ORAL ARGUMENT REQUESTED

No. 04-14-00829-CV

IN THE COURT OF APPEALS FOR THE FOURTH JUDICIAL DISTRICT OF TEXAS

AT SAN ANTONIO

Western Rim Property Services, Inc., Appellant,

v. Paula Bazan-Garcia, Appellee.

ON APPEAL FROM THE COUNTY COURT AT LAW NO. CC# 03 OF BEXAR COUNTY, TEXAS, CAUSE NO. 2014CV01064

APPELLANT’S REPLY BRIEF

BAKER BOTTS L.L.P. Jennifer M. Trulock State Bar No. 90001515 jennifer.trulock@bakerbotts.com 2001 Ross Avenue, Suite 600 Dallas, Texas 75201-2980 (214) 953-6500 (214) 953-6503 (Facsimile) BAKER BOTTS L.L.P. Stephanie F. Cagniart State Bar No. 24079786 stephanie.cagniart@bakerbotts.com 98 San Jacinto Boulevard, Suite 1500 Austin, Texas 78701-4078 (512) 322-2500 (512) 322-2501 (Facsimile)

Attorneys for Appellant Western Rim Property Services, Inc. ACCEPTED 04-14-00829-CV FOURTH COURT OF APPEALS SAN ANTONIO, TEXAS 2/9/2015 2:26:56 PM KEITH HOTTLE CLERKi Table of Contents Table of Contents Page Table of Contents .................................

................................................... ................... i Summary of the Argument ...........................

................................................... ........... 1 Argument...........................................

................................................... ...................... 2 I. The AAA Rules are a publicly available authority th at can be considered by this Court. ......................... .............................................. 2 II. The delegation clauses in the parties’ arbitration agreements are enforceable, and require the Court to send Bazan-Ga rcia’s unconscionability defense to arbitration. ......... ..................................... 6 A. Bazan-Garcia has waived any argument that the delegation clauses are unconscionable. ............ .......................... 7 B. Bazan-Garcia’s claim that the arbitration agreement s’ cost and venue provisions make the delegation claus e unconscionable is directly contradicted by the AAA Rules. ............................................ ............................................... 9 C. Bazan-Garcia’s claim that arbitrating her unconscionability defense would be prohibitively expensive is not supported by any evidence in the r ecord........ 12 III. Arbitration under the AAA Rules is not unconscionab le. .................. 15 IV. Even if the AAA Rules do not apply to this appeal, BazanGarcia is bound by her arbitration agreements becau se she has failed to prove those agreements are unconscionable . ........................ 17 A. Bazan-Garcia cannot rely on prior AAA invoices to prove that the arbitration under the Employee Handb ook is unconscionable, because she has not shown that arbitration will be conducted by the AAA. ......... ...................... 17 B. Bazan-Garcia cannot rely on AAA invoices to prove t hat arbitration under the Employee Handbook isii unconscionable if this Court is barred from conside ring the AAA Rules. .................................... ..................................... 20 C. Bazan-Garcia cannot prove that the Employee Handbook’s arbitration agreement is unconscionable because she has not shown that a less expensive arbitration alternative is unavailable to her. .... .......................... 22 D. Bazan-Garcia cannot prove that arbitration under th e Arbitration Agreement is unconscionable because she has not presented any evidence showing how much it woul d cost to travel to Dallas County. .................. ............................... 23 V. The challenged provisions do not constitute the “es sential purpose” of the parties’ agreements, and may be sev ered from the agreements. ................................... ................................................. 2 4 Conclusion and Prayer for Relief ..................

................................................... ........25 Certificate of Compliance .........................

................................................... ............27 Certificate of Service ............................

................................................... ................27iii TABLE OF AUTHORITIES Page(s) C ASES Aspen Tech., Inc. v. Shasha , 253 S.W.3d 857 (Tex. App.—Houston [14th Dist.] 2008 , no pet.) ....... 18, 19, 20 Caballero v. Contreras , No. 13-10-00150-CV, 2010 WL 3420527 (Tex. App.—Corp us Christi Aug. 31, 2010, no pet.) ...........................

................................................... ......... 12 Coon v. Umphrey , 09-09-00264-CV, 2009 WL 3030354 (Tex. App.—Beaumont Sept. 24, 2009, pet. dism’d) ................................

................................................... .............. 4 Forest Oil Corp. v. McAllen , 268 S.W.3d 51 (Tex. 2008)..........................

................................................... ...... 7 Green Tree Fin. Corp.-Ala. v. Randolph , 531 U.S. 79 (2000) ................................ ......................................15, 18, 19, 2 0, 23 In re Olshan Found. Repair Co., LLC , 328 S.W.3d 883 (Tex. 2010) ........................ .................................. 3, 4, 20, 21, 22 In re Poly-America , 262 S.W.3d 337 (Tex. 2008) ........................ .................................... 11, 12, 17, 24 John M. O’Quinn, P.C. v. Wood , 12-06-001510CV, 2006 WL 3735617 (Tex. App.—Tyler De c. 20, 2006) .......... 4 Mitchison v. Houston Ind. Sch. Dist. , 803 S.W.2d 769 (Tex. App.—Houston [14th Dist.] 1991 , writ denied) .............. 5 Nabors Drilling USA, LP v. Carpenter , 198 S.W.3d 240 (Tex. App.—San Antonio 2006, no pet. ) .................................. 8 Perez v. Spring Branch Indep. Sch. Dist. , 2011 WL 742601 (Tex. App.—Houston [14th Dist.] Mar. 3, 2011, pet. denied) ...........................................

