements among some of the

parties that contain provisions barring class arbitration.

Texas contract law maintains that “separate instruments or

contracts executed at the same time, for the same purpose,

and in the course of the same transaction are to be considered

as one instrument, and are to be read and construed together”

even if the agreements do not have all the same signatories.

But that “does not mean that all are bodily consolidated into

one instrument so that every provision in one instrument

thereby becomes a part of every other instrument.” Jones v.

Kelley, 614 S.W.2d 95, 98 (Tex. 1981) (first quote); Lawrence

v. United States, 378 F.2d 452, 461 (5th Cir. 1967) (second

quote). The parties’ later agreements cannot be read together

with the Engagement Letter for at least three reasons. First,

they were executed years after the Engagement Letter.

Second, their purposes differed. Speedemissions, Inc. v. Bear

20a

the question of class-wide arbitrability to the

arbitrators and authorized Judge Jones to resolve

that question. Because Judge Jones allowed class

arbitration to go forward based on his interpretation

of the Engagement Letter, although Glasser’s refusal

to permit class-wide arbitration was equally

permissible, this court will not upset Jones’s

conclusion. See Sun Coast Res., Inc. v. Conrad, 956

F.3d 335, 337-38 (5th Cir. 2020).

3.

Further discussion of Work is warranted. That

decision seems questionable in holding that the

incorporation of a general rule delegating

arbitrability, 6 but silent as to class arbitrability,

clearly and unmistakably delegates class arbitrability

to the arbitrator under this court’s 20/20

Communications and the Supreme Court’s Lamps

Gate, L.P., 404 S.W.3d 34, 44-46 (Tex. App.—Houston [1st

Dist.] 2013); AmeriSource Funding, Inc. v. GrandSouth Bank,

No. 4:15-CV-03569, 2017 WL 4479190, at *5-6 (S.D. Tex.

2017). Third, the Engagement Letter and Capstone Services

Agreement by their express terms formed the “complete

agreement,” which could “be amended, modified, or

supplemented only by written agreement executed by the

parties hereto with specific, written reference to this

Agreement.” The later agreements neither referred to the

Engagement Letter or Capstone Services Agreement, nor

were they signed by all the parties to the initial agreements.

6

Arguably, it is possible to construe the rule incorporated in

Work to include class arbitrability because the rule delegated

the question of “who are proper Parties to the Arbitration” to

the arbitrator. That interpretation seems to be less than clear

and unmistakable under 20/20 Communications, but the

Work court did not rely on that clause of the JAMS rule.

21a

Plus precedents. See 20/20 Commc’ns, 930 F.3d 715

(5th Cir. 2019); Lamps Plus, 587 U.S. 176, 139 S. Ct.

1407 (2019).

Although all circuits agree that class arbitrability

presents a gateway question, they disagree on

whether an agreement’s incorporation of generic rules

permitting class arbitration can ever constitute clear

and unmistakable consent to class arbitration.

Compare Spirit Airlines, Inc. v. Maizes, 899 F.3d 1230,

1233-34 (11th Cir. 2018) (“The parties’ agreement

plainly chose the AAA rules . . . . this is clear and

unmistakable evidence that the parties chose to have

an arbitrator decide whether their agreement

provided for class arbitration.”); Wells Fargo Advisors,

LLC v. Sappington, 884 F.3d 392, 398-99 (2d Cir.

2018) (same); Dish Network L.L.C v. Ray, 900 F.3d

1240, 1247-48 (10th Cir. 2018) (same); with

Catamaran Corp. v. Towncrest Pharm., 864 F.3d 966,

972-73 (8th Cir. 2017) (“Incorporation of AAA rules by

reference is insufficient evidence that the parties

intended for an arbitration to decide substantive

questions of class arbitration. When dealing with

class arbitration, we seek clear and unmistakable

evidence of an agreement to arbitrate the particular

question of class arbitration.”) (citation omitted);

Chesapeake Appalachia., L.L.C, v. Scout Petroleum.,

L.L.C., 809 F.3d 746 (3d Cir. 2016) (same); Reed

Elsevier, Inc. ex rel. LexisNexis Div. v. Crockett, 734

F.3d 594, 599-600 (6th Cir. 2013) (same); Dell Webb

Cmtys., Inc. v. Carlson, 817 F.3d 867, 876-77 (4th Cir.

2015) (same).

Work, however, is an apparent outlier even among

the circuits in which incorporation of rules suffices

22a

clearly and unmistakably to delegate the gateway

question of class arbitrability to arbitrators. No other

circuit court has held that a rule generally delegating

arbitrability questions carries with it a delegation of

class arbitrability. Work implicitly mirrors pre-Lamps

Plus and 20/20 Communications cases, which held

that general arbitrability delegations also include

delegations of class arbitrability. See, e.g, Robinson v.

J & K Admin. Mgmt. Servs., Inc., 817 F.3d 193, 197

(5th Cir. 2016) (“[I]f parties agree to submit the issue

of arbitrability to the arbitrator, then the availability

of class or collective arbitration is a question for the

arbitrator instead of the court.” (citing Pedcor Mgmt.

Co., Inc. Welfare Benefit Plan v. Nations Pers, of Tex.,

Inc., 343 F.3d 355 (5th Cir. 2003))); compare Reed v.

Fla. Metro. Univ., Inc., 681 F.3d 630, 635 (5th Cir.

2012) (“agreement to the AAA’s Commercial Rules

also constitutes consent to the Supplemental Rules,”

including those rules’ class arbitrability delegation),

with id. at 646 (Dennis, J., concurring) (opining that

Reed’s holding that an incorporated rule “referring the

issue of class arbitration vel non to the arbitrator” was

“required by our circuit precedent in Pedcor”).

It is not obvious that such precedents remained good

law after 20/20 Communications and after the

Supreme Court admonished in Lamps Plus that

ambiguity as to class arbitrability is insufficient. The

20/20 Communications court described some of the

general delegation language at issue in that case as

“arguably capacious enough under this court’s

previous rulings to include disputes over class

arbitrability.” 930 F.3d at 720 (citing Robinson, 817

F.3d at 196); see also JPay, Inc. v. Kobel, 904 F.3d 923,

23a

935 (11th Cir. 2018) (characterizing Pedcor and

Robinson as predicated on class arbitrability’s not

being a gateway question). Still, the 20/20

Communications court did not expressly address

whether Robinson and Pedcor remained viable, and

based its holding instead on an express class

arbitration bar in the arbitration agreement. And

Lamps Plus involved a broad agreement submitting

“any and all disputes, claims, or controversies” to

arbitration, which the dissent viewed as sufficient to

delegate the dispute over class arbitrability. 587 U.S.

at 206, 139 S. Ct. at 1428 (Kagan, J., dissenting). The

Supreme Court necessarily rejected the dissent’s

interpretation in holding the agreement ambiguous

on class arbitrability. Id. at 182-83, 139 S. Ct. at 141415.

The Work court perfunctorily answered the question

whether a broad arbitrability delegation includes

class arbitrability in reliance on a single pre- 20/20

Communications case: Cooper v. WestEnd Capital

Management, L.L.C., 832 F.3d 534 (5th Cir. 2016).

Cooper held only that the incorporation of an earlier

version of the same JAMS rule at issue in Work was

enough to delegate general arbitrability clearly and

unmistakably to the arbitrator. Id. at 546. But Cooper

did not concern class arbitrability, nor, because

Cooper also preceded 20/20 Communications and

Lamps Plus, did it address the viability of Pedcor and

Pedcor’s progeny. Work likely misinterpreted Lamps

Plus by extending Cooper to find a generic delegation

rule unambiguous. Work, 102 F.4th at 771. In sum,

this court inadvertently became an outlier on the far

side of a circuit split.

24a

But, because we are bound by Work, we must hold

that the Engagement Letter’s incorporation of the

AAA Rules, and by extension the AAA Supplementary

Rules, including one that delegates class arbitrability

to the arbitrator, is clear and unmistakable evidence

supporting the parties’ clear intent to arbitrate the

issue.

B. The Four-Month Deadline’s Enforceability

was for the Arbitrators.

Under the parties’ agreement, the enforceability of

the four-month deadline to complete arbitration was

also delegated to the arbitrators. 7 The Engagement

7

Regarding both the four-month deadline and the next

section discussing simultaneous arbitrations, the Feldman

and Capstone Parties argue that this court must review the

arbitrators’ conclusions de novo, and that vacatur is the

appropriate remedy for “an award granted by an arbitrator

selected in a manner inconsistent with the arbitration

agreement.” PoolRe lns. Corp. v. Organizational Strategies,

Inc., 783 F.3d 256, 262-64 (5th Cir. 2015) (citing Brook v. Peak

Int’l, Ltd., 294 F.3d 668, 672-73 (5th Cir. 2002)). Both Brook

and PoolRe vacated awards by arbitrators appointed contrary

to unambiguous clauses in the parties’ agreements. Brook,

284 F.3d at 673; PoolRe, 783 F.3d at 264. Accordingly, these

cases have been limited to evaluating “deviations from

contract provisions describing the method for selecting

arbitrators.” Bulko v. Morgan Stanley DW Inc., 450 F.3d 622,

625 (5th Cir. 2006). For instance, “we have treated arbitratorselection cases like PoolRe as ‘distinguishable’ from

arbitrator-qualifications cases.” OOGC Am., L.L.C, v.

Chesapeake Expl., L.L.C., 975 F.3d 449, 456 (5th Cir. 2020).

Here, “we cannot say [the arbitrators’] selection violated a

specific method of selection.” Bulko, 450 F.3d at 625

(emphasis in original). The Feldman and Capstone Parties do

not challenge the method by which the arbitrators were

25a

Letter states that “the arbitrator has exclusive

authority to resolve all disputes and challenges to the

formation and enforceability of this arbitration

agreement.” AAA Rule 7(a) provides that the

arbitrator “shall have the power to rule on his or her

own jurisdiction, including any objections with respect

to the existence, scope, or validity of the arbitration

agreement.” That rule is unambiguous, is

unambiguously incorporated into the agreement, and

is not even supplementary. The four-month deadline

is thereby governed by AAA Rule 7(a) because the

Engagement Letter confirms that the four-month

deadline is “jurisdictional” when it explains that if the

deadline expires, “any party then may file another

written demand for arbitration . . . with the prior

arbitrator . . . then being immediately divested of

jurisdiction.” The enforceability of the four-month

deadline was therefore delegated to the arbitrator

under the Engagement Letter and AAA Rule 7(a).

In deciding that the four-month provision was

“inconsistent with due process” and unconscionable,

the arbitrators were unpersuaded by the Feldman and

appointed, but whether more than one arbitrator could be

appointed pursuant to that method and the enforceability of

the four-month deadline. Neither issue is governed by the

selection-method case law. To be sure, the Feldman and

Capstone Parties suggest that Judge Jones was improperly

appointed to replace Judge Medley, who had resigned. But the

arbitration agreement expressly stated that, after the

expiration of the four-month period, “any party then may file

another written demand for arbitration of the dispute with

another” arbitrator, “with the prior arbitrator . . . then being

immediately divested of jurisdiction.” This contention is

meritless.

26a

Capstone Parties’ arguments that the four-month

provision must be strictly construed. They stated:

“The simple fact is that the four month period does not

allow due process to be ignored. To insist on its strict

compliance elevates form over substance and

encourages discovery delays to run out the clock and

[encourages] further arbitrations.”

“[T]he sole

question for [this court] is whether the arbitrators]

(even arguably) interpreted the parties’ contract, not

whether [they] got its meaning right or wrong.”

Oxford Health Plans, 569 U.S. at 569, 133 S. Ct. at

2067. Under this lenient standard, this court cannot

upend the arbitrators’ rejection of a strict

interpretation of the four-month provision, and in

turn its enforceability was for the arbitrators to

decide.

C. The Validity of Simultaneous Arbitrations

Was for the Arbitrators.

The Engagement Letter also delegated the

permissibility of simultaneous arbitrations to the

arbitrators. The Engagement Letter makes clear that

“[t]he arbitrator or arbitral association appointed to

resolve the dispute shall have the sole and exclusive

ability to rule on all aspects of the arbitrator’s

appointment.”

Neither

party

argues

that

simultaneous arbitrations pose a gateway issue

presumptively reserved for courts. Accordingly,

whether the Engagement Letter permitted multiple,

simultaneous arbitrations is a matter of contract

interpretation.

The Engagement Letter states that “either party

may directly appoint the single arbitrator or the

arbitral association who/which shall proceed to

27a

resolve the dispute.” This provision creates a limit of

one arbitrator per “dispute.” The scope and meaning

of “dispute” under the Engagement Letter raises an

issue on which this court defers to the arbitrators if

they “(even arguably) interpreted the parties’

contract.” Oxford Health Plans, 569 U.S. at 569, 133

S. Ct. at 2067. The arbitrators who concluded that

multiple arbitrations could proceed simultaneously

did so because they considered each arbitration to be

a different “dispute” under the Engagement Letter.

While the Feldman and Capstone Parties point out

that the underlying arbitrations all concern the same

“dispute” with the Doctors, the arbitrators’ different

conclusion is not unmoored from the agreement. The

Feldman and Capstone Parties also argue that the

arbitrators impermissibly considered the district

judge’s own, earlier interpretation that simultaneous

arbitrations were permissible. But that is inapposite:

neither principle nor precedent suggests that

arbitrators’ favorable consideration of the district

court’s view undermines the deference owed by the

courts. Further, the district court interpreted this

provision only after the Feldman and Capstone

Parties themselves raised it, and a “party cannot

complain on appeal of errors which he himself induced

the district court to commit.” United States v. LopezEscobar, 920 F.2d 1241, 1246 (5th Cir. 1991).

For these reasons, we may not second-guess the

arbitrators’ decisions to proceed simultaneously, not

to enforce the four-month provision, and to allow class

arbitration.

28a

II. Inconsistent Arbitration Awards

All four confirmed awards differ in total amounts.

Insofar as the court’s judgment only reflected the

largest (Jones) award, it rendered meaningless the

other three confirmed awards. This conundrum,

however, may be resolved indirectly by addressing the

district court’s overbroad stay enjoining the parties

from untangling the conflicting awards through

further arbitration.

