In Re Poly-America, L.P.

He agreements patients. and POLY-AMERICA, L.P., Ind. and In re opined agreements generally that are such International, unless preventing at suicide ineffective Pol-Tex d/b/a part L.L.C., of an treatment inpatient GP, Poly-America Relators. that it “fool- plan. The stated was expert No. 04-1049. high a risk of expect patient ish” to con- comply with a “no-suicide” suicide of Texas. Supreme Court re- instructions post-release tract or other Aug. He lating prevention. explained to suicide debilitating depression “the effect of an processes” on a mental inhibits person’s ability “to self-control and

individual’s use

good judgment,” impulsive as Lance be at patient

suicidal such would violating any his promises

risk for about

post-release behavior. This would include

following providers’ terse instruction Wainwright’s

“[sjtay w/parents.” Justice

approach would attribute causation care

breach of mental health standard of mental patient undiagnosed

to the whose injury,

impairment very was the cause of clearly contrary

which is statute’s

intent. See Tex. Civ. PRAC. & Rem.Code 93.001(a)(2).

§ providers’ The release only a few of general-

Lance with words

ized instruction breached standard not be precisely

care because Lance could

expected to it. The follow cases Justice

Wainwright do con- support cites for not

cern mental whose patients with illness plans comply

abilities to with treatment substantially impaired. See

were Jackson Axelrod, (Tex.2007); 221 S.W.3d 650 (Tex. Smith, 845

Elbaor v.

1992). sum, agree I that the evidence do legally case insufficient or jury’s

injury support too attenuated to

findings, improperly or that case was

submitted, judg- would affirm the court and court

ments of trial not, I

appeals. Because the does Court

respectfully dissent. Harris, Godfrey

Erica Susman W. Enoch, L.L.P., Houston, T. Craig Win- Ross, PC, Austin, Poly- Adam Brian stead America, LP, Prairie, TX, Rela- for Grand tor. Fiddler, Law Office G. Scott

Scott of TX, Fiddler, P.C., Party for Real Houston in Interest. Londa, Ogletree Deakins

Jeffrey C. Houston, Stewart, P.C., Nash Smoak & Mross, Davis Bu- Audrey Elaine Munck P.C., Pittard, trus, & Kirk L. Durham Pattard, LLP, Dallas, Kelly, Peter Law M. P.C., Kelly, Houston Of Peter M. Office TX, for Amicus Curiae. opinion O’NEILL delivered the

Justice Court, in Chief Justice of the which JEFFERSON, HECHT, Justice Justice MEDINA, WAINWRIGHT, Justice GREEN, and Justice JOHNSON Justice joined. O’NEILL,

HARRIET Justice. a series of for requirements ments contain All parties. the arbitration between the case, In this the retaliatory-discharge claims must be asserted within a maximum employment employee’s contract contains from of year of one the occurrence the requires an arbitration the event which the claim Fees from arises. employee split up to a arbitration costs including associated but arbitration — amount, discovery, capped limits elimi- fees, not limited mediation the arbitra- punitive damages nates and reinstatement fees, fees, court reporter tors’ fees to and remedies available under Workers’ hearing secure a for a place —are Act, Compensation imposes other con- split parties, employ- between with the on ditions the arbitration process. We capped at gross compensa- ee’s share “the any must whether of decide or all these Employ- tion Employee earned and, are if provisions unconscionable earning ee’s month in twelve highest are, severability whether the contract’s to the prior months time the arbitrator right. preserves clause We issues award.” Each permitted his side is hold that trial court did not abuse its discovery: in- twenty-five limited forms in allowing discretion the arbitrator to as- terrogatories (including sub-parts), twen- unconscionability agree- sess the ty-five production inspec- requests for or fee-splitting discovery-limita- ment’s things, tangible tion of documents or provisions applied in the course of deposition one oral of no six more than arbitration. We further hold that the arbi- depo- hours. Parties not use written agreement’s provisions tration precluding admission; requests sitions or Compensa- remedies under the Workers’ agreement prohibits discovery of either are substantively tion Act unconscionable party’s financial information for the except However, and void under Texas law. employee’s earnings if seeks employee those are not to the integral lost back wages, pay, pay; front and/or overall parties’ intended to arbi- purpose aspects and all the arbitration and, disputes pursuant trate their to the Finally, deemed confidential. the arbitra- clause, agreement’s severability are sever- puni- tor stripped authority to award able from the remainder of the arbitration tive, damages, exemplary, liquidated or which agreement, we conclude is otherwise employment. to order reinstatement of Accordingly, conditionally enforceable. we December Luna suffered petition grant for mandamus. injury work-related neck when he acciden- tally pipe. Poly-Amer- hit his head on a I. Facts and ica’s doctor examined Luna company employment Luna Johnny began his spine diagnosed him with an acute cervical International, Poly- with Pol-Tex d/b/a Luna filed a injury. subsequently flexion L.P., America, in Upon October 1998. his compensation began workers’ claim and hiring, signed agreement Luna an to sub- receiving physical therapy. Approximate- claims or disputes” mit “all to arbitration. later, Luna work ly two weeks returned to later, Approximately years however, four Luna light Luna duty; on a release signed agreement an amended arbitrate previ- to pain continued to suffer and utilized substantially pro- that contained the same ously scheduled vacation time to recover agree- injury. by Both the being visions. 1998 and 2002 from After warned his that to provide governed ments doctor that he needed company (FAA). get the Federal Arbitration Act work and off of return to workers’ job, if his Additionally, agree- compensation keep §§ 1-14. he wanted to U.S.C. both of Review II. without restrictions Standard Luna returned to work return, January 10, Upon 2003. his on means proper is Mandamus was al- person noticed that another Luna of com review an order by which seek and he ready being position, for his trained In under the FAA. re arbitration pelling harass supervisor began that his claims Inc., Lancaster, Am. Homestar of later, his su- him. One month Luna told (Tex.2001). In In re Pa S.W.3d that to bother pervisor his neck continued lacios, “important that recognized we it is to the him and that he needed return consis law to be as for federal and state doctor; Luna day the next that company re in possible” as enforcement tent work, scheduled to he was fired. was under FAA. 221 provisions of view filed claims for asserting Luna this suit curiam) (Tex.2006) (per discharge sec- retaliatory unlawful under Root, Inc., Kellogg Brown & (quoting re (“the 451.001 of the Labor Code tion (Tex.2005)). Federal 166 S.W.3d Act”). Compensation Workers’ Lab. Tex. may compelling not review orders courts Poly- § Claiming 451.001-.003. that Code staying litigation (“eompel- malice, will, ill spite, America acted with orders”) by interlocutory appeal. and-stay injury, sought intent to cause Luna specific 16(b)(1) (“[A]n appeal § 9 U.S.C. of imposition reinstatement and the both interlocutory order taken from an not be sought punitive damages. additionally He stay of under granting any ... a action declaratory judgment the arbitra- title.”). Accordingly, 3 of this as Section agreement tion was unenforceable be- Palacios, inappro noted would be we cause, reasons, among provisions other its pow our own mandamus priate to exercise public policy violated were unconscion- feder inconsistent er in a manner Luna two able. submitted affidavits—his Palacios, practice. See al courts’ own, expert and that of witness—in re Although mandamus 565. Poly-America of his re- support claims. in federal courts generally view is available sponded compel with a motion to arbitra- interlocutory rul non-appealable review which, court hearing, after a the trial excep only in ings, granted mandamus is granted. generally tional cases. See Gulfstream Mayacamas Corp., 485 sought Aerospace Corp. Luna a writ of mandamus in the 13, 108 n. appeals, reasserting argument 288-90 & S.Ct. court his U.S. (1988) that, where a agree- (holding of the arbitration L.Ed.2d manda substantively appealable, is not particular ment were unconscionable. order that, appropriate and “willbe appeals light The court held mus available cases”). acknowledged As we fee-splitting provisions exceptional and limitations Palacios, remedies, applied have federal courts the arbitration on that cannot be substantively template to orders was unconscionable. whole FAA, although they Poly-America appealed under mandamus relief. grant hold that almost never sought review in this Court. We (“Even Tree that at 565-66 after Green agreement’s provision the arbitration Randolph, Corp. the v. remedies under [Financial eliminates available —Alabama 513, 148 79,121 L.Ed.2d 373 Act S.Ct. is unenforcea- 531 U.S. Compensation Workers’ (2000)], held that the Fifth Circuit has ble, provision that severable but we find stay order mandamus review an agreement as a whole federal from the arbitration may still be a case for arbitration conditionally grant Poly-America’s ing and a party ‘particularly if can meet a available writ of mandamus. heavy1 ‘clearly mandamus burden to show that review of an order [mandamus com- indisputably and that the pelling district court did be available arbitration] [but] pro- satisfy not have has stay the discretion the McDermott failed to de- [the] standard.”).1 ”) ceedings manding pending (quoting arbitration.’ China, B.V., Apache Corp. Bohai v. Texaco Although precedent federal in (5th 307, Cir.2003)). 330 F.3d 310-11 This clear, uniformly appears this area is not general broadly applied rule has been permitted a federal court would be —al unappealable ancillary interlocutory orders compelled beit not address the merits —to see, FAA, proceedings e.g., under the arguments of the mandamus this case. Georgiou Exploration v. Mobil Prod. & If such review categorically were unavail Sews., U.S., 538, Inc. 190 F.3d 1999 WL unconscionability able and determinations (5th 1999) (dis- 27, July 642871 at *3 Cir. arbitrators, the sole realm of as the dis missing appeal litigation of order staying Justice senting proposes, development of in favor of arbitration proceeding for- as to issue the law this threshold would forum, eign denying and mandamus be- substantially if not precluded be hindered plaintiffs cause carry “particu- failed to Nevertheless, altogether. prece federal larly heavy burden” to warrant mandamus against granting dent counsels relief un order); relief from such Inc. v. Cofab stringent requirements less the for man Bd., Amalgamated Clothing Phila. Joint Gulfstream, are met. damus See Union, AFL-CIO-CLC, & Textile Workers 289, 1133. U.S. 108 S.Ct. Federal (3d Cir.1998); F.3d ap- only grant upon courts demon mandamus pears compel-and-stay to also or- apply indisputable” of a “clear stration 16(b)(1), Douglas ders under section see v. “First, right to issuance of the writ: (9th Court, U.S. Dist. 495 F.3d seeking the of the party issuance writ Cir.2007) (granting mandamus relief from adequate have no other must means to order); Nagin, compel-and-stay Manion v. Second, attain the relief he desires.... Cir.2001) (8th 255 F.3d & n. 4 538-40 satisfy petitioner must the burden of (dismissing interlocutory appeal various showing right that his to issuance of the orders, including compelling order arbitra- writ Third ... indisputable. is clear tion, and mandamus Man- denying court, because issuing in the exercise of its “any discretion, ion had showing not made that he must be satisfied the writ extraordinary such [was] entitled to re- under appropriate the circumstances.” lief’); Court, Inc. McDermott v. Underwrit- Cheney U.S. Dist. 542 U.S. Int% Lloyds Subscribing 380-81, ers at to Memoran- 124 S.Ct. 159 L.Ed.2d 459 (2004). dum Ins. Our No. F.2d own mandamus standard is (5th Cir.1993) (“This similar, recognized requiring court a demonstration that has 1. While it that several cases of the is true of these enforcement pre-date Supreme plaintiffs vindicating Court’s decision prevent the from would Tree, they pre-date authority Manion, Green do not statutory rights. important Supreme noting on which the Court relied in 535; Int’l, Inc., F.3d McDermott 981 F.2d stay- compelling that an order arbitration and Douglas, granted Circuit the Ninth ing dismissing underlying rather liti- than relief, concluding that a mandamus choice-of- gation appealable.” U.S. “would not provision in law the arbitration (citing at 87 n. S.Ct. 513 U.S.C. agree- would not allow enforcement 16(b)(1)) added). § (emphasis Unlike ment under circumstances forum case, present the two cases in which the Douglas, deem state would unconscionable. compel- courts denied mandamus relief from F.3d at 1068. 495 and-stay did not involve claims that orders

