Record and brief — Nitro-Lift Technologies, L. L. C. v. Howard

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g,, SUPREME COURT

wt OF THE UNITED STATES

No. 11-1377

Title Nitro-Lift Technologies, L.L.C.. Petitioner

Eddie Lee Howard. et al.

Docketed: May 16, 2012

Lower Ct: Supreme Court of Oklahoma

Case Nos.: (109,003)

Decision Date: November 22 2011

Rehearing Denied: February 13, 2012

~~~Date~~~ ~~~~~~~ Proceedings and Orders~~~

May 14 2012 Petition for a writ of certiorari filed. (Response due June 15, 2012)

May 31 2012 Waiver of right of respondents Eddie Lee Howard et al. to respond filed.

Jun5 2012 DISTRIBUTED for Conference of June 21, 2012

Jun 182012 Response Requested . (Due July 18, 2012)

Jun 29 2012 Order extending time to file response to petition to and including August 17, 2012

Aug 15 2012 Brief of respondents Eddie Lee Howard, and Shane D. Schneider in opposition filed

Aug 29 2012 DISTRIBUTED for Conference of September 24, 2012

Aug 30 2012 Reply of petitioner Nitro-Lift Technologies. L.L.C. filed. (Distributed)

Sep 72012 Record Requested

Sep 18 2012 Record received from Supreme Court of Oklahoma (1 envelope).

Sep 19 2012 Record received from District Court of Johnston County State of Oklahoma (1 envelope)

Sep 26 2012 DISTRIBUTED for Conference of October 12. 2012.

Oct 15 2012 DISTRIBUTED for Conference of October 26. 2012

Oct 29 2012 DISTRIBUTED for Conference of November 2, 2012

Nov 52012 DISTRIBUTED for Conference of November 9, 2012

Nov 13 2012 DISTRIBUTED for Conference of November 20, 2012

Nov 26 2012 Petition GRANTED. Judgment VACATED and case REMANDED. Opinion per curiam

(Detached Opinion)

Dec 28 2012 JUDGMENT ISSUED.

PETITION

FOR

WRIT OF

CERTIORARI

Supreme Ceurt, US.

FILED

AND 11-13'°7'7 MAY 14 2012

a Oe

BRIEFS OFFICE OF THE CLER*

Jn the Supreme Court of the Anited States

NITRO-LIFT TECHNOLOGIES, L.L.C.,

Petitioner,

Vv.

EDDIE LEE HOWARD and

SHANE D. SCHNEIDER,

Respondents.

On Petition for Writ of Certiorari to the

Supreme Court of the State of Oklahoma

PETITION FOR WRIT OF CERTIORARI

Jay P. Walters

Counsel of Record

Kevin R. Donelson

Kelli M. Masters

F'ELLERS, SNIDER, BLANKENSHIP, BAILEY

& TirpPens, PC

100 N. Broadway, Suite 1700

Oklahoma City, OK 73102

(405) 232-0621

jwalters@fellerssnider.com

May 14, 2012 Counsel for Petitioner

Becker Gallagher - Cincinnati, OH - Washington, D.C. - 800.890.5001!

Library of Ceneres:

‘av Library

QUESTION PRESENTED

Whether the Supreme Court of Oklahoma’s holding

that a state court may review an _ underlying

employment agreement based upon a state statute

restricting covenants not to compete, notwithstanding

the presence of a valid arbitration clause, is foreclosed

by the Federal Arbitration Act and 45 years of

authority from this Court (particularly Buckeye Check

Cashing v. Cardegna).

PARTIES TO THE PROCEEDING

Petitioner Nitro-Lift Technologies, L.L.C. was

Defendant/Appellee in the Supreme Court of

Oklahoma. Respondents Eddie Lee Howard and

Shane D. Schneider were Plaintiffs/Appellants before

that court.

CORPORATE DISCLOSURE STATEMENT

Pursuant to Supreme Court Rule 29.6, Petitioner

Nitro-Lift Technologies, L.L.C. states that it has no

parent corporation and that no publicly traded

company owns 10% or more of its stock.

ili

TABLE OF CONTENTS

QUESTION PRESENTED ....................

PARTIES TO THE PROCEEDING ............

CORPORATE DISCLOSURE STATEMENT ....

yy OF Se Pty, 9 yy! - re Vv

Bo rer ee 1

Po TTT ee 1

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED ................... 1

STATEMENT OF THE CASE ................ 2

TS PC CT Ee eS 4

B. The Proceedings Below................. 5

REASONS FOR GRANTING THE WRIT

ig OPK CC Tee 9

I. Forty-Five Years Of Settled Supreme Court

Precedent Forecloses Oklahoma’s Rule That

State Courts May Ignore An Arbitration Clause

And Decide The Validity Of The Underlying

Agreement Based On State Public Policy .....

II. The Supreme Court Of Oklahoma Has Created

A Rule Barring Arbitration Of An Entire Class

Of Cases And Exhibits The Historical Hostility

Toward Arbitration The FAA Was Designed To

DCCL CvEL dsewkhrh sees eaberertseevcees 13

III. The Decision Below Is Exceptionally

EE i 2n is bee 0 hes bebe pan aw sees 16

ee ee ee ie eed aw ea ew oe 8 18

APPENDIX

Appendix A Supreme Court of the State

of Oklahoma Opinion

(November 22,2011) ............ la

Appendix B Supreme Court of the State

of Oklahoma Order

ee 27a

Appendix C District Court of Johnston

County, State of Oklahoma

Order

(November 23, 2010) ........... 29a

Appendix D Supreme Court of the State

of Oklahoma Order

Denying Rehearing

(February 13, 2012) ............ 32a

TABLE OF AUTHORITIES

CASES

AT&T Mobility LLC v. Concepcion,

563 U.S. _, 131 S. Ct. 1740 (2011) ....... 4,13

AT&T Technologies, Inc. v. Communications

Workers of Am.,

I eg ee ee 3

Allied-Bruce Terminex Cos. v. Dobson,

I I i a ee ey 17

Bruner v. Timberlane Manor Ltd. P’ship,

155 P.38d 16 (Okla. 2006) .......... 8,9, 15, 16

Buckeye Check Cashing v. Cardegna,

oe a's wee wo kt passim

Cardiovascular Surgical Specialists, Corp.

v. Mammana,

61 P.3d 210 (Okla. 2002) .............. 14, 15

Circuit City Stores, Inc. v. Adams,

os hoe ds 060 bab eu wees 11

Citizens Bank v. Alafabco,

ee ea a ea eee 4

EEOC v. Waffle House, Inc..,

es ee as cen 13

Gilmer v. Interstate /Johnson Lane Corp.,

EE 3 vos bew-cn one 6640s 11-12

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

SP Dg kg oe cece ccovevecctéeese 13

KPMG LLP v. Cocchi,

565 US. _., 182 S.Ct. 23 (2011) ............ 4

Major League Baseball Players Ass’n v. Garvery,

ED .cckosenckubeouenates 15

Marmet Health Care Ctr., Inc. v. Brown,

565 U.S. __, 182 S. Ct. 1201 (2012)... 4,8,13,15

Mastrobuono v. Shearson Lehman

Hutton, Inc.,

i eewantan 13, 17

Moses H. Cone Mem’! Hosp. v.

Mercury Constr. Corp.,

De eed sees oes eae 9

Perry v. Thomas,

et eae eee e as bes 13

Preston v. Ferrer,

552 U.S. 346 (2008) ............ 2, 3, 4,11, 13

Prima Paint Corp. v. Flood &

Conklin Mfg.,

IE og vc ca wescacdenese passim

Rainbow Health Care Ctr. v. Crutcher,

07-cv-194-IHP, 2008 WL 268321

(N.D. Okla. Jan. 29, 2008) ................ 15

Rent-A-Center, West, Inc. v. Jackson,

561 U.S. _, 1380 S. Ct. 2772 (2010) ....... 2,12

Vil

Rivers v. Roadway Exp., Inc.,

i och seeheedecseeuwas 16

Southland Corp. v. Keating,

CY OO cok tet eee ee 1,6, 10,13

Thompson v. Bar-S Foods Co.,

B76 P.BG Gr Cee. BOOT) .. wc ccc cc ccces 14

Wyatt-Doyle and Butler Engineers, Inc. v.

City of Eufala,

13 P.3d 474 (Okla. 2000) ................. 14

CONSTITUTIONAL PROVISION

ee Ce Oe iw wen tceeseus 1,16

STATUTES

ED. 6 656444064043 0000S Oe ee eta Kes 2

i Does ous th bab eens seers aes 1

Liao ea wale eben tae an eee 12

NS TTT eee TT ere Tes ee 7, 8,12

RULES

ea ee ee oaks oe ee ae 1

ed haa a ela oh ee ue wai 6

PETITION FOR WRIT OF CERTIORARI

OPINIONS BELOW

The Supreme Court of Oklahoma’s decision is

reported at 273 P.3d 20 (Okla. 2011), and reprinted in

the Appendix (“App.”) at la-26a. The Supreme Court

of Oklahoma’s decision denying Nitro-Lift’s petition for

clarification and/or rehearing is reprinted at 32a-33a.

The unreported decision of the District Court of

Johnston County, Oklahoma (“trial court”) granting

Nitro-Lift’s motion to dismiss is reprinted at App. 29a-

3la.

JURISDICTION

The Supreme Court of Oklahoma rendered its

decision on November 22, 201i. App. la. Nitro-Lift’s

timely petition for rehearing and clarification was

denied by that court on February 13, 2012. App. 32a.

Sup. Ct. R. 13(2). This Court has jurisdiction under 28

U.S.C. § 1257(a). See, e.g., Southland Corp. v. Keating,

465 U.S. 1, 6-8 (1984).

CONSTITUTIONAL AND SATUTORY

PROVISIONS INVOLVED

The Supremacy Clause of the Constitution, Art. VI,

cl. 2, provides in pertinent part:

The Constitution, and the Laws of the United

States which shall be made in Pursuance

thereof * * * shall be the supreme Law of the

Land; and the Judges in every State shall be

bound thereby, any Thing in the Constitution or

Laws of any State to the Contrary

notwithstanding.

Section 2 of the Federal Arbitration Act (“FAA”), 9

U.S.C. § 2, provides in pertinent part:

A written provision in * * * a contract

evidencing a transaction involving commerce to

settle by arbitration a controversy thereafter

arising out of such contract or transaction, * * *

or an agreement in writing to submit to

arbitration an existing controversy arising out

of such contract, transaction, or refusal, shall] be

valid, irrevocable, and enforceable, save upon

such grounds as exist at law or in equity for the

revocation of any contract.

STATEMENT OF THE CASE

This case arises from the Supreme Court of

Oklahoma’s defiance of this Court’s repeated holding

that “unless the challenge is to the arbitration clause

itself, the issue of the contract’s validity is considered

by the arbitrator in the first instance.” Buckeye Check

Cashing v. Cardegna, 546 U.S. 440, 445-46 (2006).

Forty-five years ago in Prima Paint Corp. v. Flood &

Conklin Mfg., 388 U.S. 395 (1967), the Court held that

the FAA does not allow a party to avoid arbitration by

claiming that the underlying contract containing an

arbitration clause (but not the arbitration clause itself)

was fraudulently induced. Instead, the Prima Paint

Court held that such a claim must be decided by the

arbitrator. The Court has not receded from this

holding. See, e.g., Rent-A-Center, West, Inc. v. Jackson,

561 U.S.__,___, 180 S. Ct. 2772, 2778 (2010); Preston

v. Ferrer, 552 U.S. 346, 349 (2008).

Nonetheless, in justifying its decision to ignore the

arbitration clause and decide the validity of the

agreement as a whole based on Oklahoma law, the

Oklahoma court broadly held: “We determine that

the existence of an arbitration agreement in an

employment contract does not prohibit judicial

review of the underlying agreement.” App. 6a,

16a. (emphasis supplied). Emphasizing Oklahoma

public policy, Respondents and the Supreme Court of

Oklahoma maintain that because the underlying

agreement was allegedly invalid under Oklahoma’s

statute restricting covenants not to compete in

employment agreements, the state court had the

power to ignore the arbitration agreement and apply

the state statute. The state court did not base its

decision on any infirmity in the arbitration clause

itself.

The Oklahoma decision directly conflicts with this

Court’s precedents mandating that “questions

concerning the validity of the entire contract are to be

resolved by the arbitrator in the first instance, not by

a federal or state court.” Preston, 552 U.S. at 349; see

also AT&T Technologies, Inc. v. Communications

Workers of Am. , 475 U.S. 643, 649 (1986)(“[I]n deciding

whether the parties have agreed to submit a particular

grievance to arbitration, a court is not to rule on the

potential merits of the underlying claims.”). In

essence, the Supreme Court of Oklahoma has crafted

a rule based upon Oklahoma public policy that

prohibits arbitration in disputes involving employment

agreements containing covenants not to compete.

“When state law prohibits outright the arbitration of

a particular type of claim, the analysis is

straightforward: The conflicting rule is displaced by

the FAA.” AT&T Mobility LLC v. Concepcion, 563 U.S.

,__, 1381 S. Ct. 1740, 1747 (2011).

Because the Oklahoma court’s decision is

irreconcilable with this Court’s decisions in Prima

Paint, Buckeye Check Cashing, and Preston, Nitro-Lift

respectfully requests that the Court grant the petition

for certiorari, summarily reverse the decision below,

and remand for further proceedings not inconsistent

with these precedents. See, e.g., Marmet Health Care

Ctr., Inc. v. Brown, 565 U.S. __, 1382 S. Ct. 1201 (2012)

(per curiam) (summarily reversing enforcement of

West Virginia statute barring arbitration in personal

injury nursing home cases); KPMG LLP v. Cocchi, 565

U.S. __, 182 S.Ct. 23 (2011) (per curium) (summarily

reversing enforcement of state court failure to address

whether all claims were nonarbitrable); Citizens Bank

v. Alafabco, 539 U.S. 52 (2003) (summarily reversing

misapplication of this Court’s FAA precedent).

Alternatively, the Court should grant plenary review.

A. Factual Background

Petitioner Nitro-Lift is a Louisiana-incorporated

company that provides energy companies with a

service to stimulate the flow of hydrocarbons from a

well. Oil or gas rises to the surface naturally for a

time after a well is drilled. That natural lift inevitably

slows or stops. Nitro-Lift contracts with the well

operator to provide enhanced production using

proprietary equipment and techniques to inject

compressed gasses, such as nitrogen, into the well to

reinvigorate production.

Nitro-Lift hired Petitioners Howard and Schneider

at its office in Tishomingo, Oklahoma. App. 7a-8a.

Both employees entered into and signed an identical

Confidentiality/Non-Compete Agreement

(“Agreement”) that contains an arbitration provision

stating:

Any dispute, difference or unresolved question

between Nitro-Lift and the Employee

(collectively the “Disputing Parties”) shall be

settled by arbitration by a single arbitrator

mutually agreeable to the Disputing Parties in

an arbitration proceeding conducted in Houston,

Texas in accordance with the rules existing at

the date hereof of the American Arbitration

Association.

App. 8a, 10a, n.9. The Agreement also contains a

separate choice of law provision providing that the

Agreement “shall, in all respects be subject to and be

interpreted, construed and enforced in accordance with

the laws in effect in the State of Louisiana, without

regard to its conflict of laws principles.” App. 10a, n.

9. (all caps in original). Respondents worked for

Nitro-Lift on wells in at least Oklahoma, Texas, and

Arkansas. Plaintiffs’ Application for Temporary

Injunction Affidavit ¥ 5 (Oct. 14, 2010). Both

respondents resigned their positions and took

employment with a direct competitor of Nitro-Lift.

B. The Proceedings Below

Nitro-Lift served respondents with an arbitration

demand in July 2010 alleging breach of the Agreement

and seeking a decision prohibiting respondents from

(1) disclosing or using Nitro-Lift’s confidential

information; (2) inducing Nitro-Lift’s employees to

leave Nitro-Lift to work for its competitor; and (3)

competing or interfering with Nito-Lift’s business

relationships or soliciting its customers. App. Ya.

