In re Odyssey Healthcare, Inc.
Citation | 310 SW 3d 419 |
Decision Date | 07 May 2010 |
Docket Number | No. 09-0786.,09-0786. |
Parties | In re ODYSSEY HEALTHCARE, INC. and George Portillo, Relators. |
Court | Supreme Court of Texas |
Gerard Fazio, R. Michael Perez, Owen & Fazio, P.C., Dallas, TX, for Relator.
Joseph Gabriel Isaac, Scherr & Legate, PLLC, El Paso, TX, for Real Party in Interest.
In this negligence case, we must decide whether the trial court abused its discretion by refusing to grant the relator's motion to compel arbitration. We conclude that it did. Here, the real party in interest failed to prove a valid defense against enforcement of her agreement to arbitrate disputes with her employer. Accordingly, we conclude the trial court abused its discretion in failing to compel arbitration, and we conditionally grant the writ of mandamus.
Guadalupe Morales worked in El Paso for Odyssey Healthcare, Inc., which provides hospice care. Morales alleges that she was injured at work when she tripped on an uneven step at a patient's home. She sued Odyssey and her supervisor, George Portillo, for negligence.
Odyssey is a non-subscriber and, in lieu of workers' compensation insurance, it provided its workers with an "Occupational Injury Benefit Plan." Morales enrolled in this plan as a condition of her employment. Upon being sued, Odyssey moved to compel arbitration, relying on the arbitration clause contained in the plan.
The agreement between Morales and Odyssey provides in relevant part:
After a hearing, the trial court denied Odyssey's motion to compel arbitration. The court found that the arbitration provision forcing Morales to arbitrate in Dallas was unconscionable.1 The court of appeals denied Odyssey's petition for writ of mandamus. 310 S.W.3d 464 (Tex.App.-El Paso 2009).
Mandamus will issue if the relator establishes a clear abuse of discretion for which there is no adequate remedy by appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex.2004). A trial court that refuses to compel arbitration under a valid and enforceable arbitration agreement has clearly abused its discretion. See In re Halliburton Co., 80 S.W.3d 566, 573 (Tex.2002). A party seeking to compel arbitration must establish the existence of a valid arbitration agreement between the parties. Cantella Co. v. Goodwin, 924 S.W.2d 943, 945 (Tex. 1996) (orig. proceeding) (per curiam). The party seeking to avoid arbitration then bears the burden of proving its defenses against enforcing an otherwise valid arbitration provision. FirstMerit Bank, 52 S.W.3d at 756. Morales does not dispute that her claims are covered by the agreement and subject to arbitration if the arbitration clause is valid and enforceable.
Morales asserts several grounds for why the arbitration clause here is invalid and unenforceable, including substantive unconscionability, a non-waiver provision of the Texas Workers' Compensation Act, a Tenth Amendment violation by the Federal Arbitration Act, and illusory promises or lack of mutual consideration. We address these arguments in turn.
First, we conclude that Morales failed to establish that the arbitration clause is unconscionable. Substantive unconscionability refers to whether the arbitration provision ensures preservation of the substantive rights and remedies of a litigant. Halliburton, 80 S.W.3d at 572. Morales contends the arbitration clause is unconscionable because it will force her to arbitrate in Dallas, and she will incur substantial expense by having to produce witnesses in Dallas. Testimony from an Odyssey representative showed that Odyssey intended to arbitrate all employee claims covered by this agreement in Dallas, and it had never agreed to arbitrate any claims elsewhere. Regardless, when a party contests arbitration due to substantial expense, that party bears the burden of proving the likelihood of incurring such costs, and must provide some specific information concerning those future costs. See FirstMerit Bank, 52 S.W.3d at 756 (). Here, the record fails to show any specific information or evidence about what costs Morales would likely incur. Her conclusory assertions about costs relating to witnesses and medical experts are thus "legally insufficient evidence that Morales would be denied access to arbitration based on excessive costs." Id. at 757. Moreover, nothing in the agreement requires the arbitration to occur in Dallas. The agreement simply provides that (absent agreement otherwise) the arbitrator must be selected from a Dallas panel of arbitrators. Finally, even if the arbitrator were to conduct arbitration in Dallas, and even if this would cause Morales to incur substantial expense, the arbitrator may still "assess whether the cost provision in this case will hinder effective vindication of the employee's statutory rights and, if so,. . . modify the contract's terms accordingly." In re Poly-America, L.P., 262 S.W.3d 337, 357 (Tex.2008).
Next, Morales is incorrect that a certain non-waiver provision of the Texas Workers' Compensation Act defeats the arbitration provision. Texas Labor Code section 406.033(e), which applies to non-subscribers such as Odyssey, states: 2 However, we have held that section 406.033(e) does not render an arbitration agreement void. In re Golden Peanut Co., LLC, 298 S.W.3d 629, 631 (Tex.2009) (per curiam) ( .
Third, we conclude that the Federal Arbitration Act does not violate the Tenth Amendment by encroaching on a state power to enact and regulate its own workers' compensation system. The Tenth Amendment provides: "The powers not delegated...
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