Dillards Department Store

NO. 05-0250 *** IN THE SUPREME COURT OF TEXAS AUSTIN, TEXAS *** IN RE DILLARD DEPARTMENT STORES, INC. AND GRIZELDA REEDER *** RELATORS’ BRIEF ON THE MERITS *** SHELTON & VALADEZ Robert A. Valadez State Bar No. 20421845 Mark A. Giltner State Bar No. 07964960 600 Navarro Street, Suite 500 San Antonio, Texas 78205 (210) 349-0515 - Telephone (210) 349-3666 - Telecopier CROFTS & CALLAWAY A Professional Corporation Nissa M. Dunn State Bar No. 14766450 4040 Broadway, Suite 525 San Antonio, Texas 78209 (210) 225-5551 - Telephone (210) 225-7110 - Telecopier ATTORNEYS FOR RELATORS DILLARD DEPARTMENT STORES, INC. AND GRIZELDA REEDER IDENTITY OF PARTIES AND COUNSEL In accordance with Texas Rule of Appellate Procedure 55.2(a), Relators present the following list of all parties and their counsel: 1. Relators Dillard Department Stores, Inc. and Grizelda Reeder Defendants/Relators 2. Counsel for Relators Robert A. Valadez Mark A. Giltner Shelton & Valadez 600 Navarro Street, Suite 500 San Antonio, Texas 78205 (210) 349-0515 - Telephone (210) 349-3666 - Telecopier Nissa M. Dunn Crofts & Callaway, P.C. 4040 Broadway, Suite 525 San Antonio, Texas 78209 (210) 225-5551 - Telephone (210) 225-7110 - Telecopier Trial/Mandamus Counsel Mandamus Counsel 3. Respondent The Honorable Gonzalo Garcia 210th Judicial District Court El Paso County Courthouse 500 East San Antonio Street El Paso, Texas 79901-2496 (915) 546-2030 - Telephone (915) 546-2131 - Telecopier 4. Real Party in Interest Andrea Martinez Plaintiff ii 5. Counsel for Real Party in Interest Mike Milligan Attorney at Law 303 Texas Avenue, Suite 808 El Paso, Texas 79901 (915) 544-5587 - Telephone (915) 544-2773 - Telecopier Trial/Mandamus Counsel iii TABLE OF CONTENTS Page IDENTITY OF PARTIES AND COUNSEL ...................................................................... ii INDEX OF AUTHORITIES .............................................................................................. vi STATEMENT OF THE CASE ........................................................................................... x STATEMENT OF JURISDICTION ................................................................................... x ISSUE PRESENTED ......................................................................................................... xi Martinez admits that she agreed to arbitrate claims against Dillard’s for: (1) personal injuries arising from termination; and (2) violations of common law affecting the economic terms of her employment. Did the trial court abuse its discretion in denying Dillard’s motion to compel arbitration of Martinez’ defamation claim? a. Does Martinez’ defamation claim constitute a personal injury arising from termination? Does Martinez’ defamation claim constitute a violation of common law affecting the economic terms of her employment? Is the parties’ arbitration agreement supported by consideration? b. c. STATEMENT OF FACTS.................................................................................................. 2 SUMMARY OF THE ARGUMENT.................................................................................. 4 ARGUMENT....................................................................................................................... 5 I. Mandamus is the proper remedy for denial of a motion to compel arbitration under an agreement governed by the Federal Arbitration Act. .............. 5 The trial court abused its discretion in denying Dillard’s motion to compel arbitration. ................................................................................... 6 A. Martinez stipulated that she agreed to be subject to arbitration as a condition of her continued employment................................................. 7 iv II. B. Martinez failed to demonstrate that her claim falls outside the scope of the parties’ arbitration agreement................................................. 7 1. 2. 3. Defamation is a claim for personal injuries. ...................................... 8 Martinez’ defamation claim arises from her termination................. 10 Martinez’ defamation claim affected the economic terms of her employment. ................................................................ 12 Any ambiguities must be resolved in favor of arbitration. .............. 12 4. C. III. The parties’ agreement to arbitrate was supported by consideration. ....... 13 Dillard’s has no adequate remedy at law................................................................ 16 PRAYER ........................................................................................................................... 17 CERTIFICATE OF SERVICE.......................................................................................... 19 CERTIFICATE OF COMPLIANCE ................................................................................ 20 APPENDIX: Order Denying Defendant’s Motion to Compel Arbitration and Supplemental Motion to Compel Arbitration (signed by Judge Gonzalo Garcia on May 24, 2004) .............................................. A Opinion and Judgment of the Eighth Court of Appeals Denying Petition for Writ of Mandamus (March 3, 2005) ..................................... B Plaintiff’s First Amended Original Petition in Cause No. 2005-447 (March 1, 2005) ................................................... C Affidavit of Mark A. Giltner with true and correct copy of Motion to Consolidate (July 12, 2005).................................................................... D v INDEX OF AUTHORITIES Page Cases Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (1995) ........................................................................................................ 