Petition for Writ of Certiorari — Management Recruiters International, Inc. v. Swenson

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Uw * 8 , ubreme Court, U.S,

'- FILED

No. re

JOSEPH. SPaniou, ux, |

IN THE ee CLERK i

Supreme Court of the United States

October Term, 1988

MANAGEMENT RECRUITERS INTERNATIONAL, INC.,

and

DAVID MARTH,

Petitioners,

VS.

DEBORAH SWENSON,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

For the Eighth Circuit

DONALD L. GOLDMAN, Counsel of Record

1400 Statler Office Tower

1127 Euclid Avenue

Cleveland, Ohio 44115-1638

(216) 696-1122

Counsel for Petitioners

Management Recruiters International,

Inc. and David Marth

THE GATES LEGAL PUBLISHING CO., CLEVELAND, OHIO—TEL. (216) 621-5647

QUESTIONS PRESENTED

1. Did Congress intend to create an exception to the

Federal Arbitration Act, 9 U.S.C. §1, et seg. (1982), for

claims under Title VII of the Civil Rights Act of 1964,

42 U.S.C. §2000e-1, et seg., and require that all federal

employment discrimination claims be litigated, even if

the parties have agreed to arbitrate those claims?

2. Did Congress intend to create an exception to the

Federal Arbitration Act for claims under state civil

rights statutes, and require that all state employment

discrimination claims be litigated, even if the parties

have agreed to arbitrate those claims?

3. Does Congress partially repeal the Federal

Arbitration Act whenever it provides that a new statute

will not preempt existing state statutes?

4. Does the collateral-order doctrine permit the

appeal of an order staying proceedings pending

arbitration under Section 3 of the Federal Arbitration

Act, 9 U.S.C. §3, of a claim under a state civil rights

action?

5. Is a statute such as Sec. 1019 of the Judicial

Improvements and Access to Justice Act, 9 U.S.C. $15,

applicable to cases which are pending decision of a

petition for reconsideration on the effective date of the

statute?

ii.

RULE 28.1 STATEMENT

The parent company of Petitioner Management

Recruiters International, Inc. is CDI Corporation, and its

parent company is CDI Corp. The only affiliates of

Management Recruiters International, Inc. which are not

wholly owned subsidiaries of CDI Corporation or its

subsidiaries are Bra-Con/X-Mation, Inc., CDI

Professional Solutions Group, Inc., May-CDI, Inc., and

Pacer, Inc.

iii.

TABLE OF CONTENTS

ee I

cease acctesceesene II

I we eee ecceccerenes Vv

SE 2

Teen ew ewwueepeaue 2

Statutory Provisions Involved................... 3

pumeeenemns OF CO Case... .... 0. ccc cc cece eens 4

Reasons For Granting the Writ.................. 6

I. The Federal Arbitration Act is applicable to

claims under Title VII of the Civil Rights

ci be eersceceses’ 6

II. The Federal Arbitration Act is applicable to

state employment discrimination claims..... 18

Ill. The Court of Appeals did not have

roa se eek dhe es ewscavads 24

IV. Section 15 of the Federal Arbitration Act

precluded the exercise of jurisdiction by the

ee isk hs kn es hese bese s ss 29

una uceccucnovces 30

iv.

Appendix:

Opinion of the United States Court of Appeals for

the Eighth Circuit (October 5, 1988).......... Al

Order of the United States Court of Appeals for

the Eighth Circuit Denying Motion to Dismiss

and Petition for Rehearing (April 12, 1989) .... Al5

Order of the United States District Court (October

TURE cs aes we ee wine Meat eee ee ana nerEne A23

Statutory Provisions Involved:

Federal Arbitration Act:

Be Oe re eee ee one A30

Oe ae ea hs oa ES a eh eee aes A30

Re RS RE. SRNR scree ag Ae Sarre tne eet) A3l

Oe Oe es here a ewan ean oe A32

Or ee ce ek hen dk eA eae ee ee ae A32

OE, WOR OE 6 aac kd oe kab seucue seecees A33

Judiciary and Judicial Procedure:

eRe IE ss 6 oe a ok oka eee caw nen A35

wR og 6 ere rer rer ree A35

OR eR kf ree A36

ee Se, NN bs cn oc eee eee oan ss A37

Civil Rights Act of 1964:

Se, Mee Ore I ogc k cee kan eee bee A38

SP, Oe A BT oo wack aie ww awa es A38

0 me Pi ee Ee rrr A39

Minnesota Human Rights Act:

Minn. Stat. §363.06 Subd. 1-4,5.............. A40

Minn. Stat. §363.14 Subd. 1 (a)-(b)............. A46

Vv.

TABLE OF AUTHORITIES

Federai Cases

Administrative Management Services, Ltd., Inc. v.

Royal American Managers, Inc., 854 F.2d 1272

CE a DG & ok oe eee eee eee eee 27

Alexander v. Gardner-Denver Co., 415 U.S. 36

SPUR cc ee oes keke ores 1,6,7,8,9,10,11,12,14,15

Alford v. Dean Witter Reynolds, Inc., _.___. 'F.

Supp. ____——s (S.D.. Tex. 1989) (Westlaw 1989 WL

DE wae ee Ch ke ae ek ea aa ee eee ee 7

American Guarantee Co. v. Caldwell, 72 F.2d 209

(RUE Se Rc aid oe eeece ee cok eee ae 27

Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds,

Inc., 842 F.2d 476 (6th Cir. 1968)... . 2. cece cess 14

Bache Halsey Stewart, Inc. v. French, 425 F. Supp.

ee Se | oy, NN ay Ap etn eee AO gr a Sd 22

Barrentine v. Arkansas-Best Freight System, Inc.,

Tee ti Tee Ce ck eee ee 6,8,12,15

Bird v. Shearson Lehman/American Express, Inc.,

oT. Fee wee Ce Gs BS oka OA 4G Cae ee eee 7

Bradley v. School Board of Richmond, 416 U.S.

ee CER och ee eee eee eee ee eee 29,30

Campbell v. Dominick & Dominick, Inc., 863 F.2d

TOE ThE RA. TE eee ee eee eae ee 26

Campbell v. Dominick & Dominick, Inc., 872 F.2d

ee ee a cis ee eae ae 29

Cohen v. Beneficial Industrial Loan Corp., 337 U.S.

Be THE 9 bbs oo eee Aeh Lee eae 25

Colorado Anti-Discrimination Commission v.

Continental Airlines, Inc., 372 U.S. 714 (1963).... 19

vi.

Commonwealth Insurance Co. v. Underwriters, Inc.,

eB ee ee er ee re 26

Crist v. Miller, 846 F.2d 1143 (7th Cir. 1988)....... 27

Crotty v. City of Chicago Heights, 857 F.2d 1170

I ee are ee ee eee ee eek 27

DeFuertes v. Drexel, Burnham, Lambert, Inc., 855

eee Oi CO ks et k bck Ke 26

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213

ET ae Ce tin Weg See orw ale a kek eae 8,15

Delmay v. Paine Webber, 863 F.2d 782 (11th

EER eA ba uw as nr aay ee ites di 26,27

Delmay v. Paine Webber, 872 F.2d 356 (11th Cir.

ea ky cles bey eke keke CL eee 29

Gilmer v. Interstate/Johnson Lane Co. (N.D.

ee eee eee ee |

Gulfstream Aerospace Corp. v. Mayacamas Corp.,

2 ie Bo) gh) ra 5,24,25,26

J.J. Ryan & Sons, Inc. v. Rohne Poulenc Textile,

S.A., 663 F.2d 316 (4th Cir. 1068) ..... 2... 668 27

Jacobson v. Merrill Lynch, Pierce, Fenner & Smith,

Oe» Bhi og: oe Ae! rere 13

Jeske v. Brooks, 875 F.2d 71 (4th Cir. 1989)........ 29

Jolley v. Paine Webber Jackson and Curtis, Inc., 864

ae ee Cee Ga. DOOD cee c cabs kas hs sce oe 26,28

Jolley v. Paine Webber Jackson & Curtis, Inc., 867

ae ee Se Gt, ROOK. ss x oneusaaavaes eke aes 29

Kansas Gas & Electric Co. v. Westinghouse Elec.

Co., 861 F.2d 420 (4th Cir. 1968) ............... 27

Kremer v. Chemical Construction Corp., 456 U.S.

Ree ree ke tee se 20

Lauro Lines S.R.L. v. Chasser, 109 S. Ct. 1976

| POPP er eer Ter Eee es Ere ETT TT eS 28

Linkletter v. Walker, 381 U.S. 618 (1965) .......... 30

McDonald v. City of West Branch, 466 U.S. 284

PCN AAG Greta gE ge 6,8,12,15

McDonnell Douglas Finance Corp. v. Pennsylvania

Power and Light Co., 849 F.2d 761 (2d Cir. 1988). 27

Mitsubishi Motors Corp. v. Soler-Chrysler-Plymouth,

we ek rere re errr Te 7,8,11,23

Moses H. Cone Memorial Hospital v. Mercury

Construction Corp., 460 U.S. 1 (1983) ........... 27

Motion Picture Laboratory Technicians Local 780 v.

McGregor & Werner, Inc., 804 F.2d 16 (2d Cir.

EE be Kb Ao aon Se ona eee eee 28

NPS Communications, Inc. v. Continental Group,

Inc., 760 F.2d 463 (2d Cir. 19085) ... 1... ccc eens 17

Nicholson v. CPC International, 46 Fair Empl. Prac.

Cas. (BNA) 41019 (D. N.J. 1988), affd.,

F.2d _. ss (8rd« Cir. 1989) (Westlaw 1989

We EE 554-5 ATENEO OR eee 7,11,13

Peoples Security Life Insurance Co. v. Monumental

Life Insurance Co., 867 F.2d 809 (4th Cir. 1989) .. 27

Perry v. Thomas, 482 U.S. 483 (1987)............ 8,20

Pihl v. Thomson McKinnon Securtties, Inc., 48 Fair

Empl. Prac. Cas. (BNA) 4922 (E.D. Pa. 1988) .... = 7

Pioneer Properties, Inc. v. Martin, 776 F.2d 888

RR ea eae A Magee phn 26

Posadas v. National City Bank, 296 U.S. 497

PE CA LCR REEDS RUA RRANR Dene seh RRR ERRD 20

viii.

Purdy v. Monex International, Ltd., 867 F.2d 1521

ee Ge. Cia SS AV ests aN oN ewe eee 28,29

Queipo v. Prudential Bache Securities Co., Inc., 867

if bei kt 2° 4. Serr ere teres eee 27

Quinn v. CGR, 828 F.2d 1463 (10th Cir. 1987)...... 26

Radzanower v. Touche Ross & Co., 426 U.S. 148

Le aeee rere rarer es earring re err grag" 20

Rauscher Pierce Refsnes, Inc. v. Birenbaum, 860

ie Bf oe | ere err rr 27

Rodriguez de Quijas v. Shearson/American Express,

Inc., 109 S. Ct. 1917 (1969) ........ 8,9,10,11,12,19,20

S.A. Mineracao Da _ Trindade-Samitri v. Utah

International, 745 F.2d 190 (2d Cir. 1984) ....... 17

Sears, Reebuck and Co. v. Glenwal Co., 325 F. Supp.

86 (S.D.N.Y. 1970), aff'd, 442 F.2d 1350 (2d Cir.

SE eee Wk Ee Sa ORE REL MA ERE RO 28

Sevinor v. Merrill Lynch, Pierce, Fenner & Smith,

ee ee oe Ae a er re ee 17

Shearson/American Express, Inc. v. McMahon, 482

BM ae 2k y ) eee 7,8,9,11,14,17,19,20,24

Smiga v. Dean-Witter Reynolds, 766 F.2d 698 (2d

Sl SEES Sica Vea ERA KER ERS he OSS ae EO 28

Southland Corp. v. Keating, .465 U.S. 1 (1984)...... 8

Southwest Forest Industries, Inc. v. Sutton, 868

Pe I I. CE ik S abe wae ne ded ensue 30

Steck v. Smith Barney, Harris Upham & Co., 661

ems OOO UE PE, BID a i ss cc sce cae a 0's 7

Steele v. L.F. Rothschild & Co. 864 F.2d 1

ee ae areca aa hs nn aw ee ee oe ec 26

ix.

Swenson v. CDI Corporation, 670 F. Supp. 1438.... = 7

Swenson v. Management Recruiters Int'l, Inc., 858

F.2d 1304 (8th Cir. 1988), on petition for rehearing

and motion to dismiss, 872 F.2d 164 (8th Cir.

See er ree rey rere ee rere ere passim

Synergy Gas Co. v. Sasso, 853 F.2d 59 (2d Cir.

EE Choo aA ane ee a eee ae 28

Turboff v. Merrill Lynch, Pierce, Fenner & Smith,

OG? &.2g 1618 th Cir. 1960)... . cc ec ee 29

United States v. Wilson, 815 F.2d 53 (8th Cir.

a ee ee ee ee ere re ern Teme eee es 30

Utley v. Goldman Sachs & Co., 49 Empl. Prac. Dec.

CCH 438,701 (D. Mass. 1988).................. 7

Wilko v. Swan, 346 U.S. 427 (1953).............. 8,10

Zosky v. Boyer, 856 F.2d 554 (8rd Cir. 1988)....... 26

State Case

DeSapio v. Josephthal and Co., 540 N.Y.S.2d 932

See ci Se Col ay Saree inc en a er res 7

Statuies

Federal Arbitration Act, 9 U.S.C. §1, et seq. (1982)

WOME) ocask os cnn ea ene sent a eaawes 3

NES IS bcd ace escent ivicsetaeen 3,4,8,22,29

PRP 55 5 ok ba ha vou saul saueke vere eee 8

ee ee meer Fe Ee OL a 3,13

RD <5 5 oo 6x05 400 4G SOS 3,22,24,25,28

Dy Wa Rs Aa ce kos bs KLE ee 3,22,25,28

OUR Sa eee 24

CURE ee eee 3,29

Judiciary and Judicial Procedure (1982)

WR IS Sc ctr ercivdnes feas> 2

a oe ler sd feat e ye an 3

Ree SUN ope pt 3,4,24,25

ete Sr i ae 3,25

ee eee ee ee ree 3,4,28

SO a ee he 3,4,28

Civil Rights Act of 1964, 42 U.S.C. $1971,

et seq. (1982)

Oe ee EE ira eka ek eee ka wea 6

Oe ee I era ine hace ere 3,19

42 UGA. SRODOR GE) nc occ eee esseuessers 21

ME Uh I ik os sos eee beeen aes 19

Ae RE I 6 oS ee en cade ees 22

OF es I isin ico cc centeee cast eee i

OO UE BO ooo cc ne vs coc cnuns 3,18,20

MER So eee er eer er 3,18,20

Fair Labor Standards Act of 1938 (1982)

a IS ne ee kb eS RRS RRR EW OR 20

Securities Act of 1933 (1982)

RE ey nek soe an Ree eR es ROG 20

Securities and Exchange Act of 1934 (1982)

RU See es 66 0h ke AR ee 20

Minnesota Human Rights Act (1986)

ee Ts BONO 6 ese weewdd ee 4k Ree ee 1,3,22

8 Re I ee ere 3

xi.

Miscellaneous

Brief of Amicus Curiae American Arbitration

Association, Shearson/American Express, Inc. v.

po ere Tre re ree eee ee Eee ee 13

Legislative History of Title VII and Title XI of the

Civil Rights Act of 1964, EEOC............... 21,22

Monat and Gomez, Sexual Harassment: The Impact

of Meritor Savings Bank v. Vinson on Grievances

and Arbitration Decisions, 41 The Arbitration

SOIT DE TEE io Sis wa ee eh ee ean n es 12

No.

IN THE

Supreme Court of the United States

October Term, 1988

MANAGEMENT RECRUITERS INTERNATIONAL, INC.

and

DAVID MARTH,

Petitioners,

VS.

