ACCEPTED 13-15-00194-CV THIRTEENTH COURT OF APPEALS CORPUS CHRISTI, TEXAS 5/21/2015 2:40:56 PM DORIAN RAMIREZ CLERK
NO. 13-15-00194-CV FILED IN IN THE COURT OF APPEALS 13th COURT OF APPEALS CORPUS CHRISTI/EDINBURG, FOR THE THIRTEENTH COURT OF APPEALS DISTRICT TEXAS CORPUS CHRISTI, TEXAS 5/21/2015 2:40:56 PM DORIAN E. RAMIREZ Clerk ONEMAIN FINANCIAL, INC. AND RAUL RINCON,
Appellants,
V.
AIDA FLORES,
Appellee.
**********
Appeal from County Court at Law No. 2, Hidalgo County, Texas Trial Court Cause No. CL-14-2498-B
BRIEF OF APPELLANTS
OGLETREE, DEAKINS, NASH SMOAK & STEWART, P.C. Lawrence D. Smith State Bar No. 18638800 Adam D. Boland State Bar No. 24045520 2700 Weston Centre 112 East Pecan Street San Antonio, Texas 78205 (210) 354-1300 — Telephone (210) 277-2702 — Facsimile ATTORNEYS FOR APPELLANTS
ORAL ARGUMENT REQUESTED NO. 13-15-00194-CV
IN THE COURT OF APPEALS FOR THE THIRTEENTH COURT OF APPEALS DISTRICT CORPUS CHRISTI, TEXAS
ONEMAIN FINANCIAL, INC. AND RAUL RINCON,
Appeal from County Court at Law No. 2, Hidalgo County, Texas Trial Court Cause No. CL-14-2498-B
TO THE HONORABLE COURT OF APPEALS:
Appellants, OneMain Financial, Inc. ("OneMain"), and Raul Rincon,
(hereinafter collectively "Appellants") respectfully submit their Appellants' Brief
appealing the denial by the Trial Court of their Motion to Compel Arbitration.
ii IDENTITY OF PARTIES AND THEIR COUNSEL
The following is a complete list of all parties to the Trial Court's Order, as
well as the names and addresses of all trial and appellate counsel.
Appellants/Defendants: Appellants' Counsel: OneMain Financial, Inc. Ogletree, Deakins, Nash, Smoak & Stewart, P.C. Raul Rincon Lawrence D. Smith State Bar No. 18638800 Adam D. Boland State Bar No. 24045520 2700 Weston Centre 112 East Pecan Street Telephone: 210.354.1300 Facsimile: 210.277.2702
Defendants' Trial Counsel: Ogletree, Deakins, Nash, Smoak & Stewart, P.C. Lawrence D. Smith State Bar No. 18638800 Adam D. Boland State Bar No. 24045520 2700 Weston Centre 112 East Pecan Street Telephone: 210.354.1300 Facsimile: 210.277.2702
Appellee/Plaintiff: Appellee's Counsel: Aida Flores Carlos E. Hernandez, Jr., P.C. State Bar No. 00787681 The Law Offices of Carlos E. Hernandez, Jr., P.C. 200 East Cano Street Edinburg, Texas 78539 Telephone: 956.386.0900 Facsimile: 956.380.0771
iii Plaintiff's Trial Counsel: Carlos E. Hernandez, Jr., P.C. State Bar No. 00787681 The Law Offices of Carlos E. Hernandez, Jr., P.C. 200 East Cano Street Edinburg, Texas 78539 Telephone: 956.386.0900 Facsimile: 956.380.0771
iv TABLE OF CONTENTS
Description Page
IDENTITY OF PARTIES AND THEIR COUNSEL iii
TABLE OF CONTENTS
TABLE OF AUTHORITIES vii
STATEMENT OF THE CASE 1
STATEMENT REGARDING ORAL ARGUMENT 2
ISSUE PRESENTED 2
STATEMENT OF FACTS 3
SUMMARY OF ARGUMENT 7
ARGUMENT 8
ISSUE: Whether the Trial Court Erred in Denying Appellants' Motion to Compel Arbitration? 8 A. Standard of Review 8 B. A Strong Presumption in Favor of Arbitration Exists 9 C. Appellants Established the Existence of a Valid Arbitration Agreement 11 D. Appellee's Claims Fall Within the Scope of the Arbitration Agreement 14 E. Appellee's Arguments Opposing Arbitration are Unfounded 16
CONCLUSION AND PRAYER 24 APPENDIX
1. Order Denying Defendant's Motion to Compel Arbitration and Motion to Stay Litigation Tab 1
vi TABLE OF AUTHORITIES
Page(s)
Cases
In re 24R, Inc., 324 S.W.3d 564 (Tex. 2010) 8
ATT Technologies, Inc. v. Communication Workers of America, 475 U.S. 643 (1986) 15
Banc One Acceptance Corp. v. Hill, 367 F.3d 426 (5th Cir. 2004) 9
Burlington N.R.R. v. Akpan, 943 S.W.2d 48 (Tex. App. — Fort Worth 1996, no writ) 11, 14
Burton v. Citigroup, No. 3:03-CV-3033-M (N.D. Tex. June 9, 2004) 13
Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943 (Tex. 1996) 9
Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001) 10
D.R. Horton, Inc. v. Brooks, 207 S.W.3d 862 (Tex. App. — Houston [14th Dist.] 2006, no pet.) 21
In re Dallas Peterbilt, Ltd., L.L.P., 196 S.W.3d. 161 (Tex. 2006) 11, 13
De Oliveira v. Citicorp North America, Inc., 2012 WL 1831230 (M.D. Fla. May 18, 2012) 13
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) 9
Delfingen US-Tex., L.P. v. Valenzuela, 407 S.W.3d 791 (Tex. App. — El Paso 2013, no pet.) 8
