 

In the Missourt Court of Appeals

Eastern District
DIVISION FOUR
SCOTT CALDWELL, } No. ED106237-01
)
Respondent, } Appeal from the Circuit Court
} of St. Louis County
v. )
) Honorable Joseph L. Walsh, TI
UNIFIRST CORPORATION and )
MICHAEL DEAN SEEVER, I, )
)
Appellants. ) Filed: April 2, 2019

In this action brought by Scott Caldwell alleging employment discrimination by his
former employer and supervisor, the defendants appeal from the circuit court’s order denying
their motion to compel arbitration. Defendants contended that Mr. Caldwell had signed a valid
and enforceable arbitration agreement that required them to arbitrate Mr. Caldwell’s claims.
And most critically, defendants argued that the arbitration agreement delegated all threshold
issues, including formation and enforcement issues, to the arbitrator for determination, Mr.
Caldwell argued that the agreement and delegation provision lacked consideration. The circuit
court agreed with Mr. Caldwell and denied defendants’ motion. In light of the recent decision of
the Supreme Court of Missouri in Soars v. Easter Seals Midwest, 563 8.W.3d 111 (Mo. banc

2018), we must reverse and remand.

 
Factual & Procedural Background

Mr. Caldwell filed a petition against the defendants with the following allegations. Mr.
Caldwell began working for UniFirst as a District Service Manager in May of 2012. His job
duties included supervising and managing route drivers, scheduling, customer service, territory
and route sales, and other general managerial responsibilities.

In January of 2014, Mr. Caldwell’s lower back began to cause him great discomfort and
pain. His physician diagnosed him as having a lumbar disc protrusion, a lumbar disc herniation
that impinged on nerve roots, and severe intractable back and leg pain, Mr. Caldwell’s physician
recommended restrictions on lifting and repetitive bending. At first, UniFirst accommodated
these restrictions. Mr. Caldwell satisfactorily performed his job duties with the limited
accommodations in place.

The work environment changed at the end of 2014. In mid-December, with Mr. Caldwell
still experiencing severe pain, Mr. Caldwell’s physician ordered Mr. Caldwell to take eleven
days off work, and then to return to light duty. Over the next several months, the physician
ordered further limitations on weight-lifting, bending, stooping, squatting, climbing, twisting,
and kneeling. He also advised against long periods of sitting, and recommended frequent rest
breaks from standing, sitting, or walking.

Michael Seever, Mr. Caldwell’s supervisor, protested, calling Mr. Caldwell’s need for
time off “unacceptable.” Further, he disregarded Mr. Caldwell’s repeated requests for
accommodation. Instead, he repeatedly assigned Mr. Caldwell, a district service manager, to the
more physically strenuous tasks of a route sales representative. In March, Mr. Seever outright

denied Mr. Caldwell’s accommodation requests and unilaterally placed Mr. Caldwell on

 
extended non-paid medical leave, telling Mr. Caldwell he had done so because Mr. Caldwell had
filed a workers’ compensation claim.

Mr. Caldwell underwent surgery at the end of May 2015. His physician informed
UniFirst that Mr. Caldwell could return to work at the end of June with restrictions, and that he
could return to full duty without restrictions at the beginning of August. UniFirst, however, did
not allow Mr. Caldwell to return to work. Instead, the company denied Mr. Caldwell’s requests
for accommodation and unilaterally extended his non-paid medical leave to the end of July.
UniFirst fired Mr. Caldwell by letter dated July 27, 2015.

Mr. Caldwell sued UniFirst and Mr. Seever for employment discrimination, in violation
of the Missouri Human Rights Acts. He alleged that UniFirst and Mr. Seever refused to
accommodate his disability, that they discharged him because of his disability, and that they
retaliated against him because he complained of discrimination and requested accommodations
for his disability. Mr. Caldwell also alleged that UniFirst discriminated against him and
wrongfully discharged him because he had filed a workers’ compensation claim.

UniFirst and Mr. Seever moved to compel arbitration of Mr. Caldwell’s claims. They
asserted that the parties had entered into a mutually-binding and enforceable arbitration
agreement that required them to arbitrate, not litigate, disputes arising out of Mr. Caldwell’s
employment with UniFirst. Defendants further argued that the arbitration agreement delegated
all formation and enforcement issues, including all threshold issues, to the arbitrator for
determination.