Section 10 of the FAA lists four grounds for vacating

an arbitration award:

(1) where the award was procured

corruption, fraud, or undue means;

by

(2) where there was evident partiality or

corruption in the arbitrators, or either of them;

(3) where the arbitrators were guilty of

misconduct in refusing to postpone the hearing,

upon sufficient cause shown, or in refusing to

hear evidence pertinent and material to the

controversy; or of any other misbehavior by

which the rights of any party have been

prejudiced; or

(4) where the arbitrators exceeded their

powers, or so imperfectly executed them that a

mutual, final, and definite award upon the

subject matter submitted was not made.

See 9 U.S.C. § 10. The grounds are “exclusive.”

Citigroup Glob. Mkts., Inc. v. Bacon, 562 F.3d 349, 352

(5th Cir. 2009) (quoting Hall St. Assocs., L.L.C, v.

Mattel, Inc., 552 U.S. 576, 581, 128 S. Ct. 1396, 1401

(2008)). Inconsistency among awards, without more,

29a

is not among the exclusive grounds for judicial

vacatur.8

8

Extensive research has not shed light on precedent helpful

to resolving courts’ authority in the face of inconsistent

awards. The Feldman and Capstone parties primarily point

to two cases, which are inapposite.

In Roughneck Concrete Drilling & Sawing Co. v. Plumbers’

Pension Fund, Loc. 130, UA [UnitedAss’n], 640 F.3d 761 (7th

Cir. 2011), Judge Posner opined that to enforce one award but

not the other would establish that one “was ultra vires and

therefore cannot be enforced.” Id. at 768. Roughneck is

inapposite for two reasons. First, the FAA does not apply to

LMRA arbitrations. 9 U.S.C. § 1; see Int’l Chem. Workers

Union v. Columbia Chems. Co., 331 F.3d 491, 494 (5th Cir.

2003). Second, Roughneck’s holding was unique to its facts,

which involved more than one union’s arbitrations against a

single employer. The Roughneck court opted to enforce one

award over the other because the arbitrator whose award the

court enforced was authorized “to determine whether there

was a jurisdictional dispute,” and that arbitrator concluded

that the other arbitration was invalid. 640 F.3d at 769. No

arbitrator here had sole authority to review the jurisdiction of

the others.

And in an earlier labor case, the court held that if the

inconsistent awards are each independently valid, “the

reviewing court must . . . select that interpretation which

most nearly conforms to the intent of the parties.” Conn. Light

& Power Co. v. Loc. 420, Int’l Brotherhood of Elec. Workers,

AFL-CIO, 718 F.2d 14, 21 (2d Cir. 1983) (Winter, J.). The

court enforced the award that it “believe[d] . . . to be the better

reasoned decision.” Id. at 21. In recent years, Connecticut

Light has been described as inconsistent with the Supreme

Court’s precedent in Oxford Health Plans because it delved

into the merits of the underlying controversy. See 23andMe,

Inc. v. Davis-Hudson, No. 5:15-CV-01323-PSG, 2015 WL

30a

But the district court committed an error that

unnecessarily led to the internally inconsistent

judgment now on appeal. Specifically, the district

court erred in orally applying its March 22, 2021, stay

order to prohibit further arbitration to resolve the

conflicting confirmed awards. After the Partial Final

Judgment was entered, the parties disputed whether

any of the other much lower arbitration awards has

any res judicata effect on the Jones award. The

possibility of post-judgment arbitration to reconcile

the confirmed Jones and Glasser awards is not

precisely before this court, but the continuing

propriety of the stay order is. See Fed. R. App. P.

3(C)(4) (“The notice of appeal encompasses all orders

that, for purposes of appeal, merge into the designated

judgment or appealable order.”).

At the time it was entered, the stay order properly

enjoined the commencement of new state court and

arbitral proceedings temporarily, until the awards

were issued in the already-compelled arbitrations, to

protect both those arbitrations and the district court’s

jurisdiction. All Writs Act, 28 U.S.C. § 1651(a). The

court’s opinion justifying a stay presciently explained

why the stay must be discontinued now. Sullivan v.

Feldman, No. 4:20-cv-02236 (S.D. Tex. Mar. 22, 2021)

(order consolidating cases and enjoining further

arbitrations). Referencing “its earlier order that

multiple arbitrations could proceed” simultaneously,

the district court explained that the “arbitrators are

authorized to determine whether and when earlier

6094303, at *3-4 (N.D. Cal. Oct. 16, 2015). We resist the urge

to second-guess the merits of the various awards.

31a

decisions or awards have preclusive effects.” Dist. Ct.

Op., 2022 WL17822451, at *16. As the district court

explained, “[t]he parties applied their contract to

make this mess but agreed that arbitration would

resolve their disputes, no matter how messy. This

court will not step in to clean it up and risk making it

worse.” Id. The court recognized that the engagement

Letter gave the Feldman and Capstone Parties the

right to pursue arbitration to resolve any conflicting

awards, with any new arbitrator “determin[ing]

whether and when earlier decisions or awards have

preclusive effects.” Id.

Maintaining the stay at this juncture, however,

thwarts the parties’ bargain, “messy” as it is. The stay

is now overbroad because “it enjoins a defendant from

engaging in legal conduct.” Missouri v. Biden, 83

F.4th 350, 395 (5th Cir. 2023). Moreover, “[injunctions

must be narrowly tailored within the context of the

substantive law at issue to address the specific relief

sought.” E.T. v. Paxton, 19 F.4th 760, 769 (5th Cir.

2021). The district court’s temporary stay is no longer

viable to prevent the parties, if they so choose, from

exercising their contractual right to engage in further

arbitration.

III. Individual, Non-Signatory Defendant Jeff

Carlson Was Not Bound to Arbitrate.

Among the four awards confirmed by the district

court, only the Jones Award held Carlson individually

liable to the Doctors. The other arbitrators dismissed

claims against him. 9 The Jones award cannot be

9

In so holding, Glasser “den[ied] any and all claims of liability

lodged against Mr. Carlson as being without legal or factual

32a

upheld as to Carlson, who was neither a party to the

Engagement Letter nor subject to direct-benefits

estoppel. This court decides the identity of parties

that are bound by an arbitration agreement. See

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79,

84, 123 S. Ct. 588, 592 (2002) (citing First Options of

Chicago, 514 U.S. at 943-46, 115 S. Ct. at 1923-25;

John Wiley & Sons, Inc., 376 U.S. 543, 546-47, 84 S.

Ct. 909, 912-13).

A. Carlson Is Not Bound by the Engagement

Letter.

Carlson became President of Capstone Associated

Services, Ltd., after the Engagement Letter was

executed. Accordingly, he was a non-signatory to the

contract. As a non-signatory, Carlson is not within the

express compass of the Engagement Letter’s

arbitration provision. State contract law controls “the

scope of agreements (including the question of who is

bound by them).” Arthur Andersen LLP v. Carlisle,

556 U.S. 624, 630, 129 S. Ct. 1896, 1902 (2009); see

also Crawford Prof’l Drugs v. CVS Caremark Corp.,

748 F.3d 249, 255 (5th Cir. 2014). Under Texas law,

“[o]rdinary principles of contract and agency law may

be called upon to bind a nonsignatory to an

[arbitration] agreement whose terms have not clearly

done so.” DK Joint Venture 1 v. Weyand, 649 F.3d 310,

314 & n.4 (5th Cir. 2011) (quoting Bridas S.A.P.I.C. v.

Gov’t of Turkmenistan, 345 F.3d 347, 356 (5th Cir.

support here”; Judge Baker found “that there is no factual or

legal support for any claims of liability against Jeff Carlson”;

and Kutcher found that “there is no basis for finding Mr.

Carlson personally liable.”

33a

2003)) (alterations in original). Ordinarily, “defendant

corporations enter[ing] into” arbitration agreements

do “not cause their agents . . . who acted only as

officers on behalf of the corporations, to be personally

bound by those agreements.” Id. at 314.

But the Doctors contend that direct-benefits

estoppel nevertheless binds Carlson to arbitrate.

Simply put, that doctrine prevents a non-signatory to

a contract from seeking benefits from the contract

while objecting to its arbitration provision. In re

Weekley Homes, L.P., 180 S.W.3d 127, 131-33 (Tex.

2005); In re Kellogg Brown & Root, Inc., 166 S.W.3d

732, 739 (Tex. 2005). Consequently, if a non-signatory

seeks a benefit from a contract that contains “an

arbitration clause, then the nonsignatory must

arbitrate all claims that fall within the scope of that

arbitration clause.” Taylor Morrison of Tex., Inc. v.

Ha, 660 S.W.3d 529, 533 (Tex. 2023). “A nonsignatory

can seek the benefits of a contract either by suing

based on the contract, or by conduct that ‘deliberately

seeks and obtains substantial benefits from the

contract itself.’ ” Id. (quoting Weekley Homes, 180

S.W.3d at 132).

Carlson invoked the Engagement Letter’s

arbitration provision to intervene in the Dorfman and

Baker arbitrations, but only to seek his own

exoneration. The issue here is whether that qualifies

as a direct benefit that estops his objection to being

included in the Jones arbitration. The district court

confirmed the Jones award as to Carlson, but

although Carlson strenuously objected to being held

liable under any theory, the district court curiously

failed to consider his arguments. Be that as it may, we

34a

hold that Carlson is not estopped from objecting to the

Jones arbitration. Carlson only joined two

arbitrations to assert defenses and did not attempt to

enforce a different part of the Engagement Letter

against the Doctors. No Texas cases cited by the

Doctors or uncovered in our research involve

comparable facts. Especially because “the boundaries

of direct-benefits estoppel are not always clear,” we

decline to extend the doctrine to this context. See In re

Vista Ins. Grp., Inc., 192 S.W.3d 759, 761 (Tex. 2006).

The Doctors highlight the Texas Supreme Court’s

recent comment that it “ha[s] yet to specifically

address whether a non-signatory claimant may

likewise be required to arbitrate any related

counterclaims asserted against it in the course of

compelled arbitration proceedings.” Lennar Homes of

Tex. Land & Constr., Ltd. v. Whiteley, 672 S.W.3d 367,

377 n.8 (Tex. 2023). The Doctors assert that this court

must resolve the open issue. But this case does not

involve “related counterclaims,” because Carlson

never claimed a benefit from a provision of the

Engagement Letter. See id.

The Doctors’ reliance on Ruff v. Ruff, No. 05-1800326-CV, 2020 WL 4592794 (Tex. Ct. App.—Dallas

2020), is also misplaced. In Ruff, a non-signatory

initiated an arbitration and sought a declaration that

a contract validly released him from certain liability.

Id. at *2. In other words, he initiated arbitration to get

the benefit of that contract. When the opposing party

brought tort counterclaims in the same arbitration,

the arbitrator found the non-signatory liable for the

torts. Id. at *2-3. Only when the arbitrator opted to

adjudicate the counterclaims did the non-signatory

35a

object. Id. at *3. Both Carlson and the Ruff nonsignatory were attempting to eliminate claims against

them, but the fact that the contract in Ruff contained

a release provision makes all the difference. Whereas

Carlson’s interventions in two earlier arbitrations did

not seek a benefit from the Engagement Letter, the

Ruff non-signatory’s arbitration was principally

intended to enforce a release agreement.

The Doctors invoke the equitable nature of directbenefits estoppel, averring that Carlson’s allegedly

inconsistent positions as to whether he was subject to

the arbitration provision support binding him to the

Jones proceeding. See, e.g, Jody James Farms, JV v.

Altman Grp., 547 S.W.3d 624, 637 (Tex. 2018). The

record refutes this contention. Equity militates in

favor of Carlson for at least three reasons. First,

Carlson’s litigation conduct was less an assertion of

inconsistent positions than of alternative defenses:

that he could not be bound to arbitrate, or if he could

be, he was innocent. Second, if Carlson’s positions

were inconsistent, then so were the Doctors’ positions,

because they succeeded in persuading Judge Dorfman

that Carlson was a non-signatory who could not

participate. See also DK Joint Venture 1, 649 F.3d at

318 (emphasizing, with respect to judicial estoppel,

the relevance of a party’s taking inconsistent positions

as to whether it is bound to arbitrate).

Third, as Carlson persuasively argues, he was

hardly on notice that he remained a party to the Jones

arbitration until the nearly $100 million award was

issued against him. Specifically, Carlson was initially

a party to the Medley arbitration, but he obtained a

state court order temporarily restraining that

36a

arbitrator from continuing against him. The Doctors

then amended their complaint in the Medley

arbitration to omit any claims against Carlson so that

their arbitration could proceed. Further, when Medley

was replaced by Judge Jones, the Doctors did not

name Carlson in the caption or elsewhere except by

incorporating earlier, since-superseded pleadings in

the Medley arbitration. Because Carlson could not be

bound as a non-signatory anyway, and given the

convoluted nature of the subsequent proceedings, we

do not reach whether Carlson was sufficiently noticed

that he was a party to the Jones arbitration and

whether he even was a party to it. Even so, we can

safely conclude that the highly questionable nature of

Carlson’s “notice” was such that equity cannot bolster

the Doctors’ direct-benefits estoppel arguments.

Finally, contrary to the Doctors’ argument, Carlson

did not waive his objection to Judge Jones’s authority

because he timely objected in the Medley arbitration.

Especially if all of the Doctors’ claims against Carlson

carried over from the Medley to the Jones arbitration,

as the Doctors contend, then Carlson’s objections

before Judge Medley also carried over. Nor did

Carlson “invite error” for essentially the same reason

that direct-benefits estoppel does not apply: that

Carlson appealed to arbitration defensively in the

other proceedings did not “invite” Judge Jones’s

erroneous inclusion of him in that single award.

B. Reversal of the Jones Award as to Carlson.

Carlson seeks vacatur of the entire Jones award

because Judge Jones “exceeded [his] powers” under 9

U.S.C. § 10(a)(4) by including him. But that error only

warrants modification, not vacatur. “If an [arbitrator]

37a

exceeds [his] authority, it provides grounds for a court

to vacate that aspect of [his] decision.” Smith v.

Transp. Workers Union of Am., AFL-CIO Air Transp.

Local 556, 374 F.3d 372, 375 (5th Cir. 2004) (per

curiam) (emphasis added). Vacating the whole award

may be warranted where the ultra vires action

“taint[s] the entire process.” PoolRe, 783 F.3d at 265.

