Mack Energy Co. v. Expert Oil and Gas, L.L.C.

Supreme Court of Louisiana
FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #004

FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 28th day of January, 2015, are as follows:

BY WEIMER, J.:

2014-C -1127 MACK ENERGY CO., ET AL. v. EXPERT OIL AND GAS, L.L.C. (Parish of
St. Tammany)

Retired Judge Hillary J. Crain, Assigned as Justice ad hoc,
sitting for Justice Jefferson D. Hughes, III, recused.
Judge Scott J. Crichton, assigned as Justice ad hoc, sitting for
Justice Jeffrey P. Victory, for oral argument. He now sits as an
elected Associate Justice at the time this opinion is rendered.

Accordingly, the rulings of the lower courts, by which the
arbitration award is confirmed, are hereby AFFIRMED.

01/28/15

SUPREME COURT OF LOUISIANA

NO. 2014-C-1127

MACK ENERGY CO., ET AL.

VERSUS

EXPERT OIL AND GAS, L.L.C.

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT,
PARISH OF ST. TAMMANY

WEIMER, Justice.1

We granted a writ to determine whether an accountant, serving as an arbitrator,

exceeded his arbitral authority.

Based on an agreement, an oilfield operator was authorized to charge certain

costs against revenues prior to paying the oilfield owners. After a dispute arose, an

auditor examined the oilfield operator’s costs charged to the oilfield owners and

assigned approximately $978,000 as being unsubstantiated and, therefore,

impermissibly charged to the owners by the operator. The arbitrator reached a

different conclusion regarding what charges were permissible and awarded the owners

approximately $1.6 million.

The arbitrator’s conclusion was significantly based on employment documents

provided by the operator during the arbitration. Those employment documents were

1
Retired Judge Hillary J. Crain, assigned as Justice ad hoc, sitting for Justice Jefferson D. Hughes, III,
recused.
Judge Scott J. Crichton, assigned as Justice ad hoc, sitting for Victory, J. for oral argument. He sits as
an elected Justice at the time this opinion is rendered.

not entered as an exhibit during the arbitration, nor were the documents made available

to the parties for review. The oilfield owners were, nevertheless, apparently satisfied

with the arbitration’s final outcome, and the owners brought an action in the district

court to confirm the award. The oilfield operator, however, moved to vacate the

award. The operator argued that the arbitrator improperly considered the employment

documents and that the arbitration was limited in scope by the auditor’s findings that

the unsubstantiated charges totaled approximately $978,000. The district court

confirmed the award and denied the operator’s motion. The court of appeal affirmed,

with one judge dissenting.

Initially, the arbitration proceedings and alleged disproportionate award

appeared to approach the limits of Louisiana’s generally permissive arbitration laws;

therefore, this court granted a writ of review. After oral argument and with the benefit

of a full record, however, we find the arbitrator acted pursuant to the authority lawfully

and contractually vested in him by the parties. Thus, for the reasons that follow, we

affirm.

FACTS AND PROCEDURAL BACKGROUND

The owners of the oilfield’s mineral rights are Mack Energy Co., Knight

Resources, LLC, Big Sky Operating Companies, Inc., and Duplantis Resources, LLC

(collectively “Mack Energy”). In 2007, Mack Energy executed two agreements with

ExPert Oil & Gas, LLC (“ExPert”) to develop Mack Energy’s mineral rights in the

Lake Salvador Field in Jefferson and St. Charles Parishes. The “Participation

Agreement” indicated that Mack Energy would be given “the authority and

responsibility to act as the prospect developer for” the Lake Salvador Field and that

ExPert would be the operator. The Participation Agreement also provided details for

the payout of any successful wells and that the costs of any mineral operations would

2

be paid or reimbursed to ExPert as the operator. The other agreement was an

“Operating Agreement,” which attached an accounting procedure referred to by the

parties as “COPAS,” the acronym for the Council of Petroleum Accountants

Societies. Under COPAS procedures, a “Joint Account” was established as a means

of “showing the charges paid and credits received” for the oilfield operations. The

COPAS procedures also gave Mack Energy the right to have the joint account audited.

