Response to Petition for Writ of Mandamus - Filed - Supreme Court ...

NO. 09-0122
________________________________________________________________________
IN THE SUPREME COURT OF TEXAS
MINDI DRENNAN, BRITTNI DRENNAN, CARSON DRENNAN
LOUIE AND JOYCE DRENNAN,
Real Parties in Interest
RESPONSE TO PETITION FOR WRIT OF MANDAMUS
th
Original Proceeding from the 106 Judicial District Court, Gaines County, Texas
FRED BOWERS
RUSSELL CASSELBERRY
State Bar No. 00785712
Fulbright & Casselberry
BOWERS LAW OFFICE
211 N. Houston Ave.
1401 Texas Avenue Lamesa, Texas 79331-5441
P.O. Box 327 (806) 872-2103
Lubbock, Texas 79408-0327 (806) 872-3332 FAX
(806) 762-0863
(806) 762-5354 FAX
ATTORNEYS FOR REAL PARTIES IN INTEREST
ORAL ARGUMENT REQUESTED
IF GRANTED TO RELATOR

IDENTITY OF PARTIES AND COUNSEL
In accordance with Texas Rules of Appellate Procedure 52.3(a), Real Parties in
Interest certify that the following is a complete list of all parties and the names and addresses
of all counsel:
1. Real Parties in Interest
Mindi Drennan (Wife)
Brittni Drennan (Daughter)
Carson Drennan (Son)
Louie Drennan (Mother)
Joyce Drennan (Father)
2. Respondent
th
Honorable Carter Tinsley Schildknecht, 106 Judicial District Court, Gaines County,
Texas
3. Relator
Golden Peanut Company, LLC
4. Trial and Appellate Counsel for Real Parties in Interest
Fred Bowers
BOWERS LAW OFFICE
1401 Texas Avenue
P.O. Box 327
Lubbock, Texas 79408
R.W. (Russell) Casselberry
FULBRIGHT & CASSELBERRY
211 North Houston
Lamesa, Texas 79331
(i)

5. Trial and Appellate Counsel for Relator
Kent D. Williamson
Mark T. Craig
The Silvera Firm
5001 Spring Valley Road
1015 Providence Towers East
Dallas, Texas 75244
Appellate Counsel for Relator
Rick Thompson
Deborah G. Hankinson
Hankinson Levinger LLP
2305 Cedar Springs Blvd., Suite 230
Dallas, Texas 75201
(ii)

TABLE OF CONTENTS
Page
Identity of Parties and Counsel ............................................ (i)
Table of Contents......................................................(iii)
Index of Authorities ......................................................1
Statement of Jurisdiction ..................................................3
Issues Presented .........................................................4
Summary of the Argument.................................................5
Argument ..............................................................6
I. THE TRIAL COURT DID NOT ABUSE ITS DISCRETION
BY DENYING GOLDEN PEANUT’S MOTION TO COMPEL
ARBITRATION .............................................6
II.
THE ARBITRATION PROVISION IS UNENFORCEABLE
BY ITS OWN EXPRESS TERMS ..............................7
Prayer ................................................................16
Certificate of Service ....................................................17
(iii)

INDEX OF AUTHORITIES
Cases:
Page(s)
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 281 (1995) . . . . . . . . . . . 14
In re Bunzl USA, Inc., 155 S.W.3d 202, 211
(Tex.App.-El Paso 2004, orig. proceeding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
In re FirstMerit Bank, 52 S.W.3d 749, 753 (Tex. 2001) . . . . . . . . . . . . . . . . . . . . 6
In re Golden Peanut Co., LLC, 269 S.W.3d 302, 307-08
(Tex. App. – Eastland 2008, orig. proceeding [mand. pending]) . . . . . . . . . . . . . 13
In re Jindal Saw Ltd., 52 Tex. Sup. Ct. J 407, 2009 Tex.
