Texas Court Follows Illinois on Binding Minors to Parents’ Arbitration Agreements, Case #2

In this morning’s post, we covered an Illinois case in which a child, injured at an amusement park, had to arbitrate her claim against the venue because her mother had signed an arbitration agreement on her behalf.  That case was brought against Chicago Urban Air.  This second case is totally different.  The defendant here is Pearland Urban Air LLC (Pearland).

The issue in Pearland Urban Air, LLC v. Cerna was slightly different from Headlee.  Ms. Cerna took her child, R.W., to Pearland in August 2020.  On that occasion, she signed a arbitration agreement with no set duration.  She returned to Pearland with R.W. in November 2020, and on this second occasion, she signed no arbitration agreement.  R.W. was injured on the second visit.  Ms. Cerna sued for negligence, and Parkland moved to compel arbitration.  The trial court denied the motion, without stating its grounds for doing so.

The Texas Fourteenth Court of Appeals found that the arbitration agreement that Ms. Cerna signed in August 2020 unquestionably governed.  Her only argument was that R.W. never signed the agreement.  Unlike Illinois, the Texas court did not rely on the third-party beneficiary doctrine, or at least it doesn’t call it that.  Rather, under Texas law, parents can sign arbitration agreements on behalf of their children and bind those children through what Texas law calls an equitable principle of direct-benefits estoppel.  Having accepted the benefits of the agreement by enjoying Pearland’s offerings, R.W. bound himself to the agreement’s terms.

As to Ms. Cerna’s arguments that the August agreement did not cover the November visit, that relates to the scope of the agreement between the parties.  Questions of scope can be determined buy the arbiter.  Similarly, Ms. Cerna argued that Texas’s Arbitration Act prohibits arbitration of personal injury claims absent an agreement signed by each party and their attorneys.  That argument constitutes a challenge to the arbitration provision itself . Ordinarily, a court could decide such an issue, but here the arbitration agreement delegates such questions to the arbiter.

Chief Justice Christopher (left) dissented on this last issue.  She viewed the issue as one of contract formation.  Absent an agreement signed by the parties and their attorneys, there is no agreement to arbitrate this personal injury claim as a matter of Texas law.  However, Chief Justice Christopher believed the case to be governed by the Federal Arbitration Act, which has no signature requirement, and so she concurred on that basis.

I note that this is a less alarming version of what I have called arbitration-clause bootstrapping and David Horton has discussed as Accidental Arbitration and as Infinite Arbitration Clauses.  It’s just not reasonable to think that just because a person signs a form for one visit a venue that they agree to that form’s terms for eternity.  Why is it a problem to require that the venue provide the form with each visit?  They change their terms regularly.  Why not get consent regularly?

For more alarming examples, see our recent post on the Airbnb case in which Airbnb claimed that a guest injured at a rental was bound by its arbitration clause because, years earlier, he had registered on its site.  More notoriously, Disney tried to compel arbitration in the case of a husband of a woman who died after eating in a Disney-affiliated restaurant on the ground that he had once had a trial subscription to Disney +.  That wasn’t Disney’s only argument, but it is noteworthy that the company even tried it.