Diggs v. Citigroup, Inc., 551 Fed. Appx. 762 (5th Cir. 2014) 13, 20
EZ Pawn Corp. v. Mancias, 934 S.W.2d 87 (Tex. 1996) 20
vii In re FirstMerit Bank, NA., 52 S.W.3d 749 (Tex. 2001) 11, 14
In re Fleetwood Homes of Texas, L.P., 257 S.W.3d 692 (Tex. 2008) 19
Gonzalez v. Citigroup, 2011 WL 2148711 (D. Del. May 31, 2011) 13
In re Haliburton Co., 80 S.W.3d 566 (Tex. 2002) 13, 18
Hartford Life Ins. Co. v. Forman, 2009 WL 1546924 (Tex. App. — Corpus Christi June 3, 2009, pet. denied) 11
In re Hawthorne Townhomes, LP, 282 S.W.3d 131 (Tex. App. — Dallas 2009, org. proceeding) 12
In re Hope Lumber & Supply Co., 2008 WL 3984211 (Tex. App. — Corpus Christi Aug. 29, 2008, no pet. h.) 14, 18
Jones v. Fujitsu Network Communications, Inc., 81 F.Supp.2d 688 (N.D. Tex. 1999) 13
In re Kaplan Higher Education Corp., 235 S.W.3d 206 (Tex. 2007) 12
In re Kellogg Brown & Root, Inc., 166 S.W.3d 732 (Tex. 2005) 11
Lumuenemo v. Citigroup, Inc., 2009 WL 371901 (D. Colo. Feb. 12, 2009) 13, 18
Maverick Engineering, Inc. v. Nakkarni, 2009 WL 1974757 (Tex. App. — Corpus Christi June 5, 2009, no pet.) 12
Merrill Lynch, Pierce, Fenner, and Smith, Inc. v. Longoria, 783 S.W.2d 229 (Tex. App. — Corpus Christi 1989, no writ) 15
Minter v. Citifinancial, No. 3:02-CV-2264-R (N.D. Tex. Jan. 13, 2003) 13
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614 (1985) 10
Moses H Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) 9, 10, 14
viii Nabors Wells Servs., Ltd. v. Herrera, 2009 WL 200987 (Tex. App. - Corpus Christi Jan. 27, 2009, no pet.) 21, 22, 23
OPE Intl LP v. Chet Morrison Contrs., Inc., 258 F.3d 443 (5th Cir. 2001) 10, 14
In re Poly-America, L.P., 262 S.W.3d 337 (Tex. 2008) 22
In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) 22
Quinn v. EMC Corp., 109 F.Supp.2d 681 (S.D. Tex. 2000) 13
ReadyOne Industries, Inc. v. Flores, 2014 WL 6982275 (Tex. App. — El Paso Dec. 10 2014, no pet. h.) 14
Richmont Holdings, Inc., v. Superior Recharge Sys., LLC, 455 S.W. 3d 573 (Tex. 2014) 19
Smith v. H.E. Butt Grocery Co., 18 S.W.3d 910 (Tex. App. — Beaumont 2000, pet. denied) 9
Southland Corp. v. Keating, 465 U.S. 1 (1984) 10
Specialty Healthcare Mgmt., Inc. v. St. Mary Parish Hosp., 220 F.3d 650 (5th Cir. 2000) 9
T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218 (Tex. 1992) 23
Valero Refining, Inc. v. M/T Lauberhorn, 813 F.2d 60 (5th Cir. 1987) 11
In re Vesta Ins. Group, Inc., 192 S.W.3d 759 (Tex. 2006) 19, 20
Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (1989) 9
Webb v. Investacorp, Inc., 89 F.3d 252 (5th Cir. 1996) 11
Weekley Homes, L.P. v. Rao, 336 S.W.3d 413 (Tex. App. — Dallas 2011, pet. denied) 8
ix White-Weld & Co. v. Mosser, 587 S.W.2d 485 (Tex. Civ. App. — Dallas 1979, writ ref d n.r.e.) 9
Statutes
9 U.S.C. § 1 9
TEX. CIV. PRAC. & REM. CODE § 171.001. 9
48 C.F.R. § 222.7402 17
Texas Rule of Appellate Procedure 9.4 26
x STATEMENT OF THE CASE
On May 30, 2014, Aida Flores ("Appellee" or "Flores") filed the instant
lawsuit alleging that OneMain's termination of her employment constituted
discrimination on the basis of age and disability. (CR 4-15). Further, Appellee
claimed that OneMain subjected her to a hostile work environment based on age
and disability. (CR 4-15). Appellee also alleged claims of libel/slander and
defamation against individual Defendant Raul Rincon ("Rincon"). (CR 4-15).
Appellants timely filed an Original Answer, asserting a general denial and
the affirmative defense that Appellee's claims must be submitted to binding
arbitration as previously agreed upon by the parties. (CR 19-20). On July 23,
2014, Appellants filed a Motion to Compel Arbitration and Motion to Dismiss
("Motion"). (CR 21-49). On October 6, 2014, Appellee filed her Response to the
Motion. (CR 52-68). Also on October 6, 2014, the Trial Court held a hearing
regarding Appellants' Motion. (CR 51 and TR 1-4).
At the hearing, Appellants presented evidence that a valid and enforceable
arbitration agreement existed between the parties. (TR 5-7 and CR 21-49).
Appellee argued that the arbitration agreement should not be enforced, but
presented no testimony or evidence. (TR 1-12 and CR 52-68). On October 20,
2014, with Court approval, Appellants' submitted a Reply, including additional
evidence, to Appellee's Response. (TR 4-5 and CR 69-90).
