Delirium TV LLC v. Tran Dang ( 2024 )

Opinion issued April 9, 2024
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-23-00383-CV
———————————
DELIRIUM TV, LLC, Appellant
V.
TRAN DANG, Appellee
On Appeal from the 11th District Court
Harris County, Texas
Trial Court Case No. 2022-50674
OPINION
Appellant Delirium TV, LLC (Delirium) takes this interlocutory appeal from
the trial court’s denial of its motion to compel arbitration. See TEX. CIV. PRAC. &
REM. CODE § 171.098(a)(1) (authorizing this interlocutory appeal). In five issues,
Delirium asks us to consider whether (1) appellee Tran Dang properly invoked the
protections of the Ending Forced Arbitration of Sexual Assault and Sexual
Harassment Act of 20211 (EFAA or the Act), (2) Dang’s initiation of separate
arbitration proceedings constitutes an election to arbitrate under the EFAA, (3) Dang
can maintain a “parallel” lawsuit in Texas along with arbitration proceedings in
California, (4) the trial court abused its discretion in refusing to stay the state court
litigation in light of Dang’s pending arbitration claims, and (5) the trial court abused
its discretion in denying Delirium’s motion to compel arbitration and motion to stay.
We affirm.
Background
In January 2022, Dang was contacted on social media by a casting director
with Kinetic Content, LLC (Kinetic), who identified Kinetic as the producer of the
reality television program Love Is Blind. Dang contends that following several
interviews, she was hired by Delirium and Kinetic for the fifth season of Love is
Blind on or about April 17, 2022. According to Dang, filming took place from April
18, 2022 to May 14, 2022.
As part of the casting process, on February 7, 2022, Dang executed a
“Participant Release Agreement” (the Agreement) with Delirium. The Agreement
identified Dang as a “participant” in “LOVE IS BLIND – SEASON 5” (the Program)
1
Pub. L. No. 117-90, 136 Stat. 26 (2022) (codified at 9 U.S.C. §§ 401–02).
2
and named Delirium as the Program’s producer. The Agreement also contained an
arbitration provision, which provided, in relevant part:
68. Both Producer, on behalf of itself and Network, and I
acknowledge, understand and agree that if any dispute, controversy or
claim arising out of or relating to this Agreement, the breach of any
term hereof, or any effort by any party to enforce, interpret and/or
construe, rescind, terminate or annul this Agreement, or any provision
thereof, including without limitation the applicability of this arbitration
provision, and any and all disputes or controversies relating in any
manner to my appearance on or participation in and in connection with
the Program that are not otherwise barred or released pursuant to the
terms of this Agreement (collectively “Matters”) cannot be resolved
through direct discussions, the parties agree to endeavor first to resolve
the Matters by mediation conducted in the County of Los Angeles and
administered by JAMS. (Notwithstanding the foregoing, if any party
files suit in court, the other party or parties need not demand mediation
to enforce the right to compel arbitration.) If any Matter is not otherwise
resolved through direct discussions or mediation, as set forth above,
then the parties agree that it shall be resolved by binding arbitration
conducted in accordance with the Streamlined Arbitration Rules and
Procedures of JAMS, through its Los Angeles, California office or its
Houston, Texas office, as Producer may elect.
69. In agreeing to arbitration, the parties acknowledge that we have
waived the right to a jury trial.
In August 2022, Dang sued fellow participant Thomas Smith, Kinetic, and
Delirium, alleging that Smith sexually assaulted Dang during filming. Dang further
contended that Kinetic and Delirium, as entities involved in the development and
production of the series and the employers of Dang and Smith, were liable under
theories of respondeat superior and vicarious liability. In addition to her claims for
3
civil assault, Dang also asserted causes of action for false imprisonment and
negligence against Kinetic and Delirium.
In November 2022, Delirium filed a motion to compel mediation and motion
to compel arbitration with its original answer. In the arbitration motion, Delirium
argued that it (1) had a valid arbitration agreement with Dang, and (2) Dang’s claims
were within the arbitration provision’s broad scope. In a footnote, Delirium
summarily contended that the provisions of the EFAA were inapplicable to Dang’s
suit, but if they did apply, the trial court should abate the nonarbitrable claims
pending resolution of the arbitrable ones.
Dang opposed the motion to compel arbitration, arguing that her state law tort
claims were exempted from arbitration under the EFAA. Dang argued that her wage
claims, which were at the time the subject of a separate arbitration proceeding, were
separate and distinct from her tort claims. Dang further contended that her tort claims
(assault, negligence, and false imprisonment) all arose from the assault allegedly
perpetrated by Smith and “ignore[d], minimize[d], and exploit[ed]” by Kinetic and
Delirium.
On February 1, 2023, Dang made a demand for arbitration to JAMS,
“alleg[ing] causes of action against [Delirium] and [Kinetic] for damages resulting
from [their] evading the mandatory minimum wage and overtime provisions of the
4
Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. (‘FLSA’).”2 Dang alleged that
Delirium and Kinetic owed her wages and overtime for her time spent on call while
filming Love is Blind. Dang contended that she was “willfully detained on non-
discretionary call 24 hours a day during filming and production of Love is Blind
under [Delirium and Kinetic].”
Following Dang’s arbitration demand, Delirium filed a “Supplement to its
Motion to Compel Arbitration and Brief in Support,” arguing that because Dang’s
arbitration demand “allege[d] identical operative facts as those asserted in [her]
lawsuit” and because her lawsuit’s allegations “touch[ed] matters covered by the
parties’ arbitration agreement, all of [Dang’s] claims must also be arbitrated
regardless of the causes of action alleged.” Delirium further argued that even if some
of Dang’s claims were not subject to arbitration, the trial court must nevertheless
stay all proceedings pending the resolution of the arbitration.
