Opinion ID: 2822799
Heading Depth: 1
Heading Rank: 3

Heading: Terms of Arbitration

Text: Next, Mr. Hewitt asserts that the arbitration agreement is invalid and unenforceable because there was no mutual agreement to the essential terms of arbitration. The arbitration provision in Mr. Hewitt’s employment contract states: Hewitt agrees to abide by and to be legally bound by the Constitution and ByLaws and Rules and Regulations of the National Football League and by the decisions of the Commissioner of the National Football League, which shall be final, binding, conclusive and unappealable . . .. The constitution and bylaws of the NFL further provide: The Commissioner shall have full, complete, and final jurisdiction and authority to arbitrate[.] . . . The Commissioner shall interpret and from time to time establish policy and procedure in respect to the provisions of the Constitution and Bylaws and any enforcement thereof. In its order compelling arbitration, the trial court found that the NFL dispute resolution procedural guidelines governed the arbitration procedure and that both parties were bound by the guidelines. Mr. Hewitt acknowledges that the arbitration provision 14 clearly states he will be bound by “the Constitution and By-Laws and Rules and Regulations” of the NFL but contends he did not have sufficient information to make him aware of the full provisions of his employment contract because it does not directly mention the guidelines or attach them. Similarly, Mr. Hewitt asserts that the reference to the commissioner’s authority to interpret and establish policy does not reference the terms found in the guidelines with any amount of specificity that would enable him to assent to these terms. Mr. Hewitt stated in his affidavit that he did not know of the existence of the guidelines until the Rams sought to compel him to arbitrate his age discrimination claim. A valid arbitration clause in an employment contract requires mutuality of agreement, which “implies a mutuality of assent by the parties to the terms of the contract.” Abrams v. Four Seasons Lakesites/Chase Resorts, Inc., 925 S.W.2d 932, 938 (Mo. App. 1996). Terms not explicit in a contract may be incorporated into the contract by reference. Dunn Indus. Grp., 112 S.W.3d at 435 n.5. The intent to incorporate must be clear. See St. Louis Union Trust Co. v. Blue, 353 S.W.2d 770, 777 (Mo. 1962). To incorporate terms from another document, the contract must “make[] clear reference to the document and describe[] it in such terms that its identity may be ascertained beyond a doubt.” Intertel, Inc. v. Sedwick Claims Mgmt. Servs., Inc., 204 S.W.3d 183, 196 (Mo. App. 2006).
The guidelines were not referenced in Mr. Hewitt’s employment contract, nor were they clearly referenced in the constitution and bylaws. Mr. Hewitt’s employment contract only refers to “Rules and Regulations of the National Football League.” This reference does not identify the guidelines in such a way that Mr. Hewitt could ascertain them beyond 15 doubt. At best, under the terms of the constitution and bylaws, Mr. Hewitt agreed to arbitrate by undefined terms that the commissioner would establish. But these terms also lack certainty; Mr. Hewitt had no way to identify these terms and had no way to know that the NFL intended the guidelines to govern arbitration proceedings. Given the ambiguity of any terms actually referenced, Mr. Hewitt could not assent to them. Moreover, Mr. Hewitt did not bear the burden to seek out an unknown document not clearly identified in his employment contract or the constitution and bylaws. Though the NFL and the Rams may have intended to incorporate the guidelines into the constitution and bylaws and the employment contract, respectively, it is a well-settled rule that “[i]f ambiguous, [a contract] will be construed against the drafter.” Triarch Indus., Inc. v. Crabtree, 158 S.W.3d 772, 776 (Mo. banc 2005). The Rams had the burden to incorporate the terms in such a way that Mr. Hewitt could manifest his consent. Having failed to do so, Mr. Hewitt did not assent to the essential terms of arbitration found in the guidelines. Though Mr. Hewitt agreed to arbitrate disputes against the Rams, the specific terms of arbitration are, therefore, unenforceable. 9
Mr. Hewitt argues that the failure of the parties to agree to the specific terms of arbitration invalidates the arbitration clause in his employment contract. This Court has analyzed the validity of specific provisions of the arbitration agreement independently from the validity of the overall agreement to arbitrate. See Vincent, 194 S.W.3d at 855-58 9 Mr. Hewitt argues that a number of the rules of arbitration set out in the guidelines are unconscionable. Because Mr. Hewitt is not bound to arbitrate under the terms in the guidelines, this Court need not consider whether they are unconscionable. 16 (determining first “whether the parties have entered a valid agreement to arbitrate,” then whether arbitration provisions were unconscionable). As previously discussed, the agreement to arbitrate is valid because the plain language in his contract demonstrates that Mr. Hewitt intended to be legally bound by the constitution and bylaws of the NFL, which provided that his disputes would be arbitrated. When an arbitration agreement is valid, but specific provisions are silent or unconscionable, the failure of the terms is remedied by implying the terms from statutes within the Missouri Uniform Arbitration Act (MUAA), section 435.350 et seq. Triarch Indus., 158 S.W.3d at 775; Vincent, 194 S.W.3d at 859-61. Specifically, “where an agreement is silent as to certain necessary matters concerning the arbitration, such as how arbitrators will be appointed, arbitrators’ right to exercise authority, notification of their award, and payment of fees