Vargas et al v. Texas Taco Cabana, L.P. et al

Filing 11

ORDER GRANTING 8 Motion to Compel; DENYING 8 Motion to Dismiss; IT IS FURTHER ORDERED that this matter is STAYED pending resolution of the arbitration proceedings; IT IS FINALLY ORDERED that the parties shall file with the Court status reports every NINETY (90) days. Signed by Judge Sam Sparks. (jk)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXA

AUSTIN DIVISION

FiLED
JUL

f:

07

ci.

V'ESTEF.I.;

TEXAS

YOLANDA VARGAS and BRENDA VALDEZ,
Plaintiffs,

Case No. A-14-CA-389-SS

-vs-

TEXAS TACO CABANA, L.P. and
MANAGEMENT, INC.,
Defendants.

T.C.

ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and

specifically Defendants' Unopposed Motion to Compel Arbitration and Opposed Motion to Dismiss
[#8], and Plaintiffs' Response [#101. Having reviewed the documents, the governing law, and the

file as a whole, the Court now enters the following opinion and orders GRANTING IN PART and

DENYING IN PART the motion.

Background
Plaintiffs Yolanda Vargas and Brenda Valdez are former employees of the Taco Cabana

Restaurant No. 199 in Austin, Texas. In connection with this employment, Plaintiffs claim they were
subjected to sexual harassment, and when they complained about this harassment, they were fired.
On May 5, 2014, Plaintiffs filed a lawsuit in this Court, asserting violations of Title VII based on

sexual harassment and retaliation.

Prior to beginning employment, all Taco Cabana employees must sign an 'Agreement for
Resolution of Disputes Pursuant to Binding Arbitration Between Taco Cabana and Employee" (the

I

Arbitration Agreement). The Arbitration Agreement provides "any and all disputes, claims or
controversies for monetary or equitable relief arising out of or relating to your employment.
be arbitrated by JAMS

. . .

. .

shall

." Defs.' Mot. Compel {##8-1, -2], Exs. A, B. The claims subject to

arbitration pursuant to the Arbitration Agreement "include, without limitation, disputes, claims, or
controversies relating or referring in any manner, directly or indirectly, to: Title VII of the Civil
Rights Act of 1964 and similar state statutes." Id. The Arbitration Agreement includes an explicit

employee acknowledgment section, which requires the signing employee to acknowledge they are
agreeing to have all claims "finally decided in private arbitration and not in court." Id. Yolanda
Vargas signed the Arbitration Agreement with employee acknowledgment on June 18, 2009.

See

Ex. A at 2. Brenda Valdez signed the Arbitration Agreement with employee acknowledgment on

May 10, 2012.

See

Ex. B at 2. On June 12, 2014, Plaintiffs filed a Demand for Arbitration before

Judicial Arbitration and Mediation Services, Inc. (JAMS).

See

Defs.' Mot. Compel [#8-3], Ex. C.

Analysis
Defendants have filed an Unopposed Motion to Compel Arbitration and Opposed Motion
to Dismiss [#8]. With respect to the motion to compel arbitration, the Court GRANTS this request.

Plaintiffs clearly agreed to the arbitration of Title VII claims when they signed their employment

agreements with Taco Cabana, and Plaintiffs "accept that [the] agreements they signed as a condition

of their employment require submission of the present claims to arbitration." Pis.' Resp. [#10], at
1

Indeed, Plaintiffs have already filed their Demand for Arbitration before JAMS.
The only remaining question is whether to stay this case or dismiss it with prejudice. The

Federal Arbitration Act "provides that when claims are properly referable to arbitration, upon

application of one of the parties, the court shall stay the trial of the action until the arbitration is
-2-

complete." A/ford
U.S.C.

§

Dean Wilier Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992) (citing 9

v.

3) (emphasis added).

But the Fifth Circuit has interpreted the FAA as authorizing

"dismissal of the case when all of the issues raised in the district court must be submitted to

arbitration." Id. (collecting cases and affirming dismissal with prejudice). Plaintiffs recognize it is
within the Court's discretion whether to stay or dismiss the case, but they urge a stay because it

"would serve the vital purpose of ensuring that Plaintiffs are not denied a remedy pursuant to Fifth
Circuit guidance on preserving claim timeliness." PIs.' Resp. [#101, at 2 (citing Fonseca v. USG Ins.
Servs., 467 F. App'x 260, 261 (5th Cir. 2012) (unpublished)).
In Fonseca, a couple of months after the plaintiff filed a demand for arbitration, the arbitrator

refused to continue the process because the defendant failed to pay the required arbitration fees.

Fonseca, 467 F. App'x at 261. When the plaintiff subsequently filed suit on the underlying claims,
the district court rendered summary judgment for the defendant, finding the plaintiffs claims were

time-barred. Id. The Fifth Circuit affirmed, holding a "'demand for arbitration does not toll the
statute of limitations." Id. (quoting United States ex rd. Portland Constr. Co.

v.

Weiss Pollution

Control Corp., 532 F.2d 1009, 1013 (5th Cir. 1976)). The plaintiff "could have (and should have)
filed her suit within the statute of limitations and, thereafter, sought a stay of the action pending

arbitration.

.

.

.

Such a course would have guaranteed that the lawsuit was brought within the

limitations period

.

.

.

." Id.

In the present matter, Plaintiffs' concern is that if arbitration does not proceed for any reason,

the allowable time to file suit possibly will have passed. Plaintiffs admit the risk is "slight," but

"tangible," and the consequence of the risk's realization "would be to divest Plaintiffs of any forum
in which to seek redress for civil rights violations." Pls.' Resp. [#10], at 3. Furthermore, Plaintiffs

-3-

point out staying the proceedings for this reason is entirely consistent with the explicit agreement

of the parties to "reserve the right to go to court if they are faced with the risk of irreparable

harm.

.

.

." See Exs. A at 2, B at 2.

Operating within its discretion, the Court will stay the case as requested by Plaintiffs for the
reasons articulated by Plaintiffs. The parties, however, are required to file with the Court status

reports every ninety days.

Conclusion
Accordingly,
IT IS ORDERED that Defendants' Unopposed Motion to Compel Arbitration and

Opposed Motion to Dismiss [#8] is GRANTED IN PART and DENIED IN PART, as

described in this order. The parties are ordered to arbitrate their claims in the manner
provided for in the arbitration agreement, pursuant to 9 U.S.C.

§

4;

IT IS FURTHER ORDERED that this matter is STAYED pending resolution of the

arbitration proceedings;
IT IS FINALLY ORDERED that the parties shall file with the Court status reports

every NINETY (90) days, with the first report being due ninety days from entry of this order.

SIGNED this the3Qday of June 2014.

SAM SPARKS
UNITED STATES DISTRICT JUDGE

389 comp arb ordjtw.frni