Mack Energy invoked the right under COPAS to have an audit from the

inception of the joint account through December 2010. Accountant Dan Huey served

as the lead auditor and examined expenditures charged to the joint account totaling

nearly $37 million. In his report, Mr. Huey indicated that not all expenditures charged

by ExPert could be justified under the standard of “reasonableness and propriety” by

supporting documentation, and he identified such expenditures as “exceptions.” Mr.

Huey’s report indicated that the “[g]ross exceptions totaled $1,437,828.97 with

additional unresolved exceptions that are to be determined after response by

Operator.”

Neither Mack Energy nor ExPert agreed with Mr. Huey’s report. Pursuant to

the Participation Agreement, Mack Energy and ExPert submitted their dispute to a

mediator. Through mediation, of 106 exceptions noted in the audit report, the parties

resolved 54 exceptions. Although some exceptions had been resolved to the parties’

mutual satisfaction, Mack Energy and ExPert continued to dispute the proper

resolution of the joint account after mediation.

In fact, Mack Energy sought to terminate ExPert’s role as operator. That issue

became the topic of a separate arbitration, which concluded with a ruling maintaining

ExPert as operator. However, as far as the joint account was concerned, Mack

Energy again invoked rights described in the Participation Agreement and called for

3

the arbitration at issue in this case. Mack Energy submitted a document to ExPert

captioned “Arbitration Claim,” which recited the attempted mediation and its results

relative to the audit report: “Fifty-two (52) audit exceptions, totaling $977,598.44,

remained open at the end of the mediation.”

The parties executed a “Procedural Agreement,” describing how certain aspects

of the arbitration, such as discovery and evidence, would be handled by an arbitrator.

The Procedural Agreement also stated that the arbitrator would resolve the issues that

were “formally submitted” and indicated that the parties had already jointly selected

an arbitrator. The selected arbitrator was an accountant and a member of the Council

of Petroleum Accountants Societies, the same organization that promulgated the

COPAS procedures to which the parties were bound by the Operating Agreement.

During the hearing, the arbitrator considered whether ExPert was required to provide

employment documents relating to charges ExPert made to the joint account. The

charges had been made for services rendered by employees of ExPert E & P

Consultants, LLC, an entity affiliated with ExPert.

ExPert and ExPert Consultants had the same chief financial officer (CFO),

Michael Ledet. Moreover, the Participation Agreement was written on letterhead listing

both of the ExPert business entities. Notwithstanding the obvious connections

between the two entities, during the arbitration, ExPert took the position that charges

to the joint account for services from ExPert Consultants were the services of a third

party for which ExPert had no obligation to provide documents during the arbitration.

After a lengthy debate by the parties’ counsel and testimony by the CFO admitting that

the auditor had requested the employment documents for the audit, but the CFO

refused to provide those documents, the arbitrator ordered ExPert to produce the

employment documents.

4

The debate over the production of the employment documents evolved along

procedural lines, with the parties taking greatly disparate positions. The range of

substantive reasons for the arbitrator’s potential use of the employment documents

appeared to be well-understood by the parties. Under COPAS, when the operator

charges the joint account for services of an entity affiliated with the operator, one of

two rates is permissible. In such a situation, the auditor noted in his report that the

operator was allowed to charge either “rates commensurate with costs of ownership

and operation” or “commercial[ly] prevailing rates … less 20%.” Moreover, the

operator is allowed to charge only a flat rate for overhead expenses, such as

“administrative, supervision, [and] office services.” Thus, substantively, the arbitrator

determined the employment documents were necessary to guide his ultimate resolution

of the parties’ accounting disputes.

After the hearing, the arbitrator ordered ExPert to credit the joint account in the

amount of $1,596,269.15. Of this credit, the arbitrator found ExPert had charged

$537,579.36 for services of ExPert Consultants, which were “clearly administrative

and not chargeable.” The arbitrator explained this finding was supported by the

employment records, which had been “denied the auditors in the expenditure[s] audit”

and which had been the subject of the lengthy dispute during arbitration, culminating

in the arbitrator’s order to provide the records to him for evaluation.

