Hunter v. Baylor Health Care System

Filing 81

MEMORANDUM OPINION AND ORDER: The Court grants Baylor's 21 motions to compel arbitration of Hunter's state law negligence, gross negligence, and fraud claims. The Court additionally grants Baylor's 24 motion to bifurcate and stays Hunter's state law claims pending arbitration. Hunter's ERISA and breach-of-contract claims are not stayed and remain pending. (Ordered by Judge David C Godbey on 7/9/2019) (zkc)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
KATHLEEN HUNTER,
Plaintiff,
v.
BAYLOR HEALTH CARE SYSTEM,
Defendant.

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Civil Action No. 3:18-CV-0881-N

MEMORANDUM OPINION AND ORDER
This Order addresses Defendant Baylor Health Care System’s (“Baylor”) motion to
compel arbitration [21] and motion to bifurcate [24]. For the reasons stated below, the Court
grants both motions.
I. ORIGINS OF THE DISPUTE
Plaintiff, Kathleen Hunter, was an employee of Baylor when she was injured while
assisting a patient to the restroom. Hunter alleges that when she saw a light fixture falling
from the bathroom ceiling, she threw her body over the patient. Hunter alleges that the light
fixture then struck her, causing injuries to her head, neck, and left shoulder. After Baylor
denied benefits, Hunter filed a breach of contract and denial of ERISA benefits suit, alleging
that Baylor should have paid for her shoulder surgery. Hunter also brings state law
negligence, gross negligence, and fraud claims.

MEMORANDUM OPINION AND ORDER – PAGE 1

Baylor now moves to bifurcate Hunter’s state law claims from her denial of ERISA
benefits and breach-of-contract claims. Baylor also moves to compel arbitration of the state
law claims under the Federal Arbitration Act (“FAA”).
II. THE COURT GRANTS BAYLOR’S MOTIONS TO
BIFURCATE AND COMPEL ARBITRATION
Baylor alleges that Hunter agreed to arbitrate her state law claims against Baylor. As
for Hunter’s ERISA and breach-of-contract claims, Baylor states that these claims are
specifically carved out from the arbitration agreement and are thus not subject to arbitration.
Baylor also notes that before this action was removed to federal court, the state court judge
stayed the case and granted an agreed motion to arbitrate. However, after almost a year in
arbitration, the state court judge lifted the stay and remanded the case back to state court.
Baylor, however, does not explain why the case was remanded. To fill in the gaps in
Baylor’s description of the procedural history, the Court reviewed the removal documents,
including the attached state court documents.
While this action was still pending in state court, the parties agreed to arbitrate the
dispute after Baylor represented by affidavit that Hunter had signed an arbitration agreement
that applied to all of her claims. But the state court judge lifted the stay and remanded the
case once Hunter discovered that Baylor’s representation was false. Baylor now admits that
Hunter never actually signed any arbitration agreement. Instead, Baylor argues that the
underlying arbitration agreement is enforceable, regardless whether Hunter signed it. While

MEMORANDUM OPINION AND ORDER – PAGE 2

the Court does not approve of Baylor’s conduct, the Court agrees that the underlying
arbitration agreement is valid and enforceable.
A. Legal Standard
Section 2 of the FAA1 provides that written agreements to arbitrate controversies
arising out of an existing contract “shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.” 9 U .S.C. § 2.
When considering a motion to compel arbitration, the Court must determine “whether
the parties agreed to arbitrate the dispute.” Webb v. Investacorp, Inc., 89 F.3d 252, 257–58
(5th Cir.1996) (per curiam). “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.” Id. at 258. In deciding
whether the parties agreed to arbitrate the dispute, “courts apply the contract law of the
particular state that governs the agreement.” Wash. Mut. Fin. Grp., LLC v. Bailey, 364 F.3d
260, 264 (5th Cir.2004) (citation omitted). If there is a valid agreement to arbitrate, and there
are no legal constraints that foreclose arbitration, the court must order the parties to arbitrate
their dispute.
“The party seeking to compel arbitration need only prove the existence of an
agreement to arbitrate by a preponderance of the evidence.” Grant v. Houser, 469 Fed.
1

Hunter did not respond to Baylor’s motion to compel arbitration, so there is no
dispute regarding whether the arbitration agreement is governed by the FAA, nor that the
arbitration agreement affects interstate commerce. There is similarly no dispute that Texas
contract law governs whether there is a valid agreement to arbitrate.

