Texas’ Fifth District Court of Appeals in Dallas has ordered a former AdvoCare board member to arbitrate his claims against the company.  In AdvoCare GP, LLC, et al. v. Heath, No. 05-16-00409-CV (Tex.-App.—Dallas, Jan. 5, 2017), Richard Heath was hired to act as a board member for a nutrition company, AdvoCare, in June 2015.  As part of the hiring process, Heath was required to sign a non-disclosure agreement that included a binding arbitration clause.

A little more than one month later, Heath was terminated.  Following his termination, Heath demanded additional compensation based on a purported oral contract with the company.  After his request was refused, Heath filed a multi-million dollar lawsuit against AdvoCare and several company executives in Dallas County, Texas.

In response to Heath’s complaint, the defendants filed an answer as well as a motion to compel the dispute to arbitration based the arbitral provision included in the parties’ NDA.  They also sought to abate the trial court proceedings.  The court granted the defendants’ motion in part, but refused to compel most of Heath’s claims to arbitration.  The trial court also declined to abate the proceedings pending arbitration.  The defendants then filed an interlocutory appeal with Texas’ Fifth District.

On appeal, the Dallas court stated neither party disputed that a valid agreement to arbitrate existed.  After that, the appellate court turned to the question of scope.

According to the Fifth District, “[o]nce the existence of an arbitration agreement has been shown, the party resisting arbitration bears the burden of proving that the dispute at issue falls outside of the arbitration agreement’s scope.”  The court next said, “[b]oth the Supreme Court and the Fifth Circuit have characterized arbitration provisions that are similar to the one at issue here as broad arbitration clauses capable of expansive reach.”  The Dallas court then added, “Texas courts, including this Court, have reached similar conclusions.”

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