Karen Ashley v. Clay County et al

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
LUBBOCK DIVISION
KAREN ASHLEY,
Plaintiff,
v. 	No. 5:23-CV-013-H
CLAY COUNTY, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Karen Ashley was the Chief Nursing Officer at Clay County Memorial Hospital, a
county-owned facility near Wichita Falls, Texas. During her onboarding, she signed an
agreement that channeled “any claim or dispute” between her and her employer to an
alternate dispute resolution process. A year later, she was fired after voicing concerns about
patient safety at the Hospital. Ashley filed suit, alleging that the Hospital, its foundation,
Clay County, and the Hospital’s physician-staffing company violated her rights under the
First Amendment and state law. Soon after, the Hospital and its foundation moved to
compel arbitration, which the Court granted. See Dkt. No. 77. But in doing so, the Court
also forced the County—an apparent non-signatory to the agreement—into arbitration as
well. The Fifth Circuit partially reversed the Court’s order, holding that the Court erred by
not first considering the County’s argument that it had governmental immunity from
Ashley’s state-law claim. See Ashley v. Clay County, 125 F.4th 654 (5th Cir. 2025).
On remand, the Court granted the County’s motion to dismiss the state-law claim
under Rule 12(b)(1). And it asked the parties whether it should reconsider its prior order
compelling arbitration. Having considered the parties’ extensive briefing, the answer is
yes—in part. Under her employment agreement, Ashley still must arbitrate her claims
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against the Hospital and its foundation, but the County need not arbitrate, too. Thus, the
Court stays the proceedings and sends this case to arbitration.
As for the motions to dismiss, the Court denies the Rule 12(b)(1) portion of the
County’s motion (Dkt. No. 94) because Ashley’s remaining federal claims do not implicate
immunity. Because the Hospital and Foundation asked for a mandatory stay, and because
continuing litigation for the non-arbitrating parties would be inappropriate, the Court thus
denies the Rule 12(b)(6) portion of the County’s motion to dismiss—along with Concord’s
motion to dismiss (Dkt. No. 92)—without prejudice to refiling once arbitration is complete.
1. 	Factual and Procedural Background
A. 	Factual Background
i. 	Clay County establishes a hospital under Chapter 263 of the Texas
Health and Safety Code.
Clay County Memorial Hospital is one of Texas’ few remaining county-owned
hospitals. Dkt. No. 55 ¶ 9. The task of operating and maintaining the Hospital falls to the
Board of Managers—a group of Clay County citizens appointed by the Clay County
Commissioners Court for two-year terms. Id.; see also Tex. Health & Safety Code § 263.041.
In 1992, the County also created the Clay County Memorial Hospital Foundation, a private
501(c)(3) non-profit corporation, to provide financial support to the Hospital and ensure that
county residents receive adequate medical care. Dkt. No. 55 ¶ 10.
The Board of Managers “shall generally manage and control” the Hospital’s patients,
officers, and employees, including “all matters relating to” the Hospital’s “government,
discipline, [and] contracts.” Tex. Health & Safety Code § 263.046(a). This includes hiring
the Foundation’s CEO and other key administrators. Dkt. No. 55 ¶ 11. These individuals
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handle the Hospital’s day-to-day operations. Id. The Hospital’s physicians, however, are
staffed by a Lubbock-based company, Concord Medical Group PLLC. Id. ¶¶ 3, 11.
ii. 	Ashley signs an arbitration agreement after being hired as the
Hospital’s Chief Nursing Officer.
In 2021, Ashley was hired to serve as the Hospital’s Chief Nursing Officer. Id. ¶ 12.
On one hand, she alleges that the Hospital and Foundation were her joint employers and
that she “was under the control” of both entities. Id. Alternatively, due to ambiguity about
the Hospital’s legal status, Ashley claims that she was employed by Clay County. Id.
As part of her onboarding, Ashley completed a New Employee Record Sheet. See
Dkt. No. 61-1 at 3. The Sheet’s header listed “Clay County Memorial Hospital” along with
the Hospital’s logo. Id. The Sheet also detailed conditions of employment, some involving
dispute resolution. One provision read: “I agree that all claims, disputes and controversies
between and among employees and any employee and employer, administrative employer,
or any other person shall be exclusively and finally settled through the [Alternate] Dispute
Resolution Agreement printed on the reverse side of this document, which is incorporated
herein by reference.” Id. Ashley signed and dated the Sheet with her wet-ink signature:
Id.; see id. at 1–2 (declaration from the Hospital’s Human Resources Director).
In turn, the Alternate Dispute Resolution Agreement detailed the parties’ intention
to resolve their disputes without litigation. See id. at 4 (the Agreement). Relevant here, the
parties broadly agreed that:
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[A]ny claim or dispute between them or against the persons or entities named
above, whether related to the employment relationship or otherwise, including
those created by practice, common law, court decision, or statute, now existing
or created later, including any related to allegations of violations of state or
federal statutes related to discrimination, and all disputes about the validity of
the arbitration clause, shall by exclusively resolved, utilizing a two-step
Alternate Dispute Resolution (ADR) process . . . .
Id. The two-step ADR process requires mediation, followed by binding arbitration under
the Federal Arbitration Act, if necessary. Id. The parties further agreed to “giv[e] up any
right they may have to sue each other,” including “[a]ny right to trial by Jury or Judicial
appeal.” Id. The Agreement “survives the employment relationship.” Id.
iii. 	Ashley flags concerns about alleged patient safety issues, including
at a public Board of Managers meeting.
During her tenure as Chief Nursing Officer, Ashley reportedly uncovered a slew of
patient safety concerns. She alleges, for example, that Hospital employees lost 25 vials of
fentanyl, failed to follow blood-transfusion protocols, and changed the expiration date on
medications. Dkt. No. 55 ¶¶ 17, 23. Ashley reports that she flagged these issues (among
others) to the Hospital’s leadership, but they “failed to take any action.” Id. ¶ 17.
