Justia Arbitration & Mediation Opinion Summaries

Plaintiffs, a group of retail sales employees of defendant, appealed from an order of the district court vacating an arbitration award on the ground that the arbitrator had exceeded her authority in light of the Supreme Court's decision in Stolt-Nielson S.A. v. AnimalFeeds International Corp. At issue was whether a district court had the authority to vacate an arbitration award where it believed that the arbitrator improperly interpreted the terms of an arbitration agreement. The court held that, because the district court did not undertake the appropriate inquiry - whether, based on the parties' submission for the arbitration agreement, the arbitrator had the authority to reach an issue, not whether the arbitrator decided the issue correctly - and instead substituted its own legal analysis for that of the arbitrator's, the court reversed the judgment of the district court. The court also held that, because the court found that the arbitrator acted within her authority to reach an issue properly submitted to her by the parties and reached her decision by analyzing the terms of the agreement in light of applicable law, the award should not have been vacated. Accordingly, the court remanded with instructions to confirm the award.

Respondent filed a sex discrimination suit against petitioner alleging violations of the Texas Commission on Human Rights Act, Tex. Lab. Code 21.001-.556, where petitioner terminated its employment of respondent citing as the basis for its decision a reduction in force due to worsening business conditions. The parties sought arbitration and petitioner appealed the arbitrator's reward. At issue was whether the Texas General Arbitration Act ("TAA"), Tex. Civ. Prac. & Rem. Code 171.001-.098, precluded an agreement for judicial review of an arbitration award for reversible error, and if not, whether the Federal Arbitration Act ("FAA"), 9 U.S.C. 1-16, preempted enforcement of such an agreement. The court held that the TAA presented no impediment to an agreement that limited the authority of an arbitrator in deciding a matter and thus allowed for judicial review of an arbitration award for reversible error. The court also held that the FAA did not preempt enforcement of an agreement to expanded judicial review of an arbitration award enforceable under the TAA. The court further held that, on remand, the court of appeals must determine whether the record was sufficient to review petitioner's complaints. Therefore, the judgment of the court of appeals must be reversed and the case remanded to that court for consideration of the merits of petitioner's challenges to the arbitration award.