In re Copart, Inc., No. 19-1078

• Court: Supreme Court of Texas
• Writing for the Court: PER CURIAM.
• Citation: 619 S.W.3d 710
• Parties: IN RE COPART, INC., Copart of Houston, Inc., and Houston Copart Salvage Auto Actions, LP, Relators
• Docket Number: No. 19-1078
• Decision Date: 12 March 2021

619 S.W.3d 710

IN RE COPART, INC., Copart of Houston, Inc., and Houston Copart Salvage Auto Actions, LP, Relators

No. 19-1078

Supreme Court of Texas.

OPINION DELIVERED: March 12, 2021

John P. Mobbs, George P. Andritsos, for Real Party in Interest.

Steven J. Blanco, El Paso, Mark A. Flores, Michael Patrick Royal, Dallas, for Relators.

PER CURIAM

When deciding a motion to compel arbitration, a trial court may authorize limited discovery if the court "cannot fairly and properly make its decision on the motion to compel because it lacks sufficient information regarding the scope of an arbitration

619 S.W.3d 712

provision or other issues of arbitrability." In re Houston Pipe Line Co. , 311 S.W.3d 449, 451 (Tex. 2009) (orig. proceeding). At issue in this mandamus proceeding is whether the trial court abused its discretion in determining that such pre-arbitration discovery was warranted. For the reasons following, we hold that it did and conditionally grant mandamus relief.

In March 2015, Maria R. Ordaz began work at Copart, Inc. as a customer service representative.¹ Ordaz is a Christian woman of Arab descent. Ordaz filed an internal complaint with the company asserting that her office manager subjected her to harassment and derogatory comments related to her religion and ethnicity. Ordaz alleges that she was asked to resign shortly thereafter, and when she refused, her employment was terminated.

Ordaz sued Copart, claiming discrimination and retaliation in violation of chapter 21 of the Texas Labor Code. Copart answered and moved to compel arbitration pursuant to the Copart Employee Handbook Acknowledgment and Agreement, which contained the Copart Dispute Resolution Policy and Agreement (the arbitration agreement at issue here). In support of its motion to compel arbitration, Copart attached the sworn declaration of Kallie Sirles, a "Human Resources Generalist" at Copart. In her declaration, Sirles described Copart's policies and procedures for new employees, including the requirement that all employees sign the arbitration agreement. She also averred that Ordaz received via email and electronically signed a copy of the arbitration agreement. Attached to the declaration were various authenticated documents, including Ordaz's signed copy of the arbitration agreement, email exchanges between Ordaz and Copart human resources confirming her signature, and paperwork documenting Ordaz's hire and termination. In response to the motion to compel arbitration, Ordaz served a notice of Sirles's deposition and moved to compel pre-arbitration discovery, denying the existence of an enforceable arbitration agreement.

After a hearing, the trial court orally granted Ordaz's motion for discovery and ordered Sirles to appear for deposition. Copart sought mandamus relief in the court of appeals, which conditionally granted Copart's petition and directed the trial court to vacate its order. In re Copart, Inc. , 563 S.W.3d 427, 432–33 (Tex. App.—El Paso 2018, orig. proceeding) ( Copart I ). The court of appeals held that Ordaz's motion to compel discovery did not provide a "colorable basis" for the trial court to conclude it lacked sufficient information to decide the motion to compel arbitration. Id. at 432. Thus, an order of discovery was inappropriate. Id. However, the court of appeals allowed Ordaz thirty days to file another motion properly establishing her entitlement to pre-arbitration discovery or an evidentiary hearing, ordering the trial court to summarily rule on Copart's motion if she failed to do so. Id. at 433.

Ordaz then filed a new motion for discovery in the trial court. Attached to the motion was Ordaz's affidavit in which she denied the existence of a valid arbitration agreement, disputed Sirles's personal knowledge regarding Ordaz's execution of the agreement, and averred that the agreement lacked consideration. The trial court once again granted the motion, and Copart once again filed a petition for writ of mandamus in the court of appeals.

While the second mandamus proceeding was pending, a new trial judge was elected to the 243rd District Court and took over

619 S.W.3d 713

the case. The court of appeals abated the proceeding to allow the new judge to reconsider the order. The trial court granted the motion and issued the discovery order now at issue. The trial court concluded that the second motion for discovery and attached affidavit raised a fact issue regarding the arbitration agreement's validity and enforceability and provided "reason to believe" Sirles's deposition was material to that issue. The court thus authorized Ordaz to conduct "limited" discovery on issues of arbitrability. The court of appeals denied Copart's petition for writ of mandamus without substantive discussion. No. 08-18-00204-CV, 2019 WL 3940955 (Tex. App.—El Paso Aug. 21, 2019, orig. proceeding). Copart now seeks mandamus relief in this Court.

Mandamus is an extraordinary remedy requiring the relator to show that (1) the trial court clearly abused its discretion and (2) the relator lacks an adequate remedy by appeal. In re Prudential Ins. Co. of Am. , 148 S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding). We have held that mandamus relief is appropriate when a trial court erroneously orders pre-arbitration discovery. In re Houston Pipe Line , 311 S.W.3d at 452. Accordingly, our focus is on whether the trial court clearly abused its discretion—that is, whether the court "act[ed] without reference to guiding rules or principles or in an arbitrary or unreasonable manner." In re Garza , 544 S.W.3d 836, 840 (Tex. 2018). Copart asserts that the trial court abused its discretion in ordering pre-arbitration discovery because Ordaz provided no colorable basis to believe that the requested discovery was material to establishing the arbitration agreement's enforceability. Ordaz responds that it was within the trial court's discretion to determine it lacked sufficient information to decide specific issues of arbitrability.

It is undisputed that the Federal Arbitration Act applies to the arbitration agreement at issue. However, courts apply Texas procedure when deciding a motion to compel arbitration under the FAA. Jack B. Anglin Co. v. Tipps , 842 S.W.2d 266, 268 (Tex. 1992). As noted, we have held that the Texas Arbitration Act authorizes pre-arbitration discovery only "when a trial court cannot fairly and properly make its decision on the motion to compel because it lacks sufficient information regarding the scope of an arbitration provision or other issues of arbitrability." ...