Texas Supreme Court Rules on Arbitration of Tort Claims in Employment Contract

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