Mack Energy initiated a proceeding in the district court to have the arbitration

award confirmed. ExPert responded by moving to have the award vacated. After

briefing and oral argument by the parties, the district court confirmed the award and

ordered ExPert to pay interest from the date of Mack Energy’s filing to confirm the

5

award.2 ExPert sought a new trial regarding the interest award only, arguing that

interest could be awarded only from the date the district court confirmed the award.

The district court denied ExPert’s motion for new trial. The district court’s judgment

was affirmed on appeal by a majority vote. Mack Energy Co. v. Expert Oil and

Gas, L.L.C., 13-0182 (La.App. 1 Cir. 1/17/14) (unpub’d).3

This court granted a writ to consider ExPert’s arguments that the arbitrator

exceeded his authority in ordering the employment documents produced and further

exceeded his authority in awarding Mack Energy more than the value of the exceptions

noted in the audit report that remained unresolved after the pre-arbitration mediation.

Mack Energy Co. v. Expert Oil and Gas, L.L.C., 14-1127 (La. 10/3/14), 149

So.3d 276.

LAW AND ANALYSIS

Aside from exceptions not applicable here, arbitration is the result of two or

more parties’ choice to have a dispute resolved by person(s) outside the judicial

system. See La. C.C. art. 3099.4 The ultimate resolution of the dispute is intended to

be binding on the parties who have chosen arbitration. See Id. The choice to arbitrate

is expressed contractually, and the legislature has dictated that the choice itself to

arbitrate is also binding on the parties. See La. R.S. 9:4201 (“A provision in any

written contract to settle by arbitration a controversy thereafter arising out of the

contract, or out of the refusal to perform the whole or any part thereof, or an

2
ExPert’s motion to vacate was denied.
3
The court of appeal granted a rehearing to consider ExPert’s argument that the scope of arbitration was
more limited than initially found; the court rejected ExPert’s argument and again affirmed. Mack Energy
Co. v. Expert Oil and Gas, L.L.C., 13-0182 (La.App. 1 Cir. 5/2/14) (unpub’d).
4
Exceptions to the voluntary choice to resolve disputes by arbitration may arise in a certain “court-ordered
or … court-annexed alternative dispute resolution program.” 1A FRANK L. MARAIST , LOUISIANA CIVIL
LAW TREATISE : CIVIL PROCEDURE -SPECIAL PROCEEDINGS § 13.2, p. 224 (2005).

6

agreement in writing between two or more persons to submit to arbitration any

controversy existing between them at the time of the agreement to submit, shall be

valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity

for the revocation of any contract.”).

The Civil Code refers to an agreement to arbitrate as a “submission.” See La.

C.C. art. 3099. Regarding the subject matter of arbitration, the Civil Code indicates

that “[p]arties may submit either all their differences, or only some of them in

particular; and likewise they may submit to arbitration … generally every thing which

they are concerned in, or which they may dispose of.” La. C.C. art. 3102. The Code

again refers to the agreed-upon “submission” to delineate an arbitrator’s authority:

“The power of arbitrators is limited to what is explained in the submission.” La. C.C.

art. 3104. Furthermore, the parties’ Procedural Agreement states: “[the] issues to be

decided by the Arbitrator shall be those issues formally submitted to the Arbitrator.”