DEBORAH SWENSON,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the United States Court of Appeals

For the Eighth Circuit

Petitioners Management Recruiters International,

Inc. (‘‘“Management Recruiters’) and David Marth,

defendants below, respectfully pray that a writ of

certiorari issue to review the judgment of the United

States Court of Appeals for the Eighth Circuit, entered

on October 5, 1988, which affirmed in part and reversed

in part an order of the United States District Court for

the District of Minnesota. The District Court enforced a

pre-existing agreement between Management Recruiters

and respondent Swenson, plaintiff below, who was a

managerial employee of Management Recruiters, to

arbitrate all disputes arising out of the employment

agreement and the relationship between the parties. The

District Court stayed all of respondent’s claims. These

included claims under Section 363.06 of the Minnesota

Human Rights Act (the “MHRA’’), relating to

employment discrimination, various common law claims

arising out of the same alleged facts, and a state

statutory claim for the opening of respondent’s mail

after her resignation. Plaintiff did not assert a claim

under Title VII of the Civil Rights Act of 1964 (‘Title

VII’).

On appeal, the Eighth Circuit ruled that the Federal

Arbitration Act does not apply to agreements to

arbitrate claims arising under either Title VII or state

civil rights statutes. The Eighth Circuit held that

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974),

required this result. The order was affirmed as to the

claims relating to respondent’s mail.

The Eighth Circuit denied petitioners’ Motion to

Dismiss for Lack of Subject Matter Jurisdiction and

Petition for Rehearing and Suggestion of Rehearing en

Banc.

OPINIONS BELOW

The opinion of the United States Court of Appeals

for the Eighth Circuit on the merits is reported at 858

F.2d 1304, and is reproduced at Appendix A1 hereto. Its

opinion on the Petition for Rehearing and Motion to

Dismiss is reported at 872 F.2d 264, and is reproduced at

Appendix A15 hereto. The opinion of the United States

District Court for the District of Minnesota is reported

at 670 F. Supp. 1438, and is reproduced at Appendix

A23 hereto.

JURISDICTION

The judgment of the Court of Appeals was entered

on October 5, 1988, as part of the opinion which is

reproduced at Appendix A1 hereto. The orders overruling

the Motion to Dismiss and the Petition for Rehearing

and Suggestion of Rehearing En Banc as moot were

entered on April 12, 1989 and are contained in the

opinion reproduced at Appendix Al15 hereto. This

Court’s jurisdiction is invoked pursuant to 28 U.S.C.

§1254(1) (1982).

STATUTORY PROVISIONS INVOLVED*

Federal Arbitration Act

§2, 9 U.S.C. §2

§3, 9 U.S.C. §3

§7, 9 U.S.C. §7

§9, 9 U.S.C. 89

§10, 9 U.S.C. §10

§15, 9 U.S.C. §15

Judiciary and Judicial Procedure

28 U.S.C. §1291

28 U.S.C. §$1292(a) and (b)

28 U.S.C. §1332(a)

28 U.S.C. §1441(a)

Civil Rights Act of 1964

§207 42 U.S.C. §2000a-6

§708 42 U.S.C. §2000e-7

§1104 42 U.S.C. §2000h-4

Minnesota Human Rights Act

Minn. Stat. $363.06 Subd. 1-4, 5.

Minn. Stat. $363.14 Subd. 1 (a)-(b).

* The text of these provisions is reproduced in full at Appendix A30.

STATEMENT OF THE CASE

Respondent Swenson was an employee of petitioner

Management Recruiters. Swenson sued Management

Recruiters and Marth,' alleging sexual harassment by

Marth, her former supervisor, in violation of the

Minnesota Human Rights Act (““MHIA”’), and various

other statutory and common law claims.’ She filed her

action in state court, without utilizing any of the

administrative proceedings provided for by the MHRA

or Title VII.

Swenson and Management Recruiters were parties to

an employment agreement which provided for

arbitration. Management Recruiters and Marth removed

the action to the District Court on the basis of diversity

of citizenship, pursuant to 28 U.S.C. §§1332 and 1441.

Management Recruiters then moved for a stay of

proceedings pursuant to the Federal Arbitration Act, 9

U.S.C. §3. The District Court granted the motion.

Swenson appealed the order staying her MHRA

claims and claims that her personal mail was opened at

the office after she had resigned. Her Notice of Appeal

claimed jurisdiction pursuant to 28 U.S.C. §1292(a). The

Court of Appeals affirmed the stay as to the counts

relating to the opening of Swenson’s mail and reversed

as to the MHRA claims.

‘Management Recruiters’ parent, CDI Corporation, also sued, was

subsequently dismissed from the action.

* Defamation, intentional infliction of emotional distress, negligent

hiring and supervision, and negligence/conversion and invasion of

privacy for the opening of respondent’s mail.

Subsequent to the filing of the briefs, but prior to

argument, this Court announced its decision in

Gulfstream Aerospace Corp. v. Mayacamas Corp., 108 S.

Ct. 1133 (1988). Neither counsel nor the Court raised the

question of jurisdiction in light of the Gulfstream

decision until after the Court of Appeals announced its

decision. Petitioners filed a Motion to Dismiss for Lack

of Subject Matter Jurisdiction, based on Gulfstream, and

a Petition for Rehearing and Suggestion of Rehearing en

Banc. Respondent moved to amend her Notice of Appeal

and sought to have the Notice of Appeal treated as a

petition for a writ of mandamus. The Court of Appeals

overruled both the Motion to Dismiss and the Petition

for Rehearing.

REASONS FOR GRANTING THE WRIT

I. THE FEDERAL ARBITRATION ACT IS

APPLICABLE TO CLAIMS UNDER TITLE VII

OF THE CIVIL RIGHTS ACT OF 1964.

The issue before the Court of Appeals was whether

the Federal Arbitration Act (FAA) is applicable to an

action based upon a state civil rights statute, the

MHRA. Although this issue is of sufficient importance

by itself to merit granting a writ of certiorari,’ the Court

of Appeals created the equally important issue of

whether the FAA is applicable to Title VII.

This will necessarily entail a review of the

applicability of Alexander v. Gardner-Denver Co., 415

U.S. 36 (1974), Barrentine v. Arkansas-Best Freight

System, Inc., 450 U.S. 728 (1981), and McDonald v. City

of West Branch, 466 U.S. 284 (1984), to arbitration under

the FAA. In Alexander, this Court held that an award

rendered in a collective bargaining grievance arbitration

did not preclude the employee from filing a Title VII

action. Barrentine extended the rule of non-preclusion of

such awards to wage claims under the Fair Labor

Standards Act and concluded that ‘‘different

considerations apply where the employee’s claim is based

on rights arising out of a statute designed to provide

minimum substantive guarantees to individual workers.’

450 U.S. at 737. McDonald extended it to actions under

42 U.S.C. $1983.

>The decision of this Court of Appeals filed October 5, 1988, has

caught the attention of employment practitioners throughout the

country, both defense counsel and plaintiffs’ counsel alike. It is a

path breaking decision and ... has enormous implications for federal-

state relations ...’’ Appeilant’s Memorandum of Law in Opposition

to Appellees’ Request to Vacate on Grounds of Lack of Jurisdiction

and in Support of Appellant’s Motion to Amend Notice of Appeal.

These decisions have recently been applied in a

manner which prevents applicability of the FAA to Title

VII,‘ other federal statutes, including the ADEA® and

ERISA,® and the New York Human Rights Law.’ The

strong dissents in Bird and Nicholson support the

position of the petitioners, and further evidence the

importance of the issues presented in this petition. In

holding that Swenson’s MHRA claims must be stayed

pending arbitration, in accordance with the FAA,

notwithstanding the Alexander opinion, the District

Court concluded ‘‘the proposition that the Supreme

Court believes Congress may have intended to preclude

waiver of judicial remedies provided for in state

discriminations statutes ... is clearly dictum and more

important, it is against the tide of recent Supreme Court

decisions confronting the arbitrability of statutory

claims.’’ 670 1". Supp. at 1441.

‘Utley v. Goldman Sachs & Co., 49 Empl. Prec. Dec. (CCH) 438,701

(D. Mass. 1988), appeal pending in First Circuit, No. 89-1218; Alford

v. Dean Witter Reynolds, Inc, —..._. F. Supp. _...___._ (S.D. Tex.

1989) (Westlaw 1989 WL 56058) (following Swenson and concluding

that following Mitsubishi and Shearson would require it to overrule

Alexander, which a district court could not do).

* Steck v. Smith Barney, Harris Upham & Co., 661 F. Supp. 543 (D.

N.J. 1987) (but holding that the FAA required arbitration of the state

age discrimination claims); Nicholson v. CPC International, 46 Fair

Empl. Prac. Cas. (BNA) 41019 (D. N.J. 1988), affd. F.2d

(3rd Cir. 1989) (Westlaw 1989 WL 56698) (majority

approving and dissent rejecting Swenson); Gilmer ov.

Interstate/Johnson Lane Co. (N.D. N.C., 1988), appeal pending in

Fourth Circuit, No. 88-1796. But see Pihl v. Thomson McKinnon

Securities, Inc., 48 Fair Empl. Prac. Cas. (BNA) $922 (E.D. Pa. 1988)

(distinguishing Alexander).

* Bird v. Shearson Lehman/American Express, inc., 871 F.2d 292 (2d

Cir. 1989) (majority approving and dissent rejecting Swenson).

" DeSapio v. Josephthal and Co., 540 N.Y.S.2d 932 (1989).

Those decisions were Southland Corp. v. Keating,’

Dean Witter Reynolds, Inc. v. Byrd,’ Mitsubishi

Motors Corp. v. Soler-Chrysler-Plymouth, Inc.,"°

Shearson/American Express, Inc. v. McMahon," and

Perry v. Thomas."

The Court of Appeals found petitioners’ reliance on

these decisions misplaced, because ‘‘none of these cases

have involved employment discrimination claims.” 858

F.2d at 1306. Instead, it concluded that Alexander,

Barrentine and McDonald were controlling. The Court of

Appeals thus applied decisions which fashioned rules of

preclusion applicable to grievance arbitration, rather

than recent decisions of this Court which determined the

applicability of §§3 and 4 of the FAA. In doing so, it

utilized the type of approach which was most recently

rejected by this Court in Rodriguez de Quijas uv.

Shearson/American Express, Inc., 109 S. Ct. 1917 (1989),

overruling Wilke v. Swan, 346 U.S. 427 (1953).

Under this Court’s recent decisions, there is a clear

federal policy that arbitration agreements ‘‘must be

‘rigorously enforce[d].’’’ Perry v. Thomas, 482 U.S. at

490, citing Shearson and Mitsubishi. The appropriate

analysis was stated as follows in Shearson, 482 U.S. at

226-27:

*465 U.S. 1 (1984), holding that a claim under the California

Franchise Investment Law was arbitrable, notwithstanding a

California statute invalidating the arbitration provision.

*470 U.S. 213 (1985), rejecting the “intertwining’’ doctrine and

holding that state statutory claims were required to be arbitrated,

even if they were joined with arguably non-arbitrable federal claims.

'°473 U.S. 614 (1985), holding that arbitration of federal anti-trust

claims was required under an arbitration clause in a contract

involving an international transaction.

'' 482 U.S. 220 (1987), holding that arbitration was required of

Section 10(b) claims under the Securities Exchange Act of 1934 and

of RICO claims.

'2482 U.S. 483 (1987), holding that a claim for wages under the

California Labor Law must be arbitrated, notwithstanding a

California statute which invalidated arbitration agreements relating

to wage collection actions.

The Arbitration Act, standing alone, therefore

mandates enforcement of agreements to arbitrate

statutory claims. Like any statutory directive, the

Arbitration Act’s mandate may be overridden by a

contrary congressional command. The burden is on

the party opposing arbitration, however, to show

that Congress intended to preclude a waiver of

judicial remedies for the statutory rights at issue.

See id., at 628. If Congress did intend to limit or

prohibit waiver of a judicial forum for a particular

claim, such an intent ‘will be deducible from [the

statute’s] text or legislative history,’ ibid., or from

an inherent conflict between arbitration and the

statute’s underlying purposes.

Accord Rodriguez de Quijas, 109 S. Ct. at 1921.

The Court of Appeals began its analysis of the

applicability of the FAA to the MHRA by determining

that the FAA was not applicabie to Title VII claims.

Since this conclusion was necessary for its later

conclusion as to the MHRA, its validity must be

considered.

This conclusion was not based on the text of Title

VII. The Civil Rights Act contains no reference to the

FAA. There is no limitation of claims under Title

VII to a judicial forum, nor are there any anti-waiver

provisions similar to those considered in Shearson and

Rodriguez de Quijas. Further, there is nothing in the

legislative history which suggests that the FAA is

inapplicable to claims under Title VII."*

Instead, the Court of Appeals concluded that the

FAA conflicts with the purposes of Title VII. It relied

upon the Alexander opinion for the conclusion that:

[IJn the passage of Title VII it was the congressional

intent that arbitration is unable to pay sufficient

attention to the transcendent public interest in the

enforcement of Title VII. Title VII mandates the

promotion of the public interest by assisting victims

'? See discussion in Part II.

of discrimination. The arbitration process may

hinder efforts to carry this mandate.

858 F.2d at 1307.

The Court of Appeals adopted the hostile

characterization of arbitration contained in Alexander,

stating at 1306-07:

The analysis of Alexander lends strong support

that Congress did not intend federal judicial

proceedings in discrimination cases to be preempted

by employment arbitration agreements enforceaile

under the FAA. The Court pointed up an inherent

conflict between arbitration and the underlying

purposes of Title VII which evince a congressional

intent to prohibit waiver of judicial forums. In

Alexander, the Supreme Court expressly commented

why arbitration is poorly suited as a forum for the

final resolution of rights created by Title ViI. The

main problems with arbitration are the lack of

expertise of arbitrators, the inferior fact finding

process, and the inability of arbitration to judicially

construe Title VII by reference to public law

concepts. Alexander, 415 U.S. at 56-57 (footnote

omitted).

Alexander in turn relied on the characterization of

the arbitration process in Wilko. Alexander, 415 U.S. at

57-58, citing Wilko, 346 U.S. at 435-37.

This characterization was firmly rejected in

Rodriguez de Quijas, 109 S. Ct. at 1920:

The Court’s characterization of the arbitration

process in Wilko is pervaded by what Judge Jerome

Frank called ‘‘the old judicial hostility to

arbitration.’’ Kulukundis Shipping Co. v. Amtorg

Trading Corp., 126 F.2d 978, 985 (CA2 1942). That

view has been steadily eroded over the years,

beginning in the lower courts. See Scherk, 484 F.2d

at 616 (Stevens, J., dissenting) (citing cases). The

erosion intensified in our most recent decisions

upholding agreements to arbitrate federal claims

raised under the Securities Exchange Act of 1934,

see Shearson/American Express, Inc. v. McMahon,

iinet ae a

482 U.S. 220, 107 S. Ct. 2332, 96 L.Ed.2d 185

(1987), under the RICO statutes, see ibid., and under

the antitrust laws, see Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.

Ct. 3346, 87 L.Ed.2d 444 (1985). See also Dean

Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221,

105 S. Ct. 1238, 1242, 84 L.Ed.2d 158 (1985) (federai

arbitration statute “requires that we rigorously

enforce agreements to arbitrate’); Moses H. Cone

Memorial Hospital v. Mercury Construction Corp.,

460 U.S. 1, 24, 103 S. Ct. 927, 941, 74 L.Ed.2d 765

(1983) (‘questions of arbitrability must be addressed

with a healthy regard for the federal policy favoring

arbitration”). The shift in the Court’s views on

arbitration away from those adopted in Wilko is

shown by the flat statement in Mitsubishi: ‘‘By

agreeing to arbitrate a statutory claim, a party does

not forego the substantive rights afforded by the

statute; it only submits to their resolution in an

arbitral, rather than judicial forum.’ 473 U.S., at

628, 105 S. Ct., at 3354. To the extent that Wilko

rested on suspicion of arbitration as a method of

weakening the protections afforded in the

substantive law to would-be complainants, it has

fallen far out of step with our current strong

endorsement of the federal statutes favoring this

method of resolving disputes.

Similarly, the decision of the Court of Appeals is far

out of step with this Court’s endorsement of arbitration.