1 On February 11, 2015, the parties submitted an Agreed Order which the
Trial Court signed granting Appellants' Motion to Compel Arbitration and staying
the current proceedings. (CR 91-93). On April 1, 2015, the Trial Court, with no
notice or other pending motion, issued a new order which reversed its prior
granting of Appellants' Motion to Compel Arbitration. (CR 94). The Order
Denying Defendant's (sic) Motion to Compel Arbitration and Motion to Stay
Litigation' ("Order") was issued without any explanation. (CR 94). Appellants
timely filed their Notice of Appeal challenging the Trial Court's April 1, 2015
Order. (CR 95-96).
STATEMENT REGARDING ORAL ARGUMENT
Appellants request oral argument, because they believe it would help to
clarify the legal issues discussed herein and avoid misinterpretations or
misunderstandings of the record.
ISSUE PRESENTED
The evidence attached to Appellants' Motion and Reply and addressed at the
hearing establish that during her employment with OneMain, Appellee received
notice of the arbitration agreement on multiple occasions, including electronically
on December 17, 2012; that she continued to work for OneMain after receiving
notice; and that her claims in this lawsuit fall within the scope of the arbitration
1 Appellants' original Motion was titled Motion to Compel Arbitration and Motion to Dismiss. (CR 21).
2 agreement. In her Response and at the hearing, Appellee presented arguments and
assertions that were unsupported by evidence, law or relevant precedent.
Appellee's unjustified arguments do not overcome Appellants' evidence and the
undeniable precedent that confirms that a valid arbitration agreement exists
between the parties and should be enforced. The issue therefore presented is
whether the Trial Court erred in denying Appellants' Motion to Compel
Arbitration.
STATEMENT OF FACTS
On October 29, 1997, a related business entity of OneMain hired Appellee
as a Customer Service Representative. (CR 33). On January 1, 2002, Appellee
was promoted to Senior Customer Service Representative (later renamed Branch
Account Executive). (CR 33). On June 18, 2013, OneMain terminated Appellee.
(CR 33). From June 2006 until the date of her termination, Appellee's District
Manager was Rincon. (CR 33).
OneMain, a Delaware corporation that provides consumer lending services,
is a subsidiary of Citigroup Inc. (CR 79-87 and 89-90). Citigroup Inc. and its
subsidiaries, including OneMain, maintain an Employment Arbitration Policy
("Arbitration Agreement") that requires U.S. employees to arbitrate employment-
related disputes. (CR 33 and 36-40). OneMain expressly and unambiguously
requires employees to comply with the terms of the Arbitration Agreement as a
3 condition of continued employment. (CR 36-40). The Arbitration Agreement also
provides that continued employment constitutes acceptance of the policy. (CR 36-
40).
The Arbitration Agreement covers employment-related disputes that arise
between the company, the employee, and other employees. (CR 36-40). The
Arbitration Agreement specifically states that it covers any claims under any state
or federal laws regarding discrimination. (CR 36-40). The Arbitration Agreement
also specifically identifies defamation as an employment-related claim. (CR 36-
Appellee had specific knowledge of the Arbitration Agreement prior to and
throughout her employment. (CR 45-49). The Arbitration Agreement is attached
as Appendix A to the U.S. Employee Handbook. (CR 33). All U.S. employees
receive a copy of the Handbook and the attached appendix. (CR 33). Appellee
acknowledged receipt of the applicable Handbook in 2002, 2004, and 2006, which
contained a version of the Arbitration Agreement. (CR 33 and 47-49). In 2011
and 2013, Appellee electronically acknowledged receipt of the Handbook and
Arbitration Agreement. (CR 33 and 45-46). The 2013 acknowledgment received
by Appellee, and electronically accepted, expressly stated "[a]ppended to the
Handbook is an Employment Arbitration Policy as well as the "Principles of
Employment" that require you and Citi to submit employment-related disputes to
4 binding arbitration." (CR 45). Appellee's Handbook Acknowledgements were
submitted to the Trial Court as evidence. (CR 45-49).
Despite Appellee's agreement to arbitrate her claims against Appellants,
Appellee initiated this action on May 30, 2014, asserting claims for age
discrimination, disability discrimination, hostile work environment, and
defamation related to her termination. (CR 4-15). On June 30, 2014, Appellants
filed a timely answer and asserted the affirmative defense that this matter must be
compelled to arbitration due to the parties' entry into a binding arbitration
agreement. (CR 19-20).
On July 8, 2014, Appellants' counsel forwarded copies of Appellee's
acknowledgments and the Arbitration Agreement to Appellee's counsel and asked
that Appellee voluntarily consent to arbitration; however, on July 21, 2014,
Appellee indicated that she refused to consent to arbitration. (CR 22-23). On July
23, 2014, Appellants filed their Motion to Compel Arbitration and Motion to
Dismiss. (CR 21-49). Attached to the Motion were four exhibits, which included
the Affidavit of Lisette Mejias proving up the attached exhibits as business records
and providing additional information regarding Appellee's employment and the
Arbitration Agreement. (CR 32-34). Further, attached as exhibits were copies of
the Arbitration Agreement, the Principles of Employment, and Appellee's
acknowledgments of having received notice of the Arbitration Agreement. (CR
5 36-49). On October 6, 2014, a little over an hour before the hearing, Appellee filed
her Response to Appellants' Motion. (CR 52-68). No affidavits or evidence were
submitted with Appellee's Response. (CR 52-68).
On October 6, 2014, the Honorable Jay Palacios held a hearing pursuant to
Appellants' Motion. (TR 1-4). At the hearing, both parties' counsel appeared for
oral argument. (TR 2-4). No live testimony was presented. (TR 4-12).
