SUPREME COURT FORCES WRONGFUL-DEATH PLAINTIFFS TO ARBITRATE
In re Labatt Food Service, LP, No. 07-0419, 279 S.W.3d 640 (Tex. 2009)(Johnson) (arbitration
mandamus, arbitration of wrongful death claim by nonsignatories compelled, Wrongful Death Act claim
distinguished from loss of consortium claim and characterized as entirely derivative, determination of whether
enforceable agreement to arbitrate exists under FAA)
If Dancy had sued Labatt for his own injuries immediately prior to his death, he would have
been compelled to arbitrate his claims pursuant to his agreement. His beneficiaries,
therefore, must arbitrate as their right to maintain a wrongful death action is entirely
derivative of Dancy’s rights. The trial court clearly abused its discretion by refusing to
compel arbitration.
Some Texas courts of appeals have held that wrongful death beneficiaries are not bound
by a decedent’s agreement to arbitrate. See In re Kepka, 178 S.W.3d 279, 288 (Tex. App.
—Houston [1st Dist.] 2005, orig. proceeding [mand. dismissed]); Gomez v. Zardenetta, No.
04-97-0019-CV, 1998 WL 19858, at *7 (Tex. App.—San Antonio Jan. 21, 1998, no pet.)
(not designated for publication). To the extent the holdings of courts of appeals conflict
with our decision, we disapprove of them
IN RE LABATT FOOD SERVICE, L.P.; from Bexar County;
4th district (04-07-00312-CV, ___ SW3d ___, 05-16-07)
The Court conditionally grants the petition for writ of mandamus.
Justice Phil Johnson delivered the opinion of the Court.
View Electronic Briefs in No. 07-0419 IN RE LABATT FOOD SERVICE, L.P.
SUBSEQUENT CASE(S): In Re Golden Peanut Co.,LLC, No. 09-0122 (Tex. Nov. 20, 2009)(per curiam)
(mandamus compelling arbitration granted) (arbitration and nonsignatories, wrongful death plaintiffs bound by arb
agreement signed by worker killed on the job as derivative claimants and must arbitrate claim against employer,
pre-injury waivers, forum selection vs. waiver of substantive rights)
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In re Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009)(Johnson)
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Argued September 9, 2008
Justice Johnson delivered the opinion of the Court.
Under Texas law, wrongful death beneficiaries are generally bound by a decedent’s pre-death
contractual agreement because of the derivative nature of their claims. In this case, we consider whether
the arbitration provision in an agreement between a decedent and his employer requires the employee’s
wrongful death beneficiaries to arbitrate their wrongful death claims against the employer even though
they did not sign the agreement. We hold that it does.
I. Background
Labatt Food Service, L.P. does not provide workers’ compensation insurance to cover its employees in
the event of on-the-job injuries. Rather, it provides an “occupational injury plan” (the plan) under which
its employees may elect to participate. To become participants in the plan, employees sign an
agreement entitled “Election of Comprehensive Benefits, Indemnity, and Arbitration Agreement.”
The agreement contains several numbered paragraphs. Of primary relevance to this proceeding are
three of those paragraphs.
Paragraph three provides that the employee elects to be covered under the plan “individually and on
behalf of heirs and beneficiaries.” Paragraph three also provides that the employee will indemnify Labatt
from claims and suits based on injury to or death of the employee from occupational causes, except for
claims filed pursuant to the plan. Paragraph four consists of an arbitration clause providing that
disputes related to either the agreement, the plan, or to an employee’s occupational injury or death must
be submitted to binding arbitration pursuant to the Federal Arbitration Act (FAA). See 9 U.S.C. §§ 1-
16. Paragraph eight provides for the severability of any invalid provision.
Carlos Dancy, Jr., an employee of Labatt, elected to participate in the plan and signed an agreement.