In large part, this results from its failure to recognize

either that there was no evidence that arbitration under

the FAA would be inadequate or that the major

asserted inadequacies of labor arbitration are not

applicable under the FAA."*

‘*“In Swenson v. Management Recruiters Inc'l, Inc., 858 F.2d 1304,

1305-07 (8th Cir. 1988), the Eighth Circuit refused to enforce an

arbitration agreement with respect to Title VII claims, because it

perceived that arbitration is ‘poorly suited as a forum for the final

resolution of rights created by Title VII,’ relying on Alexander.

Because I believe that the mistrust of arbitratal proceedings reflected

in Alexander has been largely undercut by Mitsubishi, Shearson, and

de Quijas, and the court in Swenson offered no other justification for

its conclusion, I do not find Swenson persuasive.’ Nicholson v. CPC

International, Inc., Slip op. 32, n.6 (Becker, J., dissenting).

First, it concluded that arbitration was inadequate

on a silent record. As stated in Rodriguez de Quijas, 109

S. Ct. at 1921:

Finally, in McMahon we:stressed the strong

language of the Arbitration Act, which declares as a

matter of federal law that arbitration agreements

‘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. Under

that statute, the party opposing arbitration carries

the burden of showing that Congress intended in a

separate statute to preclude a waiver of judicial

remedies, or that such a waiver of judicial remedies

inherently conflicts with the underlying purposes of

that other statute. 482 U.S., at 226-227, 107 S. Ct.,

at 2337-2338. But as Justice Frankfurter said in

dissent in Wilko, so it is true in this case: ‘‘There is

nothing in the record before us, nor in the facts of

which we can take judicial notice, to indicate that

the arbitral system ... would not afford the plaintiff

the rights to which he is entitled.’’ 346 U.S., at 439,

74 S. Ct., at 189. Petitioners have not carried their

burden of showing that arbitration agreements are

not enforceable under the Securities Act.

Here, Swenson has not carried her burden of showing

that arbitration agreements are not enforceable under

Title VII or the MHRA.'®

Second, the inadequacies of labor-management

grievance arbitration discussed in Alexander,

Barrentine,'®* and McDonald" clearly would not exist in

an arbitration between petitioners and respondent

pursuant to the FAA before the American Arbitration

'SQne study has concluded that ‘“‘[A]s shown by the almost one

hundred sexual harassment arbitrations reported since 1958, however,

arbitrators appear able to handle harassment claims.’ Monat and

Gomez, Sexual Harassment: The Impact of Meritor Savings Bank v.

Vinson on Grievances and Arbitration Decisions, 41 The Arbitration

Journal 24 (1986), at 29.

'€ 450 U.S. at 741-45.

'’ 466 U.S. at 290-91.

Association. Jacobson v. Merrill Lynch, Pierce, Fenner &

Smith, 797 F.2d 1197, 1207 (3d Cir. 1986) (Adams, J.,

dissenting in part). It would be conducted by Swenson

herself, and not by a union, which may be more

concerned with the interest of the majority of its

members than the individual member aggrieved. There is

no presumption of lack of competence of the arbitrator to

determine complex legal issues, unlike a labor grievance

arbitrator whose “specialized competence ... pertains

primarily to the law of the shop, not the law of the

land.’ There is no collective-bargaining agreement to

impose limitations upon the power of the arbitrator ‘‘to

invoke public laws that conflict with the bargain between

the parties,’’ or to limit or prevent the arbitrator from

granting the range of relief provided by statute. The

arbitral procedures selected by the parties are not

inadequate."®

'§ Nicholson, Slip op. 27-33 (Becker, J., dissenting).

Procedural safeguards are contained in §7 of the Arbitration Act,

which provides for the issuance of subpoenas, the production of

documents by the witness, and punishment by contempt by the

district court for disobedience of the arbitrator’s subpoena. Further

protections are contained in the Commercial Arbitration Rules of the

American Arbitration Association, summarized in Brief of Amicus

Curiae American Arbitration Association at 13-14, Shearson:

The rules and procedures which govern arbitration are

designed to ensure fair results. Thus, the AAA’s Commercial

Arbitration Rules ... provide for neutral arbitrators (Article

12), and provide both for disqualification of an arbitrator due to

“any circumstances likely to affect impartiality’’ (Article 19),

and for peremptory challenges for any reason (Article 13). Any

party may be represented by counsel (Article 22). Pre-hearing

conferences and preliminary hearings may be held to arrange for

the exchange of information and the production of relevant

documents, and to attempt to narrow the issues and expedite

the proceedings (Article 10). The Arbitrator can subpoena

witnesses and documents for the hearing (Article 31; see also 9

U.S.C. §7), and any party has a right to offer any relevant

evidence (Article 31), and to require that witnesses testify under

oath (Article 27). Any party has a right to have a stenographic

record of the proceeding (Article 23), and briefs may be filed

(Article 35). A written award is required (Article 42), and, as a

matter of practice, the award can contain an explanation of

reasons if the parties so request.

This Court has affirmed and reaffirmed that

statutory rights may be fully vindicated in an arbitral

forum, that “arbitral tribunals are readily capable of

handling the factual and legal complexities’ of statutory

claims, that ‘‘the streamlined procedures of arbitration

do not entail any consequential restriction on

substantive rights,’’ and that arbitrators may be trusted

to follow the law, subject to post-award judicial scrutiny.

Shearson, 482 U.S. at 231-33.

In Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds,

Inc., 847 F.2d 475 (8th Cir. 1988), the Court of Appeals

applied the analytical framework of Shearson in

determining whether an ERISA claim is subject to the

FAA. In finding that it is, the Sulit Court applied the

recent decisions of this Court in the manner which

should have been done here. By eschewing the approach

of the Sulit Court, the Swenson Court created a conflict

as to the considerations to be applied in determining the

applicability of the FAA to a statutory claim.

The decision of the Court of Appeals is erroneous for

several additional reasons. The most important is that it

failed to recognize that Alexander created a rule of non-

preclusion, and not a rule of non-arbitrability. The

plaintiff had already fully arbitrated his grievance and

lost. The issues before this Court were whether he was

preciuded from litigating his Title VII claim either by

election of remedies or by the finding of the arbitrator.

Thus, this Court never addressed the issue whether his

action should have been stayed pending arbitration,

which is the only issue here.

Indeed, Alexander may be read as recognizing the

benefits of having arbitration held prior to litigation. The

Court held as follows:

We think, therefore, that the federal policy

favoring arbitration of labor disputes and the federal

policy against discriminatory employment practices

can best be accommodated by permitting an

employee to pursue fully both his remedy under the

grievance-arbitration clause of the collective-

bargaining agreement and his cause of action under

Title VII. The federal court should consider the

employee’s claim de novo. The arbitral decision may

be admitted as evidence and accorded such weight

as the court deems appropriate.

415 U.S. at 59-60. The Court continued as follows, at

n.21:

We adopt no standards as to the weight to be

accorded an arbitral decision, since this must be

determined in the court’s discretion with regard to

the facts of each case. Relevant factors include the

existence of provisions in the collective-bargaining

agreement that conform substantially with Title

VII, the degree of procedural fairness in the arbitral

forum, adequacy of the record with respect to the

issue of discrimination, and the special competence

of particular arbitrators. Where an arbitral

determination gives full consideration to an

employee’s Title VII rights, a court may properly

accord it great weight. This is especially true where

the issue is solely one of fact, specifically addressed

by the parties and decided by the arbitrator on the

basis of an adequate record."*

There is a substantial difference between requiring a

party to arbitrate statutory claims pursuant to the FAA

and holding that the party will be subject to preclusion

in a subsequent or continued judicial proceeding based

upon such statute. If the policies reflected in the FAA

and Title VII are in tension, as the Court of Appeals

concluded, an accommodation can best be achieved by

compelling arbitration and then determining the

preclusive effect to give the award.

As noted in Dean Witter Reynolds, Inc. v. Byrd, 470

U.S. at 222-23:

'* This approach to the admission and weight to be given to arbitral

awards was reconfirmed in Barrentine, 450 U.S. at 743 n.22, and in

McDonald, 466 U.S. at 292 n.13.

We believe that the preclusive effect of

arbitration proceedings is significantly less well

settled than the lower court opinions might suggest,

and that the consequences of this misconception has

been the formulation of unnecessarily contorted

procedures. We conclude that neither a stay of

proceedings, nor joined proceedings, is necessary to

protect the federal interest in the federal-court

proceeding, and that the formulation of collateral-

estoppel rules affords adequate protection to that

interest.

Initially, it is far from certain that arbitration

proceedings will have any preclusive effect on the

litigation of nonarbitrable federal claims.

(A]rbitration proceedings will not necessarily have a

preclusive effect on subsequent federal-court

proceedings.

Significantly, McDonald also establishes that

courts may directly and effectively protect federal

interests by determining the preclusive effect to be

given to an arbitration proceeding. Since preclusion

doctrine comfortably plays this role, it follows that

neither a stay of the arbitration proceedings, nor a

refusal to compel arbitration of state claims, is

required in order to assure that a_ precedent

arbitration does not impede a subsequent federal-

court action. The Courts of Appeals that have

assumed collateral-estoppel effect must be given to

arbitration proceedings have therefore sought to

accomplish indirectly that which they erroneously

assumed they could not do directly.

The question of what preclusive effect, if any,

the arbitration proceedings might have is not yet

before us, however, and we do not decide it. The

collateral-estoppel effect of an arbitration proceeding

is at issue only after arbitration is completed, of

course, and we therefore have no need to consider

now whether the analysis in McDonald encompasses

this case. Suffice it to say that in framing preclusion

rules in this context, courts shall take into account

the federal interests warranting protection. As a

| oon ea

result, there is no reason to require that district

courts decline to compel arbitration, or manipulate

the ordering of the resulting bifurcated proceedings,

simply to avoid an infringement of federal interests.

Unless Swenson abandons all of her non-MHRA

claims, there will still be a need to determine the

preclusive effect to give to the arbitration award, at least

on an issue preclusion (collateral estoppel) basis.

Swenson’s complaint asserts claims for intentional

infliction of emotional distress and negligent hiring and

supervision, based upon the same alleged acts which

form the basis for her MHRA claims. The factual

determinations of the arbitrator should be considered.

Arbitration of all the claims, including the MHRA

claims, would serve several valuable purposes, in

addition to those reflected in the FAA. The award may

be acceptable to both parties, bringing an end to the

litigation. If the award is given full preclusive effect, it

could ‘‘preclude the need for further district court

action.”” Sevinor v. Merrill Lynch, Pierce, Fenner &

Smith, 807 F.2d 16, 20 (1st Cir. 1986). If not,

[t]he arbitration could be accorded evidentiary

weight in a subsequent district court action ...

[citing McDonald] or could serve to ‘clarify and

perhaps even simplify the remaining issues which

must be litigated.” Home Life Insurance Co. v.

Kaufman, 547 F. Supp. 833, 836 (S.D.N.Y. 1982)

(citing cases) .... [T]he district court could properly

believe it was in the interest of both efficiency and

judicial economy that the [nonarbitrable] civil RICO

proceedings be stayed pending arbitration of

plaintiff’s [arbitrable] Rule 10b-5 counts.”

Clearly, the Court of Appeals should have concluded

that Title VII actions may be stayed pending arbitration

under the FAA.

**ibid., decided before Shearson, and citing NPS Communications,

Inc. v. Continental Group, Inc., 760 F.2d 463 (2d Cir. 1985) and S.A.

Mineracao Da Trindade-Samitri v. Utah International, 745 F.2d 190

(2d Cir. 1984).

II. THE FEDERAL ARBITRATION ACT IS

APPLICABLE TO STATE EMPLOYMENT

DISCRIMINATION CLAIMS.

The Court of Appeals concluded ‘‘that Congress has

articulated an intent through the text and legislative

history of Title VII to preclude waiver of judicial

remedies for violation of both federal Title VII rights

and parallel state statutory rights, thereby exempting

state statutes from the provision of the Federal

Arbitration Act.’ 858 F.2d at 1309.

The text of Title VII contains no exception to the

Arbitration Act. When Congress enacted Title VII in

1964, it did not specifically address the question of the

arbitrability of either state claims or claims under Title

VII. Instead, the Court of Appeals concluded that 42

U.S.C. §§2000e-7 and 2000h-4 demonstrate the requisite

Congressional intent that the Arbitration Act was not to

be applicable to state remedies for discrimination.

Those sections clearly have no applicability to the

Arbitration Act. Section 2000e-7 states:

Nothing in this title shall be deemed to exempt

or relieve any person from any liability. duty,

penalty, or punishment provided by any present or

future law of any State or political subdivision of a

State, other than any such law which purports to

require or permit the doing of any act which would

be an unlawful employment practice under this title

(Emphasis added).

“This title’’ refers to Title VII, and cannot be

extended to the Arbitration Act.

Similarly, §1104 of the Civili Rights Act of 1964, 42

U.S.C. §2000h-4, is limited by its terms to the Civil

Rights Act, and cannot be read to be applicable to any

other act of Congress. It provides:

Nothing contained in any title of this Act shall

be construed as indicating an intent on the part of

Congress to occupy the field in which any such title

operates to the exclusion of State laws on the same

subject matter, nor shall any provision of this Act

be construed as invalidating any provision of State

law unless such provision is inconsistent with any of

the purposes of this Act, or any provision thereof

(Emphasis added).

Had Congress intended to provide that no federal

statute would preempt state laws on discrimination, it

could have done so clearly and simply. Certainly

Congress was aware before its passage of the Civil

Rights Act that persons subject to the requirements of

state anti-discrimination statutes might argue that they

were preempted by various federal statutes.”!

The only provision in the Civil Rights Act of 1964

which contains any limitation as to federal remedies,

other than the sixty day deferral provision of Section

706(c) of the Act, 42 U.S.C. §$2000e-5(c), is found in §205

of the House Bill, relating to injunctive relief against

discrimination in places of public accommodation. It

became §207 of the Act, 42 U.S.C. §2000a-6(b), which

provides in part:

The remedies provided in this title [42 U.S.C.

§§2000a-2000a-6] shall be the exclusive means of

enforcing the rights based on this title. . .

Title VII contains no similar exclusive remedy

provision. There is no limitation of claims to a judicial

forum. There are no anti-waiver provisions similar to

those found not to bar arbitration in Shearson and

Rodriguez de Quijas. In fact, anti-preemption provisions

can be found in the Securities Act of 1933 (15 U.S.C.

*' For example, in 1963, this Court was called upon to rule upon

whether a Colorado fair employment practices statute was preempted

by the Federal Railway Labor Act or the Federal Aviation Act.

Colorado Anti-Discrimination Commission v. Continental Airlines,

Inc., 372 U.S. 714 (1963).

§77r), in the Securities and Exchange Act of 1934 (15

U.S.C. §78bb), and in the Fair Labor Standards Act (29

U.S.C. §218(a)). Yet such anti-preemption provisions

have not been interpreted as expressing a congressional

intent to prohibit arbitration of federal or state securities

claims or of state.wage act claims. Shearson, Rodriguez

de Quijas, and Perry.

Further, the claimed limitation on the Arbitration

Act would constitute a partial repeal. Since we have

shown that there is no express partial repeal, Swenson

must show the ‘clear and manifest’ intention of

Congress to impliedly repeal the Arbitration Act. Kremer

v. Chemical Construction Corp., 456 U.S. 461, 468

(1982).??

This has not been shown. One can explain the

misapplication of §§$2000e-7 and 2000h-4 only by the

degree of hostility evidenced by the Court of Appeals

toward arbitration.

The Court of Appeals also justified its conclusion by

stating that “‘[t]he legislative history of Title VII evinces

a congressional intent to allow individuals to pursue

independently one’s rights under other applicable state

and federal statutes.’’ 858 F.2d at 1308.

However, the portions of the Congressional Record

to which the Court referred merely explained that Title

VII was not intended to preempt state civil rights laws

which are not inconsistent. Jbid., n.11.”°

There is nothing in the legislative history of the Civil

Rights Act of 1964 which suggests that Congress

addressed the issue of arbitration. Instead, the

*? Quoting Radzanower v. Touche Ross & Co., 426 U.S. 148, 154

(1976), which quoted Posadas v. National City Bank, 296 U.S. 497,

503 (1936).