On May 10, 2023, the trial court signed an order summarily denying
Delirium’s motion to compel arbitration without stating the basis for the denial. This
appeal followed.
2
Before making a demand in arbitration, Dang initiated a claim with the Texas
Workforce Commission (TWC) for her alleged unpaid wages. However, TWC
determined that it was preempted from ruling on the dispute because it was subject
to a valid arbitration agreement.
5
Applicability of the EFAA to Dang’s Claims
In five issues, Delirium contends that the trial court erred in denying its motion
to compel arbitration. We first consider the application of the EFAA to Dang’s
claims. The question of whether the parties’ arbitration agreement is enforceable as
to Dang’s assault claims appears to involve an issue of first impression for any
court—the interpretation of the term “sexual assault dispute” as defined in the
EFAA.
A. The FAA and the EFAA
Courts have consistently recognized a “national policy favoring arbitration.”
See, e.g., Preston v. Ferrer, 552 U.S. 346, 353 (2008) (quoting 9 U.S.C. § 2); Stage
Stores, Inc. v. Gunnerson, 477 S.W.3d 848, 854 (Tex. App.—Houston [1st Dist.]
2015, no pet.) (quoting Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 588
(2008)). Nevertheless, “the FAA’s[3] mandates in support of its ‘liberal federal policy
favoring arbitration agreements’ may be ‘overridden by a contrary congressional
command.’” Johnson v. Everyrealm, Inc., 657 F. Supp. 3d 535, 558 (S.D.N.Y. 2023)
(quoting CompuCredit Corp. v. Greenwood, 565 U.S. 95, 98 (2012)). Recently,
Congress created an exemption from arbitration for sexual assault and sexual
harassment claims by enacting the EFAA. The EFAA provides that:
Notwithstanding any other provision of this title, at the election of the
person alleging conduct constituting a sexual harassment dispute or
3
Federal Arbitration Act, 9 U.S.C. §§ 1–402.
6
sexual assault dispute, . . . no predispute arbitration agreement . . . shall
be valid or enforceable with respect to a case which is filed under
Federal, Tribal, or State law and relates to the sexual assault dispute or
the sexual harassment dispute.
9 U.S.C. § 402(a). The EFAA applies only to any dispute or claim that arises or
accrues on or after the date of the enactment of the EFAA and does not have
retroactive effect. Johnson, 657 F. Supp. 3d at 550 (citing Pub. L. No. 117-90, § 3,
136 Stat. 26, 28 (2022)). The EFAA was enacted on March 3, 2022. Id. Under the
EFAA, a “sexual assault dispute” refers to “a dispute involving a nonconsensual
sexual act or sexual contact, as such terms are defined in section 2246 of title 18 or
similar applicable Tribal or State law, including when the victim lacks capacity to
consent.” 9 U.S.C. § 401(3). Whether the EFAA applies to a dispute is a question
for the courts, rather than an arbitrator. Id. § 402(b).
B. Standard of Review
We review a trial court’s order denying a motion to compel arbitration for
abuse of discretion. Wagner v. Apache Corp., 627 S.W.3d 277, 283 (Tex. 2021);
Henry v. Cash Biz, LP, 551 S.W.3d 111, 115 (Tex. 2018). A trial court abuses its
discretion if it acts in an arbitrary or unreasonable manner or acts without reference
to guiding rules or principles. Taylor Morrison of Tex., Inc. v. Skufca, 650 S.W.3d
660, 676 (Tex. App.—Houston [1st Dist.] 2021, no pet.) (citing Downer v.
Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985)). We defer to the
trial court’s factual determinations if they are supported by the evidence, but we
7
review the court’s legal rulings de novo. Henry, 551 S.W.3d at 115. A trial court has
no discretion in determining what the law is, which law governs, or how to apply the
law. Skufca, 650 S.W.3d at 676.
C. The Parties’ Burdens
A party seeking to compel arbitration under the FAA must establish: (1) the
existence of a valid, enforceable arbitration agreement; and (2) that the claims at
issue fall within the agreement’s scope.4 In re FirstMerit Bank, N.A., 52 S.W.3d 749,
753 (Tex. 2001) (orig. proceeding). Once the questions of validity and scope are
resolved affirmatively, the court considers whether any federal statute or policy
“renders the claims nonarbitrable.” Mendez v. New Bell Gen. Servs., L.P., 727 F.
Supp. 2d 585, 589 (W.D. Tex. 2010) (quoting Sherer v. Green Tree Servicing LLC,
548 F.3d 379, 381 (5th Cir. 2008)). “The party seeking to invalidate an arbitration
agreement bears the burden of establishing its invalidity,” as well as other defenses
to arbitration such as unconscionability, fraud, duress, or waiver. Gonzales v. Brand
Energy & Infrastructure Servs., Inc., No. H-12-1718, 2013 WL 1188136, at *2 (S.D.
Tex. Mar. 20, 2013) (citing Carter v. Countrywide Credit Indus., Inc., 362 F.3d 294,
297 (5th Cir. 2004)); In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.
1999) (orig. proceeding), abrogated on other grounds, In re Halliburton Co., 80
S.W.3d 566, 571 (Tex. 2002) (orig. proceeding).
4
On appeal, the parties do not contest the applicability of the FAA.
8
D. Analysis
On appeal, the parties do not challenge the validity of the arbitration provision
within the Agreement, nor do they argue that the claims at issue do not fall within
the arbitration provision’s scope. Rather, Delirium contends that the trial court erred
in applying the EFAA to exempt Dang’s claims from arbitration.5 Specifically,
Delirium argues that because Dang did not plead a plausible claim for sexual assault
(against either Smith or Delirium), the EFAA does not apply to her claims against
Delirium.
