In Re: American National Insurance Co.

The arbitration provision in the agreement was not an effective waiver of Inocencia Liano's right to pursue her claim in court. Thus, American National Insurance Co. could not compel Liano to arbitrate her discrimination claim against her employer.

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Click here for the full text of this decision FACTS:American National Insurance Co. employed Inocencia Liano from 1982 until she was terminated for allegedly poor performance on Aug. 8, 2005. On July 12, 2006, Liano filed the underlying suit in the case, alleging violations of the provisions of Chapter 21 of the Texas Labor Code, which prohibit age-related employment discrimination. Specifically, Liano alleged that the true motivation for her termination was that she was 60 years old, and, despite her receiving positive performance evaluations from American National, the company replaced her with a younger worker. After answering the suit, American National moved to compel arbitration of Liano’s claim, under provisions contained in two documents. The first arbitration provision was contained in a collective-bargaining agreement (CBA) between the company and the United Food and Commercial Workers International Union (UFCW). Liano was not a direct signatory to the CBA. The second document was a Home Service Agent’s Agreement (the agent’s agreement, or Form 83) signed by Liano and by an American National representative but not by UFCW. Both parties assumed that the Federal Arbitration Act, 9 U.S.C. ��1-16, governed the arbitration provisions in question. The arbitration provisions, which are substantially identical in the CBA and in Form 83, provide in relevant part as follows: “1. In the event the Union is dissatisfied with the resolution of a grievance pursuant to the provisions of [the grievance procedure provided in the CBA], the Union may submit the grievance to final and binding arbitration pursuant to the following: [Subparagraphs A-E, referred to as the "arbitration procedure"]. “2. The arbitration procedure established herein is considered by the parties to be the most expeditious and most effective manner to resolve any and all disputes, potential disputes and/or claims as between the Company, the Union, and/or Agents, their heirs and assigns and is the exclusive method for the resolution of all such claims and/or disputes. The Company, the Union, and the Agents covered by this Agreement shall be required to exhaust all available remedies through grievance and/or arbitration as provided for herein prior to proceeding to a court of law, state or federal, or any administrative agency or other regulatory body.” The trial court denied American National’s motion to compel arbitration, without stating grounds for the denial. American National filed a petition for a writ of mandamus, arguing in a single issue that the trial court clearly abused its discretion by denying the motion. Liano responded by arguing that the American National is not entitled to mandamus relief, based in part on the U.S. Supreme Court’s 1974 decision Alexander v. Gardner-Denver Co., in which the court held that a union cannot, by means of a collective bargaining agreement, prospectively waive an individual’s statutory employee rights. HOLDING:The 8th Court of Appeals denied the petition for a writ of mandamus. Mandamus, the court stated, is an extraordinary remedy, available only to correct a clear abuse of discretion when there is no other adequate remedy by appeal, as is the case when a party is erroneously denied its contractual arbitration rights under the FAA. The court first stated that it had to determine whether a valid arbitration agreement exists between the parties. Under Alexander, the court noted that a collective-bargaining agreement cannot prospectively waive an individual employee’s statutory rights. Like the arbitration provisions in the CBA, the court stated, Form 83 gives UFCW absolute control over whether to pursue an individual employee’s complaint or claim to arbitration. Therefore, although Liano individually signed the agent’s agreement, its arbitration provision raised the same concerns which the court expressed in Alexander regarding the potential tensions between the union and the individual. In sum, the court found that in accordance with the rationale articulated by the U.S. Supreme Court in Alexander, the arbitration provision in the agent’s agreement could not be used to compel Liano to arbitrate the discrimination claim she alleged against her employer, as it was not an effective waiver of her right to pursue her claim in court. Therefore, the court held that the trial court did not abuse its discretion by denying Liano’s motion to compel arbitration. OPINION:Carr, J.; McClure and Carr, JJ., and Barajas, C.J. (retired), sitting by assignment.

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