*? Indeed, petitioners provided the Court of Appeals with many more

citations to the legislative history, which showed that the sections in

question were directed to the issue of preemption. Brief of Appellees,

pp. 14-17.

legislative history confirms that Congress was concerned

only that the Civil Rights Act not be deemed to preempt

then existing or future state legislation. Requiring

Swenson to vindicate her MHRA rights in an arbitral

forum will in no way “relieve [petitioners] from any

liability, duty, penalty, or punishment”’ provided by the

MHRA.

Nowhere in any of the cited materials is there even

the hint of a suggestion that Congress intended that

enactment of Title VII or Title XI would create a

limitation upon the Arbitration Act, either as to claims

arising under Title VII or as to claims arising under

state statutes. On the contrary, in accordance with a

House rule, the Committee reported the changes in

existing law which would result from enactment of the

bill.* There is no reference to any change in the

Arbitration Act. Accordingly, the House Judiciary

Committee, which is the only committee of either House

which considered the bill, did not believe that enactment

of the Civil Rights Act would change the Arbitration

Act!

Finally, staying judicial proceedings pending

arbitration would not destroy the effectiveness of the

MHRA, nor would it in turn cause an inherent conflict

with the purposes of Title VII.

The underlying purpose of Title VII is to end

discrimination in employment. Section 2000e-5(b)

provides the primary method for enforcement of Title

VII. After meeting the deferral requirement, charges of

discrimination must be filed with the EEOC, which is

required to investigate the charge. Upon a finding of

reasonable cause, the EEOC is to use “informal methods

of conference, conciliation, and persuasion’”’ to eliminate

** Legislative History of Title VII and XI of the Civil Rights Act of

1964, EEOC, at 14-17.

discrimination. The filing ef a charge and the

opportunity for investigation and conciliation is a

condition precedent to the filing of a civil action by

either the EEOC or the complaining party.

Similar methods are provided by §363.06 of the

MHRA. Indeed, the Legislative History, 2160, found

that compliance was achieved through these methods in

99% of the cases reviewed.

Affirming the judgment of the District Court in this

case would in no way limit the ability of the EEOC or

state and local deferral agencies to enforce their

respective statutes. Indeed, the MHRA specifically

envisions arbitration before litigation. Minn. Stat.

$363.06 subd. 3.

The stay provision of section 3 of the Arbitration

Act is only applicable to a court suit or proceeding. It

has no applicability to administrative proceedings. Bache

Halsey Stewart, Inc. v. French, 425 F. Supp. 1231, 1234

(D. D.C., 1977).

Further, the FAA is inapplicable to actions brought

by the EEOC under 42 U.S.C. §2000e-5(f) or state court

actions filed by the Minnesota Commissioner of Human

Rights, because they would not be parties to an

arbitration agreement.

Instead, the FAA would come into play only where

the complainant seeks to file a court action contrary to

the terms of an arbitration agreement. Requiring

arbitration under these limited circumstances would in

no way conflict with the inherent purposes of Title VII.

An alternative judicial forum which may insure that

the arbitrator has rendered an award based upon the

relevant statute is provided by the FAA itself. 9 U.S.C.

§9 provides for confirmation and entry of a judgment

upon an arbitration award. 9 U.S.C. §10 provides for

a a |

vacation of an award upon several grounds, including

‘“... refusing to hear evidence pertinent and material to

the controversy.”’

In Mitsubishi, the defendants raised a concern that

the arbitrators might be unwilling to render an award

based upon the federal antitrust laws. The Court

responded as follows, 473 U.S., at 636-38:

There is no reason to assume at the outset of the

dispute that international arbitration will not

provide an adequate mechanism. To be sure, the

international arbitral tribunal owes no _ prior

allegiance to the legal norms of particular states;

hence, it has no direct obligation to vindicate their

statutory dictates. The tribunal, however, is bound

co effectuate the intentions of the parties. Where the

parties have agreed that the arbitral body is to

decide a defined set of claims which includes, as in

these cases, those arising from the application of

American antitrust law, the tribunal therefore

should be bound to decide that dispute in accord

with the national law giving rise to the claim. Cf.

Wilko v. Swan, 346 U.S., at 433-434. And so long as

the prospective litigant effectively may vindicate its

statutory cause of action in the arbitral forum, the

statute will continue to serve both its remedial and

deterrent function.

Having permitted the arbitration to go forward,

the national courts of the United States will have

the opportunity at the award-enforcement stage to

ensure that the legitimate interest in the

enforcement of the antitrust laws has been

addressed. The Convention reserves to each

signatory country the right to refuse enforcement of

an award where the “recognition or enforcement of

the award would be contrary to the public policy of

that country.” Art V(2)(b), 21 UST, at 2520; see

Scherk, 417 U.S., at 519, n 14. While the efficacy of

the arbitral process requires that substantive review

at the award-enforcement stage remain minimal, it

would not require intrusive inquiry to ascertain that

the tribunal took cognizance of the antitrust claims

and actually decided them (Footnotes omitted).

If Management Recruiters and Marth receive a

favorable award, Swenson would be able to challenge it

in the confirmation proceedings.

Alternatively, if Swenson receives a favorable award,

she could seek to have judgment entered upon it

pursuant to Section 9 of the Arbitration Act. If

confirmed, the judgment will be as fully enforceable “...

as if it had been rendered in an action in the court in

which it is entered.’’ 9 U.S.C. $13.

Based on the foregoing we believe that this Court

should grant the petition, so that it may decide whether

to conclude, paraphrasing Shearson, 482 U.S. at 219:

In sum, we find no basis for concluding that

Congress intended to prevent enforcement of

agreements to arbitrate state discrimination claims.

Swenson may effectively vindicate her MHRA claim

in an arbitral forum, and therefore there is no

inherent conflict between arbitration and _ the

purposes under.,ing Title VII. Moreover, nothing in

Title VII’s text or legislative history otherwise

demonstrates congressional intent to make an

exception to the Arbitration Act for state

employment discrimination claims. Accordingly,

Swenson, ‘‘having made the bargain to arbitrate,”

will be held to her bargain. Her MHRA claim is

arbitrable under the terms of the Arbitration Act.

Ill. THE COURT OF APPEALS DID NOT HAVE

JURISDICTION.

Swenson based her appeal on a claim of jurisdiction

pursuant to 28 U.S.C. $1292(a).

As a result of the overruling of the Enelow-Ettelson

doctrine in Gulfstream, orders’ staying judicial

proceedings are no longer immediately appealable under

§1292(a)(1). When petitioners moved to dismiss the

appeal for lack of jurisdiction, Swenson sought to amend

her notice of appeal, claiming appellate jurisdiction under

a Le

—

28 U.S.C. §1291 and the collateral-order doctrine

exception to the final-judgment rule, created in Cohen v.

Beneficial Industrial Loan Corp., 337 U.S. 541 (1949).

Despite this, the Court of Appeals concluded that

the arbitration agreement was illegal and against public

policy, because ‘“‘compulsory arbitration could serve to

thwart the mandate of the principals of Title VII and the

underlying state discrimination claim’’ and that ‘‘the

stay order is immediately appealable under section

$1292(a)(1) since to do otherwise is to enforce an unlawful

contract.” 872 F.2d, at 267. Clearly, $1292(a)(1) is

inapplicable.

If the Court of Appeals was referring to $1291(a)(1),”°

then the Court has constructed a novel additional

exemption to the final-judgment rule. This Court should

review the “illegal contract enforcement” exception

created by the Court of Appeals and determine that it

should not be engrafted upon §1291(a)(1). Such a new

exception is wholly unnecessary, since permissive appeal

under §1292(b) is available, as is an application for a writ

of mandamus, subject to the appropriate constraints on

the issuance of such a writ. Gulfstream, 108 S. Ct. at

1143-44.

A further reason for granting review is that the

Court of Appeals further justified its exercise of

jurisdiction by distorting the collateral-order doctrine

and creating a limitation upon the jurisdiction of district

courts under §§9 and 10 of the FAA. In Gulfstream, at

1136-37, this Court described the current contours of the

collateral-order doctrine:

Since Cohen, we have had many occasions to revisit

and refine the collateral-order exception to the final-

judgment rule. We have articulated a three-pronged

test to determine whether an order that does not

finally resolve a litigation is nonetheless appealable

* As suggested by the reference at 268, n.6. But see reference to

§$1292(a)(1) at 266.

tiie

under §2392. See Coopers & Lybrand ov.

Livesay, 437 U.S. 463, 98 S. Ct. 2454, 57 L.Ed.2d

351 (1978); see also, e.g., Richardson-Merrell, Inc. v.

Koller, 472 U.S. 424, 431, 195 S. Ct. 2757, 2761, 86

L.Ed.2d 340 (1985); Firestone Tire & Rubber Co. v.

Risjord, 449 U.S. 368, 375, 101 S. Ct. 669, 674, 66

L.Ed.2d 571 (1981). First, the order must

‘conclusively determine the disputed question.”

Coopers & Lybrand v. Livesay, supra, 437 U.S., at

468, 98 S. Ct., at 2458. Second, the order must

‘resolve an important issue completely separate

from the merits of the action.” Jbid. Third and

finally, the order must be “effectively unreviewable

on appeal from a final judgment.” Jbid. (footnote

omitted). If the order at issue fails to satisfy any

one of these requirements, it is not appealable under

the collateral-order exception to Section 1291.

The order of the District Court fails to satisfy the

third prong of the collateral-order test. It is not

“effectively unreviewabie on appeal from a_ final

judgment.’’ This has been the ruling of every court of

appeals since Gulfstream which has considered the

appealability of orders which granted a stay pending

arbitration or compelled arbitration. Commonwealth

Insurance Co. v. Underwriters, Inc., 846 F.2d 196 (3d Cir.

1988); DeFuertes v. Drexel, Burnham, Lambert, Inc., 855

F.2d 10 (1st Cir. 1988); Zosky v. Boyer, 856 F.2d 554 (3rd

Cir. 1988); Delmay v. Paine Webber, 863 F.2d 782 (11th

Cir. 1988); Campbell v. Dominick & Dominick, Inc., 863

F.2d 791 (11th Cir. 1988); Steele v. L.F. Rothschild & Co.,

864 F.2d 1 (2d Cir. 1988); and Jolley v. Paine Webber

Jackson and Curtis, Inc., 864 F.2d 402 (5th Cir. 1989). In

each of these cases, the court held that the order was not

unreviewable on appeal, and therefore the third prong of

the test was not met. See also Pioneer Properties, Inc. v.

Martin, 776 F.2d 888, 891 (10th Cir. 1985); Quinn v.

CGR, 828 F.2d 1463 (10th Cir. 1987), both decided prior

to Gulfstream.

The circuits were divided as to whether orders

denying stays or refusing to compel arbitration were

appealable. The First, Second, Fifth, Seventh, and

Eleventh Circuits held that such orders were not

appealable.** The Fourth Circuit held that they were.”’

The Court of Appeals held that the issue of

arbitrability of the MHRA claims might not be

reviewable on appeal, because of the possibility that the

arbitration award might be confirmed by a state court,

rather than a federal court which might not have

jurisdiction. This is wrong for several reasons. First, the

mere possibility of a prior state court review is not

sufficient to invoke the collateral-order doctrine. Moses

H. Cone Memorial Hospital v. Mercury Construction

Corp., 460 U.S. 1, 11 n.11 (1983),”* Crotty v. City of

Chicago Heights, 857 F.2d 1170, 1173-74 (7th Cir. 1988).

Second, the Court of Appeals wrongly concluded that

the jurisdiction of a district court to confirm, vacate or

modify the award would be dependent upon the award

exceeding the new diversity jurisdiction limit of $50,000.

It is the amount ‘in controversy’’ which determines the

jurisdiction, and not the amount of the award. American

Guarantee Co. v. Caldwell, 72 F.2d 209, 211 (9th Cir.

1934). Here, Swenson has sought both economic damages

‘‘equal to three times her lost salary and fringe benefits,”

** Crist v. Miller, 846 F.2d 1143 (7th Cir. 1988); McDonnell Douglas

Finance Corp. v. Pennsylvania Power and Light Co., 849 F.2d 761 (2d

Cir. 1988); Administrative Management Services, Ltd., Inc. v. Royal

American Managers, Inc., 854 F.2d 1272 (11th Cir. 1988); Delmay v.

Paine Webber, id.; Rauscher Pierce Refsnes, Inc. v. Birenbaum, 860

F.2d 169 (5th Cir. 1988); Queipo v. Prudential Bache Securities Co.,

Inc., 867 F.2d 721 (1st Cir. 1989).

"J.J. Ryan & Sons, Inc. v. Rohne Poulenc Textile, S.A., 863 F.2d 315

(4th Cir. 1988); Kansas Gas & Elec. Co. v. Westinghouse Elec. Co.,

861 F.2d 420 (4th Cir. 1988); and Peoples Sec. Life Ins. Co. v.

Monumental Life Ins. Co., 867 F.2d 809 (4th Cir. 1989).

** We do not hold that an order becomes final merely because it may

have the practical effect of allowing a state court to be the first to

rule on a common issue. We hold only that a stay order is final when

the sole purpose and effect of the stay is precisely to surrender

jurisdiction of a federal suit to a state court.”

and ‘‘compensation for lost employment opportunities,’’

as well as ‘“‘damages for mental pain and anguish, in an

amount in excess of $50,000” on each of several courts.

Coinplaint at 12-13.

Third, according to the Fifth Circuit, the district

court which issued the stay order would retain

jurisdiction to issue orders under §§9 and 10 of the FAA,

Jolley, 864 F.2d at 405,”* even where the arbitration is to

be held in another district. Purdy, 867 F.2d at 1523.*°

Review should be granted to resolve these conflicts

as to jurisdiction and venue.

Fourth, Swenson could obtain federal review by

promptly filing a §10 motion in a federal district court,

whether in Ohio or Minnesota. If petitioners were to win a

race to the courthouse by filing an application to confm

the award in state court, respondent could have the

proceeding removed to federal court pursuant to 28

U.S.C. §§1332 and 1441, just as this action was initially

removed by petitioners on the basis of diversity of

citizenship. Sears, Roebuck and Co. v. Glenwal Co., 325

F. Supp. 86 (S.D.N.Y. 1970), aff'd 442 F.2d 1350 (2d Cir.

1971); Synergy Gas Co. v. Sasso, 853 F.2d 59 (2d Cir.

1988).

Finally, an arbitration is a type of forum selection

clause, and as such the collateral-order doctrine is

inapplicable. Lauro Lines S.R.L. v. Chasser, 109 S. Ct.

1976 (1989).

****While an order granting a stay postpones active litigation in the

district court, it contemplates that the district court will retain

jurisdiction to confirm, modify, or in some cases, to renew the

litigation despite the arbitration award.”’

See also Smiga v. Dean-Witter Reynolds, 766 F.2d 698 (2d Cir.

1985); Motion Picture Laboratory Technicians Local 780 v. McGregor

& Werner, Inc., 804 F.2d 16 (2d Cir. 1986).

IV. SECTION 15 OF THE FEDERAL ARBITRATION

ACT PRECLUDED THE EXERCISE OF

JURISDICTION BY THE COURT OF APPEALS.

On November 19, 1988, the Judicial Improvements

and Access to Justice Act, Public Law 100-702, became

law. Section 1019 amended the FAA by adding a new

section, 9 U.S.C. §15, which provides in part that ‘‘an

appeal may not be taken from an interlocutory order ...

granting a stay of any action under section 3 of this

title.” 9 U.S.C. §15(b)(1).

In overruling petitioners’ Motion to Dismiss, the

Court of Appeals held that this section was inapplicable,

because it became effective after its opinion of October 5.

