The Missouri Supreme Court in Jefferson City heard three cases Tuesday involving fired employees battling to have claims settled in court rather than through arbitration.
Supreme Court of Missouri, Photo courtesy of Missouri Supreme Court
Increasingly, businesses are requiring new hires to sign arbitration agreements as a condition of employment. Those mandatory agreements almost always have a provision known as a delegation clause that only allows the arbitrator to decide if arbitration is called for in disputes between employers and employees. It also gives the arbitrator sole power to determine the limits of the arbitration agreement.
There’s been increased litigation from workers who contend they’ve been denied their rightful day in court by over-restrictive arbitration agreements. The U.S. Supreme Court has determined that such mandatory agreements are generally enforceable, but plaintiffs’ attorneys continue finding ways to challenge their enforceability.
Two of the cases in front of the high court Tuesday dealt with employees of the retail store Dollar General in south-central Missouri’s Laclede County. The workers were presented with arbitration agreements in 2012 and told that failure sign them would be grounds for termination.
Both employees brought discrimination lawsuits after they were fired. The circuit court sided with Dollar General and moved both disputes into arbitration. The terminated employees argued before the Supreme Court for the circuit court to be prohibited from enforcing its orders.
The third case heard by the high bench Tuesday involved a college-age worker who signed an arbitration agreement as a requirement to be hired by Easter Seals Midwest in eastern Missouri’s St. Charles County.
Lewis Soars was fired in January 2016 roughly three months after starting his job as a community living instructor for clients with developmental disabilities. Soars, who is Caucasian, sued Easter Seals for discrimination and wrongful termination and brought a discrimination lawsuit against his supervisor at the non-profit.
He alleges he was fired for reporting that other employees were smoking marijuana at work. Easter Seals claims he was terminated because he refused to participate in an internal investigation of accusations that he abused or neglected Easter Seal clients.
Unlike the cases in Laclede County, the St. Charles County Circuit Court decided against the employer, allowing the lawsuit to move forward. Easter Seals moved to have Soars’ case dismissed or sent to arbitration, but the court denied the motion.
Before the Supreme Court Tuesday, Soars argued that the delegation clause in the arbitration agreement he signed was not a valid contract as required because it didn’t meet a stipulation that each party have something of value to exchange.
Easter Seals’ Attorney Charles Reis argued that the agreement did provide for such an exchange. “Easter Seals agrees to arbitrate all claims it has against Mr. Soars, as well as Mr. Soars agreeing to arbitrate all claims against Easter Seals,” said Reis.
The attorney for Soars, Bret Kleefus, disputes the claim, contending the agreement includes a carve-out that lets Easter Seals bypass arbitration and take all their disputes with employees straight to court. “The only thing in practical effect that is going to be arbitrated are the things that my client did, in fact, bring, discrimination and wrongful termination,” said Kleefus.
Reis said Easter Seals needs access to legal measures such as “injunctive relief”, which is a court order for a defendant to stop a specific act or behavior. He said the procedure is needed to prevent unethical employees from harming its clients.
“These instructors take care of the financial aspects of the client,” Reis said. “If there is access to a bank account, Easter Seals has to have the ability to get injunctive relief for one of its employees to stop.”
In court documents filed by Reis, he said arguments that Arbitration Agreements lack necessary elements to form a valid contract are in sharp conflict with precedent in both the United States Supreme Court and Missouri courts, which recognize the validity of arbitration agreements in the employment context.
Kleefus brought up a 2012 Missouri Supreme Court case, Brewer vs. Missouri Title Loans, that determined that an arbitration agreement was so one-sided it was contrary to good conscience, or unconscionable, and also unenforceable. The agreement called for the customer to submit all claims to binding arbitration but allowed the title company to forego arbitration and pursue relief through judicial or self-help repossession.
The Supreme Court is now considering the three cases. It could hand down a decision at any time.
