                            PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


EDDIE L. HIGHTOWER,                    
                 Plaintiff-Appellee,
                 v.                               No. 01-1302
GMRI, INCORPORATED,
             Defendant-Appellant.
                                       
            Appeal from the United States District Court
       for the Eastern District of North Carolina, at Raleigh.
                W. Earl Britt, Senior District Judge.
                        (CA-00-187-5-BR)

                      Argued: September 26, 2001

                      Decided: November 14, 2001

     Before WILKINSON, Chief Judge, and NIEMEYER and
                   KING, Circuit Judges.



Reversed and remanded by published opinion. Chief Judge Wilkinson
wrote the opinion, in which Judge Niemeyer and Judge King joined.


                             COUNSEL

ARGUED: Keith Ashley Warren, FORD & HARRISON, L.L.P.,
Memphis, Tennessee, for Appellant. Carmen J. Battle, Fayetteville,
North Carolina, for Appellee. ON BRIEF: Carl K. Morrison, David
P. Knox, FORD & HARRISON, L.L.P., Memphis, Tennessee, for
Appellant. Walter T. Johnson, Jr., Greensboro, North Carolina, for
Appellee.
2                     HIGHTOWER v. GMRI, INC.
                             OPINION

WILKINSON, Chief Judge:

   Defendant GMRI, Inc. appeals the district court’s denial of its
motion to compel arbitration. Because Plaintiff Hightower agreed to
the binding arbitration provision in GMRI’s Dispute Resolution Pro-
cedure ("DRP") by, inter alia, acknowledging receipt of the DRP
materials and remaining employed after the DRP became effective,
we reverse and remand with instructions to compel arbitration.

                                  I.

   Plaintiff Eddie Hightower began employment with the Olive Gar-
den, which is owned and operated by Defendant GMRI, Inc., in
March 1998. In June 1998, he was assigned to an Olive Garden res-
taurant in Fayetteville, North Carolina where he served first as the
service manager and then as the culinary manager.

   In August 1998, Hightower attended a mandatory weekly restau-
rant meeting. The parties dispute what actually occurred at this meet-
ing. GMRI states that the meeting was a DRP "roll out" to inform
employees at the Fayetteville franchise about the implementation of
the DRP as the exclusive means of resolving employment disputes.
Yet, Hightower claims that only one percent of the meeting was
devoted to the DRP and that the GMRI representative who conducted
this portion of the meeting stated that there would be more informa-
tion provided at a DRP training session in the future.

   However, it is undisputed that Hightower attended the August
meeting and signed an attendance sheet acknowledging receipt of
GMRI’s DRP materials. The top of the form that Hightower signed
stated: "I have attended a DRP meeting and have received the infor-
mation in regards to DRP."

   GMRI’s DRP became effective on August 3, 1998. GMRI’s Dis-
pute Resolution Procedure consists of four steps: (1) open door policy
for informal review of work-related disputes; (2) peer review; (3)
mediation; and (4) binding arbitration. As a manager, Hightower was
                      HIGHTOWER v. GMRI, INC.                         3
responsible for informing employees that by continuing to work after
August 3, 1998 they were accepting the DRP. However, Hightower
claims that he never trained any employees about the DRP.

   Hightower was fired on November 17, 1998. On December 14,
1998, Hightower voluntarily submitted racial and religious discrimi-
nation claims for resolution under the mediation portion of the DRP.
However, no settlement agreement was reached and Hightower
refused to proceed to the fourth step of the DRP process, arbitration.
Instead, he filed a charge of discrimination with the EEOC, which
subsequently issued a "right to sue" letter on December 17, 1999.

   On March 20, 2000, Hightower filed this suit against GMRI in the
U.S. District Court for the Eastern District of North Carolina alleging
discriminatory conduct under Title VII of the Civil Rights Act of
1964 and the Thirteenth Amendment. On August 18, 2000, GMRI
filed a motion to dismiss or, in the alternative, to stay Hightower’s
action and compel arbitration under the DRP. GMRI sought relief
pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 3-4.

   On February 12, 2001, the district court, without explanation,
denied GMRI’s motion to compel arbitration. GMRI appeals from
this order pursuant to 9 U.S.C. §§ 16(a)(1)(A)-(B), which provide for
an appeal from an interlocutory decision refusing to grant a stay under
9 U.S.C. § 3 or denying an order to compel arbitration under 9 U.S.C.
§ 4.

   On April 26, 2001, the district court granted a motion to stay pro-
ceedings pending appeal to this court. In this order, the district court
explained that it denied GMRI’s motion to compel arbitration because
there was conflicting evidence as to whether Hightower assented to
the DRP process. Therefore, the district court concluded that no arbi-
tration agreement could be found to exist.

                                  II.

   In the FAA, 9 U.S.C. §§ 1-16, Congress endorsed arbitration as a
less formal and more efficient means of resolving disputes than litiga-
tion. The Supreme Court has noted that the FAA represents "a liberal
4                     HIGHTOWER v. GMRI, INC.
federal policy favoring arbitration agreements." Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
Because FAA provisions are mandatory, courts must compel arbitra-
tion when a valid arbitration agreement exists. See Dean Witter Reyn-
olds Inc. v. Byrd, 470 U.S. 213, 218 (1985). This prevents parties
from rushing to court whenever the prospect of arbitration appears
uninviting. To allow them to do so would undermine the clear federal
directive in support of arbitration.

