Long: Fifth Circuit Elaborates on the “Look Through” Jurisdictional Analysis for Federal Arbitration Act Petitions

On March 30, 2021, the Court of Appeals for the Fifth Circuit issued Polyflow, L.L.C. v. Specialty RTP, L.L.C., a decision concerning the arbitrability of claims related to the unauthorized use of trade secrets.

In 2014, John Wright resigned as the president of Polyflow LLC (“Polyflow”), the manufacturer of a proprietary pipe called Thermoflex used in the oil and gas industry, to form a competitor, Specialty RTP. Polyflow sued Specialty RTP and John Wright (collectively, “Specialty”) in 2015 for allegedly manufacturing a pipe identical to Thermoflex and deriving from Polyflow’s protected and confidential information. The parties settled this dispute in 2017, and the settlement agreement imposed a two-year limitation on Specialty’s ability to manufacture any competing pipes. After the two-year ban, Specialty was free to independently design a competing pipe, but, as a safeguard, the parties agreed to hire a neutral pipe expert to adjudicate whether Specialty was, in fact, independently designing its own product. The settlement agreement also contained an arbitration clause stating: “The sole and exclusive jurisdiction and venue for any action arising out of this Agreement shall be an arbitration in Harris County, Texas.”

Read more at the Institute for Energy Law's Oil & Gas E-Report (page 25) >>