Lambert v. Austin Ind.

• Decision Date: 07 October 2008
• Docket Number: No. 07-10651.,07-10651.
• Citation: 544 F.3d 1192
• Parties: William LAMBERT, Sr., Plaintiff-Appellee, v. AUSTIN IND., Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

544 F.3d 1192

William LAMBERT, Sr., Plaintiff-Appellee, v. AUSTIN IND., Defendant-Appellant.

No. 07-10651.

United States Court of Appeals, Eleventh Circuit.

October 7, 2008.

Katherine E. Flanagan, Littler Mendelson, P.C., Houston, TX, Steven R. McCown, Littler Mendelson, P.C., Dallas, TX, for Defendant-Appellant.

Randolph Frails, Randolph Frails, P.C., Augusta, GA, for Plaintiff-Appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before TJOFLAT, HULL and WILSON, Circuit Judges.

TJOFLAT, Circuit Judge:

In this case, an individual has sued his former employer for alleged age and race discrimination, as well as retaliatory termination. The question before us is whether the claims he has brought should be resolved through the company's arbitration policy or in the federal courts.¹ In addressing this issue, we need only apply basic contract interpretation principles in harmony with a general federal policy in favor of arbitration. In so doing, we hold that the district court erred in denying the employer's motion to compel arbitration. The employer's arbitration policy is a valid and enforceable contract under Georgia state law, and the claims the individual presents are precisely of the type that he agreed to arbitrate through the company's arbitration policy.

I.

On June 1, 1996, Austin Maintenance & Construction, Inc. ("Austin"), a general contractor that provides construction, maintenance, and other plant services to petrochemical and refining facilities in the Southeast region of the United States, adopted "Open Door," a company-wide workplace dispute-resolution program. The Open Door program envisioned and established an escalating three-tiered process for resolving workplace disputes—a conference with a supervisor higher up the chain of command, followed by mediation, and, as a last resort, arbitration.

While the policy suggests that most disputes can be resolved through formal discussions with supervisors, the policy advises that should employees not be able to resolve their disputes through discussions with supervisors at the first stage, the employee may contact an "Open Door facilitator" who will provide the employee with guidance. This facilitator may assist the employee in setting up a mediation, and "in some disputes involving legal issues, such as sexual harassment or discrimination based on age, sex or race, the facilitator may assist [the employee] in setting up an arbitration." As the district court aptly noted, "[t]hese provisions of the Open Door policy indicate that Austin desired to open up communications between its employees and their supervisors when a workplace dispute arose."

Austin requires that new employees agree to and abide by the Open Door policy as a condition of employment. In particular, Austin's Application for Employment specifically requires that newly-hired employees agree "to be bound by and accept as a condition of employment the terms of Open Door." Moreover, at orientation, Austin provides newly hired employees with a pamphlet that specifically states that employees "agree to waive [their] right to a trial in a court of law, and [ ] agree instead to resolve all legal claims against Austin through Open Door." Additionally, this pamphlet states that Austin also "waives its right to trial in a court of law and agrees to resolve such disputes through Open Door."

On November 28, 2001, William Lambert, Sr. submitted an Application for Employment to Austin. Some time later, Austin hired him as an at-will employee. During the orientation that Austin provided to new employees, Lambert received a "tri-fold Open Door pamphlet," which informed him, as he acknowledged, of the company's Open Door policy. This pamphlet described the Open Door policy and explained that all individuals who accept employment with Austin agree to abide by the Open Door workplace dispute resolution framework.

On February 28, 2005, Austin terminated Lambert's employment because, according to Austin, Lambert threatened a supervisor during a meeting five days earlier. Conversely, Lambert claims that he was terminated because of race and age, and in retaliation for his prior complaints of race discrimination.

