                                                                                           ACCEPTED
                                                                                      04-14-00829-CV
                                                                           FOURTH COURT OF APPEALS
                                                                                SAN ANTONIO, TEXAS
                                                                                  2/9/2015 2:26:56 PM
                                                                                        KEITH HOTTLE
                                                                                               CLERK


                                             ORAL ARGUMENT REQUESTED
                                                                      FILED IN
                              No. 04-14-00829-CV               4th COURT OF APPEALS
                                                                SAN ANTONIO, TEXAS
                                                               02/9/2015 2:26:56 PM
                     IN THE COURT OF APPEALS                     KEITH E. HOTTLE
                                                                       Clerk
            FOR THE FOURTH JUDICIAL DISTRICT OF TEXAS
                          AT SAN ANTONIO


                      Western Rim Property Services, Inc.,
                                                          Appellant,

                                       v.

                              Paula Bazan-Garcia,
                                                          Appellee.



    ON APPEAL FROM THE COUNTY COURT AT LAW NO. CC# 03 OF
         BEXAR COUNTY, TEXAS, CAUSE NO. 2014CV01064


                       APPELLANT’S REPLY BRIEF


BAKER BOTTS L.L.P.                          BAKER BOTTS L.L.P.
Jennifer M. Trulock                         Stephanie F. Cagniart
State Bar No. 90001515                      State Bar No. 24079786
jennifer.trulock@bakerbotts.com             stephanie.cagniart@bakerbotts.com
2001 Ross Avenue, Suite 600                 98 San Jacinto Boulevard, Suite 1500
Dallas, Texas 75201-2980                    Austin, Texas 78701-4078
(214) 953-6500                              (512) 322-2500
(214) 953-6503 (Facsimile)                  (512) 322-2501 (Facsimile)


           Attorneys for Appellant Western Rim Property Services, Inc.
                                                Table of Contents
                                                  Table of Contents
                                                                                                                        Page

Table of Contents ....................................................................................................... i

Summary of the Argument.........................................................................................1

Argument....................................................................................................................2

         I.        The AAA Rules are a publicly available authority that can be
                   considered by this Court. ....................................................................... 2
         II.       The delegation clauses in the parties’ arbitration agreements are
                   enforceable, and require the Court to send Bazan-Garcia’s
                   unconscionability defense to arbitration. .............................................. 6
                   A.       Bazan-Garcia has waived any argument that the
                            delegation clauses are unconscionable. ...................................... 7

                   B.       Bazan-Garcia’s claim that the arbitration agreements’
                            cost and venue provisions make the delegation clause
                            unconscionable is directly contradicted by the AAA
                            Rules............................................................................................ 9

                   C.       Bazan-Garcia’s      claim     that    arbitrating     her
                            unconscionability defense would be prohibitively
                            expensive is not supported by any evidence in the record........ 12

         III.      Arbitration under the AAA Rules is not unconscionable. .................. 15

         IV.       Even if the AAA Rules do not apply to this appeal, Bazan-
                   Garcia is bound by her arbitration agreements because she has
                   failed to prove those agreements are unconscionable. ........................ 17
                   A.       Bazan-Garcia cannot rely on prior AAA invoices to
                            prove that the arbitration under the Employee Handbook
                            is unconscionable, because she has not shown that
                            arbitration will be conducted by the AAA. ............................... 17

                   B.       Bazan-Garcia cannot rely on AAA invoices to prove that
                            arbitration under the Employee Handbook is


                                                              i
                           unconscionable if this Court is barred from considering
                           the AAA Rules. ......................................................................... 20

                  C.       Bazan-Garcia cannot prove that the Employee
                           Handbook’s arbitration agreement is unconscionable
                           because she has not shown that a less expensive
                           arbitration alternative is unavailable to her............................... 22
                  D.       Bazan-Garcia cannot prove that arbitration under the
                           Arbitration Agreement is unconscionable because she has
                           not presented any evidence showing how much it would
                           cost to travel to Dallas County. ................................................. 23

         V.       The challenged provisions do not constitute the “essential
                  purpose” of the parties’ agreements, and may be severed from
                  the agreements. .................................................................................... 24

Conclusion and Prayer for Relief.............................................................................25

Certificate of Compliance ........................................................................................27
Certificate of Service ...............................................................................................27




                                                           ii
                                           TABLE OF AUTHORITIES

                                                                                                                   Page(s)
CASES
Aspen Tech., Inc. v. Shasha,
   253 S.W.3d 857 (Tex. App.—Houston [14th Dist.] 2008, no pet.) .......18, 19, 20

Caballero v. Contreras,
  No. 13-10-00150-CV, 2010 WL 3420527 (Tex. App.—Corpus Christi
  Aug. 31, 2010, no pet.) ....................................................................................... 12

Coon v. Umphrey,
  09-09-00264-CV, 2009 WL 3030354 (Tex. App.—Beaumont Sept. 24,
  2009, pet. dism’d) ................................................................................................. 4

Forest Oil Corp. v. McAllen,
  268 S.W.3d 51 (Tex. 2008)................................................................................... 7

Green Tree Fin. Corp.-Ala. v. Randolph,
  531 U.S. 79 (2000) ......................................................................15, 18, 19, 20, 23
In re Olshan Found. Repair Co., LLC,
    328 S.W.3d 883 (Tex. 2010) ..........................................................3, 4, 20, 21, 22
In re Poly-America,
    262 S.W.3d 337 (Tex. 2008) ............................................................11, 12, 17, 24

John M. O’Quinn, P.C. v. Wood,
   12-06-001510CV, 2006 WL 3735617 (Tex. App.—Tyler Dec. 20, 2006) .......... 4

