McCaskill, Gloria v. SCI Mgmt Corp

In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 00-2839

GLORIA J. MCCASKILL,

Plaintiff-Appellant,

v.

SCI MANAGEMENT CORPORATION,

SCI ILLINOIS SERVICES INCORPORATED,

doing business as EVERGREEN CEMETERY,

SAM SMITH, et al.,

Defendants-Appellees.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 00 C 1543—Suzanne B. Conlon, Judge.

____________

ARGUED JANUARY 26, 2001Œ—DECIDED AUGUST 5, 2002

____________

Before BAUER, MANION, and ROVNER, Circuit Judges.

BAUER, Circuit Judge. Gloria J. McCaskill, an African-

American female, was employed at Evergreen Cemetery

Œ

The panel issued an opinion on April 4, 2002, McCaskill v.

SCI Management Corp., 285 F.3d 623 (7th Cir. 2002). The ap-

pellees then petitioned for rehearing, and a majority of the panel

voted to rehear the case, vacating the panel opinion. McCaskill

v. SCI Management Corp., No. 00-2839, 2002 WL 1362232 (7th

Cir. Jun. 24, 2002). Because the issues in the case remained

the same, it was determined that no further argument was nec-

essary and the matter would be decided on the record. FED. R.

APP. P. 40(a)(4).

2 No. 00-2839

as a pre-need sales person. (Evergreen’s parent company

is SCI.) McCaskill’s duties included selling funeral goods

and services prior to death. She performed these tasks

well and was quickly promoted to a management posi-

tion. After being employed for one year, McCaskill was pre-

sented with a document, which included an arbitration

provision, and was required to sign it as a condition of

continued employment. The arbitration provision stated

that disputes between employee and employer would be

decided by binding arbitration. Also, among other things,

the agreement stated that each party would bear his or her

own legal fees and costs.

In 1999, McCaskill complained to management on be-

half of several other female employees about the sexual

harassment of the female employees by a male supervi-

sor. McCaskill also complained about not receiving cer-

tain sales bonuses. Shortly thereafter, McCaskill’s employ-

ment was terminated. McCaskill filed a complaint with

the Equal Employment Opportunity Commission (EEOC)

and received a right-to-sue letter. McCaskill then filed

suit alleging violations of Title VII, 42 U.S.C. § 1981 and

other employment related provisions of state law.

A. Jurisdiction

The first question we confront is whether there was a

“final decision” over which we may exercise jurisdiction.

Although the parties agree that the district court dis-

missed the case, we must conduct our own independent

inquiry to determine if the order was final. ITOFCA, Inc. v.

MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir.

2000). We pause to note that a district court should al-

ways make clear its intent to dismiss a case, particularly

where dismissal will render an order appealable. See

Salim Oleochemicals v. M/V Shropshire, 278 F.3d 90, 93

(2d Cir. 2002).

No. 00-2839 3

An appeal may be taken from a “final decision with re-

spect to an arbitration”, but not from an interlocutory or-

der staying the action or “compelling arbitration”. 9 U.S.C.

§§ 16(a)(3), (b)(1), (b)(3). A dismissal without prejudice

compelling arbitration is an appealable final decision.

Salim Oleochemicals, 278 F.3d at 91; see also Green Tree

Financial Corp.-Alabama v. Randolph, 513 U.S. 79, 88-89

(2000) (holding “that where, as here, the District Court

has ordered the parties to proceed to arbitration, and

dismissed all the claims before it, that decision is ‘final’

within the meaning of § 16(a)(3), and therefore appeal-

able.”). So we are left with the question of whether the

“order plainly disposed of the entire case on the merits

and left no part of it pending before the court.” Green Tree,

513 U.S. at 86.

The defendants moved to dismiss the complaint and

compel arbitration. The district court entered an order

granting the defendants’ motion to compel arbitration, but

the order failed to state whether the case was also dis-

missed.

Since the district court failed to state in the order that

the matter was dismissed, we look to the proceedings and

rulings to determine if they evidence a clear intent to

dismiss the matter. See Kaplan v. Shure Bros., Inc., 153

F.3d 413, 417 (7th Cir. 1998) (“In this case, a review of

the district court’s orders convinces us that the court’s

dismissal of Kaplan’s action on February 14, 1997 is an

appealable order.”); Spitz v. Tepfer, 171 F.3d 443, 447-48

(7th Cir. 1999) (“Moreover, the tenor of the summary judg-

ment opinion reflects the trial court’s intent to dispose

of all the issues in the lawsuit . . . .”); cf. ITOFCA, Inc.,

235 F.3de at 365 (“Had MegaTrans done so [‘represented

to the Court it would not refile its counterclaims’], we

could have treated the district court’s dismissal of the

counterclaims as having been with prejudice, thus wind-

ing up the litigation and eliminating the bar to our juris-

diction.”).