We begin by reviewing the relevant facts asserted in Dang’s complaint. Under
the heading titled “Defendant Thomas Smith,” Dang outlines the following:
32. On or around May 3, 2022, while Love is Blind was being
filmed, Smith sexually assaulted [Dang] throughout the night. Amongst
other acts—and certainly by no means is the forthcoming list
exhausting—Smith forcefully and without [Dang’s] consent:
a. Incessantly groped [Dang];
b. Exposed himself in the nude to [Dang] without consent; and
5
Although the trial court’s order denying the motion to compel arbitration did not
state the basis for its decision, this was the only argument raised by Dang in her
opposition to the motion to compel arbitration. Therefore, this is the only ground
before us in reviewing the trial court’s denial of the motion. See Hearthshire
Braeswood Plaza Ltd. P'ship v. Bill Kelly Co., 849 S.W.2d 380, 390 (Tex. App.—
Houston [14th Dist.] 1993, writ denied) (noting that if trial court does not make
findings of fact or conclusions of law, then appellate court must affirm judgment if
there is evidence to support it on any legal theory raised by prevailing party, but
because nonmovant did not raise unconscionability as defense to arbitration, it could
not have been relied upon by trial court in denying motion to compel arbitration).
9
c. Forcibly and repeatedly made sexual contact with [Dang]
without her consent and over her express objections.
33. Due to Delirium TV and Kinetic Content’s 24-hour
surveillance of [Dang] and Defendant Smith, most if not all of these
traumatic acts were filmed by the production crew and within their
knowledge.
34. [Dang] reported Smith’s conduct to Delirium TV and
Kinetic Content producers the next morning following her assault.
[Dang] detailed the assault and reported that she was uncomfortable
being around Smith.
35. Delirium TV and Kinetic Content producers made
attempts to mask [Dang’s] sexual assault by characterizing it as a lack
of attraction on the part of [Dang]. When [Dang] insisted an assault
took place, Defendants Delirium TV and Kinetic Content questioned
whether the problem was really one of communication and swept aside
her concerns. Upon information and belief, Defendants took no
corrective action. Delirium TV and Kinetic Content ratified and
condoned the mistreatment for the sake of reality television.
Later, Dang’s complaint asserts the following under her cause of action styled
“Assault (Battery) – Bodily Injury and Offensive Contact”:
41. [Dang] incorporates by reference, as if fully set forth
herein, the statutory language of Texas Penal Code §§ 22.01, 22.011
describing the felonies of “Assault” and “Sexual Assault.” [Dang]
alleges that she was the victim of the aforementioned crimes that
Defendant Smith committed against [Dang] on or about May 3, 2022
and that said crimes have caused [Dang’s] damages alleged in this
Petition.
42. On or about May 3 and May 4, 2022, Defendant Smith
intentionally, knowingly, or recklessly made physical contact with
[Dang’s] person causing bodily injury—that is, physical pain, illness,
or impairments of [Dang’s] physical condition—and [Dang] did not,
and could not, consent to the harmful physical contact.
10
43. Alternatively, Defendant Smith intentionally or
knowingly caused to be made physical contact with [Dang] when
Defendant knew, or reasonably should have believed, that [Dang]
would regard the contact as offensive and provocative. Indeed, said
physical contact was offensive, provocative, and committed by Smith
despite never having consent from [Dang].
....
45. Defendants Delirium TV and Kinetic Content are liable
for the crimes, assault, battery, and sexual assault of which [Dang] is a
victim because they participated in the tortious and felonious acts
directly themselves through the actions of their vice-principal.
46. Defendant Smith was acting under the supervision of
Defendants Delirium TV and Kinetic Content when these unlawful,
offensive, and provocative acts occurred.
47. Accordingly, Delirium TV and Kinetic Content are
responsible for Defendant Smith’s conduct under the doctrines of
respondeat superior and vicarious liability. Bodily injury and offensive
contact to [Dang] were direct and proximate causes of [Dang’s] severe
mental anguish, pain, and emotional distress, for which each and every
Defendant is liable.
As noted above, the EFAA defines a “sexual assault dispute” as one involving
a “nonconsensual sexual act or sexual contact, as such terms are defined in section
2246 of title 18[6] or similar applicable Tribal or State law, including when the victim
6
18 U.S.C. § 2246 includes the following definitions:
(2) the term “sexual act” means–
(A) contact between the penis and the vulva or the penis and the anus,
and for purposes of this subparagraph contact involving the penis
occurs upon penetration, however slight;
11
lacks the capacity to consent.” 9 U.S.C. § 401(3). Here, Dang has plainly alleged
that Smith sexually assaulted her and made sexual contact with her without her
consent. Dang specifically asserts, in the context of her assault allegation, that Smith
“[i]ncessantly groped” her and “[f]orcibly and repeatedly made sexual contact” with
her “without her consent and over her express objections.” Further, Dang’s
complaint specifically references “the statutory language of Texas Penal Code
§§ 22.01, 22.011” (assault and sexual assault).7 Dang alleged that she was the victim
(B) contact between the mouth and the penis, the mouth and the vulva,
or the mouth and the anus;
(C) the penetration, however slight, of the anal or genital opening of
another by a hand or finger or by any object, with an intent to
abuse, humiliate, harass, degrade, or arouse or gratify the sexual
desire of any person; or
(D) the intentional touching, not through the clothing, of the genitalia
of another person who has not attained the age of 16 years with an
intent to abuse, humiliate, harass, degrade, or arouse or gratify the
sexual desire of any person;
(3) the term “sexual contact” means the intentional touching, either directly
or through the clothing, of the genitalia, anus, groin, breast, inner thigh,
or buttocks of any person with an intent to abuse, humiliate, harass,
degrade, or arouse or gratify the sexual desire of any person[.]
