COA Orders Employment Discrimination Case to Arbitration

by Beth Graham
October 2015

CMP Resolution Blog by Lesley Allport and Katherine Graham.

Beth Graham

 Texas’ 13th District Court of Appeals has ordered an employment discrimination lawsuit to arbitration.  InOphthalmic Consultants of Texas, P.A. v. Morales, No. 13-15-00278-CV (Tex. App – Corpus Christi, October 15, 2015), an ophthalmology business, Ophthalmic Consultants of Texas, P.A. (“OCT”), apparently hired a physician, Dr. Adolfo Morales, in 2009.  As part of his employment contract, Dr. Morales signed a three-page arbitration agreement.  In the agreement, the doctor consented to submit all employment-related and other legal claims against OCT to binding arbitration before the American Arbitration Association in the city where he was employed.  The terms of the agreement stated:

Both I and the Company understand that, by agreeing to arbitration, we are agreeing to substitute one legitimate dispute resolution forum (arbitration) for another (litigation), and thereby are waiving the right to have disputes resolved in court. This substitution involves no surrender, by me or the Company, of any statutory or common law benefit, protection, or defense.

After OCT refused to renew Dr. Morales’ contract, he filed a discrimination complaint with the Texas Workforce Commission.  According to the doctor, he was terminated due to age discrimination.  When his administrative remedies were exhausted, Dr. Morales filed a discrimination lawsuit against his former employer.  The business responded to the case by filing a motion to compel the dispute to arbitration.  The district court denied the employer’s motion and OCT filed an interlocutory appeal with Texas’ 13th District Court of Appeals in Corpus Christi.

On appeal, OCT claimed the trial court committed error when it denied the ophthalmology company’s motion to compel arbitration.  According to the employer, the company successfully established that a valid agreement to arbitrate existed and Dr. Morales’ claims fell within the scope of that agreement.

First, the Court of Appeals stated it would review the lower court’s order using an abuse of discretion standard.  Despite this, the court said it was required to defer to the district court’s factual determinations that were supported by the evidence contained in the record.  Next, the appellate court turned to the enforceability of the arbitral agreement at issue.  After examining the evidence, the court stated:

We determine that OCT bore its burden of proof and established the existence of a valid arbitration agreement between the parties. See In re Kellogg Brown & Root, 166 S.W.3d at 737; ABB Kraftwerke Aktiengesellschaft, 115 S.W.3d 287 at 291. It established that there was: (1) an offer; (2) acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party’s consent to the terms; and (5) execution and delivery of the contract with the intent that it be mutual and binding. See ABB Kraftwerke Aktiengesellschaft, 115 S.W.3d at 291. We did not find Dr. Morales’ arguments to the contrary persuasive.

After that, the Corpus Christi court examined whether the ophthalmology business waived its right to compel arbitration.  After stating there is a strong presumption against waiver, the court said:

A party may waive its right to arbitrate by expressly evidencing that it wishes to resolve the case in a judicial forum. Id. A party can also waive its right to arbitrate if it takes an action inconsistent with its right to arbitrate to the opposing party’s prejudice. Id. “Thus, waiver will be found only when (1) the party seeking arbitration has substantially invoked the judicial process and (2) the party opposing arbitration suffers actual prejudice as a result.” Id. at 533–34. An attempt to resolve the merits of a suit outside of arbitration and still retain the right to arbitration is clearly impermissible. Id. at 534. A party substantially invokes the judicial process when it takes “specific and deliberate actions, after the suit’s filing, that are inconsistent with the right to arbitrate.” Id. Examples of substantially invoking the judicial process include moving for summary judgment or seeking a final resolution of the dispute. Id.

It is undisputed that during the pendency of this case, other than its motion to compel arbitration, OCTonly filed an answer that included a demand for arbitration. It is further undisputed that the case remained effectively stayed pending the trial court’s ruling on OCT’s motion to compel arbitration. Therefore, OCT did not substantially invoke the judicial process and did not take any action inconsistent with its intention to compel arbitration. See id. at 533–34. We determine that OCT did not waive its right to enforce the arbitration agreement. See Jernigan, 111 S.W.3d at 156; In re Bruce Terminix Co., 988 S.W.2d at 704–05; Interconex, 224 S.W.3d at 533. We sustain OCT’s fourth issue.

Because a valid agreement to arbitrate existed, Dr. Morales’ claims fell within the scope of that agreement, andOCT did not waive its right to compel arbitral proceedings, Texas’ 13th District Court of Appeals in Corpus Christi reversed the district court’s order denying OCT’s motion to compel arbitration and remanded the case.

Biography


Beth Graham received a J.D. from the University of Nebraska College of Law in 2004 and a M.A. in Information Science and Learning Technologies from the University of Missouri in 2006. She also holds a B.S. in Public Administration from the University of Nebraska-Omaha. She is licensed to practice law in Texas and the District of Columbia.



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