Experienced Arbitrators and advocates frequently use boilerplate terms without pausing to decide what they actually mean. The undoubtedly unanticipated consequence of such casual usage of the term “reasoned award” was on full display on October 8, when the Houston First Court of Appeals issued its opinion in Stage Stores, Inc. v. Gunnerson, addressing a question of first impression: what is meant by the term “reasoned award” in an arbitration clause and, correspondingly, what must an Arbitrator do to fulfill the obligation to issue such an award? The Court’s decision yielded three opinions, a majority, a concurrence and a dissent.

Background. The underlying case arose from an employment relationship. The Employee had signed an employment agreement (“Agreement”) in connection with accepting employment as a Senior Vice President of the Employer. Among other clauses, the Agreement permitted the Employee to receive certain financial benefits upon termination if his departure were initiated by him “for good reason.” In that regard, the Agreement required that in advance of such a termination, the Employee would be obligated to provide advance notice of the grounds supporting the “good reason,” as well as to provide the Employer with an opportunity to cure.

The Employee resigned in 2012, stating that he was terminating the agreement for good reason. There was apparently no notice or opportunity to cure provided to the Employer. The Employer declined to pay the benefits the Employee thought he was owed. He therefore initiated an arbitration proceeding because of the refusal to pay benefits.

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