Opposition Brief — Gilmer v. Interstate/Johnson Lane Corp.

FILE

F ju 27 we

JOSEPH F. SPANIOL,

CLERK

IN THE ote

Supreme Court of the United States

OCTOBER 1990

No. ook V)

ROBERT D. GILMER,

Petitioner,

v.

INTERSTATEJOHNSON LANE CORPORATION,

Respondeni.

ON PETITION FOR WRIT OF CERTIORARI

FO THE UNITED STATES COURT OF APPEALS

oe £OR. THE. FQURTH CIRCUIT

RESPONDENT'S BRIEF IN OPPOSITION

JAMES B. SPEARS, JR.*

ROBERT S. PHIFER

Haynsworth, Baldwin, Johnson and Greaves, PA.

901 West Trade Street, Suite 1050

Charlotte, North Carolina 28202

(704) 342-2588

Attomeys for Respondent

*Counsel of Record

7 venienn

No. 90-18

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM. 1990

ROBERT D. GILMER,

Petitioner,

Vv.

INTERSTATE/JOHNSON LANE

CORPORATION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RESPONDENT'S BRIEF IN OPPOSITION

James B. Spears. Jr.*

Robert S. Phifer

HAYNSWORTH. BALDWIN,

JOHNSON AND GREAVES

Gateway Center. Suite 1050

901 West Trade Street

Charlotte. NC 28202

ATTORNEY FOR RESPONDENT

*Counsel of Record

Il.

QUESTIONS PRESENTED

WHERE THE TEXT. LEGISLATIVE

HISTORY AND PURPOSES OF THE AGE

DISCRIMINATION IN EMPLOYMENT ACT

(ADEA) DO NOT DISCLOSE A

CONGRESSIONAL INTENT TO FORECLOSE

ARBITRATION OF PETITIONER'S AGE

CLAIM, DOES THE FEDERAL

ARBITRATION ACT REQUIRE

ENFORCEMENT OF PETITIONER'S

INDIVIDUAL ARBITRATION AGREEMENT?

WHERE PETITIONER VOLUNTARILY

AGREES TO ARBITRATE EMPLOYMENT

DISPUTES WITH HIS EMPLOYER. IS THE

AGREEMENT INVALID AS A PROSPECTIVE

WAIVER OF SUBSTANTIVE RIGHTS?

PARTIES AND LIST OF

AFFILIATED CORPORATIONS

The Respondent is properly

identified in the Petition. There are

no other affiliated corporations with an

interest in this action. Respondent was

formerly known as Interstate Securities

Corporation.

ii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED .....+.46-s i

PARTIES AND LIST OF

AFFILIATED CORPORATIONS ...... ii

TABLE OF CONTENTS ae © 66 «¢ = «Bee

TABLE OF AUTHORITIES se «6 6. &- oe

GGmeewecesaw «se ee ee ew ew oe 2

STATUTES INVOLVED ......4+246-. 2

STATEMENT OF THE CASE ......-. 2

A. Proceedings Below ..... 2

B. Facts . . . . . . . . - . 3

REASONS WHY PETITION FOR WRIT

OF CERTIORARI SHOULD BE DENIED .. 3

PETITIONER'S WRITTEN ARBITRATION

AGREEMENT WAIVES NO SUBSTANTIVE

RIGHTS i * > _ > > >. * > > * > * >. l 7

: CONCLUS I ON * * . . . * * ad . . * * 2 2

iii |

ee aed

ee NE OR et le eS

—e ee

PR ee ee eee er eT

TABLE OF AUTHORITIES

Page

415 U.S. 36 (1974).7, 10, 11. 13. 18

Barrentine v. Arkansas-Best

;

450 U.S. 728 (1981). . 8. 10, ll, 13

Dean Witter Reynolds. Inc.

v. Byrd.

See)! 4

466 U.S. 284 (1984) . 8, 10, ll, 13

Mitsubishi Motors Corp, vy.

473 U.S. 614 (1985) ...

- - passim

877 F.2d 221 (3d Cir. 1989). .14, 16

107 §.Ct. 2520 (1987). .... 3

Rodi le Oui; 7

American Express. Inc.

Pog = eee oy ae

eT nr +s 86 6 «© « « « oMeteia

Shearson/American Express,

Inc, v. McMahon

482 U.S. 220 (1987) .... .passim

_v. Keating.

