Filed: August 24, 1998

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 97-2408

(CA-95-3296-DKC)

Demeka Johnson,

Plaintiff - Appellee,

versus

Circuit City Stores, Inc.,

Defendant - Appelant.

ORDER

The court amends its opinion filed July 1, 1998, as follows:

On page 9, footnote 1 -- the footnote is amended to read as

follows:

Johnson argues initially that the Federal Arbitration Act

(FAA), including its presumption in favor of arbitrability, is not applicable to this case for two reasons: (1)

a valid contract did not exist between herself and

Circuit City, and (2) even if one did, it did not evidence a transaction involving interstate commerce. See 9

U.S.C. § 2. We address Johnson’s first reason in the

folloiwng text of our opinion, but we do not address her

second reason because Johnson did not raise it below. See

Karpel v. Inova Health Sys. Servs., 134F.3d 1222, 1227

(4th Cir. 1998) (issues raised for the first time on

appeal generally will not be considered, unless refusal

to consider the issue would be plain error or would
-2-

result in a fundamental miscarriage of justice); Muth v.

United States, 1 F.3d 246, 250 (4th Cir. 1993) (same).

For the Court - By Direction

/s/ Patricia S. Connor

Clerk
PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

DEMEKA JOHNSON,

Plaintiff-Appellee,

and

ERIC BROOKS; REGINALD DERRICKSON;

MOHMED IBRAHIM; MAXINE JAMES;

ARTIS KENDALL; BERNARD

LIVINGSTON; HAROLD MOORE;

STANLEY SIMS; STEVEN TAYLOR; H.

No. 97-2408

ALEXANDER RICHARDSON,

Plaintiffs,

v.

CIRCUIT CITY STORES, INCORPORATED,

Defendant-Appellant.

EQUAL EMPLOYMENT OPPORTUNITY

COMMISSION,

Amicus Curiae.

Appeal from the United States District Court

for the District of Maryland, at Baltimore.

Deborah K. Chasanow, District Judge.

(CA-95-3296-DKC)

Argued: June 4, 1998

Decided: July 1, 1998

Before WIDENER, HAMILTON, and MICHAEL,

Circuit Judges.

_________________________________________________________________
Vacated and remanded by published opinion. Judge Hamilton wrote

the opinion, in which Judge Widener and Judge Michael joined.

_________________________________________________________________

COUNSEL

ARGUED: Rex Darrell Berry, DAVIS, GRIMM & PAYNE, Seattle,

Washington, for Appellant. Terry Lynn Sullivan, HOWREY &

SIMON, Washington, D.C., for Appellee. Jodi Beth Danis, Office of

General Counsel, EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Washington, D.C., for Amicus Curiae. ON BRIEF: David

E. Nagle, LECLAIR RYAN, Richmond, Virginia, for Appellant. William R. O'Brien, Patricia G. Butler, HOWREY & SIMON, Washington, D.C.; Warren Kaplan, THE WASHINGTON LAWYERS'

COMMITTEE FOR CIVIL RIGHTS AND URBAN AFFAIRS,

Washington, D.C., for Appellee. C. Gregory Stewart, General Counsel, Philip B. Sklover, Associate General Counsel, Vincent J. Blackwood, Assistant General Counsel, EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION, Washington, D.C., for Amicus

Curiae.

_________________________________________________________________

OPINION

HAMILTON, Circuit Judge:

Acting pursuant to 28 U.S.C. § 1292(b) and upon the petition of

Circuit City Stores, Inc. (Circuit City), we agreed to hear this interlocutory appeal of the district court's denial of Circuit City's motion for

summary judgment in this race discrimination case, brought pursuant

to 42 U.S.C. § 1981. In its order denying Circuit City's motion, the

district court held that the arbitration agreement signed by plaintiff

Demeka Johnson is unenforceable for lack of consideration. Because

we hold that the arbitration agreement is supported by adequate consideration, we vacate the district court's denial of Circuit City's

motion for summary judgment and remand for further proceedings

consistent with this opinion.

 2
I.

Johnson is a black female and a resident of Beltsville, Maryland.

In February 1995, Johnson saw an advertisement for a full-time, permanent sales associate position posted on the bulletin board at Circuit

City's Beltsville store. At the time Johnson noticed the advertisement,

she was employed as the service manager at a local McDonald's restaurant, where she had been employed since 1993. Upon noticing the

advertisement for the position at Circuit City, Johnson obtained an

application for the position and checked the box for"Full Time"

employment indicating the specific position for which she was applying. (J.A. 109).

