Totalenergies E&P USA, Inc. v. Mp Gulf of Mexico, LLC ( 2023 )

Supreme Court of Texas
══════════
No. 21-0028
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TotalEnergies E&P USA, Inc.,
Petitioner,
v.
MP Gulf of Mexico, LLC,
Respondent
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On Petition for Review from the
Court of Appeals for the Twelfth District of Texas
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JUSTICE BUSBY, dissenting.
Contracting parties beware: According to the Supreme Court of
Texas, if you agree to arbitrate a limited set of disputes under the Rules
of the American Arbitration Association (AAA), you are stripping courts
of power to decide whether a particular dispute falls outside the scope of
that agreement. And you are agreeing in advance to whatever the AAA
may choose to say in the future about the arbitrators’ power to decide
that issue.
No matter how clearly you attempt to restrict both what types of
disputes will be arbitrated and when the AAA rules apply, courts will
force you to arbitrate under the AAA rules without even considering
those restrictions. Like glitter, the AAA rules cannot be constrained if
the parties use them to any extent. Even if you say in a single sentence
that certain scope requirements are substantive preconditions to
arbitration, which shall be conducted under the AAA rules, an arbitrator
will decide under the AAA rules whether your dispute meets those
express preconditions. Because this surprising rule—which has evenly
split courts nationwide—turns on its head the U.S. Supreme Court’s
admonition that any contractual delegation of power to arbitrators to
decide such “arbitrability” questions must be “clear and unmistakable,”
I respectfully dissent.
Whether a party has given up the “right to a court’s decision about
the merits of its dispute” in favor of private arbitration is a “matter of
contract”: “a party can be forced to arbitrate only those issues it
specifically has agreed to submit to arbitration.” First Options of Chi.,
Inc. v. Kaplan, 514 U.S. 938, 942-43, 945 (1995). Because arbitrators
“derive their authority to resolve disputes” from the parties’ advance
agreement, it is ordinarily for courts—not arbitrators—to decide
whether a particular dispute falls within the scope of the parties’
agreement empowering the arbitrators. AT&T Techs. v. Commc’ns
Workers of Am., 475 U.S. 643, 648-49 (1986); see also BG Grp. PLC v.
Republic of Argentina, 572 U.S. 25, 34 (2014). Any agreement to assign
the decision of this so-called “arbitrability” question to the arbitrators
themselves must be “clear and unmistakable” to avoid “forc[ing]
unwilling parties to arbitrate a matter they reasonably would have
thought a judge . . . would decide.” First Options, 514 U.S. at 944-45; see
2
id. (noting a party “might not focus upon . . . the significance of having
arbitrators decide the scope of their own powers”).
When applying this legal framework to a particular contract, the
words chosen by the parties should be the beginning and end of the
inquiry. Unlike the Court, I begin by analyzing that article.
I.
Article 16.16 of the parties’ System Operating Agreement adopts
a “Dispute Resolution Procedure.” It begins by providing that
[a]ny dispute between the Parties concerning this
Agreement (other than Claims by a third party under
which a Party hereto is claiming indemnity, and such third
party claim is in litigation) shall be resolved under the
mediation and binding arbitration procedures of this
Article 16.16.
Thus, the parties begin by carving out certain disputes from the scope of
their procedure, which has both mediation and arbitration components.
As explained below, the arbitration component of the procedure further
limits its own scope.
Article 16.16 goes on to say that the parties “will first attempt in
good faith to resolve all disputes” through management-level
negotiations. “If any party believes further negotiations are futile, such
Party may initiate the mediation process by so notifying the other
Parties to the dispute . . . in writing.” Those parties “shall then attempt
in good faith to resolve the dispute by mediation” under the AAA’s
“Commercial Rules.” “If the dispute has not been resolved pursuant to
mediation within sixty (60) days after initiating the mediation process,
3
the dispute shall be resolved through binding arbitration, as follows:
. . . .”
