In re Kellogg Brown & Root

• Decision Date: 25 April 2002
• Docket Number: No. 01-01-01177-CV.,01-01-01177-CV.
• Citation: 80 S.W.3d 611
• Parties: In re KELLOGG BROWN & ROOT, Relator.
• Court: Texas Court of Appeals

80 S.W.3d 611

In re KELLOGG BROWN & ROOT, Relator.

No. 01-01-01177-CV.

Court of Appeals of Texas, Houston (First District).

April 25, 2002.

Rehearing Overruled July 19, 2002.

COPYRIGHT MATERIAL OMITTED

Thomas N. Thurlow, Thurlow & Associates, Houston, for Real Party In Interest.

W. Carl Jordan, Vinson & Elkins, Houston, for Relator.

Panel consists of Justices COHEN, NUCHIA, and SMITH.^*

OPINION

SAM NUCHIA, Justice.

Relator, Kellogg Brown & Root (Kellogg) filed a motion to compel arbitration of a claim by Keith D. Gray, the real party in interest, for wrongful discharge. The trial judge, the Honorable Tony Lindsay of the 280th District Court, Harris County, denied Kellogg's motion, and Kellogg filed a petition for writ of mandamus, asking this Court to direct Judge Lindsay to vacate the order denying the motion to compel and to enter an order compelling the parties to proceed to arbitration under the Federal Arbitration Act (FAA).¹ We conditionally grant the petition.

BACKGROUND

Gray was employed as a pipefitter helper by Kellogg. During his employment with Kellogg, he signed two identical documents, each titled "NEW HIRE/REHIRE," which provided

In consideration of my employment, I agree that my assignment, job or compensation can be terminated with or without cause, with or without notice at any time at the option of the Company or myself. I also agree that I will be bound by and accept as a condition of employment the terms of the Halliburton Dispute Resolution Program which are herein incorporated by reference. I UNDERSTAND THAT THE DISPUTE RESOLUTION PROGRAM REQUIRES, AS ITS LAST STEP, THAT ANY AND ALL CLAIMS THAT I MIGHT HAVE AGAINST THE COMPANY RELATED TO MY EMPLOYMENT, INCLUDING MY TERMINATION AND ANY AND ALL PERSONAL INJURY CLAIMS, ARISING IN THE WORKPLACE, I HAVE AGAINST ANY OTHER PARENT OR AFFILIATE OF THE COMPANY, BE SUBMITTED TO BINDING ARBITRATION INSTEAD OF TO THE COURT SYSTEM. I also agree that any employment contract or any other agreement which is inconsistent with the provisions of this notice or Dispute Resolution Program is absolutely void unless entered into in writing by the Chief Executive Officer.

No date appears by the signature of either Gray or the witness. On one of these documents, under the heading "SEPARATION," the signature of the project department manager is followed by the date "5/9/00," and a box has been checked to indicate that a copy was mailed to the employee on "5/09/00."

The Halliburton Dispute Resolution Plan² (the Plan) provides, "The Plan contractually modifies the `at-will' employment relationship between the Company and its Employees" to the extent stated in the Plan. The Plan covers all legal and equitable claims, including discrimination, harassment, workers' compensation retaliation, defamation, and disputes in connection with any employee benefit plan. However, "the Plan does not apply to claims for workers' compensation benefits or unemployment compensation benefits." The Plan applies to and binds the company and its employees, except those employees represented by a labor organization.

The Plan may be amended or terminated by the company by giving at least 10 days notice to current employees, but the amendment or termination will not apply to any dispute for which a proceeding has been initiated pursuant to the rules of the Plan. The Plan provides that the Federal Arbitration Act applies to arbitration proceedings, and, under the Plan, the substantive legal rights, remedies, and defenses of all parties are preserved. The arbitrator is given the authority to order all relief that a party could obtain from a court on the basis of the claims made, including punitive damages, and, in addition, may award a prevailing employee a reasonable attorney's fee.

