Opinion
No. 08-19-00285-CV
08-27-2021
CC RESTAURANT, L.P. and Cafe Central, Appellants, v. Sabina OLAGUE, Appellee.
ATTORNEY FOR APPELLANTS: Chad Baruch, Johnston Tobey Baruch PC, 12377 Merit Drive, Ste. 880, Dallas, TX 75251. ATTORNEY FOR APPELLEE: John P. Mobbs, Attorney at Law, 6350 Escondido Drive, Suite A-14, El Paso, TX 79912.
ATTORNEY FOR APPELLANTS: Chad Baruch, Johnston Tobey Baruch PC, 12377 Merit Drive, Ste. 880, Dallas, TX 75251.
ATTORNEY FOR APPELLEE: John P. Mobbs, Attorney at Law, 6350 Escondido Drive, Suite A-14, El Paso, TX 79912.
Before Rodriguez, C.J., Palafox, and Alley, JJ.
OPINION
YVONNE T. RODRIGUEZ, Chief Justice
Arguing that a valid arbitration agreement exists and covers Sabina Olague's (the "Employee") claims, CC Restaurant, L.P. and Café Central (the "Employer") appeal the trial court's denial of Employer's Motion to Compel Arbitration. We affirm the trial court's ruling.
BACKGROUND
The documents at issue forming a possible Federal Arbitration Act-based arbitration agreement are (1) the "CC Restaurant, LP D/B/A Café Central (‘Employer’) Notice to All Applicants & Employees of Arbitration Agreement" (the "Notice"), and (2) the "Claims Resolution Program" (the "Agreement").
The Notice
The Notice is a two-page document, with the first page in English and the second page in Spanish; only the English version was entered into the record. The Notice references the separate Agreement indicating both the Employee and the Employer are bound by the Agreement to arbitrate, as provided in the Agreement, by virtue of the Employee's continued employment. The Notice includes a space to indicate an effective date for when disputes will begin to be arbitrated, which is blank, and a signature line for the Employee only, indicating the Employee's agreement to "immediately read and comply with the Agreement on and after the Effective Date." The Employee signed the Notice, printed her name below, and dated it June 19, 2013.
The Agreement
The Agreement referenced in the Notice is entitled "Claims Resolution Program" and details the covered claims, procedures, and terms of the arbitration process. It specifies the Employee is agreeing to arbitrate all legal claims against the Employer "in consideration for employment with the Company as well as for any and all wages and benefits paid by the Company." At the trial court hearing on the Motion to Compel Arbitration, the Employer confirmed that it gave the Employee nothing of value to agree to arbitration, other than continuing her at-will employment.
At the end of the arbitration procedure term, the Agreement states:
The Parties expressly acknowledge and understand that by signing this Agreement, each is affirming that he/she/it has read and understands this arbitration provision; each is agreeing to be bound by it; each is waiving its respective rights to have a Dispute between or among them adjudicated by a court or by a jury; and each is waiving its respective rights to have a Dispute between or among them proceed as a class, collective, or consolidated action or arbitration.
It further states the Agreement cannot be modified except in writing signed by both parties and it supersedes any other agreements between the parties, whether written or oral. A signature line with a title and date for the Employer, and a signature line with a witness signature line and date for the Employee follow. Here, the Employee signed the Agreement and dated it June 19, 2013, without a witness signature. The Employer did not sign the Agreement.
In late 2016, the Employee was terminated, and in 2019 she filed an action against the Employer for sex discrimination and retaliation. The Employer filed a Motion to Compel Arbitration. The trial court denied the motion and this appeal ensued.
DISCUSSION
Issue
Appellant's sole issue presents two questions. Does a valid arbitration agreement exist, in light of the documents described above and the testamentary evidence presented to the trial court? And if so, did the trial court err in denying the Employer's motion to compel arbitration?
