Petition for Writ of Certiorari — Technical Education Services Inc., Petitioner v. Steven Pinkerton

Supreme Court briefJul 19, 2021

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No. _____

IN THE

Supreme Court of the United States

TECHNICAL EDUCATION SERVICES INC. d/b/a

AVIATION INSTITUTE OF MAINTENANCE, et al.,

Petitioners,

STEVEN PINKERTON,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO THE

COURT OF APPEALS OF MISSOURI, WESTERN DISTRICT

PETITION FOR WRIT OF CERTIORARI

Thomas M. Lucas

Counsel of Record

JACKSON LEWIS P.C.

500 E. Main Street, Suite 800

Norfolk, Virginia 23510

(757) 648-1445

Thomas.Lucas@jacksonlewis.com

Counsel for Petitioners

QUESTION PRESENTED

Under the Federal Arbitration Act and this

Court’s decisions, parties have broad discretion to

delegate threshold disputes of arbitrability, including

the enforceability of the arbitration agreement giving

rise to the arbitration, to an arbitrator.

The question presented is:

Whether a dispute over the collateral estoppel

effect of a prior arbitration decision must be submitted to and decided by an arbitrator pursuant to the

arbitration agreement’s broad delegation provisions.

PARTIES TO THE PROCEEDING

Petitioners are Technical Education Services,

Inc. d/b/a/ Aviation Institute of Maintenance, Adrian

Rothrock, and Gerald Yagen, defendant-appellants

below.

Respondent is Steven Pinkerton, plaintiffappellee below.

RULE 29.6 STATEMENT

Petitioner Technical Education Services, Inc.

is a privately held corporation and has no parent

corporations, subsidiaries, or affiliates that have issued shares to the public.

STATEMENT OF RELATED CASES



Pinkerton v. Technical Education Services, Inc.,



Pinkerton v. Technical Education Services, Inc.,



Pinkerton v. Technical Education Services, Inc.,

No. SC98894, Supreme Court of Missouri. Order

entered March 2, 2021.

No. WD83594, Missouri Court of Appeals, Western District, Division Four. Judgment entered

November 24, 2020.

No. 1916-CV20843, Circuit Court of Jackson

County, Missouri at Kansas City. Order entered

February 11, 2020.

iii



State ex rel. Steven Pinkerton v. Hon. Joel P.

Fahnestock, No. SC94822, Supreme Court of Missouri. Judgment entered October 31, 2017.



Pinkerton v. Technical Education Services, Inc.,

No. 1416-CV10007, Circuit Court of Jackson

County, Missouri at Kansas City. Order entered

February 2, 2015.

TABLE OF CONTENTS

QUESTION PRESENTED......................................... i

PARTIES TO THE PROCEEDING .......................... ii

RULE 29.6 STATEMENT ......................................... ii

STATEMENT OF RELATED CASES ...................... ii

TABLE OF APPENDICES ....................................... v

TABLE OF AUTHORITIES ..................................... vi

PETITION FOR A WRIT OF

CERTIORARI ............................................................ 1

OPINIONS BELOW .................................................. 1

JURISDICTION ........................................................ 1

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED ....................................... 2

STATEMENT OF THE CASE .................................. 2

REASONS FOR GRANTING THE PETITION ...... 6

The Missouri Court of Appeals’

Determination Contravenes the

FAA and the Decisions of This

Court. .................................................... 6

CONCLUSION .......................................................... 8

TABLE OF APPENDICES

Appendix A - Denial of Review of the Supreme

Court of Missouri, No. SC98894 (March 2,

2021) ....................................................................... 1a

Appendix B - Opinion of the Missouri Court of

Appeals, Western District, Division Four, No.

WD83594 (Nov. 24, 2020)........................................ 3a

Appendix C - Order of the Circuit Court of Jackson County, Missouri at Kansas City, No. 1916CV20843 (Feb. 11, 2020) ....................................... 30a

Appendix D - Opinion of the Supreme Court of

Missouri, No. SC 94822 (Oct. 31, 2017) ................ 36a

Appendix E - Opinion of the Circuit Court of

Jackson County, Missouri at Kansas City, No.

1416-CV10007 (Feb. 2, 2015) ................................ 96a

Appendix F - Statutory Provisions Involved ...... 109a

TABLE OF AUTHORITIES

Page(s)

CASES

Clark v. Pennsylvania, 128 U.S. 395 (1888)............... 1

Dean Witter Reynolds Inc. v. Byrd, 470 U.S.

213 (1985) ............................................................... 6

Henry Schein, Inc. v. Archer & White Sales,

Inc., 139 S. Ct. 524 (2019) ...................................... 6

Howsam v. Dean Witter Reynolds, 537 U.S.

79, 85 (2002) ........................................................... 6

Rent-A-Center, West, Inc. v. Jackson, 561

U.S. 63 (2010) ......................................................... 6

STATUTES

9 U.S.C. § 2 .................................................................. 6

9 U.S.C. § 3 .................................................................. 6

28 U.S.C. § 1257 .......................................................... 1

OTHER AUTHORITY

Revised Uniform Arbitration Act of 2000 §

6, comment 2 .......................................................... 6

PETITION FOR A WRIT OF CERTIORARI

Petitioners Technical Education Services, Inc.

d/b/a Aviation Institute of Maintenance, Adrian

Rothrock, and Gerald Yagen (“AIM”) respectfully petition this Court for a writ of certiorari to review the

judgment of the Supreme Court of Missouri in this

case.

OPINIONS BELOW

The March 2, 2021 en banc decision of the Supreme Court of Missouri (Docket No. SC98894) to

deny AIM’s application to transfer the matter from

the Missouri Court of Appeals is unreported, but

available at 2021 Mo. LEXIS 77, and is included in

Appx. at 1a-2a. The November 24, 2020 panel opinion of the Missouri Court of Appeals (Docket No.

WD83594) is also unreported, but available at 2020

Mo. App. LEXIS 1475, and is included in Appx. at

3a-29a. The February 11, 2020 decision of the Circuit Court of Jackson County, Missouri (Case No.

1916-CV20843) denying AIM’s Motion to Compel Arbitration is unreported, but is included in Appx. at

30a-35a.

JURISDICTION

This Court has jurisdiction pursuant to 28

U.S.C. § 1257. In this case, the Supreme Court of

Missouri denied review of the matter on appeal from

the Missouri Court of Appeals on March 2, 2021.

Thus, for purposes of jurisdiction under 28 U.S.C. §

1257, the opinion and order of the Missouri Court of

Appeals is a final, appealable decision. See Clark v.

Pennsylvania, 128 U.S. 395, 396 (1888). Under this

Court’s Order dated March 19, 2020, the deadline to

file any petition for a writ of certiorari due on or after the date of this order is extended to 150 days

from the date of the lower court judgment, order

denying discretionary review, or order denying a

timely petition for rehearing. Accordingly, the deadline to file this petition is July 30, 2021.

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

Federal Arbitration Act, 9 U.S.C. §§ 2–4. See Appx.

at 109a-112a.

STATEMENT OF THE CASE

This case raises the issue of a court’s power to

decide threshold issues of arbitrability under the

FAA where those issues have been clearly delegated

by the parties to an arbitrator. Missouri state courts

improperly held that, in the face of an agreement by

the Parties to arbitrate all issues, including threshold issues of arbitrability such as collateral estoppel,

such arbitrability issues were properly within the

purview of the courts.

AIM owns and operates a private educational

facility in Kansas City, Missouri. In 2009, Steven

Pinkerton (“Pinkerton”) emailed AIM to request information about enrolling in one of AIM’s programs

to become an aircraft mechanic. An admissions representative met with Pinkerton to tour the campus,

after which Pinkerton submitted an application for

admission to AIM’s program. Pinkerton enrolled in

AIM’s Aviation Maintenance Technical Engineer

(“AMTE”) Program, and executed a two-page Student

Enrollment Agreement.

In signing the Student Enrollment Agreement,

Pinkerton agreed to an arbitration agreement contained therein, which provides:

Arbitration Agreement: I agree that any controversy, claim or dispute of any sort arising

out of or relating to matters including, but

not limited to: student admission, enrollment, financial obligations and status as a

student, which cannot be first resolved by

way of applicable internal dispute resolution

practices and procedures, shall be submitted

for arbitration, to be administered by the

American Arbitration Association … in accordance with its commercial arbitration

rules.1 See Appx. at 3a.

State ex rel.

Pinkerton v. Fahnestock, “[a]t the time the parties signed the

1 As the Supreme Court of Missouri explained in

underlying agreement, the ‘Commercial Arbitration Rules with

Supplementary Procedures for Consumer-Related Disputes’

governed consumer arbitration disputes. The ‘Supplementary

Procedures for Consumer-Related Disputes’ provided that the

‘AAA’s most current rules will be used when the arbitration is

started.’ In 2014, the AAA replaced the ‘Supplementary Procedures for Consumer-Related Disputes’ with ‘Consumer Arbitration Rules.’” 531 S.W.3d 36, 40 n.2 (Mo. 2017). Those Rules

state 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 or

to the arbitrability of any claim or counterclaim.” American

Nearly six months after his enrollment with

AIM, Pinkerton executed a second Student Enrollment Agreement (“2010 Enrollment Agreement”), in

which he again agreed to arbitrate any and all disputes related to his enrollment and course of study

at AIM. Id.

Despite his agreement to arbitrate, Pinkerton

filed a lawsuit in 2014 in the Circuit Court of Jackson County, Missouri (Case No. 1416-CV10007) (the

“2014 Lawsuit”) against AIM. See Appx. at 96a. In

light of the arbitration agreements, AIM filed a motion to compel arbitration and stay the proceedings.

See id.

The Circuit Court held that the arbitration

agreement contained a valid, enforceable delegation

provision and, therefore, threshold questions of arbitrability were delegated to an arbitrator. Id. at 108a.

Pinkerton appealed, and the Supreme Court of Missouri held that the “arbitration agreement clearly

and unmistakably evidences the Parties’ intent to

delegate threshold questions of arbitrability to the

arbitrator,” and sustained the Missouri Circuit

Court’s Order compelling arbitration. Appx. at 36a.

The Parties proceeded to arbitration, where

the Arbitrator determined that the arbitration

agreement was unenforceable, sending the Parties

back to court. Id. at 32a. After the court granted

Arbitration Association, Consumer Arbitration Rules, at 17

(2014).

AIM’s motion to dismiss two of Pinkerton’s causes of

action, Pinkerton voluntarily dismissed the 2014

Lawsuit without prejudice. Id. at 32a-33a.

Three days after his voluntary dismissal, on

July 26, 2019, Pinkerton filed the instant lawsuit

against AIM (the “2019 Lawsuit”), asserting three of

the same causes of action originally alleged in the

2014 Lawsuit. See Appx. at 32a. AIM filed a Motion

to Dismiss or, in the Alternative, to Compel Arbitration and Stay the Proceedings pursuant to the parties’ arbitration agreement. See generally Appx. at

30a-35a. In response, Pinkerton asserted that the

Arbitrator’s decision in the prior lawsuit was a final

ruling on the merits, which precluded AIM from

compelling arbitration. The trial court denied AIM’s

Motion to Compel and held that Defendants were collaterally estopped from compelling arbitration. Id. at

33a-34a.

AIM appealed to the Missouri Court of Appeals. See Appx. at 3a-29a. On appeal, AIM argued

that under the FAA and this Court’s precedent, the

issue of any collateral estoppel effect of the prior arbitration decision must be submitted to the arbitrator for decision. Id. at 9a. The Court of Appeals affirmed the trial court’s order, concluding that AIM

was estopped from compelling arbitration in light of

an Arbitrator’s prior determination. See generally

Appx. at 3a-29a. AIM petitioned the Supreme Court

of Missouri to accept transfer of the matter to that

court for review, but the Supreme Court of Missouri

denied that petition. Appx. at 1a.

This petition for a writ of certiorari followed.

REASONS FOR GRANTING THE PETITION

The Missouri Court of Appeals’ Determination Contravenes the FAA and the Decisions of This Court.

Under the Federal Arbitration Act (“FAA”),

the decision to arbitrate disputes is strictly a matter

of contract between parties. 9 U.S.C. § 2. Indeed,

where parties have properly agreed to submit their

disputes to an arbitrator, a court must stay its proceedings in the matter and compel arbitration upon

motion of one of the parties. Id. § 3. Courts have no

discretion under the FAA to deny a motion to compel

arbitration where the parties have agreed to submit

the dispute at hand to arbitration. Id.; see also Dean

Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 218

(1985).

This Court has made clear 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” by way of a delegation clause. Rent-ACenter, West, Inc. v. Jackson, 561 U.S. 63, 68-69

(2010); see also Henry Schein, Inc. v. Archer & White

Sales, Inc., 139 S. Ct. 524, 527 (2019). This Court

has also noted that questions of arbitrability include

“prerequisites such as time limits, notice, laches, estoppel, and other conditions precedent to an obligation to arbitrate.” Howsam v. Dean Witter Reynolds,

537 U.S. 79, 85 (2002) (quoting Revised Uniform Ar-

bitration Act of 2000 § 6, comment 2) (emphasis added). Such issues are those which the parties would

ordinarily expect a court to decide. Id. at 84. Collateral estoppel is one such issue, but one which the

parties delegated in their contract to an arbitrator

for decision.

In this case, the Parties agreed to delegate any

threshold questions of arbitrability to an arbitrator

by incorporating the AAA Commercial Rules into

their arbitration agreements. As this Court has stated, threshold questions of arbitrability include claims

of estoppel, and the FAA obligates the Missouri trial

court to compel arbitration. The question of whether

a previous arbitrator’s decision on a preliminary issue, not a final decision on the merits, in a prior lawsuit operates to foreclose arbitration is one for an arbitrator, not the trial court. The Missouri Court of

Appeals therefore erred when it affirmed the trial

court’s order denying AIM’s motion to compel arbitration.

This Court should grant this petition and issue a writ of certiorari to correct the error of the Missouri courts. This case presents an opportunity for

this Court to clarify the contours of the FAA’s mandate, and make clear that where the parties’ agreement stipulates that they intend to arbitrate threshold issues of arbitrability, the trial court is divested

of jurisdiction to decide such issues. This Court

should grant this Petition to clarify that, pursuant to

the FAA, where the parties have agreed to do so, a

preliminary issue of collateral estoppel must be submitted to an arbitrator for determination.

CONCLUSION

For the foregoing reasons, the petition for a

writ of certiorari should be granted, and the judgment of the Missouri Court of Appeals should be reversed.

Respectfully submitted,

Thomas M. Lucas

Counsel of Record

JACKSON LEWIS P.C.

500 E. Main Street, Suite 800

Norfolk, Virginia 23510

(757) 648-1445

thomas.lucas@jacksonlewis.com

Counsel for Petitioners

APPENDIX

A OF REVIEW

APPENDIX A Appendix

— DENIAL

OF THE SUPREME COURT OF MISSOURI,

DATED MARCH 2, 2021

SUPREME COURT OF MISSOURI

En Banc

SC98894

WD83594

January Session, 2021

STEVEN PINKERTON,

Respondent,

vs.

TECHNICAL EDUCATION SERVICES, INC.,

Appellant.

Now at this day, on consideration of the Appellants’

application to transfer the above-entitled cause from the

Missouri Court of Appeals, Western District, it is ordered

that the said application be, and the same is hereby denied.

STATE OF MISSOURI-Sct.

I, Betsy AuBuchon, Clerk of the Supreme Court of the

State of Missouri, certify that the foregoing is a full, true

and complete transcript of the judgment of said Supreme

Court, entered of record at the January Session, 2021, and

on the 2nd day of March, 2021, in the above-entitled cause.

Appendix A

IN TESTIMONY WHEREOF, I have hereunto set my

hand and the seal of said Court, at my office in the City

of Jefferson, this 2nd day of March, 2021.

/s/

, Clerk

/s/

, Deputy Clerk

Appendix OF

B THE MISSOURI

APPENDIX B — OPINION

COURT OF APPEALS, WESTERN DISTRICT,

DIVISION FOUR, FILED NOVEMBER 24, 2020

IN THE MISSOURI COURT OF APPEALS

WESTERN DISTRICT

DIVISION FOUR

DOCKET NUMBER WD83594

STEVEN PINKERTON,

Respondent,

TECHNICAL EDUCATION SERVICES, INC.,

Appellant.

November 24, 2020, Decided

November 24, 2020, Opinion Filed

Appeal from the Circuit Court of Jackson County,

Missouri. The Honorable Patrick W. Campbell, Judge.

Before Division Four: Cynthia L. Martin, Chief Judge,

Presiding, Karen King Mitchell,

Judge and Anthony Rex Gabbert, Judge

Technical Education Services Inc., an affiliate of

Aviation Institute of Maintenance, et al., (“AIM”), appeals

the trial court’s order denying AIM’s motion to dismiss,

Appendix B

or in the alternative, to compel arbitration.1 AIM asserts

three points on appeal challenging the trial court’s

determination that AIM is collaterally estopped from

seeking to compel arbitration. We affirm the trial court’s

order.

Factual and Procedural Background

AIM, a Virginia-based corporation, operates aviation

maintenance trade schools throughout the United States,

one of which is located in Kansas City, Missouri. In

2009, Steven Pinkerton (“Pinkerton”) enrolled at AIM’s

Kansas City, Missouri trade school. In doing so, he signed

an enrollment agreement which included an arbitration

provision that provided as follows:

Arbitration Agreement: I agree that any

controversy, claim or dispute of any sort

arising out of or relating to matters including,

but not l i m it ed t o: student a d m ission,

enrollment, financial obligations and status

as a student, which cannot be first resolved by

way of applicable internal dispute resolution

practices and procedures, shall be submitted

for arbitration, to be administered by the

American Arbitration Association located

within Virginia Beach, Virginia, in accordance

with its commercial arbitration rules. All fees

and expenses of arbitration shall be shared

1. An order denying a motion to compel arbitration is appealable

under section 435.440.

Appendix B

equally and any award rendered in favor of

a student will be limited to the total amount

paid to the School by the student. Any award

or determination rendered by the arbitrator(s)

shall be final and entered as a judgment by a

court of competent jurisdiction.

Six months later, Pinkerton signed a new enrollment

agreement when he switched to a different program within

AIM’s school. The new enrollment agreement contained

the same arbitration provision.

