IN THE MISSOURI COURT OF APPEALS

WESTERN DISTRICT

MEGHANN PATRICK,

Respondent,

v.

ALTRIA GROUP DISTRIBUTION 

CO., et al.,

Appellants.

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WD81344

FILED: March 5, 2019

Appeal from the Circuit Court of Jackson County

The Honorable Marco Roldan, Judge

Before Division Two: Alok Ahuja, P.J., and Thomas H. Newton

and Mark D. Pfeiffer, JJ.

Meghann Patrick is a former employee of Altria Group Distribution 

Company. After her employment was terminated, Patrick sued Altria and a 

supervisor at Altria, alleging employment-related claims under the Missouri 

Human Rights Act, § 213.010, RSMo et seq. The defendants moved to compel 

arbitration and stay the civil action. The circuit court denied the defendants’ 

motion, and they appeal. We affirm.

Factual Background

Patrick was hired by Altria in November 2007 as a Territory Sales Manager. 

At the time she began her employment, Patrick agreed to a dispute resolution

program which included an arbitration provision.
2

In February 2012, Altria distributed to employees a revised dispute 

resolution agreement, which superseded the earlier agreement.1 Patrick executed 

the revised agreement on February 10, 2012. The agreement established a dispute 

resolution program which provided various options for addressing workplace

disputes. The program describes four dispute resolution options: The Open Door 

Policy, The Company Ombudsperson, Mediation, and Arbitration. The first three 

dispute resolution mechanisms were optional and non-binding. By contrast, under 

the agreement all workplace disputes were subject to mandatory and binding 

arbitration.

The agreement defined a covered “dispute” to mean

any legal or equitable claim, demand, dispute or controversy, whether 

based in tort, in contract, under statute, by common law, or alleging a 

violation of any legal obligation, by and between the Parties, that 

arises out of or relates in any way to the employment relationship 

between [Patrick] and [Altria] . . . including claims which relate to, 

arise from, concern or involve in any way:

. . . .

2. separation from employment of an Employee, whether 

involuntary, voluntary or “constructive”, the terms and conditions of 

employment, the cessation of employment, wages alleged to be owed 

which are required to be paid pursuant to state or federal statute, and 

benefits (including any modification, amendment or termination of a 

benefit plan) or incidents of employment with [Altria];

. . . .

4. any other matter arising out of or related in any way to

the employment relationship between [Patrick] and [Altria] including, 

by way of example and without limitation, allegations of: 

discrimination or harassment based on race, sex, religion, age, marital 

status, pregnancy, national original or disability or other bases; unpaid 

 

1 The 2012 agreement consisted of two separate documents: an “Agreement to 

the Dispute Resolution Program,” which both Altria and Patrick executed; and the “Dispute 

Resolution Program” itself, which was incorporated by reference into the Agreement. 

Because the distinction between the two documents is not relevant to the issues raised in 

this appeal, for ease of reference we refer to the two documents collectively as “the 

agreement.”
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wages or expenses; harassment prohibited by state or federal statute 

or the common law; retaliation or whistleblower claims, including 

workers’ compensation retaliation; defamation; infliction of emotional 

distress; and violation(s) of any federal, state, local or other 

governmental constitution, statute, ordinance, regulation or common 

law.

The agreement excluded from the definition of a “dispute” (1) issues relating to the 

formation, interpretation or enforceability of the agreement; (2) any claim that the 

class action waiver in the agreement is void or voidable; and (3) any claim for 

workers’ compensation benefits, state disability insurance benefits, or 

unemployment compensation benefits.

The agreement provided that, “[i]n the event you and [Altria] are unable to 

resolve, or choose not to resolve, any such legal dispute through any of the other 

dispute resolution options, you and [Altria] agree to arbitrate any such legal dispute 

under the terms of the Program rather than pursue a lawsuit.”

The agreement gave Altria the power to unilaterally amend or terminate the 

dispute resolution program. The agreement defined a “Material Amendment” as “a 

change or modification of the Program that significantly changes a substantive 

provision relating to arbitration under the Program, such as a change in the 

allocation of fees and costs, the Disputes covered, or the limitations on remedies.” A 

“Non-Material Amendment” was defined as “any change to the Program which is 

not a Material Amendment.” The agreement provided:

1. [Altria] may make a Non-Material Amendment at any 

time with or without notice.

