Date: 06-11-2018

Case Style:

Case Number: 17-50341

Judge: Jennifer Walker Elrod

Court: United States Court of Appeals for the Fifth Circuit on appeal from the Western District of Texas (Ector Midland County)

Plaintiff's Attorney: Allen Stroder

Defendant's Attorney: Jose Abelardo Howard-Gonzalez

Description: Kimberly Huckaba, a former employee of Ref-Chem, L.P., appeals the district court’s judgment compelling arbitration. Because the express language of the agreement at issue requires for it to be signed by both parties and because it is undisputed that Ref-Chem did not sign the agreement, we REVERSE and REMAND.
I.
Huckaba sued her former employer, Ref-Chem, in federal district court. Ref-Chem moved to dismiss and compel arbitration. In support of its motion, Ref-Chem provided the court with an arbitration agreement that had been
United States Court of Appeals
Fifth Circuit
FILED
June 11, 2018
Lyle W. Cayce
Clerk
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signed by Huckaba. Next to Huckaba’s signature is a signature block for Ref-
Chem. Ref-Chem, however, did not sign the agreement.
The agreement provides that:
The organization referred to above (“Employer”) and the
Employee, whose signature is affixed hereto, (“Employee”),
mutually recognize that there are many advantages to using
mediation and arbitration to settle any and all legal disputes and
claims, including, but not limited to, all those arising from or in
the course of employment. . . . In consideration of these many
benefits, the mutual agreement of both parties to the binding
arbitration provisions, the continuation of the employment
relationship and other consideration, the sufficiency of which is
hereby acknowledged by Employee, the parties hereto mutually
agree that this document shall govern the resolution of all claims
and disputes between them.
In addition, the agreement states that “[b]y signing this agreement the parties
are giving up any right they may have to sue each other” and that the
agreement “may not be changed, except in writing and signed by all parties.”
Along with a copy of the agreement, Ref-Chem submitted an affidavit from its
human resources director. Among other things, the human resources director
states that: (1) Ref-Chem kept Huckaba’s signed arbitration agreement in her
personnel file as a business record; and (2), pursuant to the agreement, Ref-
Chem “voluntarily agreed to arbitrate any disputes between” itself and
Huckaba.
In response, Huckaba also submitted an affidavit. She testifies in her
affidavit that she signed the agreement “with the expectation and intent that
it would be passed on for the signature of the appropriate Ref-Chem” officer.
It was her “intention that in order to be bound by the agreement to arbitrate,
Ref-Chem would also have to sign the agreement and agree in writing to be
bound by its terms.” She states that she did not discuss the terms of the
agreement with anyone, nor did she orally agree to arbitration.
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Based on the agreement, the district court granted Ref-Chem’s motion to
compel and dismissed the case without prejudice pending arbitration. The
district court concluded that Huckaba’s “continued employment after signing
the Arbitration Agreement constitute[d] acceptance of that agreement by both”
her and Ref-Chem. Huckaba timely appealed.
II.
“This court reviews de novo a district court’s ruling on a motion to compel
arbitration.” Klein v. Nabors Drilling USA L.P., 710 F.3d 234, 236 (5th Cir.
2013). Enforcement of an arbitration agreement involves two analytical steps:
(1) whether there is a valid agreement to arbitrate; and (2) whether the dispute
falls within the scope of that agreement. Id.; see also Kubala v. Supreme Prod.
Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016). Here, the first step is at issue.
Determining whether there is a valid arbitration agreement is a question
of state contract law and is for the court. Kubala, 830 F.3d at 202. The parties
agree that Texas law applies. Texas has no presumption in favor of arbitration
when determining whether a valid arbitration agreement exists. J.M.
Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). Instead, the party
moving to compel arbitration must show that the agreement meets all of the
requisite contract elements. Id. at 228. In addition, because the validity of the
agreement is a matter of contract, at this stage, the strong federal policy
favoring arbitration does not apply.1 Klein, 710 F.3d at 236.
1 Though it is not clear that the district court actually applied an incorrect standard
in deciding that the agreement to arbitrate is valid, we agree with Huckaba that the district
court erred in stating that, at this stage, “[t]here is a ‘strong presumption in favor of
arbitration,’ and the burden is on the party challenging the arbitration agreement to show it
is invalid.” (quoting Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294, 297 (5th Cir.
2004)).
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III.
Under Texas law, a binding contract requires: “(1) an offer; (2) an
acceptance in strict compliance with the terms of the offer; (3) a meeting of the
minds; (4) each party’s consent to the terms; and (5) execution and delivery of
