Opinion
Civil Action No 4:21-cv-02730
2022-09-29
Brenda LOPEZ DE LEON, Plaintiff, v. SANDERSON FARMS INC., Defendant.
Brent Sterling Phelps, William Nicholas Haacker, Tej R. Paranjpe, PMR Law - Paranjpe Mahadass Ruemke LLP, Houston, TX, for Plaintiff. Zachary T. Mayer, Gerardo Adrian Galvan, Joseph Edward Johnson, Mayer LLP, Dallas, TX, for Defendant.
Brent Sterling Phelps, William Nicholas Haacker, Tej R. Paranjpe, PMR Law - Paranjpe Mahadass Ruemke LLP, Houston, TX, for Plaintiff. Zachary T. Mayer, Gerardo Adrian Galvan, Joseph Edward Johnson, Mayer LLP, Dallas, TX, for Defendant.
MEMORANDUM AND ORDER COMPELLING ARBITRATION
Charles Eskridge, United States District Judge
The motion by Defendant Sanderson Farms Inc to stay litigation and compel arbitration is granted. Dkt 10.
1. Background
Sanderson Farms Inc (Processing Division) processes and packages chicken. Dkt 1 at ¶ 12-13. Plaintiff Brenda Lopez de Leon began working at its facility in Bryan, Texas, on February 2, 2018. Id at ¶ 13. She was injured on September 30, 2020, when her hand became lodged in a processing machine while she attempted to clean it. Dkt 1 at ¶¶ 12-15.
Lopez de Leon filed this action against Sanderson Farms Inc, asserting claims for negligence; premises liability; negligent hiring, training, supervision, and retention; and gross negligence. Id at ¶¶ 10, 19-37. Sanderson Farms Inc (referred to here as SFI) is the parent company of—and a separate legal entity from—Sanderson Farms (Processing Division) (referred to here as SFPD). The parties dispute which entity was the actual employer, but resolution of that issue doesn't appear to bear on resolution of the pending motion. Compare Dkt 1 at ¶ 11, with Dkt 19-1 at 128.
SFI moves to stay litigation and compel arbitration pursuant to an agreement contained within what's titled the Sanderson Farms Inc Texas Injury Benefit Plan. Dkt 27-1 at 1-62. The relevant documents are outlined next. A description of a dispute between the parties regarding the existence and authenticity of the documents then follows.
a. Relevant documents
SFI maintains a Texas Injury Benefit Plan with an effective date of January 1, 2012. Multiple copies of this document were submitted during the briefing. But only one included an executed signature page. See Dkts 10-1 (Plan), 19-1 at 3-61 (same) & 27-1 at 1-62 (executed Plan). That document will be cited as the operative version of the Plan.
The Plan contains an arbitration agreement attached as Appendix A. Dkt 27-1 at 57-60. It states in pertinent part:
The Employer hereby adopts a mandatory company policy requiring that the following claims or disputes must be submitted to final and binding arbitration under this Appendix: (A) any legal or equitable claim or dispute relating to enforcement or interpretation of the arbitration provisions in a Receipt, Safety Pledge and Arbitration Acknowledgement form or this Appendix; and (B) any legal or equitable claim by or with respect to an Employee for any form of physical or psychological damage, harm or death which relates to an accident, occupational disease, or cumulative trauma (including, but not limited to, claims of negligence or gross negligence).Dkts 27-1 at 57 (Appendix A of Plan).
SFI also maintains a document titled Summary Plan Description with an effective date of January 1, 2012. Dkt 19-1 at 62-125. An arbitration agreement nearly identical to Appendix A of the Plan is attached as Appendix A to the Summary. Compare Dkt 27-1 at 57-60 (Appendix A of Plan), with 19-1 at 117-20 (Appendix A of Summary). New employees of both SFI and SFPD receive the Summary with the attached arbitration agreement. Dkt 19-1 at 129. The Summary is available in Spanish upon request. Dkt 19-1 at 62.
In addition to the Summary, new employees also receive the Receipt, Safety Pledge and Arbitration Acknowledgement referenced in the arbitration agreements and attached to the Plan and the Summary as Appendix C. Dkts 27-1 at 62 (Appendix C of Plan) & 19-1 at 122 (Appendix C of Summary). Spanish speakers receive a Spanish version of this Acknowledgement. Dkt 19-1 at 123 (Appendix C Spanish version) & id at 129 (Luna declaration).
