Maravilla v. Gruma Corporation d/b/a Mission Tortillas
Filing
30
MEMORANDUM OPINION AND ORDER granting 21 Second MOTION to Dismiss Or, In The Alternative, Compel Arbitration. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
JESUS MARAVILLA, Individually
and on Behalf of All Others
Similarly Situated,
July 26, 2018
David J. Bradley, Clerk
§
§
§
§
Plaintiff,
V.
GRUMA CORPORATION, d/b/a MISSION
TORTILLAS,
Defendant.
§
§
§
§
§
§
§
§
CIVIL ACTION NO. H-18-1309
MEMORANDUM OPINION AND ORDER
Plaintiff Jesus Maravilla ("Plaintiff"), on behalf of himself
and
other
against
similarly
defendant
("Defendant")
maintain
situated
Gruma
indi victuals,
Corporation,
brings
d/b/a
Mission
court
accurate
is
Alternative,
Dismiss")
action
Tortilla
for failure to pay overtime wages and failure to
records
under
the
Fair
Labor
( "FLSA") , quantum meruit, and promissory estoppel. 1
the
this
Defendant's
Second Motion
Compel Arbitration
(Docket Entry No. 21)
Standards
Pending before
to Dismiss
("Defendant's
Act
or,
in the
Second Motion to
For the reasons stated below, the
court will grant the motion.
1
See
Plaintiff's
First
Amended
Complaint
Complaint"), Docket Entry No. 16, pp. 8-14 ,, 40-65.
("Amended
Factual and Procedural Backqround2
I.
Defendant
is
a
corporation
that
distributes
tortillas,
tortilla chips, and other food products to retail customers through
its subsidiaries.
Plaintiff and members of the proposed class
distribute Defendant's products to its retail customers according
to guidelines and schedules negotiated between Defendant and the
retail customers.
Plaintiff alleges that Defendant negotiates with
the retailers virtually all terms of the relationship and that
Plaintiff and members of the proposed class "must strictly follow
Defendant instructions and adhere to the pricing,
procedures
negotiated
customers." 3
between
Defendant
Plaintiff alleges
that
and
policies,
their
and
retailer-
"[b] ecause they were mis-
classified as non-employees, Plaintiff and members of the proposed
Federal Collective Group were denied the rights and benefits of
employment, including, but not limited to overtime premium wages. " 4
Plaintiff
and
Defendant
signed
a
Store
Door
Distributor
Agreement ("Distributor Agreement") that governs the relationship
between the parties. 5
The
Distributor Agreement
contains
an
arbitration clause that states:
2
See id. at 3-8
3
Id. at 5
~
19.
4
Id. at 8
~
~~
35.
11-39.
5
Distributor Agreement, Exhibit A to Defendant's Motion to
Dismiss, or in the Alternative, to Compel Arbitration ("Defendant's
First Motion to Dismiss"), Docket Entry No. 11-1.
-2-
[A]ny and all other claims and causes of action
arising out of or relating to this Agreement .
. shall
be resolved by arbitration through JAMS/Endispute
("JAMS") as provided in Subsection 15 ( i) (iii) below. 6
The Distributor Agreement also contains class waiver provision. 7
On April 26,
2018,
Plaintiff filed this action and a motion
for class certification of state law claims. 8
Defendant filed its
First Motion to Dismiss 9 and a motion to stay class certification
proceedings . 10
Plaintiff
filed an amended complaint
that
adds
claims for promissory estoppel and quantum meruit, 11 another motion
for conditional certification, 12 and a response to Defendant's First
Motion to Dismiss. 13
6
On June 5, 2018, Defendant filed its Second
Id. at 22, Section 15 ( i) ( ii) .
7
Id. at 21, Section 15(g) ("Accordingly, the parties mutually
disclaim and waive the right to pursue against one another (1) any
class action claims or causes of action of whatever nature,
• II )
8
See Plaintiff
Original Complaint
Docket Entry No. 1;
Plaintiffs' Motion for Class Certification of State Law Claims
Pursuant to Fed. R. Civ. P. 23, Docket Entry No. 2.
9
Is
I
See Defendant's First Motion to Dismiss, Docket Entry No. 11.
10
See Motion to Stay Class Certification Proceedings in Light
of Plaintiff's Agreement to Individual Arbitration, Docket Entry
No. 12.
11
See Amended Complaint, Docket Entry No. 16.
12
See Plaintiff Motion for Conditional Certification, Docket
Entry No. 19.
13
See Plaintiff's Response to Defendant's Motion to Dismiss or,
in the Alternative, Compel Arbitration ("Plaintiff's Response"),
Docket Entry No. 20.
