Erric Walker, Steve Ricketts, and Vickie Atchley, on Behalf of Themselves and All Others Similarly Situated v. Ryan's Family Steak Houses, Inc.

Defendant Ryan’s Family Steak Houses, Inc. appeals the October 2, 2003 order of the district court, denying its motion to dismiss and petition to compel arbitration, pursuant to the Federal Arbitration Act, 9 U..S.C. §§ 3 and .4, of Plaintiff Erric Walker’s, Steve Ricketts’, and Vickie Atchley’s claims' for violations of the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. §§ 201-219. For the reasons that follow, we AFFIRM.

I.

A. Procedural History

On November 12, 2002, Plaintiffs Erric Walker, Steve Ricketts, and Vickie Atchley *373 filed a self-styled “collective action” complaint for violations of the FLSA. against Defendant Ryan’s Family Steak Houses, Inc. (“Ryan’s”) in the United States District Court for the Middle District of Tennessee. Ryan’s is a Delaware corporation, with its principal place of business in South Carolina, and owns and operates a chain of over 300 restaurants in 22 states. Plaintiffs, former employees at various Ryan’s locations in Tennessee, allege that Ryan’s failed to pay them the minimum wage and/or one-and-one-half their regular rate of pay for all hours worked in excess of each 40 hour work week, in violation of the FLSA. After Plaintiffs filed suit, 18 additional unnamed plaintiffs filed their consent to become party plaintiffs in the lawsuit. Ryan’s moved to dismiss Plaintiffs’ complaint and petitioned for an, order compelling Plaintiffs to arbitrate their claims pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. §§. 3 and 4. Ryan’s argued that Plaintiffs federal court claims were foreclosed by the arbitration agreements that each had executed at the outset of their employment.

On October 2, 2003, the, district court denied Ryan’s motion, holding that there was inadequate consideration for the arbitration agreements, the agreements had the hallmarks of unconscionable adhesion contracts, the agreements were not founded upon mutual assent, and Plaintiffs did not knowingly and voluntarily waive their constitutional right to a jury trial. The court also held that the arbitration forum provided for in the agreements is not able to provide for effective vindication of statutory claims and is an inappropriate substitute for the judicial forum. The court observed that the pool of arbitrators would be constituted in a biased manner and that the limited discovery available in the forum suggested structural bias in favor of the employer. The court further determined that the arbitration agreements appear to prohibit arbitration of class-based claims, which provides a powerful disincentive for employees. to pursue individual claims of relatively low monetary value. Ryan’s timely appealed.,

B. Substantive Facts

Since 1996 or 1997, any individual who applies for employment with Ryan’s has been presented with a Í2-page application packet. The second page of the packet notifies the applicant that he or she is required to complete .and sign the “Job Application Agreement to Arbitration of EmploymenNRelated Disputes” (hereafter “Arbitration Agreement”) in order to be considered for a position. Failure to sign and accept the Arbitration Agreement and its related rules and procedures purportedly terminates the job application process. After the one-page notice come five pages of single-spaced rules and procedures governing the arbitration procedure. Only after wading through the rules does the applicant get to the one-page job application for the positions óf server, salad bar, dishwasher, frontline, hostess, meat-cutter, cook, breadroom, or cashier. The two-page Arbitration Agreement, which the applicant must sign, then follows the application. 1

. Plaintiffs cite several., examples of applicants who were hired on the spot after a 15 to '20 minute interview, during which the hiring manager hurriedly presented them with various documents that they were instructed to sign in order to be *374 considered for a job. The manager rarely explained the nature of the Arbitration Agreement to the applicants, nor were the applicants given the opportunity to take home and review any of the forms before signing or provided with copies of the executed Arbitration Agreement or rules. Consequently, many of the applicants do not even recall executing the agreements.

One Ryan’s employee, Nanella Dukes, was hired on the spot, without filling out any paperwork. Only after working for four or five days was Dukes handed the application packet and told to sign the documents, with her manager explaining that the agreement meant that if Dukes “ever had any problems with Ryan’s or Ryan’s management, [she] had to ‘go through Ryan’s arbitration.” ’ Plaintiffs Julie Oaks and Steven Ricketts also were hired on the spot without first completing the Arbitration Agreement. Oaks’s manager explained that the arbitration agreement meant that if Oaks ever had any problems with Ryan’s, she “had to ‘go through Ryan’s’ before [she] could go to an attorney.”

