The Texas high court has held that a trial court abused its discretion by refusing to stay the litigation related to one corporation, MetroPCS Communications, Inc. (Communications), until the identical claims of its corporate affiliate, MetroPCS Wireless, Inc. (Wireless), were decided by arbitration or until Wireless became a member of a certified class action. The petitioner moved the trial court to compel arbitration and requested a stay of all litigation. The trial court denied the motion to compel arbitration because of a clause excluding arbitration where a signatory was a class member, but stayed Wireless’s claims until a class certification decision was rendered in a consolidated class action against the petitioner, of which Wireless was a putative member. The trial court declined to stay the related Communications litigation, which involved claims identical to the Wireless litigation. Directing that the Communications litigation also be stayed, the Supreme Court stated that the class action exclusion clause does not provide “a signatory with sanctuary from arbitration while a non-signatory affiliate simultaneously conducts discovery and chips away at the same issues in litigation.” In re Merrill Lynch & Co., Case No. 09-0161 (Tex. June 25, 2010).
This post written by Brian Perryman.