Court Opinion

ID: 798879
Source: CourtListenerOpinion
Date Created: 2012-04-27 16:01:52+00
Date Added: 2024-06-11T17:59:46.888062
License: Public Domain

[DO NOT PUBLISH]

                      IN THE UNITED STATES COURT OF APPEALS

                                   FOR THE ELEVENTH CIRCUIT
                                    ________________________             FILED
                                                               U.S. COURT OF APPEALS
                                            No. 11-15261         ELEVENTH CIRCUIT
                                        Non-Argument Calendar        APRIL 27, 2012
                                      ________________________        JOHN LEY
                                                                        CLERK
                                 D.C. Docket No. 1:11-cv-00567-SCJ

LOUIS DOUGLAS,

llllllllllllllllllllllllllllllllllllllll                                   Plaintiff-Appellee,

                                               versus

JOHNSON REAL ESTATE INVESTORS, LLC,
a Massachusetts Limited Liability Company,

llllllllllllllllllllllllllllllllllllllll                             Defendant-Appellant.

                                      ________________________

                            Appeal from the United States District Court
                               for the Northern District of Georgia
                                  ________________________

                                           (April 27, 2012)

Before TJOFLAT, EDMONDSON, and FAY, Circuit Judges.

PER CURIAM:
      Johnson Real Estate Investors (“Johnson”) appeals the district court’s denial

of its motion to dismiss and compel arbitration in the Age Discrimination in

Employment Act (“ADEA”), 29 U.S.C. § 623(a), action that Louis Douglas filed

against Johnson. On appeal, Johnson argues that the district court erroneously

found that Johnson’s promise to arbitrate was illusory. For the reasons set forth

below, we affirm the denial of the motion to dismiss.

                                          I.

      On June 17, 2010, Douglas, who was at the time employed by Johnson,

signed a Mandatory Dispute Resolution Agreement (“MDRA”). Under the

MDRA, Johnson and Douglas agreed to resolve employment disputes through

binding arbitration “in accordance with Johnson’s Mandatory Dispute Resolution

Policy (as set forth in the Johnson Employee Handbook).” The MDRA stated that

the consideration for the agreement was Douglas’s continued employment with

Johnson and Johnson’s mutual agreement to arbitrate. The MDRA contained a

severability clause as well as a choice of law provision specifying that it was

governed by Massachusetts law. Finally, the MDRA stated that it “contain[ed] the

entire and only agreement between [Douglas] and Johnson respecting the subject

matter hereof, and no modification shall be binding upon [Douglas] or Johnson

unless made in writing and signed by an authorized representative of Johnson.”

                                          2
      In the employee handbook, Johnson reserved the right to “at any time,

change, revise, supplement, discontinue, or rescind any or all of such conditions,

policies, benefits and procedures or any other provision of this Handbook from

time to time, as it deems necessary or appropriate in its sole discretion, with or

without notice to employees.” The handbook stated that it was not an employment

contract. The Mandatory Dispute Resolution Policy in the handbook stated that

Johnson and its employees mutually agreed to resolve disputes in accordance with

the policy as a condition of continued employment. Under the policy, if Johnson

and an employee were unable to resolve a dispute through informal procedures,

then Johnson or the employee could submit the claim to arbitration. The

Mandatory Dispute Resolution Policy contained a severability clause.

      On June 17, 2010, Douglas signed a receipt acknowledging that he had

received and read the handbook and agreed to comply with the handbook.

According to the receipt, Douglas understood that the handbook could be modified,

“in writing, at any time at the sole discretion of Johnson, with or without prior

notice to [Douglas] and without [Douglas’s] consent.” Douglas also understood

that the handbook was not a contract of employment.

      After being terminated from his employment at Johnson, Douglas filed a

complaint alleging that his rights under the ADEA, 29 U.S.C. § 623(a), had been

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violated. Johnson filed a motion to dismiss, asking the district court to dismiss the

lawsuit and compel arbitration.

      In response to the motion to dismiss, Douglas argued that Johnson reserved

the right to unilaterally modify the MDRA and the Mandatory Dispute Resolution

Policy in the employee handbook, which rendered Johnson’s promises in those

documents illusory and unenforceable.

      Johnson replied that the MDRA was silent as to Johnson’s right to

unilaterally modify the agreement, but that the requirement that changes be made

in writing implied that notice to the other party was also required. Therefore, the

agreement was not illusory and was binding and enforceable. Johnson also argued

that Douglas had improperly relied on Georgia law in his response. The MDRA

specified that Massachusetts law governed the interpretation of the contract.

      The court denied Johnson’s motion to dismiss. The court found that

Johnson’s agreement to arbitrate was illusory. The MDRA relied upon the

employee handbook to detail the arbitration procedures to be used should a dispute

arise. Because the employee handbook allowed Johnson to unilaterally modify the

arbitration procedures without notifying Douglas, the agreement to arbitrate was

illusory and invalid.

                                         II.

