Amateur Athletic Union of the United States, Inc., Paul Campbell, Rod Seaford, and Charles Oliver v. Augustus Bray

ACCEPTED
04-15-00268-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
7/14/2015 8:05:30 PM
KEITH HOTTLE

NO. 04-15-00268-CV
CLERK

FILED IN
4th COURT OF APPEALS
SAN ANTONIO, TEXAS
7/14/2015 8:05:30 PM
IN THE FOURTH COURT OF A PPEALSKEITH E. HOTTLE

SAN ANTONIO, TEXAS
Clerk

AMATEUR ATHLETIC UNION OF THE UNITED STATES, INC., PAUL
CAMPBELL, ROD SEAFORD, AND CHARLES OLIVER,
Appellants
v.
AUGUSTUS BRAY
Appellee

Original Proceeding from the 57th Judicial District Court
in Bexar County, Texas, The Honorable David A. Canales, Presiding

APPELLANTS’ REPLY BRIEF

DANNICK VILLASEÑOR-HERNANDEZ
Texas Bar No. 24072713
RUTH G. MALINAS
Texas Bar No. 08399350
Plunkett & Griesenbeck, Inc.
Catholic Life Building, Suite 900
1635 N.E. Loop 410
San Antonio, Texas 78209
(210) 734-7092 (telephone)
(210) 734-0379 (facsimile)
dhernandez@pg-law.com
rmalinas@pg-law.com
ATTORNEYS FOR APPELLANTS

ORAL ARGUMENT REQUESTED
 TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ...................................................................... 2
I. Introduction ............................................................................. 4
II. Reply to Appellee’s Enforceability Argument ........................ 5
A. The Arbitration Agreement Is Not Illusory................... 5
B. The Arbitration Agreement to which Bray Agreed To Is
Valid. .............................................................................. 9
C. Campbell, Seaford, and Oliver Can Seek Enforcement
of the Arbitration Agreement Contained in AAU
National Policies. ......................................................... 10
III. Bray’s Claims are Within the Scope of the Broad Arbitration
Agreement. ............................................................................ 11
IV. Reply to Bray’s Claim that the Arbitration Agreement is
Unconscionable...................................................................... 13
A. Bray Cannot Rely on Limitations Provision and
Punitive Damages Provision to Render the Entire
Arbitration Agreement Unconscionable. ..................... 13
B. Bray Failed to Show The Arbitration Forum Is Cost
Prohibitive. ................................................................... 16
C. Bray Did Not Prove the Arbitration Agreement Was
Substantively Unconscionable. .................................... 18
CERTIFICATE OF COMPLIANCE........................................................ 20
CERTIFICATE OF SERVICE................................................................. 21

1
 TABLE OF AUTHORITIES
Page
CASES
Aspen Technology v. Shasha,
253 S.W.3d 857 (Tex.App. – Houston [14th Dist.] 2008, no pet.) .................. 8
Fleetwood Enters., Inc. v. Gaskamp,
280 F.3d 1069 (5th Cir. 2002) ........................................................................ 13
Hadnot v. Bay, Ltd.,
344 F.3d 474 (5th Cir. 2003) .................................................................... 13, 14
In re AdvancePCS Health L.P.,
172 S.W.3d 603 (Tex. 2005) ......................................................................... 5, 9
In re C&H News Co.,
133 S.W.3d 642 (Tex. App – Corpus Christi 2003, orig. proceeding) ............ 7
In re Dillard Dept. Stores, Inc.,
186 S.W.3d 514 (Tex. 2006) ........................................................................... 12
In re Halliburton Co.,
80 S.W.3d 566 (Tex. 2002). .............................................................................. 6
In re Olshan Foundation Repair Co., LLC,
328 S.W.3d 883 (Tex. 2010) ........................................................................... 19
In re Palm Harbor Homes, Inc.,
195 S.W.3d 672 (Tex. 2006) ............................................................................. 5
In re Poly-Am., L.P.,
262 S.W.3d 337 (Tex. 2008). .................................................................... 14, 15
In re Polyamerica,
296 S.W.3d 74 (Tex. 2009) ............................................................................... 9
Long v. BDP Intern., Inc.,
919 F.Supp.2d 832 (S.D.Tex. 2013) ........................................................ 13, 14
Morrison v. Amway Corp.,
49 F.Supp.2d 529 (S.D. Tex.1998) ................................................................. 18
Quinn v. EMC Corp.,
109 F.Supp.2d, 681 (S.D. Tx. 2000) ............................................................... 18
Security Service Federal Credit Union v. Sanders,
264 S.W.3d 292 (Tex. App. – San Antonio 2008, no pet.)....................... 14, 15
Tenet Healthcare, Ltd. v. Cooper,
960 S.W.2d 386 (Tex. App. – Houston [14th Dist.] 1998, review dismissed
w.o.j.) ................................................................................................................. 5
Vandeventer v. All American Life & Cas. Co.,
101 S.W.3d 703 (Tex. App. – Fort Worth 2003, no pet.) ............................... 5
Wade v. Austin,
524 S.W.2d 79 (Tex. App. - Texarkana 1975, no writ) ................................. 17