LEXIS 33 (Tex. Feb. 27, 2009) (per curiam) . . . . . . . . . . . . . . . . . . . . . 3, 7, 10, 15
st
In re Kepka, 178 S.W.3d 279, 288 (Tex.App.-Houston [1 ],
2005, orig. proceeding) [mand. denied] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 10
In re Labatt Food Serv., L.P., 52 Tex. Sup. Ct. J. 352,
2009 Tex. LEXIS 28 2009 WL 353524, at *22-23
(Tex. Feb. 13, 2009) ................................... 3, 7-8, 10, 14-15
In re Merrill Lynch, 235 S.W.3d 185, 190 (Tex. 2007) . . . . . . . . . . . . . . . . . . . . . 8
In re R & R Personnel Specialists of Tyler, Inc., 146 S.W.3d 699,
702 (Tex.App.-Tyler 2004, orig. proceeding) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
In re Weekley Homes, 180 S.W. 3d 127 (Tex. 2005) . . . . . . . . . . . . . . . . . . . . . . . 6
Moses H. Cone Mem’l Hosp. V. Mercury Constr. Corp.,
460 U.S. 1, 25 & n.32 (1983) ........................................13
Southland Corp. v. Keating, 465 U.S. 1, 15 (1984) .......................13
Vaden v. Discover Bank, No. 07-773, 2009 U.S. LEXIS 1781,
at *10-12, 20 (Mar. 9, 2009)...................................... 13-14
Walker v. Packer, 827 S.W.2d 833 839 (Tex. 1992) . . . . . . . . . . . . . . . . . . . . . . . 6
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Statutory Authority:
Page(s)
TEX. LABOR CODE ANN. §406.033(a)-(e) (Vernon 2005) . . . . . . . . . . . . 7-8, 10-14
9 U.S.C. § 2 (2006) ................................................14
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STATEMENT OF JURISDICTION
The Court should deny Golden Peanut’s Petition for Writ of Mandamus. The recent
opinions of In re Labatt Food Serv., L.P., 52 Tex. Sup. Ct. J. 352, 2009 Tex. LEXIS 28 (Tex.
Feb. 13, 2009) and In re Jindal Saw Ltd., 52 Tex. Sup. Ct. J. 407, 2009 Tex. LEXIS 33 (Tex.
Feb. 27, 2009) (per curiam), address issues of broad application and guidance throughout
Texas. The primary basis to defeat arbitration in the present case - the language of the
Arbitration Agreement itself - provides such a limited application in wrongful death cases
that granting Golden Peanut’s Petition would upset the applecart. Apparently no other case
in the appellate system has the same or similar arbitration agreement language as in this case.
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ISSUES PRESENTED
(From Real Parties in Interest)
1. DID THE TRIAL COURT ABUSE ITS DISCRETION BY
DENYING GOLDEN PEANUT’S MOTION TO COMPEL
ARBITRATION?
2. DOES THE LANGUAGE OF THE PURPORTED
ARBITRATION AGREEMENT INVALIDATE ARBITRATION?
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SUMMARY OF ARGUMENT
Relator’s Petition for Writ of Mandamus in this case should fail for several reasons.
First, the trial court had reasonable basis to deny arbitration in this cause and such finding
should not be disturbed by this Court. Second, the purported Arbitration Agreement by its
express terms says any party can use any claim, remedy, legal or equitable defense that a
party could use in a Texas state or federal court. The Texas Labor Code says that a pre-injury
waiver of a cause of action or any right by an employee is void and unenforceable. Because
the Arbitration Agreement expressly allows full use of Texas procedural and substantive law,
this attempted waiver of a right to jury trial is void and unenforceable.
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ARGUMENT
I. THE TRIAL COURT DID NOT ABUSE ITS DISCRETION BY DENYING
GOLDEN PEANUT’S MOTION TO COMPEL ARBITRATION
In this case, Golden Peanut’s burden is heavy and difficult to carry. The standard of
review in this case is an abuse of discretion standard. The party seeking to compel arbitration
by a writ of mandamus has the ultimate burden of proof in order to overturn the trial court’s
decision. This Court must issue a writ of mandamus only to correct a trial court’s clear abuse
of discretion or the violation of a legal duty when there is no other adequate remedy at law.
In re FirstMerit Bank, 52 S.W.3d 749, 753 (Tex. 2001); In re Weekley Homes, 180 S.W.3d
127 (Tex. 2005); In re R & R Personnel Specialists of Tyler, Inc., 146 S.W.3d 699, 702
(Tex.App.- Tyler 2004, orig. proceeding). A trial court abuses its discretion only if “it
reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error
of law.” Walker v. Packer, 827 S.W.2d, 833, 839 (Tex. 1992). With respect to resolution of
factual issues or matters within the trial court’s discretion, the appellate court may not
substitute its judgment for that of the trial court, even if the appellate court would have
decided the issue differently. Id. at 839-840. The Relator must show that the trial court could
reasonably have reached only one decision. Id. at 840. The Relator has the burden of
establishing the trial court abused its discretion. Id. at 840.
