Whataburger Restaurants LLC v. Yvonne Cardwell , 545 S.W.3d 73 ( 2017 )

COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
§
WHATABURGER RESTAURANTS No. 08-13-00280-CV
LLC, §
Appeal from
Appellant, §
County Court at Law No. 7
v. §
of El Paso County, Texas
YVONNE CARDWELL, §
(TC # 2013DCV0910)
Appellee. §
OPINION
This is an interlocutory appeal from the denial of a motion to compel arbitration. See
TEX.CIV.PRAC. & REM.CODE ANN. § 51.016 (West 2015)(permitting an interlocutory appeal from
the denial of a motion to compel arbitration under the Federal Arbitration Act). The trial court
denied the motion based on extensive findings supporting some of Yvonne Cardwell’s claims that
the arbitration agreement is unconscionable. When we first heard this case, we sustained
Whataburger’s contention that the trial court erred in its unconscionability analysis. Whataburger
Restaurants LLC v. Cardwell, 446 S.W.3d 897, 912-13 (Tex.App.--El Paso 2014), reversed, 484
S.W.3d 426 (Tex. 2016). On petition for review, Yvonne Cardwell did not challenge that part of
our opinion, but rather she successfully claimed before the Texas Supreme Court that we erred in
not addressing her other reasons to deny arbitration that the trial court had not ruled on. Id. at 428.
We now take up those additional arguments.
Our prior opinion sets out the full procedural and factual background. Relevant to the
issues before us, it is enough to state that Cardwell claims she was injured while working in the
course and scope of her employment with Whataburger when an object struck her on the head.
She filed suit alleging a common law negligence cause of action against Whataburger, which is a
non-subscriber under the Texas worker’s compensation system. Whataburger answered and then
moved to compel arbitration.
Whataburger supported the motion to compel arbitration with the affidavit of Cardwell’s
general manager. According to the affidavit, the manager provided Cardwell at the time of hire
with Whataburger’s arbitration policy that was contained within the Employee Handbook. The
policy appears on pages twenty-two and twenty-three of the handbook, under a bold header titled
“Texas Arbitration Policy.” The policy contains sixteen numbered paragraphs (1.01 to 7.05) which
comprehensively set out the terms of the policy.
The core of the agreement provides:
2.01 All employees, by accepting employment or by continuing employment after
the implementation of this Policy, shall be required to submit any legally
recognized claim or dispute related to their employment, including workplace
injury or disease or to the termination of their employment, to arbitration, rather
than to litigation, according to this Policy and the rules established for its
enforcement. The Company similarly shall be required to proceed to arbitration on
all matters properly brought for arbitration by employees and former employees
pursuant to this Policy.
The policy has a specific provision that addresses when Whataburger could, and could not,
alter this policy:
The duty imposed on both the Company and on employees to arbitrate all legally
recognized claims or disputes arising from the employment relationship shall
continue beyond, and not be affected by, the termination of an employee’s
employment. Moreover the company shall have no right, once the facts giving rise
2
to the legally recognized claim or dispute have occurred, to unilaterally amend or
modify this Policy or otherwise avoid its obligation to proceed to arbitration if
requested to do so in the absence of mutual consent of the Company and the
Employee. Whataburger, Inc. will not alter, modify or amend this Policy without
first providing all employees with 30 days advanced written notice. An Employee
who chooses to continue employment for at least thirty (30) days after receiving
written notice of an amendment or modification of the Policy shall be deemed to
have consented.
At the time she was hired, Cardwell signed an “Acknowledgement Sheet” where she made
four distinct acknowledgements. Relevant here, she acknowledged receipt of the Employee
Handbook. That acknowledgment states:
EMPLOYEE HANDBOOK: I understand that the information provided in the
Employee Handbook is intended to be used as a guide only. Its provisions are not
conditions of employment and may be modified, revoked, changed or deleted by
Whataburger Restaurants LLC at any time with or without notice. Nothing in this
manual is intended to create, nor is it to be construed to constitute a contract
between Whataburger and any of its employees.
