Kmart Stores of Tex., L.L.C. v. Ramirez, 08–15–00094–CV

• Decision Date: 16 March 2016
• Docket Number: No. 08–15–00094–CV,08–15–00094–CV
• Citation: 510 S.W.3d 559
• Parties: KMART STORES OF TEXAS, L.L.C., and Sears Holdings Management Corporation, Appellants, v. Norma RAMIREZ, Appellee.
• Court: Texas Court of Appeals

510 S.W.3d 559

KMART STORES OF TEXAS, L.L.C., and Sears Holdings Management Corporation, Appellants,

v.Norma RAMIREZ, Appellee.

No. 08–15–00094–CV

Court of Appeals of Texas, El Paso.

March 16, 2016

Enrique Chavez, Chavez Law Firm, El Paso, TX, for Appellee.

Robert E. Bettac, Ogletree Deakins Nash Smoak & Stewart, P.C., San Antonio, TX, for Appellant.

Before McClure, C.J., Rodriguez, and Hughes, JJ.

OPINION

YVONNE T. RODRIGUEZ, Justice

Norma Ramirez sued Appellants Kmart Stores of Texas, L.L.C. and Sears Holdings Management Corporation (collectively Kmart) for disability discrimination. Kmart moved to arbitrate based on an agreement that Ramirez purportedly acknowledged through Kmart's online employee portal and accepted by continuing to work for the company. The trial court refused to compel arbitration, and this appeal followed.

The central question here is whether Ramirez's Tipps¹ hearing testimony denying that she ever received or knew about the agreement created a genuine fact issue on notice that the trial court could have resolved in her favor, given that Kmart's electronic records purportedly show her unique login credentials were used to access and acknowledge the agreement on the online portal.

We find Ramirez raised a fact issue, and the trial court did not abuse its discretion in denying Kmart's motion to compel. The judgment of the trial court is affirmed.

BACKGROUND

Ramirez began working for Kmart as an at-will employee on May 23, 2010. In April 2012, Kmart introduced an arbitration policy requiring submission of all disputes between employees and the company to arbitration. Kmart maintains that by September 14, 2012, employees were required to complete a series of policy acknowledgments on Kmart's My Personal Information (MPI) online portal.² Among the policies posted on the portal was the arbitration agreement.

When the agreement is posted, an employee must undertake several steps in order to access and acknowledge it. First, the employee must enter her user ID and password information into the MPI login page. After successfully entering login information, an employee is directed to the MPI portal home page, which contains a menu with several options, including a link entitled "SHC Policy Acknowledgments." When an employee clicks on that link, she is directed to the policy acknowledgements page. That page contains a list of both completed and pending policy acknowledgments. If the employee has not viewed the arbitration policy, a red hyperlink that says "Arbitration Policy/Agreement" appears on the page. Clicking that hyperlink directs the employee to another page containing four additional hyperlinks: two links led to copies of the arbitration agreement in both PDF and plaintext formats, one link led to an "Opt Out form," and the fourth link was an acknowledgement of receipt.

The agreement admonishes an employee to read the terms carefully, "as it provides that virtually any dispute related to Associate's employment must be resolved only through binding arbitration." Specifically, the arbitration agreement states that "all employment-related disputes between you (‘Associate’) and Company that are not resolved informally shall be resolved by binding arbitration in accordance with the terms set below." The agreement also states that if the employee does not wish to be subject to arbitration, the employee must opt out within thirty days. Per the agreement's terms, "[b]y not opting out of this Agreement within the Opt–Out Period, Associate will be deemed to have agreed to be bound by this Agreement, including the arbitration provision[.]" The agreement also states that "[a]rbitration is not a mandatory condition of Associate's employment at Company[.]"

The Opt Out form, contained behind the third link on the arbitration agreement page, allowed employees, per agreement's terms, to cancel the agreement within thirty days. To opt out of the arbitration agreement, an employee must print the form and then either mail it or fax it to the address or phone number listed on the document.

When the employee clicks on the fourth link, the employee receives a prompt asking her to confirm acknowledgment and receipt of the arbitration agreement. The employee must then click both the "Yes" and "Submit" buttons to clear the screen. Once this screen is cleared, Kmart's internal human resource records are automatically updated to reflect employee acknowledgement of the agreement.

Roberta Kaselitz, a compliance programs manager with Sears, stated in an affidavit to the trial court that Ramirez received copies of the arbitration agreement "as part of the February 2012 launch of the new Agreement" and in April 2012. As proof of this, Kaselitz testified that Kmart's internal PeopleSoft Human Resources Management System indicated that an "Arbitration Policy/Agreement ‘Course’ was created in the PeopleSoft system" with a start date of February 3, 2012. Kaselitz further testified in her affidavit that "[t]he ‘End Date’ column reflects Plaintiff acknowledged receipt of the Agreement on April 23, 2012."

