1The Honorable John B. Jones, United States District Judge, United States

District Court for the District of South Dakota, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 00-1887

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Kathy Lyster, *

*

Appellee, *

* Appeal from the United States

v. * District Court for the Western

* District of Missouri

Ryan’s Family Steak Houses, Inc., *

*

Appellant. *

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Submitted: January 8, 2001

Filed: February 8, 2001 

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Before WOLLMAN, Chief Judge, BYE, Circuit Judge, and JONES1, District Judge.

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JONES, District Judge.

Kathy Lyster filed this action alleging unlawful sexual harassment against her

former employer, Ryan’s Family Steak Houses, Inc. Lyster signed an arbitration

agreement relating to her employment with Steak House. Steak House appeals from

the district court’s denial of its petition to compel arbitration and motion to dismiss, or

alternatively, to stay the proceedings. The district court held Lyster’s arbitration
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agreement did not require arbitration of claims that were filed after the termination of

the arbitration agreement. We reverse.

I. BACKGROUND

Lyster applied for employment with Steak House on March 5, 1998. At the time

Lyster submitted her application, she signed a Job Application Agreement to

Arbitration of Employment-Related Disputes (“Agreement”) with Employment Dispute

Services, Inc. (“EDSI”) which provided that Lyster would submit any employmentrelated dispute with Steak House to arbitration. Steak House was named as a thirdparty beneficiary of the Agreement. Lyster submitted her claim of sexual harassment

to the Equal Employment Opportunity Commission (“EEOC”) and the Missouri

Commission on Human Rights (“MCHR”) and received a right-to-sue letter.

The district court concluded under the Agreement Lyster was required to

arbitrate her claim only if she filed her claim with the EEOC and the MCHR before she

was terminated. If Lyster was terminated prior to filing her claim, the district court

concluded the Agreement would be unenforceable because the Agreement terminated

when her employment with Steak House ended. Because Steak House did not provide

sufficient information to the district court regarding the timing of Lyster’s termination

in relation to the filing of her claim with the EEOC and the MCHR, the district court

denied Steak House’s petition to compel arbitration and motion to dismiss, or

alternatively, to stay the proceedings. 

Steak House appeals on the grounds that the Agreement requires Lyster’s

employment-related claims against it be arbitrated even if the Agreement has terminated

since the date of the claim. Lyster contends the Agreement specifically excluded all

EEOC matters from arbitration and Lyster did not agree to arbitrate her Title VII

claims. Lyster further asserts her claim and cause of action for sexual harassment did

not accrue until EEOC gave a right to sue, which occurred after the Agreement
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terminated. Finally, Lyster argues the Agreement is an unconscionable adhesion

contract.

II. DECISION

Where the district court has determined the arbitrability of a dispute based on

contract interpretation, we review the decision de novo. PCS Nitrogen Fertilizer, L.P.

v. Christy Refractories, L.L.C., 225 F.3d 974, 978 (8th Cir. 2000). If the district court’s

order concerning arbitrability is based on factual findings, we review such findings for

clear error. Id. The order denying Steak House’s petition to compel arbitration and

motion to dismiss, or alternatively, to stay the proceedings is based solely on contract

interpretation and, therefore, we review the district court’s decision de novo.

A dispute must be submitted to arbitration if there is a valid agreement to

arbitrate and the dispute falls within the scope of that agreement. Telectronics Pacing

Systems, Inc. v. Guidant Corp., 143 F.3d 428, 433 (8th Cir. 1998); Dean Witter

Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (holding the Federal Arbitration Act

mandates that courts shall direct parties to arbitration on issues to which a valid

arbitration agreement has been signed). The Federal Arbitration Act (FAA), 9 U.S.C.

§ 1 et seq., declares a “liberal federal policy favoring arbitration agreements.” Moses

H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (citing 9

U.S.C. § 2). The FAA establishes that “as a matter of federal law, any doubts

concerning the scope of arbitrable issues should be resolved in favor of arbitration,

whether the problem at hand is the construction of the contract language itself or an

allegation of waiver, delay, or a like defense to arbitrability.” Id.; see Barker v. Golf

U.S.A., Inc., 154 F.3d 788, 793 (8th Cir. 1998), cert. denied, 525 U.S. 1068 (1999).

