Opinion ID: 2822799
Heading Depth: 1
Heading Rank: 2

Heading: Arbitration Clause is Valid and Enforceable

Text: Mr. Hewitt asserts the arbitration provision is invalid and unenforceable on numerous grounds, including that it provides for a decision by an allegedly biased arbitrator, a lack of mutual agreement to the arbitration’s essential terms, lack of consideration, lack of waiver of and a denial of his statutory rights, and allegations of procedural unconscionability. He also contends that the three named defendants that did not sign the employment contract cannot enforce the arbitration provision against him. Mr. Hewitt’s claims of lack of consideration and procedural unconscionability relate to the validity of the agreement to 8 arbitrate, whereas his claims regarding the arbitrator and terms of arbitration relate to only specific terms of arbitration. Accordingly, the Court will address these claims separately. The Court will also address separately Mr. Hewitt’s arguments that he did not waive his right to bring his statutory claim in a judicial forum and that the defendants who did not sign the contract cannot enforce it because those arguments involve whether the arbitration agreement encompasses his underlying claims. A. The Court May Determine Whether the Arbitration Agreement is Valid As previously discussed, Mr. Hewitt’s employment contract is governed by the FAA. The Supreme Court stated in Concepcion that the FAA reflects a “liberal policy favoring arbitration and the fundamental principle that arbitration is a matter of contract. . . . [C]ourts must place arbitration agreements on an equal footing with other contracts and enforce them according to their terms.” 131 S. Ct. at 1745 (internal citations and quotation marks omitted). If there is no valid arbitration clause, however, then there is no agreement to arbitrate, and the case may proceed in civil court. See 9 U.S.C. § 2. A court determines the validity of an arbitration agreement by applying state contract law principles. Vincent, 194 S.W.3d at 856. In Brewer v. Missouri Title Loans, this Court reaffirmed that Concepcion did not diminish a trial court’s broad authority to evaluate the validity and enforceability of arbitration agreements prior to granting or denying a motion to compel arbitration and, so, “permit[s] state courts to apply state law defenses to the formation of the particular contract at issue.” 364 S.W.3d 486, 492 (Mo. banc 2012). This provision means that, prior to referral to arbitration, a Missouri court can declare an arbitration agreement “unenforceable 9 if a generally applicable contract defense, such as fraud, duress, or unconscionability, applie[s] to concerns raised about the agreement.” 7 Robinson, 364 S.W.3d at 515 (Mo. banc 2012); see also Brewer, 364 S.W.3d at 492 n.3. Mr. Hewitt concedes that his employment contract included an arbitration provision, and the trial court found that a similar arbitration provision had been included in many of the previous employment contracts he signed with the Rams over the prior 40 years. This provision is treated like any other contract and is enforced according to its terms. See Concepcion, 131 S. Ct. at 1745. The terms of a contract are to be read “as a whole to determine the intention of the parties,” giving the terms “their plain, ordinary, and usual meaning.” Dunn Indus. Grp., Inc. v. City of Sugar Creek, 112 S.W.3d 421, 428 (Mo. banc 2003). According to the plain language in his contract with the Rams, Mr. Hewitt intended to be legally bound by the constitution and bylaws of the NFL, which provided that his disputes would be arbitrated. B. Arbitration Clause is Supported by Valid Consideration Despite executing an agreement to arbitrate, Mr. Hewitt asserts the agreement is not valid for lack of consideration. Specifically, he claims a lack of consideration on the basis that both contracting parties were not bound by the arbitration agreement. As Mr. Hewitt 7 While the ultimate issue simply is whether a contract or a term of the contract is unconscionable, in making this determination, Missouri courts examine both the procedural aspects of contract formation and the substantive provisions of the contract. Vincent, 194 S.W.3d at 858. “Procedural unconscionability deals with the formalities of making the contract, while substantive unconscionability deals with the terms of the contract itself.” Id. “Procedural unconscionability focuses on such things as high pressure sales tactics, unreadable fine print, or misrepresentation among other unfair issues in the contract formation process” while “[s]ubstantive unconscionability means an undue harshness in the contract terms.” Id. 10 notes, the first sentence of the provision states only that “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 and by the decisions of the Commissioner of the National Football League, which shall be final, binding, conclusive and unappealable.” But the arbitration provision does not end there. The following sentence 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 . . ..” In this second sentence, the Rams expressly promise to arbitrate any and all disputes before the commissioner. Both the Rams and Mr. Hewitt signed and are bound by this agreement. The trial court found that the Rams’ agreement with the NFL stated that they, as members of the league, would be bound by the constitution