According to Dukes, based on her experience conducting new employee orientations, Ryan’s managers would place an “x” in every spot an applicant was required to sign, and applicants would be instructed to sign every “x” without any explanation. Dukes’s explanation of the application process is consistent with that of Paul Heuther, who worked as a manager at various Ryan’s restaurants over a ten-year period. Heuther states that the application process typically would last no longer than 20 minutes, applicants often would be hired on the day that they applied when managers presented the application packet, they would simply tell the applicants that if they wanted a job, “sign these documents here.” Heuther further explains, “Our supervisors at Ryan’s told us during manager meetings with them, that if it came up to tell any job applicant that the arbitration agreement meant that problems would be handled ‘up the chain of command,’ and that we would handle problems ‘in house’ first, and if the problem could not be resolved there, then it would be taken to the supervisor to resolve.”

Plaintiffs complain that the time-limited context in which they were presented with the Arbitration Agreement, combined with the managers’ provision of misleading information about the agreement, is particularly problematic because many of the plaintiffs have not completed high school and/or were in dire financial circumstances at the time of application and therefore were desperate for the low-wage jobs Ryan’s offers. Plaintiffs point out that the average annual salary for a top-paid Ryan’s restaurant worker is approximately $16,000, while minimum wage employees make approximately $11,000 annually. Accordingly, Plaintiffs suggest that they had neither the ability nor the incentive to comprehend the significance of executing the Arbitration Agreement.

Unlike the typical pre-employment arbitration agreement which involves a contract between the applicant and his or her potential employer, Ryan’s Arbitration Agreement is not between the applicant and Ryan’s. Rather, it is between the applicant and Employment Dispute Services, Inc. (“EDSI”). EDSI is a South Carolina corporation whose sole business is the marketing and administration of the Employment Dispute Resolution Program. The program is a third-party arbitration system which was established in 1992 to provide employers and employees outside of the securities industry with a purportedly fair and expeditious means of resolving employment-related disputes. EDSI has contracts with a total of seven companies, including Ryan’s.

*375 The Arbitration Agreement that Plaintiffs executed explains that Ryan’s (referred to therein as the “Company”) had entered into a separate agreement with EDSI “to arbitrate and resolve any and all employment-related disputes between the Company’s employees (and job applicants) and the Company.” Although Plaintiffs were not provided with a copy of Ryan’s separate agreement with EDSI, that agreement obligates EDSI to, inter alia, “administer and provide access to the EDSI alternative dispute resolution procedures and forum for all Company job applicants, employees, and the Company itself, as provided in the EDSI Rules and Procedures”; train managers and supervisors about the alternative dispute resolution program; and train managers and employees selected to serve as potential “adjudicators” in the program.' Also, for an additional fee, EDSI will conduct “an employee relations audit (personnel polices and procedures, handbooks and other personnel forms), management training, and employee attitude surveys with recommended management responses.” Ryan’s agreement with EDSI is renewable from year to year, but Ryan’s may cancel the contract with ten days’ written notice.

By executing the Arbitration Agreement with EDSI, Plaintiffs agreed to (a) bring any employment disputes that he or she may have against _ Ryan’s and that would otherwise be decided in a state or federal court only in EDSI’s arbitral forum 2 and (b) be bound by a final decision of the EDSI arbitration panel. The purported consideration for Plaintiffs’ promise to arbitrate is EDSI’s agreement “to provide an arbitration forum, Rules and Procedures, and a hearing and decision based on any claim or dispute [that the applicant] may file or defend[.]” According to the agreement, Ryan’s is a third party beneficiary of the agreement between Plaintiffs and EDSI, and Plaintiffs are third party beneficiaries of Ryan’s agreement with EDSI. The agreement continues for the period of Plaintiffs’ employment with Ryan’s, unless mutually terminated in writing by Plaintiffs and EDSI.

The 2000 version of EDSI’s Employment Dispute Resolution Rules and Procedures — the most recent version of the rules — provides that the substantive rights and remedies in EDSI’s arbitration forum are the same as - ,are available in a federal or state court. The rules govern .all legal disputes, claims, or causes of action that arise out of the employment or possible employment of all parties signatory to an employment dispute resolution agreement with EDSI. The rules govern both the claims of a “claimant” (i.e., an applicant or employee) and any claims that a signatory defendant might bring against a claimant who has signed the Arbitration Agreement. 3

The rules further provide that a panel of three “adjudicators” resolves arbitration claims and are chosen from three separate selection pools: (1) supervisors or managers of an employer signatory to an agreement with EDSI; (2) employees who are non-exempt from the wage and hour protections of the Fair Labor Standards Act; and (3) attorneys, retired judges, or other competent legal professional persons not associated with either party. No individual who has been employed by an employer *376 involved in the dispute can serve as an adjudicator.