The translated Spanish Acknowledgement states in pertinent part:
I, the undersigned, hereby acknowledge with my signature that I have received and read (or had the chance to read) the Summary Description of the Plan (the "SDP") of the Texas de Sanderson Farms Inc Employee Benefit Plan for Occupational Injuries, effective as of 1 January 2012.It also includes a summary of the arbitration agreement, stating in part:
I hereby acknowledge that this SPD includes a mandatory policy of the company requiring that claims and disputes related to any injury taking place at the workplace (that cannot be otherwise resolved between my Employer and I) must be submitted before an arbitrator, instead of a court or jury.Dkt 16-6.
Both the employee and an employer representative must sign the Acknowledgement. Ibid.
b. Dispute over existence and authenticity
Lopez de Leon purports to create material factual issues merely from disputes she raises about the order in which the parties submitted the foregoing documents. But the only thing that matters at the end of the day is proper ascertainment of the actual, in-force documents pertinent to Lopez de Leon's employment. And there's no material dispute of fact in that respect.
SFI originally presented with its motion to stay litigation and compel arbitration a copy of the Spanish Acknowledgement signed by both Lopez de Leon and an employer representative dated February 2, 2018. Dkt 10-2. It also attached an unexecuted copy of the Plan. Dkt 10-1.
Lopez de Leon challenged the motion on the grounds that SFI hadn't met its burden to show a valid agreement between the parties. Dkt 16. She attached several documents to her response. One was her declaration in which she stated that she's fluent in Spanish and doesn't speak English. She there contended that she never received the Plan or the arbitration agreement attached to the Plan. But she did admit that she signed the Spanish Acknowledgement. Dkt 16-1 at 1-2. Lopez de Leon additionally included her executed Spanish Acknowledgement and a translated version of that Acknowledgement. Dkts 16-2 & 16-6.
SFI presented in reply a number of other documents. These included (i) a declaration by Anthony Burks, who at the time held the title Administration & Risk Manager, Dkt 19-1 at 2; (ii) a second unsigned copy of the Plan, id at 3-60; (iii) a page that indicates the availability of a Spanish version of the Summary, id at 61; (iv) a copy of the Summary, id at 62-125; (v) a declaration by Yesenia Luna, who at the time held the title Field Employee Relations Manager at SFPD, id at 128-29; and (vi) a copy of Lopez de Leon's driver's license, id at 144.
Lopez de Leon was granted leave to file a surreply based on these new documents. Dkt 21. She attached nothing further, while arguing the invalidity of the arbitration agreement for reasons addressed below. Dkt 22.
Still not before the Court at time of argument on the motion was an executed copy of the Plan. SFI was ordered to produce such a copy or otherwise demonstrate the document's binding nature. It was also ordered to file an affidavit regarding whether the Plan was in effect at the time of Lopez de Leon's employment and injury. Dkt 26.
SFI supplemented its motion with an executed copy of the Plan. Dkt 27-1 at 1-62. It also included what's designated as Amendment No 2, which altered the effective date of the Plan from November 1, 2011, to January 1, 2012. Id at 63-65. And it attached another affidavit by Luna stating that both the Plan and the Summary were in effect at the time Lopez de Leon began her employment and when she sustained her injury. Id at 3.
Despite what would seem dispositive evidence of the arbitration agreement's existence, Lopez de Leon remained steadfast in her opposition to the motion to stay and compel arbitration. She noted in a discovery letter that the signature page of the unexecuted Plan is different than the signature page of the executed Plan. She also took exception to the fact that SFI didn't attach Amendment No 2 to its original filings, didn't attach Amendment No 1 to any of its filings, and didn't address whether other amendments have been made. Dkt 28. Lopez de Leon thus renewed her opposition to the underlying motion and demanded a jury trial on all issues related to "the making of the arbitration agreement." Dkts 30 & 31.
SFI further responded by attaching what's designated as Amendment No 1, which is substantively the same as Amendment No 2. Compare Dkt 29-1 (Amendment No 1), with Dkt 27-1 at 63-65 (Amendment No 2). SFI explained that Amendment No 2 simply clarified that the Plan took effect January 1, 2012, instead of November 1, 2011. Dkt 29 at 2. SFI counsel also certified that Amendment No 2 was the last amendment to the Plan. Dkt 29.
With respect to all of this, it was ordered that Lopez de Leon could conduct a limited, one-hour deposition of a SFI corporate representative pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure. Dkt 33. Lopez de Leon objected to the order and declined to conduct the deposition. Dkt 34.
2. Legal standard
Section 3 of the Federal Arbitration Act states:
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.9 USC § 3.
