I’m not a big fan of arbitration agreements. I’m not talking about a voluntary agreement between parties to litigation to resolve an existing dispute or lawsuit by submitting it to an arbitrator or panel of arbitrators in lieu of litigation. No, I’m talking about pre-suit, pre-dispute agreements whereby parties agree (or are required to agree as a condition of doing business) to forego any remedy in court, in favor of a panel of hired guns, who may be industry insiders or—worse—paid by one of the parties. These kind of agreements require a foresight that most people simply don’t have, and anyone who says that arbitration is always a less expensive, more expeditious solution than litigation is full of it. It just isn’t true. That’s why I’m a little torn about last week’s decision by the Fourteenth Court of Appeals in Mission Petroleum Carriers v. Kelley.
In that case, one David Kelley was seriously injured in an 18-wheeler accident while employed by Mission Petroleum. Kelley wound up in the hospital, hooked up to a morphine drip and—according to his own later testimony—basically incoherent and unable to give legal consent to anything. It was during that time that a Mission representative showed up at his bedside to enroll him in Mission’s Health & Safety Plan, which would pay for his medical care, rehab, wage replacement, etc., presumably as a stand-in for workers’ compensation. The Plan also contained an arbitration provision that covered suits for injury of the kind Kelley had suffered. Kelley signed the agreement and Mission started paying benefits.
Fast forward several months and Kelley filed suit against Mission and a third party for his injuries. Mission moved to compel arbitration under the terms of its agreement but was denied. Mission then took an appeal to the Fourteenth Court.
Kelley argued to the Court that the arbitration provision was unconscionable and shouldn’t bind him because he was too high on painkillers to know what was going on when he signed it. In fact, he said he had no recollection at all of signing anything when he was in the hospital. But Justice Sharon McCally, writing for the appellate court, observed something that he should have noticed, namely, someone was sending him weekly checks of $935 and paying a bunch of his medical bills. Some of those checks even came in after he had already filed suit against Mission. The Fourteenth Court reversed and remanded the case with instructions to the trial court to send the parties to arbitration.
Much as I dislike arbitration as a cookie-cutter solution, it’s easy to see what motivated the Court here and hard to say it got it wrong. In for a penny, in for a pound: if you accept the benefits of a contract, you accept its responsibilities, too. Kelley couldn’t just keep on cashing those checks without asking where the money was coming from. Maybe if he’d at least refused additional payments once he was out of the morphine fog, the Court would have gotten to Mission’s behavior, which seemed a little sleazy. But Kelley just didn’t act like someone who had no idea he’d signed on to an agreement to receive money, and that counted for everything. Don’t contradict your words with your acts. It’s a good lesson to keep in mind for lawyers and non-lawyers, alike.