Non‑Signatory Client Can Compel Arbitration When a Contractor’s Agreement Incorporates the Client’s MSA and the Worker Assumes the Contractor’s Obligations

Introduction

In Ford v. ConocoPhillips, the Fifth Circuit addressed whether a company that did not sign a worker’s arbitration agreement can nevertheless compel that worker to arbitrate Fair Labor Standards Act (FLSA) claims. The case arose from a familiar staffing arrangement in the oil and gas sector: a consulting firm (Bedrock) hired a safety consultant (Shawn Michael Ford) and supplied him to ConocoPhillips. Ford alleged he and similarly situated safety consultants worked more than 40 hours a week for ConocoPhillips but were paid a day rate without overtime, in violation of the FLSA. He sued only ConocoPhillips. ConocoPhillips, joined by Bedrock as intervenor, moved to compel arbitration based on a chain of agreements: Ford’s Master Consulting Agreement (MCA) with Bedrock PC, and a Master Services Agreement (MSA) between ConocoPhillips and Bedrock Petroleum, an affiliate of Bedrock PC.

The district court denied arbitration. The Fifth Circuit vacated and remanded, holding that Ford’s MCA incorporated the ConocoPhillips–Bedrock Petroleum MSA by reference and that Ford expressly assumed the obligations Bedrock owed ConocoPhillips under that MSA—most notably, the obligation to arbitrate FLSA disputes on the terms set out in an arbitration exhibit to the MSA. Although unpublished, the decision clarifies important Texas-law doctrines permitting non‑signatories to enforce arbitration agreements through incorporation by reference and assumption of obligations, and it provides a blueprint for staffing and client companies seeking to ensure arbitrability of contractor disputes.

Summary of the Opinion

• Standard of review: The court reviewed de novo the denial of the motions to compel arbitration and the contract-interpretation questions.
• Non‑signatory enforcement doctrines: Texas law governs who is bound by an arbitration agreement, and allows non‑signatory enforcement under “traditional” doctrines, including incorporation by reference and third‑party beneficiary.
• Core holding: Ford’s MCA with Bedrock PC incorporated by reference the ConocoPhillips–Bedrock Petroleum MSA. Through the MCA, Ford also “assume[d] toward Bedrock all the obligations and responsibilities that Bedrock assumes toward [ConocoPhillips]” under the MSA. Because the MSA required Contractor Personnel to execute an arbitration agreement in the form attached as Exhibit H and expressly covered FLSA claims (including claims against or involving ConocoPhillips), Ford is bound to arbitrate his FLSA claims against ConocoPhillips.
• Affiliate wrinkle resolved: Although the referenced MSA was between ConocoPhillips and Bedrock Petroleum (while Ford contracted with Bedrock PC), the MSA defined “Contractor Group” to include affiliates and contemplated affiliates’ utilization of personnel to perform work. The court held this structure brought Bedrock PC within the MSA’s framework and made the ConocoPhillips MSA the “relevant MSA” incorporated by Ford’s MCA.
• Newman distinguished; rule of orderliness observed: The panel declined to revisit Newman v. Plains All American Pipeline under the court’s rule of orderliness but found it inapposite because, unlike in Newman, the incorporated document here (the MSA/Exhibit H) itself contains the operative arbitration obligation.
• Third‑party beneficiary unnecessary: Because incorporation by reference sufficed, the court did not reach ConocoPhillips’s third‑party‑beneficiary theory.
• Disposition: The order denying arbitration was vacated and the case remanded for proceedings consistent with compelling arbitration of Ford’s claims against ConocoPhillips. A separate ruling on Bedrock’s motion was unnecessary.

