Dotson v. Dillard's, Inc., WD 78229

• Decision Date: 04 August 2015
• Docket Number: WD 78229
• Citation: 472 S.W.3d 599
• Parties: L. Dotson, Respondent, v. Dillard's, Inc., et al., Appellants.
• Court: Missouri Court of Appeals

472 S.W.3d 599

L. Dotson, Respondent,

v.Dillard's, Inc., et al., Appellants.

WD 78229

Missouri Court of Appeals, Western District.

OPINION FILED: August 4, 2015

As Modified September 1, 2015

Motion for Rehearing and/or Transfer to Supreme Court Denied September 1, 2015

Application for Transfer Denied October 27, 2015

Paul A. Bullman, Kansas City, MO, Attorney for Respondent.

Thomas C. Walsh, St. Louis, MO, Karen K. Cain and Christopher C. Grenz, Kansas City, MO, Attorneys for Appellants.

Before Division Three: Karen King Mitchell, Presiding Judge, and Lisa White Hardwick and Anthony Rex Gabbert, Judges

Karen King Mitchell, Presiding Judge

Dillard's, Inc., et al. (Dillard's) appeal the trial court's denial of their motion to dismiss and compel arbitration in a case filed by Laris Dotson, under the Missouri Human Rights Act. Dillard's argues that the arbitration agreement contained a delegation provision, directing that any disputes as to arbitrability of issues were to be determined by an arbitrator and not a court. Alternatively, Dillard's argues that the arbitration agreement was a valid, enforceable agreement, mandating the court to send the matter to arbitration. Dotson argues that the delegation provision did not provide that arbitrability was exclusively for the arbitrator; thus, the issue of arbitrability was properly before the circuit court. He further argues that the arbitration agreement is unenforceable for a variety of reasons related to formation. Because the delegation provision clearly and unmistakably provided that arbitrability of issues was to be decided by an arbitrator, we reverse and remand with directions that the court stay the pending case and grant Dillard's motion to compel arbitration.

Background

Dotson, a former employee of Dillard's, Inc., was terminated in January 2014, after a seven-month term of employment. Dotson filed charges for discrimination, harassment, and retaliation against Dillard's with the Missouri Human Rights Commission, and he subsequently received a Notice of Right to Sue. Respondent then filed suit against Dillard's, Inc., and several named defendants (collectively, "Dillard's") in Jackson County Circuit Court on October 14, 2014.

On October 24, 2014, Dillard's counsel sent a letter to Dotson's counsel, advising Dotson that the arbitration agreement, which included a delegation provision, "requires all decisions regarding enforceability be made by the arbitrator." The following week, Dillard's filed a motion to dismiss and to compel arbitration. The motion identified various provisions of an arbitration agreement signed by Dotson and Dillard's, and suggested that all of his claims were covered by the agreement. The motion further pointed out that the agreement contained a delegation provision, which provided as follows:

Any dispute over a Legal Claim concerning this Agreement—the way it was formed, its applicability, meaning, enforcement, or any claim that all or part of this Agreement is void or voidable—is subject to arbitration under this Agreement.

Either the Company or the Associate may bring an action in court to compel arbitration under this Agreement, to enforce an arbitration award, or to dismiss any lawsuit seeking to resolve disputes that are covered by this Agreement.

The motion argued that, pursuant to the United States Supreme Court's decision in Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010), the delegation provision mandated that an arbitrator decide any issues raised regarding enforceability of the arbitration agreement and deprived the trial court of any authority to determine arbitrability. The motion alternatively argued that the arbitration agreement was valid and enforceable and that the court should, therefore, dismiss the case and compel arbitration.

Dotson filed suggestions in opposition to Dillard's motion, arguing that the motion should be overruled for the following reasons:

(1) Higbee West MAIN, LP (who seeks to enforce it) is not a party to the purported agreement,^{[1 ]}(2) Dillard's can unilaterally modify the purported agreement (including unilaterally modifying procedures prospectively and retrospectively at any time) thus rendering it unenforceable and illusory, (3) the purported agreement is not supported by consideration, (4) there was no meeting of the minds and no mutuality of promises, (5) Dillard's waived the purported agreement (if any), (6) the procedures are unconscionable, and (7) the purported agreement violates Plaintiff's inviolate right to a jury trial.

