ReadyOne Industries, Inc. v. Joel Antonio Flores
2014 Tex. App. LEXIS 13206
| Tex. App. | 2014Background
- Plaintiff Joel Antonio Flores sued employer ReadyOne (formerly NCED) for non-subscriber negligence arising from an on-the-job hand/finger injury on Oct. 20, 2011.
- ReadyOne moved to compel arbitration under a Mutual Agreement to Arbitrate (MAA) and attached the MAA, Spanish translations, an arbitration acknowledgement allegedly signed by Flores (2/23/2006), and plan materials.
- Flores resisted on multiple grounds: fraudulent inducement, illusory/ambiguous agreement, incorporation of the MAA into the Employee Injury Benefit Plan (SPD), procedural and substantive unconscionability, and state-law preemption arguments; he sought discovery to support those defenses.
- This Court previously granted mandamus relief limiting Flores’s discovery and held the acknowledgement did not incorporate the SPD and the MAA was not illusory on earlier record.
- After supplemental briefing and hearings, the trial court denied the motion to compel arbitration without specifying a basis; ReadyOne appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of FAA | FAA doesn't apply because Flores was not personally engaged in interstate commerce | MAA expressly invokes the FAA and ReadyOne showed it engages in interstate commerce | FAA applies; parties may contractually opt into FAA governance |
| Existence/validity of arbitration agreement | Dates on MAA/acknowledgement (typos) and alleged incorporation make agreement invalid/illusory | ReadyOne produced authenticated MAAs and acknowledgement; agreement covers Flores’s claims | ReadyOne met initial burden; agreement valid and covers negligence claim |
| Incorporation / Illusoriness | MAA incorporated into SPD/plan (including its unilateral amendment terms) or ReadyOne judicially admitted they are one instrument | MAA is unambiguous, stand-alone; alleged admissions are legal conclusions not binding facts | MAA is not ambiguous or incorporated; not illusory |
| Fraudulent inducement & unconscionability | Flores was misled, didn’t understand documents (limited English), HR told him to just sign; thus fraud/procedural unconscionability; substantive unconscionability from waived rights | Flores received Spanish translations; no evidence of affirmative misrepresentation or trick; MAA preserves substantive rights | Flores failed to prove fraudulent inducement or procedural/substantive unconscionability |
| State-law barriers (Tex. Labor Code §406.033; Tex. Civ. Prac. & Rem. Code §171.002) | Pre-injury waiver statutes and signature/attorney-signature requirements void MAA | FAA preempts conflicting state rules; MAA not a pre-injury waiver of negligence claim | State-law arguments rejected; FAA preemption applies |
Key Cases Cited
- In re Labatt Food Serv., L.P., 279 S.W.3d 640 (Tex. 2009) (standard for reviewing arbitration rulings)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (state contract law governs arbitration-agreement validity)
- In re Rubiola, 334 S.W.3d 220 (Tex. 2011) (parties may agree arbitration is governed by the FAA)
- Bernhardt v. Polygraphic Co. of Am., 350 U.S. 198 (1956) (FAA inapplicability where contract did not involve commerce)
- In re Odyssey Healthcare, Inc., 310 S.W.3d 419 (Tex. 2010) (arbitration agreement illusoriness and interplay with plan provisions)
- In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002) (limits on employer unilateral modification of arbitration agreements)