Motion-Secondary: LEN ACKIN, et al vs. POLY-AMERICA INTERNATIONAL INC., et al

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Preview
                                FILED
                                                                                                          4/11/2023 6:52 PM
                                                                                                             FELICIA PITRE
                                                                                                          DISTRICT CLERK
                                                                                                        DALLAS CO., TEXAS
                                                                                                        Debra Clark DEPUTY


                                      CAUSE NO. DC-22-08610

LEN ACKIN, INDIVIDUALLY, ET                           §                  IN THE DISTRICT COURT
AL.;                                                  §
PLAINTIFFS,                                           §
                                                      §
v.                                                    §                  191st JUDICIAL DISTRICT
                                                      §
POLY-AMERICA INTERNATIONAL                            §
INC.; POLY-AMERICA, INC; POLY-                        §
AMERICA GP, LLC; POLY-AMERICA                         §
LP; ONCOR ELECTRIC DELIVERY                           §
COMPANY, LLC; AND MARS                                §
PARTNERS, LTD;                                        §
DEFENDANTS.                                           §                  DALLAS COUNTY, TEXAS


     PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA
           TECHNOLOGIES, INC.’S MOTION TO COMPEL ARBITRATION


TO THE HONORABLE JUDGE OF SAID COURT:

        COMES NOW, Len Ackin, Individually, et al., Plaintiffs, (hereinafter “Plaintiffs”) who

files this First AmendedResponse to Defendant Poly America Technologies, Inc.’s (hereinafter,

“Poly America” or “Defendant”) Motion to Compel Arbitration. Defendant’s Motion fails on its

face. In support of this Response, Plaintiff would respectfully show the Court as follows:

                          I.    INTRODUCTION AND BACKGROUND

        On July 29, 2023, Plaintiffs filed this suit against POLY-AMERICA INTERNATIONAL

INC.; POLY-AMERICA, INC; POLY-AMERICA GP, LLC; POLY-AMERICA LP; AND

MARS PARTNERS, LTD (“Poly America”). Plaintiff filed their First Amended Petition on

August 18, 2022, which added ONCOR ELECTRIC DELIVERY COMPANY, LLC (“Oncor”). There

are 133 named Plaintiffs in this lawsuit, including Plaintiff Rafael Howard, who is a former employee of

Poly America. This lawsuit arises out of a fire caused by Defendants that have harmed Plaintiffs. It is not

a worker’s compensation case and does not involve any workplace injuries. Poly America has filed to

PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 1 OF 12
move Plaintiff Rafael Howard (“Plaintiff Howard”) in arbitration under the arbitration clause he signed

while in the employment of Poly America.


                                   II.   STANDARD OF REVIEW

        Texas appellate courts review an order denying a motion to compel arbitration under an

abuse of discretion standard. Redi-Mix, LLC v. Martinez, No. 05-17-01347-CV, 2018 Tex. App.

LEXIS 5683, at *4 (Tex. App.—Dallas July 25, 2018). Whether an arbitration agreement exists

or is enforceable is subject to de novo review. Id., citing In re Labatt Food Serv., L.P., 279

S.W.3d 640, 643 (Tex. 2009) (orig. proceeding). A trial court’s decision will be reversed if found

to have “acted in an unreasonable or arbitrary manner, meaning that it acted without reference to

any guiding rules and principles.” Id. If a Court compels arbitration on legally insufficient

evidence, the Court has acted without reference to guiding rules and principles. Evidence is

legally insufficient if the record reveals: (a) the complete absence of a vital fact; (b) the court is

barred by rules of law or of evidence from giving weight to the only evidence offered to prove a

vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; or (d) the

evidence establishes conclusively the opposite of the vital fact. Daspit Law Firm, PLLC v.

Herman, No. 05-19-00615-CV, 2020 Tex. App. LEXIS 6847, at *10 (Tex. App.—Dallas Aug.

25, 2020).

                  III. BURDEN - MOTION TO COMPEL ARBITRATION

        Texas Civil Practice and Remedies Code §171.021 governs a proceeding to compel

arbitration. It states verbatim:

                 (a) A court shall order the parties to arbitrate on application of a party showing:
                        (1) an agreement to arbitrate; and
                        (2) the opposing party's refusal to arbitrate.
                 (b) If a party opposing an application made under Subsection (a) denies the
                 existence of the agreement, the court shall summarily determine that issue. The
                 court shall order the arbitration if it finds for the party that made the application.
PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 2 OF 12
                 If the court does not find for that party, the court shall deny the application.
                 (c) An order compelling arbitration must include a stay of any proceeding
                 subject to Section 171.025.

Tex. C. Prac. Rem. C. § 174.021.

         As the party seeking arbitration. Defendant Poly America is required to establish the

existence of a valid arbitration agreement. In re Kellogg Brown & Root, Inc., 166 S.W.3d 732,

737 (Tex. 2005). Poly America must also establish that the claims at issue fall within the scope

of the agreement to arbitrate. Id. The opposing party must show no arbitration agreement exists,

that the claims do not fall within the arbitration provision, or that the arbitration agreement is

unconscionable or otherwise unenforceable. Id.

