Since (again) becoming a one-party bastion in 1999, the Supreme Court of Texas has lost influence with other states’ high courts.  It has also drawn accusations of pro-business bias and undue delay.

The Court’s 5-4 ruling last Friday in Perry Homes v. Cull, No. 05-0882 (Tex. May 2, 2008), probably won’t help.

The case.  The Culls, husband and wife, bought a new dwelling for their retirement years from Perry Homes in 1996.  They discovered foundation problems and other construction defects.  In October 2000, they filed suit in Tarrant County district court.  On December 6, 2001, four days before a trial setting, they persuaded the trial judge to send the dispute to arbitration.  The defendants unsuccessfully petitioned the Fort Worth court of appeals and the Supreme Court to undo the order.  A year later, on December 24, 2002, the arbitrator awarded the Culls $800,000 in actual and punitive damages, fees, and expenses.

Perry Homes asked the district court to vacate the award on the ground, among others, that the Culls waived their right to arbitrate by substantially invoking the judicial process.  The court denied the motion.  The court of appeals affirmed.

Perry Homes petitioned the Texas Supreme Court to grant discretionary review.  Fourteen months later, the Court took the case.  It heard oral argument on March 20, 2007, and rendered its decision reversing the lower courts on May 2, 2008.

Timeline.  The parties

  • litigated in court for 14 months (Oct. 2000-Dec. 2001),
  • arbitrated 12 months (Dec. 2001-Dec. 2002),
  • battled over confirming the award in district court 14 months (Dec. 2002-Feb. 2004),
  • fought in the court of appeals 18 months (Feb. 2004-Aug. 2005), and
  • spent 31 months before the Supreme Court (Oct. 2005-May 2008).

Decision.  The appeal to the Supreme Court raised two main questions: 

Who decides the "waiver" question — a court or the arbitrator?

— and —

Did the district court abuse its discretion in concluding that the Culls didn’t waive their right to arbitrate?

The majority held that a court, not an arbitrator, must determine the question of waiver by "litigation conduct" and that the trial judge did abuse his discretion.

Critique.  Blawgletter found the Court’s analysis of the first issue the more troubling.  We don’t mind so much its gloss on Howsam v. Dean Witter Reynolds, Inc., 531 U.S. 79, 84 (2002), where that Court said "the presumption is that the arbitrator should decide ‘allegations of waiver, delay, or a like defense to arbitrability.’"  Federal courts of appeals agree that the Howsam Court didn’t mean waiver by "litigation conduct", which the court considering whether to compel arbitration is in a better position to evaluate.  It meant waiver by doing something like waiting too long to request arbitration. 

No.  The trouble comes from the Perry Homes Court’s glossing over a possibly key distinction — that the arbitration had already happened.  Couldn’t — shouldn’t — the defendants have asked the arbitrator to find waiver of the Culls’ right to arbitrate?  The arbitration clause covered "all claims, demands, disputes, controversies, and differences that may arise between the parties to this Agreement of whatever kind or nature".  Doesn’t that include a dispute over waiver?  And how is the court in a better position to judge waiver if the, um, court has already judged that there was none?  At the least, shouldn’t the loser have to show more after losing than before?  The majority (and dissent) leave us to wonder.

As for the abuse of discretion question, it drew four dissenters.  Yes, they conceded, the Culls did wait a long time to ask for arbitration and did do a lot of stuff in the district court.  But:

I conclude the record is not conclusive either that Defendants suffered prejudice as they claimed or that the Culls obtained an unfair advantage by litigation conduct as the Court holds. I also conclude that evidence before the trial court required the court to weigh and draw inferences from it and that some evidence supports the trial court’s determination that Defendants did not prove prejudice to themselves or unfair advantage to the Culls by use of the litigation process. Accordingly, I would hold that the trial court did not abuse its discretion by compelling the parties to arbitrate and I would affirm the judgment of the court of appeals.

We tend to agree with Justice Phil Johnson, who wrote the dissent. 

Observations.  The outcome wouldn’t have much bothered us, we think, if it had come out in April 2002, when the Court declined to issue a writ of mandamus.  Even then, it would have stood out among the multiple cases in which the Court gave the back of its hand to plaintiffs who alleged that defendants waived the right to arbitrate.  But we wonder at the wisdom of using the Culls’ case, after they won on the merits, to teach a lesson about waiver.  Haven’t they suffered enough — not least by having to wait 31 months for the Court to give them an answer?  Wouldn’t the bench and bar have learned more if the Court taught the lesson to a defendant that "substantially invoked" the litigation process before demanding arbitration?

