TX Supreme Court provides guidelines on arbitration agreements

In a recent decision, the Texas Supreme Court has provided guidelines for making arbitration agreements insurmountable.

Facts

Yvonne Cardwell was injured while working for her employer, Whataburger Restaurants, LLC. When she was first onboarded, she signed a one-page acknowledgement form that stated she had received both an employee handbook and an arbitration policy. Importantly, the arbitration policy was embedded within the handbook.

Cardwell filed a lawsuit against Whataburger, and in response, the company asked the court to compel arbitration. She refused to take part in arbitration claiming the agreement was unenforceable for several reasons.

After almost nine years of litigation, the Texas Supreme Court was charged with determining whether the arbitration policy was illusory. The court held it wasn’t illusory and ordered the trial court to issue an order compelling arbitration. In doing so, it inadvertently provided helpful guidelines for making arbitration policies insurmountable.

Assure arbitration policies are kept separate

The acknowledgement form Cardwell signed contained two provisions. The first provision stated she understood the handbook she received wasn’t a contract and was only intended to be an employment guide that Whataburger could unilaterally alter at any time. The second provision, however, stated she understood that both she and Whataburger would submit any legally recognized claims or disputes to arbitration.