347 applicable contract law of the clearly general abused its discre- the trial court L.P., Health 172 state. In re AdvancePCS by failing correctly analyze ap- to or tion (Tex.2005) 603, (citing First 606 and a that the ply the law determination 514 Chicago, Kaplan, Inc. v. Options the detri- outweigh of mandamus benefits of 1920, 938, 944, L.Ed.2d 115 S.Ct. 131 U.S. remedy appellate that an is ments such (1995)). validity of determining the 985 re Prudential Ins. inadequate. See In FAA, to under the (Tex. agreement an arbitrate Am., 124, 135-36 Co. of apply governing first state law courts must 2004). arbitration is intended to Because 2;§ contract formation. See U.S.C. lower-cost, expedited means provide 514 U.S. at 115 S.Ct. Options, First disputes, proceedings mandamus resolve often, always, par- deprive if not the will agreement’s

ties of an intend- Supreme The States United order compel-and-stay ed benefits when repeatedly emphasized that Court has issue; accordingly, courts should be is at law, judi legislative whether of “state these stan- hesitant to intervene. With determina origin, applicable [to cial is mind, compel-and- turn to the dards we validity agreement of an tion of stay order this case. govern if that law arose to issues arbitrate] validity, revocability, concerning Unconscionability III. and the enforceability generally.” of contracts Federal Arbitration Act Thomas, 9,n. Perry v. 482 U.S. Poly-America that argues (1987). 107 S.Ct. 96 L.Ed.2d favoring “strong presumption” FAA’s arbi Thus, arbi “may not ... invalidate courts case, tration further applies appli agreements tration under state laws preempts more that the FAA all state Doc only provisions.” cable to arbitration public-policy grounds finding for Casarotto, Assocs., Inc. v. 517 U.S. tor’s agreement to arbitrate unenforceable. See 681, 687, 116 S.Ct. 134 L.Ed.2d Specialists In re R R Personnel & (1996); at 493 n. Perry, see also 482 U.S. (Tex. Inc., Tyler, (“A principle state-law S.Ct. FAA App. Tyler2004) (holding that meaning from the precisely that takes its — preempts “any public policy underlying the to arbitrate is at issue fact that a contract 2].”). statutes that compensation Texas workers’ comport not with [section does contrary enforceability to the of arbitra However, and lan purpose agreements”). Because neither this require only agree FAA guage of the presumption preemption ap nor federal placed “upon ments arbitrate plies in a court’s assessment state as other contracts.” Doctor’s footing same a valid have entered into parties whether Assocs., U.S. at 116 S.Ct. un agreement and enforceable to arbitrate Co., 417 (quoting Scherk v. Alberto-Culver law, disagree. state contract we der 506, 511, 41 L.Ed.2d 94 S.Ct. U.S. (1974)) added); also (emphasis see provides 2 of the FAA

Section Rep. (1924) 68-96, valid, (noting at 1 No. agreements “shall be H.R. that arbitration 2, Congress irrevocable, enforceable, by enacting section upon save to arbitrate sought place agreements equity as exist at law or in grounds such contracts, footing as other “upon the same any contract.” the revocation added). Thus, belong[]”). Perry makes [they] (emphasis § 2 where U.S.C. fashion courts under the clear that state to arbitrate is valid enforceability regarding rules special requirements FAA if it meets the 348 Unconscionability per Perry, se. IV. Arbitration and

of arbitration contracts See Texas at 492 n. 107 2520. Fur- Under Law 482 U.S. S.Ct. thermore, an contract to once enforceable A. General Standard found, strong is there is a federal arbitrate Agreements disputes to arbitrate in presumption favor of arbitration such employers employees between waiver, myriad scope, doubts—as to law; generally under Texas enforceable relating issues not to enforce- and other unconscionable nothing per there is se ability in favor of arbi- be resolved —must agreement employ an to arbitrate about Bank, See, e.g., In re tration. FirstMerit and, fact, disputes ment in Texas law has (Tex.2001); Prudential S.W.3d historically to resolve agreements favored Marshall, 898- Sec. Inc. v. S.W.2d disputes by such arbitration. See Advance (Tex.1995). However, a state court PCS, 608; EZ Corp. at Pawn S.W.3d initially through must the neu- determine — Mandas, (Tex.1996); v. S.W.2d application tral of its own contract law— Goodwin, & Cantella Co. exists whether enforceable (Tex.1996). 943, 944 instance, “general- in the first and whether contracts, Unconscionable ly may ... applicable contract defenses relating however—whether to arbitration agree- applied to invalidate arbitration or not—are unenforceable under Texas policies contravening” ments without if, “given law. A contract is unenforceable Assocs., at of the FAA. Doctor’s 517 U.S. parties’ general commercial back case, 687,116 Thus, in this if a S.Ct. 1652. commercial ground and the needs restricting limiting damages contract case, in particular trade or the clause Com- other remedies under Workers’ that it unconscion volved is so one-sided is Act unenforceable pensation generally existing under able the circumstances law, under Texas an arbitration contract parties made the contract.” when same limitations will also be with these Bank, 757; at see FirstMerit unenforceable. Co., also In re Halliburton 80 S.W.3d

Nevertheless, under Texas (Tex.2002) (“[S]ubstantive unconscion- law, contract, any agree as other with ... fairness of the ability refers to the grounds are valid unless ments to arbitrate itself.”). provision arbitration Unconscion- in revocation of equity exist at law or a ability light is to be determined agreement. proving The burden of factors, variety prevent which aim to fraud, ground such a unconscion- general, unfair oppression surprise; —such ability public policy- or voidness under if found unconscionable contract will be party opposing on the the contract. falls Dan B. Dobbs, grossly it is one-sided. See Bank, (2d FirstMerit ed.1993); Remedies Law of Thus, reject Poly-America’s as while we see also Restatement (Second) of Con presumption (1979) (“The apply sertions that we must § determi cmt. a tracts favoring assessing whether or is not nation that a contract or term is entered into an enforceable parties light in the of its unconscionable is made that the agreement under Texas law and fac setting, purpose, and effect. Relevant public policies contracting preempts FAA Texas tors include weaknesses specific more provisions make certain contractual like those involved in process fraud, unenforceable, capacity, Luna neverthe rules as to contractual generally causes; also invalidating policy the burden to establish that the other less bears particu rules which render challenged overlaps are unenforceable.

