IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

CELIA LOPEZ, §

 §

Plaintiff, §

 § Civil Action No. 3:05-CV-1724-D

VS. §

 §

H&R BLOCK FINANCIAL §

ADVISORS, INC., §

 §

Defendant. §

MEMORANDUM OPINION

 AND ORDER 

In this action for discrimination and retaliation under Title

VII of the Civil Rights Act of 1964 (“Title VII”), 42 U.S.C.

§ 2000e et seq., the court must decide whether plaintiff’s

contractual agreement to submit her Title VII claims to binding

arbitration is enforceable. Concluding that it is, the court

grants defendant’s motion to compel arbitration and stays this

case.

I

Plaintiff Celia Lopez (“Lopez”) sues defendant H&R Block

Financial Advisors, Inc. (“HRB”) alleging that it is liable under

Title VII for sex and pregnancy discrimination and retaliation

arising from HRB’s decision to terminate her employment. HRB is

headquartered in Michigan. Lopez worked at HRB’s Dallas, Texas

office as a stockbroker. 

HRB moves the court under the Federal Arbitration Act (“FAA”),

9 U.S.C. § 1 et. seq., to compel Lopez to participate in binding

 

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arbitration and to stay or dismiss the case, contending that Lopez

contractually agreed in both her application for employment and

employment agreement to submit her Title VII discrimination and

retaliation claims to binding arbitration. Lopez opposes the

motion, arguing that the application does not contain an

enforceable agreement and that the arbitration agreement in the

employment agreement is unenforceable as unconscionable and lacking

consideration.

When Lopez commenced her employment with HRB, she signed a

Financial Advisor Employment Agreement and Restrictive Covenants

(“Employment Agreement”) that provides that it is governed by the

laws of the State of Michigan and that contains the following

Arbitration Agreement:

The parties also agree to arbitrate any

dispute, claim or controversy that may arise

between the undersigned employee and the

Company, including any controversy arising out

of the employee’s employment or termination of

employment with the Company, including but not

limited to claims of race, color, religion,

sex, national origin or any other form of

unlawful discrimination prohibited by any

applicable federal, state or local civil

rights law, Title VII of the Civil Rights Act

of 1964, the Americans with Disabilities Act,

the Standards Act or any other federal, state

or local equal employment opportunity law, or

any other controversy that is required to be

arbitrated under the rules, constitution or

by-laws of the NYSE and/or the NASD as may be

amended from time-to-time. This arbitration

shall be conducted pursuant to the respective

rules and regulations of the NYSE, NASD, or

equivalent arbitration forum, then in effect,

as selected by the Company. Any award

 

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resulting therefrom may be entered as a

judgment by a court of competent jurisdiction

and venue, which the parties agree shall

include those courts described in Section 11.

The foregoing shall not limit the Company from

seeking its equitable remedies, as set forth

in Section 11, before a court of competent

jurisdiction and venue, which the parties

agree shall include those courts described in

Section 11. The parties also agree that

seeking (and obtaining) injunctive or

equitable relief as set forth in Section 11,

shall not waive either party’s rights to

subsequently seek and compel arbitration as

set forth in this Section.

The company makes the following disclosures

with respect to Arbitration:

A. Arbitration is final and binding on the

parties.

B. The parties are waiving their right to

seek remedies in court, including the

right to a jury trial.

C. Pre-arbitration discovery is generally

more limited than and different from

court proceedings.

D. The arbitrators’ award is not required to

include factual findings or legal

reasoning and any party’s right to appeal

or to seek modification of rulings by the

arbitrators is strictly limited.

E. The panel of arbitrators may include

arbitrators who were or are affiliated

with the securities industry.

F. Any arbitration award may be confirmed in

a court and a judgment entered for

enforcement and collection.

D. App. 14-15. Section 11 of the Employment Agreement, to which

the Arbitration Agreement refers in excluding certain equitable

remedies from its scope, in turn refers to §§ 7-10, which are

confidentiality and non-compete provisions.

 

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II

A

“The FAA expresses a strong national policy favoring

arbitration of disputes, and all doubts concerning the

arbitrability of claims should be resolved in favor of

arbitration.” Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471

(5th Cir. 2002). “The purpose of the FAA is to give arbitration

agreements the same force and effect as other contracts——no more

and no less.” Wash. Mut. Fin. Group, L.L.C. v. Bailey, 364 F.3d

260, 264 (5th Cir. 2004) (citing 9 U.S.C. § 2). “Courts

adjudicating a motion to compel arbitration engage in a two-step

process.” Hadnot v. Bay, Ltd., 344 F.3d 474, 476 (5th Cir. 2003).

“First, the court must determine whether the parties agreed to

arbitrate the dispute[ ]” by applying “the contract law of the

particular state that governs the agreement.” Wash. Mut., 364 F.3d

at 263-64. “‘This determination involves two considerations: (1)

whether there is a valid agreement to arbitrate between the

parties; and (2) whether the dispute in question falls within the

scope of that arbitration agreement.’” Am. Heritage Life Ins. Co.

v. Lang, 321 F.3d 533, 537 (5th Cir. 2003) (quoting Webb v.

Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996)). “[T]he

‘federal policy favoring arbitration does not apply to the

determination of whether there is a valid agreement to arbitrate

between the parties’ or to ‘the determination of who is bound’ by

 

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the arbitration agreement.” Id. at 537-38 (quoting Fleetwood

Enters. Inc. v. Gaskamp, 280 F.3d 1069, 1073-74 (5th Cir. 2002)).