Dancy later died from an apparent asthma attack that occurred while he was working. His parents and
children filed a wrongful death action against Labatt. Labatt responded by filing a motion to compel
arbitration in which it asserted the arbitration agreement bound the wrongful death beneficiaries. The
beneficiaries argued they were not bound by Dancy’s arbitration agreement for two reasons: (1) they
were not signatories to the agreement, and (2) the entire agreement was void because the indemnity
clause was a pre-injury waiver in violation of Texas Labor Code section 406.033(e).
The trial court denied Labatt’s motion without stating its reasons. The court of appeals denied
mandamus relief. Labatt now seeks mandamus relief from this Court.
II. Are the Beneficiaries Bound to Arbitrate?
A. Standard of Review
A party denied the right to arbitrate pursuant to an agreement subject to the FAA does not have an
adequate remedy by appeal and is entitled to mandamus relief to correct a clear abuse of discretion. In
re L & L Kempwood Assocs., L.P., 9 S.W.3d 125, 128 (Tex. 1999). Under an abuse of discretion
standard, we defer to the trial court’s factual determinations if they are supported by evidence, but we
review the trial court’s legal determinations de novo. Brainard v. State, 12 S.W.3d 6, 30 (Tex. 1999); see
Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992). Whether an arbitration agreement is
enforceable is subject to de novo review. See J. M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227
(Tex. 2003).
B. Governing Law
Under the FAA, whether an arbitration agreement binds a nonsignatory is a gateway matter to be
determined by courts rather than arbitrators unless the parties clearly and unmistakably provide
otherwise. In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex. 2005); see Howsam v. Dean Witter
Reynolds, Inc., 537 U.S. 79, 83-84 (2002). As this arbitration agreement is silent about who is to
determine whether particular persons are bound by the agreement, courts, rather than the arbitrator,
should determine the issue. See First Options of Chic., Inc. v. Kaplan, 514 U.S. 938, 944-45 (1995).
We apply Texas procedural rules in determining whether nonsignatories are bound by an arbitration
agreement. In re Weekley Homes, 180 S.W.3d at 130. It is not entirely clear, however, if state or federal
substantive law governs whether nonsignatories are bound to arbitrate under an agreement subject to the
FAA. Id.; see Wash. Mut. Fin. Group, LLC v. Bailey, 364 F.3d 260, 267 n.6 (5th Cir. 2004). Under the
FAA, state law generally governs whether a litigant agreed to arbitrate, and federal law governs the
scope of the arbitration clause. In re Weekley Homes, 180 S.W.3d at 130. But whether nonsignatories
are bound by an arbitration agreement is a distinct issue that may involve either or both of these matters.
Id. at 130-31; see also In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 738 (Tex. 2005) (noting
whether nonsignatory plaintiffs should be compelled to arbitrate their claims is related to validity but is
also a distinct issue). The FAA does not specify whether state or federal law governs, and the United
States Supreme Court has not directly addressed the issue. In re Weekley Homes, 180 S.W.3d at 130.
Pending an answer from the United States Supreme Court, we have determined to apply state
substantive law and endeavor to keep it consistent with federal law. Id. We keep in mind that a purpose
of the FAA is “to make arbitration agreements as enforceable as other contracts, but not more so.”
Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967); see Fleetwood Enter.,
Inc. v. Gaskamp, 280 F.3d 1069, 1074 n.5 (5th Cir. 2002).
Mindful of the foregoing, we move to the issue before us—whether an arbitration agreement governed by
the FAA binds the nonsignatory wrongful death beneficiaries of a party to the agreement.
C. Beneficiaries as Nonsignatories
We have previously determined that nonsignatories to an agreement subject to the FAA may be bound to
an arbitration clause when rules of law or equity would bind them to the contract generally. In re Weekley
Homes, 180 S.W.3d at 131 (noting that if state law would bind a nonparty to a contract generally, the
FAA appears to preempt an exception for arbitration clauses because the FAA requires states to place
arbitration contracts on equal footing with other contracts); see also Allied-Bruce Terminix Cos., Inc. v.
Dobson, 513 U.S. 265, 281 (2005) (noting that a state “may not . . . decide that a contract is fair enough
to enforce all its basic terms . . . [yet] not fair enough to enforce its arbitration clause”). Therefore, we look
to whether the agreement signed by Dancy would generally bind his beneficiaries under Texas law.
