Dixon v. Daymar Colleges Group, LLC
483 S.W.3d 332
Ky.2015Background
- Daymar College’s enrollment contract included a reverse-page arbitration clause; Students sued in circuit court despite this.
- Trial court held the arbitration clause procedurally and substantively unconscionable; Court of Appeals reversed.
- Daymar argued arbitration authority to decide enforceability lay with arbitrator via a delegation clause; Students argued trial court should decide validity.
- Key issue was whether the arbitration agreement was properly incorporated by reference into the signed document.
- Statute of Frauds (Ky. Rev. Stat. § 446.060) and assents to be bound were central to whether the back-page arbitration terms bound the Students.
- Court held the incorporation failed; Students were not bound to arbitrate, so arbitration was denied and case returned to trial court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability, court or arbitrator? | Daymar contends delegation clause assigns arbitrability to arbitrator. | Students contend trial court must decide validity before arbitration. | Trial court, not arbitrator, decides validity for formation challenges. |
| Was the arbitration agreement properly incorporated and binding? | Daymar argues incorporation by reference valid and arbitration binds. | Students assert incorporation is insufficient; signature timing undermines binding. | Incorporation by reference insufficient; arbitration not binding on Students. |
| Does the Statute of Frauds require a signed writing for the arbitration agreement? | Daymar argues no signing requirement for arbitration clause. | Students invoke Statute of Frauds to require written, signed terms. | Statute of Frauds applies; agreement must be in writing with signature at end. |
Key Cases Cited
- Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (Supreme Court (2010)) (delegation provisions and arbitrability considerations)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (Supreme Court (1995)) (whether to submit questions of arbitrability to the arbitrator)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (Supreme Court (2006)) (claims about contract validity vs. the validity of the arbitration clause itself)
- Bartlett Aviation, 682 S.W.2d 798 (Ky.App. 1985) (incorporation language and assent to terms)
- Ally Cat, LLC v. Chauvin, 274 S.W.3d 451 (Ky. 2009) (assent to be bound requires express agreement beyond mere receipt)
- JPMorgan Chase Bank, N.A. v. Bluegrass Powerboats, 424 S.W.3d 902 (Ky.2014) (state contract formation and arbitration initial burden)
- Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581 (Ky.2012) (initial burden to show existence of a valid arbitration agreement)