Court of Appeals of Texas, Beaumont.
In re H.E. BUTT GROCERY CORPORATION, d/b/a HEB PANTRY FOODS.
No. 09-99-451 CV.
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Submitted Nov. 4, 1999.
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Delivered Jan. 27, 2000.
OPINION
STOVER.
*1 H.E. Butt Grocery Corporation, d/b/a HEB Pantry Foods (“HEB”), filed a petition for writ of mandamus, seeking to compel the Honorable Joe Bob Golden, Judge of the 1st District Court of Jasper County, Texas, to vacate his August 10, 1999, order denying HEB’s motion to compel arbitration, and to enter an order arbitration.
While employed at HEB, Lois Olds enrolled in the H.E. Butt Grocery Company Work Injury Benefit Program, which included an agreement to arbitrate under the Federal Arbitration Act. Olds subsequently sustained a back injury during the course of her employment. Olds sued HEB seeking damages for negligence.
A party seeking to compel arbitration must establish the existence of an arbitration agreement, and show that the claims raised fall within the scope of that agreement; once the party establishes a claim within the arbitration agreement, the trial court must compel arbitration and stay its own proceedings. In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.1999). In support of its motion to compel arbitration, HEB produced an “Election and Agreement Form” executed by Olds on August 15, 1994. The agreement included an arbitration clause agreeing to submit any claims for occupational injury to binding arbitration under the Federal Arbitration Act, including both claims which relate to the “formation, application and interpretation of this Agreement” and “claims for damages or monetary award. ” HEB established the existence of an arbitration agreement. Olds’s pleaded claim fell within the scope of that arbitration agreement.
The burden shifted to Olds to present evidence that the agreement was procured in an unconscionable manner, induced or procured by fraud or duress, or that HEB waived arbitration under the agreement. Oakwood Mobile Homes, 987 S.W.2d at 573. The unconscionability contemplated by Oakwood is procedural unconscionability relating to the actual making or inducement of the arbitration agreement. Id. at 573 n. 3.
When HEB began its “work injury benefit plan’ in 1994, the store director held sessions during which the terms of the plan were explained to the employees in groups of about 20. The employees were given the choice between the “basic plan,” which did not contain an arbitration clause, and “comprehensive coverage,” which paid more but which included an arbitration agreement. The director, Don Mugg, testified that he explained, using a video and overheads, that “if you took comprehensive the reason the benefits were better is because you did give up your right to sue, that you’re agreeing to go in front of a professional arbitrator.” The workers were not required to make their elections at the meeting. If the employee did not elect “comprehensive coverage” within seven days she would be automatically enrolled in the “basic plan.” According to Mugg, all the employees at the store where Olds worked elected “comprehensive coverage.” Olds signed the agreement the same day it was presented to her.
*2 Olds testified the entire meeting took five or ten minutes. Olds did not recall seeing a video or a projection, but did recall being told that HEB was “lots better than Texas workmen’s comp” because she would get paid up to $2,000,000. It did not occur to her to take the agreement home, although she guessed she could have. No one told her she had the right to take the agreement to a lawyer, although the form states, “Partner [Olds] further warrants and represents that the Partner has entered into this Agreement voluntarily without duress or coercion and acknowledges that he or she has been given the opportunity to discuss this Agreement with his or her private legal counsel and has availed himself or herself of that opportunity to the extent Partner wishes to do so.” Olds did not read what she signed. She did not realize she was giving up her right to have a court or jury decide what she was entitled to if she got hurt.
The agreement stated, “To elect Comprehensive Coverage and to be eligible for Comprehensive Benefits, you must sign the following Election of COMPREHENSIVE Benefits, Release, Waiver, Indemnity and Arbitration Agreement.” The next paragraph stated, “If you are electing Basic Coverage and declining Comprehensive Coverage, do not sign this Agreement.” A boldly-typed, underlined paragraph stated, “NOTICE: BY SIGNING THIS AGREEMENT, YOU AGREE TO RELEASE AND WAIVE CERTAIN RIGHTS TO SUE YOUR EMPLOYER … AND YOU AGREE TO ARBITRATE ALL FUTURE DISPUTES.”
