UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-11317
Summary Calendar
HUGHES TRAINING INC.; HUGHES ELECTRONIC CORPORATION;
RAYTHEON COMPANY,
Plaintiffs-Appellees,
VERSUS
GRACIE COOK; LITTLETON COOK,
Defendants-Appellants.
Appeal from the United States District Court
for the Northern District of Texas, Fort Worth Division
June 29, 2001
Before EMILIO M. GARZA, STEWART, and PARKER, Circuit Judges.
ROBERT M. PARKER, Circuit Judge:
Appellants Gracie and Littleton Cook appeal from the district
court’s final judgment that vacated an arbitration award against
Gracie Cook’s former employer, Raytheon Company.1 The Cooks argue
that the district court applied an incorrect standard of review to
the arbitrator’s decision and that, even if the court applied the
correct standard of review, the facts support the arbitrator’s
award of damages for intentional infliction of emotional distress.
1
The district court asserted diversity jurisdiction pursuant to
28 U.S.C. § 1332(a). This Court has jurisdiction over an appeal
from a district court’s final judgment pursuant to 28 U.S.C. §
1291.
1
I. Facts
Hughes Training hired Gracie Cook as a senior engineering
assistant in 1993.2 When she accepted the job, she signed a
“Mutual Agreement to Arbitrate Claims.” The agreement stated that
all employment disputes would be submitted to final and binding
arbitration. The agreement contained the following provision:
Arbitration under [the] Agreement may be compelled and
enforced according to the Federal Arbitration Act (9
U.S.C. § 1 et seq.) and shall be conducted in accordance
with the EPRP [(Employee Problem Resolution Procedures)]
Arbitration Procedure.
The Employment Problem Resolution Procedures contained the
following terms relating to an appeal from an arbitration award:
Either party may bring an action in any court of
competent jurisdiction to compel arbitration under this
Agreement, to enforce an arbitration award, and to vacate
an arbitration award. However, in actions seeking to
vacate an award, the standard of review to be applied to
the arbitrator’s findings of fact and conclusions of law
will be the same as that applied by an appellate court
reviewing a decision of a trial court sitting without a
jury.
By signing the document, Cook acknowledged that she had read both
the arbitration agreement and the Employment Problem Resolution
Procedures.
After Cook obtained a degree in management information
systems, Raytheon transferred her to the Database Engineering
Department under the supervision of Mike Braudaway. Employees in
Braudaway’s department created “geocells,” which are visual
2
Hughes Training merged with Raytheon in 1998.
2
databases that reflect topography in different areas of the world
for use in flight simulators. The department worked under
stringent budgetary and time demands for which Braudaway was
responsible.
According to Braudaway, Cook struggled to comply with the
budgetary and time constraints from the beginning. She required
two additional weeks of training compared to the other employees in
the department. Braudaway teamed Cook with another employee,
Carmen Bernal, in an effort to improve the efficiency and quality
of her work. Braudaway believed that Cook’s work improved somewhat
but that she was still “inconsistent” and error-prone.3 According
to Cook, Braudaway accused her of “building cow patties.”
After a meeting in May of 1996, Braudaway informed Cook in
writing that she would have until May 31, 1996, to improve her data
base development skills. At that time, Raytheon would evaluate her
work, and, if her skills did not improve, Raytheon would take
further corrective action, which could include termination. In
response, Cook accused Braudaway of discrimination. Braudaway in
turn told her not to “play the race card.” Braudaway never
reported the discrimination claim to Raytheon’s Human Resources
Department for an investigation.
3
During her employment, Cook felt that she was not treated the
same as other employees. She complained that the department had a
“good old boy” network from which she and Bernal were excluded.
3
Braudaway gave Cook a “test bed” evaluation to complete
within a specified period of time without the help of coworkers.
Within a few days of receiving the test, Cook met with Braudaway
and Melanie Dively, the manager of the Human Resources Department.
Cook became very distraught and stressed during the meeting. She
began to cry, stutter, and rub her arm. Braudaway offered to call
Cook’s doctor, but she refused.