2
Webb v. Investacorp., Inc.,
89 F.3d 252 (5th Cir.1996) ............................................................................. 17

STATUTES
9 U.S.C. §3 ............................................................................................................ 9
TEX. CIV. PRAC. & REM. CODE §171.001(a) ......................................................... 9

3
 I. Introduction

The trial court erred in denying Appellants’ Motion to Compel

Arbitration because Appellee failed to establish that the arbitration

agreement contained in AAU’s National Policies was illusory or

unconscionable. There was a mutual promise to arbitrate all civil

disputes, and as such, Bray cannot refuse to submit his claims in the

arbitral forum. As officers and/or directors of the AAU, Appellants

Campbell, Oliver and Seaford can invoke the arbitration agreement

with regard to Bray’s claims against them. The broad arbitration

agreement contained in the AAU National Policies encompasses Bray’s

causes of actions made the basis of his suit even if they were not

specifically described in the provision.

Although Bray includes numerous reasons to find the arbitration

agreement unconscionable, he failed to bring forth any evidence in

support of his defense. The severability clause contained in the

arbitration agreement prohibits Appellee from relying on the

limitations and punitive damages provisions to render the entire

arbitration agreement unconscionable.

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II. Reply to Appellee’s Enforceability Argument

A. The Arbitration Agreement Is Not Illusory.

In determining the validity of arbitration agreements subject to

the Federal Arbitration Act, state law principles governing the

formation of contracts apply. In re Palm Harbor Homes, Inc., 195

S.W.3d 672, 676 (Tex. 2006). Arbitration agreements, like other

contracts, must be supported by consideration. Id. An illusory promise

is a promise that fails to bind the promisor, who retains the option of

discontinuing performance. Vandeventer v. All American Life & Cas.

Co., 101 S.W.3d 703 (Tex. App. – Fort Worth 2003, no pet.). When

illusory promises are all that support a purported bilateral contract,

there is no consideration to support the contract. Tenet Healthcare, Ltd.

v. Cooper, 960 S.W.2d 386 (Tex. App. – Houston [14th Dist.] 1998, rev

dismissed w.o.j.). Consideration can be the bilateral promise to

arbitrate. In re Palm Harbor Homes at 676. When an arbitration

agreement is part of an underlying contract, the rest of the parties’

agreement provides the consideration required to form a valid contract.

In re AdvancePCS Health L.P., 172 S.W.3d 603, 607 (Tex. 2005).

