Friday, November 20, 2009

NONSIGNATORIES: Wrongful Death Plaintiffs Compelled to Arbitrate by Texas Supreme Court

Following its recent decision in In re Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009), the Texas Supreme Court today issued a per curiam opinion requiring the survivors of another worker killed on the job to arbitrate - rather than litigate - their wrongful death claims based on the worker's agreement to arbitrate personal injury and death claims against the employer, a nonsubscriber under the Texas Workers Compensation Act. The Court re-iterated that the Plaintiffs were bound by the agreement as nonsignatories because their claims were entirely derivative of the claims of the dead employee. The Court further rejected the contention that the Arbitration Agreement attached to the company's Employee Injury Benefits Plan was unenforceable because it constituted an illegal pre-injury/death waiver, reasoning that the duty to arbitrate, rather than litigate, merely took the resolution of the claims to a different forum, rather than altering their availability or viability substantively. As such, it did not amount to an illegal waiver. In Re Golden Peanut Co.,LLC, (Tex. 2009) No. 09-0122 (Tex. Nov. 20, 2009)(per curiam)(mandamus compelling arbitration granted) (arbitration and nonsignatories, wrongful death plaintiffs bound by arb agreement signed by worker killed on the job as derivative claimants and must arbitrate claim against employer, pre-injury waivers, forum selection vs. waiver of substantive rights) IN RE GOLDEN PEANUT COMPANY, LLC; from Gaines County; 11th district (11 08 00215 CV, 269 SW3d 302, 11 13 08) Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus. EXCERPTS FROM THE OPINION Texas Labor Code section 406.033(e), which prohibits pre-injury waivers of personal injury or death claims, does not invalidate the decedent’s arbitration agreement. Golden Peanut petitioned the court of appeals for mandamus relief. The court held that the Mutual Agreement to Arbitrate was valid, was supported by consideration, and did not violate Texas Labor Code section 406.033(e), which prohibits pre-injury waivers of personal injury or wrongful death claims. 269 S.W.3d 302, 307– 09. However, without the benefit of our holding in In re Labatt Food Service, L.P., the court of appeals held that the trial court did not abuse its discretion in refusing to compel arbitration because the Drennans, as nonsignatories, were not bound by the agreement to arbitrate. Id. In Labatt, we held that a decedent's pre-death arbitration agreement binds his or her wrongful death beneficiaries because, under Texas law, the wrongful death cause of action is entirely derivative of the decedent’s rights. Id. at 646. The Drennans contend the arbitration agreement is nevertheless unenforceable because it violates section 406.033(e) of the Texas Labor Code, which provides [a] cause of action [against a nonsubscriber] may not be waived by an employee before the employee’s injury or death. Any agreement by an employee to waive a cause of action or any right described in Subsection (a) before the employee’s injury or death is void and unenforceable. Tex. Lab. Code §406.033(e). Subsection (a), in turn, limits the common law defenses available to an employer who does not carry workers’ compensation insurance. Id. § 406.033(a). However, an agreement to arbitrate is a waiver of neither a cause of action nor the rights provided under section 406.033(a), but rather an agreement that those claims should be tried in a specific forum. See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974) (holding that arbitration clauses are, “in effect, a specialized kind of forum-selection clause”). See also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985) (stating that, “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum”). Accordingly, section 406.033(e) does not render the arbitration agreement void. [the hyperlinks are not part of the opinion as issued by the court]

Wednesday, October 28, 2009

Arbitration of Wrongful Termination Claim Ordered: In Re Polymerica, LLC (Tex. Oct. 23, 2009)

TEXAS SUPREME COURT GRANTS EMPLOYER'S PETITION FOR MANDAMUS TO REQUIRE EMPLOYEE TO ARBITRATE HER WRONGFUL TERMINATION CLAIM In Re Polymerica, L.L.C., (Tex. Oct. 23, 2009) (orig. proceeding) Former employee required to arbitrate wrongful termination claim under arbitration agreement signed in connection with operating agreement of her employer with staffing company even though claim accrued after the operating agreement between the two companies had been terminated and the company against whom the wrongful discharge claims was asserted had not signed the dispute resolution plan containing the provision for binding arbitration. The court of appeals below had held that only claims accruing while operating agreement was in force were subject to mandatory arbitration.