A party seeking to compel arbitration by a writ of mandamus must first establish that
an valid agreement subject to the FAA actually exists and that the claims raised fall within
the scope of that agreement. FirstMerit, 52 S.W.3d 749, 753 (Tex. 2001). The Relator in this
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case has not met this initial burden. The Real Parties at Interest were never subject to the
purported Arbitration Agreement as the Agreement was invalid upon its creation and the
Relator cannot show that the Real Parties in Interest intended to create a contract which
bound them to the purported Agreement. “The question of the parties’ intent was a fact for
the trial court to resolve.” In re Bunzl USA, Inc., 155 S.W.3d 202, 211 (Tex.App.- El Paso
2004, orig. proceeding) (holding that the trial court correctly used its discretion in denying
a motion to compel arbitration on grounds that the movant could not prove a valid contract
existed due to lack of intent). The trial court did not abuse its discretion in denying Golden
Peanut’s Motion to Compel Arbitration for the reasons discussed below.
II.
THE ARBITRATION PROVISION IS UNENFORCEABLE BY ITS
OWN EXPRESS TERMS
The express terms of the Arbitration Agreement make arbitration unenforceable. That
is the key distinction between this case and other recent arbitration decisions. See In re
Labatt Food Service, L.P., 52 Tex. Sup. Ct. J. 352, 2009 Tex. LEXIS 28 (Tex. Feb. 13,
2009); In re Jindal Saw Ltd., 52 Tex. Sup. Ct. J. 407, 2009 Tex. LEXIS 33 (Tex. Feb. 27,
2009) (per curiam); In re Kepka, 178 S.W.3d 279, 288 (Tex. App.—Houston [1st Dist.]
2005, orig. proceeding [mand. denied]). Just last month the Court did not address the
conflict between §406.033 of the Texas Labor Code and the Arbitration Agreement in In re
Labatt. The Court did not decide whether the arbitration clause was void because the
beneficiaries were challenging the validity of the entire agreement, which is a decision to be
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made by an arbitrator. In re Labatt Food Service, L.P., 52 Tex. Sup. Ct. J. 352, 2009 Tex.
LEXIS 28 2009 WL 353524, at *22-23 (Tex. Feb. 13, 2009). In contrast, the Real Parties in
Interest challenge the arbitration provision (not the entire agreement) because the provision
is void and unenforceable. “[A]rbitrators generally must decide defenses that apply to the
whole contract, while courts decide defenses relating solely to the arbitration clause.” Id.
(citing In re Merrill Lynch, 235 S.W.3d 185, 190 (Tex. 2007)). Because the beneficiaries in
the present case are only challenging the validity of the arbitration clause itself, this Court,
not an arbitrator, must decide whether the arbitration clause is void. With this issue squarely
before the Court a closer look at the statute and Golden Peanut’s arbitration provision is
necessary.
The Texas Legislature has expressly prohibited workers’ compensation
nonsubscribers from entering into agreements with employees that waive an employee’s right
to file suit or assert any right for personal injury. TEX. LAB. CODE ANN. § 406.033 (Vernon
2005). In pertinent part:
(a)
In an action against an employer who does not have workers’
compensation insurance coverage to recover damages for personal
injuries or death sustained by an employee in the course and scope of
the employment, it is not a defense that:
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(1) the employee was guilty of contributory negligence;
(2) the employee assumed the risk of injury or death; or
(3) the injury or death was caused by the negligence of a fellow
employee.
(b)
This section does not reinstate or otherwise affect the availability of
defenses at common law, including the defenses described by
Subsection (a).
(c)
The employer may defend the action on the ground that the injury was
caused:
(1) by an act of the employee intended to bring about the injury; or
(2) while the employee was in a state of intoxication.
(d)
In an action described by Subsection (a) against an employer who does
not have workers’ compensation insurance coverage, the plaintiff must
prove negligence of the employer or of an agent or servant of the
employer acting within the general scope of the agent’s or servant’s
employment.
(e)
A cause of action described in Subsection (a) may not be waived by an
employee before the employee’s injury or death. Any agreement by an
employee to waive a cause of action or any right described in
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Subsection (a) before the employee’s injury or death is void and
unenforceable.
TEX. LAB. CODE ANN. § 406.033(a)-(e) (emphasis added) (Vernon 2005).
The Arbitration Agreement in this case strengthens the Labor Code provisions set out
above. Specifically, the Agreement states on page 3:
e. Remedies and Defenses
All parties are entitled to allege any claim, obtain any remedy and
assert any legal or equitable defense that the party could allege,
obtain or assert in a Texas state or federal court.”
“Mutual Agreement to Arbitrate,” cl. 6(e) (emphasis added).
As such, the Arbitration Agreement is void and unenforceable under the Texas Labor Code.
