ARBITRATION OPINIONS INVOLVING THE FEDERAL ARBITRATION ACT

Three recent Court of Appeals of Georgia opinions discuss the impact of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., on disputes in Georgia.  These cases further demonstrate that disputes arising from arbitration agreements governed by the FAA are much more likely to actually be arbitrated than are disputes arising from agreements governed exclusively by the Georgia Arbitration Code.

Davidson v. A. G. Edwards & Sons, Inc. (FAA preempts Georgia’s signature requirement; FAA preempts Georgia’s prohibition against arbitration of “personal bodily injury” claims; and post-termination claims touching on the employment contract are arbitrable):

In the first case, Davidson v. A. G. Edwards & Sons, Inc., the employment contract of Davidson, a broker/dealer who served clients in at least 16 states, included an arbitration clause stating that any controversy between Davidson and his employer in respect to the agreement or his employment shall be resolved by arbitration. Davidson v. A. G. Edwards & Sons, Inc., 324 Ga. App. 172 (decided 9/19/2013). After Davidson’s voluntary retirement, his former employer sent a letter to his former clients, which prompted Davidson to file a complaint seeking damages for defamation. Id. at 172-3.  The trial court granted A. G. Edwards’ motion to compel arbitration and stay the proceedings and then granted Davidson’s motion for interlocutory appeal. Id. at 173. The Court of Appeals reiterated its ruling from prior cases that the FAA preempts the Georgia Arbitration Code’s signature requirement, including Georgia’s requirement that arbitration clauses be separately initialed.  Id.

In Davidson v. A. G. Edwards & Sons, Inc., the Court of Appeals also held for the first time that the FAA preempts Georgia’s statutory prohibition against arbitrating “personal bodily injury” claims, although the opinion also notes that “it appears that even if there were no preemption, Davidson’s defamation claim would not be excluded from arbitration under Georgia law.” Id. at 173-4.  The opinion also held that because the post-termination claim of defamation “touched Davidson’s employment contract,” the trial court did not err in granting the motion to compel arbitration. Id. at 174-5.

Wedemeyer v. Gulfstream Aerospace Corp., (arbitration agreement applied to former employees; and post-employment claims arising from employment are arbitrable):

Similarly, in the second case, Wedemeyer v. Gulfstream Aerospace Corp., the Court of Appeals found that it was clear that the arbitration agreement in that case applied to disputes involving former employees. Wedemeyer v. Gulfstream Aerospace Corp., 324 Ga. App. 47, 50 (decided 9/27/2013). This former employee’s claims of defamation, tortious interference with legitimate business opportunities, and lost income all arose from his employment and thus were arbitrable. Id. at 50-52.

Archer Western Contractors, LLC v. Holder Construction Company, (in FAA cases, defense of res judicata is for arbitrator to decide, not the trial court):

In the third case, the Court of Appeals held that, in contrast to controversies governed by the Georgia Arbitration Code, a Georgia court enforcing an agreement to arbitrate under the FAA does not need to first decide whether the dispute is barred by res judicata. Archer Western Contractors, LLC v. Holder Construction Company, 751 S.E.2d 908, 913-914 (decided 11/22/2013).  This is an issue for the arbitrator to decide. Id. at 914.

… the Eleventh Circuit has persuasively determined that a defense of res judicata is not a gateway dispute as to whether an agreement to arbitrate under the FAA is valid or whether a party’s specific claim falls within the scope of the agreement, but is rather a question, like waiver, laches, and estoppel, that bears on the final disposition of the parties’ dispute and thus presents an issue of arbitrability for the arbitrator to decide.

Id., citing Klay v. Unitied Health Group, 376 F.3d 1092, 1109 (11th Cir. 2004).