Friday, November 20, 2009

NONSIGNATORIES: Wrongful Death Plaintiffs Compelled to Arbitrate by Texas Supreme Court

Following its recent decision in In re Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009), the Texas Supreme Court today issued a per curiam opinion requiring the survivors of another worker killed on the job to arbitrate - rather than litigate - their wrongful death claims based on the worker's agreement to arbitrate personal injury and death claims against the employer, a nonsubscriber under the Texas Workers Compensation Act. The Court re-iterated that the Plaintiffs were bound by the agreement as nonsignatories because their claims were entirely derivative of the claims of the dead employee. The Court further rejected the contention that the Arbitration Agreement attached to the company's Employee Injury Benefits Plan was unenforceable because it constituted an illegal pre-injury/death waiver, reasoning that the duty to arbitrate, rather than litigate, merely took the resolution of the claims to a different forum, rather than altering their availability or viability substantively. As such, it did not amount to an illegal waiver. In Re Golden Peanut Co.,LLC, (Tex. 2009) No. 09-0122 (Tex. Nov. 20, 2009)(per curiam)(mandamus compelling arbitration granted) (arbitration and nonsignatories, wrongful death plaintiffs bound by arb agreement signed by worker killed on the job as derivative claimants and must arbitrate claim against employer, pre-injury waivers, forum selection vs. waiver of substantive rights) IN RE GOLDEN PEANUT COMPANY, LLC; from Gaines County; 11th district (11 08 00215 CV, 269 SW3d 302, 11 13 08) Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus. EXCERPTS FROM THE OPINION Texas Labor Code section 406.033(e), which prohibits pre-injury waivers of personal injury or death claims, does not invalidate the decedent’s arbitration agreement. Golden Peanut petitioned the court of appeals for mandamus relief. The court held that the Mutual Agreement to Arbitrate was valid, was supported by consideration, and did not violate Texas Labor Code section 406.033(e), which prohibits pre-injury waivers of personal injury or wrongful death claims. 269 S.W.3d 302, 307– 09. However, without the benefit of our holding in In re Labatt Food Service, L.P., the court of appeals held that the trial court did not abuse its discretion in refusing to compel arbitration because the Drennans, as nonsignatories, were not bound by the agreement to arbitrate. Id. In Labatt, we held that a decedent's pre-death arbitration agreement binds his or her wrongful death beneficiaries because, under Texas law, the wrongful death cause of action is entirely derivative of the decedent’s rights. Id. at 646. The Drennans contend the arbitration agreement is nevertheless unenforceable because it violates section 406.033(e) of the Texas Labor Code, which provides [a] cause of action [against a nonsubscriber] may not be waived by an employee before the employee’s injury or death. Any agreement by an employee to waive a cause of action or any right described in Subsection (a) before the employee’s injury or death is void and unenforceable. Tex. Lab. Code §406.033(e). Subsection (a), in turn, limits the common law defenses available to an employer who does not carry workers’ compensation insurance. Id. § 406.033(a). However, an agreement to arbitrate is a waiver of neither a cause of action nor the rights provided under section 406.033(a), but rather an agreement that those claims should be tried in a specific forum. See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974) (holding that arbitration clauses are, “in effect, a specialized kind of forum-selection clause”). See also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985) (stating that, “[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum”). Accordingly, section 406.033(e) does not render the arbitration agreement void. [the hyperlinks are not part of the opinion as issued by the court]