EDSI provides the parties with a list of three potential adjudicators in each of the three selection pools. The parties have access to a schedule of the adjudicators’ fees and their employment history for at least the previous five years, along with related biographical information. Potential adjudicators also are required to disclose any information which may preclude them from making an objective and impartial decision.

Once EDSI selects the pools of potential adjudicators, the claimant and the defendant alternately strike names from each of the three selection pools until one name from each pool remains. Any potential adjudicator may be struck for cause. As a matter of EDSI practice, if an adjudicator is removed from the pool for cause, EDSI provides another potential adjudicator.

Once arbitration proceedings commence, 4 any party may serve a request for production of documents, and counsel for the parties have subpoena power. The rules also permit each party to schedule a deposition of one individual. A party may file a request for additional depositions, “but such requests are not encouraged and shall be granted in extraordinary fact situations and for good cause shown.”

Under the 2000 version of the rules, EDSI reserves the right to modify or amend the Rules after the date the claimant signs the Arbitration Agreement. The claimant, however, has the right to have his or her dispute resolved pursuant to the rules that were in effect at the time the agreement was signed, unless he or she prefers the modified rules.

II.

Plaintiffs filed a self-styled class action under the FLSA, seeking unpaid wages and related penalties against Ryan’s. Ryan’s argues that Plaintiffs’ action should not be in federal court at all and, pursuant to the FAA, moved to enforce the pre-employment arbitration agreements that Plaintiffs executed. For the reasons that follow, we hold that the district correctly refused to enforce Plaintiffs’ arbitration agreements as unenforceable under Tennessee law.

A. Standard of Review

This Court reviews de novo a district court’s decisions regarding both the existence of a valid arbitration agreement and the arbitrability of a particular dispute. Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 306, 311 (6th Cir.2000) (citations omitted).

B. Analysis

1. The FAA and State Law

“The FAA provides for stays of proceedings in federal district courts when an issue in the proceeding is referable to arbitration, [9 U.S.C.] § 3, and for orders compelling arbitration when one party has failed, neglected, or refused to comply with an arbitration agreement, [id] § 4.” Gilmer v. Inter state/Johnson Lane Corp., 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). “The FAA expresses a strong public policy favoring arbitration of a wide class of disputes.” Cooper v. MRM Investment Co., 367 F.3d 493, 498 (6th Cir.2004). The Sixth Circuit has repeatedly applied the FAA to arbitration agreements formed in the employment setting. E.g., Cooper, supra; McMullen v. Meijer, Inc., 355 F.3d 485 (6th Cir.2004) (per curiam); *377 Floss, supra. In particular, statutory claims may be the subject of an arbitration agreement, including employment discrimination claims and claims under the FLSA. Gilmer, 500 U.S. at 26-35, 111 S.Ct. 1647 (holding that there had been no showing that Congress intended to preclude the arbitration of claims under the Age Discrimination in Employment Act); Floss, 211 F.3d at 313 (holding that FLSA claims may be arbitrable).

The FAA provides that “[a] written provision in ... a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. “Thus, generally applicable state-law contract defenses like fraud, forgery, duress, mistake, lack, of consideration or mutual obligation, or uneonscionability, may invalidate arbitration agreements.” Cooper, 367 F.3d at 498 (citations omitted). “The federal policy favoring arbitration, however, is taken into consideration even in applying ordinary state law.” Id. (internal quotation marks and citations omitted).

2. Choice of Law

Tennessee law applies when analyzing the enforceability of the three named Plaintiffs’ Arbitration Agreements because the agreements were executed in Tennessee and substantially performed in that state. See Cooper, 367 F.3d at 499 (holding that the district court correctly looked to Tennessee law to determine whether arbitration agreement was enforceable because the agreement was executed there, the plaintiffs employment and the alleged wrongful conduct occurred there, and neither party expected any other state’s law to apply); Floss, 211 F.3d at 314 (“In deciding whether the agreements are enforceable, we examine applicable state-law contract principles.”) (citations omitted). Ryan’s argues, however, that the laws of other states apply to the plaintiffs who have opted-in to this litigation and who worked at Ryan’s locations outside of Tennessee. Ryan’s further argues that the district court violated its due process rights by applying only Tennessee law to address its motion to compel arbitration with respect to these opt-in plaintiffs. We disagree.