What follows is article 16.16.1, which is—or should be—at the
heart of this case. That article provides:
If any dispute or controversy arises between the parties out
of this Agreement, the alleged breach thereof, or any tort
in connection therewith, or out of the refusal to perform the
whole or any part thereof, and the Parties are unable to
agree with respect to the matter or matters in dispute or
controversy, the same shall be submitted to arbitration
. . . in accordance with the rules of the AAA and the
provisions in this Article 16.16. (emphases added)
Viewed as a whole, the parties’ chosen words create a substantive
condition that narrows the agreement to arbitrate—similar to what the
Court calls a “limited arbitrability” clause: “If” certain conditions are
met, including that the parties’ dispute falls within the agreed scope,
then that dispute “shall be submitted to arbitration” under the AAA
Rules and the provisions of the Agreement. In turn, AAA Commercial
Rule 7(a) provided at the relevant time that an arbitrator “shall have
the power to rule on his or her own jurisdiction, including any objections
with respect to the existence, scope, or validity of the arbitration
agreement or to the arbitrability of any claim or counterclaim.” AM. ARB.
ASS’N, Commercial Arbitration Rules and Mediation Procedures 13
(2013).
The question before us is whether this language as a whole clearly
and unmistakably provides that an arbitrator, not a court, will decide
whether the conditional “if” clause has been satisfied—in other words,
decide whether the dispute “arises . . . out of this Agreement” and
otherwise meets the agreement’s specified conditions. The answer is no
4
because as a matter of text and logic, the “if” clause is a substantive
condition precedent to arbitrators acquiring the power to decide
anything at all. It is only “if” the specified conditions are met
(antecedent) that the parties have agreed to allow arbitrators to decide
their dispute (consequent), including any issues that may then arise
regarding the arbitrators’ jurisdiction and any questions the parties
may choose to submit to the arbitrators regarding the scope of the
agreement.
Respondent MP Gulf urges us to overlook this structure and
compel arbitration without deciding ourselves whether the “if” clause
has been satisfied. But in doing so, MP Gulf commits the logical error
of using the consequent to determine the antecedent—that is, it puts the
cart before the horse.
Any other reading makes this agreement a self-contradictory
muddle. As just discussed, the agreement’s plain text provides that a
dispute shall be submitted to arbitration in accordance with the AAA
rules only “if” that dispute is within the agreed scope. But if the Court
is correct about what AAA Rule 7(a) means (which it is not as I explain
in Part II.B.), then the agreement also says by incorporation that the
arbitrators have the exclusive power to determine if a dispute is within
the agreed scope. That reading of the rule is obviously inconsistent with
the agreement’s directive that a disagreement about arbitrability needs
to be resolved in favor of the parties’ dispute falling within the scope of
the agreement to arbitrate before that dispute will even be submitted to
arbitrators under the AAA rules. These conflicting signals about “who
decides what” fail to satisfy the First Options test of clearly and
5
unmistakably assigning questions of arbitrability to the arbitrator for
decision.
The Court relegates to a footnote its thoughts about this central
contract-interpretation question: did the parties agree to substitute
arbitrators for courts as the decisionmakers regarding whether the “if”
clause of this particular agreement has been satisfied? See ante at 42
n.30. In addition, the Court does not examine how other decisions have
analyzed the effect of similar conditional language. Rather, its footnote
speculates that certain decisions would have come out the same way if
the carve-out agreements in those cases had been written more like the
expressly conditional agreement here. See id.I disagree because the interpretive question as framed by the U.S.
Supreme Court is whether the language chosen by the parties shows
that they “clearly and unmistakably” intended to delegate arbitrability
questions to the arbitrator. AT&T Techs., 475 U.S. at 649; see also First
Options, 514 U.S. at 944. And their choice here to use expressly
conditional language (“If XYZ, then arbitrate under the AAA rules”)
rather than a limitation (“Arbitrate XYZ under the AAA rules”) or a
carve-out (“Arbitrate all disputes except ABC under the AAA rules”) is
an even clearer method of signaling that the parties did not intend to
empower an arbitrator to decide under the AAA rules whether the
conditions—XYZ—have been satisfied.
II.
