Texas Supreme Court Hears Case on Standards of Judicial Review for Arbitration Awards After Hall Street

As reported by the Texas Supreme Court Blog (thanks for the cite!) the Texas Supreme Court heard arguments today on the case NAFTA Traders, Inc. v. Margaret A. Quinn; from Dallas County; 5th district (05?07?00340?CV, 257 SW3d 795, 06?17?08). NAFTA Traders appeals the confirmation of an arbitral award in favor of Margaret Quinn in a sexual discrimination case under the Texas General Arbitration Act (TAA).

The Dallas Court of Appeals relying on the U.S. Supreme Court decision in Hall Street v. Mattel Inc., 552 U.S. 576, 128 S. Ct. 1396, 170 L. Ed. 2d 254 (2008) held that “parties seeking judicial review of an arbitrationaward covered under the TAA cannot contractually agree to expand the scope of review and are instead limited to judicial review based on the statutory grounds enumerated in the statute.” (opinion is here)

The issues to be decided by the Texas Supreme Court are:

  1. Whether parties to an arbitration agreement can contractually agree to limit an arbitrator’s authority under the TAA; and
  2. Whether parties to an arbitration agreement can contractually agree to expand the scope of judicial review of an arbitration award under the TAA.

(links to ebriefs are here)

On a related note and as readers probably know, there is a current circuit split as to whether the non-statutory ground “manifest disregard of the law” survives the U.S. Supreme Court holding in Hall Street. The Court of Appeals for the Fifth Circuit decided in Citigroup Global Mkts. Inc. v. Bacon, 562 F.3d 349, 2009 U.S. App. LEXIS 4543 (5th Cir. Tex. 2009) that only statutory grounds to vacate arbitral awards are valid. (read our analysis here)

Some were hoping that the U.S. Supreme Court would step in and clarify the issue. The Court, however, denied certiorari this week to three “manifest disregard of the law” cases: The Coffee Beanery, Ltd. v. WW, LLC, 300 Fed. Appx. 415 (6th Cir. 2008); Grain v. Trinity Health, 551 F.3d 374 (6th Cir. 2008); and Comedy Club, Inc. v. Improv West Associates, 553 F.3d 1277 (9th Cir. 2008). (order list 558 U.S. is here)

We will discuss the Texas Supreme Court decision once it comes out… Stay tuned to Disputing.

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