After the arbitrator was selected and Nitro-Lift had

advanced arbitration fees for all parties, respondents

filed suit in state court on October 14, 2010. App. lla.

In their complaint, respondents sought an order

declaring the Agreement nul! and void and an

injunction prohibiting its enforcement. Id. On the

same day they filed suit, respondents obtained an ex

parte temporary restraining order enjoining Nitro-Lift

from prosecuting the arbitration claims. Id.

Thereafter, Nitro-Lift explained to the trial court that

the complaint should be dismissed and respondents

were not entitled to an injunction because respondents’

merely challenged the validity of the underlying

Agreement as opposed to the arbitration provision

itself. See Nitro-Lift’s Response to Application for

Temporary Restraining Order and Temporary

Injunction, pp. 4-5 (Nov. 10, 2010); Nitro-Lift’s Motion

to Dismiss, pp. 7-8 (Nov. 10, 2010). Citing this Court’s

authority in Prima Paint and Southland, Nitro-Lift

argued that the validity of the non-compete Agreement

must be decided by the arbitrator, not the court. Id.

The trial court agreed, held the arbitration provision

was valid on its face, dismissed respondents’

complaint, and denied injunctive relief. App. 29a-31a.

Respondents appealed the trial court’s decision.

The appeal was to be heard under Oklahoma’s

accelerated appeal procedure, meaning the appellate

court would render a decision without appellate

briefing. Okla. Sup. Ct. R. 1.36. Respondents filed a

motion asking the Supreme Court of Oklahoma to

retain the appeal, which the court granted. App. 1la.

The Supreme Court of Oklahoma then entered an

order noting that the parties’ filings in the trial court

had not addressed 15 O.S. § 219A governing covenants

not to compete. The court then directed the parties to

“show cause why this matter should not be resolved by

application of 15 O.S. 2001 § 219A.” App. at lla, 27a-

28a. Respondents filed a brief arguing, in essence,

that the underlying Agreement is invalid under

Oklahoma public policy expressed in section 219A and

the court, as opposed to the arbitrator, should decide

the case based on the statutory language. Appellants’

Brief (October 28, 2011). Nitro-Lift again argued that

the arbitrator, not the court, must decide whether or

to what extent the underlying Agreement violated

section 219A. Brief to Show Cause Regarding

Application of 15 O.S. 2001 § 219A (October 31, 2011).

On November 22, 2011, the Oklahoma court issued

its unanimous opinion reversing the trial court’s order

dismissing the complaint and denying the temporary

injunction of the arbitration proceedings. App. la-26a.

The court made short shrift of the arbitration

provision. The court broadly held: “We determine

that the existence of an arbitration agreement in

an employment contract does not prohibit

judicial review of the underlying agreement.”

App. 6a (emphasis supplied). It then analyzed the

underlying Agreement, not the arbitration provision,

under section 219A and found it to be overbroad,

invalid, and unenforceable.

Specifically, the court stated that “employers rely

upon United States Supreme Court jurisprudence.

The employees assert that jurisdiction lies in this

Court based on our pronouncements addressing the

issue. We agree with employees.” App. 13a. While

the court did not undertake its own analysis of this

Court’s precedent, it found “most instructive” its prior

analysis in Bruner v. Timberlane Manor Ltd. P’ship,

155 P.3d 16 (Okla. 2006), which the court

characterized as containing an “exhaustive overview”

of the Supreme Court’s precedent, including Prima

Paint and Buckeye Check Cashing. App. 14a-15a & n.

20. Bruner unanimously rejected the arbitration of a

nursing home wrongful death claim under the FAA

because it found that the transaction did not involve

interstate commerce. Of course, Bruner is directly at

odds with this Court’s February decision in Marmet

Health Care Ctr., Inc. v. Brown, 565 U.S. __, 1382S. Ct.

1201 (2012) (per curiam), summarily rejecting nearly

identical decisions from the Supreme Court of Appeals

of West Virginia. Without even conducting the

interstate commerce analysis of the obviously

interstate facts of this case, the court in this case

footnoted its reliance upon Bruner’s secondary holding

that the specific anti-arbitration provisions in the

Oklahoma Nursing Home Care Act governed over “the

more general statute favoring arbitration.” App. 15a,

n. 21. The court failed to identify any specific anti-

arbitration provision in 15 O.S. § 219A similar to that

contained in the act at issue in Bruner (and Marmet)

or identify whether “the more general statute” being

displaced by section 219A was the Oklahoma Uniform

Arbitration Act (OQUAA) or the FAA.

On December 12, 2011, Nitro-Lift petitioned for

clarification and/or rehearing. It sought clarification

of which general statute (the FAA or the OUAA) was

being overridden by section 219A. It pointed out the

erroneous comparison of Bruner’s analysis to this case

and the fact that Buckeye Check Cashing directly

prohibits state public policy as a basis for ignoring an

arbitration clause. On February 13, 2012, the court

denied the petition for clarification or rehearing. App.

32a.

This petition follows.

REASONS FOR GRANTING THE

WRIT OF CERTIORARI

I. Forty-Five Years Of Settled Supreme Court

Precedent Forecloses Oklahoma’s Rule That

State Courts May Ignore An Arbitration

Clause And Decide The Validity Of The

Underlying Agreement Based On State Public

Policy.

The rule adopted by Oklahoma allowing courts to

review an underlying agreement’s. validity

notwithstanding the presence of an arbitration clause

defies this Court’s settled precedent on the preemptive

effect of the FAA, even in employment contracts. As

initially set forth in Prima Paint, courts do not have

authority to entertain a challenge to the validity of a

contract that is not directed at “the making of the

agreement to arbitrate...” 388 U.S. at 404. Thisisa

matter of “federal substantive law of arbitrability.”

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

460 U.S. 1, 24 (1983).

Contrary to the decision of the Oklahoma court, the

decisions in Buckeye Check Cashing and it progeny

directly control this matter. In Buckeye Check Cashing,

this Court rejected a Florida court’s ruling that a court

rather than an arbitrator should resolve a claim that

a contract is void under the state’s usury laws. In so

holding, this Court described the fundamental

arbitrability rules established in Prima Paint and

Southland:

First, as a matter of substantive federal

arbitration law, an arbitration provision is

severable from the remainder of the contract.

Second, unless the challenge is to the

arbitration clause itself, the issue of the

contract's validity is considered by the

arbitrator in the first instance. Third, this

arbitration law applies in state as well as

federal courts.

* * *

Applying them to this case, we conclude that

because respondents challenge the

Agreement, but not _ specifically its

arbitration provisions, those provisions

are enforceable apart from the remainder

of the contract. The challenge should

therefore be considered by an arbitrator,

not a court.

546 U.S. 445-46 (emphasis supplied). The Court

specifically rejected the Florida court’s reasoning that

the arbitration agreement had to fall with the contract

as a whole because the contract was void as a matter

of state public policy. “(W]e cannot accept the Florida

Supreme Court’s conclusion that enforceability of the

arbitration agreement should turn on “Florida public

policy and contract law.” Id. at 446 (citations

omitted).

The Court reiterated this holding in Preston v.

Ferrer, 552 U.S. 346 (2008), where it considered

whether a state rule requiring the exhaustion of

administrative proceedings involving the validity of

talent agent contracts required a stay of pending

arbitration. This Court held that Buckeye Check

Cashing clarified that “all disputes arising under [the

parties’) contract, concerning the validity of the entire

contract are to be resolved by the arbitrator in the first

instance, not by a federal or state court. Jd. at 349.

The Court further reiterated that the FAA “declares a

national policy favoring arbitration”, which policy

applied to the state courts and “forecloses state

legislative attempts to undercut the enforceability of

arbitration agreements.” Jd. at 353 (citations omitted).

Notwithstanding the public policy of California to

regulate talent contracts, the Court held to its prior

decisions and directed that “attacks on the validity of

an entire contract, as distinct from attacks aimed at

the arbitration clause, are within the arbitrator’s ken.”

Id.

The Oklahoma court’s broadly-stated rule allowing

the review of the validity of underlying employment

agreements containing an arbitration provision has

also been expressly rejected by this Court. In Circuit

City Stores, Inc. v. Adams, 532 U.S. 105 (2001), the

Court reversed the holding of the United States Court

of Appeals for the Ninth Circuit that all employment

contracts were beyond the FAA’s reach. There, the

Court found that arbitration did not diminish the

rights of employees, emphasizing that “[b]y agreeing

to arbitrate a statutory claim, a party does not forgo

the substantive rights afforded by the statute; it only

submits to their resolution in an arbitral, rather than

a judicial forum.” Jd. at 123 (quoting Gilmer uv.

Interstate/Johnson Lane Corp., 500 U.S. 20, 26

(1991)).

Later, although addressing the scope of an

arbitration clause in an employment agreement, the

Court confirmed that the severability principles of

Prima Paint and Buckeye Check Cashing apply in the

context of employment agreements. In Rent-A-Center,

West, Inc. v. Jackson, 561 U.S. __, _, 180 S. Ct. 2772

(2010), the plaintiff employee brought employment

discrimination and retaliation claims under 42 U.S.

§ 1981. In its analysis of whether the claims were

subject to the parties’ arbitration agreement, the Court

reaffirmed the general rule that courts may only hear

challenges specifically aimed at the arbitration

agreement and that challenges aimed at the

agreement as a whole must go to the arbitrator. Id. at

2778. “Thus, a party’s challenge to another provision

of the contract, or to the contract as a whole does not

prevent a court from enforcing a specific agreement to

arbitrate.” Jd. “Thus, in an employment contract many

elements of alleged unconscionability applicable to the

entire contract (outrageously low wages, for example)

would not affect the agreement to arbitrate alone. But,

even where that is not the case — as in Prima Paint

* * * -. we nonetheless require the basis of the

challenge to be directed specifically to the agreement

to arbitrate before the court will intervene.” Id.

The Supreme Court of Oklahoma’s refusal to

submit to arbitration the validity of the Agreement

under 15 O.S. § 219A conflicts with long-standing

authority of this Court.

II. The Supreme Court Of Oklahoma Has

Created A Rule Barring Arbitration Of An

Entire Class Of Cases And Exhibits The

Historical Hostility Toward Arbitration The

FAA Was Designed To End.

The FAA was enacted to “reverse the longstanding

judicial] hostility to arbitration agreements,” “to place

[these] agreements upon the same footing as other

contracts,” and to “manifest a liberal federal policy

favoring arbitration agreements.” EEOC v. Waffle

House, Inc., 534 U.S. 279, 289 (2002); see also Hall

Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 581

(2008). As a result, this Court repeatedly has granted

review to strike down state rules prohibiting the

arbitration of a particular type of claim. See, e.g.,

Marmet Health Care Ctr., 132 S. Ct. at 1203-04 (FAA

preempts state statutory bar to arbitration in nursing

home injury cases); Concepcion, 131 S. Ct. at 1747

(FAA preempts state rule prohibiting class action

waivers in arbitration agreements); Preston, 552 U.S.

at 356 (FAA preempts state law granting state

commissioner exclusive jurisdiction to decide issue the

parties agreed to arbitrate); Mastrobuono v. Shearson

Lehman Hutton, Inc., 514 U.S. 52, 56 (1995) (FAA

preempts state law requiring courts to hear punitive

damage claims); Perry v. Thomas, 482 U.S. 483, 491

(1987) (FAA preempts state law requirement that

courts decide wage disputes); Southland Corp., 465

U.S. at 10 (FAA preempts state statute prohibiting

arbitration of claims under financial statute).

In bolded-text, the Supreme Court of Oklahoma

illustrated its ongoing defiance of this Court’s

precedent and its clear intent to continue to do so in

the future. The court stated:

Our jurisprudence controls this issue. Wyatt-

Doyle & Butler Engineers, Inc. v. City of Eufala,

2000 OK 74, 13 P.3d 474 held that the Uniform

Arbitration Act . . . did not prohibit this

Court from reviewing a contract submitted

to arbitration where one party asserted

the underlying agreement was void and

unenforceable. In Cardiovascular Surgical

Specialists, Corp. v. Mammana, 2002 OK 27, 61

P.3d 210, we relied on Wyatt-Doyle in

determining that an arbitrator’s review of a

contract would not prevent this Court

from considering the contract’s validity.

Furthermore, we re-emphasized a

principle first enunciated in Wyatt-Doyle,

that the public right to be free from

restraint of trade “cannot be waived by the

parties’ agreement to submit the issue of

the validity of a contract provision to

arbitration. A void provision provides no

legal basis for enforcement whether

through arbitration or judicial

pronouncement.” We reviewed an

underlying employment contract in

Thompson v. Bar-S Foods Co., 2007 OK 75, 174

P.3d 567 and held that no arbitration was

required where the agreement was not

based on a valid contract.

App. 14a. (emphasis in original opinion).

As the court did not reject the application of the

FAA to this controversy (or even conduct an interstate

commerce analysis), there can be no doubt it intends

its holding to be a proclamation applicable to all

arbitrable controversies in Oklahoma courts. Lest

there be any doubt, the court stated: “The Supreme

Court decisions discussed therein {in Bruner]},’ and

relied upon by Nitro-Lift here, were found not to

inhibit our review of the underlying contract’s

validity.” App. 15a. (emphasis in original opinion).”

Here, where Oklahoma has created a per se rule

allowing courts to decide the vaidity of employment

As discussed supra page 8, the Oklahoma court’s primary

reliance upon its own decision in Bruner v. Timberlane Manor Ltd.

P’ship further highlights its hostility to arbitration. Bruner was

summarily rejected by this Court in Marmet Health Care Ctr. , 132

S. Ct. 1203-04, when the Court struck down the application of a

nearly identical West Virginia anti-arbitration provision. Equally

important, the Bruner decision contained a detailed (although

erroneous) discussion of whether the agreement involved

interstate commerce. Yet, on the wholly distinguishable facts of

this case, the court here did not even attempt such an analysis.

Moreover, the court relied upon Bruner after an Oklahoma federal

district court rejected the commerce clause analysis in Bruner and

enjoined the state health care department from enforcing the anti-

arbitration provision of that act. See Rainbow Health Care Ctr. v.

Crutcher, 07-cv-194-IHP, 2008 WL 268321 at *6 (N.D. Okla. Jan.

29, 2008) (unpublished). Yet, the court in this case did not so

much as mention that decision.

* In rejecting this Court’s prior FAA authority, the Supreme

Court of Oklahoma also relied upon its prior decision in

Cardiovascular Surgical Specialists, Corp. v. Mammana, 61 P.3d

210 (Okla. 2003). There, the state court gave no deference to the

arbitration award and found that it could independently review

the validity of the underlying non-compete agreement. 61 P.3d at

212-13. While it was unclear whether the court was applying

federal or state arbitration law, that decision was squarely at odds

with this Court’s decisions governing the limited judicial review

of arbitration awards. See, e.g., Major League Baseball Players

' Ass’n vu. Garvery, 532 U.S. 504, 509 (2001).

contracts in the first instance, the decision should be

summarily reversed by this Court.

Ill. The Decision Below Is Exceptionally

Important.

In recent Terms this Court has reaffirmed that

state-law rules prohibiting arbitration of a class of

cases are outright preempted by the FAA. In this case,

the Supreme Court of Oklahoma has formulated and

published a rule so broad it would allow the court to

extend judicial review of an underlying agreement in

any arbitrable case, especially employment disputes.

Given its head-on conflict with this Court’s simple,

clear statements of the law, Oklahoma’s rule is

inconsistent with this Court’s fundamental role in our

judicial system. The Supremacy Clause mandates that

“the Judges in every state shall be bound” by federal

law. U.S. Const. Art. VI, cl. 2. “It is this Court’s

responsibility to say what a statute means, and once

the Court has spoken, it is the duty of other courts to

respect that understanding of the governing rule of

law.” Rivers v. Roadway Exp., Inc., 511 U.S. 298, 312

(1994).

