Extensive Litigation Does not Waive Arbitration

Originally published by Thomas J. Crane.

What happens when an employee files suit, perhaps unaware of the existence of a forced arbitration agreement? How long might a lawsuit progress before the employer mentions the supposed arbitration agreement? In Vectra Infosys v. Adema, No. 05-18-01371 (Tex.App. Dallas 8/28/2019), the employer responded to the lawsuit and conducted extensive discovery. The employer filed a motion to quash a deposition. It submitted a no evidence motion for summary judgment. This all occurred before Vectra invoked the forced arbitration agreement nine months into the lawsuit. Has the employer waived the right to invoke the alleged forced arbitration agreement? The Dallas court of appeals no, it did not waive its right to bring up the purported agreement.

The employer did not move sooner to compel arbitration, because it had just bought the company and was not aware of the alleged agreement. Plaintiff Adema claimed this late date would “inherently” cause him prejudice. But, said the court, the plaintiff offered no evidence of that prejudice. The court felt the plaintiff could use the same discovery in the arbitration. The plaintiff argued that he would be responsible for half the arbitration fees. But, again, the court noted that the plaintiff did not offer evidence showing he would be responsible for half the fees. The court distinguished the result in Perry Homes v. Cull, 258 S.W.3d 580 (Tex. 2008). That case did indeed find waiver and did find harm to the plaintiff. But, said the Dallas court of appeals, the plaintiff in Perry did include the very extensive docket sheet for that case in opposing the motion to compel arbitration. The court could see the lengthy litigation prior to the defendant invoked arbitration. The plaintiff in Perry asked the trial court to take judicial notice of the many motions and discovery instruments submitted before Perry Homes invoked arbitration.

In Vectra, the dissent was concerned about the clear manipulation by the employer. Vectra Infosys invoked arbitration shortly before trial and just before a hearing regarding the president’s refusal to answer certain questions at his deposition. See the decision here.

Despite what the Dallas court of appeals says, it is not at all certain that the arbitration will allow the plaintiff to make use of the already completed discovery. Some arbitrators just flat do not allow discovery, or they substantially curtail the sort of discovery an employee may pursue.

Curated by Texas Bar Today. Follow us on Twitter @texasbartoday.

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