Cook took medical leave within days of the meeting. She
complained to her physician that she had difficulty processing her
speech and sustaining her short-term memory. The physician
concluded that she suffered from several mini-strokes that were
propagated by her stress at work. Raytheon learned that Cook
suffered a stroke in 1988 and that, on the date of the meeting, she
exhibited stroke-like symptoms.
Upon Cook’s insistence, the physician permitted her to return
to work on August 5, 1996, ten days before his initial
authorization date. The physician provided a written note
indicating that she could return to work without any restrictions.
Cook, however, explained to Braudaway that the doctor released her
for the limited purpose of assessing the duties she was capable of
performing. Braudaway immediately directed her to resume the test
cell evaluation she began three months earlier. She had eight days
remaining in the evaluation period to complete the project. Upon
hearing that she must complete the project satisfactorily or else
be fired, she began to cry and stutter as she had done three months
4
earlier. Braudaway told her either to contact Human Resources
about a transfer or to call her doctor. Cook voluntarily left
Raytheon a few days later.
In April of 1998, Cook filed a complaint in Texas state court
alleging intentional infliction of emotional distress in connection
with the end of her employment. She also added a Title VII
discrimination claim in 1999. Her husband, Littleton Cook, filed
a claim for loss of consortium. Raytheon argued that arbitration
should be compelled pursuant to the employment agreement, and the
trial court agreed.
After conducting a two-day hearing, the arbitrator awarded
Gracie Cook $200,000 in damages for intentional infliction of
emotional distress and Littleton Cook $25,000 in damages for loss
of consortium. The arbitrator based her opinion primarily on the
fact that Raytheon knew Cook previously suffered a stroke and that
Cook exhibited symptoms of a stroke at the May 1996 meeting. The
arbitrator concluded that Raytheon’s reassignment of Cook to the
“test bed” evaluation was intentional, caused her “stress,” that
her stress was “extreme,” and that Raytheon’s conduct was “extreme
and outrageous.” The arbitrator determined that Cook’s
discrimination claim was meritless.
Raytheon filed suit to vacate the arbitration award. Raytheon
argued that the parties agreed to the judicial standard of review
in the arbitration agreement and that the evidence did not support
a finding that Raytheon intentionally inflicted emotional distress.
5
The Cooks argued that the standard of review incorporated in the
arbitration agreement was inconsistent with the agreement itself
and unconscionable in light of the parties’ respective bargaining
positions. Alternatively, the Cooks argued that the evidence
supported the claim for intentional infliction of emotional
distress.
The district court issued an order vacating the arbitration
award. The court concluded that the parties lawfully contracted
for the more expansive standard of review. The court determined
that Raytheon’s decision to immediately continue Cook’s time-
sensitive evaluation was not extreme and outrageous conduct.
Accordingly, the district court held that Gracie Cook failed to
establish her claim for intentional infliction of emotional
distress and that Littleton Cook was therefore not entitled to
damages for loss of consortium as a matter of law. The Cooks
timely filed a notice of appeal.
II. Standard of Review
A district court’s decision refusing to vacate an arbitration
award is reviewed under the same standard as any other district
court decision. See First Options of Chicago, Inc. v. Kaplan, 514
U.S. 938, 947-49 (1995). We accept findings of fact that are not
clearly erroneous and decide questions of law de novo. See General
Motors Corp. v. Pamela Equities Corp., 146 F.3d 242, 246 (5th Cir.
6
1998). No different standard applies when we review a district
court’s judgment vacating an arbitration award. See Gianelli Money
Purchase Plan and Trust v. ADM Investor Serv., Inc., 146 F.3d 1309,
1310 (11th Cir. 1998).
A district court’s review of an arbitration award is usually
“extraordinarily narrow.” Antwine v. Prudential Bache Securities,
Inc., 899 F.2d 410, 413 (5th Cir. 1990).4 However, “parties are
generally free to structure their arbitration agreements as they
see fit.” Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S.
52, 57 (1995) (qouting Volt Info. Sciences, Inc. v. Board of
Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 479
(1989)). An arbitration agreement may therefore expand judicial
review of an arbitration award beyond the scope of the Federal
Arbitration Act. See Gateway Technologies, Inc. v. MCI Telecomm.
4
The Federal Arbitration Act allows a district court to vacate
an arbitration award
(1) Where the award was procured by corruption, fraud, or
undue means.