Appellants' counsel argued the pending Motion and went through the Court's
necessary analysis, including establishing that notice of the Arbitration Agreement
occurred, that Appellee continued to work for OneMain following notice, and that
all of Appellee's claims fell within the scope of the Arbitration Agreement. (TR 5-
7 and 9-11). Appellee's counsel then presented arguments that Appellants did not
establish that a valid Arbitration Agreement existed between the parties, that the
Franken Amendment somehow prevented enforcement of the Arbitration
Agreement, and that the Arbitration Agreement is potentially illusory. (TR 7-9).
Given that Appellee's Response was not filed until immediately prior to the
hearing, the Trial Court granted Appellants additional time to file a Reply. (CR 4-
5). On October 20, 2014, Appellants filed their Reply disputing Appellee's
allegations and attaching two additional pieces of evidence. (CR 69-90).
Specifically, Appellants' presented evidence confirming that the Franken
6 Amendment did not apply to the Arbitration Agreement and that OneMain was a
subsidiary of Citigroup Inc. (CR 79-90).
On February 11, 2015, the Honorable Jay Palacios signed an Agreed Order,
submitted by the parties and signed by each parties' counsel, which granted
Appellants' Motion to Compel Arbitration and stayed any further proceedings.
(CR 91-92). On April 1, 2015, however, without any notice and no pending
motion to consider, Judge Palacios signed another Order denying Appellants'
Motion to Compel Arbitration. (CR 94). Appellants' then filed a timely Notice of
Appeal appealing the April 1, 2015 Order denying Appellants' Motion. (CR 95).
SUMMARY OF ARGUMENT
Appellants presented irrefutable evidence establishing that Appellee
received notice of the Arbitration Agreement during her employment, continued to
work after receiving notice, and that her claims fall within the scope of the
Arbitration Agreement. Appellants' evidence undeniably establishes that a valid
and enforceable Arbitration Agreement exists. Therefore, a strong presumption
supporting the enforceability of the Arbitration Agreement exists. Appellee's
conclusory and unsupportable arguments do not overcome this presumption or the
relevant case law applicable to the case at hand. Indeed, Appellee wholly failed to
present any evidence to contradict the clear evidence Appellants presented that the
Arbitration Agreement is valid and enforceable. Therefore, given the relevant
7 precedent in Texas and the strong public policy favoring arbitration agreements,
the evidence presented compels the conclusion that the Trial Court erroneously
denied Appellants' Motion to Compel Arbitration; and that Appellants' Motion to
Compel Arbitration should be granted and the parties should be ordered to
ARGUMENT
I. THE TRIAL COURT ERRED IN DENYING APPELLANTS' MOTION TO COMPEL ARBITRATION.
A. Standard of Review.
Under section 51.016 of the Texas Civil Practice and Remedies Code, this
Court should apply an abuse of discretion standard in reviewing this interlocutory
appeal. Weekley Homes, L.P. v. Rao, 336 S.W.3d 413, 418 (Tex. App. — Dallas
2011, pet. denied). Under this standard, the Court of Appeals defers "to the trial
court's factual determinations if they are supported by evidence, but [it] review[s]
the trial court's legal determinations de novo.'" Weekley, 336 S.W.3d at 418 (citing
In re Labatt Food Svc., L.P., 279 S.W.3d 640, 643 (Tex. 2009)); see Delfingen US-
Tex., L.P. v. Valenzuela, 407 S.W.3d 791, 800 (Tex. App. — El Paso 2013, no pet.).
"Whether an arbitration agreement is enforceable is subject to de novo review."
Id. "A trial court that refuses to compel arbitration under a valid and enforceable
arbitration agreement has clearly abused its discretion." In re 24R, Inc., 324
8 S.W.3d 564, 566 (Tex. 2010) (citing In re Haliburton Co., 80 S.W.3d 566, 573
(Tex. 2002)).
B. A Strong Presumption in Favor of Arbitration Exists.
Federal and state policies strongly favor arbitration. See Dean Witter
Reynolds, Inc. v. Byrd, 470 U.S. 213, 217 (1985); Moses H Cone Memorial Hosp.
v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (the Federal Arbitration Act
represents "a liberal federal policy favoring arbitration agreements"); Banc One
Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004) ("once a court
determines that an agreement to arbitrate exists, the court must pay careful
attention to the strong federal policy favoring arbitration and must resolve all
ambiguities in favor of arbitration"); Cantella & Co., Inc. v. Goodwin, 924 S.W.2d
943, 944 (Tex. 1996); see also TEx. Civ. PRAC. & REM. CODE § 171.001, et. seq.
The Federal Arbitration Act2 ("FAA") makes private agreements to submit
disputes to arbitration valid and enforceable and requires courts to enforce
arbitration agreements in the same manner as it enforces all contracts. See 9
U.S.C. § 1, et seq.; Volt Info. Sciences, Inc. v. Bd. of Trustees of Leland Stanford
Junior Univ., 489 U.S. 468, 474 (1989); Specialty Healthcare Mgmt., Inc. v. St.
2 In the employment context, any employment relationship involving interstate commerce falls within the coverage of the FAA. White-Weld & Co. v. Mosser, 587 S.W.2d 485, 487 (Tex. Civ. App. — Dallas 1979, writ ref d n.r.e.). Stated another way, if the employer's business involves interstate commerce, the FAA applies. Smith v. H.E. Butt Grocery Co., 18 S.W.3d 910, 913 (Tex. App. — Beaumont 2000, pet. denied). In this case, OneMain's business involves interstate commerce. (CR 33-34). Appellee never claimed otherwise.
9 Mary Parish Hosp., 220 F.3d 650, 654 (5th Cir. 2000). Further, the United States
Supreme Court has held that the FAA may be used to enforce arbitration
agreements between employers and employees that are required as a condition of
employment. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 105-107
(2001).
