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74, 76; Davidson, supra, 128 S.W.3d at pp. 228, 230; Weekley Homes, L.P. v. Rao (Tex.Ct.App. 2011) 336 S.W.3d 413, 421; In re Golden Peanut Co., LLC, supra, 269 S.W.3d at p. 309; In re Champion Technologies, Inc. (Tex.Ct.App. 2006) 222 S.W.3d 127, 132 (Champion Technologies); In re Brookshire Bros., Ltd. (Tex.Ct.App. 2006) 198 S.W.3d 381, 386.) And, under Texas law, the ―prospective‖ application of a contract change excludes claims that have accrued or are known to the employer before the change takes effect. (See Halliburton, supra, 80 S.W.3d at pp. 569–570; Davidson, supra, 128 S.W.3d at p. 228; Odyssey Healthcare, supra, 310 S.W.3d at p. 424; In re Golden Peanut Co., LLC, supra, 269 S.W.3d at p. 309; In re Brookshire Bros., Ltd., supra, 198 S.W.3d at p. 386; Butt Grocery Co., supra, 17 S.W.3d 360 at p. 370; Carey, supra, 669 F.3d at p. 209, fn. 4 [applying Texas law]; Morrison, supra, 517 F.3d at p. 257 [same].) ―To interpret the arbitration clause to apply retroactively would cause [the employee] to forego her vested right to litigate an accrued claim.‖ (In re Brookshire Bros., Ltd., supra, at p. 386, italics added.) Two hypotheticals demonstrate the mischief permitted by an illusory arbitration agreement. For instance, Neiman Marcus could learn about a California employee‘s sexual harassment claim when the employee raises the issue with the personnel department in an effort to resolve the dispute informally. The company then conducts an investigation, determines the claim might have merit, and decides to change the Agreement to provide greater protection against liability. It gives written notice to employees that the Agreement is being amended by stating: (1) a sexual harassment claim brought by a California employee shall be heard by a panel of three arbitrators; (2) the arbitration award in such a case shall be subject to judicial review for errors of fact and law; and (3) the current choice-of-law clause shall not apply to that type of claim and instead California law shall govern the Agreement and arbitration. (See Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1361.) Because the parties appear close to a settlement of the sexual harassment matter, the employee does not file a 34
claim with the AAA within 30 days after notice. Ultimately, the dispute is not amicably resolved, and, upon initiating arbitration, the employee is bound by the new provisions. To take another example, Neiman Marcus decides to reorganize its sales structure in an area on the East Coast. In one state, some stores close, resulting in the layoff of several at-will employees. Shortly after the layoffs are completed, the federal circuit court for that state renders a decision narrowly construing the exceptions to the at-will doctrine, interpreting state law more favorably to employers than the state courts. Neiman Marcus promptly amends the Agreement to shorten the notice period from 30 days to 10, effective immediately, and terminates the Agreement so it does not apply in the affected state. No employees file a claim with the AAA before the 10-day period expires. More than 10 days after notice of the changes, some employees file individual suits in state court, alleging common law claims for termination in violation of public policy, termination in violation of an implied-in-fact contract, and breach of the covenant of good faith and fair dealing. Neiman Marcus removes the civil actions to the appropriate federal district courts. (See 28 U.S.C. § 1441(b).) It promptly seeks to dismiss the suits for failure to state a claim upon which relief can be granted, relying on the recent federal circuit decision. (See Fed. Rules Civ.Proc., rule 12(b)(6), 28 U.S.C.) The vice of the modification provision in this case is that it allows the employer to manipulate the arbitration process, tailoring it to fit specific cases, either by making the process more difficult or more expensive for the employee, or by revoking the Agreement in the belief that a judicial forum is preferable. Accordingly, if a claim has accrued or if the employer knows about a claim, all parties to the Agreement should be bound by the version in effect at that time; no changes should apply after the point of accrual or knowledge. An employer often acquires knowledge of an employee‘s claim through the procedures established within the company to respond to unlawful employment practices. (See State Dept. of Health Services v. Superior Court (2003) 31 Cal.4th 1026, 1045–1048 [if employer adopts appropriate antiharassment policies and has communicated essential 35
Page 1 and 2: Filed 4/17/12 CERTIFIED FOR PUBLICA
Page 3 and 4: I BACKGROUND The allegations and ev
Page 5 and 6: (2) ―Violations of any common law
Page 7 and 8: attorney of record, Astineh Arakeli
Page 9 and 10: 58 Cal.App.3d 716, 719-720, disappr
Page 11 and 12: ―But, this difference in treatmen
Page 13 and 14: have exclusive authority to resolve
Page 15 and 16: not ‗clearly and unmistakably‘
Page 17 and 18: arbitrability. Rent-A-Center cautio
Page 19 and 20: the court must then determine wheth
Page 21 and 22: Simply put, Neiman Marcus has a sub
Page 23 and 24: agreement illusory because Hallibur
Page 25 and 26: eimbursements for 10 years, the pha
Page 27 and 28: once published the amendment would
Page 29 and 30: estriction merely delays, for an in
Page 31 and 32: Finally, in Carey v. 24 Hour Fitnes
Page 33: claims — it does not go far enoug
Page 37 and 38: cited or discussed. Kellogg, Nabors
Page 39 and 40: (D.Colo. 2001) 178 F.Supp.2d 1196,
Page 41 and 42: harassment. Nautilus and the indivi
Page 43 and 44: out of [the plaintiff’s] employme
Page 45 and 46: v. Kaplan, supra, 514 U.S. at p. 94
Page 47 and 48: Rothschild, J., dissenting. I respe
Page 49 and 50: concerning the contours of Texas la

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