HEB is a corporation and Olds worked in the meat department, but there is no evidence in the record before us that HEB took unfair advantage of Olds’s lack of sophistication. The agreement itself disclosed the nature and effect of the agreement. During the meeting the HEB representative persuaded the workers to sign onto the so-called “comprehensive plan,” but Olds did not establish the falsity of any of the representations made during that meeting. No one prevented Olds from reading what she signed. There was no evidence, other than that she would have to look up the word “arbitrate” in a dictionary, that Olds would have been incapable of understanding the agreement had she read it. Olds never suggested she feared she would lose her job if she elected the “basic plan” or that there would be any adverse consequences to a refusal to sign the agreement.
The evidence adduced at the hearing does not support a finding that the agreement to arbitrate was obtained in a procedurally unconscionable manner. The trial court abused its discretion when it denied HEB’s motion to compel arbitration. We conditionally grant a writ of mandamus and direct the trial court (1) to order Olds’s claims against HEB to arbitration, and (2) to stay Olds’s civil action pending arbitration. We will issue the writ only if the trial court does not follow our direction.
WRIT CONDITIONALLY GRANTED.
DISSENTING OPINION
I respectfully dissent. In a recent opinion, the Texarkana court stated in concise and cogent language, as quoted below, the current law regarding arbitration in the context of worker-related injuries and non-subscriber employers.
*3 Proof of unconscionability begins with two broad questions: 1) the procedural aspect, i.e., how did the parties arrive at the terms in controversy; and 2) the substantive aspect, i.e., are there legitimate commercial reasons justifying the terms of the contract. Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 821 (Tex.App.-San Antonio 1996, no pet.). In determining whether a contract is unconscionable, we must examine the entire atmosphere in which the agreement was made; the alternatives, if any, available to the parties at the time the contract was made; the “nonbargaining ability” of one party; whether the contract was illegal or against public policy; and whether the contract was oppressive or unreasonable. Under Texas law, the party asserting unconscionability of the contract bears the burden of proving both procedural and substantive unconscionability. The question is one of law, to be decided by the court. American Stone Diamond, Inc. v. Lloyds of London, 934 F.Supp. 839, 844 (S.D.Tex.1996) (applying Texas law).
In re Turner Bros. Trucking Co., No. 06-99-00120-CV, 1999 Tex.App. LEXIS 8741, at *15-16 (Tex.App.-Texarkana Nov. 23, 1999, no pet. h.).
Subsequent to a hearing, the trial court in the instant case denied HEB’s motion to compel arbitration. After reviewing the record and applying the well-established standards regarding abuse of discretion to the trial court’s denial of the motion to arbitrate, and in accord with the above-quoted language of In re Turner Bros. Trucking Co., I would hold that the trial court did not abuse its discretion, thus permitting the trial to go forward under the burden of proof of the principles of common law negligence, if any, of the non-subscriber employer.
Historically, in the workers’ compensation context, an employee with a job-related injury was not required to make an up-front outlay of cash in order to resolve a claim for his or her injury. The employee welfare benefit plan in the instant case, however, contains an arbitration provision requiring the employee to pay “half of the fees and costs of the arbitrator” and to post her share of the arbitrator’s fees with “[f]unds or other appropriate security” “in an amount and manner determined by the arbitrator, ten (10) days before the first day of hearing.” Because the arbitration clause contained in the HEB plan contains such a provision, I would hold the contract is both unconscionable and against public policy. Furthermore, I would hold that arbitration clauses contained in employee welfare benefit plans (which take the place of workers’ compensation) are unconscionable and in violation of public policy if they contain a provision requiring the injured worker to pay a portion of arbitration costs up front. See generally Reyes v. Storage & Processors, Inc., 995 S.W.2d 722, 726-29 (Tex.App.-San Antonio 1999, pet denied); but see generally Lambert v. Affiliated Foods, Inc., No. 07-98-0371-CV, 1999 Tex.App. LEXIS 8576, at *9-15 (Tex.App.-Amarillo Nov. 16, 1999, no pet. h.).