Brown v. GoJet Airlines, LLC
| Decision Date | 20 December 2022 |
| Docket Number | ED110645 |
| Parties | HAMPTON S. BROWN, ET AL., Respondent, v. GOJET AIRLINES, LLC, Appellant. |
| Court | Missouri Court of Appeals |
Appeal from the Circuit Court of St. Louis County; Honorable John N Borbonus
GoJet Airlines, LLC ("Appellant") appeals the judgment of the 21st Judicial Circuit denying its motion to compel arbitration in a breach of contract action filed by Hampton S. Brown ("Respondent"). Appellant raises two points on appeal. In Point I, Appellant argues the trial court erred in considering and ruling on Respondent's challenges to the arbitration agreement because it includes a delegation provision directing an arbitrator to determine threshold questions of arbitrability. In Point II, Appellant argues the trial court erred in denying its motion to compel arbitration because no statutory notice provision was required.
Because the parties agreed the arbitration agreement would be interpreted and enforced pursuant to the Federal Arbitration Act ("FAA") and § 1 of the FAA exempts its application to Respondent the arbitration agreement is not enforceable. The trial court did not err in denying Appellant's motion to compel arbitration. We deny Points I & II and affirm the judgment of the trial court.
Appellant is a limited liability company organized in Delaware with headquarters in Bridgeton, Missouri. Respondent is a resident of Austria. In November 2019, Respondent applied online to work for Appellant. The application included an arbitration agreement providing the parties agreed to arbitrate "any and all claims, disputes, or controversies" related to Respondent's employment. Appellant hired Respondent as a pilot on January 21, 2020. On that date, the parties entered a bonus agreement providing Respondent would be paid bonuses tied to the duration of his employment. Respondent would be paid $46,000 in bonuses during his first year, including $10,000 after successful completion of training; $10,000 after six months of employment; and $26,000 after one year of employment. The agreement also provided for bonuses in Respondent's second and third year. Respondent was terminated on April 15, 2021.
On November 17, 2021, Respondent filed a petition for class action relief alleging Appellant breached the bonus agreement by failing to issue bonuses he and other employees qualified for. Appellant moved to compel arbitration and stay proceedings under section 435.355,[1] arguing the parties entered "a mutually binding and enforceable arbitration agreement that requires them to arbitrate this dispute." Respondent argued the trial court could not compel arbitration because the Federal Arbitration Act exempts workers engaged in interstate commerce and the arbitration agreement did not include the statutory notice provision required by section 435.460. Appellant filed a reply motion arguing "the parties clearly and unmistakably intended to delegate the threshold issue of arbitrability to an arbitrator." Appellant quoted the arbitration agreement which provides the arbitrator, and not any court, "shall have exclusive authority to resolve any dispute relating to the formation, enforceability, applicability, or interpretation of this Agreement[.]" Appellant argued the statutory notice provision was not required because the arbitration agreement was a standalone agreement.
On May 27, 2022, the trial court denied Appellant's motion to compel arbitration because the arbitration agreement did not include the notice of an arbitration provision required by section 435.460. This appeal follows.
Whether a motion to compel arbitration should have been granted is a question of law we review de novo. St. Louis Reg'l Convention v. Nat'l Football League, 581 S.W.3d 608, 613 (Mo. App. E.D. 2019) (citing Triarch Indus., Inc. v. Crabtree, 158 S.W.3d 772, 774 (Mo. banc 2005)). Our review of a trial court's interpretation of an arbitration provision is also de novo. Hughes v. Ancestry.com, 580 S.W.3d 42, 46-47 (Mo. App. W.D. 2019) (citing Latenser v. Tarmac Int'l, Inc., 549 S.W.3d 461, 463 (Mo. App. W.D. 2018)). When we conduct a de novo review, "the judgment may be affirmed on an entirely different basis than that presented to the trial court" and "can be affirmed on any theory that is supported by the record." Belton Chopper 58, LLC v. N. Cass Dev., LLC, 496 S.W.3d 529, 532 (Mo. App. W.D. 2016) (quoting Hensley-O'Neal v. Metro. Nat'l Bank, 297 S.W.3d 610, 614 (Mo. App. S.D. 2009)).
