By R. David Gallo
On August 5, 2021, the Georgia Court of Appeals overturned a trial court’s decision to compel arbitration between a physician, Vasudeva, and his former employer, Georgia Brain & Spine Center. Vasudeva v. Dagnew, 2021 WL 3417474 (Ga. App. Aug. 5, 2021). The Court held that the arbitration agreement in Vasudeva’s employment contract was not enforceable because the parties had not initialed the arbitration clause in accordance with Georgia law. The Georgia Arbitration Code (“GAC”) does not recognize arbitration clauses in “[a]ny contract relating to the terms and conditions of employment unless the clause agreeing to arbitrate is initialed by all signatories at the time of the execution of the agreement.” O.C.G.A.§ 9-9-2(c)(9).
In addition to signing the last page of Vasudeva’s employment contract, the parties had also initialed the bottom of each of the 26 pages of the contract. The arbitration clause started on the bottom of page 21 and carried over onto page 22. The only text on page 22 other than the arbitration clause was the words “Signatures on Following Page.” Because the parties had initialed page 21 “immediately adjacent to the Arbitration Provision,” and page 22, where the arbitration agreement was the only substantive text, the trial court determined that the parties had initialed their arbitration agreement per § 9-9-2(c)(9).
The Court of Appeals reversed, explaining that “[w]hether a valid and enforceable arbitration agreement exists is a question of law,” and concluding that, because “the initials are at the bottom left of every page of the agreement,” the parties had “acknowledg[ed] [] each page generally, not the arbitration clause specifically.” [Query whether the Court would have found Vasudeva’s arbitration clause enforceable if the parties had initialed every term, rather than every page.]
There is logic to the Court’s reasoning. The Court of Appeals has previously explained that the purpose of O.C.G.A. § 9-9-2(c)(9) is “to ensure that [signatories] are not compelled to give up their common law right of access to the courts unless they specifically acknowledge the intent to do so by initialing the arbitration clause.” Pinnacle Constr. Co. v. Osborne, 218 Ga. App. 366, 368 (1995) (emphasis added). Initialing every page of a contract may not fully serve this purpose.
On the other hand, the Pinnacle and Vasudeva decisions are adding a requirement to O.C.G.A.§ 9-9-2(c)(9) that may or may not be supported by the text of the law itself. Why must the parties’ initials demonstrate “specific” acknowledgment of the arbitration clause? And does “specific” acknowledgment of the arbitration clause need to be measured by the amount of attention given to other terms in the contract? In other words, why can’t an employer draw “specific” attention to every term in the contract (as Vasudeva’s employer arguably did)?
Whatever you think of the decision, the Court articulated a mostly clear rule of law that you can follow when drafting and executing employment contracts. Going forward, if you want an enforceable arbitration clause in an employment contract, make sure that the parties initial the clause in a manner that clearly indicates “specific” acknowledgment. For example, you can draft your contract so that the parties’ initials only appear once, next to the arbitration clause. Or, if you want the parties to initial multiple terms or pages, then you can include language to the effect that the parties hereby initial and specifically acknowledge the agreement to arbitrate.
About the author:
R. David Gallo specializes in business litigation and arbitration. Prior to moving to Atlanta, David studied under leading arbitration practitioners and scholars at Columbia Law School, practiced litigation and arbitration at two AmLaw 100 firms in New York, and taught arbitration at Fordham Law School.
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About the Arbitration Blog
This blog is a user-friendly resource for businesses and individuals who find themselves faced with issues involving arbitration. Perhaps you want to include an arbitration clause in your contract, or you are being asked to sign a contract with an arbitration clause. Maybe a dispute has arisen and you want to begin arbitration proceedings but you are not sure whether your arbitration clause covers the dispute (hint: it usually does). Perhaps you received a subpoena for documents in connection with an arbitration in which you are not otherwise involved. This blog provides you with answers to simple questions and will help you ask the right questions when confronted with more complex issues.
Among other topics, we cover how to draft an arbitration clause and what to expect in arbitration proceedings. We discuss the differences and similarities among arbitrations governed by Georgia law, federal law, and international law. We explore—in layman’s terms, whenever possible—the Georgia Arbitration Code, the Federal Arbitration Act, transnational law, and decisions from Georgia’s state courts, Georgia’s federal district courts, the U.S. Court of Appeals for the Eleventh Circuit, the U.S. Supreme Court, and foreign tribunals. We provide toolkits and checklists you can use to navigate everyday arbitration issues. We discuss the various contexts and industries in which we have handled arbitration issues for our clients, including:
- Breach of Contract
- Closely Held Company Shareholder Disputes
- Communications
- Construction
- Earn Out Disputes
- Employment
- Executive Separation/Severance
- Franchise Disputes
- Gaming
- International
- Mergers and Acquisitions
- Pharmaceuticals
- Real Estate
- Securities
- Trusts and Estates
- Vendor/Supplier Disputes
- Technology
- Trusts and Estates
We are available and eager to discuss your arbitration issues with you.
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