................................................... ..................... 5 Rent-A-Center, West v. Jackson , 561 U.S. 63 (2010) ................................

................................................... ... 7, 9, 13iv

Venture Cotton Co-op v. Freeman , 435 S.W.3d 222 (Tex. 2014) ........................ ................................................ 24 , 25 Winslow v. D.R. Horton America’s Builder , 04-12-00376-CV, 2013 WL 2368300 (Tex. App.—San Anto nio May 29, 2013, no pet.) ....................................

................................................... ................. 4 O THER A UTHORITIES AAA Employment Rules ..............................

................................................... . passim Tex. R. App. P. 38.1(k)(1)(C) .....................

................................................... ............ 31 SUMMARY OF THE ARGUMENT Bazan-Garcia bases her Response on one central clai m: that this Court cannot consider the Employment Rules of the America n Arbitration Association (“AAA Rules”) because a copy of those rules was not included in the clerk’s record. Her reasons for making this argument are e asy to understand. If the AAA Rules apply, then the Court must send all of Bazan- Garcia’s claims—including her unconscionability defense—to arbitration pursuant t o the rules’ delegation clause. The AAA Rules also defeat Bazan-Garcia’s unconscion ability defense on the merits, because they supersede all three provisions that she contends make the parties’ agreements unenforceable.

Bazan-Garcia cannot escape her arbitration agreemen ts so easily. It is well established that Texas courts can consider the publicly available AAA Rules, regardless of whether they were formally entered in to evidence. Any deviation from that rule has no basis in the law, nor would i t produce a fair result where both parties have relied on those rules throughout the l itigation.

Moreover, Bazan-Garcia is bound by her arbitration agreements even if the AAA Rules do not apply in this appeal. Bazan- Garcia can only avoid her agreements by presenting specific evidence that arb itration would be prohibitively expensive. The AAA invoices that Bazan-Garcia has submitted to prove that the Employee Handbook is unconscionable do not meet thi s burden, because Bazan-2

Garcia has failed to show that the AAA would actual ly administer the arbitration proceeding, that the AAA would charge similar fees as those shown on the invoices, and that no cheaper arbitration alternati ves are available. And BazanGarcia has submitted no evidence showing her costs if the arbitration were held in Dallas County, which is fatal to her claim that the Arbitration Agreement is

unconscionable.

Bazan-Garcia is bound by her agreements to arbitrat e. WRPS therefore requests that this Court reverse the tria l court’s order, abate this litigation, and compel arbitration of Bazan-Garcia’s claims. ARGUMENT I. The AAA Rules are a publicly available authority th at can be considered by this Court. It is undisputed that the Employment Rules of the A merican Arbitration Association (“AAA Rules”) govern both o f the parties’ arbitration agreements. See App. 3 (Arbitration Agreement), App. 13 (Employee Handbook). 1 These rules are available to the public through the AAA’s website, see Opening Br. at 2 n.2, and were relied on by both parties before the trial court, see CR at 25–28, 85–94; RR at 6–7, 10–12, 15. WRPS also included a copy of the AAA Rules in the Appendix to its Opening Brief, as required by t he Texas Rules of Appellate

1 The Clerk’s Record is referred to herein as “CR,” the Reporter’s Record as “RR,” the Opening Brief filed by WRPS on Dec. 24, 2014 as “Op ening Br.,” the Appendix to the Opening Br. as “App.,” and the Response Brief filed by Baza n-Garcia on January 20, 2015 as “Resp. Br.”3

Procedure. See App. at 14–65; Tex. R. App. P. 38.1(k)(1)(C) (appe ndix must include “the text of any rule . . . on which the ar gument is based”). Despite this, and for the first time on appeal, Bazan-Garcia clai ms that this Court cannot consider the AAA Rules in resolving the parties’ di spute, because “WRPS did not attach the AAA Employment Rules to its Motion to Co mpel and did not introduce the AAA Employment Rules as an exhibit at the heari ng on its Motion to Compel Arbitration.” Resp. Br. at 11.

Bazan-Garcia is wrong. The AAA Rules are not evide nce; they are a publicly accessible authority. Consequently, Texas courts can apply those rules regardless of whether they were formally introduced into evidence. The Texas Supreme Court, for example, did precisely that in In re Olshan Found. Repair Co.,

LLC , 328 S.W.3d 883 (Tex. 2010). Like Bazan-Garcia, t he respondents in Olshan claimed that the appellate court could not consider the AAA Commercial Arbitration Rules because they had not been formall y introduced into evidence.

See Resp. to Pet. for Writ of Mandamus, 2009 WL 238897 9, at *9 (filed July 16, 2009); Tingdale’s Merits Br., 2009 WL 4764118, at * 12 (filed Nov. 16, 2009). Olshan countered that because the AAA Rules were in corporated into the parties’ agreement, and “easily verifiable by reference to t he AAA website, a source whose accuracy cannot reasonably be questioned,” they wer e properly before the Court. Olshan’s Reply to Tingdale’s Merits Br., 2009 WL 52 51087, at *8 n.8 (filed Dec.4

21, 2009) (collecting cases). The Supreme Court ag reed with Olshan, analyzing the AAA Rules in detail in its opinion and ultimate ly ruling in Olshan’s favor. See Olshan , 328 S.W.3d at 895–96.

