Fifth Circuit Overturns Arbitration Order Where Employer Failed to Countersign Agreement

The United States Court of Appeals for the Fifth Circuit has reversed a Texas federal court’s order compelling arbitration in a sexual harassment and discrimination case because one party failed to sign an agreement to arbitrate.  In Huckaba v. Ref-Chem, L.P., No. 17-50341 (5th Cir. June 11, 2018), a woman, Huckaba, signed an arbitration agreement that waived her right to sue Ref-Chem L.P. prior to beginning employment with the company.  The agreement included a signature box for Ref-Chem and also required that the company reciprocate by giving up its right to sue Huckaba.  After the woman signed the contract, however, Ref-Chem failed to have an officer of the company countersign the document.  The partially signed agreement was then stored in Huckaba’s personnel file.

Later, the woman filed a sexual harassment, discrimination, and retaliation lawsuit against Ref-Chem in Texas.  Ref-Chem responded to the woman’s complaint by filing a motion to compel the dispute to arbitration.  After determining Huckaba’s continued employment demonstrated acceptance of the parties’ agreement to arbitrate, the district court granted Ref-Chem’s motion.  Huckaba then filed an appeal with the nation’s Fifth Circuit.

On appeal, the court stated:

The arbitration agreement at issue here contains: (1) a statement that “[b]y signing this agreement the parties are giving up any right they may have to sue each other;” (2) a clause prohibiting modifications unless they are “in writing and signed by all parties;” and (3) a signature block for the employer, Ref-Chem. This express language clearly indicates an intent for the parties to be bound to the arbitration agreement by signing. The agreement also identifies the parties in the first line as “[t]he organization referred to above (‘Employer’) and the Employee, whose signature is affixed hereto.” This clause makes clear the parties’ intention that Huckaba would sign the agreement. It does not negate the other references to all parties signing.2 Ref-Chem is right when it notes that Texas courts have held that a signature block by itself is insufficient to establish the parties’ intent to require signatures. See, e.g., Tricon Energy, 718 F.3d at 455; Firstlight Fed. Credit Union v. Loya, 478 S.W.3d 157, 168 (Tex. App.—El Paso 2015, no pet.). But in this case, we have more than a blank signature block that speaks to the parties’ intent. The agreement also contains language that the parties needed to sign the agreement to give it effect or to modify it. Thus, the question of Ref-Chem’s intention is answered by the agreement it drafted.

Next, the appellate court said the case before it was similar to In re Bunzl USA, Inc., 155 S.W.3d 202 (Tex. App.—El Paso 2004, orig. proceeding [mand. denied]).  According to the Fifth Circuit:

The court in Bunzl held that the trial court did not abuse its discretion in denying an employer’s motion to compel arbitration where the employer failed to sign the arbitration agreement and show that the parties intended to be bound without the employer’s signature. 155 S.W.3d at 210–12. The employer submitted an affidavit to the court stating that the agreement was kept in the employee’s file and had in fact been reviewed before the employee’s termination. See id. at 206. While the court considered this to be some indication that the employer considered itself bound without signing, the trial court’s decision to deny the motion to compel arbitration was affirmed in light of a signature block for the employer that was left blank and a clause in the agreement barring amendments without a writing signed by both parties, both of which are present here. Id. at 211.

The court then dismissed Ref-Chem’s attempts to distinguish Bunzl from the instant case before adding:

Ref-Chem also points to other factors to demonstrate its intent to be bound without signing, such as the fact that it created the arbitration agreement, kept the agreement as a business record, and moved to compel arbitration when Huckaba sued.3 Even if we were to consider this evidence, our conclusion would remain the same. Considering the record as a whole, this evidence does not satisfy Ref-Chem’s burden that it intended to be bound without signing the agreement. Indeed, if it were, then Ref-Chem could have it both ways—argue that it did not intend to be bound because it did not sign the agreement or it did because it kept the agreement and sought to compel arbitration. We give meaning to the words Ref-Chem used in its agreement.

Finally, the U.S. Court of Appeals for the Fifth Circuit concluded “there is not a valid agreement to arbitrate in this case,” reversed the district court’s order compelling the dispute to arbitration, and remanded the lawsuit back to the district court.

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