Estella Trammell v. AccentCare, Incorporated ( 2019 )

Case: 18-50872 Document: 00514987178 Page: 1 Date Filed: 06/07/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 7, 2019
No. 18-50872
Lyle W. Cayce
Clerk
ESTELLA LYNN TRAMMELL, Individually and On Behalf of All
Others Similarly Situated,
Plaintiff - Appellant
v.
ACCENTCARE, INCORPORATED,
Defendant – Appellee
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:17-CV-1129
Before HIGGINBOTHAM, JONES, and COSTA, Circuit Judges.
PER CURIAM:*
Estella Trammell, an at-will employee of AccentCare, challenges the
district court’s order that she must arbitrate a pay dispute with the company.
The district court applied the “mailbox rule” to presume that Trammell
received the company’s proffered arbitration agreement even though she
testified that she never received the contract and indicated to her employer
that she was experiencing difficulties in receiving and sending mail. Because
Trammell overcame this presumption by introducing competing evidence, she
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 18-50872
has created a genuine issue of material fact regarding whether an arbitration
agreement was formed. The order must be reversed and remanded for trial.
Federal Arbitration Act, 9 U.S.C. Section 4 (“FAA”).
BACKGROUND
The facts underlying this case are straightforward. AccentCare is a
home healthcare provider. Ms. Trammell is an at-will employee providing in-
home personal care assistance services for AccentCare’s patients. Trammell
alleges that AccentCare violated the FLSA in miscalculating her pay, but this
appeal does not concern the merits of her claim. Following the district court’s
order compelling arbitration, the issue on appeal is whether Trammell and
AccentCare entered into a contract compelling arbitration of disputes.
In 2016, AccentCare mailed its Arbitration Agreement to Trammell’s
home address of over twenty years, the same address to which AccentCare
mailed all of her employment-related documents. But Trammell attested that
she never received the Arbitration Agreement, had no knowledge of it prior to
being presented with it in this lawsuit, did not agree to it, and did not sign it.
Additionally, Trammell attested that she notified AccentCare that she was
having difficulty both receiving and sending mail to and from her address
through the U.S. Postal Service. Trammell also attested that, starting in late
2015, before the mailing of the Arbitration Agreement, she told at least three
different AccentCare management employees that (1) she had not received a
stack of blank timesheets mailed to her home address to be filled out to record
her work hours; and (2) she had mailed in a completed timesheet but
AccentCare had not received it. Despite the fact that AccentCare’s cover letter
to Trammell requests that she countersign and return the arbitration
agreement, AccentCare did not produce an arbitration agreement signed by
her. Trammell thus requested a jury trial under the FAA on the issue of
whether a valid contract to arbitrate was formed.
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Trammell filed an FSLA suit in federal court on November 30, 2017.
AccentCare answered and moved to dismiss, or in the alternative, to stay
proceedings and compel arbitration (the “Motion”). Responding to the Motion,
Trammell disputed the existence of any arbitration agreement. The parties
offered evidence. The magistrate judge to whom the question had been
referred issued a report and recommendation that the Motion be granted. The
magistrate judge reasoned that because of the presumption underlying the
“mailbox rule,” AccentCare’s evidence that an arbitration agreement was
mailed to Trammell’s residence was sufficient to establish an enforceable
arbitration contract. The District Court adopted the Report in full, issued an
order compelling arbitration, and dismissed Trammell’s claim without
prejudice. Trammell timely appealed.
DISCUSSION
This Court reviews de novo a district court’s ruling on a motion to compel
arbitration. Huckaba v. Ref-Chem, L.P., 892 F.3d 686, 688 (5th Cir. 2018)
(citing Klein v. Nabors Drilling USA L.P., 710 F.3d 234, 236 (5th Cir. 2013)).
A two-step inquiry applies in determining whether the parties have
agreed to arbitrate a dispute under the FAA: “The first is contract formation—
whether the parties entered into any arbitration agreement at all. The second
involves contract interpretation to determine whether this claim is covered by
the arbitration agreement.” Kubala v. Supreme Production Svcs., Inc.,
830 F.3d 199, 201 (5th Cir. 2016). This case involves only the first inquiry, and
the issue turns on Texas contract law. See Carey v. 24 Hour Fitness, USA, Inc.,
669 F.3d 202, 205 (5th Cir. 2012).
Trammell bears the “initial” burden here because she requested a jury
trial on the formation issue. See Gilliam v. Glob. Leak Detection U.S.A., Inc.,
141 F. Supp. 2d 734, 737 (S.D. Tex. 2001) (“In an effort to limit meritless claims
of invalidity, the Fifth Circuit has held that a party seeking to avoid arbitration
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must bear the initial burden of production in order to create a fact issue on the
validity of an arbitration clause.”). But because AccentCare sought to compel
arbitration based on an arbitration agreement promulgated during the course
of an at-will employee’s employment, it bears the burden to demonstrate a
proper modification of Trammell’s employment terms. See Kubala v. Supreme
Production Svcs., Inc., 830 F.3d 199, 203 (5th Cir. 2016). 1
In order “[t]o demonstrate a modification of the terms of at-will
employment, the proponent of the modification must demonstrate that the
other party: (1) received notice of the change; and (2) accepted the change.”
