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Galan v. Valero Services, Inc.

United States District Court, S.D. Texas, Corpus Christi Division

January 17, 2018

GILBERT GALAN, JR., Plaintiff,
VALERO SERVICES, INC., et al, Defendants.



         Plaintiff Gilbert Galan, Jr. (Galan) sued his employers, Valero Services, Inc. and Valero Energy Corporation[1] (jointly Valero), for violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 216(b). He alleges that Valero did not pay him for all hours worked and did not pay required overtime premiums. Galan has filed a motion for leave to amend his complaint to transform this individual action into a collective action. D.E. 10. He has further filed a motion for class certification and expedited discovery in connection with the class certification request. D.E. 28.

         Also pending before the Court is Valero's “Motion to Compel Arbitration of Plaintiff's Claims and to Dismiss Litigation” (D.E. 11). Valero asserts that Galan agreed to arbitrate any cause of action related to his employment, including FLSA claims. The Fifth Circuit has held that the Court must address arbitration issues prior to any request regarding collective action certification. Reyna v. Int'l Bank of Commerce, 839 F.3d 373, 376 (5th Cir. 2016). For the reasons set out below, the Court FINDS that the parties have raised a disputed issue of material fact as to whether an arbitration agreement exists between them and ORDERS this fact question to be submitted for jury trial.


         A. Facts

         Valero hired Galan on March 15, 1994. At that time, Valero did not have any arbitration agreement with its employees. However, Valero purchased Ultramar Diamond Shamrock, Inc. (UDS) in January 2002, and in the merger integration, adopted UDS's arbitration model. The result was called “Dialogue - the Valero Dispute Resolution Program” (Dialogue), effective June 1, 2002. D.E. 11-1, p. 10. Dialogue is a multi-step set of options for handling work-related conflicts, including open communication, internal conferences, mediation, and arbitration. D.E. 11-1. Mandatory arbitration is the last step in the dispute resolution plan.

         According to the Affidavit of Kim Griffin, Director Refinery HR, she implemented the dispute resolution program when she was Valero's Dialogue Manager between January 2002 and January 2004.[2] D.E. 11-1, p. 2. It is undisputed that Valero did not get a signed arbitration agreement from Galan. Rather, Valero asserts that its employees were given notice of Dialogue by five other measures: a mailed brochure and letter; information on the Valero intranet portal; meetings; posters; and its Employee Guide. Valero claims that by continuing to work for Valero after those measures were put in place, the employees consented to the arbitration provisions of Dialogue.

         1. Mailed Brochure and Letter

         Valero claims to have mailed copies of a Dialogue brochure to the current address of each employee, including Galan (D.E. 11-2, p. 14), containing a letter from Bill Greehey, Chairman and Chief Executive Officer.[3] While Griffin attests that she supervised the mailing, including the generation of appropriate employee addresses, she does not affirmatively state that the envelopes contained pre-paid postage.[4] However, she does state that the item addressed to Galan had Valero's return address on it and it was not returned by the Post Office as undeliverable. Id. The letter, published on the third page of the brochure, states:

This program will go into effect on June 1, 2002 for all nonunion employees.[5] It is required as a condition of employment and will eliminate the lengthy and difficult process of having disputes escalate to the point where a judge and jury are needed to resolve claims. With Dialogue, disputes are resolved by a neutral professional arbitrator. Dialogue Advisors in our Corporate Human Resources Department will also be available to assist you as neutral facilitators of this process.
This brochure contains both a summary of the program and a more detailed statement of its terms and conditions. Please carefully review these materials and all of the terms that you will be required to follow.

D.E. 11-1, p. 10 (emphasis added). The following page of the Dialogue brochure contains this notice:

If an employee accepts or continues employment with Valero, both the employee and Valero agree to all provisions of Dialogue, the Valero Dispute Resolution Program (also referred to as Dialogue or the Program). This includes the requirement that any legal dispute not resolved through other Options, as discussed in this summary, be submitted to final and binding arbitration rather than through the courts or to a jury. This agreement covers any dispute with the Company or its employees, such as personal injury claims or claims of discrimination based on race, national origin, gender, religion, age or disability or claims under any federal or state statute, as well as claims under any Valero benefit plan and the Work Injury Program.
This Program applies to any workplace dispute, regardless of when it arises, including disputes that arise or are asserted after an employee leaves the Company.

D.E. 11-1, p. 11 (emphasis added). A similar notice has accompanied each update of Dialogue through the date of Galan's termination. D.E. 11-4, p. 25.

         Galan does not recall ever being told that his continued employment constituted consent to arbitration. D.E. 18-1. Furthermore, if he were ever threatened with termination for refusal to consent to arbitration, he would remember it, as that would be the only reason he would agree to it. Id. Galan attests that he never received a copy of the Dialogue brochure or its CEO letter in the mail. Id. Yet he does not deny that the address Valero used for him was his correct mailing address at the time of the 2002 implementation mailout. Id. He further admits to having received other mail from Valero. Id.

