Background
Jeremiah Hill, a seaman, was injured while working on an offshore supply vessel owned by Jackson Offshore Holdings. After the injury, the company provided maintenance and cure benefits and additional supplemental benefits. Six months later, the company presented Hill with an Advance Wage and Benefits Agreement that included an arbitration provision and a delegation clause. Hill signed the agreement but later sued in federal district court, alleging fraud and economic duress. The district court denied the company’s motion to compel arbitration without prejudice, permitting discovery on the agreement’s enforceability.
The court’s reasoning
The court first established that it had jurisdiction under the Federal Arbitration Act to review the district court’s denial of the motion to compel arbitration, noting that the text of the statute does not distinguish between denials with or without prejudice. On the merits, the court applied the severability principle established by the Supreme Court in Rent-A-Center, West, Inc. v. Jackson. The court explained that a delegation clause is an agreement to arbitrate threshold issues and is severable from the remainder of the contract. Because Hill challenged the validity of the entire agreement rather than specifically challenging the delegation clause itself, the court held that the severability principle required the dispute to be referred to an arbitrator. The court rejected the district court’s reasoning that Hill’s general allegations were sufficient to challenge the delegation clause.
absent a challenge to the delegation clause itself, we will consider that clause to be valid and compel arbitration.
Edwards v. Doordash, Inc., 888 F.3d 738, 744 (5th Cir. 2018)
What it means going forward
The decision reinforces the strict requirement in the Fifth Circuit that parties must explicitly target a delegation clause to avoid arbitration. It clarifies that general claims of fraud or duress affecting the entire contract do not prevent a court from enforcing a delegation clause that has not been specifically challenged.
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