In 2014, Pinkerton filed a lawsuit in the Circuit

Court of Jackson County, Missouri, against AIM; Adrian

Rothrock, an admissions representative; and W. Gerald

Yagen, the school’s owner, alleging the school engaged in

deception, misrepresentation, and fraud. AIM moved to

dismiss the suit, or in the alternative, to compel arbitration

and stay the proceedings. AIM contended that the

arbitration provision required delegation to an arbitrator

of all threshold arbitrability disputes, including whether

the arbitration clause is enforceable. The trial court

granted AIM’s motion to compel arbitration, concluding

that the arbitration provision required delegation of

threshold arbitrability disputes to an arbitrator, including

Pinkerton’s contention that the arbitration provision was

unenforceable because it was unconscionable.

Pinkerton sought a writ of prohibition from the

Missouri Supreme Court to require the trial court to

overrule the motion to compel arbitration because he had

raised issues involving the validity and enforceability of

Appendix B

the arbitration provision that could not be delegated to

an arbitrator for determination. State ex rel. Pinkerton

v. Fahnestock, 531 S.W.3d 36, 39-40 (Mo. banc 2017). The

Supreme Court found that “[t]he arbitration agreement

clearly and unmistakably evidence[d] the parties’ intent to

delegate threshold issues of arbitrability to the arbitrator,”

and that the trial court properly sustained AIM’s motion

to compel arbitration. Id. at 53. The Supreme Court thus

ordered the parties to proceed to arbitration. Id.

Pinkerton’s lawsuit proceeded to arbitration.

Pinkerton and AIM jointly selected the Honorable Gary

Oxenhandler to serve as the arbitrator. On November 15,

2018, Judge Oxenhandler issued an arbitrator’s decision

denoted as a “judgment” which ruled that:

Arbitration is supposed to be a fair process,

a process that affords all parties the process

they are due. Such is not the case here. For

the reasons stated above, the Arbitrator finds

the Arbitration Agreement unconscionable

and unenforceable. This case is remanded to

the Courts for appropriate action. Arbitration

dismissed.

Pinkerton filed the arbitrator’s decision with the trial court

as an attachment to a motion to lift the stay of proceedings

imposed when arbitration had been compelled. AIM did

not oppose lifting the stay, and did not challenge the

arbitration decision. The trial court granted Pinkerton’s

motion, lifted its stay, and the parties resumed litigation

of Pinkerton’s lawsuit in the trial court.

Appendix B

On July 23, 2019, Pinkerton voluntarily dismissed

his lawsuit without prejudice pursuant to Rule 67.02. 2

Three days later, Pinkerton re-filed his lawsuit, naming

the same parties and asserting the same causes of action

as had been asserted in his original lawsuit filed in 2014.

AIM once again moved to dismiss, or alternatively, to

compel arbitration and stay the proceedings. AIM argued

that the arbitration provision in the enrollment agreement

was enforceable and that any challenges to enforceability

of the provision had been delegated to the arbitrator

for determination. Pinkerton argued that AIM was

collaterally estopped from seeking to compel arbitration

because an arbitrator had already found the arbitration

provision to be unconscionable and unenforceable. AIM

argued it was not collaterally estopped from seeking to

compel arbitration because the arbitrator’s decision was

not a final judgment, and because Pinkerton’s voluntary

dismissal of the 2014 lawsuit “wipe[d] the slate clean,”

negating any preclusive effect of the arbitrator’s decision.

The trial court denied AIM’s motion to compel

arbitration. The trial judge found that for purposes of

collateral estoppel, the pertinent issue was whether the

arbitration provision was enforceable, and that “[t]he prior

action resulted in a final, valid judgment on that issue”

when the arbitrator issued his decision. The trial court

2. All Rule references are to Missouri Court Rules, Volume

I -- State 2019 unless otherwise noted. Rule 67.02 permits the

plaintiff in a lawsuit to voluntarily dismiss his or her lawsuit

without prejudice, without order of the court, prior to the swearing

of a jury in a jury tried matter, or before the introduction of

evidence at trial in a court tried matter.

Appendix B

also found that Pinkerton had established the remaining

elements of collateral estoppel. Thus, the trial court

concluded that AIM was collaterally estopped from seeking

to compel arbitration because the arbitration provision

had been determined to be unenforceable. The trial court

also concluded that Pinkerton’s voluntary dismissal of the

2014 lawsuit did not negate the preclusive effect of the

“valid final judgment regarding the enforceability of the

arbitration provision.”

AIM appeals.

Standard of Review

“We review the circuit court’s denial of a motion to

compel arbitration de novo.” Fogelsong v. Joe Machens

Auto. Group Inc., 600 S.W.3d 288, 293 (Mo. App. W.D.

2020) (citing Soars v. Easter Seals Midwest, 563 S.W.3d

111, 113 (Mo. banc 2018). “Upon such review, we must first

determine whether a valid arbitration agreement exists.”

Sniezek v. Kansas City Chiefs Football Club, 402 S.W.3d

580, 583 (Mo. App. W.D. 2013) (citing Nitro Distributing,

Inc. v. Dunn, 194 S.W.3d 339, 345 (Mo. banc 2006). If the

trial court’s ruling on the motion to compel arbitration

includes “factual findings that bear on the existence,

scope, or revocability of the arbitration agreement, then

we will affirm the factual findings if they are supported by

substantial evidence and are not against the weight of the

evidence.” Id. (citing Whitworth v. McBride & Son Homes,

Inc., 344 S.W.3d 730, 736 (Mo. App. W.D. 2011). The party

asserting the existence of a valid and enforceable contract

to arbitrate bears the burden of proving that proposition.

Id.

Appendix B

Analysis

AIM raises three points on appeal challenging the

trial court’s conclusion that AIM was collaterally estopped

from seeking to compel arbitration. In its first point, AIM

argues that the trial court committed legal error because

collateral estoppel is an issue of arbitrability which had

been delegated to the arbitrator for determination. AIM’s

second point asserts that even if the trial court properly

determined the issue of collateral estoppel instead of

referring that matter to arbitration, the trial court erred

because the arbitrator’s decision was not a final judgment

on the merits. In its third point, AIM claims that the

trial court erred in concluding that Pinkerton’s voluntary

dismissal of the 2014 lawsuit did not negate the preclusive

effect, if any, of the arbitrator’s decision. We address the

points in turn.

Point One: Because the arbitrator’s decision

controls whether an arbitration agreement exists

between Pinkerton and AIM, the trial court properly

determined the collateral estoppel effect of the

arbitrator’s decision

It is uncontested that the arbitration provision AIM

now seeks to enforce was determined by an arbitrator

to be unenforceable in connection with Pinkerton’s

2014 lawsuit. In other words, an arbitrator previously

determined that no valid arbitration agreement exists

between the parties because the arbitration provision was

unconscionable. “Arbitration is a matter of contract under

the Federal Arbitration Act (FAA).” Soars v. Easter Seals

Midwest, 563 S.W.3d 111, 114 (Mo. banc 2018) (citing AT&T

10a

Appendix B

Mobility, LLC v. Concepcion, 563 U.S. 333, 339, 131 S.

Ct. 1740, 179 L. Ed. 2d 742 (2011). “’[A] party cannot be

required to arbitrate a dispute that it has not agreed to

arbitrate[,]’ and arbitration will only be compelled where

‘a valid arbitration agreement exists . . . .’” Hughes v.

Ancestry.com, 580 S.W.3d 42, 47 (Mo. App. W.D. 2019)

(quoting NutraPet Sys., LLC v. Proviera Biotech, LLC,

542 S.W.3d 410, 413-14 (Mo. App. W.D. 2017).

As such, the ultimate issue we must resolve is the

preclusive effect of the arbitrator’s decision that no valid

arbitration agreement exists between Pinkerton and

AIM. However, the initial issue we must resolve is who, as

between an arbitrator and the trial court, was required to

determine the preclusive effect of the arbitrator’s decision.

AIM views the preclusive effect of the arbitrator’s decision

as an issue of enforceability of an arbitration agreement

that must be determined by an arbitrator based on

the arbitration agreement’s delegation language. See

Pinkerton, 531 S.W.3d at 53. Pinkerton contends that the

trial court was required to determine the preclusive effect

of the arbitrator’s decision because a trial court must first

determine that an agreement to arbitrate exists before

it can delegate matters regarding enforceability of the

agreement to an arbitrator for determination. See Theroff

v. Dollar Tree Stores, Inc., 591 S.W.3d 432, 440 (Mo. banc

2020) (“[T]he circuit court cannot delegate [a] matter

to an arbitrator whose very existence depends upon

an agreement.”). We conclude that Theroff controls the

resolution of this dispute, and that because the preclusive

effect of the arbitrator’s decision will control whether an

arbitration agreement exists, the trial court properly

11a

Appendix B

determined whether AIM was collaterally estopped by

the arbitrator’s decision.

In Theroff, the Supreme Court held that in the

absence of an agreement to arbitrate, a delegation

provision is not effective. Id. at 439-40. The Court was

reviewing a trial court’s refusal to compel arbitration

where the party opposing arbitration, who was blind,

denied affixing her digital signature to documents at

the time she was hired, and alleged that the employer’s

representative did so without her assent, as the nature

of the documents were not explained to her. Id. at 435.

Though it was uncontested that the documents included

an arbitration provision, whether the employee assented

to the arbitration provision by affixing her digital

signature was contested. Id. at 437. The Court framed the

issue before it as one of first impression, and noted that

“[u]nlike the standard scenario in which there is no dispute

about whether a party signed an arbitration agreement,

when a party disputes signing, the court must first decide

the existence of an agreement to arbitrate.” Id. (citing

Chastain v. Robinson-Humphrey Co., 957 F.2d 851, 854

(11th Cir. 1992) (noting that the trial court must determine

in first instance whether an agreement to arbitrate exists

where signature is contested) (abrogated on other grounds

by Larsen v. Citibank FSB, 871 F.3d 1295, 1303 n.1 (11th

Cir. 2017)). Noting that Theroff challenged the existence of

any agreement to arbitrate, the Supreme Court concluded

that because the “existence of the agreement to arbitrate

is a prerequisite to compelling arbitration,” the trial court

properly determined this issue. Id. at 439.

12a

Appendix B

The decision in Theroff was not unanimous. In one

dissenting opinion, a minority of the court held that a

controversy over signature is a contract formation issue

that must be referred to the arbitrator in the presence of

an unchallenged delegation provision in the arbitration

agreement. Id. at 442-46 (Powell, J., dissenting). In a

separate dissent, a minority of the court wrote separately

to emphasize that assent to a contract, whether challenged

based on signature or otherwise, is always a contract

formation issue, and that the delegation provision in

Theroff’s arbitration agreement expressly delegated to

an arbitrator disputes involving contract formation. Id. at

446-48 (Fischer, J., dissenting). We believe, however, that

the circumstances in this case are even more compelling

than those in Theroff. Here, an arbitrator determined

that the arbitration provision included in the enrollment

agreement Pinkerton signed was not enforceable, and

thus that no valid agreement to arbitrate existed. If

the arbitrator’s decision binds AIM, then there exists

no valid arbitration agreement to enforce, including the

agreement’s delegation provision. Consistent with Theroff,

where the very existence of an arbitration agreement

is challenged, it is for the trial court to make that

determination and not an arbitrator. In fact, this result

is compelled by section 435.355.1 which provides that:

On application of a party showing an agreement

described in section 435.350, and the opposing

party’s refusal to arbitrate, the court shall

order the parties to proceed with arbitration,

but if the opposing party denies the existence

of the agreement to arbitrate, the court shall

13a

Appendix B

proceed summarily to the determination of

the issue so raised . . . .

(Emphasis added.)

A IM disregards Theroff, and insists that the

preclusive effect of the arbitrator’s decision had to be

determined by the arbitrator. AIM relies on Melnuk

v. Hillman, a recent opinion which held, as a matter of

first impression, that an arbitrator, rather than the trial

court, was required to decide the collateral estoppel effect

of a previous arbitration award on a second arbitration

demand. 593 S.W.3d 674, 681 (Mo. App. E.D. 2020). But

AIM’s reliance on Melnuk is misplaced. Melnuk did not

hold that the collateral estoppel effect of a prior arbitration

decision must always be determined by an arbitrator in

the face of a second arbitration demand. More importantly,

Melnuk did not involve a scenario where the collateral

estoppel effect of an earlier arbitration decision was

central to determining whether an arbitration agreement

even exists.

In Melnuk, the owners of a limited liability company

entered into a buy-sell agreement where Hillman agreed

to purchase Melnuk’s 50% interest. Id. at 676. The buy-sell

agreement and the operating agreement for the limited

liability company each contained an arbitration provision.

Id. at 677. The buy-sell agreement contemplated that

Hillman would give Melnuk a promissory note for a portion

of the purchase price, and that the note balance could be

adjusted by subsequent contingent liabilities. Id. at 676.

One such liability involved amounts paid to key employees

14a

Appendix B

pursuant to a phantom option plan in the event of any

change of control of ownership. Id. The “change of control”

provision in the phantom option plan was modified after

the buy-sell agreement was entered into from “greater

than fifty percent” to “fifty percent or more.” Id. at 67677. As a result, nearly $300,000 was paid out by Hillman

to key employees, and Hillman notified Melnuk that the

balance Hillman owed on the promissory note was being

correspondingly reduced. Id. at 677. Melnuk disagreed

with the adjustment, and claimed he had not signed the

amendment to the phantom option plan modifying the

definition of “change of control.” Id.

Hillman initiated an arbitration proceeding seeking

a declaratory judgment that the “change of control”

contingent liability adjustments were valid under the

buy sell agreement. Id. at 677-78. Melnuk denied the

validity of the change of control adjustments, and also

asserted counterclaims seeking upward adjustments of

the promissory note balance for reasons unrelated to the

change of control payments. Id. at 678. The arbitrator

entered an arbitration award which stated that the

issues presented in the arbitration were “ten potential

adjustments” of the principal amount owed by Hillman

to Melnuk on the promissory note. Id. The arbitrator

concluded that the moneys paid to key employees “met the

contractual definition of a contingent liability adjustment”

in the promissory note, resulting in a reduction of the

amount due on the note. Id. However, the arbitrator

expressly noted in the award that no opinion was being

expressed as to whether Melnuk might have a claim for

breach of fiduciary duty or some other cause of action

15a

Appendix B

relating to improper modification of the “change of control

provision,” and noted that such claims were “beyond the

scope of this arbitration.” Id.

The arbitrator’s award was confirmed in early 2018.

Id. Almost a year later, Melnuk filed a lawsuit seeking

damages from Hillman on theories of breach of fiduciary

duty, fraud, and conspiracy arising out of the alleged

unauthorized amendment of the “change of control”

provision in the phantom option plan. Id. Hillman moved

to compel arbitration. Id. Melnuk argued the earlier

arbitration award determined that his claims were

beyond the scope of the arbitration clauses in the parties’

operating and buy/sell agreements. Id. at 678-79. Neither

party contested the existence of an arbitration agreement.

The only issue was whether the scope of the arbitration

agreement had been resolved by the earlier arbitrator’s

decision.

The trial court denied Hillman’s motion to compel

arbitration. Id. at 679. On appeal, the Eastern District

characterized the dispute between the parties as whether

Hillman was collaterally estopped by the arbitration

award to compel a second arbitration. Id. Specifically, the

parties disputed whether the arbitrability of Melnuk’s

damage claims had been decided by the first arbitration

award, and whether an arbitrator or the court should

determine this issue. Id. at 680.

The Eastern District noted that determining whether

an arbitrator or a court should “determine[] the collateral

estoppel effect of a prior arbitration award . . . is an issue

16a

Appendix B

of first impression.” Id. After analyzing federal decisions

relevant to the issue, the court concluded that “[a]n

arbitrator must decide whether Hillman is collaterally

estopped by the [earlier arbitration award] from

compelling arbitration of Melnuk’s claims for damages not

because the parties agreed to submit threshold questions

of arbitrability to an arbitrator but because evaluating

Melnuk’s collateral estoppel defense is a ‘procedural

question[] which grow[s] out of the dispute and bear[s] on

its final disposition.’” Id. at 682 (quoting Howsam v. Dean

Witter Reynolds, Inc., 537 U.S. 79, 84-85, 123 S. Ct. 588,

154 L. Ed. 2d 491 (2002)) (emphasis added).

Melnuk thus cannot be read as urged by AIM for

the proposition that an affirmative defense raising

the collateral estoppel effect of an earlier arbitration

award must always be referred for determination by an

arbitrator pursuant to a delegation provision. In fact,

Melnuk expressly dispels this conclusion. At best, Melnuk

simply holds that “the merits of an argument challenging

the scope of the issues resolved in a prior arbitration

award ‘must be presented to and resolved by [a] . . . second

arbitration proceeding.’” Id. at 681 (quoting W & T Travel

Servs., LLC v. Priority One Servs., Inc., 69 F. Supp. 3d

158, 171 (D.D.C. 2014)).

Here, there is no dispute regarding the scope of

the issues resolved by the prior arbitration award. The

parties agree that the prior arbitration award determined

the enforceability of the arbitration provision in the

enrollment agreement by concluding the provision was

unenforceable because it was unconscionable. The exact

17a

Appendix B

same issue is now framed by Pinkerton’s opposition to

AIM’s motion to compel arbitration in Pinkerton’s re-filed

case. 3 Melnuk is therefore of no assistance to AIM as it

did not address whether an arbitration agreement exists.

Instead, because the trial court first had to determine that

an arbitration agreement existed before it could compel

arbitration in Pinkerton’s refiled case, the trial court did

not err in determining the collateral estoppel effect of the

arbitrator’s decision on that very issue.

AIM’s first point on appeal is denied.

Point Two: The arbitrator’s decision was a judgment

on the merits

AIM next argues that even if the trial court properly

determined the preclusive effect of the prior arbitration

decision instead of referring that issue to an arbitrator,

the trial court erroneously found the arbitrator’s decision

collaterally estopped AIM because the arbitrator’s

decision was not a judgment on the merits.

“‘Collateral estoppel, or issue preclusion, is used to

preclude the relitigation of an issue that already has

been decided in a different cause of action.’” Matter of

Invenergy Transmission LLC, 604 S.W.3d 634, 639 (Mo.

