                                                                                  United States Court of Appeals
                                                                                           Fifth Circuit
                                                                                         F I L E D
                      IN THE UNITED STATES COURT OF APPEALS
                                                                                           July 24, 2007
                                   FOR THE FIFTH CIRCUIT
                                                                                     Charles R. Fulbruge III
                                                                                             Clerk

                                           No. 06-11177
                                         Summary Calendar




JAMES J. ARMSTRONG,
                                                                               Plaint iff-Appellant,


                                                versus

ASSOCIATES INTERNATIONAL HOLDINGS CORP. d/b/a
CITIFINANCIAL INTERNATIONAL LTD; d/b/a ASSOCIATES FINANCE;
CITIGROUP, INC.,

                                                                               Defendants-Appellees.



                           Appeal from the United States District Court
                               for the Northern District of Texas
                                Civil Action No. 3:05-cv-02006




Before DeMOSS, STEWART, and PRADO, Circuit Judges.

PER CURIAM:*

       This appeal arises from the district court’s grant of the motion to compel filed by Associates

International Holding Corp., which does business as Citifinancial International, Ltd (“Citifinancial”).

We affirm the district court’s judgment.


       *
        Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
                      I. FACTUAL AND PROCEDURAL BACKGROUND

       Citifinancial hired James J. Armstrong (“Armstrong”) in November 2000, as assistant general

counsel, after Citifinanicial acquired Armstrong’s former employer. Citifinancial is one of many

entities that are collectively known as the U.S. Consumer Group. On December 17, 2001, the Senior

Human Resources Officer issued a memorandum to all U.S. Consumer Group employees that,

effective immediately, the company was implementing an employment arbitration policy. U.S.

Consumer Group employees received a copy of the policy attached to the memorandum. The

memorandum stated that, under the employment arbitration policy, “you and the Company agree to

make arbitration the required and exclusive forum for resolution of all employment-related disputes

that are based on legally protected rights.” Employees were required to acquiesce in the policy as

a condition of employment. According to the memorandum, an employee’s “continued employment

will constitute acceptance of the Arbitration Policy.” The policy covered an array of employment-

related disputes, including Age Discrimination in Employment Act claims, breach of contract claims,

and the Employee Retirement Income Security Act of 1974 claims. Finally, the memorandum

directed each employee to sign and return an acknowledgment of receipt attached to the document.

       On December 18, 2001, Armstrong signed the acknowledgment, and continued in his position

with Citifinancial. In this appeal, however, Armstrong contends that Citifiniancial sent the form to

him in error. In an affidavit submitted to the district court, Armstrong declares that

       To the best of my knowledge, CitiFinancial International, my assigned business unit,
       was not included within the U.S. Consumer Group; I understood that the U.S.
       Consumer Group Policy had been erroneously sent to me because my temporary legal
       supervisor had been and was Martin Wong, the General Counsel of Citigroup’s
       finance operations in the United States; and Associates International Holdings
       Corporation was providing services to Citigroup’s International consumer finance.



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       On November 7, 2002, Armstrong received a copy of the 2002 Employee Handbook, which

contained the same employment arbitration policy attached to the December 2001 memorandum.

Once again, Armstrong signed and returned an acknowledgment form attached to the handbook. The

acknowledgment form contained the following language:

       I understand that this Handbook contains a provision that requires me to submit
       employment-related disputes to binding arbitration. [ ] I have read that provision
       carefully. I also understand that no provision of this Handbook or elsewhere is
       intended to constitute a waiver, nor be construed to constitute a waiver, of the
       Company’s right to compel arbitration of employment-related disputes.

Although Armstrong contends that he did not believe that the employment arbitration policy or the

manual applied to Citifinancial employees, the handbook cover identifies Citifinancial as a member

of the U.S. Consumer Group. Shortly thereafter, Citifinancial informed Armstrong that the company

intended to eliminate his position. On January 2, 2003, Armstrong resigned from Citifinancial.