Our review of the arbitration here and of the resulting award is guided by the

following principles. This court ruled that “[b]ecause of the strong public policy

favoring arbitration, arbitration awards are presumed to be valid.” National Tea Co.

v. Richmond, 548 So.2d 930, 932 (La. 1989). Moreover, “[e]rrors of fact or law do

not invalidate a fair and honest arbitration award,” (id.) and “[t]he burden of proof

rests upon the party attacking the award.” Firmin v. Garber, 353 So.2d 975, 978

(La. 1977). Such deference to arbitral awards is consistent with the longstanding

recognition that arbitration is intended to “speedily … determine disputes and

controversies by quasi judicial means, thus avoiding the formalities, the delay, the

expense, and the vexation of ordinary litigation.” Housing Authority of New

7

Orleans v. Henry Ericsson Co., 197 La. 732, 745, 2 So.2d 195, 199 (1941), quoting

3 AMERICAN JURISPRUDENCE: ARBITRATION AND AWARD, p. 830, § 2.

8

In La. R.S. 9:4210, the legislature provided the following grounds for vacating

an arbitration award:

A. Where the award was procured by corruption, fraud, or undue
means.

B. Where there was evident partiality or corruption on the part of
the arbitrators or any of them.

C. Where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing to hear
evidence pertinent and material to the controversy, or of any other
misbehavior by which the rights of any party have been prejudiced.

D. Where the arbitrators exceeded their powers or so imperfectly
executed them that a mutual, final, and definite award upon the subject
matter submitted was not made.

ExPert relies on La. R.S. 9:4210(D) in each of its two main arguments regarding the

arbitrator’s exercise of power. ExPert argues the award of $1.6 million was outside

the scope of the arbitration and that the arbitrator improperly relied on employment

documents that had not been submitted as an exhibit during the arbitration. To find

in ExPert’s favor on the scope of the award would moot our consideration of

ExPert’s argument regarding the employment documents. Therefore, we first address

the argument that the quantum of the ultimate award was beyond the scope of the

arbitrator's authority.

Quantum and Scope

ExPert suggests that there is no factual support for an award of approximately

$1.6 million. Such is not the case. The arbitration award explains that the approximate

total of $1.6 million is comprised of various components and further indicates factual

findings supporting these components. Being informed of the ultimate amount

awarded is sufficient, for our present purposes, to properly focus our review. In

reviewing arbitral awards challenged under La. R.S. 9:4210(D), it is not the role of the

9

judiciary to correct errors of fact or law; therefore, the calculation of damages is

beyond our review. See National Tea Co., 548 So.2d at 932; Louisiana Physician

Corp. v. Larrison Family Health Center, L.L.C., 03-1721, pp. 2-4 (La.App. 3 Cir.

4/7/04), 870 So.2d 575, 577-78. Thus, we are not revisiting how or why the arbitrator

arrived at an award of approximately $1.6 million. Instead, we examine whether the

arbitrator had the contractual authority to issue that award.

The Procedural Agreement, ExPert correctly notes, describes many of the

arbitrator’s powers. The Procedural Agreement itself, however, does not completely

define the arbitration’s scope; rather, the scope is to be more specifically defined

elsewhere as the Procedural Agreement states: “[t]he issues to be decided by the

Arbitrator shall be those issues formally submitted to the Arbitrator in accordance with

the provisions of the Contract.”

ExPert argues that Mack Energy formally submitted the exceptions identified in

the audit report to arbitration thereby limiting the award to a maximum of

approximately $978,000. As we recounted earlier, the audit report identified

expenditure exceptions, i.e., charges lacking sufficient supporting documentation or

other justification. ExPert also points out that, after mediation and during the

arbitration, the parties had resolved a number of those exceptions. Subtracting the

amount of the resolved exceptions from the auditor’s total is how ExPert arrives at the

$978,000 figure, which ExPert argues limits the scope of the arbitrator’s authority to

render an award.

To prevail with this line of argument, ExPert must show that the parties

contractually bound themselves to limit the arbitration to the exceptions identified in

the audit report and likewise bound themselves to the corresponding values assigned

in the audit report to each exception. See AT&T Technologies, Inc. v.

10

Communication Workers of America, 475 U.S. 643, 648-49 (1986) (“[A]rbitrators

derive their authority to resolve disputes only because the parties have agreed in

advance to submit such grievances to arbitration.”).5 Indeed, ExPert points to the

Arbitration Claim, apparently drafted by Mack Energy, and specifically to this

recitation: “Fifty-two (52) audit exceptions, totaling $977,598.44, remained open at the

end of the mediation.”

