The Texas Supreme Court Has Decided Another Arbitration Issue
The Texas Supreme Court has just decided another arbitration issue in the case of East Texas Salt Water Disposal Company, Inc. v. Werline, 53 Tex. Sup. Ct. J. 410 (Tex. 2010). This time it has further defined the limits of trial court’s ability to review arbitration decisions.
Werline was an employee of East Texas Salt Water Disposal. He had an employment contract that directed arbitration over any employment disputes. He also had a severance provision if he was terminated without cause. Werline’s employment ceased and he sought to enforce the severance provision. The parties proceeded to a three-day arbitration hearing in front of an AAA arbitrator. The arbitrator awarded in favor of Werline. East Texas Salt Water Disposal petitioned the district court to vacate, modify or correct the award on the basis that it was so against the great weight of the evidence that the arbitrator manifested bias.
The trial court vacated the award, determined all the material facts and issues in East Texas Salt Water Disposal’s favor and directed another arbitration to confirm the facts the court had found. Werline appealed and the court of appeals reversed and rendered in favor of Werline. East Texas Salt Water Disposal appealed, arguing that the court of appeals had no jurisdiction to hear the appeal.
The Supreme Court held that the court of appeals did have jurisdiction to hear the appeal from the trial court’s obviously erroneous decision.
The Texas Supreme Court then took the opportunity to remind the parties, once again, that there is limited trial court review of arbitration awards. The review is limited to the grounds expressly enumerated by Texas Arbitration Act section 171.098(a). In this way, the Texas Supreme Court’s decision is consistent with the United States Supreme Court’s decision in Hall Street v. Mattel, 128 S.Ct. 1396 (2008) decided recently on similar issues under the Federal Arbitration Act, which the TAA is modeled after.
Justice Jefferson, leading the dissent, argued that the limited issue presented on appeal, the appealability of the trial court’s order, should have been decided differently. He held that there was not sufficient finality in the trial court’s order to make it appealable. However, this is inconsistent with the purpose of the TAA to make arbitration faster and cheaper than litigation. As the Fifth Circuit stated recently in Citigroup Global Markets, Inc. v. Bacon, arbitration should be the end, not the beginning of the litigation. If the trial court’s order were not appealable, multiple arbitrations would have occurred based on reasons not listed in the statute.
