Arbitration is under attack. Whether we are talking about the evolution of employment and consumer arbitration, imposed on the unknowing and unwilling through pre-dispute contracts of adhesion, or “business to business” arbitration a/k/a “The New Litigation”, controversy abounds. For years our dysfunctional and overcrowded civil justice system seemed like no place to be for employers, banks, insurance companies and product manufacturers, and so arbitration rose in popularity as a solution. But then two things happened: tort reform made courts friendlier, and it turned out that outcomes in arbitration were sometimes not as expected, leaving traditional defendants with no right of appeal.
But a recent Texas Supreme Court decision in Fredericksburg Care Company v. Perez shines a light on what a remarkable mess arbitration has become. The decision itself is unremarkable and, in my view, correctly decided. The Court determined that a feature of the Texas Medical Liability Act, part of our tort reform in 2003, which required that to be valid an arbitration clause pertaining to a health care liability claim must be in bold, 10-point type, and signed by the patient’s attorney, was unenforceable. Why? Pre-empted by the Federal Arbitration Act. The pre-emption doctrine means that states can’t fiddle with arbitration laws. Mostly. So the parties in Fredericksburg Care are headed for arbitration, even though the arbitration clause was not in bold, 10-point type, etc.
We’re Getting to the Funny Part
Amicus briefs are being submitted in support of the patient’s Motion for Rehearing. Guess which advocacy groups want to reverse the Court’s ruling? The Texas Association of Defense Counsel? ABOTA? The Texas Trial Lawyers? YES!!!!!! ALL SIDES AGREE THE PARTIES SHOULD NOT BE OBLIGATED TO ARBITRATE!!!!!
It’s as if no one knows what to think anymore about arbitration. Confusion and controversy abound. The solution to this mess? Careful, careful attention should be given to the arbitration clause itself. One size does not fit all. But a “cookie cutter” approach too often prevails.