5 Banc One Acceptance Corp. v. Hill, 367 F.3d 426 (5th Cir. 2004) ......................................................................................... 13 Brewster v. Baker, 139 S.W.2d 643 (Tex.Civ.App. -- Beaumont 1940, no writ).......................................... 9 BWI Companies, Inc. v. Beck, 910 S.W.2d 620 (Tex.App. -- Austin 1995, orig. proceeding)........................................ 6 Cantella & Co. v. Goodwin, 924 S.W.2d 943 (Tex. 1996) ........................................................................................... 6 Channel 4, KGBT v. Briggs, 759 S.W.2d 939 (Tex. 1988) ........................................................................................... 9 City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515 (Tex. 1968) ......................................................................................... 16 Copeland v. Alsobrook, 3 S.W.3d 598 (Tex.App. -- San Antonio 1999, pet. denied)......................................... 14 Dell, Inc. v. Muniz, 163 S.W.3d 177 (Tex.App. -- San Antonio, 2005, no pet.)........................................... 11 EOG Resources, Inc. v. Hanson Production Co., 94 S.W.3d 697 (Tex.App. -- San Antonio 2002, no pet.).............................................. 16 Fleetwood Enterprises, Inc. v. Gaskamp, 280 F.3d 1069 (5th Cir. 2002) ....................................................................................... 13 Granite Construction Co. v. Beaty, 130 S.W.3d 362 (Tex.App. -- Beaumont 2004, orig. proceeding).................................. 6 Houston Printing Co. v. Dement, 18 Tex.Civ.App. 30, 44 S.W. 558 (Tex.Civ.App. 1898, writ ref’d) ........................... 8, 9 In re Alamo Lumber Co., 23 S.W.3d 577 (Tex.App. -- San Antonio 2000, orig. proceeding) .............................. 14 vi In re Anaheim Angels Baseball Club, Inc., 993 S.W.2d 875 (Tex.App. -- El Paso 1999, orig. proceeding) ................................. 5, 6 In re Bruce Terminix Co., 988 S.W.2d 702 (Tex. 1998) ......................................................................................... 17 In re Dillard Department Stores, Inc. and Grizelda Reeder, ___ S.W.3d ___, 2005 WL 552422 (Tex. App. -- El Paso, March 3, 2005, orig. proceeding) .................................................................... x, 8, 15, 16 In re FirstMerit Bank, N.A., 52 S.W.3d 749 (Tex. 2001) ................................................................................... 5, 6, 17 In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002), cert. denied, 537 U.S. 1112 (2003) ................................... 7 In re Jebbia, 26 S.W.3d 753 (Tex.App. -- Houston [14th Dist.] 2000, orig. proceeding) ................. 14 In re Kellogg Brown & Root, Inc., 48 Tex. Sup. Ct. J. 678, 2005 WL 1187775 (Tex. May 20, 2005)...............................7-8 In re L & L Kempwood Associates, 9 S.W.3d 125 (Tex. 1999) ............................................................................................... 5 In re Nexion Health at Humble, Inc., 48 Tex. Sup. Ct. J. 805, 2005 WL 1252271 (Tex. May 27, 2005).................................. 5 In re Oakwood Mobile Homes, 987 S.W.2d 571 (Tex. 1999) .................................................................................... 6, 17 In re Prudential Securities, Inc., 159 S.W.3d 279 (Tex. App. -- Houston [14th Dist.] 2005, orig. proceeding) ............... 11 In re Rolland, 96 S.W.3d 339 (Tex.App. -- Austin 2001, orig. proceeding)........................................ 11 In re Scott, 100 S.W.3d 575 (Tex.App. -- Fort Worth 2003, orig. proceeding) .............................. 13 International & G.N. Ry. Co. v. Edmundson, 185 S.W. 402 (Tex.Civ.App. -- San Antonio 1916), rev’d on other grounds, 222 S.W. 181 (Tex.Comm.App. 1920) .................................. 10 vii Krishnan v. Ramirez, 42 S.W.3d 205 (Tex.App. -- Corpus Christi 2001, pet. denied)...................................... 3 Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857 (Tex. 2000) ........................................................................................... 16 May v. Higbee Co., 372 F.3d 757 (5th Cir. 2004) ........................................................................................... 7 Moses H. Cone Memorial Hosp. v,. Mercury Construction Corp., 460 U.S. 1 (1983) ............................................................................................................ 8 Pennzoil Co. v. Arnold Oil Co., 30 S.W.3d 494 (Tex.App. -- San Antonio 2000, orig. proceeding) .............................. 11 Prudential Securities Inc. v. Marshall, 909 S.W.2d 896 (Tex. 1995) ....................................................................8, 10, 11, 12-13 Smith v. Renz, 840 S.W.2d 702 (Tex.App. -- Corpus Christi 1992, writ denied) ................................. 14 Southland Corp. v. Keating, 465 U.S. 1, 14-16 (1984) ................................................................................................. 5 Statutes TEX. GOV’T CODE § 22.001(1) (Vernon 1988).................................................................................................................. x TEX. GOV’T CODE § 22.001(2) (Vernon 1988).................................................................................................................. x TEX. GOV’T CODE § 22.001(3) (Vernon 1988).................................................................................................................. x TEX. GOV’T CODE § 22.001(6) (Vernon 1988).................................................................................................................. x 9 U.S.C. § 2.......................................................................................................................... 