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Georgia Courts: Arbitration Agreements Cover Post-Employment Conduct

In late September, the Georgia Court of Appeals issued two important decisions which will help employers enforce arbitration agreements against their former employees. In both Davidson v. A.G. Edwards & Sons, Inc. and Wedemeyer v. Gulfstream Aerospace Corporation, the appellate court compelled arbitration of tort claims that arose post-termination, broadly interpreting contractual provisions that called for arbitration of claims which “arose from” the employment relationship. – S.E.2d –, 2013 WL 5273105, at *2-3 (Ga. Ct. App. September 19, 2013); – S.E.2d –, 2013 WL 5391185, at *2-3 (Ga. Ct. App. September 27, 2013).

In both Davidson and Wedemeyer, former employees sued their former employers for defamation. In both cases, the plaintiffs alleged that their former employers made defamatory statements (a) about their work performance; (b) after they were no longer employed. Both employers invoked arbitration provisions in the employees’ employment contracts, seeking to compel them to arbitration. In both cases, the trial courts sided with the employers, ordering the parties to arbitrate. And in both cases, the appellate courts affirmed, holding that the plaintiffs’ employment contracts demanded arbitration, despite the fact that their defamation claims arose after the employment relationship ended.

In Davidson, the plaintiff sought to avoid arbitration of his defamation claim by arguing that “the terms of [the arbitration] clause do not extend to claims arising after the termination of employment.” 2013 WL 5273105, at *2 (emphasis added).  The appellate court observed that plaintiff’s argument presented a “question of . . . first impression” in Georgia. Id. The court therefore looked to the federal case law for guidance, and ultimately adopted the following test: “[The] controlling question should be whether the alleged tort of defamation ‘touch[ed] the underlying contract.’ Or, stated otherwise, did it involve significant aspects of the employment relationship.” Id. at *3 (emphasis added) (emphasis added) (citing Brown v. Coleman Co., 220 F.3d 1180, 1184 (10th Cir. 2000) and Morgan v. Smith Barney, Harris Upham & Co., 729 F.2d 1163, 1167 (8th Cir. 1984)). Since the employer’s defamatory statements related to the plaintiff’s work performance, the court concluded that they “touched [plaintiff’s] employment contract” and, therefore, that “the trial court did not err in granting [the employer’s] motion to compel arbitration . . .” Id.

The Court of Appeals reached a similar conclusion in Wedemeyer. The plaintiff in that case argued that, because the employer made defamatory statements post-termination, he “was not subject to the [employment contract] when his claims . . . arose.” 2013 WL 5391185, at *2. Further, he argued that his claims were “not covered claims” since they did not “arise from” the employment contract. Id. The court rejected both arguments. The court rejected plaintiff’s first argument because it found the arbitration provision embraced both pre-termination and post-termination claims which arose from the contract. 2013 WL 5391185, at *3. The plaintiff’s claims arose from the contract because there was a sufficient causal connection between his employment and the employer’s defamatory remarks. As the court reasoned, “[Plaintiff’s] claims . . . all arise from [an] incident that occurred during his employment . . . and that gave rise to his termination . . . Accordingly, there is at least a slight causal connection between [plaintiff’s] claims and his employment with [the employer].” Id. at *4.

Davidson and Wedemeyer indicate that Georgia courts will enforce well-drafted arbitration clauses against employees whose claims “touch upon” or “involve significant aspects of” the former employment relationship. This should be the case regardless of when the underlying conduct occurred. If an employee’s claims relate to his or her former employment, the employer will have a strong argument for compelling arbitration, even if the conduct of which it stands accused occurred well after the employment relationship ended.

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