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Missouri Supreme Court Gives Early Holiday Present to Easter Seals

It’s time for our annual holiday season blog on the status of arbitration agreement enforceability in Missouri. Last year we brought you “Missouri Supreme Court Punts Two Lawsuits in a Row, on Direct Flights to Arbitration,” which discussed two recent Supreme Court of Missouri decisions. One of those cases was State ex rel. Pinkerton v. Fahnestock, holding the incorporation of the American Arbitration Association’s (AAA) arbitration rules—and the delegation clause in those rules—would delegate threshold questions about contract enforceability to the arbitrator.

But Pinkerton wasn’t an employment case. This week, the Supreme Court of Missouri addressed arbitration agreements in the context of an employee-employer work relationship. In Soars v. Easter Seals Midwest (with a 5–2 majority), the court held that arbitration must be compelled by a trial court if the parties signed an arbitration agreement that contains a valid delegation clause mandating that the arbitrator has “exclusive authority to decide threshold issues of interpretation, applicability, enforceability, or formation.”

This referral to an arbitrator should occur even when a party challenges the validity of the arbitration agreement as a whole, including allegations such as the agreement lacks consideration or is unconscionable. This rule has been well established in decisions by the Supreme Court of the United States over many decades, but this was the first occasion the Supreme Court of Missouri had to apply the principle to employment relationships in Missouri.

The court also explained that an initial offer of at-will employment was a consideration on which a contractual promise to arbitrate claims could be based. It had previously held, in Baker v. Bristol Care, Inc., that continued at-will employment was not good consideration. The court’s decision on this issue provides helpful guidance to employers and their employees on how to form a clear and enforceable contract between them in Missouri.   

Another New Year’s Resolutions for Missouri Employers: Audit and Update Arbitration Agreements 

Even well-drafted arbitration clauses can be difficult to enforce. The Soars decision could help employers seeking to enforce arbitration agreements in Missouri. As 2018 comes to a close and employers gear up for 2019, businesses may want to review their arbitration agreements to make sure they are drafted in a way that will allow the parties to enforce their arbitration clauses.

Most importantly, employers should consider incorporating, in all arbitration agreements, a provision that expressly provides for—and requires—that any controversy, claim, and dispute be gifted to the arbitrator in the first instance. Included among these controversies, claims, and disputes are any objections with respect to the existence, scope, interpretation, applicability, enforceability, formation, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim.

In promoting the enforceability of arbitration agreements, making these adjustments may go a long way in getting potential claims to arbitration.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.

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About this Author

James, Jim, Paul, Litigator, EEOC, NLRB, DOJ, OSHA, Ogletree Deakins
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Jim has extensive experience in handling labor and employment law litigation in federal and state courts, and before the Equal Employment Opportunity Commission, the National Labor Relations Board, the Department of Justice, the Occupational Safety and Health Administration, and several state agencies.  He also regularly advises employers on all labor and human resource management issues in an effort to prevent or resolve employee issues before they escalate into legal disputes.

314-802-3950
Andrew Metcalf, Employment Attorney, Ogletree Deakins Law Firm, Human Resources Counseling, St. Louis lawyer
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Andrew represents businesses and public organizations in all aspects of employment law, including both litigation and human resources counseling. He assists clients facing lawsuits and administrative charges alleging employment discrimination, harassment, retaliation, and violations of other workplace laws and regulations, including the FMLA and FLSA. He has guided clients through investigations by the EEOC, Missouri Commission on Human Rights, the Department of Labor, and OSHA. Having extensive experience with complex employment litigation matters, Andrew offers strategies to ensure clients are efficiently and thoroughly protected in workplace legal matters.

Andrew also helps businesses and human resources professionals minimize risk by offering practical strategies and legal counseling on workplace policies, including the preparation and review of employee handbooks and employment contracts. He regularly speaks to business groups about best practices and litigation avoidance, and he is a frequent author about developments under Missouri law.

Andrew is a Committee Chair for the Human Resources Management Association of Greater St. Louis, and he also serves as a volunteer writing tutor for at-risk youth in the St. Louis area.

314-827-3430