Marriott International, Inc. v. Deon Danna ( 2019 )

Case: 18-31036 Document: 00514945274 Page: 1 Date Filed: 05/06/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
May 6, 2019
No. 18-31036
Lyle W. Cayce
Clerk
MARRIOTT INTERNATIONAL, INCORPORATED; SHERATON
OPERATING CORPORATION,
Plaintiffs - Appellants
v.
DEON DANNA,
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:17-CV-10590
Before HIGGINBOTHAM, JONES, and COSTA, Circuit Judges.
GREGG COSTA, Circuit Judge:*
Deon Danna signed an arbitration agreement when he accepted
employment at a Sheraton in New Orleans. Since the tumultuous end to his
employment in 2017, he has not filed any lawsuit against Sheraton. But
Sheraton, and its parent Marriott International, filed this lawsuit seeking a
declaration that any claims he might file are subject to arbitration. In addition,
they apparently contend that the Sheraton arbitration agreement also applies
to a state lawsuit that arises out of Danna’s prior job at the Ritz Carlton.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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Danna left the Ritz and filed that lawsuit years before going to work at the
Sheraton. The district court dismissed this case for lack of jurisdiction. We
agree and AFFIRM.
I.
In 2010, Danna was fired from his position as director of engineering at
the Ritz-Carlton in New Orleans. Danna believed his termination violated
Louisiana’s whistleblower laws and was a breach of his employment contract.
So just under a year after he was fired, he sued the Ritz, its parent company
(Marriott International), and two of his supervisors in Louisiana state court.
While that suit was pending, Danna started looking for other work. In
2013, Sheraton hired him as director of engineering at its New Orleans hotel.
When Danna accepted the Sheraton position, he signed an arbitration
agreement. The agreement covered all claims Danna had then or would have
in the future, “during or after [his] employment,” against Sheraton, its then-
parent company Starwood Hotels & Resorts, or their affiliates. The agreement
defined, without limitation, the kinds of claims it reached: those that “ar[ose]
out of or [were] related to” his employment offer, the terms and conditions of
his employment, pay, benefits, or his potential termination, among other
things.
Although Sheraton was not affiliated with Marriott at the time Danna
took the job, that changed in 2016 when Marriott purchased Starwood. After
that acquisition, things changed for Danna. Zachary Curry, his former
supervisor from the Ritz and one of the defendants in his state court lawsuit,
became his direct supervisor at the Sheraton. This led to Sheraton’s
discovering that Danna had lied on his employment application in 2013. He
had said he had never been fired—Curry and Marriott, of course, knew
otherwise. When he was confronted about this and other alleged inaccuracies,
Danna decided to resign. In a letter to his boss, he explained that after
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Sheraton changed ownership, senior management had been either “hostile” or
“stand off-ish” toward him and that he had experienced “great anxiety” given
his history with Marriott.
Months before he resigned, Danna had attempted to amend his state
court complaint to explain that, given Marriott’s and Curry’s renewed
involvement in his career, the anxiety his termination from the Ritz had caused
continued into the present. But the state court did not allow him to amend, so
those allegations never became part of that case.
Even though it was unsuccessful, Danna’s attempt to amend his state
court complaint, along with his resignation letter, seem to have spooked
Marriott and Sheraton. Less than two months later, they filed a complaint in
federal district court asking that Danna be compelled to arbitrate “any and all
claims or disputes that now exist or may hereafter arise in connection with or
in any manner relating to” his Sheraton application, employment, or
resignation. They then filed a motion to compel arbitration. Danna in turn
moved to dismiss the action, arguing that the district court lacked jurisdiction.
The district court agreed and dismissed Marriott’s and Sheraton’s complaint
without prejudice reasoning that there was no dispute ripe for adjudication.
Marriott and Sheraton pressed on, requesting leave to amend their
complaint. With permission from the district court, they reasserted the
allegations in their dismissed complaint and this time sought a declaratory
judgment that Danna was precluded from seeking damages from them for any
period of time following his voluntary resignation. They also contended that
they were entitled to a declaration that any claims Danna brought against
them must be arbitrated. The amended complaint was accepted by the district
court “provided it cause[d] no interference” with Danna’s ongoing state lawsuit.
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But the amended complaint suffered the same fate as the first. The
district court held that Marriott and Sheraton did not have standing to pursue
declaratory relief and it therefore lacked jurisdiction. They appealed.
