Petition for Writ of Certiorari — Iveth Rodriguez Lopez, Petitioner v. ReadyOne Industries, Inc.

APPENDIX

A.

Trial Court’s Order Denying Defendant’s

Motion to Compel Arbitration,

dated March 17, 2015 .................................A- 1

B.

Eighth Court of Appeals Judgment and

Opinion, dated April 25, 2018......................A-2

C.

Eighth Court of Appeals Order denying

Appellee’s Motion for Rehearing,

dated July 31, 2018....................................A- 15

D.

Order of Supreme Court of Texas denying

petition for review,

dated October 26, 2018...............................A-16

IN THE DISTRICT COURT OF

EL PASO COUNTY, TEXAS

346TH JUDICIAL DISTRICT

IVETH RODRIGUEZ LOPEZ,§

§

Plaintiff,

§

§

vs.

§ No. 2014-DCV-1252

§

READYONE INDUSTRIES, §

INC.,

§

§

Defendant.

§

ORDER DENYING DEFENDANT’S

MOTION TO COMPEL ARBITRATION

On the13th day of August, 2014, came on to be

heard Defendant’s Motion to Compel Arbitration.

After hearing the arguments of counsel and

considering the briefs and authorities cited by the

parties, the Court finds the following Order reasonable

and necessary.

It is ORDERED, ADJUDGED and DECREED

that Defendant’s Motion to Compel Arbitration be and

is hereby DENIED.

Signed this

17

day of

March

, 2015.

/s/ Angie Juarez-Barill

JUDGE

1

551 S.W.3d 305(Tex. App.–El Paso 2018, pet. denied)

COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

No. 08-15-00157-CV

Appeal from 346th District Court

of El Paso County, Texas (TC#2014-DCV1525)

READYONE INDUSTRIES, INC.,

Appellant,

v.

IVETH RODRIGUEZ LOPEZ,

Appellee.

JUDGMENT

The Court has considered this cause on the record

and concludes there was error in the judgment. We

therefore reverse the judgment of the court below and

remand the cause to the trial court with instructions

to enter an order granting ReadyOne’s motion to

compel arbitration, in accordance with this Court’s

opinion. We further order that the Appellant recover

from Appellee all costs of this appeal, for which let

execution issue, and this decision be certified below

for observance.

IT IS SO ORDERED THIS 25th DAY OF

APRIL, 2018.

ANN CRAWFORD McCLURE, Chief Justice

Before McClure, C.J., Rodriguez, J., and Larsen, J.

(Senior Judge), sitting by assignment

Rodriguez, J., Dissent

2

551 S.W.3d 305(Tex. App.–El Paso 2018, pet. denied)

COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

No. 08-15-00157-CV

Appeal from 346th District Court

of El Paso County, Texas (TC#2014-DCV1525)

READYONE INDUSTRIES, INC.,

Appellant,

v.

IVETH RODRIGUEZ LOPEZ,

Appellee.

OPINION

This is an interlocutory appeal from the denial of

a motion to compel arbitration pursuant to Section

51.016 of the Texas Civil Practices and Remedies

Code. TEX.CIV. PRAC.&REM.CODE ANN. § 51.016

(West 2015) (permitting an interlocutory appeal from

the denial of a motion to compel arbitration under the

Federal Arbitration Act). ReadyOne Industries, Inc.

Raises one issue contending the trial court abused its

discretion in denying its motion to compel arbitration

and stay proceedings pending arbitration. For the

reasons that follow, we reverse and remand with

instructions to enter an order compelling arbitration.

FACTUAL SUMMARY

ReadyOne is a garment manufacturer located in

El Paso,Texas. Pursuant to a contract with the

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United States Government, ReadyOne manufactures

and supplies apparel for the United States Military.

ReadyOne’s involvement in interstate commerce

includes purchasing goods and services from out-ofstate that are shipped to it in Texas, and

manufacturing goods that are then shipped and used

out of state.