When deciding whether to enforce an arbitration agreement, the court first determines whether a valid agreement to arbitrate exists. It then considers whether the subject dispute falls within the scope of that agreement. Edwards v. Doordash Inc., 888 F.3d 738, 743 (5th Cir. 2018). The court must compel arbitration if both elements are satisfied unless there is a federal statute or policy to the contrary. See Sherer v. Green Tree Servicing LLC, 548 F.3d 379, 381 (5th Cir. 2008).
This analytical framework is slightly altered where an arbitration agreement includes what's known as a delegation clause. Such a provision transfers "the court's power to decide arbitrability questions to the arbiter." Kubala v. Supreme Production Services Inc., 830 F.3d 199, 202 (5th Cir. 2016). And it constitutes "an additional, antecedent agreement the party seeking arbitration asks the federal court to enforce." Rent-A-Center West Inc. v. Jackson, 561 U.S. 63, 69, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010). When such a clause is thus present, a court must first assess whether the parties entered an agreement to arbitrate.
Resolution of disputes over the "very existence" of an arbitration agreement is solely a decision for a court and cannot be delegated through a delegation clause. Newman v. Plains All Am. Pipeline, LP, 23 F.4th 393, 398 (5th Cir. 2022) (emphasis in original) (hereafter Newman I). Questions regarding the existence of an arbitration agreement include disputes "about whether the Plaintiff[ ] must arbitrate" with the defendant because those disputes are over "the existence of an agreement to arbitrate." Newman v. Plains All Am. Pipeline, LP, 2022 WL 1114407 at *2 (5th Cir. 2022, per curiam) (emphasis in original) (hereafter Newman II).
Recent Fifth Circuit guidance explains, "When a court decides whether an arbitration agreement exists, it necessarily decides its enforceability between parties" as well. Newman I, 23 F.4th at 398. Even when a delegation clause is present, enforceability questions will still be for a court—not an arbitrator. This is because the questions of whether an arbitration agreement exists and whether the agreement is enforceable between the parties "are two sides of the same coin." Ibid.
3. Analysis
Lopez de Leon contests the existence and validity of the arbitration agreement. See Dkts 16 (response to motion), 22 (surreply) & 30 (response to supplement by SFI). She also demands a jury trial on the issue pursuant to Section 4 of the Federal Arbitration Act, 9 USC § 1 et seq. Dkt 31.
It's well beyond any reasonable dispute of fact that Lopez de Leon entered into an arbitration agreement containing a valid delegation clause. That conclusion is dispositive, meaning in turn that she isn't entitled to a jury trial. This action will thus be stayed, with Lopez de Leon required to pursue her claims in arbitration.
a. Whether the parties entered an agreement to arbitrate
Lopez de Leon argues that the parties never reached an agreement to arbitrate. "Determining whether there is a valid arbitration agreement is a question of state contract law and is for the court." Huckaba v. Ref-Chem. LP, 892 F.3d 686, 688 (5th Cir. 2018). And the parties agree that Texas law governs this dispute. See Dkts 10 at 5-6 (citing Texas law in this regard), 16 at 6-16 (same); see also Dkt 27-1 at 58.
"Texas has no presumption in favor of arbitration when determining whether a valid arbitration agreement exists." Huckaba, 892 F.3d at 688, citing J.M. Davidson Inc v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). An employer attempting to enforce an arbitration agreement must therefore "show the agreement meets all requisite contract elements." J.M. Davidson, 128 S.W.3d at 228. Those elements are (i) an offer, (ii) an acceptance in strict compliance with the terms of the offer, (iii) a meeting of the minds, (iv) each party's consent to the terms, and (v) execution and delivery of the contract with intent that it be mutual and binding. Huckaba, 892 F.3d at 689 (quotation marks and citation omitted). The Fifth Circuit observes, "It is a widely accepted principle of contracts that one who signs or accepts a written instrument will normally be bound in accordance with its written terms." American Heritage Life Insurance Co v. Lang, 321 F.3d 533, 538 (5th Cir. 2003). "Absent fraud, misrepresentation, or deceit, a party is bound by the terms of the contract he signed, regardless of whether he reads it or believed it had different terms." CBE Group Inc. v. Lexington Law Firm, 993 F.3d 346, 351 (5th Cir. 2021), quoting In re McKinney, 167 S.W.3d 833, 835 (Tex. 2005) (quotation marks omitted).
