McFadden v. Van Chevrolet-Cadillac, LLC

Filing 19

ORDER denying 9 : Defendant's Motion to Stay Proceedings and Compel Arbitration is DENIED. Signed on 8/3/18 by District Judge Beth Phillips. (Cordell, Annette)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
WESTERN DIVISION
EDWARD MCFADDEN,
Plaintiff,
v.
VAN CHEVROLET-CADILLAC, LLC,
Defendant.

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No. 18-00395-CV-W-BP

ORDER AND OPINION DENYING DEFENDANT’S MOTION TO STAY
PROCEEDINGS AND COMPEL ARBITRATION
Plaintiff Edward McFadden (“Plaintiff”) filed this suit for age discrimination against his
former employer, Defendant Van Chevrolet-Cadillac, LLC (“Defendant”). Now pending is
Defendant’s Motion to Stay Proceedings and Compel Arbitration, (Doc. 9), which argues that the
parties contractually agreed to arbitrate this dispute. As further explained below, the Court finds
that mutual assent is lacking because Defendant did not sign the agreement or otherwise establish
its assent. Consequently, the Motion is DENIED.
I. BACKGROUND
Defendant owns and operates a car dealership in Kansas City, Missouri. On November 28,
2016, Defendant hired Plaintiff on an at-will basis as sales director. At that time, Defendant
presented Plaintiff with a document titled Mutual Agreement to Arbitrate Claims (“Agreement”).
In relevant part, the Agreement provides that “[b]y agreeing to arbitrate, the Dealership and its
Employees give up their right to sue in court, as well as the right to trial by jury. The Dealership
and Employees agree, instead, that any legal claim that either may have against the other will be

submitted to a private, impartial arbitrator . . . for a final and binding decision[.]” (Doc. 10-1, p.
5, § 1.) (emphasis omitted.)1
The Agreement specifies that the parties agree to “resolve by arbitration all statutory,
contractual and common law claims or controversies, past, present or future, that arise out of or
relate to the Employee’s hiring, employment, or termination . . . including . . . claims of
discrimination . . . under any federal, state or local statute or ordinance[.]” (Id., p. 5, § 2.) The
Agreement states that it “shall be governed by the Federal Arbitration Act, 9 U.S.C. §§ 1-16” (the
“FAA”) (Id., p. 10, § 22.)
The Agreement concludes with a page titled “KNOWING AND VOLUNTARY
AGREEMENT.” (Id., p. 12.) This page states, in part, “I understand that by signing this agreement
I am giving up my right to a jury trial.” (Id.) A designated signature and date line is provided for
both the “Employee” and for Defendant’s “Authorized Dealership Representative.” Plaintiff
signed and dated the Agreement “11-28-16.” (Id.) The signature and date lines for Defendant are
blank. Defendant states that it “could not locate a copy of the Agreement signed by [Defendant].”
(Doc. 10, p. 6, n.1.)
On April 1, 2017, Defendant terminated Plaintiff’s employment and replaced him with a
younger individual. Plaintiff responded by filing a one-count Petition in state court. The Petition
alleges that Defendant discriminated against Plaintiff on the basis of age in violation of the
Missouri Human Rights Act. See Mo. Rev. Stat. §§ 213.010(1), 213.055.1(1)(a). Defendant
removed the case to this Court on the basis of diversity jurisdiction, (Doc. 1), and now moves to
compel arbitration pursuant to the Agreement, (Doc. 9).

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All page numbers are those generated by the Court’s CM/ECF system.

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II. DISCUSSION
Under the FAA, arbitration agreements are “valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. When
presented with a motion to compel arbitration, “we ask only (1) whether there is a valid arbitration
agreement and (2) whether the particular dispute falls within the terms of that agreement.”
Robinson v. EOR-ARK, LLC, 841 F.3d 781, 783-84 (8th Cir. 2016) (citations and quotations
omitted). Arbitration must be ordered if both inquiries are answered in the affirmative. Id.
Validity turns on the application of state contract law.2 Torres v. Simpatico, Inc., 781 F.3d
963, 968 (8th Cir. 2015). “The elements required to form a valid contract in Missouri are offer,
acceptance, and bargained for consideration.” Frye v. Speedway Chevrolet Cadillac, 321 S.W.3d
429, 436 (Mo. Ct. App. 2010) (citations and quotations omitted). The party moving to compel
arbitration bears the burden of proving these elements. Clemmons v. Kansas City Chiefs Football
Club, Inc., 397 S.W.3d 503, 506 (Mo. Ct. App. 2013).
Here, Plaintiff contends the Agreement is not valid for several reasons, including that the
parties did not mutually assent. Defendant argues the Agreement is valid, and further argues that
the Agreement’s delegation clause requires that contract formation and enforceability issues be
submitted to the arbitrator. The Court addresses these arguments below.
A. Mutual Assent
“Offer and acceptance requires a mutual agreement.” Baier v. Darden Rests., 420 S.W.3d
733, 738 (Mo. Ct. App. 2014). “A mutual agreement is reached when the minds of the contracting
parties meet upon and assent to the same thing in the same sense at the same time.” Youngs v.
Conley, 505 S.W.3d 305, 314 (Mo. Ct. App. 2016) (citations, quotations, and alterations omitted).