On March 15, 2006, Lambert brought this action against Austin and its employee, James Ballew (a project director), in the United States District Court for the Southern District of Georgia. In addition to Austin and Ballew, Lambert named Prayon, Inc., and its employee, Michael Gubosh (a maintenance manager), as defendants.² Lambert's complaint asserted claims of race and age discrimination, as well as retaliatory termination in violation of both Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e—2000e-17, and the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621 et seq. Austin and Ballew moved the district court to stay proceedings and compel arbitration pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1 et seq., based upon the Open Door policy. They moved the court, alternatively, to dismiss Lambert's complaint for failure to state a claim for relief.³ Prayon and Gubosh answered the complaint and then moved the court for a judgment on the pleadings.⁴

On January 29, 2007, the district court dismissed Lambert's claims against Ballew, Prayon, and Gubosh. With respect to Austin, the court denied its motion to compel arbitration, concluding that "the claims of retaliatory and discriminatory discharge brought by [Lambert] are not the type of ongoing, workplace disputes amenable to `open door' resolution as contemplated by the Open Door policy." The court held, moreover, that even if the parties intended to resolve workplace claims such as Lambert's through the Open Door program, the actual details of the policy were illusory and, therefore, inoperative. The court reached this conclusion by interpreting the policy as allowing Austin the unbridled discretion to grant arbitration to employees. This apparent lack of mutuality, in the court's view, rendered the program a nullity.

Austin now appeals the district court's denial of its motion to compel arbitration. For reasons articulated below, we reverse the court's order, concluding that the Open Door policy constituted a valid, enforceable agreement between Austin and its employees. We hold, moreover, that despite the fact that Lambert is no longer employed by Austin, the Open Door policy was designed to cover the particular type of workplace dispute Lambert's law suit presents.

II.

The "validity of an arbitration agreement is generally governed by the Federal Arbitration Act." Caley v. Gulfstream Aerospace Corp., 428 F.3d 1359, 1367 (11th Cir.2005). Under the FAA, a written agreement to arbitrate is "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. Accordingly, the FAA requires a court to either stay or dismiss a lawsuit and to compel arbitration upon a showing that (a) the plaintiff entered into a written arbitration agreement that is enforceable "under ordinary state-law" contract principles and (b) the claims before the court fall within the scope of that agreement. See 9 U.S.C. §§ 2-4; see also Paladino, 134 F.3d at 1061. Therefore, in determining Austin's motion to compel arbitration, we must determine whether Austin's Open Door policy is an enforceable contract under Georgia law and, if so, whether Lambert's claims fall within its scope. We address each issue in turn.

A.

Under Georgia law, a contract is enforceable if there is (a) a definite offer and (b) complete acceptance (c) for consideration. See Caley, 428 F.3d at 1373. Here, neither party disputes that Austin made an offer to Lambert: namely, that both Austin and Lambert (like Austin's other employees) would arbitrate all workplace disputes.⁵ Moreover, neither party disputes that Lambert accepted this offer by working at Austin.⁶ Rather, the parties disagree over whether Austin provided adequate consideration to make this contract legally enforceable. In particular, Lambert contends that since Austin effectively had the power to determine whether employees could arbitrate their disputes, Austin offered an illusory promise which made the agreement to arbitrate invalid and unenforceable.

To satisfy the consideration requirement under Georgia law, an accepting party to a contract can either tender bargained-for performance or make a mutual promise. O.C.G.A. § 13-3-42; see also Franklin v. UAP/GA. AG. CHEM, Inc., 237 Ga.App. 71, 514 S.E.2d 241 (1999). Thus, "mutual promises and obligations of the parties constitute[ ] sufficient consideration for the contract." Atlanta Six Flags P'ship v. Hughes, 191 Ga.App. 404, 381 S.E.2d 605, 607 (1989). However, where a party offers an illusory promise, a court will find inadequate consideration and deem the contract unenforceable. 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." Kemira, Inc. v. Williams Investigative & Sec. Servs., Inc., 215 Ga.App. 194, 450 S.E.2d 427, 431 (1994).

Here, Lambert argues that Austin offered an illusory promise with respect to the initiation of arbitration proceedings. In this regard, Lambert suggests that Austin's Open Door policy allows the company to determine not only when, but also if, an employee can arbitrate his workplace disputes. In pursuing this argument, Lambert relies on the following section of the Open Door policy:

If your dispute involves a legally protected right, such as sexual harassment or discrimination based on age, sex, or race, and you have not been able to resolve the dispute through discussions with supervisors in your chain of command or through meditation, you may request arbitration. All arbitrations under Open Door are conducted by members of the American...