Yet the Acknowledgment Sheet also has a specific place where Cardwell acknowledged the
binding nature of the arbitration policy:
ARBITRATION: I understand that Whataburger Restaurant, LLC will submit any
legally recognized claim or dispute related to employment, termination of
employment, including workplace injury or disease claims except as specifically
excluded in paragraph 3.02 of the Arbitration Policy to arbitration and by accepting
or continuing employment I shall be required to submit any legally recognized
claims or disputes to arbitration.
Her regular paychecks also contained an almost identically worded statement acknowledging the
arbitration policy.
Cardwell opposed arbitration on a number of grounds including claims that the agreement
was unconscionable and illusory. Following a hearing, the trial court denied arbitration, issuing
findings of facts and conclusions of law that sustained one of Cardwell’s unconscionability
theories. But the findings did not address all of the possible unconscionability theories, and only
inferentially refer to the illusory contract argument. In our original opinion, we did not resolve
3
these unaddressed arguments. The supreme court held that was error and we now turn to those
additional issues.
UNCONSCIONABILITY
An arbitration agreement might be attacked as either being (1) procedurally unconscionable
(referring to the circumstances surrounding the adoption of the arbitration provision) or (2)
substantively unconscionable (referring to the fairness of the arbitration provision itself). In re
Halliburton Co., 80 S.W.3d 566, 571 (Tex. 2002). Before the trial court, Cardwell claimed the
arbitration agreement was substantively unconscionable for three reasons. First, Section 7.01
limited her “rights and remedies.” That section provides:
7.01 Once an arbitration has been requested by either an employee or former
employee or by the Company, the arbitration must be completed within twelve
months or it will be dismissed with prejudice or want of prosecution unless good
cause is shown.
Cardwell contended the time limit impaired her ability to conduct discovery, is “grossly one-
sided,” and employs a subjective “good cause” standard that is higher than that under the Federal
Arbitration Act (FAA).1
Second, Cardwell claimed the agreement was substantively unconscionable because it
limited her remedies under the FAA. Section 6.01 of the agreement provides:
6.01 Except where it may be shown that the arbitrator’s award was procured by
fraud or corruption, or where the arbitrator has demonstrated evident partiality or
misconduct sufficient to substantially prejudice the rights of one or more of the
parties, or where the arbitrator’s award shows manifest disregard for the governing
law or for this Policy, the award rendered by the arbitrator shall be final, binding
and unappealable.
1
The arbitration agreement itself states that it is governed by the FAA. While Cardwell challenged the FAA’s
application below, she never carried that challenge forward, to either this court or the Texas Supreme Court. We
therefore apply federal law that in turn looks to state contract law principles to determine whether there is a valid
underlying contract requiring arbitration. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003).
4
Cardwell contends this provision is more restrictive than the FAA, which for instance allows an
agreement to be overturned when it was procured by “undue means” (in addition to fraud or
corruption). She pointed to several other textual differences between Section 6.01 and 9 U.S.C. §
10(a) in how arbitration awards are reviewed.
Finally, Cardwell contended that the requirement for any arbitration to take place in Dallas
made the agreement substantively unconscionable because of the expense of litigating there. As
we explained in our first opinion, the trial court specifically addressed this last substantive
unconscionability argument (arbitrating in Dallas) but did not address the first two arguments (the
Section 7.01 and 6.01 challenges). 446 S.W.3d 910-912.
Below, Cardwell also claimed the agreement was procedurally unconscionable because
Whataburger “created an atmosphere that attempted to minimize the possibility of any new hire
questioning the arbitration agreement” and took advantage of the parties “disparate bargaining
ability” by placing the agreement “in fine in print buried in an employee manual.” The trial court
made some fact-findings consistent with this claim, but it never expressly held the agreement
procedurally unconscionable.
As the supreme court concluded in this case, “the trial court based its ruling on only some
of Cardwell’s unconscionability arguments and on its own research and views about arbitration.”