2. [Altria] may make a Material Amendment at any time, 

provided that:

a) no such amendment will apply to a Dispute 

previously submitted to arbitration under the Program; and 

b) no such amendment will be effective until notice of 

the amendment is published to Employees in a reasonable 

manner, such as electronically through [Altria’s] Intranet or 
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electronic mail system (proof of actual receipt by an Employee is 

not necessary).

3. [Altria] may terminate this Program at any time, 

provided that:

a) the Program will remain in full force and effect for 

any Dispute previously submitted to arbitration under the 

Program; and 

b) termination will not be effective until 30 days after 

notice of termination is published to Employees in a reasonable 

manner, such as electronically through [Altria’s] Intranet or 

electronic mail system (proof of actual receipt by an Employee is 

not necessary).

Altria terminated Patrick’s employment in March 2016. Patrick filed an 

administrative complaint against Altria and supervisor John Hartnett with the 

Missouri Human Rights Commission. Following receipt of a right to sue letter from 

the Commission, Patrick filed suit against Altria and Hartnett in the Circuit Court 

of Jackson County on July 21, 2017.

2 She asserted claims under the Missouri 

Human Rights Act for gender discrimination, sexual harassment/hostile work 

environment, and retaliation.

Altria filed a Motion to Compel Arbitration and Stay Action. The motion 

alleged that a valid and binding arbitration agreement existed between Patrick and 

Altria, which required Patrick to pursue her claims in arbitration. Patrick opposed 

the motion. She argued, among other things, that the dispute resolution agreement 

was not enforceable because it was not supported by adequate consideration.

The circuit court denied Altria’s motion to compel arbitration. It concluded 

that because Altria was given the right to unilaterally modify or terminate the 

dispute resolution agreement, the agreement was not supported by mutual 

consideration, and was therefore “invalid and unenforceable.”

 

2 We refer to Altria and Hartnett collectively as “Altria” in the remainder of 

this opinion.
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Altria appeals.

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Discussion

Altria argues that the circuit court erred in denying its Motion to Compel 

Arbitration and Stay Action because the parties were bound by a valid and 

enforceable arbitration agreement that was supported by adequate consideration. 

In response, Patrick argues, among other things, that Altria’s promises in the 

dispute resolution agreement were illusory and do not constitute bargained for 

consideration, because Altria retained the unilateral right to modify or terminate its 

obligations under the agreement.

The issue of “[w]hether the trial court should have granted a motion to 

compel arbitration is a question of law decided de novo.” Ellis v. JF Enters., LLC,

482 S.W.3d 417, 419 (Mo. 2016) (citation omitted).

When faced with a motion to compel arbitration, we must 

consider three factors. First, we must determine whether a valid 

arbitration agreement exists. Second, if a valid arbitration agreement 

exists, we must determine whether the specific dispute falls within the 

scope of the arbitration agreement. Third, if a valid arbitration 

contract exists, and if the subject dispute is within the scope of the 

arbitration provision, then we must determine whether the arbitration 

agreement is subject to revocation under applicable contract principles. 

In making these determinations, we should apply the usual rules of 

state contract law and canons of contract interpretation.

Frye v. Speedway Chevrolet Cadillac, 321 S.W.3d 429, 434-35 (Mo. App. W.D. 2010)

(citations and internal quotation marks omitted).

“Under both the Federal Arbitration Act, 9 U.S.C. § 1 et seq., and the 

Missouri Uniform Arbitration Act, chapter 435, RSMo, whether the parties entered 

into an enforceable arbitration agreement is a preliminary issue for the court to 

 

3 The order denying Defendants’ motion to compel arbitration is immediately 

appealable. Lawrence v. Beverly Manor, 273 S.W.3d 525, 527 n.2 (Mo. 2009) (“This Court 

recognizes the appealability of orders denying arbitration despite the fact that such orders 

are not final judgments, under the influence, if not the command of provisions of the 

Federal Arbitration Act and the Missouri Uniform Arbitration Act relating to appealability 

of such orders.”) (citing 9 U.S.C. § 16(a)(1)(B) and § 435.440.1, RSMo).
6

decide, applying Missouri law.” Johnson v. Vatterott Educ. Ctrs., Inc., 410 S.W.3d 

735, 738 (Mo. App. W.D. 2013) (citations omitted). In Missouri, “[t]he essential 

elements of any contract, including one for arbitration, are offer, acceptance, and 

bargained for consideration.” Baker v. Bristol Care, Inc., 450 S.W.3d 770, 774 (Mo. 