The Supreme Court has held that application of only one state’s law in the context of a class action may violate the due process clause of the Fourteenth Amendment and the Full Faith and Credit Clause of Article IV, § 1 of the Constitution. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 821-22, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985) (holding that, for Kansas law to apply to class action by gas company investors seeking to recover interest on royalties, Kansas must have a significant contact or significant aggregation of contacts to the claims asserted by each member of the Plaintiff class, in order to ensure that the choice of Kansas law is not arbitrary or unfair). No constitutional problem exists in this case, however, if Tennessee law does not “conflict[] in any material way with any other law which could apply. There can be no injury in applying [Tennessee] law if it is not in conflict with that of any other jurisdiction connected, to this suit.” Id. at 816, 105 S.Ct. 2965.

Ryan’s has failed to demonstrate how Tennessee contract law materially conflicts with that of any other jurisdiction in which some of the opt-in plaintiffs worked. Ryan’s has failed to show that the law of any -other jurisdiction does not, like Tennessee, require consideration or mutuality for a valid contract or refuses to enforce unconscionable contracts. Instead, Ryan’s *378 cites to federal and state court decisions from other states which have enforced Ryan’s Arbitration Agreement in other factual settings. These decisions, however, do not establish a material conflict in basic contract principles among the states. Indeed, judges within a state often reach different results in cases when applying identical state laws. Compare Tenaglia v. Ryan’s Family Steak Houses, Inc., No. 4:02-2684-25BH, slip op. at 13-21 (D.S.C. May 9, 2003) (copy in Addendum to Ryan’s Brief) (applying South Carolina law; compelling arbitration after rejecting arguments that contract should be voided as an unconscionable contract of adhesion or due to lack of mutuality and consideration, duress, fraud in the inducement, or because the Plaintiff did not knowingly and voluntarily consent to arbitration) with Brown v. Ryan’s Family Steak Houses, Inc., No. 2:03-2582, slip op. at 10-11 (D.S.C. Feb. 27, 2004) (copy in Addendum to Plaintiffs’ Brief) (applying South Carolina law; refusing to compel arbitration because the plaintiff lacked the capacity to consent to arbitration and because the plaintiff did not knowingly and voluntarily consent to arbitration). Because Ryan’s has failed to demonstrate any relevant contradiction between Tennessee law and the law of another state, we reject Ryan’s asserted constitutional prejudice stemming from the district court’s reliance on Tennessee law to determine the enforceability of any of Plaintiffs’ Arbitration Agreements.

3. Consideration

In Floss, supra, this Court addressed the propriety of virtually the identical arbi-tral scheme at issue in this case and, as in this case, applied Tennessee contract law. At issue was the arbitrability of Plaintiffs Sharon Floss’s and Kyle Daniels’s FLSA claims in light of the arbitration agreement that they had executed with 'EDSI as part of their application for employment with Ryan’s. As in this case, the plaintiffs argued that the EDSI rules and procedures did not allow them to effectively vindicate their FLSA claims on the grounds that the procedures allow for the appointment of a biased panel of arbitrators and unduly limited their discovery opportunities. Floss, 211 F.3d at 313-14.

After voicing its concerns over EDSI’s arbitrator selection process, the Floss Court held that the plaintiffs were not bound by their arbitration agreements because, as a matter of Tennessee law, EDSI had not provided adequate consideration for the plaintiffs’ promise to submit any dispute that they may have with Ryan’s to arbitration with EDSI. Floss, 211 F.3d at 314-16. According to the EDSI rules then in effect, EDSI had reserved the right to alter the applicable rules and procedures without any obligation to notify or receive the consent of the plaintiffs. Id. at 315-16. The Court held that EDSI’s right to choose the nature of its performance rendered its promise “fatally indefinite” and, therefore, lacking in consideration. Id. at 316.

