Wednesday, November 4, 2015

State ex rel. Hewitt v. Kerr

Opinion handed down April 28, 2015

A former employee of the St. Louis Rams, Todd Hewitt, filed suit alleging age discrimination under the Missouri Human Rights Act.  The Rams then filed a motion to compel arbitration, and the Circuit Court for St. Louis County, under the Honorable Judge Kristine Kerr, granted the motion.  Hewitt then petitioned for a writ of mandamus seeking to prevent the circuit court from requiring arbitration.

I.  Facts and Holding

Hewitt joined the Rams organization in 1978, received a promotion to equipment manager in 1985, and retained that position until 2011.  The last employment contract Hewitt signed with the Rams was in 2008 and covered the 2009-2010 and 2010-2011 NFL seasons.
The contract contained an arbitration clause essentially: (1) legally binding Hewitt to the Constitution and by-laws of the NFL; (2) requiring any dispute between Hewitt and the Rams to be referred to the Commissioner, who would render a final, binding, conclusive, and unappealable decision; and (3) releasing both the Commissioner and the Rams from any claims that might arise in connection with any decision rendered.  The Constitution and bylaws also granted the Commissioner “full, complete, and final jurisdiction and authority to arbitrate.”
In January of 2011, the Rams notified Hewitt that his employment contract would not be renewed.  Hewitt was fifty-four years old.  In May of 2012, Hewitt filed suit against the St. Louis Rams and its affiliates, alleging age discrimination under the Missouri Human Rights Act.  Hewitt argued the arbitration provision was unenforceable, but the trial court granted the Rams motion to compel arbitration.  Hewitt requested a writ of mandamus be issued to prevent the trial court from compelling arbitration.  After the Missouri Court of Appeals for the Eastern District issued a preliminary order in mandamus, the Supreme Court of Missouri granted transfer.

II.  Legal Background

The main issue dealt with in this case was whether, under the particular facts and circumstances, a writ of mandamus was the “proper mechanism to review the grant of a motion to compel arbitration.”  The focus of the court’s reasoning centered on the proof Hewitt must allege in order to compel a motion for a writ of mandamus and whether adequate relief could be attained using another method.
The Supreme Court of Missouri has previously considered a writ of mandamus to be an appropriate remedy to review a motion to compel arbitration.  Under Missouri law, the Supreme Court of Missouri has the authority to “issue and determine original remedial writs,” including the issuance of a writ of mandamus: “[R]elief by mandamus must allege and prove that [a litigant] … has a clear, unequivocal, specific right to a thing claimed.”  It is possible this right can be originally derived from a statute that ensures that right, even though the statute does not clearly and specifically provide a writ of mandamus itself as a remedy to cure the wrong.  The court will not issue a writ “in any case where adequate relief can be afforded by an appeal.”  Lastly, “[M]andamus is an appropriate remedy when alternative remedies waste judicial resources or result in a burdensome delay, creating irreparable harm to the parties.”
But beyond the state procedural mechanism of writs of mandamus, the substantive clause here was one for arbitration.  Such clauses are often governed by the Federal Arbitration Act (“FAA”).  The FAA governs the enforceability and application of contracts pertaining to interstate commerce containing arbitration agreements.  The Supreme Court of the United States has held that the FAA applies even when a contract containing an arbitration agreement is executed between a resident of a single state and a party that engages in interstate commerce by doing business in multiple states. Furthermore, the FAA requires a party to submit to arbitration “save upon grounds as exist at law or in equity for the revocation of any contract.”  

III.  Instant Decision

The court concluded that a writ of mandamus was still the proper legal mechanism when reviewing a grant or a motion to compel arbitration proceedings.
In support of the issuance of the writ of mandamus, the court noted that Mr. Hewitt had no other readily available alternatives to provide an adequate remedy to assess his claim regarding what he believed to be an invalid and unjustified arbitration agreement.  Also, the delay that would ensue if the writ of mandamus was denied would harm both parties, through needless and protracted litigation via the dispute resolution process.  In addition, the court concluded that the legal system already contributed considerable resources to the litigation of the case, and a writ of mandamus would allow the parties to use their resources in other effective and more efficient ways while the case progressed.
The court was intrigued by the possibility of prohibition rather than issuance of a writ of mandamus, but ultimately concluded the remedy of prohibition was not adequate under the circumstances.  The court’s reasoning centered on the distinctions and consequences of issuing a writ of prohibition or a writ of mandamus, and concluded the differences between the two remedies were minimal and non-material.  Ultimately the court relied on the fact the two remedies “overlap to a great extent.
The court issued a writ of mandamus as the remedy because the court concluded Hewitt should not be forced to arbitrate his claim against the commissioner, who was appointed as sole arbitrator.  The court directed the trial court to vacate the order compelling arbitration under the terms set forth in the original agreement, and required the arbitration to proceed under a neutral arbitrator.

IV.  Comment

The current ruling by the Supreme Court of Missouri provides significant insight into the future of large-scale arbitration clauses requiring virtual mandatory arbitration under a prior appointed commissioner or senior member of a company, team, or entity.
In essence, the arbitration provision at issue in Kerr required Hewitt to have his dispute arbitrate under the Commissioner, or an official from the office of the Commissioner, of the National Football League.  The NFL has repeatedly claimed the Commissioner, currently Roger Goodell, is a “neutral party.”  However, this could not be further from the truth.
Roger Goodell, the Commissioner of the National Football League, works directly for the thirty-two NFL team owners.  Effectively, every decision Mr. Goodell makes is to benefit the profit margins and marketability of the entire NFL and the teams that formulate it.  However, on numerous occasions, including the case at bar, the legal system has consistently ruled the Commissioner of the NFL is not a neutral party.
These rulings likely open the door for future claims by other entities, including other major sports leagues, big corporations, and many other entities that mandate arbitration clauses for various disputes with employees.  Perhaps the next series of cases will issue writs of mandamus preventing the Commissioner of the MLB, NHL, or PGA from personally arbitrating disputes.  Or even more progressive, it is possible the same writs may be issued in cases arbitrated by the CEO or President of various major companies such as Wal-Mart, Google, or McDonald’s.
The ruling in State ex rel. Hewitt v. Kerr opens the door for a reduction in power of the major entities that have long dominated the arbitration and dispute resolution processes and gives hope to future individual success for the remaining ninety-nine percent.

– Nick Leslie