                                  A.

   In order for a court to compel arbitration, the court must first find
that an arbitration agreement exists between the parties. If an agree-
ment is found to exist, the court must then decide whether the dispute
at issue falls within the scope of the agreement. To determine whether
the parties agreed to arbitrate, courts apply state law principles gov-
erning contract formation. See First Options of Chicago, Inc. v.
Kaplan, 514 U.S. 938, 944 (1995). There is no dispute that North Car-
olina law controls in this case and that the present dispute would fall
within the scope of GMRI’s DRP.

   Under North Carolina law, a valid contract "requires offer, accep-
tance, consideration, and no defenses to formation." Koltis v. N.C.
Dep’t of Human Res., 480 S.E.2d 702, 704 (N.C. Ct. App. 1997). At
issue in the present case is whether there was mutual assent, estab-
lished by way of offer and acceptance, to the DRP program such that
an agreement to arbitrate was formed between GMRI and High-
tower.* There is no dispute that GMRI intended to be bound by its
DRP. Therefore, we are required to determine whether, under North
Carolina law, Hightower also intended to be bound by the DRP.

   North Carolina has expressed strong support for utilizing arbitra-
tion to settle disputes. Johnston County, N.C. v. R.N. Rouse & Co.,
414 S.E.2d 30, 32 (N.C. 1992). This "strong public policy" has led the
North Carolina courts to conclude that "where there is any doubt con-
cerning the existence of an arbitration agreement, it should be
resolved in favor of arbitration." Martin v. Vance, 514 S.E.2d 306,

  *Hightower does not contend that consideration was lacking or that
there is a defense to contract formation.
                       HIGHTOWER v. GMRI, INC.                         5
309 (N.C. Ct. App. 1999). Thus, North Carolina law directs us to
favor arbitration in cases in which the facts support the conclusion
that the parties formed an arbitration agreement.

                                   B.

   The facts of this case plainly indicate the presence of an arbitration
agreement between GMRI and Hightower. It is undisputed that High-
tower attended the August, 1998 DRP meeting and signed an atten-
dance sheet acknowledging receipt of the DRP materials. After he
learned that the DRP was the exclusive method for resolving employ-
ment disputes, Hightower continued working at the Olive Garden for
approximately three months. These facts lend support to GMRI’s
assertion that Hightower knew of and assented to the DRP.

   Indeed, the Court of Appeals of North Carolina has held in similar
circumstances that continuing employment after learning of the exis-
tence of a DRP constitutes an employee’s agreement to be bound by
an arbitration agreement. In Howard v. Oakwood Homes Corp., 516
S.E.2d 879 (N.C. Ct. App.), review denied, 539 S.E.2d 288 (N.C.
1999), the court of appeals held that a plaintiff who received a copy
of the company’s dispute resolution procedure in the mail and contin-
ued work for less than three months after its effective date was bound
by the arbitration provision in the dispute resolution procedure. Id. at
882. The plaintiff was bound despite the fact that she did not sign the
agreement. Id. at 882-83. The Howard court noted that the plaintiff
had received actual notice of the terms of the arbitration agreement
and had previously submitted a claim for resolution under the DRP.
The court concluded that this evidence was "sufficient to show plain-
tiff knew that the terms of the DRP would apply to her should she
continue in her employment, and that by doing so, plaintiff mutually
assented to the program." Id. at 882. In fact, under North Carolina
law, "[c]ontinued employment with actual notice of the implementa-
tion of a dispute resolution program evidences an employee’s mutual
assent to the binding arbitration agreement contained therein." King
v. Oakwood Home, Inc., No. Civ. 1:99CV0059, 2000 WL 1229753
(M.D.N.C. Aug. 3, 2000); see also Howard, 516 S.E.2d at 882-83.

  The facts of the present case closely parallel those in Howard.
Hightower signed an attendance sheet at the August 1998 meeting
6                    HIGHTOWER v. GMRI, INC.
acknowledging receipt of the DRP materials. Thus, he had actual
notice of the DRP and knew that his assent to the DRP was a condi-
tion of continued employment with GMRI. After acknowledging
receipt of the DRP information, Hightower continued to work for
GMRI. By continuing employment with GMRI for three months after
he knew that the terms of the DRP would apply to him, Hightower
demonstrated acceptance of the DRP. Therefore, Hightower is bound
by its final, binding arbitration provisions.

   If there was any doubt that Hightower assented to binding arbitra-
tion, it is also telling that he was responsible for informing other
employees that reporting to work after the DRP’s August 3, 1998
implementation date constituted acceptance of its terms. And High-
tower initially brought his current claim under the mediation provi-
sion of the DRP before deciding he would rather go to court.
Accordingly, the evidence shows that Hightower agreed to be bound
by the arbitration provision in the DRP.

                                III.

  For the foregoing reasons, we reverse the judgment of the district
court and remand with instructions to stay Hightower’s action and
compel arbitration.

                                       REVERSED AND REMANDED
