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The Texas Court of Appeals held that an employer’s limited right to modify or terminate an arbitration agreement did not render the promise to arbitrate illusory because the limitations on exercising that right would preclude the employer from avoiding its promise to arbitrate.
In In re Champion Technologies, Inc., No. 11-06-00181-CV, 2006 WL 3093839 (Tex. Ct. App. Nov. 2, 2006), plaintiffs brought a wrongful termination action against Champion, their former employer.
Champion moved to compel arbitration pursuant to an arbitration agreement that applied to each of the former employees. In opposing the motion, plaintiffs argued that the arbitration agreement was unenforceable because Champion’s promise was illusory. As support for this argument, plaintiffs cited provisions allowing Champion to amend or terminate the agreement. The trial court denied the motion.
On appeal, the Court upheld the agreement, finding that Champion’s promise to arbitrate was not illusory. Citing In re Halliburton Co., 80 S.W.3d 566 (Tex. 2002), the Court observed that the amendment and termination clauses would not allow Champion to avoid its promise to arbitrate because all changes required 30 days notice and no change would apply to any dispute for which arbitration had already been initiated. For those reasons, Champion’s promise to arbitrate was not illusory, and the Court thus remanded the case with instructions to order arbitration.
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