and bylaws, which expressly refer to the commissioner’s authority to arbitrate. While, as Mr. Hewitt notes, legal questions could arise as to the meaning of some of these constitutional provisions or bylaws, he has not demonstrated that a fact question exists as to the content of these provisions or as to the fact that those provisions say that NFL teams must comply with their terms. The record supports the trial court’s explicit finding that the constitution and bylaws “already bind the St. Louis Rams Partnership, [but] Mr. Hewitt must separately agree to be bound.” Mr. Hewitt cites no cases that would have required the Rams to expressly reaffirm their NFL membership agreement obligations in each individual employment contract they sign when, as here, the individual employment contract requires that arbitration be determined by the commissioner and governed by the NFL constitution and bylaws. 11 Indeed, the language of the arbitration agreement signed by Mr. Hewitt and the Rams distinguishes this case from the two cases cited by Mr. Hewitt in which arbitration agreements in NFL employment contracts were found to lack consideration. Sniezek v. Kansas City Chiefs Football Club, 402 S.W.3d 580 (Mo. App. 2013), and Clemmons v. Kansas City Chiefs Football Club, Inc., 397 S.W.3d 503 (Mo. App. 2013). In those agreements, the employees alone promised to be bound by the constitution and bylaws of the NFL and to refer disputes to the commissioner for arbitration. The Chiefs did not, as the Rams do here, promise to arbitrate disputes before the commissioner, nor did they sign the agreements at issue in Sniezek and Clemmons. By contrast, Mr. Hewitt’s employment contract was signed by and is binding on both Mr. Hewitt and then Rams’ president and general manager, Jay Zygmunt. Therefore, Mr. Hewitt’s argument that the agreement lacked consideration fails. C. No Procedural Unconscionability Mr. Hewitt contends the agreement should not be enforced because the conditions under which he renewed his employment contract were unconscionable. Specifically, he asserts the contract was presented “in a hurried way without any discussion of [the contract’s] terms.” This argument is undermined by Mr. Hewitt’s own long, more than 40 year tenure as a Rams employee, during which time the trial court found he had signed many employment contracts containing arbitration provisions substantially similar to this one. 8 As the trial court stated, “If Mr. Hewitt did not read his contract, inquire about its 8 Although Mr. Hewitt’s reply brief notes that his affidavit admitted only to signing multiple employment contracts with the Rams, it was his burden to show that the arbitration provision was unconscionable because he did not have time to consider the provision before 12 terms or ask for supporting documents during those decades, the [c]ourt is not able to turn back the hands of time and shield him from his own contractual promises.” Mr. Hewitt also argues that the take-it-or-leave-it basis of the agreement makes it an adhesion contract. He concedes, however, that he did not attempt to negotiate the terms of his contract, except on one occasion as to an earlier contract for which he provides no further information as to his success or failure. Mr. Hewitt’s conclusory allegations that he was unable to alter the terms of his contract and that there was disparity in the parties’ bargaining power do not prove themselves, nor would they make the agreement unconscionable. See Vincent, 194 S.W.3d at 857 (failure to negotiate does not “prove the negative” that one could not have done so). Rather, as this Court made clear in Robinson, lack of negotiation and the adhesive nature of a contractual agreement are factors to consider in determining unconscionability, but “post-Concepcion, a court should not invalidate an arbitration agreement in a consumer contract simply because it is contained in a contract of adhesion or because the parties had unequal bargaining power, as these are hallmarks of modern consumer contracts generally.” 364 S.W.3d at 515. “Mere inequality in bargaining power . . . is not a sufficient reason to hold that arbitration agreements are never enforceable in the employment context.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991); see also Brewer, 364 S.W.3d at 495; Smith v. Kriska, 113 S.W.3d 293, 298 (Mo. App. 2003). Mr. Hewitt does not allege that he “was coerced or defrauded into agreeing to the arbitration clause,” Gilmer, 500 U.S. being forced to sign this or the prior Rams contracts, and he failed to present any facts countering the Rams statement that it can show that many of his earlier contracts contained similar clauses. 13 at 33, particularly after decades of signing such agreements. He further offers no other explanation of why the disparity in bargaining power should invalidate the contract in the absence of evidence that the Rams abused their power. Under the plain language of the employment contract between Mr. Hewitt and the Rams, Mr. Hewitt agreed to arbitrate his disputes against the Rams. The agreement is supported by consideration and obligates both parties to arbitrate. Further, Mr. Hewitt does not show that the circumstances under which the contract was entered into were so unconscionable as to render the agreement invalid. Therefore, there is a valid and enforceable agreement to arbitrate.