W. Dairy Transp., LLC v. Vasquez

• Decision Date: 30 July 2014
• Docket Number: No. 08–13–00175–CV.,08–13–00175–CV.
• Parties: WESTERN DAIRY TRANSPORT, LLC, Appellant, v. Marcial Felipe VASQUEZ, Appellee.
• Court: Texas Court of Appeals

457 S.W.3d 458

WESTERN DAIRY TRANSPORT, LLC, Appellant

v.Marcial Felipe VASQUEZ, Appellee.

No. 08–13–00175–CV.

Court of Appeals of Texas, El Paso.

July 30, 2014.

Connie Quintero, Scherr & Legate, PLLC, El Paso, for Appellee.

David W. Dodge, McCathern, PLLC, Dallas, for Appellant.

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

OPINION

ANN CRAWFORD McCLURE, Chief Justice.

In this consolidated interlocutory appeal and petition for writ of mandamus, Appellant/Relator, Western Dairy Transport, LLC, challenges the trial court's order denying its motion to compel arbitration in the suit filed by Appellee/Real Party in Interest, Marcial Felipe Vasquez. We conclude that we lack jurisdiction over the petition for writ of mandamus. In the interlocutory appeal, we conclude that the trial court did not abuse its discretion by denying Western Dairy's motion to compel arbitration.

FACTUAL SUMMARY

Vasquez worked as a mechanic for Western Dairy Transport, a trucking company, and suffered a hernia

while lifting a truck tire. Western Dairy is not a subscriber to Texas's workers' compensation system, but instead provides employees like Vasquez with an ERISA injury benefit plan. The plan includes a mandatory arbitration provision, which states that it is governed by the Federal Arbitration Act (the “FAA”). Employee's claims for work-related personal injuries are within the scope of matters that must be arbitrated under the plan. Vasquez was covered under the plan, received benefits thereunder for his injuries, and signed an acknowledgment form summarizing the arbitration requirement.¹ Vasquez filed his personal injury claim against Western Dairy in the 120th Judicial District Court of El Paso County in November of 2012. Western Dairy responded to the suit with a motion to compel arbitration, which the trial court denied in June of 2013. Western Dairy challenges the denial by both interlocutory appeal and a petition for writ of mandamus.

MANDAMUS OR INTERLOCUTORY APPEAL?

As a preliminary matter, we address whether this court has jurisdiction over the interlocutory appeal or the petition for writ of mandamus. When an arbitration agreement is subject to the FAA, a court of appeals has jurisdiction over an interlocutory appeal challenging the denial of a motion to compel arbitration.² See Tex.Civ.Prac. & Rem.Code Ann. § 51.016 (West Supp.2013). If the FAA does not control, however, the agreement to arbitrate may still be enforceable under Texas common law. In re Swift Transp. Co., Inc., 311 S.W.3d 484, 491 (Tex.App.-El Paso 2009, orig. proceeding). See also L.H. Lacy Company v. City of Lubbock, 559 S.W.2d 348, 351–52 (Tex.1977) (holding that common law arbitration and statutory arbitration are “cumulative” and part of a “dual system”). Mandamus is the appropriate procedure by which we may review the trial court's ruling on a motion to compel arbitration under the common law. See In re Paris Packaging, 136 S.W.3d 723, 727 & n. 7 (Tex.App.-Texarkana 2004, orig. proceeding).

Western Dairy seeks to compel arbitration under the FAA, and alternatively, under Texas common law principles. But as Western Dairy asserted before the trial court, its injury benefit plan specifically provides that “the [FAA] will govern the interpretation, enforcement, and proceedings under this dispute resolution requirement.” Because the plan expressly provides that it will be interpreted under the FAA, we dismiss the original proceeding in mandamus for lack of jurisdiction and consider only the interlocutory appeal.

J.B. Hunt Transport, Inc. v. Hartman, 307 S.W.3d 804, 808 (Tex.App.-San Antonio 2010, no pet.) (refusing to consider enforceability of arbitration agreement under Texas law when the agreement specifically provided that it was to be interpreted and enforced under the FAA).³ Palcko v. Airborne Express, Inc., 372 F.3d 588, 596 (3rd Cir.2004) (arbitration agreement held enforceable under state law where agreement specified that state law would control in the event FAA was inapplicable).