The threat that Oklahoma will apply its broad rule

to cases beyond the covenant-not-to-compete context is

bolstered by the state court’s silence as to any limiting

principle. Further, the state court’s reliance on cases

involving all manner of disputes shows that it does not

intend to be bound by the facts of this case. Indeed, by

relying primarily upon the Bruner nursing home

injury case, it has exhibited a willingness to review

underlying contracts containing arbitration

agreements in any context whatsoever. It isimportant

for this Court to put an end to Oklahoma’s judicial

encroachment into areas clearly preempted by the

FAA.

It is readily apparent that the Supreme Court of

Oklahoma does not believe arbitrators can uphold

Oklahoma law and public policy as well as Oklahoma

courts. See App. 14a (“[T)he public right to be free from

restraint of trade ‘cannot be waived by the parties’

agreement to submit the issue of the validity of a

contract to arbitration.”) (citation omitted). The

decision in this case is a prime example of the judicial]

hostility the FAA was designed to end. Mastrobuono,

514 U.S. at 56. Rather than fulfill the purposes of the

FAA, Oklahoma’s rule “will unnecessarily complicatle]

the law and breed|(] litigation from a statute that seeks

to avoid it.” Allied-Bruce Terminex Cos. v. Dobson, 513

U.S. 265, 275 (1995).

CONCLUSION

The petition for a writ of certiorari should be

granted. The Court may wish to consider summary

reversal.

Respectfully submitted,

Jay P Walters

Counsel of Record

Kevin R. Donelson

Kelli M. Masters

FELLERS SNIDER BLANKENSHIP BAILEY

& TIPPENS, PC

100 N. Broadway

Suite 1700

Oklahoma City, OK 73102

(405) 232-0621

jwalters@fellerssnider.com

Counsel for Petitioner

APPENDIX

TABLE OF CONTENTS

Appendix A Supreme Court of the State

of Oklahoma Opinion

(November 22, 2011) ............ la

Appendix B Supreme Court of the State

of Oklahoma Order

oe eer eee 27a

Appendix C District Court of Johnston

County, State of Oklahoma

Order

(November 23, 2010) ........... 29a

Appendix D Supreme Court of the State

of Oklahoma Order

Denying Rehearing

(February 13, 2012) ............ 32a

APPENDIX A

IN THE SUPREME COURT

OF THE STATE OF OKLAHOMA

2011 OK 98

No. 109,003

[Filed November 22, 2011]

EDDIE LEE HOWARD and

SHANE D. SCHNEIDER,

Plaintiffs/Appellants,

NITRO-LIFT TECHNOLOGIES, L.L.C.,

Defendant/Appellee.

ll i i ee a

FOR OFFICIAL PUBLICATION

APPEAL FROM THE DISTRICT COURT

OF JOHNSTON COUNTY

q¥O The plaintiffs/appellants, Eddie Lee Howard

(Howard) and Shane D. Schneider (Schneider)

(collectively, employees), both Oklahoma residents

hired in Tishomingo, entered an employment contract

with the defendant/appellee, Nitro-Lift Technologies,

L.L.C. (Nitro-Lift/employer). For two years following

termination, the contract prohibits the employees

from: working for, leasing to, or selling equipment to

competitors; canvassing, soliciting, approaching, or

enticing away any past or present Nitro-lift customer

or supplier; and engaging, employing, soliciting, or

contacting officers and employees of the employer with

the intent to employ same. The contact contains an

arbitration agreement requiring application of

Louisiana law with disputes to be resolved in Houston,

Texas. After the employees terminated their

employment with Nitro-Lift, they went to work for a

competitor in Arkansas. The employer filed an

arbitration proceeding in Houston. Howard and

Schneider filed an application for a declaratory

judgment and injunctive relief in Johnston County

asserting that the non-competition agreement violated

public policy. The district court initially granted the

employees a temporary injunction, prohibiting the

employers from continuing the arbitration proceedings

in Texas. Thereafter, the employer filed a motion to

dismiss. After considering the parties’ briefs and

arguments, the district court found the arbitration

clause to be valid on its face and reasonable in its

terms, lifted the temporary restraining order, and

granted the motion to dismiss. We hold that: 1) in

conformance with our prior jurisprudence, the

existence of an arbitration agreement in an

employment contract does not prohibit judicial review

of the underlying agreement; 2) as drafted, the non-

competition covenants are void and unenforceable as

against Oklahoma’s public policy expressed by the

Legislature’s enactment of 15 O.S. 2001 §219A; and

3) judicial modification of the covenant not to compete

is inappropriate where, as here, the contractual

provisions would have to be substantially excised,

leaving only a shell of the original agreement, and

would require the addition of at least one material

term.

REVERSED AND REMANDED

Micah Knight For Plaintiffs/Appellants,

Durant, Oklahoma

Kelli M. Masters, For Defendant/Appellee.

Fellers, Snider, Blankenship

Bailey & Tippens,

Oklahoma City, Oklahoma

WATT, J:

491 Three issues' must be addressed to resolve this

cause. They are whether: 1) the validity of the

' The cause was retained to determine whether Oklahoma’s public

policy prohibited enforcement of an employment agreement

providing that arbitration should take place in another

jurisdiction with the application of yet a different state’s law.

Nevertheless, the cause’s resolution on other grounds would

render any statement on the issue an advisory opinion. See, Ball

v. Wilshire Ins. Co., 2007 OK 80, fn. 3, 184 P.3d 463; Scott v.

Peterson 2005 OK 84, ¥27, 126 P.3d 1272; City of Midwest City v.

House of Realty, Inc., 2004 OK 56, fn. 14, 100 P.3d 678. All issues

addressed herein are fairly comprised within the petition for

declaratory judgment and injunctive relief filed in the district

court on October 14, 2010 and within the Motion of Appellants

that Appeal be Retained for Disposition by Supreme Court filed on

December 14, 2010. Burrell v. Burrell, 2007 OK 47, fn. 10, 192

P.3d 286 [An argument need not be artfully drawn as long as it is

fairly comprised within the pleadings presented to the trial court.)

Furthermore, the parties were given the opportunity to address

the effect of 15 O.S. 2001 §219A, see note 2, infra, on the non-

competition provision by this Court’s order of October 18, 2011.

We note that in Bakhsh v. JACRRC Enterprise, Inc., 1995 OK CIV

APP 40, 49, 895 P.2d 746, the Court of Civil Appeals determined

that a forum selection clause may be so unreasonable that it will

be gravely difficult and inconvenient resulting in a party being

deprived of a day in court. If so, it could be declared

unenforceable. For the same proposition, see M/S Bremen v.

Zapata Off-Shore, Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513

(1972). See generally, M. Rosenhouse, J.D., “Validity and Effect

of Stipulation in Contract to Effect that It Shall Be Governed by

Law of Particular State which is neither Place where Contract Is

made nor Place Where It Is To Be Performed,” 16 A.L.R.4” 967

(1982); F. Dougherty, J.D., “Validity of Contractual Provision

Limiting Place or Court in which Action May Be Brought,” 31

A.L.R.4" 404 (1984); and W. Heiser, “Forum Selection Clauses in

State Courts: Limitations on Enforcement after Stewart and

Carnival Cruise,” 45 Fla.L.Rev. 361 (1993).

covenants not to compete should be resolved by the

arbitrator or this Court; 2) the underlying covenant is

void as against public policy pursuant to 15 O.S. 2001

§219A;* and 3) if so, can it be modified judicially to

conform with the controlling statutory provision.*

? Title 15 O.S. 2001 §219A providing:

“A. A person who makes an agreement with an employer,

whether in writing or verbally, not to compete with the

employer after the employment relationship has been

terminated, shall be permitted to engage in the same

business as that conducted by the former employer or in

a similar business as that conducted by the former

employer as long as the former employee does not directly

solicit the sale of goods, services or a combination of goods

and services from the established customers of the former

employer.

B. Any provision in a contract between an employer and

an employ. © in conflict with the provisions of this section

shail be void and unenforceable.”

° Id. Prior to today’s opinion, there have been only two non-

precedential, distinguishable pronouncements on 15 O.S. 2001

§219A, see note 2, infra. The first came from the United States

District Court in Eakle v. Grinnell Corp., 272 F.Supp.2d 1304

(E.D.Okla. 2003). While the federal court refused to apply §219A

retroactively, its assessment of the effect of the statute is

consistent with our ruling today. The opinion provides in

pertinent part:

“... Initially, it is argued by Eakle that the NCA violates

section 219A because of its duration, geographic

restriction, and overall comprehensive nature of the

prohibited activities. Eakle accurately points out that

section 219A permits employees to enter into non-compete

agreements with employers, but only to the extent ‘the

former employee does not directly solicit the sale of goods,

services or a combination of goods and services from the

q¥2 We determine that the existence of an

arbitration agreement in an employment contract does

not prohibit judicial review of the underlying

agreement. Our determination is supported by our

prior jurisprudential pronouncements in: Wyatt-Doyle

& Butler Engineers, Inc. v. City of Eufaula, 2000 OK

74, 13 P.3d 474; Cardiovascular Surgical Specialists,

established customers of the former employer.’ 15 O.S.

§219A(A). Otherwise, the employee is ‘permitted to

engage in the same business as that conducted by the

former employer or in a similar business as that

conducted by the former employer.’ Jd. Admittedly, the

NCA goes beyond section 219A(A)’s specific prohibition

against the active solicitation of established customers by,

among other things, precluding Eakle from owning,

operating, or being employed by any similar business in

competition with Grinnell... .”

Ingery Propane, LLC v. Lundy, 2009 OK CIV APP 8, 219 P.3d 547

involved a covenant not to compete executed in association with

a sale of goodwill, a situation not presented here. In consideration

for employment, Lundy signed a confidentiality and non-

solicitation agreement protecting Inergy’s customer information

and lists, pricing, business strategies, and trade secrets. It also

prohibited Lundy, for one year, from soliciting the hiring of Inergy

employees, and, for two years, soliciting or diverting customers

within fifty (50) miles of the company’s business locations where

Lundy had worked. The COCA determined, at least in some

instances, the rule of reason would be applicable even under the

confines of 15 O.S. 2001 §219A. It held that the statute addressed

the balance of competitive effects under a rule of reason analysis

finding the non-solicitation agreement enforceable.

Pronouncement by an inferior federal court, although not binding

of this Court, may have persuasive value. See, Boswell v. Schultz,

2007 OK 94, 415, 175 P.3d 390, Medipour v. State ex rel. Dept. of

Corrections, 2004 OK 19, 18, 90 P.3d 546. Opinions released for

publication by order of the Court of Civil Appeals are persuasive

only and lack precedential effect. Rule 1.200, Supreme Court

Rules, 120.8. 2001, Ch. 15, App. 1; 20 O.S. 2001 §§30.5 and 30.14.

Corp. v. Mammana, 2002 OK 27, 61 P.3d 210;

Thompson v. Bar-S Foods Co., 2007 OK 75, 174 P.3d

567; and Bruner v. Timberlane Manor Ltd.

Partnership, 2006 OK 90, 155 P.3d 16.

43 As drafted, we hold that the non-competition

covenants are void and unenforceable as against

Oklahoma’s public policy expressed by the

Legislature’s enactment of 15 O.S. 2001 §219A.* They

contain provisions, for the period of two years,

prohibiting: 1) employment with any oil or gas entity

located in the United States and generating five

percent (5%) of its gross revenues from nitrogen

generation; 2) solicitation of any past or present Nitro-

Lift customer or supplier; and 3) employing or

soliciting employment of any Nitro-Lift officer or

employee. Finally, we determine that judicial

modification of the contractual provisions is

inappropriate where, as here, the contractual

provisions would have to be substantially rewritten to

cure multiple defects.°

FACTS

94 Howard was hired by Nitro-Lift initially on

August 18, 2008 at its offices in Tishomingo. At that

time, Howard had approximately twenty (20) years’

experience in the oil and gas industry. Due to a

* Title 15 O.S. 2001 §219A see note 2, supra.

° In reaching our decision today, we consider extant federal and

state precedent. Nevertheless, our determinations rest squarely

within Oklahoma law which provides bona fide, separate,

adequate, and independent grounds for our decision. Michigan v.

Long, 463 U.S. 1032, 103 S.Ct. 3469, 77 L.Ed.2d 1201 (1983).

dispute over hours worked, compensation paid, and

time off, Howard quit in November of 2009.

Approximately a month later, Nitro-Lift rehired him.

Based on similar concerns to those he had in 2009,

Howard again resigned in April of 2010.

475 In July of 2009, Nitro-Lift hired Schneider at its

office in Tishomingo. The employee had prior

experience in the oil field with Halliburton. Harboring

complaints similar to those of Howard, Schneider quit

on June 11, 2010.

q¥6 Both employees signed confidentiality/non-

compete agreements with Nitro-Lift at their hiring.®

The agreements provide that neither employee, for a

period of two (2) years following separation, will: be

employed by any business involved in nitrogen

generation’ in the United States; solicit any past or

present customer or supplier of the employer; or

engage, employ, solicit, or contact any Nitro-Lift officer

or employee for the purpose of recruiting the officer or

employee for employment. They also bar the

employees from loaning money to a business engaging

in nitrogen generation and selling or leasing

equipment to any person or company of like kind.

° Although an employment agreement had been executed when he

was originally hired, Howard alleges that no agreement was

signed when he went back to work.

" The Confidentiality/Non-Compete agreement defines “nitrogen

generation” as:

“... the use of non-cryogenically generated nitrogen for

applications on wellsites in the oil and gas industry in the

United States...”

{7 After July 8, 2010, Nitro-Lift served the

employees with a demand for arbitration alleging that

the employees had breached the non-compete

agreement and should be ordered to refrain: a) from

disclosing or using Nitro-Lift’s confidential

information; b) from inducing its employees to leave

their employment with the company; and c) from

competing or interfering with the employer’s business

relationships or soliciting its customers.*° The

* The confidentiality/non-compete agreements provide in

pertinent part:

“... k) In consideration of the receipt of Confidential

Information during employment, the receipt of

compensation, each element of compensation being hereby

acknowledged by Employee as adequate, Employee hereby

covenants and agrees that for two years from the date of

separation from employment with Nitro-Lift, regardless

of the reason or cause for separation, he will not directly

or indirectly; [sic]

i) own, manage, operate, join, control or participate in or

be connected with (whether a director, officer, employee,

agent, representative, partner, consultant or otherwise),

or loan money to or sell or lease equipment to, any

business or Person, which wholly or in any significant

part, engages in Nitrogen Generation (as defined below)

(a ‘Competing Business’) . . . The phrase ‘Nitrogen

Generation’ means the use of non-cryogenically generated

nitrogen for applications for wellsites [sic] in the oil and

gas industry in the United States;

ii) for purposes related to any Competing Business or

about whom Employee has Confidential Information,

canvass, solicit, approach or entice away or cause to be

canvassed, solicited, approached or enticed away from

Nitro-Lift or its Affiliates any Person who or which is a

past or present customer or supplier of Nitro-Lift or any

10a

agreement calls for the application of Louisiana law in

an arbitration proceeding to be conducted in Houston,

Texas.”

of its Affiliates, or cause any such Person to curtail or

cancel its business with Nitro-Lift or its Affiliates; or

iii) engage or employ, or solicit or contact with a view to

the engagement or employment of any Person who is an

officer or employee of Nitro-Lift or any of its Affiliates, or

induce or attempt to influence any such Person to

terminate his or her employment.

