The Fifth Circuit Court of Appeals has held that wrongful death claims are derivative and therefore arbitrable under both Texas law and the federal common law of contracts.

In Graves v. BP America Inc., No. 08-40575, 2009 WL 1228012 (5th Cir. May 6, 2009), an employee of JV Piping, Graves, died in an occupational accident while working on-site at BP. Graves’ survivors brought survival and wrongful death claims against JV and BP. JV and BP moved to arbitrate the claims under an employment-related arbitration agreement with Graves. The district court held that the survival claims were derivative and therefore arbitrable, but held that the wrongful death claims were personal to the survivors and not subject to arbitration.

JV and BP cited In re Labatt Food Serv., 279 S.W.3d 640 (Tex. 2009) for the proposition that wrongful death claims are considered derivative and arbitrable, but the Court noted that In re Labatt turned on an application of Texas law, not federal law.

Nevertheless, the Court found both Texas and federal law dictated the same result; the survivors were required to arbitrate their claims. Under Texas law, the Court found In re Labatt dispositive, noting that the district court had relied on a contrary decision in its disposition because In re Labatt had not yet been decided. See In re Jindal Saw Ltd., No. 01-07-01068-CV, 264 S.W.3d 755 (Tex. App. 2008) (prior appellate case holding wrongful death claims not arbitrable under Texas law),

Under federal law, the Court found the survivors would be precluded from resisting arbitration under a "direct benefits estoppel" theory, if they were seeking to enforce some terms of the decedent’s employment contract, while attempting to avoid the arbitration term. Because the survivors were statutory beneficiaries of the decedent’s estate, their recovery was premised on the employment contract in the same manner as if the decedent was seeking relief. Accordingly, the federal common law of contracts required arbitration of the derivative wrongful death claims.

With this decision, the Fifth Circuit Court of Appeals applies the majority rule among state courts of last resort that wrongful death claims are derivative, and therefore arbitrable. See Cleveland v. Mann, 942 So.2d 108 (Miss. 2006) (patient may bind non-signatory beneficiaries to arbitrate wrongful death claims), Briarcliff Nursing Home, Inc. v. Turcotte, 894 So.2d 661 (Ala. 2004) (arbitration agreements signed by residents through their agents may bind executors of residents’ estates), and Allen v. Pacheco, 71 P.3d 375 (Colo. 2003) (arbitration in HMO contract with member bound heirs to arbitrate wrongful death claims). But see Lawrence v. Beverly Manor, 273 S.W.3d 525 (Mo. 2009) (wrongful death claims are independent of decedent’s claims and therefore not arbitrable); (Peters v. Columbus Steel Castings Co., 873 N.E.2d 1258 (Ohio 2007) (same).