Shockley v. PrimeLending

• Decision Date: 15 July 2019
• Docket Number: No. 18-1235,18-1235
• Citation: 929 F.3d 1012
• Parties: Jennifer SHOCKLEY, individually, and on behalf of all other similarly situated persons, Plaintiff - Appellee v. PRIMELENDING, a PlainsCapital Company, Defendant - Appellant
• Court: U.S. Court of Appeals — Eighth Circuit

929 F.3d 1012

Jennifer SHOCKLEY, individually, and on behalf of all other similarly situated persons, Plaintiff - Appellee

v.PRIMELENDING, a PlainsCapital Company, Defendant - Appellant

No. 18-1235

United States Court of Appeals, Eighth Circuit.

Submitted: February 12, 2019

Filed: July 15, 2019

Counsel who presented argument on behalf of the appellant was Kyle Burton Russell, of Overland Park, KS. The following attorney(s) appeared on the appellant brief; Kyle Burton Russell, of Overland Park, KS.

Counsel who presented argument on behalf of the appellee was Virginia Irene Stevens Crimmins, of Independence, MO. The following attorney(s) appeared on the appellee brief; Matthew R. Crimmins, of Independence, MO., Virginia Irene Stevens Crimmins, of Independence, MO., Laura Catherine Fellows, of Kansas City, MO., Kelly A. McCambridge, of Lee's Summit, MO.

Before SMITH, Chief Judge, BENTON and STRAS, Circuit Judges.

SMITH, Chief Judge.

PrimeLending, a PlainsCapital Company, appeals from the district court’s¹ denial of its motion to compel arbitration against Jennifer Shockley. Shockley sued PrimeLending, alleging a violation of the Fair Labor Standards Act (FLSA). The district court denied the motion to compel arbitration because there was no agreement to arbitrate between Shockley and PrimeLending. The district court held that the arbitration provision contained in the PrimeLending Handbook Addendum ("Handbook"), and the delegation provision therein, were not enforceable contracts. We agree with the district court that Shockley and PrimeLending never entered into a contract relating to either provision. Therefore, we affirm the denial of PrimeLending’s motion to compel arbitration.

I. Background

Shockley² was employed by PrimeLending from June 2016 to July 2017. PrimeLending maintained a computer network accessible by its employees, which contained employment-related information, such as its new hire policies and Handbook. In August 2016, Shockley accessed this section of PrimeLending’s network by using a computer mouse to click and open various company documents, including the Handbook. Clicking on the Handbook in the system automatically generated an acknowledgment of review. That same click would have generated a pop-up window containing a hyperlink to open the full text of the Handbook. Shockley does not recall reviewing the Handbook, and there is no evidence that she ever opened or reviewed the Handbook’s full text. As part of her required annual policy review, Shockley completed the same process in the computer network again in February 2017.

The Handbook contains two important provisions relevant to this case: the "Dispute Resolution/Arbitration Clause" ("arbitration provision") and the "Control of Decisions " provision ("delegation provision"), which is a subpart within the arbitration provision. The arbitration provision specifically includes FLSA disputes as subject to arbitration. In pertinent part, the arbitration provision states:

If the dispute cannot be settled through negotiation, you and the Company agree to attempt in good faith to resolve the covered dispute exclusively through final and binding arbitration in accordance with the terms, conditions and procedures of this Arbitration Clause.

For all Covered Disputes, both you and the Company waive their right to trial by jury or before a judge in a court of law, including the right to initiate a class, collective, representative or private attorney general action. All Covered Disputes will be settled by binding arbitration, on an individual basis, pursuant to the Federal Arbitration Act as administered by JAMS, a third party alternative dispute resolution provider.

Def.’s Reply Suggestion in Support of Its Mot. to Compel Individual Arbitration, Ex. B, at 10, Shockley v. PrimeLending , No. 4:17-cv-00763 (W.D. Mo., Dec. 11, 2017), ECF No. 18-1.

The delegation provision in full reads:

The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any claim relating to the interpretation, applicability, enforceability or formation of this Clause including, but not limited to, any claim that all or any part of this Clause is void or voidable.

Id . at 11.

Shockley sued PrimeLending in September 2017 for violating the FLSA, alleging she was not paid for all earned wages and overtime pay. PrimeLending moved the district court to compel arbitration.