If the Arbitration Claim had recited only the language just quoted, we might

agree with ExPert that the arbitration’s scope was limited to an award of $977,598.44.

However, it is important to note that the Arbitration Claim continued: “The only

disputes to be arbitrated in this arbitration are (i) a resolution of exceptions raised in

an audit of the Joint Account and (ii) the payment of credits to the Joint Account

based on the evidence to be submitted in the arbitration.”

From the excerpt last quoted, we find that the scope of arbitration was twofold.

First, the parties were to resolve the expenditure exceptions identified in the audit

report. Second, the parties were to resolve any credit which could be established

during the arbitration. To hold to the contrary, as ExPert essentially urges we should

do so by finding the scope of arbitration was limited to the exceptions and amounts

identified in the audit report, would render the second enumerated dispute in the

Arbitration Claim meaningless.6 Here, ExPert failed to demonstrate why this court

5
Although we apply Louisiana law in this case, we draw from federal jurisprudence because federal
arbitration law and Louisiana arbitration law “are almost identical in substance.” FIA Card Service, N.A.
v. Weaver, 10-1372, p. 4 (La. 3/15/11), 62 So.3d 709, 712 (internal quotation omitted).
6
In a reviewing a contract, if possible, courts are required to give meaning to each provision. See La.
C.C. art. 2046 ("When the words of a contract are clear and explicit and lead to no absurd consequences,
no further interpretation may be made in search of the parties' intent."); cf. Tresch v. Kilgore, 03-0035,
p. 4 (La.App. 1 Cir. 11/7/03), 868 So.2d 91, 93 ("Ordinary contract principles govern the question of who
is bound by an arbitration agreement, and a party cannot be required to submit to arbitration any dispute
that he has not agreed to submit.").

11

should ignore the provision identified within the Arbitration Claim as a second

enumerated dispute to be decided in arbitration.7

The second enumerated dispute in the Arbitration Claim empowered the

arbitrator to determine the “payment of credits to the Joint Account.” We find

additional confirmation within the same Arbitration Claim, that the scope of the

arbitrator’s authority was untethered from the earlier audit. Specifically, the Arbitration

Claim presented this request: “Mack Entergy … ask that … the Arbitrator make the

following findings: … 3. Based on the evidence submitted in the arbitration, credits to

the Joint Account as determined by the Arbitrator are due and payable by [ExPert].”8

(Emphasis added.)

We determine, therefore, that the arbitrator acted within the scope of authority

contractually conferred by the parties when the arbitrator reached his own conclusions

regarding what charges to the joint account were permissible and awarded a

corresponding amount of credits to be paid by ExPert. Having found that the

quantum of the arbitrator’s award was within the scope of the arbitrator’s authority,

we likewise find the arbitrator brought about a “final, and definite award upon the

subject matter submitted” as required by La. R.S. 9:4210(D), and our review of the

quantum of the award for compliance with the scope of the arbitration is complete.

7
We also note that although the burden is high, a remedy for “compelling an arbitration … when the matter
in question is inarbitral” is to seek injunctive relief from a court. MARAIST , supra § 13.5 at 231-32.
ExPert did not seek such a remedy here.
8
The Arbitration Claim provides us with the most direct statement indicating that the arbitrator was
untethered to the auditor’s findings, but we note that the Procedural Agreement appears to provide another
statement why the arbitrator was not bound to the auditor’s findings. Specifically, the Procedural
Agreement described “that the issues to be determined in this arbitration proceeding, includ[ed], inter alia,
the interpretation of the Contract, and all matters related thereto or arising thereunder shall be governed
by and decided based upon the substantive law of Louisiana.”

12

Scope of Production and Consideration of Documents

ExPert argues that the arbitrator exceeded his authority in ordering the

production of employment documents and then considering those documents when

rendering the award. ExPert’s primary argument, is that the order to produce the

documents was untimely.