MEMORANDUM OPINION AND ORDER – PAGE 3

App’x 310, 315 (5th Cir.2012) (per curiam). “[T]here is a ‘strong federal policy in favor of
enforcing arbitration agreements.’” Texaco Exploration & Prod. Co. v. AmClyde Engineered
Prods. Co., 243 F.3d 906, 909 (5th Cir.2001) (quoting Dean Witter Reynolds, Inc. v. Byrd,
470 U.S. 213, 217 (1985)). And because of this strong presumption, “a party seeking to
invalidate an arbitration agreement bears the burden of establishing its invalidity.” Carter v.
Countrywide Credit Indus., 362 F.3d 294, 297 (5th Cir.2004).
B. Hunter Agreed to Arbitrate
Baylor alleges that Hunter agreed to arbitrate her state law claims against Baylor
through an arbitration provision in the Baylor Health Care System Occupational Injury
Benefit Plan. Def.’s App. B-1 [21-5]. As stated above, Baylor admits that Hunter never
actually signed the arbitration agreement. The FAA, however, does not require that an
arbitration agreement be signed; it only requires that it be in writing. Valero Refining, Inc.
v. M/T Lauberhorn, 813 F.3d 60, 64 (5th Cir. 1987); 9 U.S.C. § 2. Moreover, Texas courts
have held that the question of whether a written contract, including an arbitration agreement,
must be signed to be binding is a question of the parties’ intent. See, e.g., In re Bunzl USA,
Inc., 155 S.W.3d 202, 209 (Tex. App.—El Paso 2004, no pet.); Valero Ref., Inc. v. M/T
Lauberhorn, 813 F.2d 60, 64 (5th Cir. 1987). But in the absence of signatures, other
evidence must be presented that is sufficient to show the parties’ assent to arbitrate. Id.
at 210.
Baylor argues that there is a valid agreement to arbitrate because Hunter was provided
notice of the arbitration agreement and accepted it by continuing her employment with

MEMORANDUM OPINION AND ORDER – PAGE 4

Baylor. Under Texas law, “when an employer notifies an employee of changes to the at-will
employment contract and the employee ‘continues working with knowledge of the changes,
he has accepted the changes as a matter of law.” In re Halliburton Co., 80 S.W.3d 566, 568
(Tex. 2002) (quoting Hathaway v. General Mills, Inc ., 711 S.W.2d 227, 229 (Tex.1986));
see In re Dillard Dept. Stores, Inc., 198 S.W.3d 778, 780 (Tex. 2006). An employer
asserting an arbitration agreement must prove both notice of the agreement and acceptance
by the employee. See id.; Halliburton, 80 S.W.3d at 568 (citing Hathaway, 711 S.W.2d at
229). “But acceptance need not be anything more complicated than continuing to show up
for the job and accept wages in return for work. ‘[W]hen the employer notifies an employee
of changes in employment terms, the employee must accept the new terms or quit. If the
employee continues working with knowledge of the changes, he has accepted the changes
as a matter of law.’” Kubala v. Supreme Prod. Services, Inc., 830 F.3d 199, 203 (5th Cir.
2016) (quoting Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986)).
Baylor provides sufficient evidence showing that Hunter had notice of the agreement
and assented to it terms. It is undisputed that Hunter is an at-will employee. As stated above,
the arbitration provision is found in the Baylor Health Care System Occupational Injury
Benefit Plan. Baylor shows that Hunter became an employee of Baylor in 2005 and was
assigned a unique identification number. Def.’s App. B. [21-4]. Also in 2005, Baylor
became a non-subscriber to the Texas Workers Compensation Act and created the Baylor
Health Care System Safe Choice Plan. Each employee went through a training process about
the plan and received an electronic copy of the Baylor Health Care System Occupational

