Opinion ID: 77119
Heading Depth: 2
Heading Rank: 5

Heading: Enforceability Under Georgia Law

Text: 55 The plaintiffs argue that, for various reasons, the DRP is not a binding contract under applicable Georgia law, and thus there is no underlying agreement to arbitrate to be enforced. Specifically, they argue that under Georgia law governing contracts (1) the DRP did not constitute an offer, (2) their continued employment did not constitute acceptance of the DRP, (3) there was no consideration for their obligations under the DRP, and (4) in any event, the DRP is unconscionable. We address each of the plaintiffs' contentions in turn.
56 The plaintiffs argue that the DRP does not constitute an offer. We disagree. An offer is the manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his assent to that bargain is invited and will conclude it. Restatement (Second) of Contracts, § 24. The DRP clearly states that it is a contract, establishes the terms of the contract, and explains the means of accepting the contract. Thus, the DRP plainly constituted an offer. 57 The plaintiffs argue that no valid offer exists because the DRP allows Gulfstream to modify the DRP unilaterally. Thus, according to the plaintiffs, any promise by Gulfstream is illusory and not an offer. However, under Georgia law, [a] promise is a manifestation of intention to act or refrain from acting in a specified way, so made as to justify a promisee in understanding that a commitment has been made. Kemira, Inc. v. Williams Investigative & Sec. Servs., Inc., 215 Ga.App. 194, 450 S.E.2d 427, 431 (1994) (quotation marks and citation omitted). Furthermore, an illusory promise exists when words of promise . . . by their terms make performance entirely optional with the `promisor' whatever may happen, or whatever course of conduct in other respects he may pursue. Id. (quotation marks and citation omitted). 58 Here, the DRP allows Gulfstream to modify the DRP only on notice, and the version of the DRP in effect at the time a claim is received governs the claim. As a result, Gulfstream is bound by the terms of the DRP with regard to covered claims, and its promise to be bound is thus not illusory. See, e.g., Iberia Credit Bureau, Inc. v. Cingular Wireless, LLC, 379 F.3d 159, 174-75 (5th Cir.2004) (The fact that the company has the right to change the terms upon notice does not mean that the contract never bound it.); Blair, 283 F.3d at 604 (promise not illusory where employer retained unilateral power to modify employee handbook but was required to provide notice before doing so). Thus, we easily conclude that an offer exists under Georgia contract law.
59 The plaintiffs also contend that they cannot be deemed to have accepted the terms of the DRP simply by their continued employment, even though the DRP expressly provides that continued employment is the proper means of acceptance. However, we agree with the district court that the employees accepted the DRP through continued employment. 60 Under general principles of Georgia contract law, `[a]n offer may be accepted . . . either by a promise to do the thing contemplated therein, or by the actual doing of the thing.' Moreno v. Strickland, 255 Ga.App. 850, 567 S.E.2d 90, 92 (2002) (quoting Herring v. Dunning, 213 Ga.App. 695, 446 S.E.2d 199, 199 (1994)). However, `[t]he offer must be accepted in the manner specified by it; and if it calls for a promise, then a promise must be made; or if it calls for an act, it can be accepted only by the doing of the act.' Id. (quoting Herring, 446 S.E.2d 199); see also State v. U.S. Oil Co., 194 Ga.App. 1, 389 S.E.2d 498, 498 (1989) (performing under a contract constitutes acceptance). 61 This general contract principle is no less applicable in the context of an employment contract. Georgia courts have held that an employee can accept new terms of employment of which the employee is aware by remaining in employment. See Fletcher v. Amax, Inc., 160 Ga.App. 692, 288 S.E.2d 49, 51 (1981) (It is the accepted law of this state that an additional compensation plan offered by an employee, by remaining in employment, constitutes a contract between them. . . .). 16 62 Here, the DRP and the cover letter distributed with it clearly announced that the DRP was a contract, that acceptance of employment or the continuation of employment by an individual shall be deemed to be acceptance of the DRP, that no signature would be required for the policy to be applicable, and that the policy would be a condition of continued employment. Thus, the DRP expressly established that the proper manner of accepting its terms was continued employment. Under Georgia law, then, the plaintiffs' act of continued employment constituted acceptance of the DRP. Moreno, 567 S.E.2d at 93 (`The offer must be accepted in the manner specified by it; and if it calls for a promise, then a promise must be made; or if it calls for an act, it can be accepted only by the doing of the act.') (quoting Herring, 446 S.E.2d at 203). 