18 U.S.C. § 2246.
7
Under Texas Penal Code section 22.011(a)(1), a person commits the offense of
sexual assault if the person intentionally or knowingly:
(A) causes the penetration of the anus or sexual organ of another person by
any means, without that person’s consent;
12
of these specifically enumerated offenses, and that Smith committed these offenses
against her on or about May 3, 2022.
Delirium seems to argue that because Dang did not specify what body parts
were involved in the alleged assault, Dang cannot invoke the provisions of the
EFAA. Delirium cites no case law to support this contention. Rather, Delirium
focuses on a decision from a New York federal district court, which interpreted the
meaning of “sexual harassment dispute” as defined by the EFAA. See Yost v.
Everyrealm, Inc., 657 F. Supp. 3d 563 (S.D.N.Y. 2023). The Yost court held that the
plaintiff must plausibly plead a claim for sexual harassment before the EFAA can
be applied to bar arbitration of the claim. Id. at 580–82. Ultimately, the court
determined that the plaintiff’s pleadings fell short, because her allegations did not
demonstrate that the defendant’s offending conduct was keyed to a protected
characteristic of the plaintiff under the New York City Human Rights Law. Id. at
580. However, the Yost court specifically limited its holding to the construction of
the term “sexual harassment dispute” in the EFAA. See id. at 584 n.14 (noting that
(B) causes the penetration of the mouth of another person by the sexual organ
of the actor, without that person’s consent; or
(C) causes the sexual organ of another person, without that person’s consent,
to contact or penetrate the mouth, anus, or sexual organ of another person,
including the actor[.]
TEX. PENAL CODE § 22.011(a)(1).
13
although EFAA “also applies to ‘sexual assault dispute[s],’” court’s “discussion as
to the EFAA’s proper construction [was] framed solely in terms of ‘sexual
harassment dispute[s]’” because plaintiff did not allege sexual assault). While
illustrative, the Yost court’s discussion does not guide our analysis of the term
“sexual assault dispute.”
We note that the EFAA’s definition of “sexual harassment dispute” includes
additional terms not found in the definition of “sexual assault dispute.” For example,
a “sexual harassment dispute” is one “relating to conduct that is alleged to constitute
sexual harassment” under applicable laws. See 9 U.S.C. § 401(4) (emphasis added).
By contrast, a “sexual assault dispute” is a “dispute involving a nonconsensual
sexual act or sexual contact” as those terms are defined under relevant laws. Id.§ 401(3). The Yost court focused on the word “alleged” in the definition of “sexual
harassment dispute,” noting that “the term adds a legal dimension to the required
allegation.” Yost, 657 F. Supp. 3d at 584–85. Congress could have similarly defined
a “sexual assault dispute” to include this “relating to” or “alleged to” language, but
it did not. As the Yost court observed, “Congress’s decision to add those qualifying
words is significant.” Id. at 585 (citing United States v. Bedi, 15 F.4th 222, 226 (2d
Cir. 2021)).
Delirium essentially asks us to require that Dang establish Smith’s criminal
liability before her claims can be exempted from arbitration pursuant to the EFAA.
14
But that is not what the Act requires. Dang has pleaded that Smith “[i]ncessantly
groped” her and “forcibly and repeatedly made sexual contact” with her “without
her consent and over her express objections.” Looking to the definitions in section
2246 (referenced in the EFAA’s definition of “sexual assault dispute”), Dang’s
allegations, if true, would constitute “sexual contact” as defined by the statute, so
long as Smith touched Dang’s “genitalia, anus, groin, breast, inner thigh, or
buttocks” with the requisite intent. See 18 U.S.C. § 2246(3).
Considering Dang’s use of the words “incessantly,” “groped,” and “sexual
contact,” along with her references to the section of the Texas Penal Code pertaining
to sexual assault and repeated assertions that Smith’s conduct was nonconsensual,
we hold that her complaint pertains to a “sexual assault dispute” as defined by the
EFAA, and that the EFAA therefore invalidates the arbitration provision at issue.
See United States v. Price, 980 F.3d 1211, 1242 n.5 (9th Cir. 2019) (order)
(Wardlaw, J., concurring) (noting that in context of section 2246, “[t]he term ‘sexual
contact’ is defined as ‘intentional’ touching, i.e., groping”); Blatt v. Pambakian, No.
20-55084, 2021 WL 4352329, at *1 (9th Cir. Sept. 24, 2021) (citing dictionary
definitions and noting that “average reader would understand ‘groped and sexually
harassed’ [as used in news article made the basis of anti-SLAPP motion] to mean, at
a minimum, that [defendant] touched [plaintiff] against her will for his sexual
15
pleasure and engaged in some sort of additional, uninvited sexual behavior—verbal,
physical, or both”).
We further reject any argument by Delirium that the EFAA does not apply to
Dang’s claims against Delirium because Smith, not Delirium, assaulted Dang, and
Delirium is not liable for Smith’s actions. Delirium focuses on whether an
employment relationship between the parties existed, or whether Delirium owed a
duty to Dang at all. Delirium’s arguments in this regard ignore the plain language of
the EFAA, which states that:
[A]t the election of the person alleging conduct constituting a . . . sexual
assault dispute, . . . no predispute arbitration agreement . . . shall be
valid or enforceable with respect to a case which is filed under Federal,
Tribal, or State law and relates to the sexual assault dispute[.]
