City of San Antonio v. Gerard Cortes , 468 S.W.3d 580 ( 2015 )

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-14-00301-CV
CITY OF SAN ANTONIO,
Appellant
v.
Gerard CORTES,
Appellee
From the 285th Judicial District Court, Bexar County, Texas
Trial Court No. 2014-CI-05707
Honorable Laura Salinas, Judge Presiding
Opinion by: Karen Angelini, Justice
Sitting: Karen Angelini, Justice
Marialyn Barnard, Justice
Patricia O. Alvarez, Justice
Delivered and Filed: April 29, 2015
REVERSED AND RENDERED
The City of San Antonio appeals the trial court’s denial of its motion to abate and to compel
arbitration. We reverse.
BACKGROUND
In his amended petition, Appellee Gerard Cortes, a San Antonio firefighter, alleged that
the current Collective Bargaining Agreement (CBA), which was agreed to by the City and the
Union, sets forth health benefits for active San Antonio firefighters like Cortes. According to
Cortes’s petition, on or about April 2, 2014, he received a letter from his fire chief that described
04-14-00301-CV
a “dependent verification process” conducted by the City in order “to verify the eligibility of
dependents on [Cortes’s] medical benefit plan.” The letter signed by the fire chief stated that the
demand for dependent verification “should be considered a directive from [his] office” and that
“full cooperation is expected.” Cortes alleged that “[b]ecause the demand to provide the
documentation is a ‘directive,’ the failure to follow this directive results in disciplinary actions,
including suspension or termination.” According to Cortes’s petition, the directive by the fire chief
“and the potential disciplinary action” exceeded the fire chief’s statutory authority under section
143.051 of the Texas Local Government Code to discipline members of the San Antonio Fire
Department. Further, Cortes alleged that by demanding verification of dependents, the City
unilaterally altered his health benefits and thus (1) denied Cortes his right to organize and bargain
collectively with his public employer regarding a condition of his employment in violation of
section 174.023 of the Texas Local Government Code, and (2) breached the obligation to negotiate
in good faith in violation of section 174.105. Cortes sought declaratory and injunctive relief.
In response to the lawsuit, the City filed a motion to abate and to compel arbitration. It later
filed a supplement to its motion. The trial court denied the motion, and the City then filed this
interlocutory appeal.
STANDARD OF REVIEW
The CBA in this case is governed by the Federal Arbitration Act. See City of San Antonio
v. Int’l Ass’n of Fire Fighters, Local 624, Nos. 04-12-00783-CV & 04-13-00109-CV, 2013 WL
5508408, at *3 (Tex. App.—San Antonio Oct. 2, 2013, no pet.). Generally, we review a trial
court’s ruling on a motion to compel arbitration for abuse of discretion, affording deference to the
court’s factual determinations, but reviewing legal questions de novo. Garcia v. Huerta, 340
S.W.3d 864, 868 (Tex. App.—San Antonio 2011, pet. denied). Thus, the existence and the
applicability of an arbitration agreement is a question of law reviewed under a de novo standard.
-2-
04-14-00301-CV
Id. If the arbitration agreement includes the claims at issue and the opposing party cannot prove
any defense preventing arbitration, “the trial court has no discretion but to compel arbitration and
stay its own proceedings.” In re FirstMerit Bank, 52 S.W.3d 749, 754 (Tex. 2001).
In order to succeed in its motion to compel arbitration, the City had to demonstrate that a
valid arbitration agreement existed and that Cortes’s claims fell within the scope of the agreement.
See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). In determining “whether a
party’s claims fall within an arbitration agreement’s scope, we focus on the [petition]’s factual
allegations rather than the legal causes of action asserted.” In re FirstMerit Bank, 52 S.W.3d at
754. And, generally, any doubts about the scope of an arbitration agreement must be decided in
favor of arbitration. In re D. Wilson Constr. Co., 196 S.W.3d 774, 782 (Tex. 2006).
Once the existence of a valid arbitration agreement is established, a strong presumption in
favor of arbitration arises, In re FirstMerit Bank, 52 S.W.3d at 753, and “an order to arbitrate the
particular grievance should not be denied unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers the asserted dispute,” Wright v.