Rather than focusing on the contract, the Court poses and
answers a different set of questions informed by extensive taxonomies
of cases that bear little relationship to the wording and structure of this
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particular agreement. Not only is exploring those questions
unnecessary to our decision, it obscures that courts nationwide are
actually quite closely divided on the very issue presented here: does an
agreement to arbitrate fewer than “all” disputes under the AAA rules
make arbitrators the sole decisionmakers regarding whether a
particular dispute must be arbitrated? Moreover, the Court’s proposed
answers conflict with decisions of the U.S. Supreme Court and our own
federal circuit as explained below, and they knee-cap our Court’s recent
precedent along the way. 1
Specifically, the Court begins by advising that an agreement to
arbitrate “any and all disputes” in accordance with the AAA rules would
establish a clear and unmistakable agreement to delegate arbitrability
decisions to the arbitrator, and it explores how reams of cases bear on
that conclusion. The Court’s conclusion is an interesting one, and it is
significant given its impact on our other cases as just noted. I address
one key aspect of this advisory conclusion in Part II.B. below: whether
AAA Rule 7(a) is in fact an exclusive delegation of power to arbitrators
to determine arbitrability.
But assuming its correctness for the moment, the Court’s
conclusion is also an unnecessary one that does not apply here because
this particular agreement is not to arbitrate “any and all disputes.”
1See ante at 13 n.11 (recognizing the tension between its holding and
our recent decision in Jody James Farms, JV v. Altman Group, Inc., 547
S.W.3d 624, 633 (Tex. 2018), that incorporation of the AAA rules does not
delegate to the arbitrator questions regarding the arbitrability of claims
involving a non-signatory), 22 n.16 (limiting our recent decision in Robinson v.
Home Owners Management Enterprises, Inc., 590 S.W.3d 518, 531 (Tex. 2019),
regarding arbitration of class-wide claims).
7
Rather, the agreement contains both (in the Court’s terminology) a
“carve-out” clause from the overall dispute-resolution procedure in
Article 16.16 as well as a substantive precondition similar to a “limited
arbitrability” clause in Article 16.16.1. I consider what other courts
have said about the effect of such clauses next.
A.
The Court holds that its interpretation of Rule 7(a) as an
exclusive delegation of power to arbitrators to determine arbitrability
does not change when the scope of the arbitration clause chosen by the
parties is narrower than “any and all possible disputes.” Ante at 31-32.
This holding is incorrect and creates a split between our jurisprudence
and that of the Fifth Circuit.
As the Court acknowledges earlier in its opinion (at 15), the Fifth
Circuit held in Henry Schein (following a remand from the U.S. Supreme
Court) that an agreement to AAA arbitration for some types of claims
but not others “incorporates the AAA rules—and therefore delegates
arbitrability [to the arbitrator]—for all disputes except those under the
carve-out.” Archer & White Sales, Inc. v. Henry Schein, Inc., 935 F.3d
274, 281 (5th Cir. 2019). Thus, the court had the power to determine
whether the carve-out applied. Id. at 282.
The Second Circuit agrees and has explained the logic and
contours of this position. “Where . . . the arbitration agreement is
narrower, vague, or contains exclusionary language suggesting that the
parties consented to arbitrate only a limited subset of disputes,
incorporation of rules that empower an arbitrator to decide issues of
arbitrability, standing alone, does not suffice to establish the requisite
8
clear and unmistakable inference of intent to arbitrate arbitrability.”
DDK Hotels, LLC v. Williams-Sonoma, Inc., 6 F.4th 308, 319 (2d Cir.
2021). As the court observed, “whether the AAA rules, including Rule
7(a), apply turns on the conditional premise that the dispute falls within
the [scope of the agreement]. If it does not, then the AAA rules do not
govern and no delegation of authority to the arbitrator to resolve
questions of arbitrability arises.” Id. at 321. The Delaware and
Mississippi Supreme Courts also agree, as do many of our Texas
appellate courts. 2
I would join the Second and Fifth Circuits and the Delaware and
Mississippi Supreme Courts in holding that a limited agreement to
arbitrate under the AAA rules does not alone empower arbitrators to
decide whether the dispute falls within the agreed limits. 3 The Court
rejects this position, agreeing instead with the Sixth, Ninth, and
Eleventh Circuits and the Kentucky Supreme Court that when the
parties agree to a carve-out arbitration clause and select the AAA rules
(e.g., “Arbitrate all disputes except ABC under the AAA rules”), they
2 See James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d 76, 80-81
(Del. 2006) (“Since this arbitration clause does not generally refer all
controversies to arbitration, the federal majority rule does not apply, and
something other than the incorporation of the AAA rules would be needed to
establish that the parties intended to submit arbitrability questions to an
arbitrator. There being no such clear and unmistakable evidence of intent, the
trial court properly undertook the determination of substantive arbitrability.”);
Nethery v. CapitalSouth Partners Fund II, L.P., 257 So. 3d 270, 274-75 (Miss.
