574 S.W.3d 753
Mo. Ct. App.2019Background
- AllyAlign and Signature Advantage contracted for administration services; the contract contains an arbitration clause that adopts the AAA Commercial Arbitration Rules and Procedures.
- Section 10.2 incorporates the AAA Rules; Section 10.3 contains a carve-out: "Notwithstanding any other provision... any party shall have the right to seek equitable relief in a court of competent jurisdiction."
- Signature Advantage sued AllyAlign for breach of contract, conversion, breach of fiduciary duty (money damages), and unjust enrichment (Count IV seeking rescission and restitution, alleged equitable relief).
- Trial court compelled arbitration for the first three counts but declined to send Count IV to arbitration, treating it as equitable and within the carve-out; the Court of Appeals denied interlocutory relief.
- AllyAlign moved the Kentucky Supreme Court under CR 65.09 to compel arbitration of Count IV; the Supreme Court granted the motion, vacated the trial court's refusal, and remanded with instructions to refer arbitrability of Count IV to the arbitrator.
Issues
| Issue | Plaintiff's Argument (Signature Advantage) | Defendant's Argument (AllyAlign) | Held |
|---|---|---|---|
| Who decides arbitrability of Count IV (rescission/restitution)? | The carve-out (Section 10.3) gives parties the right to seek equitable relief in court; court should decide arbitrability. | Contract incorporation of AAA Rules (R‑7(a)) is clear and unmistakable evidence delegating initial arbitrability to the arbitrator. | Arbitrator must decide initial arbitrability; if arbitrator finds Count IV truly exempt as equitable, arbitrator will refer it to court per the carve-out. |
Key Cases Cited
- Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069 (9th Cir. 2013) (incorporation of AAA rules constitutes clear evidence delegating arbitrability to arbitrator despite carve-outs)
- James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d 76 (Del. 2006) (holds carve-out can vest courts with arbitrability determinations; treated as anomaly by other courts)
- Brennan v. Opus Bank, 796 F.3d 1125 (9th Cir. 2015) (supports arbitrator authority to decide arbitrability)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (Supreme Court emphasizes that courts must enforce parties’ clear delegation of arbitrability to arbitrators)
- North Fork Collieries, LLC v. Hall, 322 S.W.3d 98 (Ky. 2010) (procedural standard for interlocutory review under CR 65.09 in arbitration context)