Universal Mar. Serv. Corp., 525 U.S. 70, 78 (1998) (citations omitted). To rebut this presumption,
the party opposing arbitration bears the burden of raising an affirmative defense to enforcement of
the agreement to arbitrate. J.M. Davidson, Inc., 128 S.W.3d at 227; see In re AdvancePCS Health
L.P., 172 S.W.3d 603, 607 (Tex. 2005) (discussing affirmative defenses in context of arbitration
agreements).
DISCUSSION
The City argues that the trial court erred in denying its motion to compel arbitration because
the doctrine of res judicata prevents Cortes from relitigating the issue of whether his claims should
be referred to arbitration. The City emphasizes that Cortes’s claims are identical to those already
brought by the Union and are related to the same CBA. In City of San Antonio v. International
-3-
04-14-00301-CV
Association of Fire Fighters, Local 624, Nos. 04-12-00783-CV & 04-13-00109-CV, 2013 WL
5508408, at *1 (Tex. App.—San Antonio Oct. 2, 2013, no pet.), the Union filed a lawsuit “alleging
that the City had violated Chapter 174 of the Texas Local Government Code by unilaterally
altering the prerequisites for health-insurance coverage of firefighters and their dependents without
engaging in good-faith collective bargaining with the Union.” Specifically, the Union alleged that
“the City unilaterally changed the CBA’s terms by: (1) requiring active enrollment in order for the
firefighters to continue receiving health-care benefits; and (2) threatening termination of coverage
for currently covered dependents unless the firefighters provide additional information.” Id. The
City filed a motion to compel, arguing that under the terms of the CBA, the Union’s claims had to
be compelled to arbitration. Id. After the trial court denied the motion and the City filed its
interlocutory appeal, this court considered whether the Union’s claims fell within the scope of the
CBA’s arbitration agreement. Id. at *3.
This court then looked at the arbitration provision contained within the CBA, Article 30.
Id. at *4. Article 30 states the following:
The purpose of this Article is to provide a just, equitable, and
expeditious method for resolving disputes between the City and the
Union (or employees) concerning all aspects of the employment
relationship between the City and bargaining unit employees, and
concerning the bargaining relationship between the City and the
Union. To that end, the parties hereby agree and stipulate as follows:
A. All disputes concerning the interpretation and/or application of
the terms of this Agreement shall be submitted, if at all, to the
grievance/arbitration procedure as called for herein. Failure to
initially pursue grievance/arbitration in these instances shall be
the basis for a plea in abatement in response to any suit or claim
filed with a court of law and/or administrative agency.
B. Employee claims of violation of statutory or constitutional rights
may be submitted to the grievance/arbitration procedure or may
be pursued by means of judicial and/or administrative appeal;
provided that once the employee has elected to file a lawsuit
and/or administrative claim, all issues raised by the dispute or
-4-
04-14-00301-CV
claim will be resolved in such lawsuit and/or administrative
process, and no grievance may be filed concerning the same
subject matter. It is recognized that claims falling under this
subparagraph may be included with related claims of contract
violations. In such circumstances, the City shall not be entitled
to abatement of a suit involving the contract claims, related to
the statutory or constitutional claims asserted, for failure to
grieve such contract matters initially. If the employee elects to
use the grievance/arbitration procedure to raise statutory or
constitutional claims, such matters may not thereafter be
appealed to court except as provided by this Article. 1
This court noted that pursuant to this language, (1) disputes based on the “interpretation and/or
application” of the CBA must be submitted to the arbitration procedure, and (2) “employees have
the choice to pursue claims based on a statutory violation using either the arbitration procedure or
a judicial forum, even if related contract claims are also made.” Id.
In explaining why its claims did not fall within the scope of the arbitration agreement, the
Union argued that its claims were not based on the interpretation or application of the CBA because
it had not brought claims for violations of the CBA but was instead asking “the trial court to
determine the meaning of provision of Chapter 174 and to declare a violation of those provisions.”
