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Jun 3, 2014

Missouri Appellate Court Invalidates Arbitration Agreement Not Signed by Employer

Employers need well-drafted contractual agreements to compel arbitration with their employees for sexual harassment and discrimination claims. In Baier v. Darden Restaurants, et al., 420 S.W.3d 733 (Mo. App. W.D. 2014), a Missouri appellate court held that an arbitration agreement was not enforceable when an employee signed a document stating that all employment disputes would be arbitrated, but the employer did not sign.

The plaintiff received and acknowledged the arbitration materials.

When Defendant Darden Restaurants (doing business as Olive Garden) hired the plaintiff, it gave her a booklet detailing its alternative dispute resolution (ADR) procedure. The final step of the procedure was binding arbitration. The booklet stated that ADR was the sole means for employment-related disputes, and that those disputes would not be heard by a judge or jury.

The plaintiff signed an acknowledgement form when she received the booklet. The acknowledgement form stated that the employee was required to submit all eligible disputes to Darden’s ADR program, including harassment and discrimination claims. The form had a signature line for management, but the line was left blank.

The Court refuses to compel arbitration.

When the plaintiff left her employment with Darden, she filed suit for harassment and discrimination. Darden moved to dismiss, or in the alternative, stay the proceedings and compel arbitration. The trial court denied Darden’s motion, and the Court of Appeals affirmed.

The Court held that the ADR booklet and the signed acknowledgement form did not constitute a valid, enforceable arbitration agreement. An arbitration agreement is a bilateral contract because there are mutual promises to forego litigation. Bilateral contracts are not enforceable unless both parties assent (“mutual assent”). Darden argued that there was mutual assent: Darden assented by preparing and offering the arbitration materials; Plaintiff assented by signing the acknowledgement. The Court disagreed.

The Court found insufficient evidence to establish Darden’s intent to create a mutually binding contract. In fact, the Court found contrary evidence because no Darden employee signed the “management” signature line. The existence of the signature line implied that Darden intended for the management signature to be a condition on the contract.

Without mutual assent, there was no valid contract. The plaintiff was not compelled to arbitrate her harassment and discrimination claims, even though she signed a form that stated those claims fell under Darden’s ADR program.

What Baier v. Darden Restaurants means for employers.

Missouri employers who seek to arbitrate disputes with their employees need well-crafted contracts.  Mere “acknowledgement forms” should not be the sole documentation for an arbitration agreement. The arbitration agreement should be a contract that describes with particularity the types of disputes that it covers. The employer should also ensure that the agreement is signed by both the employee and a person with the authority to bind the employer. The arbitration agreement should also be separate from the employee handbook, especially if the handbook is not a contract. See Johnson v. Vatterott Educational Center, Inc., 410 S.W.3d 735 (Mo. App. W.D. 2013.)