Keogh Cox's Win in Toledo Bend Litigation Could Have National Impact in Flood Hazard Litigation

The image of a law firm stuffed with banker boxes floor-to-ceiling is shifting to the view of a computer server filled with gigabytes of information. This is increasingly a digital world and the documents, photographs, charts, memos, and emails that are the “stuff” cases are built upon now often come in digital form. As a result, great emphasis is placed upon “electronic discovery.”

What is “electronic discovery”? “Discovery” includes the exchange of information between parties in a lawsuit. “Electronic discovery” is the process of collecting, preparing, reviewing, and producing “electronically-stored information” in the context of a civil action.

What is electronically stored information (“ESI”)? The Federal Rules of Civil Procedure define ESI as information created, manipulated, communicated, stored, and best utilized in digital form, requiring the use of computer hardware and software. Because of the wide variety of computer systems currently in use, and the rapidity of technological change, courts often give an expansive definition of ESI which can include any type of information that is stored electronically, including emails, images, spreadsheets, “metadata,” PDF documents, databases, and other groupings of information.

Are printed copies of my emails sufficient? In litigation, emails are commonly produced as printouts or PDFs. However, courts may require the production of emails in their native electronic form to allow the other party to certify that the produced emails have not been altered. If the court finds that a party, anticipating litigation, intentionally deletes or destroys ESI, that party may be exposed to a claim that they have “spoliated” evidence. An opponent may even complain if a party fails to take affirmative steps to prevent information from being deleted or overridden as part of an automated process. For instance, this often occurs when a surveillance camera system “writes over” older video to create space for new video.

Arbitration is a favored method of dispute resolution in the energy and construction sectors, where complex, high-value contracts often generate multimillion-dollar disputes. Understanding the courts' standard of review of arbitration awards directly impacts risk assessment, contract drafting, and dispute resolution strategies. A recent U.S. Fifth Circuit decision reinforces the limited grounds for judicial intervention, a principle that remains central to the effectiveness of arbitration as an efficient alternative to litigation.

In United States Trinity Services, LLC v. Southeast Directional Drilling, LLC, a drilling subcontractor obtained a $1.7 million arbitration award against the general contractor for standby costs incurred on a pipeline installation project. The subcontractor incurred costs when ordered to stop work for causes outside its control, including delayed permits, mud infiltration, and COVID-19. The subcontract contained a provision that called for reimbursement of standby costs. On appeal, the general contractor sought to vacate the award in the U.S. Northern District of Texas, arguing that the arbitration panel failed to properly interpret various contract provisions related to standby costs and exceeded its authority and acted in manifest disregard of Texas law in interpreting the contract.

The Federal Arbitration Act, 9 USC §10 (“FAA”) applies and provides the exclusive grounds to vacate an award: corruption, fraud, evident partiality, misconduct in refusing to postpone the hearing, refusing to hear evidence, or where arbitrators exceeded their powers. The U. S. Fifth Circuit Court of Appeals noted that the FAA was enacted to create a national policy favoring arbitration; the arbitrator’s authority derives from the parties’ contract; and once parties agree to arbitrate, they “bargain for” the arbitrator’s, not the court’s, interpretation of their contract.

The Court instructed that a party challenging an award bears a high burden to show that the arbitrator ignored the contract. It is not sufficient to show the arbitrator erred in interpreting the contract. The question the court asks is “whether the arbitrators construed the contract at all” not “whether they construed it correctly.” A court should not reassess the merits of the arbitrator’s decision. Here, the award recited the pertinent contract terms and the arbitrators’ analysis. This showed the arbitrators considered the contract provisions, thus ending the Court’s inquiry.

The Court rejected the argument that the arbitrators manifestly disregarded the law in interpreting the contract. “Manifest disregard” – a judicially-created concept – is not a freestanding ground for vacatur. It does not serve as a separate basis to establish that arbitrators exceeded their powers. Otherwise, the FAA’s stated grounds for vacatur would be expanded to essentially a “full-bore” judicial review process.*

However, the Circuits are split on the validity of manifest disregard of the law or contract as a basis to vacate an award. See for example, Dewan v. Walia, where the U.S. Fourth Circuit Court of Appeals vacated an award after finding the arbitrator’s contract interpretation ‘untenable.”

Mary Anne Wolf, PE, FCIArb, is an arbitrator, mediator, and attorney in construction, energy, commercial and complex cases.

References:

United States Trinity Services, LLC v. Southeast Directional Drilling, LLC, 2025 WL 1218096 (5^th Cir. 2025).

Dewan v. Walia, 544 Fed Appx 240 (4th Cir. 2013).

* Hall Street Assoc., LLC v. Mattel, 128 S.Ct. 1396 (2008).

In a decision released October 9, 2013, the U.S. Fifth Circuit upheld the grant of the defendants' Motion to Dismiss by concluding that the Federal Power Act ("FPA") preempts property damage claims based in Louisiana state tort law where the alleged damage is the result of operations that comply with the FERC-issued license. Simmons v. Sabine River Authority, No. 12-30494, - F.3d - , (5th Cir. 10/09/2013).

This issue, recognized as a question of first impression in the Fifth Circuit, arose in a case where the plaintiffs, all Louisiana owners and residents of property located downstream from the federally-licensed hydroelectric Toledo Bend Dam situated on the Sabine River, sued Sabine River Authority of Louisiana and various Entergy defendants to recover damages for flooding incidents and to enjoin the opening of the Dam's flood gates in such a way as to cause inundation of the downstream properties.

On behalf of defendants, Keogh Cox moved to dismiss the suit by claiming state tort law claims for damages and injunctive relief interferes with the exclusive authority of the Federal Energy Regulatory Commission ["FERC"] to regulate and control the operations of the federally-licensed Toledo Bend project such that the plaintiffs' claims were preempted under the FPA. The District Court granted the motion after extensive briefing and argument by Keogh Cox attorneys, John P. Wolff, III, Nancy B. Gilbert, Martin E. Golden, and Virginia J. McLin.

In affirming the district court's ruling, the Fifth Circuit recognized U.S. Supreme Court precedent that has interpreted the FPA as "occupying the field of public water use and power generation except for water use rights." As a result, in accord with Ninth Circuit law, it interpreted the general savings clause in the FPA [16 U.S.C. § 821] narrowly to exempt only "a state property law regime [that] enables users of streams and wells to obtain proprietary rights in a continuing quantity of water." The Court also recognized that state damage claims can have the same effect as a state regulation and may serve as a collateral attack on a federal license, such that it refused to interpret the limited savings clause [16 U.S.C. § 803(c)] to permit "state tort law to supplant FERC's exclusive control of dam operations." Because "applying state tort law to set the duty of care for the operation of the FERC-licensed project would 'stand as an obstacle to the accomplishment and execution of the full purposes and objectives' of the FPA," the Fifth Circuit held plaintiffs' state law property damages claims were conflict preempted under the FPA.

That a single federal agency should control public water use and dam operations was noted to be especially appropriate because the Toledo Bend Dam spans Texas and Louisiana state lines and, if not preempted, different causes of action and standards of conduct could have been imposed under the laws of the two states.