All the while, the state court proceedings have continued. The state
court dismissed Danna’s whistleblower and breach of contract claims against
all defendants except for the Ritz; the only claim potentially remaining against
Marriott is one for spoliation of evidence. A jury recently ruled in Danna’s
favor on his breach of contract claim against the Ritz. It awarded him
substantial damages. It is unclear whether that verdict has ended the state
proceedings—neither party has indicated whether judgment has been entered
for or against Marriott on Danna’s spoliation claim or whether the parties in
that case plan to request a judgment notwithstanding the verdict or a new trial
(or whether they will appeal). We, therefore, proceed with our analysis.
II.
The Federal Arbitration Act, which instructs federal courts to compel
arbitration when appropriate, is not an independent grant of federal
jurisdiction. So before compelling arbitration, a federal court must ensure that
it would, in the absence of an arbitration agreement, have jurisdiction over the
underlying substantive action. Lower Colo. River Auth. v. Papalote Creek II,
L.L.C., 858 F.3d 916, 923 (5th Cir. 2017); see also 9 U.S.C. § 4.
Marriott’s and Sheraton’s shifting focus in their pleadings and appellate
briefs make defining the underlying dispute somewhat difficult. There are two
ways to construe their submissions. The first is as a request to declare that
Danna must arbitrate certain disputes within the state court proceedings. The
allegations could also be read as a request for a declaration that any separate,
yet-to-be filed action for claims arising from his Sheraton employment is
subject to arbitration. Under either reading, however, jurisdiction is lacking.
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That Marriott and Sheraton seek a declaratory judgment does not relieve
them of the burden to show that this court has jurisdiction. See Steel Co. v.
Citizens for a Better Env’t, 523 U.S. 83, 104 (1998). That is because the
Declaratory Judgment Act, which allows the federal courts to issue declaratory
relief, “is procedural only.” Aetna Life Ins. Co. of Hartford, Conn. v. Haworth,
300 U.S. 227, 240 (1937). In other words, it gives us permission to order an
additional remedy, but it does not expand our jurisdiction. Charles A. Wright,
et al., 10B FEDERAL PRACTICE & PROCEDURE § 2766 (4th ed. 2018). The
constitutional limit on our jurisdiction to actual “cases” or “controversies”
means that the traditional ingredients of standing must still be present. Id.;
see also Lawson v. Callahan, 111 F.3d 403, 405 (5th Cir. 1997) (noting that the
“actual controversy” required by the Declaratory Judgment Act is “identical to
the meaning of ‘case or controversy’ for the purposes of Article III”).
A.
With respect to the first possible reading of Appellants’ submissions, we
are left scratching our heads. It is not clear what the arbitration would look
like if we agreed and compelled it: Which parties and which claims would go to
arbitration? There are more questions: Why, at this late date, are Marriott
and Sheraton asking to arbitrate an eight-year-old state court action? If they
believe some or all of that proceeding should be sent to arbitration, why have
they not asked the state court to compel it?
The answer may be that neither Marriott nor Sheraton has much, if
anything, at stake in the state action. 1 That lack of concrete interest in the
outcome of the state proceeding presents problems for this federal case. See
1 In fact, Danna has suggested in a letter to this panel that the recent state verdict
renders this federal case moot, which would mean we would be without jurisdiction. Lauren
C. v. Lewisville Indep. Sch. Dist., 904 F.3d 363, 371 (5th Cir. 2018) (“Whether a case is moot
is a jurisdictional issue.”). But because we find jurisdiction is lacking for a different reason,
we need not confront this question.
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Clapper v. Amnesty Int’l USA, 568 U.S. 398, 408–09 (2013) (explaining that the
federal courts lack jurisdiction over disputes absent an “actual or imminent”
injury). It means Marriott and Sheraton do not have standing to seek
arbitration of all or part of the long pending state suit. This is self evident for
Sheraton. It is not a party to the state court action and thus cannot not be
injured by those proceedings, no matter the result.
Marriott is a defendant in the state court lawsuit, but it too lacks
standing to compel arbitration of all or part of that action. The only potentially
remaining claim against Marriott in the state court is spoliation of evidence.
As we have said, we fail to understand why, if Marriott believes that claim is
arbitrable, 2 it has not asked the state court to compel arbitration. 3 But it does
not focus its arbitration request on the spoliation claims. Instead it wants to
arbitrate Danna’s pursuit (and receipt) of lost wages from the Ritz as part of
his whistleblower and breach of contract claims. We do not see how Marriott
suffers because the jury decided the Ritz owes Danna damages.