ReadyOne employed Iveth Rodriguez Lopez in

May 2011 as a sewing machine operator. On May 31,

2011, she signed a document entitled “Receiptand

Arbitration Acknowledgment.” Her signature

acknowledged that she received and read, or had the

opportunity to read, the following documents: the

Mutual Agreement to Arbitrate (MAA), the Benefits

Schedule, and the Summary Plan Description (SPD)

for the Employee Injury Benefit Plan. She further

acknowledged by her signature that claims and

disputes covered under the MAA “must be submitted

to an arbitrator, rather than a judge and jury in

court;” that she and ReadyOne were mutually

“agreeing to comply with [the] arbitration

requirements;” that all covered claims would be

subject to the MAA; and that “any decision of an

arbitrator will be final and binding.”

The MAA signed by the parties provided that all

covered claims would be exclusively resolved by

binding arbitration under the Federal Arbitration Act

(FAA). The MAA set out all arbitration procedures,

contained an integration clause providing that it

constituted the complete agreement and superseded

any prior agreement regarding arbitration; and

indicated that any oral representations made before

or after Lopez was hired did not alter the MAA.

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In October 2013, Lopez claimed that she suffered

injuries resulting from “repetitive sewing tasks.” In

her affidavit submitted to the trial court, Lopez did

not deny signing the MAA, but rather, insisted that

she did not remember signing the document. She

stated that she signed numerous documents related

to her employment and hiring, but ultimately did not

know why she was signing them. According to her

affidavit, ReadyOne told her that the documents were

for benefits if she got hurt on the job. She further

claimed to have been misled into believing that the

documents were not important and were only routine

documents that ReadyOne needed to complete its

paperwork for her employment. She did not know

that: (1) she was signing an arbitration agreement;

(2) she was waiving her rights; (3) she could seek the

advice of counsel before signing the documents; or (4)

she was permitted to decline to sign the documents.

She also claimed that ReadyOne never told her that

the arbitration agreement was a “stand-alone”

document and she was not given any time to review

the documents before signing them. Finally, Lopez

contended that ReadyOne never told her that the

arbitration agreement was a “stand-alone” document

and she was not given any time to review the

document before signing them. Finally, Lopez

contended that ReadyOne never told her that she was

signing an arbitration agreement or what that meant,

no one ever explained to her the contents of the

documents or their effect, she was never provided

with an orientation session, and no one ever

translated the documents for her. She insisted that

she never would have signed the arbitration

agreement had she been advised that it meant she

5

was waiving her right to a jury trial.

In addition to her claims concerning the MAA,

Lopez’s affidavit also provided the trial court with a

description of several learning disorders from which

she suffers, including: a dysthymic disorder, reading

disorder, disorder of written expression, and a

language disorder. She further related to the trial

court that she had a reading ability below the second

grade level and experienced difficulties with her

memory.

Lopez filed her original petition in April 2014 and

alleged that no valid MAA existed. She provided the

following reasons, relevant to this appeal, as to why

the MAA and Injury Benefit Plan were void and

invalid:

! The Federal Arbitration Act (FAA) is

inapplicable to the MAA.

! The documents are procedurally and

substantively unconscionable.

! The MAA is unenforceable because the FAA is

unconstitutional under the Tenth Amendment of the

United States for hourly employees involved in a

labor job.

! The MAA is void in violation of the Texas Labor

Code Sections 406.033(e) and 406.035. TEX. LAB.

CODE ANN. §§ 406.033(e), 406.035 (West 2015).

! The MAA is illusory and unenforceable.

! The MAA is unenforceable under Texas law,

specifically Section 171.002(a)(3) of the Texas Civil

Practices and Remedies Code. TEX. CIV. PRAC. &

REM. CODE ANN. § 171.002(a)(3) (West 2011).

6

In response, ReadyOne filed its original answer as

well as a motion to compel arbitration. In support of

its motion, ReadyOne submitted the affidavit of its

Director of Human Resources and Compliance,

Guadalupe Madrid, and the following five documents:

(1) the MAA (Exhibit A); (2) the Receipt and

Arbitration Acknowledgment (Exhibit B); (3) the

Employee Injury Benefit Plan (Exhibit C); (4) the

Summary Plan Description (SPD) (Exhibit D); and (5)

the Employee Orientation PowerPoint Presentation

(Exhibit E). Following a hearing in August 2014, the

trial courtdenied the motion to compel. ReadyOne

now appeals.

