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By: Brad Adler and Will Collins
A recent Georgia Court of Appeals case not only reinforced that state law permits the Federal Arbitration Act (“FAA”) to control arbitration agreements, but also illustrated that state law broadly interprets and defines claims arising from employment when determining whether a claim is covered by an arbitration agreement. In Waffle House, Inc. v. Pavesi, 2017 Ga. App. LEXIS 442, No. A17A1281 (October 4, 2017) the Georgia Court of Appeals held that an employee’s personal injury claims for negligent hiring, supervision, and retention of a co-worker were all covered claims subject to mandatory arbitration under the arbitration agreement signed by the employee because: (1) the agreement showed intent to be governed by the FAA and that intent was not destroyed by merely referencing that the agreement is governed by Georgia law; and (2) the agreement covered the claims arising out of employment and, under Georgia law, this language is interpreted broadly such that “nothing more than a causal connection is required to show that a claim arose out of that relationship.”
In October of 2015, the Waffle House franchise where the complainant, Brian Mikeals, worked was re-purchased from the franchisee by Waffle House, Inc. At that time, all employees were required to re-apply for non-probationary employment and complete on-boarding paperwork, including an arbitration agreement. Mikeals entered into the arbitration agreement on November 6, 2015 and again on November 14, 2015, due to a problem in the Waffle House computer system requiring employees to complete the paperwork for a second time.
In December of 2015, Mikeals suffered a severe injury at work after a co-worker placed an illegal substance in his drink. After Mikeals’ court appointed guardian initiated this suit, Waffle House filed an emergency motion to compel arbitration. The trial court denied the motion; however, the Court of Appeals reversed.
First, where the agreement stated that it “should be construed in a manner consistent with the principles and provisions of the Federal Arbitration Act … [T]his Agreement shall be governed by and interpreted in accordance with the laws of the State of Georgia” the Court of Appeals found that the language demonstrated the parties’ intent to be bound by the FAA. Contrary to the trial court, the Court of Appeals concluded that the passing reference to a Georgia choice of law provision did not transform the intent of the parties to be subject to the Georgia Arbitration Code. Instead, the court emphasized that Georgia law permits the parties to agree to arbitrate claims and elect that such arbitration will be governed by the FAA.
Second, the court reinforced the broad application and coverage of claims arising from an employment relationship. Here, the arbitration agreement covered all claims “arising out of any aspect of or pertaining in any way to [Mikaels’] employment” and included specific language listing tort claims as covered. Before even discussing that the claims in this case were tort claims that the agreement expressly covers, the court emphasized that it has a long history of broadly including claims arising from a special relationship, requiring “nothing more than a causal connection . . . to show that a claim arose out of that relationship.” According to the court, the only claims that do not arise out of an employment relationship are those “which do not have any relationship to an employee’s work or relationship to the employer.” So, the bottom line is that this decision reinforces the need to be deliberate and wise in drafting an arbitration clause and further highlights a tendency in many courts to view an arbitration provision with a wide lens.
If you have questions or would like more information, please contact Brad Adler at [email protected] or Will Collins at [email protected].