and expenses, Missouri will imply such terms.” Triarch Indus., 158 S.W.3d at 775. And when provisions in an arbitration agreement fail due to unconscionability, the court will imply the terms by statute. Vincent, 194 S.W.3d at 859-61. Consequently, the failure of the arbitration terms set out in the guidelines does not make the agreement to arbitrate unenforceable but will require that those terms be implied by statute. V. Appointment of the Commissioner as Sole Arbitrator is Unconscionable Mr. Hewitt further contends the arbitration agreement is unconscionable because it designates the commissioner as the arbitrator of any disputes arising between Mr. Hewitt and the Rams. That provision states: The Rams and Hewitt also severally and mutually promise and agree that in any dispute which may arise between them, the matter in dispute shall be referred to the Commissioner of the National Football League for decision and 17 after due notice and hearing, at which both parties may appear, the decision of said Commissioner shall be final, binding, conclusive and unappealable . . .. The provision further states that Mr. Hewitt “agrees to abide by and to be legally bound by the Constitution and By-Laws and Rules and Regulations of the National Football League.” The latter documents include the following language: Jurisdiction to Resolve Disputes 8.3 The Commissioner shall have full, complete, and final jurisdiction and authority to arbitrate: …. (B) Any dispute between any player, coach, and/or other employee of any member 10 of the League (or any combination thereof) and any member club or clubs . . .. Mr. Hewitt argues that the commissioner cannot be neutral and unbiased in a dispute between an employee and a team’s management because the commissioner is selected and his salary determined by the team owners. 11 Section 8.1 of the constitution and bylaws states: The League shall select and employ a person of unquestioned integrity to serve as Commissioner of the League and shall determine the period and fix the compensation of his employment. All voting requirements and procedures for the selection of or successor to the office of Commissioner shall be determined by the affirmative vote of not less than two-thirds or 18, whichever is greater, of the members of the League. The following provision, section 8.2 titled “Independence,” states, “The Commissioner shall have no financial interest, direct or indirect, in any professional sport.” 10 Section 2.1(A) of the NFL’s constitution and bylaws defines “member” as “an owner of a professional football club located in the United States.” 11 Mr. Hewitt also argues that, by extension, the hearing officers the commissioner is authorized by the guidelines to designate in his place as arbitrator cannot be impartial. Because the parties are not bound by the terms in the guidelines, this Court only considers the commissioner’s neutrality as the arbitrator. 18 As previously discussed, prior to referral to arbitration, Missouri courts can evaluate unconscionability claims, including claims of actual arbitrator bias, under state law in the context of contract formation, looking at the contract or arbitration agreement as a whole to see whether the agreement to arbitrate is valid. Brewer, 364 S.W.3d at 492 n.3. A court must assess the applicability of a state law contract defense under section 2 of the FAA on a “case-by-case” basis, rather than imposing a blanket rule. Brewer, 364 S.W.3d. at 491; see also id. at 492 (“The question of whether a state law unconscionability defense [is preempted by the FAA] requires analysis of the particular facts of the case”). A. Designation of NFL Commissioner as Arbitrator is Unconscionable Based on the facts of the present case, the terms in the contract designating the commissioner, an employee of the team owners, as the sole arbitrator with unfettered discretion to establish the rules for arbitration are unconscionable and, therefore, unenforceable. The constitution and bylaws provide that the “League” consists of the team owners. Under the constitution and bylaws, the league “shall select and employ” the commissioner and set his or her term of employment and compensation. The constitution and bylaws also provide unequivocally that the commissioner is employed by the league;
In effect, then, the commissioner is required to arbitrate claims against his employers. In Vincent, this Court found unconscionable a provision in an arbitration contract between a home builder and home purchasers that designated the president of a home builders association as the sole selector of the arbitrator because it found the president of the home 19 builders association was “an individual in a position of bias.” 12 194 S.W.3d at 859. Like the president of the home builders association in Vincent, the designated arbitrator, the commissioner, is an individual in a position of bias as the arbitrator. Additionally, due to the lack of any terms in the employment contract or in any document incorporated into the contract, the contract appoints the commissioner as not only the arbitrator but as the person who controls virtually every aspect of the arbitration from establishing the rules and procedures to making the final decision. Those provisions in the arbitration agreement are unconscionable. Id. B. Replacement for Arbitrator Provided for by Statute The unconscionability of the terms regarding the arbitrator does not invalidate the entire agreement to arbitrate. Vincent, 194 S.W.3d at 859-61. Instead, those unconscionable terms are replaced by the relevant provisions in the MUAA. Id. The MUAA provides for substitution of a new arbitrator when the designated arbitrator is disqualified. Section 435.360. This provision may be used to appoint a substitute arbitrator. VI. Arbitration Clause Encompasses Mr. Hewitt’s Underlying Claim Against All Defendants Lastly, Mr. Hewitt makes two claims involving the enforcement of the arbitration agreement to compel arbitration of his underlying MRHA claim. Specifically, he asserts he did not waive a judicial forum for his statutory claim under the MHRA and that the 12 In Vincent, the president of the home builders association was also the president of the company that was a party to the arbitration agreement. 