2018); see also ante at 23 nn.19-20 (collecting cases from the Texas courts of
appeals).
3 Cf. Jody James Farms, 547 S.W.3d at 633 (“The insurance policy
directly incorporates the AAA rules only for these disputes, not for disputes
between Jody James and unspecified third parties.” (emphasis added)).
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delegate to the arbitrator the question whether the dispute falls within
the carve-out. Ante at 35-40.
But all of those cases are distinguishable because they involved a
different kind of agreement: an arbitration clause with a carve-out.
Their reasoning does not apply to an arbitration clause with express
preconditions to arbitration under the AAA rules like the one we have
here. For example, the Court explains that in a carve-out case, “the
parties [have] agreed (by incorporating the AAA rules) that all disputes
over arbitrability would be resolved by the arbitrators, and ‘the effect of
the carve-out provision is to state that if an arbitrator determines that
[a party has asserted a carved-out claim], then the arbitrator must refer
that claim to a court if [the party] desires.” Ante at 37 (quoting Ally
Align Health, Inc. v. Signature Advantage, LLC, 574 S.W.3d 753, 758
(Ky. 2019)).
In this case, however, the parties have not agreed that “all”
disputes over arbitrability will be resolved by arbitrators. Thus, unlike
in those cases, there is no conflation of “the two separate and distinct
questions of (1) who decides what claims are arbitrable with (2) what
claims are arbitrable.” Ally Align Health, 574 S.W.3d at 758. The
parties here agreed that if certain express preconditions are met,
including that the claim falls within a specified scope of what claims are
arbitrable, the arbitrators are then empowered to decide that claim
under the AAA rules “and the provisions in this Article.” Under the
Article, that power to decide—including the power to decide what claims
are arbitrable—only belongs to arbitrators “if” the substantive
preconditions are met. The parties did not clearly and unmistakably
10
delegate to arbitrators the power to decide whether the preconditions
are met.
As a matter of black-letter contract law, “[w]hen an arbitration
agreement incorporates by reference outside rules, the specific
provisions in the arbitration agreement take precedence and the
arbitration rules are incorporated only to the extent that they do not
conflict with the express provisions of the arbitration agreement.”
Americo Life, Inc. v. Myer, 440 S.W.3d 18, 24 (Tex. 2014) (quotation
marks omitted). Applying this principle does not “render the AAA’s
jurisdictional rule [7(a)] superfluous,” Blanton v. Domino’s Pizza
Franchising LLC, 962 F.3d 842, 847 (6th Cir. 2020), as the Sixth Circuit
and its aligned courts have concluded. Instead, it recognizes that the
agreement’s substantive preconditions on use of the AAA rules should
take precedence over the application of particular rules. In cases where
the preconditions are met, the arbitrators are empowered to use Rule
7(a) to decide any questions of jurisdiction that the parties may raise
during the arbitration.
The Court also contends that the U.S. Supreme Court’s decision
in Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010), requires
courts to distinguish between the scope of an agreement to arbitrate and
a separate provision of the same contract that delegates the arbitrability
question to arbitrators. See ante at 41-42. But it is far from apparent
that an average contracting party would understand that sort of multi-
layered severability distinction—which the Court tries to illustrate by
citing an article’s abstruse analogy to a hole in a doughnut hole, ante at
45 n.31—with the clarity and unmistakability First Options requires.
11
Moreover, an examination of Rent-A-Center reveals that it was
addressing a far different contract and arbitration challenge than the
one at issue here and in Henry Schein. The parties in Rent-A-Center
entered into a stand-alone agreement to arbitrate employment disputes.
One provision in the agreement provided for arbitration of all disputes
arising out of the plaintiff’s employment, while a separate provision
provided that the arbitrator—and not any court—had exclusive
authority to resolve any dispute relating to the applicability or
enforceability of the agreement. 561 U.S. at 65. The agreement did not
reference the AAA rules.