Generally, “there is a presumption of arbitrability in the sense that ‘[a]n order to

arbitrate the particular grievance should not be denied unless it may be said with

positive assurance that the arbitration clause is not susceptible of an interpretation that

covers the asserted dispute.’” AT & T Tech., Inc. v. Communications Workers of

Am., 475 U.S. 643, 650 (1986) (quoting Steelworkers v. Warrior & Gulf Navigation
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Co., 363 U.S. 574, 582-83 (1960)). However, a party who has not agreed to arbitrate

a dispute cannot be forced to do so. AT & T Tech., 475 U.S. at 648.

Lyster does not challenge the district court’s conclusion that the Agreement is

governed by the FAA as an agreement that evidences a transaction involving commerce

pursuant to Section 2 of the FAA, 9 U.S.C. § 2. The Supreme Court has made clear

that “statutory claims may be the subject of an arbitration agreement, enforceable

pursuant to the FAA.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26

(1991). More specifically, we held Title VII claims are subject to individual

consensual agreements to arbitrate. Patterson v. Tenet Healthcare, Inc., 113 F.3d 832,

837-38 (8th Cir. 1997). The Supreme Court recognized that “[b]y agreeing to arbitrate

a statutory claim, a party does not forgo the substantive rights afforded by the statute;

it only submits to their resolution in an arbitral, rather than a judicial, forum.”

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985);

see Gilmer, 500 U.S. at 26 (same).

State contract law governs whether an arbitration agreement is valid. Barker,

154 F.3d at 791. Pursuant to Missouri law, “[t]he primary rule in the interpretation of

a contract is to ascertain the intention of the parties and to give effect to that intention.”

Speedie Food Mart, Inc. v. Taylor, 809 S.W.2d 126, 129 (Mo. Ct. App. 1991). A

court may evaluate extrinsic evidence to ascertain the parties’ intention only if the

contract is unclear and ambiguous. Id.; J.E. Hathman, Inc. v. Sigma Alpha Epsilon

Club, 491 S.W.2d 261, 264 (Mo. 1973). The test for determining if an ambiguity exists

in a written contract is “whether the disputed language, in the context of the entire

agreement, is reasonably susceptible of more than one construction giving the words

their plain meaning as understood by a reasonable average person.” Speedie Food

Mart, 809 S.W.2d at 129.

The Agreement signed by Lyster included the following provisions:
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The purpose of this agreement is to provide You and the Company a

forum in which claims or disputes with the Company and any other

signatories may be resolved by arbitration rather than litigation. This

Agreement does not restrict you from filing a claim or charge with any

state or federal agency, for example, Equal Employment Opportunity

Commission, state unemployment agency, state workers’ compensation

commission, where applicable. Rather, the Agreement applies only to

State or Federal court proceedings.

A. Acceptance of EDSI Agreement

Important aspects of Your acceptance of this Agreement are: ...

2. You retain the right to file a claim or charge with any State or Federal

agency that would otherwise handle Your claim or charge;

3. Except as to claims or charges handled within a State or Federal

agency, You and the Company agree to use EDSI to resolve legal claims

concerning You that either party would otherwise bring in State or

Federal court; ....

B. Agreement

1. Any employment-related dispute between the Company, Me, and/or

other signatories which would otherwise be brought in State or Federal

court will be brought ONLY in the EDSI arbitration forum and under

EDSI Rules and Procedures, as modified or amended from time to time.

....

2. ....

A. Except as to claims or charges actually handled within a State

or Federal agency, any and all disputes I may have with the

Company, or in that company, its supervisors, managers or other

agents may have with Me which would otherwise be decided in

court, shall be resolved only through arbitration in the EDSI forum

and NOT THROUGH LITIGATION IN STATE OR FEDERAL

COURT. ....