Lopez de Leon specifically contends that she didn't receive adequate notice of the arbitration agreement. Dkt 16 at 10-16. But she admits that she signed the Spanish Acknowledgement. Dkt 16-1 at 2; see also Dkt 16-2 (signed Spanish Acknowledgement). By signing that document, she affirmed that she read (or had the chance to read) the Summary, to which the arbitration agreement was attached. Dkts 16-1 & 19-1 at 117-20. She also explicitly acknowledged that the Summary includes a mandatory policy requiring claims related to any injury taking place at the workplace be submitted to arbitration. Dkt 16-1 at 2; see also Dkt 16-2 (signed Spanish Acknowledgement).
Moreover, the arbitration agreement attached to the summary is almost identical to the arbitration agreement attached to the Plan. Compare Dkt 27-1 at 57-60 (Appendix A of Plan), with 19-1 at 117-20 (Appendix A of Summary). And the Summary warns, "If any conflict arises between the information contained in this booklet and the provisions of the formal [Plan] document, the [Plan] document will control." Dkt 19-1 at 73. SFI has additionally submitted an executed copy of the Plan that includes the arbitration agreement, and it has affirmed that the Plan was in effect at the time of Lopez de Leon's employment and injury. Dkt 27-1 at 2-3 (second Luna declaration) & id at 1-62 (executed Plan).
In short, there's no question that Lopez de Leon received adequate notice of the arbitration agreement. The parties thus entered into an agreement to arbitrate. The Texas Supreme Court in In re US Home Corp. plainly held, "Like any other contract clause, a party cannot avoid an arbitration clause by simply failing to read it." 236 S.W.3d 761, 764 (Tex. 2007). Likewise, it has also held that a party who signs an arbitration agreement with opportunity to read it is charged with knowing its contents. EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex. 1996); see also In re Halliburton Co., 80 S.W.3d 566, 568-69 (Tex. 2002) (holding that employee accepted arbitration clause despite claim he didn't understand it); Jones v. Halliburton Co., 625 F. Supp. 2d 339, 345 (S.D. Tex. 2008) (holding that employee who signed employment agreement containing arbitration provision "is presumed to have read the provision"). An arbitration agreement exists between Lopez de Leon and her employer.
b. Enforceability of the arbitration agreement
Lopez de Leon argues that even if she did enter into an agreement to arbitrate, the agreement is unconscionable and therefore unenforceable. See Dkt 16.
The arbitration agreement contains a delegation clause. A term in the Acknowledgement states in bold font, "I hereby acknowledge that arbitrators, and not a judge or jury, have exclusive authority to resolve any type of conflicts related to the enforcement of arbitration proceedings." Dkt 16-6. And the arbitration agreement attached to both the Plan and the Summary also states in bold font:
The arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this agreement including, but not limited to, any claim that all or any part of this agreement is void or voidable.Dkts 27-1 at 58 (Appendix A of Plan) & 19-1 at 118 (Appendix A of Summary).
Under Newman I, "deciding an arbitration agreement's enforceability between parties remains a question for the courts." 23 F.4th at 398. This is so here, even though the parties appear to have included enforceability questions in the above delegation clause. "[F]ederal courts do not consider general challenges to the validity of the entire contract" because "an arbitration agreement is severable from the underlying contract." Edwards, 888 F.3d at 744; see also Rent-A-Center, 561 U.S. at 71, 130 S.Ct. 2772. Only arguments by Lopez de Leon regarding unconscionability will be addressed to the extent that they're directed at the arbitration agreement itself. Ibid.
To this end, Lopez de Leon contends that enforcement of the delegation clause in the arbitration agreement attached to the Summary and the Plan is procedurally unconscionable because it substantially differs from the clause contained in the Acknowledgment. Dkt 22 at 7-8. The unconscionability of a delegation clause is a matter of state law. See Kane v. Yancy, 2015 WL 9598897, *4 (S.D. Tex.), citing Carter v. Countrywide Credit Industries Inc., 362 F.3d 294, 301 (5th Cir. 2004). Under Texas law, a delegation clause "is unenforceable if it is procedurally unconscionable, substantively unconscionable, or both." Royston, Rayzor, Vickery, & Williams LLP v. Lopez, 467 S.W.3d 494, 501 (Tex. 2015). "Procedural unconscionability relates to the actual making or inducement of the contract." TMI Inc. v. Brooks, 225 S.W.3d 783, 792 (Tex. App.—Houston [14th Dist], pet denied). "This aspect of unconscionability focuses on the facts surrounding the bargaining process." Ibid.
Nothing in evidence about the bargaining process renders the delegation clause procedurally unconscionable. As detailed above, Lopez de Leon had sufficient notice of the arbitration agreement and the delegation clause contained within it. By signing the Acknowledgement, Lopez de Leon affirmed that she read or had the chance to read the arbitration agreement, and she accepted its requirements—including the delegation clause. Dkt 16-6.
