Court Opinion

ID: 4585924
Source: CourtListenerOpinion
Date Created: 2020-11-12 22:05:33.309347+00
Date Added: 2024-06-11T13:47:53.838134
License: Public Domain

STATE OF MISSOURI EX REL.                      )
SETH SCHERMERHORN,                             )
                                               )
       Relator,                                )
                                               )
v.                                             )       No. SD36747
                                               )
THE HONORABLE MICHAEL                          )       Filed: November 12, 2020
CORDONNIER,                                    )
                                               )
       Respondent.                             )

                       ORIGINAL PROCEEDING IN MANDAMUS

PRELIMINARY WRIT OF MANDAMUS QUASHED

       Seth Schermerhorn (“Relator”) filed a personal injury lawsuit against New Prime,

Inc. (“New Prime”) and Michael David Tyner, Jr. (“Tyner”) in the Circuit Court of Greene

County (“the circuit court”). The suit alleged that Relator was a passenger in a tractor-trailer

driven by Tyner, a New Prime employee, and Relator suffered bodily injuries when Tyner

negligently drove off the road and overturned the truck.

       New Prime filed a “Motion to Compel Arbitration and to Dismiss or Stay Action”

that claimed arbitration agreements between the parties contained clear and unmistakable

evidence that the parties intended to delegate the threshold issue of arbitrability to an

arbitrator. After conducting a hearing on the motion, the Honorable Michael Cordonnier

(“Respondent”) ruled that “[t]he parties have delegated the issue of arbitrability to an

                                                   1
arbitrator. Therefore, . . . the arbitrator, . . . not the Court, is vested with [the] authority to

determine the merits of [Relator’]s contest to the application of the arbitration agreement to

the issues joined.” Respondent stayed the circuit court action pending the arbitrator’s

resolution of the arbitrability issue.

           Relator filed a petition for writ of mandamus that asked this court to direct

Respondent to set aside his Order on the arbitrability issue, reinstate the case to the circuit

court’s active docket, and conduct an evidentiary hearing on whether Relator’s personal

injury claim is subject to mandatory arbitration. We issued a preliminary writ and ordered

the parties to proceed with briefing under Rule 84.24(h). 1 In light of that briefing and

further consideration of the existing case law, we now quash our preliminary writ.

           Orders granting motions to compel arbitration are not appealable[.] Instead,
           “a writ of mandamus is an appropriate mechanism to review whether a
           motion to compel arbitration was improperly sustained.” State ex rel. Hewitt
           v. Kerr, 461 S.W.3d 798, 805 (Mo. banc 2015) (citation omitted). While it is
           true that, under Rule 84.22(a), this Court may not issue a remedial writ “in
           any case wherein adequate relief can be afforded by an appeal,” an appeal
           may not constitute an adequate remedy where arbitration has been ordered
           erroneously. Hewitt explained that

                    mandamus is an appropriate remedy when alternative
                    remedies waste judicial resources or result in a burdensome
                    delay, creating irreparable harm to the parties. If [a relator] is
                    not bound to arbitrate under the terms of his contract, this
                    Court can readily avoid this duplicative and unnecessary
                    additional litigation through a writ of mandamus. To do
                    otherwise would be [sic] result in a failure of judicial
                    efficiency.

           461 S.W.3d at 806 (citations omitted). To obtain relief by mandamus, the
           relator must “allege and prove that he has a clear, unequivocal, specific right
           to a thing claimed.” Id. at 805 (citation and internal quotation marks
           omitted).

                  “The issue of whether arbitration should be compelled is a question of
           law subject to de novo review.” Baker v. Bristol Care, Inc., 450 S.W.3d 770,

1
    All rule references are to Missouri Court Rules (2020).

                                                         2
         774 (Mo. banc 2014); accord, Eaton v. CMH Homes, Inc., 461 S.W.3d 426,
         431 (Mo. banc 2015).

