[00:00:00] Speaker 03:
Next case is Cajun Services versus Benton Energy Service 20-1367.

[00:00:08] Speaker 03:
Mr. Kellum, please proceed.

[00:00:11] Speaker 01:
Good morning, Your Honors, and thank you.

[00:00:13] Speaker 01:
May it please the Court, it's indeed an honor and privilege to be before you this morning arguing on behalf of my client, Benton Energy Services, which we refer to as BESCO throughout the argument.

[00:00:24] Speaker 01:
Thank you to the court for the opportunity for allowing us to argue before you in these unprecedented times.

[00:00:31] Speaker 01:
This is an opportunity for BESCO to present its appeal to this court on what in our view was a serious miscarriage of justice that took place last summer and subsequent rulings by the court.

[00:00:43] Speaker 01:
In our view, the district court clearly was erroneous in its denial of its motion to compel arbitration.

[00:00:51] Speaker 01:
although the court had the standard of the law correct the court basically created what i will refer to as the ash standard when it it clearly went contrary to undisputed precedent within the fifth circuit which is deemed to be a big acceptable regional circuit law which will apply based on the general guarantee uh... case that i will talk about in a moment now the court up to the press the question here is waver

[00:01:19] Speaker 03:
And the arbitration clause was in delivery tickets, which were presented by Cajun.

[00:01:38] Speaker 03:
So it was Cajun presumably that was interested in arbitration.

[00:01:43] Speaker 03:
And you're even questioning whether there's a contract.

[00:01:49] Speaker 03:
And so your client first mentioned arbitration early in a footnote to a brief in the first lawsuit, and then brought its own lawsuit not mentioning arbitration.

[00:02:08] Speaker 03:
And then only later, after there was substantial discovery and you were close to trial, and then you proceeded with trial,

[00:02:19] Speaker 03:
And so how is the court abusing its discretion in finding waiver?

[00:02:24] Speaker 01:
Judge, thank you for the question.

[00:02:25] Speaker 01:
I think it's clear when you listen to my answer.

[00:02:28] Speaker 01:
First, let's talk about the nature of the contract.

[00:02:30] Speaker 01:
The rental agreement was not a negotiated hands-length master service agreement.

[00:02:36] Speaker 01:
What Cajun did was through a series of actions, went from a mere receipt of acceptance of product by unskilled laborers for Benton who picked up the product,

[00:02:48] Speaker 01:
Then they morphed into a signature which referenced terms on a website, terms and conditions.

[00:02:55] Speaker 01:
Then after they did that for a period of time, they then went to the rental agreement in question, which has fine print, small print on the back, onerous terms and conditions that are applicable to this case.

[00:03:09] Speaker 01:
It is undisputed that no one with Benton authorized these individuals to sign this rental agreement.

[00:03:17] Speaker 01:
nor was anyone with benton made aware caging could have easily presented this is a master service contract and allow for proper negotiations for the parties to agree to it that is a huge point in this case because judge in all of the cases cited by the district court as well as the plaintiffs where waiver was found there was never an opportunity for a court to have two motions for summary judgment to decide the issue

[00:03:45] Speaker 01:
but allow the issue to go to a jury to determine whether the contract was enforceable.

[00:03:51] Speaker 01:
And it wasn't until those motions for summary judgment were denied for questions of fact, the judge ordered the issue to be decided by the jury.

[00:04:01] Speaker 01:
Immediately when the jury decided that issue, that this contract was valid, BESCO immediately moved to compel arbitration.

[00:04:10] Speaker 01:
Now plaintiff wants the ability to enforce certain terms

[00:04:15] Speaker 01:
of the terms and conditions, i.e.

[00:04:17] Speaker 01:
misappropriation of product, trade secrets, etc., but on the other hand, wants to ignore the arbitration provision.

[00:04:24] Speaker 01:
The second point I'd like to make in response to your question, Your Honor, the district court was clearly wrong, and in my view, perhaps even biased, in finding that BESCO hid its intent to arbitrate.

[00:04:37] Speaker 01:
We have outlined nine separate occasions in our brief with citations

[00:04:43] Speaker 01:
which most importantly have not been disputed by the plaintiffs, where we clearly and unequivocally placed the court and the plaintiff on notice that in the event this contract is deemed to be valid, we are absolutely reserving our right to compel arbitration.

[00:05:04] Speaker 01:
There's no dispute as to that.

[00:05:06] Speaker 01:
What this court is trying to do, the district court, and if this court allows that ruling to stand, is that can a defendant, such as Besco, waive an affirmative defense in a separate proceeding, which was Cajun 1, when the lawsuit was filed and we're actually determining an issue here in Cajun 2.