On March 13, 2013, Kmart terminated Ramirez's employment. She filed suit for disability discrimination in October 2014. Kmart moved to arbitrate, submitting as evidence Kaselitz's affidavit and attached exhibits setting out the arbitration agreement and demonstrative screenshots from the MPI portal system. Ramirez responded and filed an affidavit in which she stated that she had never electronically acknowledged or agreed to any arbitration agreement.

The trial court then held a Tipps evidentiary hearing, where Ramirez again denied ever receiving or agreeing to the agreement. The entirety of her direct examination testimony on this point is as follows:

Q. Okay. And, Ms. Ramirez, did you yourself ever log in on April 23, 2012, through Kmart's MPI online portal to view an arbitration agreement?

A. No.

Q. Did you ever click on a purported screen saying that you acknowledge receipt of the arbitration policy or agreement link?

A. No.

Q. Were you ever presented with the arbitration agreement at any time during your employment?

A. No

Q. Either electronically or in writing?

A. No.

On cross-examination, Ramirez admitted to having using the MPI system before, and she denied ever giving her user ID information or password to anybody else. She also denied seeing certain sections of the MPI portal and testified that the only thing she remembered was the portion dealing with her W–2 forms. Ramirez admitted to having reviewed some policies electronically at the beginning of her employment, and she stated that she was familiar with Kmart's general distribution of policies and procedures via electronic means. However, she denied ever logging onto Kmart's network on April 23, 2012, except to clock in for work. She testified that she never saw the language on the MPI portal directing her to the arbitration agreement, and she did not know that other employees were subject to arbitration agreements. Kmart presented no new evidence at the hearing, but only moved to admit the evidence it had already submitted with its motion, including Kaselitz's Affidavit.

The trial court subsequently denied Kmart's motion to compel arbitration.

DISCUSSION

In one issue, Kmart contends that the trial court erred by refusing to compel arbitration. Because Ramirez does not dispute that the terms of the Kmart arbitration agreement would require her to arbitrate disability discrimination claims, we consider only whether the evidence conclusively established both parties actually assented to that agreement. See Delfingen US–Tex., L.P. v. Valenzuela, 407 S.W.3d 791, 798 (Tex.App.–El Paso 2013, no pet.) (party seeking to compel arbitration must establish both the existence of an agreement and that an arbitrable dispute exists within that agreement's scope).

Standard of Review and Applicable Law

In reviewing the denial of a motion to compel arbitration, "we apply a no-evidence standard to the trial court's factual determinations and a de novo standard to legal determinations." Sidley Austin Brown & Wood, L.L.P. v. J.A. Green Dev. Corp., 327 S.W.3d 859, 863 (Tex.App.–Dallas 2010, no pet.) (describing this standard as the "same as the abuse of discretion standard of review"); see also Delfingen US–Tex., L.P., 407 S.W.3d at 798.

"[D]espite strong presumptions that favor arbitration, a valid agreement to arbitrate is a settled, threshold requirement to compel arbitration." In re Estate of Guerrero, 465 S.W.3d 693, 699 (Tex.App.–Houston [14th Dist.] 2015, pet. filed). "[W]hen we are called upon to decide whether the parties have agreed to arbitrate, we do not resolve doubts or indulge a presumption in favor of arbitration, because no party may be forced to submit to arbitration in the absence of sufficient showing that the parties entered into a valid and binding arbitration agreement." Wright v. Hernandez, 469 S.W.3d 744, 751 (Tex.App.–El Paso 2015, no pet.).

"The burden of establishing an arbitration agreement's existence is evidentiary and runs with the party seeking to compel arbitration." United Rentals, Inc. v. Smith, 445 S.W.3d 808, 812 (Tex.App.–El Paso 2014, no pet.). Whether the parties agreed to be bound to an arbitration agreement is a contract formation question we review de novo, deferring to the trial court's findings of historical fact as between the parties so long as those determinations are supported by evidence. Id. at 811–12 ; Sidley Austin Brown & Wood, L.L.P., 327 S.W.3d at 863. "An employer may enforce an arbitration agreement entered into during an at-will employment relationship if the employee received notice of the employer's arbitration policy and accepted it." In re Dallas Peterbilt, Ltd., L.L.P., 196 S.W.3d 161, 162 (Tex.2006) (orig. proceeding)(per curiam).

Motions to compel arbitration are ordinarily decided in summary proceedings "on the basis of affidavits, pleadings, discovery, and stipulations." Jack B. Anglin Co., Inc., 842 S.W.2d at 269. "A summary motion to compel...