Johnson v. Vatterott Educational Centers, Inc.
2013 Mo. App. LEXIS 1175
| Mo. Ct. App. | 2013Background
- Vatterott hired Johnson as Director of Admissions in June 2009 and provided an Employee Handbook in March 2010 that included an “At Will Employment and Binding Arbitration Agreement.”
- Johnson and Vatterott’s HR Director signed the Arbitration Agreement; a signed copy was placed in Johnson’s personnel file.
- Handbook contained multiple sections declaring the handbook non-contractual, modifiable at employer’s discretion, and that only the President could bind Vatterott to any employment contract.
- Johnson was terminated in March 2011, filed an MHRA claim and obtained a right-to-sue letter, then sued in state court for discrimination, harassment, and retaliation.
- Vatterott moved to compel arbitration; the circuit court denied the motion, finding the arbitration provision was not an enforceable contract but part of a modifiable handbook. Vatterott appealed.
Issues
| Issue | Plaintiff's Argument (Johnson) | Defendant's Argument (Vatterott) | Held |
|---|---|---|---|
| Whether a valid, enforceable arbitration agreement exists | The signed arbitration clause is a binding contract and thus requires arbitration | The signed clause is binding; HR had implied authority to execute arbitration agreements | No — arbitration clause is not enforceable because handbook disclaimers and modification language negate a definite offer and HR lacked power to bind the company |
| Whether handbook disclaimers apply to the arbitration clause | Handbook disclaimers render no part of the handbook contractual, so arbitration cannot be forced | Arbitration clause, though in handbook, is a separate executed contract and should be enforced | Court construed ambiguity against drafter (Vatterott) and applied handbook disclaimers to the arbitration clause |
Key Cases Cited
- Johnson v. McDonnell Douglas Corp., 745 S.W.2d 661 (Mo. 1988) (handbook unilateral modification language prevents creation of contractual rights)
- Whitworth v. McBride & Son Homes, Inc., 344 S.W.3d 730 (Mo.App. W.D. 2011) (handbook disclaimers applied to arbitration provisions; arbitration not enforceable)
- McIntosh v. Tenet Health Sys. Hosps., Inc., 48 S.W.3d 85 (Mo.App. E.D. 2001) (arbitration clause enforceable where handbook expressly exempted arbitration provisions and employee acknowledged waiver)
- Patterson v. Tenet Healthcare, 113 F.3d 832 (8th Cir. 1997) (similar enforcement where arbitration language clearly made exception to general non-contractual handbook disclaimers)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (2010) (question whether parties agreed to arbitrate is for the court to decide under applicable law)