In re Readyone Indus., Inc.

• Decision Date: 21 December 2012
• Docket Number: No. 08–12–00121–CV.,08–12–00121–CV.
• Citation: 420 S.W.3d 179
• Parties: In re READYONE INDUSTRIES, INC.
• Court: Texas Court of Appeals

420 S.W.3d 179

In re READYONE INDUSTRIES, INC.

No. 08–12–00121–CV.

Court of Appeals of Texas, El Paso.

Dec. 21, 2012.

Alex Acosta, Scherr & Legate, PLLC, El Paso, TX, for Real Parties in Interest.

Angelica Juarez Barill, Judge 346th District Court, El Paso, TX, for Respondent.

Steven L. Hughes, Mounce, Green, Myers, Safi, Paxson & Galatzan, El Paso, TX, for Relator.

Before McCLURE, C.J., RIVERA, and ANTCLIFF, JJ.

OPINION

CHRISTOPHER ANTCLIFF, Justice.

In this original proceeding, ReadyOne Industries, Inc. seeks mandamus relief from the trial court's order permitting discovery on the arbitrability of an agreement between ReadyOne and its employee, Margaret Simental (“Simental”), governing work-related injuries. ReadyOne contends that the trial court erred in deciding that the Franken Amendment ¹ might apply to Simental's negligence cause of action and that Simental established the facts necessary to raise a reasonable expectation that the arbitration agreement was unenforceable. Concluding that the Franken Amendment is inapplicable in a personal injury suit and that Simental failed to provide a colorable or reasonable basis for believing that discovery would materially aid her in establishing her defenses to the validity of an arbitration agreement, we conditionally grant mandamus relief.

FACTUAL AND PROCEDURAL BACKGROUND

Alleging that she sustained an on-the-job injury, Simental sued ReadyOne for negligence. After filing an answer, ReadyOne moved to compel arbitration pursuant to an agreement requiring that claims of on-the-job injuries be submitted to binding arbitration. In response, Simental moved for limited discovery on the issue of arbitrability to “develop [her] case and defend against [ReadyOne's] contentions that a valid arbitration agreement exists [,] ... [and] ... to develop or inquire into any factual issues that may preclude or discredit the existence of a valid arbitration agreement.”

At the hearing on these matters, Simental argued that discovery was required as to the validity of the arbitration agreement because her affidavit, attached to the response to ReadyOne's motion to compel arbitration, raised concerns about fraudulent inducement and meeting of the minds. Simental also argued that her claims against ReadyOne are not arbitrable because the Franken Amendment prevents federal contractors from enforcing agreements to arbitrate tort claims related to or arising out of negligent hiring, supervision, or retention. ReadyOne countered that the Franken Amendment is not applicable to torts related to or arising out of negligent hiring, supervision, or retention in a personal injury suit because the Amendment applies only to title VII claims or torts related to or arising out of sexual assault or harassment.

After considering the parties' arguments, the trial court ordered limited discovery on the applicability of the Franken Amendment, fraudulent inducement, and meeting of the minds. With respect to the applicability of the Franken Amendment, Simental was permitted to discover if ReadyOne has federal contracts in excess of $1 million and if ReadyOne manufactures items commercially available off-the-shelf.

MANDAMUS

To obtain mandamus relief from the trial court's discovery order, ReadyOne must meet two requirements. ReadyOne must show that the trial court clearly abused its discretion and that it has no adequate remedy by appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex.2004).

A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law, or if it clearly fails to analyze or apply the law correctly. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex.2005). A trial court has the discretion to order pre-arbitration discovery if it lacks sufficient information regarding the scope of an arbitration provision or other issues of arbitrability, such as a defense to arbitration. In re Houston Pipe Line Co., 311 S.W.3d 449, 451 (Tex.2009)(orig. proceeding). Although the scope of discovery is within the trial court's discretion, the trial court must make an effort to impose reasonable discovery limits. In re CSX Corp., 124 S.W.3d 149, 152 (Tex.2003). Accordingly, discovery requests must be reasonably tailored to include only matters relevant to the case. In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex.1998). Because discovery is limited to matters that are relevant to the case, requests for information that are not reasonably tailored as to time, place, or subject matter amount to impermissible “fishing expeditions.” See CSX Corp., 124 S.W.3d at 152. Accordingly, an order that compels production of patently irrelevant matters is an abuse of discretion. Id. at 153.