Mitchison v. Houston Ind. Sch. Dist.,
   803 S.W.2d 769 (Tex. App.—Houston [14th Dist.] 1991, writ denied) .............. 5

Nabors Drilling USA, LP v. Carpenter,
  198 S.W.3d 240 (Tex. App.—San Antonio 2006, no pet.) .................................. 8

Perez v. Spring Branch Indep. Sch. Dist.,
   2011 WL 742601 (Tex. App.—Houston [14th Dist.] Mar. 3, 2011, pet.
   denied)................................................................................................................... 5

Rent-A-Center, West v. Jackson,
  561 U.S. 63 (2010) ......................................................................................7, 9, 13

                                                              iii
Venture Cotton Co-op v. Freeman,
  435 S.W.3d 222 (Tex. 2014) ........................................................................24, 25
Winslow v. D.R. Horton America’s Builder,
  04-12-00376-CV, 2013 WL 2368300 (Tex. App.—San Antonio May 29,
  2013, no pet.) ........................................................................................................ 4

OTHER AUTHORITIES
AAA Employment Rules ..................................................................................passim
Tex. R. App. P. 38.1(k)(1)(C) .................................................................................... 3




                                                            iv
                       SUMMARY OF THE ARGUMENT
             Bazan-Garcia bases her Response on one central claim: that this Court

cannot consider the Employment Rules of the American Arbitration Association

(“AAA Rules”) because a copy of those rules was not included in the clerk’s

record. Her reasons for making this argument are easy to understand. If the AAA

Rules apply, then the Court must send all of Bazan-Garcia’s claims—including her

unconscionability defense—to arbitration pursuant to the rules’ delegation clause.

The AAA Rules also defeat Bazan-Garcia’s unconscionability defense on the

merits, because they supersede all three provisions that she contends make the

parties’ agreements unenforceable.

             Bazan-Garcia cannot escape her arbitration agreements so easily. It is

well established that Texas courts can consider the publicly available AAA Rules,

regardless of whether they were formally entered into evidence. Any deviation

from that rule has no basis in the law, nor would it produce a fair result where both

parties have relied on those rules throughout the litigation.

             Moreover, Bazan-Garcia is bound by her arbitration agreements even

if the AAA Rules do not apply in this appeal. Bazan-Garcia can only avoid her

agreements by presenting specific evidence that arbitration would be prohibitively

expensive. The AAA invoices that Bazan-Garcia has submitted to prove that the

Employee Handbook is unconscionable do not meet this burden, because Bazan-



                                           1
Garcia has failed to show that the AAA would actually administer the arbitration

proceeding, that the AAA would charge similar fees as those shown on the

invoices, and that no cheaper arbitration alternatives are available. And Bazan-

Garcia has submitted no evidence showing her costs if the arbitration were held in

Dallas County, which is fatal to her claim that the Arbitration Agreement is

unconscionable.

              Bazan-Garcia is bound by her agreements to arbitrate.                   WRPS

therefore requests that this Court reverse the trial court’s order, abate this litigation,

and compel arbitration of Bazan-Garcia’s claims.

                                      ARGUMENT

I.     The AAA Rules are a publicly available authority that can be
       considered by this Court.
              It is undisputed that the Employment Rules of the American

Arbitration Association (“AAA Rules”) govern both of the parties’ arbitration

agreements. See App. 3 (Arbitration Agreement), App. 13 (Employee Handbook).1

These rules are available to the public through the AAA’s website, see Opening Br.

at 2 n.2, and were relied on by both parties before the trial court, see CR at 25–28,

85–94; RR at 6–7, 10–12, 15. WRPS also included a copy of the AAA Rules in

the Appendix to its Opening Brief, as required by the Texas Rules of Appellate

1
        The Clerk’s Record is referred to herein as “CR,” the Reporter’s Record as “RR,” the
Opening Brief filed by WRPS on Dec. 24, 2014 as “Opening Br.,” the Appendix to the Opening
Br. as “App.,” and the Response Brief filed by Bazan-Garcia on January 20, 2015 as “Resp. Br.”


                                              2
Procedure. See App. at 14–65; Tex. R. App. P. 38.1(k)(1)(C) (appendix must

include “the text of any rule . . . on which the argument is based”). Despite this,

and for the first time on appeal, Bazan-Garcia claims that this Court cannot

consider the AAA Rules in resolving the parties’ dispute, because “WRPS did not

attach the AAA Employment Rules to its Motion to Compel and did not introduce

the AAA Employment Rules as an exhibit at the hearing on its Motion to Compel

Arbitration.” Resp. Br. at 11.

             Bazan-Garcia is wrong. The AAA Rules are not evidence; they are a

publicly accessible authority. Consequently, Texas courts can apply those rules

regardless of whether they were formally introduced into evidence. The Texas

Supreme Court, for example, did precisely that in In re Olshan Found. Repair Co.,

LLC, 328 S.W.3d 883 (Tex. 2010). Like Bazan-Garcia, the respondents in Olshan

claimed that the appellate court could not consider the AAA Commercial

Arbitration Rules because they had not been formally introduced into evidence.

See Resp. to Pet. for Writ of Mandamus, 2009 WL 2388979, at *9 (filed July 16,

2009); Tingdale’s Merits Br., 2009 WL 4764118, at *12 (filed Nov. 16, 2009).

Olshan countered that because the AAA Rules were incorporated into the parties’

agreement, and “easily verifiable by reference to the AAA website, a source whose

accuracy cannot reasonably be questioned,” they were properly before the Court.