-3-
Motion to Dismiss
seeking an order dismissing this action and
requiring Plaintiff to arbitrate his claim with Defendant. 14
II.
Analysis
Defendant argues that because Plaintiff signed the Distributor
Agreement -- which requires mandatory arbitration of the claims and
incorporates the JAMS Streamlined Arbitration Rules and Procedures
the
court should dismiss
arbitration. 15
this
action and compel
individual
Plaintiff responds that the arbitration clause in
the Distributor Agreement is neither valid nor enforceable because
the
arbitration clause was
speaks
and
reads
Spanish,
written
and
in English,
Defendant
did
Plaintiff
not
only
provide
an
alternative version of the arbitration clause in Spanish. 16
Under
agreement
the
in
Federal
a
Arbitration Act
contract
evidencing
a
("FAA")
an
transaction
arbitration
involving
interstate commerce is "valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the revocation
See
No. 21.
14
15
Defendant's
Second
Motion
to
Dismiss,
Docket
Entry
Id. at 14.
16
Plaintiff's Response,
Docket Entry No.
20,
pp.
3-5.
Plaintiff's Response was filed in response to Defendant's First
Motion to Dismiss, Docket Entry No. 11. Defendant filed its Second
Motion to Dismiss on the same day Plaintiff's Response was filed.
Because Defendant's arguments in the Second Motion to Dismiss
regarding arbitration are virtually identical to its arguments in
its First Motion to Dismiss, Plaintiff's arguments in Response
apply with equal force to Defendant's Second Motion to Dismiss.
-4-
of any contract."
9
u.s.c.
§
Underlying the FAA is
2.
"the
fundamental principle that arbitration is a matter of contract."
AT&T Mobility LLC v.
Concepcion,
131 S.
Ct.
1740,
1745
(2011)
(internal quotation marks omitted); see Washington Mutual Finance
Group,
LLC v.
Bailey,
364
F.3d 260,
264
(5th Cir.
2004)
("The
purpose of the FAA is to give arbitration agreements the same force
and effect as other contracts -- no more and no less.").
Arbitrability is a threshold question to be determined at the
outset,
before deciding conditional certification.
Doordash, Inc., 888 F.3d 738, 743 (5th Cir. 2018)
International Bank of Commerce,
2016)).
" [f] irst,
839 F.3d 373,
Edwards v.
(citing Reyna v.
377-78
(5th Cir.
In determining whether to enforce an arbitration agreement
the court asks whether there is a valid agreement to
arbitrate and, second, whether the current dispute falls within the
scope of a valid agreement."
Id.
(citing Klein v. Nabors Drilling
USA L.P., 710 F.3d 234, 236 (5th Cir. 2013)).
If the party seeking
arbitration argues that there is a delegation clause,
performs
the
first
step
of
the
analysis
to
the court
determine
if
an
agreement to arbitrate was formed, then determines if the agreement
contains a valid delegation clause.
Edwards, 888 F.3d at 743-44.
The court must "distinguish between 'validity' or 'enforceability'
challenges and 'formation' or existence'
Homeaway,
Incorporated,
890
F.3d
(citations omitted) .
-5-
546,
challenges."
550
(5th
Arnold v.
Cir.
2018)
If there is an agreement to arbitrate with a delegation
clause, and absent a challenge to the delegation clause
itself, we will consider that clause to be valid and
compel arbitration.
Challenges to the arbitration
agreement as a whole are to be heard by the arbitrator.
Arguments that an agreement to arbitrate was never
formed, though, are to be heard by the court even where
a delegation clause exists.
See Kubala v. Supreme
Products Services, Inc., 830 F.3d 199, 202 (5th Cir.
2016) . Since Kubala, we have reiterated that the first
step of the test is limited to contract formation.
Edwards,
888
F.3d at
744.
A court
should resolve all doubts
concerning the arbitrability of claims in favor of arbitration.
Mitsubishi
Motors
Corp.
v.
Soler
S. Ct. 3346, 3353-54 (1985).
Chrysler-Plymouth,
Inc.,
105
The court must therefore first decide
whether an agreement to arbitrate was formed.
Plaintiff does not challenge the formation or existence of the
Distributor Agreement or the arbitration clause in the Distributor
Agreement.
Instead he challenges the validity of the arbitration
clause by arguing that it is unconscionable. 17
Unconscionability
based on an inability to understand English is not a
contract
formation issue under Texas law.
See Tamez v. Southwestern Motor
Transport,
570
Inc.,
155 S.W.3d 564,
(Tex. App.
