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Theroff v. Dollar Tree Stores, Inc.

Supreme Court of Missouri, En Banc

January 14, 2020

NINA THEROFF, Respondent,
v.
DOLLAR TREE STORES, INC. AND JANIE HARPER, Appellants.

          APPEAL FROM THE CIRCUIT COURT OF COLE COUNTY The Honorable Patricia S. Joyce, Judge.

          MARY R. RUSSELL, JUDGE.

         Dollar Tree Stores, Inc., and Janie Harper (collectively, "Dollar Tree") appeal from the circuit court's order overruling their motion to compel arbitration on their former employee's claim of disability discrimination. The former employee, Nina Theroff, and Dollar Tree disputed whether there was assent to the arbitration agreement. Before the circuit court could rule on Dollar Tree's motion to compel arbitration, it was required to find whether there was an agreement to arbitrate. The circuit court heard testimony from both Theroff and Dollar Tree representatives. The circuit court's order stated, in full, "Motion to compel arbitration and stay proceedings is hereby denied." Although the circuit court did not make any findings of fact, its determination of the witnesses' credibility must be given deference. Considering this, nothing suggests the order was not supported by substantial evidence, was against the weight of the evidence, or erroneously applied the law. The circuit court's order overruling Dollar Tree's motion to compel arbitration and stay proceedings is affirmed.

         Background

         Theroff alleged Dollar Tree constructively discharged her by refusing her request for a reasonable accommodation - allowing her service dog to accompany her. She filed charges with the Missouri Commission on Human Rights against Dollar Tree for discrimination based on disability and received a notice of right to sue letter. Theroff filed a petition in the circuit court asserting a single claim of disability discrimination under the Missouri Human Rights Act against Dollar Tree. Dollar Tree filed a motion to compel arbitration and stay proceedings. The circuit court held an evidentiary hearing on the motion to compel at which the following evidence was adduced:

         Theroff applied for employment at a Dollar Tree store. During Theroff's interview with the store's assistant manager, Kayla Swift, Theroff informed Swift she was legally blind and used various assistive devices. Swift hired Theroff and directed her to return to complete paperwork. Theroff returned to Dollar Tree two days later to complete the hiring paperwork electronically. One of the documents bearing Theroff's digital signature was a mutual agreement to arbitrate claims. The arbitration procedures outlined in the mutual agreement specified that JAMS employment arbitration rules and procedures controlled. JAMS Rule 11(b) provides that the arbitrator has authority to determine jurisdictional and arbitrability disputes.

         There was conflicting evidence about Theroff's knowledge of the existence of the mutual agreement and her electronic signature on it. According to Theroff, when she returned to complete the hiring paperwork, she did not know the hiring process would occur on a computer, and she only brought a small magnifier. After informing Swift that using the magnifier on the computer screen would take some time, Swift offered to assist Theroff. Without being able to see content on the computer screen, Theroff asserted that Swift prompted her for certain information: "I need your address here. I need your phone number here, your name here. This is a standard document. Just hit enter. It's just normal employment things." Theroff claimed that the two sat on either side of the keyboard and that Swift kept control until Swift thought it would be quicker for Theroff to enter information such as an account or phone numbers. The entire process took about 30 minutes. Theroff indicated Swift never mentioned arbitration, waiver of a jury trial, or JAMS rules.

         Swift disputed that she helped Theroff navigate the electronic documents. She also disputed that Theroff was legally blind or that Theroff told her she had any vision issues requiring assistive devices. Swift stated that she did not electronically sign the mutual agreement for Theroff and that she did not field any questions from Theroff concerning the mutual agreement.[1] Inconsistencies in Swift's awareness of facts surrounding Theroff's hiring were brought out during questioning. Following the evidentiary hearing, the circuit court overruled the motion without making any findings. Dollar Tree appeals.[2]

         Standard of Review

         When there are factual disputes regarding the existence of an arbitration agreement, the circuit court shall conduct an evidentiary hearing to determine whether an arbitration agreement exists. See section 435.355.1;[3] Nitro Distrib., Inc. v. Dunn, 194 S.W.3d 339, 352 (Mo. banc 2006). An appellate court's "review of the [circuit] court's determination as to the existence of an agreement itself is analogous to that in a court-tried case." Kunzie v. Jack-In-The-Box, Inc., 330 S.W.3d 476, 480 (Mo. App. 2010). As such, in an appeal from a circuit court's order overruling a motion to compel arbitration when there is a dispute as to whether the arbitration agreement exists, [4] the circuit court's judgment will be affirmed unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. See Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976).