194 S.W.3d at 859. The Court did not base its holding on this fact, however. Rather, the Court expressly found, “Even if the president of the Home Builder[s] Association of Greater St. Louis was not also the president of [the company that was a party to the arbitration agreement], this portion of the arbitration provision would be unconscionable.” Id. 20 arbitration agreement cannot be enforced by the three named defendants who did not sign the employment contract. A. Arbitration Clause Waives a Judicial Forum for Statutory Claims Mr. Hewitt asserts he did not waive a judicial forum for his claim that he was fired in violation of the MHRA because the arbitration agreement language does not include statutory claims. He is incorrect. Under Missouri law, “[i]f a contract is unambiguous, the intent of the parties is to be discerned from the contract alone based on the plain and ordinary meaning of the language used.” Whelan Sec. Co. v. Kennebrew, 379 S.W.3d 835, 846 (Mo. banc 2012) (internal quotations omitted). The agreement at issue here mandates arbitration of “any dispute which may arise” between Mr. Hewitt and the Rams. “Any dispute” plainly means any dispute, including Mr. Hewitt’s statutory claims under the MHRA. Mr. Hewitt’s efforts to characterize this language as too ambiguous to be inclusive of statutory claims are unavailing. 13 13 The primary case cited by Mr. Hewitt is a Massachusetts case that is distinguishable both on the facts and on the governing law. In Warfield v. Beth Israel Deaconess Medical Center., Inc., the Massachusetts court stated that Massachusetts law requires that an agreement to arbitrate statutory claims must be “clear and unmistakable.” 910 N.E.2d 317, 325 (Mass. 2009), abrogated on other grounds, Joule, Inc. v. Simmons, 944 N.E.2d 143, 150 n.9 (Mass. 2011). The court found the term “arising out of or in connection with [the employment agreement] or its negotiations” to be ambiguous and, ultimately, determined that the employee’s sex discrimination claim was not covered by the arbitration clause. Id. at 327-28. The language at issue in the instant case is distinguishable and is unambiguous. It, therefore, is enforceable under Missouri law. The other cases Mr. Hewitt cites for this proposition concern waiver requirements under collective bargaining agreements – a separate strand of legal precedent and one not directly applicable here. 21 B. Non-signatory Defendants Can Enforce the Arbitration Agreement Against Mr. Hewitt Mr. Hewitt asserts that defendants ITB Football Company, L.L.C., the Rams Football Company, Inc., and the St. Louis Rams, L.L.C., cannot enforce the arbitration agreement against Mr. Hewitt because, of the four named defendants, only the St. Louis Rams Partnership was a signatory to the agreement. This Court previously has rejected enforcement of an arbitration agreement against a signatory by a non-signatory on grounds that “arbitration is ultimately a matter of agreement between the parties.” Netco, Inc. v. Dunn, 194 S.W.3d 353, 361-62 (Mo. banc 2006). But Netco observed, as have the federal courts, that “a non-signatory may, in some instances, compel a signatory to arbitrate under the theory that the plaintiff/signatory is estopped from refusing to arbitrate.” Id. at 361. Dominium Austin Partners, L.L.C. v. Emerson provides an example of a situation like the present one in which all parties are properly referred to arbitration. 248 F.3d 720 (8th Cir. 2001). In Emerson, the court stated that all parties may arbitrate where “appellants made allegations which treat all these parties [signatories and non-signatories] as though they were signatories to the agreements.” Id. at 728. Similarly, Smith/Enron Cogeneration Ltd. Partnership, Inc. v. Smith Cogeneration International, Inc., held that a signatory plaintiff could not avoid enforcement when the plaintiff treated signatory and non-signatory defendants as a “single unit.” 198 F.3d 88, 98 (2d Cir. 1999). See also Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009); MS Dealer Serv. Corp. v. Franklin, 177 F.3d 942, 947 (11th Cir. 1999), abrogated on other grounds by Escobal v. Celebration Cruise Operator, Inc., 482 F. App’x 475 (11th Cir. 2012); CD Partners, LLC v. Grizzle, 424 F.3d 795, 798 (8th Cir. 2005). 22 The principles set out in these cases apply here. Mr. Hewitt’s petition makes no differentiation between the signatory and non-signatory defendants, referring to them collectively as “the Rams” or “Defendants” and alleging they fired him despite his contract due to age discrimination, stating, “Defendants, by their actions and failures to act, . . . discriminated against Mr. Hewitt on the basis of his age in violation of the Missouri Human Rights Act” (emphasis added). In other words, he alleges that each is responsible for the single act of firing him due to age while he was under contract. If the other defendants (two of whom are partners in the Rams partnership) were not bound by the contract, including the agreement to arbitrate, then Mr. Hewitt has failed to state any basis on which these nonsignatory defendants employed him or could be liable for his firing. Mr. Hewitt cannot treat these defendants severally for arbitration purposes but jointly for all other purposes. His claim against the defendants is a single one that should be referred in its entirety to arbitration.