4 No. 00-2839

There are a number of facts which, when taken togeth-

er, demonstrate that the district court did, in fact, dis-

miss the matter without prejudice. First, there is the

fact that the district court granted SCI’s motion which

actually requested the court to compel arbitration and

dismiss the case. Second, SCI never requested a stay,

and while the district court could have granted a stay, it

did not explicitly do so. Cf. Employers Ins. of Wausau v.

Bright Metal Specialties, Inc., 251 F.3d 1316, 1322 n.6

(11th Cir. 2001) (“Although the district court did not spec-

ify whether the dismissal was with or without prejudice,

the arbitration order clearly disposed of the entire case

on the merits and left no part of it pending before the

court. Moreover, the district court could have, but did

not, stay the case pending arbitration.”). Third, McCaskill

agrees the court dismissed the case. See JTC Petroleum

Co. v. Piasa Motor Fuels, Inc., 190 F.3d 775, 776-77 (7th

Cir. 1999) (“But when we raised this point at argument,

the plaintiff’s lawyer quickly agreed that we could treat

the dismissal of the two claims as having been with prej-

udice, thus winding up the litigation and eliminating the

bar to our jurisdiction.”); Health Cost Controls of Illinois,

Inc. v Washington, 187 F.3d 703, 708-09 (7th Cir. 1999)

(“The parties having thus removed the ambiguity in the

district court’s judgment, that judgment is appealable.”).

Finally, the district court, quoting another court, ended

the opinion with the comment that McCaskill could ap-

peal “subsequent” determinations by the arbitrator. The

quotation regarding subsequent appeals clearly shows

the court felt judicial review was inappropriate at this

time, but the court was noting that McCaskill could seek

subsequent judicial review because it was implicitly dis-

missing the case without prejudice.

When considered as a whole, the “tenor” of the proceed-

ings show that the district court regarded the case dis-

missed because there was nothing left to decide. Cf. CPR

No. 00-2839 5

(USA) Inc. v. Spray, 187 F.3d 245, 253 (2d Cir. 1999)

(holding that “if the district court, having ordered the

parties to arbitrate, has no independent substantive issue

left before it—only issues relating to the validity of the

arbitrator’s award—then the order compelling arbitration

is, effectively, a final order and an immediate appeal will

be proper.”). Therefore, we conclude that a final deci-

sion was entered by the district court, and we have jurisdic-

tion to hear the appeal.

B. Arbitration

Although a whole host of claims were alleged in the com-

plaint and subject to dispute, the proceedings have nar-

rowed the issues down to one, the attorney’s fees clause

in the arbitration agreement.1 The provision at issue

specifies: “Each party may retain legal counsel and shall

pay its own costs and attorneys’ fees, regardless of the

outcome of the arbitration.” The plain terms of the phrase

clearly prohibit recovery of attorney’s fees regardless of

the result or the type of action filed. McCaskill’s substan-

tive objection to the provision is that it limits her ability

to effectively vindicate her rights under Title VII. At oral

argument, SCI conceded that the agreement is unenforce-

able if construed to limit McCaskill’s ability to recov-

er attorney’s fees (provided she prevails) under Title VII.

1

The main issue in this case was not well presented, as SCI has

waived the intertwined issues of severability and construction

of arbitration agreements by the arbitrator and may not now

raise them on rehearing. See International Broth. of Boilermakers,

Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL-CIO

v. Local Lodge D354, 897 F.2d 1400, 1409 (7th Cir. 1990) (discuss-

ing the purpose of rehearings); see also HM Holdings, Inc. v.

Rankin, 72 F.3d 562, 563 (7th Cir. 1995) (per curiam) (discussing

the purpose of rehearing en banc).

6 No. 00-2839

The agreement clearly bars the plaintiff’s ability to recov-

er any attorney’s fees, and because SCI conceded the

agreement is therefore unenforceable, we need not pro-

ceed any further into an examination of whether Title

VII’s fee-shifting provisions override an arbitration agree-

ment. See First Ins. Funding Corp. v. Federal Ins. Co., 284

F.3d 799, 806 (7th Cir. 2002); Burgin v. Broglin, 900 F.2d

990, 994 n.3 (7th Cir. 1990). The verbal admission by

SCI’s counsel at oral argument is a binding judicial admis-

sion, the same as any other formal concession made dur-

ing the course of proceedings. See Soo Line R. Co. v. St.

Louis Southwestern Ry. Co., 125 F.3d 481, 483 (7th Cir.