the contract with intent that it be mutual and binding.” In re Capco Energy,
Inc., 669 F.3d 274, 279–80 (5th Cir. 2012) (quoting Coffel v. Stryker Corp., 284
F.3d 625, 640 n.17 (5th Cir. 2002)). As to the last element, whether a signature
is required to bind the parties is a question of the parties’ intent. Tricon Energy
Ltd. v. Vinmar Int’l, Ltd., 718 F.3d 448, 454 (5th Cir. 2013). Signatures are
not required “[a]s long as the parties give their consent to the terms of the
contract, and there is no evidence of an intent to require both signatures as a
condition precedent to it becoming effective as a contract.” Perez v. Lemarroy,
592 F. Supp. 2d 924, 930–31 (S.D. Tex. 2008) (quoting ABB Kraftwerke
Aktiengesellschaft v. Brownsville Barge & Crane, Inc., 115 S.W.3d 287, 292
(Tex. App.—Corpus Christi 2003, pet. denied)).
A court can decide intent as a matter of law. Tricon Energy, 718 F.3d at
454. “In construing a contract, a court must ascertain the true intentions of
the parties as expressed in the writing itself.” Italian Cowboy Partners, Ltd.
v. Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011). “In identifying
such intent, ‘we must examine and consider the entire writing in an effort to
harmonize and give effect to all the provisions of the contract so that none will
be rendered meaningless.’” Id. (quoting J.M. Davidson, 128 S.W.3d at 229).
“We begin this analysis with the contract’s express language.” Id. And we end
it there too.
The arbitration agreement at issue here contains: (1) a statement that
“[b]y signing this agreement the parties are giving up any right they may have
to sue each other;” (2) a clause prohibiting modifications unless they are “in
writing and signed by all parties;” and (3) a signature block for the employer,
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Ref-Chem. This express language clearly indicates an intent for the parties to
be bound to the arbitration agreement by signing. The agreement also
identifies the parties in the first line as “[t]he organization referred to above
(‘Employer’) and the Employee, whose signature is affixed hereto.” This clause
makes clear the parties’ intention that Huckaba would sign the agreement. It
does not negate the other references to all parties signing.2 Ref-Chem is right
when it notes that Texas courts have held that a signature block by itself is
insufficient to establish the parties’ intent to require signatures. See, e.g.,
Tricon Energy, 718 F.3d at 455; Firstlight Fed. Credit Union v. Loya, 478
S.W.3d 157, 168 (Tex. App.—El Paso 2015, no pet.). But in this case, we have
more than a blank signature block that speaks to the parties’ intent. The
agreement also contains language that the parties needed to sign the
agreement to give it effect or to modify it. Thus, the question of Ref-Chem’s
intention is answered by the agreement it drafted.
In several ways, this case is similar to a Texas appellate case, In re Bunzl
USA, Inc., 155 S.W.3d 202 (Tex. App.—El Paso 2004, orig. proceeding [mand.
denied]). The court in Bunzl held that the trial court did not abuse its
discretion in denying an employer’s motion to compel arbitration where the
employer failed to sign the arbitration agreement and show that the parties
intended to be bound without the employer’s signature. 155 S.W.3d at 210–12.
The employer submitted an affidavit to the court stating that the agreement
was kept in the employee’s file and had in fact been reviewed before the
employee’s termination. See id. at 206. While the court considered this to be
some indication that the employer considered itself bound without signing, the
2 Moreover, because Ref-Chem’s name is printed at the top of the agreement, the
language appears to reflect the fact that the employer’s name is already at the top of the
agreement, regardless of which employee signs, but the name of the employee depends on
which employee received and signed the agreement. Thus, it references the signature at the
bottom of the page, to the right of which is the signature block for Ref-Chem.
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trial court’s decision to deny the motion to compel arbitration was affirmed in
light of a signature block for the employer that was left blank and a clause in
the agreement barring amendments without a writing signed by both parties,
both of which are present here. Id. at 211.
Ref-Chem distinguishes Bunzl by saying that the “agreement in Bunzl
was missing one key provision that the court itself acknowledged: it did not
have a provision informing the plaintiff that his continued employment
constituted acceptance of the agreement.” Ref-Chem argues that such
language is present in this case and, consequently, that another case, In re
Halliburton Co., 80 S.W.3d 566 (Tex. 2002) (orig. proceeding), “controls.” Ref-
Chem highlights that, in Halliburton, the Texas Supreme Court held that an
arbitration agreement that was not signed by either party was valid as a
matter of law because: (1) the employer provided notice of the agreement; and
(2) the employee accepted the agreement by continuing to work after receiving
the notice. Because both conditions are met here, Ref-Chem insists that the
agreement is valid.
Ref-Chem is wrong in two regards: (1) its focus on acceptance; and (2) its