Similarly, in In re Champion Technologies, Inc. , Champion did not introduce a copy of the AAA Rules into evidence bef ore the trial court. 222 S.W.3d 127, 133 n.6 (Tex. App.—Eastland 2005, pet. denied). On appeal, Champion attached a copy of the rules to its brief, which petitioners moved to strike as an improper attempt to introduce evidence on appeal. See id. The Eleventh Court of Appeals denied the motion, explai ning:

The [parties’ agreement] incorporates the rules of the AAA as a part of its terms. The rules and procedur es are readily available via the internet. Relators’ act of providing a copy of these rules to the court is sim ilar to a party attaching a copy of a statute or regulation f or the court’s benefit. Id. This Court and other Texas courts of appeals also routinely cite the AAA Rules just as they would any other authority, regardless of whether the rules were included in the clerk’s record. See , e.g. , Winslow v. D.R. Horton America’s Builder , 04-12-00376-CV, 2013 WL 2368300, at *1 n.3–5 (Tex . App.—San Antonio May 29, 2013, no pet.); Coon v. Umphrey , 09-09-00264-CV, 2009 WL 3030354, at *4 n.2 (Tex. App.—Beaumont Sept. 24, 20 09, pet. dism’d); John M. O’Quinn, P.C. v. Wood , 12-06-001510CV, 2006 WL 3735617, at *1 n.2 (Tex. App.—Tyler Dec. 20, 2006).5 The two cases that Bazan-Garcia relies on in her Re sponse are not to the contrary. Neither of the cited cases involved the AAA Rules or similar, publicly available authorities. Instead, they are instances where a court of appeals refused to consider a factual record that was not p roperly submitted as part of the record on appeal. See Resp. at 11 (citing Mitchison v. Houston Ind. Sch. Dist. , 803 S.W.2d 769, 771 (Tex. App.—Houston [14th Dist.] 199 1, writ denied) (holding the court of appeals could not consider the appellant’s second “request for findings of facts and conclusions of law” that was filed with t he trial court because appellant did not arrange for a copy of the request to be inc luded in the clerk’s record); Perez v. Spring Branch Indep. Sch. Dist. , 2011 WL 742601 (Tex. App.—Houston [14th Dist.] Mar. 3, 2011, pet. denied) (holding the cour t of appeals could not review evidentiary rulings made during a bench trial becau se appellant failed to pay for and provide a copy of the reporter’s record to the appellate court)). Because WRPS is not seeking to introduce any such document into the appellate record, these cases are irrelevant.

Bazan-Garcia’s attempt to avoid the AAA Rules is no t only legally unsupported, it is puzzling in light of her actions before the trial court. WRPS

cited and relied on the AAA Rules in its Motion to Compel Arbitration. See CR 25–28. In turn, Bazan-Garcia based her entire resp onse on the claim that

arbitration under the AAA Rules would be prohibitively expensive, and on an6

affidavit from her attorney detailing his experienc e with the AAA rules. See CR at 81, 85–94; see also Resp. Br. at 4 (claiming Bazan-Garcia proved the ar bitration agreement was unconscionable through “three AAA inv oices from nearly identical employment cases that [her counsel] litigated under AAA rules”). At the hearing on its motion, WRPS discussed several AAA Rules in detail and provided copies of those rules to the court, just as counsel for bo th parties provided copies of key

cases. See RR at 6–7 (discussing AAA Rules’ delegation clause) ; id. at 10–12 (discussing delegation clause and AAA Rules governi ng costs, discovery and venue); id. at 15 (discussing process of arbitrating the issue of unconscionability under AAA Rules). Bazan-Garcia did not object, see id. , nor has she claimed that WRPS misstated or misrepresented the AAA Rules.

There is no legal or equitable justification for th is Court to ignore the publicly available rules that govern the parties’ a rbitration agreements. The AAA Rules therefore apply to this appeal.

II. The delegation clauses in the parties’ arbitration agreements are enforceable, and require the Court to send Bazan-Ga rcia’s unconscionability defense to arbitration. Bazan-Garcia’s only defense to arbitration is her c laim that the arbitration agreements are unconscionable. She doe s not dispute, however, that the AAA Rules’ delegation clause gives the arbitrator—n ot the court—authority to decide her unconscionability defense. See AAA Rule 6(a) (App. 30) (“The7

arbitrator shall have the power to rule on his or h er own jurisdiction, including any objections to the existence, scope or validity of t he arbitration agreement.”). That concession resolves this appeal, because courts mus t enforce delegation clauses under the Texas Arbitration Act. See Forest Oil Corp. v. McAllen , 268 S.W.3d 51, 61 (Tex. 2008) (holding that the Court had “no disc retion but to direct the court to compel arbitration and stay [this] litigation” beca use the parties’ arbitration agreement contained a delegation clause).