872 F.2d at 265 n.1.

Several courts have held that the enactment of

section 15 deprived them of jurisdiction over pending

appeals. Jolley v. Paine Webber Jackson & Curtis, Inc.,

867 F.2d 891 (5th Cir. 1989), supplementing 864 F.2d

402; Turboff v. Merrill Lynch, Pierce, Fenner & Smith,

867 F.2d 1518 (5th Cir. 1989); Purdy v. Monex

International, Ltd., 867 F.2d 1521 (5th Cir. 1989);

Delmay v. Paine Webber, 872 F.2d 356 (11th Cir. 1989);

Campbell v. Dominick & Dominick, Inc., 872 F.2d 358

(llth Cir. 1989); and Jeske v. Brooks, 875 F.2d 71 (4th

Cir. 1989). In Delmay and Campbell, the Fifth Circuit

followed the instruction of this Court in Bradley v.

School Board of Richmond, 416 U.S. 696, 711 (1974), that

“a court is to apply the law in effect at the time it

renders its decision, unless doing so would result in

manifest injustice or there is statutory direction or

legislative history to the contrary.”’

In Bradley, this Court made clear that such change

of law would be applicable ‘‘while a case is on direct

review,’ which is one in which the availability of appeal

has not been exhausted or lapsed, and in which the time

to petition for certiorari has not passed. Bradley, at

710-11 n.14, citing Linkletter v. Walker, 381 U.S. 618,

622 n.5 (1965).

The Eighth Circuit had previously applied this rule

where the change of law had occurred after it had

rendered an opinion, during the pendency of a petition

for rehearing with suggestion for rehearing en banc.

United States v. Wilson, 815 F.2d 53 (8th Cir. 1987), as

has the Tenth Circuit. Southwest Forest Industries, Inc.

v. Sutton, 868 F.2d 352 (10th Cir. 1989).

The decision of the Court of Appeals is contrary to

the dictates of this Court and is in conflict both with the

Tenth Circuit and a prior decision of its own circuit.

These are additional reasons for review, and perhaps a

summary disposition of reversal.

CONCLUSION

For all the foregoing reasons, Petitioners respectfully

request that this Court issue a writ of certiorari in this

case to review the decision of the United States Court of

Appeals for the Eighth Circuit.

Dated: Cleveland, Ohio

July 10, 1989

Respectfully submitted,

DONALD L. GOLDMAN

1127 Euclid Avenue

1400 Statler Office Tower

Cleveland, Ohio 44115-1638

(216) 696-1122

Counsel of Record for Petitioners

APPENDIX

OPINION OF THE UNITED STATES COURT

OF APPEALS FOR THE EIGHTH CIRCUIT

(Filed October 5, 1988)

No. 87-5465

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

DEBORAH J. SWENSON,

Appellant,

Vv. -

MANAGEMENT RECRUITERS INTERNATIONAL,

INC., DAVID MARTH,

Appellees,

STATE OF MINNESOTA,

amicus curiae/Appellant.

APPEAL FROM THE UNITED STATES DistTRICT CouRT

FOR THE DISTRICT OF MINNESOTA.

Before: Lay, Chief Judge, BRown,* Senior Circuit Judge,

and BEAM, Circuit Judge.

*The HONORABLE JOHN R. BROWN, Senior Circuit Judge for the

United States Court of Appeals for the Fifth Circuit, sitting by

designation.

Lay, Chief Judge.

Swenson commenced an action against her former

employer, Management Recruiters International, Inc.,

and her former supervisor, David Marth, alleging sex

discrimination, aiding and abetting race discrimination

pursuant to the Minnesota Human Rights Act,' invasion

of privacy and tortious conversion of the contents of her

mail. Management Recruiters removed the case to

federal court on grounds of diversity of citizenship under

28 U.S.C. $1331 (1982) and moved to stay this suit

pending arbitration of all issues pursuant to the Federal

Arbitration Act (FAA). 9 U.S.C. §3 (1982).? The district

court’ granted the motion to stay. On appeal, Swenson

contends that the district court erred in finding that the

FAA preempts state judicial remedies and in finding

that the claims are subject to arbitrations We now

reverse in part and affirm in part.

Management Recruiters International, Inc. does

business in Minnesota as OfficeMates 5. Swenson was

employed as an office manager at OfficeMates 5 in

Edina, Minnesota, from August 12, 1985, until February

13, 1987, when she terminated her employment. She filed

a discrimination suit making claims of sex discrimination

and unfair employment practices in violation of

Minnesota law. Swenson also alleges that Marth

‘Minn. Stat. §§363.01-363.14 (1986 & Supp. 1987).

‘Swenson signed an agreement with her employer containing a

provision requiring arbitration of controversies between the parties

pursuant to the Commercial Arbitration Rules of the American

Arbitration Association.

‘The Honorable Donald D. Alsop, United States Chief District Judge

for the District of Minnesota.

attempted to compel or coerce her to engage in racial

discrimination in hiring practices, constituting an unfair

employment practice in violation of Minn. Stat. $363.03

subd. 6(2) (1986).

On February 13, 1987, Swenson voluntarily quit her

job allegedly because of the discriminatory actions of her

employer. After Swenson quit her job, she claims that

employees of Management Recruiters opened her

personal, sealed mail in violation of Minn. Stat. $609.795

(1986 & Supp. 1987). After Swenson terminated her

employment, she filed suit in Hennepin County District

Court. The suit was removed to federal court, and the

district court issued an order to stay all issues subject to

arbitration. Swenson now appeals.

Preemption

In Alexander v. Gardner-Denver Co., 415 U.S. 36

(1974), the district court had held that the employee's

statutory right to a trial de novo under Title VII was

foreclosed by the employee’s voluntary submission of his

claim to final arbitration pursuant to the union’s

agreement to arbitrate. The court of appeals affirmed.

The Supreme Court in reversing, was “‘unable to accept

the proposition that petitioner waived his cause of action

under Title VII.’’ Jd. at 51. The Court unanimously

declared:

we think it clear that there can be no prospective

waiver of an employee’s rights under Title VII. ***

Title VII’s strictures are absolute and represent a

congressional command that each employee be free

from discriminatory practices. Of necessity, the

rights conferred can form no part of the collective-

bargaining process since waiver of these rights

would defeat the paramount congressional purpose

behind Title VII. In these circumstances, an

employee’s rights under Title VII are _ not

susceptible of prospective waiver.

Id. at 51-52. While the Alexander Court noted that

federal policy favors arbitration, id. at 46, it recognized

that the Title VII scheme indicates that Congress

intended federal courts to be ultimately responsible for

enforcing Title VII, and deferral to arbitral decisions

would conflict with that goal. Jd. at 56. The Court also

observed that ‘‘the choice of forums inevitably affects

the scope of the substantive right to be vindicated.”’ Jd.

(citing U.S. Bulk Carriers, Inc. v. Arguelles, 400 U.S.

351, 359-60 (1971) (Harlan, J., concurring)). The Alexander

Court concluded: “the federal policy favoring arbitration

of labor disputes and the federal policy against

discriminatory employment practices can best be

accommodated by permitting an employee to pursue

fully both his remedy under the grievance-arbitration

clause of a collective-bargaining agreement and his cause

of action under Title VII.” 415 U.S. at 59-60.

Although Alexander involves a collective bargaining

agreement, and not a commercial arbitration agreement

under the FAA, this fact should not change the Court’s

analysis. The Alexander Court was well aware that

federal policy favors arbitration. That decision turned

not on the fact that a collective bargaining arbitration

was involved, but instead on the unique nature of Title

VII. Alexander noted that “Congress indicated that it

considered the policy against discrimination to be of the

‘highest priority.’ ’’ Id. at 47.

Subsequent to the Alexander decision, the Supreme

Court again recognized that certain statutes which

provide minimum substantive guarantees, such as Title

VII, are to be treated differently for arbitration

purposes. In Barrentine v. Arkansas-Best Freight

System, Inc., 450 U.S. 728 (1981), the Supreme Court

held that wage claims brought under the Fair Labor

Standards Act are not barred by the prior submission of

those claims to the contractual dispute-resolution.

procedures. The Court noted that ‘‘[wJhile courts should

defer to an arbitral decision where the employee's claim

is based on rights arising out of the collective-bargaining

agreement, different considerations apply where the

employee's claim is based on rights arising out of a

statute designed to provide minimum _ substantive

guarantees to individual workers.’’ Id. at 737 (our

emphasis). The Barrentine Court went on to state

‘‘It]hese considerations were the basis for our decision in

Alexander v. Gardner-Denver Co.,’’ Id. (cite omitted).‘

Discrimination and civil rights legislation have

traditionally been viewed differently than purely private

economic disputes. R. Rotunda, J. Nowak & J. Young,

Treatise on Constitutional Law: Substance and

Procedure §§15.4 & 15.7 (1986).

Management Recruiters argues that the federal

policy favoring arbitration should prevail. It relies on

recent Supreme Court decisions in which the FAA was

found to preempt both state and federal remedies.

‘Management Recruiters contends that Mitsubishi Motors Corp. uv.

Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) would appear to

limit the effect of Barrentine and Alexander. The Third Circuit has

rejected the proposition that Mitsubishi limits the effect of

Barrentine and Alexander. Gavalik v. Continental Can Co., 812 F.2d

834 (3d Cir. 1987). The Third Circuit held that as long as a judicial

determination of arbitrability is the result of an independent

interpretation of the congressional intent, it will not contravene

Mitsubishi. Id. at 850 & n.30.

However, none of these cases have involved employment

discrimination claims.°

The analysis of Alexander lends strong support that

Congress did not intend federal judicial proceedings in

discrimination cases to be preempted by employment

arbitration agreements enforceable under the FAA. The

Court pointed up an inherent conflict between arbitration

and the underlying purposes of Title VII which evince a

congressional intent to prohibit waiver of judicial

forums. In Alexander the Supreme Court expressly

commented why arbitration is poorly suited as a forum

for the final resolution of rights created by Title VII.

The main problems with arbitration are the lack of

‘Perry v. Thomas, ______-—~>U.S. ___, 107 S. Ct. 2520 (1987)

(claim for wages under the California Labor Code must be arbitrated,

despite California statute which invalidated arbitration agreements in

wage collection cases); Shearson/American Express, Inc. v. McMahon,

—__ US. ______, 107 S. Ct. 2332 (1987) (claims under §10(b) of

the Securities Exchange Act and RICO claims were arbitrable under

predispute arbitration agreements); Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (federal anti-trust claims

must be arbitrated under an arbitration agreement involving

international transaction); Dean Witter Reynolds inc. v. Byrd, 470

U.S. 213 (1985) (state law claims, pendent to non-arbitrable federal

securities claims, must be arbitrated; court rejected ‘intertwining’

doctrine); Southland Corp. v. Keating, 465 U.S. 1 (1984) (claims

asserted under California Franchise Investment Law were arbitrable,

despite California law invalidating arbitration clause).

expertise of arbitrators,® the inferior factfinding process,’

and the inability of arbitration to judicially construe

Title VII by reference to public law concepts. Alexander,

415 U.S. at 56-57. See also McDonald v. City of West

Branch, 466 U.S. 284, 290 (1984) (lack of expertise cited

as reason not to defer to arbitration in section 1983

case); Barrentine, 450 U.S. at 743 (lack of competence to

decide legal issue cited as reason not to defer to

arbitration in Fair Labor Standards Act case).

Management Recruiters argues that the Supreme

Court has recently rejected the idea that the competence

of arbitrators is inadequate to decide statutory claims.

The Court in Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985), observed ‘‘we are

well past the time when judicial suspicion of the

desirability of arbitration and of the competence of

arbitral tribunals inhibited the development of

arbitration as an alternative means of dispute

resolution.” Jd. at 626-27. The Court rejected arguments

* Alexander noted that many arbitrators are not lawyers, and many

of them may not possess the knowledge to resolve the complex legal

questions that might arise under the antidiscrimination statutes. 415

U.S. at 57 n.18. Arbitrators may be ill-equipped to handle questions

of law such as the proper burden of proof or the appropriate legal

standard to apply. Id.; see also McDonald v. City of West Branch,

466 U.S. 284, 290 (1984).

’ The Alexander Court explained:

[t]he record of the arbitration proceedings is not as complete;

the usual rules of evidence do not apply; and rights and

procedures common to civil trials, such as_ discovery,

compulsory process, cr08s-examination, and testimony under

oath, are often severely limited or unavailable. *** And as this

Court has recognized, ‘‘[a]rbitrators have no obligation to the

court to give their reasons for an award.”

415 U.S. at 57-58 (citations omitted); see also McDonald, 466 U.S. at

291.

of inadequacy based on complexity of the claim,

inadequate procedures, and fear that arbitrators will not

follow the statute and fail to protect substantive rights.

Id. at 634-36. See also Shearson, _._-—»WUS..

107 S. Ct. at 2340-44.

Arguably, Mitsubishi mandates that it is the intent

found in the text of the statute, and not the conclusions

of the court regarding the adequacy of arbitration which

is determinative. However, Mitsubishi went on to note,

“‘(t]hat is not to say that all controversies implicating

statutory rights are suitable for arbitration. *** [I]t is

the congressional intention expressed in some other

statute on which the courts must rely to identify any

category of claims as tc which agreements to arbitrate

will be held unenforceable.’ Mitsubishi, 473 U.S. at 627.

We conclude that in the passage of Title VII it was

the congressional intent that arbitration is unable to pay

sufficient attention to the transcendent public interest in

the enforcement of Title VII. Title VII mandates the

promotion of the public interest by assisting victims of

discrimination. The arbitration process may hinder

efforts to carry out this mandate.

State antidiscrimination laws

Having concluded that arbitration under the FAA

was not intended to supersede federal judicial remedies

under Title VII we turn to the discussion as to whether

the same principles should apply to state remedies

serving as a counterpart to Title VII.

Alexander recognized that ‘Title VII was designed

to supplement, rather than supplant, existing laws and

institutions relating to employment discrimination.”

Alexander, 415 U.S. at 48-49. Title VII contemplates

cna

substantial involvement of state procedures in the

implementation of employment discrimination claims.

Title VII provides for initial consideration of claims in

state and local forums, and the EEOC may not process a

charge of discrimination until the state remedy has been

invoked and 60 days have passed, or until state

proceedings have terminated.* See also 42 U.S.C. $2000e-

5(b) (1982).

Two sections of the Civil Rights Act of 1964 make

clear the importance of state law and congressional

intent to preempt only those laws which actually conflict

with federal law. Section 2000e-7 of 42 U.S.C. provides:

Nothing in this subchapter shall be deemed to

exempt or relieve any person from any liability,

duty, penalty, or punishment provided by any

present or future law of any State or political

subdivision of a State, other than any such law

which purports to require or permit the doing of any

act which would be an unlawful employment

practice under this subchapter.

Section 2000h-4 of 42 U.S.C., which applies to all

titles of the Civil Rights Act, provides the standard for

preemption:

* 42 U.S.C. §2000e-5(c) (1982):

In the case of an alleged unlawful employment practice

occurring in a State, *** which has a State or local law

prohibiting the unlawful employment practice alleged and

establishing or authorizing a State or local authority to grant or

seek relief from such practice or to institute criminal

proceedings with respect thereto upon receiving notice thereof,

no charge may be filed under subsection (b) of this seetion by

the person aggrieved before the expiration of sixty days after

proceedings have been commenced under the State or local law,

unless such proceedings have been earlier terminated ***.

Al0

Nothing contained in any title of this Act shall

be construed as indicating an intent on the part of

Congress to occupy the field in which any such title

operates to the exclusion of State laws on the same

subject matter, nor shall any provision of this Act

be construed as invalidating any provision of State

law unless such provision is inconsistent with any of

the purposes of this Act, or any provision thereof.

These sections demonstrate the central role state law is

to play in the Title VII schome.

In Kremer v. Chemical Constr. Corp., 456 U.S. 461

(1982), the Court held that in Title VII cases, federal

courts are required to give res judicata effect to state

court decisions in state law discrimination cases. Kremer

filed an employment discrimination charge with the

EEOC under Title VII. The EEOC, as mandated by Title

VII,® referred the claim to the state agency charged with

enforcing state antidiscrimination law. The state agency

determined the claim to be without merit and was upheld

by an administrative appeal board.'® Kremer filed a

petition with the state appellate court and the court

affirmed. Subsequently, the EEOC determined that there

was no reasonable cause to believe the charge was true

and issued a right-to-sue notice. Kremer then filed a suit

in federal court, which was dismissed on res judicata

grounds.

