I Didn’t Agree to That! Court Holds No Arbitration without Offer and Acceptance.

Map of Missouri

From Lexology, Nicholas Ruble and Madeline Nagel discuss a recent case in which the court said that acknowledging a policy was not sufficient to form an agreement to arbitrate. Nicholas and Madeline write:

The Missouri Court of Appeals recently affirmed a trial court’s holding that a mere “Acknowledgement of Receipt,” attached to an Alternative Dispute Resolution Policy given to the employee upon hire, does not constitute an “offer” that can bind the employee to arbitrate future employment claims.

In Trunnel v. Missouri Higher Education Loan Authority, the Court of Appeals reasoned that MOHELA’s ADR Policy did not create an agreement to arbitrate because MOHELA never extended an offer to be bound by the arbitration process that could be accepted by the employee. When MOHELA hired Trunnel, Trunnel was given two documents, one titled “MOHELA Policy Regarding Mandatory Alternative Dispute Resolution/ADR Process” (“ADR Policy”) and the other a one-page document titled “Important Acknowledgement of Receipt of MOHELA Mandatory Policy on Dispute Resolution/ADR Process”). Trunnel purportedly signed the Acknowledgment of Receipt, but not the ADR Process document itself.

In pertinent part, the “Acknowledgment of Receipt” stated that employees “are bound by this Policy even if they do not sign this Acknowledgement form.” At the bottom of the form, the signature line states “I ACKNOWLEDGE RECEIPT OF THE MANDATORY ALTERNATIVE DISPUTE RESOLUTION/ADR PROCESS POLICY.” Trunnel subsequently sued for constructive discharge based on race, sex, and disability and retaliation. MOHELA moved to compel arbitration.

The trial court relied on Jackson v. Higher Education Loan Authority of Missouri, 497 S.W.3d 283 (Mo. App. E.D. 2016) to deny MOHELA’s motion to compel arbitration. In Jackson, the district court examined the exact same policy at issue, and determined that the arbitration policy signed by employees of MOHELA did not constitute a valid offer that an employee could accept. Rather than presenting an offer that could be accepted or rejected, MOHELA merely published the policy to its employees and required a signature acknowledging receipt of the policy.

Following the reasoning of Jackson, the trial court further found that Trunnel merely acknowledged receipt of the published ADR Policy, which was not an offer, and therefore she did not agree to be bound by the terms of the ADR Policy. MOHELA’s one argument on appeal was that Jackson was wrongly decided. It argued that the Acknowledgment of Receipt document Trunnel signed contained clear language that a binding agreement was being offered. The Court of Appeals noted that it was persuaded by the Jackson decision and concluded the ADR Policy and Acknowledgement of Receipt documents were merely a publication to employee, as there was no consequence for the failure to sign and nothing was presented to the employee for her acceptance. Further, while not dispositive, prominent use of the word “policy” was but one factor relied on by the Jackson Court to reach their conclusion, and in Trunnel MOHELA’s use of the word “policy” in lieu of “agreement” or “contract” again undermined its arguments that it constituted a contract.

Additionally, the Acknowledgement of Receipt form contained no explicit language manifesting an employee’s understanding that they were entering into, and bound by, the ADR Policy. The acknowledgment form simply required the employee to confirm they received a copy of the process itself, not that they assented to the terms therein. The Court discussed the Eighth Circuit case Shockley v. PrimeLending (analyzed in our 2019 Blog post: Arbitration Agreements 101: they require – you guessed it – agreement.), and found that “an acknowledgement of a review of offered terms alone does not evince an intent to accept those terms.”

Finally, MOHELA attempted to assert that an offer and acceptance existed with an affidavit from MOHELA’s Assistant Director of Human Resources, stating that Trunnel’s employment was contingent on signing the Acknowledgement. But the Court afforded little weight to the Affidavit, which contradicted the plain language of the Acknowledgement of Receipt, reasoning that if a signature on the Acknowledgement of Receipt was a condition of employment, there was no need to advise employees that their failure to sign would have no bearing on the applicability of the ADR process.

Read the full story at I Didn’t Agree to That! Court Holds No Arbitration without Offer and Acceptance. – Lexology

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