In re Polymerica, LLC d/b/a Global Enterprises, Inc.



Polymerica, L.L.C. d/b/a Global Enterprises, Inc. (“Global”) seeks a writ of mandamus ordering the trial court to grant its motion to compel arbitration. Global, an El Paso-based manufacturer of plastics, hired Angelica Soltero in 1998. In 2002, Global contracted with dmDickason Staff Leasing Company (“Dickason”) to manage Global’s human resources department. Soltero signed a Dispute Resolution Plan, which “appl[ies] to any disputes between dmDickason/Global Enterprises and any applicant for employment, employee or former employee, including legal claims such as discrimination, wrongful discharge or harassment.” The Plan includes a four-step process for resolving disputes, the fourth of which requires binding arbitration under the Federal Arbitration Act. The Plan notes that it is “a condition of employment and of continued employment” and that “employment or continued employment after the effective date of this Plan constitutes consent by the Employee to be bound by this Plan.”

Subsequently, Global distributed an employee handbook and required Soltero and all other employees to acknowledge its receipt. The acknowledgment recites that the handbook “takes precedence over, supercedes, and revokes any previous memo, bulletin, policy or procedure issued prior to [July 6, 2003], by Global Enterprises on any subject discussed in the Handbook.” The handbook includes a section on arbitration, which provides, in pertinent part:

All disputes between you and dmDickason/Global shall be resolved exclusively through arbitration under the Federal Arbitration Act. All employees are required to sign a Dispute Resolution Plan Agreement, as a condition of employment, during their new employee orientation on the first day of employment.

dmDickason/Global’s Dispute Resolution Plan and Arbitration Agreement is intended to provide a method for solving problems that is fair, prompt and effective.

. .

Your decision to accept employment with Global, or to continue your current employment after the effective date of the Dispute Resolution Plan, will mean that you have agreed to, and are bound by the Plan. All disputes between you and dmDickason, and/or you and Global shall be resolved exclusively through arbitration under the Federal Arbitration Act, the American Arbitration Association’s National Rules for the Resolution of Employment Disputes, and dmDickason’s dispute resolution plan that is given to all employees during their initial employment orientation with dmDickason.

On December 31, 2005, Global ended its operating agreement with Dickason and resumed full management of its human resources department. Five days later, Global terminated Soltero.

Soltero sued Global under chapter 21 of the Texas Labor Code alleging wrongful termination based on her national origin as well as retaliation for reporting alleged sexual harassment. The trial court denied Global’s motion to compel arbitration. Global sought mandamus relief, which the court of appeals granted in part. 271 S.W.3d 442. The court of appeals held that Soltero’s claims arising before Global and Dickason ended their relationship must be arbitrated, but that those arising after Global and Dickason’s operating agreement ended should not. Id. at 449. Soltero then nonsuited any claim arising before January 1, 2006 and alleged that, because her termination occurred after the Global/Dickason agreement ended, none of her claims were subject to arbitration. The trial court agreed, concluding that “all of [Soltero’s] claims in this suit arise from the wrongful termination occurring after the operating agreement between Global and Dickason ended.” The trial court lifted the previously ordered stay and placed the case on the trial docket. Global asks us to order the trial court to compel arbitration as to all of Soltero’s claims and to stay the proceedings pending arbitration.

Soltero concedes that she signed the Dispute Resolution Plan and the 2003 Handbook, but she argues that the Handbook’s statement revoking prior versions nullifies the Dispute Resolution Plan. That Handbook provision, however, does not cover contracts like the Plan’s arbitration agreement. We also note that the Handbook and the Dispute Resolution Plan were intended to work in tandem. 227 S.W.3d at 448 (“We fail to see how the handbook nullifies the arbitration agreements; rather, it appears to reference them.”); see also J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). If the 2003 Handbook’s discussion of arbitration eliminated the Dispute Resolution Plan, the Handbook’s discussion of—and multiple references to—the Plan would be meaningless. See Davidson, 128 S.W.3d at 229.