After submitting her application, Johnson received no response

from Circuit City for several months. During that time, she stopped

by and telephoned the store on a number of occasions to inquire about

her application, and on one such occasion she was told that her application had been lost. According to Johnson, she ultimately submitted

four or five applications for the full-time sales associate position during the period from February to September 1995. The final application, one completed by Johnson on September 6, 1995, is the

application at issue in this case.

Contained in the employment application Johnson completed on

September 6, 1995 was a Dispute Resolution Agreement. In the preliminary section of the employment application, the application

warned with respect to the Dispute Resolution Agreement: "This

agreement requires you to arbitrate any legal dispute related to your

application for employment or employment with Circuit City. Circuit

City will not consider your application unless this agreement is

signed." (J.A. 105). At the beginning of the section describing the

Dispute Resolution Agreement, the application warned further: "The

Dispute Resolution Agreement and the Dispute Resolution Rules and

Procedures affect your legal rights. You may wish to seek legal

advice before signing this Dispute Resolution Agreement." (J.A. 106).

The agreement continued:

I have read this Agreement and understand that I should

read the Dispute Resolution Rules and Procedures over the

next few days.

 3
I understand that I may withdraw my consent to this Agreement within three (3) days from the date on which I sign

below by notifying the Applicant Screening Department in

writing . . . that I am withdrawing my application for

employment at Circuit City. . . . I understand that by so notifying the Applicant Screening Department, I will not be

bound to this Agreement and that I no longer will be eligible

for employment at Circuit City. I recognize that if I sign the

Agreement and do not withdraw within three days of signing I will be required to arbitrate any and all employmentrelated claims I may have against Circuit City, whether or

not I become employed by Circuit City.

This Agreement will be enforceable throughout the application process, my employment, and thereafter with respect to

any claims arising from or relating to my application or candidacy for employment, employment or cessation of

employment with Circuit City. I then must arbitrate all my

employment-related claims, and I may not file a lawsuit in

court.

(J.A. 106) (emphasis in original). Johnson signed the Dispute Resolution Agreement and provided her social security number. Immediately

below her signature, the agreement contained an additional provision,

which stated: "Circuit City agrees to follow this Dispute Resolution

Agreement and the Dispute Resolution Rules and Procedures in connection with the Associate whose signature appears above." Id.

Underneath this provision was the signature of a Circuit City representative. Immediately following the Dispute Resolution Agreement

in the application was the following advisory:

STOP!

IF YOU HAVE NOT SIGNED THE AGREEMENT . ..

If you have decided not to agree to the terms of the preceding DISPUTE RESOLUTION AGREEMENT then you do

not need to complete the balance of this application. We

appreciate your interest in the company.

 4
IF YOU HAVE SIGNED THE AGREEMENT . . .

If you have decided at this time to agree to the terms of the

preceding DISPUTE RESOLUTION AGREEMENT then

you will need to complete the balance of this application so

that we can continue with your application process.

(J.A. 107) (emphasis in original).

As set forth above, the Dispute Resolution Agreement incorporates

the terms of the Dispute Resolution Rules and Procedures (Rules and

Procedures). With respect to what claims are subject to arbitration,

Rule 2 of the Rules and Procedures provides that"any and all

employment-related legal disputes, controversies or claims of an

Associate arising out of, or relating to, an Associate's application or

candidacy for employment, employment or cessation of employment

with Circuit City or one of its affiliates shall be settled exclusively by

final and binding arbitration . . . ." (J.A. 112). This rule provides further that all previously unasserted claims arising under federal, state,

or local statutory or common law shall be subject to arbitration,

including claims arising under the Age Discrimination in Employment Act, Title VII, the Americans With Disabilities Act, the Fair

Labor Standards Act, and 42 U.S.C. § 1981. Rule 4 provides for the

means by which "[an] Associate shall commence an arbitration." (J.A.

113). Under Rule 11, the Rules and Procedures provide that the arbitrator's authority is "limited to deciding the case submitted by the

Associate." (J.A. 117).

According to Johnson, when she submitted her application form,

no Circuit City employee discussed with her the application, the Dispute Resolution Agreement, or the Rules and Procedures. In addition,

after submitting the application, she was given three books to review,

none of which contained the Rules and Procedures the application had

advised she read.

Following her submission of the application on September 6, 1995,

Johnson was called for an interview at the Beltsville store. Johnson

was interviewed by three persons, including the store manager, all of

whom indicated to Johnson that they thought she was well qualified

and would receive an offer of employment. According to Johnson,

 5
during the course of these interviews, she spoke to a Caucasian

woman who had applied for a position just one week earlier and was

already working. In addition to undergoing interviews, Johnson provided a urine sample and took a written examination. Johnson was

subsequently told by a store employee that her application was complete and the results of her tests were "fully successful." (J.A. 60).