DENIAL OF ARBITRATION

In its sole issue, ReadyOne challenges the

order refusing to compel arbitration. Lopez raised

several arguments in opposition to the motion to

compel arbitration and the trial court denied the

motion without specifying the basis for the ruling.

ReadyOne has addressed each of these arguments

and defenses on appeal.

Standard of Review and Relevant Law

We review a trial court’s decision to grant or

deny a motion to compel arbitration for an abuse of

discretion. Ellman v. JC General Contractors, 419

S.W.3d 516, 520 (Tex. App.–El Paso 2013, no pet.).

Under this standard, we defer to a trial court’s

factual determinations if they are supported by

evidence, but we review a trial court’s legal

determinations de novo. In re Labatt Food Serv.,

L.P., 279 S.W.3d 640, 643 (Tex. 2009); Ellman, 419

S.W.3d at 520.

A party seeking to compel arbitration must (1)

7

establish the existence of a valid arbitration

agreement; and (2) show that the claims asserted are

within the scope of the agreement. See In re

AdvancePCS Health L.P., 172 S.W.3d 603, 605 (Tex.

2005); Delfingen US-Texas, L.P. v. Valenzuela, 407

S.W.3d 791, 797 (Tex. App.–El Paso 2013, no pet.).

We apply state contract principles to determine

whether a valid arbitration agreement exists. J.M.

Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex.

2003); Delfingen, 407 S.W.3d at 797. Once the party

seeking to compel arbitration proves that a valid

arbitration agreement exists, a presumption attaches

favoring arbitration and the burden shifts totheparty

resisting arbitration to establish a defense to

enforcement. Delfingen, 407 S.W.3d at 797. In the

context of enforcement, defenses refer to

unconscionability, duress, fraudulent inducement,

and revocation. In re FirstMerit Bank, N.A., 52

S.W.3d 749, 756 (Tex. 2001); Delfingen, 407 S.W.3d

at 797. Because the law favors arbitration, the

burden of proving a defense to arbitration is on the

party opposing it. IHS Acquisition No. 171, Inc. v.

Beatty-Ortiz, 387 S.W.3d 799, 807 (Tex.App.–El Paso

2012, no pet.), citing J.M. Davidson, 128 S.W.3d at

227.

Because the trial court here did not enter

specific findings of fact or conclusions of law to

explain its denial of the motion to compel arbitration,

we must uphold the trial court’s decision on any

appropriate legal theory urged below. Shamrock

Foods Co. v. Munn & Assocs., Ltd., 392 S.W.3d 839,

844 (Tex. App.–Texarkana 2013, no pet.); Inland Sea,

Inc. v. Castro, 420 S.W.3d 55, 57-59 (Tex.App.–El

Paso 2012, pet. denied) (affirming denial of motion to

8

compel arbitration on alternative ground where order

did not specify the basis for the ruling); In re Weeks

Marine, Inc., 242 S.W.3d 849, 854 (Tex.App.–Houston

[14th Dist.] 2007 (orig. proceeding).

The FAA Applies

We begin our review by examining whether the

FAA is applicable. Citing Bernhardt v. Polygraphic

Company of America, 350 U.S. 198, 76 S.Ct. 273, 100

L.Ed. 199 (1956), Lopez argues that the FAA does not

govern the MAA because there is no evidence she was

personally engaged in commerce. In Bernhardt, the

plaintiff entered into an employment contract with

Polygraphic to become superintendent of the

company’s lithograph plant in Vermont. Bernhardt v.

Polygraphic Company of America, 218 F.2d 948, 949

(2nd Cir. 1955). The employment contract contained

an arbitration provision. Id. Following his discharge,

Bernhardt sued Polygraphic in a Vermont state court

for breach of contract. Id. The Second Circuit Court

of Appeals held that the FAA applied to the

employment contract. Bernhardt, 218 F.2d at 949-50,

but the Supreme Court reversed because it concluded

that the contract did not evidence a transaction

involving commerce within the meaning of section 2

of the FAA, and there was no evidence that

Bernhardt, while performing his duties under the

employment contract, was working in commerce,

producing goods for commerce, or was engaging in

activity that affected commerce. Bernhardt, 350 U.S.

at 200-01, 76 S.Ct. at 275.