App. W.D. 2020) (quoting Brown v. Carnahan, 370 S.W.3d

637, 658 (Mo. banc 2012). Four elements must be shown in

order to give a prior adjudication preclusive effect:

3. In its second point on appeal, AIM concedes that the issue

is the enforceability of the arbitration agreement.

18a

Appendix B

(1) the issue decided in the prior action was

identical to the issue presented in the later

action; (2) the prior action resulted in a

judgment on the merits;4 (3) the party against

whom estoppel is asserted was a party or was

in privity with a party to the prior action; and

(4) the party against whom collateral estoppel

is asserted had a full and fair opportunity to

litigate the issue in the prior action.

U-Haul Company of Missouri v. Carter, 567 S.W.3d 680,

684 (Mo. App. W.D. 2019) (citing James v. Paul, 49 S.W.3d

678, 682 (Mo. banc 2001). AIM concedes that only the

second element, whether the prior adjudication resulted

in a judgment on the merits, is at issue in this case. 5

4. Some Missouri cases add the word “final” before the word

judgment in describing this element. See, e.g., Fischer ex rel.

Scarborough v. Fischer, 34 S.W.3d 263, 265 (Mo. App. W.D. 2000).

As we explain, however, inclusion of the word “final” is immaterial.

What matters is whether a determination that is binding on the

parties has been made on an issue--not whether the determination

is “final” as in final for purposes of appeal.

5. We agree that the trial court correctly concluded that

the remaining three elements for collateral estoppel have been

established. The issue decided in the arbitration proceeding was

enforceability of the arbitration agreement, and this is the identical

issue presented to us. Further, the parties are identical, and AIM

had a full and fair opportunity to litigate the issue in arbitration.

Therefore, we analyze whether the prior arbitration resulted in

a judgment on the merits.

19a

Appendix B

“‘For the purposes of collateral estoppel, an arbitration

award may constitute a final judgment on the merits.’”

Melnuk, 593 S.W.3d at 680 (quoting Graybar Elec. Co., Inc.

v. Federal Ins. Co., 567 F. Supp. 2d 1116, 1123 (E.D. Mo.

2008). AIM acknowledges this point, but asserts that the

arbitrator’s decision was not a “merits” decision, and thus

cannot constitute a judgment on the merits for purposes

of collateral estoppel. AIM relies on State v. Purvis

to contend that the arbitrator merely decided where

Pinkerton’s dispute should be litigated, and was thus not

a judgment on the merits because it was a “judgment

rendered upon some preliminary or merely technical

point, or by default, and without trial.” 739 S.W.2d 589,

591 (Mo. App. S.D. 1987).

Purvis is readily distinguishable. In Purvis, the

Southern District concluded that the State was not

collaterally estopped to prove probable cause in a driving

while intoxicated case even though an administrative

hearing officer determined in a related license suspension

proceeding that there was “no evidence in [the] file on

probable cause.” Id. at 590-91. The Southern District

concluded that the administrative hearing officer’s

decision was ambiguous, as it could not be determined

whether the hearing officer weighed evidence to find,

on the merits, that probable cause was not established,

or instead concluded that probable cause was not

demonstrated because a statutory requirement relevant

only to administrative suspension proceedings had not

been satisfied. Id. Because it was impossible to say that in

making a probable cause finding, the hearing officer relied

on anything “other than the preliminary and technical

20a

Appendix B

basis of deficiencies in the arresting officer’s report,” the

court declined to treat the hearing officer’s decision as a

judgment on the merits. Id. at 591.

In stark contrast, the arbitrator’s decision entered

in connection with Pinkerton’s 2014 lawsuit was plainly a

determination on the merits regarding the enforceability

of the parties’ arbitration agreement. The arbitrator

dismissed the arbitration proceeding after finding there

was no valid arbitration agreement to enforce because

the agreement was unconscionable. This was not a

preliminary or technical determination, but a substantive

determination on an ultimate issue that AIM insisted be

heard by an arbitrator. Purvis is of no assistance to AIM.6

AIM next argues that even if the arbitrator’s decision

was on the merits, it was not a judgment. AIM relies on

State ex rel. Henderson v. Asel, where our Supreme Court

addressed what constitutes a judgment, and held that “a

judgment is a legally enforceable judicial order that fully

resolves at least one claim in a lawsuit and establishes all

the rights and liabilities of the parties with respect to that

claim.” 566 S.W.3d 596, 598 (Mo. banc 2019). AIM argues

6. AIM also relies on Med. Shoppe Int’l, Inc. v. J-Pral Corp.,

662 S.W.2d 263, 275 (Mo. App. E.D. 1983), as additional support for

the proposition attributed to Purvis. AIM’s reliance is misplaced.

Medicine Shoppe Int’l simply concluded that J-Pral Corporation

was not collaterally estopped from raising the issue of personal

jurisdiction because, when the trial court dismissed Medicine

Shoppe’s petition for want of personal jurisdiction, “no decision

on the merits” on the issue of personal jurisdiction had yet been

entered by the arbitration tribunal. Id.

21a

Appendix B

that the arbitrator’s decision was not a judicial order, and

therefore cannot be a “judgment” on the merits. AIM’s

argument disregards authority for the proposition that

an arbitration award may constitute a judgment on the

merits for purposes of collateral estoppel. See Melnuk,

593 S.W.3d at 680. Moreover, while Henderson refers to

a judgment as a “judicial order,” it did so in the context

of addressing when a judgment is appealable. 566 S.W.3d

at 598-99. Henderson did not address what constitutes a

judgment for purposes of collateral estoppel, and cannot

be read to limit “judgments” for that purpose to judicial

orders.7

Finally, AIM argues that other courts have ruled

that “a decision on a motion to compel arbitration is not a

final judgment on the merits that gives rise to collateral

estoppel.” Pearson v. P.F. Chang’s Bistro, Inc., No.

13-cv-2009-JLS, 2015 U.S. Dist. LEXIS 184157, 2015

WL 12910914, at *4 n.4 (S.D. Cal. Feb. 23, 2015); Lotsoff

v. Wells Fargo Bank, No. 18-cv-02033-AJB-JLB, 2019

U.S. Dist. LEXIS 169373, 2019 WL 4747667, at *4 (S.D.

Cal. Sept. 30, 2019). Neither case is binding on this court.

Fogelsong, 600 S.W.3d at 295 n.3 (“This Court is not bound

7. AIM also relies on our Supreme Court’s conclusion that an

order sustaining partial summary judgment on only some issues in

a case, including issues of arbitrability and consideration, “was not

a final judgment” for purposes of appeal. Sanford v. CenturyTel

of Mo., LLC, 490 S.W.3d 717, 719 (Mo. banc 2016). However, as

with Henderson, a discussion of when judgments are appealable

cannot be fairly read to either contemplate, or be controlling on,

the issue of what constitutes a judgment on the merits for purposes

of collateral estoppel.

22a

Appendix B

by the decisions of federal district courts.”) (citing Godat

v. Mercantile Bank of Nw. Cty., 884 S.W.2d 1, 4 n.1 (Mo.

App. E.D. 1994)). In any event, both decisions are readily

distinguishable. Though Pearson noted in a footnote that a

state court’s order denying a defendant’s motion to compel

arbitration was not a “final judgment on the merits”

supporting collateral estoppel in the same plaintiff’s later

filed federal court action, there is no basis from this vague

reference to determine the basis for the state court’s

order, and more importantly, whether the order found

there to be no valid arbitration agreement in existence.

2015 U.S. Dist. LEXIS 184157, 2015 WL 12910914, at *4

n.4. And though Lotsoff rejected a plaintiff’s argument

that the defendant was collaterally estopped to compel

arbitration where the same arbitration provision had been

declared unenforceable, it is plain that the “enforceability”

determination was not only made in another case involving

different parties, but as well that the determination was

not yet final and was being appealed. 2019 U.S. Dist.

LEXIS 169373, 2019 WL 4747667, at *4.

We conclude that the arbitrator’s decision finding

the arbitration provision in the enrollment agreement

to be unenforceable was a judgment on the merits. This

conclusion is supported by Cooper v. Yellow Freight

System, Inc., 589 S.W.2d 643, 645 (Mo. App. E.D. 1979), and

by Pratt v. Purcell Tire & Rubber Co., 846 S.W.2d 230, 233

(Mo. App. E.D. 1993), both of which expressly addressed

the preclusive effect of a previous arbitrator’s decision,

and both of which concluded that “where there has been

a final and binding arbitration between the parties,” the

facts determined in the arbitration proceeding may not

23a

Appendix B

be relitigated. Pratt, 846 S.W.2d at 233 (citing Cooper,

589 S.W.2d at 645).

In Cooper, a trucking company terminated a driver

for reckless driving resulting in an accident, and an

arbitration proceeding sustained the termination on the

same grounds. 589 S.W.2d at 644. The driver then filed

suit, alleging, inter alia, that the reason provided for his

termination was false because he did not drive recklessly

resulting in an accident. Id. The Eastern District affirmed

the trial court’s grant of summary judgment for the

defendant because the issue of whether or not the driver

drove recklessly, was “the identical issue litigated by

the two parties” in arbitration, and collateral estopped

therefore barred the driver from relitigating the issue.

Id. at 645 (“[i]f the procedure used to settle the dispute

is one of the party’s own choosing, as it was here, and

was a final and binding arbitration between the parties,

the courts may not relitigate facts determined in the

arbitration proceeding.”)

Similarly, in Pratt, a mechanic alleged, in both an

arbitration proceeding and in a suit for damages, that his

former employer denied his reinstatement in retaliation

after he filed a workers’ compensation claim. 846 S.W.2d

at 230. The issue presented to the arbitrator was whether

the employer had unjustly refused to allow the mechanic

to return to work. Id. at 232. The arbitrator found that the

employer had not acted in a discriminatory manner. Id.

The Eastern District affirmed the trial court’s subsequent

grant of summary judgment in the employer’s favor on the

grounds that collateral estoppel precluded relitigating the

24a

Appendix B

reason for the employer’s refusal to reinstate the mechanic

because the same issue had already been litigated by the

parties in a final and binding arbitration proceeding. Id.

at 233 (citing Cooper, 589 S.W.2d at 645).

Cooper and Pratt thus hold that when a specific issue

has been litigated in an arbitration proceeding, and where

the arbitrator’s decision expressly resolves that issue, the

parties are collaterally estopped from relitigating the

same issue in a subsequent proceeding. Not surprisingly,

the Eastern District in Melnuk acknowledged this

precedent, and differentiated the circumstances in

Melnuk (where the scope of what was determined in a

prior arbitration was contested) from the circumstances

in Cooper and Pratt, thus reinforcing that “a party is

barred from asserting a claim identically presented and

determined in a prior arbitration proceeding.” 593 S.W.3d

at 682 (citing Cooper, 589 S.W.2d at 645; Pratt, 846 S.W.2d

at 233).

Here, AIM moved to compel arbitration in Pinkerton’s

2014 lawsuit. In response, Pinkerton generally challenged

the validity of the arbitration agreement and specifically

challenged the validity of the delegation provision. Our

Supreme Court found the arbitration agreement to

“clearly and unmistakably evidence the parties’ intent to

delegate threshold issues of arbitrability to the arbitrator.”

Pinkerton, 531 S.W.3d at 53. The Court thus ordered the

parties to proceed to arbitration, after concluding that

the delegation provision was valid and enforceable under

the FAA “’leaving any challenge to the validity of the

[a]greement as a whole,’ or to the other provisions within

25a

Appendix B

the arbitration agreement, ‘for the arbitrator.’” Id. at 52-53

(quoting Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63,

72, 130 S. Ct. 2772, 177 L. Ed. 2d 403 (2010)). The parties

thereafter agreed upon an arbitrator, and that arbitrator

subsequently issued a written decision, denominated a

judgment, which finally concluded that the arbitration

agreement was unconscionable and unenforceable,

requiring dismissal of the arbitration proceeding. AIM did

not challenge the arbitrator’s determination, and did not

oppose Pinkerton’s filing of the arbitrator’s decision with

the trial court in connection with a request to lift the stay

of proceedings. The arbitrator’s decision finally resolved

the issue of enforceability of the arbitration agreement,

and constitutes a judgment on the merits with respect to

that issue. The trial court properly concluded that AIM is

collaterally estopped to relitigate that issue in Pinkerton’s

re-filed lawsuit.

Point two on appeal is denied.

Point Three: Pinkerton’s voluntary dismissal of his

2014 lawsuit without prejudice did not vacate the

arbitrator’s decision

Finally, AIM contends that even if the trial court

properly concluded that the arbitrator’s decision was

a judgment on the merits, when Pinkerton voluntarily

dismissed the 2014 lawsuit, his action “wiped the slate

clean” as if Pinkerton never brought the 2014 lawsuit, and

thus vacated the arbitrator’s decision.

26a

Appendix B

AIM relies on Williams v. Southern Union Co.,

364 S.W.3d 228, 235 (Mo. App. W.D. 2011). In Williams,

the trial court partially sustained a defendant’s motion

to dismiss two of the plaintiff’s claims. Id. at 230. The

plaintiff subsequently dismissed the lawsuit without

prejudice pursuant to Rule 67.02, and then refiled the suit,

reasserting the previously dismissed claims. Id. at 230-31.

We found that the plaintiff was not collaterally estopped

to reassert the previously dismissed claims because her

voluntary dismissal of the initial lawsuit “wiped the slate

clean,” as if the suit had never been filed. Id. at 234-35.

Central to this holding, however, is the fact that pursuant

to Rule 74.01(b):

[A]ny order or other form of decision, however

designated, that adjudicates fewer than all

the claims or the rights and liabilities of fewer

than all the parties shall not terminate the

action as to any of the claims or parties, and

the order or other form or decision is subject

to revision at any time before the entry of

judgment adjudicating all the claims and rights

and liabilities of all the parties.

Thus, our reference to “wiping the slate clean” in

connection with the plaintiff’s voluntary dismissal of the

initial lawsuit without prejudice pursuant to Rule 67.02

simply acknowledged that interlocutory rulings by a

trial court have no preclusive effect in a refiled lawsuit

because they did not yet have a preclusive effect in the

initial lawsuit. 8

8. AIM similarly relies on Lewis v. Department of Social

Services, 61 S.W.3d 248, 256 n.4 (Mo. App. W.D. 2001). In Lewis, our

27a

Appendix B

In contrast, the arbitration compelled by AIM in

Pinkerton’s 2014 lawsuit was a distinct and independent

proceeding. It resulted in a final decision that resolved

all issues before the arbitrator by v ir tue of the

arbitrator’s conclusion that the arbitration agreement was

unenforceable. The arbitrator’s decision was final, and was

not subject to revision by the trial court. See Cornerstone

Propane, L.P. v. Precision Investments, L.L.C., 126 S.W.3d

419, 423-24 (Mo. App. S.D. 2004) (quoting R.L. Hulett &

Co. v. Barth, 884 S.W.2d 309, 311 (Mo. App. E.D. 1994)

(“[a]n arbitration award . . . finally concludes and binds the

parties on the merits of all matters properly within the

scope of the award, both as to law and facts, and the courts

will have no inquiry as to whether the determination

thereon was right or wrong, for the purposes of interfering

with the award.”). Moreover, AIM did not challenge the

court evaluated potential error in the modification of a child support

award, rather than collateral estoppel; however, in a footnote, our

court explained that:

[a]lthough the order of the probate judge is contained

in the record and reference is made to the order, this

court notes that the findings contained therein are

not binding on . . . this court. The collateral estoppel

doctrine prohibits relitigation of an issue only if, inter

alia, there has been a final judgment on the merits.

Fischer ex rel. Scarborough v. Fischer, 34 S.W.3d

263, 264 (Mo. App. 2000). Since Mr. Lewis voluntarily

dismissed his motion for modification of visitation and

child support prior to final adjudication, the order of

the probate judge does not constitute a final judgment

on the merits.

Id. As with Williams, the court’s comments merely recognize that

interlocutory rulings by a trial court do not have preclusive effect

because they remain subject to change.

28a

Appendix B

arbitrator’s decision. Pinkerton’s motion to lift the stay

of proceedings attached the arbitrator’s decision. Though

Pinkerton’s motion was not expressly titled as a motion

to confirm the arbitrator’s decision, the motion’s success

depended on recognition of the arbitration award as final

and binding, as the trial court could not otherwise have

lifted the stay and proceeded with Pinkerton’s lawsuit.

See Pinkerton, 531 S.W.3d at 53. (ordering the parties to

arbitrate Pinkerton’s lawsuit, including Pinkerton’s claims

regarding enforceability of the arbitration agreement).

AIM could have challenged the arbitrator’s decision by

moving to vacate or modify the decision as authorized by

9 U.S.C. section 9 pursuant to one of the limited grounds

described in 9 U.S.C. sections 10 and 11. AIM did not do

so, leaving the trial court with no authority but to abide by

the arbitrator’s decision. See, e.g., Lobel Fin. Inc. v. Bothel,

570 S.W.3d 87, 91 (Mo. App. W.D. 2018) (observing that a

trial court has no authority but to confirm an arbitration

award unless the award is vacated or modified or corrected

as provided by 9 U.S.C. sections 10 and 11); Cargill v.

Poeppelmeyer, 328 S.W.3d 774, 776 (Mo. App. S.D. 2010)

(holding that a “court must confirm [an arbitration] award

unless the opposing party moves to vacate or modify the

award,” and that “the party challenging an arbitration

award has the burden of demonstrating that the award

is not valid.”).

Pinkerton’s subsequent decision to voluntarily dismiss

his lawsuit without prejudice did not operate to vacate

the arbitrator’s decision fully and finally resolving the

arbitration proceeding. AIM’s argument to the contrary

suggests a party has the power to unilaterally vacate an

29a

Appendix B

arbitrator’s final decision by voluntarily dismissing related

litigation. There is no authority for that proposition, which

would frustrate the primary purpose of arbitration to

efficiently reach a final and binding decision. See Decker

v. Kamil, 100 S.W.3d 115, 117 (Mo. App. E.D. 2003).

The trial court did not err in concluding that

Pinkerton’s voluntary dismissal without prejudice

pursuant to Rule 67.02 did not “wipe the slate clean” of

the arbitrator’s final decision regarding the enforceability

of the arbitration agreement.

Point Three on appeal is denied.

Conclusion

The trial court’s order refusing to compel arbitration

is affirmed.

