Beaumont Court of Appeals Holds Arbitration Agreement Enforceable Despite “Biblical Scripture” Aspects

The Beaumont Court of Appeals has held that an arbitration agreement in an employment contract was valid and enforceable despite that the agreement included biblical scripture aspects and the parties failed to seek biblically based meditation prior to submitting their dispute to arbitration.

In The Woodlands Christian Academy v. Weibust, 09-10-00010-CV, (Tex. App. – Beaumont, October 7, 2010), Monica Weibust brought claims against her former employer for constructive discharge, harassment, retaliation and employment discrimination against the Woodlands Christian Academy (Woodlands) under the Texas Labor Code. Woodlands sought to compel arbitration pursuant to an arbitration clause contained in an employment contract which existed between Weibust and Woodlands. The trial court denied arbitration.

In response to the parties’ disagreement regarding whether Texas or Federal law controlled the arbitration agreement, the court found that it was subject to the Texas Arbitration Act (TAA).

Weibust argued the arbitration agreement was invalid in several ways. First, she argued that the contract was null and void because it was untimely executed. To support this argument, she pointed to a provision in the contract which stated that the contract was null and void if not executed by March 28, 2008. Despite that the contract was actually executed nearly one month after the date outlined in the contract, the court held that the contract was valid based on the parties’ mutual execution at the later date and Weibust’s subsequent employment during the 2008-2009 academic year.

Weibust next argued that Woodlands waived its right to seek arbitration by “taking substantial action inconsistent with the right to arbitrate.” According to the agreement, the parties mutually agreed to seek “[b]iblically based meditation” prior to submitting any dispute to arbitration as the initial dispute resolution mechanism. Because Weibust did not request the trial court to order mediation and provided no evidence to support her contention that she was prejudiced by Woodlands refusal to mediate, the Beaumont court concluded that the failure to mediate did not “nullify the right to arbitration under the contract.”

Weibust also argued that Woodlands waived its right to compel arbitration by engaging in “extensive discovery prior to its arbitration request.” While the court noted that established Texas law prevents a party from unfairly switching between litigation and arbitration, it further noted that engaging in minimal discovery and court proceedings does not conclusively waive a right to arbitrate. After considering the totality of circumstances, the court held that Woodlands did not waive its right to arbitrate. In support of this holding, the court noted that there was minimal discovery conducted, no briefs on the merits were filed and there was no evidence in the record that any interrogatories or depositions had occurred. Additionally, Woodlands’ motion to arbitrate was filed well in advance of the date set for trial.

Weibust argued the arbitration agreement was not enforceable by alleging that the “biblical scripture” aspects of the agreement rendered it beyond the scope of lawful and adequate judicial review and rendered it unconscionable in that it purported to preempt her rights under state and federal law in favor of biblical principles. The court declined “Weibust’s invitation to find that judicial review would be meaningless,” and noted that courts have authority to review and vacate arbitration decisions in a variety of circumstances under the TAA.

Similarly, despite language in the agreement which asserted that “the Holy Scriptures (the Bible) shall be the supreme authority governing every aspect of the conciliation process,” other provisions expressly stated that the arbitration agreement’s preference for using “Holy Scriptures” did not apply in circumstances where state and federal law were preemptive.

Weibust next alleged a fee-splitting provision in the arbitration agreement rendered it unconscionable. The court responded by stating her argument was “speculative at this stage,” considering that an arbitrator has discretion to alter the equal distribution of fees if necessary or financially burdensome to a party. Finally, Weibust’s argument that the unequal bargaining power which existed between herself and Woodlands at the time the contract was executed rendered the arbitration agreement unconscionable was unpersuasive to the court.

The Beaumont court reversed the trial court’s order denying arbitration and remanded the case with instructions to compel arbitration.

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