The instant case is distinguishable from Bernhardt

because the MAA specifically provides that ReadyOne

is engaged in commerce as that term is defined in

9

Section 2 of the Federal Arbitration Act and the “FAA

governs all aspects of this Agreement.” It is well

established that parties may expressly agree to

arbitrate under the FAA. In re Rubiola, 334 S.W.3d

220, 223 (Tex. 2011); Lucchese, Inc. v. Solano, 388

S.W.3d 343, 348 (Tex.App.–El Paso 2012, no pet.).

Further, ReadyOne submitted evidence that it was

regularly engaged in interstate commerce in that it

purchases and receives goods and services from

outside the state of Texas and it manufactures goods

that are shipped and used outside of the state. We

conclude that the FAA applies to the MAA. See In re

Border Steel, Inc., 229 S.W.3d 825, 830-31 (Tex. App.

–El Paso 2007) (orig. proceeding) (holding that the

FAA applied where the defendant presented evidence

that it engaged in interstate commerce and the

arbitration agreement contained a provision that the

FAA governed). Therefore, to the extent the trial

court denied ReadyOne’s motion on this basis, it

erred in doing so.

The MAA is not Ambiguous or Illusory

[Court of Appeals’ discussion and resolution of state

law issue not pertinent to the petition]

Procedural Unconscionability

[Court of Appeals’ discussion and resolution of state

law issue not pertinent to the petition]

Other Defenses to Enforcement of the Arbitration

Agreement

Lopez raised several other defenses to enforcement

of the Arbitration Agreement. First, she alleged that

the Arbitration Agreement is unenforceable under

Section 406.033(a) of the Texas Labor Code. This

10

statute provides that a non-subscriber negligence

cause of action may not be waived by an employee

before the employee’s injury and any pre-injury

agreement by an employee to waive a cause of action

is void and unenforceable. TEX.LAB.CODE ANN. §

406.033(e) (West 2015). Section 406.033(a) does not

render the Arbitration Agreement void because it is

not a pre-injury waiver of her non-subscriber

negligence cause of action. See In re Odyssey

Healthcare, Inc., 310 S.W.3d 419, 423 (Tex. 2010); In

re Golden Peanut Co., LLC, 298 S.W.3d 629, 631

(Tex. 2009). Accordingly, to the extent the trial court

denied ReadyOne’s motion to compel arbitration on

this basis, it erred.

Lopez also asserted that the Arbitration

Agreement is unenforceable under Section 171.002 of

the Texas Civil Practices and Remedies Code because

her attorney did not sign it. This statute provides

that Chapter 171 (the Texas General Arbitration Act)

does not apply to a claim for personal injury unless

the arbitration agreement is signed by each party and

each party’s attorney. TEX.CIV.PRAC.&REM.CODE

ANN. § 171.002(a)(3), ( c) (West 2011). Section of the

FAA preempts state law that could otherwise render

arbitration agreements unenforceable in a contract

involving interstate commerce. 9 U.S.C.A. § 2 (West

2009); Southland Corp. v. Keating, 465 U.S. 1, 10-11,

104 S.Ct. 852, 858, 79 L.Ed. 2d 1 (1984). This

preemption has been applied to Section 171.002 of

the Civil Practices and Remedies Code. See In re

Olsham Foundation Repair Company, LLC, 328

S.W.3d 883, 890 (Tex. 2010) (holding that the FAA

preempts the provisions of Section 171.002 that

would otherwise render an arbitration agreement

11

unenforceable). Therefore, to the extent the trial

court denied the motion on this basis, it erred in

doing so.

Finally, Lopez argued in the trial court that

compliance with the FAA violates the Tenth

Amendment by interfering with the Workers’

Compensation Act. The Texas Supreme Court has

decided this contention adversely to Lopez. See In re

Odyssey Healthcare, Inc., 310 S.W.3d at 423-24

(holding that the FAA does not violate the Tenth

Amendment by encroaching on a state power to enact

and regulate its own workers’ compensation system).