At the same time, Ashley began advocating for the Hospital to end its contract with
Concord and begin sourcing physicians from a different company, ACPHealth. Id. ¶¶ 18,
19. She teamed up with the Hospital’s CEO, Lisa Swenson, who “also advocated for this
political change in Clay County.” Id. ¶ 19. The Board of Managers agreed with their
position, terminating the Hospital’s relationship with Concord and approving a contract
with ACPHealth by a vote of 3-1. Id. ¶ 18. One abstention came from Dr. T. David Greer,
a Concord physician who—according to Ashley—was complicit in the alleged patient safety
failures. Id. ¶¶ 13, 17–18, 23. Soon after, Dr. Greer resigned from the Board. Id. ¶ 13.
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Less than three weeks later, the Board reversed course. Id. ¶ 20. The Clay County
Commissioners Court installed seven additional Board members. Id. Dr. Greer was
reappointed. Id. And the new Board promptly terminated its contract with ACPHealth. Id.
Ashley was not pleased. She arranged to speak publicly at a Board meeting a few
weeks later—not as the Chief Nursing Officer, but as a private citizen. Id. ¶¶ 21–22. There,
she detailed the missing fentanyl issue and Dr. Greer’s purported failures to follow Hospital
procedures. Id. ¶ 23. According to Ashley, she was “speaking as a citizen on matters of
public concern,” despite her high-level role in the Hospital hierarchy. Id. ¶ 22.
iv. 	Ashley is fired.
The next month, the Board of Managers, including Dr. Greer, terminated Ashley’s
employment. Id. ¶ 24. Ashley claims that she was fired because she reported “patient safety
issues and the Hospital’s violations of law.” Id. And, in Ashley’s telling, the Hospital,
Foundation, and Clay County later engaged in a campaign of retaliation by labeling her
“protected activity” as “trashing” the Hospital. Id. ¶¶ 24, 25. As a result, Ashley allegedly
suffered lost wages, mental anguish, and reputational harm. Id. ¶ 27.
B. 	Procedural Background
i. 	Early Stages of Litigation
In 2023, Ashley sued the County, alleging unlawful retaliation under state law and
42 U.S.C. § 1983. Dkt. No. 1 ¶¶ 23–43; see Tex. Occ. Code § 301.413. She also sued
Concord for state-law tortious interference. Id. ¶¶ 44–48. The County moved to dismiss on
the ground that it was not Ashley’s employer and had taken no adverse action against her.
Dkt. No. 18. Ashley then amended her complaint to add the Hospital and Foundation as
defendants. Dkt. No. 26. Later, given confusion surrounding the Hospital’s legal status,
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Ashley filed another complaint (her third), alleging that she was employed by the Hospital
and Foundation or, alternatively, the County. Dkt. No. 55 ¶ 12.
Ashley’s operative complaint raises five claims: (1) state-law retaliation against the
Hospital, Foundation, County, and Concord; (2) First Amendment free-speech retaliation
and conspiracy under Section 1983 against the Hospital and County; (3) First Amendment
associational retaliation under Section 1983 against the Hospital and County; (4) tortious
interference with employment against Concord; and (5) tortious interference with
prospective relations and economic advantage against Concord. See Dkt. No. 90 at 2.
Again, the County maintained that it was not Ashley’s employer, meaning she had
failed to state a claim under Rule 12(b)(6). See Dkt. No. 58 at 16. The County also asserted
governmental immunity from the state-law retaliation claim under Rule 12(b)(1). Id. at 12–
14. The County made both arguments in a single motion to dismiss. See Dkt. No. 58.
ii. 	Motion to Compel Arbitration
Meanwhile, the Hospital and Foundation moved to compel arbitration under the
Agreement. Dkt. No. 59. Concord did not oppose the motion. Id. at 2. And neither did
the County—a non-signatory to the Agreement—insofar as granting the motion would not
require the County to arbitrate, too. Id.; Dkt. No. 69 at 1–2. For their part, the Hospital
and Foundation did not expressly seek to compel the County to arbitration, and Ashley also
opposed the County’s involvement. See Dkt. No. 65 at 12–13. In other words, no party
understood the Agreement to force the County into arbitration.
The Court saw things differently. 1 In granting the motion to compel, the Court sua
sponte ordered the County to arbitrate alongside the Hospital and Foundation, thus denying
1 At the time, this case was assigned to a different district court judge. See Dkt. No. 16.
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the County’s motion to dismiss as moot. Dkt. No. 77. In the Court’s view, “the arbitration
clause at issue is broad and encompasses any employer” of Ashley. Id. at 1 n.1 (emphasis in
original). The County, the Court said, was also subject to the Agreement—“specifically,
whether [the Agreement] applies to [the] County or not.” Id. On the Court’s reading of the
Agreement, “any question of who is a party to the arbitration agreement is itself subject to
arbitration.” Id. That said, the Court declined to dismiss the case, choosing instead to stay
and administratively close the case pending the outcome of the arbitration. Id. at 4–5. And
it denied all other pending motions—including a motion to dismiss from Concord—as moot
without prejudice to refiling. Id. at 5; see Dkt. No. 56.
The County, maintaining its governmental immunity and non-employer status,
moved for reconsideration. Dkt. No. 78. The Court denied the motion, Dkt. No. 79, and
the County appealed. Dkt. No. 80. At the County’s request, the Court stayed its order
compelling arbitration pending appeal. Dkt. Nos. 82; 83.
iii. 	The Fifth Circuit’s Decision
The Fifth Circuit reversed, holding that the Court erred in ruling on the motion to
compel arbitration without first resolving the County’s assertion of governmental immunity
under Texas law.2 Dkt. No. 87 at 10; see Ashley, 125 F.4th at 662. The Fifth Circuit did not
address the merits of the immunity question, nor did it resolve any of the other issues (like
the County’s employer status) that the Court deferred to arbitration. See Dkt. No. 77.