In PoolRe, this court found a “taint[ on] the entire

process” where the arbitrator allowed an

impermissible plaintiff to intervene, necessarily

affecting the amount and form of the arbitration

award. Id.; see also PoolRe Ins. Corp. v.

Organizational Strategies, Inc., H-13-1857, 2014 WL

1320188, at *19 (S.D. Tex. Mar. 31, 2014). But Carlson

is a defendant, not a plaintiff, and Judge Jones held

him jointly and severally liable with the Feldman and

Capstone Parties. Carlson’s presence had no bearing

on the amount of damages suffered by the Doctors.

The improper award against Carlson did not “taint[]

the entire process.” PoolRe, 783 F.3d at 265.

CONCLUSION

The parties remain free to arbitrate another day.

For the sake of sanity, judicial efficiency, and

litigation economics, this court hopes their

disagreements will be finally resolved. We AFFIRM in

part, REVERSE in part, VACATE in part, and

REMAND. We AFFIRM the Glasser, Baker and

Kutcher arbitration awards. We AFFIRM in part the

Jones arbitration award but REVERSE in part insofar

as the Jones award pertains to defendant Jeff

Carlson. We VACATE and REMAND the district

court’s March 22, 2021, order staying further

arbitrations between the parties.

38a

APPENDIX B

_________

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

_________

SCOTT SULLIVAN, FRANK DELLACROCE, et al.,

Plaintiffs,

v.

STEWART A. FELDMAN, THE FELDMAN

LAW FIRM LLP, et al.,

Defendants.

_________

Civil Action No. H-20-2236

_________

Entered: December 20, 2022

_________

MEMORANDUM AND OPINION

A dozen substantive motions are pending in this

case. Each motion asks the court to do the same thing:

clean up the parties’ post-arbitration mess. The

parties used poorly drafted arbitration clauses to

weaponize the arbitration process and abuse the time

of multiple arbitrators in competing, wasteful

arbitrations. Now, the parties bring the multiple

awards, all issued against the defendants in this

39a

litigation but imposing different damages, and ask

this court to help sort them out. “The point” of

arbitration “is to allow for efficient, streamlined

procedures tailored to the type of dispute,” with each

side benefiting from “lower costs, greater efficiency

and speed, and the ability to choose expert

adjudicators to resolve specialized disputes.” AT&T

Mobility LLC v. Concepcion, 563 U.S. 333, 344–45

(2011) (quoting reference omitted). Arbitration is

supposed to be “speedy and not subject to delay and

obstruction.” Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395, 404 (1967). This litigation

results from the defendants’ efforts to turn arbitration

on its head.

The parties’ disputes arose from financial

investments designed to avoid taxes and reduce

certain risks of loss. Louisiana doctors Scott Sullivan

and Frank DellaCroce and their related business

entities were persuaded to make these investments by

a Texas lawyer, Stewart Feldman, his law firm, and

other entities. The tax shelters and other riskmitigation packages Feldman sold apparently failed.

Money was lost. Fingers were pointed. Arbitration

was initiated. A competing arbitration was then

initiated, followed by other competing arbitrations.

The court resolves the following motions:

(1) a motion to dismiss under Rules 12(b)(1),

12(h)(3), and 12(b)(7) of the Federal Rules

of Civil Procedure, filed by the Feldman

and Capstone Parties, (Docket Entry No.

86);

(2) a joint motion to dismiss purported claims

between the plaintiffs and a nonparty

40a

insurance entity called PoolRe, filed by the

Doctors, the Doctor Entities, and PoolRe,

(Docket Entry No. 90);

(3) a motion to confirm the March 29, 2022, but

not the November 1, 2022, arbitration

award issued by Charles Jones (the “Jones

Award”), filed by the Doctors and the

Doctor Entities, (Docket Entry No. 72);

(4) a motion to vacate the Jones Award, filed

by the Feldman and Capstone Parties,

(Docket Entry No. 87);

(5) a motion to vacate the Jones Award filed by

Capstone's President, defendant Jeff

Carlson, (Docket Entry No. 89);

(6) a motion to vacate the March 9, 2022,

award issued by Mark Glasser (the

“Glasser Award”), filed by the Doctors and

the Doctor Entities, (Docket Entry No. 92);

(7) a motion to confirm the Glasser Award,

filed by Jeff Carlson, (Docket Entry No.

109);

(8) a motion to confirm the Glasser Award,

filed by the Feldman and Capstone Parties,

(Docket Entry No. 149);

(9) a motion to vacate the March 22, 2022, and

April 14, 2022, arbitration awards issued

by Robert Kutcher (the “Kutcher Awards”),

filed by the Feldman and Capstone Parties,

(Docket Entry No. 95);

41a

(10) a motion to vacate the Kutcher Awards,

filed by Jeff Carlson, (Docket Entry No.

98);

(11) a motion to vacate the March 22, 2022,

arbitration award issued by Caroline

Baker (the “Baker Award”), filed by the

Feldman and Capstone Parties, (Docket

Entry No. 96); and

(12) a motion for reconsideration of the court's

indicative ruling at the November 18,

2022, hearing, that the motions to vacate

the Kutcher Awards and the Baker Award

were not yet ripe, filed by the Feldman and

Capstone Parties, (Docket Entry No. 147).

Having reviewed the extensive, often repetitious,

and sometimes shrill briefs; the record; and the

applicable law, the court denies both motions to

dismiss, denies the motions to vacate all four

arbitration awards on the merits, denies the motion

for reconsideration as moot; and grants the motions to

confirm the Jones Award and the Glasser Award. The

reasons are set out below.

I. Background

Doctors Scott Sullivan and Frank DellaCroce

worked as surgeons at the Center for Restorative

Breast Surgery in New Orleans, Louisiana,

performing restorative breast surgeries on women

with breast cancer. On October 22, 2015, the Doctors

entered into a turnkey agreement with Stewart

Feldman and the Feldman Law Firm, LLP. The

Doctors and their business entities—the St. Charles

Surgical Hospital, L.L.C., St. Charles Holdings,

42a

L.L.C., Center for Restorative Breast Surgery, L.L.C.,

Sigma Delta Billing, L.L.C., Cerberus Insurance

Corp., Janus Insurance Corp., and Orion Insurance

Corp. (together, the “Doctor Entities”)—sought tax

benefits and protection against exposure to various

risks of loss.

Stewart Feldman, the Feldman Law Firm LLP,

Capstone Associated Services (Wyoming), LP,

Capstone Associated Services, Ltd., and Capstone

Insurance Management, Ltd. (together, the “Feldman

and Capstone Parties”) agreed to provide the Doctors

and Doctor Entities “a wide range of services for an

ongoing term for a fixed, quarterly fee.” (Docket Entry

No. 2 at 2). The parties executed a 2015 Engagement

Letter and a document entitled the Capstone Services

Agreement, which explained that the Feldman Law

Firm and the Capstone Parties would perform work

“on behalf of, as appropriate: (i) the owners of the

[Captive Insurers] in connection with the formation of

the captives; (ii) the Clinic and certain of its affiliates

as the insureds; and (ii) the [C]aptives, Cerberus CC,

Janus CC, and Orion CC, as the insurers.” (Docket

Entry No. 7-2 at 2).

According to the Doctors, their purpose in entering

the Agreement was to participate in third-party

insurance and obtain the benefits of risk pooling. The

Doctors allege that Feldman “represented that this

alternative risk management program would protect

the Doctors and their business entities ... against a

multitude of loss exposures and provide tax benefits.”

(Docket Entry No. 46-1 at ¶ 6). Feldman also

represented that the Doctors could direct him to wind

down and liquidate at any point. (Id. at ¶¶ 12, 20).

43a

Feldman encouraged the Doctors and Doctor Entities

to have the Captive Insurers participate in “third[]party insurance and reinsurance through PoolRe,” a

“risk pooling arrangement involving sets of generally

similar policies covering generally similar risks of

closely held businesses, wherein each [Captive

insurer] assumes reinsurance on policies covering

other clients” of Feldman. (Id. at ¶ 13).

The Doctors allege that Feldman did not disclose the

fact that he also used the PoolRe insurance pool to

underwrite legal malpractice claims filed against him.

(Id. at ¶ 27). In 2019, the Doctors learned of a United

States Tax Court judgment holding “that PoolRE was

not a bona fide insurance company.” Because the

Doctors believed that the Tax Court decision “could

have very negative consequences,” the Doctors asked

Feldman and the Capstone Parties to “liquidate and

wind down Plaintiffs’ program that the Defendants

designed, implemented, and administered.” (Docket

Entry No. 1-1 at ¶¶ 25–30). The Feldman and

Capstone Parties refused.

In May 2020, the Feldman and Capstone Parties

initiated arbitration proceedings before former Harris

County, Texas, Judge Grant Dorfman. Shortly after,

the Doctors and Doctor Entities initiated arbitration

before retired United States District Court Judge

Stanwood Duval. The Doctors then sued Feldman, the

Feldman Law Firm, LLP, Capstone Associate

Services (Wyoming), LP, Capstone Associated

Services, Ltd., Carlson, and Capstone Insurance

Management, LLC (the “Feldman Parties” and the

“Capstone Parties”) in Texas state court. Capstone

Associate Services (Wyoming), LP timely removed the

44a

action under 28 U.S.C. § 1441, based on federal

jurisdiction under 28 U.S.C. § 1332(a)(1). In July

2020, the Feldman and Capstone Parties initiated a

third arbitration before another former Harris

County, Texas, judge, Caroline Baker.

The timeline of the three arbitrations and the

initiation of litigation is as follows:

May 7, 2020

Arbitration initiated by the

Feldman and Capstone Parties

before Judge Dorfman.

May 28, 2020

Arbitration initiated by

Doctors before Judge Duval.

June 17, 2020

The Doctors filed suit in Texas

state court.

June 25, 2020

The Feldman and Capstone

Parties removed to federal court.

July 20, 2020

Arbitration initiated by the

Feldman and Capstone Parties

before Judge Baker.

the

In August 2020, this court considered competing

motions to compel arbitration before Judge Dorfman,

Judge Duval, and Judge Baker. (Docket Entry No. 26,

amended at Docket Entry No. 31). The Engagement

Letter included the following arbitration clause:

With respect to any and all other controversies,

disputes or claims whatsoever between (x) the

Firm (including its lawyers) and/or its affiliates

45a

(including Capstone Associated Services, Ltd.,

Capstone Insurance Management (Anguilla),

Ltd., and/or Export Assurance) ... and (y) any

client of the Firm and/or its affiliates related to

or arising out of the Firm's or its affiliates’

services or arising under or in connection with

or related to any of the parties' agreements ...

either party may submit the dispute to any

recognized, neutral (x) arbitral association or

(y) arbitrator for final resolution in an

arbitration proceeding to be concluded within

four months ... Submission of the dispute to

arbitration under this agreement shall be the

sole and exclusive forum for resolving any and

all disputes between the parties ....

[A]ll arbitrations – regardless of the arbitral

organization or arbitrator actually hearing the

dispute – shall be conducted in Houston, Texas

applying Texas substantive law pursuant to the

Commercial Arbitration Rules ... of the

American Arbitration Association (AAA) then

in effect, whose Expedited Procedures shall

apply regardless of the monetary size of the

dispute or the number of parties to the

proceeding, with only a single arbitrator

hearing the dispute, again all regardless of the

organization sponsoring the arbitration in

question. All parties acknowledge and agree

that this arbitration agreement modifies the

AAA arbitration rules regarding, inter alia, the

selection

of

the

arbitrator

and

the

administration of the arbitration in that: (1)

either party may directly appoint the single

46a

arbitrator or the arbitral association who/which

shall proceed to resolve the dispute, provided

that the arbitrator is recognized and neutral;

(2) the AAA is not required to administer and

shall not administer the arbitration; and (3)

any recognized and neutral arbitrator

himself/herself or arbitral association may

administer the arbitration. The arbitrator or

arbitral association appointed to resolve the

dispute shall have the sole and exclusive ability

to rule on all aspects of the arbitrator's

appointment, including, but not limited to,

disputes or challenges of bias and neutrality.

(Docket Entry No. 7-2 at 15).

The parties also agreed to the following terms:

The parties agree that the arbitrator has

exclusive authority to resolve all disputes and

challenges to the formation and enforceability

of this arbitration agreement, and decide all

disputes or challenges to the enforceability of

the parties’ agreements as a whole. The parties

agree that their intent is to divest the courts of

all powers in disputes involving the parties,

except to compel arbitration, and to confirm,

vacate or enforce award. The courts shall have

no jurisdiction over legal or equitable

(including injunctive) matters. The arbitration

decision shall be final and binding in all

respects. Any person may have a U.S. District

Court or another court of competent

jurisdiction enter the findings of the arbitrator

for all purposes, including for the confirmation

and enforcement of any award.

47a

If the first arbitrator or arbitral organization

which receives a written demand for

arbitration of the dispute from either of us does

not complete the arbitration to finality within

four months of receiving the written demand,

any party then may file another written

demand for arbitration of the dispute with

another recognized, neutral, arbitrator or

arbitral association, with the prior arbitrator or

arbitral association then being immediately

divested of jurisdiction, and the replacement

arbitrator or arbitral association being required

to render a final award within four months of

the new, written demand being filed with the

replacement

arbitrator

or

arbitral

organization. The replacement arbitrator shall

not be the original arbitrator. Additionally, the

parties agree that the dispute resolution

process set forth above concerning the first

(non-HBA FDC) arbitration demand, shall

apply to every subsequent arbitration.

(Docket Entry No. 104-1 at 15).

This court granted the motion to compel the

arbitration that the Feldman and Capstone Parties

initiated before Judge Dorfman in Texas and the

arbitration that the Feldman and Capstone Parties

initiated before Judge Baker, also in Texas. But the

court stayed the arbitration that the Doctors initiated

before Judge Duval in Louisiana until the resolution

of the Texas arbitrations. (Docket Entry No. 26,

amended at Docket Entry No. 31). As the court noted

at the time, “[t]he result is piecemeal presentations

before three different arbitrators. It is not efficient,

48a

and certainly not pretty, but it results from the

parties’ own contracts and conduct.” (Id. at 2).

The inefficiencies did not end there. Far from it. Just

a few months later, the court was presented with “the

Bleak House of arbitration.” (Docket Entry No. 51).