In response to the holding in Floss, EDSI amended its rules and the Arbitration Agreement in 2000. As under prior versions, the 2000 rules give EDSI the right to modify or amend the rules after the date the claimant signs the Arbitration Agreement. The rules, however, include the following additional language: “[I]n the event these Rules and Procedures are modified after a Claimant has signed an Agreement, the claimant shall have the option to have his or her claim adjudicated under the Rules and Procedures that were in effect on the date the Agreement was signed or the Rules and Procedures that are in effect on the date their claim is filed with EDSI.”

*379 EDSI amended the Arbitration Agreement to be consistent with the revised rules. The Arbitration Agreement used to provide that any employment-related dispute would be brought only in EDSI’s arbitration forum and under its rules and Procedures, “as modified from time to time.” The new agreement omits the “as modified from time to time” language and adds the following: “However, should the EDSI Rules and Procedures be amended, I shall have the right to choose'to have my employment-related dispute resolved under the Rules and Procedures that are in effect on the date I sign this Agreement or the Rules and Procedures in effect on the date I file a claim with EDSI.”

Ryan’s maintains' that these linguistic changes to the rules and the agreement cure the consideration problem that the Floss court identified; they argue that EDSI’s promise is not illusory because Plaintiffs can insist on the rules in effect at the time they entered into their Arbitration Agreements. Plaintiffs disagree, arguing that EDSI still maintains the right to modify or amend the rules without notice or consent.

We hold that Plaintiffs have the better argument because they signed the identical Arbitration Agreement at issue in Floss. Their agreements explicitly reserve EDSI the right to modify or amend the rules from time to time, without providing Plaintiffs the- right to insist on the rules in effect at the time that they executed their respective agreements. Although the 2000 version of the rules purport to afford Plaintiffs the right to enforce the rules in effect at the time of execution, Plaintiffs’ agreements do not incorporate that right. Each of their agreements statés that “My Agreement ... contains the entire understanding and agreement of the parties regarding these subjects” and that “My Agreement may not be altered or amended, except in writing signed by the President of EDSI and Me.” 5 There is no evidence in the record that any of Plaintiffs agreed in writing with the EDSI’s President to adopt the 2000 version of the rules or that Plaintiffs provided any new consideration for EDSI’s new promise to disregard (upon Plaintiffs’ request) any post-execution amendments to its rules. Accordingly, as far as the named Plaintiffs are concerned, EDSI still retains the unfettered contractual right to alter or amend the rules and procedures, including the right to eliminate the rule added in 2000 that purports to give the claimant the right to enforce the rules and procedures that existed at the time that he or she executed the agreement. - Therefore, Plaintiffs’ Arbitration Agreements are no different from the agreements at issue, and held to be unenforceable, in Floss due to inadequate consideration from. EDSI. 6

Arguably, the consideration for Plaintiffs’ promises to arbitrate derives from a source other than EDSI, such as a promise by Ryan’s, which claims to be a third-party beneficiary of the contracts between EDSI and Plaintiffs. See Restatement (Seoond) of CONTRACTS § 71(4) (“The performance or return promise [as consideration for a promise] may be given to the promisor or to some, other person. It may be given by the promisee or by some other person.”). We hold, however, that Ryan’s has not provided adequate consideration.

*380 Adequate consideration cannot take the form of Ryan’s promise to submit any claims it may have against Plaintiffs to EDSI’s arbitral forum. As explained by one district court:

EDSI is bound by its promise to Plaintiffs only to the extent that Ryan’s is bound to submit to the forum, for without Ryan’s consent EDSI can provide no benefit to Plaintiffs.' EDSI/Ryan’s Contract contains an escape clause whereby Ryan’s can cancel its Contract with EDSI on ten days notice.... This provision stands in clear contrast to the mutual termination clause found in the Arbitration Agreement, thus negating any consideration that Plaintiffs might be deemed to receive from EDSI’s promise to provide the forum. Similarly, the ten-day escape clause eliminates consideration that might otherwise exist or flow from Plaintiffs’ “third-party beneficiary” status, as alluded to in the Arbitration Agreement.