       On May 15, 2004, Armstrong filed his complaint in the District of Puerto Rico, but the court

transferred the case to the Northern District of Texas. On March 3, 2006, Citifinancial and Citigroup

filed their motion to compel arbitration and to dismiss or stay the case. On September 12, 2006, the

district court granted the motion to compel arbitration and dismissed the case. Armstrong now

appeals.

                                  II. STANDARD OF REVIEW

       We review de novo a district court’s ruling on a motion to compel arbitration. See Webb v.

Investacorp, Inc., 89 F.3d 252, 257 (5th Cir. 1996). If the district court did not err in granting a

motion to compel, its decision to dismiss the case as opposed to staying the case should be reviewed

under an abuse of discretion standard. Fedmet Corp. v. M/V Buyalyk, 194 F.3d 674, 679 (5th Cir.

1999); Alford v. Dean Witter Reynolds, Inc., 975 F.2d 1161, 1164 (5th Cir. 1992).


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                                          III. DISCUSSION

        Under the Federal Arbitration Act (the “FAA”), “a party aggrieved by the alleged failure,

neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any

United States district court . . . for an order directing that such arbitration proceed in the manner

provided for in such agreement.” 9 U.S.C. § 4. When a party agrees to arbitrate in a particular state,

via explicit or implicit consent, the district courts of the agreed upon state may exercise personal

jurisdiction over the parties for the limited purpose of compelling arbitration. PaineWebber, Inc. v.

The Chase Manhattan Private Bank (Switzerland), 260 F.3d 453, 461 (5th Cir. 2001).

        Moreover, “courts apply the contract law of the particular state that governs the agreement.”

Washington Mut. Fin. Co. v. Bailey, 364 F.3d 260, 264 (5th Cir. 2004) (citing First Options of

Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995)). To determine whether the parties agreed to

arbitrate a dispute, the district court considers: (1) whether there is a valid agreement to arbitrate

between the parties; and (2) whether the dispute in question falls within the scope of the arbitration

agreement. Webb v. Investacorp, Inc., 89 F.3d 252, 258 (5th Cir. 1996). When a contract contains

an arbitration clause, there is a presumption of arbitrability in the sense that “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.” AT&T

Tech., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650 (1986) (quoting Steelworkers v. Warrior

& Gulf Navigation Co., 363 U.S. 574, 582-83 (1960)).

        Under Texas law, employers may modify the terms of an at-will employment relationship as

a condition of continued employment so long as employers provide notice of the modification and

the employees accept the change. In re Halliburton Co., 80 S.W.3d 577, 568 (Tex. 2002). An


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employee’s continued employment with knowledge of a change in the at-will employment relationship

constitutes acceptance of the change as a matter of law. Id. at 568.

        Here, Armstrong agreed in writing to the employment arbitration policy on two separate

occasions. In December 2001, Armstrong signed an acknowledgment form that confirmed his receipt

of the memorandum introducing the employment arbitration policy to company employees.

Thereafter, Armstrong continued in his position as assistant general counsel. Citifinancial’s notice,

Armstrong’s acknowledgment, and his continued employment effectively bind him to arbitrate this

employment-related dispute. See Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 229 (Tex. 1986)

(holding that an employee who continued working after he was notified that his employment

conditions would be modified by an arbitration policy was bound to arbitrate).

        Similarly, on November 7, 2002, Armstrong once again signed an acknowledgment form

attached to the Company’s Employee Handbook, which explicitly referenced the requirement to

arbitrate employment-related disputes.      After this date, Armstrong continued working for

Citifinancial.   Just as above, this series of events–notice, acknowledgment, and continued

employment–binds Armstrong to arbitrate his employment claims.

        Armstrong raises a plethora of foreclosed arguments in an attempt to avoid compliance with

the arbitration policy. First, Armstrong argues that he mistakenly signed the acknowledgment forms

under the impression that the employment arbitration policy did not apply to Citifinancial employees.

