Supreme Court of Missouri Affirms Denial of Motion to Compel Arbitration
In a split opinion, the Supreme Court of Missouri recently upheld a circuit court’s denial of a motion to compel arbitration following the determination that an employee of a Dollar Tree store had not actually seen the arbitration agreement she was alleged to have signed. In Theroff v. Dollar Tree Stores, Inc., a former employee sued Dollar Tree alleging disability discrimination under the Missouri Human Rights Act. Dollar Tree filed a motion to compel arbitration, pointing to an agreement to arbitrate included in Ms. Theroff's new-hire paperwork.
Ms. Theroff, who is legally blind, argued that she did not know, and was not told, there was an arbitration agreement included in her new-hire materials. Ms. Theroff completed her hiring paperwork electronically at the Dollar Tree location. Ms. Theroff testified at a hearing in the circuit court that she was not aware the hiring process would occur on a computer and she did not bring anything with her to allow her to see the screen. A Dollar Tree supervisor walked her through the hiring process and filled in certain information for her. Ms. Theroff testified that the supervisor never mentioned the arbitration agreement. The supervisor testified that she did not electronically sign the agreement without Ms. Theroff’s consent.
In reviewing the circuit court’s decision, a majority of the Supreme Court held that there must first be a legally enforceable agreement between the parties before a circuit court may compel the parties to arbitration. The opinion stated that, when a party seeks to compel arbitration, “the court must first decide the existence of the agreement to arbitrate.” The court also distinguished its recent decisions in Soars v. Easter Seals Midwest, 563 S.W.3d 111 (Mo. banc 2018), State ex rel. Newberry v. Jackson, 575 S.W.3d 471 (Mo. banc 2019), and State ex rel. Pinkerton v. Fahnestock, 531 S.W.3d 36 (Mo. banc 2017), each of which determined that issues of arbitrability were for the arbitrator, noting that those cases did not involve challenges to the actual existence of the agreement but only to the agreement’s formation.
Soars, Newberry, and Pinkerton all held that, where an arbitration clause contains a delegation provision, issues regarding the formation of an arbitration agreement are “threshold issues of arbitrability” that should go to the arbitrator to decide. The dissenting opinion in Theroff argued that whether Ms. Theroff was aware of the arbitration provision was an issue of formation that should have been decided by the arbitrator. The dissent argued that the only determination for the circuit court to make is whether there is prima facie evidence of an agreement to arbitrate. The dissent believed that this threshold was met because Dollar Tree had produced an arbitration agreement bearing Ms. Theroff’s electronic signature. The majority brushed these cases aside, holding that they were distinguishable because Ms. Theroff challenged the actual existence agreement. The court held that “existence of the agreement to arbitrate is a prerequisite to compelling arbitration.”
Theroff also held that, in the absence of an agreement, a delegation provision is not effective and a challenge to the existence of the entirety of an agreement, “necessarily challenges the existence of any delegation provision it contains.” The Supreme Court noted that when a circuit court determines that no legally enforceable agreement exists, “[i]t 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.” In a concurring opinion, Judge Breckenridge stated that refusing to determine whether an agreement exists in the first instance before compelling arbitration would “put the cart before the horse.”
This decision provides a narrow ground for challenging an arbitration provision in the circuit court, even where a delegation provision is contained. Though slight, the distinction in Theroff may prove to be significant. While the Supreme Court appeared to be trending in the direction of requiring the arbitrator to decide any issue regarding arbitrability, this opinion may have provided a small opportunity to avoid that fate in the right circumstances. The opinion could be limited to its somewhat unusual facts, but it could also signal that the court may be trending in a more anti-arbitration direction.