The Supreme Court of Texas has denied a party’s petition for a writ of mandamus after the Houston [1st] Court of Appeals held U.S. courts lacked authority to appoint an arbitration panel. In In re Aramco Services Co., No. 01-09-00624-CV, (Tex. App. – Houston [1st], March 19, 2010), DynCorp International, LLC and Aramco entered into a contract for a computer system which was to be manufactured in the U.S. and installed at Aramco’s offices in Saudi Arabia. The contract contained a Saudi “Choice of Law” provision and an arbitration clause which required an arbitrator to be “a Saudi national or a Moslem foreigner.” DynCorp filed suit in Houston seeking payment of certain monies pursuant to the contract. Aramco filed a motion to compel arbitration, which the trial court granted. DynCorp then filed a motion to compel arbitration before JAMS or the American Arbitration Association. Over Aramco’s objections, the trial court granted DynCorp’s motion in part and appointed a three party arbitration panel which consisted of two non-Muslims. Aramco sought a writ of mandamus from an appeals court. The Houston Court of Appeals held that the trial court lacked authority to appoint an arbitral panel to decide the parties’ dispute. The Houston Court conditionally granted Aramco’s writ of mandamus and directed the trial court to vacate its previous orders. DynCorp then filed a petition for a writ of mandamus with the Supreme Court of Texas. On February 25th, the Supreme Court denied DynCorp’s petition in In re DynCorp International, LLC, No. 10-0798. You can read Disputing‘s previous post about the case here. We would love to hear your thoughts. Technorati Tags: arbitration, ADR, law, Texas Supreme Court

The Northern District of Texas has held the mandatory arbitration mechanism of the Railway Labor Act (RLA) preempted a grievance which required interpretation of a collective bargaining agreement (CBA), but did not preclude claims which were independent of the CBA. In CareFlite v. AFL-CIO, No. 4:07-CV-334-Y, (N.D. Tex., February 11, 2011), CareFlite, a medical transportation company, sought summary judgment on two counts of the Office and Professional Employees International Union, AFL-CIO (“the Union”) and Craig Hilton’s Amended Counterclaim. The dispute arose out of CareFlite’s discharge of Hilton, a pilot represented by the Union. In 2006, Hilton was discharged by CareFlite and filed a grievance with the Union. Although Hilton was reinstated, he was again discharged in 2007 for failing to complete a required training certification within one year as required by a CBA between CareFlite and the Union. Hilton then filed another grievance with the Union. Previously, the United States Court of Appeals for the Fifth Circuit held that the grievance concerning Hilton’s discharge was not subject to the RLA’s mandatory arbitration mechanism because the CBA explicitly excluded the claim. More information on the history of the case is available here. Because Count I was previously resolved by the Fifth Circuit, the Northern District of Texas only addressed Counts II and III of Hilton and the Union’s Amended Counterclaim. In the relevant portion of Count II, the Union alleged “that CareFlite breached the CBA when it discharged Hilton.” According to the court, the question of Hilton’s discharge was, preempted by the RLA because it grows out of an interpretation of the CBA and centers over the meaning of the CBA. Indeed, without the CBA, Count II would not exist. Nevertheless, Hilton and the Union argue that the Court should hear the merits of Count II because, in light of the Fifth Circuit’s determination that the ATPC-related discharge question is nonarbitrable, Hilton will have a right without a remedy if the Court now determines that Count II is preempted. This argument is unavailing, however, given that the language in the CBA excluding ATPC-related discharges from arbitration is the product of negotiations in which Hilton and the Union were involved. As the Fifth Circuit noted, “unions and employees can contract to exempt certain claims from arbitration through their bargained-for CBAs.” CareFlite, 612 F.3d at 322 (citations omitted). Thus, to the extent that Hilton lacks a remedy, it is partially of his own making–or at the very least, his union’s making. Next, the court addressed Count III which alleged, that CareFlite’s “treatment of Hilton since his reinstatement, including, but not limited to, CareFlite’s refusal to provide Hilton with additional time to obtain an ATPC Certification and CareFlite’s discharge of Hilton, constitute illegal discrimination and retaliation under [45 U.S.C.A. § 152, Third and Fourth (West 2010), of] the RLA.” According to the court, “[t]he assertion of any right that is not created by a CBA is . . . not subject to binding arbitration under the statute.” CareFlite, 612 F.3d at 320-21. That is, claims that are independent of the CBA are not “minor disputes,” and the RLA’s mandatory arbitration mechanism does not preclude or preempt their being brought in federal court. See id. The allegation in Count III was, independent of the CBA and, thus, is not precluded by the RLA’s mandatory arbitration mechanism. The CBA is not the “only source” of Hilton’s right “not to be discharged wrongfully” in this case. Hawaiian Airlines, 512 U.S. at 258. Rather, Count III arises out of Section 2, Third and Fourth, of the RLA, which “protects the rights of employees to engage in organized union activities without interference from their employer.” Silva, 2008 WL 4552779, at *6 (citing Trans World Airlines, Inc. v. Indep. Fed’n of Flight Attendants, 489 U.S. 426, 440 (1989); Johnson v. Express One Int’l, 944 F.2d 247, 252 (5th Cir. 1991)). Finally, the Northern District refused to grant CareFlite’s Motion for Summary Judgment on Count III. According to the court, CareFlite offered little analysis on its claim and the court was “not prepared to say that there are no genuinely disputed material facts with regard to Count III.” The Northern District of Texas held the mandatory arbitration mechanism of the RLA preempted Count II, but did not preclude Count III of Hilton and the Union’s Amended Counterclaim. The court granted CareFlite’s Motion for Summary Judgment as to Count II and denied it as to Count III. Technorati Tags: ADR, law, arbitration