Id. at *6. This court, however, concluded that the Union’s claims did fall within the scope of the
arbitration agreement. Id. This court explained that when determining whether the Union’s claims
fell within the scope of the arbitration provision, “we focus on the complaint’s factual allegations
rather than the legal causes of action asserted.” Id. at *5 (quoting In re FirstMerit Bank, 52 S.W.3d
749, 754 (Tex. 2001)). Because the Union sought “a judicial declaration that the City has, without
authority, changed health-care benefit eligibility without bargaining collectively,” a court could
not “make such a declaration without first interpreting the current CBA provisions regarding
1
Article 30 contains two other subparagraphs, C and D, which relate respectively to the filing of (1) employment
discrimination claims and (2) disciplinary matters subject to the appeals procedure provided by chapter 143 of the
Texas Local Government Code.
-5-
04-14-00301-CV
health-care benefits, and then determining whether the information or action required by the City
alters or changes the CBA’s current provisions.” Id. This court thus concluded the Union’s claims
fell within the scope of the arbitration agreement. Id. Neither party appealed this court’s decision
and mandate issued. Thereafter, Cortes filed the underlying lawsuit containing the same allegations
as the lawsuit filed by the Union. The City argued in its motion to abate and compel arbitration
that because Cortes is in privity with the Union, he is bound by this court’s holding in City of San
Antonio v. International Association of Fire Fighters, Local 624, 2013 WL 5508408, at *5, under
the principles of res judicata and/or collateral estoppel, and cannot relitigate the issue of whether
these claims can be resolved in a judicial forum or should be compelled to arbitration.
“Broadly speaking, res judicata is the generic term for a group of related concepts
concerning the conclusive effects given final judgments.” Barr v. Resolution Trust Corp., 837
S.W.2d 627, 628 (Tex. 1992). “Within this doctrine, there are two principal categories: (1) claim
preclusion (also known as res judicata); and (2) issue preclusion (also known as collateral
estoppel).” Id. “Res judicata, or claims preclusion, prevents the relitigation of a claim or cause of
action that has been finally adjudicated, as well as related matters that, with the use of diligence,
should have been litigated in the prior suit.” Id. “Issue preclusion, or collateral estoppel, prevents
relitigation of particular issues already resolved in a prior suit.” Id. It “is designed to promote
judicial efficiency and to prevent inconsistent judgments by preventing any relitigation of an
ultimate issue of fact.” Texas Dep’t of Public Safety v. Petta, 44 S.W.3d 575, 579 (Tex. 2001). The
City argues that the trial court erred in denying its motion to abate and compel arbitration in this
case because the issue of whether these claims should be compelled to arbitration was already
determined by our prior opinion.
Under both federal and Texas law, collateral estoppel applies when (1) the issue of fact or
law sought to be litigated in the second action was fully and fairly litigated in the first action; (2)
-6-
04-14-00301-CV
that issue of fact or law was essential to the judgment in the first action; and (3) the party against
whom the doctrine is asserted was a party or was in privity with a party in the first action. See
Taylor v. Sturgell, 553 U.S. 880, 892 (2008); Sysco Foods Servs., Inc. v. Trapnell, 890 S.W.2d
796, 801-02 (Tex. 1994); see also John G. & Marie Stella Kenedy Mem’l Found. v. Dewhurst, 90
S.W.3d 268, 288 (Tex. 2002) (explaining elements of collateral estoppel under federal and Texas
law are the same). With regard to the first element, the issue of whether the parties should be
compelled to arbitration pursuant to the CBA was fully and fairly litigated in the first proceeding.
See International Association of Fire Fighters, 2013 WL 5508408, at *1-*8. Cortes argues that he
has brought one additional claim that was not brought by the Union in the first lawsuit. However,
collateral estoppel “bars successive litigation of an issue of fact or law actually litigated and
resolved in a valid court determination essential to the prior judgment, even if the issue recurs in
the context of a different claim.” Taylor, 553 U.S. at 892 (citation omitted) (emphasis added). Thus,
even though Cortes added a slightly different claim, it is based on the same facts as the first
proceeding and collateral estoppel would still apply. See Proctor v. Dist. of Columbia, No. 13-
00985, 2014 WL 6676232, at *6 (D.D.C. Nov. 25, 2014) (holding that teacher’s claims, including
one based on age discrimination, must be dismissed under collateral estoppel because even though
the prior suit by the Union had contained no allegation regarding age discrimination, the teacher’s
age discrimination allegation simply “attempt[ed] to pour new wine into old wine skins,”
“precisely th[e] type of argumentation” “forbid[den]” by issue preclusion).
