Court Opinion

ID: 9491463
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:14:51.461908+00
Date Added: 2024-06-11T17:54:45.509986
License: Public Domain

HEANEY, Circuit Judge,
dissenting.
I respectfully dissent. As a preliminary matter, I believe that Missouri law, rather than Oklahoma law, applies. “Federal district courts must apply the choice of law rules of the state in which they sit when jurisdiction is based on diversity of citizenship.” Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1320 (8th Cir.1991) (citing Klaxon Co. v. Stentor Elec. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)). We review de novo the district court’s determination of which state’s law to apply. See Salve Regina College v. Russell, 499 U.S. 225, 230, 111 S.Ct. 1217, 113 L.Ed.2d 190 (1991).
Express filed this case in the Eastern District of Missouri. Therefore, we apply Missouri’s choice of law rules. Missouri courts follow the Restatement (Second) of Conflicts when analyzing contractual agreements.4 *794See Fruin-Colnon Corp v. Missouri Highway & Transp. Comm’n, 736 S.W.2d 41, 44 (Mo.1987). Because Missouri has greater contacts, its law would govern the case absent a valid choice of law by the parties. See Restatement (Second) Conflicts § 187(l)(b). Having carefully reviewed the record, I also find that Missouri has a materially greater interest in the effect of the forum-selection clause than Oklahoma. Id. Finally, to determine whether the choice of law provision is valid, we must ask whether the arbitration clause at issue violates a fundamental policy of Missouri. Id. I conclude that it does.
In Electrical & Magneto Service Co. v. AMBAC International Corp., 941 F.2d 660 (8th Cir.1991), our court reviewed Missouri statutes concerning franchise agreements and concluded that “the Missouri Legislature created a legislative presumption that franchisees are in an inferior bargaining position with respect to franchisors and thus are entitled to protection from the oppressive use of the franchisor’s superiority.” Id. at 663 n. 3. Although the majority is correct that “we may not invalidate an arbitration agreement under any state law applicable only to arbitration provisions[,]” ante at 791, I would invalidate this arbitration agreement, because rather than single out specific protections afforded only to arbitration agreements under Missouri law, the Missouri legislative scheme at issue “is designed to regulate the marketplace to the advantage of those traditionally thought to have unequal bargaining power as well as those who may fall victim to unfair business practices.” Id. at 663. In my judgment, the arbitration provision that allows Golf U.S.A. to sue in court, but requires Express to arbitrate without the possibility of ever receiving a jury trial, violates a fundamental policy under Missouri law.
The Missouri Supreme Court has explicitly approved the legislative scheme designed to protect Missouri franchisees and has invalidated a forum-selection clause where the clause was “unreasonable” and unfairly prejudiced the franchisee. See High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d 493, 500 (Mo.1992). In agreeing with our AM-BAC decision and in interpreting Missouri franchise law, the court in High Life stated: “The Eighth Circuit Court of Appeals ... recognized the strong public policy reflected in Chapter 407 generally” in protecting franchisees and “the very fact that this legislation is paternalistic in nature indicates that it is a fundamental policy.” Id. at 498 (citing Restatement (Second) of Conflicts § 187 comment g). Consistent with holdings of our court and the Missouri Supreme Court, I would invalidate the arbitration clause because under Missouri law it is unreasonable and unfairly prejudices Express.
Even assuming that Oklahoma law applies, the provision at issue violates the Oklahoma Constitution. The Oklahoma Supreme Court has held that “ ‘[o]ne party may not unilaterally decide to have someone other than a jury determine the issues and thereby destroy the other’s right to a jury trial.’ ” Massey v. Farmers Ins. Group, 837 P.2d 880, 884 (Okla.1992) (quoting Molodyh v. Truck Ins. Exch., 304 Or. 290, 744 P.2d 992, 998 (1987)).
In my view, Golf U.S.A has the unilateral right to decide to have someone other than a jury determine the issues and thereby destroy Express’s right to a jury trial. While Golf U.S.A. can sue in court for anything involving money damages, Express may never demand a jury trial and must submit to arbitration.5 My position that the arbitration *795provision violates Oklahoma law is bolstered by an unpublished opinion6 of the Oklahoma Court of Appeals. That court explicitly stated: “Because of the special guarantee of jury trials granted by our constitution, we hold that a contractual provision purporting to grant a unilateral right to elect alternative dispute resolution procedures is not enforceable against the party demanding a jury trial.” See Neighbors v. Lynn Hickey Dodge, Inc., No. 85.676 at 9 (Okla.Ct.App. Aug. 6, 1996) (J.A. at A-111, A119) (emphasis in original).7 There can be no doubt that the Neighbors holding is both persuasive and on point with respect to this case.8
We are empowered to predict how the Oklahoma Supreme Court would decide this matter. In my view, Oklahoma law compels us to find that the unilateral right that Golf U.S.A. possesses in this case directly contravenes its constitution. It is for this reason that I respectfully dissent and hope that our court en banc, or the United States Supreme Court, corrects this transparent misapprehension of our role when hearing diversity cases.