Soltero also asserts that the Dispute Resolution Plan is illusory because the 2003 Handbook could be modified at any time. See id. at 230 n.2 (noting that “most courts . . . have held that, if a party retains the unilateral, unrestricted right to terminate the arbitration agreement, it is illusory”). But the Dispute Resolution Plan has its own termination provision, which requires notice to employees and applies prospectively only. Because Global cannot “avoid its promise to arbitrate by amending the provision or terminating it altogether,” In re Halliburton Co., 80 S.W.3d 566, 570 (Tex. 2002), the Dispute Resolution Plan is not illusory.

Next, Soltero contends that because only Dickason, not Global, was a party to the Dispute Resolution Plan, Global may not enforce the Plan’s terms. Global counters that even though it did not sign the Plan, it can enforce Dickason’s agreement with Soltero under the equitable theory of direct-benefits estoppel. We need not address direct-benefits estoppel, however, because both Global and Soltero were parties to the Plan. The Plan notes that it “will apply to any disputes between dmDickason/Global Enterprises and any applicant for employment, employee or former employee.” It also defines “covered dispute” as including any claim, demand, or controversy “between Employee and dmDickason and/or Global Enterprises.” Although the Plan is signed only by Soltero and Dickason, we have never held that the employer must sign the arbitration agreement before it may insist on arbitrating a dispute with its employee. “[N]either the FAA nor Texas law requires that arbitration clauses be signed, so long as they are written and agreed to by the parties.” In re AdvancePCS Health, L.P., 172 S.W.3d 603, 606 n.5 (Tex. 2005) (noting, however, that Texas Arbitration Act requires signatures for contracts of less than $50,000 or personal injury claims); see also In re Macy’s Tex., Inc., 291 S.W.3d 418, 418 (Tex. 2009) (per curiam) (observing that “[t]he FAA contains no requirements for the form or specificity of arbitration agreements except that they be in writing; it does not even require that they be signed”); Halliburton, 80 S.W.3d at 569 (holding arbitration clause was accepted by continued employment). And while the Plan provides that it covers disputes involving former employees of the “company,” defined as “dmDickason Staff Leasing Company, Inc. together with its subsidiaries, parent companies, affiliates, officers, directors, employees, agents, representatives, shareholders and assigns,” it also states that it applies to “any disputes between dmDickason/Global Enterprises and any . . . former employee.” See In re D. Wilson Construction Co., 196 S.W.3d 774, 782 (Tex. 2006) (observing that “we resolve doubts as to the scope of the agreements in favor of coverage”); In re FirstMerit Bank, 52 S.W.3d 749, 753 (noting that “courts must resolve any doubts about an arbitration agreement’s scope in favor of arbitration”).

The court of appeals held that Global could not enforce the arbitration agreements “for those claims arising from the alleged wrongful termination occurring after the operating agreement between Global and Dickason ended.” 271 S.W.3d at 449.

The court relied on In re Neutral Posture, Inc., 135 S.W.3d 725, 730 (Tex. App.—Houston [1st Dist.] 2003, no pet.), to explain why claims post-dating the operating agreement must be tried rather than arbitrated, but we find Neutral Posture to be distinguishable. The arbitration agreement there included a condition stating that the parties must resolve disputes via arbitration only during a set five-year period, and the claim at issue was filed after the expiration of that period. Id. There is no such time limitation in the Dispute Resolution Plan, nor is there a condition that the Global and Dickason relationship must be in existence for either to enforce the Plan. Soltero’s agreement to arbitrate survives the dissolution of that relationship, and the Dispute Resolution Plan explicitly covers former employees like Soltero.

The court of appeals also noted that Global’s former human resources manager, Valerie Scott, “was unaware of any arbitration agreement after the termination of Global’s relationship with Dickason,” and “[s]he agreed that from January 2006 until July 2007, when Global created a new arbitration agreement, there was no arbitration agreement in effect.” 271 S.W.3d at 446-47. But Scott’s testimony is ambiguous on this point. She testified that she “never even thought about [whether the 2002 agreement]” was still in effect after the relationship between Global and Dickason ended. When asked whether Global employees were covered by an arbitration agreement in 2006, she answered that “[t]here was not an arbitration agreement that we — that was created by Global Enterprises” and that she was unaware of any other arbitration agreement that might have applied to Global’s employees. Even if Scott had testified that no arbitration agreement was in effect, her statements could not alter the effect of the unambiguous agreement. See In re Dillard’s Dep’t Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (noting that “[t]he objective intent as expressed in the agreement controls the construction of an unambiguous contract, not a party’s after-the-fact conduct”); Davidson, 128 S.W.3d at 229 (“In construing this agreement, we first determine whether it is possible to enforce the contract as written, without resort to parol evidence.”).