2014) (citation and internal quotation marks omitted). 

The only contractual element at issue in this case is whether the parties 

exchanged consideration for the Agreement. “Consideration consists either of a 

promise (to do or refrain from doing something) or the transfer or giving up of 

something of value to the other party.” Id. (citation and internal quotation marks 

omitted). Mutual promises can constitute adequate consideration to support an 

enforceable contract.

[B]ilateral contracts are supported by consideration and enforceable 

when each party promises to undertake some legal duty or liability. 

These promises, however, must be binding, not illusory. A promise is 

illusory when one party retains the unilateral right to amend the 

agreement and avoid its obligation.

Id. at 777 (citations omitted); see also Soars v. Easter Seals Midwest, 563 S.W.3d 

111, 116 (Mo. 2018); Frye, 321 S.W.3d at 442 (“A contract that purports to exchange 

mutual promises will be construed to lack legal consideration if one party retains 

the unilateral right to modify or alter the contract as to permit the party to 

unilaterally divest itself of an obligation to perform the promise initially made.”).

In Baker, the Missouri Supreme Court found an employer’s promise to 

arbitrate its claims against an employee to be illusory where the employer retained 

the “‘right to amend, modify or revoke this agreement upon thirty (30) days’ prior 

written notice to the Employee.’” 450 S.W.3d at 776 (quoting agreement). Because 

the agreement permitted the employer to modify the arbitration agreement 

retroactively, the Supreme Court held that it was illusory and could not supply 

adequate consideration. The Court explained:
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The fact that Bristol must give prior written notice of an amendment 

to the arbitration agreement does not preclude Bristol from giving 

Baker prior written notice that, effective in thirty days, Bristol 

retroactively is disclaiming a promise made in the arbitration 

agreement. For instance, if in the course of an ongoing arbitration 

process, Bristol concluded that the process was not favorable, Bristol 

could provide Baker notice that, effective in 30 days, it no longer would 

consider itself bound by the results of the arbitration. While the 

dissent concludes summarily that no court would adopt a construction 

of the agreement allowing Bristol to disclaim or modify its arbitration 

promises unilaterally at any time for its own benefit, the fact remains 

that the language of the agreement would permit Bristol to do just 

that.

. . . . Contracts, like the arbitration agreement in this case, that 

permit unilateral, retroactive amendment are deemed illusory and do 

not constitute consideration to create an enforceable contract.

Id. at 777 (citations omitted).

The fact that an employer has the unilateral right to amend an arbitration 

agreement may not render the agreement illusory, if the employer’s power to modify 

the agreement is meaningfully restricted. In Frye, 321 S.W.3d 429, we recognized 

that “limiting an employer's unilateral right to amend an arbitration agreement to 

amendments that [(1)] are prospective in application and [(2)] about which 

employees have been afforded reasonable advance notice may prevent an employer's 

mutual promise from being rendered illusory.” Id. at 443. 

In this case, the agreement gives Altria the unilateral right to make 

“material amendments” to the dispute resolution agreement, which may include 

“change[s] in the allocation of fees and costs, the Disputes covered, or the 

limitations on remedies.” Altria’s right to make such material—and unilateral—

modifications is not limited in the fashion Frye contemplated: (1) the agreement 

does not limit material modifications to prospective-only application; and (2) the 

agreement does not require Altria to give advance notice of material modifications 

to employees. Instead, the agreement only prohibits material amendments from 

affecting “a Dispute previously submitted to arbitration under the Program”—which 
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means that a material amendment could apply to claims which have accrued, and of 

which Altria has notice, but which have not yet been submitted to arbitration. 

(Such “accrued-but-unasserted” claims would include claims in which an employee 

had invoked the voluntary and non-binding dispute resolution mechanisms 

specified in the agreement.) In addition, the agreement does not require that Altria 

provide advance notice of material amendments to its employees: the agreement 

provides that material amendments become effective upon the publication of notice 

to employees, meaning that employees are given contemporaneous—but not 

advance—notice of material amendments to the dispute resolution agreement.4

Thus, under Altria’s dispute resolution agreement, if an employee had 

complained to the company about alleged employment discrimination, but had not 

yet commenced arbitration proceedings, Altria would have the ability to modify the 

dispute resolution agreement to eliminate discrimination claims from the scope of 

arbitrable disputes, and the employee would have no ability to invoke arbitration 

before that modification became effective. Given Altria’s ability to materially 

modify the dispute resolution agreement with respect to accrued claims, and 

without prior notice to employees, its promise to arbitrate is illusory, and cannot 

constitute adequate consideration to support the dispute resolution agreement’s 

enforceability.

