RICHARD W. STORY, District Judge.
This case comes before the Court on Defendants' Motions to Compel Arbitration [6, 14]. After reviewing the record and conducting an evidentiary hearing,
Plaintiffs brought this action under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq., to recover unpaid minimum and overtime wages. Defendants include the owners and managers of the nightclub Pleasers. Plaintiff E'lise Z. Henlsey worked as a dancer at Pleasers from approximately June 2011 until August 2014, when the club burned down.
Defendants seek to compel arbitration based on an arbitration agreement they say Plaintiffs agreed to by either signing or continuing to work once Plaintiffs were advised of the new arbitration policy. Plaintiffs deny that they entered into a valid arbitration agreement.
The Court finds that in February 2014, Defendants sought to implement a new arbitration policy for its dancers that required the dancers and Pleasers to submit covered claims (including FLSA claims) to arbitration on an individual basis. (
(Dkt. [6-1] at 8.)
Dorsey told Mitchell she was required to sign it but did not tell her if there were any consequences of refusing to sign. However, Mitchell testified that she heard a piece of paper was circulating and that the dancers needed to sign it or they would be "let go." She signed the paper, conceding she did not read the contents and did not care what they said. She did not receive a copy to take with her.
Hensley never met with Dorsey. She testified that she was approached in the changing room by a bartender known as Star, another Plaintiff in this action whose legal name is Nikkea S. Wilson. Wilson told Hensley that she needed to sign a document or would get in trouble. Hensley refused and was not told what the document was, although she believes it was the arbitration agreement. Wilson later testified that the document was not an arbitration policy at all but was an employee handbook. While Dorsey testified that he met with Hensley about the arbitration policy, he acknowledged that Hensley did not sign the agreement and that he told her she was not required to sign it. There is no evidence Hensley read the document. So, even if Hensley and Dorsey actually met, the Court finds that Hensley never signed the arbitration agreement, did not receive a copy of it, did not know its terms, and believed there were no consequences of not signing it.
By August 2014, Pleasers decided to implement an arbitration agreement applicable to all employees, including bartenders like Wilson. Wilson did not meet with Dorsey until August 21, 2014, a few of days before Pleasers burned. Wilson went back to Dorsey's office during her shift to get change for her customers. At that time, Dorsey asked her to sign a document. He told her she had to sign it or she would not have a job. When she signed, she was only given the final page and did not know what arbitration was. Before leaving Dorsey's office, Dorsey gave her two or three pages of the agreement. She returned to work the next day, which was her last before Pleasers burned down.
The Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq., "embodies a `liberal federal policy favoring arbitration agreements.'"
Plaintiffs argue that they did not enter into arbitration agreements because Defendants did not make a definite offer and Plaintiffs never communicated acceptance of the agreement. Moreover, Plaintiffs assert that the arbitration agreements are procedurally and substantively unconscionable. The Court first analyzes whether Defendants made, and Plaintiffs accepted, any offer before turning to unconscionability.
Under Georgia law, "[a] definite offer and complete acceptance, for consideration, create a binding contract."
Mitchell briefly met with Dorsey, and she admits signing the contract. She stated Dorsey did not explain what the agreement was, but she further admits she did not care. She was also aware that an agreement was circulating and that dancers were required to sign it to keep their jobs. So, she signed it without reading and kept working.
"A person is bound by any contract he signs without reading unless he can show: (1) an emergency at the time of signing that would excuse his failure to read; (2) the other party misled him by an artifice or device which prevented him from reading; or (3) a fiduciary or confidential relationship existed on which he relied in not reading the contract."
Mitchell does not show any of the above factors were present. The only possible factor at issue is that Defendants misled her to prevent her from reading the agreement. Even assuming Dorsey did not explain the terms of the agreement, Mitchell admits she chose not to read the contract and did not care what the contents were. Moreover, Plaintiffs acknowledge that the fact they were presented with the final page of the agreement, standing alone, does not defeat the contract. (Pls.' Resp., Dkt. [13] at 6.) The Court therefore finds that Defendants offered and Mitchell accepted the contract because she signed it and Defendants did not mislead her to prevent her from reading it.
Hensley denies ever meeting with Dorsey about an arbitration agreement. Hensley never signed the agreement and testified that she never received a copy of it, either. In fact, the only time she thought she might have been presented with an arbitration agreement (by Wilson, the bartender), it turned out the document was an employee handbook. Based on Hensley's testimony, the Court finds that she did not receive a copy of the arbitration agreement and never had an opportunity to review it. And even if she met with Dorsey, he acknowledges telling her she did not have to sign the agreement but did not explain that she could be bound by continuing her employment. Thus, the Court finds that Hensley did not know the terms of the arbitration policy and did not know that continued employment could constitute acceptance despite her refusal to sign it. Accordingly, the Court finds that Defendants have failed to carry their burden to show that Hensley unequivocally accepted the arbitration agreement.
Wilson signed the arbitration agreement in her meeting with Dorsey, and she received a copy to take home with her. While she was only presented the last page of the agreement at the time she signed it, as explained above, there is no evidence Defendants misled her or would have prevented her from reading the rest of the agreement if she had asked to. The final page stated the agreement was an arbitration agreement, and it also expressly stated that continued employment would constitute acceptance. She was then given two or three pages of the three-page agreement to take with her, providing her further opportunity to review the agreement.
Wilson then came to work the following day. Continuing to work was an express method of acceptance. Courts have upheld arbitration agreements when the agreement "expressly established that the proper manner of accepting its terms was continued employment."
For a contract to be found unconscionable under Georgia law, there generally must be both procedural and substantive unconscionability.
Georgia law sets a high bar for the finding of unconscionability. As the Georgia Supreme Court has explained, "[a]n 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."
Given the high bar for finding unconscionability, the Court concludes that the agreements at issue here were neither substantively nor procedurally unconscionable. The arbitration agreement is plainly not substantively unconscionable, and Plaintiffs do not appear to argue that it is. Notably, both parties are required to submit their claims to arbitration, although even a lack of mutuality would not render an arbitration agreement unconscionable.
Even if the agreement were substantively unconscionable, the Court further finds that the process by which Plaintiffs consented to the agreements was not unconscionable. The Court recognizes that Plaintiffs lacked legal and business training and lacked equal bargaining power with their employers. As Plaintiffs testified, they needed their jobs. Still, courts have held that disparity in bargaining power is often present in the employment context and is not sufficient to show unconscionability unless circumstances show that it is extremely one-sided.
Finally, Plaintiffs contend that the timing of Defendants' adoption of the new arbitration policy on February 14, 2014, rendered the agreements procedurally unconscionable. Plaintiffs state that Defendants instituted the new policy days after Defendants answered a separate but related collective action against them.
In sum, the Court finds that the arbitration agreements are neither substantively nor procedurally unconscionable, and Plaintiffs Mitchell and Wilson are required to submit their claims to arbitration.
For the foregoing reasons, Defendants' Motions to Compel Arbitration [6, 14] are