Arbitration is becoming more and more a significant feature of the legal landscape. Arbitration is a creature of contract. Whatever the parties agree to becomes the arbitration. What if the parties agree to arbitration, but then allow some form of appeal? In a recent decision, the Fourth Court of Appeals wrestled with that question. In Methodist Healthcare System v. Friesenhahn, No. 04-16-00825 (Tex.App. San Antonio 10/11/2017), the employer invoked arbitration. But, the arbitration did not go as the employer had hoped. The arbitrator awarded the employee almost $214,00 in damages and $170,000 in attorney’s fees. So, the employer got creative and filed a motion to vacate the arbitration award. Methodist Hospital argued that the arbitration agreement provided for expanded judicial appeal. It pointed to a small number of cases that recognized arbitration agreements that provided for appeals of decisions which contain reversible error. That is, they sought to appeal the arbitration decision based on traditional litigation type appeals. For example, in one section, the agreement states that the arbitrator will apply the same law as would a judge in court. The employer argued this meant reversible error would be grounds for appeal.
But, no, the Fourth Court was not going there. The court of appeals discussed the provisions cited by the employer. It said those provisions do not provide for an expanded appeal. They simply explain that the arbitral forum is simply another forum. The same legal theories apply in arbitration and apply in court. To provide expanded judicial review, the agreement would have to apply limitations on the arbitrator’s authority. For example, noted the appellate court, the agreement could have incorporated a reference to reversible error. It did not include any such reference. See the decision here.
The employer wanted arbitration. It drafted the arbitration agreement and then invoked the agreement when the plaintiff field suit. But, in the end, the employer found arbitration was not what it wanted, after all. Be careful what you ask for. You just might get it.