Soltero’s promise to arbitrate includes her claims against Global. Mandamus relief is appropriate when a party is forced to trial despite an enforceable agreement to arbitrate. In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 462 (Tex. 2008).

Accordingly, without hearing oral argument, TEX. R. APP. P. 52.8(c), we conditionally grant Global’s petition for writ of mandamus and direct the trial court to compel arbitration as to all of Soltero’s claims and stay the proceedings pending arbitration. We are confident the trial court will comply, and our writ will issue only if it does not.

Opinion Delivered: October 23, 2009

In Re Polymerica, LLC, No. 08-1064 (Tex. Oct. 23, 2009)(per curiam) (arbitration mandamus granted in employment dispute) (terminated employee required to arbitrate wrongful termination claim against her employer even though arb agreement was with staffing company whose relationship with employer had been terminated prior to employee's claim) IN RE POLYMERICA, LLC D/B/A GLOBAL ENTERPRISES, INC.; from El Paso County; 8th district (08-08-00070-CV, 271 SW3d 442, 11-25-08) stay order of February 24, 2009 lifted Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus. Per Curiam Opinion View Electronic Briefs in IN RE POLYAMERICA, LLC D/B/A GLOBAL ENTERPRISES, INC. OTHER BLOG ENTRIES ON IN RE POLYMERICA, LLC (Tex. Sup. Ct. 2009): Supreme Court of Texas Compels Arbitration of Discrimination and Retaliation Claims By Russell Cawyer (Texas Employment Law Update) Texas Supreme Court Compels Arbitration of Employment Discrimination Claims By Victoria VanBuren (Disputing)

Monday, October 26, 2009

Ratification by Acceptance of Benefits Held to Bar Challenge to Enforceability of Post-Injury Agreement to Arbitrate