5 Rules TEX. R. EVID. 201(f)(Vernon 1988) .................................................................................... 3 viii Regulations Federal Arbitration Act, 9 U.S.C. § 2................................................................................. 5 ix STATEMENT OF THE CASE Nature of the Case Suit against Dillard Department Stores, Inc. and others for defamation. MR 1. Based on its Rules of Arbitration, Dillard’s filed a Motion to Compel Arbitration and Stay All Proceedings. MR 3. Hon. Gonzalo Garcia, 210th Judicial District Court, El Paso County, Texas. Motion to Compel Arbitration and Supplemental Motion to Compel Arbitration denied May 24, 2004 (Cause No. 2003-4957). App. A. Eighth Court of Appeals; opinion by Justice David Chew, joined by Chief Justice Richard Barajas and Justice Susan Larsen (No. 08-0400259-CV). App. B. Petition for Writ of Mandamus denied. In re Dillard Department Stores, Inc. and Grizelda Reeder, ___ S.W.3d ___, 2005 WL 552422 (Tex. App. -- El Paso, March 3, 2005, orig. proceeding). App. B. Trial Court Trial Court Disposition Court of Appeals Court of Appeals Disposition STATEMENT OF JURISDICTION This Court has jurisdiction to grant the requested relief pursuant to Texas Government Code § 22.002, which provides that the Supreme Court may issue all writs of mandamus agreeable to the principles of law regulating those writs against a district judge. TEX. GOV’T CODE § 22.002(a) (Vernon 2004). x ISSUE PRESENTED Martinez admits that she agreed to arbitrate claims against Dillard’s for: (1) personal injuries arising from termination; and (2) violations of common law affecting the economic terms of her employment. Did the trial court abuse its discretion in denying Dillard’s motion to compel arbitration of Martinez’ defamation claim? a. Does Martinez’ defamation claim constitute a personal injury arising from termination? Does Martinez’ defamation claim constitute a violation of common law affecting the economic terms of her employment? Is the parties’ arbitration agreement supported by consideration? b. c. xi NO. 05-0250 *** IN THE SUPREME COURT OF TEXAS AUSTIN, TEXAS *** IN RE DILLARD DEPARTMENT STORES, INC. AND GRIZELDA REEDER *** RELATORS’ BRIEF ON THE MERITS *** Andrea Martinez admits that she agreed to arbitrate claims against Dillard’s for personal injuries arising from the termination of her employment. Despite that agreement, she sued Dillard’s and others for defamation following her termination. Then, when Dillard’s moved to compel arbitration, Martinez tried to avoid her agreement by asserting that her claim falls outside the scope of arbitrable claims. The trial court apparently agreed, as did the El Paso Court of Appeals, which held in a published opinion that the term “personal injury” is limited to “bodily injury,” and thus Martinez’ claims for reputational injury are not subject to arbitration. That holding is contrary to over 100 years of precedent and the well-established policy of this State requiring liberal interpretation of arbitration agreements, and further, clearly demonstrates that the trial court abused its discretion in denying Dillard’s motion to compel arbitration. STATEMENT OF FACTS Andrea Martinez was employed with Dillard’s since 1983. RR PX-C. On August 25, 2000, Martinez signed an Agreement To Arbitrate Certain Claims by which she acknowledged that she had received and would be subject to the rules of arbitration, and that her continued employment constituted acceptance of the rules’ provisions: EFFECTIVE August 1, 2000, all employees (as hereinafter defined) of Dillard’s Inc., its affiliates, subsidiaries and Limited Liability Partnerships (The “Company”) employed at the stores wherein this Agreement has been distributed shall be subject to the RULES OF ARBITRATION (The “RULES”) described below. Employees are deemed to have agreed to the provisions of the RULES by virtue of accepting employment with the Company and/or continuing employment therewith. App. B; RR DX-1. The rules Martinez acknowledged provided that: Arbitration applies to the following claims over the reasons leading to separation and . . . to the following claims, timely made, which could have arisen out of the associate’s employment: • ***** Violations of any other federal, state, county, municipal or other governmental, constitution, statute, ordinance, regulation, public policy or common law, affecting economic terms of employment. Personal injuries arising from a termination, except those covered by workers’ compensation. • App. B; RR DX-2. Dillard’s authorized representative also signed the acknowledgment. RR DX-1. On November 15, 2002, Dillard’s terminated Martinez’ employment, and on November 13, 2003, Martinez filed this lawsuit against Dillard’s, its district manager 2 Grizelda Reeder, and two unnamed employees. RR PX-C; MR 1. Martinez alleged that Reeder had accused her of stealing merchandise from the store through fraudulent use of “gift cards.” MR 1. She also complained that Dillard’s terminated her based on two other false accusations relating to the improper use of gift cards, and that following her termination, a rumor began among current and former employees that Martinez had been terminated for theft. MR 1. Based upon these contentions, Martinez asserted causes of action against the defendants for defamation.1 MR 1. Dillard’s generally denied Martinez’ claims, and based on her agreement to arbitrate, moved to compel arbitration and to stay all proceedings in the trial court. MR 2, 3, 5 & 6. Martinez stipulated that she had agreed to arbitrate, but argued that her defamation claim did not fall within the scope of the agreement. MR 