The parties agree and acknowledge that the limitations as to time,

geographical area and scope of activity to be restrained as set

forth in Section 4(k) are reasonable and do not impose any greater

restraint than is necessary to protect the legitimate business

interests of Nitro-Lift. To the extent that any part of this Section

4(k) may be invalid, illegal or unenforceable for any reason, it is

intended that such part shall be enforceable to the extent that a

court of competent jurisdiction shall determine that such part, if

more limited in scope, would have been enforceable, and such part

shall be deemed to have been so written and the remaining parts

shall as written be effective and enforceable in all events.”

° The confidentiality/non-compete agreements provide in

pertinent part:

“... ARBITRATION

a)Any dispute, difference or unresolved question between

Nitro-Lift and the Employee (collectively, the ‘Disputing

Parties’) shall be settled by arbitration by a single

arbitrator mutually agreeable to the Disputing Parties in

an arbitration proceeding conducted in Houston, Texas...

CONSTRUCTION

THIS AGREEMENT SHALL, IN ALL RESPECTS, BE

SUBJECT TO AND INTERPRETED, CONSTRUED AND

lla

48 The instant cause arises out of the employee’s

petition for declaratory judgment and injunctive relief

filed in the District Court of Johnston County on

October 14, 2010. The employees sought judgment

declaring the non-compete agreement null and void

and enjoining enforcement of the same. The district

court granted the employees a temporary restraining

order pending a hearing. On November 9, 2010, Nitro-

Lift filed a motion to dismiss. The cause was heard on

November 23, 2010. An order issued that same day in

which the district court found the arbitration

agreement to be valid on its face and reasonable in its

terms and scope. Nitro-Lift’s motion to dismiss was

granted. The district court denied the employees’

motion for a stay pending appeal filed on December 2,

2010. We also declined to issue a stay. However, we

granted the employees’ motion to retain the cause on

January 19, 2011.

979 On October 18, 2011, we issued a show cause

order directing the parties to address the effect of 15

O.S. 2001 §219A on the cause. Briefs were filed on

October 28 and October 31* by the employees and the

employer, respectively.

—_

ENFORCED IN ACCORDANCE WITH THE LAWS IN

EFFECT IN THE STATE OF LOUISIANA, WITHOUT

REGARD TO ITS CONFLICT OF LAWS

PRINCIPLES. .. ” [Emphasis in original.]

12a

Standard of Review’’

{10 In Oklahoma, the rules governing appellate

review in regard to injunctive relief are settled.

Matters involving the granting or denying of injunctive

relief are of equitable concern.'’ A judgment issuing or

refusing to issue an injunction will not be disturbed on

appeal unless the lower court has abused its discretion

or the decision is clearly against the weight of the

evidence.'* An abuse of discretion occurs when a

decision is based on an erroneous conclusion of law or

where there is no rational basis in evidence for the

ruling.’ Nevertheless, this Court is not bound by the

findings or reasoning of the lower court. Rather, we

independently consider, weigh, and examine the

evidence."

'° No one alleges that the contractual language is ambiguous.

Therefore, it is subject to interpretation as a matter of law. Pitco

Prod. Co. v. Chaparral Energy, Inc., 2003 OK 5, 412, 63 P.3d 541;

Mercury Inv. Co. v. F.W. Woolworth Co., 1985 OK 38, 49, 706 P.2d

523; Walker v. Telex Corp., 1978 OK 13, 47, 583 P.2d 482.

"! Sharp v. 251" Street Landfill, Inc., 1996 OK 109, 45, 925 P.2d

546; Jackson v. Williams, 1985 OK 103, 49, 714 P.2d 1017.

2 Brown v. Oklahoma Secondary School Activities, 2005 OK 88,

411, 125 P.3d 1219; Johnson v. Ward, 1975 OK 129, 442, 541 P.2d

182; Bartlesville.v. Ambler, 1971 OK 154, 424, 499 P.2d 433.

‘8 Matter of BTW, 2008 OK 80, 420, 195 P.3d 896; Spencer v.

Oklahoma Gas & Elec. Co., 2007 OK 76, 413, 171 P.3d 890; Fent

v. Oklahoma Natural Gas Co., 2001 OK 35, 412, 27 P.3d 477.

* Sharp v. 251" Street Landfill, Inc., see note 11, supra, Jackson

v. Williams, see note 11, supra; Public Serv. Co. of Oklahoma uv.

Home Builders Ass’n of Realtors, Inc., 1976 OK 120 75, 554 P.2d

1181.

13a

Y¥ll We remain mindful that injunctions are

extraordinary remedies that should not be lightly

granted.”© Entitlemesit to injunctive relief must be

established by clear and convincing evidence and the

nature of the complained of injury must not be

nominal, theoretical, or speculative."° Nevertheless,

the question of the existence of a viable, enforceable

agreement to arbitrate 1 is a question of law which this

Court reviews de novo.’

{12 a) Oklahoma case law supports a

determination that the existence of an

arbitration agreement in an employment

contract does not prohibit judicial review of

the underlying agreement.

413 Nitro-Lift argues that the issue of the validity

of the covenants not to compete is for the arbitrator.

In doing so, the employers rely upon United States

Supreme Court jurisprudence. The employees assert

that jurisdiction lies in this Court based on our

pronouncements addressing the issue. We agree with

the employees.

Williams, see note 11, supra; Amoco Prod. Co. v. Lindley, 1980 OK

6, 450, 609 P.2d 733.

‘© Daffin v. State ex rel. Oklahoma Dept. of Mines, 2011 OK 22,

47, 251 P.3d 741; House of Realty v. City of Midwest City, 2004 OK

97, 109 P.3d 314 citing Sharn v. 251" St. Landfill, Inc., see note

11, supra.

’ Oklahoma Oncology & Hematology v. US Oncology, Inc., see

note 22, infra; Rogers v. Dell Computer Corp., see note 22, infra.

l4a

414 Our jurisprudence controls this issue.'® Wyatt-

Doyle & Butler Engineers, Inc. v. City of Eufaula, 2000

OK 74, 13 P.3d 474 held that the Uniform Arbitration

Act, 12 O.S. Supp. 2006 §1851, et seqg.’* did not

prohibit this Court from reviewing a contract

submitted to arbitration where one party asserted

that the underlying agreement was void and

unenforceable. In Cardiovascular Surgical

Specialists, Corp. v. Mammana, 2002 OK 27, 61 P.3d

210, we relied on Wyatt-Doyle, in determining that an

arbitrator’s review of a contract would not

prevent this Court from considering the

contract’s validity. Furthermore, we _ re-

emphasized a principle first enunciated in

Wyatt-Doyle, that the public right to be free from

restraint of trade ‘cannot be waived by the

parties’ agreement to submit the issue of the

validity of a contract provision to arbitration. A

void provision provides no legal basis for

enforcement whether through arbitration or

judicial pronouncement.” We reviewed an

underlying employment contract in Thompson v.

Bar-S Foods Co., 2007 OK 75, 174 P.3d 567 and held

that no arbitration was required where the

agreement was not based on a valid contract.

415 Most instructive on Nitro-Lift’s arguments is

Bruner v. Timberlane Manor Ltd. Partnerhship, 2006

OK 90, 155 P.3d 16. Bruner contains an exhaustive

overview of the United States Supreme Court decisions

8 Oliver v. Omnicare, Inc., see note 22, infra.

' The Oklahoma Uniform Arbitration Act, codified at 15 O.S.

2001 §§801, et seg. was recodified at 12 O.S. Supp. 2006, §§1851,

et seq., effective January 1, 2006. 2005 Okla. Sess. Laws, ch. 364.

15a

construing the Federal Arbitration Act (Federal Act),

9 U.S.C. §§1, et seq. and state arbitration law.”° The

Supreme Court decisions discussed therein, and

relied upon by Nitro-Lift here, were found not to

inhibit our review of the underlying contract’s

validity.”

20 Among the cases discussed are three Supreme Court cases on

which the employers rely: Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 338 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967);

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S.Ct.

1204, 163 L.Ed.2d 1038 (2006); and Southland Corp. v. Keating, 465

U.S. 1, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984). Prima Paint held that a

federal court was free to decide issues relating to the making and

performance of an arbitration agreement, but matters concerning

the making of the contract containing the arbitration agreement

were for the arbitrator. Buckeye reaffirmeti these principals.

Southland held that the Federal Act withdrew from the states the

power to require a judicial forum for the resolution of disputes which

the contracting parties agreed to resolve by arbitration.

#1 We acknowledged in Bruner v. Timberlane Manor Ltd.

Partnership, 2006 OK 90, 155 P.3d 16, that the United States

Supreme Court had determined that the Federal Arbitration Act

preempted and displaced state anti-arbitration statutes.

Nevertheless, relying on the well established principle in Oklahoma

law that where two statutes address the same subject, one specific

and one general, the specific will govern over the general, we held

that the specific statute in the Nursing Home Care Act addressing

the right to commence an action and to have a jury trial would

govern over the more general statute favoring arbitration. Here, we

are presented with similar circumstances to those encountered in

Bruner, this note, supra. The Oklahoma Legislature has enacted a

specific statute addressing non-competition agreements. Title 15

O.S. 2001 §219A, see note 2, supra, addresses the question of the

validity of the covenant at issue. Here, as in Bruner, this note,

supra, the more specific statute, 15 O.S. 2001 §219A, see note 2,

supra, addressing the validity of covenants not to compete, must

govern over the more general statute favoring arbitration.

16a

416 Nitro-Lift’s attempts to distinguish the cases

discussed above are unpersuasive. We hold that the

existence of an arbitration agreement in an

employment contract does not prohibit judicial review

of the underlying agreement. Our determination is

supported by our prior jurisprudential

pronouncements in: Wyatt-Doyle & Butler Engineers,

Inc. v. City of Eufaula, 2000 OK 74, 13 P.3d 474;

Cardiovascular Surgical Specialists, Corp. v.

Mammana, 2002 OK 27, 61 P.3d 210; Thompson uv.

Bar-S Foods Co., 2007 OK 75, 174 P.3d 567; and

Bruner v. Timberlane Manor Ltd. Partnership, 2006

OK 90, 155 P.3d 16.”

2 See also, Oklahoma Oncology & Hematology v. US Oncology,

Inc., 2007 OK 12, 419, 160 P.3d 936 |The existence of valid,

enforceable agreements to arbitrate is a question of law to be

reviewed by this Court de novo.]; Rogers v. Dell Computer Corp.,

2005 OK 51, 414, 138 P.3d 826 [Acknowledging that, under the

Federal Arbitration Act, when an arbitration provision affects

interstate commerce, the question of the contract’s validity as a

whole must be submitted to the arbitrator. Nevertheless, even

though we were prohibited by federal law from examining the

validity of the contract as a whole, we were not constrained from

treating the contract as valid and analyzing the arbitration

provision.}; Oliver v. Omincare, Inc., 2004 OK CIV APP 93, 15,

103 P.3d 626 [The question of whether a covenant not to compete

or non-competition provision is contrary to public policy is a

question of law for the court.]; Loewen Group Acquisition Corp. v.

Matthews, 2000 OK CIV APP 109, 413, 12 P.3d 977 [To the same

effect.}.

17a

{17 b) As drafted, the covenants are void and

enforceable as against Oklahoma’s public

policy expressed through legislative mandate

in 15 O.S. 2001 §219A.

418 Nitro-Lift argues that the covenants not to

compete are reasonable and necessary to protect the

confidential information and technical knowledge

imparted to the employees during training. The

employer asserts that the covenants should be

enforced as a necessary step in protecting Nitro-Lift in

the marketplace. The employees contend that they

received no confidential information during their

employment with Nitro-Lift and that the non-compete

provisions of the employment contract are void” as a

matter of law pursuant to 15 O.S. 2001 §217.% Based

on the Legislature’s more precise statement on the

matter of the enforceable parameters of a contract

between an employer and an employee containing a

* A void contract is one that is illegal or contrary to public policy.

Kincaid v. Black Angus Motel, Jnc., 1999 OK 54, 47, 983 P.2d

1016, Maryland Casualty Co. v. De Armon, 1937 OK 45, 40, 64

P.2d 719. A contract made in violation of a statute is void.

Kincaid v. Black Angus Motel, Inc., this note, supra; Missouri

Fidelity & Casualty Co. v. Scott & Scott, 1918 OK 658, 40, 178 P.

122.

* Title 15 O.S. 2001 §217 providing:

“Every contract by which any one is restrained from

exercising a lawful profession, trade or business of any

kind, otherwise than as provided by Sections 218 and 219

of this title, or otherwise than as provided by Section 2 of

this act, is to that extent void.”

18a

covenant not to complete in 12 O.S. Supp. 2006

§219A,” we agree.”

419 The primary goal of statutory interpretation is

to ascertain and, if possible, give effect to the intention

and purpose of the Legislature as expressed by the

statutory language.”’ Intent is ascertained from the

whole act in light of its general purpose and objective”

considering relevant provisions together to give full

force and effect to each.”” The Court presumes that the

Legislature expressed its intent and that it intended

*° We take judicial notice of applicable statutory provisions

pursuant to 12 O.S. 2001 §2201(A) providing:

“Judicial notice shall be taken by the court of the common

law, constitutions and public statutes in force in every

state, territory and jurisdiction of the United States.”

See also, Matter of McNeely, 1987 OK 19, ¥1, 734 P.2d 1294.

6 In the employees’ brief filed on October 28, 2011, they maintain

the same position on 12 O.S. Supp. 2006 §219A, see note 2, as this

Court takes today. In Nitro-Lift’s brief of October 31%, it

continued to assert that the statutory provision was not for this

Court to consider, but rather only for the arbitrator’s application.

* White v. Lim, 2009 OK 79, 412, 224 P.3d 679; Head v.

McCracken, 2004 OK 84, 413, 102 P.3d 670; Balfour v. Nelson,

1994 OK 249, 48, 890 P.2d 916, 39 A.L.R.5“ 935.

* Keating v. Edmondson, 2001 OK 110, 48, 37 P.3d 882; McSorley

v. Hertz Corp., 1994 OK 120, 46, 885 P.2d 1343; Oglesby v. Liberty

Mut. Ins. Co., 1992 OK 61, 48, 832 P.2d 834.

*® Haney v. State, 1993 OK 41, 45, 850 P.2d 1087, Public Serv. Co.

of Oklahoma v. State ex rel. Corp. Comm’n, 1992 OK 48 842 P.2d

750.

19a

what it expressed.*° Statutes are interpreted to attain

that purpose and end*' championing the broad public

policy purposes underlying them.” Only where the

legislative intent cannot be ascertained from the

statutory language, i.e. in cases of ambiguity or

conflict, are rules of statutory construction employed.**

If the language is plain and clearly expresses of the

legislative will, further inquiry is unnecessary.”

420 Title 15 O.S. 2001 §219A is the Legislature’s

pronouncement on Oklahoma’s_ public policy”

regarding covenants not to compete. It provides that

where an employee has executed a covenant not to

* Minie v. Hudson, see note 37, supra; Fuller v. Odom,1987 OK

64, 44, 741 P.2d 449; Darnell v. Chrysler Corp., 1984 OK 57, 45,

687 P.2d 132.

** Oklahoma Ass’n for Equitable Taxation v. City of Oklahoma

City, 1995 OK 62, 45, 901 P.2d 800, cert. denied, 516 U.S. 1029,

116 S.Ct. 674, 133 L.Ed.2d 523 (1995); Wilson v. State of

Oklahoma ex rel. Oklahoma Tax Comm’n, 1979 OK 62, 945, 595

P.2d 19:0.

* Haggard v. Haggard, 1998 OK 124, 11, 975 P.2d 439; Price v.

Southwestern Bell Tel. Co., 1991 OK 50, 7, 812 P.2d 1355.

8 State ex rel. Dept. of Human Serv. v. Colclazier, 1997 OK 134,

49, 950 P.2d 824; Matter of Estate of Flowers, 1993 OK 19, 411,

848 P.2d 1146.

* White v. Lim, see note 27, supra; Rout v. Crescent Public Works

Auth., 1994 OK 85, 110, 878 P.2d 1045.

*° The Legislature defines Oklahoma’s public policy through its

statutory enactments. See, State ex rel. Henricksen v. State ex rel.