See § 406.033(e). Subsection (e) of the Arbitration Agreement above also distinguishes this
case from several recent cases by explicitly providing for parties to take advantage of Texas
law. Compare In re Labatt Food Service, L.P., 52 Tex. Sup. Ct. J. 352, 2009 Tex. LEXIS 28
(Tex. Feb. 13, 2009); In re Jindal Saw Ltd., 52 Tex. Sup. Ct. J. 407, 2009 Tex. LEXIS 33
(Tex. Feb. 27, 2009) (per curiam); In re Kepka, 178 S.W.3d 279, 288 (Tex. App.—Houston
[1st Dist.] 2005, orig. proceeding [mand. denied].
Throughout the Arbitration Agreement, Golden Peanut continually cites the following
Texas law:
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The Agreement does not apply to Workers’ Compensation Benefits under the Texas
Workers’ Compensation Act or any other state or federal law;
judge.
Each arbitrator on the panel shall have previously served as a Texas district court
Standards for the recusal of an arbitrator shall be the same standards under which trial
judges are recused under Texas law.
• All parties are entitled to pre-arbitration discovery under the Texas
Rules of Civil Procedure.
• The same discovery devices and scope of discovery as set forth in those
rules shall apply.
• All parties are entitled to file any motions, including dispositive
motions, set forth in the Texas Rules of Civil Procedure.
• All parties are entitled to allege any claim, obtain any remedy and assert
any legal or equitable defense that the party could allege, obtain or
assert in a Texas state or federal court.
“Mutual Agreement to Arbitrate,” cls. 5(b)(ii), 6(a), 6(d), 6(e).
These numerous clauses which cite to Texas law mandate the use of Texas substantive
and procedural law in all aspects of a dispute between the parties. Despite Golden Peanut’s
choice to expressly provide for Texas law in its drafting of the Arbitration Agreement,
Golden Peanut now contends that the Arbitration Agreement supersedes Texas substantive
law, most notably TEX. LAB. CODE ANN. § 406.033. Although the Arbitration Agreement
attempts to illegally waive the Drennans’ right to a jury trial, Relator maintains such waiver
to be binding merely because the Agreement references the Federal Arbitration Act (FAA).
Golden Peanut tries to have it both ways. The Agreement expressly entitles parties to use
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Texas common-law defenses and substantive Texas law yet exclude, by brief reference to the
FAA, select provisions which are adverse to their position on the “binding” Arbitration
Agreement.
Assuming arguendo that the Arbitration Agreement is deemed valid and this cause
of action proceeds before an arbitrator, will Golden Peanut be entitled to claim contributory
negligence as a defense? The obvious answer would seem to be, according to the Agreement,
“no”, because this is not available to a nonsubscriber employer under §406.033(a). The
Relator, as the drafter of the Agreement, chose to entitle all parties “to allege any claim,
obtain any remedy and assert any legal or equitable defense that the party could allege, obtain
or assert in a Texas state or federal court.” This clause expressly includes §406.033 of the
Texas Labor Code. Likewise, the same statutory provision that prohibits workers’
compensation nonsubscriber employers from asserting the defense of contributory negligence
also expressly deems void and unenforceable any agreement which waives an employee’s
right to a personal injury cause of action or any right, including trial by jury. See §406.033.
If a court disregards §406.033(e), a clear expression of legislative intent, and deems
the Arbitration Agreement valid what would prevent a party or an arbitrator or a court to also
disregard §406.033(a) and allow Golden Peanut to plead contributory negligence as a
defense? Hopefully, that proposition is untenable. If enforced, however, the Arbitration
Agreement would allow Relator to indiscriminately choose which provisions within Texas
law will apply to their Arbitration Agreement and which provisions will not.
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The Texas Court of Appeals in Eastland misunderstood this argument. See In re
Golden Peanut Co., LLC, 269 S.W.3d 302, 307-08 (Tex. App.—Eastland 2008, orig.
proceeding [mand. pending]). “As we understand Plaintiffs’ position, they contend that the
Agreement allows Golden Peanut to assert a common law defense in arbitration that would
be unavailable in court.” Id. at 307. “The Agreement does not broaden Golden Peanut's
rights in an arbitration but merely confirms that both parties can assert the same claims and
defenses in arbitration that they could in court.” Id. at 307-08. The Real Parties in Interest
were demonstrating the inequity of cherry-picking what substantive and procedural law to
apply.
By Relator’s own choice in drafting, all Texas law applies, not merely those
provisions which benefit Golden Peanut. In its Agreement to Arbitrate, Golden Peanut chose
to incorporate substantive Texas law in its entirety; this includes §406.033 of the Texas
Labor Code. By the express terms of the Agreement between Grant Drennan and Golden
Peanut, the purported mutual Agreement to Arbitrate is void and unenforceable.
