Soars v. Easter Seals Midwest
563 S.W.3d 111
| Mo. | 2018Background
- Easter Seals Midwest (ESM) required new at-will employees to sign a standalone arbitration agreement as a condition of initial employment; Lewis Soars signed in October 2015.
- The Agreement required arbitration of employment disputes and contained a delegation clause identical to the clause upheld in Rent-A-Center, delegating threshold questions of interpretation, applicability, enforceability, or formation to the arbitrator.
- Soars was terminated in January 2016 and sued ESM (wrongful discharge) and ESM employee Charity Twine (race discrimination) in circuit court.
- ESM and Twine moved to compel arbitration; the circuit court denied the motion. The court of appeals affirmed; the Missouri Supreme Court granted transfer.
- The central legal dispute is whether the delegation clause is enforceable and whether Soars properly challenged that clause specifically or only the arbitration agreement as a whole.
Issues
| Issue | Plaintiff's Argument (Soars) | Defendant's Argument (ESM/Twine) | Held |
|---|---|---|---|
| Whether the delegation clause is enforceable | Soars argued the Agreement and delegation clause lack consideration/mutuality and are unconscionable; challenges were directed at the agreement as a whole | ESM argued the delegation clause is clear, severable, and enforceable; Soars failed to specifically challenge the delegation clause | The court held the delegation clause valid and enforceable; Soars did not specifically challenge it, so arbitrator decides formation/enforceability |
| Whether initial at-will employment supplies consideration for arbitration/delegation clause | Soars contended initial at-will employment provides no consideration, so no valid contract | ESM argued the delegation provision standing alone is a bilateral promise to arbitrate threshold issues and is supported by consideration | The court assumed, and held, the delegation clause supported by adequate consideration (bilateral, not illusory); any challenge to the remainder is for arbitrator |
| Whether challenges to the agreement as a whole defeat delegation | Soars lumped delegation objections into broader attacks on the Agreement | ESM argued severability doctrine requires specific attack on delegation to avoid enforcement | The court applied severability: specific attacks required; generic attacks leave delegation intact |
| Proper remedy | Soars sought litigation to decide arbitrability and merits | ESM sought stay and compelled arbitration for threshold arbitrability issues | The court reversed the circuit court, ordered stay, and remanded to compel arbitration to decide threshold arbitrability issues |
Key Cases Cited
- Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63 (U.S. 2010) (upholding enforceability of delegation clauses and severability doctrine)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA governs arbitration agreements and enforces arbitration clauses against state-law defenses)
- First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (U.S. 1995) (presumption against arbitrability of gateway questions unless clear and unmistakable evidence)
- Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (U.S. 2002) (procedural questions are for arbitrator absent clear intent otherwise)
- State ex rel. Pinkerton v. Fahnestock, 531 S.W.3d 36 (Mo. banc 2017) (Missouri court enforcing delegation clause and requiring specific challenge to delegation)
- Ellis v. JF Enters., LLC, 482 S.W.3d 417 (Mo. banc 2016) (arbitration agreements are severable from underlying contracts)
- Baker v. Bristol Care, Inc., 450 S.W.3d 770 (Mo. banc 2014) (consideration analysis for arbitration clauses and when promises are illusory)