EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. FRANK’S NURSERY & CRAFTS, INC., Defendant-Appellee

DAVID A. NELSON, Circuit Judge,

concurring in part and dissenting in part.

Insofar as the panel holds that the district court erred when it barred the Equal Employment Opportunity Commission from seeking general injunctive relief, I concur. Insofar as the panel holds that the money damages claim asserted on behalf of Carol Adams falls within a category of claims as to which the courts should treat private agreements to arbitrate as unenforceable, I respectfully dissent.

I

When Frank’s Nursery hired Carol Adams (a step the company — if not its *469 lawyers — has probably come to regret by this time, legal fees being what they are today), the engagement was subject to the understanding that if Ms. Adams wished to file an employment claim at any point, the claim would be resolved not by litigation in a judicial forum but by arbitration in a forum provided by the American Arbitration Association. 1 Although the legality of the arbitration agreement was challenged in the court below under Title VII of the Civil Rights Act of 1964, no such challenge has been raised here. We must therefore accept it as given that the company’s insistence on the use of the agreement did not violate Title VII.

Ms. Adams is an African American. About a year and a half after she was hired, a newly-created job at Frank’s Nursery^ — a job in which Ms. Adams was interested' — -went to a white woman. According to Frank’s Nursery, the white woman was better qualified than Ms. Adams was. Ms. Adams disagreed with the company’s assessment of her qualifications vis-a-vis those of the successful applicant — and, claiming to be the victim of racial discrimination, Ms. Adams filed a complaint with the EEOC.

That agency ultimately sued Frank’s Nursery in a federal district court in Detroit. In addition to seeking general equitable relief, the EEOC undertook to act as a sort of bureaucratic next friend of Carol Adams personally. In this role — which the EEOC assumed with a view to vindicating the public interest in preventing unlawful discrimination, as well as with a view to vindicating Ms. Adams’ individual rights — the EEOC sought a money judgment of which Ms. Adams would be the sole beneficiary. Without proposing arbitration, the EEOC asked the district court to award Ms. Adams (1) back pay with prejudgment interest, (2) compensatory damages in addition to back pay, and (3) punitive damages.

The governing statute gave Ms. Adams a right to intervene in the lawsuit. See 42 U.S.C. § 2000e — 5(f)(1). Had she exercised her right of intervention, Ms. Adams would have been entitled to ask that the claim for damages be submitted to arbitration. 2 Ms. Adams elected not to intervene, evidently preferring to let the EEOC litigate on her behalf in a forum she herself had renounced in favor of arbitration.

On these facts, the district court held that “to the extent that Adams is bound by her agreement to arbitrate, so is the EEOC.” EEOC v. Frank’s Nursery & Crafts, Inc., 966 F.Supp. 500, 505 (E.D.Mich.1997). “To decide otherwise,” the district court observed, “would render agreements to arbitrate voidable at the whim of the EEOC.” Id.

The only federal appellate court heretofore to have issued a published opinion on a comparable question is the United States Court of Appeals for the Second Circuit. That court came out the same way the district court did in the case at bar. EEOC v. Kidder, Peabody & Co., Inc., 156 F.3d 298 (2d Cir.1998). My colleagues on the panel have concluded that the Second Circuit was simply wrong. Our sister circuit’s supposed error is less obvious to me, however, and rather than creating a split of authority, I would be inclined to follow the course charted by the Second Circuit.

II

The issue in Kidder Peabody was “whether an arbitration agreement be *470 tween an employer and employee precludes the EEOC from seeking purely monetary relief for the employee under the [Age Discrimination in Employment Act] in federal court.” Id. at 300-01 . Citing with apparent approval the decision of the district court in the case at bar, and relying heavily on Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 , 111 S.Ct. 1647 , 114 L.Ed.2d 26 (1991) — a case where, in holding that a statutory age discrimination claim could be subjected to compulsory arbitration by prior agreement of the claimant, the Supreme Court cited court of appeals decisions holding, as the Second Circuit explained ( 156 F.3d at 301 ), “that an individual’s settlement or waiver of a claim under the ADEA preempted a subsequent EEOC action on that claim seeking damages for the individual” — the Second Circuit decided Kidder Peabody in favor of the employer and against the EEOC.

Although the Second Circuit recognized that the EEOC’s right of action is separate from that of the employee, the court noted other appellate decisions holding that “in seeking individual monetary relief, as opposed to class-wide injunctive relief, the EEOC does not represent the public interest to the same degree.” Kidder Peabody, 156 F.3d at 301 , citing EEOC v. United States Steel Corp., 921 F.2d 489, 496 (3d Cir.1990), and EEOC v. Goodyear Aerospace Corp., 813 F.2d 1539, 1543 (9th Cir.1987). 3 The statutory enforcement mechanism “gives the EEOC representative responsibilities when it seeks private benefits for an individual,” and “Congress would not have crafted this enforcement scheme ... unless Congress intended for the EEOC to serve as the individual’s representative when it seeks to enforce that individual’s rights.” Kidder Peabody, 156 F.3d at 302 , quoting United States Steel Corp., 921 F.2d at 495 and 494-95 (emphasis supplied). Where the EEOC acts in a representative capacity in seeking private benefits for an individual, notwithstanding that the agency also acts in the public interest, the Second Circuit reasoned that the individual’s election of an arbitral forum precludes the representative from adjudicating the claim in a different forum.