Geiger v. Ryan’s Family Steak Houses, Inc., 134 F.Supp.2d 985, 1001 (S.D.Ind.2001). Indeed, we question whether the agreement between EDSI and Ryan’s even obligates Ryan’s , to submit to EDSI’s. arbitral forum at all. The EDSI/Ryan’s agreement merely obligates EDSI (for a fee from Ryan’s) to “[a]dminister and provide access to the EDSI alternative dispute resolution procedures and forum for all Company job applicants, employees, and the Company itself, as provided in the EDSI Rules and Procedures.” (J.A. 1758.) (emphasis added). Notably, the agreement does not require Ryan’s to submit its employment claims to the EDSI forum. Thus, the Arbitration Agreements that Plaintiffs executed misrepresent the meaning of the EDSI/Ryan’s agreement by stating that Ryan’s “has entered into an agreement with [EDSI] to arbitrate and resolve any and all employment-related disputes between the Company’s employees (and job applicants) and the Company.” In truth, it is only the Ryan’s applicant or employee who has agreed to bring any employment-related dispute exclusively in the EDSI arbitration forum. See, e.g., J.A. 108 (Arbitration Agreement, § B.l) (“Any employment-related dispute ... will be brought ONLY in the EDSI arbitration forum ....”) (emphasis in original). Although the EDSI/Ryan’s contract refers to EDSI’s rules, and those rules govern any employment claim Ryan’s may have against an applicant or employee, see J.A. 310 (EDSI/Ryan’s Contract, Article II, § 1(a), (b)), the rules do not require Ryan’s to submit to the EDSI forum to resolve its employment disputes. Even if the rules did so provide, Ryan’s promise to submit to that forum would be “fatally indefinite” because (a) Plaintiffs’ Arbitration Agreements reserve EDSI’s right to modify those rules and (b) Ryan’s exerts significant financial control over EDSI 7 and, hence, the rules that supposedly bind Ryan’s. Floss, 211 F.3d at 316.

Without any supporting Tennessee authority, Ryan’s argues that the fact that it would not consider Plaintiffs’ employment applications without their prior agreement to arbitrate constitutes sufficient consideration for Plaintiffs’ promises to arbitrate. One district court has rejected this argument under Indiana law, holding that “merely a promise to consider an applicant’s application, not employ her, ... standing alone, .will not bear the weight required to allow us to construe the Arbitration Agreement as a binding contract.” Geiger, 134 F.Supp.2d at 1001-02; see also Penn v. Ryan’s Family Steak Houses, Inc., 269 F.3d 753, 760-61 (7th Cir.2001) (holding that there was no consideration *381 for the plaintiffs arbitration agreement with EDSI; noting that “the defendants provide no evidence that any Indiana court has ever held that a mere promise to consider an application for employment would provide consideration for a separate contract”). We similarly conclude that Ryan’s has failed to demonstrate that, under Tennessee law, an employer’s promise to consider an employment application is adequate consideration for a promise to arbitrate employment disputes that are wholly unrelated to the application or hiring process. Moreover, the record in this case suggests that Ryan’s has considered applications and hired applicants without first requiring them to execute an arbitration agreement. Nanella Dukes, Julie Oakes, and Steven Ricketts all were interviewed and hired without first completing their Arbitration Agreements, suggesting that Ryan’s promise to consider 'only applicants who have agreed to arbitrate is illusory, and therefore inadequate, consideration for a promise to arbitrate any kind of employment-related dispute.

4. Knowing and Voluntary Waiver of Right to File Suit in Federal Court

Citing this Court’s holding in KMC Co. v. Irving Trust Co., 757 F.2d 752 (6th Cir.1985), the district court held that Plaintiffs could not be compelled to arbitrate their claims because they did not knowingly and voluntarily waive their constitutional right to a jury trial. See KMC, 757 F.2d at 755-56 (holding that the parties to a contract may by prior written agreement waive the right, to jury trial as long as the waiver is knowing and voluntary). A panel’s recent decision in Cooper characterized KMC’s adoption of the knowing and voluntary standard as dictum, but nevertheless applied the standard. See Cooper, 367 F.3d at 507 (holding that “a party who enters an arbitration agreement necessarily consents to the clear and obvious consequence: the surrender of his right to go to trial”). We need not struggle with the question of whether KMC is binding precedent on this issue, because the en banc Court in Morrison v. Circuit City Stores, Inc., 317 F.3d 646, 668 (6th Cir.2003) (en banc) clearly adopted the knowing and voluntary standard for agreements to arbitrate in lieu of litigation.

According to Morrison, to evaluate whether a plaintiff has knowingly and voluntarily waived his or her right to pursue employment claims in federal court, the following factors must be evaluated: (1) plaintiffs experience, background, and education; (2) the amount of time the plaintiff had to consider whether to sign the waiver, including whether the employee had 'an opportunity to consult with a lawyer; (3) the clarity of the waiver; (4) consideration for the waiver; as well as (5) the totality of the circumstances. Id. (quoting Adams v. Philip Morris, Inc., 67 F.3d 580, 583 (6th Cir.1995)). The district court correctly held that these factors demonstrate that Plaintiffs did not knowingly and voluntarily consent to arbitration.

