Kyani, Inc., Todd Thompson, Scott Boulch, Volker Hartzsch A/K/A Mark Davenport, Brandon Stevens, and James Bradford v. HD Walz II Enterprises, Inc., 05-17-00486-CV

Background

Kyäni operates a distributor program; applicants apply online, must agree to electronic consent, policies, and Independent Distributor Terms & Conditions (which include an arbitration clause).
HD Walz II Enterprises (Walz) became a Kyäni distributor via Kyäni’s online portal on July 17, 2014, according to Kyäni’s General Counsel Joshua Chandler’s affidavit and attached screenshots/account log.
Walz sued Kyäni and five distributor defendants alleging deceptive trade practices and tortious interference related to manipulation of Kyäni’s network/genealogy and compensation.
Kyäni and the distributor defendants moved to compel arbitration under the Distributor Agreement; the trial court denied the motion without ruling on all evidentiary objections.
On interlocutory appeal, the court reviewed whether a valid arbitration agreement existed, whether the claims fell within its scope, and whether Walz raised valid defenses to enforcement.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Existence/authentication of arbitration agreement	Chandler’s affidavit lacks personal knowledge and fails to authenticate exhibits (account log, screenshots)	Chandler (Kyäni GC) explained application flow, attested to records, and attached screenshots/account log	Chandler’s affidavit and attachments sufficiently authenticated the online application and terms; valid agreement exists; trial court abused discretion by denying motion
Evidence defects (conclusory statements/typographical errors)	Certain affidavit statements are legal conclusions; Exhibit labeling error (J vs K) undermines authentication	The challenged statements are severable and most affidavit paragraphs state factual bases; the J/K reference was a harmless typo and Walz understood which exhibit was meant	Legal-conclusion portions may be disregarded but do not defeat authentication; typographical error did not invalidate Exhibit K
Scope / arbitrability as to non-signatory distributors	Walz: tortious-interference claims arise from general law, not the Distributor Agreement, so distributors (non-signatories) cannot compel arbitration	Defendants: Walz’s claims depend on and reference Kyäni’s policies/Distributor Agreement, invoking direct-benefits estoppel to bind non-signatories	Claims reference and rely on the Distributor Agreement and compensation plan; direct-benefits estoppel applies—distributor defendants can enforce arbitration
Defenses to arbitration (burden to oppose)	Walz asserted lack of agreement and that only Walz could have checked the online boxes; argued insufficient proof as to assent	Defendants presented authenticated evidence of Walz’s online assent; Walz offered no admissible contrary evidence	Walz failed to present admissible defenses; once defendants established a valid agreement and scope, court must compel arbitration

Key Cases Cited

Bonded Builders Home Warranty Ass’n of Tex., Inc. v. Smith, 488 S.W.3d 468 (Tex. App.—Dallas 2016) (standard for reviewing denial of motion to compel arbitration)
Big Bass Towing Co. v. Akin, 409 S.W.3d 835 (Tex. App.—Dallas 2013) (deference to trial court fact findings; review of legal questions de novo)
In re Labatt Food Serv., L.P., 279 S.W.3d 640 (Tex. 2009) (arbitrability and enforceability reviewed de novo)
J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (burden shifts to opposing party to raise affirmative defenses to arbitration)
In re Weekley Homes, L.P., 180 S.W.3d 127 (Tex. 2005) (direct-benefits estoppel may bind non-signatories when liability arises from the contract)
Meyer v. WMCO-GP, LLC, 211 S.W.3d 302 (Tex. 2006) (signatory’s right to recover must depend on the contract for arbitration to apply against non-signatory)
In re Rubiola, 334 S.W.3d 220 (Tex. 2011) (generally a party must sign to be bound by arbitration clause)
AT&T Techs., Inc. v. Communications Workers, 475 U.S. 643 (U.S. 1986) (arbitrability is for courts unless parties clearly delegate to arbitrator)
Schlumberger Tech. Corp. v. Baker Hughes Inc., 355 S.W.3d 791 (Tex. App.—Houston 2011) (incorporation of AAA rules can be clear evidence of intent to delegate arbitrability)
United Rentals, Inc. v. Smith, 445 S.W.3d 808 (Tex. App.—El Paso 2014) (sponsoring witness may authenticate documents)

Outcome: The court reversed the trial court’s denial and ordered all disputes between the parties to proceed to arbitration.