         2. Human Resources and Intranet Portal Links

         In addition to the mailout, Griffin testified that current versions of the Dialogue plan are maintained in hard copy in its human resources offices and in a digital version on Valero's intranet portal.

The Dialogue Plan has undergone various nonsubstantive revisions since 2002, particularly updating the introductory letter. Attached to this Affidavit as Exhibit A-5 is a true and correct copy of the most recent version of the Dialogue Plan, which was effective at the time Plaintiff's employment ended. Employees were notified of that revised Dialogue Plan through Valero's intranet portal. Valero has used that intranet portal to communicate with employees about human resources manuals, policies, forms, paystub information, etc. since mid-1999. Employees have daily access to the portal, are notified when new information becomes available, and are expected to review the policies and procedures posted on the company's intranet. Employees are expected and were expected, throughout the time of Plaintiff's employment, to be aware of updated and revised policies and procedures on the company's intranet, per the Employee Guide.

D.E. 11-1, p. 4. This explanation and the exhibits accompanying the motion to compel arbitration do not detail any form of notification of Dialogue and its arbitration agreement through the human resources offices or the intranet portal other than a general expectation that employees remain aware of evolving company policies as instructed in the Employee Guide.

         According to Manuel Hofilena, Valero's Senior Manager Software Development Engineer, information regarding Dialogue was posted on Valero's intranet portal for human resources materials on May 17, 2010. D.E. 20-1. Hofilena describes where the links for information are and that the portal contains an overview and a copy of the brochure.

         The link appears innocuously among a number of other “Quick Links, ” with no special emphasis. In contrast, the link for the Substance Abuse Program appears in red font and the Employee Assistance Program appears in black font, whereas the other 24 links on that side of the web page are all blue. The Dialogue link is 10th in a list of 16 close-set topics. It does not appear in the more spacious list of HR News and Resources, which includes the request, “Please check regularly for news and updates.” D.E. 20-1, p. 6.

         Nothing in Hofilena's affidavit describes how employees were notified of the importance of reviewing the Dialogue information or that they were specifically directed to access Dialogue information on the portal. Neither does Hofilena offer evidence that Galan actually accessed the Dialogue links he describes.

         Galan admits to using the portal for other purposes, including rules related to sick leave, employee benefits, and how much his paycheck would be. D.E. 18-1. In other words, he knew how to find information that he needed. However, he attests that he did not know what Dialogue was and had no reason to investigate it. Id. He neither knew that he needed it nor that Valero required it.

         3. Meetings

         Griffin testified that she directed informational meetings on or about April 17, 2002, for all employees. D.E. 11-1. Those meetings were designed to explain the Dialogue plan. Id. Griffin does not state how employees were notified of the scheduling or content of the meetings or any requirement that they attend. While all employees, including Galan, were required to attend, Griffin does not attest that Galan did attend and she does not supply any sign-in sheet or other proof to that effect. Id. Galan denies having any knowledge of such a meeting and attests that he did not attend one. Rather, the only Valero meetings he attended were safety or refinery education meetings, neither of which addressed Dialogue or arbitration. D.E. 18-1.

         4. Posters

         According to Griffin, Valero placed posters regarding Dialogue at seven work locations throughout the refinery where Galan worked and elsewhere. D.E. 11-1, 11-2, p. 17. The photographic example of such a poster shows it to be crowded by a collage of partially overlapping posters and notices. D.E. 20-2. It bears the title “Dialogue” and subtitle “The Valero Dispute Resolution Program.” However, its only reference to arbitration appears in the last of five bullet points under the smaller heading “What is Dialogue?” D.E. 20-1.

         First, the poster touts Dialogue as building on an open communications policy, encouraging teamwork, providing fair treatment in an established dispute resolution method, and promoting flexible options for resolving disputes “depending upon whether they are non-legal or legal issues.” Then it states, “It provides a confidential, binding arbitration hearing with the same legal remedies in a less intimidating setting than a long court battle in state or federal court.” Id. It does not state anything with respect to conditioning continued employment on acceptance of its terms.

         Galan testifies that he did not frequent any of the areas in which the posters were placed. D.E. 18-1. While he did visit a few of those locations on rare occasions, and did view a minimum wage and internal job posting poster that Valero asserts was in the vicinity of a Dialogue poster, he did not specifically notice any Dialogue posters and would not have understood them to reference arbitration if he had. Id.

         5. Employee Guide and Acknowledgment

         Valero modified its Employee Guide, available on the Valero intranet portal and in hard copy at Human Resources offices, to reference Dialogue. D.E. 11-2, ...

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