4; RR 11, 50. She also claimed the agreement was illusory, because Dillard’s had subsequently changed the Rules of Arbitration, even though Dillard’s stipulated that the amended rules did not apply to Martinez. MR 4, 6; RR 51. Following an evidentiary hearing, the trial court denied Dillard’s motion. App. A. Dillard’s sought relief by filing a petition for writ of mandamus with the El Paso Court of Appeals. The court of appeals rejected Martinez’ argument that the agreement was illusory, but nevertheless denied Dillard’s petition because it determined that Martinez recently filed another lawsuit against Dillard’s alleging that her termination was based on her “prior opposition to discriminatory practices and [Dillard’s] perception of her as Hispanic . . . .” See App. C, Plaintiff’s First Amended Original Petition, ¶ 3, Cause No. 2005-447. A certified copy of Martinez’ most recent pleading in that case was attached to Dillard’s petition as Appendix C. See generally TEX. R. EVID. 201(f) (“Judicial notice may be taken at any stage in the proceeding.”); Krishnan v. Ramirez, 42 S.W.3d 205, 222-23 (Tex.App. -- Corpus Christi 2001, pet. denied) (“So long as a party provides proof of another court’s records, a court can take judicial notice of another court’s records.”). On July 12, 2005, Dillard’s filed a motion in the instant case to consolidate the two causes. App. D. That motion is set for hearing on July 20, 2005. 1 3 Martinez’ claim fell outside the scope of the parties’ agreement. Slip op. at 9, 11-12. According to the court of appeals, “personal injuries arising from a termination” are limited to bodily injury only, and thus, Martinez’ claims for reputational injuries arising from Dillard’s alleged defamation are not within the scope of the parties’ agreement to arbitrate.3 Id. at 10-11. Dillard’s now seeks relief with this Court. SUMMARY OF THE ARGUMENT In order to be entitled to arbitration, Dillard’s was required to demonstrate the existence of an arbitration agreement covering Martinez’ claims. The first requirement was established by Martinez’ own admission that she agreed to arbitrate all claims within the scope of Dillard’s Rules of Arbitration in effect in August of 2000. Furthermore, that agreement was supported by consideration because both Dillard’s, like Martinez, agreed to be bound to arbitrate all disputes falling within the scope of the August 2000 Rules. Furthermore, the parties’ arbitration agreement covered Martinez’ claim for defamation. Under the Rules of Arbitration, Martinez and Dillard’s are required to arbitrate claims: (1) for personal injury arising from termination; and (2) violations of common law affecting economic terms of employment. Before this Court, Martinez has not disputed that these provisions are susceptible to an interpretation that would bring her claim under its scope. Because all doubts must be resolved in favor of arbitration, the interpretation that covers Martinez’ defamation claim must control, and her claim submitted to arbitration. The court of appeals’ holding was based on an argument that Martinez never raised. Rather, the court of appeals raised the issue sua sponte during oral argument. Slip op. at 10-11. 3 4 ARGUMENT I. Mandamus is the proper remedy for denial of a motion to compel arbitration under an agreement governed by the Federal Arbitration Act. A party seeking to compel arbitration by mandamus must first establish the existence of an arbitration agreement subject to the Federal Arbitration Act (FAA). In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753 (Tex. 2001); In re Anaheim Angels Baseball Club, Inc., 993 S.W.2d 875, 877 (Tex.App. -- El Paso 1999, orig. proceeding). The FAA applies to all suits in state and federal court when the dispute concerns a “contract evidencing a transaction involving commerce.” 9 U.S.C. § 2; Southland Corp. v. Keating, 465 U.S. 1, 14-16 (1984). “Commerce” under the FAA is broadly construed and encompasses contracts relating to interstate commerce, co-extensive with the reach of the Commerce Clause of the United States Constitution. Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265, 277 (1995). See also In re Nexion Health at Humble, Inc., 48 Tex. Sup. Ct. J. 805, 2005 WL 1252271, *1 (Tex. May 27, 2005); In re L & L Kempwood Associates, 9 S.W.3d 125, 127 (Tex. 1999); In re Anaheim Angels Baseball Club, Inc., 993 S.W.2d at 877. An employment relationship involving commerce is a sufficient transaction to fall within the FAA. In re Anaheim Angels Baseball Club, Inc., 993 S.W.2d at 877-78 (contract between employee and California employer for services rendered in Texas relates to interstate commerce and falls under FAA). At the hearing on its motion to compel arbitration, Dillard’s presented uncontroverted evidence that it is a full line retail department store headquartered in Little Rock, Arkansas, and that it maintains operations throughout Texas and 28 other 5 states. RR DX-1. Dillard’s purchases a wide variety of products from manufacturers in numerous states other than Texas. Id. Some of those products manufactured in other states are shipped to Texas stores for sale to Dillard’s customers. Id. Because Dillard’s conducts business activities across state lines and is involved in numerous transactions involving interstate commerce, the FAA applies to the parties’ agreement to arbitrate as a matter of law. See Granite Construction Co. v. Beaty, 130 S.W.3d 362, 365 (Tex.App. -Beaumont 2004, orig. proceeding); In re Anaheim Angels Baseball Club, Inc., 993 S.W.2d at 878; BWI Companies, Inc. v. Beck, 910 S.W.2d 620, 622 (Tex.App. -- Austin 1995, orig. proceeding). The court of appeals acknowledged (and Martinez does not dispute) that