Cardwell, 484 S.W.3d at 427. To be more specific, the trial court held the agreement
unconscionable on two grounds. Its principle rationale was that Whataburger was buying “a more
favorable fact finder and lying to employees about why [it was doing so].” This rationale was the
trial court’s own, as it appears nowhere in Cardwell’s written objections and was first raised by
the trial judge at the hearing. A second ground that had been urged by Cardwell reasoned that
5
Whataburger might insist that arbitration must take place in Dallas. The trial court deferred ruling
on other issues. 2
In the original appeal to this court, Whataburger attacked both of these rationales.
Whataburger also addressed the other unconscionability arguments that Cardwell made in her
response to the motion to arbitrate. Cardwell’s briefing to this court urged that the trial court was
within its discretion to conclude the agreement was unconscionable as it did. Her brief, however,
did not specifically address the substantive unconscionability arguments under Section 6.01 or
7.01 of the agreement.3
We now conclude that the substantive unconscionability claims based on Sections 6.01 and
7.01 of the agreement are waived. Cardwell never urged those issues in this court (nor the Texas
Supreme Court) as an alternative basis to affirm the decision. Nor did she respond to
Whataburger’s arguments contesting those claims. Issues not raised on appeal are generally
waived. TEX.R.APP.P. 38.1(h)(brief must contain clear and concise argument for contentions
made, with appropriate citations to authorities and to the record); Abutahoun v. Dow Chemical
Company, 463 S.W.3d 42, 52-53 (Tex. 2015), citing Guitar Holding Co., L.P. v. Hudspeth Cnty.
Underground Water Conservation Dist. No. 1, 263 S.W.3d 910, 918 (Tex. 2008); Del Lago
Partners, Inc. v. Smith, 307 S.W.3d 762, 776 (Tex. 2010); Fredonia State Bank v. General
2
The trial court’s tenth conclusion of law reads:
Plaintiff raises other arguments as to why the arbitration policy is unconscionable which the Court
need not consider at this time. Paying approximately $20,000.00 to purchase a more favorable fact
finder and lying to employees about why you are doing it is all the unconscionability this Court
needs.
3
The only mention of these provisions is in her Statement of Facts, which sets forth the provisions, along with several
others as the “relevant provisions of the Arbitration Policy regarding unconscionability . . . .” Some of the provisions
are underscored. No specific argument addresses how these provisions independently make the agreement
unconscionable. Nor does Cardwell address Whataburger’s claim that if these provisions are objectionable, they could
be severed from the agreement. See In re Poly-America, L.P., 262 S.W.3d 337, 359-361 (Tex. 2008)(holding that
remedies-limitation provisions that were individually unconscionable and void could be excised from the agreement
without defeating its underlying purpose).
6
American Life Ins. Co., 881 S.W.2d 279, 284 (Tex. 1994)(an appellate court has discretion to find
an issue is waived due to inadequate briefing); City of Midland v. Sullivan, 33 S.W.3d 1, 10 n.6
(Tex.App.--El Paso 2000, pet. dism’d w.o.j.)(appellant failed to brief complaint and thus waived
appellate review). Whataburger specifically addressed the Section 6.01 and 7.01 arguments and
Cardwell never responded; our role does not include making arguments on behalf of the litigants
before us.
Though not entirely clear, Cardwell’s brief does advance part of the procedural
unconscionability claim which she had urged below. Cardwell reminded us that the trial court
found that (1) she had limited financial means and no negotiating power, (2) the arbitration
agreement was included in small typeface on two pages of a fifty-page document and that (3) none
of its terms were actually negotiated. Citing our decision in Delfingen US-Texas, L.P. v.
Valenzuela, 407 S.W.3d 791 (Tex.App.--El Paso 2013, no pet.), she contended the totality of the
factors supported an unconscionability finding. These facts, however, would be insufficient to rise
to the level of procedural unconscionability.
Unconscionability has no precise legal definition because it is not a concept but a
determination made in light of a variety of factors. Southwestern Bell Telephone Company v.
