Court Opinion

ID: 9734070
Source: CourtListenerOpinion
Date Created: 2023-08-26 17:24:32.468019+00
Date Added: 2024-06-11T18:26:45.397047
License: Public Domain

ALOK AHUJA, Judge,
concurring.
Although I do not necessarily disagree with what is written in the majority opinion, I believe this case can be decided on somewhat narrower grounds, without addressing all of the issues the majority discusses. I accordingly concur in the result.
To my mind, two provisions of Hallmark’s Dispute Resolution Program, appearing in the policy’s first two pages, defeat its argument that the policy created an enforceable arbitration contract. First, on its opening page the policy states: “This procedure does not change the employment-at-will relationship between the Company and its employees.” On the following page, the program document states that “[t]he Company may at its sole discretion modify or discontinue the DRP at any time.”
These two statements lead me to conclude that, in promulgating the DRP, Hallmark made no enforceable promise to Ms. Morrow that could constitute consideration for her reciprocal agreement to be bound by it.
A bilateral contract “that contains mutual promises imposing some legal duty or liability on each promisor is supported by sufficient consideration to form a valid, enforceable contract.” Sumners v. Sen. Vending Co., 102 S.W.3d 37, 41 (Mo.App. S.D.2003). However, to constitute sufficient consideration, a promise of one of the contracting parties must be binding on that party.
[A] promise is not good consideration unless there is mutuality of obligation, so that each party has the right to hold the other to a positive agreement. Mutuality of contract means that an obligation rests upon each party to do or permit to be done something in consideration of the act or promise of the other; that is, neither party is bound unless both are bound.
Id. (second emphasis added; citations and quotation marks omitted). “An illusory promise is not a promise at all and cannot act as consideration; therefore, no contract is formed.” Magruder Quarry & Co. v. Briscoe, 83 S.W.3d 647, 650-51 (Mo.App. E.D.2002).
Under well-established contract law, an agreement in which one party retains the unilateral ability to avoid its contractual obligations is illusory and unenforceable. “Retaining the right to cancel a contract or to avoid one’s promise is an unenforceable, illusory promise.” Am. Laminates, Inc. v. J.S. Latta Co., 980 S.W.2d 12, 23 (Mo.App. W.D.1998); see also Estate of Buchanan, 840 S.W.2d 888, 889 (Mo.App. E.D.1992) (where decedent “retained the power to cancel her promise” to donate money to college, promise held illusory; despite decedent’s partial fulfillment of pledge, “her promise is illusory to the extent it remained executory”); Fenberg v. Goggin, 800 S.W.2d 132, 136 (Mo.App. E.D.1990) (finding that “no contract was created” where “plaintiff retained the privileged power to avoid his promise” by selling property he had agreed to permit defendant to use; “In reality, he promised nothing; therefore his promise was an ‘illusory promise,’ neither enforceable against plaintiff, nor operative as consideration for defendant’s return promise” to construct a building on plaintiffs property).
By retaining the right — “at its sole discretion” and “at any time” — to modify or discontinue the DRP, Hallmark rendered any promise to Ms. Morrow that the DRP would be available to her fatally illusory. As the majority opinion recognizes, Ms. *31Morrow did not have an enforceable right to force Hallmark to arbitrate covered claims, where Hallmark could completely discontinue the program without her consent. Although not dispositive, I note that multiple decisions from other jurisdictions have found arbitration agreements unenforceable where one of the parties retains the right to radically modify or terminate an arbitration program. See, e.g., Morrison v. Amway Corp., 517 F.3d 248, 257 (5th Cir.2008) (ai’bitration agreement unenforceable where “[t]here is nothing in any of the relevant documents which precludes amendment to the arbitration program — made under Amway’s unilateral authority ... — from eliminating the entire arbitration program or its applicability to certain claims or disputes”); Dumais v. American Golf Corp., 299 F.3d 1216, 1219 (10th Cir.2002) (“We join other circuits in holding that an arbitration agreement allowing one party the unfettered right to alter the arbitration agreement’s existence or its scope is illusory.”); Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 315-16 (6th Cir.2000) (employer’s “promise to provide an arbitral forum is fatally indefinite” where employer “has unfettered discretion in choosing the nature of that forum”; employer’s “right to choose the nature of its performance renders its promise illusory”).1
Nor do I believe that, in the present circumstances, Ms. Morrow’s continued employment by Hallmark constituted an enforceable promise that could supply consideration as of the time this agreement was purportedly entered. Far from containing any promise that Ms. Morrow’s employment would continue, for any definite or even indefinite period, the DRP itself prominently emphasizes that Ms. Morrow’s employment remained at-will, meaning that she could be discharged at any time, for any (or no) reason, subject only to recognized legal restrictions. Thus, as the majority opinion notes, Ms. Morrow had no enforceable legal right to continued employment with Hallmark. Further, it is significant that Hallmark sought to impose the DRP on Ms. Morrow during the course of her existing employ*32ment, and not as a condition of an initial employment offer; nor did Hallmark enhance Ms. Morrow’s compensation or other conditions of employment in exchange for her “agreement.”
In this respect, this case is similar to Sumners v. Service Vending Co., 102 S.W.3d 37 (Mo.App. S.D.2003). Sumners held unenforceable a Buy-Sell Agreement which imposed on a minority shareholder-employee the obligation to first offer his shares to the majority shareholders at a specified price. In response to the claim that the minority shareholder’s continued employment constituted consideration for his obligations under the Buy-Sell Agreement, the Court noted that the agreement “does not expressly promise continued employment, nor does it contain language from which it can be inferred, nor is there evidence to support such a claim.” Id. at 43 n. 3. Further, the Court observed that the minority shareholder was an existing employee at the time the Agreement was proposed, and that the employer-majority shareholders did not “promise any different employment terms ... than had previously existed,” or offer to change the method for calculating or the amount of the minority shareholder’s compensation. Id. at 43.
Similarly, in Middleton v. Holecroft, 270 S.W.2d 90, 92-93 (Mo.App.1954), an agreement gave an employer the right to employ defendant “at my option,” and provided that defendant was “free to seek employment elsewhere” if employer “fail[ed] to offer you work.” Id. at 91. The court held that no enforceable agreement was created, because the defendant could not have enforced any right to employment. Id. at 93. Middleton also held that the contract was not rendered enforceable by the parties’ partial performance under it, because “this did not obligate the plaintiff to furnish the defendant work at any future time. The plaintiff still had his ‘option’ to furnish work or not as he desired.” Id. at 94.2
Hallmark’s “continued employment as consideration” argument suffers from the same defects as in Sumners and Middleton: the DRP does not itself promise continued employment (indeed, it emphasizes the contrary); and Hallmark sought to impose the DRP not as a condition of extending an employment offer, but instead on an existing employee without any change in the conditions of Ms. Morrow’s employment, or her compensation.3
Thus, neither the promise of access to the DRP, nor Ms. Morrow’s continued employment, gave her enforceable rights against Hallmark which could constitute consideration for this bilateral contract. As such, the agreement is unenforceable against her. See Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1128, 1133 (7th Cir.1997) (Cudahy, J. concurring) (where employer “reserve[d] the right at any time to modify, revoke, suspend, terminate, or change any or all terms of this Manual,” and emphasized that “employees *33can be terminated at any time, with or without notice, and with or without cause,” contract illusory because “[i]t is quite clear that [the employer] has committed itself to do nothing”).
I accordingly concur in the result. Because I believe the illusoriness of Hallmark’s promises prevents enforcement of the DRP, I find it unnecessary to address other issues discussed in the majority opinion.
Judge JOSEPH ELLIS concurs.

