The Texas Supreme Court recently examined an arbitration agreement between an employee and an employer. In re Poly-America, L.P., Ind., No. 04-1049, __ S.W.3d __ (Tex. Aug. 29, 2008). When hired by Poly-America, Johnny Luna agreed to submit any claims against his employer to arbitration. Luna suffered a work-related injury and was later fired. Luna sued, asserting retaliatory discharge under the Workers’ Compensation Act. After the trial court granted Poly-America’s request for arbitration, Luna sought a writ of mandamus from the appellate court and obtained a ruling that the arbitration agreement was unconscionable. Poly-America then sought review by the Texas Supreme Court.
An arbitration agreement covering statutory claims is valid if it does not require a party to waive a statute’s substantive rights and remedies. Here, the arbitration agreement prohibited an award of either punitive damages or reinstatement—key remedies under the Workers’ Compensation Act. Because of this, the Court found those provisions unconscionable and void. The Court next examined a fee-splitting provision and a discovery-limiting provision. The Court concluded that the arbitrator would be better able to determine whether those provisions would hinder Luna from pursuing his statutory rights and thus declined to rule on their enforceability.
Because the agreement contained a severability clause, the Court found that the liability-limiting provisions should be severed from the otherwise enforceable agreement and conditionally granted the writ of mandamus.
To learn more about arbitration agreements, contact the Dallas employment law attorneys at Clouse Dunn Khoshbin LLP at [email protected]