Several rules of law and equity may bind nonsignatories to a contract. For example, we have held that the
principles of equitable estoppel and agency may bind nonsignatories to an arbitration agreement. In re
Weekley Homes, 180 S.W.3d at 131-35; see also In re Kellogg Brown & Root, 166 S.W.3d at 739
(noting nonsignatories may be bound to arbitration agreement under “direct benefits estoppel”); In re
Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 191-95 (Tex. 2007) (recognizing estoppel may bind a
nonsignatory to an arbitration agreement but holding plaintiffs were not bound to arbitration agreement
under “concerted misconduct estoppel” because it was not a recognized theory of estoppel under Texas
law); In re FirstMerit Bank, N.A., 52 S.W.3d 749, 755-56 (Tex. 2001) (holding a nonsignatory who sues
based on a contract subjects himself to the contract’s terms, including its arbitration agreement).
Labatt argues that under these circumstances the beneficiaries should be bound by the agreement
because (1) they are third party beneficiaries of the agreement; (2) they are bound by the agreement
because of the derivative nature of their claims; and (3) Texas Family Code section 151.001 afforded
Dancy the legal authority to bind his minor children to the agreement. Because we determine it is
dispositive, we first consider Labatt’s argument that the beneficiaries are bound to arbitrate due to the
derivative nature of their claims.
At common law there was no recognized cause of action for the wrongful death of another person.
Russell v. Ingersoll-Rand Co., 841 S.W.2d 343, 344 (Tex. 1992). The Legislature enacted the Wrongful
Death Act in order to create a cause of action to allow a deceased tort victim’s surviving parents,
children, and spouse to recover damages for their losses from the victim’s death. Shepherd v. Ledford,
962 S.W.2d 28, 31 (Tex. 1998); see Tex. Civ. Prac. & Rem. Code §§ 71.002-.004. Under the Wrongful
Death Act as it applies here, wrongful death beneficiaries may pursue a cause of action “only if the
individual injured would have been entitled to bring an action for the injury if the individual had lived.” Tex.
Civ. Prac. & Rem. Code § 71.003(a). This language is not a recent innovation but is a recodification of
language which has consistently been part of the Wrongful Death Act. See Russell, 841 S.W.2d at 346.
And we have consistently held that the right of statutory beneficiaries to maintain a wrongful death action
is entirely derivative of the decedent’s right to have sued for his own injuries immediately prior to his
death. See id. at 345-47. Thus, it is well established that statutory wrongful death beneficiaries’ claims
place them in the exact “legal shoes” of the decedent, and they are subject to the same defenses to
which the decedent’s claims would have been subject. Id. at 347.
Accordingly, we long ago held that a decedent’s pre-death contract may limit or totally bar a subsequent
action by his wrongful death beneficiaries. See Sullivan-Sanford Lumber Co. v. Watson, 155 S.W. 179,
180 (Tex. 1913); Thompson v. Fort Worth & R.G. Ry. Co., 80 S.W. 990, 992 (Tex. 1904); see also
Russell, 841 S.W.2d at 347 (affirming holdings in Thompson and Sullivan-Sanford Lumber Co.). In
Thompson, R.K. Thompson sued to recover damages for injuries he suffered while riding a train. He
accepted a settlement offer and executed a full release of the railway company. 80 S.W. at 990. Shortly
after signing the release, Thompson died from his injuries. Id. at 991. His wife and children then sued the
railway company seeking to recover damages for his death. Id. at 990. The Court noted that if Thompson
had survived, he would not have been entitled to bring suit because of the contractual release and
because the Wrongful Death Act provided, in language similar to the current Act, that beneficiaries were
only entitled to bring suit if the decedent would have been entitled to maintain an action for the injury. Id. at
991-92. The Court held that although the beneficiaries were not parties to the release, the contractual
release signed by Thompson barred their wrongful death claims because they stood in the same legal
shoes as Thompson and were subject to the same contractual defenses. Id. at 992.