Instead, the Fifth Circuit remanded “with instructions for the district court to resolve the
2 The Fifth Circuit also concluded that it had appellate jurisdiction under the collateral-order
doctrine. See Dkt. No. 87 at 8; see Helton v. Clements, 787 F.2d 1016, 1017 (5th Cir. 1986).
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issue of governmental immunity as it pertains to the County’s motion to dismiss before it
rules on the motion to compel arbitration.”3 Dkt. No. 87 at 11.
iv. 	Post-Remand
On remand, the Court granted the County’s motion to dismiss in part, concluding
that the County had governmental immunity from Ashley’s state-law retaliation claim and
that the Court thus lacked jurisdiction over that portion of the suit. Dkt. No. 90; see Fed. R.
Civ. P. 12(b)(1). The Court otherwise “reserve[d] ruling on the 12(b)(6) portion of the
motion until [it] has resolved the motion to compel arbitration.” Dkt. No. 90 at 8.
By that point, the parties had differing views on how to proceed. Ashley maintained
that the Court had to start its arbitration analysis from scratch—deciding, specifically,
“whether the governmental entities have capacity to arbitrate.” Dkt. No. 89 at 2. The
Hospital and Foundation, on the other hand, argued that the Fifth Circuit did not broadly
reverse the Court’s order compelling arbitration and that it would be improper for the Court
to reconsider its bottom-line conclusion. Id. at 4 & n.3. For its part, the County asked to
file a new Rule 12(b)(6) motion in light of an intervening decision from the Wichita Falls
Division, Swenson v. Clay County Memorial Hospital, where Chief Judge O’Connor concluded
on similar facts that Clay County was not the former Hospital CEO’s employer and thus
dismissed her claims against the County before sending the case to arbitration under the
same Agreement. 4 Id. at 2–3; see 7:23-CV-056, Dkt. No. 58 (N.D. Tex. Mar. 25, 2024).
Like Ashley, the County asked the Court in a later order to take another stab at the motion
3 After the mandate issued, the Clerk of Court transferred the case to the undersigned district judge.
4 Recall that the former CEO, Lisa Swenson, teamed up with Ashley to advocate for terminating the
Hospital’s contract with Concord and switching to ACPHealth. See supra, Section 1.A.iii.
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to compel arbitration. Dkt. No. 100 at 1. Concord—which no one maintains is a party to
the Agreement—also wanted to file a new motion to dismiss. Dkt. No. 89 at 5.
Given the confusion, the Court ordered the parties to each file a response explaining
whether reconsideration of its prior order compelling arbitration is “necessary, available,
and timely.” Dkt. No. 91 at 2. Moreover, Concord was told to file a new motion to dismiss
Ashley’s operative complaint. Id. And the County was instructed to file a supplemental
brief or a new Rule 12(b)(6) motion, “attaching any evidence that it believes is necessary to
resolving the dispute of whether the County was Ashley’s employer.” Id. The Court also
allowed the parties to reply to the responses on reconsideration. Id.
Several matters, then, are before the Court. First is whether to reconsider the Court’s
prior order compelling arbitration. See Dkt. Nos. 98–102. Second is Concord’s motion to
dismiss under Rule 12(b)(6). Dkt. No. 92. And third is the County’s motion to dismiss the
remaining federal claims under Rule 12(b)(1) and Rule 12(b)(6). Dkt. No. 94. The matters
have been fully briefed (see Dkt. Nos. 103–06; 108) and are ripe for review.
2. 	Legal Standards
A. 	Federal Arbitration Act
“Under the Federal Arbitration Act, parties to a contract may agree that an arbitrator
rather than a court will resolve disputes arising out of the contract.” Henry Schein, Inc. v.
Archer & White Sales, Inc., 586 U.S. 63, 65 (2019). Section 2 of the FAA requires treating
written arbitration agreements as “valid, irrevocable, and enforceable.” 9 U.S.C. § 2. The
Supreme Court has framed the FAA as “embodying a national policy favoring arbitration.” 5
5 So too has the Supreme Court of Texas. See, e.g., In re Whataburger Restaurants LLC, 645 S.W.3d
188, 198 (Tex. 2022) (“Federal and state policies favor arbitration for its efficient method of
resolving disputes . . . .” (quoting Rachal v. Reitz, 403 S.W.3d 840, 842 (Tex. 2013))).
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AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 346 (2011) (internal alterations omitted)
(quoting Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006)). So “any doubts
concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses
H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983).
This strong federal policy, however, “does not apply to the determination of whether
there is a valid agreement to arbitrate between the parties.” Lloyd’s Syndicate 457 v. FloaTEC,
LLC, 921 F.3d 508, 516 n.5 (5th Cir. 2019) (quoting Will-Drill Res., Inc. v. Samson Res. Co.,
352 F.3d 211, 214 (5th Cir. 2003)). After all, arbitration agreements are contracts, and “a
party cannot be required to submit to arbitration any dispute which he has not agreed so to
submit.” United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960); see
Lamps Plus, Inc. v. Varela, 587 U.S. 176, 184 (2019) (“[A]rbitration is strictly a matter of
consent.” (quotation omitted)). The FAA “simply requires courts to enforce privately
negotiated agreements to arbitrate, like other contracts, in accordance with their terms.”
Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 478 (1989).
The FAA provides “for orders compelling arbitration when one party has failed or
refused to comply with an arbitration agreement.” EEOC v. Waffle House, Inc., 534 U.S. 279,
289 (2002) (citing 9 U.S.C. §§ 3–4). In the Fifth Circuit, courts use a two-step analysis when
resolving a motion to compel arbitration under the FAA. “The first is contract formation—
whether the parties entered into any arbitration agreement at all.” Kubala v. Supreme Prod.
Servs., Inc., 830 F.3d 199, 201 (5th Cir. 2016) (emphasis in original). This question is for the
court: “Where the very existence of any [arbitration] agreement is disputed, it is for the
courts to decide at the outset whether an agreement was reached, applying state-law
principles of contract.” Will-Drill, 352 F.3d at 218. At the first step, the normal
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presumption in favor of arbitration “disappears.” O’Shaughnessy v. Young Living Essential
Oils, LC, 810 F. App’x 308, 311–12 (5th Cir. 2020) (quotation omitted).