9 U.S.C. § 402(a). Nothing in this language requires a certain relationship to exist
between the parties before the arbitration agreement is invalidated by the EFAA.
Nor does the Act specify anything about how the assault must have occurred, or who
perpetrated the assault. See Famuyide v. Chipotle Mexican Grill, Inc., No. 23-1127,
2023 WL 5651915, at *1, *4 (D. Minn. Aug. 31, 2023) (denying Chipotle’s motion
to compel arbitration of employee’s suit pursuant to EFAA; allegations related to
Chipotle’s handling of employee’s reports of sexual assault and sexual harassment
perpetrated by coworker).8 Rather, the EFAA requires (1) “alleg[ations of] conduct
8
We may rely on federal decisions and decisions from other states as persuasive
authority. See Little v. Delta Steel, Inc., 409 S.W.3d 704, 718 (Tex. App.—Fort
16
constituting a . . . sexual assault dispute,” and (2) “a case which is filed under
Federal, Tribal, or State law and relates to the sexual assault dispute.” 9 U.S.C. §
402(a). If those requirements are met, then “no predispute arbitration agreement . . .
shall be valid or enforceable with respect to [such] a case.” Id.Further, the question of whether Delirium is ultimately liable for Smith’s
alleged conduct is not the proper inquiry in our review of the trial court’s denial of
Delirium’s motion to compel arbitration. We are concerned with the arbitrability of
Dang’s claims, not their merits. See AT&T Techs., Inc. v. Commc’ns Workers of Am.,
475 U.S. 643, 649 (1986) (“[I]n deciding whether the parties have agreed to submit
a particular grievance to arbitration, a court is not to rule on the potential merits of
the underlying claims.”); Primerica Life Ins. Co. v. Brown, 304 F.3d 469, 471 (5th
Cir. 2002) (“When conducting this two-pronged [arbitrability] analysis, courts must
not consider the merits of the underlying action”). As a result, beyond addressing
whether Dang has sufficiently invoked the EFAA, we do not consider Delirium’s
arguments relating to Dang’s failure to state a claim against Delirium.9
Worth 2013, no pet.); Sanchez v. Southampton Civic Club, Inc., 367 S.W.3d 429,
435 (Tex. App.—Houston [14th Dist.] 2012, no pet.).
9
For example, Delirium contends that Dang only makes “[g]lobal allegations . . .
against multiple defendants” and “fail[ed] to allege specific acts of misconduct by
Delirium.” These questions are beyond the scope of our analysis.
17
Having determined that Dang’s claims against Delirium are exempted from
arbitration by the EFAA, we overrule Delirium’s first issue.10
Election of Arbitration
In its second and third issues, Delirium contends that the trial court erred in
denying its motion to compel arbitration because Dang made an election to pursue
certain claims in arbitration. As outlined above, after filing her lawsuit against
Smith, Kinetic, and Delirium, Dang made a demand in arbitration for unpaid wages
from Delirium and Kinetic pursuant to the FLSA. Delirium argues that regardless of
the EFAA’s application to Dang’s claims, she is estopped from or has waived her
right to contest arbitration of the instant suit because she has initiated a separate
arbitration proceeding against Delirium.
A. Dang’s Lawsuit Predated her Arbitration Demand
As a threshold matter, we reject any effort by Delirium to reframe the timeline
of events as it pertains to Dang’s filing of her lawsuit and demand for arbitration.
Dang first filed suit alleging tort claims against Smith, Delirium, and Kinetic.
Months later, she made a demand in arbitration against Delirium and Kinetic for
unpaid wages and overtime. Thus, she did not make any “election” to pursue
10
Delirium argued to the trial court that even if the EFAA applied to Dang’s civil
assault claims, the negligence and false imprisonment claims were nevertheless
subject to being compelled to arbitration. Delirium appears to have abandoned this
argument on appeal.
18
arbitration prior to the filing of her lawsuit. Rather, as the EFAA permits, Dang
elected to seek resolution of her tort claims relating to the sexual assault dispute in
litigation. See 9 U.S.C. § 402(a) (stating that predispute arbitration agreements are
not valid or enforceable with respect to lawsuits relating to sexual assault disputes
“at the election of the person alleging conduct constituting . . . a sexual assault
dispute”). Only after those tort claims were pending in litigation did Dang initiate a
separate arbitration proceeding concerning her federal law wage claims.
B. Dang’s Wage Claims are Unrelated to her Tort Claims
The case of Mera v. SA Hospitality Group, LLC, cited by Delirium, actually
supports separation of Dang’s wage claims from her tort claims, contrary to
Delirium’s arguments. See 675 F. Supp. 3d 442 (S.D.N.Y. 2023). In that case, an
employee filed suit against his former employer, asserting FLSA wage claims and
violations of New York state labor and human rights laws arising from allegedly
unpaid wages and a hostile work environment created by sexual orientation
discrimination. Id. at 444. The employer moved to compel the entire case to
arbitration pursuant to an agreement between the parties. Id.After determining that the employee had pleaded a sexual harassment dispute
within the scope of the EFAA, the district court then concluded that the parties’
arbitration agreement was unenforceable only as applied to the employee’s claims
made pursuant to New York state human rights laws. Id. at 446–48. The court found
19
that because the employee’s “wage and hour claims under the FLSA and the [New
York Labor Law] [did] not relate in any way to the sexual harassment dispute, they
must be arbitrated, as the [parties’ agreement] requires.” Id. at 448. However, the
Mera court ruled that the employee was not required to arbitrate his state law human
rights claims, because those did relate to the sexual harassment dispute. Id.; see also
KPMG LLP v. Cocchi, 565 U.S. 18, 22 (2011) (per curiam) (determining that “when
a complaint contains both arbitrable and nonarbitrable claims, the [FAA] requires
courts to compel arbitration of pendent arbitrable claims when one of the parties files
a motion to compel, even where the result would be the possibly inefficient
maintenance of separate proceedings in different forums” (internal quotations
omitted)); Sabatelli v. Baylor Scott & White Health, 832 Fed. Appx. 843, 847 (5th
Cir. 2020) (noting that “when some claims are arbitrable and others are not, it is not
unusual to have separate litigation before an arbitrator and a judge”). The Mera court
then stayed proceedings as to the FLSA and state labor law claims only—it did not
stay the claims related to the sexual harassment dispute. Mera, 675 F. Supp. 3d at
448.