1997); Keller v. United States, 58 F.3d 1194, 1198 n.8 (7th

Cir. 1995) (“Judicial admissions are formal concessions

in the pleadings, or stipulations by a party or its coun-

sel, that are binding upon the party making them. They

may not be controverted at trial or on appeal.”); In re Lefkas

Gen. Partners, 153 B.R. 804 (N.D. Ill.1993) (noting that

judicial admissions are “any ‘deliberate, clear and unequivo-

cal’ statement, either written or oral, made in the course

of judicial proceedings.”). The agreement prohibits the

recovery of attorney’s fees in any situation, thus, based on

SCI’s concession, we find that the arbitration clause is

unenforceable. The district court’s order compelling arbi-

tration is therefore REVERSED and REMANDED for further

proceedings consistent with this opinion.

No. 00-2839 7

ROVNER, Circuit Judge, concurring in the judgment.

Without any majority, the court today reverses and re-

mands the district court’s order compelling arbitration. I

would reverse and remand for the reasons stated in

McCaskill v. SCI Management Corp., 285 F.3d 623 (7th Cir.

2002), reh. granted and op. vacated by McCaskill v. SCI

Management Corp., ___ F.3d ___, 2002 WL 1362232 (7th Cir.

2002), in which Judge Bauer originally joined, and

I reproduce some of that opinion below. I cannot join in

Judge Bauer’s separate opinion on this rehearing,1 which

would reverse a district court’s decision without ever as-

certaining whether that decision was correct—through

an unprecedented expansion of the doctrine of judicial

admissions. In its zeal to circumnavigate the difficult is-

sue presented to it, Judge Bauer’s opinion has seized on a

solitary comment by the appellee, SCI, during oral argu-

ment and transformed it from a candid assessment of

the merits of SCI’s position, into an edict binding this

court from deciding an issue squarely raised by the appel-

lant and argued in the briefs. That holding is simply stun-

ning.

All of the briefs submitted in this case addressed whether

the arbitration agreement, if interpreted to preclude at-

torney’s fees, was unenforceable. In addition, SCI further

1

The dissent remains consistent from that earlier opinion, and

I will not further address it here. I remain convinced that we pos-

sess jurisdiction because the intent of the court is ascertainable

from the order and is consistent with the parties’ own understand-

ing. The parties’ stipulations should be given deference by the

court to the extent that they are factual rather than legal in

nature, as our decision in ITOFCA, Inc. v. MegaTrans Logistics,

Inc., 235 F.3d 360, 363 (7th Cir. 2000) recognizes. Judge Bauer’s

opinion gives preclusive effect to a legal rather than factual state-

ment, and the dissent gives no weight to the parties’ stipulation

as to a factual issue.

8 No. 00-2839

argued that the arbitration agreement should not be in-

terpreted as barring the award of attorney’s fees. At oral

argument, SCI emphasized the latter argument, at one

point acknowledging in response to a question that if

the court interpreted the agreement as barring attorney’s

fees, then the agreement was “inconsistent” with Title VII.

That statement was an accurate assessment of the weak-

ness of SCI’s position in light of the law. Judge Bauer’s

opinion, however, has seized upon that statement at

oral argument, declared that it is a binding “judicial ad-

mission,” and based solely on that “admission,” has deter-

mined that the arbitration agreement is unenforceable. The

problems with that holding are myriad.

First, SCI’s assessment of the law as an appellee cannot

constitute a judicial admission, because it was not a con-

cession as to a fact in issue, but rather a statement of legal

opinion. “The scope of a judicial admission by counsel is

restricted to unequivocal statements as to matters of

fact which otherwise would require evidentiary proof; it

does not extend to counsel’s statements of his conception of

the legal theory of a case.” Michael H. Graham, 30B FED.

PRAC. & PROC. EVID. (Interim ed.) § 7026 (2002). That

understanding of the scope of judicial admissions is a long-

standing one. For instance, in New Amsterdam Casualty

Co. v. Waller, 323 F.2d 20, 24 (4th Cir. 1963), the court

defined judicial admissions as follows:

A judicial admission is usually treated as absolutely

binding, but such admissions go to matters of fact

which, otherwise, would require evidentiary proof. They

serve a highly useful purpose in dispensing with proof

of formal matters and of facts about which there is

no real dispute. . . . The doctrine of judicial admissions

has never been applied to counsel’s statement of his

conception of the legal theory of the case. When counsel

speaks of legal principles, as he conceives them and

which he thinks applicable, he makes no judicial ad-

mission and sets up no estoppel which would prevent

No. 00-2839 9

the court from applying to the facts disclosed by the

proof, the proper legal principles as the Court under-

stands them.