349 exclude certain federal intent to on sion of bargains or terms unenforceable lar arbitration, see claims from categories of Although not public policy.”). of grounds Corp., Lane definition, Gilmer v. subject doctrinal see precise to Interstate/Johnson 1647, 114 20, 26, 111 S.Ct. 500 U.S. DeLanney, v. 809 S.W.2d Bell Tel. Co. Sw. (1991), waiver or the excessive (Tex.1991) J., L.Ed.2d 26 (Gonzalez, 493, concur 498 Mitsubishi, 473 rights, see by statutory of unconscionability delineated ring), —as 3346, a 628, may render 105 S.Ct. U.S. at recognized been principles the above —has un-arbitrable. State dispute by particular for well over a applied this Court Pearson, courts, FAA under the su- See, by the e.g., Flanagan v. bound century. clause, power, 302, (1884); have more limited premacy v. 61 Tex. 307 Fowler Stone urn, 478, (1854); spe- state laws that Hemming preempts v. as the FAA 11 Tex. 493 Zimmerschitte, Perry, 482 159, (1849); cifically arbitration. disfavor Tex. 2520; Townsend, n. see Jack at 492 S.Ct. Luckett v. 3 Tex. U.S. (1848). Anglin Tipps, B. Co. v. 842 S.W.2d (Tex.1992) FAA (holding that contrary a contract is Whether the extent preempts state statutes to at the public policy to or unconscionable purpose are inconsistent with the FAA’s question time it is formed is a of law. compel arbitration when require courts Walton, LLP v. Hoover Slovacek in their con- parties provided have so (Tex.2006). Because a tracts). trial court has no discretion to determine However, a waiv particular is incorrect where apply what the law or the law analyze provi er of remedies or other ly, properly its clear failure to substantive apply unconscionability consti sion of a contract is unconscionable—inde law of agreement to pendent an of of the arbitrate —it tutes abuse discretion. See Walker Packer, (Tex.1992). though included will be unenforceable even Gilmer, agreement in an to arbitrate. See Statutory Rights B. Arbitration and (“[Arbitra at 111 S.Ct. 1647 500 U.S. enforceable, agreements ‘save agreement An arbitration cov as at law or upon grounds such exist ering statutory long claims is so as valid any con for the revocation of equity the arbitration does not waive 2). ”) § To deter (quoting tract.’ U.S.C. rights the substantive and remedies the permissibility of restrictions on mine the proce statute affords and the arbitration statutory worker’s access to particular fair, employee dures are such analyze provisions rights, we “effectively statutory rights.” his vindicate issue; thus, analyze actual at statute Halliburton, In re 80 S.W.3d at 572. Fed enforceability of the various restrictions courts, enforceability analyzing eral employment contract and waivers relating to federal provisions case, turn to the retaliato issue we claims, that such con statutory have noted the Texas ry-discharge party tracts are not enforceable when Act, Tex. Lab. Compensation Workers’ af “forgo rights forced to the substantive §§ 451.001-.003. Code statute,” opposed forded merely “submitting] to resolution an Purpose of the Tex- and Structure C. arbitral, judicial, rather than a forum.” Compensation Act’s as Workers’ Corp. Chrys Motors v. Soler Mitsubishi Anti-Retaliation Provisions Inc., 614, 628, 105 ler-Plymouth, 473 U.S. (1985). Compen Texas In the The Workers’ 87 L.Ed.2d S.Ct. claims, protect enacted to Texas expres- sation Act was of federal either context employees. good workers and Fid. & Cas. Co. sation claim in faith.” Tex. Lab.Code .001(1). McLaughlin, § N.Y. v. 134 Tex. The Legislature’s pur- 451.001— (1940). 955, enacting Legis- pose The Texas section 451.001 was to lature original protect persons enacted the Workers’ Com- entitled to benefits under pensation response prevent Act in 1913 in to the Act and being the them from who, a despite growing discharged seeking needs of workers for to collect those accidents, Douglas, incidence of industrial were in- benefits. Tex. Steel v. Co. 111, creasingly being recovery. Kroger denied (Tex.Civ.App.-Fort 533 S.W.2d n.r.e.). 347, (Tex.2000); 1976, Keng, Co. v. 23 S.W.3d writ ref d Worth Since recov- Compensation ery Tex. Workers’ v. Comm’n of benefits under the Workers’ Com- (Tex.1995). Garcia, 504, pensation 893 S.W.2d Act the remedy exclusive In compensation injured order to ensure for in- available to employees subscrib- jured employees protecting employ- ing while employers, see Tex. Lab.Code 408.001(a), § from litigation, Legis- availability ers the costs of of remedies provided lature retaliatory discharge protects mechanism which for employ- workers subscribing statutory rights could recover from ees’ exercise of their employers regard compensation without to the workers’ under the Act. See Padilla v. negligence, Kroger, Conditioning, own see 23 S.W.3d at Carrier Air 67 F.Supp.2d 351, (E.D.Tex.1999); limiting employers’ exposure while Mid-South Bot- uncertain, possibly high damage awards tling Cigainero, Co. v. 799 S.W.2d denied). law, permitted (Tex.App.-Texarkana under the common see Reed writ In Copelin, principles, Tool Co. v. 689 S.W.2d accordance with these (Tex.1985). light of the purposes provisions anti-retaliation of the Act must whole, Compensation Act protect employees Workers’ even before have claim, actually policy “[i]t is the settled of this State to filed a because otherwise liberally completely construe of the ... “the law would useless [l]aw, in purposes accomplish purpose order to effectuate the would not it employ- for which was enacted.” v. S. which it was enacted.... [A]ll Huffman Underwriters, 133 Tex. 128 S.W.2d er would have to do order avoid the (1939) (citations omitted). consequences As we have of the statute would be to “[bjecause noted, recently injured we should lib- fire the workman before he filed Co., erally Compensa- construe the the claim.” Tex. at Workers’ Steel 533 S.W.2d injured worker, tion Act in favor of the a 115. strained or narrow construction of [the not “The decisions of this State do Moreover, improper. Act] would be upon waiving look with favor contracts injudicious

would be to construe the stat- rights arising under the Com Workmen’s by implica- supplies ute a manner that Huffman, pensation Law.” 128 S.W.2d rights employee’s tion restrictions on an only waivers affect not the individ Such plain that are not found in ... lan- [the] waiver, subject employee ual to the but guage.” at 349. Kroger, 23 S.W.3d public, also the which bears the cost of the compensation program. See Holt Compen

The Texas Workers’ workers’ (2d Inc., provides Group, sation Act that a subscriber to v. Cont’l 708 F.2d Cir.1983) (“A retaliatory compensation system may discharge the workers’ not carries employ “discharge any or in other manner dis with it the distinct risk other protecting ees be deterred from their against employee criminate because Act.”). Therefore, we employee compen- rights ... filed a workers’ under the has they improperly shift whether purport contracts that to determine have invalidated subscribing em- obligations injury un from a employers relieve of their the cost of Act. See in contravention Compensation employees der the Workers’ onto its ployer Co., Packing v. Calhoun v. James Vernon Lawrence provisions. of the Act’s Cf. (Tex.1973) 160, 162 (Tex. (noting that Servs., Inc., CDB much the idea impressed 2001) “[w]e agreements did (noting that large public is a element of there on-the-job injuries to the “shift the risk [the interest in the administration Gentry Superior employees”); see also Act]”); Hazel Compensation Workers’ 456, Court, 443, Cal.Rptr.3d 64 Cal.4th Co., cert, v. Mandrell Indus. 596 S.W.2d wood (2007), 782, de- 773, P.3d 556 204, — (Tex.Civ.App.-Houston [1st Dist.] 1743, -, 128 S.Ct. nied U.S. n.r.e.) (“If 1990, ... writ refd balance (2008) that under Cali- (noting L.Ed.2d by tipped the is so that [established Act] law, by employee is bound fornia when employee’s benefits under the statute agreement to ad- predispute arbitration reduced, substantially the clear intent are statutory employ- judicate nonwaivable thwarted.”). legislature of the is We have agreement rights, ment the arbitration that likewise held unenforceable contracts discovery damages, limit must liability, explicitly employers relieve of tort claim, there must sufficient to arbitrate relying prohibitions on common either law decision, and the arbitration be a written contracts, v. against such see Barnhart pay “unique must all costs employer Tex., 107 City Ry. Kansas M. & O. Co. of arbitration”). 176, (1916), upon Tex. or 184 S.W. Act, Petro Compensation the Workers’ see Challenged The Arbitration Y. Smith, leum Cas. Co. v. 274 S.W.2d Provisions (Tex.Civ.App.-San Antonio writ refd) (noting right “[t]he work of Remedies A. Limitation compensation statutory, men’s and can Compensation The Workers’ abridged by private agreements not be or who violates special applications employment”); specifies person for Cle- Act that “[a] venger Burgess, v. reasonable 31 S.W.2d section 451.001 is liable for refd); (Tex.Civ.App.-Beaumont writ as a damages by employee incurred Employers Peppers, Tex. Ins. Ass’n v. violation,” em and that “[a]n result of the (Tex.Civ.App.-Galveston in violation of section ployee discharged dism’d) (“[T]he will not writ courts in the to reinstatement 451.001 is entitled express enforce contracts which are either employment.” of position former Tex. Lab. ly impliedly prohibited by or the [Workers’ 451.002(a)-(b). previous § haveWe Code Act.”). Compensation] damages” ly explained that “reasonable see Azar damages, are not limited to actual validity concerns the of a sub-