The parties by then had initiated a fourth, fifth, and

then sixth arbitration proceeding, and the first of

different awards by different arbitrators had issued.

By late November 2020, the timeline was as follows:

July 29, 2020

Arbitration initiated by the

Doctors before arbitrator Robert

Kutcher.

Aug. 23, 2020

Arbitration initiated by the

Doctors before former Orleans

Parish, Louisiana, Civil District

Court Judge Lloyd Medley.

Nov. 9, 2020

Dorfman Award issued.

Nov. 23, 2020

Arbitration initiated by the

Doctors before former Orleans

Parish Civil District Court Judge

Carolyn Gill-Jefferson.

The Feldman and Capstone Parties moved in this

court to confirm the Dorfman Award and stay the

arbitrations before Mr. Kutcher, Judge Medley, and

Judge Gill-Jefferson. (Docket Entry Nos. 36, 47). This

court determined that it lacked jurisdiction to confirm

the Dorfman Award due to a pending appeal from the

court’s order compelling arbitration before Judge

49a

Dorfman. (Docket Entry No. 51). The court denied the

motion to stay the Kutcher, Medley, and GillJefferson arbitrations, declining to “impos[e] [its] own

conception of sound’ arbitration procedures” over the

parties’ contractual choices. (Id. at 16 (quoting StoltNielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662,

675 (2010))). The court held:

The Engagement Letter does not preclude the

parties from proceeding with separate

arbitrations for disputes involving overlapping

but different facts. The Letter does not foreclose

multiple “arbitrations,” but simply requires

that a “dispute” be heard before “a single

arbitrator.” (Docket Entry No. 7-2 at 15). The

AAA Commercial Rules do not require or

prohibit consolidation of multiple arbitrations.

Instead, the Rules leave issues related to the

“consolidation of the claims or counterclaims

with another arbitration” in the “discretion of

the

arbitrator.”

American

Arbitration

Association, Commercial Arbitration Rules,

Rule P-2, https://www.adr.org/sites/default/

files/CommercialRules_Web.pdf.

Judge Duval, Judge Baker, and Mr. Kutcher

have issued a joint proposal to streamline the

issues presented in their three arbitrations.

(Docket Entry No. 44-4). They developed a

proposal to rule on “issues common to all three

arbitrations, including discovery issues,

dispositive motions, or evidentiary rulings.”

(Id.). Both sides have also submitted their own

proposals to streamline the arbitrations.

(Docket Entry No. 44-5). While the parties have

50a

not agreed to all these proposals, the

disagreements do not preclude additional

proposals to consolidate. Nor do they preclude

each arbitrator from going forward with his or

her arbitration.

(Docket Entry No. 51 at 17).

As if the court needed further support for its

reference to Bleak House, a seventh, eighth, and ninth

arbitration followed:

Dec. 7, 2020

Arbitration initiated by the

Feldman and Capstone Parties

before Mark Glasser.

Dec. 19, 2020

Arbitration initiated by the

Doctors before former Louisiana

Fourth Circuit Court of Appeal

Judge Charles Jones.

n/a

Arbitration initiated by the

Feldman and Capstone Parties

before James Doyle.

For those keeping score, that’s nine arbitrators:

Judge Dorfman, Judge Duval, Judge Baker, Mr.

Kutcher, Judge Medley, Judge Gill-Jefferson, Mr.

Glasser, Judge Jones, and Mr. Doyle.

The pending motions to confirm or vacate do not

concern five of these arbitrators. The parties did not

move to confirm or vacate the Dorfman Award after

the appeal was dismissed. Judge Duval, Judge

Medley, Judge Gill-Jefferson, and Mr. Doyle did not

51a

issue final awards. Judge Duval has stayed the

arbitration proceedings before him. Judge Medley

determined that his jurisdiction had expired. Judge

Gill-Jefferson declined her appointment. And the

Feldman and Capstone Parties voluntarily dismissed

the arbitration they initiated before Mr. Doyle.

The remaining four arbitrators (Judge Baker, Mr.

Kutcher, Mr. Glasser, and Judge Jones) issued the

awards that are disputed here. All four arbitrators

issued final awards in favor of the Doctors and Doctor

Entities, finding that Feldman and his related entities

breached

their

fiduciary

duties,

committed

malpractice, and converted funds belonging to the

Doctors and Doctor Entities. The findings and

damages issued by each arbitrator are summarized in

the chart below.

AWARD

FINDINGS AND DAMAGES ISSUED

Baker Award

Judge Baker found that the

Feldman and Capstone Parties

were

liable

“for

breaching

fiduciary

duties,

committing

professional malpractice, making

negligent misrepresentations or

omissions, and converting funds.”

Judge

Baker

awarded

“$1,471,949.21 for the foregoing

wrongful acts and breaches.”

(Docket Entry No. 72-4 at 362–

63). The award equals the

combination of $1,250,944 in fees

forfeited by the Feldman and

52a

Capstone Parties and $221,005.21

of the risk pool premiums

converted by the Feldman and

Capstone Parties.

Judge Baker also awarded preand

post-judgment

interest

accruing at 5%, with prejudgement accrual beginning on

July 20, 2020, and ending on the

day before final execution of the

award,

and

post-judgement

accrual beginning after the award

is executed. (Id.).

Judge Baker awarded “the total

sum of $126,383.75 as reasonable,

necessary, and segregated fees

and costs incurred by the Doctors

because of the Capstone Parties’

sanctionable and contemptuous

conduct.” (Id.). The Feldman and

Capstone Parties were awarded

nothing. Claims against Jeff

Carlson

individually

were

dismissed, with prejudice.

Kutcher

Awards

Mr.

Kutcher

found

that

“Feldman’s

and

Capstone’s

breaches of fiduciary duties were

‘serious,’ pervasive, and resulted

in actual harm and threatened

future harm in substantial

amounts.” (Docket Entry No. 72-3

at 128). Mr. Kutcher found that

53a

“the Doctors are entitled to fee

forfeiture and their share of

premiums converted from the

2018/2019 risk pools.” (Id. at 116).

This equals $1,250,944 in fees and

$221,005.21

in

premiums,

totaling

$1,471,949.21.

Mr.

Kutcher

also

found

that

“Capstone violated the Texas

Insurance Code, thus entitling

the Doctors to treble damages,

attorneys’ fees, and costs, and pre

and post judgment interest.” (Id.).

The

total

award

equals

$4,415,847.63,

not

including

attorneys’ fees or interest. Mr.

Kutcher

awarded

unpaid

sanctions of $17,319.32 and

attorneys’ fees of $126.383.75

from the March 8, 2022, order.

Pre-judgement interest of 5%

began accruing on July 29, 2020,

and is set to end when the

judgment is executed, at which

point a post-judgement interest of

5% would begin. (Id. at 126).

Mr. Kutcher dismissed all claims

against Jeff Carlson, in his

individual

capacity,

with

prejudice. (Id. at 130).

Glasser Award

Mr. Glasser found the Feldman

and Capstone Parties “liable to

54a

the[ ] [plaintiffs in this case] for

breaching

fiduciary

duties,

committing

professional

malpractice, making negligent

misrepresentations or omissions,

and converting funds.” Mr.

Glasser issued a damages award

“in

the

total

amount

of

$1,471,949.21,

exclusive

of

attorneys’ fees and costs, prejudgment interest, and postjudgment interest.” (Docket Entry

No. 72-5 at 404–05). The award

equals

the

combination

of

$1,250,944 in fees forfeited by the

Feldman and Capstone Parties

and $221,005.21 of the risk pool

premiums converted by the

Feldman and Capstone Parties.

Mr. Glasser awarded pre- and

post-judgment interest at 5%. The

pre-judgment interest began

accruing on December 7, 2020,

and was set to end when the

judgment is executed at which

point post-judgement interest

would begin to accrue.

Jones Award

Judge Jones found the Feldman

and Capstone Parties “jointly,

severally, and [solitarily] liable to

[the

plaintiffs

and

Class

Members] for breaching fiduciary

duties, committing professional

55a

malpractice, fraud, conversion,

making fraudulent and negligent

misrepresentations, violating the

Texas Deceptive Trade Practice

Act, and violating RICO.” (Docket

Entry No. 72-2 at 270). Judge

Jones

defined

the

“class

members” as:

All

insureds,

captives,

participants, and owners

thereof who participated in

the 2018 PoolRe reinsurance

risk pool and the 2019

PoolRe reinsurance risk

pool. Excluded from the

class are A.M.Y. Property &

Casualty Corp. (“A.M.Y.”),

Stewart A. Feldman, The

Feldman Law Firm, LLP,

Capstone

Associated

Services, Wyoming, Limited

Partnership,

Capstone

Associated Services, Ltd.,

Capstone

Insurance

Management, Ltd., Jeff

Carlson, and all named

insureds and additional

named insureds in the 2018

and 2019 direct insurance

policies issued by A.M.Y.,

which include but may not

be limited to the following

entities also excluded from

56a

the class: Feldman/Matz

Interests, LLP; Marla B.

Matz; Stewart A. Feldman &

Associates, L.L.P.; Feldman

Hanzen, LLP; RSL Funding,

LLC; RSL-3B-IL, Limited

Partnership; RSL SpecialIV, Limited Partnership;

RSL-5B-IL,

Limited

Partnership'

Capstone

Insurance

Management

(Anguilla), Ltd.; POC Lease

Holdings, LLC; Extended

Holdings,

Limited

Partnership; RSL 2012-1,

LP; RSL-3B-IL Management

Corp.;

RSL

Special-IV

Management

Corp.;

Capstone Holdings Corp.;

Extended

Holdings

Management

Corp.;

Chestnut Holdings, LLC;

Property Express Funding,

Ltd.; PEF Management

Corp.;

RSL

2012-1

Management Corp.; PRQ

Qualified Investments, LLC;

Capstone

Associated

Services (Wyoming), LLC;

and

RSL-5B-IL

Management Corp.

(Id. at 3).

57a

Judge Jones issued declaratory

relief

and

damages

while

determining that the Feldman

and Capstone Parties “take

nothing.” (Id. at 270–73). Judge

Jones

also

found

Stewart

Feldman and Jeff Carlson

personally liable. (Id. at 139–40).

Judge Jones issued an award

amount of “$23,224,403 for [lost]

profits and loss of opportunity to

investment

profits”,

plus

“$221,005.21

for

risk

pool

premiums converted by Feldman

and Capstone.” (Id. at 270–71).

Judge Jones awarded treble

damages for violations of RCO,

the DTPA and the Texas

Insurance Code, “making their

total

award,

exclusive

of

attorneys’ fees, pre-judgment

interest,

and

post-judgment

interest, $70,336,224.60.” (Id. at

271).

Judge Jones also awarded

attorneys’ fees and costs incurred

in the arbitration proceedings “in

the amount of $18,348,294.60.”

(Id.). Judge Jones also awarded

pre- and post-judgment interest

accruing at 5%, with prejudgment accrual beginning on

July 29, 2020, and ending on the

58a

day before final execution of the

award, at which point postjudgment interest would begin.

(Id.).

Judge Jones based his award on

the finding that “Mr. Feldman

and Capstone are liable to the

Doctors

for

deprivation

of

investment opportunities, the

looting of premiums owed to the

Doctors and Class Members, and

for attorney’s [sic] fees, cost and

expenses in this arbitration.” (Id.

at 180).

The Feldman and Capstone Parties have moved to

vacate the Baker Award. (Docket Entry No. 96). The

Doctors and Doctor Entities have not sought to

confirm that Award. The Feldman and Capstone

Parties and Jeff Carlson have moved to vacate the

Kutcher Awards. (Docket Entries No. 95, 98). The

Doctors and Doctor Entities have not sought to

confirm the Kutcher Awards. The Doctors and Doctor

Entities have moved to vacate the Glasser Award.

(Docket Entry No. 92). Jeff Carlson and the Feldman

and Capstone Parties have moved to confirm the

Glasser Award. (Docket Entry Nos. 109, 149). The

Doctors and Doctor Entities seek to confirm the Jones

Award, (Docket Entry No. 72), which the Feldman and

Capstone Parties and Jeff Carlson seek to vacate,

(Docket Entry Nos. 87, 89).

The motions and responses are addressed below.

59a

II. The Motions to Dismiss

A. The Legal Standards

The Federal Arbitration Act “ ‘is something of an

anomaly’ in the realm of federal legislation” because

“[i]t bestow[s] no federal jurisdiction but rather

requir[es] [for access to a federal forum] an

independent jurisdictional basis over the parties’

dispute.” Vaden v. Discover Bank, 556 U.S. 49, 59

(2009) (internal quotation marks omitted) (quoting

reference omitted) (alterations in original). Although

the Act “creates a body of federal substantive law

establishing and regulating the duty to honor an

agreement to arbitrate,” “it does not create any

independent federal-question jurisdiction under 28

U.S.C. § 1331 or otherwise.” Moses H. Cone Mem’l

Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26 n.32

(1983); accord Oteeva, LP v. X–Concepts LLC, 253 F.

App’x 349, 350 (5th Cir. 2007); Smith v. Rush Retail

Ctrs. Inc., 360 F.3d 504, 505–06 (5th Cir. 2004) (Moses

Cone applies with “equal force” to § 10 of the FAA;

citing other circuit courts reaching the same

conclusion).

Federal jurisdiction in this case is based on diversity

of citizenship, which must exist over the course of the

litigation. “If the joinder of the absentee would destroy

diversity and the court ‘in equity and good conscience’

cannot proceed without the absentee, the action will

have to be dismissed.” 7 CHARLES ALAN WRIGHT &

ARTHUR MILLER, FEDERAL PRACTICE AND PROCEDURE

§ 1610 (quoting FED. R. CIV. P. 19(b)). In cases that

start in state court, like this case, “post-removal

joinder of a non-diverse, dispensable party destroys

60a

diversity jurisdiction” and requires remand. Cobb v.

Delta Exps., Inc., 186 F.3d 675, 677 (5th Cir. 1999).

i. Rules 12(b)(1) and 12(h)(3)

Rule 12(b)(1) governs challenges to a federal court's

subject matter jurisdiction. FED. R. CIV. P. 12(b)(1).

