           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                 FILED
                                                                          March 23, 2009

                                      No. 08-30405                    Charles R. Fulbruge III
                                                                              Clerk

WOODMEN OF THE WORLD LIFE INSURANCE SOCIETY/OMAHA
WOODMEN LIFE INSURANCE SOCIETY

                                                  Plaintiff-Appellant
v.

JRY, INDIVIDUALLY AND AS ADMINISTRATOR OF THE ESTATE OF
HIS MINOR SON, ON BEHALF OF BMY ESTATE; TSY, MOTHER OF BMY

                                                  Defendants-Appellees




                   Appeal from the United States District Court
                      for the Western District of Louisiana
                                   (6:08-CV-46)


Before GARWOOD, DENNIS, and PRADO, Circuit Judges.
GARWOOD, Circuit Judge:*
       Plaintiff-appellant, Woodmen of the World Life Insurance Society/Omaha
Woodmen Life Insurance Society (the Society), appeals the denial of its motion
to compel arbitration and to stay ongoing state proceedings pending arbitration
pursuant to the Federal Arbitration Act (FAA), 9 U.S.C. §§ 3, 4. Because we find
that the parties’ underlying dispute arguably falls within the scope of the



       *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
arbitration clause at issue in this case, we reverse and remand with instructions
to the district court to grant the motion to compel arbitration and to stay the
state proceedings.
                              STANDARD OF REVIEW
       We review de novo a district court’s denial of a motion to compel
arbitration under 9 U.S.C. § 4 as well as the denial of a motion to stay a
proceeding pending arbitration under 9 U.S.C. § 3. Tittle v. Enron Corp., 463
F.3d 410, 417 (5th Cir. 2006).
                      FACTS AND PROCEEDINGS BELOW
       The Society is a non-profit “fraternal benefit society” that, in addition to
offering life insurance coverage, also provides a number of ancillary privileges
and benefits to its members, including access to Woodmen facilities and
activities. It is organized under Nebraska law and licensed to do business in
Louisiana and many other states.1             T.S.Y. applied to the Society for a life
insurance policy on behalf of her minor son, B.M.Y., who was accepted by the
Society and issued a Certificate of Insurance (Certificate), which initiated
B.M.Y.’s insurance coverage as well as bringing about his membership in the
Society. The Certificate incorporates by reference the Articles of Incorporation
and the Constitution and Laws of Woodmen, which in conjunction with the
terms of the Certificate define the contractual relationship between members
and the Society. This case centers upon the scope of a broadly worded provision
in the Woodmen Constitution, discussed in detail below, that requires


       1
        Subpart J of the Louisiana Insurance Code, entitled “Fraternal Benefit Societies,”
defines a “fraternal benefit society” as “any incorporated society, order, or supreme lodge . .
. conducted solely for the benefit of its members and their beneficiaries and not for profit,
operated on a lodge system with ritualistic form of work, having a representative form of
government, and which provides benefits in accordance with this Subpart.”
La. R.S. 22:281.

                                               2
arbitration to resolve individual disputes between members and the Society.
      Membership in the Society afforded B.M.Y. access to a Woodmen youth
camp in Vermillion Parish, Louisiana. Absent his membership in the Society by
virtue of the Certificate, he would not have been eligible to attend the camp.
While attending the camp there, he was allegedly sexually assaulted by some of
his fellow campers.   J.R.Y. and T.S.Y (the father and mother of the minor
B.M.Y.), individually and on behalf of B.M.Y.’s estate, sued the Society in
Louisiana state court alleging that camp staff were negligent in failing to
properly supervise the campers. J.R.Y., T.S.Y. and B.M.Y. are all resident
citizens of Louisiana. The Society then brought the instant suit in the United
States District Court for the Western District of Louisiana by filing a motion to
compel arbitration and a motion for a temporary restraining order to stay the
state court proceedings pending arbitration pursuant to the FAA, 9 U.S.C. §§ 3,
4. In response, appellees (J.R.Y. and T.S.Y.) filed a F ED. R. C IV. P. 12(b)(6)
motion to dismiss, arguing that their tort claims were not covered by the
arbitration agreement. The district court held that the dispute fell outside the
scope of the arbitration agreement. Therefore the court denied the Society’s
motion for a temporary restraining order, declared the motion to compel
arbitration moot, and granted appellees’ motion to dismiss. The Society now
appeals.
                                DISCUSSION
      The Society primarily asserts that the district court erred in concluding
that appellees’ tort claims were not covered by the arbitration agreement.
However, before we consider the scope of the arbitration agreement, we first
address appellees’ argument that the arbitration clause is “reverse preempted”
by the Louisiana Insurance Code.
I. Reverse Preemption

