Appendix — Captain D's, LLC v. Smith (No. 07-799)

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APPENDIX A

SUPREME COURT OF MISSISSIPPI

Court of Appeals of the State of Mississippi

Office of the Clerk

Betty W. Sephton (Street Address)

Post Office Box 249 450 High Street

Jackson, Mississippi Jackson, Mississippi

39205-0249 39201-1082

Telephone: (601) 359-3694

Facsimile: (601) 359-2407

e-mail: sctclerk@mssc.state.ms.us

June 14, 2007

This is to advise you that the Mississippi Supreme

Court rendered the following decision on the 14th day

of June, 2007.

Supreme Court Case # 2006-CA-00024-SCT

Trial Court Case # CVO4-281AA

Tammy Smith by and through Her Father & Next

Friend, Alvin Christopher Smith v. Captain D’s, LLC

Reversed and Remanded. Appellee taxed with costs of

appeal.

| * NOTICE TO

CHANCERY/CIRCUIT/COUNTY COURT CLERKS *

If an original of any exhibit other than photos was

sent to the Supreme Court Clerk and should now be

returned to you, please advise this office in writing

immediately.

[Received JUN 15, 2007]

2a elie

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2006-CA-06024-SCT

TAMMY SMITH by and through her father & next

friend, ALVIN CHRISTOPHER SMITH,

Vv.

CAPTAIN D’s, LLC.

DATE OF JUDGMENT:

12/21/2005

TRIAL JUDGE:

HON. SHARION R. AYCOCK

COURT FROM WHICH APPEALED:

ALCORN COUNTY CIRCUIT COURT

ATTORNEY FOR APPELLANT: |

DUNCAN L. LOTT

ATTORNEY FOR APPELLEE:

BRADLEY FAREL HATHAWAY

NATURE OF THE CASE: 3

CIVIL - PERSONAL INJURY

DISPOSITION:

REVERSED AND REMANDED - 06/14/2007

MOTION FOR REHEARING FILED:

MANDATE ISSUED:

EN BANC.

CARLSON, JUSTICE, FOR THE COURT:

Tammy Smith, by and through her father and next

friend, Alvin Christopher Smith, sued Captain D’s,

LLC, in the Alcorn County Circuit Court for negligent

hiring, supervision, and retention based upon alleged

rape by a supervisor. The trial judge granted Captain

3a

D’s motion to compel arbitration and dismissed all

of Tammy’s claims against Captain D’s. Tammy

appeals, requesting that this Court reverse the trial

court’s grant of Captain D’s motion to compel arbitra-

tion and dismissal of her lawsuit, and remand this

case to the trial court for a full trial on the merits.

Upon careful consideration of the issues presented,

we agree with Tammy and thus reverse the trial

court’s grant of Captain D’s motion to compel arbitra-

tion and dismissal of Tammy’s claims, and we re-

mand this case to the trial court for further pro-

ceedings consistent with this opinion.

FACTS AND PROCEEDINGS

IN THE TRIAL COURT

On February 3, 2004, Tammy Smith (Tammy),

then seventeen years old, along with her grand-

parents’ visited Captain D’s restaurant’ in Corinth.

While they were eating, Tammy’s grandmother, saw

her friend, Peggy Jones (Jones), a manager of Cap-

tain D’s. She approached Jones for an employment

application for Tammy. Jones retrieved an employ-

ment application and delivered it to Tammy’s grand-

mother. After eating, Tammy and her grandparents

left the restaurant with the application.

At home, Tammy filled out the application for

employment, which included a single-page arbitra-

tion agreement entitled “CAPTAIN D’S EMPLOY-

MENT DISPUTE RESOLUTION PLAN.” The agree-

‘In July, 2003, Tammy moved in with her grandparents for

personal reasons that need not be discussed here.

* Captain D’s is a seafood restaurant owned and operated by

Captain D’s, LLC.

* There is evidence in the record indicating that Tammy and

her grandmother may have actually signed the one-page arbi-

4a

-ment required both Captain D’s and Tammy to sub-

mit claims between them to binding arbitration. The

agreement stated that if Tammy did file a lawsuit,

Captain D’s could use the agreement to dismiss the

lawsuit and compel arbitration.

Jones would later testify that she told Tammy that

her grandmother had to sign the agreement because

Tammy was a minor. Tammy signed the arbitration

agreement as the applicant and her grandmother

signed on the line provided for a guardian.‘

On August 17, 2004, Tammy filed suit in the

Alcorn County Circuit Court against Captain D’s

and Christopher Lee Howell (Howell),’ alleging that

Howell, a manager of Captain D’s, assaulted and

raped her during working hours. Tammy’s complaint

asserts that Captain D’s was negligent in its hiring,

supervising, and retention of Howell.

tration agreement while at the restaurant. Captain D’s arbitra-

tion plan consisted of the single-sheet agreement and a 32-page

informational booklet describing the agreement. Jones testified

in her deposition that she was unsure of whether the copy of the

booklet she gave Tammy was the December 2003 version or the

revised, February 2004 version.

*“ Tammy argues that her grandmother was not her court-

appointed guardian and, thus, did not have the authority to sign

_the arbitration agreement as Tammy’s guardian, thereby ren-

dering the agreement ineffective. Captain D’s argues that, even

if Tammy’s grandmother was not Tammy’s court-appointed

guardian, she was acting in loco parentis. Because this has no

effect on our decision, we choose not to address this issue today.

* Howell proceeded pro se, and he is not a party to this

appeal. He answered the lawsuit in the trial court, but did

not join in Captain D’s motion or otherwise move to compel

arbitration.

5a

On September 16, 2004, Captain D’s filed a Notice

of Election of Binding Arbitration, Motion to Dismiss

Complaint and to Compel Arbitration, and Alter-

native Motion to Dismiss Based on the Exclusive

Remedy of the Mississippi Workers’ Compensation

Act and Separate Answer Subject to Motions to

Compel Arbitration and to Dismiss. Tammy responded

by, inter alia, objecting to arbitration.

The issues were joined and a hearing was held on

May 3, 2005, Judge Sharion Aycock, presiding. Judge

Aycock subsequently entered a Memorandum Opinion

on December 14, 2005, granting Captain D’s motion

to compel arbitration and dismissing Tammy’s claims

against Captain D’s in the circuit court. A final judg-

ment consistent with the memorandum opinion was

entered on December 28, 2005.

Tammy submitted her Petition for Interlocutory

Appeal to this Court, requesting interlocutory review

of the trial court’s final judgment. On February 15,

2006, this Court found that final judgment had been

entered as to Captain D’s pursuant to Miss. R. Civ. P.

54(b), and further found that Tammy’s petition for

_ interlocutory appeal should be treated as a timely

filed notice of appeal from a final judgment.

DISCUSSION

A trial court’s grant or denial of a motion to compel

arbitration is a question of law; therefore, we apply a

de novo standard of review on appeal. Howard v.

Estate of Harper, 2006 Miss. LEXIS 626, *3 (Miss.

2006) (citing Sennett v. United States Fid. & Guar.

Co., 757 So. 2d 206, 209 (Miss. 2000)); Pre-Paid Legal

Servs. v. Battle, 873 So. 2d 79, 82 (Miss. 2004) (citing

Russell v. Performance Toyota, Inc., 826 So. 2d 719,

6a

721 (P 5) (Miss. 2002)). See also East Ford, Inc. v..

Taylor, 826 So. 2d 709, 713 (Miss. 2002). ~

Tammy presents three issues to be decided in to-

day’s case: (1) whether a minor may disaffirm an

arbitration agreement based on the infancy doctrine;

(2) whether the arbitration agreement is uncon-

scionable; and (3) whether the right to arbitration is

precluded by the assertion of an alternative affirma-

tive defense. However, finding one issue to be dis-

positive, we restate the critical issue for clarity in.

discussion.

WHETHER THE PARTIES AGREED

TO ARBITRATE

In the appellant’s brief, Tammy’s counsel unques-

tionably focuses the majority of his argument on

Tammy’s minority status; however, in discussing the

various issues, Tammy acknowledges the basic law

on arbitration as discussed by this Court in inter-

preting the Federal Arbitration Act (FAA) and in

applying the decisions of the United States Supreme

Court. In the course of this discussion, Tammy

asserts, inter alia, that under Mississippi law, the

courts, “when determining whether a dispute is sub-

ject to arbitration . . . must first ask (1) whether

the parties had a valid agreement in arbitration and

(2) whether the specific dispute falls within the sub-

stantive scope of that agreement.” Tammy undergirds

this statement by citing our decision in East Ford,

Inc. v. Taylor, 826 So. 2d 709, 713 (Miss. 2002).

Tammy also cites Thomson-CSF, S.A. v. American

Arbitration Association, 664 F. 3d 773, 776 (2nd Cir.

1995), which stated:

Arbitration is contractual by nature—“a party

cannot be required to submit to arbitration any

Ta

dispute which he has not agreed so to submit.”

United Steelworkers of America v. Warrior &

Gulf Navigation Co., 363 U.S. 574, 582, 4 L. Ed.