(2) Where there was evident partiality or corruption in
the arbitrators, or either of them.
(3) Where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, . . . or in refusing to
hear evidence pertinent to and material to the
controversy; or of any other misbehavior by which the
rights of any party have been prejudiced.
(4) Where the arbitrators exceeded their powers, or so
imperfectly executed them that a mutual, final, and
definite award upon the subject matter submitted was not
made.
9 U.S.C. § 10(a). In addition to the statutory list, a district
court may vacate an arbitration award when the award reflects an
arbitrator’s “manifest disregard for the law.” Williams v. Cigna
Financial Advisors, Inc., 197 F.3d 752, 761 (5th Cir. 1999).
7
Corp., 64 F.3d 993, 997 (5th Cir. 1995).
Cook contends that the standard of review in the Employment
Problem Resolution Procedures was inconsistent with the arbitration
agreement itself. She also argues that the contract is ambiguous,
and that the ambiguity should be resolved in her favor.
While the agreement stated that arbitration “may be compelled
and enforced under the Federal Arbitration Act,” it specifically
provided that the arbitration process “shall be conducted in
accordance with the [Employment Problem Resolution Procedures].”
The procedural rules pertained to the entire arbitration process,
which included the review of arbitration awards. A contract
provision is ambiguous only where the terms are susceptible to
differing reasonable interpretations. See Barnett v. Aetna Life
Ins. Co., 723 S.W.2d 663, 665 (Tex. 1987). Having read the
arbitration agreement and the Employment Problem Resolution
Procedures, we are convinced that the only reasonable
interpretation of the agreement is that the incorporated procedural
rules governed the entire arbitration process. The standard of
review set out in the Employment Problem Resolution Procedures
clearly supplemented the provisions of the Federal Arbitration Act
and is not inconsistent with the terms of the arbitration
agreement.
Appellants also contend that the employment arbitration
agreement is distinguishable from the arbitration agreement in
8
Gateway, supra, because the parties in Gateway were sophisticated
commercial entities whereas Gracie Cook was an employee negotiating
with a large corporation. Contracts in which one party has minimal
bargaining power, also referred to as contracts of adhesion, are
not automatically void. See Dillard v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 961 F.2d 1148, 1154 (5th Cir. 1992), cert.
denied, 506 U.S. 1079 (1993); In re Oakwood Mobile Homes, Inc. 987
S.W.2d 571, 574 (Tex. 1999). “Instead, the party seeking to avoid
the contract generally must show that it is unconscionable.” Id.
“There is nothing per se unconscionable about arbitration
agreements.” EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex.
1996). “‘Unconscionability’” has no precise legal definition.”
Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 821 (Tex.
App.–-San Antonio 1996, no writ) (quoting Southwestern Bell Tel.
Co. v.DeLanney, 809 S.W.2d 493, 498 (Tex. 1991)). The substantive
aspect of unconscionability is concerned with the fairness of an
agreement and must be settled on a case by case basis. See id.
Although the supplemental standard of review incorporated into the
arbitration agreement benefitted Raytheon in this instance, it was
equally available to Mrs. Cook had the award been unfavorable to
her. It was not unfair for the arbitration agreement to include a
standard of review that allowed the district court to assess the
arbitrator’s legal and factual conclusions. The district court
therefore correctly adopted the standard of review incorporated
9
into the parties’ arbitration agreement.
III. Intentional Infliction of Emotional Distress
In Texas, an employee must prove the following elements to
establish intentional infliction of emotional distress: (1) the
employer acted intentionally or recklessly; (2) the conduct was
extreme and outrageous; (3) the employer’s actions caused the
plaintiff emotional distress; and (4) the emotional distress that
the plaintiff suffered was severe. Wal-Mart Stores, Inc. v.
Bertrand, 37 S.W.3d 1, 13 (Tex. App. 2000). To be extreme and
outrageous, “conduct must be so outrageous in character and so
extreme in degree, as to go beyond all possible bounds of decency,
and to be regarded as atrocious, and utterly intolerable in a
civilized community.” Id. (citing Brewerton v. Dalrymple, 997
S.W.2d 212, 216 (Tex. 1999)). “Ordinary employment disputes” will
not support a claim for intentional infliction of emotional
distress. GTE Southwest, Inc. v. Bruce, 998 S.W.2d 605, 612 (Tex.