63 The plaintiffs also assert that remaining in Gulfstream's employ could not be an act of acceptance of the DRP because it simply continued the status quo; by continuing in employment, the plaintiffs performed no distinct, unambiguous act, but instead acted as they had in the past and as they would have in the absence of the DRP. We reject this argument. While the plaintiffs did continue their pre-DRP conduct by remaining in Gulfstream's employ, they did so in the face of changed circumstances. By specifying the manner of acceptance as continued employment and announcing that the DRP was a condition of employment, the DRP and accompanying letter plainly set forth two options for Gulfstream employees: (1) continue in employment, thereby accepting the DRP, or (2) terminate employment. Thus, given these two options, the employees' remaining in Gulfstream's employ after notice of the DRP was an unambiguous act of acceptance of the DRP. 64 Although Georgia law controls this issue, we note that our decision falls well within the mainstream of contract law. Both the Seventh and the Fifth Circuits have come to the same conclusion under similar circumstances, applying Wisconsin, Mississippi, and Louisiana law. In Tinder v. Pinkerton Sec., 305 F.3d 728, 730-33 (7th Cir.2002), an employee asserted that she never signed nor otherwise accepted her employer's unilaterally promulgated arbitration policy. Because the policy explicitly stated that remaining employed past the effective date evidenced assent to the policy and the employee remained on the job past the effective date, the Seventh Circuit concluded that she was deemed to have agreed under Wisconsin law. 17 Id. at 734-36. Similarly, in May v. Higbee Co., 372 F.3d 757, 764 (5th Cir.2004), the Fifth Circuit applied Mississippi law and held that an employee manifested assent in her employer's unilaterally promulgated arbitration policy by continuing employment where she received a notice advising her of the rules and stating that continued employment would be deemed acceptance. The Fifth Circuit reached the same conclusion under Louisiana law in Marino v. Dillard's, Inc., 413 F.3d 530, 532 (5th Cir.2005). 18 65 We thus conclude that the plaintiffs' continued employment with Gulfstream after receipt of the DRP and accompanying clear notice constituted assent to the DRP's terms. 19
66 The plaintiffs next argue that the arbitration agreement is unenforceable because there is no bargained for consideration for their relinquishment of trial rights. They argue that the employees got nothing in return. 67 This argument is unavailing. Georgia law provides that mutual promises and obligations are sufficient consideration to support a contract. See Atlanta Six Flags P'ship v. Hughes, 191 Ga.App. 404, 381 S.E.2d 605, 607 (1989) ([T]he mutual promises and obligations of the parties constituted sufficient consideration for the contract.). Here, the plaintiffs received reciprocal promises from Gulfstream to arbitrate and be bound by arbitration in covered claims. In addition, the DRP provides that Gulfstream will pay the arbitration and mediation costs. These promises constitute bargained-for consideration. 68 The plaintiffs also argue that there is no consideration because Gulfstream's promises are illusory because they can modify the DRP at any time. As explained above, this argument lacks merit because Gulfstream, unlike the employers in the cases cited by the plaintiffs, can modify the DRP only upon notice and is bound by the DRP in effect at the time it receives a claim. See Rushing v. Gold Kist, Inc., 256 Ga. App. 115, 567 S.E.2d 384, 388-89 (2002) (holding that arbitration agreement was supported by sufficient consideration where offeror retained right to modify the disputes subject to arbitration under the agreement because they were equally bound by the policy's provisions); see also Iberia, 379 F.3d at 174-75 (The fact that the company has the right to change the terms upon notice does not mean that the contract never bound it.); Blair, 283 F.3d at 604 (same). 69 The plaintiffs further argue that there are no mutual promises because only those causes of action likely to be brought by an employee are covered claims, while the DRP allows court action for causes of action that would likely be brought by Gulfstream (such as trademark and trade secret claims and noncompetition violations). 20 However, the obligations are reciprocal for the class of covered claims. Thus, bargained-for consideration amply supported the DRP.