Olshan’s Reply to Tingdale’s Merits Br., 2009 WL 5251087, at *8 n.8 (filed Dec.



                                        3
21, 2009) (collecting cases). The Supreme Court agreed with Olshan, analyzing

the AAA Rules in detail in its opinion and ultimately ruling in Olshan’s favor. See

Olshan, 328 S.W.3d at 895–96.

            Similarly, in In re Champion Technologies, Inc., Champion did not

introduce a copy of the AAA Rules into evidence before the trial court. 222

S.W.3d 127, 133 n.6 (Tex. App.—Eastland 2005, pet. denied).                On appeal,

Champion attached a copy of the rules to its brief, which petitioners moved to

strike as an improper attempt to introduce evidence on appeal. See id. The

Eleventh Court of Appeals denied the motion, explaining:

            The [parties’ agreement] incorporates the rules of the
            AAA as a part of its terms. The rules and procedures are
            readily available via the internet. Relators’ act of
            providing a copy of these rules to the court is similar to a
            party attaching a copy of a statute or regulation for the
            court’s benefit.

Id. This Court and other Texas courts of appeals also routinely cite the AAA Rules

just as they would any other authority, regardless of whether the rules were

included in the clerk’s record.    See, e.g., Winslow v. D.R. Horton America’s

Builder, 04-12-00376-CV, 2013 WL 2368300, at *1 n.3–5 (Tex. App.—San

Antonio May 29, 2013, no pet.); Coon v. Umphrey, 09-09-00264-CV, 2009 WL

3030354, at *4 n.2 (Tex. App.—Beaumont Sept. 24, 2009, pet. dism’d); John M.

O’Quinn, P.C. v. Wood, 12-06-001510CV, 2006 WL 3735617, at *1 n.2 (Tex.

App.—Tyler Dec. 20, 2006).


                                         4
             The two cases that Bazan-Garcia relies on in her Response are not to

the contrary. Neither of the cited cases involved the AAA Rules or similar,

publicly available authorities. Instead, they are instances where a court of appeals

refused to consider a factual record that was not properly submitted as part of the

record on appeal. See Resp. at 11 (citing Mitchison v. Houston Ind. Sch. Dist., 803

S.W.2d 769, 771 (Tex. App.—Houston [14th Dist.] 1991, writ denied) (holding the

court of appeals could not consider the appellant’s second “request for findings of

facts and conclusions of law” that was filed with the trial court because appellant

did not arrange for a copy of the request to be included in the clerk’s record); Perez

v. Spring Branch Indep. Sch. Dist., 2011 WL 742601 (Tex. App.—Houston [14th

Dist.] Mar. 3, 2011, pet. denied) (holding the court of appeals could not review

evidentiary rulings made during a bench trial because appellant failed to pay for

and provide a copy of the reporter’s record to the appellate court)). Because

WRPS is not seeking to introduce any such document into the appellate record,

these cases are irrelevant.

             Bazan-Garcia’s attempt to avoid the AAA Rules is not only legally

unsupported, it is puzzling in light of her actions before the trial court. WRPS

cited and relied on the AAA Rules in its Motion to Compel Arbitration. See CR

25–28.    In turn, Bazan-Garcia based her entire response on the claim that

arbitration under the AAA Rules would be prohibitively expensive, and on an



                                          5
affidavit from her attorney detailing his experience with the AAA rules. See CR at

81, 85–94; see also Resp. Br. at 4 (claiming Bazan-Garcia proved the arbitration

agreement was unconscionable through “three AAA invoices from nearly identical

employment cases that [her counsel] litigated under AAA rules”). At the hearing

on its motion, WRPS discussed several AAA Rules in detail and provided copies

of those rules to the court, just as counsel for both parties provided copies of key

cases. See RR at 6–7 (discussing AAA Rules’ delegation clause); id. at 10–12

(discussing delegation clause and AAA Rules governing costs, discovery and

venue); id. at 15 (discussing process of arbitrating the issue of unconscionability

under AAA Rules). Bazan-Garcia did not object, see id., nor has she claimed that

WRPS misstated or misrepresented the AAA Rules.

             There is no legal or equitable justification for this Court to ignore the

publicly available rules that govern the parties’ arbitration agreements. The AAA

Rules therefore apply to this appeal.

II.   The delegation clauses in the parties’ arbitration agreements are
      enforceable, and require the Court to send Bazan-Garcia’s
      unconscionability defense to arbitration.
             Bazan-Garcia’s only defense to arbitration is her claim that the

arbitration agreements are unconscionable. She does not dispute, however, that the

AAA Rules’ delegation clause gives the arbitrator—not the court—authority to

decide her unconscionability defense.         See AAA Rule 6(a) (App. 30) (“The



                                          6
arbitrator shall have the power to rule on his or her own jurisdiction, including any

objections to the existence, scope or validity of the arbitration agreement.”). That

concession resolves this appeal, because courts must enforce delegation clauses

under the Texas Arbitration Act. See Forest Oil Corp. v. McAllen, 268 S.W.3d 51,

61 (Tex. 2008) (holding that the Court had “no discretion but to direct the court to

compel arbitration and stay [this] litigation” because the parties’ arbitration

agreement contained a delegation clause).

             To avoid this result, Bazan-Garcia raises another new argument on

appeal. She claims the delegation clause itself is unconscionable, and therefore

unenforceable, because simply arbitrating her unconscionability defense under the

parties’ agreements would be prohibitively expensive. See Resp. at 34–39. This

untimely argument should be rejected by the Court because it is waived, directly

contradicted by the AAA Rules, and unsupported by any evidence in the record.

