Peleg
Peleg v. Neiman Marcus Group, Inc.
Opinion
Lead Opinion
Mallano, J.
—Under the Federal Arbitration Act (FAA) ( 9 U.S.C. §§ 1-16 ), “arbitration is a matter of contract.” (Steelworkers v. Warrior & Gulf Co. (1960) 363 U.S. 574, 582 [ 4 L.Ed.2d 1409 , 80 S.Ct. 1347 ]; accord, 9 U.S.C. § 2 .) An arbitration contract typically consists of the parties’ mutual promises to arbitrate their claims against each other.
In this employment case, an employer and its at-will employees purportedly entered into a contract requiring the arbitration of claims by both sides. But the contract contains a modification provision stating that the employer may amend, modify, or revoke the arbitration contract on 30 days’ written notice; at the end of the 30-day period, a contract change applies to any claim *1433 that has not been filed with the American Arbitration Association (AAA). The contract also has a choice-of-law clause stating that the contract shall be governed by Texas law and the FAA. The employee contends that, under the choice-of-law clause, the employer’s unilateral right to make contract changes renders the contract illusory. We ultimately conclude that the choice-of-law clause is valid and that the arbitration contract is illusory under Texas…
Dissenting Opinion
Rothschild, J.
I respectfully dissent. The parties’ arbitration agreement provides that the agreement shall be construed, governed by, and enforced in accordance with Texas law. Under Texas law, the agreement is enforceable and not illusory. (In re Champion Technologies, Inc. (Tex.Ct.App. 2006) 222 S.W.3d 127, 132 ; Nabors Drilling USA, LP v. Carpenter (Tex.Ct.App. 2006) 198 S.W.3d 240, 248-249 (Nabors Drilling); *1468 In re Kellogg Brown & Root (Tex.Ct.App. 2002) 80 S.W.3d 611, 616 .) We should therefore affirm the judgment.
As the majority correctly observes, the threshold issue in this case is whether a court rather than an arbitrator should determine the enforceability of the arbitration agreement. The parties did not brief Texas law on that issue, and the majority applies California law instead, concluding that the issue should be determined by a court because the parties’ agreement does not clearly and unmistakably provide that enforceability questions are to be decided by an arbitrator. On the merits of the enforceability issue, the majority concludes that the agreement is illusory and unenforceable under Texas law.