That conception of judicial admissions has persisted

throughout the cases leading up to this decision. See, e.g.,

New York State Organization for Women v. Terry, 159 F.3d

86, 97 n.7 (2d Cir. 1998) (“This argument relies on a mis-

understanding of the nature of judicial admissions, which

are statements of fact rather than legal arguments made

to a court.”); Solon v. Gary Community School Corp., 180

F.3d 844, 858 (7th Cir. 1999) and Keller v. United States,

58 F.3d 1194, 1198-99 n.8 (7th Cir. 1995) (quoting FED.

PRAC. & PROC., and stating that judicial admissions “ ‘have

the effect of withdrawing a fact from contention.’ ”); Mac-

Donald v. General Motors Corp., 110 F.3d 337, 341 (6th Cir.

1997) (holding that counsel’s statement on an issue of

negligence was not a judicial admission because it consti-

tuted a legal opinion or conclusion rather than a matter

of fact); Guidry v. Sheet Metal Workers International As-

sociation, Local No. 9, 10 F.3d 700, 716 (10th Cir. 1993)

modified on other grounds, 39 F.3d 1078, 1081 n.3 (10th

Cir. 1994) (rehearing en banc) (“Judicial admissions are

formal admissions . . . which have the effect of withdraw-

ing a fact from issue and dispensing wholly with the

need for proof of the fact. [citations omitted] Because the

matter Mr. Guidry claims was admitted is a proposition

of law, the doctrine of judicial admission is not applic-

able.”) The statement at oral argument in this case was

similarly a statement of legal opinion, not a stipulation of

fact. As such, it is not a judicial admission binding on the

appellee, and certainly is not binding on this court.

In fact, even if the statement had been one of fact, and

therefore fell within the doctrine of judicial admission, it

would not be binding on this court. The alleged “admission”

was nothing more than a one sentence response to a

hypothetical question at oral argument in which the court

10 No. 00-2839

asked the appellee to assume that the arbitration agree-

ment was construed as preventing an award of attorney’s

fees to the plaintiff, and then asked if the arbitration

clause would be unenforceable because it deprived the

plaintiff of the opportunity to seek her Title VII rem-

edies. The appellee responded affirmatively that such

a scenario would be inconsistent with Title VII, but em-

phasized that the court should not construe the agree-

ment in that manner. That brief response to the court’s

question is not the sort of deliberate, clear, and unambig-

uous statement evincing an intentional waiver that has

been held sufficient to constitute a judicial admission. See

Crowe v. Coleman, 113 F.3d 1536, 1542 (11th Cir. 1997)

(“waivers and concessions made in appellate oral argument

need to be unambiguous before they are allowed to change

the outcome of an appeal from a reversal to an affirm-

ance.”); see also Martinez v. Bally’s Louisiana, Inc., 244 F.3d

474, 476 (5th Cir. 2001) (“A statement made by counsel

during the course of trial may be considered a judicial

admission if it was made intentionally as a waiver, releas-

ing the opponent from proof of fact.”); MacDonald, 110 F.3d

at 340 (declaring that “[i]n order to qualify as judicial

admissions, an attorney’s statements must be deliberate,

clear, and unambiguous” and must constitute a deliberate

voluntary waiver.); Moose Lodge No. 107 v. Irvis, 407 U.S.

163, 170 (1972) (“[W]e are loath to attach conclusive weight

to the relatively spontaneous responses of counsel to

equally spontaneous questioning from the Court during

oral argument.”). In fact, SCI never repudiated the ar-

guments in its brief, in which it contested the proposi-

tion that the agreement was unenforceable. Even if judi-

cial admissions extended to legal opinions, which is clearly

false, the statement at issue here cannot be character-

ized as an unambiguous, intentional waiver of the argu-

ments made in its brief.

Finally, even if the statement satisfied all of the above

criteria, it would not bind this court because the court

No. 00-2839 11

has the discretion to consider the issue despite the judi-

cial admission. See Solon, 180 F.3d at 858 (recognizing

that court may allow party to withdraw a judicial admis-

sion); Martinez, 244 F.3d at 477 (same); New Amsterdam

Casualty Co., 323 F.2d at 24 (“a court, unquestionably, has

the right to relieve a party of his judicial admission if

it appears that the admitted fact is clearly untrue and

that the party was laboring under a mistake when he

made the admission.”). Here, it is unimaginable that if

we believed that the district court decision was correct

on the law, we would nevertheless reverse that decision

because the appellee thought we would. The court would

undoubtedly in that scenario exercise its discretion and

decide the issue. In fact, we have repeatedly held that

on review of summary judgment, we may affirm the

decision of the district court on any ground apparent in the

record. Vargas-Harrison v. Racine Unified School Dist., 272

F.3d 964, 974 (7th Cir. 2001). Of course, all of this discus-

sion is hypothetical in nature, because for good reason the

doctrine of judicial admissions does not apply to legal

opinions of the parties.

