Supreme Court Issues New Arbitration Decision

May 22, 2019

The Missouri Supreme Court issued a new arbitration decision on May 21, 2019.  In State ex rel. Jesse Newberry v. Jackson, consolidated with State ex rel. Lowrance v. Jackson, the Court considered whether two employees could sue their former employer for discrimination in court, or whether their claims should be determined in arbitration.  Both employees were required to sign arbitration agreements as a condition of continued employment. Both employees later filed discrimination lawsuits, and the employer sought to compel arbitration.

Each arbitration agreement contained a “delegation clause,” which purported to give the arbitrator the right to determine the “threshold issue” of arbitrability, such as whether there was a valid agreement to arbitrate. The court found that, although the employees argued that the agreements were not validly formed because their continued employment was not sufficient consideration, they did not specifically challenge the delegation clause. Rather, they challenged the agreement as a whole. Therefore, interpretation of the delegation clause, and the issue of arbitrability, was for the arbitrator.

This case is one of many recent Missouri cases considering the validity of arbitration clauses in the consumer or employment context.   Whether you are the party seeking to enforce an arbitration clause or seeking to avoid one, it is essential that you obtain competent legal counsel to advise on the parameters of this issue.