* 42 U.S.C. §2000e-5(c) (1982).

'°In Kremer, the Court found that the problems with the arbitral

factfinding ‘‘cannot be attributed to state administrative boards and

state courts. State authorities are charged with enforcing laws, and

state courts are presumed competent to interpret those laws.” Jd. at

478.

All

In affirming the dismissal the Supreme Court

focused on the important role of state law in enforcing

the Title VII scheme, as evidenced in the legislative

history. The legislative history of Title VII evinces a

congressional intent to allow individuals to pursue

independently one’s rights under other applicable state

and federal statutes.'! Provisions in the text as well as in

the legislative history demonstrate an explicit, mixed

federal-state scheme of Title VII and a prominent state

law role.

Alexander makes clear that Congress intended the

right in employment discrimination cases to have access

to judicial remedies to outbalance the federal policy

favoring arbitration. It is equally clear, from the text

and legislative history of Title VII and from Kremer,

that Congress intended the federal antidiscrimination

system to defer to state systems where possible. Under

the Minnesota Human Rights Act, the Department of

Human Rights may investigate charges, Minn. Stat.

§363.06 (1986), and represent victims in administrative

and judicial proceedings. Minn. Stat. §§363.071-.072

'' Senator Hubert Humphrey, the Senate floor manager for the bill,

remarked on the relationship between Title VII and existing state

statutes:

We recognized that many States already have functioning

antidiscrimination programs to insure equal access to places of

public accommodation and equal employment opportunity. We

sought merely to guarantee that these States—and other States

which may establish such programs—will be given every

opportunity to employ their expertise and experience without

premature interference by the Federal Government.

110 Cong. Rec. 12,725 (1964). In an interpretive memorandum,

Senators Clark and Case echoed Humphrey’s remarks: ‘Title VII

specifically provides for the continued effectiveness of State and local

laws and procedures for dealing with discrimination in employment”’

and that ‘(Title VII] will not override any State law or municipal

ordinance which is not inconsistent.” Jd. at 7214, 7216.

Al2

(1986). By giving individuals access to the state courts,

the private litigant ‘‘not only redresses his own injury

but also vindicates the important congressional policy

against discriminatory employment practices.’’

Alexander, 415 U.S. at 45. As the Court stated, ‘‘the

resolution of statutory or constitutional issues is a

primary responsibility of courts, and _ judicial

construction has proved especially necessary with

respect to Title VII, whose broad language frequently

can be given meaning only by reference to public law

concepts.” Jd. at 57.

We conclude that Congress has articulated an intent

through the text and legislative history of Title VII to

preclude waiver of judicial remedies for violation of both

federal Title VII rights and parallel state statutory

rights, thereby exempting state statutes from the

provisions of the Federal Arbitration Act. We emphasize

that we reach this holding based upon the legislative

history and congressional intent manifested by Congress

in passing Title VII. The intent of the state legislature in

passing the Minnesota Human Rights Act, Minn. Stat.

$§$363.01-363.14 (1986 & Supp. 1987), is not relevant to

our holding. Cf. Steck v. Smith Barney, Harris Upham &

Co., 661 F. Supp. 543 (D.N.J. 1987)."”

'? We note a New Jersey federal district court has examined the

question whether a state law Age Discrimination in Employment Act

(ADEA) claim was subject to arbitration vis-a-vis a state judicial

proceeding. In finding as we do that Alexander is still viable after

Mitsubishi and Title VII claims in federal court preempt arbitration,

the court reasoned that plaintiff's state law claims, however, did not

enjoy the same protection. The court relied on Dean Witter Reynolds

Inc. v. Byrd, 470 U.S. 213 (1985), which held that arbitration is

necessary ‘‘even where the result would be the possibly inefficient

maintenance of separate proceedings in different forums.’’ Jd. at 217.

The court also relied on the statement from Byrd that ‘the relevant

federal law requires piecemeal resolution when necessary to give

effect to an arbitration agreement.”’ Jd. at 221 (citing Moses H. Cone

Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983)).

(Footnote continued on following page.)

Al3

Swenson’s claims arising out of opening of Swenson’s

mail are arbitrable.

Swenson appeals from the district court’s stay of

Counts VI and VII of her complaint pursuant to the

FAA. These counts are based upon alleged acts by the

defendants which took place after Swenson had

terminated her employment. Swenson argues that the

parties’ employment agreement had ended and that an

arbitrator could decide only issues which arose during

the time the employment agreement was in effect.

(Footnote continued from preceding page.)

In so holding the court reasoned that an ADEA claim was

parallel to a Title VII claim, citing New Jersey authority to that

effect. Steck, 661 F. Supp. at 548. However, the court concluded that

the age discrimination statute involved was state and not federal, and

there was no congressional intent involved, so the FAA must be

strictly enforced. Id.

We find that Congress, in passing Title VII as it deals with race

and gender discrimination claims, manifested the intent to exempt

both state and federal law from arbitration. The ADEA is not part of

Title VII, and although aimed at a form of discrimination, the ADEA

does not contain the same recognition of state procedural remedies as

does Title VII in dealing with race and gender discrimination claims.

In fact, this court has found that the ADEA is more like 42 U.S.C.

§1983 than Title VII, Stillians v. State of Iowa, 843 F.2d 276 (8th Cir.

1988) (Lay, C.J., dissenting) (holding that under the ADEA, unlike

Title VII, a final, unreviewed, state administrative proceeding has

preclusive effect in federal court). Suffice it to say there are many

substantive and procedural differences in the provisions of Title VII

and the ADEA. Title VII makes clear state procedures must be

invoked as a prerequisite to a filing of a Title VII claim. The ADEA

does not have a similar requirement. Under the ADEA, 29 U.S.C.

§633(a) (1982), it is provided that ‘‘upon commencement of action

under this chapter such action shall supersede any State action”

whereas Title VII contains no such limitation. Compelling arbitration

in race and gender discrimination cases as a preemptive forum to

state enforced claims runs contra to the intended scheme Congress

has provided in Title VII. The congressional scheme recognizes both

the state agencies and courts having an integral role in enforcement

of Title VII claims.

Al4

The duty to arbitrate is contractual. Only those

issues which parties have agreed to arbitrate may be

submitted to arbitration. Morgan v. Smith Barney,

Harris Upham & Co., 729 F.2d 1163, 1165 (8th Cir. 1984)

(Arbitration is a matter of contract interpretation). This

court must first look to the language of the agreement to

determine whether the parties intended this dispute to be

arbitrated. Jd. If the contract language is ambiguous or

unclear, federal policy requires that ‘‘any doubts

concerning the scope of arbitrable issues should be

resolved in favor of arbitration.” Jd. (citing Moses H.

Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S.

1, 24-25 (1983)).

The employment agreement provides for arbitration

of ‘‘all controversies, claims, disputes and matters in

question arising out of, or relating to, this Agreement or

the breach thereof, or the relations between the

parties.’’'* The district court found that given the policy

favoring arbitration and the breadth of the arbitration

agreement, these claims arose out of Swenson’s

employment as a manager, and were within the

parameters of the arbitration clause. Swenson v. CDI

Corp., 670 F. Supp. 1438, 1440 (D. Minn. 1987). We find

no error in this interpretation. We affirm the district

court’s decision as to the arbitrability of Counts VI and

VIL.

Accordingly, we reverse in part and affirm in part

the judgment of the district court.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS,

EIGHTH CIRCUIT.

‘Manager's Employment Agreement dated August 12, 1985,

Appendix at 35.

Al5

ORDER OF THE UNITED STATES COURT

OF APPEALS FOR THE EIGHTH CIRCUIT

DENYING MOTION TO DISMISS AND

PETITION FOR REHEARING

(Filed April 12, 1989)

No. 87-5465

UNITED STATES COURT OF APPEALS

FoR THE EIGHTH CIRCUIT

DEBORAH J. SWENSON,

Appellant,

MANAGEMENT RECRUITERS INTERNATIONAL

INC.; DAVID MARTH,

Appellees,

STATE OF MINNESOTA,

amicus curiae/Appellant.

ON PETITION FOR REHEARING AND ORDER DENYING

MOTION TO DISMISS FOR LACK OF JURISDICTION.

Before Lay, Chief Judge, ARNOLD and BEAM, Circuit

Judges.

Lay, Chief Judge.

Al6

An order was issued in this case on October 5, 1988,

reversing in part and affirming in part the district

court’s order staying all issues subject to arbitration.

Swenson v. Management Recruiters, Int'l, Inc., 858 F.2d

1304 (8th Cir. 1988). Management Recruiters

International, Inc. has filed a petition for rehearing and

motion to dismiss for lack of jurisdiction pursuant to 28

U.S.C. §1292(a)(1). Deborah Swenson has amended her

notice of appeal to include 28 U.S.C. §1291 as an

additional basis for jurisdiction, and alternatively

requests that the notice of appeal be considered an

application for writ of mandamus under 28 U.S.C. $1651.

This court finds jurisdiction pursuant to section

1292(a)(1) and finds the district court’s order to be a final

order appealable under the collateral order doctrine. We

therefore deny the motion to dismiss and the petition for

rehearing.’

‘On November 19, 1988, the Judicial Improvements and Access to

Justice Act (‘‘Act’’), Public Law 100-702, became law. Section 1019

of the Act amended the Federal Arbitration Act by adding a new

section to title 9 of the United States Code. That section provides:

(b) Except as otherwise provided in section 1292(b) of title 28,

an appeal may not be taken from an interlocutory order—

(1) granting a stay of any action under section 3 of this

title;

(2) directing arbitration to proceed under section 4 of this

title;

(3) compelling arbitration under section 206 of this title; or

(4) refusing to enjoin an arbitration that is subject to this

title.

9 U.S.C. §15.

This section appears to make orders denying a stay of

proceedings pending arbitration appealable only under 28 U.S.C.

$1292(b). However, this section became effective the date of

enactment of the bill, and does not apply to our October, 1988,

decision.

Al7

The order of the district court, from which the appeal

was filed, was entered on October 7, 1987. On the main

appeal the defendant did not challenge the jurisdiction of

this court to hear the appeal. On March 22, 1988, the

Supreme Court decided Gulfstream Aerospace Corp. v.

Mayacamas Corp., 108 S. Ct. 1133 (1988). The defendant

now asserts that Gulfstream should apply to this appeal

and that this court had no jurisdiction to review the

district court’s refusal to stay arbitration. On the

assumption that Gulfstream should apply to this appeal,

we find that jurisdiction nonetheless existed for this

court’s previous review of the district court’s order.

In Gulfstream, the Enelow-Ettelson doctrine was

held to no longer be a proper basis for appellate

jurisdiction under 28 U.S.C. §1292(a)(1), which allowed

immediate appeal of orders granting or denying a stay

of judicial proceedings to allow arbitration. However, the

Court noted that section 1292(a)(1) continues ‘“‘to provide

appellate jurisdiction over orders that *** have the

practical effect of granting or denying injunctions and

have ‘‘“‘serious, perhaps irreparable, consequence.” ’ ”’

Gulfstream, 108 S. Ct. at 1142-43 (quoting Carson v.

American Brands, Inc., 450 U.S. 79, 84 (1981)); see also

Kansas Gas & Elec. Co. v. Westinghouse Elec. Corp., 861

F.2d 420, 422 (4th Cir. 1988). The moving party must

show that the order appealed from will have serious,

irreparable consequences, and can only be effectively

challenged on immediate appeal. Carson, 450 U.S. at 84.

« 66

Als

We find that this case is distinguishable from the

multitude of cases which find that appeals from orders

granting or denying a stay pending arbitration are not

immediately reviewable.” aca

In Alexander v. Gardner-Denver Co., 415 U.S. 36

(1974), which we followed in our original opinion, the

Supreme Court held that a plaintiff does not waive a

cause of action under title VII by voluntarily submitting

the claim to arbitration under a collective bargaining

agreement. The Supreme Court expressly found that

arbitration is poorly suited as a forum for the final

resolution of rights created by title VII. In our initial

review of this case we concluded that Congress in

passing title VII demonstrated the intent ‘that

arbitration is unable to pay sufficient attention to the

transcendent public interest in the enforcement of Title

VII.” Swenson, 858 F.2d at 1307. We added that ‘‘Title

VII mandates the promotion of the public interest by

assisting victims of discrimination. The arbitration

process may hinder efforts to carry out this mandate.”

Id. This court then found that Congress did not intend

federal judicial proceedings in discrimination cases to be

preempted by employment contracts containing

arbitration clauses.

* See, e.g., Rauscher Pierce Refsnes, Inc. v. Birenbaum, 860 F.2d 169

(5th Cir. 1988) (stay pending arbitration denied); Zosky v. Boyer, 856

F.2d 554 (3d Cir. 1988) (stay granted pending arbitration); VDA,

DeFuertes v. Drexel, Burnham, Lambert, Inc., 855 F.2d 10 (lst Cir.

1988) (stay granted pending arbitration); Administrative Management

Servs. Ltd. v. Royal Am. Managers, Inc., 854 F.2d 1272 (11th Cir.

1988) (motion to compel arbitration denied); McDonnell Douglas Fin.

Corp. v. Pennsylvania Power & Light Co., 849 F.2d 761 (2d Cir. 1988)

(stay pending arbitraton and motion to compel arbitration denied);

Commonwealth Ins. Co. v. Underwriters, Inc., 846 F.2d 196 (3d Cir.

1988) (stay granted pending arbitration); Crist v. Miller, 846 F.2d

1143 (7th Cir. 1988) (stay pending arbitration denied). But see Kansas

Gas & Elec. Co. v. Westinghouse Elec. Corp., 861 F.2d 420 (4th Cir.

1988) (order denying arbitration was appealable interlocutory order).

A19

In our original opinion we held that any arbitration

award regarding a discrimination claim could not be

enforced since it would: be against public policy.®

However, whether the arbitration award is enforceable

it is immediately appealable may be

different questions.‘ district court's

stay of judicial proceedings pending arbitration is

interlocutory and, notwithstanding the expense and

inconvenience to the parties, some court (probably the

state court in Ohio) could review its enforceability.

Here the question of enforceability of any arbitration

award does not turn on the jurisdictional parameter of

the contract. In this case, as we have written,

compulsory arbitration could serve to thwart the

mandate of the principles of title VII and the underlying

state discrimination claim. As we previously noted in

Swenson:

Alexander noted that many arbitrators are not

lawyers, and many of them may not possess the

knowledge to resolve the complex iegal questions

that might arise under the antidiscrimination

statutes. Arbitrators may be ill-equipped to handle

questions of law such as the proper burden of proof

or the appropriate legal standard to apply.

858 F.2d at 1306 n.6 (citations omitted).

* According to the forum selection clause of the employment contract

at issue the arbitration proceeding would require plaintiff, a

Minnesota citizen employed in Minnesota, to submit her claim to

arbitration in the State of Ohio, the domicile of the home company.

‘But see Kansas Gas & Elec. Co. v. Westingnouse tlec. Corp., 861

F.2d 420 (4th Cir. 1988) (holding that a refusal to compel arbitration

was immediately reviewable, notwithstanding Gulfstream because

“the advantages of arbitration—speed and economy—are lost

forever.”’ Id. at 422, (citing Alascom, Inc. v. ITT North Elec. Co., 727

F.2d 1419, 1422 (9th Cir. 1984)). Under such circumstances the court

found interlocutory review was ‘‘truly needed’”’ since the practical

effect of the order would have serious, perhaps irreparable

consequences.

A20

But more importantly courts should not recognize

contracts that violate law or public policy. United

Paperworkers Int'l Union v. Misco, Inc., 108 S. Ct. 364,

373 (1987). As the Supreme Court points up in Misco:

That doctrine derives from the basic notion that no

court will lend its aid to one who founds a cause of

action upon an immoral or illegal act, and is further

tified by the observation that the public’s

gp oor Mikal ce the scope of private

agreements to which it is not a party will go

unrepresented unless the judiciary takes account of

those interests when it considers whether to enforce

such agreements.

Td.