      A.     Bazan-Garcia has waived any argument that the delegation
             clauses are unconscionable.
             Bazan-Garcia admits that she did not challenge the arbitration

agreements’ delegation clauses in her Response to WRPS’s Motion to Compel

Arbitration. See Resp. at 38. She is therefore bound to them. See Rent-A-Center,

West v. Jackson, 561 U.S. 63, 73–76 (2010) (holding that a plaintiff who failed to

“make any arguments specific to the delegation provision” before the trial court

could not raise those arguments on appeal, and was bound to that provision).


                                         7
              On appeal, Bazan-Garcia protests that “no fault can be assigned” to

her for failing to challenge the delegation clauses below, because WRPS did not

introduce the AAA Rules into evidence. Resp. at 38. But WRPS was not required

to do so. See Section I, supra at 2–6. Moreover, WRPS discussed the delegation

clause at length in its Motion to Compel Arbitration, putting Bazan-Garcia on

notice that it was relying on that clause. See CR 25–28. Bazan-Garcia’s failure to

address this issue is therefore unexcused.      See Nabors Drilling USA, LP v.

Carpenter, 198 S.W.3d 240, 249 (Tex. App.—San Antonio 2006, no pet.) (holding

that a party seeking to avoid an arbitration agreement can only rely on arguments

that it raised before the trial court).

              In the alternative, Bazan-Garcia insists that she raised and preserved

her challenges to the delegation clauses at the hearing when her counsel stated:

“[Bazan-Garcia]’s going to have to go to Dallas to complain to the arbitrator

about [the arbitration agreements].” Resp. at 38 (quoting RR at 15) (emphasis in

Resp.).   According to Bazan-Garcia, this statement and two other exchanges

between the judge and WRPS’s counsel prove that “the trial court also understood

that Bazan-Garcia was challenging the delegation clause because it required

Bazan-Garcia to incur prohibitive costs of first traveling to Dallas County, Texas to

challenge the rest of the agreement.” See Resp. at 38–39.




                                          8
            At most, these statements show that Bazan-Garcia preserved an

argument that the delegation clause in the Arbitration Agreement is unenforceable,

based on that agreement’s venue clause. See App. 3 (“Any arbitration relating to

any dispute covered by this Agreement shall be arbitrated in Dallas County,

Texas.”). But the Arbitration Agreement is only one of the agreements at issue in

this appeal. The second agreement—the Employee Handbook that is incorporated

by reference into the Acknowledgement—does not have a venue clause. See App.

4, 13. Because, by her own admission, Bazan-Garcia failed to raise any timely

challenge to the Employee Handbook’s delegation clause, this Court must enforce

that clause and compel arbitration of Bazan-Garcia’s unconscionability defense.

See Rent-A-Center, 561 U.S. at 74.

      B.    Bazan-Garcia’s claim that the arbitration agreements’ cost and
            venue provisions make the delegation clause unconscionable is
            directly contradicted by the AAA Rules.
            Bazan-Garcia’s untimely challenges to the delegation clauses also fail

because they are directly contradicted by the AAA Rules, which control over any

contrary provisions in the parties’ arbitration agreements. See AAA Rule 1 (App.

28) (the arbitrator must apply the AAA Rules if “an adverse material inconsistency

exists between the arbitration agreement and these rules”).

            First, Bazan-Garcia claims that the delegation clause in the Employee

Handbook is unconscionable because its cost-sharing provision allegedly requires



                                         9
her to pay “half of the arbitrator’s fees for any hearing” on her unconscionability

defense. Resp. at 35–36. But under the AAA Rules, Bazan-Garcia will not pay

any of the arbitrator’s fees or hearing expenses. Instead, Bazan-Garcia will pay an

initial filing fee of $200, and WRPS will be responsible for paying all hearing fees

and all of the arbitrator’s fees and expenses. See Opening Br. at 26–27; AAA Rule

45 (App. 43); AAA Rule 48(i)–(iii) (App. 45–47). And if the filing fee causes her

“excessive hardship,” then Bazan-Garcia is permitted to request that the fee be

reduced or deferred. AAA Rule 43 (App. 43).

            Bazan-Garcia’s Response never addresses the above AAA Rules on

fees, even though WRPS identified and discussed them in detail at the hearing on

its motion and in its Opening Brief. See RR at 10–11; Opening Br. at 26–28. Nor

does Bazan-Garcia contend that she cannot afford the $200 filing fee, which is less

than what she paid to file her claims in state court. See CR at 81. Her silence

impliedly concedes that this challenge to the Employee Handbook’s delegation

clause is without merit, and that arbitrating her unconscionability defense would

not be prohibitively expensive.

            Second, Bazan-Garcia claims that the delegation clause in the

Arbitration Agreement is unconscionable because its venue clause allegedly

requires her to travel to Dallas County to arbitrate her unconscionability defense.

Resp. at 35–37. But under the AAA Rules, the unconscionability defense would



                                        10
be addressed during the Management Conference, which is “conducted by

telephone conference call” unless the parties agree otherwise. AAA Rule 8 (App.

31). Bazan-Garcia will therefore not have to incur any travel expenses.

              Furthermore, AAA Rule 10 empowers the arbitrator to choose the

locale of arbitration, “having regard for the contentions of the parties and the

circumstances of the arbitration.” AAA Rule 10 (App. 32). Thus, even if a non-

telephonic hearing was necessary to decide Bazan-Garcia’s unconscionability

defense, Bazan-Garcia could request a location other than Dallas County.2 This

rule defeats Bazan-Garcia’s challenge to the Arbitration Agreement, because the

Texas Supreme Court has expressly held that a provision that the arbitrator is

empowered to modify cannot be unconscionable. See In re Poly-America, 262

S.W.3d 337, 347 (Tex. 2008) (applying this rule to an agreement that “provide[d]

that the arbitrator may modify unconscionable terms”); see also Opening Br. at 29–

30 (discussing Poly-America, 262 S.W.3d at 347).