State ex rel. Alst v. Harrell, 528 S.W.3d 442, 445 (Mo. App. W.D. 2017) (footnotes

omitted).
                                                   Point 1

         Relator’s first point is that “Respondent erred in compelling arbitration because there

is no ‘clear and unmistakeable [sic] evidence’ that the parties intended to delegate the

decision regarding arbitrability of later arising personal injury tort claims.”

         A “delegation provision is an agreement to arbitrate threshold issues
         concerning the arbitration agreement. [The Supreme Court of the United
         States has] recognized that parties can agree to arbitrate ‘gateway’ questions
         of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or
         whether their agreement covers a particular controversy.” Rent-A-Ctr., W.,
         Inc. v. Jackson, 561 U.S. 63, 68–69, 130 S. Ct. 2772, 2777, 177 L.Ed.2d 403
         (2010). Generally, disputes regarding the scope of an arbitration agreement
         are resolved in favor of arbitrability. Soars [v. Easter Seals Midwest], 563
         S.W.3d [111,] 114 [(Mo. banc 2018)]. “However, when considering whether
         a court or an arbitrator should decide threshold questions of arbitrability,
         there is generally a presumption against arbitrability.” Id. In this regard, the
         Missouri Supreme Court has recognized that there must be “clear and
         unmistakable evidence” that the parties intended to arbitrate the question of
         arbitrability “to overcome this presumption.” Id.

Fogelsong v. Joe Machens Auto. Grp. Inc., 600 S.W.3d 288, 293 (Mo. App. W.D. 2020).

         “[W]e must first look to the terms of the parties’ agreement to determine whether it

contains a provision that ‘clearly and unmistakably’ delegates threshold issues of

arbitrability to the arbitrator.” Hughes v. Ancestry.com, 580 S.W.3d 42, 47 (Mo. App.

W.D. 2019). Here, the parties agree that the Personnel Services Agreement (“PSA”) is the

agreement at issue. 2 The PSA is an agreement between New Prime and Relator regarding

2
  Although both parties also make references to an “Independent Contractor Operating Agreement” (“ICOA”)
and, at times, argue in their briefs as if the ICOA is the source of the operative arbitration agreement, both
parties ultimately concede that the PSA is the agreement that we should look to in determining the parties’
intent regarding arbitration issues. As a result, our analysis is limited to the provisions in the PSA that are
identified and argued by the parties.

                                                       3
the leasing of drivers by New Prime to Relator and covers driver qualifications,

compensation, termination, and dispute resolution. The PSA does not contain a specific

delegation clause. In its absence, Respondent relies on the following provision of the PSA

as evidencing a clear and unmistakable intent by the parties to have the arbitrator decide

whether a dispute between the parties is subject to arbitration:

       Any dispute arising out of or relating to this Agreement, including an
       allegation of breach thereof, and the rights and obligations of the parties,
       shall be fully resolved by arbitration in accordance with Missouri’s
       arbitration act and except as provided herein the Commercial Arbitration
       Rules of the American Arbitration Association [(“AAA”)] . . . shall apply.

       We agree. The AAA Commercial Arbitration Rules, incorporated by reference into

the PSA, provide that “[t]he arbitrator shall have the power to rule on his or her own

jurisdiction, including any objections with respect to the existence, scope, or validity of the

arbitration agreement or to the arbitrability of any claim or counterclaim.”

               “An arbitration agreement ‘need not recite verbatim that the parties
       agree to arbitrate arbitrability’ in order to manifest [a] ‘clear and
       unmistakable’ agreement.” Caldwell [v. UniFirst Corporation], 583 S.W.3d
       [84,] 90 [(Mo. App. E.D. 2019)] (quoting Dotson [v. Dillard’s Inc.], 472
       S.W.3d [599,] 604 [(Mo. App. W.D. 2015)]. “A delegation provision that
       gives an arbitrator the authority to resolve disputes relating to the
       enforceability, validity, or applicability of an arbitration agreement
       constitutes clear and unmistakable evidence that the parties intended to
       arbitrate arbitrability.” Id. (quoting Dotson, 472 S.W.3d at 606).