Earlier this month the United States Supreme Court held that “[g]iven the substantive
supremacy of the FAA, but the Act’s non-jurisdictional cast, state courts have a prominent
role to play as enforcers of agreements to arbitrate.” Vaden v. Discover Bank, No. 07-773,
2009 U.S. LEXIS 1781, at *20 (Mar. 9, 2009) (citing Southland Corp. v. Keating, 465 U.S.
1, 15 (1984); Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 & n.32
(1983)). Vaden involved a “garden-variety” suit between Discover Bank and one of its
13

customers. Vaden, at *11. Discover sued in Maryland state court and Vaden counterclaimed.
Both parties only asserted state-law causes of actions and defenses. Id. Discover claimed
that Vaden’s counterclaims were preempted by federal law, by which Discover initiated
arbitration proceedings. Vaden, at *12. The majority held that a federal court asked to
compel arbitration should “look through” the dispute over arbitrability in determining
whether it has jurisdiction to grant the requested relief. Vaden, at *10. Vaden confirms that
state law plays a key role in determining whether an arbitration agreement is enforceable.
States can regulate contracts, including arbitration clauses, under general contract law
principles, and states may invalidate an arbitration clause “upon such grounds as exist at law
or in equity for the revocation of any contract.” 9 U.S.C. § 2 (2006); Allied-Bruce Terminix
Cos. v. Dobson, 513 U.S. 265, 281 (1995). Also, because of this Court’s disposition of In re
Labatt, the question of whether the FAA preempts Labor Code § 406.033(e) also went
unanswered. See In re Labatt Food Service, L.P., 52 Tex. Sup. Ct. J. 352, 2009 Tex. LEXIS
28, at *23 (Tex. Feb. 13, 2009).
In the present case, there is the specific intent that Texas law govern all aspects of the
arbitration, substantive as well as procedural. See, “Mutual Agreement to Arbitrate,” cls.
5(b)(ii), 6(a), 6(d), 6(e). These multiple clauses within the agreement apply the Texas Labor
Code, Texas Rules of Civil Procedure, Texas Rules of Evidence, and even require that the
arbitrator be a former Texas district court judge. See id. Obviously the Defendant, as the
drafter of the Agreement, intended the use of Texas state law and included the express
14

provision that each party is entitled “to allege any claim, obtain any remedy and assert any
legal or equitable defense that the party could allege, obtain or assert in a Texas state or
federal court.” See, cl. 6(e).
This provision should mean what it says. Without this enabling provision the Real
Parties in Interest would run headlong into the recent Labatt and In Re Jindal Saw decisions,
particularly on the issues that are not briefed in this Response. The record shows that the
trial court had several reasons to deny arbitration in this case including the language in the
agreement itself. “Any remedy” or “any claim” or “any defense” means “any.” That ruling
by the trial court complies with long-standing precedent and recent pronouncements. Golden
Peanut employees in other states probably do not have this available to them, but in Texas
state law says this arbitration provision is void and unenforceable.
15

PRAYER
WHEREFORE, PREMISES CONSIDERED, the Real Parties in Interest pray that this
Court hold that the trial court did not abuse its discretion and allow this cause to proceed
toward a jury trial on its merits.
Respectfully submitted,
BOWERS LAW OFFICE
P. O. Box 327
Lubbock, TX 79408-0327
(806) 762-0863
(806) 762-5354 Facsimile
RUSSELL CASSELBERRY
Fulbright & Casselberry
211 N. Houston Ave.
Lamesa, TX 79331-5441
(806) 872-2103
(806) 872-3332 Facsimile
BY
______________________________
FRED BOWERS
State Bar No. 00785712
ATTORNEYS FOR REAL PARTIES
IN INTEREST
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Certificate of Service
This is to certify that on this the ____day of March, 2009, a true and correct copy of
the above and foregoing Response to Writ of Mandamus to was forwarded via Certified
Mail, return receipt requested, to the attorneys for the Defendant/Relator, as indicated below:
Trial and Appellate Counsel for Relator
Kent D. Williamson
Mark T. Craig
The Silvera Firm
5001 Spring Valley Road
1015 Providence Towers East
Dallas, Texas 75244
Appellate Counsel for Relator
Rick Thompson
Deborah G. Hankinson
Hankinson Levinger LLP
2305 Cedar Springs Blvd., Suite 230
Dallas, Texas 75201
____________________________________
FRED BOWERS
17