                           IV. ARGUMENTS AND AUTHORITIES

         a.     The Question Of Arbitrability Is For The Court To Decide, And May Not Be
                Delegated To An Arbitrator

         Poly America asserts that the arbitration agreement delegates the threshold question of

arbitrability to the arbitrator by blanketly giving the arbitrator “exclusive authority to resolve any

disputes relating to the interpretation, applicability, enforceability, or formation of th[e]

Arbitration Agreement, including any claim that all or part of th[e] Arbitration Agreement is

void or voidable.” Exhibit A, Defendant’s Motion to Compel, P. 2-3. This language does not

mandate delegation of the arbitrability question.

    10   The “FAA does not confer a right to compel arbitration of any dispute at any time.” In re

Olshan Found. Repair Co., LLC, 328 S.W.3d 883, 888 (Tex. 2010). The Federal Arbitration Act

(“FAA”) provides that:

       A written provision in any . . . contract evidencing a transaction involving commerce to
       settle by arbitration a controversy thereafter arising out of such contract or transaction. . .
       shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or
       in equity for the revocation of any contract.
9 U.S.C. § 2. Emphasis added.

PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 3 OF 12
10   When the FAA controls, an agreement to arbitrate is not valid if “grounds . . . exist at law or in

equity to revoke the contract.” In re Morgan Stanley & Co., 293 S.W.3d 182, 184 (Tex. 2009).

“Arbitration under the [FAA] is a matter of consent, not coercion,” and it is well settled that the

“FAA does not require parties to arbitrate when they have not agreed to do so.” Volt Info. Seis.,

Inc, v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468, 478 (1989).

          “A party seeking to compel arbitration must establish the existence of a valid arbitration

agreement and that the claims at issue fall within the scope of that agreement.” Henry v. Cash

Biz, LP, 551 S.W.3d 111,115 (Tex. 2018). The threshold inquiry into whether a dispute is subject

to arbitration is twofold—first, whether a valid arbitration agreement exists, and second, whether

the dispute in question is covered by the arbitration agreement. Archer & White Sales, Inc. v.

Henry Schein, Inc., 878 F.3d 488 (5th Cir. 2017). In its Motion to Compel Arbitration, Defendant

conflates these two overarching questions and would have this Court believe that all issues

governing arbitrability are for the arbitrator to decide rather than a court.

          Arbitration agreements are “enforceable only if they meet ‘the requirements of the

general contract law of the applicable state.” In re Olshan Found. Repair Co., LLC, 328 S.W.3d

883, 891-92 (Tex. 2010), quoting In re Poly-America, L.P., 262 S.W.3d 337, 347 (Tex. 2008)

(citation omitted). This rule applies to FAA arbitration agreements. In re Kellogg Brown & Root,

Inc., 166 S.W.3d 732, 738 (Tex. 2005) (“Under the FAA, ordinary principles of state contract

law determine whether there is a valid agreement to arbitrate.”) Thus, the first issue—whether

the parties entered into any arbitration agreement at all—is “one of pure contract formation, and

it looks only at whether the parties ‘form[ed] a valid agreement to arbitrate some set of claims.

Archer & White Sales, Inc. v. Henry Schein, Inc., 878 F.3d 488, 492 (5th Cir. 2017), quoting IQ

Prods. Co. v. WD-40 Co., 871 F.3d 344, 348 (5th Cir. 2017). This issue is for the court to decide,


PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 4 OF 12
and the court must determine if the “parties form[ed] a valid agreement to arbitrate some set of

claims.” IQ Prods. Co. V. WD-40 Co., 871 F.3d 344, 348 (5th Cir. 2017).

       Notably, the presumption favoring arbitration does not apply when a court is examining

the threshold question of whether an arbitration agreement exists. In re Morgan Stanley & Co.,

Inc., 293 S.W.3d 182, 185 (Tex. 2009). This presumption arises only after the party seeking to

compel arbitration proves that a valid arbitration agreement exists. Id. As the party seeking

arbitration, Poly America is required to establish the existence of a valid arbitration agreement.

In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737 (Tex. 2005).

       b.        Defendant Has Failed To Show A Valid Agreement To Arbitrate

        The arbitration agreement is unenforceable because it lacks consideration and is illusory

as Poly America retains the right to amend the agreement and therefore is not mutually bound.

Under Texas law, parties enter into a binding contract when the following elements exist:

             (1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (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 mutual and binding.
Labor Ready Cent. Ill, L.P. v. Gonzalez, 64 S.W.3d 519, 522 (Tex. App.—Corpus Christi 2001).

       “Consideration is a fundamental element of any valid contract.” Id. “A contract that lacks

consideration lacks mutuality of obligation.” Id., citing See Federal Sign v. Tex. State Univ., 951

S.W.2d401, 408-09 (Tex. 1997).

        In the context of arbitration agreements, “binding promises are required on both sides as

they are the only consideration rendered to create a contract.” In re 24R, Inc., 324 S.W.3d 564,

567 (Tex. 2010). “A promise is illusory if it does not bind the promisor, such as when the

promisor retains the option to discontinue performance.” Id. “When illusory promises are all that

support a purported bilateral contract, there is no mutuality of obligation, and therefore, no

contract.” Id.

PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 5 OF 12
        Texas courts typically find that agreements to arbitrate are enforceable and consideration

is sufficient where both parties agree to arbitrate their claims. See In re 24R, Inc., et al., 324

S.W.3d 564 (Tex. 2010) (the Texas Supreme Court found that where the parties both promised to

arbitrate claims against the other and where those promises could not unilaterally be rescinded by

either party, there was sufficient consideration to support the arbitration agreement.); See also In

re Poly America, LLC, 296 S.W.3d 74, 76 (Tex. 2009); In re Dillard Pep’t Stores, Inc., 186

S.W.3d 514, 516 (Tex. 2006). However, arbitration agreements are generally not enforceable

where one party does not actually obligate itself to arbitrate. For example, in Labor Ready

Central III, L.P. v. Gonzalez, 64 S.W.3d 519 522-23 (Tex. App. - Corpus Christi 2001, orig.

proceeding), the Corpus Christi court of appeals found that there was no mutuality of obligation

and consideration where an arbitration agreement required employees to submit their claims to

arbitration, but by its language did not require the same of the employer.

        Despite the agreement stating that it was binding on both parties, the Court found that

the terms of the agreement functioned to limit the arbitration requirement to claims made by

employees. The Court held that the employer “gave no consideration for the purported arbitration

agreement. Because there [was] no mutuality of obligation, no enforceable arbitration agreement

exist[ed].” Id. at 524.

        Similarly, “[u]nder Texas law, an arbitration clause is illusory if one party can ‘avoid its

promise to arbitrate by amending the provision or terminating it all together.” Carey v. 24 Hour

Fitness, USA, Inc., 669 F.3d 202, 205 (5th Cir. 2012), quoting In re 24R, Inc., 324 S.W.3d 564,

567 (2010). In Nelson v. Watch House Int'l, L.L.C., 815 F.3d 190 (5th Cir. 2016), the Fifth

Circuit found that where one party retained the power to unilaterally modify or terminate the

purported agreement, without prior notice to the other party, the agreement was based upon an


PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 6 OF 12
illusory promise and thus not enforceable. However, “notice and acceptance are not sufficient to

render an arbitration provision [subject to unilateral modification] non-illusory.” Id. at 208.

       The Fifth Circuit, applying Texas law, has refused to enforce arbitration agreements that

were capable of being retroactively modified. See Morrison v. Amway Corp., 517 F.3d 248 (5th

Cir. 2008); 24 Hour Fitness, 669 F.3d 202. When an arbitration agreement is subject to unilateral

modification, in addition to requiring notice and acceptance of modifications, the arbitration

agreement must also specify that modifications do not apply retroactively. 24 Hour Fitness, 669

F.3d at 208, citing Weekley Homes, L.P. v. Rao, 336 S.W.3d 413, 421 (Tex. App.—Dallas 2011).

In Weekley Homes, LP v. Rao, the Dallas Court of Appeals held that an arbitration agreement

subject to unilateral modification was illusory despite the Court finding evidence of notice and

acceptance, where the agreement did not state that any modifications would only apply

prospectively. 336 S.W.3d at 421. This conclusion was adopted by the Fifth Circuit in Carey v.

24 Hour Fitness, and the Court explained that “the fundamental concern driving this line of case

law is the unfairness of a situation where two parties enter into an agreement that ostensibly

binds them both, but where one party can escape its obligations under the agreement by

modifying it.” 669 F.3d at 209. Thus, when an arbitration agreement is subject to unilateral

modification, it will only be upheld if it guarantees prior notice and does not apply retroactively.

Henry & Sons Constr. Co. v. Campos, 510 S.W.3d 689, 694 (Tex. App.—Corpus Christi 2016).

       While Defendant has produced a broad arbitration clause, a broad arbitration clause is not

limitess. A claim only falls withing the scope of a broad arbitration clause when the claim “is so

interwoven with the contract [containing an arbitration clause] that it could not stand alone . . . ”

Loy v. Harter, 128 S.W.3d 397, 403 (Tex. App. – Texarkana 2004, pet. denied); See Ford v. NYL

Care Health Plans of Gulf Coast, Inc., 141 F.3d 243, 250 (5th Cir. 1998) (same). A claim does


PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 7 OF 12
not be arbitrated if the claim is “completely independent of the contract and could be maintained

without reference to the contract.” Id. The Fifth Circuit also has found that broad “arising out of

or relating to” language can be limited by other language in the arbitration agreement. Tittle v.

Enron Corp., 463 F.3d 410 (5th Cir. 2006).