DeLanney, 809 S.W.2d 493, 498 (Tex. 1991)(Gonzalez, J. concurring). The unconscionability
defense has a long history at common law; an early decision described an unconscionable contract
as one that “no man in his senses and not under delusion would make on the one hand, and as no
honest and fair man would accept on the other.” Earl of Chesterfield v. Janssen, 28 Eng. Rep. 82,
100, 2 Ves. Sr. 125, 155 (1751), quoted in Venture Cotton Cooperative v. Freeman, 435 S.W.3d
222, 228 (Tex. 2014). “The grounds for substantive abuse must be sufficiently shocking or gross
7
to compel the court to intercede, and the same is true for procedural abuse -- the circumstances
surrounding the negotiations must be shocking.” Delfingen, 407 S.W.3d at 798.
In deciding whether a contract is procedurally unconscionable, we look to “(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.” [Internal quotation marks omitted]. Id.; Bonded Builders Home Warranty Assn.
of Texas v. Rockoff, 509 S.W.3d 523 (Tex.App.--El Paso June 16, 2016, no pet.). We determine
de novo whether an agreement fails this standard, but we defer to the trial court’s fact findings if
they are supported by the evidence. Delfingen, 407 S.W.3d at 798.
The trial court’s findings might support the unequal bargaining position of these parties,
but that by itself does not rise to the shocking quality of evidence needed to invalidate an
agreement. Under the FAA, unequal bargaining power does not establish grounds for defeating
an agreement to arbitrate absent a well-supported claim that the agreement resulted from the sort
of fraud or overwhelming economic power that would provide grounds for revocation of any
contract. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33, 111 S. Ct. 1647, 1655, 114
L. Ed. 2d 26 (1991)(“Mere inequality in bargaining power, however, is not a sufficient reason to
hold that arbitration agreements are never enforceable in the employment context.”); In re
Halliburton Co., 80 S.W.3d 566, 572 (Tex. 2002)(holding an arbitration agreement was not
unconscionable simply because an employer may make a “take it or leave it” offer to its at-will
employees). Instead, our cases have focused on circumstances when the employee lacked the
means to understand the terms of the agreement and misrepresentations were made about the nature
of what they were signing. Cf. Delfingen, 407 S.W.3d at 801-02 (worker was illiterate in English,
8
no Spanish language version was available, and terms were misrepresented to him) with ReadyOne
Industries, Inc. v. Casillas, 487 S.W.3d 254, 262 (Tex.App.--El Paso 2015, no pet.)(Spanish
language version available and no evidence of misrepresentation of any terms); ReadyOne
Industries, Inc. v. Flores, 460 S.W.3d 656, 666-67 (Tex.App.--El Paso 2014, pet. denied)(same).
Here, there is no dispute raised about Cardwell’s ability to understand the document. The only
assertion of any misrepresentation is that Whataburger lied when it claimed arbitration allows the
dispute to be resolved “more quickly and at less expense.” However, the United States Supreme
Court, the Texas Supreme Court, and this court have all published opinions attesting in general to
the same proposition. Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 685, 130 S. Ct.
1758, 1774, 176 L. Ed. 2d 605 (2010)(parties choose arbitration in part for its “lower costs, greater
efficiency and speed”); In re Poly-America, L.P., 262 S.W.3d 337, 347 (Tex. 2008)(noting that
arbitration is intended to provide a lower-cost, expedited means to resolve disputes); In re Shredder
Co., L.L.C., 225 S.W.3d 676, 679 (Tex.App.--El Paso 2006, no pet.), citing Jack B. Anglin Co.,
Inc. v. Tipps, 842 S.W.2d 266, 269 (Tex.1992)(orig. proceeding).4 The record here simply does
not support a procedural unconscionability claim.
We accordingly sustain Issue One as it pertains to the trial court’s ruling on Cardwell’s
substantive and procedural unconscionability claims, including any alternative claim that the
agreement is unconscionable as claimed in Cardwell’s response to the motion to compel
arbitration.