/s/ Cynthia L. Martin

Cynthia L. Martin, Judge

All concur

30a

Appendix COF THE CIRCUIT

APPENDIX C — OPINION

COURT OF JACKSON COUNTY, MISSOURI AT

KANSAS CITY, DATED FEBRUARY 11, 2020

IN THE CIRCUIT COURT OF JACKSON COUNTY,

MISSOURI AT KANSAS CITY

Case No. 1916-CV20843

Division 10

STEVEN PINKERTON,

Plaintiff,

TECHNICAL EDUCATION SERVICES, INC.,

Defendant.

ORDER DENYING MOTION TO DISMISS

AND MOTION TO COMPEL ARBITRATION

On this 11th day of February, 2020, the Court considers

Defendants’ Motion to Dismiss, or in the Alternative, to

Compel Arbitration and to Stay this Proceeding, and

Suggestions in Support filed October 7, 2019; Plaintiffs

Brief in Opposition filed October 17, 2019; Defendants’

Reply Memorandum in Support filed October 22, 2019; and

Plaintiffs Sur-Reply in Opposition. After having reviewed

the pleadings, considered the evidence, and heard the

arguments of counsel, the Court finds as follows:

1. Defendants’ Motion and Suggestions in Support allege

that Plaintiff signed a Student Enrollment Agreement

31a

Appendix C

with the Aviation Maintenance Technical Engineer

Program with Technical Education Services Inc. d/b/a

Aviation Institute of Maintenance (“AIM”) on September

8, 2009. On March 24, 2009 Plaintiff renegotiated the

terms of his Student Enrollment Agreement and executed

a second Student Enrollment Agreement with AIM. Both

of these Student Enrollment Agreements contained an

arbitration agreement as follows:

Arbitration Agreement: I agree that any

controversy, claim or dispute of any sort

arising out of or relating to matters including,

but not l i m it ed t o: student a d m ission,

enrollment, financial obligations and status

as a student, which cannot be first resolved by

way of applicable internal dispute resolution

practices and procedures, shall be submitted

for arbitration, to be administered by the

American Arbitration Association located

within Virginia Beach, Virginia, in accordance

with its commercial arbitration rules. All fees

and expenses of arbitration shall be shared

equally and any award rendered in favor of

a student will be limited to the total amount

paid to the School by the student. Any award

of determination rendered by the arbitration(s)

shall be final and entered as a judgment by a

court of competent jurisdiction.

2. Subsequent to signing both Student Enrollment

Agreements, Plaintiff filed a lawsuit in 2014 in the

Circuit Court of Jackson County, Missouri, Case No.

1416-CV10007 “against the school, Mr. Rothrock, and

32a

Appendix C

the School’s owner, W. Gerald Yagen, alleging the school

had engaged in fraud, misrepresentation, and deception

related to the School’s graduation and job placement

rates, starting salaries, and the costs and benefits of

its educational programs.” State ex rel. Pinkerton v.

Fahnestock, 531 S.W.3d 36, 40 (Mo. 2017). The Defendants

moved to dismiss, or in the alternative, to compel

arbitration and stay the proceedings. Id. Upon review of

Defendants’ Motion to Dismiss, the Circuit Court held that

the delegation provision was enforceable, and the issue of

whether the arbitration agreement was unconscionable is

left to the arbitrator. Id. On appeal to the Supreme Court

of Missouri, the Court sustained the Circuit Court’s Order

compelling the Parties to arbitrate. Id. at 53.

3. After delivering an opinion on the matter, Hon. Gary

Oxenhandler, whom was agreed to by both parties,

provided a Judgment dated November 15, 2018, ruling

that the Arbitration Agreement was “unconscionable and

unenforceable”, and as such “[t]his ease is remanded to the

Courts for appropriate action.” Subsequent to Hon. Gary

Oxenhandler’s decision, on December 3, 2018, Plaintiff

filed Hon. Gary Oxenhandler’s decision as an exhibit to

his motion to lift the stay in Case No. 1416-CV10007. The

stay was lifted in that case, and the parties proceeded in

Circuit Court until July, 2019.

4. On July 23, 2019, the Plaintiff filed a Notice of Dismissal

in Steven Pinkerton v. Technical Education Services, Inc.

d/b/a Aviation Institute of Maintenance, et al., Case No.

1416-CV10007. On July 26, 2019, the Plaintiff filed the

present lawsuit against the same individuals and asserted

the same causes of action as his lawsuit filed in 2014.

33a

Appendix C

5. Defendants are asking the Court to enter an order

dismissing this matter, or in the alternative compelling

Plaintiff to arbitrate his claims in this case. In Case No.

1416-CV10007, the parties were ordered to arbitrate, and

the issue regarding the enforceability of the arbitration

clause was left to the arbitrator to decide. Per the

Judgment on November 15, 2018, the enforceability of

the arbitration clause was decided by the arbitrator.

“Arbitration is supposed to be a fair process, a process

that affords all parties the process they are due. Such is

not the case here ... the Arbitrator finds the Arbitration

Agreement unconscionable and unenforceable. This

case is remanded to the Courts for appropriate action.

Arbitration dismissed.” (emphasis added).

6. Defendants allege that the judgment entered by the

Arbitrator in Case No. 1416-CV10007 was not a judgment

on the merits, thus collateral estoppel does not apply

in this present case. “Collateral estoppel operates to

prevent a party or its privies from relitigating facts or

questions at issue between the same parties which have

been previously adjudicated upon the merits.” Pratt v.

Purcell Tire and Rubber Co. Inc., 846 S.W.2d 230, 232

(Mo. App. E.D. 1993).

“Collateral estoppel is appropriate when: (1)

the issue sought to be precluded is identical to

the issue previously decided; (2) the prior action

resulted in a final adjudication on the merits;

(3) the party sought to be estopped was either

a party or in privity with a party to the prior

action; and (4) the party sought to be estopped

34a

Appendix C

was given a full and fair opportunity to be heard

on the issue in the prior action.” Wellons, Inc.

v. T.E. Ibberson Co., 869 F.2d 1166, 1168 (8th

Cir. 1989).

“[W]hen an issue of ultimate fact has once been determined

by a valid judgment, that issue cannot again be litigated

between the same parties in future litigation.” Pratt, 846

S.W.2d at 233. Here, the issue is whether the arbitration

provision is enforceable, which was a previously decided

issue in Case No. 1416-CV10007. The prior action resulted

in a final, valid judgment on that issue on November 15,

2018; the parties are exactly the same in both cases; and

the party sought to be estopped was given a full and fair

opportunity to be heard on that issue in the prior action.

7. Defendants also allege that a voluntary dismissal wipes

the slate clean, and since Plaintiff voluntarily dismissed

his claims in the first suit, it is as if the first suit had never

been brought. Even though Case No. 1416-CV10007 was

voluntarily dismissed, there was a final judgment ruling

that the same arbitration provision as the present case

was unenforceable. Thus, the voluntary dismissal does not

“wipe the slate clean” on a valid final judgment regarding

the enforceability of the arbitration provision.

WHEREFORE, for the reasons stated above, the

Court DENIES Defendants’ Motion to Stay Proceedings

and Compel Arbitration.

IT IS SO ORDERED.

35a

Appendix C

February 11, 2020

Date

/s/ PATRICK WILLIAM CAMPBELL

HONORABLE PATRICK WILLIAM CAMPBELL

36a

Appendix OF

D THE SUPREME

APPENDIX D — OPINION

COURT OF MISSOURI, FILED OCTOBER 31, 2017

SUPREME COURT OF MISSOURI

En Banc

No. SC94822

STATE ex rel. STEVEN PINKERTON,

Relator,

THE HONORABLE JOEL P. FAHNESTOCK,

Respondent.

October 31, 2017, Opinion Issued

ORIGINAL PROCEEDING IN PROHIBITION

Steven Pinkerton seeks a writ of mandamus or, in

the alternative, a writ of prohibition requiring the circuit

court to overrule the motion to compel arbitration filed

by Aviation Institute of Maintenance (the school). In the

alternative, Mr. Pinkerton seeks a writ of mandamus

requiring the circuit court to enforce discovery and allow

him to file additional opposition to the school’s motion to

compel arbitration. Mr. Pinkerton contends the circuit

court improperly sustained the school’s motion to compel

arbitration because: (1) the school’s incorporation of the

delegation provision into the arbitration agreement by

reference to the American Arbitration Association’s

37a

Appendix D

commercial rules was not clear and unmistakable evidence

the parties intended to arbitrate threshold questions

of arbitrability; (2) issues regarding the formation of

the arbitration agreement cannot be delegated to an

arbitrator; and (3) he specifically challenged the validity

and enforceability of the delegation provision.

This Court issued a preliminary writ and now holds

the incorporation of the American Arbitration Association

(AAA) rules into the arbitration agreement provided

clear and unmistakable evidence the parties intended to

delegate threshold issues of arbitrability to the arbitrator.

Mr. Pinkerton’s only specific challenge to the delegation

provision — that it would be unconscionable to delegate

a determination of unconscionability to a person with a

direct financial interest in the outcome — was without

merit, and he did not otherwise specifically challenge

the validity or enforceability of the delegation provision.

Accordingly, the circuit court properly sustained the

school’s motion to compel arbitration, stayed the case,

and ordered the parties to arbitrate threshold issues of

arbitrability. The preliminary writ is quashed.

Factual and Procedural Background

In 2009, Mr. Pinkerton e-mailed the school and

requested information about becoming an aircraft

technician.1 In response, Adrian Rothrock, an admissions

representative, scheduled an appointment at the school’s

1. The school is the Missouri affiliate of Technical Education

Services, Inc., a Virginia-based corporation operating aviation

maintenance schools throughout the United States.

38a

Appendix D

Kansas City campus. Soon thereafter, Mr. Pinkerton met

with Mr. Rothrock and received a tour of the school and a

packet of information. A few weeks later, Mr. Pinkerton

visited the school for a second time and submitted an

application for admission. Four days later, he returned

to the school to sign the two-page enrollment agreement

for the aviation maintenance technical engineer program.

The enrollment agreement listed information about the

program’s duration, graduation requirements, tuition and

fees, scheduling, and its policies regarding cancellation,

termination, withdrawal, and refunds. The enrollment

agreement also included an arbitration agreement. The

arbitration agreement was about three-fourths from the

top of the enrollment agreement’s first page. The heading

“Arbitration Agreement” was in bold face type, and the

terms of the arbitration agreement were in the same type

size as the remainder of the enrollment agreement. The

arbitration agreement provided:

I agree that any controversy, claim or dispute

of any sort arising out of or relating to matters

including, but not limited to: student admission,

enrollment, financial obligations and status as

a student, which cannot be first resolved by

way of applicable internal dispute resolution

practices and procedures, shall be submitted

for arbitration, to be administered by the

American Arbitration Association located

within Virginia Beach, Virginia, in accordance

with its commercial arbitration rules. All fees

and expenses of arbitration shall be shared

39a

Appendix D

equally and any award rendered in favor of

a student will be limited to the total amount

paid to the School by the student. Any award

or determination rendered by the arbitrator(s)

shall be final and entered as a judgment by a

court of competent jurisdiction.

Mr. Pinkerton did not receive a copy of the A A A

commercial rules. 2

Rule R-7 of the commercial rules defined the scope of

the arbitrator’s “jurisdiction.” It read, in relevant part:

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 or to

the arbitrability of any claim or counterclaim.

Mr. Pinkerton signed the enrollment agreement and

received a copy. An admissions representative and another

school official also signed the agreement.

2. At the time the parties signed the underlying agreement,

the “Commercial Arbitration Rules with Supplementary Procedures

for Consumer-Related Disputes” governed consumer arbitration

disputes. The “Supplementary Procedures for Consumer-Related

Disputes” provided that the “AAA’s most current rules will be used

when the arbitration is started.” In 2014, the AAA replaced the

“Supplementary Procedures for Consumer-Related Disputes” with

“Consumer Arbitration Rules.” The consumer rules contain the same

jurisdiction clause as the commercial rules.

40a

Appendix D

On September 28, 2009, Mr. Pinkerton began

attending classes. Almost six months later, he requested

to switch from the school’s 100-week aviation maintenance

technical engineer program to a shorter 80-week aviation

technician program. The enrollment agreement he signed

for the aviation technician program was dated March 24,

2010, and contained a change in the credit hours required

for graduation, the cost of books per semester, the total

length of the program, and the estimated total student

cost per quarter. Otherwise, the enrollment agreement

for the aviation technician program included the same

information as the enrollment agreement for the aviation

maintenance technical engineer program as well as the

same arbitration agreement. 3

In 2011, Mr. Pinkerton graduated from the school as

the valedictorian of the night program. Having fulfilled

the graduation requirements, he received a certificate

of aviation maintenance, which entitled him to take the

federal aviation administration examinations to become

an airline mechanic. He took both required examinations

and received his temporary airman certificate from the

federal aviation administration in 2012. Despite having

obtained his certification, Mr. Pinkerton alleges he cannot

find employment in the aviation field.

In 2014, Mr. Pinkerton filed a lawsuit against the school,

Mr. Rothrock, and the school’s owner, W. Gerald Yagen,

alleging the school engaged in fraud, misrepresentation,

3. Because the two enrollment agreements contained the same

arbitration agreement, they will be referred to as the singular

“enrollment agreement” throughout the remainder of the opinion.

41a

Appendix D

and deception related to the school’s graduation and job

placement rates, starting salaries, and the costs and

benefits of its educational programs. The lawsuit included

claims for violations of the Missouri Merchandising

Practices Act, fraudulent misrepresentation, negligent

misrepresentation, money had and received, and unjust

enrichment.

The school moved to dismiss, or in the alternative,

to compel arbitration and stay the proceedings, citing

the arbitration agreement in the enrollment agreement

requiring Mr. Pinkerton to arbitrate “any controversy,

claim or dispute.” The school further contended the

arbitration agreement delegated threshold arbitrability

disputes, such as whether an arbitration clause is

enforceable or its applicability to the dispute at issue, to

the arbitrator by incorporating by reference the AAA’s

jurisdictional rule into the arbitration agreement. The

school requested the circuit court enforce this delegation

provision if Mr. Pinkerton challenged the arbitration

agreement. The school also filed a motion to stay discovery

and all other pending pretrial proceedings.

In response, Mr. Pinkerton filed his preliminary

opposition to the school’s motion to compel arbitration

and the school’s motion to stay discovery. Mr. Pinkerton

argued the threshold issue of the existence of an

enforceable arbitration agreement cannot be delegated

to an arbitrator but, instead, is always a decision for the

court. He also filed a motion to stay briefing and ruling

on the motion to compel arbitration until the parties could

conduct discovery related to the arbitration agreement.

42a

Appendix D

The circuit court sustained Mr. Pinkerton’s motion to stay

briefing and ruling on the motion to compel arbitration and

allowed the parties 90 days to conduct discovery limited to

“the issue of whether an arbitration contract was formed

and the scope of any arbitration contract.”

The school subsequently renewed its motion to

compel arbitration, contending Mr. Pinkerton had not

specifically challenged the delegation provision but

challenged only the arbitration agreement as a whole. In

response, Mr. Pinkerton argued he had challenged the

existence of the delegation provision by challenging the

existence of any arbitration agreement — including any

agreement to delegate issues of arbitrability — in his

preliminary opposition. Mr. Pinkerton also contended,

for the first time, that the delegation provision was not

clearly and unmistakably incorporated into the arbitration

agreement, that both the arbitration agreement and the

delegation provision lacked consideration, and that the

delegation provision was unconscionable.

After conducting a hearing on the matter, the circuit

court sustained the school’s motion to compel arbitration.4

The circuit court concluded the delegation provision was

enforceable because Mr. Pinkerton did not challenge the

delegation provision specifically. The circuit court further

held the provision provided for delegation of the gateway

question of whether the parties agreed to arbitrate and,

therefore, the issue of whether the arbitration agreement

4. In accordance with section 435.355.4, RSMo 2000, the circuit

court denied the school’s motion to dismiss and held the case was

properly stayed.

43a

Appendix D

was unconscionable is left to the arbitrator per the clear

and unmistakable intent of the parties expressed by the

incorporation of the AAA rules into the agreement.

Mr. Pinkerton petitions this Court for a writ of

mandamus or prohibition, requesting the Court order

the circuit court to overrule the school’s motion to compel

arbitration or, in the alternative, order the circuit court

to enforce discovery and allow Mr. Pinkerton to file

additional opposition to the school’s motion to compel

arbitration. This Court issued a preliminary writ of

prohibition. Mo. Const. art. V, sec. 4.

Standard of Review

This Court has the authority to “issue and determine

original remedial writs.” Id. Writs of prohibition or

mandamus are appropriate mechanisms to challenge

whether a motion to compel arbitration was improperly

sustained. State ex rel. Hewitt v. Kerr, 461 S.W.3d 798,

805 (Mo. banc 2015); see also State ex rel. Union Pac.

R.R. Co. v. David, 331 S.W.3d 666, 666 (Mo. banc 2011).

This Court reviews de novo the legal issue of “[w]hether

a valid, enforceable arbitration agreement exists.” Union

Pac., 331 S.W.3d at 667.

Analysis

Mr. Pinkerton contends the circuit court erred in

sustaining the school’s motion to compel arbitration. He

asserts the school’s incorporation of the AAA commercial

rules into the arbitration agreement did not “clearly and

44a

Appendix D

unmistakably” express the parties’ intent to delegate

threshold issues of arbitrability to an arbitrator. He

further contends the circuit court improperly ordered

arbitration because only a court, not an arbitrator, can

decide whether an arbitration agreement was formed.

Lastly, Mr. Pinkerton argues the circuit court erred in

finding he did not specifically challenge the delegation

provision’s validity and enforceability.

The Delegation Provision

The circuit court determined the arbitration agreement

contained an enforceable delegation provision delegating

issues of arbitrability to the arbitrator. Mr. Pinkerton

contends his signature on the enrollment agreement

was not evidence he agreed to delegate threshold issues

of arbitrability to the arbitrator because the delegation

provision was not included as part of the arbitration

agreement but was instead incorporated by reference to

the AAA commercial rules. Mr. Pinkerton argues that

incorporating a delegation provision by reference does not

meet the “clear and unmistakable” standard required to

show the parties intended an arbitrator to decide issues

of arbitrability.