the FAA applies to the parties’ agreement in this case. Slip op. at 5. II. The trial court abused its discretion in denying Dillard’s motion to compel arbitration. A party seeking to compel arbitration by mandamus must first establish the existence of an arbitration agreement subject to the FAA. In re FirstMerit Bank, N.A., 52 S.W.3d at 753; In re Oakwood Mobile Homes, 987 S.W.2d 571, 573 (Tex. 1999). Once the movant establishes an agreement, the court must then determine whether the arbitration agreement covers the nonmovant’s claims. In re FirstMerit Bank, N.A., 52 S.W.3d at 753; Cantella & Co. v. Goodwin, 924 S.W.2d 943, 944 (Tex. 1996). Martinez admitted that she agreed to be subject to arbitration as a condition of her continued employment, but nevertheless, seeks to avoid that promise by asserting that because the Rules are ambiguous, they must be interpreted to exclude her claim. In addition, 6 Martinez contends that the agreement is not supported by consideration. As discussed below, both arguments are demonstrably wrong. A. Martinez stipulated that she agreed to be subject to arbitration as a condition of her continued employment. Martinez does not dispute that she signed the above-quoted acknowledgment on August 25, 2000 and that she was bound by the Rules of Arbitration in effect at that time. In fact, Martinez acknowledged as much several times during the hearing on Dillard’s motion to compel: THE COURT: But now, what I’m understanding -- okay. So she did intend, as a condition of her continued employment, to be subject to that Rules of Arbitration and that arbitration agreement that was submitted to her and she acknowledged receipt of in August of 2000. Right. There is no dispute about that, Your Honor. MR. MILLIGAN: RR 50. See also RR 11. Therefore, Martinez admitted the first element Dillard’s was required to prove -- the existence of a valid arbitration agreement.4 B. Martinez failed to demonstrate that her claim falls outside the scope of the parties’ arbitration agreement. Martinez seeks to avoid her undisputed promise to arbitrate by arguing that her claim does not fall within the scope of the parties’ arbitration agreement. Under the FAA, any doubts as to whether Martinez’ claim falls within the scope of the agreement must be resolved in favor of arbitration. In re Kellogg Brown & Root, Inc., 48 Tex. Sup. Even if Martinez had not admitted that she was bound, her acknowledgement together with her continued employment with Dillard’s established her agreement as a matter of law. In re Halliburton Co., 80 S.W.3d 566, 569 (Tex. 2002), cert. denied, 537 U.S. 1112 (2003). See also May v. Higbee Co., 372 F.3d 757, 764 (5th Cir. 2004) (Dillard’s employee manifested assent to arbitration by continuing employment after signing acknowledgment that she had received Rules of Arbitration). 4 7 Ct. J. 678, 2005 WL 1187775, *4 (Tex. May 20, 2005); Prudential Securities Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995), citing Moses H. Cone Memorial Hosp. v. Mercury Construction Corp., 460 U.S. 1, 24-25 (1983). The policy in favor of enforcing arbitration agreements is so compelling that a court should not deny arbitration unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue. Id. The burden was on Martinez to show that her claim fell outside the scope of the arbitration agreement -- a burden she failed to sustain. Prudential Securities Inc. v. Marshall, 909 S.W.2d at 900. 1. Defamation is a claim for personal injuries. Although Martinez never raised the argument, the court of appeals sua sponte concluded, without discussion, that the term “personal injuries” as used in the parties’ arbitration agreement is limited to bodily injuries: [I]n examining the term “[p]ersonal injuries arising from a termination, except those covered by workers’ compensation,” in the context of the whole instrument, it is clear that the parties’ intent was to cover bodily injuries other than those included in workers’ compensation coverage. Slip op. at 11, 2005 WL 552422 *5. Over 100 years of precedent and well-established policies governing arbitration agreements mandate otherwise. Since at least 1898, Texas courts have consistently held that defamation constitutes a claim for personal injuries. In Houston Printing Co. v. Dement, 18 Tex.Civ.App. 30, 44 S.W. 558 (Tex.Civ.App. 1898, writ ref’d), the court addressed whether a claim for libel and slander survived the death of the original plaintiff under a statute captioned “An act to provide for the survival of causes of action for personal 8 injuries . . . .” Id. at 560. On appeal, the defendant argued that the act was unconstitutional and void to the extent it included injuries to reputation because those injuries were not included in the title or caption of the act. Id. The court of appeals disagreed, holding that claims for libel and slander are claims for personal injuries, and therefore were specified in the caption: The question is presented with much force in appellant’s brief, but we are constrained to dissent from his proposition, and to hold that libel and slander are included in the term “personal injuries,” and that, therefore, injuries to the reputation are indicated by the caption of the act of May 4, 1895. That injuries to the physical man are generally meant by the expression “personal injuries” may be conceded, but it is nevertheless true that injuries to the reputation and to the health have ever been classed and treated by law writers as personal injuries. The absolute rights of each individual are the right of personal security, the right of personal liberty, and the right of private property. Injuries which affect the personal security are injuries against the life, the