Standard of Review
We review the trial court's ruling based on an abuse of discretion standard: the trial court "clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." In re Bunzl USA, Inc. , 155 S.W.3d 202, 207 (Tex.App.—El Paso 2004, orig. proceeding). We review the trial court's purely legal determinations de novo ; any clear failure to correctly determine the law constitutes an abuse of discretion. Id. Accordingly, if a valid arbitration agreement covering the Employee's claim exists, then the trial court abused it discretion in failing to compel arbitration. See Firstlight Federal Credit Union v. Loya , 478 S.W.3d 157, 161 (Tex.App.—El Paso 2015, no pet.).
Applicable Law
As the party moving to compel arbitration, the Employer must prove a valid arbitration agreement exists and the Employee's claims at issue fall within the scope of that agreement. Rachal v. Reitz , 403 S.W.3d 840, 843 (Tex. 2013) ; In re Kellogg Brown & Root, Inc. , 166 S.W.3d 732, 737 (Tex. 2005). The trial court may decide whether to compel arbitration on the basis of the record and must hold an evidentiary hearing, as needed, to resolve any material disputed facts. Jack B. Anglin Co., Inc. v. Tipps , 842 S.W.2d 266, 269 (Tex. 1992). Turning to the case at hand, it is undisputed that the Employee's claims are covered if a valid arbitration agreement exists.
For an arbitration agreement to be valid, it must contain all of the state law-required contract elements. See J.M. Davidson, Inc. v. Webster , 128 S.W.3d 223, 227 (Tex. 2003) ; see also First Options of Chicago, Inc. v. Kaplan , 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). Here, "a binding contract requires ‘(1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party's consent to the terms; and (5) execution and delivery of the contract with intent that it be mutual and binding.’ " In re Capco Energy, Inc. , 669 F.3d 274, 279–80 (5th Cir. 2012) (quoting Greater Houston Transp. v. Phillips , 801 S.W.2d 523, 525 (Tex. 1990) ); see also Lujan v. Alorica , 445 S.W.3d 443, 448 (Tex.App.—El Paso 2014, no pet.). Whether the parties require a signature on a contract to show assent and make it mutually binding is a case-specific determination based on the facts related to the parties’ intent, which is often evidenced in the contract language itself. Tricon Energy Ltd. v. Vinmar Int'l, Ltd. , 718 F.3d 448, 454 (5th Cir. 2013) ; In re Bunzl USA, Inc. , 155 S.W.3d at 211.
In Bunzl , we held an unsigned signature line plus a provision requiring modifications to the contract be written and signed evidenced an intent for the contract to be binding only upon signing. In re Bunzl USA, Inc. , 155 S.W.3d at 211 ; Lujan , 445 S.W.3d at 448. When a contract, as the Agreement in this case, specifically requires the parties’ signatures for the parties to be bound to mutual promises and only allows for written modifications to the contract signed by both parties, the trial court does not err in refusing to compel arbitration when one party fails to sign. See In re Bunzl USA, Inc. , 155 S.W.3d at 205-06 ; see also Huckaba v. Ref-Chem, L.P. , 892 F.3d 686, 690 (5th Cir. 2018).
The Agreement
In the present case, just as in Bunzl and Huckaba , even though the Employer created the Agreement, maintained it in its records, and moved to compel arbitration, the Agreement unequivocally required both parties’ signatures for each to be bound to arbitrate their claims against the other when it said "by signing this Agreement, each is affirming that he/she/it has read and understands this arbitration provision; each is agreeing to be bound by it[.]" See also Wright v. Hernandez , 469 S.W.3d 744, 758 (Tex.App.—El Paso 2015, no pet.) (while a signature is not necessarily required for a contract's enforceability, if the terms of a contract make it clear that one is required, "a party's failure to sign the agreement will render the agreement unenforceable"); Lujan , 445 S.W.3d at 448–49 (when a contract expressly requires a signature prior to it becoming binding, "the existence of the instrument is destroyed by the other party's failure to sign the instrument"); Copeland v. KB Home , No. Civ.A.3:03-CV-227-L, 2004 WL 1778949, at *3 (N.D. Tex. Aug. 4, 2004, order) (the "plain, unequivocal language of the arbitration provision in question establishes that the parties intended and expected the Agreement to be initialed and signed as a condition precedent for the formation of an arbitration agreement," and the employer's failure to do so rendered the agreement unenforceable).
