The Missouri Supreme Court in Jefferson City has reversed a lower court’s decision that allowed a fired worker to take his wrongful termination case to court.
The issue concerns arbitration agreements which are becoming more widespread and are being increasingly challenged in court.
Lewis Soars was fired from Easter Seals Midwest in eastern Missouri’s St. Charles County 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 the Easter Seal clients.
The St. Charles County Circuit Court initially allowed the lawsuit to move forward and reaffirmed its decision by denying Easter Seals’ subsequent request to have the case moved to arbitration.
The non-profit appealed to the Supreme Court, which considered its argument that the case should have been dismissed or sent to arbitration.
At issue was the arbitration agreement that Soars had signed as a condition of employment. The document contained a provision, as most arbitration agreements do, called a delegation clause which gives the arbitrator exclusive authority to resolve most disputes between the employer and employee, including whether the agreement itself is legally binding.
The high bench reversed the circuit court’s decision largely on procedural grounds. It determined that Soars, who targeted the agreement in his argument, should have instead more narrowly challenged the delegation clause itself. It said failing to do so left any decision about the validity of the overall agreement in the hands of the arbitrator.
Writing for the majority in the 5-2 decision, Chief Justice Zel Fischer said, “For Soars to properly contest the validity of the delegation provision, he must have challenged the delegation provision specifically. Otherwise, it is treated as valid and enforced.”
Soars had also contended that Easter Seals had unfairly reserved its right to bring claims against employees to court, even though it was a party to the arbitration agreement and the delegation clause. The Supreme Court said that challenge doesn’t apply because the delegation clause doesn’t contain language pertaining to “claims”.
During the Supreme Court hearing, Easter Seals argued that it needs access to legal measures such as “injunctive relief”, which is a court order for a defendant to stop a specific act or behavior. The nonprofit claimed the procedure is needed to prevent unethical employees from harming its clients.
Finally, the high court rejected Soars claim that the arbitration agreement and its delegation clause did not contain necessary consideration to be binding. “Consideration” is something of value given by one party in return for the promises of the other party to a contract. The high bench said both Easter Seals and Soars were subject to the delegation clause which supplies the necessary consideration for a bilateral contract supported by consideration.
Judge George Draper wrote the dissenting opinion in the 5-2 decision. He said it was “disturbing” that the majority conclusion changed Missouri law without considering the many arbitration cases involving at-will employees that are currently being litigated.
Soars was an at-will worker at Easter Seals, which means his employment could be terminated at any time for any reason by Easter Seals or himself. Judge Draper’s dissent stated that at-will employment, by its “moment-by-moment” nature, is not a legally enforceable contract of employment because it doesn’t have the essential element which is a statement of duration.
Judge Draper’s dissenting opinion concluded that the arbitration agreement that Soars signed was unenforceable because there was no “consideration” connected to his at-will status.
The case involving Easter Seals and Soars was one of three heard by the Supreme Court on the same day in September that were connected to fired employees battling to have their claims settled in court rather than through arbitration.
The U.S. Supreme Court has determined that such mandatory agreements are generally enforceable, but plaintiffs’ attorneys continue finding ways to challenge their enforceability.