This case Caille, 667, 669 Nut v. 734 S.W.2d Co. scribing employer’s agreement of an use (Tex.1987), may include future dam but that, requiring in the arbitration course exemplary punitive as ages, as well dis- parties between the work-related employ it is shown that the damages when putes, imposes procedural series retaliating actual malice in er acted with employee’s rights. limits on the substantive filing a workers’ against employee limita- analyze challenged must We Cont’l compensation claim. See underlying light policies tions Coffee Prods, Cazarez, 444, 454 Act, pur- Compensation Workers’ Bomer, (Tex.1996); Carnation Co. v. provisions, anti-retaliation poses its (Tex.1980). key provisions eliminating 454-55 The arbi- reme- under the agreement tration this case eliminates dies statute are unenforceable. types two of remedies available under the agreement An cover arbitration anti-retaliation of the Workers’ ing statutory long claims is valid so Act, Compensation prohibiting the arbitra- “the agreement does not waive ordering tor from reinstatement or award- rights substantive and remedies of the ing damages. punitive Tex. Lab.Code procedures statute and the arbitration (providing § 451.002 for reinstatement and employee may effectively fair so that the damages). an award of reasonable Luna statutory rights.” vindicate his re “ contends these limitations render the Halliburton, ‘[B]y 80 S.W.3d at 572. and unenforcea- unconscionable claim, a agreeing statutory to arbitrate a they prevent ble because him from effec- party forgo does not the substantive tively vindicating statutory rights his statute; rights only afforded arbitration, undercutting thus the basic as- arbitral, in an submits to their resolution Gilmer, ” sumptions of the FAA. See 500 Gilmer, judicial, rather than a forum.’ at that (noting U.S. S.Ct. at (quoting U.S. S.Ct. 1647 claims under other federal are statutes Mitsubishi, at 473 U.S. S.Ct. appropriate long for arbitration so as the 3346). case, Poly- In this Luna contends litigant effectively any can vindicate statu- America acted with actual malice in un tory rights). appeals agreed The court of him, a for lawfully discharging claim with Luna. 175 at 323-24. Al- S.W.3d Compensation which the Workers’ Act al though up- it noted other courts’ decisions damages. punitive lows Tex. Lab. waivers, holding punitive-damages id. at 451.002; Co., § Azar Nut Code preclusion and further that noted Permitting employer at an statutory always por- remedies contractually statu to absolve itself id., unconscionability, tend the court held tory remedy would undermine the deter preclusion that the of remedies here inter- purpose Compensa rent of the Workers’ ability to his retal- bring fered with Luna’s provisions. tion Act’s anti-retaliation claim under the iatory-discharge Workers’ creating Compensa the Texas Workers’ Act thus to- Compensation weighed Act, carefully bal Legislature unconscionability, ward the contract’s id. employees anced interests —of competing subject injury, employers, to the risk of Poly-America argues that the court of to attempt and insurance carriers —in Pony with appeals’ decision conflicts Ex- system, all design compensation viable Morris, press v. Corp. Courier within constitutional limitations. See Gar (Tex.App.-San no Antonio cia, at 521. we to en 893 S.W.2d Were writ), and decisions of other courts indicat- permit Poly-America’s position dorse per- ing that limitations of remedies limitations, remedy enforcement of these missible, e.g., Inv. Partners Glamour could avoid the subscribing employer Inc., Licensing, F.3d 318 n. Shots penalties by conditioning employ Act’s (5th Cir.2002). Because we view the upon very provisions ment waiver of the anti-retaliation of the provisions Workers’ have designed protect employees to who legis- Act as a non-waivable Compensation subject wrongful retaliation. been the necessary to system lative for deterrence Lawrence, 44 S.W.3d nondiscriminatory opera- and effective Our decision fully with this view. Compensation tion of the Texas is consistent Workers’ whole, There, non-subscribing em- employees Luna of a system agree as a we with specifical- Act hired, a claim—that the is elected, making to after were ployer employer. shift onto the plan ly designed to employer in an benefit participate by the Act is thus established injured employees with The balance provide that would employee’s benefits so that “tipped in lieu of common law specified benefits substantially re- the statute are at 545-46. refused to under remedies. Id. We duced, legisla- intent of the the clear public-policy [and] on void Hazelwood, 596 S.W.2d discerning legislative “no clear ture is thwarted.” grounds, refused to prohibit agreements previously such as at 206. As we have intent allow sub- empha- agreements Id. at 545. presented.” private those We enforce participation reap system’s in the workers’ scribing employers sized voluntary for compensation program employees burdening while benefits Texas, ill employers in and that courts are injury, so too we find the the cost of equipped weigh whether a non-subscrib- present of the contract —which particular plan benefits ing employer’s liability Poly-America’s limit substantively purposes undermine the would thereby un- wrongful retaliation and at Compensation Act. See id. Workers’ Legisla- regime the deterrent dermine specifically was tai- 551-53.2 Our decision Texas specifically designed protect ture non-subscribing employers lored to who Tex. under Texas law. See workers —void participate elected not to the workers’ Holt, Steel, 115; F.2d at compensation program. Importantly, we 91. im-

distinguished involving cases contracts Fee-Splitting B. Provision em- posed employment, as a condition of that phasizing “[t]he distinction between agreements provide The arbitration a employment requires an contract that claim, that, of a all fees relat- in the event prospective employee, as a condition limited including but not ed to arbitration — receipt employment, or retention of to fees, fees, mediation the arbitrators’ to ... agree employer’s liability to limit the hearing, a location for a procuring costs of voluntary a insurance occupational split fees—will be reporter and court has the program, employee which the employer the and the em- equally between option to enroll ... is decisive.” Law- employee’s contribution ployee, with rence, 44 at Brito (quoting equal gross amount to “the capped at an Inc., Sens., F.Supp. Intex Aviation Employee in compensation by earned (N.D.Tex.1995)) (citing Clevenger, in the highest earning month Employee’s Barnhart, 678; at 184 S.W. at time the arbi- prior months to the twelve 176)). The court of trator issues his award.” “weighted] just liability- provision a held that this presents appeals This case such finding of substantive heavily as a condition toward limiting provision, imposed unconscionability.” at 322. suggested in employment, which we that this was clear Poly-America argues public policy. Lawrence would violate See first, appeals because the court of subscribing allow error: id. Such waivers would Luna could not inferred that enjoy improperly to the Act’s limited-liabili- employers solely likely arbitration costs based exposing workers to ex- afford ty benefits while second, and, be- injuries paid subjective for on evidence actly the sort of costs—of to the compare to such costs cause faded employee for fear of retribution Legislature, exercising policy- plans. Tex. Lab.Code its lawed such 2. The Texas role, 406.033(e). immediately § making responded and out- summarily, Luna re- be decided we expected litigation.3 costs arbitration sponds Poly-America that it was that in- unlikely legislature think it that the present compara- failed to evidence of the following tended the issue to be resolved litigation tive cost of and that the evidence evidentiary hearing a full in all cases. objec- presented was sufficient to allow an hearing that We also envision likely tive determination that the costs of compel which a motion to arbitration is beyond arbitration were Luna’s financial ordinarily applica- would involve decided begin evidentiary means. We with the tion of terms of arbitration challenge. facts, undisputed amena- proof by ble to affidavit. With these Evidentiary Challenge mind, considerations we hold

