Thursday, September 5, 2013

So THIS Is What Non-Subscription Is About?!

I've been made aware of a stinging rebuke to a non-subscriber's motion to compel arbitration of a work injury in Texas where the judge lambasted the employer for attempting to buy a result.

Yvonne Cardwell was a part time dishwasher at Whataburger (what they call a "Team Member") and was paid $7.40 per hour for generally 17 hours per week, making $125.80 per week, or $6,541.60 per year. (The company describes this as a "competitive weekly salary" with "flexible scheduling.")

She lives in a shelter for homeless women.

Whataburger owns and/or operates over 700 restaurants in ten states and has a nice family owned business that's been in operation since the 1950s.

Cardwell alleged a serious work injury that occurred 12/23/2012 and since her employer was a non-subscriber she sued in civil court. Whataburger filed a motion to dismiss the suit and to compel arbitration arguing that Cardwell acquiesced to arbitration by signing an agreement to arbitrate and that arbitration is more efficient and less expensive.

Judge Spieczny was not impressed. Actually, as you will read, the good judge was patently offended that the company would make such claims.

When Cardwell went to work for Whataburger she was required to sign an arbitration agreement as a condition of employment. That agreement is a dense 16 paragraphs contained within a 50 page employee handbook.

As noted by the judge, "the policy was created by Whataburger and not one single word of it was proposed by Plaintiff or negotiated with Plaintiff."

Judge Spieczny also notes that Whataburger's policy manual states that the company may modify, revoke, change or delete the arbitration agreement under some circumstances, but that employees have no such powers.

The judge goes on to note the great disparity in fees associated with filing in El Paso County civil court ($305.00) versus private arbitration (somewhere between $975.00 up to $75,500.00, depending on whether it is fixed or flexible schedule and the amount in controversy) in addition to arbitrator expenses and American Arbitration Association administrative fees.

In this case the judge speculates that the fee would have been about $20,000.

From the statement of facts, it seems Judge Spieczny was less than impressed with Whataburger's attempt to control liability:

"The Court asked counsel for Whataburger if there was any conceivable reason to pay unnecessary fees other than to 'buy' a decider who would be very well paid by Whataburger, supplied by an Association which would be very well paid by Whataburger, in the hope and expectation that the decider would be biased in Whataburger's favor."

Ouch. You know counsel for Whataburger was not having a good day with that test.

Heh, heh - in fact the judge notes that counsel for Whataburger said that arbitration would be more efficient, but when the judge offered to provide a quick trial date said counsel deferred.

"Therefore, even though Whataburger can have a non-jury trial before a duly elected judge of this court promptly without paying a penny in forum fees, they instead want to pay approximately $20,000 for an AAA airbtrator to set a later hearing. There is no conceivable reason for that request other than Whataburger's belief that it will fare much better, and Ms. Cardwell will fare much worse, before an arbitatrator."

Ouch, again.

In denying Whataburger's motion to compel arbitration, Judge Spieczny says, "It is hard for this Court to think of anything more repulsive than perpetuating a system that lets large corporations lavishly buy their way out of judicial accountability and into a system more favorable to their side."

"Paying approximately $20,000.00 to purchase a more favorable fact finder and lying to employees about why you are doing it is all the unconscionability this Court needs."

Bravo to Judge Spieczny for standing up for justice.

Shame on Whataburger for frankly abusive practices wielded against impoverished employees living in a homeless shelter.

A couple of days ago I wrote about the industry's responsibility for claimant fraud.

Whataburger's employment practices are likewise just as dishonest when it tells its employees, and then tries to buffalo the court, by claiming that "Arbitration has the advantages of being less formal and getting the dispute resolved more quickly and at less expense," though in fact the opposite proved true as pointed out by the judge.

Or, as Judge Spieczny says, "Affirmatively lying about [the benefits of arbitration] in the policy is unconscionable."

Whataburger claims that they stick to the principals that got them to such business success, including "being proud of everything we do."

That includes fraud?

Management should reexamine its principals in light of this case and that maxim.

If this is what non-subscription is, I can't buy into it. And neither should you.

Here's the actual opinion and order.

The court docket to search for the case is here.


  1. An elected judge in El Paso County. Who is buying whom? A little more internet research (bravo, Judge Spieczny)would have shown that the American Arbitration Association is a non-profit association, so how they "profit" by the process is beyond me. The complaintant has the right to reject and participate in the coice of arbitrator (again, a little more internet research). While the complexity and nature of a "forced" arbitration agreement is highly questionable, the opt-out system in Texas takes away many of the defenses a corporation can raise under the "no fault" WC system. If fair and equitable compensation for injuries suffered on the job is the goal, neither party, nor Judge Spieczny's rant serve that purpose.

    1. The fallacy is that Texas "opt out" is a "system." It is not a system - it is simply nothing other than being subjected to the civil tort process. Judge Spieczny's opinion simply refutes all of the arguments raised by counsel for Whataburger. It is not the judge's job to research the Internet for deflating or supporting defense counsel's arguments. That was defense counsel's job, and he obviously failed miserably at it as evidenced by the judge's opinion. Will it hold up on appeal? Likely not ... appellate courts time and again have been loath to interfere with arbitration agreements. Will Whataburger appeal? I don't know - I guess it is a risk-return analysis: how much do they think they will lose if they go to a civil trial (judge or jury) versus arbitration? And "non-profit" is a tax status only and has nothing to do with the compensation of the officers or directors running such an entity.