To support its claim that the order was untimely, ExPert presents an elaborate

comparison of the arbitration proceeding with litigation, complete with discovery

deadlines and exhibit lists. ExPert urges that because Mack Energy did not request the

employment documents within the discovery deadline, the opportunity to seek those

documents had passed. Similarly, ExPert contends that because Mack Energy did not

include the documents on the pre-arbitration exhibit list, Mack Energy was barred from

seeking them during the arbitration. The Procedural Agreement, ExPert points out,

established a discovery schedule and required “final exhibit lists and copies of all

exhibits.”

This was no discovery dispute, however, nor can the issue be resolved by

resorting to the Procedural Agreement’s requirement for a final exhibit list. The order

to produce the documents was issued by the arbitrator during the arbitration. This

court must, therefore, determine the source of the arbitrator’s authority, if any, to

order the production of documents during arbitration.9 Louisiana’s Binding

9
Even if we were reviewing a judicial proceeding, ExPert’s argument implies that courts are rigidly bound
to adhere to discovery deadlines and witness lists. Carrying ExPert’s comparison of this arbitration to a
judicial proceeding one step further, we see ExPert raises legal issues for which it has offered no answer.
Assuming for the sake of argument we were to apply the same standards of review to this arbitration as
we would to a judicial proceeding, we note ExPert does not address why the admission of documents not
included on an exhibit list and produced after a discovery deadline would not permissibly fall within the
exercise of the tribunal’s discretion. See, e.g., First Bank & Trust v. Tedesco, 12-0774, p. 14
(La.App. 4 Cir. 12/5/12), 106 So.3d 653, 662, writ denied, 13-0021 (La. 2/22/13), 108 So.3d 774 (“We
find that the trial court acted fairly and reasonably by admitting all the evidence produced by the parties
after the discovery deadline.”).
We similarly reject as inapposite the case of Southgate Penthouses, LLC v. Mapp Const., 12-1242

13

Arbitration Law, in La. R.S. 9:4206(C)(1), plainly authorizes an arbitrator to order the

production of documents during an arbitration: “The parties to the arbitration may

offer evidence as is relevant and material to the dispute and shall produce evidence as

the arbitrator may deem necessary to an understanding and determination of the

dispute.” (Emphasis added.)

ExPert makes much over its contention that Mack Energy asked the arbitrator

to issue the production order, in an apparent effort to again shift the dispute about

whether production was required away from the ambit of La. R.S. 9:4206, and place

the dispute within the scope of discovery and the requirement for a final exhibit list.

Yet, ExPert provides no legal support for drawing a distinction between an order

issued at the behest of a party and an order originating solely as the arbitrator’s own

idea. We find no such distinction drawn within La. R.S. 9:4206, and to fully evaluate

ExPert’s argument, we recall the principle that “[w]ords and phrases shall be read with

their context.” La. R.S. 1:3. Within La. R.S. 9:4206, the authority given to the

arbitrator to order the “produc[tion] of evidence as the arbitrator may deem necessary”

is expressed within the context that “[s]trict conformity to the Code of Evidence shall

not be required, except for laws pertaining to testimonial privileges.” See La. R.S.

9:4206(C)(1). Contained within the Code of Evidence are provisions governing

matters such as “the admissibility of evidence.” See La. C.E. art. 104(A). This

context of freeing an arbitration from the formalities of the Code of Evidence further

convinces us that the legislature intended no distinction or formality that would limit

(La.App. 1 Cir. 4/26/13), 2013 WL 1790994 (unpub’d), writs denied, 13-1217, 13-1906 (La. 9/13/13)
120 So.3d 700, 705, on which ExPert heavily relies. In Southgate, the court vacated an award because
the arbitral panel “violated its own scheduling order.” Id., p. 7. The violation the court cited, however,
did not concern the production of documents, but rather allowing the claimant to bring a new “contractual
claim against Southern States after the deadline for doing so in the scheduling order had expired.” Id.

14

an arbitrator’s power to order the production of documents to only the situation when

the idea for the order originated from the arbitrator. In light of this context, we find

ExPert would have us impose a formality upon the arbitrator’s ability to order the

production of documents for the arbitrator’s consideration, where such formality has

been rejected by the legislature.

