Court of Appeals of Texas, El Paso.
ALORICA, Individually and d/b/a Alorica, Inc., Appellant.,
Mary Lou TOVAR, Appellee.
November 26, 2018
*738 Appeal from the 327th District Court of El Paso County, Texas (TC# 2016-DCV-3173)
Attorneys & Firms
Hon. John P. Mobbs, for Appellee.
Hon. Jamie Ashton, for Appellant
Before Larsen, Senior Judge (Sitting by Assignment)
YVONNE T. RODRIGUEZ, Justice
Mary Lou Tovar sued her former employer Alorica following her termination, alleging disability discrimination and workers’ compensation retaliation claims. Alorica moved to arbitrate Tovar’s claims, asserting that the company’s electronic records showed that Tovar received notice of a mandatory arbitration agreement and accepted its terms both explicitly and impliedly by continuing to show up for work. In a sworn affidavit and again at a Tipps1 hearing, Tovar denied ever seeing, receiving, or agreeing to the terms of the arbitration agreement. The trial court, crediting Tovar’s evidence over that of Alorica, denied the motion to compel arbitration. Alorica appealed, asking this Court to credit the company’s electronic records over Tovar’s sworn denial as a matter of law and compel arbitration on that basis.
We cannot do so. Our prior decision in Kmart Stores of Texas, L.L.C. v. Ramirez2 controls here. The trial court was presented with conflicting evidence regarding contract formation. Its judgment resolving this formation dispute rested on legally sufficient evidence, meaning that we cannot disturb the decision. We will affirm the order denying the motion to compel arbitration.
In response to Alorica’s motion to compel arbitration, Tovar contested the existence of an arbitration agreement and submitted a sworn affidavit to the trial court. In her affidavit, she testified that she had never seen or heard of the arbitration agreement at issue in this case until January 2017, after she filed suit. She averred that she was never presented with the arbitration agreement either in paper or electronic form, nor was she informed by anybody that she was subject to an arbitration policy. She denied signing or clicking anything to indicate that she knew, agreed to, or received notice of the agreement. She testified that if she had known of the arbitration agreement, she would not have signed it and did not and does not agree to its terms.
*739 In response to Tovar’s filing, the trial court forewent summary disposition and held two Tipps hearings.3 At the first hearing on January 9, 2017, Tovar gave live testimony. She acknowledged having used the company’s internal email system before but she again denied receiving notice of the arbitration agreement at all and stated that she would have never agreed to the document. When asked on cross-examination if it was possible that she had received it and did not remember, Tovar replied, “No. I never received it.” She testified that she had not given out her login credentials to anyone and that she did not know why Alorica’s records reflected she received notice.
During summation at the first hearing, Alorica referenced an affidavit attached to its motion to compel arbitration that was written by Susannah Lawler, Alorica’s regional senior human resources manager, in which Lawler vouched for a series of substantive and demonstrative screenshots taken from the EIS portal purportedly showing that Tovar’s login credentials were used to access a messaging center and view the arbitration agreement. At the end of the hearing, the trial court permitted limited discovery related to “this procedure for the process of sending out these forms,” allowing Lawler to be deposed, and invited supplemental briefing. The parties indicated that they agreed to additional discovery on the limited issues identified by the trial court.
At the second Tipps hearing on December 5, 2017, Alorica called Venu Thadisetti as a live witness. Thadisetti was Alorica’s solution development manager based out of an office in Florida, where he worked with information systems, web applications, and CI systems that were part of Alorica’s overall I.T. structure. Thadisetti explained that Alorica used an application known as the Employee Information System (EIS) to keep track of timekeeping, as an internal messaging platform, and for hosting training and coaching tools. Thadisetti identified Exhibit 1 as being a screenshot of an EIS inquiry for Mary Tovar’s information. Thadisetti explained that all Alorica employees had an employee ID number identifying the employee across different Alorica systems, as well as a user ID number used internally within the EIS portal. Tovar’s employee ID number was 403727 and her user ID for the EIS portal was 1003373.
Thadisetti identified Exhibit 2 as a screenshot he took of log activity for Tovar’s user ID between April 26, 2014 and April 27, 2014, which included the user name, the domain name, the computer that was used, the website that was accessed, and the date and time it was accessed. According to Thadisetti, the log activity showed that Tovar’s user ID was entered on a specific computer located within El Paso (ELP-37183) to start a session. During that active login session, Tovar’s credentials were used to sign in to the EIS system. Thadisetti testified that records showed the user attempted to access a page related to overtime pay, but that the EIS system automatically redirected the user to the portal mailbox where the mandatory arbitration agreement would have been contained in a message. Navigation away from the page to access other EIS functions was not possible unless the user first acknowledged the agreement. Based on Thadisetti’s records review, the user attempted to navigate away from the page *740 several times before finally clicking through the acknowledgment. The acknowledgment process required clicking through two screens. The first screen had the arbitration agreement with a link that stated “I have read and understand this Company Policy” at the bottom of the page. After clicking the acknowledgement link, the user was directed to a second screen with a link that stated, “I understand this Company Policy and agree to its terms and conditions.” Clicking through these screens would automatically update Alorica’s electronic records. Thadisetti believed that the user was Mary Tovar based solely on the fact that her login credentials were used and by policy nobody at Alorica had access to employee passwords, but he admitted on cross-examination that he had no personal knowledge of whether the user was in fact Mary Tovar.
At the conclusion of the second hearing, the trial court denied the motion to compel arbitration. This interlocutory appeal followed.
In its sole appellate issue, Alorica contends the trial court erred by refusing to compel arbitration. We disagree.