To avoid this result, Bazan-Garcia raises another n ew argument on appeal. She claims the delegation clause itself is unconscionable, and therefore unenforceable, because simply arbitrating her uncon scionability defense under the parties’ agreements would be prohibitively expensiv e. See Resp. at 34–39. This untimely argument should be rejected by the Court b ecause it is waived, directly contradicted by the AAA Rules, and unsupported by a ny evidence in the record. A. Bazan-Garcia has waived any argument that the deleg ation clauses are unconscionable. Bazan-Garcia admits that she did not challenge the arbitration agreements’ delegation clauses in her Response to W RPS’s Motion to Compel

Arbitration. See Resp. at 38. She is therefore bound to them. See Rent-A-Center, West v. Jackson , 561 U.S. 63, 73–76 (2010) (holding that a plainti ff who failed to “make any arguments specific to the delegation prov ision” before the trial court could not raise those arguments on appeal, and was bound to that provision).8 On appeal, Bazan-Garcia protests that “no fault can be assigned” to her for failing to challenge the delegation clauses below, because WRPS did not introduce the AAA Rules into evidence. Resp. at 38 . But WRPS was not required to do so. See Section I, supra at 2–6. Moreover, WRPS discussed the delegation clause at length in its Motion to Compel Arbitratio n, putting Bazan-Garcia on notice that it was relying on that clause. See CR 25–28. Bazan-Garcia’s failure to address this issue is therefore unexcused. See Nabors Drilling USA, LP v. Carpenter , 198 S.W.3d 240, 249 (Tex. App.—San Antonio 2006, no pet.) (holding that a party seeking to avoid an arbitration agreem ent can only rely on arguments that it raised before the trial court).

In the alternative, Bazan-Garcia insists that she r aised and preserved her challenges to the delegation clauses at the hea ring when her counsel stated:

“ [Bazan-Garcia]’s going to have to go to Dallas to c omplain to the arbitrator about [the arbitration agreements]. ” Resp. at 38 (quoting RR at 15) (emphasis in Resp.). According to Bazan-Garcia, this statement and two other exchanges between the judge and WRPS’s counsel prove that “th e trial court also understood that Bazan-Garcia was challenging the delegation cl ause because it required Bazan-Garcia to incur prohibitive costs of first tr aveling to Dallas County, Texas to challenge the rest of the agreement.” See Resp. at 38–39.9 At most, these statements show that Bazan-Garcia pr eserved an argument that the delegation clause in the Arbitrat ion Agreement is unenforceable, based on that agreement’s venue clause. See App. 3 (“Any arbitration relating to any dispute covered by this Agreement shall be arbi trated in Dallas County, Texas.”). But the Arbitration Agreement is only one of the agreements at issue in this appeal. The second agreement—the Employee Han dbook that is incorporated by reference into the Acknowledgement—does not have a venue clause. See App. 4, 13. Because, by her own admission, Bazan-Garcia failed to raise any timely challenge to the Employee Handbook’s delegation cla use, this Court must enforce that clause and compel arbitration of Bazan-Garcia’ s unconscionability defense.

See Rent-A-Center , 561 U.S. at 74.

B. Bazan-Garcia’s claim that the arbitration agreement s’ cost and venue provisions make the delegation clause unconsc ionable is directly contradicted by the AAA Rules. Bazan-Garcia’s untimely challenges to the delegatio n clauses also fail because they are directly contradicted by the AAA R ules, which control over any contrary provisions in the parties’ arbitration agr eements. See AAA Rule 1 (App. 28) (the arbitrator must apply the AAA Rules if “an adverse material inconsistency exists between the arbitration agreement and these rules”).

First, Bazan-Garcia claims that the delegation clau se in the Employee Handbook is unconscionable because its cost-sharing provision allegedly requires10

her to pay “half of the arbitrator’s fees for any h earing” on her unconscionability defense. Resp. at 35–36. But under the AAA Rules, Bazan-Garcia will not pay

any of the arbitrator’s fees or hearing expenses. Ins tead, Bazan-Garcia will pay an initial filing fee of $200, and WRPS will be respon sible for paying all hearing fees and all of the arbitrator’s fees and expenses. See Opening Br. at 26–27; AAA Rule 45 (App. 43); AAA Rule 48(i)–(iii) (App. 45–47). A nd if the filing fee causes her “excessive hardship,” then Bazan-Garcia is permitte d to request that the fee be reduced or deferred. AAA Rule 43 (App. 43).

Bazan-Garcia’s Response never addresses the above A AA Rules on fees, even though WRPS identified and discussed the m in detail at the hearing on its motion and in its Opening Brief. See RR at 10–11; Opening Br. at 26–28. Nor does Bazan-Garcia contend that she cannot afford th e $200 filing fee, which is less than what she paid to file her claims in state cour t. See CR at 81. Her silence impliedly concedes that this challenge to the Emplo yee Handbook’s delegation clause is without merit, and that arbitrating her u nconscionability defense would not be prohibitively expensive.

Second, Bazan-Garcia claims that the delegation cla use in the Arbitration Agreement is unconscionable because its venue clause allegedly requires her to travel to Dallas County to arbitrat e her unconscionability defense. Resp. at 35–37. But under the AAA Rules, the uncon scionability defense would11

be addressed during the Management Conference, whic h is “conducted by telephone conference call” unless the parties agree otherwise. AAA Rule 8 (App. 31). Bazan-Garcia will therefore not have to incur any travel expenses. Furthermore, AAA Rule 10 empowers the arbitrator to choose the locale of arbitration, “having regard for the conte ntions of the parties and the circumstances of the arbitration.” AAA Rule 10 (Ap p. 32). Thus, even if a nontelephonic hearing was necessary to decide Bazan-Ga rcia’s unconscionability defense, Bazan-Garcia could request a location othe r than Dallas County. 2 This rule defeats Bazan-Garcia’s challenge to the Arbitr ation Agreement, because the Texas Supreme Court has expressly held that a provi sion that the arbitrator is empowered to modify cannot be unconscionable. See In re Poly-America , 262 S.W.3d 337, 347 (Tex. 2008) (applying this rule to an agreement that “provide[d] that the arbitrator may modify unconscionable terms ”); see also Opening Br. at 29– 30 (discussing Poly-America , 262 S.W.3d at 347).