If the court concludes that an arbitration agreement exists, it goes on to the second
step: “whether this claim is covered by the arbitration agreement.” Kubala, 830 F.3d at 201
(emphasis in original). Again, the second step is most often a question for the court. Id.
But “the analysis changes” when the arbitration agreement includes a delegation clause that
punts certain issues—including the validity of the agreement itself—to the arbitrator. Id.; see
Edwards v. Doordash, Inc., 888 F.3d 738, 744–45 (5th Cir. 2018) (citing Rent-A-Ctr., West, Inc.
v. Jackson, 561 U.S. 63, 72 (2010)). In those cases, “the court’s analysis is limited.” Kubala,
830 F.3d at 202. “It performs the first step—an analysis of contract formation—as it always
does.” Id. But if an agreement to arbitrate exists under the FAA, the “only question” at
step two is “whether the purported delegation clause is in fact a delegation clause”—that is,
if it “evinces an intent” to have the arbitrator decide a given issue, like the validity of the
underlying arbitration agreement. Id.; see Edwards, 888 F.3d at 744. “If there is a valid
delegation, the court must grant the motion to compel.” Archer & White Sales, Inc. v. Henry
Schein, Inc., 935 F.3d 274, 279 (5th Cir. 2019).
When ruling on a motion to compel arbitration, courts may consider “the pleadings
and evidence on file.” Jackson v. Royal Caribbean Cruises, Ltd., 389 F. Supp. 3d 431, 443–44
(N.D. Tex. 2019); see also Gezu v. Charter Commc’ns, 17 F.4th 547, 552–54 (5th Cir. 2021)
(looking to declarations outside the pleadings as evidence that the parties had formed an
agreement to arbitrate). The party seeking to compel arbitration must prove the existence of
an agreement to arbitrate by a preponderance of the evidence. Grant v. Houser, 469 F. App’x
310, 315 (5th Cir. 2012). In the end, a motion to compel must be granted “unless it may be
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said with positive assurance” that the arbitration clause does not apply. AT&T Techs., Inc. v.
Commc’ns Workers of Am., 475 U.S. 643, 650 (1986) (quotation omitted).
B. 	Reconsideration
The Federal Rules of Civil Procedure do not expressly authorize motions for
reconsideration. Bass v. U.S. Dep’t of Agric., 211 F.3d 959, 962 (5th Cir. 2000). Still, parties
may seek reconsideration of an interlocutory order under Rule 54(b). Austin v. Kroger Tex.,
LP, 864 F.3d 326, 336 (5th Cir. 2017). An order compelling arbitration is interlocutory
where, as here, it stays and administratively closes the case. Sw. Elec. Power Co. v. Certain
Underwriters at Lloyds of London, 772 F.3d 384, 387–88 (5th Cir. 2014); see Dkt. No. 77 at 4–5.
The order is thus considered under Rule 54(b), as other courts have found. See, e.g., Black v.
Experian Info. Sols., No. H-21-4231, 2022 WL 1809307, at *1 (S.D. Tex. June 2, 2022).
Rule 54(b) “authorizes the district court to ‘revise[] at any time’ ‘any order or other
decision . . . [that] does not end the action.’” Austin, 864 F.3d at 336 (alterations in original)
(quoting Fed. R. Civ. P. 54(b)). The standard is less exacting than Rule 59(e)’s requirements
for reconsidering final judgments. See Templet v. HydroChem Inc., 367 F.3d 473, 479 (5th Cir.
2004) (noting that Rule 59(e) is meant to “correct manifest errors of law or fact or to present
newly discovered evidence” (quotation omitted)). Rather, when addressing an interlocutory
order under Rule 54(b), “the trial court is free to reconsider and reverse its decision for any
reason it deems sufficient, even in the absence of new evidence or an intervening change in
or clarification of the substantive law.” Austin, 864 F.3d at 336 (quoting Lavespere v. Niagara
Mach. & Tool Works, Inc., 910 F.2d 167, 185 (5th Cir. 1990), abrogated on other grounds, Little
v. Liquid Air Corp., 37 F.3d 1069, 1075 n.14 (5th Cir. 1994) (en banc)).
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3. 	Analysis
As explained below, the Court will reconsider in part its prior order compelling
arbitration.6 See Dkt. No. 77. Ashley still must arbitrate her claims with the Hospital and
Foundation. But the Court should not have forced the County to participate, too. Indeed,
no party then—and no party now—wanted the County to arbitrate. Whether there is an
agreement to arbitrate is always a question for the court, Kubala, 830 F.3d at 201, and “the
FAA does not require parties to arbitrate when they have not agreed to do so.” Volt, 489
U.S. at 478. The Court did not previously address the evidence—later detailed in Swenson—
that the County is not Ashley’s employer and, therefore, is not a party to the Agreement.
As for the motions to dismiss, the Court denies the Rule 12(b)(1) portion of the
County’s motion because Ashley’s remaining federal claims do not present an immunity
problem. Given the pending arbitration, though, it is too soon to decide the Rule 12(b)(6)
portions of the County’s and Concord’s motions to dismiss. So the Court denies them
without prejudice to refiling once arbitration is complete—as it did before.
A. 	Under Rule 54(b), the Court will reconsider in part its prior order
compelling arbitration.
In a footnote, the Court previously concluded that Clay County “is also subject to
the arbitration clause—specifically, whether it applies to Clay County or not.” Dkt. No. 77
at 1 n.1 (further reasoning that “any question of who is a party to the arbitration agreement
6 To be clear, reconsideration does not follow from the Fifth Circuit’s judgment and mandate. The
Fifth Circuit did not instruct the Court to start from scratch on remand; it only reversed the Court’s
order compelling arbitration “insofar as it declined to address the County’s motion to dismiss on
the basis of governmental immunity under Texas law.” Dkt. No. 90 at 3 (quoting Dkt. No. 87 at
2). The Court fulfilled that mandate by dismissing Ashley’s state-law claim against the County.