In re Halliburton Co., 80 S.W.3d 566, 568 (Tex. 2002). Continued employment
following notice that an arbitration policy would take effect is enough to satisfy
both requirements. Id. at 569. “To prove notice, an employer asserting a
modification must prove that he unequivocally notified the employee of definite
changes in employment terms.” Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227,
229 (Tex. 1986) (citing Stowers v. Harper, 376 S.W.2d 34, 39 (Tex.Civ.App.—
Tyler 1964, writ ref'd n.r.e.).
A district court must hold a trial on the existence of an arbitration
agreement if “the making of the arbitration agreement . . . [is] in issue.”
9 U.S.C. § 4. The question, then, is whether Trammell, through her sworn
affidavit and other evidence of non-receipt, has put the existence of the
agreement in issue. AccentCare chiefly relies on the law’s presumption, per
the mailbox rule, that Trammell actually received the Arbitration Agreement.
1 Arbitration agreements between employers and their employees are broadly
enforceable in Texas. In re Poly–Am., L.P., 262 S.W.3d 337, 348 (Tex. 2008). But “[a]lthough
[the Texas Supreme Court has] repeatedly expressed a strong presumption favoring
arbitration, the presumption arises only after the party seeking to compel arbitration proves
that a valid arbitration agreement exists.” J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223,
227 (Tex. 2003).
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In Texas, the “mailbox rule” holds that “[a] letter properly addressed,
stamped and mailed may be presumed to have been received by the addressee
in the due course of the mail.” Wells Fargo Bus. Credit v. Ben Kozloff, Inc.,
695 F.2d 940, 944 (5th Cir. 1983) (citing Southland Life Insurance Co. v.
Greenwade, 159 S.W.2d 854 (Tex. 1942)). But this presumption is rebuttable.
See Southland, 159 S.W.2d at 857.
Whatever the precise amount of evidence required to rebut the mailbox
rule’s presumption of receipt, and hence, notice for the purpose of establishing
an agreement to arbitrate, Trammell has satisfied it here. Trammell has
denied receipt in a sworn affidavit, stating further that she notified three
AccentCare personnel about her problems sending and receiving mail at her
home, including mail from AccentCare, and that she began driving her time
slips to work since they were being lost in the mail. Moreover, while there is
no dispute that AccentCare mailed the proposed arbitration agreement to
Trammell, the company admits that it cannot produce the signed agreement,
which tends to corroborate that she did not sign the agreement. Not that
signature was legally required, but the absence of a signed document is not
inconsistent with Trammell’s claim of non-receipt. Nor did AccentCare offer
affidavits from its employees contradicting what Trammell allegedly told them.
Trammell has not merely provided an unsubstantiated affidavit which “does
not allege or explain any potential deficiency” in the mailing process. See, e.g.,
Cash v. AXA Equitable Life Ins., 229 F. Supp. 3d 542, 549–50 (W.D. Tex. 2017).
Affidavits that “simply deny receipt . . . are insufficient to undermine the
presumption of receipt.” Marsh v. First USA Bank, 103 F. Supp. 2d 909, 917–
19 (N.D. Tex. 2000); see also Tinder v. Pinkerton Sec., 305 F.3d 728, 735-36 (7th
Cir. 2002) (affidavit with plaintiff’s bare denial of receipt of arbitration notice
is insufficient to create genuine issue of material fact). Trammell has produced
here what other parties have not-–controvertible evidence, other than a bare
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denial of receipt, that there was some irregularity in the mailing process. The
district court thus erred in relying on the presumption of the mailbox rule
without regard to the competing evidence Trammell provided to rebut that
presumption. Because Trammell created a genuine issue of material fact
regarding whether an arbitration agreement was formed, she is entitled to a
jury trial under Section 4 of the FAA.
CONCLUSION
For the foregoing reasons, we REVERSE the district court’s order and
REMAND for further proceedings consistent with this opinion.
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