499 S.W.3d 96
Tex. App.2016Background
- Augustus Bray, a 30-year AAU volunteer and district Governor, was accused of sexual misconduct at an AAU track meet; criminal charge later dismissed. Bray pursued and exhausted AAU internal complaint and appeal procedures, then sued AAU officers Campbell, Oliver, and Seaford for negligence, IIED, defamation, aiding and abetting, and conspiracy, and alleged AAU respondeat superior liability.
- AAU National Policies (prominently displayed) include a broad "Binding Arbitration" clause covering "all civil disputes," specifying AAA rules, FAA, Florida law, and arbitration in the county of AAU’s national office; the clause bars punitive/exemplary damages and contains a severability clause.
- AAU and the individual defendants moved to compel arbitration and abate the lawsuit; the trial court denied the motion in a general order. The defendants appealed interlocutorily under the FAA.
- Record shows Bray signed AAU membership/charter documents (including documents signed as Governor) that incorporate the National Policies; Bray invoked AAU administrative remedies, indicating assent to AAU rules.
- The court examined (1) whether a valid arbitration agreement exists binding Bray and/or non-signatory individual defendants, (2) whether Bray’s tort claims fall within its scope, and (3) Bray’s affirmative defenses (illusory/mutuality and unconscionability for costs and punitive-damages waiver).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/enforceability as to non-signatories/agency | Bray: Neither he nor the individuals signed the arbitration clause; non-signatories cannot be compelled | AAU: Bray and officers bound by membership/charter documents and agency/respondeat superior principles | Agreement valid and binding on Bray and defendants via membership/agency; arbitration enforceable |
| Scope — do Bray’s tort claims fall within arbitration | Bray: Tort claims stand apart from AAU policies and are not subject to arbitration | AAU: Clause is very broad ("all civil disputes"); claims arise from conduct in official AAU roles and tie to AAU sexual-misconduct rules | Claims factually intertwined with AAU policies and fall within arbitration scope |
| Illusory / mutuality (AAU may amend unilaterally) | Bray: No restriction on AAU’s amendment power makes promise illusory; no mutuality/consideration | AAU: Clause is part of broader membership contract; membership and continuing benefits provide consideration | Not illusory: underlying AAU contract/continued membership provides consideration; Bray accepted amended terms by conduct |
| Unconscionability — costs and punitive damages waiver | Bray: Florida forum and arbitration costs are prohibitive; bar on exemplary damages denies statutory remedy | AAU: No specific proof of prohibitive costs; severability can remove any unenforceable provision | Costs: Bray failed to provide specific evidence showing prohibitive/arbitration costs would deter suit — no unconscionability proven. Punitive-damages waiver: unconscionable and unenforceable; severed from agreement |
Key Cases Cited
- In re Rubiola, 334 S.W.3d 220 (Tex. 2011) (FAA arbitration-agreement existence and scope rules)
- In re Dillard Dept. Stores, 186 S.W.3d 514 (Tex. 2006) (arbitration clause scope can cover tort claims factually intertwined with contract)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (standard for proving valid arbitration agreement under state contract principles)
- In re Labatt Food Serv., L.P., 279 S.W.3d 640 (Tex. 2009) (review standard for denial of motion to compel arbitration)
- In re Odyssey Healthcare, Inc., 310 S.W.3d 419 (Tex. 2010) (consideration/mutuality and enforcement of arbitration clauses)
- In re Palm Harbor Homes, Inc., 195 S.W.3d 672 (Tex. 2006) (mutuality and underlying contract providing consideration for arbitration clause)
- In re Olshan Found. Repair Co. LLC, 328 S.W.3d 883 (Tex. 2010) (excessive arbitration costs can render clause unconscionable; burden to prove)
- In re AdvancePCS Health L.P., 172 S.W.3d 603 (Tex. 2005) (arbitration clause enforceable absent stand-alone illusory promise)
- In re Poly-Am., L.P., 262 S.W.3d 337 (Tex. 2007) (severability of unconscionable arbitration provisions)
- Halliburton Co. v. Ironshore Specialty Ins., 80 S.W.3d 566 (Tex. 2002) (savings clause and unilateral amendment concerns)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (intent of parties governs who is bound by arbitration agreement)
- Bridas S.A.P.I.C. v. Government of Turkmenistan, 345 F.3d 347 (5th Cir. 2003) (party intent controls who is bound by arbitration agreement)