[00:05:30] Speaker 01:
But, Your Honor, it is undisputed in Cajun 1 that in the footnote,

[00:05:34] Speaker 01:
We put the parties on notice of our intent.

[00:05:37] Speaker 01:
In Cajun 2, it's even more clear.

[00:05:40] Speaker 01:
Twice in affirmative defenses, various times in motions, in the pretrial order, in objections to jury instructions, and in fact, at trial.

[00:05:51] Speaker 01:
The issue here is notice.

[00:05:54] Speaker 01:
The Pacquiao case that we cite, Fifth Circuit 2015, says once a defendant has put the plaintiff on notice,

[00:06:03] Speaker 01:
of its intent to arbitrate, plaintiff's burden of waiver is higher.

[00:06:10] Speaker 01:
The burden is already high because there is a presumption in favor of arbitration, as declared by the United States Supreme Court.

[00:06:18] Speaker 01:
But here, where there was notice, and read that case carefully and the cases cited in it, which we noted in our brief, there's no requirement that arbitration be specifically asserted as an affirmative defense.

[00:06:34] Speaker 01:
Which we in fact did.

[00:06:36] Speaker 01:
But the court, the clear error of the district court was relying upon Cajun 1 and the footnote and the lack of an affirmative defense as a quote unquote fatal flaw.

[00:06:50] Speaker 01:
That is clear error because it was not required.

[00:06:54] Speaker 00:
Ms.

[00:06:54] Speaker 00:
Judge Stoll, I just wanted to ask you, I have two questions.

[00:06:58] Speaker 00:
One is the relationship between Cajun 1 and Cajun 2 because I understood that Cajun 1

[00:07:04] Speaker 00:
while it was procedurally ended, it was continued in Cajun 2.

[00:07:08] Speaker 00:
So procedurally, it's as if it's the same case.

[00:07:12] Speaker 00:
But my second question is, when was the footnote first asserted in Cajun 1?

[00:07:19] Speaker 00:
How much time had passed between when the case was first filed and you first mentioned arbitration?

[00:07:27] Speaker 01:
Your Honor, I'll address the second question first.

[00:07:30] Speaker 01:
The footnote was addressed in October of 2017, which was only approximately 10 months after the first lawsuit was filed, but more importantly, before Cajun 2 was filed.

[00:07:48] Speaker 01:
And it was brought up at that point when the plaintiff sought affirmative relief on enforcing the terms of the contract.

[00:07:58] Speaker 00:
And what about my first question?

[00:08:01] Speaker 00:
Because I understood, you know, one of the big questions here is what is the relationship between Cajun 1 and Cajun 2?

[00:08:08] Speaker 00:
And there seems to be a disagreement between the parties.

[00:08:11] Speaker 00:
You seem to put more emphasis on the fact that you raised the issue immediately in Cajun 2.

[00:08:16] Speaker 00:
But I see them as essentially the same case.

[00:08:20] Speaker 01:
Well, there's no dispute, Your Honor, that at the time Cajun 2 was filed, Cajun 1 was administratively closed.

[00:08:27] Speaker 01:
Cajun 1 was administratively closed because we filed a standing pleading saying that the plaintiffs lacked standing to assert certain causes of action in Cajun 1.

[00:08:40] Speaker 01:
And plaintiffs, importantly, agreed with that assertion and allowed the case to be dismissed.

[00:08:46] Speaker 01:
I think that is a critical point.

[00:08:48] Speaker 01:
We all knew that there would be a new filed lawsuit in which all of the causes of action would then be properly pled.

[00:08:57] Speaker 01:
And that's where affirmative defenses were filed, motions for summary judgment were filed, and the court was allowed to give us an opportunity to decide that issue.

[00:09:07] Speaker 01:
Had the court decided the motion for summary judgment and found the contract to be enforceable, of course there would have been an immediate motion to enforce arbitration.

[00:09:17] Speaker 01:
But until the court, which everyone agrees, the court is the one who has to decide the contract's enforceability.

[00:09:24] Speaker 01:
Until the court made that determination,

[00:09:26] Speaker 01:
It was not right.

[00:09:28] Speaker 01:
Besco could not have asserted a right to arbitration without a contract.

[00:09:34] Speaker 00:
The judge below emphasized that in his view, it could have been asserted in the alternatives.

[00:09:43] Speaker 00:
What's your response to that?

[00:09:44] Speaker 01:
Well, whether it was asserted in the alternative, the threshold question had to be, was there a contract?

[00:09:50] Speaker 01:
Once he decided that there was a question of fact and that issue could not be decided,

[00:09:55] Speaker 01:
The alternative position is mute.