4
The trial court reasoned that arbitration might actually cost Whataburger more than litigation. Even if true, Cardwell
would lack standing to complain about Whataburger’s expenses. She would be concerned only with her own expenses,
and as we noted in our first opinion, Whataburger waived the Dallas arbitration requirement upon which her cost
objections were based. 446 S.W.3d at 912. The trial court offered to make litigation a more expedient option by
providing a quick trial setting. But when Whataburger drafted its employee manual, it had no right to expect that this
trial court, or any other trial court, would prioritize their dockets to hear Whataburger’s cases first.
9
ILLUSORY CONTRACT
Cardwell has urged at each stage of the litigation that Whataburger failed its initial burden
to show that there was an enforceable arbitration governing this dispute. We find no real dispute
that an arbitration agreement exists, that there is mutual consideration in the reciprocal promises
to arbitrate, or that the agreement covers work injury claims. Rather, Cardwell’s challenge claims
that the arbitration agreement is illusory because Whataburger retained the unilateral right to
change or modify the agreement. “An arbitration agreement is illusory if it binds one party to
arbitrate, while allowing the other to choose whether to arbitrate.” Royston, Rayzor, Vickery, &
Williams, LLP v. Lopez, 467 S.W.3d 494, 505 (Tex. 2015). The argument usually arises when the
parties agree to arbitrate in one part of a writing, but elsewhere one party has reserved the unilateral
right to change the agreement at its sole option. In re 24R, Inc., 324 S.W.3d 564, 567 (Tex.
2010)(an arbitration agreement is illusory if one party is able to “avoid its promise to arbitrate by
amending the provision or terminating it altogether”); Carey v. 24 Hour Fitness, USA, Inc., 669
F.3d 202, 206-09 (5th Cir. 2012)(finding arbitration agreement illusory because employer could
unilaterally modify or terminate provision at any time); Morrison v. Amway Corp., 517 F.3d 248,
254 (5th Cir. 2008)(same).
That is exactly the argument Cardwell advances here. The arbitration agreement, contained
on two pages of the employee handbook, has no escape clause itself. In fact, under the text of the
arbitration policy, Whataburger could not alter the agreement, except on thirty days’ written notice.
Once “the facts giving rise to the legally recognized claim or dispute have occurred,” Whataburger
had no right “to unilaterally amend or modify this Policy or otherwise avoid its obligation” to
arbitrate. These types of provisions do not create an illusory contract. See In re Halliburton Co.,
80 S.W.3d 566, 570 (Tex. 2002). Rather, Cardwell claims that a statement in the
10
Acknowledgement Sheet provides that everything in the Employee Handbook (which according
to Cardwell would necessarily include the Texas Arbitration Policy) “is intended to be used as a
guide only.” “Its provisions are not conditions of employment and may be modified, revoked,
changed or deleted by Whataburger Restaurants LLC at any time with or without notice. Nothing
in this manual is intended to create, nor is it to be construed to constitute a contract between
Whataburger and any of its employees.” Cardwell alternatively contends that at the very least, the
seemingly conflicting statements create an ambiguity worthy of remanding the case for the trial
court to resolve.
Whataburger responds that the arbitration agreement is “stand-alone” and not part of the
Employee Handbook, though it is found there. It also notes that neither the handbook, nor the
arbitration agreement incorporate each other -- an important factor in prior case law. Whataburger
further contends that the acknowledgment form itself proves that the arbitration agreement and the
handbook are distinct documents, as each is listed and acknowledged separately on the form.
Moreover, the form cannot be considered under the parole evidence rule, and parol evidence is
never admissible to create an ambiguity in a complete agreement.
Three prior decisions bear on this issue. In J.M. Davidson, Inc. v. Webster, 128 S.W.3d
223 (Tex. 2003) the court reviewed a one page agreement which prospective employees were
required to sign. The first three sentences described an arbitration agreement. The next nine
sentences addressed other employment issues such as the employer’s right to verify the answers
on the employment application, the need for a pre-employment physical, the at-will nature of the
employment, and the employer’s right to release information to others. Id. at 226. The document
concluded with the statement that the employer “reserves the right to unilaterally abolish or modify
any personnel policy without prior notice.” Id.