The plaintiff employee sued for employment discrimination and
Rent-A-Center moved to compel arbitration. The employee argued that
a court should determine whether enforcing the arbitration agreement
would be unconscionable, but the Supreme Court disagreed. It observed
there was no dispute that the delegation provision clearly and
unmistakably provided the arbitrator with exclusive authority to decide
whether the agreement was enforceable. See id. at 69 n.1. Nor was
there any disagreement that the employee’s discrimination suit as well
as his claim that the agreement was unconscionable were within the
scope of the agreement’s broad promise to arbitrate all disputes arising
out of his employment.
Instead, the only question in dispute was whether the plaintiff’s
claim of unconscionability challenged the validity of the contract as a
whole or of the delegation provision specifically. Id. at 70-72. The
Supreme Court concluded that the plaintiff was challenging the
unconscionability of the contract and of particular procedural provisions
12
regarding fee-splitting and discovery limits in arbitration. Id. at 72-75.
It therefore treated the separate delegation and scope-of-arbitration
provision as valid and enforced it, leaving the validity challenges for the
arbitrator to decide. Id. at 72.
The routine severability analysis in Rent-A-Center does not shed
any light on the proper decision in this case, which involves no validity
challenges to all or any part of the agreement. Here, the agreement
includes a single combined sentence that addresses the scope of the
agreement to arbitrate, incorporates the AAA rules including Rule 7(a)
regarding the arbitrator’s power to decide arbitrability, and uses
expressly conditional language (absent in Rent-A-Center) to describe the
relationship between the two. Although I agree with my colleagues in
the majority that the scope of the arbitrator’s authority to decide
questions of arbitrability can be a distinct inquiry from the scope of the
agreement to arbitrate, the results of those separate analyses should
nonetheless be identical when the phrase that incorporates the AAA
rules is grammatically subject to the same textual limitations the
parties expressed regarding their agreement to arbitrate.
To the extent that reconciling the two analyses “might seem like
a chicken-and-egg problem,” that tension “is resolved by application of
the presumption favoring a judicial determination.” Jody James Farms,
547 S.W.3d at 633. “After all, the basic objective in this area is not to
resolve disputes in the quickest manner possible, no matter what the
parties’ wishes . . . , but to ensure that commercial arbitration
agreements, like other contracts, are enforced according to their terms.”
First Options, 514 U.S. at 947 (quotation marks omitted).
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Finally, unlike in Rent-A-Center, the parties here disagree about
(1) whether their dispute falls within the scope of the promise to
arbitrate, (2) whether the AAA rules come into play in deciding that
scope issue given the conditional structure of the combined sentence,
and (3) even if the AAA rules apply, whether the Rule 7(a) arbitrability
provision—which (unlike the Rent-A-Center agreement) does not
reference an exclusive delegation to the arbitrator—prevents courts
from deciding the scope issue.
In summary, I conclude regarding the second issue that an
affirmative answer to the first (scope) issue is a condition precedent to
the application of the AAA rules under the particular language of this
agreement, so that answer must be given by a court. As explained in
Part II.B. below, I also conclude regarding the third issue that even if
the AAA rules apply, Rule 7(a)’s delegation language is not exclusive
and thus does not deprive courts of the power to address the scope issue.
For either of those independent reasons (or both together), I would hold
that the court of appeals erred by failing to address the first issue
regarding scope before compelling arbitration, and I would reverse and
remand for it to do so.
B.
The Court’s holding that the AAA rules clearly and unmistakably
delegate arbitrability decisions to arbitrators in place of courts is
founded on its interpretation of Rule 7(a). It characterizes Rule 7(a)’s
statement that the arbitrator “shall have the power to rule on” the
arbitrability of a claim as “mandatory and exclusive language” that
“clearly and unmistakably delegate[s] that decision exclusively to the
14
arbitrator,” thereby depriving courts of the power to address it. Ante at
28-29. That view is flatly contrary to federal law and U.S. Supreme
Court precedent.
As First Options explains, an arbitration clause can grant
arbitrators at most “primary authority to decide whether a party has
agreed to arbitrate.” 514 U.S. at 942 (emphasis added). Under the
Federal Arbitration Act, courts still retain the ability to vacate an
arbitration award “where the arbitrators exceeded their powers.”
9 U.S.C. § 10(a)(4). 4 Thus, as a matter of law, Rule 7(a) cannot mean
what the Court says; the authority that the rule gives arbitrators to
decide the scope of their own powers does not exclude courts from
policing the limits on those powers drawn by the arbitration agreement’s
unambiguous language.