Shortly thereafter, the store manager summoned Johnson for a second interview. According to Johnson, the store manager, whose attitude had changed from the previous interview, stated that the purpose

of the interview was to make certain that Johnson really wanted the

job. The store manager then told Johnson that there were no positions

available at the Beltsville store, but that she would forward Johnson's

application to two other Circuit City stores. Because Johnson did not

have access to transportation to the other stores, Johnson declined the

offer to have the store manager forward her application.

During the next several weeks after her second interview, Johnson

stopped by the Beltsville store on a number of occasions to see

whether the position for which she had applied had been filled.

According to Johnson, the store continued to advertise the full time,

permanent position as vacant until after this action was filed on October 31, 1995.

Also some time after Johnson's second interview with the store

manager, Johnson's mother called Circuit City to complain about her

daughter's experience. As a result of these calls, Johnson was put in

touch with Cheryl Holland, a district manager for Circuit City, who

told her the store manager would now "love" to have Johnson work

at the Beltsville store and Johnson should call there again. (J.A. 61).

As directed, Johnson called the store manager at Beltsville but was

referred to the scheduling manager. The scheduling manager then

advised Johnson that she would only be considered for a temporary

sales position for the holiday season. Johnson declined the offer of

temporary employment because she had only applied for, and was

only interested in, a full-time, permanent position. Johnson asserts

that she has not heard from Circuit City since that time.

On October 31, 1995, a group of current and former employees of

Circuit City filed this action in the United States District Court for the

 6
District of Maryland, alleging that Circuit City engaged in racially

discriminatory promotion practices in violation of 42 U.S.C. § 1981

and Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq.

Johnson joined this suit prior to the plaintiffs' filing of their second

amended complaint, and in the second amended complaint, Johnson

alleged that Circuit City engaged in discriminatory employment practices affecting her in violation of 42 U.S.C. § 1981. Johnson's position in the lawsuit is unique and different from that of other plaintiffs

in that she is the only plaintiff who was never employed by Circuit

City, but rather, was merely an applicant for employment.

On November 20, 1996, prior to any discovery on Johnson's claim,

Circuit City filed a motion for summary judgment seeking the dismissal of Johnson's claim on the basis that she was bound by an

agreement to arbitrate any claims arising out of her application for

employment. On May 30, 1997, the district court entered an order and

memorandum opinion denying Circuit City's motion for summary

judgment, holding that under Maryland contract law, the alleged arbitration agreement was void for lack of consideration.

On June 13, 1997, Circuit City filed a motion for certification for

appellate review pursuant to 28 U.S.C. § 1292(b). On that same date,

this court issued our opinion in O'Neil v. Hilton Head Hospital, 115

F.3d 272 (4th Cir. 1997), upholding the validity of an arbitration

agreement, at least arguably similar to the Dispute Resolution Agreement at the center of this dispute. On September 16, 1997, the district

court entered a memorandum opinion and order granting Circuit

City's motion for certification to appeal, stating that an immediate

appeal may materially advance the determination of the litigation

between Johnson and Circuit City, regardless of which way this court

rules. The district court declined, however, to stay proceedings in the

district court pending the interlocutory appeal. On October 16, 1997,

we granted Circuit City's petition for permission to appeal, and Circuit City now seeks reversal of the district court's denial of its motion

for summary judgment as to Johnson's claims of unlawful race discrimination in violation of § 1981.

On November 25, 1997, Circuit City filed a motion to correct the

record on appeal, apparently because counsel had discovered that one

printed page of the standard employment application form completed

 7
by applicants for employment with Circuit City did not appear in the

copy of Johnson's application which had been attached to Circuit

City's motion for summary judgment in the district court. Johnson

opposed the motion, arguing that there was no evidence that Johnson

had been provided with a complete copy of the application and that

the page was not included in the record before the district court. In

response to Circuit City's motion, we deferred action on the motion

to permit the parties to file a similar motion in the district court so that

the district court could rule on the motion in the first instance. The

district court denied Circuit City's motion to correct the record on

February 17, 1998, and we subsequently deferred action on Circuit

City's motion to correct the record pending oral argument.

II.