First, most of the plaintiff class have not completed high school, and most were in dire financial circumstances at the time of application. The average annual salary for a top-paid Ryan’s restaurant worker ..is approximately $16,000, while minimum wage employees make approximately $11,00.0 .annually. Accordingly, the district court .did. not err in concluding that the experience, background, and level of education of the plaintiffs was “low to mid-level.” .

Second, Plaintiffs typically were hired on the spot after a brief'interview, during which the hiring manager hurriedly presented them with various documents that *382 they were instructed to sign in order to be considered for a job. According to one opt-in plaintiff, Ryan’s managers would place an “x” in every spot an applicant is required to sign, and applicants would be told to sign every “x” without any explanation. The hiring manager usually would not mention the arbitration agreement, and Plaintiffs had no opportunity to take the Arbitration Agreement home or consult an attorney, even though the agreement purports to afford them that right. Unlike the arbitration agreement found to be knowingly and voluntarily executed in Morrison because the plaintiff had three days to withdraw her 'consent, Morrison, 317 F.3d at 668, Plaintiffs were given no option to revoke their consent to the Arbitration Agreement.

Additional evidence suggests that, on those occasions when Ryan’s managers would discuss the agreement, they would provide misleading information. Plaintiff Julie Oaks’s manager explained that the arbitration agreement meant that if Oaks ever had any problems with Ryan’s, she “had to ‘go through Ryan’s’ before [she] could go to an attorney.” Paul Heuther, a former manager at various Ryan’s restaurants, explained that “supervisors at Ryan’s told us during manager meetings with them, that if it came up to tell any job applicant that the arbitration agreement meant that problems would be handled ‘up the chain of command,’ and that we would handle problems ‘in house’ first, and if the problem could not be resolved there, then it would be taken to the supervisor to resolve.” It is no surprise, therefore, that many of the plaintiffs do not even recall executing agreements that preclude them from vindicating their rights in state or federal court.

Third, the Arbitration Agreement’s waiver provision states that the claimant agrees that any disputes with Ryan’s “which would otherwise be decided in court, shall be resolved only through arbitration in the EDSI forum and NOT THROUGH LITIGATION IN STATE OR FEDERAL COURT.” (J.A. 303) (emphasis in original). The district court found that the waiver provision is explicit, but not clear because it does not use more commonly understood waiver language about forgoing the right to have claims heard at “trial” or by a “jury.” Cf. Buraczynski v. Eyring, 919 S.W.2d 314, 322 (Tenn.1996) (affirming motion to compel arbitration of agreement that stated, “BY SIGNING THIS CONTRACT ... YOU ARE GIVING UP YOUR RIGHT TO A JURY OR COURT TRIAL”) (emphasis in original). We are not entirely persuaded by the district court’s reasoning because the Arbitration Agreement does refer to the fact that the signatory agrees to arbitrate claims “which would otherwise be decided in court,” conveying the key point that the signatory will not be able to bring a claim in court. And, although the waiver provision does not refer to relinquishing the right to a jury trial, this Court has held that “a party who enters an arbitration agreement necessarily consents to the clear and obvious consequence: the surrender of his right to go to trial.” Cooper, 367 F.3d at 508 (citation omitted). Nevertheless, the district court’s conclusion is supported by the fact that most of the plaintiffs lack even a high school degree and, therefore, were at a disadvantage when attempting to comprehend the Arbitration Agreement’s legalistic terminology. The court’s conclusion is further supported by the fact that Ryan’s managers appeared to have provided misleading information to several of the plaintiffs about what rights they would relinquish upon executing the Arbitration Agreement, providing them with a confused interpretation of the waiver language.

*383 Fourth, for the reasons discussed above, the court correctly held that the agreements lacked consideration.

Like the district court, we hold that an analysis of the above-stated factors support the conclusion that Plaintiffs did not knowingly and voluntarily execute their Arbitration Agreements. Accordingly, the district court did not err in refusing to enforce them on this ground.

5. Mutual Assent

The district court found that there was strong evidence that the Arbitration Agreements between Plaintiffs and EDSI did not result from a meeting of the min