Corp. Comm’n, 2001 OK 89, 413, 37 P.3d 835; Todd v. Frank’s

Tong Serv., Inc., 1989 OK 121, 412, 784 P.2d 47; Mobbs v. City of

Lehigh, 1982 OK 149, 416, 655 P.2d 547, 31 A.L.R. 4" 1.

20a

compete with an employer, the employee “shall be

permitted to engage in the same business as that

conducted by the former employer or in a

similar business as that conducted by the former

employer as long as the former employee does

not directly solicit the sale of goods, services or

a combination of goods and services from the

established customers of the former employer.”

The statute goes on to provide that any provision in a

contract between an employer and an employee in

conflict with the provisions of the section “shall be

void and unenforceable.”™

{21 Subsection A utilizes the mandatory term,

“shall,”” in association with the employee’s right to

engage in the same or similar business as that of the

employer while subsection B provides that “any”

provision in a contract between the employer and

employee conflicting with those terms “shall be void

and unenforceable.” The term “any” is all-embracing

and means nothing less than “every” and “all.”* The

* Title 15 O.S. 2001 §219A, see note 2, supra.

*’ Generally, the use of “shall” signifies a command. City of

Midwest City v. House of Realty, Inc., 2008 OK 28, fn. 5, 198 P.3d

886; Zeier v. Zimmer, Inc., 2006 OK 98, 47, 152 P.3d 861; Cox v.

State ex rel. Oklahoma Dept. of Human Servs., 2004 OK 17, 421,

87 P.3d 607, cert. denied, _ _ U.S. ____, 129 S.Ct. 2434, 174 L.Ed.2d

228 (2009). Nevertheless, there may be times when the term is

permissive in nature. City of Midwest City v. House of Realty,

Inc., this note, supra; Minie v. Hudson, 1997 OK 26, 47, 934 P.2d

1082; Texaco, Inc. v. City of Oklahoma City, 1980 OK 169, 49, 619

P.3d 869.

* JPMorgan Chase Bank v. Specialty Restaurants, Inc., 2010 OK

2la

plain, clear, unmistakable, unambiguous, and

unequivocal language of 15 O.S. 2001 §219A prohibits

employers from binding employees to agreements

which bar their ability to find gainful employment in

the same business or industry as that of the

employer.” The only exception allowed by the

statutory provision is that the employee may be barred

from soliciting goods or services from the employer’s

established customers.

{22 The covenants not to compete contain

provisions, for the period of two years, prohibiting the

employees from accepting employment with any oil or

gas entity located in the United States which

generates five percent (5%) of its gross revenues from

nitrogen generation. The same clause prevents the

employees from: “owning, managing, operating,

joining, controlling or participating” in a similar

business; being a director, officer, representative,

partner, or consultant in any business engaging in

nitrogen generation; loaning money to a like

enterprise; or selling or leasing equipment to any

person or business which has any significant portion of

its business as nitrogen generation, whether or not the

equipment is related to that particular portion of the

business. The covenant conceivably could be

interpreted to prevent the employees from taking jobs

in any capacity from a competing business, even one

not directly related to the nitrogen generation process.

The agreement not only bars active solicitation of

65, 416, 243 P.3d 8; State ex rel. Porter v. Ferrell, 1998 OK 41,

99,959 P.2d 576.

8° Scanline Medical, LLC v. Brooks, see note 42, infra.

22a

current customers or suppliers of Nitro-Lift, it also

forbids the employees from approaching past

customers and suppliers. Furthermore, it operates to

inhibit the employees from employing or engaging any

Nitro-Lift officer or employee even where those

individuals might seek employment on their own

initiative rather than from any intervention by the

employees.

423 The non-competition contracts go well beyond

the bounds of what is allowable under §219A and

violate the legislatively expressed public policy.

Therefore, we hold that, pursuant to 15 O.S. 2001

§219A, the covenants not to compete are void and

unenforceable as against Oklahoma’s public policy

expressed through legislative mandate.

{24 c) Judicial modification of the covenant

not to compete is inappropriate where, as here,

the contractual provisions would have to be

substantially excised, leaving only a shell of

the original agreement, and would require the

addition of at least one material term.

{25 To bring the non-competition agreement within

the bounds of what is allowable under 15 O.S. 2001

§219A, we would have to decimate its provisions.

Essentially, subsections (k)(i) and (k)(iii) would have to

be stricken in their entirety, leaving only subsection

(k)Gi) relating to solicitation of past or present

customers or suppliers of Nitro-Lift. However, that

subsection also suffers shortcomings and infirmities.

{26 Subsection (k)(ii) prohibits the employee from

canvassing, soliciting, approaching or enticing away

Nitro-Lift’s past or present customers or suppliers.

23a

Section 219A allows an employer to _ prohibit

solicitation by an employee of “established customers,”

but it says nothing about barring purchases from an

employer’s suppliers. Undoubtedly, the Legislature, in

utilizing the term “established customer,” had in mind

those businesses and customers wherein a relationship

was ongoing and anticipated to continue into the

future.*° However, the non-competition agreement

does not define what is a “present customer™ which

might stretch to encompass temporary or single-event

relationships.

427 The covenant not to compete contains a

severability provision. Judicial modification is

justified if the contractual defect can be cured by

imposition of reasonable limitations concerning the

activities embraced, time, or geographical limitations.

Nevertheless, “there is more amiss here than can be

reformed effectively.” Two of the three provisions of

“ Characterizing an established customer as one which the

purchasers of a business would anticipate would continue to

patronize the enterprise. See, Bessemer Trust Co. v. Branin, 618

F.3d 76 (2™ Cir. 2010); Rice v. Hulsey, 829 N.E.2d 87 (Ind. App.

2005); Delta Resources, Inc. v. Harkin, 118 A.D.2d 133, 506

NY.S.2d 695 (1986).

“ In Key Temporary Personnel, Inc. v. Cox, 1994 OK CIV APP

123, 884 P.2d 1213, the Court of Civil Appeals determined that

the modification of a contract to limit “clients” to “clients who

remain Key clients” was not a substantial modification of the non-

competition agreement. Nevertheless, in doing so, it

differentiated the agreement under consideration from one in

which other major modifications might be required.

* Bayly,Martin & Fay, Inc. v. Pickard, 1989 OK 122, 414, 780

24a

the contract would require delineation in their

entirety. To conform with the restrictions of 15 O.S.

2001 §219A, we would have to determine whether the

phrase “present customers” within the agreement

conformed to the Legislature’s term “established

customer,” thereby supplying a material term of the

contract. We would also be required to excise the

portion of the subsection (k)(ii) relating to past

customers and suppliers.

428 We will not reform a covenant not to compete

so offensive that it would require us to supply material

terms.** We hold that the breadth of the delineation

required to bring the non-competition agreements into

conformance“ and the necessity of adding at least one

material term to the contract prevents judicial

modification.

CONCLUSION

{29 Through the enactment of 15 O.S. 2001 §219A,

the Legislature has expressed its intent with relation

to the viability of covenants not to compete in the

employment context. This Court does not extend its

P.2d 1168; Scaline Medical, LLC v. Brooks, 2001 OK CIV APP 88,

{32, 259 P.3d 911.

“ Bayly, Martin & Fay, Inc. v. Pickard, see note 42, supra. See

also, J. Boatman, “Contract Law: As Clear as Mud: The Demise

of the Covenant not to Compete in Oklahoma,” 2002 Okla.L. Rev.

491 (2002).

** This is not a situation where all the ills of the covenant not to

compete may be cured by striking offending sections. See,

Cardiovascular Surgical Specialists Corp. v. Mammana, 2002 OK

27, 61 P.3d 210.

25a

auspices, in determining the validity of a statute, to

consider its propriety, desirability, wisdom and

practicability. These matters are left to the legislative

department.* To do so here would be especially

egregious. The Legislature used mandatory directives

in 15 O.S. 2001 §219A regarding the boundaries of any

non-competition agreement extracted as a condition of

employment. In doing so, it utilized plain, clear,

unmistakable, unambiguous, and unequivocal

language leaving no room for judicial interpretation.

430 In conformance with our prior jurisprudence,

we hold that the existence of an arbitration agreement

in any employment contract does not prohibit judicial

review of the underlying agreement. As drafted, we

determine that the non-competition covenants are void

and unenforceable as against Oklahoma’s public policy

as expressed by the Legislature’s enactment of 15 O.S.

2001 §219A. Finally, because judicial modification

cannot be accomplished without rewriting the

agreement tocure multiple defects, leaving only a shell

of the original agreement, and would require the

addition of at least one material term, it is

inappropriate.

431 Discretion is abused, so as to warrant reversal,

when a trial judge makes a clearly erroneous

conclusion and judgment, against reason and the

evidence.“ On this record, we are constrained to hold

*’ Keating v. Edmondson, see note 28, infra. See also, State ex rel.

Cartwright v. Dunbar, 1980 OK 15, 48, 618 P.2d 900; Tate v.

Logan, 1961 OK 136, 40, 362 P.2d 670.

“© Spencer v. Oklahoma Gas & Elec. Co., see note 13, supra;

Tibbets v. Sight ‘n Sound Appliance Ctrs. , 2003 OK 72, 43, 77 P.3d

26a

that the lifting of the temporary injunction and the

failure to grant the employees permanent relief was

without a basis in law, reason, or evidence and an

abuse of discretion. The cause is reversed and

remanded for proceedings consistent with this opinion.

REVERSED AND REMANDED.

ALL JUSTICES CONCUR.

1042; Finnel v. Seismic, 2003 OK 35, 48, 67 P.3d 339; Green Bay

Packaging, Inc. v. Preferred Packaging, Inc., 1996 OK 121, 432,

932 P.2d 1091.

27a

APPENDIX B

IN THE SUPREME COURT

OF THE STATE OF OKLAHOMA

2011 OK 98

No. 109,003

[Filed October 19, 2011]

EDDIE LEE HOWARD and

SHANE D. SCHNEIDER,

Plaintiffs/Appellants,

NITRO-LIFT TECHNOLOGIES, L.L.C.,

Defendant/Appellee.

ee ee ee ee ee ee a

ORDER

We granted the plaintiffs’/appellants’ motion to

retain the above styled and numbered cause on

January 19, 2011. Essentially, the basis for the

request was to determine whether Oklahoma’s public

policy prohibited enforcement of a covenant not to

compete in an employment agreement providing that

arbitration should take place in another jurisdiction

28a

with the application of yet a different state law.

Neither of the parties addressed the effect that 15 O.S.

2001 §219A, specifically addressing the acceptable

ambit of covenants not to compete in the employment

relationship, might have upon the resolution of the

cause.

The parties are hereby ordered to show cause why

this matter should not be resolved by application of 15

O.S. 2001 §219A. The responses are to be filed

simultaneously, within ten (10) days of the date this

order is filed of record.

DONE BY ORDER OF THE SUPREME COURT

THIS 18™ DAY OF OCTOBER, 2011.

/s/ Steven W. Taylor

CHIEF JUSTICE

29a

APPENDIX C

IN THE DISTRICT COURT OF

JOHNSTON COUNTY

STATE OF OKLAHOMA

Case No: CJ-2010-57

[Filed November 23, 2010]

Eddie Lee Howard

Plaintiff,

VS.

Nitro-lift Technologies, Llc

Defendant.

ORDER

This matter is before the court on a motion to dismiss.

The parties have thoroughly briefed and argued the

issue to this court and after consideration, this court

finds as follows:

1. The Oklahoma statutory provision concerning

restraint of trade at 15 O.S.271 is not absolute; the

validity of any such restraint is determined by its

reasonableness. Key Temporary personnel vs. Cox,

Ok. App., 884 P2d 1213 (1994)

30a

2. In Oklahoma, arbitration agreements are generally

accepted, 12 O.S. 1851, et seq. and the role of the

courts is limited to certain preliminary inquiries in

the face of such an agreement, 12 O.S. 1857 (B).

This determination by the court is a “gateway”

question for the court to the binding effect of the

arbitration clause, Oklahoma Oncology vs. US

Oncology OK, 160 P3d 936 (2007). Generally, if an

otherwise valid clause is not an unreasonable

restraint the issues presented under the clause are

for the arbitration.

3. In this instance the court here finds there is a valid

arbitration clause. It is plainly stated and described

in the agreement signed by the parties and the

topics covered are reasonable, in that the

Defendant in this matter has a legitimate interest

in the protection of its confidentialities and

proprietary matters. Further the non-competition

provision which is designed to prevent competitors

from obtaining the benefit of specialized training

and knowledge imparted to its employees is

likewise reasonable and is restricted to a two (2)

year period in application. Finally the poison

providing that the employees may not for two (2)

years after termination with Nitro-lift solicit or

influence any person to terminate employment with

Nitro-lift is also reasonable.

4. Although in its argument the plaintiffs suggest

they might present a “fraud in the inducement” to

This arbitration clause, none was presented here

and no finding is entered in that regard

5. This court finding the arbitration agreement is

valid on its face and reasonable in its terms and

scope the Temporary Restraining Order sought by

3la

the Plaintiffs is denied and the Motion to Dismiss

of the Defendant company is granted.

Ordered this 23™ day of November, 2010.

/s/

THE HONORABLE ROBERT M. HIGHSMITH

32a

APPENDIX D

IN THE SUPREME COURT

OF THE STATE OF OKLAHOMA

2011 OK 98

No. 109,003

[Filed February 13, 2012]

EDDIE LEE HOWARD and

SHANE D. SCHNEIDER,

Plaintiffs/Appellants,

NITRO-LIFT TECHNOLOGIES, L.L.C.,

Defendant/Appellee.

Nee Nee eee eee ee”

ORDER

It is hereby ordered that petition for clarification

and/or rehearing filed by the defendant/appellee is

denied. Because this was not a proceeding to enforce

an arbitration award, the plaintiff/appellants

application for attorney fees is also denied. The appeal

33a

related costs of $483.99 are, however, awarded to the

plaintiff/appellants. 12 O.S. 2001 §978; Rules 1.14 and

1.36, Oklahoma Supreme Court Rules, 12 O.S. 2011,

Ch. 15 App. 1.

DONE BY ORDER OF THE SUPREME COURT

IN CONFERENCE THIS 13™ DAY OF

FEBRUARY, 2012.

/s/ Steven W. Taylor

CHIEF JUSTICE

ALL JUSTICES CONCUR

OPPOSITION

BRIEF

Supreme Cou, US.

RD FILED

“—— AUG 15 2012

BRIEFS OFFICE OF THE CLERK

No. 11-1377

IN THE

Supreme Court of the Anited States

NITRO-LIFT TECHNOLOGIES, L.L.C..,

Petitioner,

. 2

EDDIE LEE HOWARD and

SHANE D. SCHNEIDER,

Respondents.

On Petition for a Writ of Certiorari to the

Supreme Court of the State of Oklahoma

RESPONDENT'S BRIEF IN OPPOSITION

MICAH KNIGHT

Counsel of Record

MICAH KNIGHT, P.C.

123 N. 7% Ave.

P.O. Box 1576

Durant, OK 74702

(580) 924-1849

micahknight@sbcglobal.net

Attorney for Respondents

August 15, 2012

Library of Congress

Law Library

QUESTION PRESENTED

Whether this Court has jurisdiction to review a

state supreme court decision construing only state

law when all parties argued before that court that

state law applied to the issues in this case and no

party claimed that federal law applied until after the

state supreme court ruled based on Oklahoma law.