. Section 187 of the Restatement provides:
(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue.
(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to the issue, unless ...
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which ... would be the state of the applicable law in the absence of an effective choice of law by the parties.
*794Restatement (Second) Conflicts § 187 (1988).

. Once one closely examines the franchise agreement, it is not hard to understand why the arbitration agreement is so truly one-sided. Clause 16.4.2 of the franchise agreement, for example, provides that Golf U.S.A. may terminate the agreement:
If You [Express] fail to cure a default hereunder, where such default materially impairs the goodwill associated with the Golf USA name, service mark or logo; but only after You have been given written notice to cure said default and have failed to do so after 24 hours.
(J.A. at A-55). Because the provision quoted above is so broad, if Golf U.S.A. determined that Express "materially impair[ed] the goodwill associated with the Golf USA name,” Golf U.S.A. could terminate the agreement within twenty-four hours notice and sue Express in court for monies owed as a result of the alleged breach. On the other hand, as in this case, where Express claims that Golf U.S.A. materially breached their agreement, Express is forced to submit to arbitration.

.Although Oklahoma Supreme Court rules provide that unpublished opinions have no prece-dential effect, see Okla. Sup.Ct. R. 1.200(b)(5), and "shall not be ... cited in any brief or other material presented to any court,” courts interpreting this provision have found that unpublished opinions may be used for persuasive value. See, e.g., Tilton v. Capital Cities/ABC Inc., 938 F.Supp. 751, 753 n. 1 (N.D.Okla.1995) ("Although ... Oklahoma Court of Appeals' unpublished opinion[s][do] not have precedential value, ... [they may] be persuasive.”); see also Farmers Ins. Group v. Stark, 924 P.2d 798, 800 (Okla.Ct.App.1996) ("The trial court found persuasive and followed ... an unpublished opinion ... of this court.”); Employers Mut. Cas. v. Mosby, 943 P.2d 593, 594 (Okla.1997) (discussing Northland v. Nance, an unpublished court of appeals opinion analyzed in Farmers, and while overruling Nance because a published court of appeals opinion was on point, never suggested that lower courts could not use unpublished opinion for persuasive value). Our court has also stated that one may cite an unpublished opinion of our court if, although lacking precedential value, it has persuasive value on a material issue and no published opinion would serve as well. See 8th Cir. R. 28A(k). In this regard, I do not agree that the cases cited by the majority sufficiently address the issues before us.

. In Cannon v. Lane, 867 P.2d 1235 (Okla.1993), the Oklahoma Supreme Court stated; "Because we hold that the contract before this Court is one 'with reference to insurance’ and therefore an exception to the Uniform Arbitration Act, we need not address the constitutional issue of whether the contract for arbitration of future disputes deprives the petitioner of a jury trial and violates his constitutional rights under ... the Constitution of the State of Oklahoma.” Id. at 1239 n. 7. Although the court did not reach the issue, it is clear that, at the very least, it considered the question open whether arbitration clauses may deprive one of the right to a jury trial in violation of the Oklahoma Constitution. This fact, in conjunction with the holdings in Massey and Neighbors, clearly shows the error made by the majority.

. Interestingly, the court in Neighbors considered the Shaffer opinion, relied on so heavily by the majority, and yet still found that the arbitration clause violated the Oklahoma Constitution. See Neighbors, 85.676, at 7 (J.A. at A—117.) One may question why the Oklahoma Supreme Court withdrew Neighbors from publication, rather than simply overruling it. Perhaps the reason is that "[o]pinions of the Court of Civil Appeals which apply settled precedent and do not settle new questions of law shall not be released for publication." 20 O.S.1991, § 30.5.