SS Se ra a 4

iv

Swenson vy. Management Recruiters

858 F.2d 1304 (8th Cir. 1988)

883 F.2d 184 (lst Cir. 1989)

STATUTES

Age Discrimination in Employment

Act,

29 U.S.C. § 621. et seq ..

Civil Rights Act of 1871

42 G.8.C. § 1963 . « © c« @ «

Civil Rights Act of 1964

42 U.S.C. § 2000(e). et seg

(Title VII) ee ee oa ee

Fair Labors Standards Act,

oe eS > eee

Federal Arbitration Act,

9 OeSeCe 5 l . . . . . . . .

, 13

, 13

- passim

‘ 13

o£2.. 43

‘ 13

- passim

ie il <a ak Le * Sete el ae

No. 90-18

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

ROBERT D. GILMER.

Petitioner.

Vv.

INTERSTATE/JOHNSON LANE

CORPORATION,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RESPONDENT'S BRIEF IN OPPOSITION

Respondent, Interstate/Johnson Lane

Corporation, respectfully requests that

this Court deny the Petition for Writ of

Certiorari seeking review of the Fourth

Circuit's opinion in this case. That

opinion is reported at 895 F.2d 195

(4th Cir. 1990). and is fully set out in

the Appendix to the Petition at pages

la-36a.

JURISDICTION

The jurisdictional requisites are

adequately set forth in the Petition.

STATUTES INVOLVED

The Petition properly identifies

each of the statutes involved in this

case.

STATEMENT OF THE CASE

A. Proceedings Below

The Petition correctly sets forth

the proceedings before the District

Court and the Court of Appeals for the

Fourth Circuit.

—

ee ee ee ee ee

ce A

a

B. Facts

The facts essential for resolution

of this Petition are reported in the

Petition at page 3-4. However,

Petitioner's arbitration agreement was

not part of a collective bargaining

agreement; rather, it was required for

his employment as a securities broker

for Respondent.

REASONS WHY PETITION FOR WRIT OF

CERTIORARI SHOULD BE DENIED

The Petition should be denied for

several reasons. The decision below

correctly applied this Court's decisions

which have continued to expand the

Federal Arbitration Act's authorization

for arbitration of statutory claims.

Express. Inc... _ U.S. . 109 S. Ct.

1917 (1989): Perry v. Thomas. 107 S. Ct.

2520 (1987): Shearson/American Express.

Inc, vy. McMahon.

Mitsubishi Motors Corp. Vv.

482 U.S. 220 (1987):

Soler

473 U.S. 614

(1985):

Byrd.

Corp. vy. Keating.

Dean Witter Reynolds. Inc. v.

470 U.S. 213 Southland

465 u.s. 1

(1985);

(1984).

The Fourth Circuit also properly

balanced the analytical framework

required by those decisions against the

special protections afforded a claimant

under the ADEA and found no reason that

the Petitioner's ADEA rights could not

adequately be protected in an arbitral

forum.

In seeking to overcome the

proper resolution of this case. the

Petition contains several misstatements.

regarding the Fourth Circuit's decision

as well as this Court's precedents.

Furthermore. the Petition focuses only

6 Ae aT ake ge

|

.

.

|

)

.

on the results of the Fourth Circuit's

analysis, not on the Court's analytical

process or application of this Court's

controlling decisions under the Federal

Arbitration Act, 9 U.S.C. § 1 et seq.

Respondent submits that these arguments

do not state a valid reason for granting

certiorari.

The Fourth Circuit correctly

followed the analytical framework

required by this Court under the Federal

Arbitration Act:

To defeat application of the

Arbitration Act . . ., the [party

Opposing arbitration] must

demonstrate that Congress intended

Lo make an exception

to the

Arbitration Act for claims arising

under [a particular statute]. an

intention discernible from the

text, history or purposes of the

statute.

Shearson/American Express, Inc. v.

McMahon. 107 S. Ct. at 2337-38 (1987)

(emphasis added). The Petition

conspicuously does not demonstrate any

fault in the Fourth Circuit's analysis

of the ADEA under the standards

enunciated by this Court in McMahon.

The Circuit Court thoroughly analyzed

the ADEA's text, it's legislative

history. and underlying purposes in

deciding that Congress had not

demonstrated an intention to foreclose

arbitration of an individual employee's

written agreement to arbitrate

employment claims with his employer (App.

7a-23a). Petitioner cannot fault the

correctness of the Fourth Circuit's

legal analysis: he simply dislikes the

result. That dislike, however, provides

no basis for granting the Petition.

Petitioner attempts to create an

issue for review by mischaracterizing

the Fourth Circuit's decision and the

status of this Court's earlier decisions.

