A Missouri state appellate court has refused Hallmark's attempt to compel arbitration of a former at-will employee's discrimination claims, citing the arbitration agreement’s lack of mutuality and its illusory nature.

In Morrow v. Hallmark Cards, Inc., No. WD 67440, 2008 WL 2582662 (Mo. Ct. App. June 30, 2008), Morrow was an employee of Hallmark. During the course of Morrow's employment, Hallmark adopted a dispute resolution program (DRP) requiring arbitration of certain employment disputes if internal non-binding resolution was unsuccessful. Hallmark specified that continued employment after the effective date of the DRP would constitute acceptance of the program's terms. Hallmark also emphasized that the DRP did not change the character of its at-will relationship with its employees.

Five months after the adoption of the DRP, Hallmark terminated Morrow's employment. Morrow followed the initial stages of the DRP, but eventually refused to arbitrate and filed suit against Hallmark for employment discrimination and wrongful termination. Hallmark moved to compel arbitration, and the trial court granted the motion. After another eight months passed, Morrow initiated arbitration proceedings. The arbitrator determined that the DRP was valid and dismissed Morrow's claims as untimely. The trial court denied Morrow's motion to vacate the award.

On appeal, the Court observed that the DRP was characterized as a new term or condition of employment by Hallmark. The Court made clear that it distinguished new terms or conditions of employment from legally enforceable employment contracts. According to the Court, terms and conditions of at-will employment "are not enforceable at law as contractual duties" in the same manner as an employment contract.

Because Morrow and Hallmark had an at-will relationship, the Court found that Hallmark had promised nothing to Morrow for her acquiescence to the DRP except for the inherent promise to pay for the work performed. "The employer can enforce, through employee discipline, many different conditions of [at-will] employment; but the employer has no legal cause of action for breach of contract."

To the Court, Hallmark's remedy against Morrow for not complying with the terms of employment – including assent to the DRP – was limited to discharge or discipline, and it would not compel the performance of a contractual duty unsupported by no more consideration than a continued at-will employment relationship.

The Court also noted that the terms of the DRP allowed Hallmark to modify or discontinue it at Hallmark's sole discretion at any time, rendering any "promise" in the DRP illusory. It was also troubled by the non-mutual scope of the arbitral claims within the agreement; "the only covered claims are employment-related claims against the company," the Court noted.

Since there was no enforceable arbitration agreement, the Court held that the trial court erred in compelling arbitration. Accordingly, the Court remanded the case for further proceedings.