Johnson v. Vatterott Educ. Ctrs., Inc.

• Decision Date: 08 October 2013
• Docket Number: No. WD 75472.,WD 75472.
• Citation: 410 S.W.3d 735
• Parties: Valerie M. JOHNSON, Respondent, v. VATTEROTT EDUCATIONAL CENTERS, INC., Appellant.
• Court: Missouri Court of Appeals

410 S.W.3d 735

Valerie M. JOHNSON, Respondent,
v.
VATTEROTT EDUCATIONAL CENTERS, INC., Appellant.

No. WD 75472.

Missouri Court of Appeals,
Western District.

Oct. 8, 2013.

[410 S.W.3d 737]

Michael A. Williams and Thomas J. Hershewe, Kansas City, MO, for appellant.

Christopher M. Sanders, Clayton, MO and Whitney P. Cooney, St. Louis, MO, for respondent.

Before Division One: MARK D. PFEIFFER, P.J., and VICTOR C. HOWARD and ALOK AHUJA, JJ.

ALOK AHUJA, Judge.

Vatterott Educational Centers, Inc., Rebecca Mattney, Dave Inlow, and Cheryl Tilley (collectively “Vatterott”) appeal an order entered by the Circuit Court of Jackson County, which denied their motion to compel arbitration of employment discrimination claims brought by plaintiff Valerie Johnson. We affirm.

Background

Vatterott operates a for-profit post-secondary educational institution with locations across the United States. Vatterott hired Johnson to serve as the Director of Admissions at its Kansas City campus in June of 2009. On March 15, 2010, Vatterott gave Johnson an Employee Handbook. The Employee Handbook contained a section titled “At Will Employment and Binding Arbitration Agreement” (“Arbitration Agreement”). This section was signed by Johnson and Arijana Baskot, Director of Human Resources for Vatterott. One copy of the signed Arbitration Agreement was removed from the Employee Handbook and placed in Johnson's personnel file.

Vatterott terminated Johnson's employment in March 2011. After filing a complaint with the Missouri Commission on Human Rights and obtaining a right to sue letter, Johnson sued Vatterott in the circuit court, alleging claims of racial discrimination, harassment, and retaliation, all in violation of the Missouri Human Rights Act. Vatterott moved the circuit court to stay the proceeding and compel arbitration. The circuit court denied the motion, finding that the Arbitration Agreement was not an enforceable contract but merely part of Vatterott's Employee Handbook. This appeal follows.¹

Standard of Review

Whether a dispute is subject to arbitration is reviewed de novo. Morrow v. Hallmark Cards, Inc., 273 S.W.3d 15, 21 (Mo.App. W.D.2008) (en banc). In deciding an appeal from an order refusing to compel arbitration, we consider three issues:

First, we must determine whether a valid arbitration agreement exists. Second, if a valid arbitration agreement exists, we must determine whether the specific dispute falls within the scope of the arbitration agreement. Third, if a valid arbitration contract exists, and if the subject dispute is within the scope of the arbitration provision, then we must determine whether the arbitration agreement is subject to revocation under applicable contract principles.

[410 S.W.3d 738]

Whitworth v. McBride & Son Homes, Inc., 344 S.W.3d 730, 736 (Mo.App. W.D.2011) (citations and internal quotation marks omitted).

Discussion

Under both the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and the Missouri Uniform Arbitration Act, chapter 435, RSMo, whether the parties entered into an enforceable arbitration agreement is a preliminary issue for the court to decide, applying Missouri law. Granite Rock Co. v. Int'l Bhd. of Teamsters, 561 U.S. 287, 130 S.Ct. 2847, 2855–56, 177 L.Ed.2d 567 (2010); State ex rel. Vincent v. Schneider, 194 S.W.3d 853, 856 (Mo. banc 2006); Whitworth, 344 S.W.3d at 736–37 & n. 8;Frye v. Speedway Chevrolet Cadillac, 321 S.W.3d 429, 436 & n. 12 (Mo.App. W.D.2010); Morrow, 273 S.W.3d at 21.