Marriott and Sheraton try to connect those damages awarded against
the Ritz to them, and thus the arbitration agreement signed three years after
the Ritz employment ended, by pointing out that the later Sheraton
2 It is far from clear that the spoliation claim is subject to arbitration. The arbitration
agreement, entered into after Danna had already filed his state suit, contemplates
arbitration of claims related to Danna’s employment at the Sheraton. It is hard to imagine
how a claim for spoliation of evidence in a case about a different job fits the bill. Indeed, the
initial complaint recognized that the agreement extends only to claims “relating to [Danna’s
Sheraton] application, [his] employment at the [Sheraton], or his resignation or separation
therefrom.”
3 And if Marriott and Sheraton have this other route to obtain the relief they seek, it
is best we keep our nose out of the state court’s business. When a state lawsuit is pending,
federal courts are rightly loathe to exercise their discretion to grant declaratory relief that
might short-circuit those proceedings. See Travelers Ins. Co. v. La. Farm Bureau Fed’n, Inc.,
996 F.2d 774, 776 (5th Cir. 1993). To do so would often be “antithetical to the noble principles
of federalism and comity.” Id.
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employment may have been a factor in calculating the damages Danna
suffered. But subtracting the salary Danna earned in his post-Ritz
employment from what he would have earned had he stayed at the Ritz is the
standard lost wages calculation. See, e.g., 42 U.S.C. § 2000e-5(g)(1) (“Interim
earnings or amounts earnable with reasonable diligence . . . shall operate to
reduce the back pay otherwise allowable.”). Far from injuring appellants (or
even the Ritz), Danna’s Sheraton employment reduced the damages the Ritz
would otherwise owe. 4 And that would be true of any post-Ritz income,
whether it was earned working at the Sheraton, another hotel, or on an
offshore rig. It thus borders on the nonsensical to argue that an employment
dispute is subject to arbitration because the plaintiff entered into an
arbitration agreement with a future employer whose wages are being used to
reduce the lost wages the earlier employer must pay. But the larger and
simpler point is that this is all a question of damages the Ritz owes. It involves
an injury to the Ritz, not to Marriott or Sheraton.
B.
As to the second possible interpretation of Marriott’s and Sheraton’s
request—that they want a declaration making clear Danna cannot use the
courts to bring claims arising out of his employment at the Sheraton—we again
lack jurisdiction. 5 Marriott and Sheraton certainly would be injured if Danna
4 Appellants’ theory seems to be that the lies on the application made Danna’s
Sheraton employment illegitimate, so it should not be considered in calculating damages in
the claim against Ritz. But excluding his Sheraton salary from the lost wages calculation
would mean Ritz is on the hook for more damages—there would be nothing to deduct from
the salary he would have earned with continued employment at the Ritz.
5 This is most likely the interpretation Marriott and Sheraton now intend. In a letter
brief filed with this panel they contend that they “have never waived, and have consistently
maintained, their right to compel the arbitration of any claims or disputes that arise out [of]
Appellee’s employment with the” Sheraton. But that letter also complains about how
damages were calculated in the state court, so we remain confused about what it is Marriott
and Sheraton want.
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filed a suit relating to his employment at the Sheraton. There is no evidence,
however, that such a suit has been or will be filed. Clapper, 568 U.S. at 410
(explaining that an injury cannot be “premised on a speculative chain of
possibilities”) (citing Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009)).
In fact, there are indications one will not be filed. If Danna wanted to bring a
lawsuit because he believed the “hostil[ity]” he experienced at the Sheraton
rose to the level of a hostile work environment based on a protected status, he
would have had to file a complaint with the EEOC within 300 days of his
resignation. See Heath v. Bd. of Supervisors for So. Univ. and Agric. and Mech.
Coll., 850 F.3d 731, 736 n.1 (5th Cir. 2017) (explaining that in Louisiana an
employee who feels he has been subjected to a hostile work environment must
file a charge with the EEOC within 300 days of the alleged unlawful act). A
tort claim under Louisiana law, such as intentional inflection of emotional
distress or termination in violation of public policy, must be filed within a year.
La. Civ. Code Ann. art. 3492. There is no allegation that Danna has done
anything to pursue these federal or state claims even though the limitations
period has likely run. Because Sheraton or Marriott have not shown a
likelihood they will face future litigation over Danna’s employment, they do
not have standing to pursue a protective declaratory judgment. Bauer v. Texas,
341 F.3d 352, 358 (5th Cir. 2003).
***
Because Marriott and Sheraton have failed to show that the underlying
state action injures them or that there is a substantial likelihood they will be
sued in a separate action, the federal courts do not have jurisdiction to decide
if a declaratory judgment should issue. The district court’s judgment is
therefore AFFIRMED.
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