Generally, any silence or ambiguity “concerning the

scope of arbitrable issues should be resolved in favor of

arbitration.” Mitsubishi Motors Corp. v. Soler ChryslerPlymouth, Inc., 473 U.S. 614, 626, 105 S. Ct. 3346, 87 L.

Ed. 2d 444 (1985) (internal quotation omitted). Issues will,

therefore, typically “be deemed arbitrable unless it is clear

that the arbitration clause has not included them.” First

45a

Appendix D

Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 945, 115 S.

Ct. 1920, 131 L. Ed. 2d 985 (1995) (internal quotations

omitted). This has been referred to as the “presumption of

arbitrability.” Granite Rock Co. v. Int’l Bhd. of Teamsters,

561 U.S. 287, 300, 130 S. Ct. 2847, 177 L. Ed. 2d 567 (2010).

This presumption of arbitrability, however, is reversed

when considering whether a court or an arbitrator should

decide threshold questions of arbitrability. First Options,

514 U.S. at 944-45. Disputes about arbitrability include

those “questions such as whether the parties are bound by

a given arbitration clause, or whether an arbitration clause

in a concededly binding contract applies to a particular

type of controversy.” BG Grp. PLC v. Republic of Arg.,

134 S. Ct. 1198, 1206, 188 L. Ed. 2d 220 (2014) (internal

quotations omitted). Disputes over the formation of the

parties’ arbitration agreement and its enforceability or

applicability to the dispute at issue have been considered

threshold issues of arbitrability. Id. at 1206-07. When

considering whether parties have intended to delegate

threshold questions of arbitrability to an arbitrator,

“[c]ourts should not assume that the parties agreed

to arbitrate arbitrability unless there is clea[r] and

unmistakabl[e] evidence that they did so.” Rent-A-Ctr., W.,

Inc. v. Jackson, 561 U.S. 63, 69 n.1, 130 S. Ct. 2772, 177 L.

Ed. 2d 403 (2010) (internal quotation omitted) (alteration

in original). This “‘clear and unmistakable’ requirement

. . . pertains to the parties’ manifestation of intent” that

issues of arbitrability be decided by the arbitrator instead

of the court. Id. at 69 n.1 (emphasis omitted).

46a

Appendix D

The United States Supreme Court has addressed

why different standards are necessary when considering

“whether a particular merits-related dispute is arbitrable”

versus “who (primarily) should decide arbitrability.” First

Options, 514 U.S. at 944-45 (emphasis omitted). The

Supreme Court explained:

[T]his difference in treatment [between

whether a particular merits-related dispute

is arbitrable or who (primarily) should decide

arbitrability] is understandable. The latter

question arises when the parties have a contract

that provides for arbitration of some issues. In

such circumstances, the parties likely gave at

least some thought to the scope of arbitration.

And given the law’s permissive policies in

respect to arbitration, one can understand

why the law would insist upon clarity before

concluding that the parties did not want to

arbitrate a related matter. On the other hand,

the former question — the who (primarily)

should decide arbitrability question — is

rather arcane. A party often might not focus

upon that question or upon the significance of

having arbitrators decide the scope of their own

powers. And, given the principle that a party

can be forced to arbitrate only those issues it

specifically has agreed to submit to arbitration,

one can understand why courts might hesitate

to interpret silence or ambiguity on the “who

should decide arbitrability” point as giving

the arbitrators that power, for doing so might

47a

Appendix D

too often force unwilling parties to arbitrate a

matter they reasonably would have thought a

judge, not an arbitrator, would decide.

Id. at 945 (internal quotations and citations omitted)

(emphasis omitted).

Mr. Pinkerton interprets the “clear and unmistakable”

standard to prohibit the delegation provision from being

incorporated by reference into an arbitration agreement.

He contends that no clear and unmistakable evidence

exists of the parties’ mutual assent to the delegation

provision unless the delegation provision is expressly

written into an arbitration agreement. Mr. Pinkerton

incorrectly assumes that a contract is silent or ambiguous

about who should decide arbitrability if the delegation

provision is incorporated into an arbitration agreement

by reference.

While the Supreme Court has referred to the

“clear and unmistakable” standard as a “heightened

standard,” First Options explains it is “heightened”

insofar as it is a higher standard than the “presumption

of arbitrability” standard applied when interpreting

“silence” or “ambiguity” related to the scope of arbitration

provisions. Rent-A-Ctr., 561 U.S. at 69 n.1. The Supreme

Court has not held the “clear and unmistakable” standard

is heightened in relation to generally applicable principles

of contract interpretation.

Interpretation of a written contract is a question of

law. Webbe v. Keel, 369 S.W.3d 755, 756 (Mo. App. 2012).

48a

Appendix D

In Missouri, “the primary rule of contract interpretation

is that courts seek to determine the parties’ intent and

give effect to it.” Chochorowski v. Home Depot U.S.A.,

404 S.W.3d 220, 226 (Mo. banc 2013). “The intention of

the parties is to be gleaned from the four corners of the

contract.” L.A.C. ex rel. D.C. v. Ward Parkway Shopping

Ctr. Co., 75 S.W.3d 247, 260 (Mo. banc 2002). Each clause

“must be read in the context of the entire contract, and

interpretations that render provisions meaningless should

be avoided.” McGuire v. Lindsay, 496 S.W.3d 599, 607

(Mo. App. 2016). This Court determines the parties’ intent

as “expressed by the plain and ordinary meaning of the

language of the contract.” Chochorowski, 404 S.W.3d

at 226. “When the language of a contract is clear and

unambiguous, the intent of the parties will be gathered

from the contract alone, and a court will not resort to a

construction where the intent of the parties is expressed

in clear and unambiguous language.” Id. at 226-27. “It

is only where the contract is ambiguous and not clear

that resort to extrinsic evidence is proper to resolve the

ambiguity.” J. E. Hathman, Inc. v. Sigma Alpha Epsilon

Club, 491 S.W.2d 261, 264 (Mo. banc 1973).

M i s sou r i f u r t her r e cog n i z e s t hat “ m at t er s

incorporated into a contract by reference are as much

a part of the contract as if they had been set out in the

contract in haec verba.” Dunn Indus. Grp., Inc. v. City

of Sugar Creek, 112 S.W.3d 421, 435 n.5 (Mo. banc 2003).

Generally, “[t]erms not explicit in a contract may be

incorporated into the contract by reference” so long as

the “intent to incorporate [is] clear.” Hewitt, 461 S.W.3d

at 810-11. “To incorporate terms from another document,

49a

Appendix D

the contract must make [] clear reference to the document

and describe[] it in such terms that its identity may be

ascertained beyond a doubt.” Id. Parties may, therefore,

“incorporate contractual terms by reference to a separate,

noncontemporaneous document, including a separate

agreement to which they are not parties, including a

separate document which is unsigned.” Intertel, Inc. v.

Sedgwick Claims Mgmt. Servs., 204 S.W.3d 183, 196 (Mo.

App. 2006). There is no requirement that an incorporated

document be attached to the contract or provided to the

parties prior to the execution of the contract.

Here, the parties’ arbitration agreement specifically

references the AAA’s commercial arbitration rules.

At the time Mr. Pinkerton signed the enrollment

agreement, the AAA’s “Commercial Arbitration Rules

with Supplementary Procedures for Consumer-Related

Disputes” governed all consumer arbitration disputes. The

reference to the AAA’s commercial rules in the arbitration

agreement was not a mere passing reference to these

rules; instead, it was a clear reference to an identifiable,

ascertainable set of rules. Such a reference establishes

the parties’ intent to incorporate the AAA commercial

arbitration rules into the enrollment agreement.

This finding is consistent with most federal circuit

courts, which have concluded arbitration agreements

containing similar language were sufficient to incorporate

by reference the delegation provision in the AAA rules.

For example, arbitration agreements stating disputes

will be “settled by,” “conducted by,” and “determined by”

arbitration “in accordance with” specific rules containing

50a

Appendix D

a delegation provision have been held to have “clearly and

unmistakably” incorporated the delegation provision into

the arbitration agreement. Brennan v. Opus Bank, 796

F.3d 1125, 1129 (9th Cir. 2015) (“settled by”); Petrofac,

Inc. v. DynMcDermott Petroleum Operations Co., 687

F.3d 671, 674 (5th Cir. 2012) (“conducted by”); Fallo v.

High — Tech Inst., 559 F.3d 874, 877-78 (8th Cir. 2009)

(“settled by”); Qualcomm Inc. v. Nokia Corp., 466 F.3d

1366, 1373 (Fed. Cir. 2006) (“settled by”); Terminix Int’l

Co. v. Palmer Ranch LP, 432 F.3d 1327, 1332 (11th Cir.

2005) (“conducted”); Contec Corp. v. Remote Solution

Co., 398 F.3d 205, 208 (2d Cir. 2005) (“determined by”). 5

5. Only the Tenth Circuit has held an arbitration agreement

that specifically referenced the AAA commercial arbitration rules

did not clearly and unmistakably delegate “whether an arbitration

agreement exists or what the scope of the agreement is” to an

arbitrator. Riley Mfg. Co., Inc. v. Anchor Glass Container Corp., 157

F.3d 775, 780 (10th Cir. 1998). Riley, however, was decided before

Rent-A-Center and did not consider whether the AAA commercial

arbitration rules were incorporated by reference into the arbitration

agreement. Instead, the Tenth Circuit held that, although the

arbitration clause in the contract was broadly written, there was

“no hint in the text of the clause or elsewhere in the contract that

the parties expressed a specific intent to submit to an arbitrator the

question whether an agreement to arbitrate exists or remained in

existence after the Settlement Agreement.” Id. at 780. Accordingly,

it is unclear whether the parties raised the issue of incorporation

of the AAA rules’ delegation provision. See also Quilloin v. Tenet

HealthSystem Phila., Inc., 673 F.3d 221, 229-30 (3d Cir. 2012)

(not discussing whether the contract’s incorporation of the AAA

rules required delegation of threshold issues of arbitrability to an

arbitrator).

51a

Appendix D

The dissenting opinion attempts to differentiate

these federal cases on the basis that all but one involved

sophisticated parties, not a mere consumer such as

Mr. Pinkerton.6 But in doing so, the dissenting opinion

ignores longstanding Missouri contract principles and,

instead, advocates for adoption of a standard that would

have far-reaching consequences beyond interpretation of

arbitration agreements.

6. The dissenting opinion relies on 50 Plus Pharmacy v. Choice

Pharmacy Systems, LLC, 463 S.W.3d 457 (Mo. App. 2015), and Dolly

v. Concorde Career Colleges, Inc., 2017 Mo. App. LEXIS 988, 2017

WL 4363863 (Mo. App. Oct. 3, 2017), for the proposition that a mere

reference to the AAA commercial rules does not establish the parties

clearly and unmistakable intended to delegate threshold issues of

arbitrability. But 50 Plus Pharmacy is factually distinguishable in

that: (1) the contract at issue specifically stated the parties consented

to litigate any disputes arising out of the contract in courts located

in Missouri and did not contain an arbitration provision; and (2)

although the agreement containing the arbitration agreement

was incorporated into the contract by reference, the arbitration

agreement related to the narrow topic of escrow claims, which were

not at issue in the case. 463 S.W.3d at 461. Moreover, the court of

appeals in Dolly disregarded the arbitration provision’s reference

to the AAA rules by reasoning that although “the language in

the relevant AAA Rules might be clear and unmistakable, that

language is not recited in the agreement signed by the Students.”

2017 Mo. App. LEXIS 988, 2017 WL 4363863, at *3. Such an analysis

ignores the principle that “matters incorporated into a contract by

reference are as much a part of the contract as if they had been set

out in the contract in haec verba.” Dunn Indus. Grp., 112 S.W.3d

at 435 n.5. Accordingly, to the extent 50 Plus Pharmacy and Dolly

hold that incorporation by reference of the AAA rules is insufficient

to establish the parties intended to delegate threshold issues of

arbitrability, they should no longer be followed.

52a

Appendix D

The dissenting opinion asserts whether Mr. Pinkerton

intended to incorporate the AAA rules is a factual question

that should be put to the parties’ proof. But for purposes

of contract interpretation, the intent of the parties is a

question of law to be determined from the four corners of

the contract. Whelan Sec. Co. v. Kennebrew, 379 S.W.3d

835, 846 (Mo. banc 2012). It is only when an ambiguity

arises and cannot be resolved within the four corners of

the contract that “the parties’ intent can be determined

by use of parol evidence.” Id. Only then does the parties’

intent become “a factual issue to be resolved by the finder

of fact.” Id.

The dissenting opinion recognizes these principles

but contends this Court must look at the “context” of an

agreement — including who signed it and the nature of the

agreement — to determine ambiguity. More specifically,

the dissenting opinion asserts that the unsophisticated

nature of a party is key to the determination of

ambiguity and that “when a consumer contract purports

to incorporate by reference another writing, the court

should determine whether the parties actually know and

understand the provisions to be included.”

But the dissenting opinion is mischaracterizing the

general proposition that “ambiguity depends on context”

to conclude “context” means consideration of the parties’

circumstances and whether they actually know and

understand the incorporated provision. Such a subjective

standard is not what this Court means by considering the

“context” of an agreement. Rather, “context” means the

reading of the agreement as a whole to determine whether

53a

Appendix D

an ambiguity exists. J. E. Hathman, 491 S.W.2d at 264; see

also Purcell Tire & Rubber Co., v. Exec. Beechcraft, Inc.,

59 S.W.3d 505, 510 (Mo. banc 2001) (“Contract language

is not interpreted in a vacuum, but by reference to the

contract as a whole.”).

Furthermore, while the dissenting opinion cites to

cases that mention the sophistication of the parties, such

cases do not support the subjective “context” standard

advocated for by the dissenting opinion. Instead, such

cases address specific contract provisions or clauses —

such as exculpatory clauses, indemnity clauses, forum

selection clauses, and jury trial waivers — that impose

additional requirements for a specific provision or clause

to be enforceable.

For instance, in addressing exculpatory and indemnity

clauses, this Court held limitations or shifts of liability in

contracts are enforceable if the exculpatory or indemnity

clause contains clear, unambiguous, unmistakable, and

conspicuous language. Alack v. Vic Tanny Intern. of

Mo., Inc., 923 S.W.2d 330, 337-38 (Mo. banc 1996). In

determining the clause’s enforceability, this Court did

not consider parol evidence as to the parties’ subjective

intent regarding the clause. Instead, the Court required

the clause to include specific terms like “‘negligence’ or

‘fault’ or their equivalents” that would conspicuously shift

the liability. Id. at 337. This Court subsequently held that

requirement does not govern contracts when the parties

are both sophisticated businesses. Purcell Tire, 59 S.W.3d

at 509. But again, the parties’ subjective intent was not

examined. This Court simply recognized: “Sophisticated

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Appendix D

businesses that negotiate at arm’s length may limit

liability without specifically mentioning ‘negligence,’

‘fault,’ or an equivalent.” Id. “Sophisticated parties have

freedom of contract — even to make a bad bargain, or to

relinquish fundamental rights.” Id. at 508.

Similarly, in High Life Sales Co. v. Brown-Forman

Corp., 823 S.W.2d 493, 497 (Mo. banc 1992), this Court

adopted the majority rule that forum selection clauses

will be enforced, so long as doing so is neither unfair

or unreasonable. In considering whether to enforce the

forum selection clause, this Court considered whether

“the contract was entered into under circumstances that

caused it to be adhesive” — that is, a contract “in which

the parties have unequal standing in terms of bargaining

power.” Id. There was no consideration of whether the

parties subjectively understood the forum selection clause.

Id. Instead, this Court reasoned “the important factor is

that the contract terms were generally arrived at under

circumstances that cannot be described as ‘adhesive.’” Id.

Finally, in Malan Realty Investors, Inc. v. Harris, 953

S.W.2d 624, 627 (Mo. banc 1997), this Court held that the

parties’ waiver of a right to a jury trial must be knowing

and voluntary. But in doing so, this Court recognized

that “more than contract law is involved.” Id. And while

the Court acknowledged “[t]he real concern with every

case decision has been the relative bargaining powers of

the parties,” the analysis focused primarily on whether

the written agreement contained “clear, unambiguous,

unmistakable, and conspicuous language” such that a

knowing and voluntary waiver of the right to a jury trial

was evident. Id.

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Appendix D

It follows that none of the cases considering the

sophistication of the parties addresses arbitration

agreements, and each case presents an exception to

general principles of contract law. The United States

Supreme Court has held arbitration can be limited only

by application of principles of general contract law, AT&T

Mobility LLC v. Concepcion, 563 U.S. 333, 339, 131 S. Ct.

1740, 179 L. Ed. 2d 742 (2011), so this Court cannot make

a rule specifically applicable to arbitration delegation

clauses.

The dissenting opinion also relies on several federal

district court cases — all from the Ninth Circuit — and

a few state cases. This is because Missouri courts have

never considered the sophistication of the contractual

parties in determining the parties’ intent with respect to

arbitration agreements. Rather, Missouri courts apply

the longstanding principle that a party’s failure to read

or understand the terms of a contract is not a defense to

enforcement of those terms. Robinson v. Title Lenders,

Inc., 364 S.W.3d 505, 509 n.4 (Mo. banc 2012). Missouri

contract law, therefore, generally does not support

differential treatment for consumers for purposes of

contract interpretation.

Finally, were this Court to adopt the dissenting

opinion’s approach, its impact would extend beyond

interpretation of arbitration agreements. Arbitration

agreements are placed “on an equal footing with other

contracts, and courts will examine arbitration agreements

in the same light as they would examine any contractual

agreement.” Triarch Indus., Inc. v. Crabtree, 158 S.W.3d

56a

Appendix D

772, 776 (Mo. banc 2005). Therefore, this Court would

have to consider the parties’ sophistication in determining

intent in all contracts.

Applying Missouri’s general contract principles to

this case, Mr. Pinkerton agreed the AAA commercial

arbitration rules, which include a delegation provision,

would govern arbitration disputes. By clearly referencing

the A A A commercial arbitration rules, the parties

expressed their intent to arbitrate any dispute under these

rules, including the AAA’s “jurisdiction” rule providing

that the “[a]rbitrator 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.” Accordingly, the delegation provision clearly

and unmistakably evidences the parties’ intent to delegate

threshold issues of arbitrability to the arbitrator.7

7. The dissenting opinion argues that finding the parties

incorporated the AAA commercial arbitration rules by reference

conflicts with this Court’s analysis in Hewitt, 461 S.W.3d at 811.