Thus, to the extent the trial court denied the motion

on this basis, it erred.

ReadyOne carried its burden of establishing

the existence of an agreement to arbitrate the claims

raised by Lopez in her suit. Lopez did not establish

any valid defenses to enforcement of the Arbitration

Agreement. Because the trial court erred by denying

ReadyOne’s motion to compel arbitration, we sustain

Issue One. We reverse and remand the cause to the

trial court with instructions to enter an order

granting ReadyOne’s motion to compel arbitration.

April 25, 2018

ANN CRAWFORD McCLURE, Chief Justice

Before McClure, C.J., Rodriguez, J., and Larsen, J.

(Senior Judge), sitting by assignment

Rodriguez, J., Dissent

12

551 S.W.3d 305(Tex. App.–El Paso 2018, pet. denied)

COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

No. 08-15-00157-CV

Appeal from 346th District Court

of El Paso County, Texas (TC#2014-DCV1525)

READYONE INDUSTRIES, INC.,

Appellant,

v.

IVETH RODRIGUEZ LOPEZ,

Appellee.

DISSENTING OPINION

I, respectfully, dissent. I find the arbitration

agreement is unenforceable based on the affirmative

defense of procedural unconscionability.

[Dissenting Opinion’s discussion of state law

issue not pertinent to the petition]

Lopez states she was not given time to review

the documents. Further, she was told “‘that the

documents are for benefits if you get hurt on the job,

just sign them’ or words to that effect. I was misled

into believing that the documents were not important

and were just routine documents that the company

needed to complete their paperwork on my

13

employment and so I could receive benefits if I was

hurt on the job. I did not know that what I was

signing was an arbitration agreement or anything

other than papers required to be signed for my job.”

This is sufficient evidence to support a legal

conclusion that Lopez was affirmatively misled into

signing the arbitration agreement. We must uphold

the trial court’s decision on an applicable legal theory

and she clearly acted in accordance with guiding

rules or principles. The trial court did not abuse her

discretion in refusing to compel arbitration, because

her conclusion is not arbitrary or unreasonable.

April 25, 2018

YVONNE T. RODRIGUEZ, Justice

14

COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

No. 08-15-00157-CV

Appeal from 346th District Court

of El Paso County, Texas (TC#2014-DCV1525)

READYONE INDUSTRIES, INC.,

Appellant,

v.

IVETH RODRIGUEZ LOPEZ,

Appellee.

ORDER

The Appellee’s motion for rehearing, having been

duly considered, is denied. Accordingly, it is

ORDERED that said motion be and it is hereby

denied.

IT IS SO ORDERED THIS 31ST DAY OF JULY,

2018.

ANN CRAWFORD McCLURE, Chief Justice

Before McClure, C.J., Rodriguez, J., and Larsen, J.

(Senior Judge), sitting by assignment

Rodriguez, J., Dissent

15

NO. 18-0887

SUPREME COURT OF TEXAS

RE: Case No. 18-0887

Date: 10/26/2018

COA #: 08-15-00157-CV TC#: 2014-DCV1252

STYLE: LOPEZ v. READYONE INDUSTRIES, INC.

Today the Supreme Court of Texas denied the

petition for review in the above-referenced case.

MR. JEFFREY B. POWNELL

SCHERR & LEGATE PLLC

ONE TEXAS TOWER

109 NORTH OREGON, 12TH FLOOR

EL PASO, TX 79901

* DELIVERED VIA E-MAIL *

MR. S. ANTHONY SAFI

MOUNCE, GREEN, MYERS, SAFI

PAXSON, & GALATZAN, P.C.

P.O. BOX 1977

EL PASO, TX 79950-1977

* DELIVERED VIA E-MAIL *

DISTRICT CLERK EL PASO COUNTY

EL PASO COUNTY COURT

16

500 EAST SAN ANTONIO SUITE 103

EL PASO, TX 79901

* DELIVERED VIA EMAIL *

MS. DENISE PACHECO

CLERK, EIGHTH COURT OF APPEALS

500 EAST SAN ANTONIO, SUITE 1203

EL PASO, TX 79901

* DELIVERED VIA E-MAIL *

17