MEMORANDUM OPINION AND ORDER – PAGE 5

Injury Benefit Plan effective July 1, 2005. Baylor also made printed copies available at the
rollout training sessions. Hunter completed the training program on June 27, 2005, using her
unique identification number. Def.’s App. B, B-5.
Then in 2012, all Baylor employees, including Hunter, went through another annual
training on the Baylor Health Care System Safe Choice Plan and again received an electronic
copy of the Baylor Health Care System Occupational Injury Benefit Plan effective July 1,
2009. Hunter completed the training program on January 30, 2012 using her unique
identification number. App. B, B-1, B-2, B-5. Hunter therefore had notice of the arbitration
provision in the Baylor Health System Occupational Injury Benefit Plan through the training
programs.
In addition to these training programs, Baylor employees also received training
through Baylor Learning Network (“BLN”). In both 2006 and 2009, Hunter received
notifications to take lessons identified as Baylor Health Care System Safety 2006: Safe
Choice and Baylor Health Care System Safety 2009: Safe Choice. Def.’s App. B, B-3.
Hunter completed these lessons on February 5, 2006 and June 14, 2009, scoring a 100% on
the lesson test each time. Def.’s App. B, B-3. Baylor alleges that the purpose of these
lessons was to educate Hunter and notify her of the Baylor Health Care System Occupational
Injury Benefit Plan. Within the BLN network, the plan would have been available to Hunter
to review and read. Baylor argues that Hunter, as an employee, was covered by the plan
during the years 2005 to 2016 and accepted the plan, including the arbitration provision, by

MEMORANDUM OPINION AND ORDER – PAGE 6

continuing her employment with Baylor. The Court holds that Baylor provides sufficient
evidence that Hunter agreed to the arbitration provision.
C. The Delegation Clause Requires an Arbitrator to Determine Whether
Hunter’s Claims Fall Within the Scope of the Arbitration Agreement
The Court ordinarily determines whether an arbitration agreement covers the claims
at issue. However, when an arbitration agreement contains a delegation clause giving the
arbitrator the primary power to rule on the arbitrability of a specific claim, the analysis
changes. Kubala., 830 F.3d at 201. When there is a possible delegation clause, the Court
first performs the usual analysis of whether there is a valid agreement to arbitrate, as the
Court did above. Then, the only remaining question is whether the purported delegation
clause evinces an intent to have the arbitrator decide threshold issues of arbitrability. Id. The
Supreme Court in Rent-A-Ctr., W., Inc. v. Jackson held the following was a valid delegation
clause: “The Arbitrator . . . shall have exclusive authority to resolve any dispute relating to
the interpretation, applicability, [or] enforceability . . . of this Agreement.” 561 U.S. 63, 76
(2010). Here, the arbitration clause states that the following is covered by binding
arbitration: “every claim or dispute relating to enforcement or interpretation of any written
terms of the requirement for binding arbitration,” and “the determination of whether a claim
is covered by these provision will be subject to arbitration under this arbitration
requirement.” Def.’s App. B-1, Bates Label 000956, 000957. While the language used is
a bit more clunky than that used in Rent-A-Center, the Court holds that this language conveys
an intent to have the arbitrator decide whether a given claim falls within the scope of the

MEMORANDUM OPINION AND ORDER – PAGE 7

arbitration agreement. The Court additionally finds no external legal constraints that would
nonetheless preclude arbitration. Accordingly, the Court grants Baylor’s motion to compel
arbitration of Hunter’s state law negligence, gross negligence, and fraud claims.
D. The Court Stays All Clams Compelled to Arbitration
Because the Court grants Baylor’s motion to compel Hunter’s state law claims, the
Court also grants Baylor’s motion to bifurcate Hunter’s state law tort claims from her ERISA
denial of benefits and breach-of-contract claims. The Court additionally stays the case with
respect with respect to Hunter’s state law claims.
CONCLUSION
The Court grants Baylor’s motions to compel arbitration of Hunter’s state law
negligence, gross negligence, and fraud claims.2 The Court additionally grants Baylor’s
motion to bifurcate and stays Hunter’s state law claims pending arbitration. Hunter’s ERISA
and breach-of-contract claims are not stayed and remain pending.
Signed July 9, 2019.

_________________________________
David C. Godbey
United States District Judge

2

The Court defers ruling on Baylor’s request for attorneys’ fees until after an
arbitration award is issued.

MEMORANDUM OPINION AND ORDER – PAGE 8