In Sullivan-Sanford Lumber Co., the Court again held that a pre-death contractual release signed by a
decedent barred a subsequent action by his wrongful death beneficiaries. 155 S.W. at 180. The Sullivan-
Sanford Lumber Company allowed non-employees to ride their trains without charge but issued them
boarding passes containing the following language:
The user of this pass rides only on the following conditions: (1) This permit is accepted with the
understanding that the person using it assumes all risk of injury of any character while using the same
and hereby waives any claim for damages in case of injury . . . .
135 S.W. 635, 636 (Tex. Civ. App.—Texarkana 1911), rev’d, 155 S.W. 179 (Tex. 1913). J.A. Watson
was riding a train courtesy of a boarding pass when the train collided with another train killing Watson. Id.
His wife and children sued the Lumber Company. Id. The Court held, as it did in Thompson, that the
beneficiaries were not entitled to recover under the Wrongful Death Act because Watson himself could
not have recovered for his injuries if he had survived, and his wrongful death beneficiaries were subject to
the same contractual defenses that Watson would have been subject to had he sued. 155 S.W. at 180.
Consistent with our holdings in Thompson and Watson, many courts of appeals have held that a
decedent’s pre-death contract may limit or bar a subsequent wrongful death action. See Newman v.
Tropical Visions, Inc., 891 S.W.2d 713, 719 (Tex. App.—San Antonio 1994, writ denied) (pre-injury
liability release signed by decedent before taking scuba diving lessons barred subsequent wrongful
death and survival action against scuba instructor); Winkler v. Kirkwood Atrium Office Park, 816 S.W.2d
111, 115 (Tex. App.—Houston [14th Dist.] 1991, writ denied) (release executed by decedent before
joining health club precluded his beneficiaries from bringing wrongful death and survival action);
McClellan v. Boehmer, 700 S.W.2d 687, 690 (Tex. App.—Corpus Christi 1985, no writ) (release and
settlement signed by automobile accident victim barred survival and wrongful death actions after victim
died from injuries sustained in accident).
Despite this line of authority, the wrongful death beneficiaries argue that agreements to arbitrate are
different than other contracts, and they should not be bound by Dancy’s agreement. We reject their
argument. If we agreed with them, then wrongful death beneficiaries in Texas would be bound by a
decedent’s contractual agreement that completely disposes of the beneficiaries’ claims, but they would
not be bound by a contractual agreement that merely changes the forum in which the claims are to be
resolved. Not only would this be an anomalous result, we believe it would violate the FAA’s express
requirement that states place arbitration contracts on equal footing with other contracts. 9 U.S.C. § 2; see
Volt Info. Scs., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989).
The beneficiaries also argue that they should not be bound because Dancy did not have the authority to
bind them to the arbitration agreement when the wrongful death cause of action actually belongs to the
surviving spouse, children, and parents of the deceased. While it is true that damages for a wrongful
death action are for the exclusive benefit of the beneficiaries and are meant to compensate them for their
own personal loss, the cause of action is still entirely derivative of the decedent’s rights. Tex. Civ. Prac. &
Rem. Code §§ 71.003(a), .004(a); Russell, 841 S.W.2d at 347. Thus, regardless of the fact that Dancy’s
beneficiaries are seeking compensation for their own personal loss, they still stand in Dancy’s legal
shoes and are bound by his agreement.
In the alternative, the beneficiaries urge us to circumvent the derivative claim rule by holding that wrongful
death actions are analogous to and should be treated similarly to loss of consortium claims. A tort action
seeking damages for loss of consortium, however, is fundamentally different than a statutory wrongful
death action. If Dancy had suffered a severe but nonfatal injury, his children would have been entitled to
bring a claim to recover for the loss of care, guidance, love, and protection ordinarily provided by their
father.[1] Reagan v. Vaughn, 804 S.W.2d 463, 466 (Tex. 1990). Their lost consortium claims would be
derivative in the sense that the beneficiaries would be required to establish Labatt was liable for their
father’s underlying injury in order to recover damages. Whittlesey v. Miller, 572 S.W.2d 665, 668 (Tex.
