The Supreme Court of Texas held that a post-injury arbitration acknowledgment agreement is valid and compelled arbitration of tort claims within the context of an employment contract. In In re Macy’s Texas, Inc., __ S.W.3d __ (Texas 2009) (No. 08-0584), Erica Tomsic was an employee at department store Macy’s. Tomsic claims to have injured her back while working at the store in April 2007. On May 9 2007, Tomsic signed an “Arbitration Acknowledgment” in which she acknowledges she had “received and read (or had the opportunity to read) the Summary Plan Description . . . for the Federated Department Stores, Inc. Injury Benefit Plan for Texas Employees, effective February 1, 2005.” Tomsic also acknowledged that the Plan required arbitration of on-the-job injuries against “the Company.” The Plan also contained the following clause: All Texas employees of Federated Department Stores, Inc, Macy’s West, Inc., and Federated Systems Group, Inc. will be covered by this program. References to the word “Company” in this booklet will mean your particular employer. Despite the arbitration agreement, Tomsic sued Macy’s Texas, Inc. and Macy’s Texas, Inc. moved to compel arbitration. Tomsic argued that she was not employed by any of the entities mentioned by the Plan, thus, she was not required to arbitrate her claims. The trial court denied Macy’s Texas, Inc. motion to compel arbitration. The Texas Supreme Court agreed with Tomsic that the affidavit alone is not sufficient to require relief. However, the court noted that the Plan defined “the Company” as “your particular employer.” In addition, the court stated that “Tomsic offers no explanation why she would agree with anyone other than her employer on a health-benefits plan or arbitration for on-the-job injuries.” The court also explained that although the Arbitration Acknowledgment predated Tomsic’s injury, the Plan did not. Because this case was decided under the Federal Arbitration Act, and not under the Texas Arbitration Act, post-injury arbitration agreements don’t have to be signed by each party’s attorneys. Accordingly, the court directed the trial court to enter an order to compel arbitration. Technorati Tags: arbitration, ADR, law, Texas Supreme Court

During this Fourth of July holiday weekend, our good friend Don Philbin stumbled across “Civil Jury Trials R.I.P.? Can it Actually Happen in America?” 40 St. Mary’s L.J. 795 written by the Honorable W. Royal Furgeson, Jr. In the article, Judge Furgeson discusses the Arbitration Fairness Act of 2007, which is analogous to the Arbitration Fairness Act of 2009 (previously blogged here) currently considered in the U.S. Congress. If enacted, the bill would amend the Federal Arbitration Act to ban pre-dispute arbitration of employee, consumer, franchise, and civil right claims. (Senate version: S. 931 and Status; House version: H.R. 1020 and Status) Judge Furgeson proposes to amend the Federal Arbitration Act: Why not amend the FAA so that all mandatory arbitration agreements are unenforceable if entered into before the actual dispute arises, except for those in collective bargaining agreements and international contracts? There is a long history behind the development of collective bargaining agreements in labor contracts and both labor and management have put processes in place that facilitate in special ways the objectives of both parties. Such arrangements should be honored. Likewise, the globalization of the marketplace has created demands for dispute resolution in the international arena that are best served by mandatory arbitration agreements. To not support such agreements would place American companies at a disadvantage and would be a mistake. For all other dealings between parties in the United States, parties should be allowed to agree to arbitration only after the dispute arises. Another amendment would also be in order. The parties to arbitration should be able to agree that their arbitrator’s decision can be reviewed for legal error. The present state of the law forecloses such an agreement, as the Supreme Court has recently announced, but such a review would be a positive development and should be considered by amendment to the FAA. The article also discusses the use of mediation in the American system: It also should be noted that non-binding mediation is an entirely different kind of animal and is a wonderful addendum to our justice system. Even in yesteryear when juries flourished, over 90% of cases settled. Before mediation, they settled without the parties having any forum to tell their story. Mediation facilitates this important principle of due process, where everyone gets to tell their story before an impartial and fair decision maker. Such mediation, however, does not have the defects of binding arbitration outlined above. If the matter is not resolved in mediation, the right to jury is preserved. And judicial review is also preserved. Now, because of mediation, settlements have the added benefit of giving people their day to be heard. This makes settlements more meaningful and more helpful in resolving disputes. Any thoughts? Technorati Tags: arbitration, ADR, law, legislation, Arbitration Fairness Act of 2009

Via the Adjunct Law Prof Blog, we learned that a new coalition, the Business Leaders for a Fair Economy is speaking out in support of the Employee Free Choice Act of 2009. The coalition released this ad, which claims that 1,000 business leaders agree the Employee Free Choice Act is key to restoring the country’s economy. The Act ( Senate version: S. 560 and Status; House version: H.R. 1409 and Status ) is currently in the U.S. Congress and as it relates to dispute resolution, it would amend the National Labor Relations Act to require first mediation and then binding arbitration if both parties are unable to reach an agreement within a certain time frame. As we blogged recently, George McGovern has openly opposed the passage of the Act. Let us know your thoughts about the Employee Free Choice Act! Technorati Tags: arbitration, ADR, law, legislation, Employee Free Choice Act of 2009

Within President Obama’s proposal to reform the financial services sector, A New Foundation: Rebuilding Financial Supervision and Regulation, there is a provision that directs the U.S. Securities and Exchange Commission (SEC) to study the use of mandatory arbitration clauses in investor contracts. Check out Professor Barbara Black’s discussion of the proposal in her post First Look at the Administration’s Financial Regulatory Reform and the Wall Street Journal’s post The Beginning of the End of Mandatory Arbitration? We welcome your commentary! Technorati Tags: arbitration, ADR, law, securities regulation