Aside from the statutory authority to order the documents to be produced, we

find the following contractual basis within the Procedural Agreement, which is similar

in substance to La. R.S. 9:4206: “The Arbitrator is not required to apply the rules of

evidence used in judicial proceedings, but may do so if deemed appropriate.”

Therefore, we find that the arbitrator had the authority pursuant to La. R.S. 9:4206 and

pursuant to the parties’ Procedural Agreement to order the production of the

employment records during the arbitration for the arbitrator’s consideration of the

merits of the dispute.10 See Firmin, 353 So.2d at 977 (“The object of arbitration is

the speedy disposition of differences through informal procedures without resort to

court action.”).11

10
Although not mentioned by either party, we note that the Procedural Agreement allows “all evidence,
documents, depositions and testimony in the previous arbitration between the parties shall be available for
use by any party for purposes related to this arbitration without being in violation of any Protective Orders
issued in the previous arbitration. The admissibility of any such evidence will be determined by the
arbitrator herein.” The arbitrator in the instant matter noted that “[w]hile timesheets were denied the
auditors in the expenditure audit, they were provided during the previously cited arbitration effort.” ExPert
denies that the documents at issue “were requested by Mack [Energy] in the [earlier] arbitration or ordered
to be produced by [the arbitrator in the earlier matter (emphasis omitted)],” but ExPert does not explain
the basis for the quoted remarks from the arbitrator’s decision in the present matter. If the arbitrator in the
present matter was discussing the same documents at issue in the instant case, and those documents had
in fact been produced in the earlier arbitration, then yet another contractual basis existed for the arbitrator
to order their admission.
11
In light of the legal principles cited, it is unnecessary for us to delve further in the record to ascertain
whether the arbitrator had justification to order documents to be produced during the arbitration. For
completeness of the narrative of this case, we note the arbitrator stated the following justifications:

Now, based on Mr. Huey’s testimony, he was denied the opportunity to obtain those
[documents].

15

To reiterate, the introduction of evidence, not the formal designation of evidence

as an exhibit, was the contractual threshold for considering evidence to resolve the

parties’ dispute. We have found 70 pages in the transcript of the arbitration

proceeding culminating in the arbitrator’s order for the documents to be produced.

Furthermore, we have already found the parties’ discussion and ultimately the

arbitrator’s order satisfied the parties’ contractual threshold for introduction of the

documents in the record. However, we also address why the arbitrator ordered the

documents to be produced to him and not included as a formal exhibit, because the

record reveals additional contractual support for the arbitrator’s order.

When objecting to the arbitrator’s indication that the documents must be

produced, ExPert made much of the fact that the documents were employment

documents and that employment documents had only been produced in the prior

arbitration after the issuance of a protective order. Apparently, ExPert’s concern was

that the employment documents contained employees’ salary information. When

ordering the documents produced only to him, the arbitrator seemed sympathetic to

that concern, indicating:

I’d like to have these names presented and I would like to have that
[payroll] information provided only to me.
....

Now, obviously that affected his report and it affected everything that’s taken
place since that time. …

But I still get back to the point that those were critical documents with regard to
doing the job that Mr. Huey was asked to perform. And I know from my prior experience
that that’s solid grounds.

And while I understand that, yes, we’re real late in the game, but I think that those
documents should have been provided. If they were not provided and were or were not
requested, going forward past Mr. Huey’s presence in your office, Mr. Ledet, I think they
should have been and I think they should be now.

16

And I don’t plan on entering that as an exhibit. If you want to
consider that aside information for the arbitrator, I don’t know the legal
terms to label it beyond that, but that’s the way I view it.

The arbitrator’s remarks remind us that the parties’ Procedural Agreement

indeed indicated that “[t]he conduct of the hearing shall be informal.” Recalling also

that the arbitrator was not an attorney, but an accountant, who expressed he was

unaware of “the legal terms” for keeping the documents confidential, it appears the

arbitrator was attempting to fashion something akin to a protective order or an order

that the documents be filed under seal. The parties’ Procedural Agreement

incorporated by reference the Code of Ethics for Arbitrators in Commercial Disputes.