The Supreme Court of Texas has held “parties to an arbitration agreement may grant non-signatories the right to compel arbitration.” In In re Rubiola, No. 09-0309, (Tex., March 11, 2011), Brian and Christina Salmon agreed to purchase a home from Greg and Catherine Rubiola with J.C. Rubiola acting as listing broker for the transaction. Brothers Greg and J.C. Rubiola jointly operate a number of real estate and mortgage companies in San Antonio, including Rubiola Management, L.L.C. and Rubiola Mortgage Company. The Rubiola’s various business entities operate at the same location under the name Rubiola Mortgage and Realty. The parties’ purchase agreement was a standard Texas real estate sales contract and did not contain an arbitration clause. The Salmons obtained mortgage financing from Rubiola Mortgage Company and signed an arbitration agreement as part of the mortgage process. Although the only signatories to the arbitration agreement were the Salmons and J.C. Rubiola, in dual capacity as real estate agent and mortgage broker representing Rubiola Mortgage Company, the agreement defined parties as, Rubiola Mortgage Company, and each and all persons and entities signing this agreement or any other agreements between or among any of the parties as part of this transaction. “The parties” shall also include individual partners, affiliates, officers, directors, employees, agents, and/or representatives of any party to such documents, and shall include any other owner and holder of this agreement. Several months later, the Salmons sued the Rubiolas along with other business entities involved in repairing the home. The Salmons alleged that a series of misrepresentations were made to induce them to purchase the home. They also alleged violations of the Texas Deceptive Trade Practices Act and negligent supervision of repairs made to the home. The Salmons sought to rescind the sale or collect damages. The Rubiolas moved to compel arbitration pursuant to the mortgage finance agreement. The trial court denied the Rubiolas’ motion and the court of appeals likewise refused to compel arbitration during a mandamus proceeding. The Rubiolas then sought mandamus review before the Supreme Court of Texas. First, the Texas Supreme Court noted that, in general, only signatories to an arbitration agreement are bound by its terms. The Court continued by stating although non-signatories are typically bound by arbitration agreements only in rare circumstances, “[w]ho is actually bound by an arbitration agreement is [ultimately] a function of the intent of the parties, as expressed in the terms of the agreement.” According to the Court, this case was different in that a non-signatory was seeking to compel arbitration against a signatory. The Court agreed with the Rubiolas that the definition of “parties” provided by the arbitration agreement was broad and both J.C. and Greg Rubiola were parties to the agreement. The Court then concluded, Because the arbitration agreement expressly provides that certain nonsignatories are considered parties, we conclude that such parties may compel arbitration under the agreement. Next, the Court stated the claims brought by the Salmons fell under the terms of the arbitration agreement. The underlying arbitration agreement defines arbitrable disputes to include “any and all controversies between the parties of whatever type or manner, including without limitation, all past, present and/or future credit facilities and/or agreements involving the parties.” The Rubiola brothers were, as we have already concluded, non-signatory parties to the arbitration agreement, which broadly covers all controversies between the parties and all past, present or future agreements involving the parties. This language indicates that the arbitration agreement was not limited to the financing part of the transaction but rather extended to the real estate sales contract and the Salmons’ complaints regarding that sale. According to the Court, We conclude that signatories to an arbitration agreement may identify other parties in their agreement who may enforce arbitration as though they signed the agreement themselves. The Supreme Court of Texas held the Rubiolas had the right to compel the parties’ dispute to arbitration and conditionally granted their request for mandamus relief. Technorati Tags: ADR, law, arbitration, Texas Supreme Court

Mark your calendars! The American College of Healthcare Executives (ACHE) will host the 2011 Congress on Healthcare Leadership March 21-24, 2011 in Chicago, IL at the Hilton Chicago and Palmer House Hilton. The 2011 Congress will offer “more than 100 educational seminars, special programs, networking events and professional development possibilities.” According to the event brochure, the Congress, will be filled with opportunities to explore the latest developments in healthcare leadership, discuss today’s top healthcare issues with colleagues and expert faculty, and further refine your leadership skills. More than 4,500 healthcare executives will attend Congress this year, making it an unparalleled opportunity to reconnect with your peers and expand your professional network. As many of you know, Disputing’s own Karl Bayer and Holly Hayes will present “Introducing Conflict Resolution Strategies in Health Care” at the Congress on Thursday, March 24th at 9 am in the State Ballroom of the Palmer House Hilton. More information on the 2011 ACHE Congress is available here. You may register by mail, fax or online here. You can also follow the ACHE Congress on Twitter @ACHECongress. Technorati Tags: Healthcare, Mediation