limb, the body, the health, or the reputation of the individual. Id. at 560. See also Channel 4, KGBT v. Briggs, 759 S.W.2d 939, 940 (Tex. 1988) (holding that defamation claim survives death of the person defamed under statute providing that causes of action for personal injury to health, reputation, or person do not abate because of the injured person’s death); Brewster v. Baker, 139 S.W.2d 643, 645 (Tex.Civ.App. -- Beaumont 1940, no writ) (damage to character as the result of slander or libel is a personal injury). Indeed, it is hard to imagine an injury more personal than one to reputation. The San Antonio Court of Civil Appeals put it this way: A person is composed of two elements, as we have always understood, viz., mind and matter, or material and immaterial things. As to which is the more important, we scarcely need discuss; for an injury to the body may heal and the body resume its normal condition, but an injury to character, to 9 the vital moving force of a man -- to the real man -- may not be healed. The wound in the first instance is buried with the body and is separated again into the material elements composing it; but in the other it may survive as a curse to those who follow. Injury to character or good name is a personal injury. International & G.N. Ry. Co. v. Edmundson, 185 S.W. 402, 405 (Tex.Civ.App. -- San Antonio 1916), rev’d on other grounds, 222 S.W. 181 (Tex.Comm.App. 1920) (emphasis supplied). These authorities demonstrate unequivocally that defamation is a personal injury claim, and thus, falls within the scope of Dillard’s rules of arbitration covering claims for personal injuries arising from a termination. Any other interpretation not only contravenes long-established precedent, it also violates the equally well-settled requirement that any doubts as to whether a claim falls within the scope of an arbitration agreement must be resolved in favor of arbitration. Prudential Securities Inc. v. Marshall, 909 S.W.2d at 899. Again, the policy favoring arbitration agreements is so compelling that a court cannot deny arbitration unless an arbitration provision is not susceptible to an interpretation covering the dispute at issue. Id. Both Martinez and the court of appeals ignore this rule in favor of a limited interpretation which ensures that her claim will be excluded from arbitration. Based upon the authorities cited above, the parties’ agreement clearly was susceptible of an interpretation covering claims for reputational injuries such as those Martinez alleged in this lawsuit. 2. Martinez’ defamation claim arises from her termination. Martinez argued before the courts below that her defamation claim falls outside the scope of her agreement to arbitrate because it is unrelated to the termination of her employment with 10 Dillard’s. The arbitrability of a claim depends on its relationship to the subject matter of the arbitration clause, not on how a plaintiff chooses to characterize it. Dell, Inc. v. Muniz, 163 S.W.3d 177, 180 (Tex.App. -- San Antonio, 2005, no pet.); In re Rolland, 96 S.W.3d 339, 345 (Tex.App. -- Austin 2001; orig. proceeding) . Thus, in determining whether a claim is arbitrable, the court should focus on the factual allegations of the complaint, rather than the legal causes of action asserted. Prudential Securities Inc. v. Marshall, 909 S.W.2d at 900; In re Prudential Securities, Inc., 159 S.W.3d 279, 283 (Tex. App. -- Houston [14th Dist.] 2005, orig. proceeding); Pennzoil Co. v. Arnold Oil Co., 30 S.W.3d 494, 498 (Tex.App. -- San Antonio 2000, orig. proceeding). To be within the scope of an arbitration provision, the allegations need only be factually intertwined with arbitrable claims or otherwise touch upon the subject matter of the agreement containing the arbitration provision. In re Prudential Securities, Inc., 159 S.W.3d at 283. See also Pennzoil Co. v. Arnold Oil Co., 30 S.W.3d at 498. Here, the Rules of Arbitration apply to claims for personal injuries arising from a termination, including claims over the reasons leading to the employee’s separation. RR DX-2. Dillard’s conduct that allegedly caused Martinez’ damages arose from her employment relationship and led to her termination. For instance, Martinez alleges that on November 14, 2002, Reeder claimed to have irrefutable evidence that Martinez had been stealing merchandise from Dillard’s through the fraudulent use of “gift cards.” MR 1 at ¶ 7. According to Martinez, Reeder also told the store manager that Martinez “is going to be arrested by the police and taken out of the store in handcuffs.” Id. Martinez then asserts that once she was exonerated of Reeder’s charges, she was terminated based 11 upon two other false accusations, both of which also related to the improper use of “gift cards.” MR 1 at ¶ 8. Finally, Martinez complains that following her termination, a “rumor” began among current and former Dillard’s employees that she had been terminated for theft. MR 1, at ¶ 9. The relationship between Martinez’ employment with Dillard’s, her termination, and the factual allegations in her petition is undeniable. Indeed, but for the employment relationship, her claims would not exist. Clearly, the facts alleged in Martinez’ petition are intertwined with and touch upon the subject matter of the parties’ agreement -Martinez’ employment -- and thus are arbitrable. 