assertion that the agreement here, like the Halliburton agreement, informed
Huckaba that her continued employment constituted acceptance. First,
Halliburton addresses “whether an employee accepted the agreement,” not the
manner by which the agreement became binding. See 80 S.W.3d at 568. Here,
the issue is the execution element of a binding contract under Texas law, not
acceptance. Second, contrary to Ref-Chem’s characterization of the agreement,
and unlike the situation in Halliburton, the agreement here does not state that
submission to arbitration is a term of employment and that commencing work
constitutes acceptance and binds the parties. See Halliburton, 80 S.W.3d at
569 (“[I]f you . . . continue your employment, . . . you will agree . . . .”). Instead,
the language about continued employment provides that “continuation of the
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employment relationship” serves as consideration for the agreement. Thus,
Halliburton does not control this case.
Ref-Chem also points to other factors to demonstrate its intent to be
bound without signing, such as the fact that it created the arbitration
agreement, kept the agreement as a business record, and moved to compel
arbitration when Huckaba sued.3 Even if we were to consider this evidence,
our conclusion would remain the same. Considering the record as a whole, this
evidence does not satisfy Ref-Chem’s burden that it intended to be bound
without signing the agreement.4 Indeed, if it were, then Ref-Chem could have
it both ways—argue that it did not intend to be bound because it did not sign
the agreement or it did because it kept the agreement and sought to compel
arbitration.5 We give meaning to the words Ref-Chem used in its agreement.
3 In addition, Ref-Chem highlights Huckaba’s continued employment as evidence of
an intent to be bound without signing. Nonetheless, as discussed previously, the agreement
did not state that Huckaba agreed to be bound as a condition of her employment. Thus, her
continued employment does not conflict with her statement that she intended that the parties
would be bound upon signing. For the same reason, the fact that Ref-Chem continued to
employ Huckaba does not demonstrate its assent to the arbitration agreement. See, e.g.,
Bunzl, 155 S.W.3d at 211 n.4 (“The Agreement does not provide that [the employee’s]
employment is contingent upon the Agreement, nor does it provide that employment
constitutes acceptance of the Agreement. Thus, [the employer] did not necessarily manifest
its assent to the Agreement by employing [the employee].”).
4 Notably, the same Texas court of appeals that decided Bunzl came to a different
conclusion in Firstlight, holding that an arbitration agreement that had not been signed by
the employee fell “squarely within the rule announced in Halliburton.” 478 S.W.3d at 168.
However, that agreement, unlike the one here, had language like the language in the
Halliburton agreement, stating that “[a]ny employee accepting or continuing employment . . .
agrees to be bound by the Policy as a condition of his or her employment.” Id. at 162
(alteration in original). Given this language, the court construed clauses that referenced
signing the agreement as evincing the parties’ intent to have signing be an alternative, rather
than exclusive, manner of binding the parties. Id. at 170. The same tension between various
provisions of the agreement—some that discuss being bound by signing and others by
accepting or continuing employment—is not present here. There is therefore no need to
harmonize the agreement.
5 At oral argument, when asked what he would say if Ref-Chem did not want to
arbitrate, Ref-Chem’s attorney said that he does not think the agreement gives Ref-Chem a
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And because Ref-Chem did not sign the agreement, neither party is bound. See
Scaife v. Associated Air Ctr. Inc., 100 F.3d 406, 411 (5th Cir. 1996) (“If parties
negotiating a contract intend that the contract shall be reduced to writing and
signed by the parties, . . . then either party may withdraw at any time before
the written agreement is drawn up and signed by both parties.” (alteration in
original) (quoting Gasmark, Ltd. v. Kimball Energy Corp., 868 S.W.2d 925, 929
(Tex. Ct. App.—Fort Worth 1994, no writ))).

* * *

choice but, assuming Huckaba did want to arbitrate, “the arguments would just be switched.”
Oral Argument at 21:01–22:16, Huckaba v. Ref-Chem, L.P., No. 17-50341 (5th Cir. argued
Feb. 8, 2018). When asked if that then meant he would lose, the attorney clarified with a
“yes.” Id. This exchange highlights the unilateral nature of the agreement under Ref-Chem’s
interpretation, which could render it unenforceable under Texas law. See Royston, Rayzor,
Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494, 505 (Tex. 2015) (holding that an
arbitration agreement is unenforceable “if it binds one party to arbitrate, while allowing the
other to choose whether to arbitrate”).
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Outcome: Because we conclude that there is not a valid agreement to arbitrate in
this case, the district court’s judgment compelling arbitration is REVERSED,
and this case is REMANDED for further proceedings.

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