Flores v. BJ's Restaurant Operations ( 2023 )

Case: 23-50038 Document: 00516923816 Page: 1 Date Filed: 10/06/2023
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
____________ FILED
October 6, 2023
No. 23-50038
Lyle W. Cayce
____________ Clerk
Daniel Flores, on Behalf of Himself and on Behalf of All Others Similarly
Situated,
Plaintiff—Appellee,
versus
BJ’s Restaurant Operations Company; BJ’s Restaurants,
Incorporated,
Defendants—Appellants.
______________________________
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:21-CV-1185
______________________________
Before Clement, Haynes, and Oldham, Circuit Judges.
Per Curiam:*
The question presented is whether Daniel Flores and BJ’s
Restaurants, his former employer, formed a valid agreement to arbitrate
under Texas Law. The district court said no. We REVERSE.
_____________________
*
This opinion is not designated for publication. See 5th Cir. R. 47.5.
Case: 23-50038 Document: 00516923816 Page: 2 Date Filed: 10/06/2023
No. 23-50038
I.
Flores worked at BJ’s. As part of his on-boarding process, Flores
signed an agreement to submit any work-related disputes to binding
arbitration. That agreement requires individual arbitration and forbids
collective action. Nevertheless, he brought a class action suit against the
company in federal court alleging that BJ’s violated the Fair Labor Standards
Act.
BJ’s moved to compel arbitration. The district court, adopting the
reasoning of the magistrate judge’s report and recommendation in full, found
that there was no enforceable arbitration agreement between Flores and BJ’s
because the company failed to sign the agreement. BJ’s timely appealed. See
9 U.S.C. § 16(a)(1).
II.
A.
Under the Federal Arbitration Act, a party is entitled to enforcement
of an arbitration agreement where (1) there is a valid agreement to arbitrate
and (2) the dispute falls within the scope of that agreement. Huckaba v. Ref-
Chem, LP, 892 F.3d 686, 688 (5th Cir. 2018) (citing Klein v. Nabors Drilling
USA LP, 710 F.3d 234, 236 (5th Cir. 2013)). In this case, only the first
element is at issue.
Determining if there is a valid agreement to arbitrate is a question of
law, which we review de novo. Id. We answer that question by looking to the
validity of the contract under state law. Id. (citing Kubala v. Supreme Prod.
Servs., Inc., 830 F.3d 199, 202 (5th Cir. 2016)).
This contract is governed by Texas law, which requires: “(1) an offer,
(2) an acceptance, (3) a meeting of the minds, (4) each party’s consent to the
terms, and (5) execution and delivery of the contract with the intent that it be
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mutual and binding.” See Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.W.3d
631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). This case
hinges on the final element, asking whether there was a validly executed
contract in the absence of BJ’s signature.
Under Texas law, “to make a signature a condition precedent to
enforcement of a contract—including an arbitration agreement—the
agreement must clearly and explicitly require a signature before it becomes
binding.” Firstlight Fed. Credit Union v. Loya, 478 S.W.3d 157, 170 (Tex.
App.—El Paso 2015, no pet.). And the absence of a signature by a party will
“not necessarily destroy” an agreement. Wright v. Hernandez, 469 S.W.3d
744, 757 (Tex. App.—El Paso 2015, no pet.); see also In re Polymerica, LLC,
296 S.W.3d 74, 76 (Tex. 2009) (orig. proceedings) (per curiam) (noting that
Texas law does not require that an “employer must sign [an] arbitration
agreement before it may insist on arbitrating a dispute with its employee”).
B.
Here, it is clear that Texas law did not require BJ’s signature to form
an enforceable arbitration agreement. Perhaps most importantly, there is no
place for BJ’s to sign the agreement. It contains no signature block at the end
of the agreement for the company. Cf. In re Bunzl USA, Inc., 155 S.W.3d 202,
211 (Tex. App.—El Paso 2004, orig. proceeding) (finding that a signature
was required when the contract had a signature block intended for the
employer); Hi Tech Luxury Imps., LLC v. Morgan, No. 03-19-00021-CV, 2019
WL 1908171, at *2 (Tex. App.—Austin Apr. 30, 2019, no pet.) (mem. op.)
(same). And Flores has pointed to no Texas case in which a court has
invalidated an agreement for lack of signature when there was no empty
signature block.
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Even if the contract was ambiguous on this point,† Texas law would
require us to consider the parties’ conduct. See DISH Network LLC v.
Alexander, No. 13-20-00240-CV, 2021 WL 3085763, at *7 (Tex. App.—
Corpus Christi July 22, 2021, pet. denied), reh’g denied (Aug. 30, 2021). The
actions here decisively favor BJ’s. The employer prepared Flores’s
arbitration agreement on its letterhead, as it does for every employee. BJ’s
presented the agreement to Flores for signature, as part of his onboarding
process, and required that he complete it before starting employment. The
company kept the agreement in his personnel file, and then sought to enforce
it against him upon the filing of this suit. Texas courts have found that these
considerations evince an employers’ intent to be bound even when they did
not sign arbitration agreements. Id. at *6–7; Wright, 469 S.W.3d at 761(similar).
Flores says otherwise. He argues the plain language references to
“signing” show that BJ’s signature was a condition precedent for contract
execution. Red Br. 13. But such a reading is possible only by looking at those
clauses in isolation. And Texas law commands looking to the instrument as a
whole, harmonizing all the clauses. J.M. Davidson, Inc. v. Webster, 128
S.W.3d 223, 229 (Tex. 2003). When viewing the complete instrument, the
three scattered mentions of “signing,” ROA.144–46, are not enough to
“clearly and explicitly require a signature.” Firstlight, 478 S.W.3d at 170.
Flores also believes that under BJ’s reading, the contract would fail
for lack of consideration. But this position misunderstands the nature of the
_____________________
†
Flores points out, for example, that three peripheral clauses mention BJ’s signing
the agreement. The core of the agreement, however, deals with binding arbitration, waiving
the right to collective action, and detailing—at length—the arbitration procedures that the
parties agree to use with no reference to a signature requirement at all. So we find the
contract unambiguous. But as explained in the body text, it would not matter if the
agreement’s three signature references created ambiguity on this point.
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arbitration agreement. The agreement here is supported by the consideration
of new employment. Even though Flores’s employment was at-will, that is
not illusory because the agreement survives the employment relationship. It
provides an avenue to address, for example, claims of wrongful termination.
Accordingly, the Texas Supreme Court has repeatedly blessed such
agreements. See In re Whataburger Rests. LLC, 645 S.W.3d 188, 197–98 (Tex.
2022), reh’g denied (June 17, 2022).
REVERSED.
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