3. Martinez’ defamation claim affected the economic terms of her employment. In addition, Martinez’ claim falls within the provision covering violations of “common law . . . affecting economic terms of employment.” RR DX-2. Martinez’ cause of action for defamation asserts a violation of common law. And because her employment was terminated and she claims loss of wages and earning capacity, the alleged defamation affected the economic terms of her employment. For these reasons it cannot be said with positive assurance that the Rules of Arbitration are not susceptible to an interpretation covering the dispute at issue. Therefore, Martinez failed in her burden to demonstrate that her claim for defamation falls outside the scope of the parties’ arbitration agreement. 4. Any ambiguities must be resolved in favor of arbitration. In her response to Dillard’s petition, Martinez does not dispute that the parties’ agreement is susceptible of an interpretation that includes her claims. Prudential Securities Inc. v. Marshall, 909 12 S.W.2d 896, 899 (Tex. 1995) (court should not deny arbitration unless terms are not susceptible of an interpretation covering dispute at issue). Instead, she merely claims that its terms are ambiguous, and must be construed in her favor to preclude arbitration of her defamation claim. Martinez incorrectly confuses the rules of construction controlling the scope of an arbitration agreement with those governing whether an arbitration agreement exists. As Martinez suggests, state law determines whether there is a valid agreement to arbitrate between the parties. Fleetwood Enterprises, Inc. v. Gaskamp, 280 F.3d 1069, 107374 (5th Cir. 2002). Nonetheless, once a court determines that an agreement to arbitrate exists, the court “must pay careful attention to the strong federal policy favoring arbitration and must resolve all ambiguities in favor of arbitration.” Banc One Acceptance Corp. v. Hill, 367 F.3d 426, 429 (5th Cir. 2004) (emphasis supplied). See also In re Scott, 100 S.W.3d 575, 580 (Tex.App. -- Fort Worth 2003, orig. proceeding). Here, Martinez has consistently admitted that she agreed to arbitrate claims within the scope of Dillard’s Rules of Arbitration in effect as of August 2000. RR 50. Therefore, to the extent the scope of those Rules is ambiguous, that ambiguity must be resolved in favor of arbitrability. The trial court’s determination otherwise was a clear abuse of discretion. C. The parties’ agreement to arbitrate was supported by consideration. Martinez also contends that the agreement is unsupported by consideration. As with any contract, consideration is a fundamental element of a valid agreement to arbitrate, and can consist of a benefit to the promisor or a loss or detriment to the 13 promisee. Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex.App. -- San Antonio 1999, pet. denied); Smith v. Renz, 840 S.W.2d 702, 704 (Tex.App. -- Corpus Christi 1992, writ denied). In an arbitration agreement, the benefit of the bargain is the right to avoid the expense and delay of litigation by arbitrating. In re Jebbia, 26 S.W.3d 753, 756 (Tex.App. -- Houston [14th Dist.] 2000, orig. proceeding). Thus, the mutual promises to give up the right to litigate can constitute the consideration supporting an agreement to arbitrate. Id.; In re Alamo Lumber Co., 23 S.W.3d 577, 579 (Tex.App. -- San Antonio 2000, orig. proceeding). Here, the plain language of the applicable Rules of Arbitration establish that Dillard’s, like Martinez, unequivocally bound itself to arbitrate all disputes within the scope of the parties’ agreement. Both the acknowledgment form and the rules of arbitration applicable to Martinez reflect Dillard’s agreement and obligation to arbitrate claims under the rules in effect at that time. The acknowledgment states that “This Agreement contains the rules and procedures Dillard’s and associates covered under the Agreement must follow to resolve any covered claims through arbitration.” MR 3, Ex. 1 (emphasis supplied). The applicable rules state “These Rules of Arbitration govern procedures in the arbitration of all covered disputes. The Company and the Associate agree that the procedures provided in these Rules will be the sole method used to resolve any covered dispute arising between them.” MR 6, Ex. 3, Scope ¶ 1 (emphasis supplied). Nothing in that language indicates that Dillard’s reserved the right to amend the rules applicable to Martinez, and there is no other evidence indicating to the contrary. Dillard’s, like Martinez, agreed to be bound to arbitrate all disputes falling within the 14 scope of the rules in effect in August of 2000, and that agreement provided sufficient consideration to support the parties’ arbitration agreement. Despite the plain language of the parties’ agreement, Martinez has consistently argued that Dillard’s reserved the right to unilaterally change the agreement without notice to employees, and thus Dillard’s promise to arbitrate is illusory and insufficient consideration to support enforcing the parties’ agreement. As the court of appeals recognized, however, the parties’ agreement contained neither an express nor an implicit provision indicating that Dillard’s retained any unilateral right to modify the parties’ agreement. In re Dillard Department Stores, Inc., 2005 WL 552422, *4 (Tex.App. -- El Paso March 3, 2005, orig. proceeding). Martinez has never contended otherwise, but instead has asserted that Dillard’s reserved that right by its subsequent conduct because it initially attached the 2002 Rules of Arbitration to its motion to compel and to a subsequent document filed in the trial court.5 See Response at 9. At the hearing on its motion to compel, however, Dillard’s made clear that the 2002 Rules of Arbitration do not apply to Martinez: THE COURT: So you’re saying that that arbitration agreement dated in 2002, this plaintiff is not subject thereto? Correct. So where it excludes [sic] defamation claims, especially and particularly, that does not apply in this case. MR. GILTNER: THE COURT: Before the court of appeals, Martinez