929 F.3d 1012
8th Cir.2019Background
- Jennifer Shockley worked for PrimeLending from June 2016 to July 2017 and accessed an internal company network containing a Handbook and policies.
- Clicking the Handbook link generated a system acknowledgment of review and a pop-up hyperlink to the Handbook’s full text; Shockley does not recall or have evidence she opened the full text.
- The Handbook contained an arbitration provision covering FLSA claims and a delegation provision purporting to give the arbitrator exclusive authority to decide arbitrability.
- Shockley sued PrimeLending under the FLSA for unpaid wages and overtime; PrimeLending moved to compel arbitration based on the Handbook provisions.
- The district court denied the motion, holding no enforceable arbitration agreement or delegation clause was formed because Shockley did not unambiguously accept the terms; PrimeLending appealed.
- The Eighth Circuit affirmed, concluding under Missouri contract law there was no offer/acceptance (no unequivocal acceptance) and thus no enforceable delegation or arbitration agreement.
Issues
| Issue | Shockley’s Argument | PrimeLending’s Argument | Held |
|---|---|---|---|
| Whether a valid delegation clause was formed | The delegation clause is not an enforceable contract because Shockley never unequivocally accepted handbook terms | The delegation clause is part of the Handbook and was formed by Shockley’s acknowledgment of review, so arbitrator should decide arbitrability | Held: No — delegation clause invalid for lack of acceptance under Missouri law |
| Whether the arbitration agreement was formed | No valid arbitration contract; mere system-generated acknowledgment and continued employment do not show assent | Handbook terms (including arbitration) were presented and acknowledged via internal system, creating a contract | Held: No — arbitration provision unenforceable for lack of unequivocal acceptance |
| Burden to compel arbitration | N/A (respondent challenges formation) | PrimeLending bears burden to prove a valid agreement to arbitrate | Held: PrimeLending failed to meet its burden to show a valid arbitration agreement |
| Effect of invalid delegation clause on arbitrability inquiry | Court must decide validity of arbitration agreement because delegation clause is challenged and invalid | If delegation clause were valid, arbitrator decides arbitrability | Held: With delegation clause invalid, court reviews arbitration agreement and finds it invalid too |
Key Cases Cited
- Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (delegation clauses may commit arbitrability questions to arbitrators)
- Nebraska Machinery Co. v. Cargotec Solutions, LLC, 762 F.3d 737 (8th Cir. 2014) (employee should not be forced into arbitration to prove she never agreed to arbitrate)
- Soars v. Easter Seals Midwest, 563 S.W.3d 111 (Mo. 2018) (delegation provision is an antecedent, severable agreement that must be specifically challenged)
- Jackson v. Higher Educ. Loan Auth. of Mo., 497 S.W.3d 283 (Mo. Ct. App. 2016) (party seeking to compel arbitration must prove a valid agreement under state law)
- Berkley v. Dillard’s, Inc., 450 F.3d 775 (8th Cir. 2006) (continued employment does not necessarily manifest assent to arbitration unless clearly stated)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (arbitration is contractual; courts enforce arbitration agreements only when parties agreed)