When Mr. Caldwell began working for UniFirst, he signed an Employment Agreement
and Restrictive Covenant. That agreement provided that Mr. Caldwell was hired for a two-week

period that automatically renewed every two weeks, unless terminated by either party, for any

 
reason, upon two weeks’ notice. The short-duration employment agreement also contained a
non-compete clause, a number of restrictive covenants regarding the protection of UniFirst’s

trade secrets and confidential information, and the following arbitration clause:

9. Arbitration of Disputes

Any controversy or claim arising out of or relating to this Agreement or the
breach thereof or otherwise arising out of the EMPLOYEE’s employment or
termination of that employment (including, without limitation, any claims of
unlawful employment discrimination whether based on age or otherwise) shall, to
the fullest extent permitted by law, be settled by arbitration in any forum and
form agreed upon by the parties or, in the absence of such an agreement, under
the auspices of the American Arbitration Association (“AAA”) in the city of the
AAA office nearest the location of the EMPLOYEE’s most recent employment
with the COMPANY, in accordance with the Employment Dispute Resolution
Rules of the AAA, including, but not limited to, the rules and procedures
applicable to the payment and selection of arbitrators. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction thereof.
This Section 9 shall be specifically enforceable. Notwithstanding the foregoing,
this Section 9 shall not preclude either party from pursuing a court action for the
sole purpose of obtaining a temporary restraining order or a preliminary
injunction in circumstances in which such relief is appropriate including, but not
limited to, per Section 10 below; provided that any other relief shall be pursued
through an arbitration proceeding pursuant to this Section 9.'

(Emphasis supplied.)? The Employment Dispute Resolution Rules of the AAA, referenced here,
and generally referred to by the parties as the “delegation provision,” state that an arbitrator
“shall have the power to rule on his or her own jurisdiction, including any objections with
respect to the existence, scope or validity of the arbitration agreement.” American Arbitration
Association, Employment Arbitration Rules and Mediation Procedures, Rule 6a. The AAA rules
further provide that the arbitrator “shall have the power to determine the existence or validity of

a contract of which an arbitration clause forms a part....” Jd., Rule 6b.

 

! Section 10 generally provides that in the event of an employee’s breach, UniFirst is entitled to injunctive relief
without showing damages.
2 Mr. Caldwell does not argue that his claims are not covered or within the purview of this arbitration agreement.

 
The circuit court denied defendants’ motion, with two key holdings. The court first
found that Mr. Caldwell was an at-will employee, and as such his employment was not valid
consideration to create a valid agreement to arbitrate. Secondly, the circuit court found that the
employment agreement lacked mutuality, because UniFirst had reserved for itself that ability to
assert its claims against Mr. Caldwell in court, while Mr. Caldwell was forced to arbitrate any
claims he might have.

Defendants appealed, and this Court affirmed, holding that the purported arbitration
agreement lacked consideration, and therefore a valid agreement to arbitrate did not exist. After
we issued our decision, the Supreme Court of Missouri issued its Soars decision and directed this
Court to reconsider our decision.

Standard of Review

Whether the trial court should have granted a motion to compel arbitration is a question
of law that this Court reviews de novo. Soars v. Easter Seals Midwest, 563 S.W.3d 111, 113
(Mo. banc 2018).

Discussion

This Court is constitutionally bound to follow the most recent controlling decision of the
Supreme Court of Missouri. Mo. Const. Art. V, § 2; AdeMillan v. Pilot Travel Centers, LLC, 515
S.W.3d 699, 706 (Mo. App. E.D. 2016). Little difference exists between the facts and provisions
in Soars and those at issue in this case. Soars controls here.

We begin with the most basic of principles. Arbitration is a matter of contract. Dunn

Indus. Grp., Inc. v. City of Sugar Creek, 112 S.W.3d 421, 435 (Mo. banc 2003); Jimenez v.

