Court Opinion

ID: 4909052
Source: CourtListenerOpinion
Date Created: 2021-09-08 00:00:39.660589+00
Date Added: 2024-06-11T08:13:18.562333
License: Public Domain

Case: 21-20086     Document: 00516004841         Page: 1     Date Filed: 09/07/2021

              United States Court of Appeals
                   for the Fifth Circuit
                                                                       United States Court of Appeals
                                                                                Fifth Circuit

                                                                              FILED
                                                                      September 7, 2021
                                  No. 21-20086                           Lyle W. Cayce
                                                                              Clerk

   Donna Kay Butler; Brittany Gallien; Ernest Kizzee;
   Jasmine Smithers; LaPorsha Stanley; Bonnie Williams,

                                                           Plaintiffs—Appellants,

                                       versus

   Z&H Foods, Incorporated,

                                                            Defendant—Appellee.

                  Appeal from the United States District Court
                      for the Southern District of Texas
                            USDC No. 4:19-cv-2759

   Before Southwick, Oldham, and Wilson, Circuit Judges.
   Per Curiam:*
          The six plaintiffs are former employees of a Popeyes restaurant owned
   by the defendant, Z&H Foods, Inc. (“Z&H”). In 2019, after exhausting their
   administrative remedies before the Equal Employment Opportunity
   Commission (“EEOC”), they sued in federal district court. Plaintiffs

          *
            Pursuant to 5th Circuit Rule 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   opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
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                                         No. 21-20086

   brought discrimination and retaliation claims (based on color and/or race)
   under Title VII and 42 U.S.C. § 1981. Z&H filed an answer and responded
   to some discovery requests but made none of its own. Then, nine months
   after the complaint was filed, Z&H moved to compel arbitration. Relying on
   an arbitration agreement between each plaintiff and Z&H (the
   “Agreement”), the district court compelled arbitration and dismissed the
   case. Plaintiffs appealed.
          We review the district court’s order compelling arbitration de novo.
   Crawford Pro. Drugs, Inc. v. CVS Caremark Corp., 748 F.3d 249, 256 (5th Cir.
   2014). But we review the court’s factual findings only for clear error. Id.
   Applying those standards, we address and reject plaintiffs’ four arguments in
   turn. The first three lack merit, and plaintiffs forfeited the fourth by failing to
   raise it before the district court.
          Plaintiffs first argue there simply was no arbitration Agreement. More
   precisely, they argue the Agreement’s existence is “in issue” within the
   meaning of the Federal Arbitration Act (“FAA”), and that the district court
   therefore erred by denying them a jury trial on the question. See 9 U.S.C. § 4
   (“If the making of the arbitration agreement . . . be in issue, the court shall
   proceed summarily to the trial thereof.”).
          Questions of an arbitration agreement’s validity and existence are
   governed by state law. See, e.g., Halliburton Energy Servs. v. Ironshore Specialty
   Ins. Co., 921 F.3d 522, 530 (5th Cir. 2019). To put the Agreement’s existence
   “in issue” for FAA purposes, plaintiffs “must make at least some showing
   that under prevailing law, [they] would be relieved of [their] contractual
   obligations to arbitrate if [their] allegations proved to be true and produce
   some evidence to substantiate [their] factual allegations.” Am. Heritage Life
   Ins. Co. v. Orr, 294 F.3d 702, 710 (5th Cir. 2002) (quotation and alterations
   omitted); see 9 U.S.C. § 4. And without corroborating evidence, self-serving

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   affidavits will not suffice to entitle the plaintiffs to a jury trial. See Orr, 294
   F.3d at 710.
           The district court correctly applied these standards and concluded the
   Agreement’s existence was not “in issue.” Though each plaintiff offered an
   affidavit claiming he or she had not signed the Agreement, the court
   concluded that “Plaintiffs do not offer, and the record does not contain, any
   evidence that corroborates Plaintiffs’ self-serving affidavits.” Given that
   factual finding, the existence of the Agreement was not in issue. See Orr, 294
   F.3d at 710. And the court explicitly based its finding on its consideration of
   a wide variety of evidence—including a digitally signed Agreement for each
   plaintiff.
           The plaintiffs now contend the court’s factual conclusion was clearly
   erroneous. Their argument boils down to the claim that Z&H either forged
   each and every one of plaintiffs’ digital signatures or simply falsified the
   Agreements from the ground up. Specifically, they point to a letter Z&H
   previously sent to the EEOC—a letter where Z&H wrongly said it had “no
   record” of one of the plaintiffs’ (Jasmine Smithers) ever having worked for
   Z&H. They suggest that this letter, combined with Z&H’s later production
   of Smithers’s signed Agreement, proves that Z&H forged at least her
   signature and perhaps the others. They also argue that forging digital
   documents and signatures is, in general, easy to do.
           Neither point comes close to showing the district court clearly erred.
   Z&H offered an explanation for the inaccurate EEOC letter: the error, said
   Z&H, was based on Smithers’ own mistaken listing of her dates of
   employment when she complained to the EEOC. There is nothing clearly
   erroneous about crediting that explanation. And the mere fact that a
   document can be falsified does not mean any given document actually was
   falsified. So we conclude the district court’s finding—that nothing in the