The district court held as a matter of law that the arbitration agreement signed by Johnson in this case was not supported by adequate

consideration and was, therefore, unenforceable. Because its decision

was a legal one, our review is de novo. See Higgins v. E.I. DuPont

de Nemours & Co., 863 F.2d 1162, 1167 (4th Cir. 1988) (whether a

party was entitled to summary judgment is a matter of law which we

review de novo).

Whether a party agreed to arbitrate a particular dispute is an issue

for judicial determination to be decided as a matter of contract. See

AT&T Technologies, Inc. v. Communications Workers of Am., 475

U.S. 643, 648-49 (1986); Arrants v. Buck, 130 F.3d 636, 640 (4th Cir.

1997). In so deciding, the court should apply "ordinary state-law principles that govern the formation of contracts." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); see also Arrants, 130

F.3d at 640 ("Courts decide whether there is an agreement to arbitrate

according to common law principles of contract law."). However, the

Supreme Court has emphasized that "it should be kept in mind that

`questions of arbitrability must be addressed with a healthy regard for

the federal policy favoring arbitration.'" Gilmer v. Interstate/Johnson

Lane Corp., 500 U.S. 20, 26 (1991) (quoting Moses H. Cone Mem'l

Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). "Pursuant to

that liberal policy, `any doubts concerning the scope of arbitrable

issues should be resolved in favor of arbitration, whether the problem

at hand is the construction of the contract language itself or an allega-

 8
tion of waiver, delay, or a like defense to arbitrability.'" O'Neil, 115

F.3d at 273-74 (quoting Moses H. Cone, 460 U.S. at 24-25).1

In this case, the district court applied basic principles of contract

law and concluded that the arbitration agreement on which Circuit

City relied to compel Johnson to arbitrate her § 1981 claim against

Circuit City lacked sufficient consideration to constitute an enforceable agreement. Specifically, the district court held that the failure of

Circuit City to affirmatively promise to incur any detriment in

exchange for Johnson's agreement to arbitrate any claims she might

have against Circuit City meant that Johnson's agreement to arbitrate

was not supported by any consideration on Circuit City's part and,

thus, lacked mutuality. The district court, in particular, noted that

while the Dispute Resolution Agreement stated that Johnson's application would not be considered in the absence of her agreement to

arbitrate her claims, Circuit City never actually agreed to consider

Johnson's application even if she did agree to arbitrate her claims.

The district court also held that because Circuit City did not agree to

arbitrate any claims it had against Johnson and because the arbitrator's authority was specifically limited to deciding"the case submitted by the Associate," (J.A. 117), consideration for the agreement

could not be found in a "`mutual promise[ ] to arbitrate disputes under

the contract,'" (J.A. 170) (quoting Holmes v. Coverall North Am.,

Inc., 649 A.2d 365, 370 (Md. 1994)).

Following the district court's denial of Circuit City's motion for

summary judgment, however, we decided O'Neil, in which we held

_________________________________________________________________

1 Johnson argues initially that the Federal Arbitration Act (FAA),

including its presumption in favor of arbitrability, is not applicable to 

this case for two reasons: (1) a valid contract did not exist between 

herself and Circuit City, and (2) even if one did, it did not evidence 

a transaction involving interstate commerce. See 9 U.S.C. § 2. We 

address Johnson’s first reason in the folloiwng text of our opinion, 

but we do not address her second reason because Johnson did 

not raise it below. See Karpel v. Inova Health Sys. Servs., 134

F.3d 1222, 1227 (4th Cir. 1998) (issues raised for the first time on appeal

generally will not be considered, unless refusal to consider the issue

would be plain error or would result in a fundamental miscarriage of justice); Muth v. United States, 1 F.3d 246, 250 (4th Cir. 1993) (same).

 9
that an arbitration agreement was supported by adequate consideration where both parties agreed to be bound by the arbitration process.

See O'Neil, 115 F.3d at 274. In O'Neil, the plaintiff signed an

acknowledgment form recognizing receipt of an employee handbook

and agreeing to submit all employment disputes to arbitration. See id.

at 273. Specifically with respect to arbitration, the plaintiff agreed:

"I understand that [the employer] makes available arbitration for resolution of grievances. I also understand that as a

condition of employment and continued employment, I

agree to submit any complaints to the published process and

agree to abide by and accept the final decision of the arbitration panel as ultimate resolution of my complaints for any

and all events that arise out of employment or termination

of employment."

See id. (quoting agreement) (emphasis in original). In holding that the

plaintiff's agreement to arbitrate employment disputes was supported

by adequate consideration, we rejected her argument that the absence

of any affirmative obligation on the part of the employer to adhere to

the arbitration process was fatal to its enforcement, stating:

[Plaintiff] first argues the contract to arbitrate was not supported by adequate consideration because the agreement

was not binding on the hospital. [Plaintiff's] argument fails

because its premise is mistaken.