Analysis

Precedents Cited and Their Influence

• Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009): The Supreme Court instructs that “who is bound” by an arbitration clause is governed by state contract law, and that traditional doctrines can extend arbitration to non‑signatories. The panel relied on this to apply Texas doctrines of incorporation by reference and third‑party beneficiary (though it resolved the case on incorporation/assumption alone).
• Jody James Farms, JV v. Altman Group, Inc., 547 S.W.3d 624 (Tex. 2018), and Rachal v. Reitz, 403 S.W.3d 840 (Tex. 2013): Texas recognizes at least six non‑signatory theories: incorporation by reference, assumption, agency, alter ego, equitable estoppel, and third‑party beneficiary. These decisions frame the doctrinal menu available to bind or benefit non‑signatories.
• In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005), and Bridas S.A.P.I.C. v. Government of Turkmenistan, 345 F.3d 347 (5th Cir. 2003): Both emphasize the limited but real circumstances under which non‑signatories can be compelled or can compel arbitration under traditional contract principles, highlighting foreseeability and fairness when an agreement’s scope is broadened to include others.
• Sierra Frac Sand, LLC v. CDE Global Ltd., 960 F.3d 200 (5th Cir. 2020): A key Texas‑law case on incorporation by reference. It confirms that a contract may incorporate another document if the signed document plainly refers to it, that signers are presumed to know incorporated terms, and that failure to request the incorporated document is at one’s own risk. The panel used Sierra Frac to:
  • Validate that the MCA “plainly refers” to another writing—“the relevant MSA”—and explicitly incorporates it via the entire‑agreement clause.
  • Reject Ford’s lack‑of‑knowledge argument and his contention that the referenced MSA “did not exist” as to Bedrock PC.
  • Emphasize that the incorporated document was indeed the ConocoPhillips MSA, because the MSA’s affiliate‑inclusive definitions and performance structure linked Bedrock PC to the MSA’s duties.
• Newman v. Plains All American Pipeline, LP, 23 F.4th 393 (5th Cir. 2022) (and the denial of rehearing en banc): The court acknowledged Newman but distinguished it. In Newman, the incorporated document (a pay letter) neither contained an arbitration clause nor made the non‑signatory a third‑party beneficiary. Here, the incorporated MSA and its Exhibit H contained the arbitration obligation itself. The panel also invoked the Fifth Circuit’s rule of orderliness in declining to revisit Newman’s approach.
• Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005): Texas courts must harmonize contract provisions to give effect to all terms and avoid rendering any provision meaningless. The panel used this canon to avoid reading the MCA’s incorporation and “assumption” clauses out of the agreement, as Ford’s interpretation would have done.
• In re Lyon Financial Services, Inc., 257 S.W.3d 228 (Tex. 2008): Cited through Sierra Frac for the presumption that signers know incorporated terms and bear the risk of not obtaining or reviewing them.
• Multi‑circuit authorities (e.g., Contec, Apollo Computer, Eckert/Wordell, Becker v. Delek, Casa Arena Blanca): These decisions reflect that other circuits permit non‑signatory enforcement in analogous settings. The panel noted them in addressing, but not adopting, calls to revisit Newman, underscoring that its approach remains consistent with traditional doctrines and broader federal practice.