In the present case, the Agreement's language specified the Employer's signature was required for the Employer to be bound to arbitrate its claims against the Employee. The Employer did not sign the Agreement, however the Employee did, therefore, only the Employee agreed to arbitration. Huckaba , 892 F.3d at 691 ; Mendivil v. Zanios Foods, Inc. , 357 S.W.3d 827, 828-29 (Tex.App.—El Paso 2012, no pet.) ; Hi Tech Luxury Imports, LLC v. Morgan , No. 03-19-00021-CV, 2019 WL 1908171, at *2 (Tex.App.—Austin Apr. 30, 2019, no pet.) (memo op.)(holding the trial court did not err in denying the employer's motion to arbitrate where the employer failed to sign and the contract specified the "signature below" attesting to the terms of the agreement, namely, mutual promises to arbitrate.).
The Notice
The Employer asserts the Notice alone constitutes an arbitration agreement because the Employee continued to work after receiving the Notice—which states both parties are bound by the Agreement when the Employee "submit[s] an application or start[s] or continue[s] work for the Employer after the Effective Date, as provided in the Agreement." While that argument may evidence the Employee's agreement to arbitrate her claims against the Employer, the Notice itself provides no consideration on the part of the Employer for an agreement to arbitrate other than continuing employment, which is alone insufficient. There is no mutuality in its terms; instead, the Notice is predicated on the Agreement: it indicates the parties are bound by the Agreement as provided for in the Agreement. And when the Agreement specifies the "[p]arties expressly acknowledge and understand that by signing this Agreement, each is affirming that he/she/it has read and understands this arbitration provision; each is agreeing to be bound by it ...," it is clear that by not signing the Agreement, the Employer is not agreeing to be bound to arbitrate its disputes against the Employee. Thus, there is no mutuality.
Our decision in Firstlight viewed the employee's continuing at-will employment following the notice of an arbitration policy as acceptance of the arbitration policy; the employee accepted the arbitration policy by virtue of continuing to work at Firstlight even though she did not sign the agreement. Firstlight , 478 S.W.3d at 170. However, unlike here, the arbitration agreement in Firstlight contained sufficient consideration in the Employer and the Employee's mutual promises to arbitrate. Id. The elements of acceptance by the parties and consideration must not be confused or equated to one another.
Urging us to disregard Employer's signature as a condition precedent to this Agreement, the Employer relies on In re Halliburton Co. , 80 S.W.3d 566, 568-69 (Tex. 2002). The Employer posits its adoption of the Agreement is sufficient consideration for the Notice to constitute an agreement to arbitrate disputes irrespective of whether they signed the Agreement. In Halliburton , like in Firstlight , the employer mutually promised to arbitrate disputes without signing the arbitration document because it did not make its signature a condition precedent to the parties’ mutual promise to arbitrate. Id. While the employer in Halliburton could modify or end the arbitration program, it had to first provide employees a notice period and any changes would only be applied prospectively. Id. at 569-70. The court upheld the arbitration agreement because although the employer could unilaterally make changes to the policy, it was limited in so doing by the notice and prospective application provisions, and more importantly, both parties would be bound by the changes —which the court found was sufficient consideration to render the agreement valid. Id. at 570. Here, the Notice references the separate Agreement indicating both the Employee and the Employer are bound by the Agreement to arbitrate when the Employee "submit[s] an application or start[s] or continue[s] work for the Employer after the Effective Date, as provided in the Agreement." The fact the Notice recites "as provided in the Agreement" still makes the Employer's claims against the Employee subject to arbitration only when the Employer executes the Agreement, which it did not.
The Employer cannot successfully argue because Halliburton did not require the employer to sign the arbitration agreement, the Employer here does not have to sign this arbitration agreement for it to be held valid. In this Agreement, there is no mutual promise to arbitrate between the Employer and the Employee. Further, the Employer did not give the Employee anything of value, besides continuing at-will employment and payment, in exchange for her agreement to arbitrate future disputes. Therefore, the purported agreement to arbitrate fails for lack of consideration. We overrule the Appellant's sole issue on appeal.
