## Facts

- Carla Baker worked for Bristol Care and was promoted from an hourly position to a salaried managerial role at a long-term care facility.
- As a condition of the promotion, Bristol presented (1) an employment agreement and (2) a stand-alone arbitration agreement.
- The employment agreement stated employment would continue indefinitely unless Baker gave notice or Bristol terminated her under specified termination options, including termination at Bristol’s sole option with minimal notice or pay.
- Baker received increased pay, additional benefits, and rent-free housing at the facility under the employment arrangement.
- The arbitration agreement required binding arbitration of all legal claims between Baker and Bristol, stating consideration as Baker’s continued employment and mutual promises to arbitrate.
- The arbitration agreement stated it did not change Baker’s at-will status and allowed either party to terminate employment at any time, for any reason, with or without cause.
- The arbitration agreement also permitted Bristol to unilaterally modify, amend, or revoke the arbitration agreement retroactively and without notice.
- After Bristol terminated Baker, she filed a class action seeking allegedly unpaid overtime wages.
- Bristol and its president, David Furnell, moved to compel arbitration; the trial court denied the motion.

## Issues

1. Whether the arbitration agreement was supported by consideration under Missouri contract law and therefore enforceable.
2. Whether continued at-will employment can constitute consideration for an employee’s agreement to arbitrate in these circumstances.
3. Whether an employer’s unilateral, retroactive power to modify or revoke an arbitration agreement makes the employer’s promise to arbitrate illusory, defeating consideration.

## Decision

- The Supreme Court of Missouri (en banc) affirmed the denial of the motion to compel arbitration.
- The court held no valid, enforceable arbitration agreement existed because the agreement lacked consideration.
- The court concluded (1) continued at-will employment did not supply consideration for Baker’s promise to arbitrate, and (2) Bristol’s promise to arbitrate was illusory due to its reserved right to retroactively modify, amend, or revoke the agreement without notice.
- Because the agreement failed for lack of consideration, the court did not reach arguments about unconscionability or whether the agreement applied to Furnell.

## Legal Principles

- Arbitration agreements are contracts; their formation and validity are determined by generally applicable state contract law principles, including consideration.
- Continued at-will employment, standing alone, may not constitute consideration for an arbitration agreement where the employer retains the ability to terminate the employee at any time and thus provides no binding commitment of continued employment.
- A promise is illusory, and cannot serve as consideration, when one party reserves unilateral authority to avoid or alter its performance; an employer’s unilateral retroactive power to modify or revoke an arbitration agreement can render its promise to arbitrate illusory.
- When an arbitration agreement fails for lack of consideration, courts need not address defenses such as unconscionability or questions of a nonsignatory’s coverage.

## Conclusion

The Missouri Supreme Court held the arbitration agreement unenforceable because it lacked consideration: Baker’s continued at-will employment did not support her arbitration promise, and Bristol’s retained unilateral, retroactive amendment power made its own promise to arbitrate illusory, so the wage-and-hour claims proceeded in court.


Baker v. Bristol Care, Inc., 450 S.W.3d 770 (Mo. 2014)