Kentucky Court of Appeals Enforces ICC Clause

The Kentucky Court of Appeals has ordered enforcement of a clause compelling the parties to med/arb through the Institute for Christian Conciliation. The case (Whitefield Academy, et al v Alford, et al, Case No. 2021-DA-0678-I, issued November 4, 2021) involves a Christian school in Louisville, Ky. When the parents enrolled their daughter in the school in 2016, the mother signed the school’s standard enrollment agreement, which included an ICC clause. Both mother and daughter signed the form for each subsequent school year until the daughter was expelled in early 2020. The parents believe the school discriminated against their daughter in expelling her, and sued the school in state court for breach of contract, negligence, intentional infliction of emotional distress, defamation, and invasion of privacy. The school asked the court to refer the case to the ICC pursuant to the contract clause.

The trial court determined that there was not a valid agreement to arbitrate, because the clause referred to the Rules of Procedure for Christian Conciliation, but the family did not receive a copy of the Rules.

On interlocutory appeal, the Court of Appeals reversed. The court construed the clause under the Federal Arbitration Act, and determined that the ICC Rules of Procedure were incorporated by reference, just as procedural rules of an agreement to arbitrate “are routinely incorporated by reference, and subsequently enforced by courts.” The Court noted, “Here, the plain terms of the enrollment agreement manifest a clear intent that the parties will arbitrate disputes.” (p. 18)

In addition to naming the school as a defendant, the parents also sued two school officials individually. The Court of Appeals ruled that the arbitration clause was generally applicable to the school officials as well, even though they did not personally sign the enrollment agreement.

Left unanswered were the questions of whether the student herself, who is a minor, as well as her father, who never signed the agreement, are also bound by the arbitration clause. The appellate court remanded those issues to the trial court. Two additional defendants, who allegedly published a story about the expulsion, were determined to be outside of the arbitration agreement, and the case against them can continue in the circuit court.

The Kentucky Court of Appeals reached the correct decision. The family offered no reason why the ICC clause should not be enforced. It is interesting that the Court treated the clause as if it referred only to arbitration, whereas it specifically requires that the parties first seek “biblically based mediation,” and proceed to arbitration only if “resolution and reconciliation do not result” from mediation.

Whoever drafted the ICC clause in the School’s enrollment agreement did not strictly adhere to the “Model Med/Arb Clause” long promoted by the ICC. Had they done so, they would have removed the basis for the trial court’s decision. The model clause states, “We have received and read” the ICC Rules “which are incorporated into this agreement by reference…” Since the enrollment agreement is completed online, the School could simply have hyperlinked the Rules to it, as the Court noted. This is what the ICC General Conciliation Clause now recommends.

The Whitefield version of the med/arb clause includes some other problematic departures from the model clause recommended by the ICC. For example, as the Court noted, the Whitefield version inter-changes the words “arbitrator” and “arbiter,” and in one place refers to “a panel of the arbitrator.” Selection of the arbitrators includes two partisan arbitrators who select the neutral – not a process preferred by the ICC.

This family may have some legitimate claims against the school, but there is no reason why they cannot find justice in a private Christian process. And they already agreed to it.