Dallas-based Dickey’s Barbecue Restaurants is taking the American Arbitration Association and one of its arbitrators to court over what it alleges is a “flagrant and stated disregard” for the rule of law that resulted in death penalty sanctions against it.
Dickey’s is in arbitration with franchisee G Six Consulting but told the court in its lawsuit filed Tuesday that two Dickey’s executives who are not parties to the arbitration or the arbitration agreement — Jeffrey Gruber, who is the senior vice president of franchise relations, and Deborah Longworth, Dickey’s senior director of store development — have been ordered to appear to submit to prehearing depositions by AAA arbitrator Gary Leydig.
“In flagrant and stated disregard for the FAA, AAA Rules, federal and Texas law, and all notions of equity and due process, Leydig has issued death-penalty sanctions against DBRI because the Individual Plaintiffs refused to waive their rights and submit to the jurisdiction of the AAA,” Dickey’s alleges in the 42-page lawsuit.
Dickey’s told the court that it has offered “on multiple occasions” to provide a corporate representative for deposition but that Leydig and G Six “refused the offer.”
“Mr. Leydig said that if DBRI would not force the Individual plaintiffs to submit to the AAA’s jurisdiction, then DBRI would be punished,” the suit alleges. “And he acted on that threat last night.”
According to the lawsuit, Leydig issued sanctions that prevent Dickey’s from presenting any witness testimony or documentary evidence, bar it from cross-examining any G Six witnesses or presenting any expert witness of its own and exclude it from presenting any defenses against G Six’s claims.
Leydig’s order also dismissed Dickey’s counterclaims against G Six. Dickey’s argues that Leydig has “no power” to issue those sanctions did and that his order is “effectively a default judgment on all claims and counterclaims, which is a violation of law and AAA rules.”
“Mr. Leydig has explicitly stated that he refused to consider case law presented by [Dickey’s], has ruled that he ‘do[es] not consider himself bound by the procedural rules — including those controlling discovery procedure — of the federal courts, Texas or any other judicial jurisdiction,’” Dickey’s alleges. “He also refuses to consider the AAA’s discovery rules and the arbitration agreement between DBRI and G Six in conducting the arbitration. And he has made advance rulings on many legal and factual issues before considering DBRI’s position.”
Dickey’s is bringing the lawsuit alongside the CEO of holding company Dickey’s Capital Group, Roland Dickey Jr., Gruber and Longworth. The defendants are the AAA, Leydig and G Six Consulting.
In a statement issued to The Lawbook, the AAA said it “cannot discuss specific arbitration cases it may be involved with or may have administered with anyone other than the parties or representatives directly involved in those cases.”
“With regard to the litigation that names AAA as a party, because AAA is a neutral arbitration administrator, AAA’s rules provide that it is not a necessary and proper party to disputes about an arbitration,” the statement concluded.
A final hearing in the arbitration is scheduled for April 28 in Dallas, according to the suit.
The arbitration between Dickey’s and G Six, Dickey’s said, stems from G Six’s decision to “unilaterally” close a Dickey’s Barbecue location three months after it began operating the restaurant because it wasn’t making money. G Six initiated the arbitration proceeding in October 2023.
“Dickey’s did not terminate the agreement, which is still in place,” according to the suit. “Rather, the closing was done voluntarily by G Six and in violation of its obligations under the franchise agreement with Dickey’s. G Six has blamed Dickey’s for its inability to turn a profit in the three months it was open. And G Six and its counsel have improperly weaponized the Arbitration Proceeding and the AAA and Mr. Leydig are complicit.”
The case has been assigned to Dallas County District Judge Kim Bailey Phipps, and Dickey’s has asked the court to enter an order that would halt the prehearing depositions and arbitration proceedings, prevent Leydig from enforcing the sanctions order and enjoin the AAA from moving forward with the final hearing.
Dickey’s is also asking the court to “oversee the arbitration proceedings going forward.”
“To put it succinctly, the arbitrator is out of control and the AAA is condoning his behavior. As such, plaintiffs have no recourse but to seek the intervention of this Court,” Dickey’s told the court.
Federal appellate courts are largely in agreement that an arbitrator does not have authority to order depositions of non-parties, Dickey’s said, noting that case law from the Second Circuit, Third Circuit, Fourth Circuit, Fifth Circuit, Sixth Circuit, Seventh Circuit, Ninth Circuit and Eleventh Circuit supports that contention.
Dickey’s is represented by Mary Goodrich Nix, Michael K. Hurst, Jamie R. Drillette and Amanda C. Alexander of Lynn Pinker Hurst & Schwegmann.
The case number is DC-25-04677.