2
         Bazan-Garcia suggests that during the hearing on WRPS’s Motion to Compel Arbitration,
WRPS conceded that Bazan-Garcia would have to travel to Dallas to arbitrate her
unconscionability defense. See Resp. at 39. This is not the case. In response to a question from
the court regarding whether Bazan-Garcia would have to present her unconscionability defense
to an arbitrator in Dallas, WRPS’s counsel responded: “They do have to ask the arbitrator in
Dallas, unless the AAA decides the arbitration should not occur in Dallas.” RR at 11–12
(emphasis added). Bazan-Garcia selectively quotes this portion of the record, and omits the
italicized phrase. Nothing in the AAA Rules or the Arbitration Agreement prevents either the
arbitrability question from being resolved by telephonic conference or a request from Bazan-
Garcia to change the venue.


                                              11
            In her response, Bazan-Garcia ignores Poly-America and insists that

WRPS cannot rely on this argument because “[c]ourts have expressly rejected this

same circular logic.” Resp. at 36. In support, she quotes a footnote from an

unpublished case in which the Thirteenth Court of Appeals stated that “it would

appear preferable” for such issues to “be submitted to, and decided by, the courts

as a gateway matter.” Resp. at 36–37 (quoting Caballero v. Contreras, No. 13-10-

00150-CV, 2010 WL 3420527, at *10 n.2 (Tex. App.—Corpus Christi Aug. 31,

2010, no pet.)). But this authority cannot supersede authority from the Texas

Supreme Court.    Moreover, Bazan-Garcia conveniently omits the rest of that

footnote, in which the Caballero panel acknowledged Poly-America’s rule and that

the rule is binding on the courts of appeals. See id. Because Poly-America

forecloses Bazan-Garcia’s challenge to the Arbitration Agreement’s delegation

clause, Bazan-Garcia is bound to her agreement.

      C.    Bazan-Garcia’s claim that arbitrating her unconscionability
            defense would be prohibitively expensive is not supported by any
            evidence in the record.
            Finally, Bazan-Garcia’s untimely challenges to the delegation clauses

fail because she has not provided any evidence showing that arbitrating her

unconscionability defense under the Employee Handbook or the Arbitration

Agreement would be prohibitively expensive.




                                       12
             Before the trial court, Bazan-Garcia claimed that the arbitration

agreement in the Employee Handbook was unconscionable because its cost-sharing

provision allegedly requires her to split the costs of arbitration equally with WRPS.

See Resp. at 10. Bazan-Garcia estimated that arbitrating the merits of her claims

against WRPS could cost upwards of $20,000, based on invoices from three prior

AAA arbitrations, described as “labor cases . . . similar in nature, complexity, and

amount of witnesses as Ms. Bazan-Garcia’s case.” CR 85.

             How much it would cost to arbitrate the merits of Bazan-Garcia’s

claims, however, has no relevance to whether the delegation clause is

unconscionable.      The delegation clause requires Bazan-Garcia to submit her

unconscionability defense to the arbitrator. To avoid that clause, therefore, Bazan-

Garcia must show that arbitrating just her unconscionability defense would be

prohibitively expensive.    Rent-A-Center, 561 U.S. at 74.       The United States

Supreme Court has warned that this is a “difficult” standard to meet, because such

a proceeding is usually less complicated, less fact-intensive, and less lengthy than

arbitrating the actual merits of the parties’ underlying dispute.        Id. (“[T]he

unfairness of the fee-splitting arrangement may be more difficult to establish for

the arbitration of enforceability [of the arbitration agreement] than for arbitration

of more complex and fact-related aspects of the alleged employment

discrimination.”).



                                         13
             Bazan-Garcia failed to introduce any evidence to meet this burden.

The three AAA invoices she submitted, for example, were for proceedings that

lasted 2 to 3 days each, involved testimony from witnesses and experts, and

required the arbitrator to decide the merits of all of the parties’ statutory and fact-

intensive employment claims. See CR 85–94. Any hearing on Bazan-Garcia’s

unconscionability defense, in contrast, would likely last an hour or less, involve a

smaller and much simpler set of issues, require little or no fact-finding, and only

require testimony from Bazan-Garcia herself. Because there is no evidence on the

costs of such a hearing, or even a showing that a hearing would be required,

Bazan-Garcia cannot prove that the Employee Handbook’s delegation clause is

unconscionable.

             Bazan-Garcia’s challenge to the Arbitration Agreement’s delegation

clause—that it would be prohibitively expensive to travel to Dallas to arbitrate her

unconscionability defense—is also unsupported by the evidence. Bazan-Garcia

submitted an affidavit to the trial court stating that arbitrating the merits of her

claims in Dallas would cause her to “incur substantial additional expenses in travel

and lodging.” CR 96–97. But this conclusory statement does not provide any

information regarding how much such travel would actually cost, much less prove

a likelihood that Bazan-Garcia could not pursue her claims if she were required to

incur those costs. Indeed, Bazan-Garcia’s affidavit is almost identical to testimony



                                          14
that the U.S. Supreme Court found was inadequate to prove that an arbitration

agreement was unconscionable in Green Tree Fin. Corp.-Ala. v. Randolph. See

531 U.S. 79, 91 n.6 (2000) (discussing as insufficient plaintiff’s testimony “that

‘[a]rbitration costs are high and that she did not have the resources to arbitrate”).