A relator has no adequate remedy by appeal if the appellate court is unable to cure the trial court's discovery error. Walker v. Packer, 827 S.W.2d 833, 843 (Tex.1992). This occurs when the trial court erroneously “compels the production of patently irrelevant ... documents, such that it clearly constitutes harassment or imposes a burden on the producing party far out of proportion to any benefit that may obtain to the requesting party.” Id. In such a situation, mandamus is the proper remedy. Id.

THE FRANKEN AMENDMENT

In its first issue, ReadyOne argues that the trial court erred by ordering discovery regarding the applicability of the Franken Amendment because, on its face, the Amendment is inapplicable, and even if applicable, does not bar enforcement of the arbitration agreement. ReadyOne thus insists that the trial court abused its discretion by requiring discovery into patently irrelevant matters. We agree.

Applicable Law

Our analysis of whether the Franken Amendment applies in this case turns on a question of statutory construction. A question of statutory construction is a legal one that we review de novo. Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex.2009). When construing statutes, we ascertain and give effect to the legislature's intent. Id. We do so by looking first and foremost at the statutory text, reading the words and phrases in context and construing them according to the rules of grammar and common usage. Id.;Lexington Ins. Co. v. Strayhorn, 209 S.W.3d 83, 85 (Tex.2006); Tex.Gov't Code Ann. § 311.011 (West 2005). Where statutory text is clear, it is determinative of legislative intent unless the plain meaning of the statute's text would produce an absurd result. Entergy, 282 S.W.3d at 437.

Several canons of statutory construction are helpful in guiding our analysis. Under the doctrine of ejusdem generis, when general words in a statute follow specific examples, the general words are to be restricted in their meaning to a sense analogous to the same kind or class as those expressly mentioned. City of San Antonio v. City of Boerne, 111 S.W.3d 22, 29 (Tex.2003). Likewise, according to the maxim noscitur a sociis (associated words), when general and specific words are grouped together in a statute, the general words are limited by the specific and will be construed to embrace only objects similar in nature to those things identified by the specific words. Id. Similarly, the last antecedent rule states that a qualifying phrase in a statute must be confined to the words and phrases immediately preceding it to which it may, without impairing the meaning of the sentence, be applied. Spradlin v. Jim Walter Homes, Inc., 34 S.W.3d 578, 581 (Tex.2000).

Discussion

1. Abuse of Discretion

With these principles in mind, we have scrutinized the Franken Amendment to determine whether personal injury claims related to or arising out of negligent hiring, supervision, or retention fall within its parameters. We conclude that they do not.

In relevant part, the Franken Amendment provides:

(a) None of the funds appropriated or otherwise made available by this Act may be expended for any Federal contract for an amount in excess of $1,000,000 that is awarded more than 60 days after the effective date of this Act, unless the contractor agrees not to:

...

(2) take any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates that the employee or independent contractor resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.

Pub.L. 111–118, § 8116, 123 Stat. 3409, 3454–55 (2009). By regulation, the Amendment “does not apply to the acquisition of commercial items (including commercially available off-the-shelf items).” 48 C.F.R. § 222.7403 (West 2010).

The dispute here centers on the meaning of the clause “any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.” [Emphasis added]. ReadyOne asserts that “the list of generic torts following ‘including’ are not additional torts to which the arbitration prohibition would apply,” but are “simply a descriptive list of some of the type of torts that could arise out of sexual assault or harassment.” Simental, on the other hand, posits that, when read in the disjunctive, the conjunction “or” serve to identify the types of claims to which the Amendment applies and to cast them as claims independent of one another. Thus, according to Simental, the phrase “or negligent hiring, supervision, or retention” is independent of and does not modify the phrase “any tort related to or arising out of sexual assault or harassment, including....” We disagree.

When identifying the types of claims not subject to arbitration, the Amendment begins by listing title VII claims, followed...