The bottom line is that the courts should not enforce

a contract that violates some explicit public policy. Hurd

v. Hodge, 334 U.S. 24, 35 (1948). By staying plaintiff's

proceedings in the federal district court pending

arbitration the district court has affirmatively enforced

the arbitration clause within the contract which on its

face we found to violate public policy. We reject the

argument that enforcement of the arbitration proceeding

might be subsequently reviewable. If the award were

later enforced not only would a court enforce a futile

unlawful act, but we would have unwittingly engaged in

a proceeding which may well frustrate plaintiff's

discrimination suit. This is particularly true in this case,

if plaintiff’s challenge to the arbitration award would

have to be pursued in the state court of Ohio.’ The state

* The contract incorporates the provisions of the Federal Arbitration

Act and stipulates that the arbitration award may be enforced in

either the state or federal court located in the district where the

award is made. However, if the arbitration award is less than

$50,000, plaintiff would not then have the requisite jurisdictional

amount to assert federal diversity jurisdiction in the federal district

court in Ohio. See 28 U.S.C. §1332 (as amended by Judicial

Improvements and Access to Justice Act, Pub. L. No. 100-702, §201,

102 Stat. 4642, 4646 (1988)) (effective 180 days after the date of

enactment, November 19, 1988).

A21

court might reject plaintiff's policy arguments and

enforce the award. Thus the federal district court’s

decision to stay the plaintiff's claim under the Minnesota

Human Rights Act may indeed be ‘‘unreviewable if not

appealed now,’ Moses H. Cone Memorial Hosp. uv.

Mercury Constr. Corp., 460 U.S. 1, 12 (1983), because, if

the state court found that the arbitration clause was

enforceable, it presumably would be res judicata in the

stayed proceedings of the federal district court in

Minnesota. See 28 U.S.C. §1738.

We have held the arbitration clause is not

enforceable because it is against public policy. This

policy is explicit and well defined. It can be ascertained

‘“‘by reference to the laws and legal precedents and not

from general considerations of supposed public

interests.’’ W.R. Grace & Co. v. Local Union 759, Int'l

Union of the United Rubber Workers, 461 U.S. 757, 766

(1983) (citing Muschany v. United States, 324 U.S. 49, 66

(1945)).

On this basis we hold that the stay order is

immediately appealable under section 1292(a)(1) since to

do otherwise is to enforce an unlawful contract.

Consistent with our original holding, we find review of

the stay order in the present case to be truly necessary

since the practical effect of nonreview may have serious

and perhaps irreparable consequences. Gulfstream at

1142-43.

Under this argument we also find that the collateral

order doctrine is applicable. The district court’s stay

order thus would be reviewable under Cohen v. Beneficial

Loan Corp., 337 U.S. 541 (1949). Moses, 460 U.S. 1.

Moses found that the district court’s stay pending state

court resolution was also appealable under the exception

to the finality rule, also known as the collateral order

doctrine. Moses, 460 U.S. at 11-13. The Court found that

the Moses situation fulfilled the three part Cohen test.

A22

First, the order effectively refusing to adjudicate the

merits presented an important issue separate from the

merits. Second, once the state court determined the

question of arbitrability that decision would be res

judicata and the case would be entirely unreviewable in

federal court. Third, the district court stay conclusively

determined the question in dispute: the practical effect of

the order amounted to a dismissal since the decision

deferred to the state court determination.

The facts of our case also meet the three part test of

Cohen. First, the order refusing to stay arbitration,

therefore enforcing the arbitration clause within the

contract presents an important issue separate from the

merits. Second, by allowing arbitration pursuant to the

contract, enforcement of the award may very well! be

before the state court of Ohio. A_ state court

determination of the legality of the arbitration clause will

render the question res judicata in federal court.

Third, under these circumstances the stay conclusively

determined the question in that the order effectively

amounts to a dismissal if the review would take place in

Ohio state court. Therefore we find under the unusual

circumstances of this case the stay order to be reviewable

under the collateral order doctrine. The motion to

dismiss the appeal for lack of jurisdiction is denied. The

petition for rehearing is denied; by reason of this

supplemental opinion by the panel the suggestion for

rehearing en banc is rendered moot.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS,

EIGHTH CIRCUIT.

*In view of our holding that the review may be obtained under

section 1291(a)(1) and under the collateral order doctrine we need not

review plaintiff's alternative claim that she is entitled to review by

writ of mandamus.

A23

ORDER OF THE UNITED STATES

DISTRICT COURT

(Dated October 7, 1987)

3-87 CIV 221

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

THIRD DIVISION

DEBORAH J. SWENSON,

Plaintiff, Si

Vv.

CDI CORPORATION, MANAGEMENT

RECRUITERS INTERNATIONAL, INC.,

and DAVID MARTH,

Defendants.

ORDER

DONALD GOLDMAN of Cleveland, Ohio, appeared on behalf

of defendants.

ROBERT STICH of Lasley, Gaughan, Stich & Angell of

Minneapolis, Minnesota, appeared on behalf of

defendants.

DouGLas HEDIN of Minneapolis, Minnesota, appeared on

behalf of the plaintiff.

A24

The above-entitled matter comes before the court

upon the motion of defendant CDI Corporation (‘‘CDI’’),

Management Recruiters International, Inc. (““MRI’’), and

David Marth, to stay proceedings pursuant to 9 U.S.C.

§3.

I. BACKGROUND.

The facts material to this motion are not in dispute.

Plaintiff was a managerial employee of MRI. CDI is the

parent corporation of MRI. David Marth is also a

managerial employee of MRI, and acted in a supervisor

capacity towards the plaintiff.

Plaintiff and MRI entered into a Manager’s

Employment Agreement which contained the following

arbitration clause:

Except as provided in Subsection 10(b) hereof, all

controversies, claims, disputes and matters in

question arising out of, or relating to, this

Agreement or the breach thereof, or the relations

between the parties, shall be decided by arbitration

in accordance with the Commercial Arbitration

Rules of the American Arbitration Association ...

The award rendered by the arbitrator shall be final

and judgment may be entered upon it in accordance

with applicable law in any court having jurisdiction

thereof, including a federal district court, pursuant

to the Federal Arbitration Act.

In her complaint, plaintiff asserts seven claims for

relief, three of which the plaintiff concedes are subject to

arbitration. (Count III-defamation, Count IV-intentional

infliction of emotional distress, and Count V-negligent

hiring and supervision.) The parties disagree, however, as

to the arbitrability of the remaining counts of the

complaint.

| A25

II. DISCUSSION.

The Federal Arbitration Act provides that written

agreements to arbitrate controversies arising out of an

existing contract ‘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.

Several recent Supreme Court cases provide an analytical

framework for determining the arbitrability of plaintiff's

remaining claims for relief. Specifically, in Mitsubishi

Motors v. Soler Chrysler-Plymouth, 473 U.S. 614 (1984),

the Court stated that the ‘‘first task of a court asked to

compel arbitration of a dispute is to determine whether

the parties agreed to arbitrate that dispute.’ Jd. at 626.

Next, if the dispute involves statutory rights, the court

should consider whether Congress intended ‘‘to preclude

a waiver of judicial remedies for the statutory rights at

issue.”’ Id. at 628.

A. Agreement to Arbitrate.

The plaintiff argues that Counts VI

(negligence/conversion) and VII (invasion of privacy) fall

outside the scope of the arbitration clause because the

acts giving rise to the claims occurred after the

plaintiff's termination. Both claims relate to the actions

of unnamed employees of CDI and MR} who allegedly

opened plaintiff's personal mail subsequent to her

termination. The letters were addressed to the plaintiff

and mailed to the plaintiff's former business address.

‘It should be noted that defendants are not requesting the court to

compel arbitration pursuant to Section 4, but rather to stay the

proceedings pursuant to Section 3. Notwithstanding the distinction

mentioned above, the substantive determination of arbitrability is the

same under Sections 3 and 4.

}

A26

Whether the parties agreed to arbitrate is

determined by applying ‘federal substantive law of

arbitrability ...’’ Moses H. Cone Memorial Hospital v.

Mercuiy Construction Corp., 460 U.S. 1, 24 (1983). That

body of law counsels:

That questions of a-bitrability must be addressed

with a healthy regard for the federal policy favoring

arbitration ... The Arbitration Act establishes that,

as a matter of federal law, any doubts concerning

the scope of arbitrable issues should be resolved in

favor of arbitration, whether the problem at hand is

the construction of the contract language itself or an

allegation of waiver, delay, or a like defense to

arbitrability.

Moses H. Cone Memorial Hospital, 460 U.S. at 24-25.

Although the issue is far from being one-sided, given

the presumption in favor of arbitrability, the court is

satisfied that plaintiff's claims arising from the opening

of the plaintiff's mail are claims that arose out of her

employment as a manager and are within the parameters

of the arbitration clause at issue. See Aspero v. Shearson

American Express, 768 F.2d 106, 109 (6th Cir. 1985).

The final two claims asserted by the plaintiff, Count

I-sexual discrimination in violation of the Minnesota

Human Rights Act and Count II-race discrimination in

violation of the Minnesota Human Rights Act, are

clearly within the scope of the arbitration clause.’

’ Plaintiff's argument that because the employment contract did not

expressly prohibit the defendants from discriminating against the

plaintiff the parties did not intend to arbitrate this type of dispute is

contrary to the case law. The Supreme Court, in several recently

decided cases, has required arbitration of state and federal statutory

claims. See, e.g., Perry v. Thomas, 107 S.Ct. 2520 (1987) (California

Labor Code); Southland Corp. v. Keating, 465 U.S. 1 (1983) (California

Franchise Investment Law).

B. Congressional Intent to Preclude Waiver of

Judicial Remedies of Statutory Rights.

The plaintiff argues that Congress intended to

preclude waiver of the judicial remedies provided for in

the Minnesota Human Rights Act. In support of her

argument, plaintiff relies exclusively on language in

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). In

Alexander, the Court determined that an employee does

not surrender his right to litigate a Title VII action by

unsuccessfully arbitrating the underlying dispute

pursuant to a collective bargaining grievance procedure.

The Supreme Court reasoned that “‘[t]he purpose and

procedures of Title VII indicate that Congress intended

federal courts to exercise final responsibility for

enforcement of the Title VII; deferral to arbitral

decisions would be inconsistent with that goal.”’ /d. at

56.

The Arbitration Act, like any statutory directive,

may be overridden by a contrary congressional

command. Shearson/American Express, Inc. ov.

McMahon, 107 S. Ct. 2332, 2337 (1987). The

congressional command can be in the form of expressed

statutory language, legislative history, or from an

inherent conflict between arbitration and the statute's

underlying purposes.’ Jd.

Defendants argue that because plaintiff is relying on

state as opposed to federal discrimination laws, it is

theoretically impossible for Congress to have intended to

preclude waiver of judicial remedies provided for in the

Minnesota Human Rights Act. Defendants’ argument is

not without some judicial support. See Steck v. Smith

Barney, Harris Upham & Co., Inc., 661 F.Supp. 543, 548

(D.N.J. 1987). The court, however, disagrees.

* Plaintiff's argument that the non-waiver provision of the state

statute is sufficient to preclude waiver was recently rejected by the

Supreme Court. Keating, 465 U.S. at 10.

alll

A28

It is not inconceivable that Congress, through the

express language of a federal statute or the supporting

legislative history, could articulate an intent to preclude

waiver of judicial remedies not only for violations of

federal statutory rights but also for violation of similar

state statutory rights, thereby exempting these

particular state statutes from the provisions of the

Federal Arbitration Act. The question remains, however,

whether Congress expressed such an intent when

enacting the federal discrimination laws.

Plaintiff refers the court’s attention to Alexander,

where the Supreme Court states that ‘‘[mJoreover, the

legislative history of Title VII manifests a congressional

intent to allow an individual to pursue independently his

rights under both Title VII and other applicable state

and federal statutes.”

Although the language provides colorable support

for the proposition that the Supreme Court believes

Congress may have intended to preclude waiver of

judicial remedies provided for in state discrimination

statutes, the proposition is clearly dictum and more

important, it is against the tide of recent Supreme Court

decisions confronting the arbitrability of statutory

claims. See, e.g., McMahon, 107 S.Ct. 2332 (1987) (claims

under §10(b) of the SEA and RICO are arbitrable);

Mitsubishi, 473 U.S. 614 (1984) (claims under federal

antitrust laws are arbitrable); Dean Witter Reynolds, Inc.

v. Byrd, 470 U.S. 213 (1984) (Court rejected doctrine of

intertwining). Given the previously cited and other

recently decided Supreme Court cases, the court believes

that the Supreme Court would conclude that Congress

did not intend to preclude waiver of judicial remedies

provided for in state discrimination statutes.

A29

Based upon the record as presently constituted, and

the foregoing discussion,

IT IS ORDERED That defendants’ motion to stay

proceedings is granted.

IT IS FURTHER ORDERED That this action is

stayed pending completion of arbitration of all issues

here pending between the parties.

DATED: October 7, 1987.

/s/ DONALD D. ALSOP

Chief U. S. District Judge

A30

FEDERAL ARBITRATION ACT

§2, 9 U.S.C. §2

§2. Validity, irrevocability, and enforcement of

agreements to arbitrate

A written provision in any maritime transaction or a

contract evidencing a transaction involving commerce to

settle by arbitration a controversy thereafter arising out

of such contract or transaction, or the refusal to perform

the whole or any part thereof, or an agreement in writing

to submit to arbitration an existing controversy arising

out of such a contract, transaction, or refusal, shall be

valid, irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the revocation of

any contract.

July 30, 1947, c. 392, 61 Stat. 670.

§3, 9 U.S.C. §3

§3. Stay of proceedings where issue therein referable to

arbitration

If any suit or proceeding be brought in any of the

courts of the United States upon any issue referable to

arbitration under an agreement in writing for such

arbitration, the court in which such suit is pending, upon

being satisfied that the issue involved in such suit or

proceeding is referable to arbitration under such an

agreement, shall on application of one of the parties stay

the trial of the action until such arbitration has been had

in accordance with the terms of the agreement, providing

the applicant for the stay is not in default in proceeding

with such arbitration.

July 30, 1947, c. 392, 61 Stat. 670.

A3l

§7, 9 U.S.C. §7

87. Witnesses before arbitrators; fees; compelling

attendance

The arbitrators selected either as prescribed in this

title or otherwise, or a majority of them, may summon in

writing any person to attend before them or any of them

as a witness and in a proper case to bring with him or

them any book, record, document, or paper which may be

deemed material as evidence in the case. The fees for

such attendance shall be the same as the fees of

witnesses before matters of the United States courts.

Said summons shal! issue in the name of the arbitrator

or arbitrators, or a majority of them, and shall be signed

by the arbitrators, or a majority of them, and shall be

directed to the said person and shall be served in the

same manner as subpoenas to appear and testify before

the court; if any person or persons so summoned to

testify shall refuse or neglect to obey said summons,

upon petition the United States district court for the

district in which such arbitrators, or a majority of them,

are sitting may compel the attendance of such person or

persons before said arbitrator or arbitrators, or punish

said person or persons for contempt in the same manner

provided by law for securing the attendance of witnesses

or their punishment for neglect or refusal to attend in

the courts of the United States.

July 30, 1947, c. 392, 61 Stat. 672; Oct. 31, 1951, c. 655,

§14, 65 Stat. 715.

A32

§9, 9 U.S.C. §9

89. Award of arbitrators; confirmation; jurisdiction;

procedure

If the parties in their agreement have agreed that a

judgment of the court shall be entered upon the award

made pursuant to the arbitration, and shall specify the

court, then at any time within one year after the award

is made any party to the arbitration may apply to the

court so specified for an order confirming the award, and

thereupon the court must grant such an order unless the

award is vacated, modified, or corrected as prescribed in

sections 10 and 11 of this title. If no court is specified in

the agreement of the parties, then such application may

be made to tne United States court in and for the

district within which such award was made. Notice of the

application shall be served upon the adverse party, and

thereupon the court shall have jurisdiction of such party

as though he had appeared generally in the proceeding.