1978). But loss of consortium claims are not entirely derivative as are wrongful death claims; instead,
they are separate and independent claims distinct from the underlying action. Id. at 667, 669. Thus, a
settlement agreement signed by an injured spouse does not bar a subsequent loss of consortium claim
by the non-injured spouse. Id. at 669.
A wrongful death action is different than a loss of consortium claim because the Wrongful Death
Act expressly conditions the beneficiaries’ claims on the decedent’s right to maintain suit for his injuries.
Tex. Civ. Prac. & Rem. Code § 71.003(a); see Russell, 841 S.W.2d at 346. The Legislature created an
entirely derivative cause of action when it enacted the Wrongful Death Act, and Dancy’s beneficiaries are
bringing an entirely derivative claim. Their wrongful death action is not in the same category as a loss of
consortium claim for purposes of derivative status analysis. We decline their invitation to circumvent the
clear language of the Wrongful Death Act.
In addition, other states have resolved this issue based on whether the wrongful death action is an
independent or derivative cause of action under state law. See Cleveland v. Mann, 942 So.2d 108, 118-
19 (Miss. 2006) (beneficiaries bound by decedent’s arbitration agreement because under Mississippi
Wrongful Death Act, beneficiaries may bring suit only if decedent would have been entitled to bring
action immediately before death); Briarcliff Nursing Home, Inc. v. Turcotte, 894 So.2d 661, 665 (Ala.
2004) (administrator of estate bringing wrongful death claim bound because administrator stands in legal
shoes of decedent); Ballard v. Sw. Detroit Hosp., 327 N.W.2d 370, 372 (Mich. Ct. App. 1982)
(administrator bringing wrongful death action bound by arbitration agreement because wrongful death is
a derivative cause of action under Michigan law); but see Bybee v. Abdulla, 189 P.3d 40, 43 (Utah 2008)
(beneficiaries not bound because wrongful death is an independent cause of action under Utah law);
Finney v. Nat’l Healthcare Corp., 193 S.W.3d 393, 395 (Mo. Ct. App. 2006) (beneficiary not bound
because under Missouri law the wrongful death act creates a new cause of action belonging to the
beneficiaries). Other states, however, resolve the issue based on what the contracting parties intended.
Allen v. Pacheco, 71 P.3d 375, 379-80 (Colo. 2003) (beneficiaries bound when contract reflects intent of
the parties to bind beneficiaries); Herbert v. Superior Court, 215 Cal. Rptr. 477, 480 (Cal. Ct. App. 1985)
(beneficiaries bound when contract reflects intent of the parties to bind beneficiaries).
A review of the cases decided based on statutory language indicates that courts in states where wrongful
death actions are recognized as independent and separate causes of action are more likely to hold that
the beneficiaries are not bound by a decedent’s agreement to arbitrate, see, e.g., Bybee, 189 P.3d at 46-
47; Finney, 193 S.W.3d at 395, while beneficiaries in states where wrongful death actions are wholly
derivative in nature are generally held to be bound by a decedent’s arbitration agreement. See
Cleveland, 942 So.2d at 118-19; Ballard, 327 N.W.2d at 372; Bybee, 189 P.3d at 46 (“Courts that
compel nonsignatory heirs to abide by arbitration agreements often do so because under their law a
wrongful death cause of action is wholly derivative of and dependent on the underlying personal injury
claim.”). Our holding is consistent with those in the majority of states that have statutes similar to the
Texas statute and have considered the issue.
Some Texas courts of appeals have held that wrongful death beneficiaries are not bound by a decedent’
s agreement to arbitrate. See In re Kepka, 178 S.W.3d 279, 288 (Tex. App.—Houston [1st Dist.] 2005,
orig. proceeding [mand. dismissed]); Gomez v. Zardenetta, No. 04-97-0019-CV, 1998 WL 19858, at *7
(Tex. App.—San Antonio Jan. 21, 1998, no pet.) (not designated for publication). To the extent the
holdings of courts of appeals conflict with our decision, we disapprove of them.