-- San Antonio,
2004); Doskocil Manufacturing Company, Inc. v. Sang Nguyen, Civil
Action No. 02-16-00382, 2017 WL 2806322, at *5 (Tex. App. -- Fort
Worth,
June
29,
2017)
understand English
is
("a
not
contract
a
defense
signatory's
to
contract
inability
to
formation.") .
Because Plaintiff challenges the validity rather than the formation
17
See Plaintiff's Response, Docket Entry No. 20, p. 5.
-6-
of the arbitration clause,
the court must consider whether the
agreement to arbitrate contains a valid delegation clause.
Arnold, 890 F. 3d at 551 (5th Cir. 2018)
See
("[Plaintiff's] allegation
that a particular provision of the contract is illusory is properly
considered a validity challenge rather than a formation challenge.
And so, we move on to consider the parties' arguments concerning
the purported delegation clause.").
Defendant
delegation
argues
clause
that
through
the
the
arbitration
incorporation
clause
of
includes
JAMS. 18
a
The
arbitration clause states that "any and all other claims and causes
of action arising out of or relating to this Agreement .
. shall
be resolved by arbitration through JAMS/Endispute" 19 and that all
arbitration proceedings will be governed by the JAMS Streamlined
Arbitration Rules and Procedures ("JAMS Streamlined Rules") . 20 JAMS
Streamlined Rule 8 states:
Jurisdictional and arbitrability disputes, including
disputes over the
formation,
existence,
validity,
interpretation or scope of the agreement under which
Arbitration is sought, and who are proper Parties to the
Arbitration, shall be submitted to and ruled on by the
Arbitrator.
The Arbitrator has the authority to
18
Defendant's Second Motion to Dismiss, Docket Entry No. 21,
p. 14.
19
Distributor Agreement, p. 22, Section 15 (i) (ii).
20
Id. at 23, Section 15 ( i) ( i v) ("All arbitration proceedings,
once properly commenced, shall proceed pursuant to JAMS Streamlined
Arbitration Rules and Procedures ('JAMS Streamlined Rules') or such
other rules as JAMS may then decide are applicable.").
-7-
determine jurisdiction and arbitrability
preliminary matter.
issues
as
a
JAMS Streamlined Arbitration Rules & Procedures, JAMS, p. 11, 2014.
Because the arbitration clause expressly incorporates
the JAMS
Streamlined Rules, which give the arbitrator the power to determine
arbitrability, the parties have agreed to arbitrate arbitrability,
including disputes about validity. See Green Tree Servicing, L.L.C.
v. House, 890 F.3d 493, 503-04 (5th Cir. 2018)
("The district court
did not err in ruling that the parties' express incorporation of
the JAMS rules provides clear evidence that they agreed that the
arbitrator would decide arbitrability.n);
Crawford Professional
Drugs, Inc. v. CVS Caremark Corp., 748 F.3d 249, 262-63 (5th Cir.
2014)
("express incorporation of the same AAA Rules constitutes
clear
and
unmistakable
evidence
arbitrate arbitrability.").
that
the
parties
agreed
to
The court "must treat [the delegation
clause] as valid absent any specific challenge to the delegation
clause by
[Plaintiff] . n
Edwards ,
8 8 8 F . 3d at
74 6 .
challenges the agreement to arbitrate as a whole,
specifically challenge the delegation clause.
Plaintiff
but does not
The court therefore
concludes that the parties have agreed to submit any issues of
arbitrability to the arbitrator.
Because the arbitration clause contains a class-action waiver
and
because
the
class-action
Systems Corp. v. Lewis,
138 S.
waiver
Ct.
-8-
is
1612,
enforceable,
1623
(2018),
see
Epic
the court
concludes that Plaintiff must submit to individual arbitration.
The court will therefore grant Defendant's Second Motion to Dismiss
and compel Plaintiff to arbitrate this dispute individually. 21
See
Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir.
1992)
("The weight of authority clearly supports dismissal of the
case when all of the issues raised in the district court must be
submitted to arbitration.").
III.
Conclusion
For the reasons set forth above, Defendant's Second Motion to
Dismiss or,
in the Alternative, Compel Arbitration (Docket Entry
No. 21) is GRANTED.
SIGNED at Houston, Texas, on this the 26th day of July, 2018.
UNITED STATES DISTRICT JUDGE
21
Because the court will dismiss this case in favor of
individual arbitration, Defendant's alternative motion to dismiss
Plaintiff's claims in the event that the court retains jurisdiction
are moot. See Defendant's Second Motion to Dismiss, Docket Entry
No. 21, pp. 17-23.
-9-
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