2 Bazan-Garcia suggests that during the hearing on WRPS’s Motion to Compel Arbitration, WRPS conceded that Bazan-Garcia would have to trave l to Dallas to arbitrate her unconscionability defense. See Resp. at 39. This is not the case. In response t o a question from the court regarding whether Bazan-Garcia would have to present her unconscionability defense to an arbitrator in Dallas, WRPS’s counsel responde d: “They do have to ask the arbitrator in Dallas, unless the AAA decides the arbitration should not o ccur in Dallas .” RR at 11–12 (emphasis added). Bazan-Garcia selectively quotes this portion of the record, and omits the italicized phrase. Nothing in the AAA Rules or the Arbitration Agreement prevents either the arbitrability question from being resolved by telep honic conference or a request from BazanGarcia to change the venue.12 In her response, Bazan-Garcia ignores Poly-America and insists that WRPS cannot rely on this argument because “[c]ourts have expressly rejected this same circular logic.” Resp. at 36. In support, sh e quotes a footnote from an unpublished case in which the Thirteenth Court of A ppeals stated that “it would appear preferable” for such issues to “be submitted to, and decided by, the courts as a gateway matter.” Resp. at 36–37 (quoting Caballero v. Contreras , No. 13-10- 00150-CV, 2010 WL 3420527, at *10 n.2 (Tex. App.—Co rpus Christi Aug. 31, 2010, no pet.)). But this authority cannot superse de authority from the Texas Supreme Court. Moreover, Bazan-Garcia conveniently omits the rest of that footnote, in which the Caballero panel acknowledged Poly-America ’s rule and that the rule is binding on the courts of appeals. See id. Because Poly-America forecloses Bazan-Garcia’s challenge to the Arbitrat ion Agreement’s delegation clause, Bazan-Garcia is bound to her agreement. C. Bazan-Garcia’s claim that arbitrating her unconscio nability defense would be prohibitively expensive is not sup ported by any evidence in the record. Finally, Bazan-Garcia’s untimely challenges to the delegation clauses fail because she has not provided any evidence showing that arbitrating her unconscionability defense under the Employee Handbo ok or the Arbitration Agreement would be prohibitively expensive.13 Before the trial court, Bazan-Garcia claimed that t he arbitration agreement in the Employee Handbook was unconscionab le because its cost-sharing provision allegedly requires her to split the costs of arbitration equally with WRPS.

See Resp. at 10. Bazan-Garcia estimated that arbitrat ing the merits of her claims against WRPS could cost upwards of $20,000, based o n invoices from three prior AAA arbitrations, described as “labor cases . . . s imilar in nature, complexity, and amount of witnesses as Ms. Bazan-Garcia’s case.” C R 85.

How much it would cost to arbitrate the merits of Bazan-Garcia’s claims, however, has no relevance to whether the de legation clause is unconscionable. The delegation clause requires Baz an-Garcia to submit her unconscionability defense to the arbitrator. To av oid that clause, therefore, BazanGarcia must show that arbitrating just her unconsci onability defense would be prohibitively expensive. Rent-A-Center , 561 U.S. at 74. The United States Supreme Court has warned that this is a “difficult” standard to meet, because such a proceeding is usually less complicated, less fact -intensive, and less lengthy than arbitrating the actual merits of the parties’ under lying dispute. Id. (“[T]he unfairness of the fee-splitting arrangement may be more difficult to establish for the arbitration of enforceability [of the arbitrati on agreement] than for arbitration of more complex and fact-related aspects of the all eged employment discrimination.”).14 Bazan-Garcia failed to introduce any evidence to me et this burden. The three AAA invoices she submitted, for example, were for proceedings that lasted 2 to 3 days each, involved testimony from wi tnesses and experts, and required the arbitrator to decide the merits of all of the parties’ statutory and factintensive employment claims. See CR 85–94. Any hearing on Bazan-Garcia’s unconscionability defense, in contrast, would likel y last an hour or less, involve a smaller and much simpler set of issues, require lit tle or no fact-finding, and only require testimony from Bazan-Garcia herself. Becau se there is no evidence on the costs of such a hearing, or even a showing that a h earing would be required, Bazan-Garcia cannot prove that the Employee Handboo k’s delegation clause is unconscionable.

Bazan-Garcia’s challenge to the Arbitration Agreeme nt’s delegation clause—that it would be prohibitively expensive to travel to Dallas to arbitrate her unconscionability defense—is also unsupported by th e evidence. Bazan-Garcia submitted an affidavit to the trial court stating t hat arbitrating the merits of her claims in Dallas would cause her to “incur substant ial additional expenses in travel and lodging.” CR 96–97. But this conclusory state ment does not provide any information regarding how much such travel would ac tually cost, much less prove a likelihood that Bazan-Garcia could not pursue her claims if she were required to incur those costs. Indeed, Bazan-Garcia’s affidavi t is almost identical to testimony15

that the U.S. Supreme Court found was inadequate to prove that an arbitration agreement was unconscionable in Green Tree Fin. Corp.-Ala. v. Randolph

. See 531 U.S. 79, 91 n.6 (2000) (discussing as insuffici ent plaintiff’s testimony “that ‘[a]rbitration costs are high and that she did not have the resources to arbitrate”).