2d 1409, 80 S. Ct. 1347 (1960). Thus, while there

is a strong and “liberal federal policy favor-

ing arbitration agreements,” Mitsubishi Motors -

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.

614, 625, 87 L. Ed. 2d 444, 105 S. Ct. 3346 (1985)

(quotations omitted), such agreements must not

be. so broadly construed as to encompass claims

and parties that were not intended by the

original contract.

Id. at 776.

Captain D’s likewise states, “[w]hen evaluating a

motion to compel arbitration it must be shown that a

valid agreement to arbitrate exists and whether the

dispute in question falls within the scope of that

arbitration agreement. Fleetwood Enterprises, Inc. v.

Gaskamp, 280 F. 3d 1069, 1073 (5th Cir. 2002).”

This Court’s decision in today’s case follows on the

heels of our recently-decided opinion in Rogers-Dabbs

Chevrolet-Hummer v. Blakeney, 950 So. 2d 170 (Miss.

2007). In Rogers-Dabbs, we once again set out the

well-established responsibility of the courts when

confronted with arbitration issues by stating that the

courts must first determine whether the parties have

agreed to arbitration of the dispute and if it is

determined that they have, then a determination

must be made as to “whether legal constraints ex-

ternal to the parties’ agreement foreclosed arbitration

of those claims.” Jd. at 173 (quoting Mitsubishi

Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

U.S. 614, 626, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)).

See also East Ford, 826 So. 2d at 713.

8a

Since our decision today turns on the first prong

(whether the parties agreed to arbitrate the dispute),

we focus only on this prong. As we have noted on

prior occasions, this first prong has two sub-factors:

“(1) whether there is a valid arbitration agreement

- and (2) whether the parties’ dispute is within the

scope of the arbitration agreement.” Rogers-Dabbs,

950 So. 2d at 173 (quoting East Ford, 826 So. 2d

at 713)). In Rogers-Dabbs, the vehicle purchaser,

Blakeney, executed various documents relating to

the purchase, including an arbitration agreement

wherein Blakeney agreed with the dealer, Rogers-

Dabbs, to submit to arbitration “all claims, demands,

disputes or controversies of every kind or nature

between them arising from, concerning or relating to”

the transaction, including negotiations, financing

arrangements, extended warranties, performance of

the vehicle, “or any other aspect of the vehicle and

its sale, lease, or financing.” Jd. at 174. Blakeney

eventually sued Rogers-Dabbs under several theories,

asserting that the car dealer’s employee(s) had

engaged in a fraudulent scheme to use Blakeney’s

identity to obtain forged titles to stolen vehicles,

resulting in Blakeney never receiving title to his

vehicle. Rogers-Dabbs filed a motion to compel

arbitration based on the arbitration clause in the

consumer contract, and the trial court denied the |

motion to compel arbitration. On' appeal, we affirmed

the trial court’s denial of the motion to compel arbi-

tration. This Court found that the parties’ dispute

“was not within the scope of the arbitration agree-

ment.” Jd. at 178. In reaching this conclusion, the

Court stated that while the purchaser no doubt had

agreed to arbitrate claims originating from (or relat-

ing to) the sale of the vehicle, “no reasonable person

would agree to submit to arbitration any claims

9a

{taking the claims as alleged to be true for the sake of

argument] concerning a Hummer to which he would

never receive a title; a scheme of using his name to

forge vehicle titles and bills of sale to sell stolen

vehicles; and the commission of civil fraud against

him by misappropriating his title to the Hummer he

purchased and forging his name on: fake titles and

bills of sale on various stolen vehicles . . .” Jd. at 177.

Although we found the existence of a valid arbitra-

tion agreement, we found, on the other hand, that the

dispute between the purchaser and dealer was not

within the scope of the arbitration agreement. Thus,

we found that the car dealer had failed to satisfy the

first prong of East Ford, that being whether the

parties had agreed to arbitrate the dispute. Jd. at

176, 178.

Turning to the facts of today’s case, Captain D’s

Employment Dispute Resolution Plan stated, inter

alia:

[Bloth Captain D’s and I agree to settle any and

all previously unasserted claims, disputes, or

controversies arising out of or relating to my

application for employment, employment and/or

cessation of employment with Captain D’s, ex-

clusively by final and binding arbitration before

a neutral Arbitrator. By way of example only,

such claims include claims under federal, state

and local statutory or common law, such as the

Age Discrimination in Employment Act, Title VII

of the Civil Rights Act of 1964, as amended,

including the amendments of the Civil Rights Act

of 1991, the Americans with Disabilities Act, the

Family Medical Leave Act, the law of contract

and law of tort.

10a

I understand that if I do file a lawsuit regarding

a dispute arising out of or relating to my appli-

cation for employment, employment, or cessa-

tions (sic) of employment, Captain D’s may use

this Agreement in support of its request to the

court to dismiss the lawsuit and require me to

use arbitration.

Just as in Rogers-Dabbs, there is no fervent effort to

attack the validity of the arbitration agreement

which Tammy signed, other than the assertion of

disaffirmance. Therefore, we quickly move to the first

prong’s second consideration—whether the parties’

dispute is within the scope of the arbitration agree-

ment. Hogers-Dabbs, 950 So. 2d at 176 (citing East

Ford, 826 at 713)). In determining the scope of the

arbitration agreement, “[clourts often characterize

arbitration language as either broad or narrow.” MS

Credit Ctr., Inc. v. Horton, 926 So. 2d 167, 175 (Miss.

2006). The United States Supreme Court has found

similar language—“any controversy or claim arising

out of or related to”—to constitute a broad arbitration

provision. Smith Barney, Inc. v. Henry, 775 So. 2d

722, 726 (Miss. 2001) (citing Prima Paint Corp. v.

Flood & Conklin Mfg. Co., 388 U.S. 395, 406, 87 S.

Ct. 1801, 18 L. Ed. 2d 1270 (1967)). “Because broad

arbitration language is capable of expansive reach,

courts have held that it is only necessary that the

dispute “touch” matters covered by the contract to be

arbitrable.” Horton, 926 So. 2d at 176 (internal quota-

tion marks omitted). Further, “relate” means “to

stand in some relation; to have bearing or concern; to

pertain; refer; to bring into association with or con-

nection with; with “to.” Black’s Law Dictionary 892

(Abridged 6th ed. 1991).

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The question of “scope” is narrowed to whether

Tammy’s rape claim arises out of or relates to

“(Tammy’s] application for employment, employment,

and/or cessation of employment with Captain D’s,” so

as to subject Tammy’s sexual assault claim to arbi-

tration. While recognizing the breadth of the lan-

guage in the arbitration provision, we unquestionably

find that a claim of sexual assault neither pertains to

nor has a connection with Tammy’s employment.

In sum, we find that Tammy’s sexual assault claim

against Captain D’s and its employee is clearly not

within the scope of the arbitration agreement;

therefore, Captain D’s “fails to satisfy the first prong

of East Ford (whether the parties have agreed to

arbitrate the dispute).” Rogers-Dabbs, 950 So. 2d at

178. Likewise, as-we found in Rogers-Dabbs, our

action today does not offend the Federal Arbitration

Act by remanding this case for a full trial on the

merits of the case. Id.

For the reasons stated, we find this issue to have

merit, and since this issue is dispositive, we deem it

unnecessary to address the other issues raised on

appeal. |

CONCLUSION

For the reasons stated, the Alcorn County Circuit

Court’s judgment compelling Tammy to arbitration

and dismissing her claims is reversed, and this case

is remanded to the trial court for further proceedings

consistent with this opinion.

12a

REVERSED AND REMANDED.

SMITH, C.J., WALLER, P.J., EASLEY, RAN-

DOLPH AND ‘LAMAR, JJ., CONCUR. DIAZ, P.J.,

AND GRAVES, J., CONCUR IN RESULT ONLY.

DICKINSON, J., DISSENTS WITH SEPARATE

WRITTEN OPINION.

DICKINSON, JUSTICE, DISSENTING:

After much discussion with my fellow justices com-

prising the majority concerning our respective views

in this case, and after carefully reexamining my own

view, I unfortunately find it impossible to withhold

this dissent. This is so, even though my disagreement

with the majority’s conclusions is si.ght. The majority

and I are in agreement that Tammy Smith and Cap-

tain D’s entered a valid, binding arbitration

agreement. There were no other issues raised by the

parties and briefed to the trial court or to this Court

on appeal. Thus, the majority today takes the un-

usual step of deciding an interlocutory appeal on an

issue never raised or briefed by either party, and not

discussed by the trial court. (22. My disagreement

with the majority may be summarized as follows: The

majority correctly concludes that Tammy must sub-

mit her claims to arbitration if they “arise out of or

relate to her employment.” However, the majority

then decides (apparently as a matter of law) that

Tammy’s claims do not relate to her employment. It

is my view that we don’t know whether they do or

not because the issue (which I believe to be fact-

intensive) was never raised with the trial court,’ and

* Tammy raised three issues with the trial court in opposition

to Captain D’s motion to compel arbitration. She claimed

(1) that the Mississippi Arbitration Act did not apply to minors;

(2) that her grandmother, Pat Spencer, (who co-signed the

13a

was neither raised nor briefed here.’ Thus, I respect-

fully dissent from the majority’s disposition of this

case, and would instead remand the case for an evi-

dentiary hearing.