Additionally, in Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., the
Supreme Court held, "[the FAA] establishes that, as a matter of federal law, any
doubts concerning the scope of arbitrable issues should be resolved in favor of
arbitration, whether the problem at hand is the construction of the contract
language itself or an allegation of waiver, delay, or a like defense to arbitrability."
460 U.S. at 24-25; see also OPE Intl LP v. Chet Morrison Contrs., Inc., 258 F.3d
443, 445 (5th Cir. 2001). Further, "[In enacting the FAA,] Congress declared a
national policy favoring arbitration and withdrew the power of the states to require
a judicial forum for the resolution of claims which the contracting parties agreed to
resolve by arbitration." Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). This
congressional policy "requires that [courts] rigorously enforce agreements to
arbitrate." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S.
614, 626 (1985) (citing Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221
(1985)).
10 Texas law is consistent with the federal standard. An agreement to arbitrate
in Texas is enforceable under the FAA if: (1) a valid agreement exists; and (2) the
claims raised are within the scope of the agreement. In re Kellogg Brown & Root,
Inc., 166 S.W.3d 732, 737 (Tex. 2005); Hartford Life Ins. Co. v. Forman, 2009
WL 1546924, at *3 (Tex. App. — Corpus Christi June 3, 2009, pet. denied).
"Because state and federal policies continue to favor arbitration, a presumption
exists favoring agreements to arbitrate under the FAA, and courts must resolve any
doubts about an arbitration agreement's scope in favor of arbitration." In re
FirstMerit Bank, NA., 52 S.W.3d 749, 753 (Tex. 2001); see Burlington N.R.R. v.
Akpan, 943 S.W.2d 48, 50 (Tex. App. — Fort Worth 1996, no writ) (finding that
arbitration is strongly favored and noting that Texas courts will "indulge every
reasonable presumption" in favor of arbitration).
C. Appellants Established the Existence of a Valid Arbitration Agreement.
Ordinary state law contract principles determine the validity of a written
arbitration agreement. Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996);
Valero Refining, Inc. v. M/T Lauberhorn, 813 F.2d 60, 64 (5th Cir. 1987). In
Texas, "[a]n 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) (an at-will employee that receives notice of the
11 arbitration agreement and continues to work accepts the terms as a matter of law);
see Maverick Engineering, Inc. v. Nakkarni, 2009 WL 1974757, at * 4 (Tex. App.
— Corpus Christi June 5, 2009, no pet.) (if a valid arbitration agreement exists, a
presumption favoring arbitration exists).
Further, the Texas Supreme Court has held that agents of a signatory to an
arbitration agreement may enforce the agreement even if they themselves are non-
signatories. See In re Kaplan Higher Education Corp., 235 S.W.3d 206, 209-10
(Tex. 2007). Parties to an arbitration agreement may not avoid arbitration by
naming individual agents of the other party to the agreement and suing them in
their individual capacities. In re Hawthorne Townhomes, LP, 282 S.W.3d 131,
139 (Tex. App. — Dallas 2009, org. proceeding) (individual agents of the corporate
entity are entitled to invoke the corporate entity's arbitration agreement when sued
individually).
It is undisputed that OneMain presented Appellee with the Arbitration
Agreement and that the Agreement provides that all U.S. employees agree to refer
disputes involving employment-related claims between relevant entities and
employees to arbitration for a final and binding resolution. (CR 32-40 and 45-49).
Appellee accepted and consented to be bound by the Arbitration Agreement's
terms on multiple occasions, including with her acknowledgement of the
Agreement in 2013. (CR 45-49). Further, following her receipt of notice of the
12 Arbitration Agreement, Appellee continued to work for OneMain. (CR 32-34).
These facts are undisputed; thus, Texas case law establishes that Appellee's
conduct constitutes acceptance of the Arbitration Agreement as a matter of law.
See Quinn v. EMC Corp., 109 F.Supp.2d 681, 687 (S.D. Tex. 2000); Jones v.
Fujitsu Network Communications, Inc., 81 F.Supp.2d 688, 692 (N.D. Tex. 1999)
("[b]y continuing to work for Defendant after he received notice of the Arbitration
Policy, Plaintiff accepted the arbitration policy as a matter of law."); In re Dallas
Peterbilt, Ltd., L.L.P., 196 S.W.3d at 163; In re Halliburton Co., 80 S.W.3d at 568-
569.
In fact, prior similar versions of the same Arbitration Agreement that the
company seeks to enforce herein have been upheld by courts applying Texas law.
See Diggs v. Citigroup, Inc., 551 Fed. Appx. 762, 765-66 (5th Cir. 2014); Burton v.
Citigroup, No. 3:03-CV-3033-M (N.D. Tex. June 9, 2004); Minter v. Citifinancial,
No. 3:02-CV-2264-R (N.D. Tex. Jan. 13, 2003); see also De Oliveira v. Citicorp
North America, Inc., 2012 WL 1831230, at * 3 (M.D. Fla. May 18, 2012);
Gonzalez v. Citigroup, 2011 WL 2148711, at * 2 (D. Del. May 31, 2011);
Lumuenemo v. Citigroup, Inc., 2009 WL 371901, at * 7 (D. Colo. Feb. 12, 2009).
Here, the Trial Court did not make any findings of fact, either oral or
written. (CR 94 and TR 4-12). The underlying Order simply indicates that the
Motion is denied, but does not identify the rationale for the decision. Further,
13 Appellee has not presented one shred of evidence to contest that notice and
acceptance have occurred. Thus, the record establishes that Appellants have
satisfied their burden, based on the presented evidence, that a valid Arbitration
Agreement exists between the parties. See ReadyOne Industries, Inc. v. Flores,
2014 WL 6982275, at * 3 (Tex. App. — El Paso Dec. 10 2014, no pet. h.) (exhibits
and authenticated affidavit satisfied initial burden regarding existence of valid
agreement).