This Court must submit Bazan-Garcia’s claims and he r unconscionability defense to arbitration pursuant t o the delegation clauses in the parties’ agreements. The Court does not need to de cide the merits of BazanGarcia’s challenges to those clauses, because she w aived them by failing to raise them before the trial court. Moreover, even if tho se claims were before this Court, they are directly contradicted by the AAA Rules and unsupported by the record. Both delegation clauses are therefore enforceable.

III. Arbitration under the AAA Rules is not unconscionab le.

If the Court determines that the AAA Rules apply in this appeal, but holds that the agreements’ delegation clauses are u nenforceable, then it will have to decide the merits of Bazan-Garcia’s unconscionab ility defense—i.e., whether arbitrating Bazan-Garcia’s claims against WRPS woul d be prohibitively expensive. This defense fails, because the AAA Rules directly contradict all of the challenges that Bazan-Garcia has raised against the Employee H andbook and the Arbitration Agreement.16 At the hearing on its Motion to Compel Arbitration and in its Opening Brief, WRPS explained that the Employee Handbook ag reement’s cost-sharing provision is not unconscionable because the AAA Rul es expressly limit BazanGarcia’s arbitration costs. See RR at 10–11; Opening Br. at 26–28; see also AAA Rule 1 (App. 28) (AAA Rules govern if “an adverse m aterial inconsistency exists between the arbitration agreement and these rules”) . Under these rules, BazanGarcia will be charged a $200 filing fee and any fe es associated with her witnesses. AAA Rule 45 (App. 43). In addition, she can ask fo r relief from any fees that cause her “extreme hardship.” AAA Rule 43 (App. 43 ). WRPS, on the other hand, is responsible for all hearing fees and for p aying the arbitrator’s fees and expenses. AAA Rules 48(i)–(iii) (App. 45–47). Baz an-Garcia has never disputed WRPS’s interpretation of the rules, nor claimed tha t she cannot afford these expenses. She therefore cannot show that arbitrati on under the Employee Handbook would be prohibitively expensive.

Likewise, the venue and discovery-limitation provis ions in the Arbitration Agreement do not make the agreement unc onscionable, because the AAA Rules empower the arbitrator to modify both the se provisions. See RR at 11 (discussing AAA Rules 9 and 10); Opening Br. at 30– 31 (same). As explained in Section II.B above, Bazan-Garcia’s claim that this Court can find these provisions unconscionable despite these rules is directly fore closed by the Texas Supreme17

Court’s decision in Poly-America

. See supra at 11–12 (discussing Poly-America , 262 S.W.3d at 347). Consequently, Bazan-Garcia als o cannot show that arbitration under the Arbitration Agreement would be unconscion able.

IV. Even if the AAA Rules do not apply to this appeal, Bazan-Garcia is bound by her arbitration agreements because she has failed to prove those agreements are unconscionable. Bazan-Garcia has staked this appeal on the hope tha t the Court will ignore the AAA Rules. But that alone cannot reliev e Bazan-Garcia of her arbitration obligations. Instead, she must prove a likelihood that the excessive costs of arbitration would prevent her from pursuin g her claims, including by identifying the organization or arbitrator who will conduct the proceeding, establishing what the fees would be charged by that organization or arbitrator, and demonstrating that no cheaper alternative is availa ble to the parties. See Opening Br. at 23–25. As WRPS pointed out in its Opening B rief, Bazan-Garcia has not met any of these requirements, see id. , and she fails to justify or excuse these omissions in her Response. Consequently, regardles s of whether the AAA Rules apply in this appeal, the Court must compel arbitra tion of Bazan-Garcia’s claims. A. Bazan-Garcia cannot rely on prior AAA invoices to p rove that the arbitration under the Employee Handbook is unconsci onable, because she has not shown that arbitration will be conducted by the AAA. The only evidence that Bazan-Garcia has submitted t o prove that arbitration under the Employee Handbook’s cost-shar ing provision would be18

prohibitively expensive are three invoices from all egedly “similar arbitrations” conducted by the AAA. See CR 85–94. But the Employee Handbook does not require that the arbitration be conducted by the AA A; instead, it only requires that arbitration occur “under” the AAA Rules. See App. 13; see also Opening Br. at 23-25. Bazan-Garcia must therefore make a “factual showing that the AAA would administer the arbitration” before she can rely on those invoices to prove her unconscionability defense. Aspen Tech., Inc. v. Shasha , 253 S.W.3d 857, 864 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (cit ing Green Tree , 531 U.S. at 90 n.6). Bazan-Garcia has not made any such showing. On app eal, she tries to avoid this requirement altogether by arguing that Shasha , one of the cases cited in WRPS’s Opening Brief, stands for a different propos ition: that “evidence of expected AAA costs presented solely in the form of testimony [is] legally insufficient.” Resp. at 26 (emphasis added); see also id. (quoting Shasha , 253 S.W.3d at 864 (“[T]estimony alone does not provide specific evidence as to Shasha’s likely costs to arbitrate under the [arbit ration] agreement.”). Because Bazan-Garcia also submitted invoices from other arbitrations in supp ort of her unconscionability argument, she claims that Shasha supports her position. See id

.19 Bazan-Garcia’s argument misreads and misrepresents Shasha. After reviewing an affidavit submitted by plaintiff’s att orney regarding how much arbitration with the AAA would cost, the court stat ed:

this testimony alone does not provide specific evidence as to Shasha’s likely costs to arbitrate under the 2006 Agreement. Though Shasha’s counsel provides projec ted fees for filing with the AAA, AAA case service, and AAA administration, this projection is based on the premise that the AAA would administer the arbitration. However, the arbitration provision in the 2006 Agreement does not require that the AAA conduc t or administer the arbitration; rather the provision states that arbitration shall be “in accordance with the [ AAA Rules].” Under this language, the AAA may administer the arbitration, but the parties are not required t o have the arbitration administered by the AAA. 253 S.W.3d at 864 (emphases added). In context, it is clear that the court of appeals’ concern was not the testimonial nature of the evidence, but that Shasha did not provide an adequate basis for assuming that these costs would be governed by the AAA Rules’ fee schedule. See id.