Tammy, who was an employee of Captain D’s, al-

leges that her employer was negligent in hiring,

supervising, and retaining her manager, Christopher

Howell, and that she was assaulted by her manager

at the restaurant.

I think it important to note here that, in its zeal to

separate what it calls “Tammy’s rape claim” from the

scope of her arbitration agreement, the majority fails

to absorb the fact that Tammy filed no “rape claim”

against Captain D’s. Her claim against Captain D’s

(as the majority recognizes and states elsewhere in

its opinion) is for “negligent hiring, supervision, and

retention” of her manager, Howell.” Thus, this Court

is not really being called upon today (as the majority

asserts) to decide “whether Tammy’s rape claim

arises out of or relates to” her employment.

arbitration agreement) did not hold the status of plaintiffs

guardian; and (3) that the cost of arbitration was prohibitive.

’ The trial judge granted Captain D’s motion to compel arbi-

tration. Tammy filed an interlocutory appeal with this Court,

raising the issues of (1) whether a minor may disaffirm an

arbitration agreement; (2) whether the arbitration agreement

was unconscionable; and (3) whether Captain D’s should be

prevented from compelling arbitration after asserting the af-

firmative defense of “exclusive remedy” under the Workers

Compensation Act. In her order, Judge Aycock stated it was

“apparent Plaintiffs real contention is that Plaintiff, due to her

minority status, should not be bound by the arbitration

agreement.”

* Tammy did, of course, file a “rape claim” against Howell (the

perpetrator). However, neither Howell nor Tammy’s rape claim

against him is before us.

l4a

As stated, there is no dispute that Tammy is bound

by the arbitration agreement. Therefore, she must

submit her claims against Captain D’s to arbitration

if they “arise out of or relate to” her employment. In

her efforts before the trial court (and before this

Court) to avoid arbitration, Tammy argued only that

she was not bound by the agreement. She neither

stated nor implied that she should not be required to

arbitrate because her claims did not relate to her

employment.”

Footnote 1, supra, specifically lists Tammy’s three

arguments, none of which even hint that Tammy

takes the position that her claims do not relate to her

employment. The majority, realizing that the issue

has not been raised, skillfully and smoothly claims to

“restate the critical issue for clarity in discussion.”

I’m not sure I know what this means, but I am sure

that it would be inaccurate to conclude that the

majority's deciding issue somehow flowed from the

issue raised before this Court.

Not only was the issue never raised nor briefed by

any of the parties, but it seems to me its resolution

requires an examination of the facts—an exami-

nation never conducted by the trial court or the

majority. The trial court never examined the facts

because the trial court was presented with no facts on

the issue to examine. This Court, of course, never

examined the facts because we were placed by the

* It could be argued that Tammy’s claims against Captain D’s

so clearly relate to her employment that Tammy’s counsel didn’t

even bother raising the issue with the trial court or here. One

would think if Tammy’s ‘caunsel concluded the argument had

any merit whatsoever, it would have at least been raised and

argued.

15a

parties in the same position as the trial court, that is,

we were given no facts to examine.

All we are told about Tammy’s claim is that she

alleges in her complaint “Mil or about February 18,

2004, at approximately 10:00 a.m., at the Captain D’s

restaurant . . . Howell, while in the scope and scope of

his employment injured the plaintiff, Smith, by

willfully and intentionally assaulting and raping her

on the restaurant premises in the women’s restroom.”

Tammy’s complaint further alleges that Captain D’s

should be held responsible for damages because it

negligently hired Howell as a supervisor and failed

to properly monitor and supervise him. More sig-

nificantly, Tammy claims that “Captain D’s had a

duty to supervise employee, Howell, when he dealt

with the public and with fellow employees.”

In my view, there are many unaddressed factual

questions which bear on the issue of whether

Tammy’s claims against Captain D’s of negligent

hiring, retention, and supervision of Howell relate to

her employment. For instance, we do not know (1)

whether the restaurant was open for business, or was

closed with the doors locked, with only employees

(perhaps only Tammy) locked inside with the man-

ager; (2) whether Tammy was working at the time,

and thus was required (as an employee) to be on the

premises and under Howell’s supervision and control;

(3) whether Howell, in his capacity as manager,

ordered Tammy to go to the restroom for some pre-

textual reason, such as to take toilet paper or paper

towels; (4) whether customers or other employees

were present in the restaurant or in the rest room at

the time of the incident; or (5) whether Tammy failed

to stop the assault out of fear of losing her job.

16a

It seems to me important for the trial court to

address these and many other factual questions. For

instance (and only by way of hypothetical example),

suppose the facts revealed that:

Tammy reported for work at 9:30 on the day in

question, and that the restaurant was not open

to the public. No employees other than Tammy

and Howell were present. While Tammy was

preparing to open the restaurant, Howell (as

Tammy’s manager) ordered her to fill the paper

towel dispenser in the Ladies’ restroom. Tammy

complied with her manager’s order and went into

the restroom, and the manager then followed her

in and began to. assault her. When Tammy

attempted to resist, Howell, threatened to fire

her if she resisted further, or if she reported the

incident. And even though Captain D’s was

aware that Howell had done the same thing at

other restaurants in the past, it hired him

anyway.

I wish to emphasize that we have no reason to

believe that any of these things happened, but neither

do we have any reason to know that they didn’t. We

just don’t know, and neither did the trial judge.

Under the above hypothetical facts, it could hardly be

argued with credibility that Tammy’s claim is not

“related to” her employment since it was because of

her employment that she was present in the store

with the doors locked, and was subject to the man-

ager’s orders and threats.

On the other hand, it could be that Tammy was not

working, but just stopped by to get something to eat

and Howell, seeing her go into the restroom, followed

her in and assaulted her. Again, this is a hypo-

thetical, and we have no reason to believe that the

17a

assault alleged by Tammy happened this way. But if

it did, it would be difficult to argue that the assault

was related to Tammy’s employment.

I firmly believe this matter should be remanded to

the trial court for an evidentiary hearing and a deter-

mination of whether Tammy’s claims against Captain

D’s relate to her employment. If the trial court, after

reviewing the evidence submitted by the parties,

concludes that they do, this case should be settled in

arbitration. If it does not, then the matter should

proceed to trial in the circuit court.

Because the majority decides this appeal on an

issue never raised; ignores the need for a factual

determination; and simply decides as a matter of law

that Tammy’s claims do not relate to her employ-

ment, I respectfully dissent.

18a

APPENDIX B

IN THE CIRCUIT COURT OF ALCORN COUNTY,

MISSISSIPPI

CIVIL ACTION NO. CV04-281(A)A

TAMMY SMITH BY AND THROUGH HER FATHER &

NEXT FRIEND, ALVIN CHRISTOPHER SMITH,

Plaintiff

versus

CAPTAIN D’s, LLC AND CHRISTOPHER LEE HOWELL.

Defendants

OPINION

THIS CAUSE having come before the Court on the

motion of Captain D’s, LLC, to dismiss the Plaintiffs

Complaint against Captain D’s, LLC, and to compel

arbitration. The Court having considered said motion;

having heard arguments of counsel; and being other-

wise fully advised in the premises, finds that the

motion is well-taken and that it should be GRANTED.

THE FACTS

The facts of this case are essentially not in dispute.

_ The Plaintiff Tammy Smith was seventeen years old

when she moved in with her grandparents in July

2003. She was living with her grandparents in

February 2004 when she sought employment with

Captain D’s restaurant in Corinth, Alcorn County,

Mississippi. She completed an employment applica-

tion and executed an “Employee Dispute Resolution |

Plan” which contained a binding arbitration clause.

Plaintiffs grandmother, Mrs. Spencer, also signed

19a

the document. There was little, if any, discussion

regarding the Employee Dispute Resolution Plan at

the time of the execution. On February 18, 2004,

Plaintiff was raped by the store manager at the

restaurant location.

Plaintiffs counsel initially contended Tammy Smith |

did not execute the agreement, that Plaintiffs grand-

mother did not hold the status of Plaintiffs guardian

and raised objections to the cost of arbitration. How-

ever, after considerable argument, oral and by brief,

it is apparent Plaintiffs real contention is that Plain-

tiff, due to her minority status, should not be bound

by the arbitration agreement.

THE LAW

Congress has declared a national policy in favor

of arbitration. Phearson/American Express, Inc. v.

McMahon, 482 U.S. 220 (1987); Moses H. Cone

Memorial Hospital v. Mercury Construction Corp.,

460 U.S. 1 (1983); Dean Whitter Rentals. Inc. v. Bryd,

470 U.S. 213 (1985). Likewise, our Mississippi Su-

preme Court has adopted many cases favoring arbi-

tration. “The case law in Mississippi regarding arbi-

tration and the Federal Arbitration Act are consis-

tent with one another.” Smith Barney..Inc. v. Henry,

775 So. 2d 722 (Miss. 2001); also see Hutto v. Jordan,

204 Miss. 30, 36 So. 2d 809, 812 (Miss. 1948). The

Federal Arbitration Act does not exclude minors from

its application. Federal substantive law of arbitra-

bility must be applied in state court proceedings

involving the Federal Arbitration Act. See Southland

Corporation v. Keatings, 465 U.S. 116 (1984), 104

S.Ct. 852, 861, 79 L. Ed. 2d, 1, 15, fn.10; Mitsubishi

Motors Corp. v. Soler Chrysler Plymouth, Inc., 473

U.S. 614 (1985), 627 105 S. Ct 3346, 3354, 87 L. Ed,

2d 444, 455-456.