POST-INJURY WAIVER OF RIGHT TO LITIGATE IN FAVOR OF RESOLUTION BY ARBITRATION ENFORCED BY MANDAMUS. Argument that post-injury arbitration agreement was unenforceable as invalid precluded by worker's acceptance and retention of benefits in the form of continuing payment of wages by employer. In Re Weeks Marine, Inc. (Tex.App.- Houston [14th Dist.] Oct. 8, 2009) MEMORANDUM OPINION OF THE 14TH COURT OF APPEALS On July 1, 2009, relator Weeks Marine, Inc., filed a petition for writ of mandamus in this Court. See Tex. Gov’t Code Ann. §22.221 (Vernon 2004); see also Tex. R. App. P. 52. In the petition, Weeks Marine requests that we compel the respondent, the Honorable Steven Kirkland, presiding judge of the 215th District Court of Harris, to vacate his March 30, 2009 order denying its motion to abate and stay the proceedings and compel arbitration. We conditionally grant the petition. Background On April 29, 2006, Jose Jimenez was injured while working on a dredging vessel for his employer, Weeks Marine. On May 8, 2006, several days after Jimenez had surgery for his injuries, Weeks Marine sent him a Claims Arbitration Agreement (the “Agreement”) in which he agreed to arbitrate any claims arising from his injury in exchange for Weeks Marine’s agreement to pay him advanced wages, which would be applied toward any recovery Jimenez might have against Weeks Marine.[1] Jimenez signed the Agreement the next day. On June 29, 2006, Jimenez filed the underlying lawsuit against Weeks Marine alleging that his injuries were caused by Weeks Marine’s negligence and the unseaworthiness of the vessel. Weeks Marine formally requested that Jimenez submit his claims to arbitration pursuant to the Agreement. When Jimenez refused to do so, Weeks Marine moved to compel arbitration. The trial court denied Weeks Marine’s motion to compel arbitration. Weeks Marine then sought mandamus relief in this court. See In re Weeks Marine, Inc., 242 S.W.3d 849 (Tex. App.—Houston [14th Dist.] 2007, orig. proceeding [mand. denied]). We rejected Jimenez’s arguments that (1) the Agreement is not subject to the Federal Arbitration Act (“FAA”)[2] because post-injury agreements between a seaman and his employer are invalid under Section 5 of the Federal Employers’ Liability Act; (2) the Agreement does not meet the standards applied in Garret v. Moore-McCormack Co., 317 U.S. 239 (1942), to agreements that diminish a seaman’s substantive right; (3) and the Agreement is substantively unconscionable. Id. at 857–60. With respect to Jimenez’s defense of procedural unconscionability, we concluded that the trial court was required to hold an evidentiary hearing because the parties had submitted conflicting affidavits. Id. at 862–63 (citing Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992) (orig. proceeding)). We granted the petition in part, but did not direct the trial court to enter an order compelling arbitration while disputed fact issues remained regarding procedural unconscionability. Id. at 863. Weeks Marine filed a petition for writ of mandamus in the Texas Supreme Court, which was denied on October 10, 2008. On January 27, 2009, Weeks Marine filed its first amended motion to compel arbitration and motion for an evidentiary hearing. On March 13, 2009, the trial court conducted an evidentiary hearing and, on March 30, 2009, denied Weeks Marine’s first amended motion to compel arbitration. Jimenez and Weeks Marine each filed proposed findings of fact and conclusions of law. On May 20, 2009, the trial court signed its findings of fact and conclusions of law, concluding that the Agreement is invalid because it is procedurally unconscionable and Weeks Marine procured it by use of duress. On May 27, 2009, Weeks Marine filed an amended request for additional findings of fact and conclusions of law, which the trial court denied. Standard of Review In the prior mandamus proceeding, this court determined that the arbitration agreement is subject to the FAA. See In re Weeks Marine, 242 S.W.3d at 853. Mandamus is the appropriate vehicle to seek relief from a trial court order denying a motion to compel arbitration under the FAA. In re Bank One, N.A., 216 S.W.3d 825, 826 (Tex. 2007) (orig. proceeding) (per curiam).[3] To be entitled to the extraordinary relief of a writ of mandamus, the relator must show that the trial court clearly abused its discretion and it has no adequate remedy by appeal. In re Team Rocket, L.P., 256 S.W.3d 257, 259 (Tex. 2008) (orig. proceeding). [...] The party seeking to compel arbitration under the FAA must establish that (1) a valid arbitration agreement exists, and (2) the claims at issue fall within the scope of the agreement. In re Dillard Dep't Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (orig. proceeding) (per curiam). Jimenez does not dispute that he signed the Agreement or that his claims are subject to the Agreement, but, instead, challenges its validity. An agreement to arbitrate is valid under the FAA if its meets the requirements of the general contract law of the appropriate state. In re Poly-Am., L.P., 262 S.W.3d 337, 347 (Tex. 2008) (orig. proceeding). In determining the validity of an agreement to arbitrate under the FAA, courts must first apply state law governing contract formation. Id. As with any other contract, agreements to arbitrate are valid unless grounds exist at law or in equity for revocation of the agreement. Id. at 348. Whether a valid arbitration agreement exists is a legal question subject to de novo review. In re D. Wilson Constr. Co., 196 S.W.3d at 781. Because the law favors arbitration, the burden of proving a defense to arbitration is on the party opposing arbitration. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001 (orig. proceeding). Ratification Weeks Marine asserts Jimenez ratified the Agreement and, therefore, any defenses to the creation of the Agreement are irrelevant.[4] In light of the trial court’s finding that the Agreement is procedurally unconscionable, Jimenez argues that Weeks Marine must establish he later developed an intent to contract. Ratification is the adoption or confirmation by a person, with knowledge of all material facts, of a prior act which did not legally bind that person and which that person had the right to repudiate. Facciolla v. Linbeck Constr. Corp., 968 S.W.2d 435, 440 (Tex. App.—Texarkana 1998, no pet.); Enserch Corp. v. Rebich, 925 S.W.2d 75, 84 (Tex. App.—Tyler 1996, writ dism’d). Ratification may be express or implied from a course of conduct. Isaacs v. Bishop, 249 S.W.3d 100, 110 n.9 (Tex. App.—Texarkana 2008, pet. denied); Zieben v. Platt, 786 S.W.2d 797, 802 (Tex. App.