E. I absolutely must use the EDSI forum for any and all

employment-related disputes and/or claims and/or related tort

claims I may have against the Company and all other signatories to

this Agreement which would otherwise be brought in court, even
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if the Agreement has been terminated since the date of the claim.

....

G. My Agreement shall continue for the period of My employment

with the Company unless mutually terminated in writing by EDSI

and Me.

The “Company” referred to in the Agreement is the Steak House.

Lyster contends the language in the Agreement relating to claims filed with the

EEOC specifically excluded all EEOC matters from arbitration. We disagree.

Although the Agreement permits Lyster to participate in state and federal administrative

proceedings, the Agreement specifically states any claim that would otherwise be

pursued in state or federal court must be pursued in an arbitral forum.

Although the Agreement with EDSI terminated when Lyster’s employment with

Steak House ended, the Agreement clearly states in section B.2.E. that Lyster’s

employment-related claims shall be arbitrated even if the Agreement is terminated after

the date of her claim. Considering the Agreement as a whole, it is clear and

unambiguous that Lyster agreed any employment-related claims she had against Steak

House arising from and during her employment with Steak House, which would

otherwise be brought in state or federal court, would be arbitrated. The plain meaning

of the language in the Agreement does not require that before any claims are subject

to arbitration they must be filed with the EEOC or the MCHR. Additionally, the

Agreement does not exclude from arbitration claims pursued with the EEOC for which

Lyster had not received a right-to-sue letter prior to her termination by Steak House.

Pursuant to the Agreement, Lyster’s Title VII claim of sexual harassment by one of

Steak House’s supervisors, which arose during Lyster’s employment with Steak House,

must be pursued in an arbitral, rather than a judicial, forum.

Lyster’s final argument, that the Agreement is an unconscionable adhesion

contract, lacks merit. Pursuant to Missouri law, “[a] contract is substantively
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unconscionable if there is undue harshness in the terms of the contract. Or, as more

colorfully stated, an unconscionable contract is one, such as no man in his senses and

not under delusion would make, on the one hand, and as no honest and fair man would

accept on the other, ....” Killion v. Bank Midwest, N.A., 987 S.W.2d 801, 810 (Mo.

Ct. App. 1998) (internal quotation marks and citations omitted). We recognized the

potential that substantial arbitration fees may make an arbitration agreement

unconscionable in Dobbins v. Hawk’s Enterprises, 198 F.3d 715, 717 (8th Cir. 1999).

However, Lyster has not established on the record before us that undue harshness exists

in the terms of the Agreement in light of Missouri law governing unconscionability.

See Green Tree Financial Corp.-Alabama v. Randolph, 121 S.Ct. 513, 522 (2000)

(holding the party seeking to invalidate an arbitration agreement because of prohibitive

arbitration fees bears the burden of proof and the possibility of such party incurring

prohibitive costs is too speculative to invalidate an arbitration agreement where the

record reveals only that the agreement is silent on the subject of arbitration costs).

Based upon the above discussion it is clear that Lyster executed a valid

arbitration agreement and her claim of unlawful sexual harassment against Steak House

falls within the scope of the Agreement. Therefore, Steak House is entitled to an order,

pursuant to Section 4 of the FAA, 9 U.S.C. § 4, compelling Lyster to pursue her sexual

harassment claim in an arbitral, rather than a judicial, forum. Lyster requests if we find

the FAA applicable to this case we enter an order requiring the arbitration be conducted

in Joplin, Missouri, the city in which Lyster was employed by Steak House. During

oral argument, counsel for Steak House stated the arbitration proceedings would be

conducted in Missouri, in the city where Lyster was employed. We reverse the district

court’s denial of Steak House’s petition to compel arbitration and stay proceedings.

We remand with directions to enter an order compelling arbitration in accordance with

the terms of the Agreement, pursuant to 9 U.S.C. § 4, and to enter an order staying the

proceedings pending resolution of the arbitration, pursuant to 9 U.S.C. § 3.
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A true copy.

 ATTEST:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.