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State ex rel. Newberry v. Jackson

Supreme Court of Missouri, En Banc

May 21, 2019

STATE ex rel. JESSE NEWBERRY, Relator,
v.
The HONORABLE STEVE JACKSON, Respondent. STATE ex rel. BECKY LOWRANCE, Relator,
v.
The HONORABLE STEVE JACKSON, Respondent.

          ORIGINAL PROCEEDING IN PROHIBITION

          Patricia Breckenridge, Judge.

         Jesse Newberry and Becky Lowrance each seek a permanent writ of prohibition preventing the circuit court from enforcing its January 2018 orders sustaining motions to compel arbitration and stay proceedings filed by Dolgencorp, LLC, d/b/a Dollar General. Mr. Newberry and Ms. Lowrance assert the circuit court improperly sustained Dollar General's motions to compel arbitration because Dollar General failed to meet its burden to show consideration supported either the employee arbitration agreements or the provisions delegating threshold issues of arbitrability to the arbitrator. This Court issued a preliminary writ in each case.

         This Court holds the arbitration agreement in each case includes a delegation clause providing that the arbitrator decides issues of formation - namely, whether there was consideration for the arbitration agreements. Because Mr. Newberry and Ms. Lowrance do not raise challenges specific to the delegation provisions, the circuit court properly sustained Dollar General's motions to compel arbitration, stayed the cases, and ordered the parties to arbitrate the question of whether consideration existed. The preliminary writs are quashed.

         Factual and Procedural Background

         In August 2014, Dollar General began prompting its employees each time they logged into their computers to electronically sign a document titled "Dollar General Employee Arbitration Agreement." The agreement requires Dollar General and its employees to settle "Covered Claims," including discrimination and retaliation, in arbitration. It indicates all arbitrations are to be conducted in accordance with the American Arbitration Association ("AAA") Employment Arbitration Rules, "except as superseded by the terms of this [a]greement." As incorporated, AAA Employment Arbitration Rule 6.a provides arbitrators "shall have the power to rule on [their] own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement." The agreement itself, however, supersedes the AAA rule by stating claims regarding the "scope or enforceability" of the agreement are not considered arbitrable "Covered Claims."

         The agreement further contains language permitting Dollar General employees to "opt out" of the agreement, provided the employees complete and submit an "Arbitration Opt Out Form" within 30 days of accessing the agreement. On the other hand, the agreement advises that if employees take no action within 30 days of the initial notice, the agreement automatically goes into effect. Ms. Lowrance, an at-will employee of nine years at the time, and Mr. Newberry, an at-will employee of 15 years at the time, testified they asked the district manager about the consequences of failing to sign the agreement. The manager informed them they would likely be discharged if they did not sign. Fearing loss of employment, Mr. Newberry and Ms. Lowrance electronically signed their agreements in August 2014. No Dollar General representatives signed the agreements.

         Mr. Newberry was discharged in June 2016, and Ms. Lowrance was discharged in October 2016. Both timely filed charges of discrimination with the Missouri Human Rights Commission and received notices of right to sue. In July 2017, Mr. Newberry timely filed a petition against Dollar General asserting sex, age, and disability discrimination, along with retaliation for voicing his opposition to the discrimination, against Dolgencorp and the supervisors who oversaw the discrimination and retaliation. In November 2017, Ms. Lowrance timely filed a separate petition raising the same claims against the same defendants.

         Dollar General filed motions to compel Mr. Newberry and Ms. Lowrance to submit their claims to arbitration and stay further proceedings. In their suggestions opposing Dollar General's motions to compel, Mr. Newberry and Ms. Lowrance argued there was no consideration for the arbitration agreements. They further claimed to "specifically challenge[]" the delegation provisions by asserting they are unconscionable and there is no "clear and unmistakable evidence" of the parties' intent to incorporate them. During the hearing about Dollar General's motions to compel arbitration, Mr. Newberry and Ms. Lowrance testified they signed the agreements with knowledge they would be bound to arbitrate covered claims, read the documents before they signed them, read the "opt out" provisions, but did not necessarily "understand" the documents.

         In January 2018, the circuit court sustained Dollar General's motions to compel arbitration and stay proceedings, finding "no reason the principles of [State ex rel. Pinkerton v. Fahnestock, 531 S.W.3d 36 (Mo. banc 2016), ] regarding a 'delegation clause' should not apply to a case with individuals the same as a 'commercial case.'" The court alternatively held the arbitration agreements were valid, executed by the parties, not unconscionable on their face, and supported by consideration in the form of mutuality of enforcement and continued at-will employment.

         Mr. Newberry and Ms. Lowrance filed petitions for a writ of mandamus or prohibition in the court of appeals, which denied their writ petitions. Mr. Newberry and Ms. Lowrance subsequently petitioned this Court for a writ of mandamus or prohibition compelling the circuit court to rescind its orders for arbitration and prohibiting the circuit court from requiring them to submit their claims to arbitration. This Court issued its preliminary writ of prohibition in each case in May 2018. Mo. Const. art. V, sec. 4.1.

         Standard of Review

         This Court has authority to "issue and determine original remedial writs." Id. Writs of mandamus or prohibition are proper methods to dispute whether a motion to compel arbitration was improperly sustained. State ex rel. Hewitt v. Kerr, 461 S.W.3d 798, 805 (Mo. banc 2015); see also State ex rel. Union Pac. R.R. Co. v. David, 331 S.W.3d 666, 666 (Mo. banc 2011). The Court reviews de novo the legal issue of whether a valid, enforceable delegation clause exists within an arbitration agreement. See Union Pac., 331 S.W.3d at 667.

         No Specific Challenge to Delegation Provisions

         Mr. Newberry and Ms. Lowrance each seek a permanent writ of prohibition from this Court requiring the circuit court to rescind its January 2018 orders compelling arbitration and staying the court proceedings. They assert Dollar General failed to show consideration supported their agreements to arbitrate, including the severed delegation clauses. Specifically, they assert consideration is required for a delegation clause to come into effect as a contract. They claim, when a defense of lack of consideration is raised, the party seeking to ...


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