“Under Rule 12(b)(1), a claim is properly dismissed for

lack of subject matter jurisdiction when the court

lacks the statutory or constitutional power to

adjudicate the claim.” In re FEMA Trailer

Formaldehyde Prods. Liab. Litig., 668 F.3d 281, 286

(5th Cir. 2012) (quoting reference omitted). Courts

may dismiss for lack of subject matter jurisdiction

based on: “(1) the complaint alone; (2) the complaint

supplemented by undisputed facts in the record; or (3)

the complaint supplemented by undisputed facts plus

the court’s resolution of disputed facts.” Clark v.

Tarrant County, 798 F.2d 736, 741 (5th Cir. 1986)

(citing Williamson v. Tucker, 645 F.2d 404, 413 (5th

Cir. 1981)).

The plaintiff has the burden to prove subject matter

jurisdiction. See Ramming v. United States, 281 F.3d

158, 161 (5th Cir. 2001). When a factual challenge to

subject matter jurisdiction under Rule 12(b)(1) does

not implicate the merits of a plaintiff’s cause of action,

the district court has substantial authority “to weigh

the evidence and satisfy itself as to the existence of its

power to hear the case.” Garcia v. Copenhaver, Bell &

Assocs., 104 F.3d 1256, 1261 (11th Cir. 1997) (citation

omitted); see also Clark, 798 F.2d at 741. The court

may consider matters outside the pleadings, such as

deposition testimony or affidavits, to resolve a factual

challenge to subject-matter jurisdiction, without

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converting the motion to dismiss to one for summary

judgment. Garcia, 104 F.3d at 1261.

Under Rule 12(h)(3), the court must dismiss an

action “[i]f the court determines at any time that it

lacks subject-matter jurisdiction.” FED. R. CIV. P.

12(h)(3).

ii. Rule 12(b)(7)

Rule 12(b)(7) provides for dismissal of an action if a

litigant fails to join a party under Rule 19. Under Rule

19, a defendant may identify a person or entity that is

not named in the suit, assert that the absent person

or entity's participation is critical, and ask the court

to join that person or entity. If Rule 19(a) requires

joinder, the court must join that person or entity if

feasible. If the absent person or entity cannot be

joined, the court must decide under Rule 19(b)

whether to proceed without that person or dismiss the

suit.

Rule 12(b)(7) requires a two-step inquiry. First, Rule

19(a) is applied to determine whether the absent party

is required to be joined. See HS Res., Inc. v. Wingate,

327 F.3d 432, 439 (5th Cir. 2003). The court considers

whether complete relief can be granted without

joining the absent party. The court considers whether

the absent person or entity claims an interest relating

to the action and is so situated that, if the action is

resolved in their absence, their ability to protect their

own interest will be impaired or impeded or existing

parties might be subject to a substantial risk of

multiple or inconsistent obligations. FED. R. CIV. P.

19(a)(1). The issue is whether the court may order

“meaningful” relief, defined as relief that would

achieve the objective of the lawsuit, without adding

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the absent party. See Disabled Rights Action Comm.

v. Las Vegas Events, Inc., 375 F.3d 861, 979 (9th Cir.

2004).

A plaintiff is not required to name all tortfeasors in

a single action. See Temple v. Synthes Corp., Ltd., 498

U.S. 5, 7 (1990) (“It has long been the rule that it is

not necessary for all joint tortfeasors to be named as

defendants in a single lawsuit.”); see also Nottingham

v. Gen. Am. Commc’ns Corp., 811 F.2d 873, 880 (5th

Cir. 1987). The Committee Notes to Rule 19(a) state

that “a tortfeasor with the usual ‘joint-and-several’

liability is merely a permissive party to an action

against another with like liability.” Temple, 498 U.S.

at 7. Courts have recognized that “[i]f persons subject

to rights of indemnity or contribution were always

indispensable parties, there would not be a need for

the impleader provisions of Rule 14.” Pasco Int’l

(London) Ltd. v. Stenograph Corp., 637 F.2d 496, 503

(7th Cir.1980).

The second category of required parties is parties

that claim an “interest relating to the subject of the

action.” FED. R. CIV. P. 19(a). An absent person’s

interest must be such that joinder is required to

protect either the absent person or the existing

parties. The absent person is a required party if that

person claims an interest relating to the action and,

as a practical matter, that interest might be impaired

or impeded if the case is resolved in the person’s

absence. The absent person is also a required party if

in his absence, the existing parties would be subject to

a substantial risk of multiple or inconsistent

obligations. A “Rule 12(b)(7) motion will not be

granted because of a vague possibility that persons

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who are not parties may have an interest in the

action.” 5A CHARLES ALAN WRIGHT & ARTHUR MILLER,

FEDERAL PRACTICE AND PROCEDURE § 1359. The

moving party has the burden of showing that an

absent party must be joined for just adjudication.

Ploog v. HomeSide Lending, Inc., 209 F. Supp. 2d 863,

873 (N.D. Ill. 2002).

If there is an absent, required person, the court

decides whether that person is indispensable to the

action and cannot be joined. FED. R. CIV. P. 19(a)–(b).

In deciding whether an absent person is

indispensable, the court considers: (1) the extent to

which a judgment rendered in the absence of that

necessary party might be prejudicial to that person or

to those already parties; (2) the extent to which the

prejudice can be lessened or avoided by shaping the

judgment; (3) whether judgment issued in the

necessary person's absence will be adequate; and (4)

whether the plaintiff will have an adequate remedy if

the action is dismissed for nonjoinder. FED. R. CIV. P.

19(b). If the absent person is a required party under

Rule 19(a) and no reason prevents joinder, the court

must join that person. If joinder is not feasible, the

court must dismiss the action or decide whether to

proceed without the absent person.

In ruling on a motion to dismiss for failure to join a

necessary and indispensable party, a court must

accept the complaint allegations as true. Davis Cos. v.

Emerald Casino, Inc., 268 F.3d 477, 479 n.2 (7th Cir.

2001). The moving defendant has the burden of

showing that a party must be joined for just

adjudication. Ploog, 209 F. Supp. 2d at 873 (“The

proponent of a Rule 12(b)(7) motion to dismiss has the

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burden of producing evidence which shows the nature

of the absent party’s interest and that the protection

of that interest will be impaired or impeded by the

absence.”). The analysis under Rule 19 is fact specific.

See Rhone-Poulenc Inc. v. Int’l Ins. Co., 71 F.3d 1299,

1301 (7th Cir. 1995) (stating that a Rule 19

determination depends on the circumstances of the

case). Determinations as to whether a party is

required under Rule 19(a) and indispensable under

Rule 19(b) are not mechanical; instead, “the court

must consider the practical potential for prejudice in

the context of the particular factual setting presented

by the case at bar.” Schlumberger Indus. Inc. v. Nat’l

Sur. Corp., 36 F.3d 1274, 1286 (4th Cir. 1994).

B. Analysis

The Feldman and Capstone Parties have moved to

dismiss on the basis of Rules 12(b)(1), 12(h)(3), and

12(b)(7). (Docket Entry No. 86). More than two years

after removing this case to federal court on the basis

of diversity jurisdiction, these defendants now argue

that PoolRe, which is not a party in this case, is

indispensable but cannot be joined without destroying

diversity. In response, the Doctors and Doctor Entities

have moved to dismiss with prejudice any claims they

might have against PoolRe, which, again, is not and

has never been a party to this case. (Docket Entry No.

90).

The court denies both motions. Dismissal is not

appropriate under Rule 12(b)(1) or Rule 12(h)(3)

because the court has subject matter jurisdiction.

PoolRe is not a party. Diversity is complete. The

defendants’ reliance on the Supreme Court's recent

decision in Badgerow v. Walters, 142 S. Ct. 1310

65a

(2022), is misplaced. The defendant in Badgerow

removed a Section 10 motion to vacate an arbitration

award to federal court on the basis of federal question

jurisdiction. Id. at 1314–15. The plaintiff sought

remand, which the district court denied on the basis

that the underlying employment dispute raised

federal-law claims. Id. Diversity jurisdiction was not

at issue; instead, the issue was whether the district

court could “look through” the motion to vacate to the

“underling substantive controversy” to determine that

a federal question existed. Id. (quoting reference

omitted). The Court held that the district court may

not do so. Id. Although a court may “look through” a

Section 4 application to compel arbitration, Sections 9

and 10 “contain none of the statutory language” that

the Court found critical to Section 4. “The federal

‘district courts may not exercise jurisdiction absent a

statutory basis.’ And the jurisdiction Congress confers

may not ‘be expanded by judicial decree.’ ” Id. at 1318

(quoting references omitted).

This case is not like Badgerow. This case did not

come to this court on either a Section 9 or Section 10

petition to confirm or vacate an arbitral award.

Rather, the Feldman and Capstone Parties,

defendants here, removed a Section 4 petition to

compel arbitration. PoolRe was not a party to that

petition, and the plaintiffs have not sought to bring

PoolRe into this case.

The defendants argue that because the plaintiffs

seek confirmation of the Jones Award, which lists

PoolRe as a party to that arbitration, PoolRe is

effectively a party to this case. That argument lacks

authority and persuasiveness. The plaintiffs have not

66a

sought to confirm any arbitration award against

PoolRe. The Federal Arbitration Act states that “the

court shall have jurisdiction of” an adverse party

served with an application to confirm. 9 U.S.C. § 9.

The parties in this case do not include PoolRe.

Diversity is complete, and diversity jurisdiction

exists.

As to the Rule 12(b)(7) motion, PoolRe does not

appear to be a required party under Rule 19(a). The

Feldman and Capstone Parties cite no support or

persuasive reason for the proposition that the Federal

Arbitration Act “makes PoolRe a required party to the

application to confirm.” (Docket Entry No. 86 at 11).

Section 9 of the Act provides: “Notice of the

application [to confirm] shall be served upon the

adverse party, and thereupon the court shall have

jurisdiction of such party as though he had appeared

generally in the proceeding.” 9 U.S.C. § 9. The Act

does not define “adverse party,” and there is no cited

support indicating that the term refers to all entities

referred to, or involved in, an arbitration. A more

reasonable reading is that an “adverse party” is a

party against whom confirmation of an arbitration

award is sought.

In any event, the Feldman and Capstone Parties

have not shown a sufficient basis to dismiss under

Rule 19(b). The Feldman and Capstone Parties state

that PoolRe may be subject to multiple and

inconsistent awards, but they do not explain how,

given the absence of any effort to enforce an award

against PoolRe. Nor do the Feldman and Capstone

Parties show how a risk to PoolRe prejudices the

Feldman and Capstone Parties. The parties are bound

67a

by their arbitration Agreement and the results it

produced. The Feldman and Capstone Parties show no

basis for their argument that these results prevent

this court from acting on the parties’ motions to vacate

or affirm the various awards in the absence of PoolRe

as a party. The Feldman and Capstone Parties have

not met their burden to show that PoolRe is

indispensable under Rule 19(b). See Ploog, 209 F.

Supp. 2d at 873.

Dismissal under Rules 12(b)(1), 12(h)(3), or 12(b)(7)

is not appropriate. Nor is it appropriate for the court

to dismiss claims that have not been raised against

PoolRe, which is not a party. The court cannot

“dismiss” claims that have not been raised. Both the

Feldman and Capstone Parties’ motion to dismiss,

(Docket Entry No. 86), and the Doctors’ motion to

dismiss, (Docket Entry No. 90), are denied.

III. The Motions to Vacate or Confirm

A. The Legal Standards

“Congress enacted the FAA to replace judicial

indisposition to arbitration ....” Hall St. Assocs., L.L.C.

v. Mattel, Inc., 552 U.S. 576, 581 (2008). Judicial

review of arbitrators’ decisions is, accordingly,

“extraordinarily narrow” and highly deferential. See

In re Trans Chem. Ltd. & China Nat’l Mach. Import

& Exp. Corp., 978 F. Supp. 266, 303 (S.D. Tex. 1997);

Forsythe Int’l. S.A. v. Gibbs Oil Co., 915 F.2d 1017,

1020 (5th Cir. 1990); Executone Info. Sys., Inc. v.

Davis, 26 F.3d 1314, 1320 (5th Cir. 1994); Gulf Coast

Indus. Workers Union v. Exxon Co., 991 F.2d 244, 248

(5th Cir. 1993); Psarianos v. Standard Marine, Ltd.,

790 F. Supp. 134, 135 (E.D. Tex. 1992), aff’d, 12 F.3d

461 (5th Cir. 1994).

68a

Under Section 9 of the Federal Arbitration Act,

when a party moves to confirm an award within one

year of its issuance, “the court must grant such an

order unless the award is vacated, modified, or

corrected as prescribed in sections 10 and 11” of the

Act. 9 U.S.C. § 9 (emphasis added). “Section 10 lists

grounds for vacating an award, while § 11 names

those for modifying or correcting one.” Hall St.

Assocs., 552 U.S. at 582. The Supreme Court has

emphasized that “[t]here is nothing malleable about

‘must grant,’ which unequivocally tells courts to grant

confirmation in all cases, except when one of the

‘prescribed’ exceptions applies.” Id. at 587.

The four statutory grounds listed in Section 10 for

vacating an award are:

(1) the award was procured by corruption,

fraud, or undue means;

(2) there was evident partiality or corruption in

the arbitrators, or either of them;

(3) the arbitrators were guilty of misconduct in

refusing to postpone the hearing, upon

sufficient cause shown, or in refusing to

hear evidence pertinent and material to the

controversy; or of any other misbehavior by

which the rights of any party have been

prejudiced; or

(4) 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.

69a

9 U.S.C. § 10(a). Section 11 provides three additional

grounds that establish when a court may modify or

correct an award:

(a) there

was

an

evident

material

miscalculation of figures or an evident

material mistake in the description of any

person, thing, or property referred to in the

award;

(b) the arbitrators have awarded upon a matter

not submitted to them, unless it is a matter

not affecting the merits of the decision upon

the matter submitted; or

(c) the award is imperfect in matter of form not

affecting the merits of the controversy.

Id. § 11.

These grounds are exclusive. Hall St. Assocs., 552

U.S. at 583. If one of these grounds is not satisfied, the

court must confirm the award. Id. Doing so

“substantiat[es] a national policy favoring arbitration

with just the limited review needed to maintain

arbitration’s essential virtue of resolving disputes

straightaway.” Id. at 588. It also prevents “full-bore

legal and evidentiary appeals that can ‘rende[r]

informal arbitration merely a prelude to a more

cumbersome and time-consuming judicial review

process,’ and bring arbitration theory to grief in postarbitration disputes.” Id. (quoting Kyocera Corp. v.

