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575 S.W.3d 471
Mo.
2019
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Background

  • Dollar General required employees to electronically sign an "Employee Arbitration Agreement" in 2014; agreements incorporated AAA Employment Arbitration Rules but purported to exclude "claims concerning the scope or enforceability" from arbitration.
  • Agreements allowed a 30-day "opt out"; employees who took no action were told the agreement would automatically take effect. Newberry and Lowrance signed after being told noncompliance could risk termination; Dollar General did not sign the documents.
  • Both employees later filed discrimination and retaliation suits in court after termination; Dollar General moved to compel arbitration and stay proceedings.
  • The circuit court granted Dollar General’s motions, finding delegation clauses valid and arbitration agreements supported by consideration; the court of appeals denied writ relief, and this Court issued preliminary writs but ultimately reviewed whether the delegation clause was specifically challenged.
  • Newberry and Lowrance argued there was no consideration for the arbitration agreements (and thus no consideration for the severed delegation clauses), and that the court should decide formation issues rather than an arbitrator.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Who decides threshold formation (consideration) questions when a delegation clause exists? Newberry/Lowrance: lack of consideration for the agreements (including delegation) means a court must decide formation. Dollar General: the delegation clause is severable and, not having been specifically challenged, delegates arbitrability to the arbitrator. Court: delegation clause valid and severable; because plaintiffs did not specifically challenge the delegation clause, the arbitrator decides formation (including consideration).
Must the party seeking to compel arbitration prove consideration for the delegation clause when lack of consideration is asserted? Newberry/Lowrance: party seeking arbitration bears the burden to prove consideration, a higher burden when formation is contested. Dollar General: no separate burden in court to prove consideration for delegation when delegation clause is not specifically challenged. Court: Dollar General had no duty to prove consideration for delegation in court because plaintiffs failed to specifically challenge the delegation clause.

Key Cases Cited

  • Rent-A-Ctr. W., Inc. v. Jackson, 561 U.S. 63 (2010) (delegation clauses are severable; specific challenges to the delegation clause must be decided by courts).
  • First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938 (1995) (clear and unmistakable evidence required to show parties agreed to arbitrate arbitrability).
  • State ex rel. Pinkerton v. Fahnestock, 531 S.W.3d 36 (Mo. banc 2016) (reference to AAA rules can constitute clear and unmistakable evidence delegating arbitrability to arbitrator).
  • Soars v. Easter Seals Midwest, 563 S.W.3d 111 (Mo. banc 2018) (adopting Rent‑A‑Ctr. rule that delegation clauses must be specifically challenged).
  • Baker v. Bristol Care, Inc., 450 S.W.3d 770 (Mo. banc 2014) (distinguishing formation/validity issues from applicability/enforceability issues for arbitration agreements).
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Case Details

Case Name: State ex rel. Jesse Newberry, Relator v. The Honorable Steve Jackson, consolidated with State ex rel. Becky Lowrance, Relator v. The Honorable Steve Jackson
Court Name: Supreme Court of Missouri
Date Published: May 21, 2019
Citations: 575 S.W.3d 471; SC96985, consolidated, w, SC96986
Docket Number: SC96985, consolidated, w, SC96986
Court Abbreviation: Mo.
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    State ex rel. Jesse Newberry, Relator v. The Honorable Steve Jackson, consolidated with State ex rel. Becky Lowrance, Relator v. The Honorable Steve Jackson, 575 S.W.3d 471