We don’t buy the argument that the defendants won because Bob Perry makes lots of big political contributions.  (See The Dallas Morning News article here.)  But we admit to discomfort that the Court:

  • reached out to review an order it declined to examine six years ago;
  • waited 2.5 years to decide whether or not to uphold the order; and
  • stretched to vacate an arbitration award.

We haven’t seen a single decision, from any court, that vacated an arbitration award because a party waived the right to arbitrate.  Perry Homes cites none.  It strikes us as harsh and extreme.

Finally, as we have mentioned, the Court swayed more non-Texas courts to "follow" its legal reasoning during the six years between 1993 and 1998 than at any other time since 1940.  We proposed that the "balance" of Republican and Democratic justices in those years likely accounted for the exceptional quality and persuasiveness of the Court’s opinions.  We don’t have balance any more.

The shift to a one-party Court has coincided with a dip in influence.  Perry Homes may help illustrate why.

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Photo of Barry Barnett Barry Barnett

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck…

Clients and colleagues call Barry Barnett an “incredibly gifted lawyer” (Chambers and Partners) who is “magic in the courtroom” (Who’s Who Legal), “the top antitrust lawyer in Texas” (Chambers and Partners), and “a person of unquestioned integrity” (David J. Beck, founder of Beck Redden).

Barnett is a Fellow in the American College of Trial Lawyers, and Lawdragon has named him one of the top 500 lawyers in the United States three years in a row. Best Lawyers in America has honored him as “Lawyer of the Year” for Bet-the-Company Litigation (2019 and 2017) and Patent Litigation (2020) in Houston. Based in Texas and New York, Barnett has tried complex business disputes across the United States.

TRIAL COUNSEL
Barnett’s background, training, and experience make him indispensable to his clients. The small-town son of a Texas roughneck and grandson of a Texas sharecropper, Barnett “developed an unusual common sense about people, their motivations, and their dilemmas,” according to former client Michael Lewis.

Barnett has been historically recognized for his effectiveness and judgment. His peers chose him, for example, to the American College of Trial Lawyers and American Law Institute. His decades of trial and appellate work representing both plaintiffs and defendants have made him a master strategist and nimble tactician in complex disputes.

Barnett focuses on enforcement of antitrust laws, the “Magna Carta of free enterprise,” in Supreme Court Justice Thurgood Marshall’s memorable phrase. “Barry is one of the nation’s outstanding antitrust lawyers,” according to Joseph Goldberg, a member of the Private Antitrust Enforcement Hall of Fame. Named among Texas’s top ten antitrust lawyers of 2023, Business Today calls Barnett a “trailblazer” among the “distinguished legal minds” who “dedicate their skill and expertise to the maintenance of healthy competition in various sectors” of the Lone Star State’s booming economy. Barnett is also adept in energy and intellectual property matters and has battled for clients against a Who’s Who list of corporate behemoths, including Abbott Labs, Alcoa, Apple, AT&T, BlackBerry, Broadcom, Comcast, Dow, JPMorgan Chase, Samsung, and Visa.

Barnett commands a courtroom with calm and credibility and “is the perfect lawyer for bet the company litigation,” said Scott Regan, General Counsel of former client Whiting Petroleum. His performance before the Supreme Court in Comcast Corp. v. Behrend prompted the Court to withdraw the question on which it had granted review. The judge in a trial involving mobile phone technology called Barnett “one of the best” and that his opening statement the finest he had ever seen. Another trial judge told Barnett minutes after a jury returned a favorable verdict against the county’s biggest employer that he was one of the two best trial lawyers he’d ever come across—adding that the other one was dead.

COMPLETE PACKAGE
A versatile trial lawyer, Barnett knows how to handle a case all the way from strategic pre-suit planning to affirmance on appeal. He’s tried cases to verdict and then briefed and argued them when they went before appellate courts, including the Second, Third, Fifth, and Tenth Circuits, the Supreme Court of Louisiana, and (in the case of Comcast Corp. v. Behrend) the Supreme Court of the United States.

