Jottings By An Employer's Lawyer

Tuesday, September 21, 2004

Pigs Get Fat, Hogs Get Slaughtered - Still True in Arbitration Cases


A few years ago, my now fellow shareholder Pat Stanton, used the old adage as the title for his portion of a panel in a Palm Springs presenation on the drafting of arbitration plans. (Although some might question the legal authority of such a statement, I am sure Pat took it from the 7th Circuit opinion in Finance Investment Co. (Bermuda) v. Goodman:"We do not look forward to another round of extended collateral litigation and appeal. Before Geberit hurries back to the trough for seconds, we remind it of the adage that "pigs get fat, but hogs get slaughtered.")

Unfortunately, the authors of the arbitration agreement that was challenged and rejected in a decision earlier this month by a Texas Court of Appeals probably didn't hear Pat's humorous but legally sound speech, advising against reaching too far when drafting an arbitration agreement. Otherwise, they might have dropped the requirement requiring an employee to pay up to one month's wages for the arbitration fees and precluding certain relief that would be allowed in court, in this case punitive damages and reinstatement. Because of those provisions, the appellate court reversed the lower court and denied the employer's motion to compel arbitration. In Re Johnny Luna (Tx. Ct. App. - Houston [1st Dist.] 9/9/04). The plan's provisions which limited discovery and shortened the statute of limitations fared better, although care still should be taken in those areas.

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