Corpus Christi COA Orders Employment Dispute to Arbitration

In an interlocutory appeal, the Corpus Christi Appeals Court has reversed a lower court’s decision to deny a party’s motion to compel arbitration in an employment dispute.  In DISH Network, L.L.C. v. James Brenner, Nos. 13–12–00564–CV and 13–12–00620–CV (June 27, 2013), James Brenner filed an employment discrimination lawsuit against his former employer, DISH Network, under the Texas Commission on Human Rights Act.  When Brenner was hired to work as a customer service representative for the company, however, he signed an agreement to arbitrate any employment disputes with EchoStar Communications.  EchoStar is the former name of the company that controls DISH Network.  No one from EchoStar or DISH Network signed the arbitration agreement.

DISH Network responded to Brenner’s lawsuit by filing a motion to compel arbitration under the Federal Arbitration Act (FAA).  In response, Brenner argued the parties’ agreement to arbitrate was illusory, indefinite, and wrongfully barred collective actions.  Although the trial court initially sided with DISH Network, the court denied the company’s motion due to the fact that both parties did not sign the agreement.  Instead, the trial court ordered the parties to mediate their dispute.  DISH Network then filed an appeal with Texas’ Thirteenth District in Corpus Christi.

First, the appellate court addressed Brenner’s argument that DISH Network lacks the capacity to seek arbitration because the corporation failed to maintain corporate formalities and its ability to function.  According to Brenner, the company “is not in good standing as it has not satisfied all franchise tax requirements.”  In response, DISH Network produced a “Certificate of Account Status from the Texas Comptroller, which confirms that DISH Network ‘is in good standing’ with the Texas Comptroller ‘having no franchise tax reports or payments due at this time.’”  According to the court,

Assuming without deciding that Brenner has not waived this capacity issue, see TEX. R. CIV. P. 93(2) (requiring a party to file a verified pleading if he contends that the plaintiff lacks the capacity to sue unless the truth of such matter appears of record), because the most current certificate before this Court establishes that DISH Network is in good standing with the Texas Comptroller, we conclude that it has the capacity to seek arbitration. Brenner’s contention based on forfeiture of corporate privileges is moot.

Next, the Court of Appeals addressed the validity of the parties’ arbitration agreement.  After finding that DISH Network established a valid agreement to arbitrate existed, the court discussed whether the company was required to sign the contract.  According to the Thirteenth District, “a signature is not required to prove a party’s acceptance of an arbitration agreement under the FAA.”  The court stated,

The undisputed evidence establishes that DISH Network intended to be bound by the Arbitration Agreement. As in Brown & Root, DISH Network drafted the Arbitration Agreement, which set out that Brenner and EchoStar (now DISH Network) agreed, among other things, that any claim arising out of Brenner’s termination would be resolved by arbitration. See 1998 Tex. App. LEXIS at *4. The agreement specifically set out that the company agreed to resolve Brenner’s termination claim through arbitration. See id. DISH Network required all employees to sign the Arbitration Agreement prior to working at the company. See id. The Arbitration Agreement was printed on EchoStar’s letterhead. Finally, DISH Network, through its motion, requested that the agreement be enforced. See id.

After that, the court addressed Brenner’s argument that the agreement to arbitrate was illusory.  According to the appeals court,

We have already concluded that the evidence in this case established that DISH Network, the non-signing party, assented to the terms of the Arbitration Agreement—that it intended to be bound by the agreement, even absent its signature.

Next, the Thirteenth District dismissed Brenner’s allegation that the arbitration agreement lacked consideration by stating, “it is well-settled in Texas that “’[a] mutual agreement to arbitrate claims provides sufficient consideration for an arbitration agreement.’”  The court also found “there is no evidence that the Arbitration Agreement is subject to change by DISH Network,” and dismissed Brenner’s claim that the agreement failed as a result of its alleged bar to class action claims.

The appellate court stated,

Brenner also claimed in the trial court that the Arbitration Agreement expired upon his termination because it was a covenant within a larger employment agreement. We disagree. Assuming without deciding that the Arbitration Agreement in this case was such a covenant, Texas law provides that an arbitration agreement survives termination of employment, even absent a savings clause.

Finally, the Thirteenth District Court of Appeals dismissed Brenner’s argument that his case falls outside of the scope of the parties’ agreement.  According to the court,

Because we must resolve any doubts about an arbitration agreement’s scope in favor of arbitration, we conclude that Brenner’s claims against DISH Network, L.L.C. fall within the scope of the Arbitration Agreement.

Since DISH Network established that an agreement to arbitrate existed and Brenner’s claims fell within the scope of that agreement, the Corpus Christi Appeals Court reversed “the order denying DISH Network’s motion to compel arbitration and motion to abate the proceedings pending arbitration” and remanded the case.