. As Hallmark argues, in certain circumstances "an implied obligation to use good faith is enough to avoid finding a contract null and void due to an illusory promise." Magruder Quarry & Co. v. Briscoe, 83 S.W.3d 647, 650-51 (Mo.App. E.D.2002); see also Cordry v. Vanderbilt Mortgage & Fin., Inc., 445 F.3d 1106, 1110 (8th Cir.2006) (Missouri law). At the same time, however, the implied covenant 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." Stone Motor Co. v. Gen. Motors Corp., 293 F.3d 456, 466-67 (8th Cir.2002) (Missouri law) (citations and quotation marks omitted); see also Giessow Rests., Inc. v. Richmond Rests., Inc., 232 S.W.3d 576, 579 (Mo.App. E.D.2007) (“A court will not ‘find an implied covenant if the parties have either dealt expressly with the matter or have intentionally left the contract silent on the point.' ” (citation omitted)); Bishop v. Shelter Mut. Ins. Co., 129 S.W.3d 500, 506 (Mo.App. S.D.2004) (covenant of good faith and fair dealing does not limit employer’s right to terminate at-will employee; “This follows because the implied covenant cannot be used to contradict or override the express employment terms contained in a contract, i.e., that an employee can be terminated for any cause.”); Mo. Consol. Health Care Plan v. Cmty. Health Plan, 81 S.W.3d 34, 45-49 (Mo.App. W.D.2002). Thus, any implied duty of good faith and fair dealing could not “trump” Hallmark’s right to discontinue the DRP. While Hallmark may have been obligated by the implied covenant not to exercise its unilateral discretion in bad faith, or in an arbitrary and capricious manner, see id., this does not alter the fact that Hallmark alone retained the right to completely negate its obligations under the DRP at any time. This is not a case (like those Hallmark cites) where an obligation to use "reasonable efforts” in performance of discretionary contractual duties could save a contractual promise from illusoriness.

. I agree with the majority that the restrictive covenant cases Hallmark cites are distinguishable: in those cases, a restrictive covenant is justified in order to safeguard particular “protectable interests'' of the employer, and in exchange for agreeing to such a restriction the employee is given not only employment, but access to competitively sensitive information, methods or relationships.

. We are not presented here with an arbitration program imposed only on newly-hired employees; one accompanied by an increase in compensation or substantive changes to the employee’s terms or conditions of employment; or one in which the employer's right to modify or terminate the program is explicitly and meaningfully limited. I express no opinion on the legality of a hypothetical arbitration program containing one or more of these features.