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   record supports plaintiffs’ affidavits about falsification—was not clearly
   erroneous.
          Second, the plaintiffs argue the Agreement was based on an illusory
   promise and therefore invalid under Texas law. This question is indeed
   governed by Texas contract law, see e.g., Halliburton, 921 F.3d at 530, and we
   review the district court’s contract interpretation de novo, see D2 Excavating
   Inc. v. Thompson Thrift Constr., Inc., 973 F.3d 430, 433 (5th Cir. 2020). Under
   Texas law, “an arbitration provision [is] illusory if the contract permits one
   party to legitimately avoid its promise to arbitrate, such as by unilaterally
   amending or terminating the arbitration provision and completely escaping
   arbitration.” Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d
   494, 505 (Tex. 2015).
          The plaintiffs argue as follows. The Agreement is part of an Employee
   Handbook (the “Handbook”). The Handbook provides both that “[t]he
   procedures, practices, policies and benefits described here may be modified
   or discontinued,” and that “Z&H . . . reserves the right to amend or modify
   these policies at any time.” Meanwhile, the arbitration Agreement describes
   itself as “mutually binding” and “only . . . revo[cable] or modifi[able] by a
   writing signed by the Parties.” But the Agreement also provides that “to the
   extent of any conflict with this Agreement, the express terms regarding the
   resolution of disputes contained in the separate written binding and
   enforceable contract shall control.” The Handbook counts as such a separate
   contract. So, plaintiffs contend, the Handbook’s unilateral-modification
   provision trumps the Agreement’s mutual-modification provision and
   renders the latter illusory under Royston. 467 S.W.3d at 505.
          This reading is creative but wrong. First, it does not accord with the
   plain contractual text. See Great Am. Ins. Co. v. Primo, 512 S.W.3d 890, 893
   (Tex. 2017) (“‘Plain meaning’ is a watchword for contract interpretation

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   because word choice evinces intent. A contract’s plain language controls, not
   what one side or the other alleges they intended to say but did not.”
   (quotation omitted)). The Handbook states that Z&H has “separate
   documents regarding arbitration.” (emphasis added). Thus, the Handbook
   (along with its unilateral-modification clause) does not apply to the
   Agreement. Moreover, as the district court correctly noted, plaintiffs’
   reading would render superfluous the Agreement’s provision that it “can
   only be revoked or modified by a writing signed by the Parties.” See Coker v.
   Coker, 650 S.W.2d 391, 394 (Tex. 1983) (readings that render phrases
   meaningless are disfavored). We conclude that under Texas law, Z&H has
   no unilateral power to terminate the Agreement. The Agreement is therefore
   not illusory.
          Third, the plaintiffs argue Z&H waived its right to arbitrate through
   its litigation conduct. “Waiver of arbitration is a disfavored finding. But we
   will find it when the party seeking arbitration substantially invokes the
   judicial process to the detriment or prejudice of the other party.” Int’l Energy
   Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 999 F.3d 257, 266 (5th
   Cir. 2021) (quotation and internal citation omitted). And that invocation
   requires, “at the very least, engag[ing] in some overt act in court that evinces
   a desire to resolve the arbitrable dispute through litigation rather than
   arbitration.” In re Mirant Corp., 613 F.3d 584, 589 (5th Cir. 2010). Yet merely
   participating in discovery—without “shower[ing] the opposing party with
   interrogatories and discovery requests”—does not amount to waiver.
   Keytrade USA, Inc. v. Ain Temouchent M/V, 404 F.3d 891, 898 (5th Cir. 2005)
   (quotation and alterations omitted).
          Here, Z&H filed an answer and participated in discovery, but it made
   neither discovery requests nor motions of its own. It waited nine months
   before filing its motion to dismiss and compel arbitration. But under our
   precedent, that does not constitute a waiver. See Keytrade, 404 F.3d at 898.

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          Fourth and finally, the plaintiffs argue the district court had power to
   stay the case but not to dismiss it. They raise this issue for the first time on
   appeal and make no showing of extraordinary circumstances. So the issue is
   forfeited. See, e.g., Kitchen v. BASF, 952 F.3d 247, 253 (5th Cir. 2020)
   (“Because [the appellant] did not present this argument to the district court,
   and he makes no attempt to demonstrate extraordinary circumstances for
   why we should consider it, this argument is [forfeited].”). The plaintiffs’
   only response is that Z&H asked the district court to stay the case as an
   alternative to dismissing it. But a mere request to stay—in the alternative and
   by the opposing party, no less—is no substitute for plaintiffs’ actually raising
   the argument below.
          AFFIRMED.

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