                                       3
      For the first time on this appeal, appellees contend that, pursuant to the
McCarran-Ferguson Act, 15 U.S.C. § 1011 et seq., the Louisiana Insurance Code
reverse preempts the FAA and renders the arbitration clause void and
unenforceable. Although federal law normally preempts conflicting state law,
the McCarran-Ferguson Act creates a limited exception for state statutes
regulating the insurance industry. Am. Bankers Ins. Co. of Fla. v. Inman, 436
F.3d 490, 493 (5th Cir. 2006). The McCarran-Ferguson Act states in relevant
part that “[n]o Act of Congress shall be construed to invalidate, impair, or
supersede any law enacted by any State for the purpose of regulating the
business of insurance . . . unless such Act specifically relates to the business of
insurance.” 15 U.S.C. § 1012(b). La. R.S. 22:868 provides in pertinent part as
follows:
      “A. No insurance contract delivered or issued for delivery in this
      state and covering subjects located, resident, or to be performed in
      this state, or any group health and accident policy insuring a
      resident of this state regardless of where made or delivered, shall
      contain any condition, stipulation, or agreement:
                                       ***
      (2) Depriving the courts of this state of the jurisdiction of action
      against the insurer.
                                       ***
      C. Any such condition, stipulation, or agreement in violation of this
      Section shall be void, but such voiding shall not affect the validity
      of the other provisions of the contract.”
Appellees further point out that “Louisiana courts have consistently held that
compulsory arbitration clauses in contracts of insurance are unenforceable under
this statute because they operate to deprive Louisiana courts of jurisdiction of
the action against the insurer.” Hobbs v. IGF Ins. Co., 834 So.2d 1069, 1071 (La.
Ct. App. 3d Cir. 2002), writ denied, 836 So.2d 71 (La. 2003).
      Ordinarily, a party waives any argument on appeal that was not raised in


                                        4
the district court. Stokes v. Emerson Elec. Co., 217 F.3d 353, 358 n.19 (5th Cir.
2000); Guillory v. PPG Industries, Inc., 434 F.3d 303, 313 & n.37 (5th Cir. 2005).
We have recognized an exception to this general rule where “[w]e will consider
an issue raised for the first time on appeal . . . if it is a purely legal one and if
consideration is necessary to avoid a miscarriage of justice.” Langhoff Props.,
LLC v. BP Prods. N. Am., Inc., 519 F.3d 256, 261 n.12 (5th Cir. 2008). Although
appellees do raise a purely legal issue, we do not find that refusing to consider
their reverse preemption argument here will result in a miscarriage of justice
necessitating a departure from the general rule.
      First of all, as a fraternal benefit society, the Society is specifically
excluded from the Louisiana Insurance Code’s definition of an “insurer,” which
includes “every person engaged in the business of making contracts of insurance,
other than a fraternal benefit society.” La. R.S. 22:46(10) (emphasis added). This
suggests that appellees’ suit against the Society is not an action against an
“insurer” within the meaning of La. R.S. 22:868(A)(2). Moreover, Subpart J of
the Louisiana Insurance Code, entitled “Fraternal Benefit Societies,” specifically
exempts fraternal benefit societies such as the Society from the majority of the
state’s insurance laws: “Except as herein provided, societies shall be governed
by this Subpart and shall be exempt from all other provisions of the insurance
laws of this state unless they be expressly designated therein, or unless it is
specifically made applicable by this Subpart.” La. R.S. 22:303.
      Although La. R.S. 22:868 does not expressly include fraternal benefit
societies within its scope, appellees contend, for the first time at oral argument,
that Subpart J specifically makes that provision applicable to fraternal benefit
societies.   Appellees, for the first time at oral argument, cite to La. R.S.
22:299(F), which governs benefit contracts issued by fraternal benefit societies
and provides in relevant part as follows: “Every life . . . insurance certificate . .