11
The court noted that the arbitration agreement itself stated an adequate basis for
consideration--the mutual promise of the employer and employee to submit disputes to arbitration.
Id. at 229. The unilateral right of the employer to abolish or modify any “personnel policy,”
however, was problematic if the arbitration policy was a “personnel policy.” Id. The court then
restated its well-established rules for construing claimed ambiguous agreements:
Deciding whether a contract is ambiguous is a question of law for the court. In
construing a written contract, the primary concern of the court is to ascertain the
true intentions of the parties as expressed in the instrument. To achieve this
objective, we must examine and consider the entire writing in an effort to
harmonize and give effect to all the provisions of the contract so that none will be
rendered meaningless. No single provision taken alone will be given controlling
effect; rather, all the provisions must be considered with reference to the whole
instrument. A contract is unambiguous if it can be given a definite or certain legal
meaning. On the other hand, if the contract is subject to two or more reasonable
interpretations after applying the pertinent rules of construction, the contract is
ambiguous, creating a fact issue on the parties’ intent.
Id. at 229 [citations to authority omitted]. The court concluded it could not give a definite, certain
meaning to this agreement, and it decided the agreement was ambiguous. It remanded the case for
the trial court to conduct a hearing to determine the parties’ intent. Id. at 231-32, citing Jack B.
Anglin Co. Inc. v. Tipps, 842 S.W.2d 266, 269 (Tex. 1992).
Seven years later, the court decided In re 24R, Inc., 324 S.W.3d 564 (Tex. 2010). There,
the employee signed an arbitration agreement. In a separate employee handbook, the employer
reserved the right to “revoke, change or supplement guidelines at any time without notice.” Id. at
567. The employee handbook recognized the existence of the arbitration as one of the policies the
employee must agree to, but neither the arbitration policy, nor the handbook incorporated by
reference each other. Id. Moreover, the arbitration agreement itself expressed no right of
modification. Id. Any right to modify would have to come from the handbook, which by its own
terms was not a contract. Id. Concluding that the arbitration policy was a “stand-alone”
12
agreement, the court held the trial court abused its discretion in not enforcing the arbitration
agreement.
With these bookends, we decided Sun Fab Indus. Contracting, Inc. v. Lujan, 361 S.W.3d
147, 152-53 (Tex.App.--El Paso 2011, no pet.). That arbitration agreement contained within the
employee handbook. We took some pains to describe how it was described in the table of contents,
and its juxtaposition to an acknowledgment form. Id. at 148-49. The handbook contained the
disclaimer that “any statement or policy herein contained” could be changed by the employer
without notice. Id. at 151. The employee also signed an acknowledgment form that similarly
stated, “the policies in the guide are not a contract” and they might be changed, interpreted, or
withdrawn by the employer. Id. The arbitration agreement was found on a separate page of the
handbook, after the handbook receipt form. Id. The employee separately signed it. Id. It
mentioned, but did not incorporate the employee handbook. Id.; cf In re C & H News Co., 133
S.W.3d 642, 647 (Tex.App.--Corpus Christi-Edinburg 2003, orig. proceeding)(agreement was
illusory when arbitration agreement expressly required arbitration “as provided in the Handbook”
and the employer retained the right to unilaterally change the handbook at any time without prior
notice). We concluded that the arbitration agreement, like that in 2R, Inc., was a stand-alone
agreement that contained its own consideration (binding reciprocal promises to arbitrate) and that
the non-contractual handbook did not make the agreement illusory. Id. at 153.
Both sides contend these cases dictate the outcome here. Cardwell contends that In re
C&H requires us to find the agreement is illusory, or at least J.M. Davidson, Inc. requires a remand
with our finding that the agreement is ambiguous. Whataburger likens the case 2R, Inc. and Sun
Fab, emphasizing that the agreement here is stand-alone and does not incorporate the handbook.