20a

The Plaintiff contends Mississippi law specifically

prohibits a minor from submitting to arbitration. The

Defendant argues that the Federal Arbitration Act

controls and a minor in Mississippi should not be

allowed to disaffirm an arbitration clause by assert-

ing infancy. Counsel for both parties advised the

Court no Mississippi cases have been decided on

whether minors can disaffirm an arbitration clause

based on the “infancy doctrine”. Clearly, it is well

settled in Mississippi that contracts with infants

impose no liability on them which is not voidable at

their election. Lott Mellott v. Love, 119 so. 2d 913

(Miss. 1929); Ferguson v. Bobo, 54 Miss. 121 (Miss.

1876); Bell v. Smith, 124 So. 331 (Miss. 1929); Star

Chevrolet Co. v. Green by Green, 473 So. 2d 157 (Miss.

1985).

While Mississippi has not decided the legal issue of

whether a plaintiffs status as a minor is a sufficient

challenge to arbitration, other state courts have de-

termined minors cannot disaffirm an arbitration

clause. Sheller v. Franks Nursery and Crafts, Inc.,

957 Fed. Supp. 150 (N. D. Ill. 1997). The Illinois

infancy law is akin to Mississippi’s infancy law and

states, “The general rule applicable to all contracts,

other than for necessaries, is that the contract of

a minor is voidable and may be repudiated by the

minor during minority or within a reasonable time

upon achieving majority absent a ratification.” Sheller

at 153. The Illinois Court reasoned that “the privilege

of minority .... is to be used as a shield and not as a

sword.” That is, “after disaffirmance, the infant is not

entitled to be put in a position superior to such a one

as he would have occupied if he had never entered

into the voidable agreement.” The minor “is not

entitled to retain an advantage from a transaction

which he repudiates.” Jd. A Pennsylvania Court in

2la

Doyle v. Giuliucci, reasoned a minor is a beneficiary

of such an agreement because it enables the minor

to obtain employment which would be unavailable

unless the minor agreed to resolve differences through

an arbitration agreement. Doyle v. Giuliucci, 401

P.2d 1 (1965). Indeed, our Mississippi Courts have

aligned itself with a similar limited application of the

infancy law doctrine. See Star Chevrolet Co. v. Green,

473 So. 2d 157 (Miss. 1985). (Holding, minor may not

use infancy, which is a shield for protection, as a

sword for attack; such conduct by a minor amounts to |

fraud); Also see Evans v. Morgan, 12 So. 270 (Miss.

1891).

Plaintiff further claims the arbitration clause is

unenforceable because it is procedurally and substan-

tively unconscionable. Arbitration agreements are

not per se inherently unconscionable. East Ford Inc.

v. Taylor, 826 So. 2d 709, 714 (Miss, 2002). Proce-

dural unconscionability may be proved by showing

“a lack of knowledge, lack of voluntariness, incon-

spicuous print, the use of complex legalistic language,

disparity in sophistication or bargaining power of the

parties and/or a lack of opportunity to study the

contract and inquire about the contract terms.” Jd.

at 714. The Plaintiff is charged with reading the

contract. Washington Mut. Finance Group, LLC uv.

Bailey, 364 F.3d 260, 265 (5th Cir. 2004). In Missis-

sippi, a person is charged with knowing the contents

of any document that he executes. J.R. Watkins Co. v.

Runnels, 252 Miss. 87, 96, 172 So. 2d 567, 571 (Miss.

1965). “A person cannot avoid a written contract

which he has entered into on the ground that he did

not read it or have it read to him.” Jd. In the subject

case, the minor, accompanied by her grandmother,

are presented the contract which contains the arbi-

tration clause. The Employee Dispute Resolution Plan

22a

consists of one page (6 paragraphs). In plain lan-

guage and conspicuous print it explains that if there

is a dispute involving employment, Captain D’s can

use the agreement to ask a court to dismiss a law-

suit and require plaintiff to use arbitration. Mrs.

Spencer’s presence and signature would indicate her

guardian status as well as her voluntary, but nec-

essary, consent. Plaintiff testified that she loves to

read and makes good grades. If she had read the

agreement and did not understand the agreement

she was obligated to ask questions before signing.

She testified she asked no questions. It is disingenu-

ous to claim that the document was complex if she

made no attempt to read the agreement. Substantive

unconscionability is shown by oppressive terms of the

agreement. Rusell v. Performance Toyota, Inc., 826

So. 2d 719 (Miss. 2002); East Ford, at 714. The facts

in this case do not rise to one of substantive un-

conscionability. ©

The Mississippi Supreme Court has recently com-

pelled arbitration when the defenses of uncon-.

scionability, contracts of adhesion, and lack of mean-

ingful choice were raised. See Northwest Financial

Mississippi, Inc. v. McDonald, 2005 WL 67487, pages

11-23 (Miss.2005).

Borrowers’ arbitration agreements with lenders

were not shown to be procedurally and substan-

tively unconscionable, despite claims that they

were adhesion contracts and the borrowers lack-

ed a meaningful choice; each borrower signed

a single-page arbitration agreement written in

plain language, the borrowers did not claim that

they were unable to read or that they asked

anyone to explain arbitration, they simply stated

that no one informed them that they were sign-

23a

ing an arbitration agreement or told them what

an arbitration was, any reasonable person would

know that the right to a jury trial was waived,

and the borrowers submitted no evidence that

they could not get a competitive loan from

another company or that could not do without

the loan. |

In enacting § 2 of the Arbitration Act, Congress

declared a national policy favoring arbitration and

withdrew the power of the states to require a judicial

forum for the resolution of claims which the con-

tracting parties agreed to resolve by arbitration. JP

Timberlands Operating Co., Ltd. v. Denmiss Corp.,

726 So. 2d 96 (Miss. 1998), quoting Southland Corp.

uv. Keating, 465 U.S. 1 (1984)

CONCLUSION

Notwithstanding the well settled Mississippi Law

of the doctrine of infancy and our state’s adherence to

the protection of minors, this Court is of the opinion

that minors who execute arbitration clauses should

not be able to disaffirm those agreements. Practically

speaking, thousands of our Mississippi youth are

employed by nationally known publically traded and

private employers, many of which utilize arbitration

agreements. The minors receive a benefit, i.e. em-

ployment and compensation, that they should not

later be allowed to disavow. Opportunities exist for

employment that do not require the execution of an

arbitration agreement. In light of our proclaimed

federal and state courts’ preference for arbitration,

Tammy Smith should not be allowed to disaffirm the

arbitration clause that she voluntarily signed and for

which she received full benefits even though she did

not read the agreement nor ask any questions re-

garding it meaning. Arbitration does not preclude

24a

recovery for the Plaintiff, rather, merely selects her

forum. |

IT IS, THEREFORE, ORDERED AND ADJUDGED

that all claims made by the Plaintiff in her Com-

plaint against Captain D’s, LLC, shall be submitted

to binding arbitration in accordance with the terms of

the arbitration agreement entered into by the Plain-

tiff with. Captain D’s, LLC, and that the Alcorn

County Circuit Court action shall be dismissed ac-

cordingly as to Captain D’s, LLC. The claims by the

Plaintiff against separate Defendant, Christopher

Lee Howell, for independent liability on his part, if

any, are not subject to. this order.

ORDERED AND ADJUDGED, THIS, the 13th day

of December, 2005.

/s/ Sharion Aycock

SHARION AYCOCK

Circuit Court Judge

25a

APPENDIX C

SUPREME COURT OF MISSISSIPPI

Court of Appeals of the State of Mississippi

Office of the Clerk

Betty W. Sephton (Street Address)

Post Office Box 249 450 High Street

Jackson, Mississippi Jackson, Mississippi

39205-0249 ' 39201-1082

Telephone: (601) 359-3694

Facsimile: (601) 359-2407

e-mail: sctclerk@mssc.state.ms.us

September 13, 2007

This is to advise you that the Mississippi Supreme

Court rendered the following decision on the 13th day

of September, 2007.

Supreme Court Case # 2006-CA-00024-SCT

Trial Court Case # CVO4-281AA

Tammy Smith by and through Her Father & Next

Friend, Alvin Christopher Smith v. Captain D’s, LLC

Motion for rehearing filed by appellee is denied.

Dickinson, J., would grant.

| * NOTICE TO

CHANCERY/CIRCUIT/COUNTY COURT CLERKS *

If an original of any exhibit other than photos was

sent to the Supreme Court Clerk and should now be

returned to you, please advise this office in writing

immediately.

