The Mississippi Supreme Court held that sexual assault and rape of a teenage employee by a restaurant manager at their work site does not fall with the scope of the employee’s employment and thus the employer, Captain D’s, could not arbitrate the employee’s claims against Captain D’s for negligent hiring, supervision, and retention of the alleged perpetrator-manager. Smith v. Captain D’s, LLC. No. 2006-CA-00024-SCT (Miss. June 14, 2007).

Tammy Smith (“Tammy") was seventeen (17) years old when she applied for employment at Captain D’s restaurant. Tammy filled out an employment application form which included a single-page arbitration agreement entitled, “Captain D’s Employment Dispute Resolution Plan (“Agreement"). The Agreement required both Captain D’s and Tammy to submit claims between them to binding arbitration. In other words, if Tammy filed a lawsuit against Captain D’s, it could use the Agreement to dismiss the lawsuit and compel arbitration. Because Tammy was a minor at the time she applied for employment, Tammy’s grandmother signed on the line provided for a guardian in the Agreement.

Tammy filed suit in a circuit court against Captain D’s and Chris Howell, a manager of Captain D’s, alleging that Howell assaulted and raped her during working hours. She asserted that Captain D’s was negligent in its hiring, supervising, and retention of Howell. In response, Captain D’s filed a Notice of Election of Biding Arbitration, Motion to Dismiss, among other motions. The circuit court granted Captain D’s motion to dismiss Tammy’s claims and to compel arbitration. The issue before the State Supreme Court was whether or not the parties agreed to arbitrate all claims between them. In order to answer this question, the Court asked the following questions: (1) whether the parties had a valid agreement in arbitration; and (2) whether the specific dispute falls within the substantive scope of that agreement (i.e., whether or not the incident occurred was related to Tammy’s employment at Captain D’s). The Court found that the parties had a valid agreement to arbitrate and went on to determine if Tammy’s claims were within the scope of the Agreement. Although the Court recognized that the language in the Agreement was broad and included “any controversy or claim arising out of or related to" Tammy’s claim, the Court held that a claim of sexual assault neither pertains to nor has a connection with Tammy’s employment at Captain D’s. Therefore, the Court overturned the lower court’s decision to dismiss Tammy’s claims and to compel arbitration.