The Missouri Court of Appeals just upheld a trial court’s refusal to enforce an arbitration agreement, concluding that an employer failed to prove that an employee signed an electronic arbitration agreement during the employee’s onboarding process.
According to the Court of Appeals:
“When determining whether it is appropriate to compel arbitration, the trial court ‘must determine whether a valid arbitration agreement exists and, if so, whether the specific dispute falls within the scope of the arbitration agreement. Because arbitration is a matter of contract, parties will be compelled to arbitrate their claims only if an alleged arbitration agreement satisfies the essential elements of a valid contract. Although the Federal Arbitration Act [(FAA)] is to be applied when enforcing a contract that invokes its provisions, Missouri contract law applies to determine whether the parties have entered a valid agreement to arbitrate.”[1]
The essential elements of any contract, including one for arbitration, are ‘offer, acceptance, and bargained for consideration.’ The elements of offer and acceptance require there to be a mutual agreement, i.e., a meeting of the minds, between the contracting parties, which means the parties meet upon and assent to the same thing, in the same sense, and at the same time. A meeting of the minds occurs when there is a definite offer and unequivocal acceptance.
The Court went on to explain that: the trial court found that the Agreement proposed a bilateral contract. However, it was “not convinced” either party electronically signed the Agreement and thus denied the Motions to Compel. The party seeking to compel arbitration has the burden of proving that existence by competent evidence. The employee’s sworn affidavit, however, provided that she had “no recollection nor do I believe that I signed an arbitration agreement.” For these reasons she argued her employer failed to establish her assent to the Agreement.
[The employee’s] argument that assent, or meeting of the minds, did not occur is a challenge to the agreement’s existence, and existence of the agreement to arbitrate is a prerequisite to compelling arbitration. Thus, the trial court was faced with the factual question of whether the electronic signature was inputted by Haworth. In turn, the trial court made the express factual finding that it was not convinced the parties signed the Agreement. After noting the intent of the parties is a question of fact, it found that the employer failed to establish the parties intended to enter the Agreement and that “the parties did not mutually assent to the [Agreement].” According to the Court of Appeals, these factual findings related to the existence of an arbitration agreement to which it must defer. Considering the foregoing, the Court of Appeals concluded that “the trial court reasonably concluded that the employee did not mutually assent to the Agreement.”
This is a critical case because, in my opinion, courts may overlook the element of mutual assent. And mutual assent is a critical issue, particularly when arbitration provisions are buried in paperwork signed by individuals like employees and investors.
[1] Citations omitted throughout.