Hewitt, however, is factually distinguishable from the present case.

In Hewitt, an employment agreement contained an arbitration

provision that incorporated the NFL’s constitution and bylaws, which

gave the commissioner complete authority to arbitrate and stated

the commissioner shall, from time to time, establish procedures

and policies with respect to the constitution and bylaws. Id. at 810.

The constitution and bylaws did not reference the NFL dispute

resolution guidelines. Id. Nevertheless, the trial court found the

NFL dispute resolution guidelines governed the arbitration process.

Id. This Court held the guidelines did not meet the requirements

for incorporation by reference because the guidelines were not a

separate, non-contemporaneous document described in terms such

that their identity could be ascertained beyond a doubt. Id. at 811.

Unlike the guidelines in Hewitt, the AAA commercial arbitration

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Enforceability of the Delegation Provision

Upon finding the parties clearly and unmistakably

intended to delegate threshold issues to the arbitrator,

the circuit court concluded the delegation provision was

enforceable and compelled arbitration. Mr. Pinkerton

asserts the circuit court erroneously compelled arbitration

because state and federal arbitration law require the

circuit court to adjudicate the threshold question of

whether an arbitration agreement was formed. But such

an argument ignores the nature of his challenges to the

arbitration agreement, the severability of the delegation

provision, and his failure to specifically challenge the

enforceability of such provision.

First, Mr. Pinkerton contends threshold issues of the

formation of an arbitration agreement cannot be delegated

to an arbitrator. Under the Federal Arbitration Act

(FAA), 8 arbitration is solely a matter of contract. AT & T

rules were specifically referenced in the enrollment agreement.

Because the enrollment agreement specifically identified the rules,

which Mr. Pinkerton could have ascertained beyond a doubt, there

was no lack of certainty as to the arbitration terms referenced by

the enrollment agreement.

8. Neither party contests that the FAA governs the arbitration

agreement in the enrollment agreement. 9 U.S.C. §§ 1-16 (2006).

The FAA governs the validity, irrevocability, and enforcement of

agreements to arbitrate in contracts “evidencing a transaction

involving commerce.” 9 U.S.C. § 2. Because the school is a Virginiabased corporation operating aviation maintenance schools throughout

the United States, its enrollment agreement with Mr. Pinkerton is a

contract falling within the purview of the FAA. 9 U.S.C. § 1 (defining

commerce as “commerce among the several States”).

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Appendix D

Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643,

648, 106 S. Ct. 1415, 89 L. Ed. 2d 648 (1986). Accordingly,

“arbitrators derive their authority to resolve disputes only

because the parties have agreed in advance to submit

such grievances to arbitration.” Id. Parties “cannot be

required to submit to arbitration any dispute which he [or

she] has not agreed so to submit.” Id. (internal quotations

omitted). Therefore, because arbitration “is a matter of

consent, not coercion,” Stolt-Nielsen S.A. v. AnimalFeeds

Int’l Corp., 559 U.S. 662, 681, 130 S. Ct. 1758, 176 L. Ed. 2d

605 (2010), 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. Granite Rock, 561 U.S. at

299; Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S.

440, 444 n.1, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006).

Questions concerning whether an arbitration agreement

was ever concluded are, therefore, “generally nonarbitral

question[s].” Granite Rock, 561 U.S. at 296-97.

Nevertheless, Mr. Pinkerton does not challenge

whether the arbitration agreement was formed or

concluded. Instead, Mr. Pinkerton challenges the

conscionability of such arbitration agreement. While this

Court has held unconscionability is a state law defense to

contract formation, see Brewer v. Mo. Title Loans, 364

S.W.3d 486, 493 (Mo. banc 2012), conscionability is not an

essential element of contract formation. As recognized

by the Supreme Court, unconscionability is a “generally

applicable contract defense[]” like fraud and duress. RentA-Ctr., 561 U.S. at 68. As such, while unconscionability is a

defense to contract formation and, therefore, a contract’s

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Appendix D

validity and enforceability, Eaton v. CMH Homes, Inc.,

461 S.W.3d 426, 432 (Mo. banc 2015), it is not an issue

of whether a contract has ever been “concluded.” 9 See

Buckeye, 546 U.S. at 444 n.1.

Mr. Pinkerton’s mischaracterization of the issue

of unconscionability as a formation issue rather than

enforceability has no impact on the resolution of this

case, however, because both issues of formation and

enforceability of arbitration clauses can be delegated to

an arbitrator. Mr. Pinkerton does not cite any case law

prohibiting issues of formation from being delegated to

the arbitrator. Mr. Pinkerton relies on Baker v. Bristol

Care, Inc., 450 S.W.3d 770 (Mo. banc 2014), for the

proposition that formation issues can never be delegated

to an arbitrator. In Baker, this Court held a delegation

provision that provided the “arbitrator [would] resolve

disputes ‘relating to the applicability or enforceability’

of the agreement” did not delegate issues of contract

formation to the arbitrator. Id. at 774. Baker, however,

does not state that issues related to contract formation

can never be delegated to an arbitrator but only that

the delegation provision at issue in Baker was limited to

issues of “applicability” or “enforceability.” In contrast,

the delegation provision at issue here is broader than in

Baker. It delegates to the arbitrator “the power to rule

on his or her own jurisdiction, including any objections

with respect to the existence, scope, or validity of the

9. Issues as to whether a contract has been “concluded” include

whether: a contract was signed by the obligor, a signor lacked

authority to sign a contract to commit a principal, or a signor lacked

the mental capacity to sign a contract. Buckeye, 546 U.S. at 444 n.1.

60a

Appendix D

arbitration agreement or to the arbitrability of any claim

or counterclaim.”

Mr. Pinkerton also cites Jimenez v. Cintas Corp.,

475 S.W.3d 679, 683-84 (Mo. App. 2015), Hopwood v.

CitiFinancial, Inc., 429 S.W.3d 425, 427 (Mo. App. 2014),

and Bellemere v. Cable-Dahmer Chevrolet, Inc., 423

S.W.3d 267, 273 (Mo. App. 2013), for the proposition that

courts cannot delegate formation issues to an arbitrator.

These cases, however, involved no discussion of a

delegation provision and, therefore, are distinguishable

from the present case. Consequently, the circuit court

did not err in concluding the challenges raised by Mr.

Pinkerton could be delegated to an arbitrator.

Mr. Pinkerton further asserts the circuit court

erroneously concluded the delegation provision was

enforceable. As the circuit court reasoned, however, the

delegation provision is a severable, antecedent agreement

to arbitrate threshold issues Mr. Pinkerton failed to

specifically challenge.

The FAA provides:

A written provision in . . . a contract evidencing

a transaction involving commerce to settle by

arbitration a controversy thereafter arising out

of such contract . . . shall be valid, irrevocable,

and enforceable, save upon such grounds as

exist at law or in equity for the revocation of

any contract.

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Appendix D

9 U.S.C. § 2. “The FA A thereby places arbitration

agreements on an equal footing with other contracts, and

requires courts to enforce them according to their terms.”

Rent-A-Ctr., 561 U.S. at 67 (internal citation omitted). But

similar to other contracts, arbitration agreements “may be

invalidated by generally applicable contract defenses, such

as fraud, duress, or unconscionability.” Id. at 68 (internal

quotation omitted).

To invalidate an arbitration agreement a specific

challenge must be made to the arbitration agreement,

not to the contract as a whole. Ellis v. JF Enters., LLC,

482 S.W.3d 417, 423-24 (Mo. banc 2016). This “is because

§ 2 [of the FAA] states that a ‘written provision’ ‘to settle

by arbitration a controversy’ is ‘valid, irrevocable, and

enforceable’ without mention of the validity of the contract

in which it is contained.” Rent-A-Ctr., 561 U.S. at 67

(emphasis omitted). Arbitration agreements, therefore,

are severable. Ellis, 482 S.W.3d at 419. “This means that

they are to be considered separate and apart from any

underlying or contemporaneously related agreement.” Id.

It is under this framework that the Supreme Court

determined a delegation provision is an additional,

severable agreement to arbitrate threshold issues that is

valid and enforceable unless a specific challenge is levied

against the delegation provision. Rent-A-Ctr., 561 U.S.

at 71. In Rent-A-Center, the defendant sought to compel

arbitration. Id. at 65. The plaintiff asserted the arbitration

agreement, as a whole, was unenforceable because it

was unconscionable under state law. Id. at 66. In finding

the controversy was subject to arbitration, the Supreme

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Appendix D

Court focused on the delegation provision. Id. at 68-69.

The Supreme Court explained: “The delegation provision

is an agreement to arbitrate threshold issues concerning

the arbitration agreement.” Id. at 68. “An agreement

to arbitrate a gateway issue is simply an additional,

antecedent agreement the party seeking arbitration

asks the . . . court to enforce, and the FAA operates on

this additional arbitration agreement just as it does on

any other.” Id. at 70. Such delegation provisions are valid

under section 2 of the FAA “save upon such grounds as

exist at law or in equity for the revocation of any contract.”

Id. (internal quotation omitted). Therefore, unless the

plaintiff “challenged the delegation provision specifically,

[the Supreme Court] must treat it as valid under § 2, and

must enforce it under §§ 3 and 4, leaving any challenge

to the validity of the [a]greement as a whole for the

arbitrator.” Id. at 72. The Supreme Court then concluded

the defendant was seeking to enforce the delegation

provision and the plaintiff challenged the arbitration

agreement as a whole and not the delegation provision

specifically. Id. The delegation provision, therefore, was

enforceable, and the gateway issues of arbitrability were

delegated to the arbitrator. Id.

Similarly, in seeking to compel arbitration, the

school sought enforcement of the incorporated delegation

provision. The delegation provision, as an additional,

antecedent agreement to arbitrate threshold issues, is

valid and enforceable under the FAA unless specifically

challenged by Mr. Pinkerton.

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Appendix D

The only specific challenge Mr. Pinkerton raised

before the circuit court as to the enforceability of the

delegation provision was his contention the delegation

provision was unconscionable on the sole ground that “[i]t

would be unconscionable to delegate such a determination

[of unconscionability] to a person with a direct financial

interest in the outcome.” Such a contention, however, is

defeated by the Supreme Court’s holding in Rent-A-Center

that issues of unconscionability can be delegated to an

arbitrator. 561 U.S. at 73-74. Mr. Pinkerton’s challenge

to the delegation provision, therefore, is without merit.

Although Mr. Pinkerton now claims, on appeal, he

raised other challenges to the validity or enforcement

of the delegation clause separate from his challenges

to the arbitration agreement as a whole, he did not. Mr.

Pinkerton’s various challenges were to the arbitration

agreement as a whole. For example, Mr. Pinkerton asserted

“there was no meeting of the minds as to the arbitration

clause” because “its terms are incomprehensible.” Mr.

Pinkerton also asserted the “print of the arbitration

clause is too small as to be virtually unreadable” and the

“arbitration clause is, both on its face and in practice, a

model of unconscionability.” While a party may challenge

a delegation provision by arguing “common procedures

as applied to the delegation provision rendered that

provision unconscionable,” id. at 74 (emphasis omitted),

Mr. Pinkerton did not direct his challenges specifically

to the delegation provision. Instead, he argued the

“incomprehensible” terms and the print rendered the

entire arbitration clause invalid and the entire arbitration

clause was unconscionable. These are challenges to the

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Appendix D

arbitration agreement as a whole, not to the delegation

provision specifically.

Additionally, Mr. Pinkerton asserts the arbitration

agreement is unconscionable because the “clause purports

to require the parties to share arbitration expenses

equally, in contravention of even the AAA’s own express

rules requiring the business in any consumer dispute

. . . to bear substantially all arbitration costs.” Mr.

Pinkerton contends this conflict between the fee sharing

provision in the arbitration agreement and the AAA’s rules

makes the entire “clause” unconscionable. This too is not

a specific challenge to the delegation provision.10

Mr. Pinkerton also asserts the arbitration clause

“facially and in practice unilaterally imposes arbitration

on only one party — the student” and “no student

has ever . . . been allowed to opt out of the arbitration

provision.” Because both the school and Mr. Pinkerton

are required to submit threshold questions of arbitrability

to the arbitrator, these challenges could only refer to

the arbitration provision defining the scope of arbitrable

claims. Likewise, Mr. Pinkerton contended that this

10. Moreover, Mr. Pinkerton did not raise this specific challenge

in his pleadings before the circuit court. In his opposition to the

defendants’ motion to stay the circuit court’s September 8 order,

Mr. Pinkerton lists the general factors of unconscionability, stating:

“Each of these factors supports a finding of unconscionability with

regard to the arbitration agreements and delegation provisions

utilized by Defendants in their Enrollment Agreements.” No specific

challenge to the fee sharing provision of the arbitration agreement

was made in his pleadings before the circuit court. See Rule 84.13(a).

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Appendix D

“arbitration clause is facially incomprehensible as to

what claims would be covered by it” and, specifically,

whether “the arbitration clause . . . applies to a claim

by a student against [the school] for fraud.” Again, such

contentions apply only to the arbitration provision that

defines the scope of claims that are arbitrable. Similarly,

Mr. Pinkerton’s contention that “the clause purports to

limit students’ remedies” also refers only to the arbitration

of specific disputes arising out of “student admission,

enrollment, financial obligations and status as a student”

and not the arbitration of threshold issues of arbitrability.

Accordingly, none of these challenges are directed

specifically to the delegation provision.11

Although Mr. Pinkerton challenges the validity of

the arbitration agreement as a whole, his only specific

challenge to the delegation agreement — that it was

unconscionable to delegate formation issues to an

arbitrator — is without merit, and he did not otherwise

direct any specific challenges to the delegation provision.12

11. In his brief before this Court, Mr. Pinkerton also references

arguments from his reply in support of his motion to stay briefing

and his sur-reply in opposition to the defendants’ motion to stay

discovery. The circuit court overruled Mr. Pinkerton’s motion for

leave to file these documents; therefore, these arguments were not

before the circuit court. Following the school’s renewed motion to

compel arbitration, Mr. Pinkerton filed opposition to the school’s

motion and had an opportunity to raise these additional arguments

in the circuit court.

12. The dissenting opinion contends the record clearly shows

Mr. Pinkerton specifically challenged the delegation provision and

points to a motion he filed stating in capital letters that he “disputes

the existence and enforceability of any agreement to delegate issues

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Appendix D

This Court must, therefore, treat the delegation provision

“as valid under § 2 [of the FAA], and must enforce it under

§§ 3 and 4, leaving any challenge to the validity of the [a]

greement as a whole,” or to other provisions within the

arbitration agreement, “for the arbitrator.” Id. at 72.

The circuit court, therefore, did not err in ordering the

parties to arbitrate threshold issues of arbitrability. The

preliminary writ of prohibition is quashed, and the case

shall proceed to arbitration.

Conclusion

The arbitration agreement clearly and unmistakably

evidences the parties’ intent to delegate threshold issues

of arbitrability to the arbitrator. Because Mr. Pinkerton’s

only specific challenge to the delegation provision — that

it would be unconscionable to delegate a determination

of unconscionability to a person with a direct financial

interest in the outcome — is without merit, the delegation

provision is valid and enforceable under the FAA. The

circuit court, therefore, properly sustained the school’s

motion to compel arbitration, staying the case and ordering

the parties to proceed to arbitration. The preliminary writ

is quashed.13

of arbitrability to an arbitrator.” What the dissenting opinion ignores

is that Mr. Pinkerton then proceeded to challenge the arbitration

agreement as a whole. Again, a delegation provision is a severable

agreement that is enforceable unless a specific challenge is levied

against the provision. Rent-A-Ctr., 561 U.S. at 71. Therefore, despite

his contentions to the contrary, Mr. Pinkerton failed to levy a direct

challenge to the delegation provision.

13. In the alternative, Mr. Pinkerton seeks a writ of mandamus

requiring the circuit court to enforce discovery and allow him to file

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Appendix D

/s/

Patricia Breckenridge, Judge

Fischer, C.J., Wilson and Russell, JJ., concur;

Stith, J., dissents in separate opinion filed;

Draper, J., concurs in opinion of Stith, J.

Powell, J., not participating.

additional opposition to the school’s motion to compel arbitration.

In support of his alternative theory, Mr. Pinkerton asserts: “If this

Court finds the record is not yet sufficient to deny the motions to

compel arbitration, [he] should be afforded the remainder of the

arbitration-related discovery he seeks, and an opportunity to adduce

all the relevant evidence and his arguments.” Because this Court

does not find the record to be insufficient, this Court rejects Mr.

Pinkerton’s alternative grounds for a writ of mandamus.

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Appendix D

DISSENTING OPINION

I dissent.

The United States Supreme Court has held, “When

deciding whether the parties agreed to arbitrate a

certain matter (including arbitrability), courts generally

... should apply ordinary state-law principles that govern

the formation of contracts.” First Options of Chi., Inc.

v. Kaplan, 514 U.S. 938, 944, 115 S. Ct. 1920, 131 L.

Ed. 2d 985 (1995). But the Supreme Court added an

important qualification “applicable when courts decide

whether a party has agreed that arbitrators should

decide arbitrability: Courts should not assume that the

parties agreed to arbitrate arbitrability unless there is

‘clea[r] and unmistakabl[e]’ evidence that they did so.”

Id. (emphasis added); accord Rent-A-Ctr., W., Inc. v.

Jackson, 561 U.S. 63, 68, 130 S. Ct. 2772, 177 L. Ed. 2d

403 (2010). Therefore, the record must provide “clear and

unmistakable” evidence the parties intended to delegate

questions of arbitrability to the arbitrator.

The majority fails to give meaning to this high

standard of proof when it holds “clear and unmistakable”

evidence of such intent is irrebuttably provided based

solely on the fact Mr. Pinkerton signed a contract

referencing the American Arbitration Association’s rules

of arbitration and one of the unattached commercial AAA

rules at that time delegated issues of arbitrability to an

arbitrator. Regardless of whether this is a valid conclusion

for commercial or sophisticated parties — as numerous

federal courts have held — Mr. Pinkerton undeniably is

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Appendix D

an unsophisticated consumer, and only one of the cases

on which the majority relies involved an unsophisticated

party.