[Received SEP 17, 2007]

26a

APPENDIX D

CONSTITUTION OF THE UNITED STATES

Article VI.

Debts Validated—Supreme Law of Land—

Oath of Office

Clause 2. Supreme Law of Land

This Constitution, and the Laws of the United

States which shall be made in Pursuance thereof; and

all Treaties made, or which shall be made, under the

Authority of the United States, shall be the supreme

Law of the Land; and the Judges in every State shall

be bound thereby, any Thing in the Constitution or

Laws of any State to the Contrary notwithstanding.

Current through P.L. 110-131 approved 11-30-07

27a

APPENDIX E

AMENDMENT XIV.—CITIZENSHIP; PRIVILEGES

AND IMMUNITIES; DUE PROCESS; EQUAL

PROTECTION; APPOINTMENT OF

REPRESENTATION; DISQUALIFICATION OF

OFFICERS; PUBLIC DEBT; ENFORCEMENT

Section 1. All persons born or naturalized in the

.United States, and subject to the jurisdiction thereof,

are citizens of the United States and of the State

wherein they reside. No State shall make or enforce

any law which’ shall abridge the privileges or

immunities of citizens of the United States; not shall

any State deprive any person of life, liberty, or

property, without due process of law; nor deny to any

person within its jurisdiction the equal protection of

the laws.

28a

APPENDIX F

UNITED STATES CODE

Title 9.—Arbitration

Chapter 1.—General Provisions

§ 2. Validity, irrevocability, and enforcement

of agreements to arbitrate

A written provision in any maritime transaction or

a contract evidencing a transaction involving com-

merce to settle by arbitration a controversy there-

after arising out of such contract or transaction, or

the refusal to perform the whole or any part thereof,

or an agreement in writing to submit to arbitration

an existing controversy arising out of such a contract,

transaction, or refusal, shall be valid, irrevocable,

and enforceable, save upon such grounds as exist at

law or in equity for the revocation of any contract.

CREDIT(S)

(July 30, 1947, c. 392, 61 Stat. 670.)

Current through P.L. 110-131 approved 11-30-07

29a

APPENDIX G

CAPTAIN D’S EMPLOYMENT

DISPUTE RESOLUTION PLAN

I recognize that differences possibly may arise be-

tween Captain D’s, LLC and me during my

application or employment with Captain D’s. I recog-

nize that it is in the interest of both Captain D’s and

me that disputes be resolved in a manner that is fair,

private, expeditious, economical, final and less bur-

densome or adversarial than court litigation. Captain

D’s has an effective Internal Complaint Procedure,

and I will try to take advantage of it where feasible.

I understand, however, that not all issues can be

resolved using the Internal Complaint Procedure.

Except as set forth below, both Captain D’s and I

agree to settle. any and all previously unasserted

claims, disputes, or controversies arising out of or

relating to my application for employment, employ-

ment and/or cessation of employment with Captain

D’s, exclusively by final and binding arbitration

before a neutral Arbitrator. By way of example only,

such claims include claims under federal, state and

local statutory or common law, such as the Age

Discrimination in Employment Act, Title VII of the

Civil Rights Act of 1964, as amended, including the

amendments of the Civil Rights Act of 1991, the

Americans with Disabilities Act, the Family Medical

Leave Act, the law of contract and law of tort.

I understand that if I do file a lawsuit regarding a

dispute arising out of or relating to my application for

employment, employment, or cessations of employ-

ment, Captain D’s may use this Agreement in

support of its request to the court to dismiss the

lawsuit and require me to use arbitration.

30a

I understand that I still may exercise my rights -

under the National Labor Relations Act and file

charges with the National Labor Relations Board. I

further understand that I still may file adminis-

trative charges with the Equal Employment Oppor-

‘tunity Commission or similar federal, state or local

agency, but that upon receipt of a right-to-sue letter

or similar administrative determination, I shall arbi-

trate any claim that I may have against Captain D’s.

I understand that I must file a claim under the Cap-

tain D’s Employment Dispute Resolution Plan within

the federal or state statute of limitations period most

applicable to your claim. I further agree that if I

commence an arbitration, it will be conducted in

accordance with the “Captain D’s Employment Dis-

pute Resolution Plan.”

I understand that neither this Agreement nor the

Dispute Resolution Rules and Procedures form a con-

tract of employment between Captain D’s and me. I

further understand that my signature to this Agree-

ment in no way guarantees that Captain D’s will

offer me employment. If Captain D’s does offer me

employment and I become employed at Captain D’s,

this Agreement in no way alters the “at-will” status

of my employment. I understand that my employ-

ment, compensation and terms and conditions of my

employment can be altered or terminated, with or

without cause, and with or without notice, at any

time, at the option of either Captain D’s or myself.

I understand that no General Manager, other store

manager, or representative of Captain D’s, other than

an Officer of Captain D’s at the level. of Vice-

President or above, has any authority to enter into

any agreement for employment for any specific dura-

tion, to make any agreement contrary to the foramina

3la

or to after the Captain D’s Employment Dispute

Resolution Plan.

Social Security No.: 428-59-5975

Applicant/Employee Signature: /s/ Tammy Smith

Month: Feb Day: 3 Year: 2004

Name (Printed): Tammy Smith

In addition to the Applicant/Employee. If Appli-

cant/Employee is under 18 years of age,a Parent or

Guardian must sign below.

Parent or Guardian Signature: /s/ Pat Spencer

Month: Feb Day: 3 Year: 2004

Name (Printed): Pat Spencer

32a

APPENDIX H

IN THE SUPREME COURT OF THE

STATE OF MISSISSIPPI

[Filed JUL 6 2007]

Case No. 2006-CA-00024-SCT

TAMMY SMITH BY AND THROUGH HER FATHER &

NEXT FRIEND, ALVIN CHRISTOPHER SMITH

Plaintiff/Appellant

VS.

CAPTAIN D’s, LLC AND CHRISTOPHER LEE HOWELL

Defendant / Appellee

On Appeal from the Circuit Court of

Alcorn County, Mississippi; Cause No. CV04-281AA

MOTION OF APPELLEE CAPTAIN D’S, LLC

| FOR REHEARING

Bradley F: Hathaway

MSB No. 10203

Campbell DeLong, LLP

923 Washington Avenue

P.O. Box 1856

Greenville, Mississippi 38702

Telephone: (662) 335-6011

Facsimile: (662) 334-6407

33a

~ MOTION FOR REHEARING

NOW COMES Captain D’s, LLC (hereinafter “Cap-

tain D’s”), Appellee herein, by counsel, and, due to

specific errors of law and/or fact which this Court

either overlooked or misapprehended in its original

opinion, moves for rehearing.

I. Relevant Background

This appeal was taken by Tammy Smith (herein-

after “Smith”) from a ruling by the Circuit Court of

Alcorn County, Mississippi, dismissing Smith’s cir-

cuit court suit and compelling her to submit claims

she filed against her employer, Captain D’s, to arbi-

tration consistent with an arbitration agreement

Smith entered into in connection with her employ-

ment with Captain D’s. On appeal, Smith asserted

three distinct defenses to arbitration:

1. First, Smith asserted she could disavow the

arbitration agreement based on her status as

a minor; .

2. Secondly, she argued the arbitration agree-

ment was unconscionable; and

3. Thirdly, she contended that arbitration had

been waived by Captain D’s assertion of an

alternative defense.

See Smith’s “Statement of the Issues” at p. 1 of Brief

of Appellant.

On June 14, 2007, this Court reversed the decision

of the trial court, reinstated Smith’s circuit court suit,

and remanded the case on the merits. Though finding

that Smith and Captain D’s struck a valid, binding

agreement to arbitrate, the majority of the Court con-

cluded that Smith’s claims against Captain D’s were

not within the scope of the arbitration agreement,

34a

finding they did not “arise out of her employment.”

Justice Dickinson dissented from the majority with

a separately written opinion in which he aligned .

himself with the majority in finding that a valid,

binding agreement existed but refused to evaluate

the scope of the arbitration agreement because 1) the

defense had never been raised or briefed at the trial

court or on appeal; and 2) the defense wholly de-

pended on facts not before the Court.

Captain D’s respectfully urges the Court to recon-

sider its ruling, which constitutes a significant depar-

ture from settled law and, if allowed to stand, would

significantly change the law regarding appellate

issues in general and arbitration issues specifically.

The particular errors in the Court’s ruling are as

follows:

1. The ruling disregards or ignores the proce-

dural bar to issues not raised by an appel-

lant before the trial court, departing from

stare decisis;

2. Closely related to #1, the Court either over-

looked or misapprehended Smith’s admis-

sion that her dispute fell within the scope of

the arbitration agreement.

3: The ruling eliminated or unreasonably re-

laxed the burden of proof of the party con-

testing arbitration in violation of the Federal

Arbitration Act (“FAA”); and

4. The Court misapprehended the true nature

of Smith’s claims against Captain D’s be-

cause of facts not before the Court.

For these reasons, as demonstrated below, Captain

D’s submits that the original opinion of the Court

35a

should be withdrawn and replaced by an opinion

affirming the holding of the trial court.

