Arbitration

Arbitration agreements seem to be everywhere today.  Perhaps the most prominent use of arbitration provisions is in the employment arena.  Employers often require employees to agree to arbitrate any dispute relating to their employment, as opposed to seeking relief in court.  The enforceability of an arbitration provision depends on the particular language and facts at hand.

The Missouri Court of Appeals for the Western District recently examined the enforceability of an arbitration agreement in a unique fact pattern.  In Theroff v. Dollar Stores, Inc., et al. (Mo. App. W.D. April 24, 2018), Plaintiff Theroff was hired by Dollar Store.  As part of the hiring process, she was required to digitally execute various documents, including a Mutual Agreement to Arbitrate Claims (“Arbitration Agreement”).  Theroff is blind. Because of her blindness, Theroff was assisted in her onboarding process by a Dollar Store employee.

Shortly after her employment began, Theroff quit and filed a disability-discrimination claim against Dollar Store with the Missouri Human Rights Commission.  Once she received the requisite right-to-sue letter from the Commission, Theroff filed a lawsuit against Dollar Tree in Missouri state court alleging she was constructively discharged because of her disability.  More specifically, she alleged that Dollar Tree deliberately created an intolerable working environment by denying a reasonable-accommodation request relating to her service dog.  Dollar Tree filed a motion to dismiss the lawsuit and to compel arbitration of Theroff’s dispute pursuant to the Arbitration Agreement.

The Circuit Court held an evidentiary hearing on the motion, where Theroff testified that she did not sign the Arbitration Agreement and did not authorize anyone to sign it on her behalf.  She further testified that she could not read the employment documentation (including the Arbitration Agreement) and that a Dollar Store employee read the documents out loud to her.  Theroff testified that the employee never read anything about arbitration and that the first time she even heard the term was in connection with Dollar Store’s motion to compel.  The Circuit Court denied the motion without an opinion and Dollar Store promptly appealed.

On appeal, Dollar Tree argued that the Arbitration Agreement was enforceable.  The Court of Appeals reset the question presented because Dollar Store’s arguments presumed the Agreement had been “concluded.”  The real question, the Court held, was whether a valid arbitration provision existed.

The Court noted the general rule that arbitration agreements are enforceable if the parties have “concluded” or “formed” an agreement to arbitrate.  Id. (citing State ex rel. Pinkerton v. Fahnstock, 531 S.W.3d 36, 49 (Mo. banc 2017)).  “Issues as to whether a contract has been ‘concluded’ include whether: a contract was signed by the obligor, a signor lacked authority to sign a contract to commit a principal, or a signor lacked the mental capacity to sign a contract.”  Id. (citing Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 444 n.1).  Based on these principles, the Court noted that the Arbitration Agreement may be considered valid, but that whether it was concluded and is enforceable is a different question.

Based on the testimony of Theroff, the Court held that there was a factual dispute as to whether the Arbitration Agreement was “concluded,” or, in other words, properly executed by all parties.  The Court held that the Circuit Court was within its discretion to believe Theroff’s testimony and deny the motion to compel.

At first blush, the Court’s opinion in Theroff appears to be limited to a very specific fact scenario.  But parties often dispute whether an alleged arbitration agreement was signed and, even if signed, whether it is enforceable.  The Theroff opinion may leave a larger footprint than expected.  The decision makes clear that Circuit Courts have the power to determine whether an arbitration agreement is enforceable where facts differ as to whether it was properly executed, and thereby “concluded,” by the parties.  Given the widespread use of arbitration agreements in virtually all types of relationships, we expect “Theroff arguments” to play a significant role in arbitration disputes in Missouri going forward.


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