also argued that Dillard’s judicially admitted that it had the right to modify the agreement because it attached a copy of its 2002 Rules of Arbitration to certain documents filed with the trial court. The court of appeals rejected that argument. Slip op. at 4. In her response to Dillard’s petition, Martinez did not resurrect her “judicial admission” argument, and thus, has apparently abandoned it. 5 15 MR. GILTNER: RR 51. Correct. The 2002 rules do not apply in this case. Furthermore, a party’s after-the-fact conduct does not control construction of its contracts. Rather, it is the objective intention of the parties as expressed in their written agreement that controls. Lopez v. Munoz, Hockema & Reed, L.L.P., 22 S.W.3d 857, 861 (Tex. 2000) (court must give effect to parties’ intentions as expressed in the document); City of Pinehurst v. Spooner Addition Water Co., 432 S.W.2d 515, 518 (Tex. 1968) (instrument alone deemed to express intention of parties; objective, rather than subjective, intent controls); EOG Resources, Inc. v. Hanson Production Co., 94 S.W.3d 697, 701 (Tex.App. -- San Antonio 2002, no pet.) (written contract deemed to express intention of parties and will be enforced as written, no matter what their actual intention may have been). Indeed, as the court of appeals acknowledged: Even if Dillard’s had in fact modified the 2000 arbitration agreement it had entered with Ms. Martinez, without notice or her consent, and had attempted to enforce the modified agreement, there is nothing in the agreement that provides for unilateral modification. Under such circumstances, Dillard’s would have been doing what it had no contractual right to do, and thus be in breach of the original agreement. In re Dillard Dept. Stores, Inc., 2005 WL 552422, *6, n. 3. Therefore, the 2002 changes to Dillard’s Rules of Arbitration have no bearing on this case, and fail as a matter of law to demonstrate any lack of consideration supporting the parties’ arbitration agreement. III. Dillard’s has no adequate remedy at law. A party who is erroneously denied the right to arbitrate has no adequate remedy at law because the fundamental purpose of arbitration -- “to provide a rapid, less expensive 16 alternative to traditional litigation” -- would be defeated if a party must wait to appeal a denial of arbitration. See, e.g., In re FirstMerit Bank, N.A., 52 S.W.3d at 753; In re Oakwood Mobile Homes, 987 S.W.2d at 574-75; In re Bruce Terminix Co., 988 S.W.2d 702, 704 (Tex. 1998). Dillard’s has no adequate remedy at law and thus requests that a writ of mandamus issue directing Judge Garcia to withdraw his order denying arbitration and to enter an order granting Dillard’s motion to compel arbitration. PRAYER WHEREFORE, PREMISES CONSIDERED, Relators Dillard Department Stores, Inc. and Grizelda Reeder respectfully pray that their petition be granted, and that this Court issue a writ of mandamus directing Judge Gonzalo Garcia of the 210th Judicial District Court of El Paso County to vacate his May 24, 2004 order denying Dillard’s Motion to Compel Arbitration and Supplemental Motion to Compel Arbitration and to grant Dillard’s motion. Relators further pray for such other relief, at law or in equity, to which they may be justly entitled. 17 Respectfully submitted, SHELTON & VALADEZ Robert A. Valadez State Bar No. 20421845 Mark A. Giltner State Bar No. 07964960 600 Navarro Street, Suite 500 San Antonio, Texas 78205 (210) 349-0515 - Telephone (210) 349-3666 - Telecopier CROFTS & CALLAWAY A Professional Corporation Nissa M. Dunn State Bar No. 14766450 4040 Broadway, Suite 525 San Antonio, Texas 78209 (210) 225-5551 - Telephone (210) 225-7110 - Telecopier By:___________________________________ Nissa M. Dunn ATTORNEYS FOR RELATORS DILLARD DEPARTMENT STORES, INC. AND GRIZELDA REEDER 18 CERTIFICATE OF SERVICE I do hereby certify that a true and correct copy of the foregoing Relators’ Brief on Merits was served on the 18th day of July, 2005, by U. S. Mail: Mike Milligan Attorney at Law 303 Texas Avenue, Suite 808 El Paso, Texas 79901 Attorney for Real Party in Interest The Honorable Gonzalo Garcia 210th Judicial District Court El Paso County Courthouse 500 East San Antonio Street El Paso, Texas 79901-2496 Respondent ___________________________ Nissa M. Dunn 19 CERTIFICATE OF COMPLIANCE At the request of the Court, I certify that this submitted computer disk complies with the following requests of the Court: 1. This filing is labeled with or accompanied by the following information: a. Case name: In re Dillard Department Stores, Inc. and Grizelda Reeder No. 05-0250 Relators’ Brief on the Merits b. c. d. The Docket Number: The Type of Brief: The Word Processing Software and Version Used to Prepare the Filing: Microsoft Office Word 2003 2. This disk contains only an electronic copy of the submitted filing and does not contain any appendices, any portion of the appellate record (other than a portion contained in the text of the filing), hypertext links to other material, or any document that is not included in the filing. The electronic filing is free of viruses or any other files that would be disruptive to the Court’s computer system. The following software, if any, was used to ensure the filing is virus-free: eTrust AntiVirus by Computer Associates 3. 4. I understand that a copy of this filing will be posted on the Court’s web site and becomes part of the Court’s record. Copies have been sent to all parties associated with this case on this the 18th day of June, 2005. 5. _________________________________ NISSA M. DUNN State Bar No. 14766450 Crofts & Callaway, P.C. 4040 Broadway, Suite 525 San Antonio, Texas 78209 (210) 225-5551 - Telephone (210) 225-7110 - Telecopier 20