5
 Appellee claims that AAU’s arbitration agreement is illusory

because it did not contain a “savings clause” requiring notification of

modifications or termination. In Halliburton, an at-will employee

brought an action alleging discrimination. In re Halliburton Co., 80

S.W.3d 566 (Tex. 2002). Halliburton, the employer, was denied their

motion to compel arbitration based on the arbitration agreement

contained in their dispute resolution program. Id. The employer sent

notice to the employee advising him that continuing employment would

constitute acceptance of the new plan. Id. at 567. The Texas Supreme

Court determined the arbitration agreement in an employer-employee

relationship was not illusory, in part because the employee had notice of

the proposed changes to his at-will employment contract and accepted

them by continuing to work after a specified date. Id. at 573. Here,

although amendments were made to the arbitration agreement in 2006

and 2009, Bray agreed to be bound to the revised language year after

year with the renewal of his membership. Bray did not offer any

contrary evidence. There is no evidence for this Court to consider that

supports his allegation that AAU’s amendments and addition were done

absent any notice or prospective-only requirements. (Appellee’s Brief at

6
p.11). Further, AAU is a volunteer organization. This fact distinguishes

the instant case from Halliburton which involved an employer-employee

relationship. If Bray did not agree to any revisions to the arbitration

agreement, Bray could have chosen to not participate in any further

AAU events and terminate his membership. However, Bray chose to

continue his involvement with the AAU as a member and District

Officer.

In C&H News Co., the Court concluded the arbitration agreement

was illusory because the employee handbook contained a provision in

which the company expressly reserved the right to unilaterally amend

the handbook, and in essence, could unilaterally change the scope of the

arbitration agreement. In re C&H News Co., 133 S.W.3d 642, 646 (Tex.

App – Corpus Christi 2003, orig. proceeding). AAU’s arbitration

agreement does not contain such a reservation. (CR:41-42). There was

no evidence before the trial court supporting Appellee’s contention that

AAU could avoid its promise to arbitrate.

In fact, in Aspen Technology, the Court was faced with

interpreting the following provision:

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 The incentive compensation plan administrator (Vice
President of Worldwide Sales Operations) is responsible
for the interpretation of the plan. If the meaning or
interpretation of the plan wording requires clarification
after consideration of all the facts, the Senior Vice
President, Worldwide Sales, and Business Development
(SVP Sales) or his/her designee, will issue a written ruling,
which will be final. In addition, the SVP Sales will be
responsible for periodic review of the plan and may make
revisions from time to time.

Aspen Technology v. Shasha, 253 S.W.3d 857, 862 (Tex.App. – Houston

[14th Dist.] 2008, no pet.)(emphasis added). Despite the last sentence,

the court concluded that Aspen did not retain a unilateral, unrestricted

right to modify or terminate the arbitration provision in that

agreement. Id. at 863. As a matter of law, the arbitration agreement

was not illusory. Id.

AAU’s arbitration agreement unambiguously binds both the AAU

and its members be bound by the promise to arbitrate. Further, the

arbitration agreement does not contain any language indicating that

AAU retains the unilateral right to modify or terminate the arbitration

agreement. Therefore, the arbitration agreement is not illusory and

should be enforced.

8
 B. The Arbitration Agreement to which Bray Agreed To Is
Valid.

Appellee argues he only signed documents in his capacity as

Governor of the AAU South District, and thus cannot not be bound to

the arbitration agreement individually. Neither the FAA nor Texas law

requires that arbitration clauses be signed as long as it is written and

agreed to by the parties. See 9 U.S.C. §3; TEX. CIV. PRAC. & REM. CODE

§171.001(a); see In re Polyamerica, 296 S.W.3d 74, 76 (Tex. 2009); In re

AdvancePCS Health, L.P., 172 S.W.3d 603, 606 (Tex. 2005). The first

sentence of the AAU arbitration agreement states that “[b]y applying

for AAU membership […] or entering any AAU event,” the member or

participant has agreed to submit any civil disputes to arbitration.

(CR:41). Even though Appellee claims he did not sign anything in his

individual capacity, Bray agreed to be bound by the AAU Code, which

includes the National Policies and arbitration agreement, when he

applied and renewed his membership and paid his annual membership

dues. (CR:44). Appellee cannot deny that he received notice and agreed

to the terms each year when he renewed his membership.

Further, at the time of the incident, Bray was acting in his official

capacity on the AAU’s Jury of Appeals. (CR:3). Although the arbitration

9
agreement applies to applicants, members, and entrants, at all times

relevant to the claims made in the lawsuit, Bray was much more than

an AAU member – he was an elected officer for the AAU. As such, Bray

had sufficient notice of the arbitration agreement, agreed to be bound

by it, and under Texas law cannot refuse to abide by it.