Lopez de Leon argues that the delegation clause in the Acknowledgement should be construed as narrower than the one in the arbitration agreement attached to the Summary and the Plan. Dkt 16 at 7. That's irrelevant for two reasons. First, the Acknowledgement itself points to the arbitration agreement attached to the Summary, which in turn points to the arbitration agreement attached to the Plan—both of which contain the more detailed delegation clause. Dkts 19-1 at 118 (Appendix A of Summary) & 27-1 at 58 (Appendix A of Plan). Second, while the Acknowledgement is stated more briefly, it's stated more generally in plain terms that cover the quoted language above from the arbitration agreement.
Lopez de Leon also attempts to draw dispute as to whether she was provided an English or Spanish version of the Summary. Dkt 22 at 6. But it's uncontested that the first page of the English version states in both English and Spanish, "If you have difficulty understanding any part of this booklet, or would like a Spanish version of this booklet, contact the Risk Manager." Dkt 19-1 at 62.
All of this forecloses any claim that enforcement of the delegation clause contained within the arbitration agreement is procedurally unconscionable. The delegation clause will be treated as valid, as Lopez de Leon plainly had notice of that clause in the arbitration agreement and wasn't misled by the terms of the Acknowledgment.
Because the delegation clause is enforceable, and no other part of the arbitration agreement was challenged as unenforceable, the arbitration agreement is enforceable.
c. Demand for jury trial
Lopez de Leon cites Section 4 of the Federal Arbitration Act in support of her jury-trial demand on issues related to the making of the arbitration agreement. Dkt 31. That provision states in pertinent part:
If the making of the arbitration agreement or the failure, neglect, or refusal to perform the same be in issue, the court shall proceed summarily to the trial thereof. If no jury trial be demanded by the party alleged to be in default, or if the matter in dispute is within admiralty jurisdiction, the court shall hear and determine such issue. Where such an issue is raised, the party alleged to be in default may, except in cases of admiralty, on or before the return day of the notice of application, demand a jury trial of such issue, and upon such demand the court shall make an order referring the issue or issues to a jury in the manner provided by the Federal Rules of Civil Procedure, or may specially call a jury for that purpose.9 USC § 4 (emphasis added).
The Fifth Circuit holds that it's "well-established that a party to an arbitration agreement cannot obtain a jury trial merely by demanding one." American Heritage Life Insurance Co. v. Orr, 294 F.3d 702, 710 (5th Cir. 2002) (quotation marks and citation omitted). Instead, as noted by the emphasis above, the party must actually put the existence of an arbitration agreement at issue. Prescott v. Northlake Christian School, 141 F. Appx. 263, 269 (5th Cir. 2005); see also Butler v. Z&H Foods Inc., 2021 WL 4073110, *1 (5th Cir 2021, per curiam). To do so, a party "must make at least some showing that under prevailing law, he would be relieved of his contractual obligations to arbitrate if his allegations proved to be true." Orr, 294 F.3d at 710 (quotation marks and citation omitted); see also Z&H Foods, 2021 WL 4073110 at *1. The party must "produce some evidence to substantiate his factual allegations." Orr, 294 F.3d at 710 (quotation marks and citation omitted); see also Z&H Foods, 2021 WL 4073110 at *1.
The only evidence submitted by Lopez de Leon is her affidavit that states an employee described the Spanish Acknowledgement "in a very quick way" and that a document entitled "Arbitration Agreement" was never mentioned. Dkt 16-1 at 2. But "without corroborating evidence, self-serving affidavits will not suffice." Z&H Foods, 2021 WL 4073110 at *1. It also mustn't be forgotten that Lopez de Leon pointedly declined to conduct a deposition of SFI's corporate representative in this respect. Dkts 33 & 34.
Simply put, Lopez de Leon isn't entitled to a jury trial because she hasn't produced evidence to substantiate her factual allegations. To the contrary, the mass of overwhelming evidence submitted by SFI is undisputed in any material way.
4. Conclusion
The demand by Plaintiff Brenda Lopez de Leon for jury trial is DENIED. Dkt 31.
The motion by Defendant Sanderson Farms Inc to stay litigation and compel arbitration is GRANTED. Dkt 10.
Plaintiff Brenda Lopez de Leon is ORDERED to participate in arbitration as outlined by the arbitration agreement attached to the Sanderson Farms Inc Texas Injury Benefit Plan. Dkt 27-1 at 1-62 (executed Plan).
This action is STAYED and ADMINISTRATIVELY CLOSED pending the result of arbitration.
SO ORDERED.