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is itself subject to arbitration”). Accordingly, the Court required the County to arbitrate. Id.
For three reasons, that conclusion—and that conclusion alone—warrants reconsideration.
First, the Court’s prior order improperly tasked the arbitrator with deciding whether
the County is subject to the Agreement. Again, it is a court’s duty to decide “at the outset”
whether there was an agreement to arbitrate between the parties. Will-Drill, 352 F.3d at 218;
see also Lloyd’s Syndicate 457, 921 F.3d at 515 (“We have consistently treated attacks on an
arbitration agreement’s existence as step one matters for courts, not arbitrators.”). Because
the County disputes that it ever agreed to arbitrate with Ashley, the Court must resolve the
contract-formation question for itself. Kubala, 830 F.3d at 201.
The Agreement adheres to that principle, contrary to the Court’s prior reasoning.7
See Dkt. No. 77 at 2. It governs all “claims and disputes involving Employer’s customers
and clients, administrative employers, all agents and other employees, all subsidiaries,
affiliates and parent companies and any other person or entity that has agreed to this process.”
Dkt. No. 61-1 at 4 (emphasis added). Of course, the County alleges that, because it was not
Ashley’s employer, it did not agree to the process detailed in the Agreement. Dkt. No. 100
at 10. In such cases, the onus is on the court, not the arbitrator, to resolve the dispute
without any thumb on the scale for arbitration. See O’Shaughnessy, 810 F. App’x at 312.
Next, the Court misunderstood its authority to consider evidence in resolving a
motion to compel arbitration. In denying the County’s motion for reconsideration (Dkt.
7 The Court reasoned that the Hospital and Foundation also understood the Agreement to require
arbitration over who was bound by the Agreement. Dkt. No. 77 at 1 n.1. True, those parties
suggested that the “gateway” issue of whether a party is subject to the Agreement falls within its
delegation clause, which provides that “all disputes about the validity of the arbitration clause” are
reserved for the arbitrator. See Dkt. No. 60 at 7. But as explained more below, validity is different
from formation. See infra, Section 3.A.ii.
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No. 78), the Court reasoned that the County’s arguments about its non-employer status
were “premised upon the review of evidence and documents—something reserved for
summary judgment.” See Dkt. No. 79 at 1. But courts routinely treat motions to compel
arbitration like motions for summary judgment. See Jackson, 389 F. Supp. 3d at 443–44 &
n.6 (Ramirez, J.) (collecting cases). That makes sense: an order compelling arbitration “is in
effect a summary disposition of the issue of whether or not there had been a meeting of the
minds on the agreement to arbitrate.” Grant v. House of Blues New Orleans Restaurant Corp.,
Civ. A. No. 10-3161, 2011 WL 1596207, at *3 (E.D. La. Apr. 27, 2011) (quoting Century
Indem. Co. v. Certain Underwriters at Lloyd’s, 584 F.3d 513, 528, 532 (3d Cir. 2009)); see also 9
U.S.C. § 4 (a district court should not order arbitration unless it is “satisfied that the making
of the [arbitration] agreement or the failure to comply therewith is not in issue”). Nothing
about the procedural posture bars the Court from considering the County’s evidence that it
was not Ashley’s employer.
Lastly, Chief Judge O’Connor’s decision in Swenson—which was not available when
the Court issued its initial order—weighs heavily here. That case closely tracks this one: it
also involved a Hospital employee—caught up in the same underlying dispute—who tried
to stave off arbitration under the same Agreement. See Swenson v. Clay Cnty. Mem’l Hosp.,
7:23-CV-056, 2024 WL 262576, at *2 (N.D. Tex. Jan. 24, 2024). There too the County
resisted arbitration on the grounds that it was not the plaintiff’s employer—thus, it could not
be subject to the plaintiff’s claim under the Texas Whistleblower Act. Id. at *1. Relying on
similar evidence to what is before this Court, Chief Judge O’Connor ultimately concluded
that the County was not the plaintiff’s employer and thus declined to force the County into
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arbitration under the Agreement.8 7:23-CV-056, Dkt. No. 58 at 3–4. There is no reason to
deviate from that decision here. See infra, Section 3.A.i.a.
For these reasons, the Court will reconsider the portion of its prior order requiring
the County to participate in arbitration. 9 See Dkt. No. 77 at 1 n.1
i. 	Based on the evidence provided, Clay County was not Ashley’s
employer and is therefore not a party to the Agreement.
On reconsideration, the key step-one question is whether Clay County was Ashley’s
employer. If so, then the County is a party to the Agreement, and Ashley’s claims against it
must be resolved in arbitration. See Dkt. No. 61-1 at 4 (providing for a two-step ADR
process between “Employer and Employee”). The undisputed evidence, however, tells a
different story: it shows that Ashley was not employed by the County. Thus, the County
will not be forced to arbitrate Ashley’s claims under the Agreement.
Take, for example, Chapter 263 of the Texas Health and Safety Code, which governs
county-owned hospitals. It provides that the Hospital’s Board of Managers, not the County,
“shall generally manage and control the hospital,” including “its officers and employees”
and “all matters relating to its government, discipline, contracts, and fiscal concerns.” Tex.
Health & Safety Code § 263.046(a). The Board also determines the salaries of Hospital
employees. Id. § 263.047. Moreover, the Hospital’s superintendent, not a County official,
can discharge an employee at his or her discretion. Id. § 263.076(c). The statute suggests,
then, that the Hospital manages its own affairs, including the hiring and firing of employees.
8 Chief Judge O’Connor at first agreed with the Court’s prior reasoning in this case before reversing
course on reconsideration. See Swenson, 2024 WL 262576, at *2.
9 While neither Ashley nor the County filed a formal motion for reconsideration following the Fifth
Circuit’s remand, the Court construes their responses (Dkt. Nos. 98; 100) as such motions.