Legal Reasoning

1. Clear incorporation by reference in the MCA:
   • The MCA expressly stated that Ford “is made aware” Bedrock “has entered into” an MSA with a “Company” customer and that if Ford is “hired by [the] Company,” he “agrees to the provisions of the MSA as Bedrock’s contractor.”
   • An entire‑agreement clause in Article 13 “explicitly includ[ed] the relevant MSA” as incorporated.
   • Under Texas law, this plain reference suffices. A signer is charged with knowledge of incorporated documents and cannot evade those terms by claiming he did not request or review them.
2. Identifying the “relevant MSA” as the ConocoPhillips–Bedrock Petroleum MSA:
   • Ford argued that because the MCA defined “Bedrock” as Bedrock PC (not Bedrock Petroleum), the “MSA” must be an agreement between Bedrock PC and ConocoPhillips; thus, the Conoco–Bedrock Petroleum MSA could not be the referenced document.
   • The court rejected this, pointing to the MSA’s definitions and operational scheme:
     • “Contractor Group” includes Bedrock Petroleum’s affiliates; Bedrock PC is such an affiliate.
     • “Contractor Group Personnel” covers individuals utilized by any Contractor Group member to perform duties under the MSA, “howsoever such individuals may be employed, contracted, or otherwise engaged.”
     • “All Work shall be performed by Contractor Group Personnel,” explicitly contemplating affiliate involvement and performance.
   • Because Bedrock PC, as an affiliate, engaged Ford to perform work under the ConocoPhillips MSA, the MSA was indeed the “relevant MSA” referenced by the MCA.
   • Reading the MCA otherwise would render its incorporation and “assumption” language meaningless, contrary to Texas canons of contract construction.
3. Assumption of Bedrock’s MSA obligations by Ford:
   • The MCA provides that Ford “assumes toward Bedrock all the obligations and responsibilities that Bedrock assumes toward [ConocoPhillips], as set forth in the relevant MSA, insofar as applicable, generally or specifically, to [Ford’s] work.”
   • Under the MSA, Bedrock Petroleum was obligated to require all Contractor Personnel to execute an arbitration agreement “in the form” attached as Exhibit H, and the MSA barred assignment of personnel to Work until execution occurred.
   • Exhibit H is broad: it requires arbitration of “any and all” claims “arising out of or related to” performance of services on a project for ConocoPhillips, explicitly including FLSA claims and claims “against or involving” ConocoPhillips.
   • By the MCA’s assumption clause, Ford took on Bedrock’s arbitration‑related obligations as they applied to his work. Thus, he is bound to arbitrate on Exhibit H’s terms—even though his arbitration clause with Bedrock PC was not identical to Exhibit H and even if he did not separately sign Exhibit H.
4. Scope match to Ford’s claims:
   • Both the MCA arbitration clause and Exhibit H expressly encompass FLSA disputes. Ford’s misclassification and overtime allegations fall squarely within the arbitrable universe.
5. Non‑signatory enforcement by ConocoPhillips:
   • Because the incorporated MSA/Exhibit H itself imposes arbitration obligations for claims “against or involving” ConocoPhillips and because Ford assumed those obligations, ConocoPhillips—as the MSA counterparty and intended beneficiary of the arbitration requirement—can compel arbitration under traditional Texas doctrines.
   • Given this path, the panel did not decide whether ConocoPhillips was also a third‑party beneficiary of Ford’s MCA.
6. Newman distinguished:
   • In Newman, the incorporated document lacked an arbitration obligation and did not make the non‑signatory a beneficiary; thus incorporation could not create arbitrability where none existed. Here, by contrast, the incorporated MSA and its exhibit are the very source of the arbitration duty that Ford assumed.

Impact

• Staffing and client companies:
  • This opinion provides a roadmap to ensure arbitrability of disputes with contractor personnel. Key drafting elements that proved decisive include:
    • An express incorporation clause in contractor agreements that “explicitly includes” the client’s “relevant MSA.”
    • An assumption clause obligating the worker to take on the contractor’s MSA‑based obligations “insofar as applicable” to the worker’s assignments.
    • A client MSA that:
      • Defines “Contractor Group” broadly to include affiliates;
      • Anticipates affiliates’ use of personnel as “Contractor Group Personnel”; and
      • Requires those personnel to execute arbitration agreements in a specified form, with scope that covers claims “against or involving” the client and names statutes like the FLSA.
  • Even if the worker’s agreement with the staffing affiliate contains a non‑identical arbitration clause, the assumption of obligations can bind the worker to the client MSA’s arbitration exhibit.
• FLSA collective actions:
  • Expect expanded use of motions to compel arbitration in misclassification suits against clients of staffing companies. Plaintiffs who sue only the client may still be compelled to arbitrate if their contractor agreements incorporate and assume the client MSA’s arbitration terms.
  • The breadth of Exhibit H (covering claims “against or involving” the client) is particularly consequential for limiting multi‑party and collective litigation in court.
• Non‑signatory enforcement under Texas law:
  • This decision reinforces that incorporation by reference and contractual assumption are potent, “traditional” routes for non‑signatories to compel arbitration—without resorting to more contested theories like estoppel.
  • It also shows that affiliate relationships do not break the chain of incorporation where the MSA expressly includes affiliates within the “Contractor Group.”
• Drafting and risk allocation:
  • MSAs should continue to:
    • Mandate execution of a uniform arbitration form by all personnel;
    • Condition assignment of personnel on execution; and
    • Include indemnities if personnel are assigned without executing the arbitration form (as seen in the MSA’s Article 6.3 and other indemnities relating to FLSA misclassification).
  • Contractor agreements should:
    • Identify that the “relevant MSA” is incorporated and available upon request; and
    • Contain an explicit assumption clause tethered to the worker’s assignments.
  • Workers are on notice that failing to request or review incorporated documents will not shield them from those terms under Texas law.
• Procedural posture and precedential weight:
  • The decision is unpublished (5th Cir. R. 47.5) and thus carries limited precedential effect, but it is highly instructive for district courts and litigants within the Fifth Circuit and beyond on how to apply incorporation and assumption doctrines in the staffing context.