D. Appellee's Claims Fall Within the Scope of the Arbitration Agreement
As the Supreme Court stated in Moses H. Cone Mem. Hosp. "as a matter of
federal law, any doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration." 460 U.S. at 24-25; see also OPE Int'l LP, 258
F.3d at 445; In re FirstMerit Bank, NA., 52 S.W.3d at 753; In re Hope Lumber &
Supply Co., 2008 WL 3984211, at * 3 (Tex. App. — Corpus Christi Aug. 29, 2008,
no pet. h.) ("[a]ny doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration."); Akpan, 943 S.W.2d at 50 (arbitration is strongly
favored and noting that Texas courts will "indulge every reasonable presumption"
in favor of arbitration).
Here, the Arbitration Agreement covers Appellee's claims. (CR 36-40).
Appellee's Original Petition includes claims for age discrimination, disability
discrimination, hostile work environment and defamation related to her
14 termination. (CR 4-18). Appellee's claims inarguably arise out of her
employment relationship with OneMain and fall within the express written scope
of the Arbitration Agreement. (CR 36-40).
To the extent Appellee contends otherwise, she bears the burden to show
that her claims fall outside the scope of the arbitration policy. Merrill Lynch,
Pierce, Fenner, and Smith, Inc. v. Longoria, 783 S.W.2d 229, 231 (Tex. App. —
Corpus Christi 1989, no writ). The United States Supreme Court has held that in
"the absence of any express provision excluding a particular grievance from
arbitration, we think only the most forceful evidence of a purpose to exclude the
claim from arbitration can prevail." ATT Technologies, Inc. v. Communication
Workers of America, 475 U.S. 643, 650 (1986) (citing United Steelworkers of
America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 584 (1960)). Not only
is there a complete absence of "forceful evidence" negating the application of the
Arbitration Agreement to Appellee's claims, there is no evidence that even
remotely negates its application to her claims. As a result, Appellee's claims are
covered by the Arbitration Agreement. Because the Arbitration Agreement is valid
and Appellee's claims fall within the scope of the policy, the Trial Court abused its
discretion in not compelling arbitration.
15 E. Appellee's Arguments Opposing Arbitration are Unfounded.
Appellee asserts that the Arbitration Agreement is unenforceable on the
grounds that Appellants did not establish that an Arbitration Agreement existed
between the parties, that the Franken Amendment somehow prevented
enforcement of the Arbitration Agreement, that the Arbitration Agreement is
potentially illusory, and a laundry list of other unjustified assertions. (CR 52-68
and TR 7-9). Appellee's arguments are neither supported by Texas case law nor
evidence.
1. OneMain Financial, Inc. is a subsidiary of Citigroup Inc., thus, the Arbitration Agreement exists between the parties. Appellee argues that her Arbitration Agreement is with Citigroup Inc. and
not OneMain, the subsidiary from which she received the Agreement and for
whom she worked. (CR 52-68). The language of the Agreement expressly states
that the Agreement relates to the employee, Appellee, and Citigroup Inc., its
subsidiaries, and affiliates. (CR 36). OneMain Financial, Inc. is a subsidiary of
Citigroup Inc. (CR 79-873 and 89-90). Indeed, Appellee has presented no
evidence to contradict Appellants evidence. Appellee's unfounded assertion that
OneMain is not a subsidiary is insufficient to negate the existence of an
enforceable Arbitration Agreement between the parties.
3The exhibit submitted to the Trial Court is a document filed with Citigroup Inc.'s 2013 10-K. This document is a public record and filed with the Securities and Exchange Commission.
16 2. The Franken Amendment is wholly inapplicable.
Although not asserted in Appellee's Response, at the hearing on this matter,
Appellee's counsel stated that the Franken Amendment may apply to this matter.
(TR 7-9). The Franken Amendment restricts the use of arbitration agreements by
federal contractors with contracts in excess of $1 million with the Department of
Defense. 48 C.F.R. § 222.7402. The Amendment further is limited to cover only
claims asserted under Title VII or torts related to or arising out of sexual assault or
harassment. 48 C.F.R. § 222.7402. OneMain is not a federal contractor and does
not have or maintain any contracts with the Department of Defense, thus, the
Franken Amendment is inapplicable. (CR 89-90). More importantly, Appellee
asserts only claims for harassment and discrimination under the Texas Commission
on Human Rights Act, and defamation against Rincon. (CR 4-18). Therefore, the
claims asserted by Appellee do not even fall under the scope of claims coved by
the Franken Amendment. Thus, this argument is frivolous and not supported at all
by relevant law or the pleadings.
3. The Arbitration Agreement is not illusory.
Appellee summarily alleged that the Arbitration Agreement is illusory. (CR
52-68). After citing a few cases concerning illusory agreements, Appellee
presented no further argument or analysis in her Response concerning this position.
17 (CR 52-68). A plain review of the Arbitration Agreement, however, clearly shows
it is not illusory.
In In re Halliburton Co., the Texas Supreme Court reviewed an arbitration
agreement that contained very similar terms and conditions as the Arbitration
Agreement in this matter. 80 S.W.3d 566, 568-69 (Tex. 2002). The Texas
Supreme Court, in analyzing whether the agreement was illusory, held that the
agreement, including its terms and conditions, was not illusory because the
employer could not avoid its promise to arbitrate because the employer could not
avoid its obligation without providing notice of a change to the agreement. Id. at
569-70. Thus, any changes were prospective. Id. Here, the Arbitration
Agreement is not illusory because OneMain has no right to unilaterally amend or
revoke the Agreement without providing 30 days' notice of the changes. (CR 36-
40); see In re Halliburton, 80 S.W.3d at 568-70; In re Hope Lumber & Supply Co.,
2008 WL 3984211, at * 4; see also Lumuenemo, 2009 WL 371901, at * 6 (holding
that a similar version of the arbitration agreement at issue in this case was not
illusory). Appellee's argument that the Agreement is illusory fails.
