Brown v. Patel

IN THE UNITED STATES DISTRICT COURT April 22, 2025

FOR THE SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk

HOUSTON DIVISION

§

Bryce Brown, §

§

Plaintiff, §

§ Civil Action No. 4:24-cv-05036

v. §

§

Chandresh Patel, and G&A §

Outsourcing III LLC d/b/a Onpoint §

Lab,1 §

§

Defendants. §

MEMORANDUM AND ORDER

ON MOTION TO COMPEL ARBITRATION

AND RECOMMENDATION ON SUMMARY JUDGMENT MOTION

This is an employment dispute. Plaintiff Bryce Brown sued Defendants

G&A Outsourcing III, LLC, OnPoint Lab L.L.C., and Chandresh Patel

(“Defendants”) for race and sex discrimination and retaliation allegedly

experienced during Brown’s employment with G&A Outsourcing, a

Professional Employee Organization for OnPoint Lab. See Dkt. 1, 4 (amended

complaint). Defendants filed a motion to compel arbitration and stay the case.

Dkt. 11. After carefully considering the motion, id., Brown’s response, Dkt. 14,

Defendants’ reply, Dkt. 15, the record, and the applicable law, the Court grants

1 According to Defendants, Plaintiff has incorrectly identified OnPoint Lab as the

“d/b/a” of Outsourcing III, LLC, when they are in fact two separate entities. Dkt. 6

at 1. That issue is immaterial to the Court’s analysis.

Defendants’ motion to compel arbitration.2 Based on that conclusion, the

undersigned further recommends that Brown’s pending motion for summary

judgment (Dkt. 16) be denied as moot.

Background

Brown filed this suit on December 20, 2024. Dkt. 1. His amended

complaint raised race and sex discrimination and retaliation claims under

Section 1981 of the Civil Rights Act of 1866 and Title VII of the Civil Rights

Act of 1964. Dkt. 4 at 6-10. Defendants moved to compel arbitration and stay

the case, Dkt. 11, to which Brown responded, Dkt. 14, and Defendants replied,

Dkt. 15. Brown also filed a motion for summary judgment, Dkt. 16, to which

Defendants have not responded. The motions are ripe for resolution.

Legal Standard

Section 2 of the Federal Arbitration Act (“FAA”) states that written

provisions to arbitrate particular disputes arising out of the contract “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. “A party seeking to

compel arbitration must first show that a valid arbitration agreement exists

2 A motion to compel arbitration is a non-dispositive matter that a magistrate judge

can resolve by order. See Glob. Indus. Contractors, LLC v. Red Eagle Pipeline, LLC,

617 F. Supp. 3d 633, 636 (S.D. Tex. 2022) (following the First and Third Circuits’

approach); see also, e.g., Herod v. DMS Sols. Inc., 2024 WL 4881439, at *1 n.2 (S.D.

Tex. Nov. 25, 2024) (same).

between the parties, a determination governed by traditional state contract

principles.” Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co.,

921 F.3d 522, 530 (5th Cir. 2019) (quoting Jody James Farms, JV v. Altman

Grp., Inc., 547 S.W.3d 624, 631 (Tex. 2018)). The Court determines whether

an agreement exists “based on the parties’ intent as expressed in the terms of

the contract.” Id. (citing Chrysler Ins. Co. v. Greenspoint Dodge of Hous., Inc.,

297 S.W.3d 248, 252 (Tex. 2009)).

Analysis

Defendants seek to enforce an arbitration agreement that covers “all

disputes related to Plaintiff’s employment” and “gateway issues of

arbitrability.” Dkt. 11 at 1-2, 7-11. Brown responds that the arbitration

agreement is not enforceable due to substantive unconscionability, Dkt. 14 at

4, procedural unconscionability, id. at 13-18, prohibitive costs, id. at 5-8, and

the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act

(“EFAA”), id. at 8-13. In reply, Defendants invoke case law indicating that

Brown’s arguments against the agreement’s enforceability are reserved for the

arbitrator. Dkt. 15 at 8-9, 11. They also argue that the EFAA does not apply

to Brown’s sex discrimination claim. Id. at 16-17.3

3 Defendants note that Brown’s brief cited five nonexistent cases and misrepresented

three others. See Dkt. 15 at 1 n.2; see, e.g., Dkt. 14 at 4 (Brown claiming that Hadnot

v. Bay, Ltd., 344 F.3d 474, 478 n.14 (5th Cir. 2003), “cited approvingly” Shankle v. B-