Cintas Corp., 475 S.W.3d 679, 683 (Mo. App. E.D. 2015). Any obligation to arbitrate is based

on assent and agreement. NutraPet Systems, LLC v. Proviera Biotech, LLC, 542 8.W.3d 410,
413 (Mo. App. W.D. 2017). Arbitration will only be compelled where a valid arbitration
agreement exists and the specific dispute falls within the scope of that agreement. Jd. A party
cannot be required to arbitrate a dispute that it has not agreed to arbitrate. Morrow v. Hallmark
Cards Inc., 273 S.W.3d 15, 21 (Mo. App. W.D. 2008). Arbitration is “a way to resolve disputes
- but only those disputes - that the parties have agreed to submit to arbitration.” Dotson v.
Dillard’s Inc., 472. S.W.3d 599, 603 (Mo. App. W.D. 2015). Nor may an arbitrator act, absent an
agreement. “Arbitrators derive their authority to resolve disputes only because the parties have
agreed in advance to submit such grievances to arbitration.” State ex rel. Pinkerton v.
Fahnestock, 531 S.W.3d 36, 49 (Mo. banc 2017).

A delegation provision is an agreement to arbitrate threshold issues concerning the
arbitration agreement. Soars, 563 S.W.3d at 114. “Just as the arbitrability of the merits of a
dispute depends upon whether the parties agreed to arbitrate that dispute, the question who has
the primary power to decide arbitrability turns upon what the parties agreed about that matter.”
Dotson, 472 S.W. 3d at 603. As noted in Soars, a delegation provision “is simply an additional
antecedent agreement the party seeking arbitration asks the court to enforce.” Soars, 563 S.W.3d
at 114. The question of arbitrability - whether an agreement creates a duty for the parties to
arbitrate the particular grievance ~ is undeniably an issue for judicial determination, unless the
parties clearly and unmistakably provide otherwise. Dotson, 472 S.W.3d at 604; Latenser v.
Tarmac Int’L, Inc., 549 S.W.3d 461, 463 (Mo. App. W.D. 2018). We thus look to the agreement
to see if the parties affirmatively addressed the question of who decides arbitrability. Dotson,
472 S$.W. 3d at 602; accord Soars, 563 S.W.3d at 114. And in so looking, we conclude that the
parties not only addressed the question, but clearly and unmistakably manifested an intent to

delegate threshold issues of arbitrability to the arbitrator.

 
An arbitration agreement “need not recite verbatim that the parties agree to arbitrate
arbitrability” in order to manifest “clear and unmistakable” agreement. Dotson, 472 S.W.3d at
604. A delegation provision that gives an arbitrator the authority to resolve disputes relating to
the enforceability, validity, or applicability of an arbitration agreement constitutes clear and
unmistakable evidence that the parties intended to arbitrate arbitrability. /d. at 606. Our
Supreme Court, in Soars, found a clear, manifest intention to delegate threshold questions of
arbitrability to an arbitrator where the parties expressly agreed to give an arbitrator “exclusive
authority to resolve any dispute relating to the interpretation, applicability, enforceability or
formation.” Soars, 563 S.W.3d at 114. To constitute “clear and unmistakable” evidence, a
provision need only provide authority to the arbitrator; nothing requires that the provision, to be
effective, also expressly exclude courts as an available forum.” Dotson, 472 S,.W. 3d at 606.
Our Supreme Court, in Pinkerton, found clear and unmistakable evidence of the parties intent to
delegate threshold issues of arbitrability to an arbitrator simply where the agreement referenced
AAA rules, which in turn included a rule providing that the arbitrator “shall have the power to
rule on his or her own jurisdiction, including any objections with respect to the existence, scope,
or validity of the arbitration agreement.” Pinkerton, 531 S.W.3d at 48; accord NutraPet
Systems, 542 S.W.3d at 416 (holding issues of arbitrability for arbitrator, not court, where
agreement specifically incorporated rules of AAA); accord Latenser, 549 S.W.3d at 464 (finding
parties clearly and unmistakably intended to delegate threshold issues of arbitrability to arbitrator
where agreement incorporated AAA rules, with same delegation provision as in Pinkerton). The
Supreme Court found clear and unmistakable intent to delegate threshold issues to an arbitrator
even though a copy of the rules was not attached to the agreement or provided to the plaintiff.