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Both parties rely on Missouri contract law, and the Court finds that it applies to the Motion.

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“A meeting of the minds occurs when there is a definite offer and an unequivocal acceptance.” Id.
(citations and quotations omitted) (emphasis in original). Under Missouri law, a “party’s signature
on a contract remains the common, though not exclusive, method of demonstrating agreement.”
Baier, 420 S.W.3d at 738 (citations and quotations omitted). “Assent can be shown in other ways,
such as by the parties’ conduct.” Heritage Roofing, LLC v. Fischer, 164 S.W.3d 128, 134 (Mo.
Ct. App. 2005).
Whether mutual assent exists “depends upon the intentions of the parties.” Baier, 420
S.W.3d at 738. “Seldom are the intentions of parties capable of direct proof and, ordinarily, such
intentions are determinable only through logical deduction from proven facts.” Id. (citations and
quotations omitted). The Court must find whether the facts establish a party’s intent to be bound.
Id. at 738-39; see also Int’l Ass’n of Bridge, Structural, Ornamental, & Reinforcing Ironworkers,
Shopman’s Local 493 v. EFCO Corp. & Constr. Prods., Inc., 359 F.3d 954, 956 (8th Cir. 2004)
(stating that “whether the parties have a valid arbitration agreement that binds them is a question
for judicial determination”).
As discussed above, the Agreement contains a designated signature and date line for both
the “Employee” and for Defendant’s “Authorized Dealership Representative.” Plaintiff signed
and dated the Agreement. The signature and date lines for Defendant are blank. Plaintiff alleges
that there was no mutual assent because Defendant did not sign the Agreement or otherwise
establish its assent, and the Court agrees.
Upon review of Missouri case law, the Court finds that Baier v. Darden Restaurants, 420
S.W.3d 733 (Mo. Ct. App. 2014), is most applicable to this case. In Baier, the employee signed
an acknowledgement that she received a booklet describing her employer’s dispute resolution
process. Id. at 735. The acknowledgement stated: “I agree as a condition of my employment, to

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submit any eligible disputes I may have to the company’s [Dispute Resolution Process] . . . this
includes . . . claims under state and federal laws relating to harassment or discrimination[.]” Id.
The booklet mandated arbitration as the final step of this process for employment disputes. Id.
The acknowledgement also included a signature line for “Management Signature,” but no one
signed the document on behalf of the employer. Id. The employee subsequently sued her employer
in state court for sexual harassment, gender discrimination, and retaliation. Id. at 735-36. The
trial court denied the employer’s motion to compel arbitration, and the employer appealed.
On appeal, the Missouri Court of Appeals recognized that the acknowledgment was a
proposal to enter into a bilateral contract. Id. at 738. That is, each party would promise to arbitrate
employment-related disputes “in exchange for the other party’s promise to do the same.” Id.3 The
court then found that mutual assent does not exist simply because “an offeree signs an unsigned
proposal.” Id. at 739 (emphasis in original). “Rather, the absence of the offeror’s signature on the
proposal presents a question of fact, requiring the trial court to determine the offeror’s intent, i.e.,
whether an ‘offer’ to enter into a bilateral contract was made, and thus whether the offeror intends
to be bound if the unsigned proposal is accepted by the offeree.” Id. Baier then held that the
employer failed to present evidence of such intent. Instead, the employer merely offered a “selfserving claim that [it] meant for the [acknowledgement] to be an offer that would mutually bind
both [employee] and [employer] if accepted in writing by [employee].” Id. Baier found that the
“trial court was free to disregard this self-serving claim.” Id.
Baier also found that the lack of a signature when called for constituted “contrary evidence
of [employer’s] intent” to be bound because the court was “hard pressed to discern any purpose
for placing a signature line for [employer] on the [acknowledgement] unless it was to require an

In contrast, a unilateral contract involves “a mutual understanding that one party perform and the other party
compensate for such performance.” Ketcherside v. McLane, 118 S.W.3d 631, 635 (Mo. Ct. App. 2003).
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authorized signature as a condition of mutual assent.” Id. The employer also failed to provide any
explanation for its failure to sign. Id. Consequently, Baier found a lack of mutual assent and
affirmed the trial court. Id.; see also Cody v. Chase Prof’ls, 2018 WL 2219090, at * 3 (W.D. Mo.
May 15, 2018) (finding Baier “instructive” and denying motion to compel arbitration under similar
facts).4
Similarly, this Court finds that Defendant failed to present facts that show mutual assent.
The Agreement contains a conspicuous and unambiguous signature line for Defendant’s
“Authorized Dealership Representative.” This Court is “hard pressed to discern any purpose” for
the signature line “unless it was to require an authorized signature as a condition of mutual assent.”
Baier, 420 S.W.3d at 739. Indeed, directly above the signature line states: “by signing this
agreement I am giving up my right to a jury trial.” (Doc. 10-1, p. 12.) (emphasis supplied.)
Defendant’s signature line, however, is blank. This blank signature line is “contrary evidence” of
Defendant’s purported intent to be bound. Baier, 420 S.W.3d at 739.
The Court further finds that Defendant failed to present other evidence that would establish
its assent even absent a signature. Defendant relies on an Affidavit from its Director of Human
Resources, David McCullough. (Doc. 10-1, pp. 2-3.) In relevant part, Mr. McCullough states that
“[b]y hiring a candidate for employment, [Defendant] accepts the terms of and agrees to be bound
by the Agreement.” (Id., ¶ 8.) According to Mr. McCullough, Defendant discussed and presented
the Agreement to Plaintiff before hiring him, Plaintiff signed the Agreement as a condition of
employment, and Defendant filed the Agreement in Plaintiff’s personnel file. (Id., ¶¶ 7, 10-12.)
The Court finds these statements to be self-serving and not sufficient to show mutual
assent.

