278 So.3d 1124
Miss.2019Background
- Jackson County, as guarantor for Singing River Health System (a county-owned community hospital), sued KPMG alleging negligent audits that caused financial harm and bond losses.
- KPMG moved to compel arbitration based on arbitration clauses attached to KPMG engagement letters for fiscal years 2008–2012 between KPMG and Singing River.
- Jackson County argued the engagement letters never formed enforceable contracts under Mississippi’s "minutes rule" because the hospital board minutes did not record sufficient terms.
- The Jackson County Circuit Court granted KPMG’s motion to compel arbitration, holding arbitrability was for the arbitrator under the contract’s delegation clause.
- The Mississippi Supreme Court, applying its recent decision in KPMG, LLP v. Singing River, held the minutes rule prevented formation of an enforceable contract (and thus arbitration), reversed the grant, and remanded with instructions to deny arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the engagement letters created an enforceable contract subject to arbitration under the minutes rule | Jackson County: no—board minutes lack essential terms, so no contract or arbitration clause formed | KPMG: yes—Singing River stipulated to acceptance; any minutes-rule dispute goes to arbitrator via delegation clause | Held: No contract formed under minutes rule; formation is for the court to decide, so arbitration cannot be compelled |
| Whether arbitrability questions were delegated to the arbitrator | Jackson County: delegation cannot cure lack of contract formation under the minutes rule | KPMG: delegation clause covers threshold issues, so arbitrator should decide enforceability | Held: Delegation does not overcome the absence of evidence on the minutes showing agreement to arbitrate; court decides formation |
| Whether committee minutes could satisfy the minutes rule | Jackson County: committee minutes are insufficient; only Board minutes speak for the Board | KPMG: relied on committee or other evidence to show assent | Held: Only Board minutes suffice; committee minutes cannot substitute |
| Whether federal precedent (Henry Schein) requires different outcome | Jackson County: Henry Schein inapplicable to minutes-rule formation issue | KPMG: cited Henry Schein to support delegating arbitrability | Held: Henry Schein does not change the result; clear evidence on the minutes to delegate does not exist |
Key Cases Cited
- Wellness, Inc. v. Pearl River Cty. Hosp., 178 So. 3d 1287 (Miss. 2015) (explains Mississippi minutes rule requiring sufficient terms recorded in official board minutes for contract formation)
- Sawyers v. Herrin-Gear Chevrolet Co., 26 So. 3d 1026 (Miss. 2010) (arbitration orders are appealable under Mississippi Rules of Appellate Procedure)
- E. Ford, Inc. v. Taylor, 826 So. 2d 709 (Miss. 2002) (standard of de novo review for appeals of orders compelling arbitration)
- Qualcomm Inc. v. Am. Wireless License Grp., LLC, 980 So. 2d 261 (Miss. 2007) (non-signatory may enforce arbitration agreement as third-party beneficiary or via equitable estoppel)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (party intent to delegate arbitrability must be clear and unmistakable)
- Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (2010) (arbitration clauses may delegate arbitrability if clearly intended by parties)
- Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524 (2019) (parties can delegate arbitrability to arbitrators; does not revive wholly-groundless exception)