C. Other Cases Cited by Delirium are Distinguishable
Delirium cites two other cases to support its argument that Dang must arbitrate
her tort claims because she elected to arbitrate her wage claims. Both cases are
factually distinguishable. For example, the case of Nghiem v. NEC Electronic, Inc.,
20
25 F.3d 1437 (9th Cir. 1994) concerned an employee who first initiated arbitration
against his former employer, and while arbitration was pending, filed a lawsuit in
state court on “substantially the same issues.” Id. at 1439. Ultimately, the arbitrator
rendered a decision in favor of the employer. Id. The trial court granted the
employer’s motion to confirm the arbitration award and dismissed the employee’s
suit in its entirety. Id. On appeal, the Ninth Circuit Court of Appeals affirmed, noting
that “[o]nce a claimant submits to the authority of the arbitrator and pursues
arbitration, he cannot suddenly change his mind and assert lack of authority [of the
arbitrator].” Id. at 1440. Relying on United States Supreme Court precedent, the
court determined that the employee’s election of arbitration amounted to a waiver of
any objection he had to arbitration. Id.Similarly, in Mays v. Lanier Worldwide, Inc., an Alabama federal district
court held that the plaintiff had waived any right to object to the jurisdiction of the
arbitrator where he previously “voluntarily initiated binding arbitration” and
“active[ly] participat[ed] in the full arbitration proceedings.” 115 F. Supp. 2d 1330,
1342 (M.D. Ala. 2000).
Both of these cases relied upon by Delirium are factually distinguishable from
the present case because, here, Dang did not file suit after obtaining an unfavorable
result in arbitration. Unlike the plaintiffs in both Nghiem and Mays, Dang first filed
suit in state court concerning her tort claims, and then initiated arbitration against
21
Delirium for her federal wage claims. These are two distinct proceedings concerning
different claims, although both are brought against Delirium.
We disagree with Delirium’s contention that “the key issues in both
proceedings revolve around the allegation that [Dang] was falsely imprisoned as a
result of her alleged employment.” Although Dang does allege certain identical facts
in both proceedings, the “key issue” in Dang’s lawsuit is the alleged sexual assault,11
while the focus of her arbitration demand is Delirium’s alleged failure to adequately
compensate her for her time spent on call during the filming and production of Love
is Blind. Dang’s arbitration demand does not mention Smith or the assault. Because
these are separate and distinct proceedings, with different factual allegations and
claims, the trial court correctly denied Delirium’s motion to compel Dang’s tort
claims to arbitration with her federal wage claims. See, e.g., KPMG, 565 U.S. at 22
(contemplating “separate proceedings in different forums” if not all of plaintiff’s
claims are subject to arbitration); Mera, 675 F. Supp. 3d at 448 (ordering arbitration
of wage claims but denying motion to compel arbitration of sexual harassment
claims, pursuant to EFAA).
We overrule Delirium’s second and third issues.
11
As Delirium acknowledges elsewhere in its briefing, Dang argued in response to
Delirium’s motion to compel arbitration that “each and every claim alleged in this
lawsuit is predicated on allegations that a sexual assault occurred while [Dang] was
working for [Kinetic and Delirium] and while they were orchestrating the situation
that enabled the assault.”
22
Stay of Proceedings
Lastly, Delirium argues that the trial court erred in denying its motion to stay
the litigation proceedings pending the outcome of the FLSA arbitration. We review
a trial court’s order on a motion to stay arbitration for an abuse of discretion.
Prestonwood Tradition, LP v. Jennings, 653 S.W.3d 436, 441 (Tex. App.—Dallas
2022, no pet.) (citing Henry, 551 S.W.3d at 115).
A. No Mandatory Stay
Delirium first contends that, pursuant to Section 3 of the FAA, a stay of
Dang’s lawsuit was mandatory. Section 3 provides as follows:
If any suit or proceeding be brought in any of the courts of the United
States upon any issue referable to arbitration under an agreement in
writing for such arbitration, the court in which such suit is pending,
upon being satisfied that the issue involved in such suit or proceeding
is referable to arbitration under such an agreement, shall on application
of one of the parties stay the trial of the action until such arbitration has
been had in accordance with the terms of the agreement, providing the
applicant for the stay is not in default in proceeding with such
arbitration.
9 U.S.C. § 3; see also In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 195 (Tex.
2007) (orig. proceeding) (noting that FAA “require[s] courts to stay litigation of
issues that are subject to arbitration”) (emphasis added). We have already
determined that the claims presented in Dang’s lawsuit are not subject to arbitration,
given the applicability of the EFAA. Further, it does not appear, at least at this early
stage in the litigation, that the state law tort claims at issue in this litigation and the
23
federal wage claims pending in arbitration are so closely related that proceeding with
the lawsuit would be detrimental to the arbitration.12 The Mera case is again
instructive here. After determining that the EFAA only rendered the arbitration
agreement unenforceable as to the claims made pursuant to New York state human
rights laws, it ordered a stay of the litigation as to the wage-and-hour claims only,
which were being compelled to arbitration—it did not stay the claims relating to the
sexual harassment dispute. 675 F. Supp. 3d at 448.
