Flemma v. Halliburton Energy Servs., Inc.

• Decision Date: 17 January 2012
• Docket Number: No. 29,933.,29,933.
• Citation: 2012 -NMCA- 009,33 IER Cases 162,269 P.3d 931
• Parties: Edward R. FLEMMA, Plaintiff–Appellee, v. HALLIBURTON ENERGY SERVICES, INC., Rick Grisinger, Richard Montman, and Karl E. Madden, Defendants–Appellants.
• Court: Court of Appeals of New Mexico

2012 -NMCA- 009

269 P.3d 931

33 IER Cases 162

Edward R. FLEMMA, Plaintiff–Appellee,

v.HALLIBURTON ENERGY SERVICES, INC., Rick Grisinger, Richard Montman, and Karl E. Madden, Defendants–Appellants.

No. 29,933.

Court of Appeals of New Mexico.

Nov. 17, 2011.Certiorari Granted, Jan. 17, 2012, No. 33,353.

Guebert Bruckner P.C., Terry R. Guebert, Don Bruckner, Albuquerque, NM, for Appellee.

Jackson Lewis LLP, Danny W. Jarrett, James L. Cook, Albuquerque, NM, Vinson & Elkins LLP, W. Carl Jordan, Corey E. Devine, Houston, TX, for Appellants.

OPINION

SUTIN, Judge.

{1} Edward R. Flemma, an employee of Defendant Halliburton Energy Services, Inc. (Halliburton), was terminated allegedly for voicing opposition to a proposed location for a new Halliburton facility, and he sued Halliburton and three of its employees claiming wrongful and retaliatory discharge. Defendants appeal the district court's refusal to compel arbitration. We reverse, holding that (1) under Texas law there was sufficient evidence of Flemma's acceptance of and assent to a contractual arbitration program when Halliburton mailed the terms to Flemma, and Flemma accepted the terms by continuing employment with Halliburton; (2) the differences between Texas and New Mexico in terms of the evidence required to prove acceptance and assent are insufficient to overcome application of the place-of-contract-formation rule on public policy grounds and, thus the arbitration agreement should be enforced under Texas law, which was the state where the contract was formed; and (3) under Texas law the arbitration agreement was not illusory and was therefore supported by consideration.

BACKGROUND

{2} Flemma was hired by Halliburton in 1982 in Louisiana. During his twenty-six years of employment with Halliburton, Flemma received numerous promotions, including his latest promotion, in 2006, to district manager for the company in Farmington, New Mexico. Flemma was involved in evaluating the move of three Halliburton facilities from established locations in Farmington to a more suitable, consolidated location. Halliburton considered two locations for the consolidated facility—Troy King, within Farmington's city limits, and Crouch Mesa, outside the city limits. For various reasons, Flemma opposed the Troy King location.

{3} The facts surrounding Flemma's termination are undisputed. In August 2006, Flemma and Defendant Karl Madden, a district sales manager for Halliburton, received a warning from Defendant Richard Montman, Flemma's supervisor, that “if you value your career, you will keep your mouth shut about the Troy King property.” The day after this warning, Defendant Rick Grisinger, a vice president of Halliburton, told Flemma to stop making “negative comments” regarding Troy King. According to Flemma's complaint, Madden complied with Montman's and Grisinger's directives to “keep his mouth shut,” while Flemma continued to voice his concerns regarding the Troy King facility. In July 2007, Flemma prepared an executive summary in which he compared the two separate locations and indicated that he favored the Crouch Mesa location.

{4} In April 2008, Montman told Flemma, “Today is your last day with the company, you are not meeting my expectations.” Flemma was given the option of signing a resignation, general release, and settlement agreement, as well as accepting twelve weeks of base salary, or being fired. He refused to sign the documents and was fired. He stated in an affidavit filed in this action that he was terminated in retaliation for not keeping his mouth shut about his concerns related to the Troy King facility. Madden was promoted to Flemma's position with the company after Flemma was fired.

{5} In response to these events, Flemma filed a complaint in the district court for wrongful and retaliatory discharge against Halliburton, Grisinger, Montman, and Madden (collectively, Defendants). Defendants responded by filing a motion to compel arbitration. As part of their motion, Defendants provided evidence to the court of four separate mailings by which Halliburton notified Flemma that continued employment with the company constituted his acceptance of the terms of Halliburton's Dispute Resolution Program (the Program), which included binding arbitration of all employment-related disputes. Each of the mailings was sent to Flemma while he was working for Halliburton either in Texas or in Louisiana. Halliburton maintained a record of all the Program packets that were returned to Halliburton by the post office as undeliverable. None of the packets sent to Flemma was returned as undeliverable.