—Houston [14th Dist.] 1990, no writ). Any act inconsistent with an intent to avoid a contract has the effect of ratifying the contract. Isaacs, 249 S.W.3d at 110 n.9.Once a party ratifies a contract, it may not later withdraw its ratification and seek to avoid the contract. Mo. Pac. R.R. Co. v. Lely Dev. Corp., 86 S.W.3d 787, 792 (Tex. App.—Austin 2002, pet. dism’d). The relevant inquiry focuses on the actions - taken by the party seeking to avoid the contract once that party became fully aware of the subject prior act which did not legally bind the party. Harris v. Archer, 134 S.W.3d 411, 427 (Tex. App.—Amarillo 2004, pet. denied). A party cannot avoid an agreement by claiming there was no intent to ratify after that party has accepted the benefits of the agreement. See Oram v. Gen. Am. Oil Co. of Tex., 513 S.W.2d 533, 534 (Tex. 1974) (per curiam) (“Whatever her mental reservations have been, her acceptance of the payments are inconsistent with the intention to avoid the lease. . . . The effect is to waive or abandon any right of rescission or of attack upon the initial invalidity, if any, of the lease."). Whether a party has ratified a contract may be determined as a matter of law if the evidence is not controverted or is incontrovertible. Mo. Pac. R.R. Co., 86 S.W.3d at 792. Although some cases have stated ratification must be “intentional,” that intent may be inferred from the acceptance of benefits under the agreement after having full knowledge of the act that would make the agreement voidable. Williams v. City of Midland, 932 S.W.2d 679, 685 (Tex. App.—El Paso 1996, no pet.) (stating that intentional ratification may be shown by party’s acceptance of benefits under agreement, after becoming fully aware of fraud); Motel Enters., Inc. v. Nobani, 784 S.W.2d 545, 547 (Tex. App.—Houston [1st Dist.] 1990, no writ) (op. on reh’g) (stating that intent to give validity to former transaction may be inferred from existing facts and circumstances such as retaining benefits of invalid contract with full knowledge of facts that make contract invalid). The “intention” of giving validity to an earlier act is susceptible to misinterpretation and misapplication—as is shown by Jimenez’s position. Old Republic Ins. Co. v. Fuller, 919 S.W.2d 726, 728 n.1 (Tex. App.—Texarkana 1996, writ denied). “A party’s intent is indeed important in determining the question of ratification, but not because the party must possess intent to ratify. Rather, the party must perform a voluntary, intentional act which is inconsistent with an intention of avoiding the prior agreement.” Id. Therefore, Weeks Marine is required to demonstrate only that Jimenez performed an intentional act that was inconsistent with any intention to avoid the Agreement. Weeks Marine contends that Jimenez ratified the Agreement by accepting the benefits of the Agreement, i.e., the payment of the advanced wages. The trial court found that relator had received approximately $20,000 from Weeks Marine under the Agreement. Jimenez signed the Agreement on May 9, 2006, and started receiving the wage payments soon thereafter. While still receiving payments, Jimenez hired an attorney and, on June 29, 2006, filed the underlying lawsuit against Weeks Marine. On September 21, 2006, Weeks Marine requested that Jimenez submit his claims to arbitration pursuant to the Agreement, but, on September 25, he refused to do so. On October 3, 2006, Weeks Marine filed its motion to compel arbitration. It is not disputed that Jimenez continued to receive and accept advanced wage payments until they were exhausted on October 28, 2006, under the terms of the Agreement, or that he did not return any of those payments, even after he had hired an attorney and after Weeks Marine had formally requested arbitration. Even if the Agreement were unenforceable due to procedural unconscionability or duress, Jimenez ratified it by accepting and retaining the benefits of the Agreement. See In re Border Steel, Inc., 229 S.W.3d 825, 835 (Tex. App.—El Paso 2007, orig. proceeding [mand. denied]) (“[A]ssuming for a moment that the Agreement [to arbitrate] were unenforceable, Juarez ratified it by accepting and retaining benefits under the Plan following his injury.”); In re Leadership Ford, Inc., No. 05-99-00618-CV, 1999 WL 424303, at *4 (Tex. App.—Dallas June 25, 1999, orig. proceeding) (not designated for publication) (holding employee ratified his agreement to be bound by plan and its arbitration requirements when he accepted plan’s benefits after his injury and did not return such benefits after he knew his employer intended to enforce plan’s arbitration requirements).[5] Having accepted the advanced wage payments after becoming aware that the Agreement is allegedly invalid due to procedural unconscionability or duress, Jimenez cannot now avoid the Agreement on those grounds. See Harris, 134 S.W.3d at 427 (stating that party, who has been fraudulently induced to enter into voidable agreement engages in conduct that recognizes agreement as binding after it has become aware of fraud, ratifies agreement and waives any right to assert fraud as basis to avoid agreement). Jimenez further contends that Weeks Marine must also show that the circumstances surrounding the later contract formation were not unconscionable. Jimenez’s attorney filed the underlying lawsuit against Weeks Marine on Jimenez’s behalf less than two months after Jimenez signed the Agreement. Because Jimenez continued to accept wage payments after he was represented by an attorney, it cannot be said that the circumstances surrounding the subsequent ratification of the Agreement were unconscionable. We sustain this issue. Conclusion We hold that the trial court abused its discretion in denying Weeks Marine’s motion to compel arbitration.[6] Accordingly, we conditionally grant the petition for writ of mandamus and direct the trial court to vacate its March 30, 2009 order and compel arbitration of Jimenez’s claims. The writ will issue only if the trial court fails to act in accordance with this opinion.We lift the stay issued on July 2, 2009. /s/ John S. Anderson CASE DETAILS AND LINKS: In Re Weeks Marine, Inc. (Tex.App.- Houston [14th Dist.] Oct. 8, 2009)(Anderson)(ratification of agreement to arbitrate by acceptance of benefits; post-injury waiver of right to litigate) (arbitration compelled by mandamus) Decision: MOTION OR WRIT GRANTED: Opinion by Justice Anderson Panel composition: Before Justices Anderson, Guzman and Boyce Appellate cause no: 14-09-00580-CV Case style: In Re: Weeks Marine, Inc . Appeal from 215th District Court of Harris County Trial Court Judge: Steven Kirkland Also see prior blog post on 2007 mandamus case referenced in the opinion: In Re Weeks Marine, Inc. (Tex.App.- Houston [14th Dist.] Dec. 19, 2007)(Seymore) (arbitration mandamus)