             This    Court    must    submit    Bazan-Garcia’s     claims    and    her

unconscionability defense to arbitration pursuant to the delegation clauses in the

parties’ agreements. The Court does not need to decide the merits of Bazan-

Garcia’s challenges to those clauses, because she waived them by failing to raise

them before the trial court. Moreover, even if those claims were before this Court,

they are directly contradicted by the AAA Rules and unsupported by the record.

Both delegation clauses are therefore enforceable.

III.   Arbitration under the AAA Rules is not unconscionable.
             If the Court determines that the AAA Rules apply in this appeal, but

holds that the agreements’ delegation clauses are unenforceable, then it will have

to decide the merits of Bazan-Garcia’s unconscionability defense—i.e., whether

arbitrating Bazan-Garcia’s claims against WRPS would be prohibitively expensive.

This defense fails, because the AAA Rules directly contradict all of the challenges

that Bazan-Garcia has raised against the Employee Handbook and the Arbitration

Agreement.




                                          15
            At the hearing on its Motion to Compel Arbitration and in its Opening

Brief, WRPS explained that the Employee Handbook agreement’s cost-sharing

provision is not unconscionable because the AAA Rules expressly limit Bazan-

Garcia’s arbitration costs. See RR at 10–11; Opening Br. at 26–28; see also AAA

Rule 1 (App. 28) (AAA Rules govern if “an adverse material inconsistency exists

between the arbitration agreement and these rules”). Under these rules, Bazan-

Garcia will be charged a $200 filing fee and any fees associated with her witnesses.

AAA Rule 45 (App. 43). In addition, she can ask for relief from any fees that

cause her “extreme hardship.” AAA Rule 43 (App. 43). WRPS, on the other

hand, is responsible for all hearing fees and for paying the arbitrator’s fees and

expenses. AAA Rules 48(i)–(iii) (App. 45–47). Bazan-Garcia has never disputed

WRPS’s interpretation of the rules, nor claimed that she cannot afford these

expenses.   She therefore cannot show that arbitration under the Employee

Handbook would be prohibitively expensive.

            Likewise, the venue and discovery-limitation provisions in the

Arbitration Agreement do not make the agreement unconscionable, because the

AAA Rules empower the arbitrator to modify both these provisions. See RR at 11

(discussing AAA Rules 9 and 10); Opening Br. at 30–31 (same). As explained in

Section II.B above, Bazan-Garcia’s claim that this Court can find these provisions

unconscionable despite these rules is directly foreclosed by the Texas Supreme



                                        16
Court’s decision in Poly-America. See supra at 11–12 (discussing Poly-America,

262 S.W.3d at 347). Consequently, Bazan-Garcia also cannot show that arbitration

under the Arbitration Agreement would be unconscionable.

IV.   Even if the AAA Rules do not apply to this appeal, Bazan-Garcia is
      bound by her arbitration agreements because she has failed to prove
      those agreements are unconscionable.
            Bazan-Garcia has staked this appeal on the hope that the Court will

ignore the AAA Rules.       But that alone cannot relieve Bazan-Garcia of her

arbitration obligations. Instead, she must prove a likelihood that the excessive

costs of arbitration would prevent her from pursuing her claims, including by

identifying the organization or arbitrator who will conduct the proceeding,

establishing what the fees would be charged by that organization or arbitrator, and

demonstrating that no cheaper alternative is available to the parties. See Opening

Br. at 23–25. As WRPS pointed out in its Opening Brief, Bazan-Garcia has not

met any of these requirements, see id., and she fails to justify or excuse these

omissions in her Response. Consequently, regardless of whether the AAA Rules

apply in this appeal, the Court must compel arbitration of Bazan-Garcia’s claims.

      A.    Bazan-Garcia cannot rely on prior AAA invoices to prove that the
            arbitration under the Employee Handbook is unconscionable,
            because she has not shown that arbitration will be conducted by
            the AAA.
            The only evidence that Bazan-Garcia has submitted to prove that

arbitration under the Employee Handbook’s cost-sharing provision would be


                                        17
prohibitively expensive are three invoices from allegedly “similar arbitrations”

conducted by the AAA. See CR 85–94. But the Employee Handbook does not

require that the arbitration be conducted by the AAA; instead, it only requires that

arbitration occur “under” the AAA Rules. See App. 13; see also Opening Br. at

23-25. Bazan-Garcia must therefore make a “factual showing that the AAA would

administer the arbitration” before she can rely on those invoices to prove her

unconscionability defense. Aspen Tech., Inc. v. Shasha, 253 S.W.3d 857, 864

(Tex. App.—Houston [14th Dist.] 2008, no pet.) (citing Green Tree, 531 U.S. at 90

n.6).

            Bazan-Garcia has not made any such showing. On appeal, she tries to

avoid this requirement altogether by arguing that Shasha, one of the cases cited in

WRPS’s Opening Brief, stands for a different proposition: that “evidence of

expected AAA costs presented solely in the form of testimony [is] legally

insufficient.” Resp. at 26 (emphasis added); see also id. (quoting Shasha, 253

S.W.3d at 864 (“[T]estimony alone does not provide specific evidence as to

Shasha’s likely costs to arbitrate under the [arbitration] agreement.”). Because

Bazan-Garcia also submitted invoices from other arbitrations in support of her

unconscionability argument, she claims that Shasha supports her position. See id.




