New Petition Asks SCOTX to Consider Whether Arbitrator Exceeded His Authority

Originally published by Beth Graham.

A hospital has asked the Supreme Court of Texas to consider whether an arbitrator exceeded his authority in a workplace discrimination dispute.  In Methodist Healthcare System, Ltd., LLP v. Friesenhahn, No. 17-0955, a woman, Friesenhahn, was terminated by her employer, Methodist Healthcare Systems, for purportedly violating a workplace policy.  After she was fired, Friesenhahn accused her former employer of both age and gender discrimination.  Following arbitration proceedings regarding the alleged discrimination, Friesenhahn was awarded nearly $384,000 in damages and legal fees.

Next, Friesenhahn sought to confirm the arbitral award.  In response, Methodist Healthcare Systems filed a motion to vacate the arbitrator’s award.  According to the hospital, “the arbitration agreement provided for expanded judicial review and the arbitrator ignored the legal standards applicable in reviewing Friesenhahn’s discrimination claim.”  The trial court ultimately confirmed the arbitration award and ordered the hospital to pay Friesenhahn additional attorneys’ fees “for enforcing the arbitration award.”  Methodist Healthcare Systems then filed an appeal with Texas’ Fourth District Court of Appeals in San Antonio.

In October, the San Antonio Court held “the parties’ arbitration agreement did not expand judicial review; therefore, we need not consider Methodist’s argument that the trial court erred in confirming the arbitration award under an expanded judicial review.”  In addition, the appellate court stated the trial court committed error when it awarded Friesenhahn additional legal costs because she was “not entitled to recover any such additional attorney’s fees as a matter of law.”  Finally, the Court of Appeals affirmed the remainder of the lower court’s judgment.

Last week, Methodist Healthcare Systems filed a petition for review with the Supreme Court of Texas.  According to the hospital’s petition, the issues presented in the case include:

1. Whether an arbitration award must be reviewed for legal error to determine whether the arbitrator exceeded his authority where the arbitration agreement required the arbitrator to follow legal precedent and be subject to the same limitations in granting a remedy as a court.

2. (Unbriefed) Whether the arbitrator exceeded his power by awarding damages for discrimination when, under governing precedent, the claimant presented no evidence of discrimination.

The petition is currently being reviewed by the Texas Supreme Court Justices.   Please check back soon for future updates in this case!

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