III. The Indemnity Clause
The Labor Code provides that an employee’s cause of action against a non-subscriber employer to
recover damages for personal injuries or death sustained in the course and scope of employment may
not be waived by an employee before the employee’s injury or death. Any agreement by an employee to
waive [such] a cause of action . . . before the employee’s injury or death is void and unenforceable.
Tex. Lab. Code § 406.033(e).
The beneficiaries challenge the validity of the entire agreement on the basis that the indemnification
clause in paragraph three is in substance a pre-injury waiver that violates Labor Code section 406.033
(e). They, however, specify that their challenge to the agreement’s validity “is not dependent on or
directed solely to the arbitration provision.” Instead, they argue that the contract as a whole, including its
arbitration clause, is rendered invalid by the allegedly illegal indemnity clause because the clause is
not severable.
There are two types of challenges to an arbitration provision: (1) a specific challenge to the validity of the
arbitration agreement or clause, and (2) a broader challenge to the entire contract, either on a ground
that directly affects the entire agreement, or on the ground that one of the contract’s provisions is illegal
and renders the whole contract invalid. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444
(2006).
A court may determine the first type of challenge, but a challenge to the validity of the contract as a whole,
and not specifically to the arbitration clause, must go to the arbitrator. Id. at 448-49; see Prima Paint, 388
U.S. at 403-04 (claim of fraud in the inducement of arbitration clause itself may be adjudicated by court,
but court may not consider claim of fraud in the inducement of the contract generally); Forest Oil Corp. v.
McAllen, 268 S.W.3d 51, 56 (Tex. 2008) (“[T]he party opposing arbitration must show that the fraud
relates to the arbitration clause specifically, not to the broader contract in which it appears.”); Perry
Homes v. Cull, 258 S.W.3d 580, 589 (Tex. 2008) (“[A]rbitrators generally must decide defenses that
apply to the whole contract, while courts decide defenses relating solely to the arbitration clause.”); In re
Merrill Lynch, 235 S.W.3d at 190 & n.12 (noting that a defense relating to the parties’ entire contract
rather than the arbitration clause alone is a question for the arbitrators); In re FirstMerit Bank, 52 S.W.3d
at 756 (noting that the defenses of unconscionability, duress, fraudulent inducement, and revocation must
specifically relate to the arbitration part of a contract and not the contract as a whole if they are to defeat
arbitration, and that validity of an arbitration provision is a separate issue from validity of the whole
contract).
We recently considered the first type of challenge in In re Poly-America, L.P., 262 S.W.3d 337 (Tex.
2008). There, Johnny Luna and his employer, Poly-America, entered into a five-page-long arbitration
agreement. Id. at 345, 360. After Luna was fired, he sued for retaliatory discharge and sought a
declaratory judgment that the arbitration agreement was unenforceable because it contained provisions
that violated public policy and were unconscionable. Id. at 345. One of his arguments was that provisions
prohibiting the arbitrator from awarding punitive damages or ordering reinstatement violated Labor Code
provisions authorizing such relief. Id. at 352. We determined that those provisions were unconscionable
and void, but they were severable and did not invalidate the rest of the agreement to arbitrate. Id. at 359-
60. We stated that “where a particular waiver of substantive remedies or other provision of a contract is
unconscionable—independent of the agreement to arbitrate—it will be unenforceable even though
included in an agreement to arbitrate.” Id. at 349.
But that statement must be read in context of the case as it was presented to us. We were considering
only provisions that were part of the arbitration agreement. There was no challenge to an invalid or illegal
provision outside of the arbitration agreement because the entire contract at issue was an arbitration
agreement. Because we were considering the various challenged provisions only as they were part of
the arbitration agreement itself, the Court could properly adjudicate Luna’s challenge. Buckeye, 546 U.S.
at 444; Prima Paint, 388 U.S. at 409. At oral argument in this case, Labatt urged the Court to similarly
sever the indemnity clause if we found it violated Labor Code section 406.033(e). But as we explain
below, we do not reach the issue of whether the indemnity clause is void because it is a question for the
arbitrator.
