El Paso Court of Appeals Denies Motion to Compel Arbitration in Employment Case

In Young Mens Christian Assoc. of Greater El Paso, Texas et al. v. Garcia, No. 08-11-00096-CV (Tex. App. – El Paso Oct. 26, 2011) Jose G. Garcia brought discrimination and retaliatory discharge action against Young Mens Christian Association of Greater El Paso, Texas and Rio Grande Valley, YMCA of Greater El Paso, YMCA of El Paso, and Fred & Maria Loya YMCA (collectively referred to as the “YMCA“), Garcia’s former employer. YMCAmoved to compel arbitration pursuant to a dispute resolution provision found in its nearly seventy-page personnel policy manual. Garcia argued in trial court that there was no arbitration agreement because the personnel policy manual stated that it was not a contract and did not alter the terms of employment. The trial court denied YMCA’s motion to compel arbitration and YMCA brought an interlocutory appeal.

The El Paso Court of Appeals explained that a party seeking to compel arbitration under the Federal Arbitration Act (“FAA”) must establish: (1) the existence of a valid arbitration agreement, and (2) that the claims asserted are within the scope of the agreement. In determining the validity of agreements to arbitrate, courts generally apply ordinary state law principles governing the formation of contracts. The court further said that Garcia’s argument challenged two of the five elements essential to the formation of a valid contract: (1) a meeting of the minds and (2) each party’s consent to the terms.

The court held that arbitration provision contained in employer’s personnel policy manual was not a contract and thus did not establish a valid agreement to arbitrate between YMCA and Garcia.

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