Poly-America claims that may summarily trial court decide wheth- appeals, by crediting court of Luna’s factu compel er to on the basis of arbitration concerning al financial ina allegations his affidavits, pleadings, discovery, stip- costs, bility improperly to share arbitration However, if the material facts ulations. applied evidentiary a new standard that necessary determine the issue require parties seeking compel will all controverted, by opposing an affidavit or engage expensive discov evidence, trial otherwise admissible ery resisting party whenever submits evidentiary hear- court must conduct cursory subjective evidence that arbi ing disputed to determine the material tration costs are “unaffordable.” This evi- facts. burden, dentiary Poly-America argues, is only presented Luna Id. Because the facts contrary policy sup to Texas law and compel were uncontro- on the motion to ports summary disposition of motions to affida- verted under this standard —Luna’s compel response, Luna arbitration. original accompanying petition vits his upon the court of contends the facts which challenged nor were neither contradicted relied could have been controvert appeals Poly-America’s response in believe —we cross-examination, by ed affidavit or which in appeals properly the court of acted do; Poly-America consequently, failed to appeal. those on crediting facts appeals ruling the court of based its on the his original petition Luna’s af Luna attached to his undisputed facts established parties Anglin, expert Both cite 842 own affidavit and that of an witness fidavits. support respective likely at to their providing detailed estimates There, case, proper positions. we defined the in Luna’s cost of arbitration court agree- circumstances under which a trial under the expected Luna’s share evidentiary hearing full on a provision should hold a based capped fee-splitting ment’s compel to arbitration: salary (approximately motion monthly on his $3,300.00) Poly-America supervisor. aas main of arbitration Because the benefits anticipated Luna his share expensive dispo- described expedited lie in and less money “way more legislature the arbitration costs dispute, sition of a afford,” that, if and averred he compel that a motion to than I can has mandated Lawyers Manage- Trial Association likewise Society for Human Resource The Texas 3. The Luna, supporting an ami- submitted an amicus brief ment Texas State Council submitted arguing unconscionability be de- supporting Poly-America's argu- that should cus brief ments, by comparing general arguing appeals “the financial the court of termined peer group” to compare alleged condition of the claimant’s wrongfully failed to Luna’s litigation. arbitration costs. prospective with the cost of estimated costs satisfy requirements of pay had to such an amount to have his not this Court’s determined, support claims of “specific” claim he would be unable to evidence pursue against company claim un- unconscionably expensive his arbitration. See attorney willing Corp., he could find an less In re U.S. Home (Tex.2007). However, pay ap- those fees. Luna recounted that he the court of attempted attorneys, solely had to retain two but Luna’s peals upon relied not belief represent had him on a mon- upon expert’s specific refused but his and his estimates, contingent-fee objective basis etary provided because of the arbitra- which agreement. support for Luna’s uncontroverted claim preclude costs his that arbitration would Poly-America dispute did not these facts pursuit of the lawsuit. See 175 S.W.3d in legal arguments plead- but asserted its not, appeals 319. The court of did there- ings provisions, that the cost as written or fore, subjective rely solely on and incontro- as applied, were not unconscionable under allegations. vertible At hearing Texas law. on its motion to compel, Poly-America again only asserted Unconscionability Fee- legal in arguments response to Luna’s Splitting Provisions challenge to cost-splitting provision. Poly-America alternatively challenges There is no indication in the record that appeals’ the trial the court of conclusion that court discredited or otherwise agreement’s viewed the cost-allocation fa- facts recited Luna’s affida- insufficient; rather, finding unconscionability vits as vor a because on the basis of Poly-America’s the court did not consider the relative legal arguments, the trial likely that Luna incur if granted court the motion to costs would compel. This that, disposition litigated was case were court —costs consistent with our state- estimates, Poly-America’s based on Anglin ments which we indicated that would compel greatly capped motions to should exceed the cost of arbitra- be decided sum- marily disputed provide any unless fact tion—and Luna failed to evi- issues of re- quire a full the actual cost evidentiary hearing. dence of of arbitration See id. Although he would bear. we have no However, appeals clearly the court of fee-splitting provisions doubt that some differed from the trial court in its view of may operate discourage like employees the law. It held that the trial court’s seeking Luna from vindication of their granting compel light of the motion to —in rights Compensation under Workers’ of inability Luna’s averred to afford his Act, Poly-America agree we must with likely agree- arbitration costs and the that the trial court did not abuse its discre- ment’s other limitations —was an abuse of in in case. ordering tion this doing discretion. 175 at 318-20. so, appeals properly country the court of credited have Courts across the univer- undisputed sally fee-splitting facts contained in Luna’s the use of condemned expected agreements employment affidavits as to the total cost of in contracts that anticipated deterring potential arbitration and Luna’s share have the effect of liti- upon pre-termination monthly statutory based his gants vindicating from their at Poly-America rights income. Id. 319-20. an arbitral forum. See Green Tree, 90-91, appeals contends the court of at improperly 531 U.S. S.Ct. subjective, gone ruled based on Luna’s and thus have so far as to find Some courts incontrovertible, practically fee-sharing agreements per that he unenforceable belief arbitration, See, Int’l e.g., could not afford which does se. Cole v. Bums Sec. (D.C.Cir. rests, Seros., initially, party at least with 105 F.3d 1483-85 1995), Halliburton, opposing arbitration. at cited in 80 S.W.3d 572; Mgmt. Shankle v. B-G Maint. Stores, Inc., City Morrison v. Circuit of (10th Colo., Inc., 163 F.3d 1233-35 (6th Cir.2003); accord F.3d 659-60 Cir.1999); Computer v. Avnet Paladino Sys., v. Rockwell Semiconductor Bradford (11th Techs., Inc., 134 F.3d (4th Inc., Cir.2001); 238 F.3d Cir.1998). that “an These courts reason Pierce, Lynch, v. Merrill Fen Rosenberg required, can never as a con- employee (1st be Smith, Inc., ner 170 F.3d & pay to an arbitra- employment, dition of Cir.1999). compensation in order to secure the tor’s magnitude Luna of contends statutory of claims.... [TJhis

resolution he could incur under the arbitra the fee surely bringing deter the of arbitra- would to be agreement, tion which he estimates tion and constitute a de forfeiture facto $3,300, him from high prevent as will Cole, 1468; statutory rights.” 105 F.3d at Poly-America claim. coun pursuing his (“Such Shankle, F.3d at 1235 a accord would be much litigation ters that costs clearly result undermines the remedial and therefore the arbitration higher, ... anti-discrimina- deterrent functions of cost-splitting provision agreement’s capped laws.”). un employee and cannot be benefits in evaluating It is true that conscionable. agree fee-splitting

