Darrell Trigg v. Little Six Corporation
457 S.W.3d 906
Tenn. Ct. App.2014Background
- Trigg, a long‑time high‑level manager, negotiated and signed a 2007 employment agreement that bought out his equity for $1,578,599, continued his $154,472 salary, and included an arbitration clause and a $50,000 severance if terminated without cause.
- The agreement: at‑will employment, express representations that Trigg had counsel, 21 days to consider, 7‑day revocation right, and an arbitration provision adopting AAA Commercial Rules with costs split equally.
- Little Six terminated Trigg without cause in April 2012 and paid the $50,000 severance; Trigg then sued for retaliatory discharge, violations of the Tennessee Public Protection Act (whistleblower), and the Tennessee Human Rights Act.
- Defendants moved to compel arbitration under the agreement; Trigg opposed, arguing the arbitration clause is unconscionable and contrary to public policy because the up‑front and shared costs (his share estimated $10,000–$30,000) would be prohibitively expensive given his post‑termination income (~$25,000/yr) and depleted retirement.
- The trial court held the agreement was the product of arm’s‑length negotiation (not a contract of adhesion), that Trigg had notice and opportunity to consult counsel, and that Trigg failed to prove arbitration costs would be cost‑prohibitive; it ordered arbitration.
- The Court of Appeals affirmed, applying Tennessee law (TUAA), concluding Trigg did not meet the burden to show arbitration fees would preclude vindication of his statutory and common‑law claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether arbitration clause is unenforceable as unconscionable because arbitration costs are prohibitively high | Trigg: the up‑front and split AAA/arbitrator fees ($10k–$30k) given his financial condition make arbitration inaccessible and thus unconscionable / contrary to public policy | Little Six: clause was negotiated by Trigg (had counsel), not adhesive; costs are comparable to litigation, can be shifted or reduced under AAA rules, and Trigg bears burden to prove prohibitive costs | Court: Trigg failed to prove costs would bar vindication; clause not unconscionable or against public policy — arbitration compelled |
| Whether contract formation questions (including unconscionability) are for court or arbitrator under agreed forum | Trigg implicitly: unconscionability is for court to decide under TUAA | Little Six: same (court should decide formation under state law) | Court: TUAA governs; formation/unconscionability questions are for the court to decide |
| Whether fee‑splitting term automatically renders arbitration oppressive when AAA rules apply | Trigg: even with AAA rules, high up‑front costs deter claims; fee‑split favors drafter | Little Six: AAA rules allow fee relief, shifting of costs, and arbitration often costs no more than litigation; Trigg negotiated term | Court: fee‑splitting is a relevant factor but here not dispositive; no proof costs would be prohibitive |
| Whether enforcing the arbitration clause would violate public policy by thwarting statutory rights | Trigg: yes, because prohibitive costs effectively deny access to statutory remedies | Little Six: no; enforcement furthers contractual freedom and does not clearly harm public good | Court: no public‑policy violation; impropriety not clear or inherent; clause enforceable |
Key Cases Cited
- Pyburn v. Bill Heard Chevrolet, 63 S.W.3d 351 (Tenn. Ct. App. 2001) (plaintiff bears burden to show arbitration costs likely prohibit vindication; AAA rules may permit cost shifting)
- Rosenberg v. BlueCross BlueShield of Tenn., Inc., 219 S.W.3d 892 (Tenn. Ct. App. 2006) (party seeking to avoid arbitration must present specific evidence of likely fees and ability to pay)
- Green Tree Financial Corp.–Alabama v. Randolph, 531 U.S. 79 (U.S. 2000) (party challenging arbitration on cost grounds bears burden; hypothetical inability insufficient)
- Benton v. Vanderbilt Univ., 137 S.W.3d 614 (Tenn. 2004) (arbitration agreements are favored under Tennessee law)
- Taylor v. Butler, 142 S.W.3d 277 (Tenn. 2004) (definition and standard for unconscionability — procedural and substantive factors)
- Owens v. Nat’l Health Corp., 263 S.W.3d 876 (Tenn. 2007) (under TUAA, contract‑formation questions are for the court)
- Vintage Health Resources, Inc. v. Guiangan, 309 S.W.3d 448 (Tenn. Ct. App. 2009) (public‑policy analysis; courts should enforce bargained terms absent clear impropriety)