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Baier, 420 S.W.3d at 739 (rejecting employer’s “self-serving” statement that the

Appeal docketed, No. 18-2173, but dismissed pursuant to a joint stipulation of the parties (8th Cir. July 11, 2018).

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acknowledgment was an offer that would be mutually binding if accepted in writing by the
employee); Cody, 2018 WL 2219090, at * 3 (rejecting similar statements as “not conclusive, and
if anything . . . self-serving”). Importantly, Mr. McCullough does not explain why Defendant
failed to execute the Agreement. He does not state that Defendant actually signed the Agreement,
but that the signed copy is missing or misplaced. Nor does the record establish that Defendant
orally accepted the terms once Plaintiff signed. Heritage Roofing, 164 S.W.3d at 134-35 (finding
oral consent when one party responded to written proposal for roofing work: “I approve it, I want
you to go ahead and do the work”). Finally, simply filing the unexecuted document in Plaintiff’s
personnel file does not establish Defendant’s intent to be bound.
The Court also rejects Defendant’s suggestion that it established assent by filing the Motion
to Compel Arbitration. (Doc. 10, p. 6, n.3.) “There is simply no authority for the proposition that
mutual assent (i.e., offer and acceptance) to the terms of a bilateral contract can be supplied long
after a contract was supposedly formed by a later suit to enforce the contract.” Baier, 420 S.W.3d
at 740-41. Under all these circumstances, the Court finds that Defendant failed to present facts
sufficient to establish mutual assent.
Finally, the case law cited by Defendant is not persuasive. Defendant cites Houston v.
NPC International, Inc., 2014 WL 12779236 (W.D. Mo. Mar. 24, 2014), a case in which Judge
Fenner held an arbitration agreement was enforceable despite the lack of the employer’s signature.
However, Houston is distinguishable because the contract in that case did not have a blank for the
employer to sign the agreement. Houston, Case No. 13-CV-01160, Doc. 13-2, p. 2-3. Thus, the
negative inference created by the lack of a signature was not present. The other cases Defendant
relies upon are factually distinguishable, were decided prior to Baier, and/or did not find mutual
assent. See, e.g., In re H&R Block, 2014 WL 3401010, at * 2 (W.D. Mo. July 11, 2014) (finding,

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in suit for alleged negligent handling of tax returns, and without mentioning Baier, that “assent
was shown by H&R Block preparing and transmitting plaintiff’s tax returns in exchange for
plaintiff’s agreement to [arbitrate] and payment of fees to H&R Block.”); Heritage Roofing, 164
S.W.3d at 135.
B. The Delegation Clause
Defendant next contends that the parties delegated disputes regarding contract formation
and enforceability to the arbitrator. (Doc. 14, p. 9-10.) The Agreement provides that “[t]he
arbitrator . . . shall have exclusive authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Agreement including, but not limited to any claim
that all or any part of this Agreement is void or voidable.” (Doc. 10-1, p. 10, § 21.)
Before reaching the delegation clause, however, this Court must first find that the parties
entered into a valid contract. See Pinkerton v. Fahnestock, 531 S.W.3d 36, 49 (Mo. banc 2017)
(“[A] court must be satisfied that the parties have ‘concluded’ or formed an arbitration agreement
before the court may order arbitration to proceed according to the terms of the agreement.”).
Because the Court concludes that the Agreement lacks mutual assent, the delegation clause has no
import. Id.; Bellemere v. Cable-Dahmer Chevrolet Inc., 423 S.W.3d 267, 273 (Mo. Ct. App. 2013)
(recognizing that “enforceability under the FAA never comes into play if a contract itself was
never formed”). Therefore, Defendant’s reliance on the delegation clause is rejected.
III. CONCLUSION
Accordingly, Defendant’s Motion to Stay Proceedings and Compel Arbitration, (Doc. 9),

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is DENIED. Defendant’s request for oral argument is also denied as unnecessary.
IT IS SO ORDERED.
/s/ Beth Phillips
BETH PHILLIPS, JUDGE
UNITED STATES DISTRICT COURT

DATE: August 3, 2018

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