The Kidder Peabody court was strengthened in its conclusion by the fact — a fact repeatedly recognized by the Supreme Court — “that the [Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.J expresses a strong Congressional preference in favor of enforcing arbitration agreements.” Kidder Peabody, 156 F.3d at 300 . See Gilmer, 500 U.S. at 25 ; Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 , 103 S.Ct. 927 , 74 L.Ed.2d 765 (1983). “[T]he FAA’s ‘liberal federal policy favoring arbitration agreements’ ... supports the conclusion that where the individual has freely agreed to arbitrate the ADEA claim, that decision, like the decision to waive or settle a claim, prevents the EEOC from pursuing monetary remedies on behalf of the individual in the federal forum.” Kidder Peabody, 156 F.3d at 302 , quoting Moses H. Cone Mem’l Hosp., 460 U.S. at 24 .

The Second Circuit readily acknowledged that the case before it “presents competing public interests — the interest in allowing the EEOC broad authority to pursue actions to eradicate and prevent employment discrimination and the interest in encouraging parties to arbitrate.” Id. at 303. This clash of interests probably stems in part, at least, from the fact that the concept of the public good embodied in the Arbitration Act has a rather different philosophical flavor than the concept of the public good embodied in Title VII and the congeries of New Deal legislation that Congress pressed into service as a mechanism for enforcing Title VII.

*471 , The Arbitration Act can fairly be characterized as a statute promoting individualism. It manifests an understanding that where participants in economic activity have chosen to adopt dispute resolution procedures that they believe will cut red tape, take less time, and save litigation expense, the public interest will be served by allowing implementation of the choices made by the key players themselves.

Title VII and its 1972 amendments — as the majority opinion demonstrates — is a more collectivistic statute. It is not concerned with economic efficiency, and it showcases the principle that individual choices are subordinate to the overriding interests of the state.

There is nothing particularly remarkable about the tension between the two statutes — such tensions are commonplace, obviously, in the work product of a national legislature answerable to an electorate as large and as varied as ours — and one might hope that Congress itself will ultimately tell us how the somewhat uneasy fit between the Arbitration Act and Title VII ought to be accommodated. In the absence of clear guidance from Congress, however, the courts must do the best they can to square the circle.

Recognizing that anything approaching certitude in such an exercise is impossible, I am bound to say that the answer given by the Second Circuit in Kidder Peabody makes sense to me:

“We believe that the result reached by the district court, allowing the EEOC to pursue injunctive relief in the federal forum while encouraging arbitration of the employee’s claim for private remedies, strikes the right balance between these interests. Further, to permit an individual, who has freely agreed to arbitrate all employment claims, to make an end run around the arbitration agreement by having the EEOC pursue back pay or liquidated damages on his or her behalf would undermine the Gilmer decision and the FAA.” 156 F.3d at 303 .

Given the .representative capacity in which the EEOC prosecutes claims on behalf of individuals, it does not seem to me that the Second Circuit solution would undermine either Title VII or any Supreme Court decision of which I am aware. 4 To the extent that my colleagues on the panel have seen the matter differently, I respectfully dissent. As indicated above, and on the strength of the reasoning contained in Part III C of the majority opinion, I concur in the conclusion that the EEOC is not barred from seeking general injunctive relief. 5

. I should suppose that if such alternative dispute resolution agreements are generally believed to be viable, use of the agreements would tend to encourage the hiring of marginal job applicants. If this assumption be correct, it seems to me that today's decision may well have a tendency — completely unintended by this court, of course — to place the disadvantaged job seeker at a further disadvantage.

. I am inclined to doubt that Frank’s Nursery could have defeated such a request as untimely if the request had been presented promptly upon the filing of the lawsuit. This issue has not been briefed, however, and I should be reluctant to hazard a firm opinion on the question at this juncture.

. "[W]here an individual has freely contracted away, waived or unsuccessfully litigated a claim, ‘the public interest in a back pay award is minimal.' ” Kidder Peabody, 156 F.3d at 302 , quoting Goodyear Aerospace Corp., 813 F.2d at 1543 .

. I am not unmindful of General Tel. Co. of the Northwest, Inc. v. EEOC, 446 U.S. 318 , 100 S.Ct. 1698 , 64 L.Ed.2d 319 (1980), where the EEOC tells us that "the Supreme Court ... confirmed that the Commission does not represent the victims of alleged discrimination in its suits...." (EEOC Reply Br. at 11.) But what the Supreme Court confirmed in General Telephone, as I read the Court’s opinion, is that when the Commission acts for the benefit of specific individuals, "it acts also to vindicate the public interest in preventing employment discrimination.” General Telephone, 446 U.S. at 326 (footnote omitted) (emphasis supplied). Because of the public interest role played by the agency when it brings suit in its own name, in other words, "the EEOC is not merely a proxy for the victims of discrimination....” Id. (emphasis supplied). This is a far cry from saying that the EEOC exercises no representative responsibilities when it seeks private benefits for an individual — and the caselaw, as we have seen, teaches very clearly that “Congress intended for the EEOC to serve as the individual’s representative when it seeks to enforce that individual’s rights.” Kidder Peabody, 156 F.3d at 302 , quoting E.E.O.C. v. United States Steel Corp., 921 F.2d at 495 .

. Such general injunctive relief does not, of course, include blocking the use of arbitration agreements; having failed to appeal the district court's denial of an injunction on that issue, the EEOC is precluded from pursuing it further in this case.