II. The Court Ignored the Procedural Bar and

Either Overlooked or Misapprehended Smith’s

Assertion to the Trial Court That Her Dispute

Arose Out Of Or In Course Of Her Employ-

ment With Captain D’s

Stare decisis et non quieta movere: security and

certainty require that accepted legal principle not be

unsettled.

The decision by this Court is a dramatically con-

sequential one, considering that an otherwise pedes-

trian arbitration case has singularly uprooted the

legion of cases holding that appellants will not be

heard to assert a claim—or raise a defense—or seek

resolution of an issue—which was not raised at the

trial court. Making this ruling all the more unique is

that a defense to arbitration was raised and tried sua

sponte by the Court without being raised at any time

by the party who had the burden of raising the

defense and proving entitlement to it.

More specifically, the Court took Smith’s three de-

fenses to arbitration and, it is respectfully submitted,

improperly recast them as a challenge to the scope of

the arbitration agreement. It is worth noting at this

point two basic facts: 1) Smith never challenged the

scope of the arbitration agreement; and-2) Smith took

the position at the trial court level that her claims

against Captain D’s were within the scope of the

arbitration agreement.

The parties and the Court were blessed in this case

with an ample record. Captain D’s originally re-

sponded to Smith’s lawsuit by moving to dismiss it

and to compel the claims to arbitration. (C.P. 17).

36a

Smith filed her initial objections to arbitration, re-

sisting it on the grounds: 1) that she did not execute

the agreement; 2) that she was not-bound by the

agreement; and 3) that the costs of arbitration were

objectionable. Smith later clarified that she was not

denying that she actually executed the arbitration

agreement but rather disputed she was bound by it

due to her status as a minor. (C.P. 63). Smith then

moved to compel discovery to develop her objections,

and the trial court granted Smith’s request for discov-

ery on her two narrow objections: 1) her entry into

the arbitration agreement as a minor; and 2) the

costs associated with the arbitration agreement. (C.P.

117). Smith’s “waiver” defense did not appear until

her appeal. Discovery ensued and supplemental

briefs were submitted by both parties to supply the

trial court with the benefit of the arbitration-related

discovery. (C.P. 123 and 305).

In her supplemental brief to the trial court, Smith

unequivocally proclaimed:

But for the intentional tort exclusion, this case

would fall under the Workers’ Compensation Act.

(C.P. 305 at p. 7; Appendix 1) (emphasis added). Need-

less to say, for a claim to “fall under the Workers’

Compensation Act” it must “arise out of and in the

course of employment.” Miss. Code. Ann. § 71-3-7.

Much more, then, than simply not contesting that her

claims fell outside the scope of the arbitration

agreement, Smith actually asserted to the trial court

that her claims “arose out or’ her employment—a

position totally consistent with not challenging the

scope of the agreement. As the subject arbitration

agreement unambiguously covered all “claims, dis-

putes, or controversies arising out of or relating to

[Smith’s] employment... with Captain’s D’s,” (R.E. 1)

37a

there was never a case or controversy concerning the

scope of the agreement.

That. notwithstanding, the Court found, without

the benefit of. any facts, that Smith’s “sexual assault

claim against Captain D’s and its employee is clearly

not within the scope of the arbitration agreement.”

{ 17 (emphasis added).1 This holding demonstrated

an unprecedented expansion of appellate review. No

other pronouncement of law has been indoctrinated

into the law more than the rule that an issue not

raised before the lower court and only raised for the

first time on appeal is deemed waived and proce-

durally barred. Cooper v. Lawson, 264 So.2d 890, 890

(Miss. 1972); Harbin v. Chase Manhattan Bank, 871

So. 2d 764, J 6 (Miss. App. 2004).

In Waters v. Gnemi, 907 So. 2d 307 (Miss. 2005),

this Court wrote:

We have been consistent in holding that we need

not consider matters raised for the first time on

appeal, which practice would have the practical

effect of depriving the trial court of the oppor-

tunity to first rule on the issue, so that we can

then review such trial court ruling under the

appropriate standard of review. If we were to

adopt such a practice of considering for the first

time on appeal matters not raised before the trial

court, such practice would have the chilling effect

of depriving the trial court of the opportunity to

‘This statement reflects a critical misapprehension of the

claims against Captain D’s. Smith states no “sexual assault claim”

against Captain D’s, only against its employee, Christopher

Howell, who did not assert a right to arbitration. Smith’s claims

against Captain D’s are “negligent hiring, supervision and re-

tention.”

38a

first rule on the issue, which would then deprive

this Court of the opportunity to perform our

mandated appellate review by utilizing the ap-

propriate standard for review of the trial court’s -

ruling.

Waters, 907 So. 2d at 139.

In Leverett v. State, 197 So. 2d 889 (Miss. 1967), it

was said:

The Supreme Court is‘a court of appeals, it has

no original jurisdiction; it cam only try questions ~

that have been tried and passed upon by the

court from which the appeal is taken. Whatever

remedy appellant has is in the trial court, not

in this court. This court can only pass on the

question after the trial court has done so.

Leverett, 197 So. 2d at 890 (quoting Collins v. State,

159 So. 865 (1935)).

That de novo review is applied to grants or denials

of arbitration does not limit that principle. In Gulf

Ins. Co. v. Neel-Schaffer, an arbitration-related case

in which the Court also exercised de novo review,

Justice Carlson, writing for the majority, addressed a

party’s opposition to arbitration on grounds raised for

the first time on appeal by firmly stating:

Finally, Neel-Schaffer makes several arguments

based upon principles of equity, estoppel and un-

conscionability. These are procedurally barred

and without merit. As to substantive unconscion-

ability, this issue is procedurally barred based on

the fact that it is raised for the first time during

this appeal.

Gulf Ins. Co. v. Neel-Schaffer, 904 So. 2d 1036, (32

(Miss. 2004) (emphasis added).

39a

In Speedee Cash of Mississippi, Inc. v. Williams,

this Court, reviewing a trial court’s denial of arbitra-

tion under the de novo standard, devoted a special

section of the opinion to the matter of preserving

defenses to arbitration, writing:

In the appellee’s brief presented to the Court,

Williams makes a claim of unconscionability, and

Speedee Cash responds to this claim in its appel-

lant’s reply brief. However, there is absolutely

nothing in the record to show that this claim was

raised before the circuit court. The only claims in

Williams’ complaint. are those of wrongful repos-

session, conversion, etc. Unconscionability is not

mentioned. While there is a notice of hearing on

Speedee Cash’s motion to compel arbitration,

there is no transcript of a hearing. While Speedee

Cash filed a memorandum in support of its

motion to compel, Williams never filed a re-

sponse. Finally, the circuit court’s order denying

Speedee Cash’s motion to compel arbitration is a

summary order and offers absolutely no rationale

for the circuit court’s decision. Therefore, we must

treat the issue of unconscionability as one never

presented to the circuit court and apply the pro-

cedural bar. See, e.g., Brewer v. State, 819 So.2d

1169, 1175 (Miss.2002).

Because Williams raised no issues and offered no

evidence to the circuit court as to why the arbitra-

tion agreement should not be enforced, we reverse

the circuit court’s denial of Speedee Cash’s motion

to compel arbitration.

Speedee Cash of Mississippi, Inc. v. Williams, 915 So.

2d 1061, { 6 and { 7 (Miss. 2005) (emphasis added).

—

40a

In the instant case, there was a departure from

this settled law, eschewing the procedural bar al-

together. The Court, instead, likened the instant.

case to the recently-decided opinion in Rogers-Dabbs

Chevrolet-Hummer v. Blakeney, 950 So. 2d 170 (Miss.

2007) and, following a lengthy discussion of Rogers-

Dabbs, arrived at the conclusion that Smith’s claims

were similarly not contemplated by the arbitration

agreement. Absent from this discussion was a pivotal

distinction between Rogers-Dabbs and this case. In

Rogers-Dabbs, Justice Carlson listed at the outset of

the Court’s opinion the precise defenses asserted by

Blakeney, the party resisting arbitration before the

circuit court, as follows:

On the other hand, Blakeney asserts .. . that he

did not agree to have claims involving identity

theft and forgery resolved by arbitration inas-

much as such claims were not contemplated by

the arbitration agreement; that the FAA prereq-

uisites are not satisfied; and that the arbitration

agreement at issue is procedurally unconscion-

able.

{6 (emphasis added).

The significant peril presented by the Court’s deci-

sion to future litigants confronted with arbitration

issues is that it requires parties who are seeking to

preserve a trial court’s grant of arbitration to antici-

pate (and thus brief) defenses not raised by the party

resisting it. Smith did not challenge the scope of the

arbitration agreement and Captain D’s naturally did

not devote briefing to the issue, yet the Court’s analy-

sis turned on the scope of the agreement. If the

Court’s decision is mandated, it stands to reason that

it will unsettle and retool the landscape of arbitration

law. Consider that there are two prongs to determin-

4la

ing whether a dispute is subject to arbitration: 1) did

the parties have a valid agreement to arbitrate; and

2) does the controversy fall within the substantive

scope of the agreement. If, now, a party resisting

arbitration does not contest the first prong (and

perhaps, even confesses the first prong is met) but

only challenges the second prong, must the party

seeking to uphold arbitration regardlessly strive to

disprove the validity of any defenses to the first

prong where none has been raised? Respectfully,

time-honored precedent does not support that.