                                        18
            Bazan-Garcia’s argument misreads and misrepresents Shasha. After

reviewing an affidavit submitted by plaintiff’s attorney regarding how much

arbitration with the AAA would cost, the court stated:

            this testimony alone does not provide specific evidence
            as to Shasha’s likely costs to arbitrate under the 2006
            Agreement. Though Shasha’s counsel provides projected
            fees for filing with the AAA, AAA case service, and
            AAA administration, this projection is based on the
            premise that the AAA would administer the
            arbitration. However, the arbitration provision in the
            2006 Agreement does not require that the AAA conduct
            or administer the arbitration; rather the provision states
            that arbitration shall be “in accordance with the [AAA
            Rules].” Under this language, the AAA may administer
            the arbitration, but the parties are not required to
            have the arbitration administered by the AAA.

253 S.W.3d at 864 (emphases added). In context, it is clear that the court of

appeals’ concern was not the testimonial nature of the evidence, but that Shasha

did not provide an adequate basis for assuming that these costs would be governed

by the AAA Rules’ fee schedule. See id.

            This requirement has also been adopted by the United States Supreme

Court. In Green Tree, the Court explained that a plaintiff who failed to “make any

factual showing that the American Arbitration Association would conduct the

arbitration” could not rely on evidence of how much an AAA-administered

proceeding would cost to show that her arbitration agreement was unconscionable.

Green Tree, 531 U.S. at 90 n.6. And while the Texas Supreme Court has accepted



                                        19
AAA invoices as some evidence of the costs of arbitration, it did so in a case where

the parties’ agreement specifically required them to submit their disputes to

“binding arbitration administered by the American Arbitration Association.”

Olshan, 328 S.W.3d at 887, 897 (emphasis added).

              Bazan-Garcia has failed to make any “factual showing that the AAA

would administer the arbitration” under the parties’ agreement. See Shasha, 253

S.W.3d at 864. She therefore cannot prove, based solely on invoices from AAA-

administered arbitrations, that arbitration under the Employee Handbook would be

prohibitively expensive and unconscionable.3

       B.     Bazan-Garcia cannot rely on AAA invoices to prove that
              arbitration under the Employee Handbook is unconscionable if
              this Court is barred from considering the AAA Rules.
              In addition, if the Court is barred from considering the AAA Rules, as

Bazan-Garcia has argued in the Response, then Bazan-Garcia cannot rely on AAA



3
        Bazan-Garcia attempts to flip the burden of proof by claiming that WRPS was required to
show that arbitration “through an arbitration association other than the AAA, would be less
expensive than an arbitration actually administered by AAA.” Resp. at 28. This argument was
squarely rejected in Shasha. Like Bazan-Garcia, Shasha argued that his evidence regarding how
much AAA arbitration would cost was sufficient to meet his burden of proof, because the other
party failed to counter that evidence by showing that non-AAA arbitration would be more
affordable. The court of appeals disagreed, explaining that even though the other party could
have prevailed by submitting such evidence, “such proof is not necessary for Shasha to be
required to make a factual showing that the AAA would administer the arbitration.” Aspen
Tech., Inc. v. Shasha, 253 S.W.3d 857, 864 (Tex. App.—Houston [14th Dist.] 2008, no pet.).
Bazan-Garcia’s argument is also contrary to Olshan, in which the Texas Supreme Court held that
the party claiming arbitration would be prohibitively expensive has the burden of affirmatively
proving that no cheaper arbitration alternatives were available under the parties’ agreement. See
328 S.W.3d at 897 (citing Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 90 n.6 (2000)).


                                               20
invoices to prove that arbitration under the Employee Handbook would be

unconscionable.

            The Texas Supreme Court’s opinion in Olshan is instructive. Like

Bazan-Garcia, the Olshan respondents claimed that arbitration would be

prohibitively expensive, and as evidence submitted several arbitration invoices

from allegedly “similar” AAA-administered arbitrations.     328 S.W.3d at 897.

Rather than relying solely on these invoices, the Supreme Court examined the

AAA Rules separately to determine, based on the rules’ fee schedule and the

amounts of the respondents’ claims, “how much [respondents] will be charged

under the AAA Rules.”        Id.   Without that information, the Supreme Court

explained, respondents could not meet their “burden to show the likelihood of

incurring excessive costs.” Id.

            If Bazan-Garcia is correct and the AAA Rules cannot be considered

by the Court in this appeal, then Olshan is clear: Bazan-Garcia cannot meet her

heavy burden of proving that arbitration governed by those rules and fee schedule

would be prohibitively excessive and unconscionable. See Olshan, 328 S.W.3d at

897. She therefore cannot avoid her arbitration obligations under the Employee

Handbook.




                                        21
      C.     Bazan-Garcia cannot prove that the Employee Handbook’s
             arbitration agreement is unconscionable because she has not
             shown that a less expensive arbitration alternative is unavailable
             to her.
             The Texas Supreme Court has intentionally set the bar high for

holding that an arbitration agreement is unconscionable, and has explained that a

party may not “avoid arbitration [by] assum[ing] the most expensive possible

scenario.” Olshan, 328 S.W.3d at 897. In Olshan, the Supreme Court explained

that to meet this burden, the party resisting arbitration must also show that no

cheaper alternative is available to the parties, such as by demonstrating it “made

any effort to reduce the likely charges through requests for fee waivers, pro bono,

arbitrators, or even simply requesting a one arbitrator panel.” Id.

             WRPS specifically discussed this requirement in its Opening Brief

and pointed out that Bazan-Garcia had failed to make such a showing.           See

Opening Br. at 25.       In her response, Bazan-Garcia discusses Olshan, but

conspicuously omits any mention of this requirement. See Resp. at 27–30. For

this additional reason, Bazan-Garcia cannot prove that arbitrating her claims

against WRPS under the Employee Handbook would be unconscionable.