We provi enforceability fee-splitting an em operate prohibit sions, courts take into account some fully effectively vindicat ployee from litiga versus relative costs of arbitration ing statutory rights are not enforceable. See, at 556 e.g., Bradford, tion. 238 F.3d Halliburton, How 80 S.W.3d at 572. expected (focusing upon n. 5 “a claimant’s ever, majority joins this of other Court ability to or actual arbitration costs and his though recognizing courts which— costs, against measured base pay those articulated courts policy same concerns expected line of the claimant’s costs arrangements per se holding fee-splitting ability pay those litigation and his require some evidence unconscionable— costs”). However, stage at likely will incur complaining party that a nec much of this evidence is proceedings, an amount as to arbitration costs such essarily speculative, and thus counsels statutory rights deter enforcement of interference with against a court’s ex ante Corp., forum. See U.S. Home the arbitral arbitration. Bank, 764; FirstMerit federal courts have at 756-57. As that arbitration costs We do not doubt recognized: likewise case as to might high given so forum. But “the cases, preclude incur- access to the potential some [I]n will be saddled [a claimant] will ‘risk’ that ring large arbitration costs and fees justi- speculative is too litigants seeking prohibitive from costs potential deter agree- of an arbitration fy fo- the invalidation rights in the arbitral vindicate their Tree, at 531 U.S. of the ment.” Green rum .... the fees and costs [I]f Luna has not demonstrated litigants, S.Ct. 513. potential forum deter arbitral in the ability pursue to his claim that the clearly that forum is not an effec- then hinges upon payment his tive, for the arbitral forum adequate, substitute or even costs; contrary, de- to the dem- the estimated judicial forum.... burden of [T]he circumstances, Luna pending upon the incurring such costs is onstrating that all, at any to cost may not have bear given a of circumstances likely under set (includ- twenty-five interrogatories set of Poly-America presented has some evi- twenty-five ar- capped cost-splitting ing sub-parts) dence that and one set of Luna. rangement even benefit The requests production inspection for provision in fee-splitting Luna’s arbitration things. Additional- tangible documents or agreement caps his share of costs at “the al- ly, agreement includes limitations by Employee gross compensation (1) earned leged by Luna to a be unconscionable: Employee’s highest earning in month in single, to a six- party limitation of each prior the twelve months to the time the (2) prohibition a on re- deposition; hour (Emphasis arbitrator issues his award.” (3) admission; quests inquiry a ban on added). Luna, however, presented evi- (4) finances; Poly-America’s into “highest monthly salary dence of his in the confidentiality provision requiring confi- year preceding [his] termination from and their attor- dentiality parties of the period necessarily earlier company,” neys aspects all of the arbitra- regarding than that relevant under the arbitration Luna tion. contends these limitations agreement. The record contains no fact- virtually impossible make it for him to based estimation of in wages Luna’s prove retaliatory discharge his claim of and, thus, period relevant time no evidence and render the arbitration un- likely of his share of arbitration costs. conscionable. litigants Just as we allow who demon- Although impression an issue of first inability strate an pay proceed to costs to Court, courts around the coun several court, however, with their claims we see analyzed enforceability of try have nothing that prevent would arbitrators provisions limiting par similar arbitration fairly adjusting employee provi- from cost discovery. ties’ access to various forms necessary sions when to full allow vindica- functionally Applying equivalent a rule statutory tion of rights the arbitral fo- analyze fee-splitting provi that used to rum. See Tex.R. P. 145. The contract Civ. sions, courts refuse to enforce these such presented in specifically provides this case adequate pre limitations when evidence that may modify the arbitrator unconscion- plaintiff’s ability present that a sented terms; if provisions preclud- able the cost his or her claims in an arbitral forum is ed Luna’s enforcement of his non-waivable See, thereby e.g., Cap hindered. Hulett v. statutory rights, they surely would be un- Inc., 07-6151-AA, Group, No. itol Auto conscionable for the reasons we have ex- (D.Or. Oct.29, at *4-*5 WL plained and the arbitrator would be free to 2007) discovery (holding restrictions modify them. The arbitrator is better sit- prohibited requests for admission or inter uated to provision assess whether the cost de rogatories parties and limited to three in this will case hinder effective vindication positions unconscionable because and, so, statutory rights of Luna’s if unreasonably “serve to withhold informa modify accordingly. the contract’s terms plaintiff tion from that would otherwise be Halliburton, 572. We through discovery, hindering available thus the trial conclude court did not abuse its ability in an present her her claims in refusing discretion to declare the con- forum”); v. Al accord cost-splitting provision tract’s unconsciona- Ostroff F.Supp.2d nullify agreement. Corp., ble and the arbitration terra Healthcare (E.D.Pa.2006). upholding arbi Courts Discovery Limitations C. discovery lim provisions containing tration recognition itations have done so agreement provides The 2002 par determined that a party single principle, each serve on the other a same but arbitration, in ability prevail to provide adequate plaintiffs party ticular failed to strong plaintiffs a case provisions “prove regardless that the insuffi of how evidence ... a fair cient to allow ... claimants merits.” is on the claims.” Gil opportunity present to their discovery if the limita agree We that see, mer, 1647; 31, 111 at S.Ct. U.S. agreement imposes the arbitration tions Litig., In re Cotton Yam Antitrust e.g., presentation operate prevent to effective (4th Cir.2007); Ami 505 F.3d 286-87 they would be unenforcea of Luna’s claim Holdings, Capital v. Clarium sil Ltd. proceedings, in the point But at this ble. C06-05255MJJ, No. 2007 WL Mgmt., the knowing particular what without 2007) (N.D.Cal. *4 Sept.20, and defenses—and the evidence claims (“[Claimant] adequately not demon has be, discerning prove needed to them—will why under the AAA strated discovery preclu- potential the limitations’ deny opportunity a fair to rules would it The as largely speculative. effect is sive claims.”). its present in a discovery needs particular sessment of and, turn, enforceability in the given these courts case agree We thereon, limitations that, is a determination underlying the substantive where to the arbitrator as waivable, limitations on we believe best suited right is not ex ante cost-sharing, the case unfolds. As with discovery unreasonably impede that effec vindica discovery prevent limitations that rights of such are likewise prosecution tive insuf However, rights “prove or because the rel tion of non-waivable unenforceable. opportunity a fair to pre the facts ficient to allow inquiry depends upon [Luna] evant Gilmer, claims,” U.S. at given particular present [his] in a case and the sented would be unconsciona discovery upon limitations’ effect the rele S.Ct. arbitrator, binding not on the are doubtful ble and thus statutory regime, vant we specifically case the assessing claims and discov that courts — pro point At this the begins— acknowledges. ery limitations before arbitration that ceedings, though, we cannot conclude position accurately to deter the best the trial court presented the evidence discovery on will have mine which limits limi discovery the compelled finding a impermissible effect. such Thus, per tations were se unconscionable. case, expert witness testi- In this Luna’s not abuse its discretion. the trial court did employment-discharge fied that in most take the employer only the needs to cases Inquiry D. Prohibition on plaintiff while the plaintiffs deposition, into Cause” “Good testimony needs from a number generally provi the arbitration Luna claims disprove employer’s of witnesses ability the arbitrator’s prohibits was based sion likely defense that termination ‘just ‘good or cause’ apply “to cause’ Additionally, poor performance. on relating Employee’s stated, likely to claims employee will wish standard expert sepa concerning employment his or claims depose additional witnesses to show discrimination, substantively uncon therefrom” is ration pattern practice in a retalia prohibits, typically has a scionable because employer whereas case, inquiry into whether tory-discharge ready employees of available pool valid, had a nondiscriminato employer preparing managers to assist Poly- employee. reasons, ry firing reason for expert For these arbitration. the contract cannot be dis- America contends concluded, agreement’s the arbitration claims, in fact does read as Luna reduce covery “significantly limitations provision, with this it is immaterial prevent inquiry. agree such an We from Poly-America, ap- and with the court of claims of substantive unconsciona- Luna’s peals, prohibition oper- that this does not bility. asserts; rather, prohibi-

ate as Luna Application simply emphasizes that the contract F. Lifetime employment. relates to at-will See Mont- Finally, argues Luna that the arbitration Brown, gomery County Hasp. Dist. agreement unconscionably applies even (Tex.1998). Thus, S.W.2d may employ- claims that arise after Luna’s prohibition prevents the arbitrator from Poly-America with has ended and ment substituting “good requirement cause” Luna’s nothing which have to do with for the “at will” standard. provision The imagine we can cir- employment. While not, however, prohibit inquiry does into might a closer present cumstances Poly-America whether termi- improperly here concern his question, Luna’s claims filing nated Luna in retaliation for his of a termination, the central employment compensation workers’ claim. Because we agreement. agree focus of the We thus provision merely read the to articulate an appeals provi- with the court of that this contracts, accepted employment rule of agree- sion does not render the arbitration necessary inquiry to restrict a into per ment se unconscionable. See 175 Poly-America’s the motivations behind ter- at 326. case, agree mination of Luna we appeals with the court of that the provision Severability VI. is not unconscionable. In re Palm in this agreement The arbitration Homes, Inc., Harbor clause, severability case contains a which (Tex.2006) (rejecting a claim that an arbi- provides as follows: provision substantively tration was uncon- any Agreement of this Should term be scionable where the challenged provision unenforceable, illegal, declared or uncon- “effectively incorporate[d] pro- established scionable, remaining terms of the law”). of contract visions Agreement shall remain in full force and E. possible, One-Year Limitations Period effect. To the extent both Em- Ar- ployee Company desire that the The agreement arbitration includes a term(s) modify bitrator declared requires clause that written notice of a unenforceable, illegal, or unconsciona- claim to be filed within a maximum of one way to retain the intend- ble such as year from the giving events rise to an term(s) closely meaning ed as pro- arbitrable claim. Luna contends this possible. unconscionably vision shortens the two- that, if year applicable Poly-America argues statute of limitations even ele- retaliatory claims of of its arbitration discharge. See John- ments Med., Sanchez, unconscionable, son & Johnson Inc. v. 924 Luna are (Tex.1996). However, required the uncon- as nevertheless because from the provisions Luna filed this case well within the one- scionable are severable Luna year period prejudice general agreement and thus suffered no to arbitrate.4 refusing appeals 4. The Court received briefs from amici curiae the court of erred in to sever deemed from the Texas Association of Business and the unconscionable Management agreement. Society the remainder of the arbitration for Human Resource Council, argue amicus curiae the Tex- Texas State both of which The brief submitted See provisions. the unenforceable provisions are absent contends the unconscionable McAninch, 389, 153 Tex. and are Patrizi v. integral to the entire contract (1954); City see also ap- court of S.W.2d therefore not severable. The of Luna, Firefighters, Ass’n stating that the Beaumont v. Int’l peals agreed with of S99, provi- Local Union No. S.W.3d fee-splitting and remedies-limitation (citing pet.) no oppor- (Tex.App.-Beaumont Luna of his “together deprive sions 922, 925 Rogers Wolfson, v. 763 S.W.2d tunity to vindicate his claim the arbitral denied)); 1989,writ Stro provi- (Tex.App.-Dallas that “those concluding forum” and man, (citing Frankiewicz at 86 purpose to the of the S.W.2d integral sions are Assocs., Comp. 633 S.W.2d severed.” 175 v. Nat’l agreement and cannot be (Tex.1982)). previously have came 507-08 We appeals at 328. The court of provi contract conclusion, illegal severance of appears, by identify- allowed to this provisions the invalid were sions where ing fee-splitting and remedies-limita- reciprocal prom “only part many of the weighing as in favor of provisions and “did not consti agreement” ises in the whole,” unconscionability “as a but of the purpose main or essential tute the identify any particular provi- not court did Williams, at 871. agreement.” 569 S.W.2d that, itself, agree- defeat the by sion would id. at 324. We purpose. ment’s See the arbitration The 2002 version of determined, however, that the reme- have pages in this case is over five agreement individually provisions are dies-limitation provisions numerous long and contains void, and no reason unconscionable and see any un- by imposing Luna as challenged easily excised from the why they cannot be for me- procedures burdens: conscionable underlying defeating contract without its arbitrator, diation, of a neutral selection purpose. motions, general provi- and other filing of procedures. governing sions illegal