Appellant argues the trial court lacked authority to determine the validity of the parties' arbitration agreement because the agreement contained a delegation provision reserving the consideration of its validity and enforceability to an arbitrator. Appellant references the arbitration agreement which provides:
Authority of the Arbitrator. Except as noted in the following paragraph, the arbitrator, and not any federal, state, or local court, shall have exclusive authority to resolve any dispute relating to the formation, enforceability applicability, or interpretation of this Agreement, including without limitation any claim that it is void or voidable. Thus, except as noted in the following paragraph, the parties voluntarily waive the right to have a court determine the enforceability of this Agreement . . . .
Appellant argues we are bound to enforce delegation provisions, "i.e., contractual language that gives an arbitrator exclusive authority to determine any threshold issues, including the validity or enforceability of the arbitration agreement - and cannot consider and rule on these issues themselves." Rent-A-Ctr. W., Inc. v. Jackson, 561 U.S. 63, 72 (2010). Appellant notes the Missouri Supreme Court has enforced delegation provisions. State ex rel. Pinkerton v. Fahnestock, 531 S.W.3d 36, 52 (Mo. banc 2017), abrogated on other grounds by Theroff v. Dollar Tree Stores, Inc., 591 S.W.3d 432 (Mo. banc 2020). Appellant argues it submitted sufficient evidence of the agreement under 28 U.S.C. § 1746.
Appellant argues, in addition to the delegation provision in the parties' arbitration agreement, "another delegation clause is contained in the referenced Employment Arbitration Rules of the American Arbitration Association." Appellant argues the parties incorporated these rules into their agreement, "unequivocally demonstrat[ing] an intent to arbitrate the threshold issue of arbitrability." Appellant argues incorporating these rules into an arbitration agreement means issues of contract formation must be decided by the arbitrator, not a court. Pinkerton, 531 S.W.3d at 52.
Appellant contends it "has never argued" the arbitration agreement is enforceable under the FAA. Instead, Appellant argues the agreement is enforceable under state law because "all contracts must be governed by law," and Missouri law applies under conflict of law rules because its business is in Missouri and Missouri has the most significant relationship to the arbitration agreement. Armstrong Bus. Servs., Inc. v. H & R Block, 96 S.W.3d 867, 872 (Mo. App. W.D. 2002). Appellant notes the Missouri Uniform Arbitration Act governs where it is "not preempted by the FAA." Eaton v. CMH Homes, Inc., 461 S.W.3d 426, 431 (Mo. banc 2015). Appellant argues Respondent cannot claim on appeal the Missouri Uniform Arbitration Act does not govern because he did not present this claim to the trial court. GP&W Inc. v. Daibes Oil, LLC, 497 S.W.3d 866, 870 (Mo. App. E.D. 2016).
Respondent argues Appellant did not submit competent evidence of an arbitration agreement because the agreement was not supported by a sworn declaration. Brown v. Chipotle Servs., 645 S.W.3d 518, 521 (Mo. App. W.D. 2022). Respondent argues he has not waived this contention because respondents can raise new arguments on appeal. Id. at 526-27. Respondent argues, even assuming the arbitration agreement was properly in evidence, it provides it is subject to the FAA, which by its terms does not apply to workers "engaged in foreign or interstate commerce." 9 U.S.C. § 1. Respondent cites the arbitration agreement, which provides "the parties are subject to the Federal Arbitration Act ('FAA') and [] this Agreement shall be enforceable pursuant to and interpreted in accordance with the FAA." Respondent argues parties may choose whether their agreement to arbitrate will be governed by the FAA or state law. Volt Info. Scis. v. Bd. of Trs. of Stanford Univ., 489 U.S. 468, 472 (1989). Respondent argues the parties' arbitration agreement provided it was governed by the FAA and "[n]othing in the entire job application package completed online by [Respondent], of which the arbitration document was a part, refers to Missouri law."
Even if Missouri law applies, Respondent argues the trial court had no authority to compel arbitration because the Missouri Uniform Arbitration Act only gives courts the authority to compel arbitration where the parties' agreement provides arbitration will be held in Missouri. Teltech, Inc. v. Teltech Commc'ns, Inc., 115 S.W.3d 441, 442-43 (Mo. App. W.D. 2003). Respondent argues this arbitration agreement is not enforceable because it merely provides for arbitration "in or near the city in which you are or were last employed by, or applied for employment with, the Company, as applicable." Respondent argues he is from Austria, he submitted his application from Austria, and the record is silent on where Respondent was last employed, so Appellant has failed to demonstrate Missouri arbitration law applies.
Respondent argues courts must determine whether there is an enforceable arbitration agreement before considering the effectiveness...
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