Standard of Review and Applicable Law
A party seeking to compel arbitration must (1) establish the existence of a valid arbitration agreement and (2) show that the claims asserted are within the scope of the agreement. Delfingen US-Tex., L.P. v. Valenzuela, 407 S.W.3d 791, 797 (Tex.App.--El Paso 2013, no pet.). The parties do not dispute that if this arbitration agreement is valid, it covers the claims subject to this litigation. We limit our discussion accordingly.
While Texas and federal law both strongly favor arbitration, “a valid agreement to arbitrate is a settled, threshold requirement to compel arbitration[,]” and “when we are called upon to decide whether the parties have agreed to arbitrate, we do not resolve doubts or indulge a presumption in favor of arbitration, because no party may be forced to submit to arbitration in the absence of [a] sufficient showing that the parties entered into a valid and binding arbitration agreement.” [Internal citations and alterations omitted]. Id.
A signature, electronic or otherwise, is generally deemed to be sufficient to show assent to an arbitration agreement. However, signatures are not always required in order to demonstrate contract formation. Kmart Stores of Tex., 510 S.W.3d at 570-71 (outlining risks).
This is not the first time this Court has been asked to find that an employer’s electronic records indicating that an employee received notice of a Kmart Stores of Tex., 510 S.W.3d at 570.
After full merits briefing, the Texas Supreme Court denied Kmart’s petition for review on February 17, 2017, after the date of the final Kmart’s ambit.
At first blush, the similarities between this case and Kmart.4 The distinction in the form with respect to how the evidence is presented is not material.
Second, Alorica maintains that Thadisetti “testified at length” about the security measures used by Alorica’s I.T. department. However, it is not clear from Alorica’s briefing how Alorica’s I.T. security set-up differed at all from the one employed in Kmart.
Although Alorica does not explicitly state such in its brief, by directing our attention to this testimony, Alorica appears to imply that the two sets of login credentials show that the I.T. department implemented a variation of a widely-implemented security procedure known as two-step authentication or two-factor authentication to ensure identity integrity. “Multifactor authentication is a process by which online accounts and services confirm the identity of a user through a series of verification steps (known as ‘factors’), each of which provides additional evidence that the user is who she claims to be.” Kyle Swan, Comment, Id. at 125; see also Eric Griffith, Two-Factor Authentication: Who Has It and How to Set It Up, PC MAGAZINE (Feb. 16, 2018, 2:56 P.M.), https://www.pcmag.com/feature/358289/two-factor-authentication-who-has-it-and-how-to-set-it-up (providing examples); Multi-factor authentication, WIKIPEDIA, https://en.wikipedia.org/wiki/Multi-factor_authentication (last visited Nov. 14, 2018).
We express no opinion on whether the use of two-factor authentication is necessary or sufficient to defeat an employee’s sworn lack-of-notice claim as a matter of law because there is no legally sufficient evidence showing that two-factor authentication actually occurred in this case. As we understand it, two-factor authentication is conditional, and while Thadisetti testified that EIS could only be accessed on an Alorica network, he never testified that the use of a unique user-ID/password combination to access the EIS portal at the second log-in point was conditioned on the correct entry of another unique user-ID/password combination granting a specific user access to an Alorica computer at the first log-in point. In other words, there is no evidence that the unique log-in credentials needed to access a computer connected to Alorica’s network as “Mary Tovar” for general purposes needed to be entered before the second set of unique log-in credentials granting the user access to the EIS portal as “Mary Tovar” would be accepted. There is no testimony that the two sets of log-in credential are used conjunctively and sequentially. As such, we cannot pass on the question of two-factor authentication.
Nevertheless, there is evidence that during an active session initiated with Mary Tovar’s login credentials, the EIS portal was accessed using another set of Mary Tovar’s login credentials. However, Mary Tovar made several sworn denials of ever receiving notice of the agreement or clicking to agree with an arbitration agreement in a trial court. Alorica insists that in order for a court to credit Tovar’s “self-serving” testimony over Thadisetti’s testimony, Tovar must also explain how it was that her login credentials could have been used by someone else. That is not currently required under Texas law. We declined to adopt that extra requirement in Tipps hearing, even if this case involves two sets of non-conditional, non-sequential login credentials rather than one.
The remainder of the arguments Alorica advances were addressed in Id. at 571.
Alorica also directs this Court’s attention to a handful of federal district court cases in which judges faced with the same factual dilemma presented here decided in favor of the employer, not the employee. See generally, e.g., Kmart specifically deals with the issue of appellate resolution, and under stare decisis, it binds us here. The trial court’s decision here was proper.
The trial court’s decision rested on legally sufficient evidence. Issue One is overruled. The trial court’s order denying Alorica’s motion to compel arbitration is affirmed.
Jack B. Anglin Co., Inc. v. Tipps, 842 S.W.2d 266, 269 (1992).
510 S.W.3d 559 (Tex.App.--El Paso 2016, pet. denied).
A non-movant who submits evidence raising an issue of material fact as to the existence of an arbitration agreement can trigger an evidentiary hearing. See In re DISH Network, L.L.C., No. 08-17-00161-CV, 563 S.W.3d 433, 438–41, 2018 WL 5276720, at *4-*5 (Tex.App.--El Paso Oct. 24, 2018, orig. proceeding).
Although the parties’ briefs largely analyzed this as an implied consent Firstlight agreement, the outcome here under these facts would be the same regardless of whether we treated this as an agreement that was expressly accepted by clicking the link on the second screen, as Tovar unequivocally denied receipt, acknowledgement, or acceptance of the agreement under oath.
On appeal before the Fifth Circuit, the employee in Holmes abandoned any challenges to the district court’s findings that the agreement was valid and instead argued that provisions of the Dodd-Frank Act altered the ability to arbitrate certain classes of claims. See 498 Fed.Appx. at 406. The Fifth Circuit thus did not rule on the formation issue.