C. Campbell, Seaford, and Oliver Can Seek Enforcement of the
Arbitration Agreement Contained in AAU National Policies.

Appellee seeks to avoid arbitration by claiming Campbell, Seaford

and Oliver are not agents of AAU, and thus cannot invoke the AAU

arbitration provision. Appellee’s argument is defeated, however, by his

own petition in which Bray predicates AAU’s liability on allegations

that the individual appellants were acting in the course and scope of

employment by AAU and in furtherance of AAU’s business when they

committed the alleged acts leading to Bray’s lawsuit. (CR:7). Appellee

cannot have it both ways.

At the time of the incident made the basis of the Bray’s lawsuit,

Appellants Campbell, Oliver, and Seaford were all officers and/or

directors of the AAU fulfilling the duties of their respective positions.

(CR:3) The alleged acts Bray complains of took place during an AAU-

sponsored event. (CR:3). Contrary to Appellee’s argument, Campbell,

10
Oliver and Seaford did not expressly agree that they are not agents of

the AAU. (Appellee’s Brief at p.20). The “Agency” provision in the

National Policies simply states that “membership” itself does not create

an agency relationship. (CR:45). The AAU does not want members

across the country representing themselves to be agents of the AAU

without their written authorization. In this case, all three individual

Appellants were acting as officers and/or directors rather than merely

an AAU member present at an AAU-sponsored event.

Moreover, Appellants Campbell, Seaford and Oliver seek

enforcement of the arbitration agreement contained in the AAU

National Policies based on their AAU membership. They agreed to be

bound by the same arbitration agreement as Appellee did. Further, the

arbitration agreement states “[t]he parties agree that the binding

arbitration shall be in lieu of any litigation by and between all of the

parties related to the dispute.” (CR:41).

III. Bray’s Claims are Within the Scope of the Broad Arbitration
Agreement.

In In re Dillard Dept. Stores, Inc., Andrea Martinez, an employee

of Dillard for almost twenty years, filed a lawsuit against Dillard

alleging defamation after being terminated. In re Dillard Dept. Stores,

11
Inc., 186 S.W.3d 514, 515 (Tex. 2006). Martinez filed a lawsuit against

Dillard, its district manager, and two unnamed employees. Id. Dillard

moved to compel arbitration. Martinez argued her defamation claim

was not within the scope of the agreement, which specifically listed

claims subject to arbitration. Id. at 516. However, the Texas Supreme

Court found that defamation was covered under the arbitration

agreement because defamation is a personal injury (one of the specific

claims subject to arbitration), and directed the trial court to order all

claims proceed to arbitration under the Federal Arbitration Act. Id.

The AAU arbitration agreement was purposefully drafted to

include a broad range of claims, and thus “civil disputes” was used to

identify the claims that would be subject to arbitration. (CR:41). By

applying for membership with AAU, an applicant agrees to comply with

all provisions contained in the AAU Code, including the arbitration

agreement. (CR:43). Further, when Bray submitted his annual

membership dues, he agreed to be bound by the AAU Code, including

all AAU Policies, including the arbitration agreement. (CR:44).

Therefore, Bray should be bound and compelled to arbitrate his claims

12
filed against AAU and the individual Appellants, Campbell, Oliver, and

Seaford.

IV. Reply to Bray’s Claim that the Arbitration Agreement is
Unconscionable
A. Bray Cannot Rely on Limitations Provision and Punitive
Damages Provision to Render the Entire Arbitration
Agreement Unconscionable.

When determining if an arbitration agreement is unconscionable,

the Court must examine the totality of the circumstances surrounding

the formation of the agreement. The “only cases under Texas law in

which an agreement was found procedurally unconscionable involve

situations in which one of the parties appears to have been incapable of

understanding the agreement.” Long v. BDP Intern., Inc., 919

F.Supp.2d 832, 845 (S.D.Tex. 2013)(quoting Fleetwood Enters., Inc. v.

Gaskamp, 280 F.3d 1069, 1077 (5th Cir.2002).

Bray argues the arbitration agreement is substantively

unconscionable because it imposes a one-year limitations period and

prohibits an award of punitive or exemplary damages. Even if these

provisions were “unconscionable”, the agreement’s severance clause

(CR:41) would allow those provisions to be severed without invalidating

the entire argument. Hadnot v. Bay, Ltd., 344 F.3d 474 (5th Cir. 2003);

13
Security Service Federal Credit Union v. Sanders, 264 S.W.3d 292, 300

(Tex. App. – San Antonio 2008, no pet.).