Complex Concepts Simplified

• Incorporation by reference: When a signed contract clearly refers to another document and indicates that document is part of the agreement, the unsigned document’s terms become binding as if set out in full. A signer is presumed to know those terms; not reading or requesting the incorporated document does not negate assent.
• Non‑signatory enforcement: Although arbitration is contractual, state contract law allows non‑signatories to enforce arbitration in defined circumstances (e.g., incorporation by reference, assumption, agency, alter ego, estoppel, third‑party beneficiary). The question “who is bound” is a matter of state law.
• Assumption of obligations: A party can agree to “assume” obligations that another owes to a third party under a separate contract. Here, Ford assumed Bedrock’s obligations to ConocoPhillips under the MSA, including the obligation to arbitrate on Exhibit H’s terms.
• Affiliate coverage in MSAs: By defining “Contractor Group” to include affiliates and “Contractor Group Personnel” to include individuals used by affiliates, MSAs can extend obligations (including arbitration) to work performed through affiliated staffing entities.
• Rule of orderliness: A Fifth Circuit panel cannot overrule a prior panel; changes to circuit law generally require en banc action or intervening Supreme Court precedent. The panel invoked this rule to decline invitations to revisit Newman but found a factual distinction instead.
• FLSA claims and arbitration: FLSA rights can be arbitrated. Clauses that expressly include FLSA claims, as both the MCA and Exhibit H did, will generally encompass misclassification and unpaid overtime disputes.
• “Baseball” arbitration option: The MCA referenced an optional “final offer” (baseball) arbitration format, where each side submits a final number and the arbitrator picks one. While not outcome‑determinative here, it signals the parties’ intent to channel disputes into arbitration and streamline resolution mechanics.

Conclusion

Ford v. ConocoPhillips underscores how a well‑drafted network of agreements can bind contractor personnel to arbitrate with a client that did not sign the worker’s own contract. The Fifth Circuit held that where a contractor’s agreement with a worker plainly incorporates a client’s MSA and the worker expressly assumes the contractor’s obligations toward that client, the client may compel arbitration if the incorporated MSA requires it—especially when the MSA’s defined “Contractor Group” embraces affiliates and the arbitration exhibit expressly covers claims against or involving the client, including FLSA claims.

The decision provides practical guidance: clients and staffing firms seeking predictability should align their MSAs and contractor agreements to include explicit incorporation and assumption language and to require a uniform, broad arbitration form for all personnel. Plaintiffs and counsel should expect that incorporation‑by‑reference and assumption clauses will be enforced according to their terms, and that disputes over compensation and classification—even when pleaded solely against the client—will frequently be redirected to arbitration when these drafting features are present. Although unpublished, the opinion is a detailed application of Texas contract law that will likely influence how courts and practitioners structure and litigate arbitration provisions in the staffing and gig‑economy contexts.