       Here, the arbitration clause was part of Plaintiff Howard’s employment contract. The

clause was centered around Plaintiff’s employment with Defendant. This claim does not arise out

of Plaintiff Howard’s employment with Defendant. Defendant breached its duty to Plaintiff

Howard as a member of the public, not an employee. Plaintiff Howard would have been injured

even if had not been an employee of Defendant, and Plaintiff Howard’s injuries occurred even

when he was not at work. This is not a case of employment-related disputes that is clearly what

is contemplated in the arbitration agreement.

       c.      The Arbitration Agreement Is Not Valid Because There Is No Mutuality Of
               Obligation, And Any Promise To Be Bound By The Terms Of The
               Agreement To Arbitrate Is Illusory

       In the present case, Poly America’s agreement to arbitrate is not valid because there is no

mutuality of obligation, and any promise to be bound by the terms of the agreement to arbitrate is

illusory. As in Labor Ready Central III, L.P. v. Gonzalez, the terms of the arbitration agreement

effectively only require its users to arbitrate their claims, not Poly America. Although Poly

America purports to bind itself to arbitration by including certain language in the agreement, the

effect of the terms is to only bind users to arbitrate any claim they may have against Poly

America.

       Poly America purports to bind itself to arbitration by including the following language in

its Terms of Use, but only specifies claims the employee is making against the Company; it does

bind the Company to claims it has against the employee. Ex. A, P. 9


PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 8 OF 12
       Therefore, there is no mutuality of obligation because the terms operate to effectively

only bind the users, not Poly America, to arbitration.

       d.      Even if a Valid Arbitration Agreement Exists, Its Terms are Unconscionable

       “Unconscionability has no precise legal definition because it is not a concept but a

determination to be made in light of a variety of factors.” Delfingen v. Valenzuela, 407 S.W.3d 791,

798 (Tex. App.—El Paso 2013). Arbitration agreements governed by the FAA are unenforceable if

they are unconscionable. In re Olshan Found. Repair Co., LLC, 328 S.W.3d 883, 891 (Tex. 2010).

“Arbitration agreements may be either substantively or procedurally unconscionable, or both.”

Royston, Rayzor, Vickery & Williams, LLP v. Lopez, 467 S.W.3d 494, 499 (Tex. 2015). Generally, the

test is whether, “given the parties' general commercial background and the commercial needs of

the particular trade or case, the clause involved is so one-sided that it is unconscionable under the

circumstances existing when the parties made the contract.” In re First Merit Bank, N.A., 52

S.W.3d749, 757 (Tex. 2001).

       Substantive unconscionability refers to the fairness of the arbitration provision itself,

whereas procedural unconscionability refers to the contract formation process and whether the

party resisting enforcement of the contract was faced with an absence of meaningful choice.

Leblanc v. Lange, 365 S.W.3d 70, 88 (Tex. App.—Houston [1st Dist.] 2011). In assessing

unconscionability, courts examine:

                   1) the "entire atmosphere" in which the agreement was made;
                   2) the alternatives, if any, available to the parties at the time the contract was
                      made;
                   3) the "non-bargaining ability" of one party;
                   4) whether the contract was illegal or against public policy; and
                   5) whether the contract is oppressive or unreasonable?

Delfingen, 407 S.W.3d at 798. (“The totality of the circumstances must be assessed as of the time

the contract was formed.”)

PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 9 OF 12
       Here, the arbitration provision is unconscionable because Plaintiff Howard is bound for

the tortious conduct of his former employer that had nothing to do with the scope of his

employment. This arbitration agreement was made as a condition of Plaintiff Howard’s

employment, and there were no alternatives. Therefore, Plaintiff essentially had no bargaining

power in accepting the new terms. It is also unreasonable for an agreement that was concerned

solely with an employee/employer relationship to bind one party for conduct done outside that

relationship and enforced after the employee had left his job.

       e.      Forced Arbitration for Only One Plaintiff is Against Justice and Efficient

Court Procedure

       Poly America has filed this Motion to Compel Arbitration against Plaintiff Howard, who

represents less than one percent of the Plaintiffs in this case. Plaintiff Howard suffered injuries

not truly contemplated by the agreement. And removing him from the case would only cause

additional costs; Poly America will have to remain in the case against the other 132 Plaintiffs.

Plaintiff Howard would also remain in the lawsuit anyways as the arbitration agreement does not

cover Oncor, who Plaintiff Howard also has claims against. Arbitration agreements exist in part

to reduce the costs of litigation. Arbitration here would only serve to increase costs, waste time,

increase work for all counsel, and otherwise go against justice.

                                       V. CONCLUSION

       Defendant Poly America’s Motion to Compel Arbitration should not be granted as it fails

to establish the existence of a valid arbitration agreement. The arbitration agreement is not valid

and thus unenforceable because it does not comply with the requirements of general contract law

of Texas. Specifically, the agreement to arbitrate is not supported by consideration or a mutuality

of obligation. Alternatively, if a valid agreement to arbitrate does exist, its terms are


PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 10 OF 12
unconscionable and as such is unenforceable, and enforcing it would go against justice. Plaintiff

Howard would remain in the lawsuit regardless as would Poly America.

                                              PRAYER

        WHEREFORE, all premises considered, Plaintiff respectfully requests that the Court

deny Defendant Poly America’s Motion to Compel Arbitration. Plaintiff seeks such other and

further relief to which it may be justly entitled.

