549 S.W.3d 226
Tex. App.2018Background
- Nathan and Misti Robinson sued Home Owners Management Enterprises, Inc. (HOME) (and Warranty Underwriters) for construction defects; the trial court compelled arbitration under a Limited Warranty and TRCC Addendum.
- The warranty’s arbitration clauses required binding arbitration under the FAA but were silent as to class arbitration and did not incorporate AAA or other industry rules.
- Nearly a year after filing and shortly before scheduled individual arbitration, the Robinsons sought to add class-action allegations against HOME about the company’s release practices.
- The arbitrator allowed the supplemental class claims to proceed but bifurcated them from the individual arbitration; individual claims were then arbitrated and resolved in the Robinsons’ favor.
- HOME moved in district court to prohibit class arbitration; the trial court ruled (after a nonevidentiary hearing) that (1) who decides whether class arbitration is available is a gateway question for the court absent clear and unmistakable delegation, and (2) the warranty does not permit class arbitration.
- The Robinsons appealed; the court of appeals affirmed, holding courts presumptively decide class-arbitrability when the contract is silent and that the warranty’s silence did not authorize class arbitration.
Issues
| Issue | Plaintiff's Argument (Robinsons) | Defendant's Argument (HOME) | Held |
|---|---|---|---|
| Who decides availability of class arbitration when contract is silent? | Arbitrator should decide because class-vs-bilateral is a procedural matter tied to arbitration procedures. | Court should decide because class arbitration is a substantive, gateway question absent clear and unmistakable delegation. | Court: gateway substantive question for courts unless contract clearly and unmistakably delegates to arbitrator. |
| Whether the warranty authorized class arbitration | Silence means no distinction; arbitration choice implies acceptance of class procedure. | Silence cannot be read to permit class arbitration; class arbitration requires explicit consent. | Court: warranty does not authorize class arbitration; silence insufficient to infer consent. |
| Whether incorporation of AAA rules (not present here) would delegate class-arbitrability | Robinsons argued general arbitration terms could imply delegation. | HOME noted no incorporation here; where AAA rule present, still may be insufficient for class issue. | Court: incorporation of AAA rules can sometimes show delegation, but here no incorporation and even incorporation may be insufficient for class issue without clear language. |
| Whether Wood (In re Wood) controls the outcome in Texas | Robinsons relied on Wood as precedent that arbitrator decides class issues. | HOME and court argued Wood relied on Bazzle plurality and subsequent Supreme Court decisions undermine that holding. | Court: Wood not dispositive given later Supreme Court decisions; follow modern federal trend reserving question to courts. |
Key Cases Cited
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010) (party cannot be compelled to submit to class arbitration absent contractual basis)
- Oxford Health Plans LLC v. Sutter, 569 U.S. 564 (2013) (arbitrator’s contractual construction stands where parties clearly and unmistakably delegated arbitrability to arbitrator)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002) (gateway questions of arbitrability presumptively for courts absent clear and unmistakable delegation)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (class arbitration differs materially from bilateral arbitration; FAA preempts state rule that effectively required class procedures)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (delegation of arbitrability requires clear and unmistakable evidence of parties’ intent)
- In re Wood, 140 S.W.3d 367 (Tex. 2004) (per curiam) (earlier Texas decision holding arbitrator decides class-certification issues under facts then-present)
- In re Labatt Food Serv., L.P., 279 S.W.3d 640 (Tex. 2009) (gateway arbitrability matters, including who is bound, are for courts absent clear delegation)