Under Texas law, however, the unilaterally mistaken party must bear responsibility for his error.

Wentwood Woodside I, LP v. GMAC Commercial Mortgage Corp., 419 F.3d 310, 316 (5th Cir.

2005). Second, Armstrong argues that the employment arbitration policy was not supported by

sufficient consideration. Under Texas law, however, the contractual obligation for both parties to


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arbitrate, as required by the policy contested in this appeal, is by definition sufficient consideration.

Halliburton, 80 S.W.3d at 569-70.

        Third, Armstrong argues that U.S. Consumer Group’s reserved right to “revise, amend,

modify, or discontinue the Policy at any time in its sole discretion” makes the agreement illusory.

Pursuant to the arbitration policy, however, revisions or amendments cannot take effect until thirty

days after notice to the employee. The Texas Supreme Court has upheld arbitration agreements with

similar provisions. Id.(upholding a ten-day notice of termination provision); J.M. Davidson, Inc. v.

Webster, 128 S.W.3d 223, 237 (Tex. 2003) (remanding case to lower court to determine if arbitration

plan could be terminated without notice).

        Fourth, Armstrong argues that Citifinancial fraudulently induced him to sign the employment

arbitration agreement. Armstrong bases this assertion on the fact that Citifinancial terminated his

position shortly after he acknowledged the policy for the second time. To prevail on the claim of

fraudulent inducement, however, Armstrong must show that Citifinancial made material and false

representations in order to induce his agreement. In re FirstMerit Bank, 52 S.W.3d 749, 758 (Tex.

2001); Ernst & Young v. Pacific Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001). Armstrong

presents no such evidence. Even assuming that Citifinancial knew his position would end soon, this

alone does not support fraudulent inducement and Armstrong had already agreed to arbitrate

employment-related disputes via the November 2001 acknowledgment form.

        We find three other arguments raised in this appeal wholly without merit and either

unsupported by case law or against the weight of settled law. Armstrong argues that the human

resources department of Citifinancial lacked authority from the board of directors to implement an

employment arbitration policy. Armstrong presents no case law and, more importantly, we find no


                                                   6
case law to support this proposition. Armstrong further argues that the arbitration policy does not

cover his claims; yet, the policy explicitly includes breach of contract, ERISA, and ADEA claims.

Armstrong also argues that the American Arbitration Association, designated to preside over

arbitrations commenced pursuant to the policy, is not neutral and favors the employers who pay their

fees and may be a source of future business. Following the Supreme Court’s lead, we “decline to

indulge the presumption that parties in an arbitral body conducting a proceeding would be unable or

unwilling to retain competent, conscientious and impartial arbitrators.” Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 30 (1994) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 634 (1985)). As noted by the district court, “generalized attacks on arbitration

are out of step with the federal policy favoring arbitration.”

       Finally, Armstrong faults the district court for not holding an evidentiary hearing and

dismissing, as opposed to staying, the case. To briefly address these arguments, first, Armstrong

never requested a hearing, and the district court is not required to conduct a hearing on this threshold

determination. See U.S. Titan, Inc. v. Guangzhou Zhen Hua Shipping Co., 241 F.3d 135, 145 (5th

Cir. 2001). Armstrong contends that the facts were controverted as to whether he knowingly agreed

to the employment arbitration policy based on his mistaken belief. As stated above, a unilateral

mistake, as a matter of law, would not affect the outcome of this decision. Second, the Fifth Circuit

encourages district courts to dismiss cases with nothing but arbitrable issues because staying the

action serves no purpose. Alford, 975 F.2d at 1164. Accordingly, the district court did not err in not

conducting an evidentiary hearing and dismissing the case after granting Citifinancial’s motion to

compel arbitration.




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                               IV. CONCLUSION

For the foregoing reasons, we affirm the district court’s judgment.




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