Despite the majority’s refusal to so recognize,

Missouri historically has required greater specificity and

protection for consumer contracts purporting to waive the

consumer’s litigation rights — including the right to jury

trial, forum selection clauses, and waiver of negligence

clauses — than it has for such provisions in a contract

between sophisticated parties. Rather than presuming

the consumer understands the contract, the courts look

to the record to determine whether the waiver is valid on

a case-by-case basis.

Applying these principles here, it is error to find

the contract’s mere incorporation of the unattached

and undescribed AAA rules would have unambiguously

signaled to an unsophisticated consumer that an

arbitrator rather than a judge would determine whether

the arbitration provision itself was valid. The contract’s

reference to the AAA rules is but one fact among many the

courts must consider in determining the factual issue of

whether the parties “clearly and unmistakably” intended

to delegate the arbitrability issue to the arbitrator.

THE CONTRACT DID NOT UNAMBIGUOUSLY

DELEGAT E T H E IS SU E OF CON T R AC T

FORMATION TO THE ARBITRATOR

I agree with the majority that the intention of the

parties as to the meaning of a contract becomes a factual

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Appendix D

issue requiring a court to resort to parol evidence only

when an ambiguity arises and “cannot be resolved within

the four corners of the contract.” Whelan Sec. Co. v.

Kennebrew, 379 S.W.3d 835, 846 (Mo. banc 2012). When

the contract is ambiguous, however, the law is well-settled

that the issue of intent is a factual question as to which

parol evidence is admissible. Id.

While Missouri law provides that matters incorporated

by reference into a contract “are as much a part of the

contract as if they had been set out in the contract,”

Dunn Indus. Grp., Inc. v. City of Sugar Creek, 112

S.W.3d 421, 435 n.5 (Mo. banc 2003) (citations omitted),

Missouri law also is well-settled that “[m]ere reference”

to another agreement in the primary contract “is

insufficient to establish that [a party] bound itself to the”

other agreement, id. at 436. The party must specifically

incorporate by reference the secondary agreement to be

bound to it by contract principles. Id. at 436 n.5. Parties

can incorporate a separate document only if “the contract

makes clear reference to the document and describes it

in such terms that its identity may be ascertained beyond

doubt.” Intertel, Inc. v. Sedgwick Claims Mgmt. Servs.,

Inc., 204 S.W.3d 183, 196 (Mo. App. 2006).

This Court recently applied these rules in the

arbitration context in State ex rel. Hewitt v. Kerr, 461

S.W.3d 798, 811 (Mo. banc 2015). Hewitt held a vague or

indefinite incorporation by reference of arbitration rules

may make the contract ambiguous, and in such a case

the contract will be construed against the drafter. Id.

In Hewitt, the employment contract said it incorporated

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Appendix D

“Rules and Regulations of the National Football League.”

Id. at 803. Those rules in turn incorporated arbitration

guidelines of the NFL. Id. at 804. This Court concluded

the guidelines nonetheless were not binding on Mr.

Hewitt because the “guidelines were not referenced in

Mr. Hewitt’s employment contract, nor were they clearly

referenced in the constitution and bylaws. ... Th[e contract]

reference does not identify the guidelines in such a way

that Mr. Hewitt could ascertain them beyond doubt.” Id.

at 811. Hewitt continued:

At best, under the terms of the constitution

and bylaws, Mr. Hewitt agreed to arbitrate by

undefined terms that the commissioner would

establish. But these terms also lack certainty;

Mr. Hewitt had no way to identify these

terms and had no way to know that the NFL

intended the guidelines to govern arbitration

proceedings. Given the ambiguity of any terms

actually referenced, Mr. Hewitt could not

assent to them.

Moreover, Mr. Hewitt did not bear the burden

to seek out an unknown document not clearly

identified in his employment contract or the

constitution and bylaws. Though the NFL and

the Rams may have intended to incorporate

the guidelines into the constitution and bylaws

and the employment contract, respectively, it

is a well-settled rule that “[i]f ambiguous, [a

contract] will be construed against the drafter.”

Triarch Indus., Inc. v. Crabtree, 158 S.W.3d

72a

Appendix D

772, 776 (Mo. banc 2005). The Rams had the

burden to incorporate the terms in such a way

that Mr. Hewitt could manifest his consent.

Having failed to do so, Mr. Hewitt did not

assent to the essential terms of arbitration

found in the guidelines.

Id. (emphasis added).

While the majority says that no Missouri arbitration

case has looked at the context of an agreement to arbitrate

in determining its ambiguity, Hewitt did just that. In

determining whether the contract was ambiguous,

Hewitt did not merely note that the Rams contract said it

incorporated another matter and conclude this fact alone

unambiguously made the incorporated matter a part

of the contract. Instead, it looked at the terms, looked

at the rules incorporated, determined the incorporated

rules were not clear as to where to find the guidelines

they in turn incorporated, and determined the contract,

therefore, was ambiguous and must be interpreted against

the drafter. Id.

Even more directly on point is 50 Plus Pharmacy v.

Choice Pharmacy Systems, LLC, 463 S.W.3d 457 (Mo.

App. 2015). Missouri law long has provided, “Whether a

dispute is covered by an arbitration clause is relegated

to the courts as a matter of law and is to be determined

from the contract entered into by the parties.” Greenwood

v. Sherfield, 895 S.W.2d 169, 174 (Mo. App. 1995). 50 Plus

Pharmacy recognized “there is a significant difference

between the question of who should decide arbitrability

73a

Appendix D

versus whether arbitration should be compelled.” 463

S.W.3d at 460. While “the latter question ... operates

under a [presumption of arbitrability], the former ...

operates under a principle wherein the law reverses

the presumption.” Id. (citations omitted). In Missouri,

therefore, “unless the parties clearly and unmistakably

provide otherwise, the question of whether the parties

agreed to arbitrate is to be decided by the court, not the

arbitrator.” Id. at 461 (citations omitted).

The Missouri Court of Appeals recently followed 50

Plus Pharmacy in Dolly v. Concorde Career Colleges,

Inc., 2017 Mo. App. LEXIS 988, 2017 WL 4363863, at *3

(Mo. App. Oct. 3, 2017). Dolly involved a dispute over an

arbitration provision in an enrollment agreement between

a small college and its students. 2017 Mo. App. LEXIS

988, [WL] at *1. The enrollment agreement incorporated

the AAA rules by reference, and the college argued this

was sufficient evidence of the parties’ intent to delegate

arbitrability of their dispute to the arbitrator. 2017 Mo. App.

LEXIS 988, [WL] at *2. The appellate court disagreed,

however, noting, “While parties may agree to arbitrate ...

questions of arbitrability ... that would normally be for the

court[,] there must be clear and unmistakable evidence

of such [an] agreement.” Id. (internal quotations omitted).

The appellate court specified that, “While the language in

the relevant AAA Rules might be clear and unmistakable,

that language is not recited in the agreement signed by

the Students” and a “general reference to the AAA Rules

in an arbitration provision is not sufficient to establish

an agreement to delegate [arbitrability].” 2017 Mo. App.

LEXIS 988, [WL] at *3.

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The question of who the parties are and what parties

in their situation would understand the contract to mean

also has been recognized by other states in determining

whether a delegation clause in an arbitration agreement

is ambiguous. As the Supreme Court of Kentucky noted

in Dixon v. Daymar Colleges Group, LLC, 483 S.W.3d 332

(Ky. 2015), “when a party raises a good-faith [formation]

challenge to [an] arbitration agreement itself, that issue

must be resolved before a court can say that [the party]

clearly and unmistakably intended to arbitrate that very

validity question.” Id. at 342, quoting, Rent-A-Center, 561

U.S. at 82 (Stevens, J., dissenting). In Dixon, a group of

students argued an arbitration provision was not binding

on them “because their signature was physically inscribed

before the arbitration provision ... itself.” Id.

While Dixon conceded “the delegation provision was

clear,” it noted “the language of the delegation provision

is largely beside the point.” Id. Instead, the decision

confirmed “a trial court is tasked with determining

whether there exists a ‘valid, binding arbitration

agreement’ before it may order a case to arbitration.” Id.

at 341, quoting, JPMorgan Chase Bank, N.A. v. Bluegrass

Powerboats, 424 S.W.3d 902, 907 (Ky. 2014). Dixon found

language that incorporated subsequent amendments

inadequate to include the arbitration provision after the

signature line on the reverse side of the page. 483 S.W.3d

at 346; see also Walker v. Builddirect.Com Techs. Inc.,

2015 OK 30, 349 P.3d 549, 551 (Okla. 2015) (reciting general

incorporation rules requiring “a contract must make clear

reference to the extrinsic document to be incorporated,

describe it in such terms that its identity and location

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may be ascertained beyond doubt, and the parties to the

agreement [must have] had knowledge of and assented to

the incorporated provisions”).

The majority does not formally disagree with these

principles. But these principles are inconsistent with the

majority’s determination that the mere incorporation

of AAA rules is inherently unambiguous. To so hold is

error. The majority is required to look at the contract

as a whole, including who signed it and the nature of

the contract, and of the matters incorporated, before it

can determine whether incorporation of the AAA rules

“clearly and unmistakably” informed an unsophisticated

party such as Mr. Pinkerton that he was delegating to

an arbitrator the right to determine the validity of the

arbitration clause itself.

In particular, the majority is required to consider

the fact that this is a contract between a sophisticated

business entity and a consumer. The majority suggests

Missouri law just does not allow it to consider this fact

unless it first finds the contract ambiguous, even though

it is consideration of the unsophisticated nature of the

plaintiff that is key to the determination of ambiguity

in the first instance. Indeed, the majority even concedes

Missouri does consider the sophistication of the parties

when considering the validity of a waiver of the right to sue

the other party for their own negligence. But, it says, that

is an isolated exception, not relevant here. The majority

is wrong on all counts.

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Many Missouri cases, addressing a wide variety

of issues and in a myriad of contexts, have stated that

the sophistication of the parties properly is considered

in determining an agreement’s meaning and validity.

These cases are part of a long history of Missouri cases

recognizing that cases involving the giving up by an

unsophisticated party of a litigation right requires more

exacting scrutiny and consideration of the unsophisticated

nature of the signer in determining whether a contract is

unambiguous.

50 Plus Pharmacy specifically recognized “a general

reference to ‘the then Existing Commercial Arbitration

Rules of the American Arbitration Association[’] ... [is] not

the sort [of express delegation] addressed or contemplated

by the Rent-A-Center court as dictating delegation of

the gateway matter of the question of arbitrability to the

arbitrator.” 463 S.W.3d at 461. This is, of course, the very

question at issue in this case, and the same result should

be reached. Similarly, Dolly held mere reference to the

AAA rules “does not constitute ‘clear and unmistakable’

evidence of delegation to an arbitrator of disputes

relating to formation and enforceability of the arbitration

provision.” 2017 Mo. App. LEXIS 988, 2017 WL 4363863,

at *3.

Perhaps the most well-known decision about whether

the sophistication of the party determines the validity

of the waiver is Purcell Tire & Rubber Co. v. Executive

Beechcraft, Inc., 59 S.W.3d 505 (Mo. banc 2001). This

Court was tasked with determining whether an ambiguity

existed in a contract between two “sophisticated

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businesses, experienced in th[e] type of transaction.” Id.

at 510-11. In holding there was no ambiguity in the liability

waiver at issue, this Court specifically held “[a]mbiguity

depends on context” and “[l]anguage that is ambiguous

to an unsophisticated party may not be ambiguous to a

sophisticated commercial entity.” Id. at 510, citing, Alack

v. Vic Tanny Int’l of Mo., Inc., 923 S.W.2d 330, 338 n.4

(Mo. banc 1996) (emphasis added). It was only because

of the contract’s “commercial context,” that Purcell held

there was no ambiguity, repeatedly citing the fact the

parties were “sophisticated businesses” in each instance.

59 S.W.3d at 509-11.

The majority incorrectly suggests these cases have

no application here and just mean more specific language

must be used in to waive the seller’s negligence. This

misses the point. The reason more specific language

must be used is that an unsophisticated purchaser would

not understand the more general language was intended

to waive negligence unless that fact were spelled out

in the contract. The analogy is exact. Unsophisticated

persons such as Mr. Pinkerton would not understand that

incorporation of the AAA rules meant that an arbitrator

would decide issues of arbitrability unless that fact were

spelled out in the contract.

Moreover, Purcell’s recognition of the importance of

whether a party is sophisticated is not, as the majority

would suggest, an isolated instance. The principle the

majority adopts — that a provision that would be clear to a

sophisticated party may not be clear to an unsophisticated

one — has been applied time and again to attempts to

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get an unsophisticated consumer to contract to waive the

right to sue for negligence.14 Furthermore, the principle

14. In addition to Purcell, numerous other Missouri cases have

followed the same rationale in the context of liability waivers. See

Village of Big Lake v. BNSF Ry. Co., 433 S.W.3d 460, 468 (Mo. App.

2014) (“It is [] clear that a different standard applies to determine

whether general exculpatory clauses or indemnity clauses can cover

claims of future negligence depending on whether the parties to the

contract are sophisticated businesses, experienced in this type of

transaction.”) (citations omitted); National Info. Solutions, Inc. v.

Cord Moving & Storage Co., 475 S.W.3d 690, 692 (Mo. App. 2015)

(“In general, for a party to effectively release itself from or limit

liability for its own negligence, the language of the contract must be

clear, unequivocal, conspicuous and include the word ‘negligence’ or

its equivalent. But less precise language may be effective when the

contract is negotiated at arm’s-length between equally sophisticated

commercial entities.”) (citations omitted); Lone Star Indus., Inc.

v. Howell Trucking, Inc., 199 S.W.3d 900, 903 n.2 (Mo. App. 2006)

(“[C]ourts have drawn a distinction between contracts with

consumers and contracts between businesses of equal power and

sophistication.”); Caballero v. Stafford, 202 S.W.3d 683, 696 n.2 (Mo.

App. 2006) (“We do not ignore the principal [sic] that less precise

language may be effective in agreements negotiated at arms length

between equally sophisticated commercial entities.”); Milligan v.

Chesterfield Vill. GP, LLC, 239 S.W.3d 613, 616 n.3 (Mo. App. 2007)

(“Sophisticated businesses that negotiate at arm’s length may limit

liability without specifically mentioning ‘negligence,’ ‘fault,’ or an

equivalent.”); Easley v. Gray Wolf Invs., LLC, 340 S.W.3d 269,

273 (Mo. App. 2011) (finding it “significant[]” that “the evidence

established that [Appellant] was a relatively sophisticated party

contracting at arm’s length with [Respondent]”); Monsanto Co. v.

Gould Elecs., Inc., 965 S.W.2d 314, 316-17 (Mo. App. 1998) (“Here,

[Respondent] and [Appellant] are sophisticated commercial entities.

[Respondent] agreed to indemnify [Appellant] from ‘any and all

liabilities ....’ Such terms clearly and unequivocally provide for

[Respondent] to indemnify [Appellant] against any and all claims.”).

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on which these cases are founded — that “ambiguity

depends on context” and the sophistication of the parties

— was stated by Purcell as a general concept, and this

Court has recognized it as such. For example, Utility

Service & Maintenance, Inc. v. Noranda Aluminum,

Inc., 163 S.W.3d 910, 913 (Mo. banc 2005), a case involving

an indemnity provision in a contract between two

“sophisticated commercial entities,” said Missouri “has

[and continues to] draw[] a distinction between contracts

with consumers and contracts between businesses of equal

power and sophistication.” Id., citing, Alack, 923 S.W.2d

at 338 n.4.

Similarly, numerous other Missouri cases have applied

the principle that ambiguity depends on context and the

sophistication of the consumer to other types of contract

provisions that attempt to limit an unsophisticated party’s

rights. Importantly, this Court applied these principles to

a contract purporting to waive the right to jury trial in

Malan Realty Investors, Inc. v. Harris, 953 S.W.2d 624

(Mo. banc 1997), stating the fundamental right to “a jury

trial may be waived by contract .... However ... [there is

a] real concern [in such situations regarding] the relative

bargaining powers of the parties.” Id. at 627. To determine

the validity of a jury trial waiver, Malan took into account

several factors, including the “disparity in bargaining

power between the parties [and] the business acumen of

the party opposing the waiver.” Id.

Various federal courts similarly have applied Purcell’s

analysis and principles, considering the sophistication of

the parties in deciding whether fundamental rights may

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be contractually waived. See, e.g., Lift Truck Lease &

Serv., Inc. v. Nissan Forklift Corp., N. Am., 2013 U.S.

Dist. LEXIS 85183, 2013 WL 3092115, at *2 (E.D. Mo.

June 18, 2013) (“In Missouri, sophisticated parties may

contract to relinquish fundamental rights[.]”); Sports

Capital Holdings (St. Louis), LLC v. Schindler Elevator

Corp. & Kone, 2014 U.S. Dist. LEXIS 49624, 2014 WL

1400159, at *2 (E.D. Mo. Apr. 10, 2014) (involving a dispute

over an elevator maintenance contract and noting, “It is

well-settled in Missouri that ‘[s]ophisticated parties have

freedom of contract — even to make a bad bargain, or to

relinquish fundamental rights’”).

This Court has recognized the importance of the

sophistication of the parties in considering the validity of

a forum selection clause as well. In High Life Sales Co. v.

Brown-Forman Corp., 823 S.W.2d 493 (Mo. banc 1992),

this Court noted, “Many courts have refused to enforce

a forum selection clause on the grounds of unfairness if

the contract was entered into under circumstances that

caused it to be adhesive.” Id. at 497 (citations omitted).

Based on this premise, this Court held the forum selection

agreement “was not unfair [because] it was between two

substantial and successful companies, drafted and agreed

upon by their respective counsel following give-and-take

negotiations on various provisions.” Id.

Missouri cases similarly have considered the

sophistication of the parties in determining the validity

of the terms of a lease waiver provision in Halls Ferry

Investments, Inc. v. Smith, 985 S.W.2d 848, 853 (Mo. App.