Mandamus to Compel Arbitration Denied in the Absence of Underlying Agreement to Arbitrate

In Re GeoMet, Inc. (Tex.App.- Houston [14th Dist.] Oct. 22, 2009) MEMORANDUM OPINION OF THE FOURTEENTH COURT OF APPEALS On August 10, 2009, relator, GeoMet, Inc., filed a petition for writ of mandamus in this Court. See Tex. Gov’t Code Ann. §22.221 (Vernon 2004); see also Tex. R. App. P. 52. In the petition, relator asks this Court to compel the Honorable Mike Engelhart, presiding judge of the 151st District Court of Harris County, to set aside his May 18, 2009 order denying its motion to compel arbitration. Relator has not established that the claims of real party interest, El Paso E&P Company, L.P. f/k/a El Paso Production Company, are subject to an agreement to arbitrate. See In re Dillard Dep’t Stores, Inc., 186 S.W.3d 514, 515 (Tex. 2006) (orig. proceeding) (per curiam). Therefore, relator has not established its entitlement to the extraordinary relief of a writ of mandamus. Accordingly, we deny relator’s petition for writ of mandamus. PER CURIAM Panel consists of Chief Justice Hedges and Justices Seymore and Sullivan. CASE DETAILS AND LINKS: In Re GeoMet, Inc. (Tex.App.- Houston [14th Dist.] Oct. 22, 2009)(per curiam)(arbitration mandamus denied, no agreement to arbitrate established) Disposition on appeal: MOTION OR WRIT DENIED in Per Curiam Opinion Panel members: Chief Justice Adele Hedges, Justices Charles Seymore and Kent Sullivan Appellate cause no: 14-09-00685-CV Style: In Re Gomet, Inc. Appeal from 151st District Court of Harris County (Houston) Trial Court Judge: Mike Engelhart