The contrary position offered by Judge Bauer would

mean that one party’s characterization of the law would

necessarily bind this court and dictate the outcome of

the appeal. I have been unable to find any other case in

which a statement at oral argument was used in this

manner, and the cases cited by his opinion all involve is-

sues of fact, not law. The repercussions of such a holding

would be widespread if the court actually followed this

approach in all cases. For example, imagine the scenario

in which a district court grants summary judgment to

an employer in a discrimination case. The plaintiff then

appeals, and the issues identified by the plaintiff on ap-

peal are fully briefed. At oral argument, however, the

employer opines that it believes it will lose on one of

those issues. Under Judge Bauer’s approach today, we

12 No. 00-2839

would be bound by that “judicial admission” and would

be required to remand the district court’s correct decision

for a trial on the merits. Or consider the scenario, not un-

common, in which an appellee wrongly declares that a

controlling Supreme Court case is inapplicable, and argues

instead based on other cases. Would we as a court then

ignore the controlling Supreme Court case because of that

“judicial admission?” That is unlikely to happen in this

court, nor should it, and it should not happen in this case

either. These examples illustrate the folly of expanding

the judicial admission doctrine beyond its application to

facts, to control aspects of law. Judge Bauer’s opinion rep-

resents an unfortunate expansion of the judicial admis-

sion doctrine that was designed to streamline the judicial

process. By allowing the reversal of even a proper dis-

trict court decision, the expanded judicial admission ap-

proach betrays that purpose and sacrifices judicial effi-

ciency and clarity in the law, for no gain.

The enforceability of the arbitration agreement was

raised by the appellant in this case and briefed by both

parties. The court has the responsibility to decide that

issue, rather than reversing because the appellee thinks

it is going to lose. SCI should lose, for the reasons stated

in the opinion originally issued by this court, but the dis-

trict court deserves better than to see its decision remanded

based on a party’s, rather than the court’s, assessment

of the law. For the convenience of the reader, I reproduce

the relevant part of the prior opinion in this case address-

ing the merits of the enforcement issue, followed by some

closing comments:

The arbitration agreement at issue here provides for

the arbitration of a number of employment-related dis-

putes, including those based on harassment or discrimina-

tion. It excludes other types of claims likely to be brought

by SCI, such as disputes related to noncompetition or

confidentiality agreements, and “any claim by the Com-

pany against the Employee which is based upon fraud,

No. 00-2839 13

theft or other dishonest conduct of employee.” Agreement

¶ 2. The arbitration agreement further specifies as follows:

Each party may retain legal counsel and shall pay its

own costs and attorneys’ fees, regardless of the outcome

of the arbitration. Each party shall pay one-half of the

compensation to be paid to the arbitrator(s), as well as

one-half of any other costs relating to the administra-

tion of the arbitration proceeding (e.g., room rental,

court reporter, etc.).

Agreement, ¶ 4. Some courts have refused to enforce ar-

bitration agreements which mandate that the parties

each pay half the costs of arbitration, while others have

considered whether the cost-shifting provision renders the

arbitration proceedings inaccessible for that individual. See,

e.g., Green Tree Financial Corp.-Alabama v. Randolph,

531 U.S. 79 (2000); Brown v. Wheat First Securities, Inc.

257 F.3d 821 (D.C. Cir. 2001); Bradford v. Rockwell Semi-

conductor Systems, Inc., 238 F.3d 549 (4th Cir. 2001);

Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, 170

F.3d 1 (1st Cir. 1999); Koveleskie v. SBC Capital Markets,

Inc., 167 F.3d 361 (7th Cir. 1999); Shankle v. B-G Mainte-

nance Management of Colorado, Inc., 163 F.3d 1230 (10th

Cir. 1999); Cole v. Burns International Security Services,

Inc., 105 F.3d 1465 (D.C. Cir. 1997). We need not address

the issue here, however, because the attorney’s fees pro-

vision renders the agreement unenforceable.

In Gilmer v. Interstate Johnson Lane Corp., 500 U.S. 20,

26 (1991), the Supreme Court held that claims under fed-

eral statutes may be appropriate for arbitration as long

as the litigant may effectively vindicate her statutory

cause of action in the arbitral forum, and the statute will

continue to serve its remedial and deterrent purposes.