Hughes, 580 S.W.3d at 47-48.

       In State ex rel. Pinkerton v. Fahnestock, the parties’ arbitration agreement

specifically referenced and incorporated the AAA’s commercial arbitration rules. Our

supreme court held that this reference was sufficient to prove that the parties clearly and

unmistakably intended to delegate the threshold issue of arbitrability to an arbitrator. 531

S.W.3d 36, 45 (Mo. banc 2017) (abrogated on other grounds by Theroff v. Dollar Tree

                                               4
Stores, Inc., 591 S.W.3d 432 (Mo. banc 2020)). The commercial arbitration rules at issue in

Pinkerton mirrored the rules at issue here as they provided that the arbitrator “shall have the

power to rule on his or her own jurisdiction, including any objections with respect to the

existence, scope or validity of the arbitration agreement.” 531 S.W.3d at 48.

       Subsequent cases have duly followed Pinkerton’s holding in concluding that an

arbitration agreement’s reference to the AAA rules constitutes clear and unmistakable

evidence of the parties’ intent to submit the arbitrability decision to an arbitrator. See

Fogelsong, 600 S.W.3d at 294-96; Latenser v. v. Tarmac Int’l, Inc., 549 S.W.3d 461, 463-

64 (Mo. App. W.D. 2018); NutraPet Sys., LLC v. Proviera Biotech, LLC, 542 S.W.3d 410,

413 (Mo. App. W.D. 2017); and Caldwell, 583 S.W.3d at 91.

       Relator attempts to distinguish Pinkerton on the ground that his claim for personal

injury based in negligence is not a commercial dispute – the type of claim at issue in

Pinkerton. He argues that the arbitration clause in that case, by referencing the AAA

Commercial Arbitration Rules, expressly referenced the type of claim at issue, whereas the

PSA does not.

       At first blush, this argument sounds plausible, but we do not read Pinkerton’s

holding regarding the “gateway” issue of who decides arbitrability as being dependent in

any way upon the specific nature of the parties’ dispute. Point 1 fails.

                                         Points 2 and 3

       We address Relator’s remaining points together as they fail for the same reason.

Relator’s second point claims Respondent erred in compelling arbitration because the

arbitration agreements constitute unenforceable contracts of adhesion. Point 3 claims

                                                5
Respondent erred in compelling arbitration because the arbitration provisions, and any

delegation clauses therein, are unconscionable and unenforceable.

       Because these points challenge the arbitration agreements as a whole, they fail

summarily. Our courts have repeatedly held that “a delegation provision is an additional

arbitration agreement” that is “severable and should be considered separately from the

underlying arbitration agreement.” Caldwell, 583 S.W.3d at 91.

       Thus, to properly contest the validity of a delegation provision, a party must
       challenge the provision specifically. [Soars, 563 S.W.3d at 114.] Absent
       such a direct, meritorious challenge to the delegation provision, the provision
       is valid and enforceable, and any challenge to the validity of the agreement as
       a whole is for the arbitrator. Id. A challenge to another provision of the
       contract, or to the contract as a whole, does not prevent a court from
       enforcing a specific agreement to arbitrate. Dotson, 472 S.W.3d at 605;
       Latenser, 549 S.W.3d at 464.

Id.

       In these points, the only challenge to the delegation clause is that it is part of an

agreement that is unconscionable and unenforceable. Our courts have declined to address

arguments against a delegation provision that are “expressly identical to . . . arguments

against the [arbitration] [a]greement[s] as a whole.” Soars, 563 S.W.3d at 115-16. Such

challenges are nothing more than an attempt “to circumvent [our high court]’s and the

United States Supreme Court’s holding that a party must specifically challenge a delegation

provision to avoid its application.” Id. at 116.

       Points 2 and 3 also fail, and the preliminary writ of mandamus is quashed.

DON E. BURRELL, J. – OPINION AUTHOR

GARY W. LYNCH, J. – CONCURS

MARY W. SHEFFIELD, J. – CONCURS

                                                6