What, too, is to made of the fact that “arbitration is

contractual by nature.” See United Steelworkers of

America v. Warrior & Gulf Navigation Co., 363 U.S.

574, 582, 4 L. Ed. 2d 1409, 80 S. Ct. 1347 (1960). Ifa

party, such as Smith, does not contend her dispute is

one which she did not agree to arbitrate, is it not a

substitution of judgment and violation of the freedom

to contract to make a contrary decision for her? The

only reasonable conclusion that can be drawn from

the fact that Smith’s very capable attorneys did not

make such a claim is because it was so clear to them

that Smith did contract to arbitrate claims of the

nature at issue. The undersigned was unable to find

another decision by this Court where, when faced

with such mutual assent, the Court altered the agree-

ment of the parties.

The integrity and stability of our judicial system

and even our broader society relies on settled princi-

ples of law—which have been hewed and formed and

fashioned over time and then withstood the crucible

of consistent application —remaining settled. Stare

decisis has always been the preferred course of action

for this Court. “Our application of stare decisis is

necessary, inter alia, so that trial courts can make

42a

correct decisions and lawyers can properly advise

their clients.” United Services Auto. Ass’n v. Stewart,

919 So.2d 24, 421 (Miss. 2005).

By invoking for Smith a defense to arbitration

which was not raised or briefed (and which would

constitute an about-face by Smith from her position

at the trial court), Captain D’s respectfully submits

that the Court erred and, upon reconsideration of the

matter, the trial court’s grant of arbitration should be

affirmed.

III. The Court’s Decision Unreasonably Relaxed If

Not Eliminated Altogether Smith’s Burden of

Proof

By holding as a matter of law that Smith’s claims

were not contemplated by the scope of the subject

arbitration agreement, the Court rendered an opinion

in conflict with established arbitration law and re-

laxed, if not eliminated, Smith’s burden of proof.

The Court has consistently aligned itself with fed-

eral precedent in declaring that it “will respect the

right of an individual or entity to agree in advance of

a dispute to arbitration or other alternative dispute

resolution.” MS Credit Center, Inc. v. Horton, 926

So.2d 167, {20 (Miss. 2006) (citing Russell v. Per-

formance Toyota, Inc., 826 So. 2d 719, 722 (Miss.

2002). “Indeed, it is not a matter of discretion since

[the Court’s] duty requires [it] to follow the law.” Id.

Consistent with this policy, doubts concerning 1) the

scope of arbitration agreements and 2) asserted de-

fenses are resolved in favor of arbitration. Jd. A

fortiori, it is an imperative that a party resisting

arbitration on the ground that the subject claims are

not arbitrable bears the burden of proving it. Jd.

43a

In Norwest Financial Mississippi, Inc. v. McDonald,

905 So.2d 1187 (Miss. 2005), this Court acknowl-

edged where the burden of proof squarely lies:

Additionally, the lenders do not have the burden

to prove lack of unconscionability, as argued in

the Parkerson concurring opinion. The party re-

sisting arbitration must shoulder the burden of

proving a defense to arbitration.

McDonald, 905 So.2d at 1193 (emphasis added); see

also Green Tree Financial Corp. v. Randolph, 531

U.S. 79, 81, 121 S. Ct. 513, 517 (2000) (highest court

holding that party seeking to invalidate an arbitra-

tion agreement bears the burden of proving that the

claims are unsuitable for arbitration, pointing out

that “/t/he Court need not discuss how detailed such a

showing would have to be, for in this case, there. was

no timely showing at all on the point.” (emphasis

added)).

Perhaps one of this Court’s strongest statements

regarding the burden of proof which must be dem-

onstrated by a party resisting arbitration on the

grounds that claims are not arbitrable is found in JP

Timberlands Operating Co., Ltd. v. Denmiss Corp.,

726 So.2d 96, 146 (Miss. 1998):

Doubts as to the availability of arbitration must

be resolved in favor of arbitration. Unless it can

be said with positive assurance that an arbitra-

tion clause is not susceptible of an interpretation

which would cover the dispute at issue, then a

stay pending arbitration should be granted.

See also Terminix Intern., Inc. v. Rice, 904 So.2d 1051

(Miss. 2004), Russell, 826 So.2d at 722.

Here, Smith made no showing whatsoever regard-

ing the scope of the arbitration agreement. At the

44a

risk of repetition, the very nature of Smith’s claims

against Captain D’s depend on them “arising out of

her employment” with Captain D’s; hence, her admis-

sion that “[b]ut for the intentional tort exclusion, this

case would fall under the Workers’ Compensation

Act.” As in Norwest Financial Mississippi, Inc.,

Captain D’s did not have the burden to prove Smith’s

‘claims were contemplated by the arbitration agree-

ment, Smith had the burden to prove they were not—

and she did not.

Even so, the subject arbitration agreement stipu-

lated that “claims, disputes, or controversies arising

out of or relating to [Smith’s] .. . employment...

with Captain’s D’s” would be arbitrated. Arbitration

language which includes claims “related to” is char-

acterized as broad language. “Because broad arbitra-

tion language is capable of expansive reach, courts

have held that ‘it is only necessary that the dispute

“touch” matters covered by (the contract] to be arbi-

trable:” Horton, 926 So. 2d at 125 (emphasis added)

(quoting Penzoil Exploration & Prod. Co. v. Ramco

Energy, Lid., 139 F.3d 1061, 1068 (5th Cir. 1998)

(citing Mississippi Fleet Card, LLC v. Bilstat, Inc.,

175 F. Supp. 2d 894, 899 (S.D. Miss. 2001); First

Family Fin. Serv., Inc. v. Fairley, 173 F. Supp. 2d

565, 570 (S.D. Miss. 2001); Blount v. Nat'l Lending

Corp., 108 F. Supp. 2d 66, 669 (S.D. Miss. 200);

Pridgen v. Green Tree Fin. Servicing Corp., 88 F.

Supp. 2d 655, 657 (S.D. Miss. 2000).

As there is complete unanimity amongst the Court

that Smith was bound by the arbitration agreement,

her claims against Captain D’s are arbitrable if they

merely “touch” matters related to or arising out of her

employment. Smith, though bearing the full weight of

the burden of proof, did not suggest, imply, hint or

45a

allude that her claims did not touch on matters re-

lated to or arising out of her employment. The Court’s

opinion, as it stands, relieved her of that legal

imperative and created an issue where one did not

exist.

Most surely, the Court did not intend to create a

black-letter rule of law that “negligent hiring, super-

vision, and retention” claims against an employer are

never arbitrable under an agreement which covers

controversies “arising out of or “related to” the sub-

ject employment. Since, however, those are the

claims stated against Captain D’s, without any fur-

ther showing by Smith, is that not the precedential

implication of the ruling? This is in conflict.with the

state of arbitration law across the country, even

considering cases involving intentional acts such as

sexual assault and the like. See, e.g., Douglass uv.

Pflueger Hawaii, Inc., 135 P.3d 129, 139 (acknowl-

edging parties did not dispute whether plaintiffs

complaint fell within arbitration agreement, though

suit included claims for “hostile, intimidating and/or

offensive work environment,” “unsafe working envi-

ronment,” “sexual assault and sexual discrimination,”

“negligent training of the supervisor,” and “negligent

supervision); Kaddouri v. Merrill Lynch, 2005 WL

283582, *6 (N.D. Tex. 2005) (compelling. arbitration of

claims by plaintiff against her employer for negligent

retention, negligent training and negligent supervi-

sion of another employee accused of abusive conduct);

Ryan’s Family Steak Houses, Inc. v. Regelin, 735 So.

2d 454, 457 (Ala. 1999) (plaintiff compelled to arbi-

trate claims where seeking money damages against

her employer for invasion of privacy, the tort of out-

rage, assault and battery, and negligent training and

supervision, with all the claims stemming from sexu-

ally inappropriate conduct occurring in the work-

46a

place); Dantz v. American Apple Group, LLC, 123

Fed. Appx. 702, 710 (6th Cir. 2005) (upholding arbi-

trability of claims by plaintiff against employer based

on theories of unjus: enrichment, sexual harassment,

negligent retention, retaliation, promissory estoppel,

breach of contract and spoliation of evidence); Butcher

v. Bally Total Fitness Corp., 2003 WL 1785027, *1

(Ohio App. April 3, 2003) (employee who brought

action against her former employer for sexual harass-

ment, sexual discrimination, hostile work environ-

ment, and negligent retention in the workplace

required to submit claims to arbitration); Bender v.

A.G. Edwards & Sons, Inc., 971 F.2d 698, 701 (11th

Cir. 1992) (employee who brought suit against em-

ployer alleging sexual harassment and seeking re-

dress under state law theories of battery, intentional

infliction of emotional distress, and negligent reten-

tion required to submit claims to arbitration).