Holding
The trial court reasonably concluded the Employer did not establish the existence of a valid arbitration agreement. Accordingly, it did not abuse its discretion in refusing to compel arbitration.
CONCLUSION
We affirm the trial court's ruling.
Alley, J., Dissenting
DISSENT
JEFF ALLEY, Justice
What happens when an employer requires its applicants or employees to sign an agreement to arbitrate disputes, the employee signs the agreement but the employer does not, and then the employer seeks to enforce the agreement? One might think that could never happen, but a host of reported cases and the record before this Court says otherwise. Here, the employee (Sabrina Olague) signed two documents presented to her by the employer (Café Central) acknowledging her agreement to arbitrate certain disputes, but Café Central never put its signature on the agreement. Nonetheless, it now seeks to compel arbitration of an employment dispute between the parties. One approach to the question is to ask if the shoe were on the other foot, would a court enforce the arbitration agreement? That is, if Sabina Olague sought to compel arbitration, could Café Central defeat the request by claiming it never signed the operative document?
See Huckaba v. Ref-Chem, L.P. , 892 F.3d 686, 690 (5th Cir. 2018) ; SK Plymouth, LLC v. Simmons , 605 S.W.3d 706, 711 (Tex.App.--Houston [1st Dist.] 2020, no pet.) ; Hi Tech Luxury Imports, LLC v. Morgan , No. 03-19-00021-CV, 2019 WL 1908171, at *1 (Tex.App.--Austin Apr. 30, 2019, no pet.) ; Wright v. Hernandez , 469 S.W.3d 744, 756 (Tex.App.--El Paso 2015, no pet.) ; In re Bunzl USA, Inc. , 155 S.W.3d 202 (Tex.App.--El Paso 2004, orig. proceeding).
The two documents at issue are a "Claims Resolution Program" which details the arbitration program, and which Olague signed, but Café Central did not. The other document is a "Notice of Arbitration Agreement" (the "Notice") with language stating that if Olague submitted an application, or worked after the "effective date," she and the employer were bound by the arbitration program described in the Claims Resolution Program. I could agree that if the Claims Resolution Program were the only document in the case, Café Central would not be bound to arbitrate and the mutuality of the promises would evaporate (then to, the enforceability of the arbitration clause). But based on the language in the Notice, coupled with the act of Sabina Olague appearing for work (and more importantly, Café Central allowing her to show up for work), I believe both parties are bound to the arbitration agreement. Accordingly, I respectfully dissent.
As the majority ably notes, the "Claims Resolution Program" document by its terms obligates the parties to actually sign the document--and for reasons unfathomable to me, Café Central did not do that. But the other document in the case--the Notice--allows for another avenue to find a mutually enforceable promise to arbitrate. That document begins this way:
CC RESTAURANT, LP D/B/A CAFE CENTRAL (‘EMPLOYER’) NOTICE TO ALL APPLICANTS & EMPLOYEES OF ARBITRATION AGREEMENT
You (Employee or applicant) and the Employer agree to and are bound by the current Claims Resolution Program (‘Agreement’), and waive any right to a jury trial and agree to final and binding arbitration of all legal disputes that could otherwise be brought as a lawsuit, when you submit an application or start or continue work for the Employer after the Effective Date, as provided in the Agreement.
On and after 12:01 a.m. on the Effective Date of ____, 2013, all legal ‘Disputes’ between you and the Employer (as defined in the Agreement) will be arbitrated
....
Out of this document, three concepts shape my view of this case.
First, when a notice is given to employees stating that their continued employment constitutes assent to an arbitration agreement, the agreement is enforceable. In re Halliburton Co. , 80 S.W.3d 566, 568 (Tex. 2002) ("Yet we made clear that when an employer notifies an employee of changes to the at-will employment contract and the employee ‘continues working with knowledge of the changes, he has accepted the changes as a matter of law.’ "), quoting Hathaway v. General Mills, Inc. , 711 S.W.2d 227, 229 (Tex. 1986). This Court made the same point in Firstlight Federal Credit Union v. Loya , 478 S.W.3d 157, 168 (Tex.App.--El Paso 2015, no pet.). And the Texas Supreme Court more recently reiterated the point in In re Copart, Inc. , 619 S.W.3d 710 (Tex. 2021) (per curiam). Here, Olague acknowledged the enforceability of the agreement by continuing to work after being informed that in doing so, she agreed to arbitrate certain disputes. Café Central acknowledged the enforceability of the same agreement by allowing Olague on its premises to perform work, (and presumably paying her for her services).