Our problem with both parties’ positions is twofold. First, we have an incomplete record because
13
neither party offered the entire employee handbook into the record. We are left with two pages
from the middle of that document, and a statement from a separate document that attempts to limit
the entire handbook. As we noted in Sun Fab, the juxtaposition of the arbitration within the
handbook and how it was labeled there, might itself show whether the arbitration agreement is a
stand-alone agreement or not. And while Whataburger contends we are limited to looking to the
four corners of the agreement under the parole evidence rule, we do not have the four corners of
the actual document in our record. We might not even have two corners. We have two pages from
the middle of a fifty-page document. We agree that parol evidence cannot be admitted to create
an ambiguity to an integrated agreement. See Friendswood Dev. Co. v. McDade & Co., 926
S.W.2d 280, 283 (Tex. 1996). The a priori question here, however, is what comprises the
integrated agreement. Does the Texas Arbitration Agreement truly stand alone, or is it just a piece
of the other provisions in the Employee Handbook?
Our second problem is that the trial court may or may not have considered this issue. The
trial court’s sixth fact-finding states:
There are provisions in the hand book and the acknowledgment forms which may
allow Whataburger to modify, revoke, change, or delete the arbitration policy under
some circumstances. Employees have no such powers.
The trial court used “may” with respect to Whataburger’s power to modify, and stated that power
existed “under some circumstances.” This qualifying language undermines Cardwell’s contention
that nothing in the handbook was contractual and that Whataburger had an absolute right to negate
the arbitration agreement at its pleasure. The circumstances referenced are unclear to us, but our
record does suggest that the trial court may have had the entire employee handbook before it
(otherwise, how did the court know the number of pages in the document?).
We conclude the wiser course is to remand the illusory contract issue for the trial court to
decide on the merits, and upon a full record. As tempting as it may be to bring to an end the
14
procedural wrangling over where to litigate this dispute, we are guided by several other
considerations. An appellate court has the discretion to consider alternate grounds to affirm a trial
court’s decision when those grounds were presented, but not decided by the trial court. Cincinnati
Life Ins. Co. v. Cates, 927 S.W.2d 623, 625-26 (Tex. 1996)(so stating summary judgment context);
In re Brock Specialty Services, Ltd., 286 S.W.3d 649, 656-57 (Tex.App.--Corpus Christi 2009, no
pet.)(so stating in arbitration context). The interests of judicial economy guide that discretion.
Cates, 927 S.W.2d at 625. We are also guided, however, by whether the record is adequately
developed on the alternate ground. In re Brock Services, 286 S.W.3d at 656. The nature of the
issue also plays a role, such as whether it is fact intensive and decided on a case-by-case basis.
See State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 382 (Tex. 1993)(Philips. C.J.,
concurring)(agreeing that a fact intensive issue not passed on by trial court should be remanded
for it to first consider).
These considerations guide us to remand without reaching any conclusions on the illusory
contract claim. The record is undeveloped. Cardwell’s illusory contract theory was barely a page
of her thirty-page objection to arbitration. It garnered a bit more prominence at the hearing, but it
is at best addressed with only a single glancing blow in the one of the trial court’s twenty-seven
findings of fact. An operative document, the Employee Handbook, was never introduced below
and may (or may not) shed light on whether the arbitration agreement is in fact a stand-alone
agreement, implicating the parol evidence rule and several prior and controlling precedents. As
even the small subset of cases we discuss above highlight, whether a contract is illusory is often a
fact intensive inquiry.
We emphasize that we have not decided that the documents before us are ambiguous, nor
that if required to do so, we could not decide the case on the present record. We merely decide
15
that the trial court should ensure that the record is complete and that it should take the first pass on
this issue.
We sustain Whataburger’s Issue One as it challenges the trial court’s findings invalidating
the agreement as being substantively unconscionable. We also overrule Cardwell’s alternative
basis for asserting procedural and substantive unconscionability. We remand the case for the trial
court to decide the illusory contract challenge that Cardwell has urged.
July 26, 2017
ANN CRAWFORD McCLURE, Chief Justice
Before McClure, C.J., Rodriguez, and Hughes, JJ.
Hughes, J., not participating
16