         If there is no factual dispute about the existence of an arbitration agreement, the overruling of a motion to compel arbitration is reviewed de novo. Soars v. Easter Seals Midwest, 563 S.W.3d 111, 113 (Mo. banc 2018). "An appellate court's review of the arbitrability of a dispute is de novo" because "[w]hether a dispute is covered by an arbitration provision is relegated to the courts as a question of law." Dunn Indus. Grp., Inc. v. City of Sugar Creek, 112 S.W.3d 421, 428 (Mo. banc. 2003). Likewise, this "Court reviews de novo the legal issue of whether a valid, enforceable delegation clause exists within an arbitration agreement." State ex rel. Newberry v. Jackson, 575 S.W.3d 471, 474 (Mo. banc 2019) (emphasis added). Because contract interpretation is a question of law, State ex rel. Pinkerton v. Fahnestock, 531 S.W.3d 36, 44 (Mo. banc 2017), a de novo standard of review is appropriate for appellate review of a denial of a motion to compel arbitration when a court must analyze the terms of an arbitration agreement.

         Analysis

         I. Existence of the agreement to arbitrate is a prerequisite to compelling arbitration

         Dollar Tree asks this Court to analyze the record to determine whether the circuit court found by a preponderance of evidence[5] that Theroff signed the mutual agreement. Dollar Tree maintains that, if so, the circuit court had no choice but to delegate all challenges to the arbitrator. Theroff argues she did not "sign" the agreement because (1) she did not authorize Swift to make the operative click, and (2) even if it was Theroff who clicked, Swift did not inform her of the existence of the arbitration agreement, which Theroff could not view or read. Dollar Tree maintains Theroff had knowledge of the mutual agreement and signed it.

         The outcome of this case turns on the circuit court's factfinding role, including its assessment of witnesses. When the parties challenge facts relevant to a particular issue, as they did here, this Court will defer to the circuit court's assessment of the evidence. White v. Dir. of Revenue, 321 S.W.3d 298, 308 (Mo. banc 2010). With no written findings of fact, this Court views the facts "as having been found in accordance with the result reached." Rule 73.01(c). In addition, this Court must "give due regard to the opportunity of the [circuit] court to have judged the credibility of witnesses[.]" Rule 84.13(d)(2).

         Although Dollar Tree and Theroff do not dispute that the mutual agreement contains an electronic signature, the issue here is whether the mutual agreement to arbitrate existed per section 435.355.1, as Theroff asserts she did not assent to it. "[A]rbitration is a matter of contract." Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 67 (2010). At the most fundamental level, assent is required for a contract or an agreement to exist. Green v. Cole, 15 S.W. 317, 318 (Mo. 1891) ("It is a well[-]settled principle of law that to constitute a contract[, ] the minds of the parties must assent to the same thing in the same sense.").

         This case presents facts raising an issue of first impression for this Court - the question of whether there was, in the first instance, assent to the arbitration agreement. Unlike the standard scenario in which there is no dispute about whether a party signed an arbitration agreement, when a party disputes signing, the court must first decide the existence of an agreement to arbitrate. See Chastain v. Robinson-Humphrey Co., 957 F.2d 851, 854 (11th Cir. 1992) (noting the court is responsible for deciding in the first instance whether a party who did not sign an arbitration agreement can be bound to arbitrate because "that party is challenging the very existence of any agreement, including the existence of an agreement to arbitrate") (abrogated on other grounds by Larsen v. Citibank FSB, 871 F.3d 1295, 1303 n.1 (11th Cir. 2017)). Newberry, Soars, and Pinkerton, cases on which the dissenting opinions rely, are dissimilar. There were no disputes regarding assent to the agreement; rather, the challenges were to the agreements' validity. Newberry, 575 S.W.3d at 473 ("Fearing loss of employment, Mr. Newberry and Ms. Lowrance electronically signed their agreements . . . ."); Soars, 563 S.W.3d at 113 ("Soars signed the Agreement as a condition of his employment . . . . Soars was made aware his employment . . . was conditioned upon him signing the Agreement."); Pinkerton, 531 S.W.3d at 41 ("Mr. Pinkerton signed the enrollment agreement and received a copy. An admissions representative and another school official also signed the agreement."). As Newberry, Soars, and Pinkerton presumed an arbitration agreement existed, these cases did not address the situation in which a party claimed she did not assent to an arbitration agreement in the first instance, which are the facts here.