                                               Respectfully submitted,

                                               KINDER LAW PLLC



                                               By:
                                               JENNIFER ANNE KINDER
                                               TEXAS BAR NO. 00787837
                                               Email: jkinder@justcallkinder.net

                                               By:
                                               GRIFFIN T. MCMILLIN
                                               TEXAS BAR NO. 24131500
                                               Email: gmcmillin@justcallkinder.net
                                               3701 W. Northwest Highway
                                               Building 3, Suite 304
                                               Dallas, Texas 75220
                                               Tel. (214) 812-9800
                                               Fax. (214) 484-2144
                                               ATTORNEYS FOR PLAINTIFF

                                  CERTIFICATE OF SERVICE

        I certify that a true and correct copy of the foregoing document has been forwarded to all

known counsel of record pursuant to the Texas Rules of Civil Procedure on this 31st day of

March 2023.




                                                      Jennifer Anne Kinder
PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 11 OF 12
DeHay & Elliston, L.L.P.
3500 Bank of America Plaza
901 Main Street
Dallas, TX 75202-3736
Telephone: (214) 210-2400
Fax: (214) 210-2500
GARY D. ELLISTON
Texas State Bar No. 6584700
PAMELA J. WILLIAMS
Texas State Bar No. 00791936
ATTORNEYS FOR DEFENDANTS
POLY-AMERICA INTERNATIONAL INC.,
POLY-AMERICA GP, LLC,
POLY-AMERICA LP, AND
MARS PARTNERS, LTD

John C. Stewart
Texas Bar No. 19211525
Daniel G. Altman
Texas Bar No. 00793255
Lance Travis
State Bar No. 00797568
Oncor Electric Delivery Company LLC
777 Main Street, Suite 747
P.O. Box 970
Fort Worth, Texas 76101-0970
(817) 215-5885 (telephone)
 (facsimile)
John.stewart@oncor.com
ATTORNEYS FOR DEFENDANT
ONCOR ELECTRIC DELIVERY
COMPANY LLC




PLAINTIFFS’ FIRST AMENDED RESPONSE TO DEFENDANT POLY AMERICA TECHNOLOGIES, INC.’S MOTION TO
COMPEL ARBITRATION
PAGE 12 OF 12
EXHIBIT A
                                                                                                               FILED
                                                                                                   2/28/2023 3:55 PM
                                                                                                      FELICIA PITRE
                                                                                                   DISTRICT CLERK
                                                                                                 DALLAS CO., TEXAS
                                                                                                 Debra Clark DEPUTY


                                    CAUSE NO. DC-22-08610

LEN ACKIN, Individually, et al.,                   §                   IN THE DISTRICT COURT
                                                   §
       Plaintiffs,                                 §
                                                   §
v.                                                 §                  191ST JUDICIAL DISTRICT
                                                   §
POLY-AMERICA INTERNATIONAL,                        §
INC., et al.,                                      §
                                                   §
       Defendants.                                 §                 DALLAS COUNTY, TEXAS

DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS
                AS TO PLAINTIFF RAFEAL HOWARD

       Defendants Poly-America International, Inc., Poly-America GP, LLC, Poly-America L.P.,

and MARS Partners, Ltd. (collectively, “Defendants”) file this Motion to Compel Arbitration and

Stay Proceedings as to Plaintiff Rafeal Howard (“Motion”), and will respectfully show the Court

as follows:

                                      I.     INTRODUCTION

       Plaintiff Rafeal Howard (“Mr. Howard”) claims he was injured while working for

Defendant Poly-America, L.P. (“Poly-America”) after a fire was started by an unknown arsonist

at Poly-America’s facility on August 19, 2020. However, as a condition of his employment with

Poly-America, Mr. Howard signed a valid and enforceable arbitration agreement whereby he

agreed to arbitrate all claims against Defendants, including claims for tortuous conduct causing

him personal, emotional, physical, or economic injuries. Accordingly, Mr. Howard must arbitrate

his claims against Defendants.

       Moreover, the arbitration agreement requires that the arbitrability of claims made by Mr.

Howard against Defendants be decided by an arbitrator. Thus, the proceedings related to Mr.

Howard’s claims should be stayed until an arbitrator makes such decision.



DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS AS TO PLAINTIFF RAFEAL HOWARD - PAGE 1
                                       II.    BACKGROUND

       A. The Arbitration Agreement

       Mr. Howard began working for Poly-America in June 2020. As a condition of his

employment, he reviewed and signed an Arbitration Agreement with Defendants on June 25, 2020.

See Ex. A. The Arbitration Agreement expressly provides:

       1. Mandatory Arbitration. Any and all Claims, complaints, disputes, demands
       and causes of action . . .the Employee presently has or may have in the future,
       against the Company . . . shall be submitted to mandatory arbitration, pursuant to
       this Agreement. This applies to . . . [claims] alleging tortuous conduct, including
       but not limited to, for any personal, emotional, physical or economic injury.

       ...