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Case law supports this arrangement. Courts, including the Fifth Circuit, have
resolved employment-related suits against county-owned hospitals without reference to
county control. In Sosa v. Board of Managers of Val Verde Memorial Hospital, for example, the
Fifth Circuit described the Board of Managers of a Texas county-owned hospital as the
hospital’s “governing body.” 437 F.2d 173, 174 (5th Cir. 1971). It then addressed claims
that the Board violated the law in exercising its “broad discretion” to deny the plaintiff
doctor’s admission to the hospital’s medical staff. Id. at 176–77; see Gaalla v. Citizens Med.
Ctr., 407 F. App’x 810, 813–14 (5th Cir. 2011) (similar). These cases suggest that county-
owned hospitals in Texas operate independently from the county, particularly when it
comes to matters of employment.
The Texas Attorney General agrees. One AG opinion provides that the hospital’s
superintendent and Board of Managers “hold[] the power to appoint hospital employees”
and that “[n]either the [county] commissioners court nor the county judge . . . holds such
authority.” Op. Tex. Att’y Gen. No. KP-0045, at 2 (2015) (citing Tex. Health & Safety
Code § 263.076(a)). Further, the Board “is not accountable on a day-to-day basis to the
commissioners court.” Id. at 2 n.3 (quotation omitted). Another AG opinion, this one from
then-AG Abbott, agrees: “Once the County has made the requisite determinations and
acquired the property, the hospital board of managers has express authority to manage the
facility, personnel, and patients consistently with legal requirements.” Op. Tex. Att’y Gen.
No. GA-0552, at 3 (2007) (citation omitted). Though Texas Attorney General opinions are
not binding as a matter of state law, Hartzell v. S.O., 672 S.W.3d 304, 318 (Tex. 2023), they
reinforce that the County was not Ashley’s employer.
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The record confirms what the legal authority makes clear. The County’s name or
logo appears nowhere on the Agreement or the New Employee Record Sheet. See Dkt. No.
61-1 at 3–4. The only defendant listed on either document is the Hospital. Id. at 3. Nor
does the County have any record of Ashley’s employment, a fact the County Treasurer
confirmed in a sworn statement. Dkt. No. 95-6 at 2. Moreover, the Hospital’s by-laws
confirm that the Board of Managers “is responsible for the appointment of qualified and
competent medical staff,” Dkt. No. 95-14 at 6, and one of the County Commissioners
clarified that the County “did not ever employ Ms. Ashley” or exercise any control or
influence over the Hospital’s decision to hire and terminate her. Dkt. No. 95-11 at 2.
Taking all this evidence together, the County has shown that it was not Ashley’s
employer and, therefore, was not a party to the Agreement.
a. 	The intervening decision in Swenson is persuasive.
Chief Judge O’Connor relied on similar evidence in concluding that Clay County did
not employ the Hospital CEO in Swenson. See 7:23-CV-056, Dkt. No. 58 at 3–4. He noted
that, as here, there was testimony from the Clay County Commissioners that “they had no
right to direct or control Plaintiff’s employment and that Plaintiff was not a County
employee.” Id. at 3. And he also found persuasive the Texas Attorney General opinions,
which reiterate that county officials have no authority to hire hospital employees. Id. at 3–4.
While Chief Judge O’Connor initially sided with this Court’s original rationale for sending
the County to arbitration, see Swenson, 2024 WL 262576, at *2 (citing 5:23-CV-013, Dkt. No.
77), he reconsidered that position after reviewing the County’s evidence of its non-employer
status. The Court does the same here.
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b. 	There is no sign that the County is a bound non-signatory to
the Agreement.
While the evidence proves that the County was not Ashley’s employer, there is one
more matter to consider: whether the County is nevertheless a bound non-signatory to the
Agreement. The Court need not dwell on this point, since no party argues that the County
must arbitrate on this theory. See Dkt. No. 100 at 20. But, suffice it to say, “[a]rbitration
agreements apply to nonsignatories only in rare circumstances.” Bridas S.A.P.I.C. v. Gov’t of
Turkmenistan, 345 F.3d 347, 358 (5th Cir. 2003). Non-signatories may be bound to an
arbitration agreement under six principles of contract and agency law: (1) incorporation by
reference; (2) assumption; (3) agency; (4) alter ego; (5) equitable estoppel; and (6) third-party
beneficiary. Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009); In re Kellogg Brown &
Root, Inc., 166 S.W.3d 732, 739 (Tex. 2005). While it is the Court’s job to assess contract
formation at step one, Kubala, 830 F.3d at 201, there is no allegation that any of these
doctrines bind the County to the Agreement as a non-signatory. Because the party seeking
to compel arbitration must prove that an agreement exists, In re Kellogg, 166 S.W.3d at 737,
and because no party seeks to have the County arbitrate here, the Court need not address
whether any of the above-stated doctrines apply.
ii. 	Under the Agreement, Ashley must still arbitrate her claims against
the Hospital and Foundation, as the Court originally found.
While Ashley’s claims against the County are not subject to arbitration, the same
cannot be said for her claims against the Hospital and Foundation. To begin, there can be
no dispute that the Agreement binds Ashley, the Hospital, and the Foundation.10 Ashley
signed the New Employee Record Sheet, which incorporates the Agreement and lists “Clay
10 There has been no assertion that it binds Concord, too. See Dkt. Nos. 99 at 2; 101 at 6.
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County Memorial Hospital” at the top. See Dkt. No. 61-1 at 3. And the Hospital’s Human
Resources Director declared that Ashley completed the form during her onboarding process
with the Hospital. Id. at 1–2. As for the Foundation, the Agreement contemplates joint
employers which, according to Ashley’s own allegations, include the Hospital and
Foundation. Id. at 4; see Dkt. No. 55 ¶ 12 (Third Amended Complaint alleging that
“[A]shley was jointly employed by both the Foundation and the Hospital” or, alternatively,
the County). Therefore, unlike with the County, there is no step-one question about the
existence of an agreement to arbitrate with the Hospital and Foundation.