Delirium attempts to distinguish Mera, arguing that the court there did not
stay the human rights law claims because “those claims were entirely unrelated” to
the plaintiff’s wage dispute. Delirium contends that unlike the claims in Mera,
Dang’s claims have “overlapp[ing] factual contentions” and similarly concern
“issues such as her alleged working conditions, employment status and false
imprisonment.” Dang’s arbitrable and nonarbitrable claims may be more closely
related than those in Mera, particularly with respect to her false imprisonment and
negligence claims. Questions concerning Dang’s employment status may arise in
12
See AgGrow Oils, L.L.C. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 242 F.3d 777,
783 (8th Cir. 2001) (remanding case to trial court for consideration of discretionary
stay, noting that issues such as “the risk of inconsistent rulings, the extent to which
parties will be bound by the arbitrators’ decision, and the prejudice that may result
from delays” are “properly committed in the first instance to the [trial] court’s
discretion” and must be weighed in determining whether to order stay and
parameters of such stay); Courtland Bldg. Co. v. Jalal Fam. P’ship, Ltd, 403 S.W.3d
265, 276 (Tex. App.—Houston [14th Dist.] 2012, no pet.) (remanding case to trial
court for consideration of whether litigation of claims not ordered to arbitration
should be stayed).
24
both the wage-and-hour arbitration and the trial court’s resolution of the false
imprisonment or negligence claims. But the crux of Dang’s lawsuit concerns the
assault allegedly perpetrated by Smith, and whether the environment created by
Delirium and Kinetic allowed that assault to happen. And whether Delirium or
Kinetic owed some duty to Dang to protect her from Smith turns on Smith’s
relationship with the corporate defendants, not Dang’s, at least with respect to her
vicarious liability claims. See F.F.P. Operating Partners, L.P. v. Duenez, 237
S.W.3d 680, 686 (Tex. 2007) (noting that “[g]enerally in Texas, the doctrine of
vicarious liability, or respondeat superior, makes a principal liable for the conduct
of his employee or agent”); Vecellio Ins. Agency, Inc. v. Vanguard Underwriters Ins.
Co., 127 S.W.3d 134, 138 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (stating
that “[v]icarious liability is liability placed upon one party for the conduct of another,
based solely upon the relationship between the two”).
This is not a situation where “litigation must be abated to ensure that an issue
two parties have agreed to arbitrate is not decided instead in collateral litigation.”
See In re Merrill Lynch Trust Co. FSB, 235 S.W.3d at 195–96 (granting mandamus
in response to trial court’s failure to stay litigation between plaintiff and Merrill
Lynch affiliate entities while arbitration between plaintiff and Merrill Lynch
proceeded; the court assumed for purposes of its decision that same issues were to
be decided in both proceedings). Rather, in this case, Dang agreed to arbitrate her
25
wage dispute, but she did not assert any wage-related claims in her lawsuit. See
Courtland Bldg. Co. v. Jalal Fam. P’ship, Ltd., 403 S.W.3d 265, 276 (Tex. App.—
Houston [14th Dist.] 2012, no pet.) (“To determine whether litigation of the
[nonarbitrable] claims should be stayed, it is necessary to know whether litigation of
those claims would undermine issues to be resolved in arbitration, or whether the
arbitration would resolve matters that are material to the litigation of those issues.”).
B. Dang’s Interest in Litigating Her Claims
We must also consider Congress’s intentional carve-out of sexual assault
disputes from arbitration through the EFAA in assessing whether Dang’s lawsuit
asserting such a claim should be stayed pending resolution of a separate arbitration
proceeding. Though it does not appear that any court has addressed this exact issue,13
13
The case of In re Merrill Lynch & Co., Inc., 315 S.W.3d 888 (Tex. 2010) (orig.
proceeding) (per curiam), though similar, is distinguishable. There, the Texas
Supreme Court addressed the trial court’s discretion to stay one MetroPCS
subsidiary’s (Communications) litigated claims against Merrill Lynch while
compelling arbitration of identical claims against Merrill Lynch brought by a
different subsidiary (Wireless). Id. at 889. Communications’s agreement with
Merrill Lynch did not contain an arbitration clause, but Wireless’s agreement did.
Id. at 889–90. The court held that Communications’s claims should be stayed
because failure to do so “would create duplicative litigation” and “could moot the
contemplated arbitration between Wireless and Merrill Lynch, destroying [Merrill
Lynch]’s bargained-for rights.” Id. at 890–92.
We acknowledge the court’s holding in In re Merrill Lynch & Co. but determine it
is distinguishable from the present case for at least one important reason: the
litigation and arbitration in that case admittedly concerned “identical claims with
virtually identical facts.” Id. at 889. Although the claims here may involve some
related questions, they are not identical.
26
a Texas federal district court considered an analogous question in Vuoncino v.
Forterra, Inc., No. 21-cv-01046-K, 2022 WL 868274 (N.D. Tex. Feb. 28, 2022).