G Maint. Mgmt. of Colo. Inc., 163 F.3d 1230, 1234 (10th Cir. 1999), and “recognized

that” cost-splitting, confidential requirements, and limitations on discovery “can

I. The arbitration agreement and delegation clause are valid.

Brown does not dispute that the agreement contains an arbitration

provision or that he signed it. See Dkt. 15 at 8; Dkt. 11-5 (Arbitration

Agreement); Dkt. 11-6 (Brown’s signature page). The agreement provides that

the parties

agree to utilize binding arbitration as the sole and exclusive means

to resolve all covered disputes that may arise by and between

Employee and the Company and/or Employee and PEO, including

but not limited to disputes regarding the application and selection

process, the employment relationship, termination of employment,

and compensation…. This Agreement is governed by the Federal

Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). All disputes covered

by this Agreement will be decided by a single arbitrator through

final and binding arbitration and not by way of court or jury trial.

Dkt. 11-5 at 2. The arbitration clause is valid and binds the parties.

Similarly, Brown does not dispute the validity of the clause that states

explicitly that disputes over the agreement’s enforceability are reserved for the

arbitrator. As the agreement states,

The arbitrator—and not any federal, state, or local court or

agency—will have exclusive authority to resolve any dispute

render an arbitration agreement substantively unconscionable, when the Fifth

Circuit’s opinion does not reference Shankle nor address any aspect of

unconscionability); id. (Brown asserting that Circuit City Stores, Inc. v. Adams, 532

U.S. 105, 123 (2001), “acknowledged that ‘inequality of bargaining power between

employers and employees’ is a significant consideration in evaluating enforcement of

arbitration agreements, when the cited passage actually marshaled the “real benefits

to the enforcement of arbitration agreements” in the employment context). The Court

cautions Mr. Brown that even parties without counsel must carefully review their

filings and ensure that they are supported by existing law, based on a reasonable

inquiry. See Fed. R. Civ. P. 11(b). Misstating case law falls short of that standard.

relating to the scope, applicability, validity, enforceability, or

waiver of this Agreement.

Dkt. 11-5 at 2; see also Dkt. 11 at 10-11; Dkt. 15 at 9-11.

Federal law permits parties to “delegate threshold arbitrability

questions to the arbitrator, so long as the parties’ agreement does so by ‘clear

and unmistakable’ evidence.” Henry Schein, Inc. v. Archer & White Sales, Inc.,

586 U.S. 63, 69 (2019) (quoting First Options of Chicago, Inc. v. Kaplan, 514

U.S. 938, 944 (1995)). The arbitration agreement does just that by granting

the arbitrator “exclusive authority to resolve any dispute relating to the ...

enforceability” of the agreement. See Dkt. 11-5 at 2.

In addition, a provision “stipulating that the AAA Rules will govern the

arbitration of disputes constitutes such ‘clear and unmistakable’ evidence.”

Arnold v. Homeaway, Inc., 890 F.3d 546, 552 (5th Cir. 2018) (citing Petrofac,

Inc. v. DynMcDermott Petroleum Operations Co., 687 F.3d 671, 674-75 (5th Cir.

2012)). And here, the agreement clearly and unmistakably delegates

arbitrability questions to the arbitrator by invoking the AAA rules. See Dkt.

11-5 at 3 (stating that, “except as provided in this Agreement or otherwise

agreed to,” the arbitration “will be under the then current Employment

Arbitration Rules of the AAA”).

As Defendants note, the agreement’s multiple delegation clauses

preclude Brown from using his unconscionability challenges to avoid

arbitration. When determining if arbitration can be compelled, courts

“distinguish between ‘validity’ or ‘enforceability’ challenges and ‘formation’ or

‘existence’ challenges. Arnold, 890 F.3d at 550. Courts look to state law to

determine whether a challenge goes to validity or existence of a contract. See

Lopez v. Cintas Corp., 47 F.4th 428, 433 (5th Cir. 2022) (citing Edwards v.