In Hadnot, the arbitration agreement precluded the arbitrator

from awarding any punitive or exemplary damages. See Id. at 478. The

Fifth Circuit held that the punitive damage provision did not render the

arbitration agreement unconscionable. Id. Even though the agreement

at issue did not have a severance clause, the Court held that the

unenforceable provision could be severed because doing so still allowed

the arbitration clause to remain capable of achieving its purpose. Id.

The relevant inquiry is “whether or not the parties would have entered

into the agreement absent the unenforceable provisions.” Long at 846

(quoting In re Poly-Am., L.P., 262 S.W.3d 337, 360 (Tex. 2008). In Long,

the Court found that severance of a one-year limitations period

provision was appropriate. Id. In any event, here Appellants have not

asserted limitations.

In In re Poly-Am., the arbitration agreement contained the

following severability clause:

“Should any term of this Agreement be declared illegal,
unenforceable, or unconscionable, the remaining terms of the
Agreement shall remain in full force and effect. To the extent
possible, both Employee and Company desire that the

14
 Arbitrator modify the term(s) declared to be illegal,
unenforceable, or unconscionable in such a way as to retain
the intended meaning of the terms as closely as possible.”

In re Poly-Am. at 860.

With regard to Bray and AAU, there is no evidence that the

parties would not have entered into the agreement absent the one-year

limitations period and provision prohibiting punitive or exemplary

damages. AAU’s arbitration agreement contains a severability clause

similar to the one found in In re Poly-Am., which expressly states:

If any portion of the arbitration agreement shall be
declared invalid or unenforceable, the rest of the
agreement (to so arbitrate) shall remain in full force
and effect.

(CR:41). By seeking enforcement of the entire general arbitration

agreement, AAU did not waive its right to have the punitive damages or

statute of limitations clause severed. As a result, Appellee cannot rely

on the limitations or punitive damage provision to render the entire

arbitration agreement unconscionable. In order to promote public policy

favoring arbitration, Bray should be compelled to arbitrate his claims

against all Appellants. See Security Service Federal Credit Union v.

Sanders, 264 S.W.3d 292, 301 (Tex.App – San Antonio 2008, no pet.)

15
 B. Bray Failed to Show The Arbitration Forum Is Cost
Prohibitive.

Bray argues that arbitration agreement is substantively

unconscionable because the costs imposed are excessive and would

prevent Bray from asserting his rights in an arbitration proceeding.

(Appellee’s Brief at p.34). However, he failed to bring forth any evidence

to show that arbitration of his claims would be unconscionable on the

ground that the arbitral forum was cost prohibitive. Appellee claims the

costs are excessive because he is unable to pay the arbitration fees and

costs and cannot afford to travel to Florida for arbitration. (Appellee’s

Brief at p.34). However, there is no evidence in the record regarding his

financial position which prohibits him from paying the arbitration fees.

Bray’s conclusory affidavit states he cannot afford it, but no evidence to

support that statement was included. In addition, Bray claims this

litigation is of no cost to him because the contingency fee agreement

does not obligate him to pay for litigation expenses unless a recovery is

made on his behalf. (CR:111).

Bray also argues that being forced to arbitrate in Florida would be

a “serious financial burden on Appellee and would effectively prevent

16
[him] from asserting his rights in an arbitration proceeding.” (Appellee’s

Brief at p. 35-36).

In Webb v. Investacorp, Inc., the court upheld an arbitration

provision that called for the Texas-based plaintiff to proceed with

arbitration in the county where the Florida defendant maintained its

executive offices. Webb v. Investacorp., Inc., 89 F.3d 252 (5th Cir.1996)

The court held that “while the venue and cost provisions may be

disfavorable to the Webbs, the fact that a bargain is a hard one does not

entitle a party to be relieved therefrom if he assumed if fairly and

voluntarily.” Webb at 259 (5th Cir.1996)(quoting Wade v. Austin, 524

S.W.2d 79, 86 (Tex. App. - Texarkana 1975, no writ)). As in Webb, Bray,

a Texas resident, agreed to be bound by an arbitration agreement that

had a Florida venue provision, should be compelled to arbitrate his

claim in Florida.