Secondly, that issue was essential to our judgment in the first appeal, and our judgment
was not appealed. Cortes argues that there is not yet a final judgment on the merits with regard to
the case brought by the Union. However, for purposes of collateral estoppel there need not
necessarily be a final judgment on the merits. Instead, the test for finality is “whether the
conclusion in question is procedurally definite.” Van Dyke v. Boswell, O’Toole, Davis &
-7-
04-14-00301-CV
Pickering, 697 S.W.2d 381, 385 (Tex. 1985) (quoting RESTATEMENT (SECOND) OF JUDGMENTS
§ 13, comment (g) (1982)). “The factors to be considered in answering this question include
whether ‘the parties were fully heard, [whether] the court supported its decision with a reasoned
opinion [and whether] the decision was subject to appeal or was in fact reviewed on appeal.’” Id.
(quoting RESTATEMENT (SECOND) OF JUDGMENTS § 13, comment (g) (1982)) (alteration in
original). In the prior case brought by the Union, the parties were fully heard at the trial court and
at this court in the interlocutory appeal. And, because neither party filed a petition for discretionary
review in the supreme court, mandate was issued. Thus, the prior appeal meets all these elements.
So, while the merits of the case brought by the Union have not resulted in a final judgment, the
issue of whether the parties should be compelled to arbitration is final for purposes of collateral
estoppel.
Lastly, Cortes was in privity with the Union, the party in the first action, and is thus bound
by this court’s ruling in the first appeal that the parties should be compelled to arbitration under
the CBA. Collateral estoppel may not be asserted against one who was not a party in the first case.
See Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 329 (1971). “The rules that
identify the parties affected by issue preclusion . . . are often described as rules of ‘privity’ and
‘mutuality.’” 18 Charles Alan Wright, FEDERAL PRACTICE & PROCEDURE: JURISDICTION § 4416
(2d ed.). “The term ‘privity’ signifies that the relationship between two or more persons is such
that a judgment involving one of them may justly be conclusive upon the others, although those
others were not party to the lawsuit.” Gill & Duffus Servs., Inc. v. A.M. Nural Islam, 675 F.2d 404,
405 (D.C. Cir. 1982). Union members are considered to be in privity with their union for purposes
of collateral estoppel. See Hitchens v. Cnty. of Montgomery, 98 Fed. Appx. 106, 114 (3d Cir. 2004)
(“[C]ourts have held union members to be in privity with the union and have held that a decision
against a union can bind union members in a subsequent action.”); Heade v. Wash. Metro. Area
-8-
04-14-00301-CV
Transit Auth., No. 09-02460, 2010 WL 938462, at *2 n.2 (D.C.C. 2010) (“Plaintiff’s contention
that the arbitration’s findings do not bar her claim because she was not a party to that proceeding
is also without merit . . . [because] she was in privity with her union.”), aff’d, 2010 WL 3521596
(D.C. Cir. 2010) (affirming and stating appellant was in privity with the union). Thus, individual
members of labor unions can be bound by judgments in suits brought by the union in its
representative capacity. Meza v. Gen. Battery Corp., 908 F.2d 1262, 1268 (5th Cir. 1990).
Because collateral estoppel prevents relitigation of the underlying issue in this appeal, we
reverse the trial court’s order on the City’s motion to abate and to compel arbitration, render
judgment granting the motion, and abate the underlying lawsuit “until the exhaustion of remedies
provided for in this [CBA] have been completed to finality.” International Ass’n of Fire Fighters,
2013 WL 5508408, at *8.
Karen Angelini, Justice
-9-