DoorDash, Inc., 888 F.3d 738, 745 (5th Cir. 2018)). “Under Texas law,

unconscionability goes to validity rather than formation.” Id. (citing In re Poly-

America, L.P., 262 S.W.3d 337, 348 (Tex. 2008) (vacating a district court

decision for resolving the merits of plaintiff’s unconscionability claim, finding

that it must be decided in arbitration)). Brown’s unconscionability contentions

therefore dispute the validity of the arbitration agreement, and not the

agreement’s existence.4 This is doubly so because Brown did not mount any

challenges “specific to the delegation provision ....” See Rent-A-Center, W., Inc.

v. Jackson, 561 U.S. 63, 71-76 (2010) (rejecting analogous unconscionability

challenge that sought to invalidate the agreement as a whole, where the

agreement vested the arbitrator with exclusive authority to resolve questions

4 Notably, too, Brown is wrong about the costs attendant to arbitration. See Dkt. 14

at 5-6. Under the arbitration agreement, Brown is only responsible for paying the

initial filing fee and his own costs. See Dkt. 11-5 at 4. All other costs, including for

the arbitrator, are borne by his employer. See id. (“G&A Partners (and/or the

Company, as applicable) shall pay any remaining portion of the initial fee and will

pay all costs and expenses unique to arbitration, including without limitation the

arbitrator’s fees.”).

of enforceability). Because Brown has proffered no argument that would

negate the arbitration agreement’s delegation clauses, his challenges to the

agreement’s enforceability must be resolved by the arbitrator.

II. The EFAA does not apply to Brown’s claims.

Brown also contends that the EFAA precludes arbitration. See Dkt. 14

at 8-9. But as Defendants assert, the EFAA does not apply because Brown

does not allege sexual harassment or assault. See Dkt. 15 at 16-17.

After finding a valid arbitration agreement, the Court must determine

whether any federal statute or policy renders the claims non-arbitrable. See

JP Morgan Chase & Co. v. Conegie ex rel. Lee, 492 F.3d 596, 598 (5th Cir. 2007).

The EFAA states that “no predispute arbitration agreement ... shall be valid

or enforceable with respect to a case which is filed under Federal, Tribal, or

State law and relates to the sexual assault dispute or the sexual harassment

dispute.” 9 U.S.C. § 402(a) (emphasis added). Brown acknowledges this

explicit limitation. Dkt. 14 at 9.

Brown tries to recast his discrimination claim as a sexual harassment

claim. See id. But Defendants contend, and the Court agrees, that Brown has

not alleged any conduct constituting sexual harassment—only sex

discrimination. See Dkt. 15 at 16-17; see also, e.g., Campos v. Ins. & Bonds

Agency of Tex., LLC, 2013 WL 321865, at *6 (W.D. Tex. Jan. 28, 2013) (sex-

based harassment constitutes sex discrimination, but the reverse is not

necessarily true); Pepe v. N.Y. Life Ins. Co., 2023 WL 1814879, at *4 & n.19

(E.D. La. Feb. 7, 2023) (EFAA did not apply to pro se plaintiff’s liberally-

construed complaint, which did not raise a claim for sexual harassment).

Brown’s further policy arguments are irrelevant because EFAA does not apply

to his claims. See Dkt. 14 at 11.

The proper remedy is to grant Defendants’ motion to compel arbitration

and to stay this case pending arbitration. See Smith v. Spizzirri, 601 U.S. 472,

475-76 (2024) (“When a federal court finds that a dispute is subject to

arbitration, and a party has requested a stay of the court proceeding pending

arbitration, the court does not have discretion to dismiss the suit on the basis

that all the claims are subject to arbitration.”). And because the arbitrator

must decide whether the arbitration agreement is enforceable, and if so,

whether Brown’s claims have merit, Brown’s motion for summary judgment

should be denied as moot.

Order and Recommendation

For the foregoing reasons, it is ORDERED that Defendants G&A

Outsourcing III, LLC, OnPoint Lab L.L.C., and Chandresh Patel’s motion to

compel arbitration and stay the case (Dkt. 11) be GRANTED. This dispute

must be submitted to arbitration. These proceedings are hereby STAYED

pending arbitration.

It is further RECOMMENDED that Plaintiff Bryce Brown’s motion for

summary judgment (Dkt. 16) be DENIED as moot.

If the Court adopts the recommendation, then it is further

RECOMMENDED that that this case be administratively CLOSED. Within

30 days of completing the arbitration process, the parties should be directed to

notify this Court as to whether this case should be reopened or dismissed.

The parties have fourteen days from. service of this

Memorandum and Order and accompanying Recommendation to file

written objections. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). Failure

to file timely objections will preclude appellate review of factual

findings and legal conclusions, except for plain error. Ortiz v. City of

San Antonio Fire Dep’t, 806 F.3d 822, 825 (5th Cir. 2015).

Signed on April 22, 2025, at Houston, Texas.

(A,

United States Magistrate Judge