KURT D. ENGELHARDT, District Judge.
Presently before the Court are the "Motion for Preliminary Injunction and to Stay JAMS Arbitration in San Francisco" (Rec. Doc. 10), filed by Plaintiff, Sean C. Cooper, and the "Motion to Dismiss Complaint for Declaratory Judgment" (Rec. Doc. 3) filed by Defendant WestEnd Capital Management, LLC ("WestEnd"). Having carefully considered the parties' submissions, the record, and applicable law,
On or about September 15, 2009, George Bolton Holdings, LLC ("Bolton"), Robert Gustave Ozag ("Ozag"), and Plaintiff entered into a "First Amended and Restated Operating Agreement" ("Operating Agreement") for WestEnd as its Members and Managers.
Almost three years later, on or about July 31, 2012, Ozag and Bolton voted to expel Plaintiff from WestEnd.
Later that month, on August 25, 2012, WestEnd filed a "Verified Petition for a Temporary Restraining Order and Preliminary Injunction and Permanent Injunctive Relief" against Plaintiff in the Civil District Court for the Parish of Orleans, State of Louisiana.
Prior to dismissing its state court action, WestEnd commenced an arbitration proceeding, on September 26, 2012, by filing a "Demand for Arbitration Before JAMS," requesting a hearing in San Francisco, California, as well as a "Statement of Claim."
Pertinent to these motions is Section 24 of the Operating Agreement, entitled "Arbitration," which provides:
WestEnd's motion to dismiss contends that Plaintiff's action is governed and precluded by the arbitration provision set forth in Section 24 of the Operating Agreement. Although acknowledging that the express provisions of 9 U.S.C. §3 provide for a stay of a federal court action pending completion of arbitration — upon a determination by the court that any involved issue is referable to arbitration — WestEnd contends the Court has discretion to dismiss, rather than stay, the action if all pending issues are referable to arbitration. In opposing WestEnd's motion to dismiss, and in support of his own motion for preliminary injunction and to stay, Plaintiff maintains that the Operating Agreement requires arbitration in New Orleans, as the location of WestEnd's principal office at the time the dispute arose, rather than in San Francisco. Recognizing that no JAMS office exists in New Orleans, Plaintiff urges the Court to order arbitration in Dallas, Texas (where JAMS has an office), stay the San Francisco proceeding, and appoint a new arbitrator from the New Orleans area, or, alternatively, Dallas. Alternatively, Plaintiff maintains that, by commencing the aforementioned state court proceeding, obtaining a temporary restraining order, and then dismissing the matter with prejudice, with no reservation of claims for arbitration, the pending JAMS arbitration proceeding initiated by Defendant is barred by principles of res judicata and/or waiver.
With respect to res judicata, the Court applies Louisiana law "to determine the preclusive effect of a prior Louisiana court judgment, if any." See Lafreniere Park Foundation v. Broussard, 221 F.3d 804, 808 (5th Cir. 2000). "Louisiana's doctrine of res judicata can only be invoked if all essential elements are present and established beyond all question. See Kelty v. Brumfield, 633 So.2d 1210, 1215 (La.1994). Thus, a state court dismissal with prejudice bars a subsequent federal suit only if: "(1) the judgment is valid; (2) the judgment is final;
Regarding the last element, "[w]hat factual grouping constitutes a `transaction', and what groupings constitute a `series', are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage." Lafreniere Park Foundation, 221 F.3d at 810-11 (quoting Restatement (Second) of Judgments § 24(2) and citing Hy-Octane Investments, Ltd. v. G&B Oil Products, Inc., 702 So.2d 1057, 1060 (La. App. 3rd Cir.1997) (quoting Black's Law Dictionary: "a group of facts so connected together as to be referred to by a single legal name; as a crime, a contract, a wrong.")). In Lafreniere Park Foundation, the Fifth Circuit concluded: "Both of the actions concern a group of facts so connected as to constitute a single wrong and so logically related that judicial economy and fairness mandate that all issues be tried in one suit." 221 F.3d at 811.
Regarding the issue of waiver, as this Court recently stated in Baricuatro v. Industrial Personnel and Management Services, Inc., Civil Action No. 11-2777, 2013 WL 757643, *2 (E.D. La. 2/27/13)(Engelhardt, J):
Applying the foregoing principles here, the Court disagrees that the pending JAMS arbitration presently is barred by either res judicata or waiver. Although a dismissal with prejudice qualifies as a final judgment, and there is no assertion that the state court was not competent, the Court is not convinced that the claims at issue in the JAMS arbitration proceeding arose out of the same "transaction or occurrence that was the subject matter of the state court litigation." In so concluding, the Court recognizes that the state court petition referenced, as background information, Plaintiff's expulsion from WestEnd, and the professed grounds for that expulsion. The pertinent averred wrong constituting the subject matter of the state court proceeding, for which expedited temporary injunctive relief was sought, however, was Plaintiff's alleged post-expulsion misconduct
For similar reasons, the Court disagrees that Defendant waived its right to arbitration by virtue of the state court proceeding. Such waiver will be found only when the party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party. As explained above, WestEnd's state court suit for temporary restraining order, preliminary injunction, and permanent injunctive relief did not seek a judicial resolution of any of the issues WestEnd seeks to arbitrate in the JAMS proceeding. Nor has legal prejudice (delay, expense, or damage to Plaintiff's legal position) been shown. Plaintiff was expelled as a member of WestEnd on July 31, 2012; the state court litigation, addressing Plaintiff's post-expulsion conduct terminated on October 22, 2012; the JAMS arbitration proceeding, asserting claims relative to conduct allegedly giving rise to Plaintiff's expulsion, commenced, prior to the actual dismissal of the state court litigation, on September 26, 2012. Thus, the Court finds no undue delay by WestEnd in seeking arbitration. Further, because WestEnd pursued only its request for temporary relief in state court, Plaintiff was not required to appear in the state court suit. Nor did he do so. Finally, there has been no showing that discovery relative to the arbitral claims occurred during the brief course of the state court litigation.
Having disposed of Plaintiff's res judicata and waiver arguments relative to arbitration, the Court focuses on Plaintiff's assertions regarding venue. Although arguably undetermined, or at least unclear, during the proceeding's infancy, the arbitrator's February 14, 2013 scheduling order, along with the August 9, 2013 "Notice of Hearing," reflect that the arbitration hearing in the matter will take place between November 11 and 19, 2013, in New Orleans, Louisiana. See Rec. Doc. 29-3, p. 4, and attached Exhibit "A." Significantly, the parties' arbitration agreement requires only that pertinent disputes be resolved by means of binding JAMS arbitration, pursuant to JAMS's Arbitration Rules and Procedures, and, regarding venue, that the "arbitration hearing be held in the "county and state of the principal office of the Company at the time the dispute arises," which the Plaintiff contends is New Orleans, Louisiana. Importantly, the agreement does not require that the entire arbitration proceeding be administered from New Orleans, that the chosen arbitrator live in New Orleans, or that all discovery be taken in New Orleans. Additionally, as WestEnd contends, there is no New Orleans JAMS office and, at the time the Operating Agreement was signed, WestEnd's headquarters were located in San Francisco. Although the parties seemingly could have mandated, in the Operating Agreement, the requisite residence of the arbitrator, where discovery was to take place, and from which JAMS office the arbitration proceeding would be administered, as opposed to only selecting the venue of the actual arbitration hearing, they did not. Thus, considering the federal policies favoring arbitration and attempting to give effect to the all provisions of the parties' agreement, where possible, the Court declines to enjoin or stay the pending JAMS arbitration proceeding.