Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 7

Margaret Quinn sued her employer Nafta Traders, Inc. for sex discrimination in violation of Texas law after Nafta terminated her employment. Nafta's employee handbook provides that "a dispute arising out of [the] employment relationship... or its termination" must be submitted to binding arbitration. The arbitration agreement further provides that the "arbitrator does not have authority (i) to render a decision which contains a reversible error of state or federal law, or (ii) to apply a cause of action or remedy not expressly provided for under existing state or federal law." The arbitrator awarded Quinn $30,000 in back pay, $30,000 in mental anguish damages, $29,031 in "special damages," $104,828 in attorney's fees, and costs. Nafta moved to vacate this award, arguing that the arbitrator had inappropriately applied federal law to a state-law claim and awarded double recovery to Quinn. Is a provision in an arbitration agreement limiting the arbitrator's authority to render a decision containing reversible error of state or federal law enforceable? [ Nafta Traders, Inc. v. Quinn , 339 S.W.3d 84 (Tex. 2011).]