                                         5
. shall meet the standard contract provision requirements not inconsistent with
the Subpart [J] for like policies issued by life insurers in this state.” La. R.S.
22:868 is located within Chapter 4 of the Louisiana Insurance Code, which lays
out the “Insurance Contract Requirements” for all insurers in the state,
including life insurers.2 Therefore, appellees contend that the “standard contract
provision requirements” in Chapter 4 that do not conflict with Subpart J,
including La. R.S. 22:868, are applicable to fraternal benefit societies such as the
Society.
      Appellees cite no caselaw, from Louisiana or otherwise, in support of this
argument.     We are aware of only one district court case addressing a similar
claim brought under a nearly identical set of Missouri statutes. Thrivent Fin.
for Lutherans v. Lakin, 322 F. Supp. 2d 1017, 1023–24 (W.D. Mo. 2004). In
Thrivent, the Missouri Department of Insurance (MDI) contended that a
Missouri anti-arbitration statute applied to a fraternal benefit society, despite
a provision in the Missouri Insurance Code exempting such organizations from
the general insurance laws of the state. Id. MDI relied on a provision in the
Missouri “fraternal code” similar to the statute cited by appellees in the instant
case, which required that insurance contracts issued by fraternal benefit
societies “meet the standard contract provision requirements not inconsistent
with this chapter . . . for like policies issued by life insurers in this state.” Id. at
1023 (quoting R.S. Mo. § 378.619(6)). Although facially appealing, this argument
was ultimately rejected by the district court, which concluded that to embrace
MDI’s reading of the statute would undermine the unique status afforded
fraternal benefit societies under Missouri law and render the exemption


      2
         Specifically, La. R.S. 22:868 is contained within Chapter 4 of the Louisiana
Insurance Code (“Insurance and Insurance Contract Requirements by Type of Insurance”),
Part I (“Insurance and Policy Requirements in General”).

                                           6
provision “superfluous or irrelevant.” Id. at 1024.
        The court’s analysis in Thrivent is persuasive in many respects and it is
reasonably arguable that it applies equally to the above referenced Louisiana
laws.    When the Louisiana Legislature drafted a separate subpart of its
Insurance Code for fraternal benefit societies and exempted them from the
general insurance laws of the state, the Legislature seems to have recognized
that those organizations were unique and should be governed by a different set
of rules than ordinary insurance companies. Moreover, it appears that the
Legislature drafted La. R.S. 22:868 with the intent of prohibiting insurance
companies from compelling the arbitration of insurance claims made by policy
holders. The dispute before us is not a claim for recovery on the insurance policy
and does not depend so much on B.M.Y.’s life insurance policy as it does on his
membership agreement as a Woodman. Therefore, the public policy concerns
underpinning La. R.S. 22:868 are not strongly implicated in this case.
        We accordingly conclude that the circumstances here are not such as to
merit our departure from the general rule prohibiting us from considering new
arguments first raised on appeal. See Carillo v. La. Ins. Guar. Ass’n, No. 08-
30359, slip op. 1574 at 1580, ____ F.3d ____ (5th Cir. Feb. 19, 2009). Therefore,
we determine that, because appellees failed to raise their reverse preemption
argument in the district court, they have waived that defense.
II. Scope of the Arbitration Clause
        The Society claims that the district court erred in determining that
appellees’ tort claims fall outside the scope of the arbitration agreement. We
find that, because the claims are arguably covered under the language of the
agreement, we must err on the side of arbitration.
        In considering whether to compel arbitration under the FAA, a court must
engage in a two-step analysis. Tittle, 463 F.3d at 418. “First, a court must

