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International Corrugated and Packing Supplies, Inc. v. Lear Corp.

United States District Court, W.D. Texas, El Paso Division

July 3, 2019




         On May 3, 2019, the Fifth Circuit issued a limited remand in the instant action for this Court to make findings as to whether, when, and under what terms the parties entered into the agreements at issue in this case. See ECF No. 94. On June 6, 2019, the Court held a hearing, and the parties presented their witnesses and evidence. See ECF No. 99. Having duly considered the parties' pleadings, witness testimony, and exhibits, the Court now enters its Findings of Fact.[1]


         When adjudicating a motion to compel arbitration, the Court is directed to engage in a two-step analysis. Washington Mut. Fin. Grp., LLC v. Bailey, 364 F.3d 260, 263 (5th Cir. 2004). The Court must first "determine whether parties agreed to arbitrate the dispute." Klein v. Nabors Drilling USA L.P., 710 F.3d 234, 236 (5th Cir. 2013). This determination is guided by two questions: "(1) is there a valid agreement to arbitrate the claims and (2) does the dispute in question fall within the scope of that arbitration agreement?" Id. (quoting Sherer v. Green Tree Servicing LLC, 548 F.3d 378, 381 (5th Cir. 2008)). Federal courts adopt state-law contract principles when determining the validity of an agreement to arbitrate. Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996) (per curiam) (citing First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). Thus, "the strong federal policy favoring arbitration does not apply to the initial determination of whether there is a valid agreement to arbitrate." Klein, 710 F.3d at 266. Once the Court determines that the parties agreed to arbitrate their dispute, the Court must "consider whether any federal statute or policy renders [Plaintiffs] claims nonarbitrable." Bailey, 364 F.3d at 263.

         Under Texas law, the party seeking to compel arbitration bears the burden to establish the existence of an agreement to arbitrate. Ffrench v. PricewaterhouseCoopers Corp. Fin., LLC, Civ. A. No. H-12-0291, 2012 WL 1900930, at *2 (S.D. Tex. May 24, 2012) (citing Henry v. Gonzalez, 18 S.W.3d 684, 688 (Tex. App.-San Antonio 2000, pet. dism'd by agr.)); Weiner v. Citigroup, Civ. A. No. 3:01CV2246-M, 2002 WL 655531, at *2 (N.D. Tex. Apr. 19, 2002) (citing Henry, 18 S.W.3d at 688-89). The party seeking to compel arbitration must prove by a preponderance of the evidence that such an agreement exists. See Ffrench, 2012 WL 1900930, at *2 (citing Banks v. Mitsubishi Motors Credit of Am., Inc., 435 F.3d 538, 540 (5th Cir. 2005)).


         1. Plaintiff International Corrugated and Packing Supplies, Inc. ("International Corrugated"), a Texas corporation, sells packaging materials that its customers use to ship products.

         2. Defendants Lear Corporation and Lear Mexican Seating Corporation are Delaware corporations with their principal places of business in Michigan and are suppliers of seats and electrical components to automobile manufacturers.

         3. Plaintiff provided shipping materials to Defendants from April 2007 until Defendants terminated their relationship in 2014. Ray Hernandez, the President of International Corrugated, testified that Plaintiff filed suit to seek compensation for 198 unpaid transactions. Hr'g Tr. 11:37:00-l 1.[2]

         4. The parties' business relationship began with Plaintiff submitting its quote or price book to Defendants. Defendants used the quotes they received to create a blanket purchase order ("blanket PO") on April 19, 2007. See Hr'g Ex. D-l at 000025. The blanket PO had a delivery date of February 2008. Id. Ricardo Perez, Accounting Director for Defendants, testified that the delivery date is the date by which goods must be delivered under the blanket PO, but he also said that a blanket PO can remain open after the delivery date. Hr'g Tr. 11:22:47-23:29. The April 2007 blanket PO had Lear's terms and conditions incorporated by reference in it. Hr'g Ex. D-l at 000026.

         5. Defendants failed to prove that Plaintiff ever received the April 2007 blanket PO. Defendants could not show any emails containing the April 2007 blanket PO being sent to Plaintiff at that time nor could they offer a witness who could testify to Plaintiff receiving the April 2007 blanket PO. Ray Hernandez testified that Defendants never sent the April 2007 blanket PO to him. Hr'g Tr. 11:34:30-59. Further, Defendants could not show that Plaintiff signed any purchase order, including the April 2007 blanket PO, during the time they transacted business. Moreover, Defendants failed to prove that there was a meeting of the minds that the terms and conditions in the April 2007 blanket PO would govern all subsequent transactions between the parties.

         6. Josue Olivas, a manager in Defendants' Materials Department, explained that to place an order, he would make a call or send an email to Plaintiff that included the purchasing order number ("PO#") from the April 2007 blanket PO and the quantity of the packing supplies needed. Hr'g Tr. 10:59:03-11:00:06. From there, Olivas would wait for Plaintiff to accept the offer and deliver the materials with a packing slip that included the PO#. Id. 11:11:55-13:52. Defendants would not accept the delivery if the packing slip did not have the PO# on it Id. 11:03:18-27. Olivas further testified that the most common method of making an offer to Plaintiff was via a phone call. Id. 11:11:53-55. Olivas also specified that he received from Defendants' Purchasing Department the vendor and PO# to use when making orders. Id. 11:01:02-35.

         7. In describing the process for the parties' transactions, Ray Hernandez' testimony was generally consistent with Josue Olivas'. Hernandez testified that Defendants would make orders via phone call or email, with the phone being the most typical method. Id. 11:37:33-38:01. Defendants would tell Plaintiff the products and quantities needed, and Plaintiff could choose to accept or deny the offer; Hernandez noted that Plaintiff did deny some orders. Id. 11:38:01-15. Further, Hernandez explained that Defendants would sometimes send a filled-out purchase order after Plaintiff accepted Defendants' offer over the phone. Id. 11:41:27-58, 11:50:27-53.

         8. Hernandez testified that the course of dealing between the parties varied from transaction to transaction. See Id. 11:37:00-58. However, the typical form a transaction took was Defendants calling to make an offer, Plaintiff accepting the offer over the phone, Defendants following up with paperwork at a later time, Plaintiff delivering the products requested, and Defendants paying Plaintiff thereafter. Id. 11:37:33-39:04, 11:41:27-58. ...

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