       6. Arbitrability. Employee and Company agree that any dispute over whether or
       not a Claim is arbitrable under this Agreement shall be decided by the arbitrator
       selected by the parties hereto. It is the parties’ intention that any doubt concerning
       the arbitrability of a Claim be resolved in favor of arbitration.

Id. (emphasis in original).

       During his employment Mr. Howard also received two different Employee Handbooks

from Poly-America that contained copies of his Arbitration Agreement, including all the

provisions therein. He acknowledged his receipt of the Employee Handbooks on June 10, 2020

and April 7, 2021, respectively. See Ex. B. Importantly, Mr. Howard expressly acknowledged that

he and Poly-America “agree[d] to be bound by the arbitration agreement contained in the

Handbook and that [he] would abide by the terms of the arbitration agreement as provided therein.”

Id.

       B. The Arson

       Poly-America’s facility is located at 2000 W. Marshall Dr., Grand Prairie, Texas 75051,

where it conducts its recycling and manufacturing business. On or about August 19, 2020, a fire

was set by an unknown arsonist at the Grand Prairie facility causing substantial damage to an


DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS AS TO PLAINTIFF RAFEAL HOWARD - PAGE 2
outdoor concrete storage pad, retaining walls, railroad tracks, rail cars, and the inventory of raw

materials stored on the property north of the manufacturing buildings. 1 Mr. Howard was working

his scheduled shift at Poly-America’s Grand Prairie facility at the time of the fire.

         In the months following the fire, neither Mr. Howard nor any other Poly-America employee

filed a Workers’ Compensation Claim or a request for arbitration related to injuries sustained as a

result of the fire. Instead, in violation of the Texas Workers’ Compensation Act 2 and his

Arbitration Agreement, Mr. Howard was improperly named in Plaintiffs’ First Amended Petition

and Disclosure Request filed on August 18, 2022. 3 Due to delays in receiving discovery responses

from Plaintiffs, Defendants do not know at this time if there are any other Plaintiffs who are

employees or former employees who also signed an arbitration agreement.

                                III.     ARGUMENTS AND AUTHORITIES

         A. The Court Should Compel Arbitration

         When seeking to compel arbitration, a party must show that: (1) there is a valid agreement

to arbitrate, and (2) the claims for which arbitration is sought fall within the scope of the agreement.

In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006) (citing In re Oakwood Mobile

Homes, Inc., 987 S.W.2d 571, 573 (Tex. 1999) (per curiam)); In re Kellogg Brown & Root, Inc.,

166 S.W.3d 732, 737 (Tex. 2005); In re First Merit Bank, 52 S.W.3d 749, 753 (Tex. 2001).



1
  The Court is familiar with the fire underlying this lawsuit because the dispute over how much its insurer owes Poly-
America for its subsequent damages—Poly-America, L.P. v. Zurich American Insurance Company and Texcap-
Concord Insurance Services, LP, Cause No. DC-21-10086—is also before this Court. Further, following a robust and
thorough investigation following the fire in 2020, in its publically available Investigation Report, the Grand Prairie
Fire Department determined that the fire was a “result of deliberate acts of ‘an unidentified’ individual.”
2
  Under the Texas Workers’ Compensation Act, recovery of workers' compensation benefits was Mr. Howard’s
exclusive remedy for the work-related injuries he is now claiming in this lawsuit. See TEX. LAB. CODE § 408.000.
Defendants will address this issue once his claims are properly before an arbitrator.
3
 In the case style Mr. Howard is named as “Rafael” Howard. According to his employment records, however, his
name appears to be “Rafeal” Howard.


DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS AS TO PLAINTIFF RAFEAL HOWARD - PAGE 3
Because Texas law strongly favors arbitration, courts must resolve doubts as to the scope of the

arbitration agreement in favor of coverage of the claims in the lawsuit. In re D. Wilson, 196 S.W.3d

at 782-83.

               1. Mr. Howard Entered into a Valid Arbitration Agreement

         The Texas Supreme Court has squarely held an employer may enforce an arbitration

agreement entered into during an at-will employment relationship if the employee received notice

of the employer’s arbitration policy and accepted it. In re Dallas Peterbilt, Ltd., L.L.P., 196 S.W.3d

161, 162 (Tex. 2006). The notice requirement is not limited to the underlying agreement itself,

but instead refers to all communications between the employer and employee. Id. And, more

specifically, the Supreme Court has found that the arbitration agreement between Poly-America

and one of its employees is valid and enforceable for all claims arising out of or related to the

employee’s employment with Poly-America. In re Poly-America, L.P., 262 S.W.3d 337 (Tex.

2008).

         Mr. Howard was an at-will employee of Poly-America who had unequivocal notice of the

contents of his Arbitration Agreement; and he accepted such terms when he signed his Arbitration

Agreement and two separate acknowledgement forms of the same arbitration agreement in each

of the Employee Handbooks he received. See Exs. A & B. Accordingly, there is a valid agreement

to arbitrate between Mr. Howard and Defendants in this case.