Vuoncino concerned claims brought by a former employee for breach of contract,
wrongful discharge, violations of a Florida whistleblower statute, and the
whistleblower provision of the Sarbanes-Oxley Act (SOX). Id. at *2. The defendants
moved to compel arbitration of all the employee’s claims but his SOX claim,
acknowledging that arbitration of that claim was prevented by the statute. Id.; see
also 18 U.S.C. § 1514A(e)(2) (exempting all SOX whistleblower claims from
“predispute arbitration agreement[s]”). After determining that the state law claims
were subject to arbitration, the court ruled that those claims must be stayed, pursuant
to the mandatory stay provisions of section 3 of the FAA. See Vuoncino, 2022 WL
868274, at *6; 9 U.S.C. § 3. However, the court did not order a stay as to the
remaining, nonarbitrable SOX claim. Vuoncino, 2022 WL 868274, at *8.
First, the court considered cases within the Fifth Circuit that applied the test
for a discretionary stay in non-signatory arbitration cases in different factual
contexts.14 Id. at *6. For example, the Vuoncino court noted that some federal district
14
Texas courts employ a similar test. See, e.g., In re Devon Energy Corp., 332 S.W.3d
543, 548 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (orig. proceeding) (stating
that “a non-signatory party’s claims may be subject to the mandatory stay [outlined
in section 3 of the FAA] if the issues presented in the nonparty-party litigation if
litigated would have rendered the arbitration redundant and thwarted the federal
policy favoring arbitration”) (internal quotations omitted).
27
courts applied this test in cases where (as here) all defendants had an arbitration
agreement with the plaintiff,15 but some of the plaintiff’s claims were nonarbitrable
for procedural or policy reasons. Id. at *7 (citing Kindred Hosps. Ltd. P’ship v. Cigna
Health & Life Ins. Co., No. 17-CV-866-A, 2018 WL 10561987, at *1 (N.D. Tex.
May 8, 2018) (staying claim that was “inherently inseparable from the claims the
court . . . determined to be arbitrable”); Jones v. Halliburton Co., 625 F. Supp. 2d
339, 356 (S.D. Tex. 2008), aff’d and remanded, 583 F.3d 228 (5th Cir. 2009) (“In
this case, the claims to be arbitrated and those to be litigated involve many of the
same operative facts, and allowing the litigation of the nonarbitrable claims to
proceed could have a significant impact on the arbitration. The Court therefore
reluctantly concludes that it should stay litigation of Plaintiff's nonarbitrable claims
during the pendency of the parties’ arbitration.”)).
However, the Vuoncino court concluded that this test did not necessarily
support a stay of the plaintiff’s SOX claim. Id. For example, the court pointed out
that while some of the plaintiff’s claims shared a “nucleus of operative facts” with
the SOX claim, another claim had “no significant factual overlap” and was “easily
separable” from the SOX claim. Id.15
Of course, Smith did not have an arbitration agreement with Dang, but he is not a
party to this appeal.
28
After reviewing district court decisions from courts outside the Fifth Circuit
considering the same question, some denying a stay of SOX claims and others
granting one, the court identified “two competing interests”: “the interest of a SOX
plaintiff to have immediate access to a federal forum” as guaranteed by the statute;
and “the interest of an arbitrating party in its right to a meaningful arbitration, as
expressed by the Fifth Circuit and embodied in the FAA.” Id. at *7–8 (internal
quotations omitted). Ultimately, the court concluded that the plaintiff’s “interest in
having a direct path to a federal forum for his SOX claim outweigh[ed] Defendants’
interest in enforcing its contractual right to arbitrate [the plaintiff’s] other claims.”
Id. at *8.
The court emphasized SOX’s “explicit carve-out of predispute arbitration
agreements,” which “evinced a clear intention to preclude a waiver of judicial
remedies for the statutory rights at issue.” Id. (internal quotations omitted).
Ultimately, the court concluded that a stay of the SOX claim would disregard this
express congressional intention.16 Id.16
In so holding, the Vuoncino court noted that although the defendants’ contractual
rights to arbitration were somewhat diminished by its decision, they were at least
assured that their arbitrable claims would proceed to arbitration. Id. The court also
pointed out that the defendants could still avail themselves of the opportunity to
have a court resolve legal issues related to the SOX claim, such as any arguments
that the claim failed as a matter of law. Id.29
The Vuoncino court’s reasoning applies to Congress’s enactment of the EFAA
and express carve-out of sexual assault disputes from arbitration. See 9 U.S.C. § 401.
The stated purpose of the EFAA is to “empower sexual harassment [and sexual
assault] claimants to pursue their claims in a judicial, rather than arbitral, forum.”
Yost, 657 F. Supp. 3d at 586 (citing H.R. Rep. No. 117-234, at 3–4 (2022)). We
therefore hold that the trial court’s denial of Delirium’s motion to stay was not an
abuse of its discretion, given this important consideration. See Prestonwood
Tradition, 653 S.W.3d at 441; see also In re Merrill Lynch Trust Co. FSB, 235
S.W.3d at 195 (noting trial court’s “wide discretion” to say when party’s “day in
court” will be). We overrule Delirium’s fourth and fifth issues.17
Conclusion
Having overruled each of Delirium’s issues, we affirm the trial court’s order
denying Delirium’s motion to compel arbitration and motion to stay.
Amparo Monique Guerra
Justice
Panel consists of Justices Kelly, Hightower, and Guerra.
17
Our resolution of this issue does not prevent the trial court from revisiting the issue
of a stay later in the litigation proceedings, should it determine in its discretion that
one is warranted. See Metro. Life Ins. Co. v. Lindsay, 920 S.W.2d 720, 726 & n.7
(Tex. App.—Houston [1st Dist.] 1996, no writ) (reversing denial of motion to
compel arbitration pursuant to FAA and stating that although record did not support
appellant’s contention that trial court also abused discretion by refusing
to stay litigation among non-arbitrating parties pending outcome of arbitration,
nothing in opinion prohibited trial court from reconsidering stay on remand).
30