S.D. Texas Holds Arbitrator Must Decide Arbitrability Question in Employment Discrimination Case

The Southern District of Texas in Houston has ordered the question of arbitrability to be decided by an arbitrator in an employment discrimination case. In Valdez v. Autozone Inc., No. H-14-3386 (S.D. Tex., February 17, 2015), a woman, Valdez, filed a motion to compel arbitration against her former employer, Autozone, in the Southern District of Texas. Previously, Valdez accused Autozone of unlawfully discriminating against her based on sex and disability. Valdez also claimed the company engaged in retaliation, harassment, and created a hostile working environment.

Prior to Valdez’s employment, she signed an “Occupational Injury Benefit Plan” that contained an arbitration clause. The clause required all claims made “in connection with a job-related injury” to be resolved through binding arbitration. Although Valdez and Autozone agreed that the arbitral provision was enforceable, the parties disputed whether each of the former worker’s claims was subject to arbitration. According to Valdez, all of her causes of action should be arbitrated under the terms of the agreement. Autozone countered that the woman’s sex discrimination, retaliation, sexual harassment, and hostile work environment claims should be litigated.

The federal court held:

This court will not decide whether the claims are covered by the provision, because the contract between the parties also states that “[t]he determination of whether a claim is covered by this Section shall also be subject to mediation and arbitration under this Section.” Id. at 9. Defendant acknowledges this provision and claims that it is not opposed to arbitrating the question of arbitrability. Plaintiff acknowledges it as well but claims that defendant has waived its right to assert this provision because of its initial refusal to arbitrate the entire case. Dkt. 5. Defendant’s argument that certain of plaintiff’s claims are not subject to arbitration is not sufficient to deprive it of the right to assert application of the arbitration clause to other claims—including the arbitrability of the disputed claims.

After finding that Autozone did not waive its right to arbitration by substantially invoking the judicial process, the Southern District of Texas ordered the parties to “submit the question of arbitrability of plaintiff’s claims to an arbitrator,” and litigate any causes of action the arbitrator determines are not subject to the parties’ agreement.

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