If the adverse party is a resident of the district within

which the award was made, such service shall be made

upon the adverse party or his attorney as prescribed by

law for service of notice of motion in an action in the

same court. If the adverse party shall be a nonresident,

then the notice of the application shall be served by the

marshal of any district within which the adverse party

may be found in like manner as other process of the

court.

July 30, 1947, c. 392, 61 Stat. 672.

§10, 9 U.S.C. §10

§10. Same; vacation; grounds; rehearing

In either of the following cases the United States

court in and for the district wherein the award was made

may make an order vacating the award upon the

application of any party to the arbitration—

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(a) Where the award was procured by corruption,

fraud, or undue means.

(b) Where there was evident partiality or corruption

in the arbitrators, or either of them.

in refusing to postpone the hearing, upon sufficient cause

shown, or in refusing to hear evidence pertinent and

material to the controversy; or of any other misbehavior

by which the rights of any party have been prejudiced.

(d) Where the arbitrators exceeded their powers, or

so imperfectly executed them that a mutual, final, and

definite award upon the subject matter submitted was

not made.

(e) Where an award is vacated and the time within

which the agreement required the award to be made has

not expired the court may, in its discretion, direct a

rehearing by the arbitrators.

July 30, 1947, c. 392, 61 Stat. 672.

3 815, 9 U.S.C. 815

§15. Appeals

(a) An appeal may be taken from—

(1) an order—

(A) refusing a stay of any action under section

3 of this title,

(B) denying a petition under section 4 of this

title to order arbitration to proceed,

this title to compel arbitration,

(D) confirming or denying confirmation of an

award or partial award, or

A34

(E) modifying, correcting, or vacating an

award;

(2) an interlocutory order granting, continuing, or

modifying an injunction against an arbitration that is

subject to this title; or

(3) a final decision with respect to an arbitration

that is subject to this title.

(b) Except as otherwise provided in section 1292(b) of

title 28, an appeal may not be taken from an

interlocutory order—

(1) granting a stay of any action under section 3 of

this title;

(2) directing arbitration to proceed under section 4

of this title;

(3) compelling arbitration under section 206 of this

title; or

(4) refusing to enjoin an arbitration that is subject

to this title.

(Added Nov. 19, 1988, P. L. 100-702, Title X, $1019(a),

102 Stat. 4671.)

A35

JUDICIARY AND JUDICIAL PROCEDURE

28 U.S.C. §1291

§1291. Final decisions of district courts

The courts of appeals (other than the United States

Court of Appeals for the Federal Circuit) shall have

jurisdiction of appeals from all final decisions of the

district courts of the United States, the United States

District Court for the District of the Canal Zone, the

District Court of Guam, and the District Court of the

Virgin Islands, except where a direct review may be had

in the Supreme Court. The jurisdiction of the United

States Court of Appeals for the Federal Circuit shall be

limited to the jurisdiction described in sections 1292(c)

and (d) and 1295 of this title.

28 U.S.C. §1292(a)-(b)

§1292. Interlocutory decisions

(a) Except as provided in subsections (c) and (d) of

this section, the courts of appeals shall have jurisdiction

of appeals from:

(1) Interlocutory orders of the district courts of

the United States, the United States District Court

~for the District of the Canal Zone, the District Court

of Guam, and the District Court of the Virgin

Islands, or of the judges thereof, granting,

continuing, modifying, refusing or dissolving

injunctions, or refusing to dissolve or modify

injunctions, except where a direct review may be

had in the Supreme Court;

(2) Interlocutory orders appointing receivers, or

refusing orders to wind up receiverships or to take

steps to accomplish the purposes thereof, such as

directing sales or other disposals of property;

A36

(3) Interlocutory decrees of such district courts

or the judges thereof determining the rights and

liabilities of the parties to admiralty cases in which

appeals from final decrees are allowed.

(b) When a district judge, in making in a civil

action an order not otherwise appealable under this

section, shall be of the opinion that such order involves a

controlling question of law as to which there is

substantial ground for difference of opinion and that an

immediate appeal from the order may materially advance

the ultimate termination of the litigation, he shall so

state in writing in such order. The Court of Appeals

which would have jurisdiction of an appeal of such action

may thereupon, in its discretion, permit an appeal to be

taken from such order, if application is made to it within

ten days after the entry of the order: Provided, however,

That application for an appeai hereunder shall not stay

proceedings in the district court unless the district judge

or the Court of Appeals or a judge thereof shall so order.

28 U.S.C. §1332(a)-(b)

§1332. Diversity of citizenship; amount in controversy;

costs

(a) The district courts. shall have _ original

jurisdiction of all civil actions where the matter in

controversy exceeds the sum or value of $50,000,

exclusive of interest and costs, and is between—

(1) citizens of different States;

(2) citizens of a State and citizens or subjects

of a foreign state;

(3) citizens of different States and in which

citizens or subjects of a foreign state are additional

parties; and

A37

(4) a foreign state, defined in section 1603(a) of

this title, as plaintiff and citizens of a State or of

different States.

(b) Except when express provision therefor is

otherwise made in a statute of the United States, where

the plaintiff who files the case originally in the Federal

courts is finally adjudged to be entitled to recover less

than the sum or value of $50,000, computed without

regard to any setoff or counterclaim to which the

defendant may be adjudged to be entitled, and exclusive

of interest and costs, the district court may deny costs

to the plaintiff.and, in addition, may impose costs on the

plaintiff.

28 U.S.C. §1441(a)

§1441. Actions removable generally

(a) Except as otherwise expressly provided by Act

of Congress, any civil action brought in a State court of

which the district courts of the United States have

original jurisdiction, may be removed by the defendant

or the defendants, to the district court of the United

States for the district and division embracing the place

where such action is pending. For purposes of removal

under this chapter, the citizenship of defendants sued

under fictious names shall be disregarded.

A38

CIVIL RIGHTS ACT OF 1964,

§207, 42 U.S.C. §2000a-6

§2000a-6. Jurisdiction; exhaustion of other remedies;

exclusiveness of remedies; assertion of rights based on

other Federal or State laws and pursuit of remedies for

enforcement of such rights

(a) The district courts of the United States shall have

jurisdiction of proceedings instituted pursuant to this

title [Title II] and shall exercise the same without regard

to whether the aggrieved party shall have exhausted any

administrative or other remedies that may be provided

by law.

(b) The remedies provided in this title [Title II] shall be

the exclusive means of enforcing the rights based on this

title, but nothing in this title [Title II] shall preclude any

individual or any State or local agency from asserting

any right based on any other Federal or State law not

inconsistent with this title [Title II], including any

statute or ordinance requiring nondiscrimination in

public establishments or accommodations, or from

pursuing any remedy, civil or criminal, which may be

available for the vindication or enforcement of such

right.

(July 2, 1964, P. L. 88-352, Title II, $207, 78 Stat. 245.)

§708, 42 U.S.C. §2000e-7

§2000e-7. Effect on State laws

Nothing in this title [Title VII] shall be deemed -to

exempt or relieve any person from any liability, duty,

penalty, or punishment provided by any present or

future law of any State or political subdivision of a

A39

State, other than any such law which purports to require

or permit the doing of any act which would be an

unlawful employment practice under this title [Title VII].

(July 2, 1964, P. L. 88-352, Title VII, $708, 78 Stat. 262.)

§1104, 42 U.S.C. §2000h-4

§2000h-4. State authority

Nothing contained in any title of this Act shall be

construed as indicating an intent on the part of Congress

to occupy the field in which any such title operates to

the exclusion of State laws on the same subject matter,

nor shall any provision of this Act be construed as

invalidating any provision of State law unless such

provision is inconsistent with any of the purposes of this

Act, or any provision thereof.

(July 2, 1964, P. L. 88-352, Title XI, $1104, 78 Stat. 268.)

A40

MINNESOTA HUMAN RIGHTS ACT

Minn. Stat. 8363.06, Subd. 1-4, 5

363.06. Grievances

Subdivision 1. Actions. Any person aggrieved by a

violation of this chapter may bring a civil action as

provided in section 363.14, subdivision 1, clause (a), or

may file a verified charge with the commissioner or the

commissioner’s designated agent. A charge filed with the

commissioner must be in writing on a form provided by

the commissioner and signed by the charging party. The

charge must state the name of the person alleged to have

committed an unfair discriminatory practice, and set out

a summary of the details of the practice complained of.

The commissioner may require a charging party to

provide the address of the person alleged to have

committed the unfair discriminatory practice, names of

witnesses, documents, and any other information

necessary to process the charge. The commissioner may

dismiss a charge when the charging party fails to

provide required information. The commissioner within

ten days of the filing shall serve a copy of the charge and

a form for use in responding to the charge upon the

respondent personally or by mail. The respondent shall

file with the department a written response to the charge

within 20 days of receipt of the charge.

Subd. 2. Charge, issuance by commissioner.

Whenever the commissioner has reason to believe that a

person is engaging in an unfair discriminatory practice,

the commissioner may issue a charge stating in statutory

language an alleged violation of a particular section of

section 363.03.

A4l

Subd. 3. Time for filing claim. A claim of an unfair

discriminatory practice must be brought as a civil action

pursuant to section 363.14, subdivision 1, clause (a), filed

in a charge with a local commission pursuant to section

363.116, or filed in a charge with the commissioner

within 300 days after the occurrence of the practice. The

running of the 300 day limitation period is suspended

during the time a potential charging party and

respondent are voluntarily engaged in a _ dispute

resolution process involving a claim of unlawful

discrimination under chapter 363, including arbitration,

conciliation, mediation or grievance procedures pursuant

to a collective bargaining agreement or statutory,

charter, or ordinance provisions for a civil service or

other employment system. A potential respondent who

participates in such a process with a potential charging

party before a charge is filed or a civil action is brought

shall notify the department and the charging party in

writing of the participation in the process and the date

the process commenced, and shall also notify the

department and the charging party of the ending date of

the process. A respondent who fails to provide this

notification is barred from raising the defense that the

statute of limitations has run unless the 300 days plus a

period of time equal to the suspension period has passed.

Subd. 4. Inquiry into charge. (1) Consistent with clause

(7), the commissioner shall promptly inquire into the

truth of the allegations of the charge. The commissioner

shall make an immediate inquiry when a charge alleges

actual or threatened physical violence. The commissioner

shall also make an immediate inquiry when it appears

that a charge is frivolous or without merit and shall

dismiss those charges.

A42

The commissioner shall give priority to investigating

and processing those charges, in the order below, which

the commissioner determines have the following

characteristics:

(a) there is evidence of irreparable harm if

immediate action is not taken;

(b) there is evidence that the respondent has

intentionally engaged in a reprisal;

filed against the respondent;

(d) the respondent is a government entity;

(e) there is potential for broadly promoting the

policies of this chapter; or

(f) the charge is supported by substantial and

credible documentation, witnesses, or other evidence.

The commissioner shall inform charging parties of

these priorities and shall tell each party if their charge is

a priority case or not.

On other charges the commissioner shall make a

determination within 12 months after the charge was

filed as to whether or not there is probable cause to

credit the allegation of unfair discriminatory practices,

and

(2) If the commissioner determines after

investigation that no probable cause exists to credit the

allegations of the unfair discriminatory practice, the

commissioner shall, within ten days of the determination,

serve upon the charging party and respondent written

notice of the determination. Within ten days after receipt

of notice, the charging party may request in writing, on

forms prepared by the department, that’ the

A43

commissioner reconsider the determination. The request

shall contain a brief statement of the reasons for and

new evidence in support of the request for

reconsideration. At the time of submission of the request

to the commissioner, the charging party shall deliver or

mail to the respondent a copy of the request for

reconsideration. The commissioner shall either reaffirm

or reverse the determination of no probable cause within

20 days after receipt of the request for reconsideration,

and shall within ten days notify in writing the charging

party and respondent of the decision to reaffirm or

reverse.

A decision by the commissioner that no probable

cause exists to credit the allegations of an unfair

discriminatory practice shall not be appealed to the court

of appeals pursuant to section 363.072 or sections 14.63

to 14.68.

(3) If the commissioner determines after

investigation that probable cause exists to credit the

allegations of unfair discriminatory practices, the

commissioner. shall serve on the respondent and -the

respondent's attorney if the respondent is represented by

counsel, by first class mail, a notice setting forth a short

plain written statement of the alleged facts which

support the finding of probable cause and an

enumeration of the provisions of law allegedly violated.

If the commissioner determines that attempts to

eliminate the alleged unfair practices through conciliation

pursuant to subdivision 5 have been or would be

unsuccessful or unproductive, the commissioner shall

issue a complaint and serve on the respondent, by

registered or certified mail, a written notice of hearing

together with a copy of the complaint, requiring the

respondent to answer the allegations of the complaint at

A44

a hearing before an administrative law judge at a time

and place specified in the notice, not less than ten days

after service of said complaint. A copy of the notice shall

be furnished to the charging party and the attorney

general.

(4) If, at any time after the filing of a charge, the

commissioner has reason to believe that a respondent

has engaged in any unfair discriminatory practice, the

commissioner may file a petition in the district court in a

county in which the subject of the complaint occurs, or

in a county in which a respondent resides or transacts

business, seeking appropriate temporary relief against

the respondent, pending final determination of

proceedings under this chapter, including an order or

decree restraining the respondent irom doing or

procuring an act tending to render ineffectual an order

the commissioner may enter with respect to the

complaint. The court shall have power to grant

temporary relief or a restraining order as it deems just

and proper, but no relief or order extending beyond ten

days shall be granted except by consent of the respondent

or after hearing upon notice to the respondent and a

finding by the court that there is reasonable cause to

believe that the respondent has engaged in a

discriminatory practice. Except as modified by this

section, the Minnesota rules of civil procedure shall

apply to an application, and the district court shall have

authority to grant or deny the relief sought on conditions

as it deems just and equitable. All hearings under this

section shall be given precedence as nearly as practicable

over all other pending civil actions.

(5) If a lessor, after engaging in a discriminatory

practice defined in section 363.03, subdivision 2, clause

A45

no knowledge of the practice or of the existence of a

charge with respect to the practice, the lessor shall be

liable for actual damages sustained by a person by

reason of a final order as provided in this section

requiring the person to be evicted from the dwelling unit.

(6) In any complaint issued under this section, the

commissioner may seek relief for a class of individuals

affected by an unfair discriminatory practice occurring

on or after a date 300 days prior to the filing of the

charge from which the complaint originates.

(7) The commissioner may adopt policies to

determine which charges are processed and the order in

which charges are processed based on their particular

social or legal significance, administrative convenience,

difficulty of resolution, or other standard consistent with

the provisions of this chapter.

(8) The chief administrative law judge shall adopt

policies to provide sanctions for intentional and frivolous

delay caused by any charging party or respondent in an

investigation, hearing, or any other aspect of proceedings

before the department under this chapter.

* * * * *

Subd. 5. Attempts to eliminate unfair practices. The

commissioner, in complying with subdivision 4, shall

endeavor to eliminate the unfair discriminatory practice

through education, conference, conciliation and

persuasion at the place where the practice occurred, or

the respondent resides or has a principal place of

business.

A46

Minn. Stat. §363.14, Subd. 1(a)-(b)

§363.14. Court actions, suits by private parties,

intervention, district court jurisdiction,

attorney’s fees, and costs

Subdivision 1. Court actions, suits by private parties,

intervention. A person may bring a civil action seeking

redress for an unfair discriminatory practice:

(a) Directly to district court; or

(b) Notwithstanding the provisions of any law to

the contrary, (1) within 45 days after the commissioner

has dismissed a charge because it is frivolous or without

merit, because the charging party has failed to provide

required information, because the commissioner has

determined that further use of department resources is

not warranted, or because the commissioner has

determined that there is no probable cause to credit the

allegations contained in a charge filed with the

commissioner; (2) within 45 days after the commissioner

has reaffirmed a determination of no probable cause if

the charging party requested a reconsideration of the

probable cause determination; or (3) after 45 days from

the filing of a charge pursuant to section 363.06,

subdivision 1 if a hearing has not been held pursuant to

section 363.071 or if the commissioner has not entered

into a conciliation agreement to which the charging party

is a signator. The charging party shall notify the

commissioner of an intention to bring a civil action,

which shall be commenced within 90 days of giving the

notice;

core ee aa

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.