Prudential-Bache Trade Servs., Inc., 341 F.3d 987,

998 (9th Cir. 2003)) (citation omitted).

“[I]n holding that §§ 10 and 11 provide exclusive

regimes for the review provided by the statute,” the

Supreme Court did not “exclude more searching

70a

review based on authority outside the statute as well,”

such as enforcement under “state statutory or

common law, for example, where judicial review of

different scope is arguable.” Id. at 590. That said, a

court may set aside an arbitration award “only in very

unusual circumstances.” First Options, Inc. v. Kaplan,

514 U.S. 938, 942 (1995).

“That the award does not draw its essence from the

contract is a statutory ground for vacatur, derived

from 9 U.S.C. § 10(a)(4), which permits vacatur when

the arbitrator exceeds his powers. The test is ‘whether

the award, however arrived at, is rationally inferable

from the contract.’ ” Am. Laser Vision, P.A. v. Laser

Vision Inst., L.L.C., 487 F.3d 255, 259 (5th Cir. 2007)

(quoting reference omitted) (footnote omitted). “The

Arbitration Act establishes that, as a matter of federal

law, any doubts concerning the scope of arbitrable

issues should be resolved in favor of arbitration,

whether the problem at hand is the construction of the

contract language itself or an allegation of waiver,

delay, or a like defense to arbitrability.” Moses H.

Cone, 460 U.S. at 24–25.

In deciding whether an arbitrator exceeded his or

her authority so as to warrant vacatur under the Act,

courts resolve doubts in favor of arbitration.

Executone, 26 F.3d at 1320–21 (citing Valentine

Sugars, Inc. v. Donau Corp., 981 F.2d 210, 213 (5th

Cir. 1993)). As the Fifth Circuit has explained:

We will not second-guess multiple, implicit

findings and conclusions underpinning the

award. We do not decide if the award was free

from error. We decide only that it is not the kind

of extraordinary award that ineluctably leads

71a

to the conclusion that the arbitrator was

“dispensing his own brand of industrial justice.”

There are advantages and disadvantages in

contracting for private resolution of a dispute

announced without explanation of reason.

When a party does so and loses, federal courts

cannot rewrite the contract and offer review the

party contracted away.

Am. Laser Vision, 487 F.3d at 260.

In reviewing an award, a court “looks only to the

result reached. The single question is whether the

award, however arrived at, is rationally inferable

from the contract.” Executone, 26 F.3d at 1325

(quoting Anderman/Smith Operating Co. v. Tenn.

Gas Pipeline Co., 918 F.2d 1215, 1219 n.3 (5th Cir.

1990)). An arbitrator’s factual findings “are

unreviewable” and “must be accepted as true.” Apache

Bohai Corp. LDC v. Texaco China BV, 480 F.3d 397,

407, 409 (5th Cir. 2007), overruled on other grounds

by Hall St., 552 U.S. at 584–86. “[I]t is the arbitrator’s

construction which was bargained for; and so far as

the arbitrator’s decision concerns construction of the

contract, the courts have no business overruling him

because their interpretation of the contract is

different than his.” Id. at 405 (quoting United

Steelworkers of Am. v. Enter. Wheel & Car Corp., 363

U.S. 593, 598–99 (1960)).

Arbitrator misconduct is another statutory basis for

vacatur, drawing its authority from 9 U.S.C.

§ 10(a)(3). Vacatur on this basis is also narrow, and a

reviewing court defers to the arbitrator's procedural

decisions. “To constitute misconduct requiring

vacation of an award, an error in the arbitrators’

72a

determination must be one that is not simply an error

of law, but which so affects the rights of a party that

it may be said that he was deprived of a fair hearing.”

Laws v. Morgan Stanley Dean Witter, 452 F.3d 398,

399 (5th Cir. 2006) (quoting El Dorado Sch. Dist. No.

15 v. Cont’l Cas. Co., 247 F.3d 843, 848 (8th Cir.

2001)). When an arbitrator’s procedural decision is

challenged on the basis of misconduct, courts

recognize that arbitration differs from litigation, and

that difference affects the standard of judicial review:

Arbitration proceedings are not constrained by

formal rules of procedure or evidence. By

agreeing to arbitration, a party trades the

procedures and opportunities for review of the

courtroom for the simplicity, informality, and

expedition of arbitration. Arbitrators should be

expected to act affirmatively to simplify and

expedite the proceedings before them. They

need provide only a fundamentally fair hearing.

Courts reviewing arbitral awards may not

superimpose rigorous procedural limitations

upon the conduct of the arbitrators.

Mantle v. Upper Deck Co., 956 F. Supp. 719, 730–31

(N.D. Tex. 1997) (citations omitted).

B. Analysis

The Doctors and Doctor Entities seek to confirm the

March 29, 2022, arbitration award issued by Judge

Charles Jones and to vacate the March 9, 2022, award

issued by Arbitrator Mark Glasser. (Docket Entry

Nos. 72, 92). The Feldman and Capstone Parties seek

to vacate the Jones Award; the March 22, 2022, award

issued by Judge Caroline Baker; and the March 22,

2022, and April 14, 2022, awards issued by Arbitrator

73a

Robert Kutcher. (Docket Entry Nos. 97, 95, 96). The

Feldman and Capstone Parties seek to confirm the

Glasser Award. (Docket Entry No. 149). Jeff Carlson

seeks to confirm the Glasser Award and to vacate the

Kutcher Awards and the Jones Award. (Docket Entry

Nos. 89, 98, 109). All four arbitrators found that the

Feldman and Capstone Parties breached their

fiduciary duties, committed professional, malpractice,

and converted funds. All four arbitrators found

Stewart Feldman and the entities he controlled

culpable and liable. Judge Jones additionally found

Jeff Carlson personally “liable for knowingly

participating in and facilitating Mr. Feldman’s

breaches of fiduciary duties.” (Docket Entry No. 72-2

at 184). In short, every arbitrator found against the

Feldman and Capstone Parties. The variations are the

damages amounts.

The court grants the motions to confirm, as the

Federal Arbitration Act requires “unless the award is

vacated, modified, or corrected as prescribed in

sections 10 and 11” of the Act. 9 U.S.C. § 9. The court

finds that the grounds for vacatur are not met as to

the Jones Award, the Kutcher Awards, the Glasser

Award, or the Baker Award. Each motion to vacate is

accordingly denied.

The vacatur motions raise various issues as to each

of the four arbitrators, but a common issue is whether

each arbitrator had jurisdiction to issue his or her

award, given the provision in the arbitration

Agreement limiting the time for arbitration to a fourmonth period. The court first addresses the

jurisdictional issue and then the additional issues

raised in the individual motions to vacate.

74a

i. Jurisdiction

The Feldman and Capstone Parties argue that the

Agreement allows only one arbitrator to be appointed

at a time and that a new arbitrator cannot be

appointed until four months after the initial

arbitration began and then failed to conclude. The

Feldman and Capstone Parties focus on the following

language in the Agreement:

If the first arbitrator or arbitral organization

which receives a written demand for

arbitration of the dispute from either of us does

not complete the arbitration to finality within

four months of receiving the written demand,

any party then may file another written

demand for arbitration of the dispute with

another recognized, neutral, arbitrator or

arbitral association, with the prior arbitrator or

arbitral association then being immediately

divested of jurisdiction, and the replacement

arbitrator or arbitral association being required

to render a final award within four months of

the new, written demand being filed with the

replacement

arbitrator

or

arbitral

organization. The replacement arbitrator shall

not be the original arbitrator. Additionally, the

parties agree that the dispute resolution

process set forth above concerning the first

(non-HBA FDC) arbitration demand, shall

apply to every subsequent arbitration.

(Docket Entry No. 104-1, at 15). According to the

Feldman and Capstone Parties, the language “first

arbitrator,”

“prior

arbitrator,”

“divested

of

jurisdiction,” and “replacement arbitrator” all support

75a

their one-arbitrator-at-a-time theory. (Docket Entry

No. 87-1 at 10). Under this theory, and the way the

Feldman and Capstone Parties apply it, neither Mr.

Kutcher nor Judge Jones was properly appointed and

Judge Baker could not issue an award because she

was divested of jurisdiction at the end of four months

from her appointment. That leaves Mr. Glasser as the

only arbitrator whose award the Feldman and

Capstone Parties do not seek to vacate.

The court has already rejected the one-arbitrator-ata-time argument, holding that the parties' arbitration

Agreement anticipated and allowed for multiple

arbitrations. In its December 4, 2020, order, this court

held:

The Engagement Letter does not preclude the

parties from proceeding with separate

arbitrations for disputes involving overlapping

but different facts. The Letter does not foreclose

multiple “arbitrations,” but simply requires

that a “dispute” be heard before “a single

arbitrator.” (Docket Entry No. 7-2 at 15). The

AAA Commercial Rules do not require or

prohibit consolidation of multiple arbitrations.

Instead, the Rules leave issues related to the

“consolidation of the claims or counterclaims

with another arbitration” in the “discretion of

the

arbitrator.”

American

Arbitration

Association, Commercial Arbitration Rules,

Rule P-2, https://www.adr.org/sites/default/

files/CommercialRules_Web.pdf. Judge Duval,

Judge Baker, and Mr. Kutcher have issued a

joint proposal to streamline the issues

presented in their three arbitrations. (Docket

76a

Entry No. 44-4). They developed a proposal to

rule on “issues common to all three

arbitrations, including discovery issues,

dispositive motions, or evidentiary rulings.”

(Id.).

(Docket Entry No. 51 at 17).

The four arbitrators who issued the awards in

dispute—Judge Baker, Mr. Kutcher, Mr. Glasser, and

Judge Jones—all cited to that language from the

court. These arbitrators issued a joint order, stating

that the Engagement Letter does contemplate

multiple arbitrations. (Docket Entry No. 72-7 at 2–3).

“There is no question that the cause of multiple

arbitrations and the chaos is the arbitration provision

of the Engagement Letter entered into by the

parties.... These multiple arbitrations are a product of

the Engagement Letter. That salient fact cannot be

ignored.” (Id.); see also (Docket Entry No. 72-2 at 22

(Jones Award)); (Docket Entry No. 72-16 at 1–2 (Jones

Order)); (Docket Entry No. 72-19 at 19 (Dorfman

Award)); (Docket Entry No. 72-7 at 3 (Joint Order)

(“Judge Dorfman also acknowledged that multiple

arbitrations are appropriate when he denied the

request to hear the matters alleged in the Duval

Arbitration.”)). The Feldman and Capstone Parties’

one-arbitrator-at-a-time argument is not persuasive.

The Feldman and Capstone Parties’ four-month

jurisdictional argument is also riddled with problems.

In an effort to help their argument on the

enforceability of the four-month provision, the

Feldman and Capstone Parties included in their briefs

a chart that purports to display the timeline for when

different arbitrators first had jurisdiction and when

77a

they were divested of jurisdiction. Rather than

resolving or explaining the problems with this

argument, the chart exposes them. The chart the

Feldman and Capstone Parties provided sets out the

following:

Arbitrator

Status of

Arbitrator

Date

Date

Appointed Divested of

and by

Jurisdiction

Whom

and by

Whom

Judge

Baker

Original

arbitrator

July 20,

2020, by

the

Feldman

and

Capstone

Parties

December 7,

2020, by the

Feldman and

Capstone

Parties’

appointment

of Mr.

Glasser

Mr.

Kutcher

Neither

original nor

replacement

arbitrator

July 29,

2020, by

the Doctors

December 7,

2020, by the

Feldman and

Capstone

Parties’

appointment

of Mr.

Glasser

Judge

Medley

Original

arbitrator as

to class

claims

August 23,

2020, by

the Doctors

December 19,

2020, by the

Feldman and

Capstone

Parties’

appointment

78a

of Mr.

Glasser

Judge GillJefferson

Original

arbitrator as

to RICO

claims

November

10, 2020,

by the

Doctors

Mr.

Glasser

Replacement December

arbitrator

7, 2020, by

the

Feldman

and

Capstone

Parties

n/a

Judge

Jones

Neither

original nor

replacement

arbitrator

n/a

December

19, 2020,

by the

Doctors

December 10,

2020, by the

Feldman and

Capstone

Parties’

appointment

of Mr.

Glasser

(Docket Entry No. 87-1 at 12). The Feldman and

Capstone Parties argue that because four months had

not elapsed from the appointment of Judge Duval as

an arbitrator when Judge Baker and Mr. Kutcher

were appointed, their appointments are invalid under

the Agreement, and they lacked jurisdiction to

arbitrate. The Feldman and Capstone Parties argue

that because Mr. Glasser was validly appointed after

four months had elapsed without a ruling from the

other arbitrators, a new arbitrator could not be

appointed until four months after Mr. Glasser’s

79a

appointment if he had not issued an award before

then.

These arguments and the corresponding chart raise

more questions than they answer. Why do the

Feldman and Capstone Parties start the four-month

clock with Judge Baker and not Judge Dorfman, who

was the first arbitrator appointed? If Judge Medley

was the “original” arbitrator for the class claims, how

could he be displaced by Mr. Glasser before Judge

Medley’s four-month jurisdiction had expired? If

Judge Gill-Jefferson was the “original” arbitrator of

the RICO claims, how could she be displaced by Mr.

Glasser before her four-month jurisdiction had

expired? How did Mr. Glasser divest Judge Medley

and Judge Gill-Jefferson of jurisdiction when their

four months had not yet expired? It appears that the

Feldman and Capstone Parties invoke the four-month

jurisdictional provision when it helps their case and

distance themselves from it when it does not. Heads

they win, tails you lose.

Besides

this

calculated

and

inconsistent

construction of the four-month jurisdictional

provision, there is an additional reason why the

provision cannot serve as a basis for vacatur. Each of

the four arbitrators who issued the now disputed

awards declared the four-month provision invalid. All

four arbitrators agreed that the provision was

unconscionable, given the complexity of the case, and

that compliance would violate the Doctors' due

process rights, in part because the Feldman and

Capstone

Parties

deliberately

dragged

the

proceedings out when they appeared to be unfavorable

to those Parties. “The simple fact is the four[-]month

80a

period does not allow due process to be ignored. To

insist on its strict compliance elevates form over

substance and encourages discovery delays to run out

the clock and further arbitrations.” (Docket Entry No.