“Once the court finds that the parties agreed to arbitrate, it must

consider whether any federal statute or policy renders the claims

nonarbitrable.” Wash. Mut., 364 F.3d at 263.

There is no question in this case that Lopez’s claims fall

within the scope of the Arbitration Agreement. It provides, in

relevant part, that 

The parties also agree to arbitrate any

dispute, claim or controversy that may arise

between the undersigned employee and the

Company, including any controversy arising out

of the employee’s employment or termination of

employment with the Company, including but not

limited to claims of . . . sex . . . or any

other form of unlawful discrimination

prohibited by . . . Title VII of the Civil

Rights Act of 1964. 

D. App. 14. Lopez does not contest this point. Nor does Lopez

argue that a federal statute or policy renders her claims

nonarbitrable. Title VII claims are clearly subject to mandatory

arbitration agreements. See Rojas v. TK Commc’ns, Inc., 87 F.3d

745, 748 (5th Cir. 1996). The dispositive issue is whether Lopez

and HRB have a valid agreement to arbitrate. In deciding this

question, the court need only address the Employment Agreement, not

the employment application.

B

Citing only Texas law, Lopez argues first that the Arbitration

Agreement is unenforceable because it lacks mutuality and, in turn,

 

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consideration. She contends the Employment Agreement lacks

mutuality because HRB “has carved out from the [arbitration]

agreement any equitable claims by [HRB] for breach of restrictive

covenants under the Employment Contract (which encompasses nearly

the entire universe of potential claims by HRB against Plaintiff).”

P. Br. 4. 

Because the Employment Agreement provides that it is governed

by the laws of the State of Michigan, the court applies Michigan

law in deciding whether Lopez and HRB entered into an enforceable

Arbitration Agreement. In Ryoti v. Paine, Webber, Jackson &

Curtis, Inc., 371 N.W.2d 454 (Mich. Ct. App. 1985) (per curiam),

the court rejected the contention that there was no bargained-for

consideration given in exchange for an agreement to arbitrate where

the plaintiff signed a written arbitration agreement that became

part of his employment contract. The court reasoned that “his

employment was conditioned upon his signing this agreement [and,]

[u]nder these circumstances, it is clear that the arbitration

agreement was supported by consideration.” Id. at 457.

Additionally, Lopez has presented no authority that shows

that, under Michigan law, a clause that permits one party to pursue

equitable remedies, but still binds that party to arbitrate the

merits of the claim, renders the arbitration clause unenforceable.

And the Arbitration Agreement itself provides that, if HRB seeks

 

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such remedies, this does not effect a waiver of Lopez’s rights to

seek and compel arbitration. See D. App. 14.

C

Lopez argues second that the Arbitration Agreement is

unconscionable. She maintains that this is so because, by

providing that arbitration will be conducted “pursuant to the

respective rules and regulations of the NYSE, NASD, or equivalent

arbitration forum, then in effect, as selected by the Company,” HRB

has retained the unilateral right to amend or alter the agreement

by changing, without notice or limitation, the forum, rules, and

regulations of the arbitration. She cites the holding of Nasir v.

Air Liquide America Corp., 2004 WL 2236658 (N.D. Tex. Oct. 1, 2004)

(Sanders, J.), for the proposition that “where an employer retains

the unilateral, unrestricted right to modify or terminate its

arbitration policy, any agreement to arbitrate under such terms is

illusory.” Id. at *2. 

Lopez’s reliance on Nasir is misplaced for at least two

reasons. First, in Nasir Judge Sanders was making an Erie

prediction concerning how the Supreme Court of Texas would decide

a question of Texas law. See id. (“Texas’ highest court has not

decided whether an arbitration agreement is illusory when the

employer retains the unilateral, unrestricted right to modify or

terminate its arbitration policy.”). Second, even if Lopez could

show that Michigan law is similar to Judge Sanders’ “educated guess

 

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as to how the Texas Supreme Court would rule,” id. (internal

quotation marks omitted), the Arbitration Agreement does not give

HRB the unilateral, unrestricted right to modify or terminate its

arbitration policy, within the meaning of Nasir. In Nasir the

arbitration policy was set out in an employee handbook, the

handbook consisted only of guidelines that the employer could

revise, amend, or terminate at any time, and there was no prior

notification requirement. Id. at *1. The employer thus retained

the unilateral right to amend the handbook, including the

arbitration agreement. Id. In the present case, HRB is not

entitled to revise, amend, or terminate the Arbitration Agreement.

Under the provision at issue, it is only entitled to select the

rules and regulations of arbitration, subject to the narrow

restriction that they must be the rules and regulations of the

NYSE, NASD, or an equivalent arbitration forum, then in effect.

* * *

Accordingly, the court holds that HRB has established that

there is a valid agreement to arbitrate between the parties and

that Lopez’s Title VII claims fall within the scope of the

Arbitration Agreement. The court therefore grants its January 18,

2006 motion to compel arbitration and stays this case. The court

directs the clerk of court to close this case administratively for

 

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statistical purposes. Either party may move the court to reopen

the case to enforce or vacate the arbitration award, if such relief

is warranted.

SO ORDERED.

March 10, 2006.

_________________________________

SIDNEY A. FITZWATER

UNITED STATES DISTRICT JUDGE

 

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