JEFFERSON CITY — The Missouri Supreme Court has ruled that a lower court properly enforced arbitration between a private aviation school and a student who sued after graduating because he couldn't find a job.
In a 4-2 decision issued Oct. 31, justices found that American Arbitration Association (AAA) rules in an agreement between the Aviation Institute of Maintenance in Kansas City and Steven Pinkerton "provided clear and unmistakable evidence the parties intended to delegate threshold issues of arbitrability to the arbitrator."
Pinkerton, who graduated as night school valedictorian in 2011, went on to obtain certification from the Federal Aviation Administration as an airline mechanic with a temporary airman certificate but alleged he could not find employment in the aviation field. He sued the school and its officials in 2014, claiming it 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.
The school sought to dismiss his suit or alternatively to compel arbitration and stay proceedings because its enrollment agreement with Pinkerton stated that he would arbitrate "any controversy, claim or dispute," according to the opinion.
It further argued that 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 opinion states.
"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 AAA," the opinion states. "The circuit court, therefore, properly sustained the school’s motion to compel arbitration, staying the case and ordering the parties to proceed to arbitration."
Justice Patricia Breckenridge wrote for the majority, with Chief Justice Zel Fischer and Justices Paul Wilson and Mary Russell concurring.
In dissent, Justice Laura Denvir Stith, with Justice George Draper concurring, wrote that the case should be remanded to the circuit court to determine the factual question of whether an "unsophisticated student such as Mr. Pinkerton" clearly and unmistakably intended to delegate the issue of arbitrability to the arbitrator.
"I dissent from the majority’s holding that Mr. Pinkerton did not preserve the issue of delegation, its questioning of the fact that unconscionability has been recognized as an issue of contract formation, and its holding that, in a consumer case such as this, the mere reference to incorporation of the AAA rules, without their attachment and without specifically referencing the incorporation of the delegation provision, is unambiguous," she wrote.