72-7 at 4). The arbitrators also determined “that, not

only would proceeding with the hearing be

inconsistent with due process, but that given the

complexity of the issues and the discovery issues that

populate this matter[,] the four[-]month limitation is

unconscionable.” (Id. at 5).

The arbitrators found that part of the reason the

four-month period kept expiring was that the

Feldman and Capstone Parties intentionally let the

clock run when they did not like the direction the

arbitration was heading. (Id.). The arbitrators found

that the Feldman and Capstone Parties manipulated

the four-month provision to frustrate the arbitrations

and abuse the process. “It would be unconscionable to

allow Capstone’s failure to respond fully to discovery

and deprive the Doctors adequate opportunity to

prepare by denying the continuance.” (Id.). In earlier

orders, Judge Duval, Judge Baker, and Mr. Kutcher

all expressed due-process concerns over the fourmonth provision because, when these arbitration

proceedings were initiated in 2020, a pandemic was

raging, and the City of Houston (where the

arbitrations were to occur) had been hit by a deadly

hurricane. (Id. at 3); (Docket Entry No. 72-4 at 10). All

the arbitrators reasonably concluded that they could

not “render” a “reasoned award” and comply with due

process within four months of their appointments.

(Docket Entry No. 72-7 at 4).

81a

The court cannot, and will not, second-guess these

determinations. The Engagement Letter explicitly

states that “the arbitrator has exclusive authority to

resolve all disputes and challenges to the formation

and enforceability of this arbitration agreement,” and

that exclusive authority extends to “all disputes or

challenges to the enforceability of the parties’

agreements as a whole.” (Docket Entry No. 104-1 at

15 (emphasis added)). The Engagement Letter also

states that the “parties agree that their intent is to

divest the courts of all powers in disputes involving

the parties, except to compel arbitration, and to

confirm, vacate or enforce award. The courts shall

have no jurisdiction over legal or equitable (including

injunctive) matters.” (Id. (emphases added)). The

Feldman and Capstone Parties agreed to these terms.

Now that they have lost in the arbitrations they

agreed to, they ask the court to “rewrite the contract

and offer review the party contracted away.” Am.

Laser Vision, 487 F.3d at 260. The court cannot and

will not do so.

The law adverse to the Feldman and Capstone

Parties is just as clear. Contract interpretation “is a

question for the arbitrator. It is the arbitrator’s

construction which was bargained for; and so far as

the arbitrator’s decision concerns construction of the

contract, the courts have no business overruling him

because their interpretation of the contract is

different from his.” United Steelworkers of Am. v.

Enter. Wheel & Car Corp., 363 U.S. 593, 599 (1960).

“Even ‘the failure of an arbitrator to correctly apply

the law is not a basis for setting aside an arbitrator’s

award.’ ” Am. Laser Vision, 487 F.3d at 260 (quoting

82a

reference omitted). The only circumstance that may

justify relief from an error as to the law is if the court

finds that the arbitrator “appreciate[ed] the existence

of a clearly governing principle but decide[ed] to

ignore or pay no attention to it,” resulting in

“significant injustice.” Id. at 259 (quoting reference

omitted).

The arbitrators’ holding that the four-month

provision is unconscionable and violates due process

presents no manifest disregard of the law. Indeed, the

court agrees with the arbitrators that the disputes

were complicated, that four months was not a

reasonable amount of time to resolve the disputes

even in the absence of a pandemic and flood, that the

global pandemic and localized natural disasters made

a lengthier period even more necessary, and that the

Feldman and Capstone Parties engaged in

unjustifiable, intentional, and willful delay. The

arbitrators’ jurisdictional findings will not be

disturbed.

ii. The Jones Award

The Feldman and Capstone Parties seek to vacate

the Jones Award on seven grounds:

(1) Judge Jones was not properly vested with

jurisdiction.

(2) Mr. Glasser resolved the same disputes that

were before Judge Jones.

(3) Judge Jones was partial to the Doctors.

(4) Judge Jones decided issues that were

conditionally submitted to him, on a specific

condition that never materialized. The

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specific condition was that Mr. Kutcher had

been divested of jurisdiction.

(5) Judge Jones sat with three other arbitrators

as opposed to being the sole arbitrator.

(6) Judge Jones “conspired” with Mr. Glasser

and considered ex parte evidence.

(7) Judge Jones exceeded his authority by

allowing class claims to proceed.

(Docket Entry No. 87-1 at 7–9). These arguments are

echoed in Jeff Carlson’s motion to vacate the Jones

Award. (Docket Entry No. 89). None is persuasive.

The court has already addressed the arguments

identified as items (1), (2), (5), and (6) in this list.

Judge Jones determined that he was properly vested

with jurisdiction. His reasoning was extensive. (See

Docket Entry No. 72-2 at 19–28). Judge Jones rejected

the Feldman and Capstone Parties' objection that his

jurisdiction had lapsed, finding the four-month

jurisdictional “provision to be ‘unconscionable,’

contrary to due process, and legally unenforceable in

the context of these proceedings, and specifically,

considering [the Feldman and Capstone Parties’]

noncompliance with their discovery obligations.” (Id.

at 24–25). This court has no basis to reverse or replace

Judge Jones’s findings or the consistent findings of

the other arbitrators that the Feldman and Capstone

parties had so abused the four-month provision as to

make it unenforceable.

Judge Jones also found that the claims for class

arbitration in particular, and the other claims in

general, were properly before him because the Doctors

and Doctor Entities submitted their claims to him

84a

first after Judge Medley determined that his

jurisdiction had expired. (Id. at 20). The Doctors and

Doctor Entities initially filed their arbitration

demand with Judge Jones on December 19, 2020, and

then, promptly after Judge Medley determined that

his jurisdiction would end on December 23, 2020, the

Doctors and Doctor Entities amended their demands

to include claims that had been pending before Judge

Medley. (Id. at 19). Judge Jones was, therefore, “the

first to receive an arbitration demand containing the

claims previously before Judge Medley upon the

expiration of Judge Medley's jurisdiction on December

23, 2020.” (Id. at 20).

The Feldman and Capstone Parties argue that

Judge Jones's reasoning is flawed and should be set

aside because he did not “rely on the critical language

in the arbitration clause,” but rather on the

“irrelevant” case of In re Houston Specialty Insurance

Co., 569 S.W.3d 138 (Tex. 2019). (Docket Entry No.

87-1 at 14). The Feldman and Capstone Parties’

argument is not persuasive. Judge Jones properly

relied on the language of the Agreement, which gives

arbitrators the “sole and exclusive ability to rule on all

aspects of the arbitrator's appointment.” (Docket

Entry No. 7-2 at 15). Judge Jones also relied on the

AAA rules, which the parties' Agreement specifically

incorporated. Finally, Judge Jones did not misapply

Houston Specialty. In that case, the Texas Supreme

Court held that claims for declarations of nonliability

in a legal malpractice case (like the claims Feldman

and the Feldman Entities pursued) “are legally

invalid, have ‘no basis in law,’ and should [be]

dismissed” under Texas law. 569 S.W.3d at 141. Judge

85a

Jones correctly applied Houston Specialty to this case

to conclude that the earlier appointment of Mr.

Glasser by the Feldman and Capstone Parties, who

did not have valid claims under Texas law, did not

divest Judge Jones of jurisdiction.

As to item (2), the court determined in its earlier

order that multiple arbitrations could proceed. To the

extent the awards were inconsistent, the issue of

which award controls was not a question for the court,

but rather for an arbitrator to decide. The “arbitrators

are authorized to determine whether and when earlier

decisions or awards have preclusive effects.” (Docket

Entry No. 51 at 17–18). “The parties applied their

contract to make this mess but agreed that arbitration

would resolve their disputes, no matter how messy.

This court will not step in to clean it up and risk

making it worse.” (Docket Entry No. 51 at 3).

As to items (5) and (6) on the list of issues raised by

the Feldman and Capstone Parties, this court has also

already determined that the parties’ arbitration

Agreement called for multiple arbitrators and that the

arbitrators could decide how to proceed. “The fastest,

most efficient, and most timely way to conclude these

various arbitrations, despite the parties’ best efforts

to thwart those goals and distort the process, is a

procedural decision best left to the arbitrators to

decide.” (Docket Entry No. 51 at 2–3). The arbitrators

decided that multiple arbitrations could and would

proceed, and they did.

That leaves items (3), (4), and (7). The third ground

for vacatur asserted by the Feldman and Capstone

Parties is that Judge Jones was partial to the Doctors

because he had received two tickets to a football game

86a

from someone who happened to be a work colleague of

a non-party witness. Thousands of these tickets had

apparently been given out for free by one of the

universities playing in the game. (Docket Entry No.

72-17 at 8 (Judge Jones Order)). Judge Jones

considered the objection to his partiality at length.

(Id.). The court agrees with Judge Jones that the

Feldman and Capstone Parties “fail[ ] to meet the

stern standard for evident partiality” and that the

“objection merely raises a trivial, attenuated, and

speculative relationship between the Arbitrator,” the

witness, and the witness’s colleague. (Id.). Judge

Jones did not have a duty to disclose such immaterial

information. See Peoples Sec. Life Ins. Co. v.

Monumental Life Ins. Co., 991 F.2d 141, 146 (4th Cir.

1993) (“It is well established that a mere appearance

of bias is insufficient to demonstrate evident

partiality.”).

Even if Judge Jones should not have accepted the

tickets or should have disclosed that fact to guard

against even a remote risk of appearing partial, his

failure to do so is not a ground for vacatur, given the

attenuated nature of the connection. See Positive

Software Sols., Inc. v. New Century Mortg. Corp., 476

F.3d 278, 282–83 (5th Cir. 2007) (“[N]ondisclosure

alone does not require vacatur of an arbitral award for

evident partiality. An arbitrator’s failure to disclose

must involve a significant compromising connection to

the parties.”).

The fourth and seventh grounds are similarly

without merit. The Agreement placed the

determination of issues regarding arbitrability solely

within the discretion of the arbitrator. Judge Jones

87a

had the exclusive authority to determine which issues

were properly before him, including the preclusive

effect of earlier arbitrations and whether a class-wide

arbitration would proceed. “[T]he Agreement

incorporates the AAA rules for arbitration. Those

provisions strongly indicate that the parties

bargained for the arbitrator to decide class

arbitrability.” Sun Coast Res., Inc. v. Conrad, 956 F.3d

335, 338 (5th Cir. 2020).

Finding no basis to vacate the Jones Award, the

court “must” confirm it. 9 U.S.C. § 9. “There is nothing

malleable about ‘must grant,’ which unequivocally

tells courts to grant confirmation in all cases, except

when one of the ‘prescribed’ exceptions applies.” Hall

St. Assocs., 552 U.S. at 587. The motion to confirm the

Jones Award is granted. The motion to vacate is

denied.

iii. The Glasser Award

The Doctors and Doctor Entities seek to vacate the

Glasser Award on two grounds:

Arbitrator Glasser (1) exceeded his powers, or

so imperfectly exceeded them that a mutual,

final, and definite award upon the subject

matter was not made or so imperfectly exceeded

them that a mutual, final, and definite award

upon the subject matter was not made, and (2)

demonstrated evident partiality.

(Docket Entry No. 92-1). As to the first ground, the

Doctors and Doctor Entities claim that Mr. Glasser

was improperly appointed because he invalidly

divested jurisdiction from Judge Medley. The court

notes that Judge Medley determined that he no longer

88a

had jurisdiction after the appointment of Mr. Glasser

as the arbitrator. The court has already addressed

this jurisdictional argument and does not find it to be

an appropriate basis for vacatur.

The second issue raised by the Doctors and Doctor

Entities is that Mr. Glasser obstructed Judge Jones's

rulings on class arbitration by reaching an

inconsistent result on the class arbitration issue. Mr.

Glasser found that the Agreement did not allow for

class arbitration; Judge Jones found that it did. The

mere fact of inconsistency is not a basis to vacate one

or both Awards, see 9 U.S.C. § 10, and the Doctors

have not identified another basis for that relief.

Finding no basis to vacate the Glasser Award, the

court “must” confirm it. Id. § 9. The motion to confirm

the Glasser Award is granted. The motion to vacate is

denied.

iv. The Baker Award

The court held a hearing on November 18, 2022, on

the motions addressed in this memorandum and

order. (Docket Entry No. 143). At that hearing, the

court indicated that the Feldman and Capstone

motion to vacate the Baker Award should be denied

as not ripe because no party had sought to confirm

that Award. (Id.). The parties had, however,

thoroughly briefed the issues and asked the court to

resolve them. Having reviewed the motion and

applicable case law further, the court now denies the

motion on the merits.

The Feldman and Capstone Parties sought to vacate

Judge Baker’s award on one ground, that “the

arbitrator exceeded her powers, or so imperfectly

89a

executed them that a mutual, final, and definite

award upon the subject matter submitted was not

made.” (Docket Entry No. 96). They argue that “the

Baker Award must fall because at the time she issued

her award, she was not the designated decisionmaker

under the parties’ arbitration agreements. Under

those agreements, only one arbitrator shall resolve

any one ‘dispute’ at any one time.” (Docket Entry No.

96-1 at 6 (emphasis omitted)).

The court has already addressed these arguments in

the jurisdictional section of this opinion. The

Agreements did allow for more than one arbitrator at

a time. For the reasons stated in the jurisdictional

section of this opinion, the motion to vacate the Baker

Award is denied. Judge Baker did not lack jurisdiction

to issue her Award.

v. The Kutcher Awards

At the November 18, 2022, hearing, the court also

indicated that the motion to vacate the Kutcher

Awards was not ripe because no party to the

arbitration had sought to confirm the award. (Docket

Entry No. 143). Again, the parties had thoroughly

briefed the issues and asked the court to resolve them.

Having reviewed the motion and applicable case law

further, the court now denies this motion on the

merits.

The Feldman and Capstone Parties seek to vacate

the Kutcher Awards on six grounds:

(1) Mr. Kutcher exceeded his powers because

his appointment was invalid and contrary to

the express terms of the arbitration

agreement.