Williams v. Cigna Financial Advisors Inc., 197 F.3d 752,

763 (5th Cir. 1999). See also Equal Employment Opportunity

Commission v. Waffle House, 534 U.S.279, 122 S. Ct. 754,

14 No. 00-2839

761 (2002) (narrowly construing impact of arbitration agree-

ment to hold that the existence of an arbitration agree-

ment between private parties does not affect the EEOC’s

right to seek all remedies). One of the remedies provided

by Title VII is that attorney’s fees may be awarded to a

prevailing plaintiff, 42 U.S.C. § 2000e-5(k), and we noted

in Dunning v. Simmons Airlines, Inc., 62 F.3d 863, 872

(7th Cir. 1995), that a prevailing party should ordinarily

recover attorney’s fees absent special circumstances ren-

dering such an award unjust. In Dunning, we emphasized

the importance of the fees provision to the purposes of

Title VII:

Attorney’s fees in Title VII litigation are not limited

to a proportion of the monetary damages assessed

in the case because, as Congress has recognized, a

plaintiff in any civil rights suit acts “not for himself

alone but also as a ‘private attorney general,’ vindicat-

ing a policy that Congress considered of the highest

importance.” [citations omitted] . . . A rule of propor-

tionality would make it difficult, if not impossible, for

individuals with meritorious civil rights claims but

relatively small potential damages to obtain redress

from the courts. This is totally inconsistent with Con-

gress’ purpose in enacting § 1988. Congress recognized

that private-sector fee arrangements were inade-

quate to ensure sufficiently vigorous enforcement of

civil rights. In order to ensure that lawyers would be

willing to represent persons with legitimate civil rights

grievances, Congress determined that it would be

necessary to compensate lawyers for all time reasonably

expended on a case.

Id. at 873 n.13. The right to attorney’s fees therefore

is integral to the purposes of the statute, and often is

central to the ability of persons to seek redress from

violations of Title VII. In recognition of the importance of

the attorney’s fees provisions to the remedial and deterrent

No. 00-2839 15

effect of Title VII, counsel for SCI conceded at oral argu-

ment that if we construe the arbitration agreement as

not allowing the arbitrator to award attorney’s fees, then

the agreement deprives the plaintiff of remedies under

Title VII and is unenforceable.

The attorney’s fees provision in the arbitration agree-

ment quite plainly does just that. It mandates that each

party shall pay its own attorney’s fees regardless of the

outcome of the arbitration. SCI attempts to avoid that

plain language with a novel interpretation. According to

SCI, the provision regulates only what McCaskill is re-

sponsible for paying, not what she may be awarded, and

thus it is possible for an arbitrator to award her attorneys’

fees consistent with the arbitration agreement, as long

as she uses that award to pay her attorneys. That defies

the plain meaning of the words. SCI has identified no

other context in which a court would hold that a provi-

sion requiring a person to pay her own attorney’s fees

actually means the opposing party may be required to pay

the fees to her, and then she must pay her own attorney.

The provision obviously means that neither party can be

required to pay the attorney’s fees of the other party, either

directly or through the straw man approach advocated

by SCI.

In fact, the Ninth Circuit reached that conclusion re-

garding a similar clause in Graham Oil Co. v. ARCO

Products Co., a Div. of Atlantic Richfield Co., 43 F.3d

1244 (9th Cir. 1994). The arbitration agreement in Graham

Oil was part of a distributor agreement with a franchisee,

and provided that each party would bear its own attor-

ney’s fees. Id. at 1247. The court recognized that franchi-

sees may agree to an arbitral forum for resolving stat-

utory disputes, but stated that they may not be forced

“to surrender the statutorily-mandated rights and bene-

fits that Congress intended them to possess.” Id. The court

held that the attorney’s fees clause purported to forfeit

16 No. 00-2839

the statutorily-mandated right to recover attorney’s fees

provided under the Petroleum Marketing Practices Act

(PMPA). Id. It further noted that the right to attorney’s

fees was important to the effectuation of the PMPA’s pol-

icies, specifically the purpose of deterring a franchiser

from improperly contesting meritorious claims, and ac-

cordingly held that the clause contravened the PMPA. Id.

at 1248. The court then held that the attorney’s fees

clause, as well as two other contravening clauses, were not

severable from the arbitration agreement as a whole—

a claim not even raised in this case and therefore not be-

fore us here.

Similar to Graham Oil, the clause here purports to for-

feit McCaskill’s statutory right to attorney’s fees, a rem-

edy that we have already recognized is essential to fulfill

the remedial and deterrent functions of Title VII. Because

the provision prevents her from effectively vindicating

her rights in the arbitral forum by preemptively deny-

ing her remedies authorized by Title VII, the arbitration

agreement is unenforceable.

I note that this position has recently been challenged

in dicta in Metro East Center for Conditioning and Health

v. Qwest Communications Intern., Inc., ___ F.3d ___, 2002

WL 1378752 (7th Cir. 2002). Metro East relies on the

Supreme Court’s decision in Evans v. Jeff D., 475 U.S. 717

(1986), stating that Evans, “a case the McCaskill court did

not mention, holds that plaintiffs may forego attorney’s

fees under 42 U.S.C. §1988,” and arguing from that prop-

osition that employees can contract away their remedies.

