The Eastern District of Texas blog is one of our favorites. Today, Michael Smith posted about a district judge’s decision to refuse to compel arbitration on the basis that the party seeking to arbitrate had waived that right by participation in the underlying litigation. We’ve discussed waiver as a defense to arbitration before. It will be interesting to see what, if anything, comes of this. Technorati Tags: arbitration, ADR, law

The Texas Supreme Court handed down six opinions today; none of them has anything to do with arbitration. Sadly, we’re too busy to discuss any of them at length. We would note, however, that one of the opinions discusses the economic loss rule, and how one goes about asserting it in Texas. Technorati Tags: litigation, Texas Supreme Court, law

This morning, the Third Court of Appeals issued an opinion in an interesting case not normally within our area of interest, but which is worth mentioning nonetheless. The opinion, written by Justice Henson, describes the legal confusion which ensues when a couple begins to divorce and executes a mediated divorce settlement agreement but then does not consummate the divorce. In this case, the soon-to-be-ex-wife died the day before the hearing to enter the final divorce decree was to occur. Her (putative?) widower, of course, argues that since the decree was never signed, he remained her beneficiary and entitled to the share of their property to which he would have been entitled had the marriage not gone south years earlier. The other would-be heirs, of course, did not agree. Sorting through all this, the Court (sensibly, it seems to us, as non-family lawyers) explains that the Family Code and opinions interpreting it actually provide a fairly clear answer in this case of first impression. Spiegel v. KLRU Endowment Fund, ___ S.W.3d ___ (Tex. App. – Austin 2007) (Cause No. 03-06-00593-CV) Technorati Tags: litigation, Third Court of Appeals, law

This past Friday, while Karl and I attended the Austin Bar Association’s annual Bench Bar conference, the Texas Supreme Court handed down another mandamus, per curiam opinion reversing trial court and court of appeals decisions not to compel arbitration. The case involved an employee of RLS Legal Solutions (“RLS”) named Amy Cobb Maida (“Maida”) who worked as a sales rep for RLS from 1997 until 2002. As per her employment contract, she was paid a base salary twice a month and a commission payment monthly. All payments were made to her by RLS via direct deposit. In November 2001, RLS asked her to sign a new employment contract, which contained, among other things, an arbitration clause. Maida objected to the new contract, but RLS told her that it would not pay her unless and until she signed. Sure enough, on the next payday, RLS did not pay her her salary. The next work day, Maida signed the contract containing the arbitration agreement, but she indicated that she had done so under duress. Later, when her employment dispute arose with RLS and RLS moved to compel arbitration, Maida argued that the arbitration agreement was unenforceable as it was procured by duress. The Court of Appeals found the arbitration agreement to be unenforceable since RLS had withheld wages that had already been earned by Maida until she signed the agreement. In other words, this was not a “take it or leave it” employment contract; this was a situation where the employer would not pay the employee past wages until she signed the future contract. The Supreme Court was unbothered by that distinction and instead focused on whether or not Maida objected to the contract as a whole or just the arbitration clause. Since Maida’s duress argument applied not just to the agreement to arbitrate, but to Maida’s whole deal with RLS, the Supreme Court reversed the court of appeals and held that the arbitrator, and not the courts, must rule on the duress argument. In other words, in order to have avoided arbitration, Maida would have had to have testified that she had no problem with the other terms of her contract with RLS (which may have had an adverse impact on the substance of her litigation with RLS, one might think). While at first blush it seems strange that the Supreme Court would enforce an agreement to arbitrate while assuming that it was procured by duress, Friday’s opinion is in line with FAA jurisprudence, including the recent U.S. Supreme Court’s Buckeye Check Cashing opinion, where that court upheld an arbitration agreement in an illegal contract. Finally, we would note that the court of appeals opinion which has now been reversed was discussed in the updated arbitration paper Karl presented on Friday. So, on the very same day the paper was posted on this blog, part of it was rendered obsolete and out of date. In RE: RLS Legal Solutions, LLC, ___ S.W.3d ___ (Tex. 2007) (Cause No. 05-0290) Technorati Tags: arbitration, ADR, Texas Supreme Court, law