CATHY J. BOWLES, Plaintiff - Appellant
ONEMAIN FINANCIAL GROUP, L.L.C., Defendant-Appellee
from the United States District Court for the Southern
District of Mississippi
JOLLY, COSTA, and HO, Circuit Judges.
GRADY JOLLY, CIRCUIT JUDGE.
Bowles appeals the district court's order compelling the
arbitration of her federal age discrimination suit against
OneMain Financial. Bowles objected to arbitration on the
grounds that a valid arbitration agreement was never formed
between her and OneMain for two reasons: first, there was no
meeting of the minds and, second, the circumstances
surrounding the arbitration agreement's formation render
it procedurally unconscionable. Although the district court
correctly rejected Bowles's meeting of the minds
argument, it erroneously referred her procedural
unconscionability challenge to the arbitrator. Because
procedural unconscionability goes to contract formation under
Mississippi law, the district court should have ruled on this
objection. Accordingly, we REVERSE and VACATE the district
court's order and REMAND to the district court to decide
the merits of Bowles's procedural unconscionability
had worked for OneMain Financial Group and its predecessors
since 1998. Over that period she had agreed several times
through employment contracts and acknowledgments of employee
handbooks to refer all employment disputes to arbitration. In
2016, Bowles was again required to review and acknowledge
OneMain's Employee Dispute Resolution Program/Agreement
("Arbitration Agreement"). This Arbitration
Agreement provides that any employment-related dispute will
be referred to arbitration in accordance with the rules and
procedures of the American Arbitration Association. In
addition, the Arbitration Agreement contained a delegation
clause, which delegated to the arbitrator as follows:
"any legal dispute . . . arising out of, relating to, or
concerning the validity, enforceability or breach of this
Agreement, shall be resolved by final and binding
arbitration." On November 15, 2016, Bowles viewed the
Arbitration Agreement and electronically signed a certificate
that reads: "I hereby certify that I have carefully read
the Employment Dispute Resolution Program/Agreement within
and that I understand and agree to its terms."
October 2017, OneMain terminated Bowles for allegedly
inappropriate interactions with employees under her
supervision. Bowles filed an unsuccessful administrative
complaint with the EEOC. She next filed suit in federal court
alleging that her termination violated the Age Discrimination
in Employment Act and Title VII of the Civil Rights Act of
1964. In response, OneMain moved the district court, under
the Federal Arbitration Act,  to compel Bowles to arbitrate her
claims pursuant to the 2016 Arbitration Agreement.
objected to OneMain's motion to compel by challenging the
formation of the Arbitration Agreement itself on two grounds.
First, she argued that there was no "meeting of the
minds" because she did not understand that she was
agreeing to a binding arbitration agreement and therefore
there was not the mutual assent necessary for contract
formation under Mississippi law. Second, she argued that the
Agreement was procedurally unconscionable because her assent
was obtained through misrepresentation, she never had a
meaningful opportunity to bargain, and there was a gross
disparity in the parties' bargaining power.
district court granted OneMain's motion to compel and
dismissed the case with prejudice. It first found that there
was the meeting of the minds necessary for contract formation
in Mississippi. Next, instead of considering Bowles's
procedural unconscionability claim on the merits, the
district court found that "[c]laims of unconscionability
do not affect whether an arbitration agreement has been
entered but, instead, such claims permit a court to
invalidate an otherwise existing agreement." Thus,
reasoning that Bowles's procedural unconscionability
objection went to the enforceability of the Arbitration
Agreement and not its formation, the court held that this
argument must be decided by the arbitrator under the
Arbitration Agreement's delegation clause. Accordingly,
the district court granted OneMain's motion to compel
arbitration and dismissed the case with prejudice.
has now appealed arguing that the district court incorrectly
upheld the validity of the Arbitration Agreement on the
erroneous ground that there was a meeting of the minds, and
further erred by referring her procedural unconscionability
claim to the arbitrator when, under Mississippi law, such
objections are for the court to decide.
court reviews the grant or denial of a motion to compel
arbitration de novo." Carey v. 24 Hour Fitness, USA,
Inc., 669 F.3d 202, 205 (5th Cir. 2012) (citing
Morrison v. Amway Corp., 517 F.3d 248 (5th Cir.
2008)). To determine whether the parties entered a valid
arbitration agreement, "courts generally . . . should
apply ordinary state-law principles that govern the formation
of contracts." First Options of Chi., Inc. v.
Kaplan, 514 U.S. 938, 944 (1995). In Mississippi,
"[t]he elements of a contract are (1) two or more
contracting parties, (2) consideration, (3) an agreement that
is sufficiently definite, (4) parties with legal capacity
to make a contract, (5) mutual assent, and (6) no legal
prohibition precluding contract formation." GGNSC
Batesville, LLC v. Johnson, 109 So.3d 562, 565 (Miss.
2013) (quoting Adams Cmty. Care Ctr., LLC v. Reed,
37 So.3d 1155, 1158 (Miss. 2010)). Under Mississippi law,
both of Bowles's challenges-meeting of the minds and
procedural unconscionability-go to contract formation.
See West v. West, 891 So.2d 203, 213 (Miss. 2004)
("Procedural unconscionability goes to the formation of
the contract." (citing East Ford, Inc. v.
Taylor, 826 So.2d 709, 714 (Miss. 2002))); GGNSC
Batesville, 109 So.3d at 565 (mutual assent necessary
element of contract formation).
courts must follow a two-step analysis to determine whether a
claim must be arbitrated. "At step one, 'the court
must determine whether the parties entered into any
arbitration agreement at all.'" Lloyd's
Syndicate 457 v. FloaTEC, L.L.C., 921 F.3d 508, 514 (5th
Cir. 2019) (quoting IQ Prod. Co. v. WD-40 Co., 871
F.3d 344, 348 (5th Cir. 2017)). At step two, "we engage
in a 'limited' inquiry: '[W]hether the
[parties'] agreement contains a valid delegation
clause.'" Id. (alteration in original)
(quoting IQ Prod., 871 F.3d at 348). If the
agreement contains such a delegation clause, "a motion
to compel arbitration should be granted in almost all
cases." Id. (quoting IQ Prod., 871
F.3d at 348).
concern in this appeal relates only to step one. Courts may
not refer the step one inquiry-whether an arbitration
agreement was formed in the first place-to the arbitrator.
See Lloyd's Syndicate 457, 921 F.3d at 514
("The first step is a question of contract formation
only-did the parties form a valid agreement to arbitrate some
set of claims. This inquiry is for the court." (internal
quotation marks and citation omitted)); Will-Drill Res.,
Inc. v. Samson Res. Co., 352 F.3d 211, 218 (5th Cir.
2003) ("Where the very existence of any [arbitration]
agreement is disputed, it is for the courts to decide at the
outset whether an agreement was reached."); see also
Begole, 761 Fed.Appx. at 251 ("[W]here a party