Pinkerton, 531 S.W.3d at 48; accord Latenser, 549 S,W.3d at 463-64 (giving effect to delegation

 
provision even though not explicitly written into arbitration provision where arbitration
agreement simply referenced AAA rules).

The arbitration agreement here states that the Employment Dispute Resolution Rules of
the AAA would govern arbitration. By clearly referencing AAA rules, the parties expressed
their intent to arbitrate any dispute under those rules, including the rule providing that the
arbitrator “shall have the power to rule on his or her own jurisdiction, including any objections
with respect to the existence, scope or validity of the arbitration agreement.” We thus hold that
the parties clearly and unmistakably intended to delegate threshold issues to the arbitrator. See
Soars, 563 S.W.3d at 114; Pinkerton, 531 S.W.3d at 48; Latenser, 549 S.W.3d at 463-64;
Dotson, 472 S.W.3d at 604.

Accordingly, we are compelled to enforce the delegation provision save a meritorious
direct challenge to the delegation provision. Soars, 563 S.W.3d at 114; Dotson, 472 S.W.3d at
608; Latenser, 549 S.W.3d at 463-64, A delegation provision may be invalidated, revoked, or
otherwise found unenforceable upon such grounds as exist at law or in equity for the revocation
of any contract. Soars, 563 S.W.3d at 114. However, because a delegation provision is an
additional arbitration agreement, the delegation provision is severable and should be considered
separately from the underlying arbitration agreement. /d. Thus, to properly contest the validity
of a delegation provision, a party must challenge the provision specifically. Jd. Absent such a
direct, meritorious challenge to the delegation provision, the provision is valid and enforceable,
and any challenge to the validity of the agreement as a whole is for the arbitrator. id. A
challenge to another provision of the contract, or to the contract as a whole, does not prevent a
court from enforcing a specific agreement to arbitrate. Dotson, 472 S.W.3d at 605; Latenser,

549 S.W.3d at 464.

 

 
Mr. Caldwell contended that the delegation provision lacked consideration because his at-
will employment is not valid consideration, and because the arbitration agreement lacked
mutuality, in that UniFirst had carved out a unilateral right to pursue court action, while he was
forced to arbitrate any claims he might have. Our Supreme Court has rejected this argument.
Soars, 563 S.W.3d at 116-17. As in Soars, the parties here mutually agreed to proceed in
accordance with the Employment Dispute Resolution Rules of the AAA, which includes a
delegation provision to arbitrate threshold questions of arbitrability. “A contract consisting of
mutual promises to undertake some legal duty or liability between parties is a bilateral contract.”
Soars, 563 S.W.3d at 116. In a bilateral contract, “a promise by one party to a contract is
sufficient consideration for a promise by the other party.” /d. The promises must not be illusory,
meaning one party retains the unilateral right to amend the agreement and avoid its obligations.
id. But, as the Supreme Court instructed in Soars, when determining the existence of
consideration, the Court does not evaluate the adequacy of the consideration because freedom of
contract includes the freedom to make a bad bargain. /d. Here, when the delegation provision ts
severed from the rest of the arbitration agreement and considered by itself, as we are instructed
to do, the parties mutually agreed to proceed in accordance with the AAA rules and to arbitrate
threshold questions of arbitrability. Thus the agreement was bilateral in nature and supported by
consideration. /d. at 117. Mr. Caldwell’s challenges to the validity and enforceability of the
agreement as a whole, including his contention that the arbitration agreement itself lacked
consideration, are for the arbitrator. /d.

Conclusion
The parties clearly and unmistakably intended to delegate threshold issues to the

arbitrator. Mr. Caldwell’s specific challenge to the delegation provision lacks merit. We thus

 
must treat the delegation provision as valid and enforceable. Accordingly, we reverse the circuit
court’s order, and remand the cause to the circuit court with directions to stay the case and order

the parties to proceed to arbitration to determine threshold issues of arbitrability.

las DM eonuy,

LAWRENCE E. DORE nee

COLLEEN DOLAN, P.J. and
MARY K. HOFF, J., concur.

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