An or unconscionable the in- Poly-America that agree We may generally contract provision of a expressed by the parties, tent of the as not constitute long severed so as it does clause, that unconscionable severability is purpose agreement. of the the essential possible. provisions be excised where Williams, 569 S.W.2d See Williams Furthermore, by it is clear the contract’s Slovacek, (Tex.1978); Hoover see also agree- purpose main terms that the (citing Restatement 206 S.W.3d at 565 their parties for the to submit (1981)). ment § 208 (Second) of Conteacts than forum rather disputes to an arbitral invalidity particu or not the of Whether Excising the in court. id. proceed rest of the con provision lar affects the we have identi- provisions unconscionable remaining whether the depends upon tract pur- undermine this not defeat or fied will mutually de independent in the context upheld we have pose, which courts determine pendent promises, which employment to arbitrate agreements the contract looking language to the AdvancePCS, 172 S.W.3d disputes. See Sons, Ray R. & Inc. v. See John itself. 90; 608; S.W.2d at Corp., EZ Pawn Stroman, (Tex.App. 923 S.W.2d Co., at 944. denied) & Cantella 1996, writ [14th Dist.] Houston Inc., Servs., Bus. (citing Hanks v. GAB VII. Conclusion (Tex.1982)). The rele invalid, substantively uncon- hold as parties We inquiry is whether or not vant void, par- provisions of scionable and into the would have entered improper. would be argues severance Lawyers that such Trial Association man- contract that the “established” boundaries of prohibit ties’ award being ignored. damus were damages punitive or reinstatement thus inhibit effective vindication of Luna’s in Only years ago, two we held In re retaliatory-discharge claim in an arbitral that mandamus was avail- Palacios review forum. We further hold that the trial arbitration, deny able for “orders that but court did not abuse its discretion in allow- compel not orders that it.”1 We noted ing the arbitrator determine whether prac- previous that this was a reversal of fee-splitting agreement discovery tice,2 by Supreme but was necessitated of applied limitations —as the course opinion Tree Finan- Court’s Green arbitration —are unconscionable. Because Corp. Randolph, which said that cial we find the invalid pro- remedies-limitation arbitration “would not compelling orders visions severable from the unless included final appealable” arbitrate, Today which dismissal of the case.3 the Court we conclude is otherwise circle, enforceable, again full saying the trial comes once court did abuse ar- compelling mandamus review of orders compelling its discretion in arbitration. “proper,” though bitration is courts should Accordingly, conditionally we grant Apparently, be “hesitant” about it.4 so writ of mandamus. long expresses qualms, as one Palacios is a dead letter. dissenting Justice BRISTER filed a course, opinion. governing Of firm rules manda- broken, mus are made to be as issuance of Justice participate WILLETT did not primarily judgment the writ is a matter of the decision. and prudence.5 As the United States Su- 2004, preme Court said in mandamus is BRISTER, Justice dissenting. if a appropriate party right, shows a clear The thing granting hard about manda- remedy, no alternative and that mandamus knowing mus relief is stop. when to This “appropriate is under the circumstances.”6 years Court has tried over the man- to set (especially prong) This test the last defies through tests, damus boundaries various precise application, years judicial but generated all of which soon exceptions, and produce effort have failed to a better one. objections result, most of which were judges met with As a reasonable will some- 564, (Tex.2006) Dean, 391, (5th (“The Cir.2008) (emphasis 1. 221 S.W.3d 527 F.3d added). grant large decision whether to mandamus is ly prudential.”); Pipe Corp., In re Atlantic 135, (1st Cir.2002) (concluding (noting F.3d man abrogation 2. Id. at 565 of Freis v. Canales, (Tex.1994)). "prudent damus under the circum 877 S.W.2d was Chimenti, stances”); In re 79 F.3d (6th Cir.1996) (noting availability of interlocu 3. 531 U.S. 87 n. 121 S.Ct. (2000). tory appeal merely was one of several factors L.Ed.2d 373 affecting "prudential court’s considerations” mandamus). regarding issuance of 4. 262 S.W.3d 347. See, Link, 6.Cheney v. U.S. Court Colum- e.g„ Dist. Dist. CSR Ltd. v. bia, 367, 380-81, (Tex. 1996) ("Because 542 U.S. 124 S.Ct. of the size and (2004) (holding complexity litigation, 159 L.Ed.2d 459 mandamus of the asbestos the most (1) prudent judicial should issue when there is no other ade- use of in this case resources (2) quate remedy, indisputable” permit preliminary is to a "clear and resolution of the (3) personal jurisdiction right, appropriate fundamental issue of "the writ is under mandamus.”) added); circumstances”). (emphasis writ of In re “pru- dispute long times whether mandamus would have since been disagree is dent” under “appropriate Surely expense the circum- concluded. the time stances,” differently and sometimes decide incurred this case arbitrating would have departing one than the next. But case been less that incurred in than mandamus prudent from ap- Palacios is neither nor review. now that And mandamus review propriate five concluded, for at least reasons. go must parties to arbi- strong tration our anyway. Given state’s