Id. at *5. Evans went unmentioned in the initial Mc-

Caskill opinion because it is unrelated to the arbitra-

tion issue decided in McCaskill. In Evans, the Court ad-

dressed whether it could enforce a consent decree that

waived attorney’s fees in exchange for relief on the merits

greater than could reasonably be expected at trial. The

Court held that Congress did not intend to ban “all fee

No. 00-2839 17

waivers offered in connection with substantial relief on the

merits.” 475 U.S. at 730. Instead, the Court held that

Congress enacted the fee-shifting provision as “ ‘an integral

part of the remedies necessary to obtain’ compliance with

civil rights laws [citation omitted] to further the same

general purpose—promotion of respect for civil rights—that

led it to provide damages and injunctive relief,” and that

the exchange of fees for other relief to which he indis-

putably is not entitled is no more objectionable than a

concession on damages to secure broader injunctive re-

lief. Id. at 731-32. Thus, the Court recognized that attor-

ney’s fees were an integral part of the arsenal of remedies,

and that they could be subject to the negotiations con-

cerning those remedies. That is a far cry from a blanket

waiver in an arbitration agreement required as a condi-

tion of employment. In fact, the Court explicitly distin-

guished the case before it from one involving a policy of

demanding a fee waiver. Id. at 740. The Evans Court rec-

ognized the importance of the fees provision among the

remedies available to a litigant and therefore supports

the holding that an arbitration agreement eliminating

that right fails to provide the litigant with a forum in

which she can effectively vindicate her statutory rights.

For the reasons set forth in this opinion, I believe that

the district court’s order compelling arbitration should be

reversed and remanded and accordingly I concur in the

judgment.

18 No. 00-2839

MANION, Circuit Judge, dissenting. My colleagues agree

that although the district court neither dismissed the

case nor ordered a stay following its order to compel

arbitration, the decision is nevertheless final and thus

appealable because SCI moved to dismiss instead of re-

questing a stay and because McCaskill agrees the court

dismissed the case. They also agree, for very differ-

ent reasons, to reverse the district court’s order compel-

ling arbitration and to remand for further proceedings,

presumably a trial on the merits. Because the district

court did not either dismiss the case or order a stay pend-

ing arbitration, in my view its order is not a final deci-

sion and is thus not appealable. This court should re-

mand and direct that the district court either dismiss the

case or order a stay.

Longstanding federal policy strongly favors arbitra-

tion. Green Tree Fin. Corp.-Alabama, et al. v. Randolph, 531

U.S. 79, 91 (2000) (citing Moses H. Cone Mem’l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Section 16

of the Federal Arbitration Act (“FAA”) governs appel-

late review of arbitration orders. It provides, in relevant

part, that an appeal may be taken from “a final decision

with respect to an arbitration . . . .” 9 U.S.C. § 16(a)(3). In

addition, an appeal may not be taken from an interlocutory

order “compelling arbitration . . . .” 9 U.S.C. § 16(b)(3).

The FAA does not define the term “final decision.” In

Green Tree, the Supreme Court interpreted the phrase

according to its well-established, plain meaning, i.e., a de-

cision which “ends the litigation on the merits and leaves

nothing more for the court to do but execute the judgment.”

531 U.S. at 86 (citations omitted). In addressing a dis-

trict court’s order compelling arbitration and dismissing

the case with prejudice, the Supreme Court held that

such an order is a “final decision” and thus is immediately

appealable pursuant to the FAA. Id. The Court noted,

however, that if a district court enters a stay instead of

No. 00-2839 19

a dismissal, that order is not a final, appealable decision

under the FAA. Id. at 87, n.2.1 See Salim Oleochemicals

v. M/V Shropshire, 278 F.3d 90 (2d Cir. 2002) (order

compelling arbitration and dismissing without prej-

udice was an appealable decision under the FAA); ATAC

Corp. v. Arthur Treacher’s, Inc., 280 F.3d 1091 (6th Cir.

2002) (order staying proceedings pending arbitration not

appealable under the FAA); Interactive Flight Tech., Inc.

v. Swissair Swiss Air Transp. Co., Ltd., 249 F.3d 1177

(9th Cir. 2001) (order compelling arbitration and dismiss-

ing case without prejudice appealable under the FAA);

Employers Ins. of Wausau v. Bright Metal Specialties,

Inc., 251 F.3d 1316 (11th Cir. 2001) (order compelling

arbitration and dismissing the case deemed appealable

under the FAA).

Here, notwithstanding the court’s assumption to the

contrary, the district court did not actually dismiss the

case. The court clearly could have ordered a stay. 9 U.S.C.