Under Missouri law (as elsewhere), a valid contract must be based upon “offer, acceptance, and bargained for consideration.” Whitworth, 344 S.W.3d at 737 (citing Johnson v. McDonnell Douglas Corp., 745 S.W.2d 661, 662 (Mo. banc 1988)).

In this case, the Arbitration Agreement was disseminated as part of, and contained within, Vatterott's Employee Handbook. “Under Missouri law, employee handbooks generally are not considered contracts because they normally lack the traditional prerequisites of a contract.” McIntosh v. Tenet Health Sys. Hosps., Inc., 48 S.W.3d 85, 89 (Mo.App. E.D.2001) (citing Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 835 (8th Cir.1997) (Missouri law)). In Johnson, 745 S.W.2d 661, the Missouri Supreme Court held that an employee handbook which was unilaterally prepared by an employer, and subject to change by the employer at any time, could not establish enforceable contractual rights. The Court explained:

McDonnell's unilateral act of publishing its handbook was not a contractual offer to its employees. The handbook was merely an informational statement of McDonnell's self-imposed policies, providing a nonexclusive list of acts for which an employee might be subject to discipline. Several of the rules and regulations in the handbook were couched in general terms and were open to broad discretion and interpretation. The handbook also provided that the rules were subject to change at any time. Given the general language of the handbook and the employer's reservation of power to alter the handbook, a reasonable at will employee could not interpret its distribution as an offer to modify his at will status. An employer's offer to modify the at will status of his employees must be stated with greater definiteness and clarity than is found here. Since McDonnell Douglas made no offer to its employees, no power of acceptance was created in the plaintiff.

Id. at 662–63 (citations omitted); see also, e.g., Jennings v. SSM Health Care St. Louis, 355 S.W.3d 526, 533–34 (Mo.App. E.D.2011); Doran v. Chand, 284 S.W.3d 659, 664–65 (Mo.App. W.D.2009) (“Employees point to nothing in ADT's handbook ... that would lead a reasonable at will employee to believe that ADT clearly and definitely offered to modify his or her at will status.”).

Despite the general rule that employee handbooks do not create contractual rights, an arbitration agreement contained within an employee handbook may constitute an enforceable agreement where the employer and employee unambiguously agree that binding arbitration will constitute the employee's exclusive remedy for employment-related disputes. See, e.g., McIntosh, 48 S.W.3d at 87, 89 (enforceable arbitration agreement found where employee

[410 S.W.3d 739]

executed form acknowledging receipt of employee handbook, in which he “voluntarily agree[d] ... to submit to final and binding arbitration” any employment-related disputes, and acknowledged that he was waiving his right to jury trial, and that arbitration would constitute his “sole and exclusive remedy” for such claims); Patterson, 113 F.3d at 835 (similar).

The Arbitration Agreement which Vatterott seeks to enforce contains provisions stating that it constitutes a binding and enforceable contract. Thus, the Agreement refers to itself as a “contract.” In the Agreement Johnson agreed that a wide variety of employment-related disputes “shall be submitted to and determined exclusively by binding arbitration with the American Arbitration Association (AAA').” The Agreement later reiterates that “[t]he Award of the Arbitrator is final and binding upon the EMPLOYEE and COLLEGE,” that “[a]rbitration is the exclusive means for the EMPLOYEE to enforce any legal rights he may have against the COLLEGE,” and that by executing the Agreement Johnson waived her jury-trial rights. The Agreement specifies numerous details of the arbitration procedure (including applicable rules, selection of arbitrators, filing deadlines, venue, and recoverable damages and expenses), and provides that it “will survive the termination of the EMPLOYEE's relationship with COLLEGE.” Immediately below the Agreement's signature blocks, it states in oversize type that “THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE PARTIES.”

On the other hand, the Arbitration Agreement plainly constituted part of the Employee Handbook, even though it was separately executed by Johnson and Vatterott's Director of Human Resources, and a copy...