For example. contrary to the Petition's

suggestion, neither the Fourth Circuit

nor any other circuit court applying the

Federal Arbitration Act has questioned

the “continued viability" of Alexander

v._Gardner-Denver Co,., 415 U.S. 36

(1974) or any other decision of this

Court. (Petition 7-8) Since Alexander

does not control or even address the

central issue in this case. any question

of its “continued viability" has no

significance for resolving this Petition.

This argument is a false issue and

should not mislead the Court.

The Fourth Circuit found Alexander

"inapposite" in applying the Federal

Arbitration Act to an individual

employee's written agreement to

arbitrate employment disputes.

(App. 24a) The circuit court similarly

found that Barrentine v. Arkansas-Best

Freight Systems. 450 U.S. 728 (1981) and

McDonald _v,. City of West Branch. 466

U.S. 284 (1984) were inapposite to the

facts and legal issue presented in this

case. Certainly a lower court can

properly determine that another court

decision is inapposite to a particular

set of facts or legal issue without

questioning that decision's “viability”.

The Fourth Circuit's determination

that Alexander. Barrentine. and McDonaid

do not control the Federal Arbitration

Act question here is clearly correct for

several reasons. First. none of these ~

cases required this Court to analyze an

arbitration agreement in light of the

dictates of the Federal Arbitration Act.

Since that Act was not analyzed or

applied in any of these earlier cases.

the central question required by the Act

was never considered in the earlier

decisions. (A.@.- identifying a

Congressional intent to foreclose

enforcement of an arbitration agreement. )

Where the earlier decisions did not

consider that question. and,

specifically. where this Court never

considered the particular statute in

this case -- the ADEA -- the earlier

Supreme Court decisions clearly do not

control the issue that was before the

Fourth Circuit.

Also. the Petition similarly

misstates thac:

the Fourth Circuit found that the

(Supreme Court's] three [earlier]

cases were displaced by Mitsubishi

- « « McMahon . . and Rodriguez de

(Petition 8) (emphasis added). As

already noted, the Fourth Circuit only

found that these decisions were

"inapposite” (App. 24a) and for several

reasons determined that the earlier

cases "do not control our decision here."

(App. 27a). As shown by the Circuit

Court's point-by-point contrast of key

factors and facts (App. 23a-27a).

Alexander. Barrentine. or McDonald do

not alter or conflict with this Court's

required analysis prescribed by McMahon

and other Supreme Court decisions under

the Federal Arbitration Act.

The Fourth Circuit's proper

application of the Arbitration Act to

this case did not require “displacement”

of Alexander or any other decision of

this Court. The proper analysis set

forth in Mitsubishi and McMahon led the

10

Circuit Court to the correct result

without a conflict with Alexander.

Barrentine or McDonald.

argument

This illusory

in the Petition should not

misdirect this Court's attention by

suggesting that the Fourth Circuit has

failed to follow any controlling

authority.

Next. the Petitioner misrepresents

the decision below by claiming that:

{t)he Pourth Circuit's opinion

fails to recognize that Mitsubishi.

McMahon. and Rodriguez each

involved disputes arising out of a

business context.

(Petition 9). The Fourth Circuit

directly addressed this point:

We remain sensitive to the fact

that the context in which this case

arises differs somewhat from the

contexts of Mitsubishi. McMahon and

Rodriguez. Whereas the statutes in

those cases were primarily

commercial in focus. the ADEA is a

civil rights statute. Moreover,

the complainants in those cases

were securities customers and

ll

persons injured by antitrust

violations, not employees who are

allegedly victims of discrimination

in the workplace. Although the

beneficiaries of statutory

protections may vary, the

principles of statutory

interpretation do not.

29a-30a)

The Petition's

(App.

misstatement on this point again shows

the inadequate justification for

granting the Petition.

The Petition also overstates the

courts.

conflict between circuit

(Petition 10) This error becomes more

obvious when the Federal Arbitration

Act's requirements under McMahon are

McMahon

court separately analyze the text.

acknowledged. requires that a

legislative history and purposes of each

statute in dispute. For example, Title

VII of the 1964 Civil Rights Act, 42

U.S.C. § 2000e et seq.. has never been

in dispute in this Litigation.

12

184 (lst Cir. 1989) and Swenson vy.

Management Recruiters Int'l. Inc.