Here the agreement to be bound by arbitration was a mutual

one. The contract to arbitrate was proffered by the

employer. Such a proffer clearly implies that both the

employer and the employee would be bound by the arbitration process. If an employer asks an employee to submit to

binding arbitration, it cannot then turn around and slip out

of the arbitration process itself.

Id. Although we recognized in O'Neil that an agreement may be

unenforceable where the agreement permits the employer to ignore

the results of arbitration, we noted that the arbitration agreement in

O'Neil did not contain such a clause and we"decline[d] to read such

a clause into the contract." Id. at 275. Instead, we held that "[a]

 10
mutual promise to arbitrate constitutes sufficient consideration for

[the] arbitration agreement." Id.

As in O'Neil, both parties in this case agreed to be bound by the

arbitration process for the resolution of any claim required to be submitted to arbitration under the Dispute Resolution Agreement. Therefore, we hold that the Dispute Resolution Agreement was supported

by adequate consideration. Although, as the district court noted, Circuit City did not affirmatively agree to consider Johnson's application

even if she signed the agreement, but rather, stated merely that her

application would not be considered in the absence of her signature,

no consideration above and beyond the agreement to be bound by the

arbitration process was required. Here, the Dispute Resolution Agreement contained a provision stating, "Circuit City agrees to follow this

Dispute Resolution Agreement and the Dispute Resolution Rules and

Procedures in connection with the Associate whose signature appears

above." (J.A. 106). Because Circuit City agreed to be mutually bound

by the terms of the Dispute Resolution Agreement, it was not necessary that it agree to incur any additional detriment in exchange for

Johnson's agreement to arbitrate her employment-related claims,

regardless of whether that consideration was an agreement to actually

consider her application or some other additional consideration.

Rather, the agreement to be bound by the same rules was sufficient.

We recognize, as noted by Johnson, that the Dispute Resolution

Agreement apparently requires the arbitration only of Johnson's

claims against Circuit City and does not appear to require the arbitration of any claims Circuit City might have against Johnson, as evidenced by the limitation of the arbitrator's authority to claims

"submitted by the Associate." (J.A. 117). However, the agreement in

O'Neil similarly appeared to require only the arbitration of the

employee's complaints, providing that the employee, specifically,

agreed "to submit any complaints" to arbitration and to accept the

final decision as ultimate resolution of "[the employee's] complaints."

O'Neil, 115 F.3d at 273. Although the district court opined in its order

granting Circuit City's motion for certification of appeal that we recognized in O'Neil an implied agreement on the part of the employer

to arbitrate its claims, we do not read O'Neil as implying such an

agreement. Instead, O'Neil implied merely an agreement on the part

of the employer to "be bound by the arbitration process." Id. at 274.

 11
An agreement to "be bound by the arbitration process" does not necessarily mean an agreement to submit the employer's claims to arbitration; rather, it more likely means that the employer agreed, with

respect to any claims the employer has agreed should be submitted

to arbitration, to be bound by the rules of the arbitration procedure

and to be bound by its results. Therefore, O'Neil is not distinguishable

on the basis that, in O'Neil, we interpreted the agreement as requiring

not only that the employer be bound by the arbitration process, but

also that the employer agree to submit any claims it might have

against the employee to arbitration.

III.

Because we held in O'Neil, under materially similar circumstances,

that the arbitration agreement in that case was supported by sufficient

consideration to uphold its enforceability, the district court erred in

holding the Dispute Resolution Agreement in this case to be unenforceable because it lacked adequate consideration and in denying

Circuit City's motion for summary judgment on that basis.2 We,

therefore, vacate the district court's order denying Circuit City's

motion for summary judgment as to Johnson's claims and remand to

the district court for further consideration of Circuit City's motion.3

VACATED AND REMANDED

_________________________________________________________________

2 In rendering our decision, we have not relied on the page of the standard employment application (Page 2) that Circuit City asserts was part

of the application signed by Johnson and has submitted in support of its

motion to correct the record on appeal. We therefore deny Circuit City's

motion to correct the record for purposes of this appeal. However, on

remand, Circuit City will have the opportunity to seek leave of the district court to supplement the record to include the missing page.

3 Because the district court held the Dispute Resolution Agreement

invalid solely on the basis of inadequate consideration, we express no

opinion as to the merits of Johnson's alternative arguments relating to the

enforceability of the Dispute Resolution Agreement.

 12