1998), stating, “While the lease failed to state that no

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such obligation existed, an ambiguity cannot be created

by silence, especially when both parties are sophisticated

bargainers.” Likewise, Missouri courts have “long ...

held that an ambiguity [in a contract generally] cannot

be created by silence, especially when both parties are

sophisticated bargainers.” Morelock-Ross Properties, Inc.

v. English Vill. Not-for-Profit Sewer Corp., 308 S.W.3d 275,

280 (Mo. App. 2010) (determining a contract for sewage

collection services between sophisticated parties could

not be rendered ambiguous on the grounds it failed to

expressly mention how certain fees should be collected)

(citations and quotations omitted).

These cases are not merely “exceptions” that

can be ignored in determining the meaning of the

arbitration clause. They are the rule in cases involving

the validity under Missouri law of a waiver of rights by an

unsophisticated consumer. When dealing with a contract

in which the parties have such unequal bargaining power,

the principle set out in Purcell that “ambiguity depends

on context” and the sophistication of the party is not an

exception to the general rule regarding interpretation,

applicable (for some unexplained reason) only in the case

of waivers of the right to sue for negligence. Indeed, it

would make no sense to allow consideration of a party’s

sophistication in that context but no other. Rather,

these are established principles of Missouri contract

law, applicable to the many kinds of waivers of litigation

rights contained in contracts between sophisticated and

unsophisticated parties.

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For these reasons, when, as here, the issue is the

validity of an unsophisticated consumer’s waiver of

litigation rights, Missouri’s consistent rule has been to

consider the lack of sophistication of one of the parties in

determining how that party would interpret the waiver.

This is the only way to treat an arbitration clause the same

as other contract clauses are treated under Missouri law,

which the majority concedes is required by the Federal

Arbitration Act (FAA). The waiver of the right to have a

judge determine the issue of arbitrability, like the a waiver

of the right to sue for negligence, the right to jury trial,

and the right to select one’s forum, should be considered

“in context” and in light of the relative sophistication of

the parties. Indeed, it must be considered in the same way

as are other comparable contractual waivers in Missouri.

See Rent-A-Ctr., 561 U.S. at 68; Brewer v. Mo. Title Loans,

364 S.W.3d 486, 497 (Mo. banc 2012) (arbitration provisions

are required to be treated the same as, and subject to the

same defenses as, other contract provisions).

The majority does not cite any contrary Missouri

cases. Instead, it relies on a number of United States

court of appeals cases. While most of those cases do hold

incorporation of the AAA rules unambiguously waives the

right to have a court determine arbitrability, those cases

do not govern here for numerous reasons.

First, the FAA leaves the question of who should

decide contract formation issues to the parties to

determine by contract; it does not require that these

issues be delegated to the arbitrator. Second, as noted

earlier, the FAA requires arbitration clauses be treated

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Appendix D

the same as other comparable contract provisions in the

state. Rent-A-Ctr., 561 U.S. at 68-69. In this case, that

means the arbitration clause should be governed by the

same principles of incorporation by reference, context, and

the sophistication of the consumer as are other contractual

waiver provisions, for these are general principles of

Missouri contract law. For that reason, it does not matter if

under federal law the AAA incorporation provision would

be considered unambiguous; this is a matter of state law.

See State v. Storey, 901 S.W.2d 886, 900 (Mo. banc 1995)

(federal interpretation of Missouri law is not binding on

Missouri courts); Brewer, 364 S.W.3d at 492 (“[Federal

law] permits state courts to apply state law defenses to

the formation for the particular contract at issue on a

case-by-case basis.”).

Third, and even more importantly, all of the federal

cases addressing delegation of the arbitrability issue by

incorporation of the AAA rules except Fallo v. HighTech Institute, 559 F.3d 874 (8th Cir. 2009), involve a

sophisticated business entity or executive.15 As noted in

Brennan v. Opus Bank, 796 F.3d 1125, 1130-31 (9th Cir.

2015), the rest of these federal cases simply do not address

15. See Petrofac, Inc. v. DynMcDermott Petroleum Operations

Co., 687 F.3d 671, 673-74 (5th Cir. 2012) (dispute between a

subcontracting corporation against the general contractor company);

Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1368 (Fed. Cir.

2006) (patent infringement dispute between telecommunication

corporations); Terminix Int’l Co. v. Palmer Ranch Ltd. P’ship, 432

F.3d 1327, 1329 (11th Cir. 2005) (dispute between limited partnerships

arising from 20 extermination service contracts); Contec Corp. v.

Remote Solution Co., 398 F.3d 205, 207 (2d Cir. 2005) (indemnification

dispute between electronics corporations).

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whether delegation by incorporation would apply in a

consumer case or one involving an unsophisticated party.

Neither do any of these cases suggest the FAA requires

them to find that incorporation of the AAA rules is

sufficient to delegate the issue of arbitrability. Delegation

of arbitrability is simply an inference they have drawn

in the sophisticated business transactions presented to

them. Id. Brennan said it would apply such a presumption

to the sophisticated entities in that case, but it expressly

left unresolved the question of whether “incorporation

of the A A A rules can be clear and unmistakable

evidence of delegation of arbitrarily where one party is

an unsophisticated consumer.” Ingalls v. Spotify USA,

Inc., 2016 U.S. Dist. LEXIS 157384, 2016 WL 6679561, at

*3 (N.D. Cal. Nov. 14, 2016); see also Quilloin v. Tenet

HealthSystem Phila., Inc., 673 F.3d 221 (3d Cir. 2012)

(refusing to find delegation of questions of arbitrability in

case in which contract said AAA rules governed).

The unsophisticated consumer issue has been directly

determined in numerous district court cases in the

Ninth Circuit. Even prior to Brennan, the district court

in Tompkins v. 23andMe, Inc., 2014 U.S. Dist. LEXIS

88068, 2014 WL 2903752, at *11 (N.D. Cal. June 25, 2014),

held incorporation by reference of the AAA rules is just

one factor in determining whether the parties intended

to delegate the arbitrability decision to the arbitrator.

Tompkins concluded “incorporation of the AAA rules

does not necessarily amount to ‘clear and unmistakable’

evidence of delegation, particularly when the party asked

to accept the agreement is a consumer.” Id. The court

subsequently refused to extend the presumption used in

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cases between sophisticated commercial parties to cases

involving consumers if the arbitration agreement itself

“lacks an express delegation provision on its face, so a

consumer would have to look up the AAA rules to find

[the delegation provision].”16 Id.

Since Brennan, “Every district court decision in [the

Ninth Circuit] to address the question ... has [followed

the Tompkins approach and] held that incorporation of

the AAA rules was insufficient to establish delegation in

consumer contracts involving at least one unsophisticated

party.” Ingalls, 2016 U.S. Dist. LEXIS 157384, 2016 WL

6679561, at *3; Money Mailer, LLC v. Brewer, 2016 U.S.

Dist. LEXIS 47928, 2016 WL 1393492, at *2 (W.D. Wash.

Apr. 8, 2016); Galilea, LLC v. AGCS Marine Ins. Co., 2016

U.S. Dist. LEXIS 45866, 2016 WL 1328920, at *3 (D. Mont.

Apr. 5, 2016); Vargas v. Delivery Outsourcing, LLC, 2016

U.S. Dist. LEXIS 32634, 2016 WL 946112, at *8 (N.D. Cal.

Mar. 14, 2016); Aviles v. Quik Pick Express, LLC, 2015

U.S. Dist. LEXIS 174960, 2015 WL 9810998, at *6 (C.D.

Cal. Dec. 3, 2015); Meadows v. Dickey’s Barbecue Rests.,

Inc., 144 F. Supp. 3d 1069, 1078 (N.D. Cal. 2015).

For example, in Meadows, after noting “an inquiry

about whether the parties clearly and unmistakably

delegated arbitrability by incorporation should first

16. While the court in Zenelaj v. Handybook Inc., 82 F. Supp.

3d 968, 974 (N.D. Cal. 2015), said Tompkins did not base its holding

on the fact it was a consumer case, Tompkins certainly treated the

matter as a fact question requiring consideration of the consumer’s

lack of sophistication and bargaining power. Prior to Brennan,

however, the Zenelaj decision had caused a circuit split on this issue.

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consider the position of those parties,” the court concluded

it is “much less reasonable” to find “‘clear and unmistakable’

evidence of delegation” for an “inexperienced individual,

untrained in the law,” such as a restaurant franchisee,

than it is for “a large corporation ... or a sophisticated

attorney.” 144 F. Supp. 3d at 1078.

Similarly, in Aviles, a truck driver filed suit against

the defendant trucking company, which moved to

compel arbitration. 2015 U.S. Dist. LEXIS 174960, 2015

WL 9810998, at *1. Even though the plaintiff was “an

independent contractor who operates his own trucking

business,” the court deemed him an unsophisticated party

because he was “untrained in the law” and it was “doubtful

that [he] actually understood the import of [the bolded

delegation clause’s] terms.” 2015 U.S. Dist. LEXIS 174960,

[WL] at *6. Based on the plaintiff’s unsophisticated status,

the court found there could not be clear and unmistakable

intent to delegate. Id.

Again, in Vargas, an “unsophisticated luggage

delivery driver” signed an arbitration agreement that

included a delegation provision incorporating the AAA

rules “without an opportunity to review the documents or

consult with an attorney.” 2016 U.S. Dist. LEXIS 32634,

2016 WL 946112, at *8. The court found the plaintiff’s

status as an “unsophisticated” party to be dispositive

and held the delegation clause to be invalid because

“incorporation of AAA’s rules does not evidence a ‘clear

and unmistakable’ intent to delegate disputes involving

unsophisticated employees.” 2016 U.S. Dist. LEXIS 32634,

[WL] at *7.

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In Galilea, the court held the plaintiffs, who had

formed an LLC for the purpose of owning a boat, were

“individual[s] not well-versed in arbitration law” and,

therefore, “unlikely to be aware that the AAA rules provide

for the arbitrator to determine his own jurisdiction.” 2016

U.S. Dist. LEXIS 45866, 2016 WL 1328920, at *3. The

court itself then determined arbitrability because the

plaintiffs were not “sophisticated part[ies] for [arbitration]

purposes.” Id.

Finally, in Money Mailer, the court held incorporation

of the AAA rules did not “show a ‘clear and unmistakable’

intent to delegate questions of arbitrability” when the

bound party was a “small business owner ... [with] no

legal experience.” 2016 U.S. Dist. LEXIS 47928, 2016 WL

1393492, at *2.

The middle district of Alabama in Palmer v. Infosys

Technologies Ltd., Inc., 832 F.Supp.2d 1341 (M.D. Ala.

2013), similarly refused to hold mere incorporation of

the AAA rules into an arbitration provision constitutes a

clear and unmistakable agreement to delegate the issue

of arbitrability. This is particularly true when the relevant

state law provides such issues are to be resolved by the

court, as Palmer found was the case in California and as

is the case in Missouri for the reasons already noted in

cases involving unsophisticated consumers. Id. at 1344.

The single United States court of appeals case on which

the majority relies involving a consumer, Fallo, simply

assumed the incorporation rule applied in the consumer

context before it, without recognizing the cases it relied

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on were commercial cases. 559 F.3d at 878-79. Further,

while Fallo says it affirmed delegation of arbitrability to

the arbitrator, it then proceeded to interpret delegation as

including only the question of what claims were subject to

arbitration, for it went on to consider the merits of Fallo’s

unconscionability challenge rather than leaving that issue

to the arbitrator. Id. Fallo has been further limited by

the Eighth Circuit’s decision in Nebraska Machinery

Co. v. Cargotec Solutions, LLC, 762 F.3d 737, 741 n.2 (8th

Cir. 2014), which said the question of the existence of an

agreement to arbitrate is for the court.

Far more persuasive is the decision by the Montana

Supreme Court in Global Client Solutions v. Ossello, 2016

MT 50, 382 Mont. 345, 367 P.3d 361 (Mont. 2016), that, like

the federal district court cases just discussed, rejected

the idea there is a “‘general rule’ that incorporation of

the AAA rules into an arbitration clause constitutes an

agreement to arbitrate arbitrability.” Id. at 369. Noting

the only cases finding otherwise “almost exclusively

involve[d] arbitration disputes between sophisticated

parties in commercial settings,” Ossello refused to find

the parties had agreed to arbitrate arbitrability, noting

“the AAA rules [were] not part of the record and neither

the DAA nor [the creditor’s] arguments specify which of

the multiple sets of commercial or consumer AAA rules

[were] supposedly incorporated [into the contract].” Id.

While here, as the majority notes, attorneys for both

parties located the relevant AAA rules and attached them

to their motions, the question is not what sophisticated

legal minds can figure out today about the AAA rules but

rather what a student such as Mr. Pinkerton understood

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at the time. As in Ossello, the AAA rules were neither

attached nor explained at the only time that is relevant

in determining Mr. Pinkerton’s intent.

In Morgan v. Sanford Brown Institute, 225 N.J. 289,

137 A.3d 1168 (N.J. 2016), the Supreme Court of New

Jersey held an arbitration delegation provision in an

enrollment agreement between student-plaintiffs and a

college that said it was to be administered according to

AAA rules was unenforceable because it “did not clearly

and unmistakably” show intent to “delegate arbitrability.”

Id. 1182. The contract in question was written “in ninepoint font” and included a “more than 750-word arbitration

clause set forth in thirty-five unbroken lines.” Id. at 1181.

The court noted, “The meaning of arbitration is not selfevident to the average consumer.” Id. at 1180. It concluded,

therefore, that such a provision could not be enforceable

unless it “explain[ed] in some broad or general way that

arbitration is a substitute for the right to seek relief in

our court system.” Id. at 1179.

The majority just waves off these cases by saying

they are not consistent with Missouri law. But for all of

the reasons already discussed, they are indeed consistent

with Missouri law’s recognition that the sophistication of

the signer affects the determination whether a contract

waiver is ambiguous. It is the majority that is incorrectly

treating an arbitration clause differently than it treats

other contractual attempts to waive the litigation rights

of an unsophisticated consumer.

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Under these settled principles of Missouri law, while

a consumer signing a student enrollment form including

an arbitration agreement may understand the right to sue

over certain types of claims in court are being waived,

that does not apprise the student that the validity of the

waiver itself will be determined by the arbitrator rather

than by a court. Just as Purcell and the other cited cases

recognized that use of general language about waivers

might be insufficient in a consumer context involving an

unsophisticated party, so here use of general incorporation

by reference language should not be sufficient to constitute

irrebuttable proof of an intent to delegate arbitrability.

Indeed, the concerns expressed in those cases have even

greater application because the United States Supreme

Court has held the party seeking to require arbitration

has the burden of proving by “clear and unmistakable”

evidence that the other party intended to delegate

arbitrability to the arbitrator.

At a minimum, this is a question of fact that

should be put to the parties’ proof, not decided by an

irrebuttable presumption. As Alack stated, “our law on

such an important point cannot be so out of step with the

understanding of our citizens.” 923 S.W.2d at 337. This

Court should recognize a generally applicable principle

of Missouri contract law that when a consumer contract

purports to incorporate by reference another writing, the

court should determine whether the parties actually know

and understand the provisions to be included.

Applying these principles here, Mr. Pinkerton was a

young, non-college educated student who was trying to

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go to school to learn how to repair aircraft engines. The

school he attended is a large for-profit corporation. The

school did not provide Mr. Pinkerton with a copy of the

AAA rules. Nothing in the contract explains the content

of the AAA rules even generally, nor does the contract

explain where and how to find them. The contract does

not explain that, while the referenced rules were called

“commercial” rules at that time, they nonetheless applied

to consumers like Mr. Pinkerton and precluded him

from having a court decide whether the agreement or

the delegation provision was enforceable or binding. An

average consumer might well presume the rules are simply

that: rules governing the procedural aspects of arbitration,

not “rules” that actually take away the consumer’s rights.

Certainly nothing in the contract mentioned delegation of

arbitration decisions to an arbitrator. It is not surprising

that both Mr. Pinkerton and the school’s agent testified

they had no idea what the AAA rules contained and no

idea what they required the arbitrator or the court to

decide. Neither said they understood the rules delegated

to an arbitrator the arbitrability issue itself.

On these facts, a trial court certainly could find Mr.

Pinkerton did not “clearly and unmistakably” intend to

delegate arbitrability to an arbitrator. This Court should

remand the case for a factual determination whether

Mr. Pinkerton actually knew and understood what the

provisions of the AAA rules were, where he could find

them, and whether, as a matter of fact, he clearly and

unmistakably showed an intent to delegate arbitrability

issues to an arbitrator.

92a

Appendix D

II. M R . P I N K E R T O N S P E C I F I C A L L Y

CHALLENGED THE DELEGATION PROVISION

The majority notes the Supreme Court has held that to

challenge the delegation of arbitrability, a party has to have

challenged the provision specifically. The majority then

states Mr. Pinkerton failed to do so in the trial court.17 The

latter statement is factually incorrect. The record clearly

shows Mr. Pinkerton argued — in opposition to the motion

to refer the matter to arbitration — that the arbitration

agreement, including the delegation clause, was invalid.

Indeed, in his suggestions in opposition to the defendant’s

renewed motion to compel arbitration, in response to the

school’s claim he had not raised the issue specifically, Mr.

Pinkerton used capital letters for emphasis in stating he

did raise the issue and repeated he “disputes the existence

and enforceability of any agreement to delegate issues

of arbitrability to an arbitrator.” He similarly argues in

this Court that the putative delegation provision does

“not delegate any threshold issues to an arbitrator.” This

issue was preserved.

17. The Supreme Court recognizes two types of challenges

to the validity of arbitration: “One type challenges specifically the

validity of the agreement to arbitrate. ... The other challenges the

contract as a whole ....” Buckeye Check Cashing, Inc. v. Cardegna, 546

U.S. 440, 444, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006). A challenge

to a delegation provision within an arbitration agreement must be

made to that provision specifically as distinct from a challenge to

the arbitration agreement as a whole. Rent-A-Ctr., 561 U.S. at 70-72.

93a

Appendix D

III. U NCONSCIONA BI LI T Y IS A CON T R ACT

FORMATION ISSUE

While the majority recognizes “this Court has held

that unconscionability is a state law defense to contract

formation,” the majority nonetheless unnecessarily creates

uncertainty by suggesting it is not sure why this is the

case because “conscionability is not an essential element

of contract formation. As such, while unconscionability is

a defense to contract formation and, therefore, a contract’s

validity and enforceability, it is not an issue of whether a

contract has ever been concluded.” Slip op. at *20 (citations

and quotation omitted).

This dicta in

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