TABLE OF CONTENTS

UC Iee BSE TED occccsccccccssevecescccsescccesecesconssee i

SE I FF CUED oii ccvcecnceccsvastecnnncenseensssoens iv

IID snseetricccccnssorsensnsnsenecadeenensonsnmeeeneesenss 1

IIT sercnnssnsumesicseemnecaesensepeenmonnunnnnimemeimnaiaens 1

REASONS FOR DENYING THE WRIT.................... 5

I. No Federal Question is Properly Pre-

sented by This Case Because No Issue of

Federal Law Was Decided by, or Proper-

ly Raised Before, the Oklahoma Su-

IIE iiiinisiiiietdsiinintindanaiisabiiailiaebadedanstaing 5

II. Even if the FAA Were Implicated, This

Court Would Still have to Remand to the

Oklahoma Supreme Court to Determine

the Validity of the Arbitration Agree-

SIIITD \ceisitessinieiediehaestaiieehciiatiptaiaseghlasalinadeadiiaustialaabalaeaiiemlaiiaiiaiit 12

TABLE OF AUTHORITIES

Cases Pages

Adams v. Robertson, 520 U.S. 83 (1997) ..........0000000 12

AT & T Technologies, Inc. v. Communication

Workers of Am., 475 U.S. 643 (1986) ................ 13

Buckeye Check Cashing, Inc. v. Cardegna,

DI UN tiated ciated .8

Circuit City Stores, Inc. v. Adams, 532 U.S.

EES A RCM nape Re 10

Crowell v. Randell, 35 U.S. 368 (1836) ................... 10

Doctors Associates, Inc. v. Casarotto, 517

SAR Eee k ee en 12

First Options of Chicago, Inc. v. Kaplan, 514

ne ee 13

Fox Film Corp. v. Muller, 296 U.S. 207(1938)........... 5

Herb v. Pitcairn, 324 U.S. 117 (1945) ....................... 6

Herndon v. Georgia, 295 U.S. 441 (1935) .................. 5

Hill v. California, 401 U.S. 797 (1971) ................... 10

M/S Breman v. Zapata Off-Shore, Co., 407

IN ee iia a a a 14

Marmet v. Health Care Ctr., Inc. v. Brown,

Sk A ene 15

Mastrobuono v. Shearson Lehman Hutton,

ie Me iii eats 10

McGoldrick v. Compagnie Generale Transat-

lantic, 308 U.S. 430 (1940) .......cccccscccccscssccconseesee 10

Michigan v. Long, 463 U.S. 1032 (1983) ..............000.. )

Prima Paint Corp. v. Flood & Conklin Mfg.

Sel, GIG MPI cnccicnciccedésiinbetecndsmensedesséon 8

Rent-A-Center, W. v. Jackson, 561 U.S. __,

es We SE iniiiniciiincnissinnirnsenimenmoens 12,13

Safeway Stores, Inc. v. Oklahoma Retail

Grocers Assn., Inc., 360 U.S. 334 (1959) .............. 5

State Farm Mutual Automobile Ins. Co. v.

Duel, 324 U.W. 154 (1945) ................ccccccccccccceses 10

Volt Info. Sciences, Inc. v. Board of Trustees

of Leland Stanford Junior Univ., 489 U.S.

ECT er nea ne a oe 9,10

Howard v. Nitro-Lift Tech., L.L.C., 273 P.3d

EIA: SIIIIIET » ncirnininigneniasndmieididiniiusmutaianets 8, 9,14

Pointer v. Hill, 536 P.2d 358 (Okla. 1975) .............. 11

Pirrong v. Pirrong, 552 P.2d 383 (Okla. 1976)

seliianiainnenninteiiinieigninaiseieanindtueteaiiaNs ll

Tomahawk Resources, Inc. v. Craven, 130

ES SEED -chidscndcdinentenideuneneeveeneons 11,12

Statutes and Rules

| | KE ee eee eee EE 5, 10, 12

SE an Ser oe ee 3, 4, 7, 8,15

SE UIMIIITDD sdinccsinicintinhetniniiis ddeinnbidatatduenatiiesieiidmidiamadibiddiaias 6

As i aan aici 6

INTRODUCTION

This case involves a decision by the Oklahoma

Supreme Court construing Oklahoma law. Petitioner

would have this Court believe that the Oklahoma

Supreme Court ignored the decisions of this Court

construing the Federal Arbitration Act (“FAA”). The

application of the FAA, however, was not presented

to the Oklahoma Supreme Court until after that

court had already ruled on the merits based on state

law. At every level of this proceeding, Petitioner ar-

gued that state law (namely, the Oklahoma Uniform

Arbitration Act) applied to the arbitration clause in

this case. This Court has no jurisdiction over the pe-

tition because no federal law issues were decided be-

low or preserved by the Petitioner for review.

STATEMENT

Petitioner paints a misleading picture for the

Court. Eddie Howard and Shane Schneider are not

sophisticated professional employees. Respondents

are oil field workers. Their primary duties, while

employed with Petitioner, were to watch the gauges

on a truck in the oil field. Neither employee has a

college degree or specialized certificate because their

job with Petitioner did not require it. Neither em-

ployee received any specialized training or confiden-

tial information from Petitioner because their job

with the Petitioner did not require it.

Both of the Respondent employees are Oklahoma

residents. They both applied for a job at Petitioner's

offices in Tishomingo, Oklahoma, and during their

employment, they worked primarily in Oklahoma.

See Verified Application for Temporary Restraining

Order and Temporary Injunction and Supporting

Brief and Supporting Affidavits of Eddie Howard at

91-8 and Shane Schneider at 941-8 (October 14,

2010).

Petitioner required its employees to sign a form

entitled “Confidentiality/Non-Compete Agreement”

(“agreement”), which does not reference the FAA,

and prohibits the employees: (1) from working for a

competitor anywhere in the world for a period of two-

years following termination of employment, (2) from

soliciting Petitioner’s employees and customers for a

competitor or supplier, and (3) from loaning money to

a business engaged in the same business as Petition-

er.| The agreement states that Louisiana law applies

to the employment relationship and that disputes re-

garding the agreement must be submitted by em-

ployees to arbitration in Houston, Texas, over 300

miles away from Respondents’ homes in Oklahoma.

The agreement also allows Petitioner to file claims

against employees in court. Application for Tempo-

rary Restraining Order, Temporary Injunction and

Supporting Brief and Supporting Affidavit of Eddie

Howard and Shane Schneider (October 14, 2010).

Because of a dispute concerning work hours and

pay, Respondents quit their jobs with Petitioner and

went to work for a competitor who paid overtime.

1 Eddie Howard left his employment with Petitioner

and when he was re-hired by Petitioner a short time later,

he did not sign a new agreement. Application for Tempo-

rary Restraining Order, Temporary Injunction, Support-

ing Brief, and Supporting Affidavit of Eddie Howard at

95. (October 14, 2010). There is an unresolved issue as to

whether an employee is bound by a document signed dur-

ing a previous term of his employment.

Petitioner filed an arbitration proceeding in Houston,

Texas, pursuant to the Commercial Rules of Arbitra-

tion of the American Arbitration Association. Res-

pondents dispute the unverified facts alleged by Peti-

tioner, including but not limited to the allegation

that it paid all of the arbitration fees. In response,

Respondents filed a Petition for Declaratory Judg-

ment and Application for Temporary Restraining Or-

der and Temporary Injunction in the District Court

of Johnston County, Oklahoma, seeking to enjoin Pe-

tition from proceeding with the arbitration. Petition

for Declaratory Judgment, Application for Temporary

Restraining Order and Temporary Injunction and

Supporting Brief (Oct. 14, 2010).

Initially, the District Court granted a temporary

restraining order staying the arbitration. After hear-

ing arguments of counsel, the District Court denied

the temporary injunction, finding that the non-

compete agreement was reasonable and the arbitra-

tion agreement was valid under state law. Order of

the District Court of Johnston County, Oklahoma

(Nov. 23, 2010). Respondents appealed to the Okla-

homa Supreme Court. The Oklahoma Supreme

Court held as a matter of Oklahoma law that the fact

that the agreement contained an arbitration clause

did not, under Oklahoma’s Uniform Arbitration Act,

prevent the Oklahoma Supreme Court from review-

ing the validity of the agreement, and in doing so,

found that the noncompete agreement was void and

unenforceable as against the public policy of the

State of Oklahoma as articulated by the Oklahoma

Legislature in 15 O.S §219A. This holding was pre-

mised on the Petitioner’s own arguments that the ar-

bitration clause was governed by state law. Because

no federal issues were argued, the Oklahoma Su-

preme Court based its ruling on both the effect of the

arbitration clause and the underlying agreement on

Oklahoma law.

The Oklahoma Supreme Court’s ruling that the

agreement was void rested on the Oklahoma Legisla-

ture’s clear declaration of Oklahoma public policy as

related to noncompetition and _ non-solicitation

agreements in 15 O.S. § 219A:

A. A person who makes an agreement

with an employer, whether in writing or

verbally, not to compete with the em-

ployer after the employment relation-

ship has been terminated, shall be per-

mitted to engage in the same business

as that conducted by the former em-

ployer or in a similar business as that

conducted by the former employer as

long as the former employee does not di-

rectly solicit the sale of goods, serv’zes

or a combination of goods and services

from the established customers of the

former employer.

B. Any provision in a contract between

an employer and an employee in conflict

with the provisions of this section shall

be void and unenforceable.

15 O.S. §219A.

REASONS FOR DENYING THE WRIT

I. No Federal Question Is Properly Pre-

sented by This Case Because No Issue of

Federal Law Was Decided by, or Properly

Raised Before, the Oklahoma Supreme

Court.

The Petition for Certiorari should be denied be-

cause there is no federal question for this Court to

review. The Federal Arbitration Act, 9 U.S.C. §1, et

seq. (“FAA”) was not raised by the Petitioner until

after the Oklahoma Supreme Court decided the ap-

peal on the merits of the state law issues. Only after

the Supreme Court had issued a decision on the me-

rits did the Petitioner, as part of a petition for re-

hearing, raise the FAA. This Court has stated on

numerous occasions that it has no jurisdiction unless

a federal question has been both raised and decided

in the state court below. Safeway Stores, Inc., v. Ok-

lahoma Retail Grocers Assn., Inc., 360 U.S. 334, 342

at n. 7 (1959) (“The United States Supreme Court

will not decide an issue raised for the first time on

review of a state court decision). This Court does not

review state court decisions in circumstances, like

this case, when the federal law was not invoked or

briefed by the parties, or addressed by the state court

below. “[T]his rule applies whether the state law

ground is substantive or procedural.” Fox Film Corp.

uv. Muller, 296 U.S. 207, 210 (1935). Moreover, in a

case like the instant case, on direct review of a state

court judgment, the independent and adequate state

ground doctrine is jurisdictional. Herndon v. Georgia,

295 U.S. 441 (1935). (“We are not permitted to render

an advisory opinion, and if the same judgment would

be rendered by the state court after we corrected its

views of federal laws, our review could amount to

nothing more than an advisory opinion.”) Herb v.

Pitcairn, 324 U.S. 117 (1945).

In the Oklahoma District Court, Petitioner began

by arguing that Oklahoma law, including the Okla-

homa Uniform Arbitration Act, 12 O.S. §1851 et seq.,

and Oklahoma cases construing the Oklahoma sta-

tute, applied to the arbitration clause in this case.

See Defendant Nitro-Lift Technologies, L.L.C.’s Brief

in Support of its Motion to Dismiss (Nov. 9, 2012).

Petitioner next argued that either the Oklahoma or

Louisiana Uniform Arbitration Act, La. Rev. Stat.

§9:4201 et seq. applied. In the briefing in the Dis-

trict Court, Petitioner argued, “Whether the court

applies Oklahoma law or Louisiana law to the issues

before it the outcome should be the same.” Petitioner

cited United States Supreme Court decisions, only as

guidance in construing the state arbitration acts,

stating, “Louisiana courts will look to federal law to

interpret the Louisiana Arbitration Law, since it is

substantially identical to the UAA.” Defendant Nitro-

Lift Technologies, L.L.C.’s Supplemental Brief in

Support of its Motion to Dismiss, pp. 1 (Nov. 22,

2010).?

2 Petitioner filed three briefs at the District Court level

(1) Nitro-Lift’s Response to Application for Temporary

Restraining Order and Temporary Injunction and Brief in

Support (Nov. 9, 2010) (2) Nitro-Lift Technologies, L.L.C.’s

Motion to Dismiss and Brief in Support (Nov. 9, 2010),

and (3) Nitro-Lift Technologies, L.L.C.’s Supplemental

Brief in Support of its Motion to Disndiss (Nov. 22, 2010).

Each pleading urged the court to follow Oklahoma or

Louisiana law to interpret the arbitration provision.

At the hearing on November 23, 2011, Petitioner

again invoked only state law, stating, “We submitted

a supplemental brief to you regarding the applicable

Louisiana law which is, in essence, identical to Okla-

homa law that applies to arbitration.” Transcript of

Hearing before the Hon. Robert Highsmith, Johnston

County, District Court, State of Oklahoma, pp. 15, |s.

18-22 (Nov. 23, 2010). In sum, Petitioner’s overrid-

ing theme in the District Court was that either Ok-

lahoma law or Louisiana law applied to this case.

In the Oklahoma Supreme Court, Petitioner

again filed pleadings and briefs asserting that state

law applied to the agreement. Up to the moment the

Oklahoma Supreme Court issued its decision, Peti-

tioner did not once assert that the FAA applied to the

arbitration clause in this case or otherwise seek to

invoke federal law as the basis for its assertion that

the question whether the agreement was void must

be decided in arbitration rather than by the court.

Instead, Petitioner consistently argued that the state

arbitration laws of Oklahoma or Louisiana required

that result. Nitro-Lift’s Response to Petition for Cer-

tiorari before the Oklahoma Supreme Court and Brief

to Show Cause Regarding Application of 15 O.S. 2001

§219A (Oct. 31, 2011).

As a result of Petitioner’s framing of the issue, the

Oklahoma Supreme Court decision did not purport to

construe the FAA and did not even determine the

proprietary of arbitration under state law.? Instead,

the Oklahoma Supreme Court reasoned that it did

not need to reach that issue because it found that the

underlying non-competition covenants “void and un-

enforceable as against Oklahoma’s public policy ex-

pressed by the Legislature’s enactment of 15 O.S.

§219A”. Howard v. Nitro-Lift Tech., L.L.C., 273 P.3d

20. Thus, the Oklahoma Supreme Court concluded

that determining the validity of the arbitration pro-

vision would represent purely “an advisory opinion.”

Howard v. Nitro-Lift Tech., L.L.C., 273 P.3d 20, 23 at

n. 1.

The only arbitration issue raised was whether

Oklahoma’s Uniform Arbitration Act precluded a

state court from determining the validity of the

agreement to be arbitrated. Howard, 273 P.3d 20, 26

atn. 19. While the Oklahoma Supreme Court consi-

dered FAA cases in construing how the Oklahoma

Uniform Arbitration Act should be applied, the Ok-

lahoma Supreme Court expressly stated that it was

merely considering, not applying or construing, FAA

precedent when it determined, based on established

Oklahoma precedents, that it would not construe its

own Arbitration Act in the same way this Court con-

strued the FAA in Prima Paint Corp. v. Flood &

Conklin Mfg. Co., 388 U.S. 395 (1967); Buckeye Check

Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006):

5 The Court initially retained jurisdiction “[t}o deter-

mine whether Oklahoma's public policy prohibited en-

forcement of an employment agreement providing that

arbitration should take place in another jurisdiction with

the application of yet a different state’s law.” Howard uv.

Nitro-Lift Tech., L.L.C., 273 P.3d 20, 23 at n. 1.

In reaching our decision today, we con-

sider extant federal and state precedent.

Nevertheless, our determination rests

squarely within Oklahoma law which

provides bona fide, separate, adequate,

and independent grounds for our deci-

sion. Michigan v. Long, 463 U.S. 1032

(1983).

Howard, 273 P.3d 20, 23 at n. 5.

State courts are under no obligation to interpret

their own arbitration statutes in the same way this

Court has construed the FAA, nor are they foreclosed

from applying state arbitration statutes when parties

have chosen to rely on them instead of on the FAA.

This Court recognized in Volt Info. Sciences, Inc. v.

