Nafta Traders, Inc. v. Quinn
339 S.W.3d 84
| Tex. | 2011Background
- Quinn, Nafta Traders' VP of Operations, was terminated for alleged business conditions-related reduction in force.
- Quinn sued for sex discrimination under the Texas Commission on Human Rights Act.
- Nafta's employee handbook required binding arbitration for employment disputes but did not specify governing law; it limited arbitrator authority and required a written opinion.
- Arbitration proceeded under AAA rules; arbitrator awarded Quinn back pay, mental anguish, special damages, attorney fees, and costs.
- Nafta sought vacatur under the FAA, TAA, common law, and handbook limitation clause; Quinn argued the agreement could not enlarge judicial review.
- Court of Appeals held the TAA precludes contracting to expand judicial review; Nafta petitioned for review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May parties contract to expand review of an arbitration award under the TAA? | Nafta argues the agreement expands review beyond statutory grounds. | Quinn argues such expansion is prohibited by the TAA and Hall Street. | Yes; TAA permits expanded review when defined by contract. |
| Does FAA preemption bar Texas-law expansion of review? | FAA allows contracting for broader review; Hall Street does not forbid expansion outright. | FAA preempts state-law expansion of review. | No; FAA does not preempt enforceable expansion under the TAA. |
| Is there a conflict between Hall Street and Volt regarding permissible review scope? | Volt supports state-law review flexibility; Hall Street restricts expansion under FAA. | Hall Street controls federally; Volt misreads FAA preemption. | Volt rationale remains applicable; states may permit expanded review absent clear contract to the contrary. |
| What is the proper standard and record for reviewing vacatur under the TAA when parties contract to limit arbitral authority? | Record should reflect challenged grounds; contract limits arbitral authority but not basic review. | Standard remains limited and requires preserved objections and adequate record. | Record sufficient for merits review on remand; standard aligned with contractual limits. |
Key Cases Cited
- Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (grounds for vacatur/modification exclusive under FAA)
- Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Jr. Univ., 489 U.S. 468 (U.S. 1989) (FAA preempts state-law barriers to arbitration agreements, not necessarily to all state procedures)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 563 U.S. 409 (U.S. 2010) (arbitration decisions require proper contract scope; exceptions for contract-based limits)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA preemption of state-unconscionability rules on class arbitration waivers)
- Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (U.S. 1985) (expedited enforcement of arbitration agreements; arbitration policy)
- Cable Connection, Inc. v. DIRECTV, Inc., 44 Cal. 4th 1334 (Cal. 2008) (state-law MERP review can apply to private arbitration; enforcement under terms)