Barnett is a sought-after public speaker, often serving on panels and talking about topics like the trials of antitrust class actions and techniques for streamlining complex litigation. He also comments on trends in commercial litigation and the implications of major rulings for outlets such as NPR, Reuters, Law360, Corporate Counsel, and The Dallas Morning News. He’s even appeared in a Frontline program about underfunding of state pensions, authored chapters on “Fee Arrangements” and “Techniques for Expediting and Streamlining Litigation” (the latter with Steve Susman) in the ABA’s definitive treatise on Business and Commercial Litigation in Federal Courts, 5th, and commented on How Antitrust Enforcers Might Think Like Plaintiffs’ Lawyers.

HARD GRADERS
Clients and other hard graders have praised Barnett for his courtroom skills and legal acumen.

A client in a $100 million oil and gas case, which Barnett’s team won at trial and held on appeal, said Barnett and his team “presented a rare combination of strong legal intellect, common sense about right and wrong, and credibility in the courtroom.” David McCombs at Haynes and Boone said Barnett “has a natural presence that goes over well with juries and judges.”

Even former adversaries give Barnett high marks. Lead opposing counsel in a decade-long antitrust slugfest said “Barry is a highly skilled advocate. He understands what really matters in telling a narrative and does so in a very compelling manner.”

CIVIC ENGAGEMENT
Barnett relishes opportunities to collaborate with all kinds of people. At the Center for American and International Law (CAIL), founded by a former prosecutor at Nuremberg in 1947 and headquartered in the Dallas area, he has served on the Executive Committee, co-chaired the committee that produced CAIL’s first-ever strategic plan, supported CAIL’s Institute for Law Enforcement Administration and other development efforts, and proposed formation of a new Institute for Social Justice Law. CAIL’s former President David Beck said “Barry is extremely bright” and is “very well prepared in every lawsuit or professional task he undertakes.”

Barnett is also a Trustee of the New-York Historical Society, a Sterling Fellow at Yale, a member of the Yale University Art Gallery’s Governing Board, a winner of the Class Award for his work on behalf of his college class, and a proud contributor to the Yellow Ribbon Program at Harvard Law. Barnett’s pro bono work includes leading the trial team representing people who are at greatest risk of severe illness and death as a result of being exposed to the novel coronavirus SARS-CoV-2 while being detained in the Dallas County jail—work for which he received the NGAN Legal Advocacy Fund RBG Award.

At Susman Godfrey, Barnett has served on the firm’s Executive Committee, Employment Committee, and ad hoc committees on partner compensation, succession of leadership, and revision of the firm’s partnership agreement. He also twice chaired the Practice Development Committee.

KEEPING PERSPECTIVE
Barnett understands that clients face many pressures. Managing the stress is important, especially in matters that take years to resolve. He encourages clients to call him whenever they have a question or concern and to keep the inevitable ups and downs in perspective. He wants them to know that he will do his level best to help them achieve their goals. He also strives to foster trust and to make working with him a pleasure.

Cyrus “Skip” Marter, the General Counsel of Bonanza Creek in Denver and a former Susman Godfrey partner and client, said Barnett is “excellent about communicating with clients in a full and honest manner” and can “negotiate for his clients from a position of strength, because he is not afraid to take a case through a full trial on the merits.” Stacey Doré, the President of Hunt Utility Services and a former client, said that Barnett is “an excellent trial lawyer and the person you want to hire for your bet-the-company cases. He is client focused, responsive, and uniquely savvy about trial and settlement strategy.” A New York colleague said, “Barry is a joy to work with as co-counsel. He tackles complex procedural and factual hurdles capably, efficiently, and without drama.”

PERSONAL
Barnett’s wide-ranging experience and calm, down-to-earth approach enable him to connect with clients, judges, jurors, witnesses, and even opposing counsel. He grew up in Nacogdoches, Texas. He co-captained his high school varsity football team as an All-East Texas middle linebacker while also serving as the Editor of Key Club’s Texas-Oklahoma District, won the Best Typist award, took the History Team to glory, and sang in the East Texas All Region Choir. As Dan Kelly of client Vistra Corp. put it, Barnett is “a great person to be around.”

Barnett is steady and loyal. He has practiced at Susman Godfrey his entire career. He and his wife Nancy live in Dallas and enjoy spending time in Houston and New York. Their daughter works for H-E-B in Houston, and their son is a Haynes and Boone transactions lawyer in Dallas.

As a member of Ivy League championship football teams in his junior and senior years at Yale and a parent of two Yalies, Barnett has no trouble choosing sides for “The Game” in November. And he knows how important fighting all the way to the end is. On his last play from scrimmage, in the waning minutes of The Game on Nov. 22, 1980, he recovered a Crimson fumble.

Yale won, 14-0.