Turning to the text, the Agreement broadly refers to the ADR process “any claim or
dispute” between the parties, “whether related to the employment relationship or otherwise,
including those created by practice, common law, court decision, or statute.” Dkt. No. 61-1
at 4. The New Employee Record Sheet, which Ashley signed, is much the same: “I agree
that all claims, disputes and controversies between and among employees and any employee
and employer . . . shall be exclusively and finally settled through the [Agreement].” Id. at 3.
That expansive language covers Ashley’s claims, as the Court originally found. Dkt. No. 77
at 1–2. Still more, by signing the Agreement, the parties “[gave] up any right they may have
to sue each other” and “expressly waived” any jury trial or judicial appeal. Dkt. No. 61-1 at
4. Thus, Ashley must pursue her claims against the Hospital and Foundation in arbitration.
Ashley resists this conclusion, arguing that the Court must determine the Hospital’s
“capacity to arbitrate”—that is, whether it “had the authority to enter into an arbitration
agreement.” Dkt. No. 98 at 10–11. That, however, is a question for the arbitrator. Under
the Agreement’s delegation clause, “all disputes about the validity of the arbitration clause”
must be resolved through the ADR process. Dkt. No. 61-1 at 4. Whether the Hospital had
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authority to contract for arbitration goes to the Agreement’s validity; it does not present a
step-one formation question that, as explained above, is the province of the Court. See Rent-
A-Ctr., 561 U.S. at 70 n.2. Nor is it a question of immunity, as Ashley at times suggests. See
Dkt. No. 98 at 10–11 (citing San Antonio River Auth. v. Austin Bridge & Rd., LP, 601 S.W.3d
616, 626 (Tex. 2020)). As the Court previously found, any challenge to the validity of the
Agreement—including Ashley’s allegation that the Hospital lacked authority to execute the
Agreement in the first place—must be referred to arbitration. See Dkt. No. 77 at 4.
* 	* 	*
In sum, the Court reconsiders the portion of its prior order (Dkt. No. 77) forcing the
County to arbitrate Ashley’s claims against it. Whether Ashley and the County agreed to
arbitrate is a question for the Court, not the arbitrator. And here, the evidence shows that
the County was not Ashley’s employer, meaning it did not agree to arbitrate. Thus, the
County is not bound by the Agreement—as a signatory or otherwise. But the rest of the
Court’s order holds true: under the Agreement’s plain terms, Ashley’s claims against the
Hospital and Foundation must be resolved through arbitration.
B. 	The Court stays and administratively closes this case pending arbitration.
“If a dispute is subject to mandatory grievance and arbitration procedures, then the
proper course of action is usually to stay the proceedings pending arbitration.” Ruiz v.
Donahoe, 784 F.3d 247, 249 (5th Cir. 2015). The stay often coincides with administrative
closure. See Mire v. Full Spectrum Lending Inc., 389 F.3d 163, 167 (5th Cir. 2004).
There is no reason to treat this case differently. Indeed, in their motion to compel,
the Hospital and Foundation expressly requested a stay pending completion of arbitration
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proceedings.11 Dkt. No. 60 at 9. Under Section 3 of the FAA, a district court must stay
proceedings upon the application of a party if it is “satisfied that the issue involved in such
suit or proceeding is referable to arbitration.” 9 U.S.C. § 3. In those situations, the Court
“has no discretion under [S]ection 3 to deny the stay.” Complaint of Hornbeck Offshore (1984)
Corp., 981 F.2d 752, 754 (5th Cir. 1993) (quotation omitted).
But the Court does have wide discretion to extend the stay to proceedings against the
County and Concord—the two non-signatories. Id. at 755. And it does so here. The
Court’s authority to issue a discretionary stay of litigation pending arbitration, even for
claims involving non-arbitrating parties, stems from its inherent power to control its docket.
Id. (citing Moses H. Cone Mem’l Hosp., 460 U.S. at 20 n.23). Factors to consider include
whether “(1) the arbitrated and litigated disputes involve the same operative facts; (2) the
claims asserted in the arbitration and litigation are ‘inherently inseparable’; and (3) the
litigation has a ‘critical impact’ on the arbitration.” Rainier DSC 1, LLC v. Rainier Cap.
Mgmt., LP, 828 F.3d 356, 360 (5th Cir. 2016) (quoting Waste Mgmt., Inc. v. Residuos
Industriales Multiquim, S.A. de C.V., 372 F.3d 339, 343 (5th Cir. 2004)). “District courts
within the Fifth Circuit have held that it is not absolutely necessary that the claims be
inherently inseparable in order to justify a discretionary stay; significant overlap of claims is
sufficient.” Neukranz v. Conestoga Settlement Servs., LLC, No. 3:19-CV-1681, 2020 WL
4679542, at *4 (N.D. Tex. July 14, 2020) (Ramirez, J.) (quotation omitted).
Here, Ashley’s claims against the County and Concord involve the same set of facts
as the claims that are subject to arbitration. Central to all of them are Ashley’s allegations
11 Alternatively, they requested that the Court dismiss the case outright. Dkt. No. 60 at 8–9. But
that approach is only proper “when all of the issues raised in the district court must be submitted to
arbitration,” which is not true here. Ruiz, 784 F.3d at 249–50 (emphasis omitted).
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that the defendants violated her constitutional rights and undermined her employment at
the Hospital. In fact, two of the three claims against the Hospital and Foundation that must
be brought in arbitration—Count Two involving First Amendment free-speech rights and
Count Three involving First Amendment associational rights—were also alleged against the
County. Dkt. No. 55 ¶¶ 40; 50. In other words, Ashley’s remaining claims against the
County are “inherently inseparable” from those that she must pursue in arbitration. Waste
Mgmt., 372 F.3d at 343 (quotation omitted). That factor supports a discretionary stay.