Board of Trustees of Leland Stanford Junior Univ.,

489 U.S. 468 (1988), that parties to an arbitration

agreement do not have to use the FAA to carry out

agreements to arbitrate and may instead rely on

state laws to govern the procedures under which ar-

bitration agreements will be enforced (or not en-

forced):

Just as they may limit by contract the

issues which they will arbitrate, see

Mitsubishi, supra at 628, so too may

they specify by contract the rules under

which that arbitration will be con-

ducted. Where, as here, the parties

have agreed to abide by state rules of

arbitration, enforcing those rules ac-

cording to the terms of the agreement is

fully consistent with the goals of the

FAA, even if the result is that arbitra-

tion is stayed where the [FAA] would

otherwise permit it to go forward.

Volt Info. Sciences, Inc. v. Board of Trustees of Lel-

and Stanford Junior Univ., 489 U.S. 468, 477; see al-

so Mastrobuono v. Shearson Lehman Hutton, Inc.,

514 U.S. 52, 57, (1995) (The FAA’s proarbitration pol-

icy does not operate without regard to the wishes of

the contracting parties).4

Thus, the Oklahoma Supreme Court’s decision

rests solely on state law; therefore, it does not

present a federal question or any question within the

jurisdiction of this Court. State Farm Mutual Auto-

mobile Ins. Co. v. Duel, 324 U.S. 154, 160 (1945)

(“[since] the [State] Supreme Court did not pass on

the question, we may not do so.”); Hill v. California,

401 U.S. 797, 805-806 (1971); Crowell v. Randell, 35

U.S. 368 (1836); McGoldrick v. Compagnie Generale

Transatlantic, 309 U.S. 430, 434-435 (1940) (“in the

+ Petitioner’s failure to argue the applicability of the FAA

and its reliance on state arbitration laws was not necessarily a

mere oversight. Petitioner apparently believes that Respon-

dents are exempt from the FLSA under the Federal Motor Car-

rier Act as workers employed in connection with interstate op-

eration of motor vehicles. If that were the case, their employ-

ment contracts would not be subject to the FAA, which excludes

“contracts of employment of seamen, railroad employees, or any

other class of workers engaged in foreign or interstate com-

merce.” 9 U.S.C. §1. This Court held in Circuit City Stores, Inc.

v. Adams, 532 U.S. 105, 119 (2001), that this provision “ex-

empts from the FAA .. . contracts of employment of transporta-

tion workers.” Petitioner's theory that it was not required to pay

overtime to Respondents is thus flatly at odds with its belated

reliance in this case on the FAA, and consistent with its initial

approach of relying solely on state arbitration laws as authority

for the enforcement of its arbitration agreement.

exercise of its appellate jurisdiction .. . [ijn cases

coming here from state courts in which a state sta-

tute is assailed as unconstitutional, there are reasons

of peculiar force which should lead us to refrain from

deciding questions not presented or decided in the

highest court of the state whose judicial action we

are called upon to review.”).

The record before this Court shows that the Ok-

lahoma Supreme Court was not called upon to con-

strue or apply federal law until after it already

reached its decision on independent state law

grounds. Only after receiving an unfavorable opinion

did Petitioners decide to try a new tactic and claim

that federal law applied to the arbitration clause and

that the FAA precluded the Oklahoma courts from

addressing the validity of the agreement. In doing so,

Petitioner asked the Oklahoma Supreme Court to

rule on an issue that Petitioner had not previously

briefed or presented to that court or to the trial court.

In Oklahoma, however, a party seeking a rehear-

ing cannot make a new claim if the argument could

have been raised before the appeal was resolved. In

that regard, the Oklahoma Supreme Court has

stated, “fiJm civil cases it is a well recognized rule

that questions not advanced on the original hearing

will not be considered on petition for rehearing, ex-

cept in unusual circumstances or where fundamental

or jurisdictional error is involved.” Pointer v. Hill,

536 P.2d 358,361 (Okla. 1975); see Pirrong v. Pirrong,

552 P.2d 383 (Okla. 1976) (denying rehearing be-

cause the allegation of discrimination was not raised

in the original hearing). Furthermore, a petition for

rehearing is not granted for presenting points which

the “losing party overlooked, misapprehended, or

failed to fully address.” Tomahawk Resources, Inc. v.

Craven, 130 P.3d 222, 225 (Okla. 2005); see also

Adams v. Robertson, 520 U.S. 83, 86-87 (1997).

(“When the highest state court is silent on a faderal

question before us, we assume that the issue was not

properly presented.”). The Oklahoma Supreme

Court's denial of rehearing did not comment on the

federal-law issue Petitioner belatedly sought to raise;

thus, it cannot be interpreted as having decided that

issue.

Il. Even if the FAA Were Implicated, this

Court Would Still Have to Remand to thie

Oklahoma Supreme Court to Determitrie

the Validity of the Arbitration Agree-

ment.

Although Respondents maintain that there is no

federal question to support this Court’s jurisdiction,

as a matter of caution, Respondents must point out

that even if the FAA had been properly invoked, the

Oklahoma Supreme Court would clearly still have

jurisdiction to determine the validity of the arbitra-

tion agreement. Under the FAA, 9 U.S.C. §2, arbitra-

tion clauses “shall be valid, irrevocable, and enforce-

able, save upon such grounds as exist at law or in

equity for the revocation of any contract.” “If a party

challenges the validity under §2 of the precise

agreement to arbitrate at issue, the federal court

must consider the challenge before ordering com-

pliance with that agreement under §4.” Rent-A-

Center, W., Inc. v. Jackson, 561 U.S. _, 130 S. Ct.

2772, 2779-2780 (2010).

Arbitration clauses are like any other contract

and “may be invalidated by general applicable con-

tract defenses such as fraud, duress, or unconsciona-

bility.” Doctors Associates, Inc. v. Casarotto, 517 U.S.

681 (1996). This is an issue for the court to decide.

Even though parties can delegate to the arbitrator

the authority to determine this issue, this Court has

clearly stated that “courts should not assume that

the parties agreed to arbitrate arbitrability unless

there is “clea[r] and unmistakabl[e] evidence that

they did so.” First Options of Chicago, Inc. v. Kap-

lan, 514 U.S. 938 (1995); AT & T Technologies, Inc. v.

Communication Workers, 475 U.S. 643, 649 (1986)

(Unless the parties “clearly and unmistakably pro-

vide otherwise, the question of whether the parties

agreed to arbitrate is to be decided by the court, not

the arbitrator.”).

Rent-A Center v. Jackson contained specific lan-

guage delegating to the arbitrator the exclusive au-

thority to resolve any dispute related to the enfor-

ceability of the arbitration agreement, 561 U.S. _,

130 S. C. 2772, 2777. Unlike the circumstances in

Rent-A-Center, the arbitration clause here does not

provide that issues of enforceability are to be decided

by the arbitrator. Accordingly, because the arbitra-

tion clause did not reserve to the arbitrator the is-

sues of enforceability or validity, the enforceability of

the arbitration clause is itself subject to judicial re-

view by the Oklahoma Supreme Court.

Respondents argued in the District Court and on

appeal that the arbitration agreement itself was un-

conscionable because of the forum selection clause,

the choice of Louisiana law, the unilateral right of

Petitioner to file in court as well as the substantial

cost involved to Respondents (especially when im-

posed on hourly workers). Additionally, Eddie How-

ard’s affidavit shows that Petitioner’s representa-

tive’s misrepresented the terms of the Agreement

when presented to him during his first term of em-

ployment. See Petition for Declaratory Judgment, Re-

sponse to Motion to Dismiss, and Verified Application

for Temporary Restraining Order and Temporary In-

junction and Supporting Brief and Supporting Affi-

davits of Eddie Howard at {41-12 and Shane

Schneider at 4|4,1-12 (October 14, 2010).

Without ruling, the Oklahoma Supreme Court

recognized that a forum selection cause may be un-

conscionable and in doing so, stated:

[A] forum selection clause [in an arbi-

tration agreement] may be so unreason-

able that it will be gravely difficult and

inconvenient resulting in a party being

deprived of a day in court. If so, it could

be declared unenforceable.

Howard, 273 P.3d 20, 22 at n. 1, citing M/S Breman

v. Zapata Off-Shore, Co., 407 U.S. 1 (1972).

Because the Oklahoma Supreme Court did not

reach this issue (determining it was mooted by the

substantive ruling), even if the Petitioner were cor-

rect, the matter would still have to be remanded to

the Oklahoma Supreme Court for a determination on

the merits of the validity of the arbitration clause it-

self because a court cannot conclude that a party tru-

ly agreed to arbitrate until it decides whether the

agreement is unconscionable or not. The likelihood

that the Oklahoma court would hold the arbitration

clause unconscionable and would thus reach exactly

the same result on remand provides an additional

reason why review of the issue posed by the Petition-

er (even if it were properly presented) does not rise to

the level of importance necessary to justify granting

a writ of certiorari. ®

Finally, Petitioners are incorrect in asserting that

the Oklahoma Supreme Court’s decision conflicts

with Marmet v. Health Care Ctr., Inc. v. Brown, __

U.S. __, 182 S. Ct. 1201. Marmet held that if a state

law prohibits outright the arbitration of a particular

type of claim it is displaced by the FAA. 7d. at 1203.

The Oklahoma Court’s decision relies on 15 OS.

§219A, which applies to all contracts. The statute

does not single out or treat arbitration clauses diffe-

rently; it treats an arbitration clause the same as

any other contract. Section 219A does not even forbid

arbitration of non-competition agreements; it merely

declares when a non-competition agreement is or is

not valid.

6 Moreover, the ultimate conclusion that the noncompete

agreement at issue in this case is unenforceable under Oklaho-

ma law, as the Oklahoma Supreme Court held, is so clear that

even if that issue were sent to arbitration, any arbitrator who in

good faith attempted to follow the law would have to hold the

noncompete agreement unenforceable, rendering Petitioner's

insistence on conducting an arbitration of the issue in a distant

and inconvenient forum still more of a waste of time for all con-

cerned, including this Court.

CONCLUSION

The Petition for a Writ of Certiorari should be de-

nied.

Respectfully submitted,

MICAH KNIGHT

Counsel of Record

MICAH KNIGHT, P.C.

123 N. 7 Ave.

P.O. Box 1576

Durant, OK 74702

(580) 924-1849

micahknight@sbcglobal.net

Attorney for Respondents

August 15, 2012

RECORD

AND

BRIEFS No. 11-1377

In the Supreme Court of the Bnited States

NITRO-LIFT TECHNOLOGIES, L.L.C..,

Petitioner.

Vv.

EDDIE LEE HOWARD and

SHANE D. SCHNEIDER.

Respondents.

On Petition for Writ of Certiorari to the

Supreme Court of the State of Oklahoma

REPLY BRIEF OF PETITIONER

Jay P. Walters

Counsel of Record

Kevin R. Donelson

Kelli M. Masters

FELLERS, SNIDER, BLANKENSHIP, BAILEY

& Tippens, PC

100 N. Broadway, Suite 1700

Oklahoma City, OK 73102

(405) 232-0621

jwalters@fellerssnider.com

August 30, 2012 Counsel for Petitioner

—

Becker Gallagher - Cincinnatuu, OH + Washington, D.C. + 800.890_500!

Library of Coneress

Law Library

TABLE OF CONTENTS

Ee er ren es ee ii

Beamer TWEE GE POGMNOMIOT 2 ww. ccc cece casas 1

I. The Oklahoma Supreme Court’s Rejection Of

Decades Of Federal Arbitration

Jurisprudence Was Fairly Presented Below

And Addressed By The State Court ........ 2

A. The Oklahoma Supreme Court Directly

Addressed The Question Presented And

Rejected This Court’s Federal Arbitration

eee ee eee ee 2

B. Nitro-Lift Fairly Raised And Preserved

ee WOUNGS BIOMED ww cece eeseces 8

Il. Other Issues Which May Require Further

Consideration On Remand Are Not An

er we cece ee hdaceanes 10

ee EGFI POS TS Ce TT CTOT CE Te CTT 1l

TABLE OF AUTHORITIES

CASES

Bruner v. Timberlane Manor Ltd. P’ship,

155 P.3d 16 (Okla. 2006) .......... 4,5, 6, 7,12

Buckeye Check Cashing v. Cardegna,

546 U.S. 440 (2006) ................ 1,6, 9, 10

Cohen v. Cowles Media Co.,

ee eel ete 3

Davis v. Wechsler,

a a Se te eee 3

Doctor’s Assocs. v. Casarotto,

gE ene rere 11

Eddings v. Okla.,

nn cpa e eb hne de eeeae we 8

Florida v. Powell,

Eg gn kev wcceewnecdentce 3

Howard v. Nitro-Lift Technologies, L.L.C.,

273 P.3d 20 (Okla. 2011) .............. passim

Howell v. Mississippi,

fd ee ee ae ae rae 2

KPMG LLP v. Cocchi,

oo a. Bee es Ge, BP ED 20 vc wc cacen 11

ili

Marmet Health Care Center, Inc. v. Brown,

565 U.S. __, 182 S. Ct. 1201 (2012)...... 4,5,12

Michigan v. Long,

Ge a Se CD 6 io SO 6 kine pane cee 3

New York ex rel. Bryant v. Zimmerman,

ee GPa PED 406 4 és ok ae eeesbekeeavens 8

Pennsylvania v. Labron,

Ge SP PCED 0 0s ch devnch anes seueeues 7

Perry v. Thomas,

ee es ES 6 kd oeseunes eee 11

Prima Paint Corp. v. Flood & Conklin Mfg.,

ee Wh PROD 24.06 tas cevncesase 6,9, 10

PruneYard Shipping Center v. Robins,

re er ees ee 8

Rainbow Health Care Ctr. v. Crutcher,

07-cv-194-IHP, 2008 WL 268321

Se Gs GE, Ws EE oA co hv et ecteceees 12

Raley v. Ohio,

ee es ED hice ckaks axneeuuce 2-3

Southland Corp. v. Keating,

Ge: DD 60k 8 Se ease ecne as 6,9, 10, 12

Street v. New York,

Sy ny I hae 3

CONSTITUTION AND STATUTES

WG I wees cces vavsscvers

Federal Arbitration Act,

RE Ee passim

lea S se whee aa ne ee 88 2, 7,11

I on bc cece wees icccecesce 5

EE ee ee eee ee ee 1, 10

REPLY BRIEF OF PETITIONER

Respondents’ Opposition does not suggest that the

Supreme Court of Oklahoma’s decision is consistent

with this Court’s longstanding rule that “unless the

challenge is to the arbitration clause itself, the issue of

the contract’s validity is considered by the arbitrator in

the first instance.” Buckeye Check Cashing ov.

Cardegna, 546 U.S. 440, 445-46 (2006). The state court

disregarded the arbitration agreement when it held

that Oklahoma law and public policy invalidated the

contract as a whole,’ including the arbitration clause.

After first waiving its right to oppose the Petition,

Respondents now argue the federal issue was not fairly

raised by Nitro-Lift or resolved by the Oklahoma court.

Respondents misstate the record and the decision

below. The Oklahoma Supreme Court dispelled most

of Respondents’ arguments when it stated:

Nitro-Lift argues that the issue of the validity of

the covenants not to compete is for the

arbitrator. In doing so, the employers rely

upon United States Supreme Court

jurisprudence.

. Respondents’ waiver argument is curious given the Oklahoma

Supreme Court’s opinion applying 15 O.S. § 219A was not based

upon any arguments made by Respondents. OklaSup. Ct. Order

(October 19, 2011) (“Neither of the parties addressed the effect

that 15 O.S. 2001 § 219A. ..might have upon the resolution of the

cause.”). The Oklahoma Supreme Court sua sponte raised the

issue. App. 4a n.1, Howard v. Nitro-Lift Technologies, L.L.C., 273

P.3d 20, 26 (Okla. 2011).