APPLICABLE LAW

A party seeking to compel arbitration under the FAA must establish: (1) the existence of a valid, enforceable arbitration agreement, and (2) that the claims at issue fall within the agreement's scope. In re FirstMerit Bank, 52 S.W.3d 749, 753 (Tex.2001) (orig. proceeding). There is a presumption in favor of arbitration under both state and federal law when ambiguities arise in regard to an arbitration agreement's scope, but there is no such presumption in regard to the agreement's validity. Id. ; Fleetwood Enterprises, Inc. v. Gaskamp, 280 F.3d 1069, 1074 (5th Cir.2002). Validity is instead determined by the requirements of general contract law of the applicable state. Morrison v. Amway Corp., 517 F.3d 248, 254 (5th Cir.2008) ; In re AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex.2005) (orig. proceeding). Once the questions of validity and scope are resolved affirmatively, the court then considers whether any federal statute or policy “renders the claims nonarbitrable.” Mendez v. New Bell General Services, L.P., 727 F.Supp.2d 585, 589 (W.D.Tex.2010), quoting Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir.2008). The party seeking to invalidate an arbitration agreement bears the burden of establishing this matter, as well as other defenses to arbitration, such as unconscionability, fraud, duress, or waiver. Gonzales v. Brand Energy & Infrastructure Services, Inc., No. H–12–1718, 2013 WL 1188136, at *2 (S.D.Tex. Mar. 20, 2013), citing Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 297 (5th Cir.2004). In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.1999), abrogated on other grounds by, In re Halliburton Co., 80 S.W.3d 566, 571 (Tex.2002) (orig. proceeding).

Whether an agreement imposes a duty to arbitrate is a question of law that the appellate court reviews de novo . In re C & H News Co., 133 S.W.3d 642, 645 (Tex.App.-Corpus Christi 2003, orig. proceeding). The trial court's related factual determinations, however, fall under the no-evidence standard. Sidley Austin Brown & Wood, LLP v. J.A. Green Development Corp., 327 S.W.3d 859, 862–63 (Tex.App.-Dallas 2010, no pet.) (analyzing these standards of review for purposes of interlocutory review under Section 51.016 of the Civil Practice and Remedies Code ). This standard is the same as the abuse of discretion standard of review. Id.

THE SCOPE AND VALIDITY OF THE ARBITRATION AGREEMENT

Western Dairy has satisfied its initial burden of demonstrating the existence of a valid arbitration agreement. The injury benefit plan and plan summary set out the terms of the arbitration provision. Vasquez signed an acknowledgement form summarizing the arbitration provision and confirming his receipt of the plan summary. Additionally, there is adequate consideration in support of the arbitration agreement. A summary of the plan provides that the arbitration policy applies to claims brought by either Western Dairy or Vasquez, and that the agreement to arbitrate is binding upon both. Our Supreme Court holds that reciprocal pledges to arbitrate constitute sufficient consideration so long as the employer cannot unilaterally opt out of its promise to arbitrate. In re Halliburton Co., 80 S.W.3d at 569–70 ; J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 228 (Tex.2003). The plan specifies that Western Dairy cannot amend or terminate the arbitration provision with respect to any injury claim arising before any effort to amend or terminate is made. In Odyssey Healthcare, the Texas Supreme Court held that a virtually identical termination and amendment clause did not render the arbitration agreement illusory. In re Odyssey Healthcare, Inc., 310 S.W.3d 419, 424 (Tex.2010) (orig. proceeding). See also In re Halliburton Co., 80 S.W.3d at 569–70. Accordingly, Western Dairy does not have the right to unilaterally opt out of its pledge to arbitrate. Western Dairy has also established that Vasquez's personal injury claim falls within the scope of the arbitration agreement. The acknowledgment form Vasquez signed provides as follows: “I also acknowledge that [the plan] includes a mandatory company policy requiring that claims or disputes relating to the cause of an on-the-job injury ... be submitted to [arbitration].” Accordingly, the only remaining issue is whether any federal statute or policy renders the claim nonarbitrable.

DOES 9 U.S.C. § 1 EXCLUDE VASQUEZ FROM THE FAA'S CONTROL?

Section 2 of the FAA provides that arbitration agreements “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Section 1 sets forth the exclusions to Section 2. 9 U.S.C. § 1. Section 1, however, expressly limits the reach of the FAA by exempting from its coverage the “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”⁴ Id. The Unites States Supreme Court has analyzed section 1, focusing on the residual phrase, “or any other class of workers engaged in foreign or interstate commerce.” Circuit City Stores, Inc., 532 U.S. at 112, 121 S.Ct. 1302.

In Circuit City, the Supreme Court reviewed the Ninth Circuit's holding that the residual phrase exempted all employment contracts from the FAA, including that of a sales counselor at a retail store whose job duties were not closely related to interstate commerce. Id. at 110, 112, 121 S.Ct. 1302. The court held that the Ninth Circuit's interpretation failed to give proper effect to section 1's preceding reference to “seamen” and “railroad employees,” and was thus too broad. Id. at 114, 121 S.Ct. 1302. In reaching this conclusion, the court applied the maxim of ejusdem generis, which stands for the principle that where “general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words.” Id. at 114–15...