[00:09:58] Speaker 01:
What's the difference between a judge ordering that the contract is valid and enforceable and on the second day we then file a motion to enforce arbitration?

[00:10:09] Speaker 01:
In all, with all due respect to the district court, I believe that's a red herring.

[00:10:13] Speaker 01:
Whether we file them collectively as an alternative motion or back to back should not make a difference in this case.

[00:10:22] Speaker 01:
I reserve the remaining of my time for a bottle.

[00:10:25] Speaker 03:
Thank you, counsel.

[00:10:26] Speaker 03:
We will save it.

[00:10:28] Speaker 03:
And Mr. Scott, please proceed.

[00:10:33] Speaker 02:
Good morning, may it please the court.

[00:10:36] Speaker 02:
Walter Scott on behalf of Appalachian Services.

[00:10:44] Speaker 02:
This is the first of two separate but related appeals from an adverse jury verdict.

[00:10:52] Speaker 02:
The jury verdict is significant in this first appeal because it speaks to all appellants did to affirmatively litigate the case to trial, not once, but twice.

[00:11:06] Speaker 02:
Judge Stoll mentioned how long did it take for them to drop the footnote, which was ambiguous at best.

[00:11:14] Speaker 02:
Uh, counsel indicated 10 months.

[00:11:16] Speaker 02:
The more important point, perhaps, is that it was just weeks before the first trial was scheduled to proceed.

[00:11:23] Speaker 02:
Counsel indicates that Cajun agreed with the standing issue.

[00:11:30] Speaker 02:
No, Cajun did not.

[00:11:32] Speaker 02:
However, Cajun did not want to take the chance, precisely what's happening here, of having to try the case and have it held hostage to an argument on appeal.

[00:11:47] Speaker 02:
took the prudent path of agreeing to administratively close the case and refile so as to avert any standing issues following a trial on the merits.

[00:12:04] Speaker 02:
Now, in terms of all that FESCO appellants did, as the court indicated, they filed their own lawsuit.

[00:12:14] Speaker 02:
They also filed their own affirmative counterclaims.

[00:12:17] Speaker 02:
And they moved for summary judgment on their claims.

[00:12:20] Speaker 02:
They participated in discovery, both for fact and expert discovery.

[00:12:25] Speaker 02:
And ultimately, they submitted their claims to the jury, even while contending that the very types of claims that they were submitting were subject to arbitration.

[00:12:35] Speaker 02:
They nevertheless persisted in trying to submit those claims on their behalf to the jury.

[00:12:44] Speaker 02:
A lot of this is, you know, actions speak a lot louder than words in this instance, where Besco repeatedly and consistently litigated the case on all claims.

[00:12:57] Speaker 02:
Never tried to limit it to the breach of contract, to the validity of the contract, but asserted and litigated all claims.

[00:13:06] Speaker 02:
Now, the trial judge who presided over these proceedings and the trial itself,

[00:13:13] Speaker 02:
reviewed at length and delineated at length the totality of circumstances for the precise reason of averting the arguments that are being made today.

[00:13:25] Speaker 02:
And the trial court applied correct law under Fifth Circuit and Federal Circuit precedent, which is essentially the same for these purposes, and determined after a rigorous analysis that Vesco

[00:13:42] Speaker 02:
had waived arbitration as to all claims by substantially invoking the judicial process in acting inconsistent with any intent to arbitrate and thereby prejudicing Cajun.

[00:14:00] Speaker 02:
There is no, nothing clearly erroneous about the court's, the trial court's decision or findings.

[00:14:07] Speaker 02:
They are meticulous, rigorous and well founded.

[00:14:12] Speaker 02:
and they should not be disturbed on appeal.

[00:14:15] Speaker 02:
The trial court in various circumstances reflects that Besco is duplicitous and disingenuous in one, litigating all claims, two, subsequently contending that those claims are subject to arbitration and thus waiving

[00:14:42] Speaker 02:
arbitration as to all claims.

[00:14:45] Speaker 02:
As the court pointed out and as the cases point out, you can't have it both ways.

[00:14:51] Speaker 02:
And that is exactly what BESCO has sought to do, not once but twice, first with standing and now with arbitration.

[00:14:59] Speaker 02:
With that, Your Honors, I would defer to our brief subject to any questions and the trial court's decision and yield the remainder of my time.

[00:15:12] Speaker 03:
Thank you, counsel.

[00:15:13] Speaker 03:
Mr. Callum has some rebuttal time.

[00:15:16] Speaker 01:
Brief rebuttal, your honor.

[00:15:17] Speaker 01:
Judge Stahl would like to answer one question.

[00:15:19] Speaker 01:
You talked about the delay at the beginning in the 10-month time period.