App. 13a, 273 P.3d at 26 (emphasis supplied). The

premise and holding of the Supreme Court cases cited

by Nitro-Lift and discussed by the court involve the

preemptive scope of the Federal Arbitration Act

(“FAA”). Respondents attempt to recast this statement

by the Oklahoma court to suggest that federal

authority was cited “only as guidance.” (Opp. P. 6).

However, the lower court’s own description of the case

shows that it considered the same issue and argument

Nitro-Lift raised in the Petition. Respondents’ waiver

argument is meritless.

I. The Oklahoma Supreme Court’s Rejection Of

Decades Of Federal Arbitration

Jurisprudence Was Fairly Presented Below

And Addressed By The State Court.

A federal issue conferring jurisdiction on the Court

to review a state court decision under 28 U.S.C.

§ 1257(a) may arise if it “was either addressed by or

properly presented to the state court that rendered the

decision”. Howell v. Mississippi, 543 U.S. 440, 443

(2005) (citing cases; emphasis supplied). In this case,

the Court has jurisdiction because the state court

directly addressed the federal issue and Nitro-Lift

raised the issue below.

A. The Oklahoma Supreme Court Directly

Addressed The Question Presented And

Rejected This Court’s Federal Arbitration

Jurisprudence.

“There can be no question as to the proper

presentation of a federal claim when the highest state

court passes on it.” Raley v. Ohio, 360 U.S. 423, 436

(1959). “It is irrelevant to this Court’s jurisdiction

whether a party raised below and argued a federal-law

issue that the state supreme court actually considered

and decided.” Cohen v. Cowles Media Co., 501 U.S.

663, 667-68 (1991) (citing cases).

Whether a federal issue was fairly raised in the

lower court is a federal question. Street v. New York,

394 U.S. 576, 583 (1969). The state court may not

evade review by labeling the decision as based on an

adequate and independent state ground or by burying

the federal issue in its opinion. “[A]mbiguous or

obscure adjudications by state courts do not stand as

barriers to a determination by this Court of the validity

under the federal constitution of state action.” Florida

v. Powell, 130 S. Ct. 1195, 1201 (2010). In Michigan v.

Long, 463 U.S. 1032, 1040-41 (1983), the Court held

that when a state-court decision “fairly appears” to be

“interwoven with the federal law,” and “when the

adequacy and independence of any possible state law

ground is not clear from the face of the opinion,” the

Court “will accept as the most reasonable explanation

that the state court decided the case the way it did

because it believed that federal law required it do so.””

The Oklahoma Supreme Court here acknowledged

Nitro-Lift raised and argued federal authority from

FAA arbitration decisions of this Court (App. 13a), and

then it proceeded to reject those arguments. The court

* «(W]hatever springs the State may set for those who are

endeavoring to assert rights that the State confers, the assertion

of Federal rights, when plainly and reasonably made, is not to be

defeated under the name of local practice.” Davis v. Wechsler, 263

U.S. 22, 24 (1923) (Holmes, J.).

discussed that it was rejecting the same case law and

authority raised by Nitro-Lift in its Petition. App. 15a.

The primary Oklahoma case upon which it relied has

since been effectively overruled by this Court’s decision

in Marmet Health Care Center, Inc. v. Brown, 565 U.S.

_, 182 S. Ct. 1201 (2012) (per curiam) (summarily

reversing enforcement of West Virginia statute barring

arbitration in personal injury nursing home cases).

In rejecting application of the FAA and this Court’s

arbitration decisions, the Oklahoma decision states as

follows:

Most instructive on Nitro-Lift’s arguments is

Bruner v. Timberlane Manor Ltd. P’ship, 2006

OK 90, 155 P.3d 16. Bruner contains an

exhaustive overview of the United States

Supreme Court decisitns construing the Federal

Arbitration Act (Federal Act), 9 U.S.C. §§ 1, et

seq. and state arbitration law. [FN20]. The

Supreme Court decisions discussed therein,

and relied upon by Nitro-Lift here, were found

not to inhibit our review of the underlying

contract’s validity.[FN21).

App. 15a., 273 P.3d at 26 & nn. 20-21 (court’s

emphasis). The court’s reference to Bruner and the

accompanying footnotes dispel any notion that the

Oklahoma Supreme Court failed to pass on Nitro-Lift’s

FAA preemption arguments.

In Bruner, the Oklahoma Supreme Court stated

that the “dispositive question on appeal is

whether the Federal Arbitration Act applies to

the nursing home’s admission contract.” 155 P.3d

at 19 (emphasis supplied). There, the court applied the

Oklahoma Uniform Arbitration Act (QUAA) and

conducted an analysis to determine whether the anti-

arbitration provision in Oklahoma’s Nursing Home

Care Act was preempted by the FAA. Ultimately, the

court concluded that the FAA was not applicable,

primarily because it found nursing home admission

contracts do not involve interstate commerce. /d. at pp.

21-31. As a secondary ruling, the Bruner court held

that even if the nursing home contract did involve

interstate commerce, the FAA’s mandate (which would

otherwise preempt the anti-arbitration act) was

overridden by a contrary congressional command

allowing states to create appeal procedures for nursing

home transfers, 42 U.S.C. § 1396r(c)(2). Id. at pp. 31-

32.

Of course, in Marmet, this Court, in a unanimous,

per curium opinion, rejected a nearly identical anti-

arbitration statute upheld by the West Virginia

Supreme Court of Appeals on nearly identical bases as

those relied upon in Bruner. 132 S. Ct. 1201-03. The

only reasonable interpretation of the Oklahoma’s

court’s focused reliance on Bruner here is that the court

believed Bruner’s FAA analysis was sufficient to defeat

any reliance upon FAA preemption in this case. Merely

because the court used the now-overruled decision in

Bruner as a substitute for a more detailed FAA

analysis does not mean that the federal issue

addressed in Nitro-Lift’s Petition for Certiorari was not

fairly raised and addressed jn this case.

Lest there be any doubt, in footnote 20 of the

Oklahoma Supreme Court’s decision here, the court

found: “Among the cases discussed [in Bruner] are

three Supreme Court cases on which the employers

rely: Prima Paint Corp. v. Flood & Conklin Mfg. Co,

388 U.S. 395 (1967); Buckeye Check Cashing v.

Cardegna, 546 U.S. 440 (2006); and Southland Corp. v.

Keating 465 U.S. 1 (1984).” App. 15a n. 20, 273 P.3d

at 26 n.20 (emphasis supplied). The court discussed

the holding in Prima Paint. Each of these cases cited

by the court addressed FAA preemption of state law

limits on the arbitrability of a particular dispute.

Buckeye Check Cashing, 546 U.S. at 444-448

(“severability” of contract and arbitration clause is

federal substantive law and validity of underlying

contract to be decided by arbitrator); Southland Corp.,

465 U.S. at 10-14 (FAA is federal substantive law

“applicable in state and federal courts;” rejecting view

that state law could bar enforcement of FAA even for

state-law claims in state court); Prima Paint; 388 U.S.

at 400-403 (“severability” is not a question of state

law). The court in this case (and in Bruner) raised and

passed on these core federal issues and thereby

conferred jurisdiction on this Court.*

Further, in footnote 21, the court acknowledged that

the FAA preempted and displaced anti-arbitration

statutes. App. 15a n. 21, 273 P.3d at 26 n. 21.

However, relying on Bruner, the court analogized this

case to Bruner and found that the specific statute

addressing “non-competition” agreements governed

“over the more general statute favoring arbitration.”

3 Where, as here, the state court’s decision is preempted by the

FAA and this Court’s federal authority, simple logic precludes

finding an adequate and independent state-law ground based on

the very state-law authority that is preempted.

Id. at n. 21. In its motion to reconsider, Nitro-Lift

asked the court to clarify whether it was referencing

the FAA (which it was discussing at that point in the

opinion) as the more general statute or another statute.

Defendant/Appellee Nitro-Lift Technologies, L.L.C.’s

Pet. for Clarification And/Or Reh’g at p. 3 (Dec. 12,

2011). However, the court refused to clarify this

hopelessly ambiguous statement.‘

The state supreme court in this case directly

addressed and passed on the federal arbitration issue

raised in the Petition and this Court has jurisdiction

under 28 U.S.C. § 1257(a). Further, when, as here, the

state court’s decision relies upon its own cases, which,

in turn, rely upon federal authorities, the cases are not

being used merely as “guidance” and the state law is

“interwoven with federal law” such that the “adequacy

and independence of any possible state law ground is

not clear from the face of the opinion.” See

Pennsylvania v. Labron, 518 U.S. 938, 941 (1996). In

these circumstances, the Court’s jurisdiction is

“secure.” Id.

* The Supremacy Clause preempts any state attempt to recognize

a more specific statute as overriding established federal law. U.S.

Const. Art. VI, cl. 2.

B. Nitro-Lift Fairly Raised And Preserved The

Federal Issues.

Alternatively, Nitro-Lift fairly raised the federal

issues in the lower courts. The Supreme Court of

Oklahoma acknowledged as much when it stated that

Nitro-Lift raised federal issues relating to the FAA and

Supreme Court authority regarding the preemption of

state law. App. 13a, 15a & nn. 20,21, 273 P.3d at 26 &

nn. 20,21.

To preserve a federal issue,

“{njo particular form of words or phrases is

essential, but only that the claim of invalidity

and the ground therefor be brought to the

attention of the state court with fair precision in

due time. And if the record as a whole shows

either expressly or by clear intendment that this

was done, the claim is to be regarded as having

been adequately presented.”

PruneYard Shipping Center v. Robins, 447 U.S. 74, 85

n.9 (1980)(quoting New York ex rel. Bryant v.

Zimmerman, 278 U.S. 63, 67 (1928)); see also Eddings

v. Okla. , 455 U.S. 104, 113. n.9 (1982) (“jurisdiction does

not depend on citation to book and verse.”).

Respondents’ contention that Nitro-Lift did not

raise the federal issue until after the ruling by the

Oklahoma Supreme Court is wrong. While Nitro-Lift

cited the OUAA and the corresponding Louisiana

arbitration act in the lower courts, Respondents’

contention that Nitro-Lift only cited federal authority

as “guidance” to interpret those statutes is not

supported by the record. Nitro-Lift made alternative

arguments under each of these three sources to both

the trial court and the state supreme court and

specifically addressed the question presented in the

Petition. In its first argument in response to

Respondents’ application for a temporary restraining

order and temporary injunction, Nitro-Lift stated as

follows:

Plaintiffs incorrectly state that the validity of

the Agreements must be determined as “an

initial matter,” and that “there is nothing to

arbitrate if this Court finds that the non-

compete provisions [are] void as a matter of

law.” In Prima Paint Corp. v. Flood & Conklin

Mfg. Co., 388 U.S. 395 (1967) and Southland

Corp. v. Keating, 465 U.S. 1 (1984), the USS.

Supreme Court established three propositions

concerning challenges to arbitration

agreements. First, an arbitration provision

is severable from the remainder of the

contract. Second, unless the challenge is to

the arbitration clause alone, the issue of

the contract’s validity is to be considered

by the arbitrator in the first instance.

Third, this arbitration law applies in both

state and federal courts. See Buckeye Check

Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006).

Therefore, challenges to the validity of an

entire contract, such as the challenge made by

Plaintiffs in the present action, are to be

considered by the arbitrator, not the Court.

Prima Paint, 388 U.S. at 402; Buckeye Check

Cashing, 546 U.S. at 1208-1209.

Defendant Nitro-Lift Technologies, L.L.C.’s Response to

Application for Temporary Restraining Order and

Temporary Injunction and Brief in Support, p. 4 (Nov.

9, 2010).

Nitro-Lift raised the same argument in its Motion

to Dismiss before the trial court. Defendant Nitro-Lift

Technologies, L.L.C.’s Motion to Dismiss and Brief in

Support, p. 7 (Nov. 9, 2010). The state-court appeal

proceeded under the expedited procedures of Okla.

Supr. Ct. R. 1.36, which meant the parties’ briefs in the

trial court served as their briefs on appeal. When the

Oklahoma Supreme Court sua sponte raised the

application of 15 O.S. § 219A and requested briefing,

Nitro-Lift addressed that issue and argued again that

under Prima Paint, Southland, and Buckeye Check

Cashing, these authorities applied in both state and

federal courts and the decision was one for the

arbitrator and not the court. Nitro-Lift’s Brief to Show

Cause Regarding the Application of 15 O.S. 2001

§ 219A, p. 7 (Oct. 31, 2011).

Nitro-Lift repeatedly raised and argued below the

very question presented to this Court for resolution.

This Court has jurisdiction.

Il. Other Issues Which May Require Further

Consideration On Remand Are Not An

Obstacle To Review.

Respondents contend that _ potential

unconscionability litigation on remand is an obstacle to

review. (Opp. pp. 12-13). Respondents also note that

there may be an issue as to whether Howard had a

second term of employment not covered by the

arbitration agreement. (Opp. p. 2n. 1). Ifthe potential

for additional litigation on remand were an obstacle to

review, this Court’s certiorari jurisdiction would be

uselessly narrow.

The possibility of post-remand validity litigation did

not hinder this Court’s review in Perry v. Thomas, 482

U.S. 483, 492 (1987). In Perry, the Court reversed the

state court and held the FAA preempted the state

statute. The Court declined to review Plaintiffs

alternative arguments because they “may be resolved

on remand”. 7d. at 492. Likewise, with regard to

unconscionability, the court held that the “issue was

not decided below . . . and may likewise be considered

on remand.” Z7d. at n. 9; see also Doctor’s Assocs. v.

Casarotto, 517 U.S. 68 (1996) (court held FAA

preempted Montana notice provision notwithstanding

contention that one petitioner was not entitled to

enforce the arbitration provision); KPMG LLP uv.

Cocchi, 565 U.S. __, 1382 S. Ct. 23 (2011) (summary

reversal of state court decision refusing to refer case to

arbitration because two claims may not be arbitrable,

and remanding to state court to decide the issue).

Respondent cannot prevent review of the facially

erroneous decision of the Oklahoma court based upon

speculation the court on remand might invalidate the

arbitration provision on other grounds.

II. Conclusion

The question presented in the Petition was passed

upon by the Oklahoma court and fairly raised by Nitro-

Lift. This Court has jurisdiction under 28 U.S.C.

§ 1257(a).

This case is an ideal candidate for review and

summary reversal. The Supreme Court of Oklahoma’s

repeated holding was extraordinarily broad: “We

determine that the existence of an arbitration

agreement in an employment contract does not

prohibit judicial review of the underlying

agreement.” App. 6a, 16a, 273 P.3d at pp. 23, 27.

(emphasis supplied). The court’s decision cites and

rejects this Court’s FAA jurisprudence in reaching this

decision and places great emphasis on its prior decision

in Bruner, which has been summarily rejected by this

Court in Marmet. Without corrective action from this

Court, the Oklahoma decision will be cited and relied

upon by parties to avoid arbitration in a wide variety of

cases. The decision — if left unreviewed — will

“encourage and reward forum shopping” contrary to the

pronounced goals of the FAA. See Southland, 465 U.S.

at 15; see, e.g., Rainbow Health Care Ctr. v. Crutcher,

07-cv-194-IHP, 2008 WL 268321 at *6(N.D. Okla. Jan.

29, 2008) (rejecting Bruner’s FAA analysis and

enjoining state health care department from enforcing

the anti-injunction provision in Oklahoma’s Nursing

Home Care Act).

The Petition for a Writ of Certiorari should be

granted and the decision of the Oklahoma Supreme

Court deserves summary reversal.

Respectfully submitted,

Jay P. Walters

Counsel of Record

Kevin R. Donelson

Kelli M. Masters

FELLERS SNIDER BLANKENSHIP BAILEY

& TIPPENS, PC

100 N. Broadway

Suite 1700

Oklahoma City, OK 73102

(405) 232-0621

jwalters@fellerssnider.com

Counsel for Petitioner

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.