Specifically in response to the delegation provision, Dotson argued that it was "100% contrary to ... overwhelming Missouri law," and that Dillard's bore the burden of proving that a valid arbitration agreement existed. Dotson raised no challenge specifically directed to the validity or enforcement of the delegation provision at any point below.

The circuit court overruled Dillard's motion to dismiss and to compel arbitration, finding that the arbitration agreement, as a whole, was unenforceable due to a lack of consideration. As to the delegation provision, the court, quoting the Missouri Supreme Court's decision in Baker v. Bristol Care, Inc., 450 S.W.3d 770 (Mo. banc 2014), determined that Dotson "raise[d] claims regarding the formation, and thus the validity, of the purported arbitration agreement," and "[a] claim raising a contract formation issue, in regards to the validity of an arbitration agreement, is ‘subject to resolution by Missouri state courts.’ " The court's judgment did not address the United States Supreme Court's decision in Rent–A–Center. Dillard's appeals.

Standard of Review

"The issue of whether arbitration should be compelled is a question of law subject to de novo review." Baker, 450 S.W.3d at 774.

Analysis

Dillard's raises two points on appeal. First, they argue that the circuit court erred in addressing Dotson's attack on the validity of the arbitration agreement, as a whole, because issues regarding the validity and arbitrability of Dotson's claims were delegated to the arbitrator by the delegation provision, which Dotson did not challenge below. Alternatively, Dillard's argues that Dotson's claims fell within the provisions of the arbitration agreement, which was valid and enforceable and required arbitration. Finding the first point dispositive, we do not address the second.

The arbitration agreement at issue here provides that it is to be governed by the Federal Arbitration Act (FAA). Under the FAA, "[a] written provision in ... a contract ... to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.

If any suit or proceeding be brought ... upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement....

9 U.S.C. § 3. "A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any ... court which, save for such agreement, would have jurisdiction ... for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4.

"[A] party who has not agreed to arbitrate will normally have a right to a court's decision about the merits of its dispute ...." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995) (emphasis added). "But, where the party has agreed to arbitrate, he or she, in effect, has relinquished much of that right's practical value." Id. "The party still can ask a court to review the arbitrator's decision, but the court will set that decision aside only in very unusual circumstances." Id. "Hence, who—court or arbitrator—has the primary authority to decide whether a party has agreed to arbitrate can make a critical difference to a party resisting arbitration." Id.

"[T]he answer to the ‘who’ question ... is fairly simple." Id. at 943, 115 S.Ct. 1920. "Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, so the question ‘who has the primary power to decide arbitrability’ turns upon what the parties agreed about that matter." Id. (internal citations omitted). In other words, "arbitration is simply a matter of contract between the parties; it is a way to resolve those disputes—but only those disputes—that the parties have agreed to submit to arbitration." Id.

Here, Dillard's argues that the parties agreed to submit the threshold question of arbitrability to an arbitrator through the delegation provision. Dotson did not directly challenge this proposition below. He has, however, challenged the delegation provision for the first time on appeal, arguing that it failed to expressly exclude the courts from determining questions of arbitrability; therefore, he claims, the court committed no error.² He also argues that the arbitration agreement, as a whole, was invalid.

"[T]he question of arbitrability—whether a[n] ... agreement creates a duty for the parties to arbitrate the particular grievance—is undeniably an issue for judicial determination[,] [u]nless the parties clearly and unmistakably provide otherwise ..." AT & T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (emphasis added). "An agreement to arbitrate a gateway issue [such as arbitrability] is simply an additional, antecedent agreement the party seeking arbitration asks the ... court to enforce, and the FAA operates on this additional arbitration agreement just as it...