The district court acknowledged that "[c]ourts must give full effect to valid delegation provisions." Shockley v. PrimeLending , No. 4:17-cv-00763, 2018 WL 7506169, at *1 (W.D. Mo., Jan. 12, 2018). The court also noted that a party seeking to compel arbitration and enforce any part of an arbitration agreement, including a delegation provision, must prove an arbitration agreement was validly formed under state contract law. The district court found that the parties did not form an enforceable agreement to arbitrate their disputes. Consequently, the court declined to interpret the arbitration and delegation provisions contained in the Handbook. Specifically, the district court decided that furnishing an employee a Handbook that could be modified unilaterally by PrimeLending did not constitute an offer; secondly, the court determined that even if it was an offer, merely reviewing a Handbook does not constitute acceptance. Relying on Nebraska Machinery Co. v. Cargotec Solutions, LLC , 762 F.3d 737 (8th Cir. 2014), the district court reasoned that Shockley should not be "compelled to proceed to arbitration in order to prove that she never agreed to arbitrate claims in the first place." Shockley , 2018 WL 7506169, at *3. The district court denied PrimeLending’s motion to compel arbitration based on the absence of an agreement to arbitrate. PrimeLending appeals that decision.

II. Discussion

Our review of the district court’s denial of PrimeLending’s motion to compel arbitration is de novo. See McNamara v. Yellow Transp., Inc. , 570 F.3d 950, 954 (8th Cir. 2009). Arbitration agreements are favored by federal law and will be enforced as long as a valid agreement exists "and the dispute falls within the scope of that agreement." Berkley v. Dillard’s, Inc. , 450 F.3d 775, 777 (8th Cir. 2006) (internal quotation omitted). Arbitration is a matter of contract law, and favored status notwithstanding, parties cannot be compelled to arbitrate unless they have contractually agreed to be bound by arbitration. See Howsam v. Dean Witter Reynolds, Inc. , 537 U.S. 79, 83, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002). The primary inquiry, therefore, is to determine whether the parties formed a valid contract that binds them to arbitrate their dispute. As the party seeking to compel arbitration, PrimeLending carries the burden to prove a valid and enforceable agreement. See Jackson v. Higher Educ. Loan Auth. of Mo. , 497 S.W.3d 283, 287 (Mo. Ct. App. 2016).

Missouri law governs this case. See Baker v. Bristol Care, Inc. , 450 S.W.3d 770, 774 (Mo. 2014) (en banc). Missouri law requires (1) an offer, (2) acceptance, and (3) consideration to form a valid and enforceable contract. Id . An offer is made when the offeree—the person receiving the offer—would "reasonably believe that an offer has been made." Jackson , 497 S.W.3d at 288 (internal quotation omitted). A valid offer does not require the use of any specific terms of art. See id . The use of typical contractual terms can be helpful to discern intent. Id . at 289. A valid offer will include the ability to accept through some affirmative words or action. See id . at 290. An acceptance is present when the offeree signifies assent to the terms of the offer in a "positive and unambiguous" manner. Katz v. Anheuser-Busch, Inc. , 347 S.W.3d 533, 545 (Mo. Ct. App. 2011) (quoting Kunzie v. Jack-In-The-Box, Inc. , 330 S.W.3d 476, 484 (Mo. Ct. App. 2010) ). Together, offer and acceptance constitute mutual assent. See Guidry v. Charter Commc’ns, Inc. , 269 S.W.3d 520, 528 (Mo. Ct. App. 2008). Third, an agreement must have an exchange of consideration: a promise to do something or refrain from doing something, or the transfer of something of value to the other party. Baker , 450 S.W.3d at 774.

When parties contract to arbitrate future disputes, they may choose to incorporate a delegation provision, which is "an agreement to arbitrate threshold issues concerning the arbitration agreement." Soars v. Easter Seals Midwest , 563 S.W.3d 111, 114 (Mo. 2018) (en banc) (quoting Rent-A-Center, West, Inc. v. Jackson , 561 U.S. 63, 68, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) ). The delegation provision places "gateway questions of arbitrability" into the hands of an arbitrator. Jackson , 561 U.S. at 68–69, 130 S.Ct. 2772 (internal quotations omitted). These gateway questions may include determining the validity of the arbitration agreement itself. Id . at 69, 130 S.Ct. 2772. "An agreement to arbitrate a gateway issue is simply an additional, antecedent agreement the party seeking arbitration" is asking the court to enforce. Id . at 70, 130 S.Ct. 2772. "[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." State ex rel. Pinkerton v. Fahnestock , 531 S.W.3d 36, 50 (Mo. 2017) (en banc).

As a severable and presumably valid provision of a contract, a delegation provision must be specifically challenged. See Soars , 563 S.W.3d at 114. In essence, just as an arbitration agreement can be a standalone contract within an employment agreement, a delegation provision "is simply an additional, antecedent agreement" within an arbitration agreement. Id . (internal quotation omitted). If not challenged directly, we presume the delegation provision is valid, and, as a result, antecedent questions such as an arbitration contract’s validity will go to the arbitrator. Pinkerton , 531 S.W.3d at 50.

A. Delegation Provision

The delegation provision contained...