Texas Supreme Court Decides In re Poly-America (Tex. 2008)

In re Poly-America, LP, No. 04-1049 (Tex. Aug. 29, 2008) (O'Neill)(arbitration in employment context, retaliatory termination, workers compensation system) MAJORITY OPINION (EXCERPT): In this retaliatory-discharge case, the employee’s employment contract contains an arbitration agreement that requires the employee to split arbitration costs up to a capped amount, limits discovery, eliminates punitive damages and reinstatement remedies available under the Workers’ Compensation Act, and imposes other conditions on the arbitration process. We must decide whether any or all of these provisions are unconscionable and, if they are, whether the contract’s severability clause preserves the arbitration right. We hold that the trial court did not abuse its discretion in allowing the arbitrator to assess the unconscionability of the agreement’s fee-splitting and discovery-limitation provisions as applied in the course of arbitration. We further hold that the arbitration agreement’s provisions precluding remedies under the Workers’ Compensation Act are substantively unconscionable and void under Texas law. However, those provisions are not integral to the parties’ overall intended purpose to arbitrate their disputes and, pursuant to the agreement’s severability clause, are severable from the remainder of the arbitration agreement, which we conclude is otherwise enforceable. Accordingly, we conditionally grant the petition for mandamus. * * * Conclusion We hold invalid, as substantively unconscionable and void, provisions of the parties’ contract that prohibit the award of punitive damages or reinstatement and thus inhibit effective vindication of Luna’s retaliatory-discharge claim in an arbitral forum. We further hold that the trial court did not abuse its discretion in allowing the arbitrator to determine whether the fee-splitting agreement and discovery limitations — as applied in the course of arbitration — are unconscionable. Because we find the invalid remedies-limitation provisions severable from the agreement to arbitrate, which we conclude is otherwise enforceable, the trial court did not abuse its discretion in compelling arbitration. Accordingly, we conditionally grant the writ of mandamus.