Flemma v. Halliburton Energy Services, Inc.

Brief Fact Summary.

Plaintiff sued Defendant for wrongful termination. Defendant filed a motion to compel arbitration, arguing Plaintiff had accepted the company’s arbitration agreement governed by Texas law. Plaintiff argued the arbitration agreement was unenforceable and illusory.

Synopsis of Rule of Law.

New Mexico’s choice of law doctrine requires application of the law where the arbitration agreement was formed, unless enforcement of the agreement would offend public policy.

Facts.

Edward Flemma (Plaintiff) was terminated by his employer, Halliburton Energy Services (Defendant). Plaintiff brought suit against Defendant for wrongful retaliatory discharge, arguing that he was fired for expressing safety concerns about a new facility. Defendant filed a motion to compel arbitration, arguing that Plaintiff had agreed to a binding arbitration agreement that they mailed to him in Texas. Plaintiff argued that the arbitration agreement was unenforceable both because he never received or assented to it and the Defendant’s ability to modify the terms of the agreement after a claim was accrued makes the agreement illusory.

Issue.

Would enforcement of an arbitration agreement, formed in Texas, violate New Mexico public policy?

Discussion.

Under choice of law rule, the Court determined that the arbitration agreement was formed and enforceable under Texas law. However, the Court declined to apply Texas law to the enforcement of the agreement because enforcement of the agreement would offend New Mexico public policy. The agreement offended public policy because it was substantively unconscionable, favoring Defendant by allowing them to change the terms of the agreement without notice to the Plaintiff. The Court then declined to enforce the agreement under New Mexico law because the agreement was illusory.