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In reversing a lower court order denying an employer's motion to compel arbitration, the Texas Court of Appeals held that the Federal Arbitration Act (FAA) governed the arbitration agreement because the agreement specifically stated that the employer engaged in interstate commerce by purchasing out-of-state goods and advertising outside the state.
In In re Border Steel, Inc., No. 08-06-00308-CV, 2007 WL 1855690 (Tex. App. June 28, 2007), Juarez suffered an injury during the course of his employment with Border Steel. Pursuant to an employee benefit plan, Border Steel paid Juarez short-term disability benefits and medical expenses. Juarez later sued Border Steel alleging that it negligently caused its injuries.
Border Steel moved to compel arbitration pursuant to an arbitration agreement that was part of the employee benefit plan. The trial court denied the motion.
On appeal, the Court held that the FAA governed the arbitration agreement because the dispute concerned a transaction involving interstate commerce. As the Court noted, the arbitration agreement specifically stated that Border Steel engaged in interstate commerce by purchasing goods and services outside of Texas, using interstate mail and telephones, and advertising outside Texas.
Additionally, the Court found that Border Steel did not procure the arbitration agreement through fraudulent or unconscionable means. Participation in the plan was voluntary, and the jury trial waiver was printed in bold type. Moreover, Border Steel provided a Spanish version of the arbitration agreement, which Juarez signed. Finally, even if the agreement was unenforceable, Juarez ratified it by accepting benefits under the Plan following the injury.
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