90a

(2) The Kutcher Awards irreconcilably conflicts

with the Glasser Award.

(3) The Kutcher Awards decided the rights and

liabilities of non-parties to the arbitration,

including PoolRe and non-party pool

participants.

(4) Mr. Kutcher exceeded his authority when he

acted in conjunction with other arbitrators

and not as a “single arbitrator,” as

mandated by the parties’ Agreement.

(5) Mr. Kutcher displayed his evident partiality

by failing to disclose certain aspects of his

professional and personal relationship with

the Doctors and their counsel.

(6) Mr. Kutcher exceeded his powers when he

ordered the production of files belonging to

nonparty clients of The Feldman Law Firm

LLP without affording those nonparties due

process.

(Docket Entry No. 95-1 at 8 (emphases omitted)). Jeff

Carlson joins in these arguments to vacate the

Kutcher Awards. (Docket Entry No. 98).

The court has already addressed items (1), (2), and

(4) in this list of issues. The first ground for vacatur is

identical to the grounds presented in the motions to

vacate the Jones Award and Baker Award: “the

Kutcher Award[s] must fall because [the Doctors]

failed to follow the mandatory arbitrator selection

procedures set forth in the parties’ arbitration

agreement. Under that agreement, only one arbitrator

shall resolve any ‘dispute’ at any one time.” (Docket

Entry No. 95-1 at 7 (emphasis omitted)). Again, the

91a

court has already addressed these arguments in the

jurisdictional section. For the reasons stated in that

section, this ground to vacate the Kutcher Awards is

denied. Mr. Kutcher did not lack jurisdiction.

Similarly, the court has already determined that the

Engagement

Letter

contemplated

multiple

arbitrations, and that inconsistency alone was not a

valid ground for vacatur of all or any of the resulting

Awards.

That leaves items (3), (5), and (6). As to item (3), the

Kutcher Awards did not improperly decide the rights

of nonparties because the Awards directed only the

defendants in this case to pay damages. In any event,

the Feldman and Capstone Parties cannot raise a

supposed injury to nonparties as a ground for vacatur.

As to item (5), the Feldman and Capstone Parties

argue that Mr. Kutcher was partial to the Doctors

because he had previously represented the Doctors’

law firm. Mr. Kutcher properly disclosed this

information. The AAA rules are clear that such a

disclosure “is not an indication that the arbitrator

considers that the disclosed circumstance is likely to

affect impartiality or independence.” AAA R-17(c). As

to item (6), this is a procedural dispute that the

arbitrator properly resolved.

The motion to vacate the Kutcher Awards is denied.

IV. Conclusion

The court has issued the following orders:

• The Feldman and Capstone Parties’ motion to

dismiss for lack of jurisdiction. (Docket Entry

No. 86), is DENIED.

92a

• The Doctors’ motion to dismiss purported

claims against PoolRe, (Docket Entry No. 90),

is DENIED.

• The Feldman and Capstone Parties’ motion to

vacate the March 22, 2022, award of Caroline

Baker, (Docket Entry No. 96), is DENIED.

• The Feldman and Capstone Parties’ motion to

vacate the March 22, 2022, and April 14, 2022,

awards of Robert Kutcher, (Docket Entry No.

95), is DENIED.

• Jeff Carlson’s motion to vacate the March 22,

2022, and April 14, 2022, awards of Robert

Kutcher, (Docket Entry No. 98), is DENIED.

• The Doctors’ motion to vacate the March 9,

2022, award of Mark Glasser, (Docket Entry

No. 92), is DENIED.

• Jeff Carlson’s motion to confirm the March 9,

2022, award of Mark Glasser, (Docket Entry

No. 92), is GRANTED.

• The Feldman and Capstone Parties’ motion to

confirm the March 9, 2022, award of Mark

Glasser, (Docket Entry No. 149), is GRANTED.

• The Doctors’ motion to confirm the March 29,

2022, award of Charles Jones, (Docket Entry

No. 72) is GRANTED.

• The Feldman and Capstone Parties’ motion to

vacate the March 29, 2022, award of Charles

Jones, (Docket Entry No. 87), is DENIED.

• Jeff Carlson’s motion to vacate the March 29,

2022, award of Charles Jones, (Docket Entry

No. 87), is DENIED.

93a

• The Feldman and Capstone Parties’ motion for

reconsideration, (Docket Entry No. 147), is

DENIED as moot.

In accordance with the confirmed awards, the court

grants judgment in favor of the Doctors and Class

Members and against the Feldman Parties, finding

the Feldman Parties jointly and severally liable to the

Doctors and Class Members for: breaching fiduciary

duties; committing professional malpractice; making

fraudulent and negligent misrepresentations, fraud,

and conversion; violating the Texas Deceptive Trade

Practices Act; and violating RICO. The Feldman

Parties take nothing and their claims, affirmative

defenses, and all relief they sought is rejected and

dismissed, with prejudice.

The Feldman and Capstone Parties are liable to, and

must pay, the Doctors and the Doctor Entities a total

amount of $70,336,224.60, exclusive of attorneys' fees

and costs; pre-judgment interest; and post-judgment

interest. Because Judge Jones already awarded

attorney's fees and the court has confirmed his Award,

the Feldman and Capstone Parties must also pay the

Doctors and the Doctor Entities the attorneys' fees

and costs the Doctors incurred in the arbitration

proceedings, in the amount of $18,348,294.60.

The court imposes prejudgment interest at a rate of

5%, beginning to accrue on July 29, 2020, and ending

on March 28, 2022. Consistent with TEX. FIN. CODE

§ 304.003, the court awards the Doctors and the

Doctor Entities post-judgment interest at a rate of 5%,

beginning on March 29, 2022. Stewart Feldman and

those in active concert with him cannot tender to the

risk pool or pool participants for payment or

94a

reimbursement any portion of: (1) A.M.Y. Property &

Casualty Insurance Corp.’s claims; (2) the legal fees

and expenses incurred in the Judge Dorfman

arbitration, the arbitration proceedings, other related

arbitrations or proceedings in state or federal court,

and state bar proceedings; or (3) any damages award

issued in the arbitration proceedings addressed in this

memorandum and opinion.

Judgment for the Doctors and Doctor Entities will

be entered separately. Counsel for the Doctors and

Doctor Entities must submit a proposed order to

reflect and implement the relief granted and denied in

this Memorandum and Opinion, no later than

January 13, 2023.

SIGNED on December 19, 2022, at Houston, Texas.

/s/ Lee H. Rosenthal

Lee H. Rosenthal

United States District Judge

95a

APPENDIX C

_________

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_________

No. 23-20140

_________

SCOTT SULLIVAN; FRANK DELLACROCE; ST. CHARLES

SURGICAL HOSPITAL, L.L.C.; ST. CHARLES HOLDINGS,

L.L.C.; CENTER FOR BREAST RESTORATIVE SURGERY,

L.L.C.; SIGMA DELTA BILLING, L.L.C.; CERBERUS

INSURANCE CORPORATION; JANUS INSURANCE

CORPORATION; ORION INSURANCE CORPORATION,

Plaintiffs-Appellees,

versus

STEWART A. FELDMAN; THE FELDMAN LAW FIRM,

L.L.P.; CAPSTONE ASSOCIATED SERVICES (WYOMING),

LIMITED Partnership; CAPSTONE ASSOCIATED

SERVICES, Limited; CAPSTONE INSURANCE

MANAGEMENT, Limited; JEFF CARLSON,

Defendants-Appellants,

_________

SCOTT SULLIVAN; FRANK DELLACROCE; ST. CHARLES

SURGICAL HOSPITAL, L.L.C.; ST. CHARLES HOLDINGS,

L.L.C.; CENTER FOR BREAST RESTORATIVE SURGERY,

L.L.C.; SIGMA DELTA BILLING, L.L.C.; CERBERUS

INSURANCE CORPORATION; JANUS INSURANCE

CORPORATION; ORION INSURANCE CORPORATION,

96a

Defendants-Appellees,

versus

STEWART A. FELDMAN; THE FELDMAN LAW FIRM,

L.L.P.; CAPSTONE ASSOCIATE SERVICES (WYOMING),

LIMITED Partnership; CAPSTONE ASSOCIATED

SERVICES, Limited; CAPSTONE INSURANCE

MANAGEMENT, Limited; JEFF CARLSON,

Plaintiffs-Appellants,

_________

SCOTT SULLIVAN; FRANK DELLACROCE; ST. CHARLES

SURGICAL HOSPITAL, L.L.C.; ST. CHARLES HOLDINGS,

L.L.C.; CENTER FOR BREAST RESTORATIVE SURGERY,

L.L.C.; SIGMA DELTA BILLING, L.L.C.; CERBERUS

INSURANCE CORPORATION; JANUS INSURANCE

CORPORATION; ORION INSURANCE CORPORATION,

Plaintiffs-Appellees,

versus

STEWART A. FELDMAN; THE FELDMAN LAW FIRM,

L.L.P.; CAPSTONE ASSOCIATED SERVICES (WYOMING),

LIMITED Partnership; CAPSTONE ASSOCIATED

SERVICES, Limited; CAPSTONE INSURANCE

MANAGEMENT, Limited; JEFF CARLSON,

Defendants-Appellants,

_________

Appeal from the United States District Court

for the Southern District of Texas

USDC Nos. 4:20-CV-2236, 4:21-CV-658, 4:21-CV-682

_________

97a

ON PETITION FOR REHEARING EN BANC

Before JONES, SMITH, and HO, Circuit Judges.

PER CURIAM:

Treating the petition for rehearing en banc as a

petition for panel rehearing (5TH CIR. R.40 I.O.P.), the

petition for panel rehearing is DENIED. Because no

member of the panel or judge in regular active service

requested that the court be polled on rehearing en

banc (FED. R. APP. P.40 and 5TH CIR. R.40), the

petition for rehearing en banc is DENIED.

98a

APPENDIX D

_________

(Arbitration Agreement – excerpt from

attachment to client engagement letter)

_________

CLIENT INFORMATION: GUIDELINES ON

ADMINISTRATION & BILLING

CAPSTONE AND THE FIRM

_________

***

With respect to any and all other controversies,

disputes or claims whatsoever between (x) the Firm

(including its lawyers) and/or its affiliates (including

Capstone Associated Services, Ltd., Capstone

Insurance Management (Anguilla), Ltd., and/or

Export Assurance) (including their employees, officers

and directors) and (y) any client of the Firm and/or its

affiliates related to or arising out of the Firm’s or its

affiliates’ services or arising under or in connection

with or related to any of the parties’ agreements (but

in no event for attorneys’ fees for services previously

rendered, see preceding paragraph), either party may

submit the dispute to any recognized, neutral (x)

arbitral association or (y) arbitrator for final

resolution in an arbitration proceeding to be

concluded within four months, except that the

American Arbitration Association (AAA) shall not

administer the arbitration. Submission of the dispute

to arbitration under this agreement shall be the sole

and exclusive forum for resolving any and all disputes

between the parties, except for attorneys’ fees for

99a

services previously rendered which are before the

HBA’s FDC.

Except as to the HBA’s FDC which shall apply its

own rules, all arbitrations -- regardless of the arbitral

organization or arbitrator actually hearing the

dispute -- shall be conducted in Houston, Texas

applying Texas substantive law pursuant to the

Commercial Arbitration Rules (and not the rules for

Large, Complex Commercial Cases) of the American

Arbitration Association (AAA) then in effect, whose

Expedited Procedures shall apply regardless of the

monetary size of the dispute or the number of parties

to the proceeding, with only a single arbitrator

hearing the dispute, again all regardless of the

organization sponsoring the arbitration in question.

All parties acknowledge and agree that this

arbitration agreement modifies the AAA arbitration

rules regarding, inter alia, the selection of the

arbitrator and the administration of the arbitration in

that: (1) either party may directly appoint the single

arbitrator or the arbitral association who/which shall

proceed to resolve the dispute, provided that the

arbitrator is recognized and neutral; (2) the AAA is

not required to administer and shall not administer

the arbitration; and (3) any recognized and neutral

arbitrator himself/herself or arbitral association may

administer the arbitration. The arbitrator or arbitral

association appointed to resolve the dispute shall have

the sole and exclusive ability to rule on all aspects of

the arbitrator’s appointment, including, but not

limited to, disputes or challenges of bias and

neutrality.

100a

In all cases, the parties shall be deemed to have

adopted the Optional Rules of the AAA For

Emergency Measures of Protection (regarding

injunctive or equitable relief, which requests for relief

shall exclusively be submitted to the arbitrator). In all

events, the parties waive the right to trial by jury in

any action or proceeding. This arbitration provision

shall be effective notwithstanding any actions that

may later take place. The parties agree that the issue

of arbitrability shall likewise be decided by the

arbitrator, and not by any other person. That is, the

question of whether a dispute itself is arbitrable shall

be decided solely by the arbitrator and not, for

example, by any court. The parties agree that the

arbitrator has exclusive authority to resolve all

disputes and challenges to the formation and

enforceability of this arbitration agreement, and

decide all disputes or challenges to the enforceability

of the parties’ agreements as a whole. The parties

agree that their intent is to divest the courts of all

powers in disputes involving the parties, except to

compel arbitration, and to confirm, vacate or enforce

award. The courts shall have no jurisdiction over legal

or equitable (including injunctive) matters. The

arbitration decision shall be final and binding in all

respects. Any person may have a U.S. District Court

or another court of competent jurisdiction enter the

findings of the arbitrator for all purposes, including

for the confirmation and enforcement of any award.

If the first arbitrator or arbitral organization which

receives a written demand for arbitration of the

dispute from either of us does not complete the

arbitration to finality within four months of receiving

101a

the written demand, any party then may file another

written demand for arbitration of the dispute with

another recognized, neutral, arbitrator or arbitral

association, with the prior arbitrator or arbitral

association then being immediately divested of

jurisdiction, and the replacement arbitrator or

arbitral association being required to render a final

award within four months of the new, written demand

being filed with the replacement arbitrator or arbitral

organization. The replacement arbitrator shall not be

the original arbitrator. Additionally, the parties agree

that the dispute resolution process set forth above

concerning the first (non-HBA FDC) arbitration

demand, shall apply to every subsequent arbitration.

We look forward to working with you.

September 18, 2015