[00:15:24] Speaker 01:
One of the principles I think is very important as cited in the Republic Insurance and the Tinnaco Fifth Circuit cases that we cited is that waiver is a factual determination dependent upon all facts and not solely dependent upon the passage of time.

[00:15:41] Speaker 01:
So although that could be one factor, it is clearly not determinative.

[00:15:46] Speaker 01:
The second point that I would like to strongly assert is that you're talking about the plaintiffs are making the argument that Besco could not have it both ways.

[00:15:56] Speaker 01:
That is precisely the issue, however, that the Fifth Circuit in general guarantee decided.

[00:16:03] Speaker 01:
Besco was forced, if you read Judge Ash's opinion and the Ash standard that he

[00:16:10] Speaker 01:
enunciated to make the decision, do we accept that this rental agreement is enforceable and move for arbitration?

[00:16:19] Speaker 01:
Or do we contest this contract, litigate the case, and forego our right to arbitration?

[00:16:28] Speaker 01:
And what the clear precedent of the Fifth Circuit says is no party, including Besco, should be forced to make that determination.

[00:16:38] Speaker 01:
and that alternative proceedings are encouraged and in fact are mandated and allowed by law.

[00:16:45] Speaker 01:
Why is that important?

[00:16:47] Speaker 01:
Besco preserved it right through nine times to seek arbitration if the contract were found enforceable.

[00:16:56] Speaker 01:
What Besco was forced to then do, we couldn't sit back as a punching bag and allow plaintiffs to proceed with their course of action and causes of action not knowing ultimately how the jury would

[00:17:08] Speaker 01:
rule on that threshold issue there were certain actions to participate in the litigation that had to take place but those were consistent with our position that the contract was not valid for example pursuing a cause of action on the oral contract or fraud those causes of action would have been there in our favor had the judge excuse me had the jury found that no contract existed so those positions or

[00:17:37] Speaker 01:
congruous and those positions are in harmony with the position that best go took.

[00:17:43] Speaker 01:
It was not until the judge instructed the jury and the jury came back and found the contract to be enforced that the issue of arbitration was ripe.

[00:17:56] Speaker 01:
That is an undisputed point.

[00:17:59] Speaker 01:
And when the judge says, well, what else could best go have done?

[00:18:04] Speaker 01:
Judge Stahl asked one of the questions earlier about, could you have filed the motion in the alternative?

[00:18:11] Speaker 01:
And I explained why that was not a tenable position or one that would really be relevant at the end of the day.

[00:18:18] Speaker 01:
Besco had to preserve its right to arbitrate, but on the same time defend the claims of the plaintiff.

[00:18:26] Speaker 01:
And then the third position could only aggressively move on arbitration once the jury had rendered its verdict.

[00:18:33] Speaker 01:
It's not a situation where BESCO simply invoked arbitration after three years of litigation because of an adverse jury award.

[00:18:43] Speaker 01:
Cajun was placed on notice throughout the litigation.

[00:18:47] Speaker 01:
Secondly, once the court ruled on the contract issue, then the issue was right.

[00:18:52] Speaker 01:
The two points that I'd like to raise finally are the court relied upon two cases, unity communications versus singular wireless and Republic,

[00:19:02] Speaker 01:
in support of its position for waiver.

[00:19:05] Speaker 01:
The Unity Communications Corporation case, in that case, arbitration was properly denied.

[00:19:13] Speaker 01:
There was no intent to arbitrate, absolutely none, for three years in the litigation.

[00:19:21] Speaker 01:
That case was not even close.

[00:19:23] Speaker 01:
In the Republic case, once again,

[00:19:26] Speaker 01:
There was no intent to arbitrate made by the party seeking arbitration until days before trial.

[00:19:34] Speaker 01:
The court used those opinions to support waiver and totally in our view and with all due respect ignored the clear precedent of the general guarantee case in recognizing the predicament that best go within while preserving its right to defend the contract saying it was enforceable.

[00:19:54] Speaker 01:
but at the same time preserving its right to arbitration.

[00:19:57] Speaker 01:
If this judgment were allowed and this ruling is allowed to stand, a party, in my opinion, would no longer have the right to contest the enforceability of a contract and at the same time reserve the right to arbitrate.

[00:20:14] Speaker 01:
Thank you, Your Honors.

[00:20:15] Speaker 01:
I appreciate your consideration and time.

[00:20:18] Speaker 03:
Thank you, Counsel.

[00:20:19] Speaker 03:
We will drill down and attempt to

[00:20:23] Speaker 03:
reach a proper decision, the case is submitted.

[00:20:28] Speaker 01:
The honorable court is adjourned until tomorrow morning at 10 a.m.