§ 3. Had the court issued the stay, as I see it under the

appropriate procedure when compelling arbitration, any

appeal at this stage would be barred. See Green Tree,

531 U.S. at 87, n.2. There is nothing in the district

court’s opinion that would allow us to infer that the

court intended to dismiss the case. SCI filed a motion to

compel arbitration and to dismiss the case. The district

court’s order, however, merely compelled arbitration. The

1

In resolving questions of finality, we have asked whether an

appeal is from an “embedded” (those involving a request for ar-

bitration and other relief) or “independent” (a request to order

arbitration solely) proceeding. Previously, an order compelling

arbitration in an independent proceeding was appealable, whereas

one in an embedded proceeding was interlocutory. See Napleton

v. General Motors Corp., 138 F.3d 1209, 1212 (7th Cir. 1998). The

Supreme Court, however, rejected this distinction in Green Tree.

531 U.S. at 88.

20 No. 00-2839

order does not address, in any manner whatsoever, SCI’s

request for a dismissal of the case. While it is true that

SCI’s attorney stated at oral argument that the district

court’s opinion effectively dismissed the case, it is well

settled that parties cannot agree to jurisdiction, nor can

an attorney’s assertion at oral argument establish finality

in order to create appellate jurisdiction. See ITOFCA, Inc.

v. MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir.

2000). Rather, we have consistently held that “[i]t is our

threshold and independent obligation to make that deter-

mination even [when] both parties agreeably [consider

an] order to be final and appealable.” ITOFCA, 235 F.3d

at 363 (citations omitted).

Additionally, the district court’s indication that McCaskill

could appeal subsequent determinations by the arbitra-

tor is not evidence that it intended to dismiss. Rather, the

statement is entirely consistent with the statutory pro-

cedure permitting judicial review of any final determina-

tion by the arbitrator. Had the court ordered a stay pend-

ing arbitration, all of the issues not resolved by this

split opinion would then properly come before the dis-

trict court, and perhaps before us, for full briefing and

adjudication. Once a court determines that there is a va-

lid and enforceable agreement to arbitrate and that the

claims fall within the scope of the agreement, We Care Hair

Dev., Inc. v. Engen, 180 F.3d 838, 844 (7th Cir. 1999), it

can compel arbitration. At that point the statute pro-

vides only that the court order a stay pending arbitration.

9 U.S.C. § 3. That should have and very well could have

been what the court had in mind when it issued its order to

compel arbitration. Based on the record, we do not know

that the court intended to dismiss the case.

Without a dismissal of the underlying case, the district

court’s order compelling arbitration remains an interlocu-

tory order under Section 16(b)(3) of the FAA, and under

Green Tree, we are not permitted to exercise jurisdiction

No. 00-2839 21

over this case. Of course, as previously noted, the district

court may also grant a stay under Section 3 of the FAA, in

which case we would not have jurisdiction since it would

not be appealable. 9 U.S.C. §16(b)(1); Green Tree, 531

U.S. at 87, n.2.2 In any case, it is incumbent upon dis-

trict courts to fully address and clearly dispose of a mo-

tion filed by a litigant for the parties’ benefit, to conserve

its own judicial resources and to aid this court on review.

See Salim Oleochemicals, 278 F.3d at 93 (urging “district

courts in these circumstances to be as clear as possible

about whether they truly intend to dismiss an action or

mean to grant a stay . . . or whether they mean to do

something else entirely.”). See also Dustrol, Inc. v. Cham-

pagne-Webber, Inc., 2002 WL 122500, *4 (N.D. Tex. Jan.

24, 2002) (citing Green Tree, district court clearly states

that “the court dismisses this case because there are no

longer any unadjudicated claims presently before the

court.”).

2

I pause to take note of an issue left unresolved by the Supreme

Court in Green Tree, i.e., whether a district court may dismiss

a case under the FAA at all. Green Tree, 531 U.S. at 87 n.2 (de-

clining to address whether district court should have entered a

stay, rather than a dismissal). The plain language of the FAA

gives a court only the power to grant a stay. See 9 U.S.C. § 3. In

contrast, nothing in the FAA refers to the district court’s power to

dismiss a case. See also Stephen H. McClain, Under a New

Supreme Court Decision, Litigants Seeking Arbitration of a Dis-

pute can Control the Timing of an Appeal, 48-Aug. Fed. Law. 22,

25 (2001) (noting that, during oral argument of Green Tree, some

of the justices questioned whether or not a stay was required

under the FAA). This court has also questioned whether there is

any statutory authority for dismissing a case when compelling

arbitration. See Kroll v. Doctor’s Assoc., Inc., 3 F.3d 1167, 1172

(7th Cir. 1993). The uncertainty surrounding a district court’s

ability, or authority, to dismiss a case under the FAA is yet

another reason to decline jurisdiction over this appeal.

22 No. 00-2839

Accordingly, I conclude that the order is not final in this

case and would remand the case back to the district court

for further disposition or clarification of its order.

A true Copy:

Teste:

________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit

USCA-97-C-006—8-5-02