         Theroff, unlike the plaintiff in Soars and the relators in Newberry and Pinkerton, challenges the existence of any agreement.[6] Although Theroff did not expressly cite section 435.355.1 in challenging "the existence of the agreement to arbitrate," her assertions that she did not see, read, know of, or assent to the arbitration agreement are, in effect, a challenge to the agreement's existence.[7] "The existence of a contract necessarily implies there has been a 'meeting of the minds' between the parties." Arrowhead Contracting, Inc. v. M.H. Washington, LLC, 243 S.W.3d 532, 535 (Mo. App. 2008). Theroff's argument that assent, or meeting of the minds, did not occur is a challenge to the agreement's existence, and existence of the agreement to arbitrate is a prerequisite to compelling arbitration.

         By ruling in Theroff's favor and overruling the motion to compel arbitration, the circuit court, after reviewing all the evidence, impliedly found there was no agreement.[8]The circuit court made no express findings of fact or law addressing whether Theroff signed the mutual agreement; the order simply stated, "Motion to compel arbitration and stay proceedings is hereby denied." The circuit court could have believed Theroff's account that she could not see the screen, was not able to view or read the arbitration agreement on her own because she did not have the proper assistive device, or did not know the arbitration agreement was included in the onboarding material through which Swift verbally guided her. Considering the due regard owed to the circuit court's assessment of credibility of the witnesses under the standard of review, this Court cannot say otherwise. Nothing suggests the order overruling the motion to compel arbitration was not supported by substantial evidence, was against the weight of the evidence, or was the result of an erroneous application of the law. See Murphy, 536 S.W.2d at 32. The order overruling Dollar Tree's motion to compel arbitration and stay proceedings is affirmed.

         II. In the absence of an agreement, a delegation provision is not effective

         Parties can agree to arbitrate "gateway" questions of "arbitrability," including whether the parties have agreed to arbitrate a given controversy. Newberry, 575 S.W.3d at 474. Contractual arrangements to arbitrate gateway questions of arbitrability occur when the parties include a "delegation provision" in the arbitration agreement. Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010). "[A] delegation provision is an additional, severable agreement to arbitrate threshold issues that is valid and enforceable unless a specific challenge is levied against the delegation provision." Pinkerton, 531 S.W.3d at 50 (citing Rent-A-Ctr., W., Inc., 561 U.S. at 71). When evaluating the intention of parties to delegate threshold arbitrability issues to the arbitrator, "'[c]ourts should not assume that the parties agreed to arbitrate arbitrability unless there is clea[r] and unmistakabl[e] evidence that they did so.'" Id. at 43 (alterations in original) (quoting Rent-A-Ctr., W., Inc., 561 U.S. at 69 n.1).

         To the extent Newberry, Soars, and Pinkerton can be read to suggest one can be forced into arbitration by a contract to which one is a stranger, this interpretation is incorrect. This is evident in Prima Paint Corp. v. Flood & Conklin Manufacturing Co., 388 U.S. 395, 402 (1967), in which the Supreme Court held a court, before determining arbitration issues, must determine "that the contract in question is within the coverage of the Arbitration Act." The Supreme Court recently noted that, "[w]hile a court's authority under the Arbitration Act to compel arbitration may be considerable, it isn't unconditional." New Prime Inc. v. Oliveira, 139 S.Ct. 532, 537 (2019). A court should determine if the contract in question falls within the coverage of the arbitration act before applying the act's severability principle, requiring a challenge to an arbitration agreement, or delegation provision, separate from a challenge to the overall contract. Id. at 538. Here, there simply was no agreement of the parties to arbitrate in the first instance when one party, as the circuit court found, did not agree to arbitrate at all.

         Theroff's challenge to the existence of the mutual agreement in its entirety because of a lack of assent necessarily challenges the existence of any delegation provision it contains.[9] Theroff denied the existence of the agreement to arbitrate under section 435.355.1, convincing the circuit court the agreement did not exist. It follows that there is not clear and unmistakable evidence of the existence of assent to a delegation provision. Under these facts, the circuit court cannot delegate the matter to an arbitrator whose very existence depends upon an agreement. The circuit court acted in accordance with section 435.355.1.

         Conclusion

         The order overruling Dollar Tree's motion to compel arbitration ...


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