In addition, the AAA itself acknowledged Rule 7(a)’s non-
exclusive nature in its September 2022 amendment. The rule now
provides that “[t]he arbitrator shall have the power to rule on his or her
own jurisdiction, including any objections with respect to the existence,
scope, or validity of the arbitration agreement or to the arbitrability of
any claim or counterclaim, without any need to refer such matters first
to a court” (emphasis added). AM. ARB. ASS’N, Commercial Arbitration
4 By way of illustration, Jody James Farms involved an appeal of the
trial court’s final judgment denying Jody James’s motion to vacate an
arbitration award and confirming the arbitration award against Jody James.
547 S.W.3d at 630. In reviewing that determination, this Court did not
approach the inquiry through the lens of whether the arbitrator had exceeded
its powers under section 10(a)(4), instead identifying the relevant question as
“whether a binding arbitration agreement exist[ed]” in the first place. Id. at
633.
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Rules and Mediation Procedures 14 (2022). Although the amendment is
not applicable here, it confirms that the function of Rule 7(a) is to give
arbitrators non-exclusive power to address any arbitrability issues that
may arise during an arbitration, while not disturbing the court’s role as
an available decisionmaker for arbitrability issues that may come before
it in a motion to compel. By indicating that arbitrability matters can
be—but need not be—referred to a court, the AAA shows its
understanding that both courts and arbitrators have the power to decide
arbitrability issues under its rules.
The Court does not engage with this new language. But the
Court’s reasoning depends on arbitrators having exclusive power to
decide arbitrability, which suggests that its decision today will not apply
to arbitrations governed by the new rule.
The 2022 amendment recognizing that both courts and
arbitrators have a role to play in deciding arbitrability questions also
shows why the Florida Supreme Court’s recent decision on this issue is
wrong. According to that court, “[t]he question of whether a claim is
arbitrable must, by necessity, be determined before the commencement
of arbitration”; thus, recognizing courts’ continued power to decide
questions of arbitrability when the parties have incorporated the AAA
rules would render Rule 7(a) meaningless. Airbnb, Inc. v. Doe, 336
So. 3d 698, 705 (Fla. 2022) (emphasis added). Not so.
Whether parties commence an arbitration by agreement or as a
result of a court’s ruling on a motion to compel, arbitrators can and
frequently do decide issues regarding their jurisdiction—including the
arbitrability of a claim as permitted by Rule 7(a)—that arise in that
16
arbitration proceeding. That role is the very one contemplated by the
amended rule as well as the cases on which the Court relies. See, e.g.,
Ally Align Health, 574 S.W.3d at 758 (“[I]f an arbitrator determines that
[a party has asserted a carved-out claim], then the arbitrator must refer
that claim to a court if [the party] desires.”).
On the other hand, arbitrability disputes must necessarily be
resolved by a court in some cases, and practical difficulties are sure to
flow from the Court’s holding that the AAA rules oust courts from this
role entirely. For example, in addition to filing this suit for declaratory
judgment, Total also filed an arbitration claim with the International
Institute for Conflict Prevention and Resolution (IICPR) as required by
the parties’ separate Cost Sharing Agreement. Under the Court’s
decision today, if Total had moved to compel arbitration of its IICPR
claim—as MP Gulf did with respect to its AAA claim under the System
Operating Agreement—the trial court would likewise be bound to refer
any questions concerning the arbitrability of that claim to the
arbitrators in the IICPR proceeding. And while each organization’s
rules may provide authority for its arbitrators to determine their own
jurisdiction, it is not clear how such a finding would bind the trial court
with respect to other pending proceedings (before a separate
organization under a separate agreement) without begging the very
same question the Court confronts at the outset: whether courts retain
any authority to determine de novo the scope of either agreement’s
incorporation of arbitral rules.