               2. Mr. Howard’s Claims are Subject to the Arbitration Agreement

         The Arbitration Agreement Mr. Howard acknowledged and executed provides that “[a]ny

and all Claims, complaints, disputes, demands and causes of action . . .the Employee presently has

or may have in the future, against the Company . . . shall be submitted to mandatory arbitration,




DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS AS TO PLAINTIFF RAFEAL HOWARD - PAGE 4
pursuant to this Agreement. This applies to . . . [claims] alleging tortuous conduct, including but

not limited to, for any personal, emotional, physical or economic injury.” Ex. A.

       In this case, Mr. Howard makes claims against Defendants for various tortious conduct,

such as negligence, nuisance, battery, and premises and product liability. He also alleges he

personally suffered physical, emotional, and economic injuries as a result of Defendants’ purported

conduct. Accordingly, Mr. Howard’s claims in this lawsuit are fully within the scope of his

Arbitration Agreement with Defendants.

       B. Any Question of Arbitrability Must Go to the Arbitrator

       Whether a particular dispute falls within the scope of the arbitration clause is an issue for

an arbitrator to decide when the arbitration agreement “clearly and unmistakably” reserves

arbitrability questions to the arbitrator. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123

S. Ct. 588, 589, 154 L. Ed. 2d 491 (2002). In a unanimous opinion, the United States Supreme

Court held that “[w]hen the parties’ contract delegates the arbitrability question to an arbitrator, a

court may not override the contract. In those circumstances, a court possesses no power to decide

the arbitrability issue. That is true even if the court thinks that the argument that the arbitration

agreement applies to a particular dispute is wholly groundless.” Henry Schein, Inc. v. Archer &

White Sales, Inc., 139 S. Ct. 524, 531, 202 L. Ed. 2d 480 (2019).

       In determining whether an arbitration agreement “clearly and unmistakably” reserves

arbitrability issues for the arbitrator, courts must ask this question: “Did the parties agree to submit

the arbitrability question itself to arbitration?” First Options of Chicago, Inc. v. Kaplan, 514 U.S.

938, 943 (1995). See also In re Poly-America at 357. Here, the answer is, unequivocally, yes.

Section 6 of the Arbitration Agreement states, “Employee and Company agree that any dispute

over whether or not a claim is arbitrable under this Agreement shall be decided by the arbitrator



DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS AS TO PLAINTIFF RAFEAL HOWARD - PAGE 5
selected by the parties hereto. It is the parties’ intention that any doubt concerning the arbitrability

of a Claim be resolved in favor of arbitration.” Ex. A.

        Because Mr. Howard and Defendants clearly and unmistakably agreed to delegate the

question of arbitrability to the arbitrator, any issues of arbitrability must be determined by the

arbitrator. Henry Schein, 139 S. Ct. at 531. In re Poly-America at 361.

       C. The Court Should Stay Proceedings Related to Mr. Howard

       Texas law provides that a “court shall stay a proceeding that involves an issue subject to

arbitration if an order for arbitration or an application for that order is made under this subchapter.”

TEX. CIV. PRAC. & REM. CODE § 171.025. Because Mr. Howard’s claims are subject to a valid

Arbitration Agreement, as is the question of arbitrability itself, the Court must stay the state court

proceedings. See id. §§ 171.021(c) & 171.025(a); Forest Oil Corp. v. McAllen, 268 S.W.3d 51, 56

(Tex. 2008) (holding if claim falls within the scope of a valid arbitration agreement, a court has no

discretion but to compel arbitration and stay the state court proceedings); Jabri v. Qaddura, 108

S.W.3d 404, 410 (Tex. App.—Fort Worth 2003, no pet.) (held an order compelling arbitration

must include a stay). And there is no legitimate basis for Mr. Howard to assert the need for

discovery on the preliminary question of arbitrability because the issue of arbitrability itself must

be decided by the arbitrator.

                                IV.    CONCLUSION AND PRAYER

        Plaintiff Rafeal Howard and Defendants agreed to a valid, enforceable Arbitration

Agreement. Mr. Howard’s claims are subject to that Arbitration agreement. Moreover, if there is

any dispute about the arbitrability of Mr. Howard’s claims, that dispute must be decided by the

arbitrator. Accordingly, Defendants respectfully request that the Court grant this Motion in its




DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS AS TO PLAINTIFF RAFEAL HOWARD - PAGE 6
entirety and compel Plaintiff Rafeal Howard to arbitrate his claims and stay all proceedings in this

matter pending the outcome of such arbitration.



                                              Respectfully submitted,

                                              DEHAY & ELLISTON, L.L.P.
                                              3500 Bank of America Plaza
                                              901 Main Street
                                              Dallas, TX 75202-3736
                                              Telephone: (214) 210-2400
                                              Fax: (214) 210-2500

                                      By:     /s/ Pamela J. Williams
                                              GARY D. ELLISTON
                                              Texas State Bar No. 6584700
                                              PAMELA J. WILLIAMS
                                              Texas State Bar No. 00791936

                                              ATTORNEYS FOR DEFENDANT
                                              POLY-AMERICA INTERNATIONAL INC.,
                                              POLY-AMERICA GP, LLC., POLY-AMERICA
                                              L.P., and MARS PARTNERS, LTD


                                 CERTIFICATE OF SERVICE

       I HEREBY CERTIFY that, on February 28, 2023, a true and correct copy of the foregoing
instrument has been provided to all counsel of record via e-filing, in accordance with the Texas
Rules of Civil Procedure, to all counsel of record.