The case of Hill v. JJB Hilliard, W.L. Lyons, Inc.,

945 S.W.2d 948 (Ky. App. 1996), stands out as a

particularly well-reasoned approach to analyzing

a strikingly similar fact pattern in the context of

whether claims of this nature are arbitrable. There,

Jane Hill (“Hill”) was employed by Hilliard Lyons as

a stockbroker, and, as a condition of her employment,

Hill was required to enter into an arbitration agree-

ment which provided that she agreed to submit to

arbitration any dispute, claim, or controversy be-

tween Hilliard Lyons and herself “arising out of her

employment.” Jd. at 949.

After going to work for Hilliard Lyons, Hill alleged

she was raped by her supervisor, W. William Brab

(“Brab”), while they were attending a convention in

New York. Id. at 950. She further alleged that Brab

threatened her that, if she told anyone of the inci-

47a

dent, she would lose her job. Id. Subsequently, Hill

filed a state court action against Hilliard Lyons,

Brab, and certain officers and directors of Hilliard

Lyons, claiming assault and battery, false imprison-

ment, intentional infliction of emotional distress,

along with sexual harassment, retaliation, and viola-

tion of equal pay laws. Jd. All defendants collectively

moved to dismiss and defer the case to arbitration.

Id. Notably, Hill resisted arbitration at the trial court

level on the grounds her claims did not “arise out of

her employment.” Jd. The trial court, after consider-

ing oral arguments on Hills defense to the scope of

the arbitration agreement, found that all of her

‘claims arose out of her employment with Hilliard

Lyons and compelled her to arbitrate. Jd.

On appeal, the Kentucky appeals court cogently

distinguished Hill’s claims against her employer for

sexual harassment, retaliation, and violation of equal

pay laws from Hill’s claims against Brab for the

sexual assault. The claims against the employer were

found to “arise out of her employment” and were

compelled to.arbitration, while the claims against the

employee for sexual assault were reinstated in the

state court action. Jd. at 951. In other words, the Hill

Court, resisted lumping Hill’s claims against her

employer with the sexual assault claim against her

co-worker and treated the separate claims on their

own merit. This, Captain D’s submits, underscores a

point of error in the original opinion of the Court,

which on more than one occasion inaccurately treated

Smith’s claims against Captain D’s as a “sexual

assault claim,” when, unquestionably, Smith made no

such claim against Captain D’s.

48a

‘IV. The Nature of Smith’s Claims Were Mis-

apprehended Because of Insufficient wuts

Before the Court

Though Captain D’s submits Smith has waived any

right to challenge the scope of the arbitration agree-

ment, the law requires that, even when the scope of

the arbitration agreement is placed in doubt, the

presumption in favor of arbitration can be overcome

only with “clear evidence that the parties did not

intend the claim to be arbitrable.” Harvey v. Joyce,

199 F.3d 790, 793 (5th Cir.2000) (emphasis added)

(citing Moses H. Cone Memorial Hosp. v. Mercury

Const., 460 U.S. 1, 24-25, 103 S. Ct. 927, 74 L. Ed.2d

765 (1983)). Without rehashing Smith’s waiver of any

challenge to the scope of the subject arbitration lan-

guage, evidence in the form of facts are required to

decide the issue, as Justice Dickinson’s dissent cor-

rectly appraises.

The flip-side of Smith not contending that her

claims against Captain D’s do not arise out of or .

relate to her employment is that Captain D’s was

never afforded the opportunity to counter that attack

and to make a record of it, resulting in something of

an “appeal by ambush.” See generally Melendez uv.

Exxon Corp., 998 S.W.2d 266, 282 (Tex. App. 1999).

At the trial court level and on appeal, Smith was

effectively permitted to silence the facts and evidence

demonstrating that her claims against Captain D’s

are inertricably related to her employment yet, at the

same time, successfully challenge arbitration. Smith

has been licensed to now go before a jury and present

those same facts and that same evidence which, if

they had been before the trial court or this Court in

the first instance, would subject her claims to arbitra-

tion—and there is no doubt that she will. This is an

49a

injustice to Captain D’s and an affront to the FAA’s

stated preference in favor of arbitration.

Captain D’s makes the following proffer of what the

factual allegations would demonstrate concerning the

central basis for Smith’s claims against Captain D’s:

On February 18, 2004, Tammy Smith clocked

in to work at the Corinth, Mississippi, Captain

D’s restaurant at or about 10:07 a.m. ©

Two other Captain D’s employees were at work

as well—Christopher Howell (Smith’s man-

ager) and a cook.

Smith clocked off of work that day at or about

5:09 p.m, working approximately 7 hours.

Smith claims that during the morning of Feb-

ruary 18th she had a sexual encounter with

Howell in one of the restaurant bathrooms.

According to one account Smith gave, Howell

first asked Smith if she wanted to keep her job,

and Howell then proceeded into the men’s

bathroom with Smith following behind him

a few minutes later. Smith gave a second

account to a Captain D’s employee that she

went into the ladies’ bathroom and Howell

came in while she was there. Smith gave a

third account that Howell directed her to go

into the ladies’ bathroom and she complied.

Regardless of which account is believed, Smith

is consistent in her claim that these events

occurred while she was on the job and working

under the supervision and direction of Howell.

Smith claims she had sex with Howell in the

Captain D’s bathroom because Howell alleg-

edly told her she had to have sex with him in

50a

order to keep her job, and she felt compelled to

do so for that reason. | |

Smith claims that Captain D’s negligently

hired Howell and negligently allowed Howell

to remain in a managerial role over Smith,

asserting that Captain D’s. knew or should

have known of Howell’s propensity toward this

sort ot behavior.

Captain D’s emphasizes that it denies liability and

that these facts have not been weighed by the final

arbiter of this case for credibility—only that these

factual allegations form the basis of Smith’s claims

that Captain D’s negligently placed Howell in a posi-

tion of authority over her and negligently placed

Smith under his direction, control and command

while in Captain D’s employment. Smith does not

claim she was raped while a customer at Captain D’s

and by mere coincidence happened also to be an

employee. Indeed, the duties she claims Captain D’s

owed to her were not as an invitee but as an em-

ployee. For a final time, recall her counsel’s charac-

terization that “[b]ut for the intentional tort exclu-

sion, this case would fall under the Workers’ Com-

pensation Act.” Even Smith acknowledged that, at a

minimum, her dispute with Captain D’s “touched”

matters concerning her employment.

Indeed, the notion of rape shocks the senses, but in

this search for the truth, the emotionally-charged

claim of rape must be divorced from the separate

legal basis for Smith’s claims against Captain D’s,

which deserve separate treatment.

V. Conclusion

Wherefore, first and foremost, Captain D’s submits

there existed no case or controversy before this Court

5la

regarding the scope of the subject arbitration agree-

ment. Smith, as the party resisting arbitration, had

the burden of raising and proving applicable defenses

to arbitration. She never asserted at the trial level or

on appeal that her claims against Captain D’s did not

fall within the substantive scope of the subject agree-

ment. Smith, in fact, took the position before the trial

court that her claim “arose out of and in the course of

her employment with Captain D’s, eliminating any

doubt that her claims touched on matters concerning

her employment. The procedural bar should have

precluded any consideration of this issue.

Moreover, Captain D’s respectfully submits that

even if the scope of the arbitration agreement was

placed in doubt, it was error to relieve Smith of

her burden of proving with “clear evidence” that her

claims against Captain D’s do not “touch” on matters

concerning her employment. Because no facts were

presented by Smith, it was a violation of the FAA and

case law interpreting it for the Court to conclude as a

matter of law that the subject scope of arbitration

was narrower than Smith’s claims.

Captain D’s urges this Court to reconsider its origi-

nal opinion and, because there was a valid, binding

agreement to arbitrate, enter a ruling which affirms

the decision of the Circuit Court of Alcorn County,

Mississippi. Alternatively, Captain D’s seeks remand

for an evidentiary hearing on the question of whether

Smith’s claims against Captain D’s fall within the

scope of agreement to arbitrate.

RESPECTFULLY SUBMITTED, THIS, the 5th

day of July, 2007.

52a

CAPTAIN D’S, LLC

BY: /s/ Bradley F. Hathaway

BRADLEY F’. HATHAWAY

MSB NO. 10203

Attorney for Defendant/Appellee

OF COUNSEL: .

CAMPBELL DELONG, LLP

923 Washington Avenue (38701)

P.O. Box 1856

Greenville, MS 38702-1856

T: (662) 335-6011

F: (662) 334-6407

CERTIFICATE OF SERVICE

I, Bradley F. Hathaway, attorney of record for

Defendant/Appellee herein, do hereby certify that I

have this day served via U.S. Mail a true and correct

copy of the above and foregoing document to:

Honorable Sharion Aycock Duncan Lee, Esq.

Alcorn County Circuit Judge DUNCAN LEE LOTT, P.A.

P.O. Drawer 1100 P.O. Box 382

Tupelo, MS 38802-1100 Booneville, MS 38829

John Ferrell, Esq.

FERRELL & MARTIN, P.A.

P.O. Box 146 .

Booneville, MS 38829

THIS, the 5th day of July, 2007.

/s/ Bradley F.-Hathaway

BRADLEY F.. HATHAWAY