The argument that Bray would have to seek new counsel in

Florida, which may involve an hourly-fee arrangement instead of a

contingency fee arrangement, is insufficient to render the arbitration

agreement unconscionable. Further, Appellee has failed to cite a single

17
case to support his position with regard to the forum selection contained

in the arbitration agreement.

C. Bray Did Not Prove the Arbitration Agreement Was
Substantively Unconscionable.

Bray has also failed to show that the terms of the arbitration

agreement were so “one-sided or oppressive” they constitute substantive

unconscionability. Quinn v. EMC Corp., 109 F.Supp.2d, 681, 686 (S.D.

Tx. 2000). Bray failed to offer any evidence showing that “no man in his

senses and not under a delusion would enter into and ... no honest and

fair person would accept a contract on such terms.” Id.(quoting

Morrison v. Amway Corp., 49 F.Supp.2d 529,534 (S.D. Tex.1998)).

Under the terms of AAU’s arbitration agreement, both parties agree to

forego civil litigation and submit all civil disputes to arbitration.

Nothing in the agreement is so one-sided or oppressive that it is

unconscionable. Bray has cited no case in which the provisions about

which he complains of invalidated an entire arbitration agreement.

Although Bray argues various reasons he claims should justify

finding the arbitration agreement unconscionable, he did not present

any evidence for the trial court to make that determination. The

affidavits contained in the record (Bray’s and his attorney’s affidavit)

18
are conclusory and speculative, and do not meet the standard required

to show that Bray will incur excessive costs in arbitrating his claims.

Bray submitted no evidence with regard to the expected cost differential

between arbitration and litigation, which the most important of three

factors the Texas Supreme Court considered when determining if an

arbitration agreement was unconscionable. In re Olshan Foundation

Repair Co., LLC, 328 S.W.3d 883, 893-894 (Tex. 2010). As such, this

Court should disregard Bray’s reasons as, without evidence, they cannot

support his substantive unconscionability argument.

CONCLUSION AND PRAYER

For the foregoing reasons, Appellants respectfully request that

this Court reverse or vacate the trial court’s April 14, 2015 Order

Denying Defendants’ Motion to Compel Arbitration and Abate

Proceedings Pending Arbitration and order the trial Court to abate the

proceedings so that the Parties may proceed with arbitration in Orange

County, Florida. Appellants pray for such other and further relief as

they may be entitled.

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 CERTIFICATE OF COMPLIANCE

Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), the

undersigned certifies this Appellants’ Reply Brief complies with the

type-volume limitations of Texas Rule of Appellate Procedure

9.4(i)(2)(C). The undersigned prepared the Appellants’ Brief using

Microsoft Word 2013 and is relying on that software’s word-count

function.

Exclusive of the exempted portions listed in Texas Rule of

Appellate Procedure 9.4(i)(2)(C), the brief contains 2,999 words.

Respectfully submitted,

LEWIN PLUNKETT
Texas Bar No. 16079000
DANNICK VILLASEÑOR-HERNANDEZ
Texas Bar No. 24072713
Plunkett & Griesenbeck, Inc.
Catholic Life Building, Suite 900
1635 N.E. Loop 410
San Antonio, Texas 78209
(210) 734-7092 (telephone)
(210) 734-0379 (facsimile)
lplunkett@pg-law.com
dhernandez@pg-law.com

/s/ Dannick Villaseñor-Hernandez
DANNICK VILLASEÑOR-HERNANDEZ

COUNSEL FOR APPELLANTS

20
 CERTIFICATE OF SERVICE

This will certify that a true and correct copy of the foregoing
Appellants’ Brief has been forwarded this 14th day of July, 2015, to the
following attorneys of record via the method stated:

Jerry Galow Via E-Mail
Justin Studdard Via E-Mail
Galow & Smith, P.C.
1204 Nueces
Austin, Texas 78701

/s/ Dannick Villaseñor-Hernandez
DANNICK VILLASEÑOR-HERNANDEZ

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