1999). In the employment context, “extreme conduct exists only in
the most unusual of circumstances.” Id. at 613. “There is no
litmus test for outrageousness; whether conduct was outrageous and
extreme must be analyzed on a case-by-case basis.” Skidmore v.
Precision Printing and Packaging, Inc., 188 F.3d 606, 613 (5th Cir.
1999).
The district court concluded that returning Cook to the “test
bed” evaluation after her absence from work did not constitute
10
extreme and outrageous conduct. The court relied primarily on the
fact that Cook’s physician did not expressly list any restrictions
on her work duties. The court also surmised that by instructing
Cook to complete the “test bed” evaluation within eight days of her
return, Raytheon simply resumed her normal work duties.
In GTE Southwest, Inc. v. Bruce, a supervisor continuously
subjected the plaintiffs to extremely humiliating and abusive
conduct for a period of more than two years. See Bruce, 998 S.W.2d
at 613-14. The conduct involved profanity, urging employees to
quit, approaching employees in a physically hostile manner, and
other harassing behavior. See id. The Texas Supreme Court
concluded that the repeated offensive conduct, evaluated as a
whole, “went beyond the boundaries of tolerable workplace conduct.”
Id. at 617.
In Wal-Mart Stores, Inc. v. Bertrand, 37 S.W.3d 1 (Tex. App.–-
Tyler 2000), the Texas Court of Appeals compared the facts before
it with those before the Texas Supreme Court in Bruce.
See Bertrand, 37 S.W.3d at 13-15 (citing Bruce, 998 S.W.2d at 613-
14). The conduct in Bertrand was similar, but far less egregious
and of much shorter duration. See Bertrand, 37 S.W.3d at 14. The
court of appeals concluded that the repeated conduct was not
outrageous as a matter of law. See id. at 14-15.
This case does not involve the same type of repeated abusive
11
behavior. Cook may have felt ostracized by Braudaway, but
Braudaway’s conduct leading up to her return from medical leave was
no more than a normal employment dispute over an employee’s work
performance. Braudaway’s decision to resume the evaluation
immediately upon Cook’s return raises greater concern. An
employer’s conduct may be considered extreme and outrageous if the
employer knew that the employee was “peculiarly susceptible to
emotional distress, by reason of some physical or mental condition
or peculiarity.” Fields v. Teamsters Local Union No. 988, 23
S.W.3d 517, 532 (Tex. App.–-Houston [1st Dist.] 2000) (quoting
RESTATEMENT (SECOND) OF TORTS § 46 cmt. f). Braudaway knew that Cook
suffered symptoms of a stroke during the May 1996 meeting. Based
on his knowledge of Cook’s peculiar susceptibility to emotional
distress, the arbitrator concluded that Braudaway’s conduct was
intentional, extreme, and outrageous.
Although his conduct was insensitive to Cook’s peculiar
physical susceptibility to stress, we agree with the district court
that it was not extreme and outrageous.
[T]o properly manage its business, an employer must be
able to supervise, review, criticize, demote, transfer,
and discipline employees. Although many of these acts
are unpleasant for the employee, an employer must have
latitude to exercise these rights in a permissible way,
even though emotional distress results.
12
Bruce, 998 S.W.2d at 612 (citations omitted). Cook returned to
work with her physician’s note, which did not list work
restrictions. Cook claims that she told Braudaway that she was
returning to work in order to assess the work she was capable of
performing. It is fundamental to a successful business that an
employer have employees that are capable of effectively and
efficiently performing their jobs. To ensure the quality of an
employee’s work, an employer must be able to evaluate an employee’s
performance. See id. Employer’s cannot be expected to cater to
the peculiar sensitivities of an employee who cannot physically
work in a stressful environment. While Braudaway’s conduct was
insensitive to Mrs. Cook’s condition, his instructions that she
resume the evaluation were not extreme and outrageous. The
district court’s judgment vacating the arbitration award is
therefore affirmed.
AFFIRMED
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