Holding Back the Steamroller
By Gabriel Hopkins
For many plaintiff-side lawyers, the relentless restriction of access to the civil justice system by American judges has been at once depressing, bewildering, and infuriating. The most prominent example of this is, of course, binding pre-dispute arbitration. As the eminent procedure scholar Arthur Miller phrased it in a recent article: “Compelled private adjudication essentially is now competing with the public adjudicatory system and replacing access to the courts, the possibility of jury trial, and any process transparency.”
Back in 2009, the Texas Supreme Court placed another brick before the courthouse door when it decided In re Gulf Exploration, LLC. In the decision, the Court held that an order granting a motion to compel arbitration could almost never be reviewed until after the arbitration was concluded. This was true even in cases where the very existence of an agreement was in dispute. The decision was a significant step back, but now Public Justice, in cooperation with attorneys at Public Citizen, is working to right this wrong.
The Court’s reasoning, though a little technical, essentially concluded that for procedural reasons the only way to keep Texas law consistent with the practice of the federal courts and other states courts was to make it impossible to get any kind of review or appeal from an order granting arbitration.
If you aren’t already familiar with arbitration and how it operates in our everyday world, you may be wondering what all the fuss is about. The reason this is a big deal is because each passing pro-arbitration decision makes it easier for large, well-resourced corporations to offer goods and services to consumers, or for employers to offer jobs to applicants, that require these consumers and hopeful employees to sign away the constitutional and legal rights that they would otherwise receive in court.
Now it’s one thing to say that when you make your own bed, you have to lie in it. If you did, indeed, know there was an arbitration clause in that contract you signed, well, then in many cases there’s not much the law can do to help you, even if you have the right to appeal. But if you didn’t know, if you were tricked, or misled, or you insist that the contract you signed simply did not contain such a clause, then there is no reason at all you should have to submit to arbitration. Of course, that is one of the foundational rules of arbitration, a rule that even the US and Texas Supreme Courts have recognized: no arbitration without an agreement. So Gulf Exploration says that you can’t enforce this basic rule of the game if the judge makes a mistake. And judges do make mistakes, that’s why there’s a system of appellate courts in the first place.
In an effort to bring at least some semblance of sanity to the state of Texas, Public Justice and Public Citizen have filed an amicus brief before the Texas Supreme Court to argue that review should be permitted at least where the existence of an agreement is in dispute. The case, In re Helle, presents a dispute between two former business partners. The defendant partner moved to compel arbitration. Perplexingly, even though the defendant never produced a signed, written arbitration agreement between the parties the trial court granted the motion, robbing the plaintiff of the procedural protections of a jury trial, and with no ability to correct the error until after he has fought his way through an arbitral forum.
Our principle argument is that Gulf Exploration’s central justification – that barring the review of orders to compel was the only way to stay consistent with the practice of the federal courts and the majority of the states – is simply wrong. All of the federal appeals courts to reach the question have in fact held that there are at least some appropriate vehicles for reviewing orders to compel when there is clear error below. And contrary to the Texas court’s assertion, a supermajority of state courts permit review of such orders, some even by right through an immediate appeal.
Finally, we point out what should be obvious: that compelling parties to arbitrate pursuant to a non-existent arbitration agreement is simply a contradiction in terms. Even the arbitration-happy Roberts Court has admitted that a party cannot be forced to arbitrate unless they have, in fact, agreed to do so. To do otherwise would violate all existing jurisprudence, the laws enforcing arbitration, and, oh yes, the Texas Constitution, which, in the words of the Texas Supreme Court, “confers an exceptionally broad jury trial right upon litigants.”
It’s a mad mad mad mad world, but let’s hope we can bring a bit of reason back to this part of it.