NM Supreme Court rules against Halliburton in dispute over employment arbitration agreement

Yesterday, in Flemma v. Halliburton Energy Services, Inc., the New Mexico Supreme Court ruled that an employment arbitration agreement was unconscionable under New Mexico law.

As explained in Justice Barbara Vigil‘s opinion, the arbitration agreement in question allowed Halliburton to unilaterally modify the arbitration agreement, or the rules under which an arbitration would be conducted, except when an arbitration proceeding has already begun.

The agreement was illusory, however, because it allowed Halliburton to unilaterally modify the agreement, or the arbitration rules, after an employee’s claim has accrued, but before any arbitration proceeding has been started. “In effect,” Justice Vigil said, “Halliburton could change the rules of the game just before it starts.” The Court contrasted Halliburton’s arbitration agreement with one the Court of Appeals upheld in Sisneros v. Citadel Broadcasting Company, 2006-NMCA-102, 140 N.M. 266, 142 P.3d 34, which restricted the employer’s right to amend or terminate the agreement once a claim has accrued.

The lesson here is fairly simple — if you are an employer, and want to be able to enforce an arbitration agreement with your employees in New Mexico, you must make it clear that the arbitration agreement can’t be modified after an employee’s claim has accrued.

As a side note, this is Justice Vigil’s first precedential opinion since she joined the Supreme Court in December. If you would like more information about her, please see my pre-election interview with her.

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