Although we are not aware of any reported Missouri decisions addressing this 

precise issue, numerous courts in other jurisdictions have held that a party’s

promise to arbitrate is illusory where it retains the unilateral right to modify the 

arbitration agreement with respect to claims which have accrued, but are not yet in 

arbitration. In some of these cases, the courts have held that the application of 

 

4 The material amendments provision contrasts with the agreement’s 

termination provision, which provides that Altria may not terminate the program “until 30 

days after notice of termination is published to Employees.” (Emphasis added.)
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unilateral contract modifications to accrued-but-unasserted claims renders an 

arbitration agreement illusory, even if the other party is provided with advance 

notice of the contract modifications. As the California Court of Appeal explained in 

a case in which an employer could alter an arbitration agreement on 30 days’ notice, 

applicable to any claims for which arbitration had not yet been initiated:

We do not suggest the Agreement is unenforceable solely 

because it exempts filed claims from contract changes. Rather, the 

Agreement fails because it exempts only filed claims—it does not go far 

enough. The Agreement should also exempt claims that have accrued 

or are known to the employer that are not filed within 30 days. 

Otherwise, Neiman Marcus would have the unfettered unilateral right 

to modify the arbitration process or terminate the Agreement as to 

those claims. It would retain the ability to pick and choose the claims 

it wants to arbitrate, making the company's performance optional and 

thus illusory.

. . . .

The vice of the modification provision in this case is that it 

allows the employer to manipulate the arbitration process, tailoring it 

to fit specific cases, either by making the process more difficult or more 

expensive for the employee, or by revoking the Agreement in the belief 

that a judicial forum is preferable. Accordingly, if a claim has accrued 

or if the employer knows about a claim, all parties to the Agreement 

should be bound by the version in effect at that time; no changes 

should apply after the point of accrual or knowledge.

Peleg v. Neiman Marcus Grp., Inc., 140 Cal. Rptr.3d 38, 61, 63 (App. 2012) (Texas 

law) (emphasis added; citations, brackets, and internal quotation marks omitted).5

In other cases, courts have held that arbitration promises are illusory where 

a party has the unilateral right to modify an arbitration agreement with respect to 

accrued-but-unasserted claims, and the other party is not given advance notice of 

 

5 See also, e.g., Moua v. Optum Servs., Inc., 320 F. Supp.3d 1109, 1113–14 

(C.D. Cal. 2018); Totten v. Kellogg Brown & Root, LLC, 152 F. Supp.3d 1243, 1252–53 (C.D. 

Cal. 2016); Cummings-Reed v. United Health Group, 2:15-CV-02359-JAM-AC, 2016 WL 

1734873, at *3–4 (E.D. Cal. May 2, 2016); Keanini v. United Healthcare Servs., Inc., 33 F. 

Supp. 3d 1191, 1197–99 (D. Haw. 2014); Reyes v. United Healthcare Servs., Inc., 2014 WL 

3926813, at *2–*3 (C.D. Cal. Aug. 11, 2014); Flemma v. Halliburton Energy Servs., Inc., 303 

P.3d 814, 822 (N.M. 2013).
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the modifications (so that it could initiate arbitration under the unmodified 

agreement). As the Texas Court of Appeals explained, without advance notice of 

contract modifications,

once a claim arises, the forum in which that claim will be decided 

hinges not on mutually binding promises, but on a race between 

employer and employee, with the party who acts first controlling the 

outcome. While [the employer] may force the employee to fulfill her 

promise and arbitrate claims, the employer is bound to its own 

reciprocal promise only when the employee reaches the arbitrator's 

door before the employer can unilaterally revise or terminate the 

agreement without notice and at its own discretion. Because [the 

employer’s] ability to select which claims it arbitrates is restrained 

only by the speed at which it can alter or terminate the Agreement 

before formal arbitration commences, its promise was illusory.

Temp. Alts., Inc. v. Jamrowski, 511 S.W.3d 64, 70 (Tex. App. 2014). These cases 

hold that a contracting party must be given sufficient advance notice of unilateral 

modifications of an arbitration agreement, so that it has an opportunity to invoke 

the unmodified arbitration procedures if it chooses.