                                                  /s/ Pamela J. Williams
                                                  PAMELA J. WILLIAMS




DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS AS TO PLAINTIFF RAFEAL HOWARD - PAGE 7
EXHIBIT A
EXHIBIT B
                         Automated Certificate of eService
This automated certificate of service was created by the efiling system.
The filer served this document via email generated by the efiling system
on the date and to the persons listed below. The rules governing
certificates of service have not changed. Filers must still provide a
certificate of service that complies with all applicable rules.

Cris Page on behalf of Pamela Williams
Bar No. 791936
cpage@dehay.com
Envelope ID: 73204648
Status as of 2/28/2023 4:27 PM CST

Case Contacts

Name                  BarNumber     Email                                  TimestampSubmitted     Status

John CStewart                       john.stewart@oncor.com                 2/28/2023 4:08:27 PM   SENT

Angie Ranton                        angela.ranton@oncor.com                2/28/2023 4:08:27 PM   SENT

Pamela J.Williams                   pwilliams@dehay.com                    2/28/2023 4:08:27 PM   SENT

Cris Page                           cpage@dehay.com                        2/28/2023 4:08:27 PM   SENT

Diane Hallmark                      diane.hallmark@oncor.com               2/28/2023 4:08:27 PM   SENT

ROCIO CASTRO                        RCASTRO@JUSTCALLKINDER.NET 2/28/2023 4:08:27 PM               SENT

Lance Travis                        LTravis@cobbmartinez.com               2/28/2023 4:08:27 PM   SENT

Anacorina Andrade                   aandrade@brlaw.com                     2/28/2023 4:08:27 PM   SENT



Associated Case Party: LEN ACKIN

Name                BarNumber     Email                        TimestampSubmitted      Status

FRED NESSLER                      fwn@nesslerlaw.com           2/28/2023 4:08:27 PM    SENT

Griffin McMillin                  gmcmillin@justcallkinder.net 2/28/2023 4:08:27 PM    SENT

Jennifer Kinder     787837        jkinder@justcallkinder.net   2/28/2023 4:08:27 PM    SENT



Associated Case Party: ONCOR ELECTRIC DELIVERY COMPANY, LLC

Name               BarNumber    Email               TimestampSubmitted      Status

Lance C.Travis                  ltravis@brlaw.com   2/28/2023 4:08:27 PM    SENT
                         Automated Certificate of eService
This automated certificate of service was created by the efiling system.
The filer served this document via email generated by the efiling system
on the date and to the persons listed below. The rules governing
certificates of service have not changed. Filers must still provide a
certificate of service that complies with all applicable rules.

Rocio Castro on behalf of Griffin McMillin
Bar No. 24131500
rcastro@justcallkinder.net
Envelope ID: 74548029
Filing Code Description: Response
Filing Description: FIRST AMENDED RESPONSE TO MTN TO COMPEL
ARBITRATION
Status as of 4/12/2023 11:28 AM CST

Associated Case Party: LEN ACKIN

Name                BarNumber Email                                  TimestampSubmitted Status

Jennifer Kinder     787837       jkinder@justcallkinder.net          4/11/2023 6:52:42 PM     SENT

ROCIO CASTRO                     RCASTRO@JUSTCALLKINDER.NET          4/11/2023 6:52:42 PM     SENT

FRED NESSLER                     fwn@nesslerlaw.com                  4/11/2023 6:52:42 PM     SENT

Griffin McMillin                 gmcmillin@justcallkinder.net        4/11/2023 6:52:42 PM     SENT



Case Contacts

Name                 BarNumber    Email                         TimestampSubmitted     Status

John CStewart                     john.stewart@oncor.com        4/11/2023 6:52:42 PM   SENT

Angie Ranton                      angela.ranton@oncor.com       4/11/2023 6:52:42 PM   SENT

Pamela J.Williams                 pwilliams@dehay.com           4/11/2023 6:52:42 PM   SENT

Cris Page                         cpage@dehay.com               4/11/2023 6:52:42 PM   SENT

Diane Hallmark                    diane.hallmark@oncor.com      4/11/2023 6:52:42 PM   SENT

Christine Harvey                  charvey@dehay.com             4/11/2023 6:52:42 PM   SENT

Adam Bell                         AdamB@poly-america.com        4/11/2023 6:52:42 PM   SENT

Lance Travis                      LTravis@cobbmartinez.com      4/11/2023 6:52:42 PM   SENT

Anacorina Andrade                 aandrade@cobbmartinez.com 4/11/2023 6:52:42 PM       SENT

Ruark Mershon                     RuarkM@poly-america.com       4/11/2023 6:52:42 PM   SENT

Alexis Quezada                    alexisq@poly-america.com      4/11/2023 6:52:42 PM   SENT

Landon Dutra                      ldutra@cobbmartinez.com       4/11/2023 6:52:42 PM   SENT