4. Any assertion of waiver fails because Appellee did not establish that Appellants substantially invoked the judicial process to her detriment. Appellee alleges that Appellants waived the Arbitration Agreement in her
Response, but she fails to detail how waiver allegedly occurred. (CR 64-66).
18 Nevertheless, Appellee has failed to establish that Appellants waived the
Arbitration Agreement by substantially invoking the judicial process to her
prejudice. In re Fleetwood Homes of Texas, L.P., 257 S.W.3d 692, 694 (Tex.
2008); see Richmont Holdings, Inc., v. Superior Recharge Sys., LLC, 455 S.W. 3d
573, 576 (Tex. 2014) (no waiver occurred when defendant filed separate lawsuit
against plaintiff in another county, moved to transfer venue, and engaged in
minimal discovery). There is a strong presumption against waiver under the
Federal Arbitration Act. In re Vesta Ins. Group, Inc., 192 S.W.3d 759, 763 (Tex.
2006). A party does not waive its right to arbitrate merely by delay. Id. Instead,
the party arguing waiver must establish that any delay resulted in prejudice. In re
Fleetwood Homes of Texas, L.P., 257 S.W.3d at 694. Appellee makes no
argument on how Appellants have allegedly waived the Agreement or how she is
prejudiced, but simply cites inapplicable cases on the subject matter. (CR 52-68).
Appellee filed suit on May 30, 2014, and Appellants filed a timely answer
on June 30, 2014, asserting the affirmative defense that Appellee's claims are
subject to a binding Arbitration Agreement. (CR 4 and 19-20). On July 8, 2014,
Appellants sent Appellee notice of her acknowledgments and the Arbitration
Agreement and attempted to move this matter to arbitration informally. (CR 22-
23). After receiving notice of Appellee's refusal to consent to arbitration,
Appellants filed their Motion to Compel Arbitration and Motion to Dismiss on July
19 23, 2014. (CR 21). Appellee has also propounded discovery upon Appellants,
which Appellants have opposed given that the parties are not in the proper forum.
On these facts, Appellee's waiver argument fails as a matter of law. See In re
Vesta Ins. Group, Inc., 192 S.W.3d at 763 (no waiver where case litigated in court
for 2 years, over $200,000.00 in fees expended during discovery, four depositions
were noticed and one set of requests for production issued); EZ Pawn Corp. v.
Mancias, 934 S.W.2d 87, 90 (Tex. 1996) (filing an answer, sending written
discovery, noticing a deposition, discussing a docket control order and agreeing to
postpone trial did not constitute waiver). Given the relevant facts of this case,
Appellee's assertion of waiver is unsupportable.
5. Appellee has failed to establish unconscionability as a defense.
Appellee presented vague arguments of unconscionability in her Response,
but fails to provide any evidence in support of those allegations. (CR 52-68).
Furthermore, review of applicable case law demonstrates that the Arbitration
Agreement is not unconscionable. See Diggs, 551 Fed. Appx. at 765-66 (the Fifth
Circuit confirmed that a similar version of the arbitration agreement at issue herein
was not unconscionable, and that a valid and enforceable arbitration agreement
existed between the parties).
First, while Appellee references several cases concerning arbitration fees,
she does not argue or present evidence that she would incur excessive arbitration
20 costs in this matter that would render the Arbitration Agreement unconscionable.
(CR 52-68). Alternatively, the Arbitration Agreement expressly states that the
company will pay all filling fees, hearing fees, and arbitrator fees. (CR 36-40). In
fact, Appellee admits that Appellants will bear the costs typically shared by the
parties. (CR 61); see D.R. Horton, Inc. v. Brooks, 207 S.W.3d 862, 870 (Tex. App.
— Houston [14th Dist.] 2006, no pet.) (finding the plaintiff's unconscionability
argument moot because the employer agreed to pay all the costs associated with
arbitration of their dispute); see also Nabors Wells Servs., Ltd. v. Herrera, 2009
WL 200987, at *6 (Tex. App. - Corpus Christi Jan. 27, 2009, no pet.) ("because the
record contains no specific evidence that Herrera would actually be charged
excessive arbitration fees, there is legally insufficient evidence that the arbitration
agreement is unconscionable based on excessive costs."). Thus, Appellee's
argument is wholly inappropriate because the fees are borne by OneMain. (CR 36-
Appellee also erroneously contends that the Arbitration Agreement deprives
her of an equivalent and accessible forum to adjudicate her claims and is therefore
unconscionable and unenforceable. (CR 62-64). The Corpus Christi Court of
Appeals previously rejected this particular argument from Appellee's counsel. See
Nabors Wells Servs., Ltd., 2009 WL 200987, at *6-7. Further, Appellee's assertion
finds no support in Texas case law because the Arbitration Agreement does not
21 limit Appellee's ability to pursue any statutory or common law rights or any
remedies available under the law. Id. "An arbitration agreement covering statutory
claims is valid so long as 'the arbitration agreement does not waive substantive
rights and remedies of the statute and the arbitration procedures are fair so that the
employee may effectively vindicate his statutory rights.'" In re Poly-America,
L.P., 262 S.W.3d 337, 352 (Tex. 2008) (citing In re Haliburton, 80 S.W.3d at 572).
"'By agreeing to arbitrate a statutory claim, a party does not forgo the substantive
rights afforded by the statute; it only submits to their resolution in an arbitral,
rather than a judicial, forum."' Id.