6

It is unnecessary in this case to decide whether an arbitration agreement is 

always illusory if a party is given the power to modify the agreement as to accrued 

claims, or whether advance notice of unilateral modifications is sufficient to avoid a 

finding that the agreement is unenforceable. In this case, Altria’s dispute 

resolution agreement fails under either standard: it plainly allows Altria to make 

unilateral, material modifications to the agreement which apply to accrued-butunasserted claims; but the agreement also provides that those amendments become 

effective without any advance notice to employees. Thus, under either of the 

approaches discussed above, Altria’s modification power renders its promise to 

 

6 See, e.g., Henry & Sons Constr. Co., Inc. v. Campos, 510 S.W.3d 689, 693–95 

(Tex. App. 2016); Jaworski v. Ernst & Young U.S. LLP, 119 A.3d 939, 947–48 (N.J. Super. 

Ct. App. Div. 2015); Pierce v. Kellogg, Brown & Root, Inc., 245 F. Supp.2d 1212, 1215 (E.D. 

Okla. 2003)
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arbitrate illusory, and the dispute resolution agreement therefore fails for lack of 

consideration.

Altria makes two additional arguments in defense of the agreement. First, it 

argues that concerns over its power to unilaterally modify the dispute resolution 

agreement are “purely hypothetical,” because Altria has not in fact exercised its 

right to modify the dispute resolution program since it was adopted in 2012. We 

determine whether an agreement is supported by consideration as of the time it was 

executed, however. Turner v. Sch. Dist. of Clayton, 318 S.W.3d 660, 670 (Mo. 2010) 

(consideration “‘must be measured at the time the parties enter into their contract’”; 

citation omitted). Whether or not Altria ultimately exercised its authority to modify 

the agreement is irrelevant.

Altria also argues that its right to unilaterally modify the dispute resolution

agreement is “checked by the duty of good faith and fair dealing.” Although the 

duty of good faith and fair dealing may in some circumstances be invoked to uphold 

an agreement against a claim that it is illusory, the duty of good faith and fair 

dealing “has nothing to do with the enforcement of terms actually negotiated and 

cannot block [the] use of terms that actually appear in the contract.” Morrow v. 

Hallmark Cards, Inc., 273 S.W.3d 15, 31 n.1 (Mo. App. W.D. 2008) (Ahuja, J., 

concurring) (citation omitted). “Thus, any implied duty of good faith and fair 

dealing could not ‘trump’ [Altria’s] right to discontinue” or amend the program

under the agreement’s express terms. Id.

7 The duty of good faith and fair dealing 

could not be invoked to deny Altria its clear contractual right to modify the terms of 

 

7 As the California Court of Appeal explained in Peleg: “[i]f . . . a modification 

provision expressly addresses whether contract changes apply to claims that have accrued 

or are known to the employer, the covenant [of good faith and fair dealing] cannot create 

implied terms that contradict the express language.” 140 Cal. Rptr.3d at 68; accord, e.g., 

Moua v. Optum Servs., Inc., 320 F. Supp. 3d 1109, 1114 (C.D. Cal. 2018); Cummings-Reed v. 

United Health Group, 2:15-CV-02359-JAM-AC, 2016 WL 1734873, at *3 (E.D. Cal. May 2, 

2016); Totten v. Kellogg Brown & Root, LLC, 152 F. Supp.3d 1243, 1253 (C.D. Cal. 2016).
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the dispute resolution agreement with respect to accrued-but-unasserted claims, 

unilaterally and without advance notice.

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Conclusion

The dispute resolution agreement fails for lack of consideration because 

Altria’s promise to arbitrate is illusory in light of its ability to unilaterally and 

materially modify the agreement. We affirm the circuit court’s order denying 

Altria’s motion to compel arbitration.

___________________________________

Alok Ahuja, Judge

All concur.

 

8 In its reply brief, Altria also argues that the modification provision could be 

severed, and the remainder of the dispute resolution agreement enforced. Because this 

argument was not raised until Altria’s reply brief, at which point Patrick had no 

opportunity to respond, it was not properly presented and we do not address it. See, e.g., 

State ex rel. Lavender Farms, LLC v. Ashcroft, 558 S.W.3d 88, 94–95 (Mo. App. W.D. 2018) 

(“Issues not raised by appellants in their opening brief cannot be raised for the first time in 

the reply brief, and are not properly preserved.”); Blankenship v. Div. of Emp’t Sec., 327 

S.W.3d 579, 582 n.4 (Mo. App. S.D. 2010) (same).