Therefore, circuit court decisions which

involved Title VII

claims! do not

present a true conflict with the

Statutory analysis of the ADEA presented

here. Indeed, because

Mitsubishi and

its progeny require analysis of the

specific statute

that allegedly

conflicts with the Federal Arbitration

Act. Petitioner's threshold reliance

upon Alexander (Title VII). Barrentine

(Pair Labor Standard Act) and McDonald

(Civil Rights Act of 1871) must fail,

particularly where this Court was not

called upon to analyze those statutes

under the Federal Arbitration Act as

this Court subsequently required in

McMahon.

lUtley vy. Goldman Sachs & Co... 883 F.2d

» 858

F.2d 1304 (8th Cir. 1988)

13

The Third Circuit's decision in

Nicholson v. CPC Int'l. Inc... 877 F.2d

221 (3d Cir. 1989) reached a different

result than did the Fourth Circuit in

determining that the Federal Arbitration

Act could not mandate arbitration of an

ADEA claim. The Fourth Circuit

specifically addressed the decision and

made clear its rationale for reaching a

different result:

We find the reasoning of the

majority opinion in Nicholson

unpersuasive, and therefore we have

respectfully chosen not to follow

it. Instead. we are in agreement

with Judge Becker's dissent in that

case that Congress did not intend

to preclude waiver of the judicial

forum by ADEA claimants.

Our holding reflects nothing more

than the view that courts should

not strain to find in statutes what

Congress has not put there. We find

no congressional intent to preclude

waiver of the judicial forum in the

text, the legislative history. or

the underlying purposes of the ADEA.

We recognize that the ADEA embodies

without question an important

14

federal policy in prohibiting age

discrimination. So too. however.

do the Securities Act of 1933 and

the Securities Exchange Act of 1934

represent. inter alia. an important

federal policy in protecting

investors from fraudulent

securities transactions. Likewise

the Sherman Act reflects an

important federal policy in

preventing excessive concentration

in relevant markets. Nonetheless.

arbitration of claims under these

Statutes is clearly encouraged.

See Mitsubishi. McMahon. and

Rodriguez.

Courts cannot determine whether

arbitration agreements are to be

enforced by making subjective

judgments as to the relative

importance of various federal

statutes. Rather. Congress must

provide clear guidance if it wishes

federal courts to refrain from

enforcing arbitration agreements

when violations of a particular

Statutory right are alleged.

Without such affirmative guidance

in the ADEA, we are reluctant to

set aside a coordinate federal

Statute such as the Arbitration

Act.

(App. 27a-29a) Respondent submits that

the Fourth Circuit's reasoning is

profoundly correct in light of this

15

Court's decisions in Mitsubishi.

McMahon. and Rodriguez. It is readily

apparent that the Fourth Circuit's

decision correctly determined that an

individual arbitration agreement can be

enforced to resolve an ADEA claim when

that court's analysis is juxtaposed

against this Court's clear holding in

Mi bishi:

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 a judicial,

forum. It trades the procedures

and opportunity for review of the

courtroom for the simplicity.

informality. and expedition of.

arbitration.

473 U.S. at 628. The Nicholson decision

patently ignores this point. Respondent

therefore submits that the Nicholson

court’s erroneous analysis should not

16

provide a basis for review of the

present case.

PETITIONER'S WRITTEN ARBITRATION

AGREEMENT WAIVES NO SUBSTANTIVE RIGHTS

The Petition's challenge to the

validity of the written arbitration

agreement ignores the clear protection

provided Petitioner by this Court's

interpretation of the Federal

Arbitration Act in Mitsubishi. 473 U.S.

at 628 (quoted supra. at page 16).

Where a party to a written agreement

gives up no substantive rights. there is

no question of waiver. prospective or

otherwise. Further, the court below

correctly resolved this question based

on clear precedents of this Court. The

Pourth Circuit explained:

Gilmer also argues that the

arbitration agreement should not be

enforced because it constituted a

prospective waiver. This plainly

17

is not is not the law. Prospective

waiver of the judicial forum lies

at the heart of the FAA. where it

is not only permitted but

encouraged. In addition,

prospective waivers were clearly

approved in Mitsubishi. McMahon.

and Rodriguez. In all three cases,

the Court enforced arbitration

agreements which were entered into

before the cause of action at issue

arose. See Mitsubishi. 473 U.S. at

617-18: McMahon. 107 S. Ct. 15

2335-36: Rodriguez. 109 S. Ct. 15

1918-19. If. however. Gilmer means

that prospective waivers must be

examined to determine whether they

were knowing and voluntary. then

this certainly is true. See

Alexander vy. Gardner-Denver Co.,.