In Huckaba v. Ref-Chem, L.P. , 892 F.3d 686, 690 (5th Cir. 2018), the court appropriately concluded that watered down language only stating that the employee's continued employment constitutes consideration for the agreement, could not overcome an unexecuted document which by its terms required execution by both parties. The difference here is that the Notice language explicitly states that continued employment binds both employee and employer to the terms of the arbitration agreement. In that regard, the language of the Notice is distinguishable from that in Huckaba. And that kind of language was entirely missing in this Court's opinion in In re Bunzl USA, Inc. , 155 S.W.3d 202 (Tex.App.--El Paso 2004, orig. proceeding). That being said, the distinctions drawn in Huckaba, Bunzl , and this Court's other opinion, Firstlight Federal Credit Union , are fine ones and a party operates at its own peril by failing to strictly attend to the details of its own documentation, particularly when asking the other party to waive a significant right like the right to a jury trial.
The Notice document was signed by Olague in June of 2013 and she alleges she was discharged by Café Central in December 2016.
The second important factor is that the Notice explicitly states that the "Employer agree[s] to and [is] bound by the current Claims Resolution Program (emphasis added)." The language in the Notice, coupled with Olague reporting to work and Café Central allowing Olague to work, precludes either party from disavowing the agreement. Both parties have given something in exchange for the promise to arbitrate, and both parties have said in the Notice that they are bound by the Claims Resolution Program. So, whether Café Central actually signed the Claims Resolution Program is beside the point. The Notice--along with the actions that both parties took pursuant to the Notice--evidences adoption of the terms in the Claims Resolution Program. We said as much in Firstlight , where the employee was presented with a similar "notice" document, but the employee failed to sign the form, even though the form stated "[Y]ou are required to print the last page, sign and date, and return [the] completed [form]." Firstlight , 478 S.W.3d at 162-63. Despite the form being unsigned, this Court enforced it based on the conduct of the employee appearing for work. Id. at 169-70. Obtaining a signature was "an alternative method of agreement[.]" Id.
By contrast, the Claims Resolution Program has different verbiage. It states "By accepting employment with the company, or by continued employment with Company, each employee agrees to resolve all legal claims against the Company through the arbitration process...." So unlike the Notice, the Claims Resolution Program does not tie the Employer's agreement to be bound to the continued employment of the employee. Given this difference in language, and our obligation to harmonize and give effect to all terms of a contract, this added language in the Notice must mean something, and I conclude it provides an alternate means to bind the parties to the substantive terms of the arbitration agreement as contained in the Claims Resolution Program. See Firstlight Fed. Credit Union , 478 S.W.3d at 169 ("Standard contract principles dictate that in construing a contract, the court ‘must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless.’ "), quoting Italian Cowboy Partners, Ltd. v. Prudential Ins. Co. of Am. , 341 S.W.3d 323, 333 (Tex. 2011).
The final piece is that the Notice adopts the Claims Resolution Program which contains the essential terms of an arbitration agreement. It outlines the types of disputes that are to be governed by arbitration and Olague's employment discrimination allegations fall within the class of disputes to be arbitrated. It also contains a comprehensive procedure governing arbitration. And our jurisprudence commands that mandamus is the appropriate remedy to enforce binding arbitration agreements. See e.g. In re Dallas Peterbilt, Ltd., L.L.P. , 196 S.W.3d 161, 163 (Tex. 2006) (enforcing arbitration policy similarly presented through a notice to applicants, followed by the applicant's acceptance of the job); Jack B. Anglin Co. v. Tipps , 842 S.W.2d 266, 272-73 (Tex. 1992) (noting there is no adequate remedy by appeal for a party denied its contracted-for arbitration right under the FAA).
For these reasons, I would sustain Appellants’ Issue and enter an order compelling arbitration.