First, Congress amended the Federal public favoring freedom con- policy “permits Arbitration Act in 1988 so tract,12 that a contract is uncon- claims appeal immediate of orders to arbi- hostile far more than scionable are asserted often tration, appeal ... bars of but interlocu- decision, today’s are sustained. After tory orders arbitration.”7 favorable any it is hard how arbitration cannot to see Texas law is to the same effect.8 As the stopped by alleging be in its tracks uncon- trial order here was court’s favorable scionability. arbitration, defer we should to the cost- analysis already benefit conducted Third, purely advisory; is today’s opinion legislatures.9 federal and state cannot We it, if is ignores an arbitrator there little we simply mandamus inter- substitute when require can do. federal and state law Both locutory prohibited run- appeal is without decision, an arbitrator’s courts enforce ning Supremacy prob- into serious Clause is, very matter excep- no what few 10 lems; pre-arbitration “[f]requent review exceptions tions.13 concern The allowable inevitably Congress’s would frustrate in- extrinsic matters like cor- procedural or parties tent to to an arbitrable move fraud, ruption, refusing to hear evi- 14 dispute court and into arbitration as out of (as dence; include they do not Su- quickly easily as possible.”11 held) preme just disregarding Court law, Second, even if error is legal the trial court ordered these “manifest.”15 if parties years five Had of mandamus ago. to arbitration What the benefit review intervened, ignored? can be proceedings resulting mandamus order Cull, 580, Perry Corp.-Ala. Randolph, v. 531 11. Homes v. 599 Green Tree Fin. 7. — Ferrer, 79, 86, (Tex.2008) (quoting Preston v. U.S. U.S. 148 373 121 S.Ct. L.Ed.2d -, -, (2000) 16) § 128 S.Ct. 169 L.Ed.2d 917 (construing (emphasis U.S.C. 9 (2008) added). Hosp. H. Cone Mem'l v. and Moses 1, 22, Mercury Corp., 460 U.S. 103 Constr. (1983)) (internal S.Ct. L.Ed.2d 765 171.098; § 8. See Civ. Prac. & Rem.Code In Tex. omitted). quotations Palacios, (Tex.2006). re S.W.3d Stephens v. Martin Pav- - Ins. Co. Ctr., Inc., 12. Med. re McAllen S.W.3d Fairfield 9. LP, (Tex.2008); ing, For- -, -, (Tex. 2008 WL at *1 Cantu, 234 S.W.3d th v. 2008) ("Although gener mandamus review is Benefits Servs., Inc., (Tex.2007); v. CDB Lawrence discretion, ally place a matter within our our (Tex.2001). government powers separated requires in a of priorities us to also the of the other consider 9-11; §§ 13. See 9 U.S.C. government.”). Texas branches of Tex. Civ. Prac. & 171.087-171.088, §§ 171.091. Rem.Code VI, (“[T]he 10. art. U.S. cl. Const, Id. ... Laws United States shall be the Land; Judges supreme and the Law of - Mattel, Inc., Assocs., Thing every thereby, any 15. Hall L.L.C. shall be bound St. State 1396, 1404, -, -, any U.S. 128 S.Ct. in the or Laws of State to the Constitution (2008). notwithstanding.”). L.Ed.2d Contrary Fourth, might actually prefer if cash for employees even most arbitrators would (and comply appellate delays) with an court’s manda- rather wages appellate lost no rulings, issuing hybrid mus them creates a puni- long than reinstatement or shot procedure unknown to the arbitration acts. notes, As the several damages. tive Court noted, already As statutes commit those courts have held that such “limitations concerning matters the law and the merits permissible.”16 Twice remedies judicial to the arbitrators and foreclose Supreme 2003 the Court declined to hold review the details of the result. This remedy-stripping that a arbitration clause appears parties’ agree- also to violate the deferring violates the FAA—each time case, ment in this which authorized the had ad- question until after arbitrators unconscionability: arbitrator to address dressed it.17 We should do the same here. any Agreement Should term of this (as have never held the Court holds We unenforceable, illegal, declared or uncon- repeatedly today) an arbitration scionable, remaining terms an employee is invalid unless Agreement shall in remain full force and “effectively statutory can vindicate his possible, effect. To the extent both Em- in rights.”18 say did not so In re We ployee Company and Ar- desire the (as Halliburton Co. the Court’s citations term(s) modify bitrator the declared to aver), phrase appears only where that in a unenforceable, illegal, or unconsciona- parenthetical describing opinion by an an way ble such a as to retain the intend- appellate Michigan, intermediate court in term(s) meaning closely ed of the as as opinion approved an we neither nor possible. judgment adopted.19 Nor does the Court’s Telling the arbitrators advance what comply Despite with this new standard. (as legal rulings they should make here, remedy imposed limits an arbi- today) Court does is an improper way to Johnny trator still Luna 50 could award circumvent these restrictions. years of future wages, lost which would Fifth finally, and an Court decides certainly “effectively seem to vindicate his important question in the abstract that the statutory rights.” more than the Even render moot. The Court fee-splitting discovery-limiting provi- concedes that unconscionability of the fee- sions, simply early to tell too whether splitting discovery-limiting clauses un- remedy-stripping provisions will be should be deferred to the But arbitrator. fair to Luna at all. unconscionability remedy-stripping important and controversial fact-based, Such just just clause is as question should not be decided in such an speculative until all the facts are arbitrat- way. ed. The fairness of such offhanded and abstract We should clauses is not as suggests; many one-sided as the Court instead wait to see whether the arbitration (2003) (remanding 16. 262 S.W.3d at 352. deter- 414 for arbitrator to prohibited mine whether contracts class arbi- Book, Sys., 17. See Health v. Inc. PacifiCare tration). 401, 406-07, 538 U.S. 123 S.Ct. 155 (2003) (holding L.Ed.2d 578 that “since we 349, 352, 352, & 18. 262 S.W.3d 356. do not know how the arbitrator will construe barring the remedial dam- limitations” treble (citing v. 19. 80 S.W.3d Rembert ages, proper compel "the course is to arbitra- Houses, Inc., tion”); Bazzle, Ryan’s Family Mich. Steak Corp. Green Tree Fin. 444, 454, (1999)). App. U.S. 123 S.Ct. L.Ed.2d N.W.2d Circuit, was the Ninth necessary; makes such a decision to arbitration award more, necessary “if to decide it is widely recognized it is not the court as the “most more.”20 necessary hostile,”24 center,”25 not to decide “far to the left of “renegade” country employ- court problems overlooks all these The Court so, manda- ment arbitration cases.26 Even “has ground on the that mandamus been only granted in that case because mus was broadly by federal courts to re- applied” arbitrating single representa- class But compelling orders arbitration.21 view could moot the class action he tive’s case sup- string citations that follow do appel- it out without brought, wiping had cited, port that claim. Of the five cases short, there is no “broad” late review.27 Tree,22 and a fourth Green predated three opposite doing precisely consensus for trial court order favorable did not involve a Legisla- Texas Congress and the of what single granting case to arbitration.23 The ture intended. from an order favorable mandamus relief Claims, D.E.A., 19 Lab. Law. F.3d ployment 20. PDK Labs. Inc. v. U.S. Discrimination J., (2004) ("The (D.C.Cir.2004) (Roberts, Ninth Circuit 303 n. concur- mandatory arbitra- to be hostile to ring). continues Nolan, agreements.”); Dennis R. Em- 21. S.W.3d at 346. City, 41 ployment Arbitration Circuit After (2003) (“[Djespite Con- Brandéis LJ. Georgiou Exploration & Prod. v. Mobil arbitration in gress’s broad endorsement of Cir.1999); (5th Servs., US, 190 F.3d 538 Inc. repeated Supreme Court's the FAA and Bd., Amalgamated v. Phil. Joint Inc. Cofab (not many judges policy, of that confirmation Union, F.3d Clothing & Textile Workers Circuit) deep- remain all of them on the Ninth Cir.1998); Intern., (3d Inc. v. McDermott hostile.”); Jiang, ly skeptical openly if not Hai Subscribing Lloyds to Memo- Underwriters Administer Civil Do We Allow Contract Law to (5th 104207, F.2d 744 randum Ins. No. of Haskins v. Pru- Rights Remedies? Casenote on Cir.1993). Co., 2003 L.Rev. Mich. St. U. dential Insurance ("The (2003) Ninth Circuit Det. C.L. (8th Nagin, 255 F.3d 23. Manion v. employ- to arbitration of is the most hostile Cir.2001) (involving injunction to obtain sala- among claims the circuit ment discrimination arbitration); payments pending ry see also courts....”). (involving temporary Cofab, 141 F.3d at 110 award stay to enforce arbitration of motion III, Note, Greene v. 25. See Earl Armendariz matter). pending NLRB review of related Services, Psychcare Health Inc.: Foundation Supreme Court Searches For The California Borstein, Arbitrary 24. See Adam Enforcement: Ground, 108-09 1 J. Middle Am. Arb. Agreements Contain Unlaw- Arbitration When (2001) ("On mandatory agree- Provisions, Loy. L.A.L.Rev. ful continuum, Cir- the Ninth ment enforcement ("This (2006) finding of uncon- combination sitting to the left of center as would be far cuit favoring public policy over scionability and protect- concerned with it seems to be more made the Ninth of the FAA has enforcement statutory rights employees than ing of towards unlawful arbitra- Circuit more hostile Court.”) Supreme toeing the line with the cir- any than other federal cuit.”); Adam J. G. McGuinness & Michael Notes, LaFond, Private 26. See Jennifer The Karr, "Unique" Approach to Arbi- California’s v. Laws in Public Armendariz Will Why Less Traveled This Road Enforcement of tration: Servs., Psychcare Pepp. Health Foundation Preemp- the Issue Make All the on Difference (2002) (“The Ninth n. L.Rev. Act, 2005 J. Arbitration tion Under the Federal respect renegade circuit with is the Circuit (2005)(“|T]he conclu- 91-92 Disp. Resol. compelled to employees can be [whether] ... the Ninth that California courts—and sion claims.”). statutory arbitrate imposing own biases their Circuit—are inescapable.”); Steven against arbitration is Court, F.3d Gilmer, 27. Douglas Warshawsky» v. U.S. Dist. Contractual Ex- M. Cir.2007). (9th Doctrine, 1068-69 Statutory Em- Federal haustion certainly leaving It true that matters Petitioner, Texas, The STATE unconscionability

like to arbitrators will mean “substan- development of the law is hindered,”28 tially but the same could be Grady BROWN, Jr., Respondent. J.

said of arbitration in It is hard all cases. system to see the allure of a which No. 05-0236. law, ignore decision-makers can unless planning ignore course one is the law Supreme Court of Texas. on popularity, oneself. Based its few arbi- Aug. apparently go trators that far. But even carefully judges jurors selected make

mistakes, carefully arbitra- selected surely

tors are no less fallible. Neverthe-

less, policy only these are matters that amend;

Congress can address or can- we disregard the express legislative limits interlocutory

on merely by calling review questions

mandamus when we think the

are important and the issues well-briefed. appeal

"While from arbitration awards is limited,

very appeal adequate is an

remedy unless the benefits of mandamus

outweigh the Considering costs.29 far, expended Johnny

costs so I doubt outweighed by

Luna would consider them

getting right to seek reinstatement (which employees rarely re- (which

quest) punitive damages

rarely get). Accordingly, agree I with the appeals

Court the court of erred in

reviewing reversing the trial court’s compelling

order arbitration. But I dis-

agree any that we have place reviewing extent,

those matters either. I To that

respectfully dissent. Am., Inc., 244 S.W.3d at 346. 29. In re BP Products N. (Tex.2008); In re Prudential Ins. Co. Am., (Tex.2004).

Case Details

Case Name: In Re Poly-America, L.P.

Court Name: Texas Supreme Court

Date Published: Aug 29, 2008

Citation: 262 S.W.3d 337

Docket Number: 04-1049

Court Abbreviation: Tex.