70 Finally, the plaintiffs argue that the DRP is unenforceable because it is both procedurally and substantively unconscionable. 71 They first argue that the DRP is procedurally unconscionable due to the employee's lack of bargaining power. In support, they cite various Georgia cases acknowledging the unequal bargaining power between an employer and employee, but none holding that such contracts are unconscionable as a result of that disparity. Indeed, Georgia courts have enforced standard-form arbitration agreements in employment relationships. Rushing, 567 S.E.2d at 388-89. 72 Under Georgia law, [p]rocedural unconscionability addresses the process of making the contract, while substantive unconscionability looks to the contractual terms themselves. NEC Techs., Inc. v. Nelson, 267 Ga. 390, 478 S.E.2d 769, 771 (1996). In determining whether a contract is procedurally unconscionable, Georgia courts look to the following factors: age, education, intelligence, business acumen and experience of parties, their relative bargaining power, the conspicuousness of and comprehensibility of the contract language, the oppressiveness of the terms, and the presence or absence of meaningful choice. Id. at 772. 73 Although there is some bargaining disparity here, as often in the employment context, the plaintiffs have failed to show that the DRP and its making is so one-sided as to be unconscionable. Its terms are clear and were presented to employees with a cover letter reflecting the importance of the policy, and its terms are not oppressive. Under these circumstances, the plaintiffs have failed to show that the DPR is procedurally unconscionable. See Gilmer, 500 U.S. at 32-33, 111 S.Ct. at 1655 (Mere inequality in bargaining power . . . is not a sufficient reason to hold that arbitration agreements [are unenforceable].); Saturna v. Bickley Constr. Co., 252 Ga.App. 140, 555 S.E.2d 825, 827 (2001) (Further, lack of sophistication or economic disadvantage of one attacking arbitration will not amount to unconscionability. (quotation marks and citation omitted)); see also Oblix, Inc. v. Winiecki, 374 F.3d 488, 490 (7th Cir.2004) (applying California law and concluding fact that employee's employment was conditioned on arbitration agreement offered on a take-it-or-leave-it basis did not render it unconscionable). 74 Finally, the plaintiffs assert that certain terms of the DRP are substantively unconscionable. Specifically, they argue that the following aspects of the DRP are unconscionable: (1) Gulfstream's reservation of rights to sue for claims it may have while confining employees to arbitration for their likely causes of action; (2) the prohibition of class actions; (3) Gulfstream's reservation of the right to modify the DRP; (4) the limitations on discovery; (5) the cloaking of DRP process in secrecy; and (6) the one-way aspects of the process. 75 Under Georgia law, an unconscionable contract is such an agreement as no sane man not acting under a delusion would make and that no honest man would take advantage of. Hall v. Fruehauf Corp., 179 Ga.App. 362, 346 S.E.2d 582, 583 (1986). None of the provisions challenged by the plaintiffs offends this standard. 76 Under the DRP, some claims, many of which would typically be brought by an employee, are subject to arbitration and others, many of which would be brought by Gulfstream, are not. However, this fact does not render the DRP unconscionable. The promises are mutual: both parties are required to arbitrate covered claims, and neither is required to arbitrate non-covered claims. The cases cited by the plaintiffs, which suggest that an arbitration agreement is unconscionable due to lack of mutuality if only the employee is required to arbitrate, are inapposite. In any event, Georgia law provides that an arbitration provision [is] not unconscionable because it lack[s] mutuality of remedy. Saturna, 555 S.E.2d at 827. 77 The plaintiffs further argue that the DRP is unconscionable because it precludes class actions and because it limits discovery by allowing the taking of depositions only if authorized by the arbitrator. We disagree. As the Supreme Court has explained, the fact that certain litigation devices may not be available in an arbitration is part and parcel of arbitration's ability to offer `simplicity, informality, and expedition,' see Gilmer, 500 U.S. at 31, 111 S.Ct. 1647, 114 L.Ed.2d 26 (internal quotation marks omitted), characteristics that generally make arbitration an attractive vehicle for the resolution of low-value claims. Iberia, 379 F.3d at 174-75 (enforcing arbitration agreement with class-action prohibition and rejecting position that it was unconscionable because it immunized company from low-value claims); see also Randolph v. Green Tree Fin. Corp., 244 F.3d 814, 816 (11th Cir.2001) (enforcing arbitration of TILA claims even though arbitration agreement precluded class actions under TILA). 21 The DRP's prohibition of class actions and discovery limitations are consistent with the goals of simplicity, informality, and expedition touted by the Supreme Court in Gilmer. See Gilmer, 500 U.S. at 31, 111 S.Ct. 1647, 114 L.Ed.2d 26. 78 The plaintiffs next argue that the DRP unconscionably requires that the parties not disclose transcripts from the arbitration or the arbitrator's award. In many employment claims, both sides might well prefer confidentiality. See Rosenberg v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 8 n. 4 (1st Cir.1999) (observing that both sides might desire confidentiality); see also Iberia, 379 F.3d at 175 (same, in cellular customer-provider context). We thus agree with the Fifth Circuit that while the confidentiality agreement might be more favorable to employers (as repeat players) than to individual employees, it is not so offensive as to be invalid. Iberia, 379 F.3d at 175. 22 79 Finally, the plaintiffs argue that several asymmetries in the DRP render it unconscionable. Specifically, they point to the fact that employees but not Gulfstream are required to exhaust steps prior to arbitration, that employees are prohibited from having counsel in the first two internal steps of the process, and that 30-day deadlines are imposed on employees but not on Gulfstream. Plaintiffs cite no Georgia authority for this argument. These provisions are reasonably designed to resolve claims as quickly and efficiently as possible, consistent with the goals of arbitration, and not so offensive as to be unconscionable.