Phillip Sykes of Forman Perry Watkins Krutz & Tardy LLP in Jackson, Mississippi obtained a very unusual result by winning summary judgment in a commercial arbitration. The president of a $100 million subsidiary of a publicly traded corporation filed suit against the company and its CEO alleging breach of his employment agreement and fraudulent inducement, among other things, following his termination for cause. Ultimately, the United States Court of Appeals for the Fifth Circuit affirmed the arbitrator’s award of summary judgment. See Fred M. Haag v. InfraSource Corporate Services, LLC (f/k/a InfraSource Corporate Services, Inc.) et al., 2013 U.S. App. LEXIS 3544).
Concerning the underlying facts, Haag was the president of a substantial subsidiary of a publicly traded company, InfraSource Corporate Services, Inc. (subsequently acquired by another public company, Quanta Services, Inc.). When the parent corporation discovered certain irregularities in Mr. Haag’s benefits and expense allowances that he had approved for himself, InfraSource presented Haag with its findings and offered him the opportunity to resign. He rejected that offer. InfraSource’s CEO directed that he be terminated.
Thereafter, Haag sued InfraSource and its CEO in United States District Court for the Southern District of Mississippi. His filing suit in district court violated the arbitration clause in his employment agreement. Over Haag’s vigorous objections, Sykes succeeded in persuading the district court to compel arbitration.
Once in arbitration, the parties exchanged tens of thousands of pages of documents, took nearly a dozen depositions across the country, and had numerous disputes involving electronic discovery and other matters. Ultimately, the defendants/respondents moved for summary judgment against all of Haag’s claims. Following extensive briefing including sur-responses and sur-replies, the arbitrator granted that motion.
When the defendants/respondents moved to confirm the arbitrator’s award in district court, Haag filed a motion to vacate that decision claiming that summary judgment was improper because the arbitrator exceeded his powers by denying him a hearing based upon an unambiguous and undisputed mistake of material fact. Vacating an arbitration award is a very high hurdle based upon the Federal Arbitration Act and common law precedent. The InfraSource defendants aggressively opposed Haag’s arguments. The district court wrote a lengthy opinion denying Haag’s motion to vacate the arbitration award and confirming the arbitrator’s award of summary judgment to the InfraSource defendants. (See 2012 U.S. Dist. LEXIS 28365).
Afterwards, Haag appealed to the United States Court of Appeals for the Fifth Circuit. Although he tried to recast his arguments, Haag could not overcome the strength of the InfraSource defendants’ reliance upon the combination of his own statements memorialized in contemporaneous emails, concessions made at deposition, and application of common law precedent. The Fifth Circuit affirmed the district court’s decision. (See 2013 U.S. App. LEXIS 3544). The Fifth Circuit also denied Haag’s motion for reconsideration and en banc hearing.