Finally, the approach the Court follows in parsing Rule 7(a)’s
phrase “shall have the power” is linguistically flawed. The word “shall”
17
in grants of jurisdiction does not signal exclusivity. For example,
although federal district courts “shall have original jurisdiction of all
civil actions arising under” federal law, 28 U.S.C. § 1331, that grant does
not oust state courts of concurrent jurisdiction. See Tafflin v. Levitt, 493
U.S. 455, 458-59 (1990). And the definite article “the” is “used to
designate a particular person or thing, or a particular class of persons
or things.” 5 Although it can be a word of limitation, as the Court
explains, that does not mean it is a word of exclusion—particularly when
the thing specified is capable of being shared with other people or things
not mentioned in the sentence. In particular, any limitation indicated
by using “the” in referring to a thing that is the object of a sentence
would naturally apply to that sentence’s subject, not to another noun not
mentioned. 6 So at most, Rule 7(a)’s statement that the arbitrator “shall
have the power to” do certain things introduces a specified (or perhaps
limited) list of powers possessed by the sentence’s subject: the arbitrator.
It suggests nothing about whether other unmentioned people—such as
judges—shall also have some of those powers.
Because Rule 7(a)—both before and after its amendment—does
not clearly and unmistakably vest decisionmaking power over
arbitrability in arbitrators alone, it does not deprive Texas courts of
their ability to resolve the parties’ disagreement regarding whether
their dispute falls within the scope of the arbitration clause.
5 Webster’s New International Dictionary 688 (2d ed. 1934).
6 For example, if I said “he shall wash the red car,” that statement
designates what he will wash and may be limiting if cars of other colors are
also waiting to be washed. But the statement does not exclude an unmentioned
third party from also washing the red car.
18
Accordingly, I would hold that the court of appeals erred in failing to
reach that issue and reverse and remand for it to do so.
C.
I conclude with a brief response to the concurring opinion, which
suggests that we need not resolve whether a trial court or an arbitrator
is the correct entity to decide whether this dispute falls within the scope
of the Cost Sharing Agreement’s arbitration clause. Instead, we can
decide that question ourselves whenever the clause unequivocally
applies to the dispute and that answer is consistent with a judgment
below compelling arbitration. Ante at 8-10 (Bland, J., concurring). I
agree with the Court (ante at 49 n.34), however, that this reasoning does
not provide an alternative ground for affirmance.
The Court and this dissent start with the question of who decides
arbitrability for an important reason: if the parties’ agreement provides
that the arbitrability issue is for the arbitrator to decide (as the Court
holds), we should not issue an advisory opinion telling the arbitrator
how to do the job that the parties deliberately assigned to him or her.
The concurrence’s certainty that the arbitrator would inevitably
determine that the arbitration agreement applies anyway is the mirror
image of the practice the U.S. Supreme Court rejected in Henry Schein,
in which some courts “short-circuit[ed] the process and decide[d] the
arbitrability question themselves if the argument that the arbitration
agreement applies to the particular dispute [was] ‘wholly groundless.’”
139 S. Ct. 524, 527-28 (2019). As the Supreme Court explained, “[w]hen
the parties’ contract delegates the arbitrability question to an arbitrator,
19
. . . a court possesses no power to decide the arbitrability issue.” Id. at
529.
Second, in my view, the arbitrability issue is even more complex
than the concurrence suggests. As the Court notes, Total’s request for a
declaratory judgment construing the Cost Sharing Agreement
potentially implicates three agreements: not only the Cost Sharing
Agreement itself (which has a forum selection clause choosing litigation
in Harris County) but also the System Operating Agreement (which MP
Gulf argues requires AAA arbitration) and the Chinook Operating
Agreement (which Total argues requires IICPR arbitration). Ante at 2-
3. The concurrence addresses part of this tangled web, concluding that
the System Operating Agreement’s arbitration clause trumps the Cost
Sharing Agreement and encompasses this dispute.
As the Court points out, the parties’ arguments on this issue are
extensive and detailed. Ante at 46 & n.32. I express no view on whether
the concurrence’s analysis is correct as far as it goes, as we have no
power to do so under the Court’s holding that the arbitrability question
is for the arbitrators to resolve. But I believe it is important to note for
completeness that other arguments not addressed by the Court or the
concurrence will presumably be before the arbitrators as well, including
Total’s arguments that this cost-sharing dispute is more closely related
to the Cost Sharing Agreement and the Chinook Operating Agreement
and that its Harris County suit and IICPR arbitration were filed first
and involve logically antecedent issues so they should proceed first
under principles of dominant jurisdiction. Because I would hold that
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these arguments should be addressed by courts rather than arbitrators,
I respectfully dissent.
J. Brett Busby
Justice
OPINION FILED: April 14, 2023
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