This requirement has also been adopted by the Unite d States Supreme

Court. In Green Tree , the Court explained that a plaintiff who failed t o “make any factual showing that the American Arbitration Assoc iation would conduct the arbitration” could not rely on evidence of how much an AAA-administered proceeding would cost to show that her arbitration agreement was unconscionable.

Green Tree , 531 U.S. at 90 n.6. And while the Texas Supreme Court has accepted20

AAA invoices as some evidence of the costs of arbit ration, it did so in a case where the parties’ agreement specifically required them t o submit their disputes to “binding arbitration administered by the American Arbitration Association.” Olshan , 328 S.W.3d at 887, 897 (emphasis added).

Bazan-Garcia has failed to make any “factual showin g that the AAA would administer the arbitration” under the parties ’ agreement. See Shasha , 253 S.W.3d at 864. She therefore cannot prove, based s olely on invoices from AAAadministered arbitrations, that arbitration under t he Employee Handbook would be prohibitively expensive and unconscionable. 3

B. Bazan-Garcia cannot rely on AAA invoices to prove t hat arbitration under the Employee Handbook is unconsci onable if this Court is barred from considering the AAA Rules . In addition, if the Court is barred from considerin g the AAA Rules, as Bazan-Garcia has argued in the Response, then Bazan -Garcia cannot rely on AAA

3 Bazan-Garcia attempts to flip the burden of proof by claiming that WRPS was required to show that arbitration “through an arbitration assoc iation other than the AAA, would be less expensive than an arbitration actually administered by AAA.” Resp. at 28. This argument was squarely rejected in Shasha . Like Bazan-Garcia, Shasha argued that his eviden ce regarding how much AAA arbitration would cost was sufficient to m eet his burden of proof, because the other party failed to counter that evidence by showing th at non-AAA arbitration would be more affordable. The court of appeals disagreed, explai ning that even though the other party could have prevailed by submitting such evidence, “such p roof is not necessary for Shasha to be required to make a factual showing that the AAA wou ld administer the arbitration.” Aspen Tech., Inc. v. Shasha , 253 S.W.3d 857, 864 (Tex. App.—Houston [14th Dist .] 2008, no pet.). Bazan-Garcia’s argument is also contrary to Olshan , in which the Texas Supreme Court held that the party claiming arbitration would be prohibitive ly expensive has the burden of affirmatively proving that no cheaper arbitration alternatives we re available under the parties’ agreement. See 328 S.W.3d at 897 (citing Green Tree Fin. Corp.-Ala. v. Randolph , 531 U.S. 79, 90 n.6 (2000)).21

invoices to prove that arbitration under the Employ ee Handbook would be unconscionable.

The Texas Supreme Court’s opinion in Olshan is instructive. Like Bazan-Garcia, the Olshan respondents claimed that arbitration would be prohibitively expensive, and as evidence submitted several arbitration invoices from allegedly “similar” AAA-administered arbitrati ons. 328 S.W.3d at 897. Rather than relying solely on these invoices, the S upreme Court examined the AAA Rules separately to determine, based on the rul es’ fee schedule and the amounts of the respondents’ claims, “how much [resp ondents] will be charged

under the AAA Rules.” Id. Without that information, the Supreme Court explained, respondents could not meet their “burden to show the likelihood of incurring excessive costs.” Id.

If Bazan-Garcia is correct and the AAA Rules cannot be considered by the Court in this appeal, then Olshan is clear: Bazan-Garcia cannot meet her heavy burden of proving that arbitration governed by those rules and fee schedule would be prohibitively excessive and unconscionable

. See Olshan , 328 S.W.3d at 897. She therefore cannot avoid her arbitration ob ligations under the Employee Handbook.22

C. Bazan-Garcia cannot prove that the Employee Handboo k’s arbitration agreement is unconscionable because she has not shown that a less expensive arbitration alternative is unavailable to her. The Texas Supreme Court has intentionally set the b ar high for holding that an arbitration agreement is unconscion able, and has explained that a party may not “avoid arbitration [by] assum[ing] th e most expensive possible scenario.” Olshan , 328 S.W.3d at 897. In Olshan , the Supreme Court explained that to meet this burden, the party resisting arbit ration must also show that no cheaper alternative is available to the parties, su ch as by demonstrating it “made any effort to reduce the likely charges through req uests for fee waivers, pro bono, arbitrators, or even simply requesting a one arbitr ator panel.” Id.

