Sun Fab Industrial Contracting, Inc. v. Eric Lujan, 361 S.W.3d 147

Sun Fab Industrial Contracting, Inc. provided Lujan with an employee handbook; the handbook includes a table of contents, an Introduction, and a separate Agreement to Arbitrate Claims on page 15; the handbook receipt signed by Lujan states the policies are not a contract and may be changed at any time; arbitration agreement signed on July 2, 2008 is a standalone, one-page document located after the handbook receipt.
Lujan filed an employment discrimination suit alleging termination after a workers’ compensation claim; Sun Fab moved to compel arbitration and stay proceedings based on the arbitration agreement.
Lujan argued the arbitration agreement is illusory because the handbook reserves unilateral right to modify the agreement without notice and the handbook and arbitration agreement were incorporated by reference.
The trial court denied arbitration, citing the handbook’s unilateral modification right as rendering the arbitration illusory.
The Court of Appeals reversed, holding the arbitration agreement is a valid, non-illusory standalone contract not incorporated by reference into the handbook; case remanded for further proceedings based on the arbitration agreement’s validity.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the arbitration agreement illusory due to unilateral handbook modification rights?	Lujan asserts the handbook grants Sun Fab power to alter the arbitration terms unilaterally.	Sun Fab argues the arbitration agreement is a separate stand-alone contract not modified by the handbook.	Arbitration agreement is not illusory; valid and separate from the handbook.
Does the arbitration clause incorporate or rely on the handbook?	Lujan contends the handbook's incorporation by reference makes the arbitration clause illusory.	Sun Fab contends the arbitration agreement is a stand-alone document, not incorporated by the handbook.	Arbitration agreement does not incorporate the handbook.
Are the terms of the arbitration agreement supported by consideration and enforceable?	Lujan argues consideration may be lacking if the agreement is illusory.	Sun Fab contends there is mutual consideration and the agreement is equally binding.	Arbitration agreement is supported by consideration and enforceable.

In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002) (arbitration promise non-illusory when not subject to unilateral modification)
In re Datamark, Inc., 296 S.W.3d 614 (Tex. App.—El Paso 2009) (absence of illusory terms where promise to arbitrate is enforceable)
In re 24R, Inc., 324 S.W.3d 564 (Tex. 2010) (manual not a contract; arbitration clause not illusory when not incorporated by reference)
In re U.S. Home Corp., 236 S.W.3d 761 (Tex. 2007) (mutual arbitration consideration sufficient to support agreement)
In re AdvancePCS Health L.P., 172 S.W.3d 603 (Tex. 2005) (stand-alone arbitration requires only mutual promise)