Under the Plan, an employee who wishes to initiate arbitration is to pay a $50 fee to the dispute resolution provider selected by the employee.³ The company agrees to pay all additional fees and expenses of arbitration. If the company initiates the arbitration, the employee does not pay the $50 fee. Discovery costs and fees and expenses of witnesses, experts, and consultants are borne by the party incurring such costs. If the employee consults with or retains an attorney in connection with the arbitration, the employee is responsible for the attorney's fees, except that the Plan will pay a maximum annual benefit, under its legal consultation plan, of $2,500, with the employee paying a deductible of $25 and a 10% co-pay.

On May 9, 2000, Gray's employment with Kellogg was terminated. Gray filed a lawsuit for wrongful discharge, alleging that he was discharged because he had filed a worker's compensation claim on May 5, 2000 or because he had proceeded with the claim with the assistance of an attorney. In its answer, Kellogg asserted its rights under the arbitration agreement and requested that the lawsuit be dismissed or stayed. In November 2000, Kellogg filed a motion to compel arbitration, asserting that Gray and Kellogg had entered into an enforceable arbitration agreement and the FAA applied both by the terms of the agreement and because the Kellogg employment context affected interstate commerce. In support of its motion, Kellogg attached the affidavit of Don Oden, Shared Services Supervisor on the Kellogg construction project on which Gray had worked. The affidavit stated that the construction project was to expand a Shell refinery to permit a Shell/Pemex joint venture to increase production of petroleum products, which were to be distributed into Mexico and locations throughout the United States. Also attached were the two documents signed by Gray, a copy of a brochure describing the Dispute Resolution Program, and a copy of the Plan and its rules.

Gray's response opposed the motion to compel arbitration. However, in July 2001, Gray's attorney wrote Kellogg's attorney, acknowledging Kellogg's desire for arbitration and asking who would conduct the arbitration and what discovery would be allowed. Kellogg's attorney responded by letter, describing the process and informing Gray of the $50 fee to be paid to the chosen provider. On September 25, 2001, Gray's attorney wrote Kellogg's attorney, enclosing a $50 check, selecting JAMS as the provider, and specifying certain discovery he wanted to pursue.

In late November 2001, Kellogg's attorney learned that the lawsuit was still on the trial docket and was set for trial on November 30. In a telephone conversation on November 29, Gray's attorney informed Kellogg's attorney that Gray had no intention of arbitrating his claim because the trial court had not ordered arbitration. On December 5, the trial court held a hearing on Kellogg's motion to compel arbitration and denied the motion. The trial court announced that it found no contract because there was no consideration and, specifically, that the provision that the employee pay only a $50 fee was not "consideration for this particular alleged contract which says new hiree/rehire [sic]."

DISCUSSION

When a trial court erroneously denies a party's motion to compel arbitration under the FAA, the movant has no adequate remedy at law and is entitled to a writ of mandamus. In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex.2001) (orig.proceeding).

Enforceability of the Agreement

A party seeking to compel arbitration must establish the existence of an arbitration agreement and show that the claims raised fall within the scope of the agreement. In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (orig.proceeding). If one party denies that there is a binding arbitration agreement, the trial court may summarily decide whether to compel arbitration on the basis of uncontroverted affidavits, pleadings, discovery, and stipulations. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992) (orig.proceeding). Whether there is an enforceable agreement to arbitrate is a question of law and is therefore reviewed de novo. See J.M. Davidson, Inc. v. Webster, 49 S.W.3d 507, 511 (Tex.App.-Corps Christi 2001, no pet.); Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 388 (Tex.App.-Houston [14th Dist.] 1998, pet. dism'd w.o.j.).

Kellogg produced, as evidence of an arbitration agreement, two one-page documents signed by Gray, a copy of a company brochure explaining the dispute resolution program, and a copy of the Plan. Gray argued that there was no evidence to establish when the two documents were signed except for Oden's deposition, which states that the two documents were "signed by Mr. Gray during his employment with [Kellogg]." The second of these two documents, under the heading "SEPARATION," indicates that a copy of the document was mailed to the employee on May 9, 2000 and is signed by the project department manager and dated "5/9/00," the date of Gray's termination.

The two documents at issue contain, under a heading "NEW HIRE/REHIRE," an agreement to be bound by the terms of the dispute resolution program as a condition of employment and incorporating by reference the terms of that program. Both documents are signed by a witness and Gray. Oden's...