The case now before us presents a challenge of the second type that we refer to above: a broad
challenge to the entire contract on the ground that one of the contract’s provisions is illegal and renders
the whole contract invalid, but not specifically challenging the arbitration clause. The Supreme Court
addressed a similar challenge in Buckeye. 546 U.S. 440. There, Buckeye Check Cashing operated a
deferred deposit service by which its customers obtained cash in exchange for the customer’s check in
the amount received plus a finance charge. Id. at 442. For each transaction, Buckeye’s customers
signed a “Deferred Deposit and Disclosure Agreement,” which included an arbitration clause. Id.
Buckeye customers brought a class action suit in Florida state court. Id. at 443. They alleged the finance
charges in the agreement violated Florida lending and consumer protection laws. Id. Buckeye moved to
compel arbitration, but the plaintiffs argued the contract as a whole, including the arbitration clause, was
rendered invalid by the usurious finance charges. Id. The trial court denied the motion to compel, holding
that the court rather than an arbitrator should resolve the claim that a contract is void and illegal. Id. The
Florida Supreme Court affirmed, but the United States Supreme Court reversed. Id. at 449. The United
States Supreme Court held that “regardless of whether the challenge is brought in federal or state court,
a challenge to the validity of the contract as a whole, and not specifically to the arbitration clause, must go
to the arbitrator.” Id.
Like the plaintiffs in Buckeye, the beneficiaries in this case challenge the contract on the ground that an
illegal clause renders the whole contract void. The beneficiaries challenge the arbitration clause only in
the sense that they also challenge all parts of the agreement because the parts comprise the whole. But,
unless a challenge is to the arbitration clause or arbitration agreement itself, as it was in In re Poly-
America, the question of a contract’s validity is for the arbitrator and not the courts. Accordingly,
the beneficiaries’ challenge to the validity of the agreement must be determined by the arbitrator, and we
do not address it. Buckeye, 546 U.S. at 445-46; In re Merrill Lynch, 235 S.W.3d at 190 & n.12; In re
FirstMerit Bank, 52 S.W.3d at 756, 758.
Because of our disposition of the case, we do not address Labatt’s alternative argument that the FAA
preempts Labor Code section 406.033(e) to the extent the state statute would prevent or restrict
enforcement of the arbitration provision. See In re Bison Bldg. Materials, Ltd., Nos. 01-07-00003-CV, 01-
07-00029-CV, 2008 WL 2548568, at *8 (Tex. App.—Houston [1st Dist.] June 26, 2008, orig.
proceeding) (mem. op.); In re Border Steel, Inc., 229 S.W.3d 825, 831-32 (Tex. App.—El Paso 2007,
orig. proceeding); In re R & R Pers. Specialists of Tyler, Inc., 146 S.W.3d 699, 703-04 (Tex. App.—Tyler
2004, orig. proceeding).
IV. Conclusion
If Dancy had sued Labatt for his own injuries immediately prior to his death, he would have been
compelled to arbitrate his claims pursuant to his agreement. His beneficiaries, therefore, must arbitrate
as their right to maintain a wrongful death action is entirely derivative of Dancy’s rights. The trial court
clearly abused its discretion by refusing to compel arbitration.
We conditionally grant Labatt’s petition for writ of mandamus. The trial court is directed to enter an order
compelling arbitration of the beneficiaries’ claims. We are confident the trial court will comply, and the
writ will issue only if it fails to do so.
________________________________________
Phil Johnson
Justice
OPINION DELIVERED: February 13, 2009
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[1] Dancy’s parents would not have been entitled to recover lost consortium damages had he survived his injuries.
See Roberts v. Williamson, 111 S.W.3d 113, 119 (Tex. 2003).
Note: Key legal terms and phrases rendered in bold type and hyperlinks are not part of the opinion as issued by
the Texas Supreme Court