{6} In December 1997, while Flemma was working for Halliburton in Texas, the corporation notified him in writing of its adoption of the Program, effective January 2, 1998, and of the fact that continuing employment with Halliburton indicated agreement to be bound by the Program. The Program offered various alternatives that employees could use to resolve disputes with Halliburton, including a hotline, trained professionals who could assist in various ways confidentially and neutrally, known as Ombudsmen, and a legal consultation plan. The Program included, as a final step, arbitration of all disputes in accordance with the “Halliburton Dispute Resolution Plan” (the Plan). The notification packet included a copy of the Plan and its Rules (the Rules), a brochure describing the Program's basic components, a trifold summary of the Program, and a transmittal letter. The packet was mailed to Flemma's address of record in Tomball, Texas. The second mailing also went to Flemma's address of record in Tomball in the spring of 1998. The 1998 mailing included a transmittal letter, and a revised edition of the Plan and the Rules that again stated that continuing employment with Halliburton constituted consent to be bound by the Plan.

{7} In the summer of 1999, Flemma was working for Halliburton in Louisiana when it mailed a package to his address of record in Belle Chasse, Louisiana, an updated version of the brochure describing the Program's components, which became effective in August 1999, along with a current edition of the Plan and the Rules, and a transmittal letter. This package was mailed to all employees of Halliburton-related companies, again notifying them of the binding effect of the Program. And in October 2001, when Flemma was working for Halliburton, again in Texas, the corporation mailed to his address of record, which was then the address of his business office in Bellaire, Texas, another copy of the Plan and the Rules, a descriptive brochure of the Program, again stating that continuing employment with Halliburton constituted consent to be bound by the Program, and a transmittal letter reminding him that each employee in the United States has agreed to utilize the Program.

{8} On November 4, 2003, Flemma signed a Secondment Agreement in which Halliburton agreed to “second” Flemma to Halliburton International Inc. By the terms of the agreement, Flemma would remain employed by Halliburton, pursuant to an international assignment, which was contained in a separate document also dated November 4, 2003, effective January 1, 2004. The Secondment Agreement permitted Flemma to work for Halliburton International in accordance with a set of conditions described therein. Among those conditions in the Secondment Agreement was a provision that incorporated the terms of the Program. The Secondment Agreement stated that the Program applied to all Halliburton employees “from or working in the [United States].”

{9} Under the Rules, Halliburton reserved the right to amend the Plan at any time by giving at least ten days notice to current employees. The Rules further provided that no amendment would apply to a dispute for which a proceeding had been initiated. A rule governing termination of the Plan was identical to the foregoing rule governing amendment and allowed Halliburton to terminate the Plan at any time, provided that ten days notice had been given to current employees, and provided that the termination would not apply to any proceeding that had already been initiated.

{10} In an affidavit, Flemma stated that he did not remember ever seeing the dispute resolution material while working in Texas and Louisiana from 1997 to 2001. He also stated that he did not “recall receiving, opening[,] or reading this material, or being conscious of the fact that by remaining on the job with Halliburton ... in the United States, [he] would be accepting an agreement to arbitrate any disputes [he] had with the company.” Flemma stated that the materials may have been disposed of by his ex-wife, with whom he was living during 1997 to 2000.

{11} The district court denied Defendants' motion to compel arbitration on two grounds. First, the district court held that the agreement to arbitrate was unenforceable because it would be viewed as illusory under New Mexico law. The court's holding was based on the premise that Halliburton would have “unfettered discretion to [modify the Plan] after a claim accrue[d], but before the claim [was] filed.” The district court was also not persuaded that the ten-day rule that restricted Halliburton from modifying the Plan was sufficient to overcome its illusory nature, in part, because it was only applicable to current employees. Thus, someone in Flemma's circumstances, whose claim had already accrued and who would not be considered a current employee would not receive a ten-day notice. Second, the district court applied the public-policy exception that pertains to the application of foreign law and held that “enforcing an agreement solely on the basis of mailing, without affirmative evidence of acceptance or mutual assent, particularly when it relates to the surrender of a right to a jury trial, would be contrary to public policy.”

DISCUSSION

{12} Defendants contend that the district court erred in holding that Flemma did not agree to arbitrate disputes with...