415 U.S. 36. S52 n.1S (1974).

However, Gilmer has never asserted

that his waiver was anything other

than knowing and voluntary. nor is

there anything to lead us to that

conclusion.

Our holding is further

buttressed by the fact that it is

well-established that federal’

courts need not always be the forum

for the resolution of ADEA claims.

The grant of concurrent

jurisdiction to state and, federal

courts in the ADEA allows ADEA

claimants to bring their claims in

state court in the first instance.

See Mathis. 680 F. Supp. at 547:

Jacoby vy. High Point Label. Inc..

442 F. Supp. 518. 520 (M.D.N.C.

1977). Thus. Congress clearly did

18

not intend that all ADEA disputes

be resolved in federal court:

rather it contemplated a more

flexible scheme for the resolution

of individual ADEA claims. In

fact. Congress' grant of concurrent

jurisdiction over ADEA suits may

evince an affirmative intent, apart

from that contained in the FAA, to

permit waiver of the judicial forum.

In Rodriguez. the Court noted that

congressional legislation provided

for concurrent jurisdiction

constituted an "explicit

authorization for complainants to

waive (federal court procedural]

protections by filing suit in state

court." 109 S. Ct. at 92 The

Court went on to declare that

“arbitration agreements. which are

‘in effect. a specialized kind of

form-selection clause,.' should not

be prohibited .. . since they like

the provision for concurrent

jurisdiction, serve to advance the

objective of allowing [claimants] a

broader right to select the forum

for resolving disputes. whether it

be judicial or otherwise." Id. at

1921 (quoting §Scherk vy,

Alberto-Culver Co,

= » 417 U.S. 506,

519 (1974)). The grant of

concurrent jurisdiction in the ADEA

evidences. if anvthing, a

congressional intent to provide a

broad right of forum selection,

including the right to elect

arbitration.

19

(App. 19a-2la) In light of this Court's

clear holding in Mitsubishi as well as

the Fourth Circuit's proper resolution

of this question, there is no need for

this Court to address this question

again.

Finally. Petitioner challenges the

lower court's reading of the record

evidence. The lower court did determine

that the employee "never asserted that

his waiver was anything other than

knowing and voluntary." (App. 20a)

However, Petitioner's argument here as

before the court below relies upon

argument of his counsel. not the record

evidence.

evidence before the district court and

Petitioner submitted no

that court did not find that his

agreement was involuntary. (App.

39a-42a) Petitioner never cross

20

appealed to the circuit court on this

point. Indeed, Petitioner's counsel

told the trial judge:

"I'm not allegin an

anything. * ging y fraud or

(See Joint Appendix before the circuit

court 43-44.) The Fourth Circuit

properly evaluated the record evidence

on this point. It was not compelled to

substitute argument of Petitioner's

counsel for the evidence. Certiorari is

mot needed where the lower court

properly evaluated the record evidence.

Also. Petitioner urges this Court to

find a lack of consideration for his

Signing the arbitration agreement. The

Fourth Circuit necessarily resolved this

argument when it found that:

a

Gilmer registered as a securities

representative with the New York

Stock Exchange."

21

(App. 3a) (emphasis added). Although

Petitioner's counsel attempted to

convince the District Court on this

consideration argument (Circuit Court

Joint Appendix. pages 20. 41. 43-46).

the trial court did not find any lack of

consideration. (App. 39a-42a)

Petitioner did not cross appeal on this

or any point of law or fact.

Petitioner's written agreement to

arbitrate employment disputes is clearly

valid and enforceable as authorized by

the Federal Arbitration Act.

’ CONCLUSION

In light of the foregoing reasons

and authorities. the Petition for Writ

of Certiorari should be denied.

22

Respectfully submitted.

HAYNSWORTH. BALDWIN.

JOHNSON, AND GREAVES.

James B. Spears. Jr.*

Robert S. Phifer

*Counsel of Record

23

P.A.

CERTIFICATE OF SERVICE

I. James B. Spears, Jr.. do hereby

certify that I have this day served a

copy of the within and foregoing

Repondent's Brief in Opposition to

Petition for Certiorari. upon the

following person(s). by placing copies

of same in the United States Mail,

properly addressed and with the correct

amount of postage affixed thereto. to

the following persons:

John T. Allred

W. R. Loftis. Jr.

Robin E. Shea

PETREE. STOCKTON. & ROBINSON

1001 West Fourth Street

Winston-Salem, N.C. 27101

Dated this the 27th day of July. 1990.

Gateway Center, Suite 1050

901 West Trade Street

Charlotte. North Carolina 28202

(704) 342-2588