The analysis for Concord is largely the same. The remaining state-law claim against
the Hospital and Foundation—alleging unlawful retaliation under Section 301.413 of the
Texas Occupations Code—was also alleged against Concord. Dkt. No. 55 ¶¶ 31–32. While
Ashley alleged two separate state-law causes of action against Concord only, those claims—
involving tortious interference with employment—still overlap factually with the claims in
arbitration. See id. ¶¶ 53–57. “The ‘close relationship’ between the facts supporting all of
the claims weighs in favor of a stay.” Neukranz, 2020 WL 4679542, at *5 (quotation
omitted). Lastly, when resolving litigated disputes during a pending arbitration, there is
always the concern that, “[g]iven the binding effect of a federal judgment” and the “factual
similarities” in the claims, the arbitrator would “be strongly influenced to follow the Court’s
determination.” Broussard v. First Tower Loan, LLC, 150 F. Supp. 3d 709, 728 (E.D. La.
2015). Therefore, allowing the litigation to proceed against the non-signatories risks
“critical impact” on the arbitration. Waste Mgmt., 372 F.3d at 343 (quotation omitted).
Against that backdrop, the Court stays proceedings as to all the defendants and
administratively closes this case pending the outcome of the arbitration.
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C. 	The Court denies the Rule 12(b)(1) portion of the County’s motion to
dismiss and denies what is left without prejudice to refiling.
One question remains: what about the pending motions to dismiss? After remand,
Concord and the County both filed renewed motions to dismiss. See Dkt. Nos. 92; 94.
Concord’s motion arises solely under Rule 12(b)(6); the County presses arguments under
both Rule 12(b)(1) and Rule 12(b)(6). But the County’s jurisdictional challenge lacks merit,
and it is premature to decide whether Ashley states a claim for relief against either
defendant. Thus, the Court denies the Rule 12(b)(1) portion of the County’s motion to
dismiss and denies what is left—Concord’s motion to dismiss and the Rule 12(b)(6) portion
of the County’s motion—without prejudice to refiling once arbitration is complete.
i. 	The County’s jurisdictional challenge is meritless.
The Fifth Circuit was clear: “Motions to compel arbitration are not one of the
limited instances in which district courts have leeway to pretermit the resolution of
jurisdictional challenges.” Ashley, 125 F.4th at 661 (quoting Hines v. Stamos, 111 F.4th 551,
566 (5th Cir. 2024)). So before sending this case to arbitration, the Court must resolve the
Rule 12(b)(1) portion of the County’s motion to dismiss. See Dkt. No. 94 at 15–24.
That said, the County’s argument falls flat. In the County’s view, the Court lacks
jurisdiction over Ashley’s remaining federal claims because the County was not her
employer and so its “governmental immunity is not waived for [Ashley’s] claims based on
her termination.” Id. at 24. True, “the County’s governmental immunity defense raises a
jurisdictional inquiry.” Ashley, 125 F.4th at 662. But the only claims left against the County
arise under Section 1983, and it is black-letter law that counties are not immune from suit
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under that statute. 12 Howlett v. Rose, 496 U.S. 356, 376 (1990); accord Dallas County v.
Gonzales, 183 S.W.3d 94, 109 (Tex. App.—Dallas 2006, pet. denied); see also Hoff v. Nueces
County, 153 S.W.3d 45, 49–50 (Tex. 2004) (holding that Texas counties are not arms of the
state for purposes of Eleventh Amendment immunity). Plus, the County seemingly assumes
that a Section 1983 claim cannot lie against a county that was not the plaintiff’s employer.
See Dkt. No. 94 at 15–16. But Ashley alleges that the County conspired against her for
exercising her First Amendment rights, even if it did not formally terminate her. Dkt. No.
104 at 16–17, 23. Thus, the County’s arguments are properly resolved under the rubric of
Rule 12(b)(6). Its jurisdictional challenge under Rule 12(b)(1) is denied.
ii. 	Because the Court stays all proceedings, the remaining motions to
dismiss are moot.
Having stayed all litigation, it is premature for the Court to resolve Concord’s
motion to dismiss under Rule 12(b)(6), as well as the Rule 12(b)(6) portion of the County’s
motion to dismiss. See Moore v. Gold Strike Casino Resort, LLC, 3:25-CV-270, 2026 WL
560238, at *2 (N.D. Miss. Feb. 27, 2026) (denying motion to dismiss without prejudice to
renewal following arbitration). Accordingly, those motions (Dkt. Nos. 92; 94) are denied as
moot without prejudice to refiling once arbitration is complete.
4. 	Conclusion
In sum, under Rule 54(b), there is good cause to reconsider in part the Court’s prior
order compelling arbitration. See Dkt. No. 77. While Ashley still must arbitrate her claims
against the Hospital and Foundation, the same is not true for Concord or the County. The
12 Ashley concedes, as she must, that she cannot recover punitive or exemplary damages from the
County. Dkt. No. 104 at 28; City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 271 (1981) (holding
that municipalities are immune from punitive damages under Section 1983). Thus, her claim for
punitive or exemplary damages against the County, see Dkt. No. 55 ¶ 58, is dismissed.
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evidence shows that the County was not Ashley’s employer, so it never agreed to arbitrate
any disputes with her. Thus, the County will not be forced to arbitrate.
The County’s jurisdictional challenge under Rule 12(b)(1), however, is unavailing.
So that portion of its motion to dismiss (Dkt. No. 94) is denied. Next, because the Hospital
and Foundation requested a mandatory stay, and because continuing litigation for the non-
arbitrating parties would be inappropriate, the Court denies the Rule 12(b)(6) portion of the
County’s motion to dismiss—as well as Concord’s motion to dismiss under Rule 12(b)(6)
(Dkt. No. 92)—without prejudice to refiling once arbitration is complete. The Hospital and
Foundation’s motion to compel arbitration (Dkt. No. 59) is granted: Ashley must pursue her
claims against those defendants in accordance with the Agreement.
The Clerk of Court is directed to administratively close this case. The parties are
ordered to file a joint status report within 30 days of the arbitration’s completion explaining
how they propose to proceed with this case.
So ordered on March 30, 2026.
JAMES WESLEY HENDRIX
UNITED STATES DISTRICT JUDGE
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