WRPS specifically discussed this requirement in its Opening Brief and pointed out that Bazan-Garcia had failed to mak e such a showing. See Opening Br. at 25. In her response, Bazan-Garcia d iscusses Olshan , but conspicuously omits any mention of this requirement

. See Resp. at 27–30. For this additional reason, Bazan-Garcia cannot prove t hat arbitrating her claims against WRPS under the Employee Handbook would be u nconscionable.23

D. Bazan-Garcia cannot prove that arbitration under th e Arbitration Agreement is unconscionable because she has not presented any evidence showing how much it would co st to travel to Dallas County. Bazan-Garcia also claims that arbitration under the Arbitration Agreement would be unconscionable, on the grounds t hat she cannot afford the costs of travel and lodging in Dallas County. See Resp. at 24–25. In support of this claim, Bazan-Garcia submitted an affidavit sta ting that “if it is determined that I must bring my lawsuit against my employer in Dall as County, Texas, I will incur substantial additional expenses in travel and lodgi ng, and I will probably not continue with my claim.” CR 96.

As explained in Section II.C above, this conclusory statement is inadequate to prove that the Arbitration Agreement is unconscionable. See supra at 14–15 (discussing Green Tree , 531 U.S. at 90 n.6 (holding that plaintiff’s testimony “that [a]rbitration costs are high and th at she did not have to resources to arbitrate” was inadequate to prove unconscionabilit y)). For example, BazanGarcia does not indicate the amount of those “subst antial” expenses, identify what type of transportation she would use to get to Dall as County, state how long she would have to stay, or show that no cheaper alterna tives are available to her. Without this basic information, this Court cannot f ind that arbitration pursuant to the Arbitration Agreement would be prohibitively ex pensive, or allow BazanGarcia to escape her bargain with WRPS.24

V. The challenged provisions do not constitute the “es sential purpose” of the parties’ agreements, and may be severed from th e agreements. Finally, if this Court concludes that any of the ch allenged provisions in the Employee Handbook or Arbitration Agreement i s unconscionable, then it must sever that provision and enforce the remainder of the parties’ agreement. The Court can only decline to do so if it concludes tha t the unconscionable provision constitutes the arbitration agreement’s “essential purpose.” See Opening Br. at 32– 33 (discussing Poly-America , 262 S.W.3d at 360; Venture Cotton Co-op v.

Freeman , 435 S.W.3d 222, 230 (Tex. 2014)). In her Respons e, Bazan-Garcia contends that the three challenged provisions are “ integral” to the parties’ arbitration agreements because (1) the agreements d o not contain a severability clause, see Resp. at 40 (citing Poly-America , 262 S.W.3d at 360), and (2) WRPS did not request severance from the trial court, see Resp. at 40–41.

First, “[i]n determining an agreement’s essential p urpose, the issue is ‘whether or not parties would have entered into the agreement absent the unenforceable provisions.’” Venture Cotton , 435 S.W.3d at 230 (quoting PolyAmerica , 262 S.W.3d at 360). WRPS and Bazan-Garcia’s inco rporation of the AAA Rules in both the Arbitration Agreement and the Employee Handbook demonstrate that none of the provisions challenged by Bazan-Garcia were “essential” to those agreements. The AAA Rules not only supersede the challenged provisions, they also give the arbitrato r power to modify or remove25

them. See AAA Rule 1 (App. 28). If these particular provisi ons were “essential” to the agreements, then it is highly unlikely the p arties would have given the arbitrator such authority.

Second, and contrary to Bazan-Garcia’s suggestion, the Texas Supreme Court has never held that the absence of a severability clause proves that all of the agreement’s terms constitute its “essent ial purpose.” Instead, the Supreme Court expressly held in Venture Cotton that a court of appeals is required to sever an unconscionable provision from an arbitr ation agreement even when the agreement has no severability clause, and even when that remedy was not requested from the trial court. 435 S.W.3d at 230 (discussed in Opening Br. at 32)

. Consequently, if this Court concludes that any prov ision in the parties’ arbitration agreements is unenforceable, then it must sever tha t provision and enforce the remainder of the agreements.

CONCLUSION AND PRAYER FOR RELIEF For the reasons set forth above, WRPS respectfully requests the Court reverse the trial court’s Order denying WRPS’s moti on to compel arbitration, and direct the trial court to compel arbitration of all of Bazan-Garcia’s claims and abate this litigation.26 Respectfully submitted, BAKER BOTTS L.L.P. By: /s/ Jennifer M. Trulock Jennifer M. Trulock State Bar No. 90001515 2001 Ross Avenue, Suite 600 Dallas, Texas 75201 (214) 953-6500 Telephone (214) 953-6503 Facsimile jennifer.trulock@bakerbotts.com Stephanie F. Cagniart State Bar No. 24079786 98 San Jacinto Boulevard, Suite 1500 Austin, Texas 78701-4078 (512) 322-2500 Telephone (512) 322-2501 Facsimile stephanie.cagniart@bakerbotts.com ATTORNEYS FOR APPELLANT WESTERN RIM PROPERTY SERVICES, INC.27 Certificate of Compliance This brief complies with the type-volume limitation s of Tex. R. App. P. 9.4, as it contains 5,861 words, excluding the p arts of the brief exempted by Rule 9.4(i)(1). /s/ Stephanie F. Cagniart Stephanie F. Cagniart

Certificate of Service I hereby certify that on February 9, 2015, a copy o f the foregoing was served by the Court’s CM/ECF electronic service and by electronic mail on the following parties:

Javier Espinoza Josue F. Garza The Espinoza Law Firm, PLLC 503 E. Ramsey, Ste. 103 San Antonio, Texas 78216 210-229-1302 (Facsimile) josue@espinozafirm.com

/s/ Stephanie F. Cagniart Stephanie F. Cagniart