                                        7
‘determine whether the parties agreed to arbitrate the dispute in question.’” Id.
(quoting Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996)). “Second,
a court must determine ‘whether legal constraints external to the parties’
agreement foreclose[] the arbitration of those claims.’” Id. (quoting Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, 105 S.Ct. 3346, 3355 (1985)). Other
than the improperly raised reverse preemption argument, appellees offer no
external legal constraints that would preclude enforcement of the agreement.
Therefore, our analysis is limited to deciding whether the parties agreed to
arbitrate this dispute, which requires us to determine: “‘(1) whether there is a
valid agreement to arbitrate between the parties; and (2) whether the dispute
in question falls within the scope of that arbitration agreement.’” Id. (quoting
Webb, 89 F.3d at 258).
      Appellees (other than by their reverse preemption argument first raised
on appeal) do not challenge the validity of the arbitration agreement, and
therefore we only consider whether it encompasses their tort claims.          In
determining the scope of an arbitration agreement, we focus primarily on the
contract itself and not “general policy goals.” EEOC v. Waffle House, Inc., 122
S.Ct. 754, 764 (2002).    Nevertheless, the federal presumption in favor of
arbitration does come into play to the extent that “ambiguities in the language
of the agreement should be resolved in favor of arbitration.” Id.; see also AT&T
Techs., Inc. v. Commc’ns Workers of Am., 106 S.Ct. 1415, 1419 (1986). Thus,
“[w]henever the scope of an arbitration clause is fairly debatable or reasonably
in doubt, the court should decide the question of construction in favor of
arbitration.” In re Hornbeck Offshore (1984) Corp., 981 F.2d 752, 755 (5th Cir.
1993) (quoting Mar-Len of La., Inc. v. Parsons-Gilbane, 773 F.2d 633, 635 (5th
Cir. 1985)).



                                       8
      The arbitration agreement at issue, which is contained in the Woodmen
Constitution and incorporated by reference in B.M.Y.’s Certificate, provides in
pertinent part as follows:

      “Sec. 2. Resolution of Individual Disputes
               (a) Purpose. The purpose of this Section 2 is to provide
      opportunities for members . . . and the Society to be promptly heard
      and to seek fair resolution of any disputes regarding any individual
      rights or individual interests they have or claim to have as members
      . . . of the Society and without the delay and expense of formal legal
      proceedings.
               (b) Scope. This Section 2 shall apply whenever a member .
      . . makes a claim for damages, or claims any form of redress for a
      violation of his or her individual rights or a denial of individual
      privileges or benefits which he or she claims as a member. . . . This
      includes, but is not limited to, disputes involving alleged fraud,
      misrepresentation, discrimination, denial of civil rights, conspiracy,
      defamation, or infliction of distress by the Society or any officer,
      employee or agent of the Society.”

Appellees argue that the agreement only governs disputes relating to rights,
privileges, or benefits enjoyed by an individual as a member of the Society.
Appellees claim that, because the right to have proper supervision at the camp
was not in any way linked to membership in the Society, their suit falls outside
the scope of the arbitration clause. In contrast, the Society asserts that the
agreement covers any claim at all for damages brought by a member against the
Society. Further, the Society argues that attendance at the Society camp was
an exclusive privilege that B.M.Y. was only able to enjoy by virtue of his
membership in the Society.      Therefore, any alleged violation of “individual
rights,” “denial of civil rights,” or “infliction of distress” by Society camp staff
stemmed directly from B.M.Y.’s membership in the Society and therefore is
covered under the arbitration agreement.
      While we do not believe that the scope of the arbitration clause is so broad

                                         9
as to cover any conceivable dispute between a member and the Society,3 we find
that it is at least “fairly debatable” that appellees’ claims fall within the bounds
of the agreement. See In re Hornbeck, 981 F.2d at 755. B.M.Y. could not have
attended the Society’s camp if he were not a Woodman. As such, the claims
arising from his alleged assault by other campers at the Society’s camp he was
attending solely by virtue of his membership arise, at least indirectly and not
wholly fortuitously, from his membership in the Society.                  Therefore, the
arbitration clause is at a minimum “‘susceptible of an interpretation that covers
the asserted dispute,’” and we must resolve doubts in favor of coverage. See
AT&T Techs., 106 S.Ct. at 1419 (quoting United Steelworkers of Am. v. Warrior
& Gulf Nav. Co., 80 S.Ct. 1347, 1353 (1960)).
                                    CONCLUSION
       For the foregoing reasons, we REVERSE the district court’s order granting
appellees’ F ED. R. C IV. P. 12(b)(6) motion and denying the Society’s motions.
Further, we REMAND the case to the district court with instructions to grant
the Society’s motion to compel arbitration and to stay the state proceedings
pending arbitration.
                          REVERSED AND REMANDED.




       3
        Consider, for example, an automobile collision between a Society vehicle and a non-
Society vehicle driven by a non-Society member in which B.M.Y. is a passenger and the
presence of which on the occasion in question is wholly unrelated to anything in connection
with or arising out of B.M.Y.’s membership.

                                            10