The Arbitration Agreement in this case only requires the parties to submit
claims within the scope of its coverage to binding arbitration. (CR 36-40). The
Agreement does not eliminate any claims, causes of actions, or available damages.
(CR 36-40). Thus, Appellee's claim that the Agreement deprives her of an
equivalent and accessible forum fails, and the Agreement cannot be found
unenforceable on that basis.
Despite unequivocal Texas case law on this issue, Appellee also maintains
that the Arbitration Agreement is unconscionable because it deprives her of her
right to a jury trial. Texas law does not prohibit a party from contractually waiving
its constitutional right to a trial by jury. In re Prudential Ins. Co. of Am., 148
22 S.W.3d 124, 132-33 (Tex. 2004). For this reason, again Appellee's argument is
unsupportable as a matter of law.
6. Appellee has failed to establish indefiniteness as a defense.
Appellee presents no recognizable argument or precedent in her Response
that would support her assertion that the Arbitration Agreement is unenforceable
for alleged indefiniteness. (CR 61). The Texas Supreme Court has held that a
contract need only be sufficiently definite in its material terms so that a court can
understand what the parties agreed to. See T.O. Stanley Boot Co., Inc. v. Bank of
El Paso, 847 S.W.2d 218, 221 (Tex. 1992). If evidence of all material terms of a
contract is introduced, the contract is enforceable and will not fail for
indefiniteness. Id. at 222. In reviewing an arbitration agreement, the Corpus
Christi Court of Appeals found an arbitration agreement sufficiently definite as to
its material terms when it identified the scope of the claims required to be
submitted to arbitration, the parties bound by the agreement, the organization
responsible for administering the arbitration and the applicable rules. See Nabors
Wells Servs., Ltd., 2009 WL 200987, at *5.
Appellee claims that the Agreement is indefinite in regards to the procedures
to be used in conducting the arbitration, who will pay the arbitrator, rules of
discovery, and whether the proceedings will be of record. (CR 61-62). The
Agreement, however, expressly covers each of these alleged deficiencies. (CR 36-
23 40). In fact, the Arbitration Agreement goes into extensive details on these terms
and several additional terms, including: initiation of proceedings; appointment of
arbitrator(s); vacancies; proceedings; stenographic record; discovery; prehearing
motions; evidence; fees and expenses; awards; enforcement of awards; expenses
and fees; and additional terms. (CR 36-40). Therefore, Appellee's argument that
the Arbitration Agreement is unenforceable due to indefiniteness fails as a matter
of law.
CONCLUSION AND PRAYER
WHEREFORE, PREMISES CONSIDERED, Appellants respectfully pray
that this Honorable Court determine that the Trial Court abused its discretion and
erred in denying their Motion to Compel Arbitration, reverse the Trial Court's
Order, render an order compelling submission of this matter to arbitration pursuant
to the terms of the Arbitration Agreement, and stay the underlying proceeding until
the arbitration proceedings are completed. Appellants pray for such other and
further relief, at law or in equity, to which they may be entitled.
24 Respectfully submitted,
/s/ Lawrence D. Smith Lawrence D. Smith State Bar No. 18638800 Larry.Smith@ogletreedeakins.com Adam D. Boland State Bar No. 24045520 Adam.Boland@ogletreedeakins.com Ogletree, Deakins, Nash, Smoak & Stewart, P.C. 112 E. Pecan Street 2700 Weston Centre San Antonio, Texas 78205 210.354.1300 — Telephone 210.277.2702 — Facsimile
ATTORNEYS FOR APPELLANTS ONEMAIN FINANCIAL, INC. AND RAUL RINCON
25 CERTIFICATE OF SERVICE
On this 21st day of May 2015, I electronically transmitted the foregoing pleading, using the electronic filing system, which will transmit a Notice of Electronic Filing to the following counsel of record:
Carlos E. Hernandez, Jr., P.C. The Law Offices of Carlos E. Hernandez, Jr., P.C. 200 East Cano Street Edinburg, Texas 78539 carlos.hernandezjr@att.net
/s/ Lawrence D. Smith Lawrence D. Smith Adam D. Boland
CERTIFICATE OF COMPLIANCE
I hereby certify that I have reviewed the foregoing brief and concluded that the factual statements in the brief are supported by competent evidence included in the record. I further certify that the foregoing brief complies with Texas Rule of Appellate Procedure 9.4, and contains 5,158 words.
/s/ Lawrence D. Smith Lawrence D. Smith / Adam D. Boland
21230297.1
26 TAB 1 Accepted by: Alma Navarro Electronically Submitted 10/6/2014 11:47:43 AM Hidalgo County Clerks Office
CAUSE NO. CL-14-2498-B
AIDA FLORES, IN COUNTY COURT Plaintiff,
vs. AT LAW NO. 2
ONEMAIN FINANCIAL, INC. and RAUL RINCON, Defendants HIDALGO COUNTY, TEXAS
ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION AND MOTION TO STAY LITIGATION
On this day, came to be heard DEFENDANT'S MOTION TO COMPEL ARBITRATION
AND MOTION TO STAY LITIGATION. The Court, having considered the Motion and Plaintiff's
Response, is of the opinion that Defendant's Motion is without merit and therefore should be
DENIED.
IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that DEFENDANT' S
MOTION TO COMPEL ARBITRATION AND MOTION TO STAY LITIGATION is hereby
2015 SIGNED the 1 day of APRIL , 2044.
PRESID
cc: Carlos E. Hernandez, Jr., The Law Offices of Carlos E. Hernandez, Jr., P.C., 200 E. Cano St., Edinburg, Texas 78539-4510 E-mail: hernandezirlawfirm@yahoo.com
Lawrence D. Smith, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., 2700 Weston Centre, 112 E. Pecan Street, San Antonio, Texas 78205 E-mail: larry.smithRogletreedeakins.com