                                          4
      We review a district court’s denial of a motion to stay proceedings and

compel arbitration de novo. Lambert v. Austin Ind., 544 F.3d 1192, 1193 n.1 (11th

Cir. 2008). We generally do not consider arguments not raised before the district

court. Ledford v. Peeples, 657 F.3d 1222, 1258 (11th Cir. 2011). “Judicial

economy is served and prejudice is avoided by binding the parties to the facts

presented and the theories argued below.” Stewart v. Dep’t of Health & Human

Servs., 26 F.3d 115, 115 (11th Cir. 1994) (quotation omitted).

      A contract containing an arbitration agreement “shall be valid, irrevocable,

and enforceable, save upon such grounds as exist at law or in equity for the

revocation of any contract.” 9 U.S.C. § 2. “[A]rbitration is a matter of contract.”

AT&T Mobility LLC v. Concepcion, 563 U.S. ___, 131 S. Ct. 1740, 1745, 179
L. Ed. 2d 742 (2011) (quotation omitted). “[S]tate law generally governs whether

an enforceable contract or agreement to arbitrate exists.” Caley v. Gulfstream

Aerospace Corp., 428 F.3d 1359, 1368 (11th Cir. 2005). As with contracts

generally, courts must enforce arbitration agreements “according to their terms.”

AT&T Mobility LLC, 563 U.S. at ___, 131 S.Ct. at 1745. Under the final clause of

§ 2, however, “agreements to arbitrate [may] be invalidated by generally applicable

contract defenses, such as fraud, duress, or unconscionability.” Id., 563 U.S. at

___, 131 S.Ct. at 1746 (quotation omitted). An arbitration agreement may not be

                                          5
invalidated “by defenses that apply only to arbitration or that derive their meaning

from the fact that an agreement to arbitrate is at issue.” Id.

      In Georgia, a choice of law provision in a contract is enforceable unless

applying that law “would be contrary to the public policy or prejudicial to the

interests of this state.” Moon v. CSA-Credit Solutions of Am., Inc., 696 S.E.2d 486,

488 (Ga. Ct. App. 2010) (quotation omitted). In Massachusetts, several factors are

considered to determine whether two documents will be read as a single, integrated

contract: “simultaneity of execution, identity of subject matter and parties,

cross-referencing, and interdependency of provisions.” Gilmore v. Century Bank

& Trust Co., 477 N.E.2d 1069, 1073 (Mass. App. Ct. 1985). Under some

circumstances, the terms of an employment manual may supply the terms of an

employment contract. Jackson v. Action for Bos. Cmty. Dev., Inc., 525 N.E.2d
411, 414 (Mass. 1988). In Jackson, the employer retained the right to unilaterally

modify the manual’s terms, which tended “to show that any ‘offer’ made by the

[employer] in distributing the manual was illusory.” Id. at 415. Based on that fact,

as well as other circumstances, the court in Jackson concluded that the parties had

not entered a contract based on the terms in the manual. Id. at 416.

      The district court correctly denied Johnson’s motion to dismiss.

Massachusetts law governs the instant dispute because the arbitration agreement

                                           6
contained a choice of law provision designating that Massachusetts law governed

the interpretation of the MDRA. See Moon, 696 S.E.2d at 488. Johnson

adequately alerted the district court to this provision when, in its reply, it rebutted

Douglas’s assertion that Georgia law applied by pointing to the choice of law

provision and asserting that Massachusetts law governed the dispute.

      Under Massachusetts law, Johnson’s promise to arbitrate was illusory. See

Jackson, 525 N.E.2d at 415-16. The MDRA stated that a modification was only

binding if “made in writing and signed by an authorized representative of

Johnson.” As Douglas was not required to sign a modification to the contract,

Johnson could modify the MDRA unilaterally—that is, without Douglas’s

agreement or knowledge. Therefore, Johnson’s promise to arbitrate was illusory,

and the MDRA was unenforceable. See Jackson, 525 N.E.2d at 415-16.

      Even if the above provision did not render the MDRA unenforceable, we

would nonetheless affirm the district court’s decision. The MDRA must be read in

conjunction with the Mandatory Dispute Resolution Policy, which was contained

in the employee handbook. The MDRA and Mandatory Dispute Resolution Policy

form an integrated contract, as evidenced by the facts that: (1) Douglas signed both

documents on the same day, (2) both documents addressed the same subject matter

and parties—that is, dispute resolution and arbitration between Johnson and

                                           7
Douglas, (3) the MDRA specifically referenced the Mandatory Dispute Resolution

Policy section of the handbook, and (4) the MDRA relied on the procedures set

forth in the handbook to expand upon the dispute resolution procedures. See

Gilmore, 477 N.E.2d at 1073. The Mandatory Dispute Resolution Policy could be

unilaterally modified by Johnson, as expressly stated both in the employee

handbook and in the acknowledgment of receipt of the handbook. Because

Johnson retained the right to unilaterally modify part of the integrated contract, its

promise to arbitrate was illusory. See Jackson, 525 N.E.2d at 415-16. Thus, the

district court was correct that the contract was unenforceable due to Johnson’s

illusory promise.1

       For the foregoing reasons, we affirm the denial of the motion to dismiss.

       AFFIRMED.

       1
         We do not consider Johnson’s severability argument because, unlike the choice of law
issue, Johnson did not argue before the district court that any invalid provisions of the contract
were severable. See Ledford, 657 F.3d at 1258.

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