Former morning show anchor must go back to arbitration with station, appeals court rules

By David Yates | May 18, 2009

Following seven months of litigation, an appeals court ruling has sent a former KBTV NBC 4 morning show personality back to the arbitration table.

In October, Rocio Garza sued the station over the $10,000 she had to pay to get out of her contract with station owner Nexstar Broadcasting Inc.

As the Southeast Texas Record reported, Garza said that in early 2008 she had become unhappy with the progress she was making at her job, but was told by Chris Pruitt, the station's new general manager, that she would be required to pay $10,000 if she decided to leave.

Pruitt had replaced Van Greer, and Garza claimed Greer had previously told her the he would not require her to pay the $10,000 to end her contract.

A few months ago, 136th District Judge Milton Shuffield ruled against Nexstar's motion to abate, finding that the arbitration clause in Garza's contract was unenforceable because her employment relationship with Nexstar was "at will."

The ruling led Nexstar to appeal, arguing that Garza's contract fell under the Federal Arbitration Act because Nexstar does business in Louisiana as well as Texas.

On May 14, justices seated on the Texas Ninth District Court of Appeals issued a memorandum opinion conditionally granting the company's writ of mandamus to enforce arbitration.

"Nexstar established the existence of an agreement to arbitrate and the claims asserted by Garza fall within the scope of that agreement," the justices' per curium opinion states. "Although the trial court determined the contract is an at-will employment agreement, the parties' mutual agreement to arbitrate disputes arising out of the contract supply adequate consideration for the agreement to arbitrate.

"Garza failed to establish that Nexstar waived its right to compel arbitration. Thus, the trial court erred in ruling that the arbitration agreement is unenforceable. We are confident that the trial court will compel arbitration in this case and stay all proceedings in the trial court pending arbitration."

Case background

According to court papers, Garza's contract stated she was subject to $10,000 in liquidated damages if she leaves before her employment term ends.

After Pruitt informed Garza she would have to pay the money, Garza decided to stay.

In October, Garza claims she was demoted to weekend weather and was no longer allowed to appear on the morning show which she claimed was retaliation for complaining.

Garza decided to resign, but was again told she would have to pay the $10,000, according to her complaint.

She had argued the liquidated damages are unenforceable because of a similar appellate ruling in the case of Jennifer Gray vs. Nexstar.

In that case, Nexstar appealed a judgment rendered in a suit filed against former employee Jennifer Gray for breach of contract and against Gray's subsequent employer, KTBS Inc., for interference with the contract.

According to court documents, two years ago a jury awarded Nexstar $1 in nominal damages from Gray on the breach of contract claim, and $2,000 in actual damages from KTBS on the tortious interference with the contract claim.

Judge Gary Sanderson, 60th District, had granted Gray a declaratory judgment, ruling that a liquidated damages provision in the contract was an unenforceable penalty as a matter of law, and further ruled that Nexstar was not entitled to attorneys' fees and awarded attorneys' fees instead to Gray.

The court granted KTBS's motion for judgment notwithstanding the verdict on the ground that there was no evidence of damages and rendered judgment that Nexstar take nothing from KTBS, states court documents.

On June 26, 2008, Texas' Ninth Court of Appeals reversed and remanded Judge Sanderson's judgments and ordered a new trial.

In addition to the appellate ruling, Garza also argued the contract is illusory and unenforceable because the station only promised to keep her until June 14, 2008, but she had to promise her services until 2010.

Garza further claims that when the company demoted her, it breached the contract.

Wyatt D. Snider and Jason M. Byrd of Snider and Byrd in Beaumont represent her.

Nexstar is represented in part by attorneys William L. Davis and Jeffrey W. Barnes.

Trial case No. D182-571
Appeals case No. 09-09-00146

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