Court Opinion

ID: 2668993
Source: CourtListenerOpinion
Date Created: 2014-04-05 05:17:46.978998+00
Date Added: 2024-06-11T12:12:47.240135
License: Public Domain

Case: 12-11227       Document: 00512585147         Page: 1     Date Filed: 04/04/2014

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                    Fifth Circuit

                                                                            FILED
                                                                            April 4, 2014

                                       No. 12-11227                        Lyle W. Cayce
                                                                                Clerk

MARGARITA AVILES

                                                  Plaintiff - Appellant
v.

RUSSELL STOVER CANDIES, INCORPORATED

                                                  Defendant - Appellee

                   Appeal from the United States District Court
                        for the Northern District of Texas
                             USDC No. 3:12-CV-1409

Before SMITH, DENNIS, and HIGGINSON, Circuit Judges.
PER CURIAM:*
       Margarita Aviles (“Aviles”) filed a negligence suit against her employer,
Russell Stover Candies, Inc. (“Russell Stover”), in Texas state court, alleging
that on or about June 16, 2010 her hand was seriously injured when it was
caught in a machine during her employment. Following the injury, the Russell
Stover Candies, Inc. Texas Employee Injury Benefit Plan (“the Plan”) paid
medical benefits, on Aviles’s behalf, to her medical-care providers and disability
benefits directly to Aviles. Russell Stover removed the case to the U.S. District

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
     Case: 12-11227      Document: 00512585147        Page: 2    Date Filed: 04/04/2014

Court for the Northern District of Texas, and the parties consented to proceed
before a magistrate judge. See 28 U.S.C. § 636(c)(1).
      Russell Stover moved to dismiss (or, alternatively, to stay the court
proceeding pending completion of arbitration between the parties) based on the
provisions of the Waiver and Arbitration Agreement (“the Agreement”), signed
by Aviles. The magistrate judge agreed and dismissed the suit. Aviles timely
appealed. See id. § 636(c)(3). Aviles contends that the magistrate judge erred
in dismissing her suit because the Agreement is illusory and not binding under
Texas law as a consequence of Russell Stover’s retention of the right to
unilaterally alter the Plan’s summary description, including the arbitration
procedures therein.
      “[A]rbitration is a matter of contract,” Rent-A-Center, W., Inc. v. Jackson,
130 S. Ct. 2772, 2776 (2010), so “the interpretation of an arbitration agreement
is generally a matter of state law,” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp.,
559 U.S. 662, 681 (2010). The Federal Arbitration Act (“the FAA”), however,
“places arbitration agreements on an equal footing with other contracts, and
requires courts to enforce them according to their terms.” Rent-A-Center, 130 S.
Ct. at 2776 (citation omitted). Aviles and Russell Stover agree that Texas law
governs the Agreement at issue in this case.
      The Agreement provides that Aviles and Russell Stover shall arbitrate
before the American Arbitration Association “any and all” disputes that arise
between them. The Agreement expressly states that Aviles “acknowledge[s] and
understand[s] that by signing th[e] Agreement,” she is “giving up the right to a
jury trial on all of the claims covered by th[e] Agreement . . . in exchange for
eligibility for the Plan’s medical, disability and death benefits and in
anticipation of gaining the benefits of a speedy, impartial, mutually-binding
dispute resolution procedure.”1 Further, the Agreement states that it may “only

      1
         Russell Stover is a nonsubscriber to the optional Texas Workers Compensation Act.
Instead, the company voluntarily established the Plan under the Employee Retirement Income

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     Case: 12-11227       Document: 00512585147         Page: 3     Date Filed: 04/04/2014

be revoked or modified by mutual consent evidenced by a writing signed by both
[Aviles] and [Russell Stover]’s authorized representative and which specifically
states an intent to revoke or modify th[e] Agreement.” Finally, the Agreement
lists the claims subject to arbitration, which include claims for bodily injury, as
well as, “any and all claims challenging the validity or enforceability of th[e]
Agreement (in whole or in part) or challenging the applicability of th[e]
Agreement to a particular dispute or claim.”
       This final provision constitutes an “agree[ment] to arbitrate ‘gateway’
questions of ‘arbitrability,’ such as . . . whether [the parties’] agreement covers
a particular controversy.” Id. at 2777. The agreement to arbitrate that gateway
question, which we will refer to as the “delegation provision,” “is simply an
additional, antecedent agreement” that “is severable from the remainder of the”
arbitration agreement. Id. at 2777–78 (internal quotation marks omitted).
       Under the FAA, a delegation provision is valid, “save upon such grounds
as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2; see
Rent–A–Center, 130 S. Ct. at 2778. Delegation provisions may be clear and
unmistakable evidence that the parties manifested their intent to arbitrate
gateway questions of arbitrability, First Options of Chi., Inc. v. Kaplan, 514 U.S.
938, 944 (1995), and courts must enforce them unless the party resisting
arbitration challenges the delegation provision itself specifically, Rent-A-Center,
130 S. Ct. at 2777-79.
       The terms of the delegation provision in this case provide clear and
unmistakable evidence that Aviles and Russell Stover manifested their intent
to arbitrate whether Aviles’s claims are within the scope of the arbitration
agreement. The delegation provision subjects to arbitration, inter alia, “any and
all claims challenging the validity or enforceability of th[e] Agreement.” Aviles’s

Security Act of 1974 to provide medical, wage-replacement, and death benefits to Russell
Stover’s Texas employees injured or killed in the course and scope of their employment. Any
employee who wants to participate in the Plan and be eligible for its benefits in the event of
an occupational injury is required to accept the terms of the Agreement.

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contention that the Agreement is invalid or unenforceable as an illusory contract
is such a claim. An arbitrator, not the district court, must decide whether that
claim is within the scope of the arbitration agreement.          See id. at 2776.
Moreover, because a delegation provision is severable from the rest of the
arbitration agreement, it must be challenged “specifically.” Id. at 2777-79 (“[A]
party’s challenge to another provision of the contract, or to the contract as a
whole, does not prevent a court from enforcing a specific agreement to arbitrate
[contained within the challenged contract].”).      Given that Aviles does not
challenge the delegation provision itself specifically, her general claim that,
because the arbitration procedures allegedly may be modified unilaterally by
Russell Stover, her agreement to arbitrate is illusory, and therefore
unenforceable, must be submitted in the first instance to the arbitrator. The
magistrate judge therefore correctly dismissed Aviles’s suit so that she could
submit it to arbitration. The magistrate judge, however, decided Aviles’s claim
that her agreement to arbitrate is illusory and further determined that her
underlying negligence claims were within the scope of the parties’ arbitration
clause. Given our analysis, the magistrate judge should have declined to decide
either of those two issues.
      For these reasons, we AFFIRM the judgment of the magistrate judge
dismissing Aviles’s suit, see Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161,
1164 (5th Cir. 1992) (stating that dismissal, as opposed to a stay pending
arbitration, is proper “when all of the issues raised in the district court must be
submitted to arbitration”), but VACATE the judgment of the magistrate judge
to the extent that it decided those two issues.

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