                                         22
      D.     Bazan-Garcia cannot prove that arbitration under the
             Arbitration Agreement is unconscionable because she has not
             presented any evidence showing how much it would cost to travel
             to Dallas County.
             Bazan-Garcia also claims that arbitration under the Arbitration

Agreement would be unconscionable, on the grounds that she cannot afford the

costs of travel and lodging in Dallas County. See Resp. at 24–25. In support of

this claim, Bazan-Garcia submitted an affidavit stating that “if it is determined that

I must bring my lawsuit against my employer in Dallas County, Texas, I will incur

substantial additional expenses in travel and lodging, and I will probably not

continue with my claim.” CR 96.

             As explained in Section II.C above, this conclusory statement is

inadequate to prove that the Arbitration Agreement is unconscionable. See supra

at 14–15 (discussing Green Tree, 531 U.S. at 90 n.6 (holding that plaintiff’s

testimony “that [a]rbitration costs are high and that she did not have to resources to

arbitrate” was inadequate to prove unconscionability)).        For example, Bazan-

Garcia does not indicate the amount of those “substantial” expenses, identify what

type of transportation she would use to get to Dallas County, state how long she

would have to stay, or show that no cheaper alternatives are available to her.

Without this basic information, this Court cannot find that arbitration pursuant to

the Arbitration Agreement would be prohibitively expensive, or allow Bazan-

Garcia to escape her bargain with WRPS.


                                         23
V.    The challenged provisions do not constitute the “essential purpose” of
      the parties’ agreements, and may be severed from the agreements.
             Finally, if this Court concludes that any of the challenged provisions

in the Employee Handbook or Arbitration Agreement is unconscionable, then it

must sever that provision and enforce the remainder of the parties’ agreement. The

Court can only decline to do so if it concludes that the unconscionable provision

constitutes the arbitration agreement’s “essential purpose.” See Opening Br. at 32–

33 (discussing Poly-America, 262 S.W.3d at 360; Venture Cotton Co-op v.

Freeman, 435 S.W.3d 222, 230 (Tex. 2014)). In her Response, Bazan-Garcia

contends that the three challenged provisions are “integral” to the parties’

arbitration agreements because (1) the agreements do not contain a severability

clause, see Resp. at 40 (citing Poly-America, 262 S.W.3d at 360), and (2) WRPS

did not request severance from the trial court, see Resp. at 40–41.

             First, “[i]n determining an agreement’s essential purpose, the issue is

‘whether or not parties would have entered into the agreement absent the

unenforceable provisions.’” Venture Cotton, 435 S.W.3d at 230 (quoting Poly-

America, 262 S.W.3d at 360). WRPS and Bazan-Garcia’s incorporation of the

AAA Rules in both the Arbitration Agreement and the Employee Handbook

demonstrate that none of the provisions challenged by Bazan-Garcia were

“essential” to those agreements.       The AAA Rules not only supersede the

challenged provisions, they also give the arbitrator power to modify or remove


                                         24
them. See AAA Rule 1 (App. 28). If these particular provisions were “essential”

to the agreements, then it is highly unlikely the parties would have given the

arbitrator such authority.

              Second, and contrary to Bazan-Garcia’s suggestion, the Texas

Supreme Court has never held that the absence of a severability clause proves that

all of the agreement’s terms constitute its “essential purpose.”         Instead, the

Supreme Court expressly held in Venture Cotton that a court of appeals is required

to sever an unconscionable provision from an arbitration agreement even when the

agreement has no severability clause, and even when that remedy was not

requested from the trial court. 435 S.W.3d at 230 (discussed in Opening Br. at 32).

Consequently, if this Court concludes that any provision in the parties’ arbitration

agreements is unenforceable, then it must sever that provision and enforce the

remainder of the agreements.

                   CONCLUSION AND PRAYER FOR RELIEF
              For the reasons set forth above, WRPS respectfully requests the Court

reverse the trial court’s Order denying WRPS’s motion to compel arbitration, and

direct the trial court to compel arbitration of all of Bazan-Garcia’s claims and abate

this litigation.




                                         25
Respectfully submitted,

BAKER BOTTS L.L.P.

By: /s/ Jennifer M. Trulock
  Jennifer M. Trulock
  State Bar No. 90001515
  2001 Ross Avenue, Suite 600
  Dallas, Texas 75201
  (214) 953-6500 Telephone
  (214) 953-6503 Facsimile
  jennifer.trulock@bakerbotts.com

   Stephanie F. Cagniart
   State Bar No. 24079786
   98 San Jacinto Boulevard, Suite 1500
   Austin, Texas 78701-4078
   (512) 322-2500 Telephone
   (512) 322-2501 Facsimile
   stephanie.cagniart@bakerbotts.com

ATTORNEYS FOR APPELLANT
WESTERN RIM PROPERTY
SERVICES, INC.




  26
                            Certificate of Compliance
              This brief complies with the type-volume limitations of Tex. R. App.
P. 9.4, as it contains 5,861 words, excluding the parts of the brief exempted by
Rule 9.4(i)(1).

                                      /s/ Stephanie F. Cagniart
                                      Stephanie F. Cagniart




                              Certificate of Service
             I hereby certify that on February 9, 2015, a copy of the foregoing was
served by the Court’s CM/ECF electronic service and by electronic mail on the
following parties:

            Javier Espinoza
            Josue F. Garza
            The Espinoza Law Firm, PLLC
            503 E. Ramsey, Ste. 103
            San Antonio, Texas 78216
            210-229-1302 (Facsimile)
            josue@espinozafirm.com




                                      /s/ Stephanie F. Cagniart
                                      Stephanie F. Cagniart




                                        27