Sunday, October 25, 2009

Supreme Court Clarifies Recent Ruling on Pre-Arbitration Discovery

CAN ANY DISCOVERY BY DONE BEFORE ARBITRATION? Recent Holding Disapproving of Pre-Arbitration Discovery "Reiterated" Perhaps as a noble gesture to a former colleague (Craig Enoch), who is listed as one of eleven (11) attorneys for the real party in interest (O'Connor & Hewitt, Ltd.), the Texas Supreme Court last Friday issued a brief supplemental opinion on motion for re-hearing clarifying that all discovery is not necessarily precluded when a motion to compel arbitration is filed and pending. For undivinable reasons, the original mandamus opinion in IN RE HOUSTON PIPE LINE COMPANY, ET AL (Tex. 2009) is not even cited in the one-page follow-up opinion. See prior post: Pre-Arbitration Discovery Quashed by Texas High Court =============================== In re Houston Pipe Line Company, et al. =============================== Connor complains on rehearing that our opinion may be misinterpreted to foreclose all pre-arbitration discovery in the underlying case because we have vacated the underlying discovery order and directed the trial court to rule on the pending motion to compel arbitration. O'Connor submits that such an interpretation would conflict with the Court's recognition here that pre-arbitration discovery is permissible when a trial court needs additional information to make its determination regarding the scope of the arbitration provision or other issues of arbitrability. We reiterate that the discovery order below was overbroad and must be vacated, but that the trial court retains discretion to order limited discovery on issues of scope or arbitrability, if necessary. We further reiterate that motions to compel arbitration and any reasonable discovery should be resolved without delay. O'Connor's motion for rehearing is overruled. OPINION DELIVERED: October 23, 2009. REPRESENTATIVES FOR THIS PARTY: O'Connor & Hewitt, Ltd.
Mr. Thomas J. Sims
Mr. Timothy S. Perkins
Mr. James W. Cole
Mr. William F. Seerden
Mr. Ronald B. Walker
Mr. Gilberto Hinojosa
Mr. Craig T. Enoch
Ms. Melissa Prentice Lorber
Mr. Neel Alan Choudhury
Mr. Stanley B. Binion
Mr. Alex S. Valdes
LINKS FOR ORIGINAL OPINION ON PETITION FOR WRIT OF MANDAMUS AND RELATED CASE INFORMATION FOR In Re Houston Pipe Line Co., L.P. (Tex. 2009), No. 08-0800 (Tex. Jul. 3, 2009) (per curiam) (arbitration mandamus) (trial court ordered to rule on motion to compel arbitration, and to vacate pre-arbitration discovery orders determined by the supreme court to be overbroad) THE GIST: At issue in this proceeding is whether the trial court abused its discretion by permitting discovery on damage calculations and other potential defendants, instead of deciding the motion to compel arbitration. For the reasons below, we conclude the trial court should not have ordered pre-arbitration discovery, but rather should have decided the motion to compel arbitration. ... [W]e conditionally grant the writ and direct the trial court to vacate the discovery order and to rule on the motion to compel arbitration. IN RE HOUSTON PIPE LINE COMPANY, L.P., ET AL.; from Victoria County; 13th district (13-07-00299-CV & 13-07-00362-CV, [interlocutory appeal and mandamus petition] 269 SW3d 90, 08-26-08 Opinion of the Thirteenth Court of Appeals by Chief Justice Rogelio Valdez denying mandamus relief) stay order issued October 17, 2008, lifted Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Texas Supreme Court conditionally grants the petition for writ of mandamus. Get this Per Curiam Opinion [4 pages in pdf] E-Briefs in IN RE HOUSTON PIPE LINE CO., LP d/b/a HOUSTON PIPE LINE CO.