Canon I(E) of that Code indicates: “When an arbitrator’s authority is derived from the

agreement of the parties, an arbitrator should neither exceed that authority nor do less

than is required to exercise that authority completely.” The comments to Canon I

further explain that the arbitrator is empowered to “make interim rulings, and otherwise

control or direct the arbitration. These activities are integral parts of an arbitration.”

Therefore, we find that the arbitrator was contractually empowered to issue an order

by which the employment documents would be kept confidential.12

ExPert makes another related argument about the arbitrator failing to adhere to

formalities. According to ExPert, the arbitrator could not consider the employment

documents when rendering an award because the documents were not introduced as

an exhibit. Our initial observation about this argument is that ExPert does not point

to a contractual definition of the arbitral record or, more importantly, to a contractual

or other legal requirement limiting the arbitrator’s consideration to only documents

submitted as exhibits within the arbitral record. We note that the Procedural

12
Recalling that Mack Energy did not object to not seeing the documents, nothing in this opinion should
be construed to address the situation where an opposing party has not been given access to documents that
an arbitrator has ordered to be produced directly to the arbitrator.

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Agreement requires a court reporter, but only to “transcribe the hearing daily if live

testimony is presented.” Receiving and certifying exhibits as part of the arbitral record

is not described as one of the court reporter’s obligations. Therefore, even though

ExPert attempts to equate submitting evidence in the form of an exhibit with

introducing evidence in the arbitral record, we find no basis to require the introduction

of evidence in the form of an exhibit as a prerequisite for introducing evidence into the

arbitral record.

As evidence need not be submitted in exhibit form in order to be part of the

arbitral record, there is no doubt the documents were properly introduced into the

record. Nor were the documents introduced without adequate notice to ExPert.

Indeed, there are approximately 70 pages of transcript devoted to debating the issue

of whether ExPert needed to provide the employment records. The arbitrator then

ordered the documents be produced to him pursuant to his contractual power and as

authorized by statute, and the documents were accordingly produced.

Finally, we perceive ExPert’s argument against the arbitrator considering the

employment documents to be merely an effort to revisit the merits of the decision

under the guise of the arbitrator failing to adhere to a formality. We reject this

argument, finding the following oft-cited principle applies: “An appellant may not

actually seek review of the merits of the case by couching its argument in terms of

arbitrators having exceeded their authority.” Gilbert v. Robert Angel Builder, Inc.,

45,184, p. 6 (La.App. 2 Cir. 4/14/10), 34 So.3d 1109, 1113-14, citing Wittich v.

Wittich, 06-418, p. 7 (La.App. 5 Cir. 11/28/06), 948 So.2d 195, 198, and P & M

Equities, Inc. v. Latter & Blum, Inc., 96-940, p. 5 (La.App. 5 Cir. 3/25/97), 692

So.2d 1255, 1258.

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Ultimately, as we earlier emphasized, the arbitrator was contractually authorized

to reach an independent conclusion as to whether ExPert’s charges to the parties’ joint

account were permissible. That the arbitrator considered the employment documents

in forming his conclusion and rendering his award is undisputed. We have found the

arbitrator acted within his authority in all instances challenged by ExPert.

CONCLUSION

We granted a writ in this matter because of the concern that Louisiana’s

arbitration laws may have been significantly violated. Having reviewed the record,

however, we found the arbitrator acted pursuant to the scope lawfully delineated by

the businesses which submitted their dispute to an arbitrator to resolve. When, as

here, parties submit their dispute for resolution by arbitration, the role of the courts in

reviewing the outcome is limited. As we have previously explained, “[a]rbitration is

a substitute for litigation,” and “[j]udges are not entitled to substitute their judgment for

that of the arbitrators chosen by the parties.” National Tea Co., 548 So.2d at 933.

Accordingly, the rulings of the lower courts, by which the arbitration award is

confirmed, are hereby AFFIRMED.

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