2009 Arbitration Case Law: Texas Supreme Court

Continuing with our 2009 Year-End Highlights series, we present today a summary of noteworthy arbitration opinions handed down by the Texas Supreme Court.

The landmark case In re Poly-America, L.P. , 262 S.W.3d 337 (Tex. 2008) decided in 2008, involves a retaliatory-discharge claim. The court concluded that fee-splitting schemes in an arbitration agreement are unconscionable. (post available here)

In February, the court decided three arbitration-related cases: (1) In In re: Labatt Food Service, L.P. the court resolves the issue of whether nonsignatories to an arbitration agreement should be compelled to arbitrate claims when the decedent’s claims would have to be arbitrated. (2) In re Jindal followed Labatt‘s precedent. The court held that an arbitration agreement between a decedent and his employer required the nonsignatories beneficiaries to arbitrate their claims. (3) In re Bank of America, N.A., presents the the issue of enforceability of contractual jury waivers. The court analyzed their similarities with arbitration clauses, both falling within the category of forum- selection clauses.

In April, the court ruled on In re Gulf Exploration, LLC. The issue was whether mandamus review of orders compelling arbitration should be entirely precluded. (post available here)

In June, the court decided two arbitration-related cases: (1) In re International Profit Associates, Inc. The court held that a party challenging a forum-selection clause has the burden of proving the clause is invalid. (post available here) (2) The court held that a post-injury arbitration acknowledgment agreement is valid and compelled arbitration of tort claims within the context of an employment contract. In re Macy’s Texas, Inc. (post available here)

Perhaps the most significant case decided this year by the Texas Supreme Court was In re Morgan Stanley & Co., Inc. The court applied Prima Paint‘s separability doctrine, Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395 (1967). The court declined to follow Fifth Circuit precedent and held that the court, not the arbitrator should decide the issue of capacity to contract. (post available here and comments by Professor Alan Scott Rau are here)

In July, the court held that a district court abused its discretion by permitting discovery instead of deciding a motion to compel arbitration, In re Houston Pipe Line Co. (post available here)

In October, the court decided In re Polymerica. The court held that an agreement to arbitrate discrimination claims between an employee and a staffing agency hired by the employer survives the dissolution of the contract between the staffing agency and employer. (post available here)

Also in October, Chrysler Insurance Co. v. Greenspoint Dodge of Houston, Inc., was decided by the court. The case deals with a dispute over insurance coverage to pay for a $1.5 million defamation arbitration award granted to a former employee. (post available here)

In November, the court held in In re Golden Peanut Co., that wrongful death beneficiaries nonsignatories to an arbitration agreement must be compelled to arbitrate when the decedent’s claims would had been arbitrated. (post available here)

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