Fifth Circuit Overturns W.D. Texas Order Compelling Arbitration in FLSA Case

The nation’s Fifth Circuit Court of Appeals has reversed a Texas federal court’s order compelling an at-will employee to arbitrate a pay dispute with her employer.  In Trammell v. AccentCare, Inc., No. 18-50872 (5th Cir., June 7, 2019), a woman, Trammell, provided in-home personal care assistance services for a home healthcare provider, AccentCare, for several years as an at-will employee.  In 2016, the company apparently mailed an arbitration agreement to Trammell’s home.  Trammell did not sign the document or return it to AccentCare.

In late 2017, Trammell filed a Fair Labor Standards Act (“FLSA”) lawsuit against AccentCare in the Western District of Texas.  Her employer responded to the case by filing a motion to compel arbitration based on the agreement that was mailed to Trammell’s home in 2016. According to Trammell, however, she never received the document and had no knowledge regarding its contents.  In addition, Trammell offered testimony stating her employer was notified about her intermittent difficulties related to receiving mail at her home.

A federal magistrate judge found the arbitration agreement was valid based on the mailbox rule.  Under the rule, “[a] letter properly addressed, stamped and mailed may be presumed to have been received by the addressee in the due course of the mail.” The Western District of Texas adopted the magistrate judge’s recommendation and issued an order compelling the FLSA dispute to arbitration.  In response, Trammell filed an appeal with the United States Court of Appeals for the Fifth Circuit.

According to the Fifth Circuit’s unpublished opinion, the mailbox rule is rebuttable:

Whatever the precise amount of evidence required to rebut the mailbox rule’s presumption of receipt, and hence, notice for the purpose of establishing an agreement to arbitrate, Trammell has satisfied it here. Trammell has denied receipt in a sworn affidavit, stating further that she notified three AccentCare personnel about her problems sending and receiving mail at her home, including mail from AccentCare, and that she began driving her time slips to work since they were being lost in the mail. Moreover, while there is no dispute that AccentCare mailed the proposed arbitration agreement to Trammell, the company admits that it cannot produce the signed agreement, which tends to corroborate that she did not sign the agreement. Not that signature was legally required, but the absence of a signed document is not inconsistent with Trammell’s claim of non-receipt. Nor did AccentCare offer affidavits from its employees contradicting what Trammell allegedly told them. Trammell has not merely provided an unsubstantiated affidavit which “does not allege or explain any potential deficiency” in the mailing process. See, e.g., Cash v. AXA Equitable Life Ins., 229 F. Supp. 3d 542, 549–50 (W.D. Tex. 2017). Affidavits that “simply deny receipt . . . are insufficient to undermine the presumption of receipt.” Marsh v. First USA Bank, 103 F. Supp. 2d 909, 917– 19 (N.D. Tex. 2000); see also Tinder v. Pinkerton Sec., 305 F.3d 728, 735-36 (7th Cir. 2002) (affidavit with plaintiff’s bare denial of receipt of arbitration notice is insufficient to create genuine issue of material fact). Trammell has produced here what other parties have not-–controvertible evidence, other than a bare denial of receipt, that there was some irregularity in the mailing process. The district court thus erred in relying on the presumption of the mailbox rule without regard to the competing evidence Trammell provided to rebut that presumption. Because Trammell created a genuine issue of material fact regarding whether an arbitration agreement was formed, she is entitled to a jury trial under Section 4 of the FAA.

Because a question of fact existed regarding whether a valid agreement to arbitrate existed, the United States Court of Appeals for the Fifth Circuit reversed the lower court’s order compelling arbitration and remanded the case.

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