Amicus Curiae Brief — Gilmer v. Interstate/Johnson Lane Corp.

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4) ue ee Fi

No. 90-18 soeti atin

IN THE

Supreme Court of the United States

OCTOBER TERM, 1990

ROBERT D. GILMER.

y Petitioner,

INTERSTATE/JOHNSON LANE CORPORATION,

Respondent.

On Writ of Certiorari To the United States

Court of Appeals for the Fourth Circuit

BRIEF FOR THE LAWYERS’ COMMITTEE FOR

CIVIL RIGHTS UNDER LAW AS

AMICUS CURIAE IN SUPPORT OF THE

PETITIONER

ROBERT F. MULLEN ALAN E. Kraus*

DaviD S. TATEL NICHOLAS DEB. KATZENBACH

Co-Chairmen LAURA J. LOKKER

PETER C. HARVEY

NORMA REDLICH

Trustee RIKER, DANZIG, SCHERER,

BARBARA R. ARNWINE HYLAND & PERRETTI

THOMAS J. HENDERSON Headquarters Plaza

Morristown, NJ 07962-1981

LAWYERS’ COMM!TTEE FOR (201) 538-0800

CiviL RIGHTS UNDER Law

1400 “Eye” Street, N.W.

Suite 400

Washington, DC 20005

(202) 371-1212

Attorneys for Amicus Curiae

Lawyers’ Committee for Civil Rights

Under Law

November 15, 1990 *Counsel of Record

2\

*~

eee.

QUESTION PRESENTED

Whether an employee who signs a pre-employment con-

tract with his employer to arbitrate any claims between the

parties bargains away his right to have his federal statutory

claims of discrimination adjudicated in the courts?

li

TABLE OF CONTENTS

PAGE

QUESTION PRESENTED .......... fe ete eG l

INTEREST OF AMICUS CURIAE ........... l

SUMMARY OF ARGUMENT.............. 2

ARGUMENT

I. THE FOURTH CIRCUIT’S DECISION

ALLOWING COMPULSORY ARBITRATION

OF ADEA CLAIMS DISREGARDS THIS

COURT'S HOLDINGS IN GARDNER-

DENVER, MCDONALD, AND BARRENTINE

AND IS CONTRARY TO THE LEGISLATIVE

INTENT OF FEDERAL CIVIL RIGHTS

STAC UE ss <p b.uc sb be be eae ee o's 5

A. There are Significant Differences Between

Civil Rights and Commercial Disputes that

Warrant a Lesser Deference to Arbitration . . 8

B. The Courts Are Far Better Suited Than

Private Arbitrators to Adjudicate

Employment Discrimination Claims. .... . 11

C. The Inequality of Bargaining Leverage

Between Employers and Employees Justifies

Less Deference to the FAA ........... 15

D. The Text and Legislative History of the

FAA and Title VII Amply Demonstrate a

Congressional Preference for a Judicial

ROG... + > 00-0 bS ae eee se bs « 16

1. The FAA exempts employment disputes 17

2. The legislative history of Title VII

evidences a clear preference for judicial

PP NR 18

CORRS ce cetevesere eee 24

TABLE OF AUTHORITIES

Cases

Albemarle Paper Co. v. Moody, 422 U.S. 405

SE a

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

a

Alford v. Dean Witter Reynolds, 905 F.2d 104

a ag ge nella

American Postal Workers Union v. United States

Postal Service, 823 F.2d 466 (i ith Cir. 1987)...

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

450 U.S. 728 (1981), cert. denied, 471 U.S. 1054

aes 2 oe wane onesie ee 0 9

Connecticut v. Teal, 457 U.S. 440 (1982) ......

Derwin v. General Dynamics Corp., 719 F.2d 484

ee

Gilmer v. Interstate/Johnson Lane Corporation,

895 F.2d 195 (4th Cir. 1990).............

Hazelwood School District v. United States,

CE ES

Johnson v. University of Wisconsin - Milwaukee,

I

International Brotherhood of Teamsters v. United

States, 431 U.S, 324 (1977)... ........4.4..

Lewis v. Bloomsburg Mills, Inc., 773 F.2d 561

Tt 6 UW be da 0's

Lorillard v. Pons, 434 U.S. 575 (1978)... .....

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

oi LECCE creie TE ody Avo dic 6 a cle ve «

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985) ........

Nicholson v. CPC International, Inc., 877 F.2d 221

Nee tees

18

iv

Occidental Chemical Corp. v. Intn’l Chemical

Workers Union, 853 F.2d 1310 (6th Cir. 1988). .

Oscar Mayer and Co. v. Evans, 441 U.S. 750

BOO wi ed a Oe aera

Payne v. Travenol Laboratories, Inc., 673 F.2d 798

(Sth Cir.), cert. denied, 459 U.S. 1038 (1982)...

Rodriguez De Quijas v. Shearson/American

Express, Inc., 490 U.S. 477 (1989) .........

Shearson/American Express, Inc. v. McMahon,

GS ee Lace st tet ates sees

Sledge v. J.P. Stevens & Co., 585 F.2d 625

(4th Cir. 1978), cert. denied, 440 U.S. 981 (1979)

Swenson v. Management Recruiters International,

Inc., 858 F.2d 1304 (8th Cir. 1988), cert. denied,

OS. .¢ RODE Ge Pe eee tec ccce.

Tenney Engineering, Inc. v. United Electrical,

Radio and Machine Workers’ of America,

207 F.2d 450 (3d Cir. 1953) .............

Trans World Airlines, Inc. v. Thurston,

Se eee Pe ee

United Paperworkers Intn’l Union, AFL-CIO v.

Misco, Inc., 484 U.S. 29 (1987) ...........

United Steelworkers of America v. Enterprise

Wheel & Car Corp., 363 U.S. 593 (1960) .....

Utley v. Goldman Sachs & Co., 883 F.2d 184

(ist Cir. 1989), cert. denied, US. ,

} 29 % Qh ae ae

Wards Cove Packing Co., Inc. v. Atonio,

GO UB. Geeeress oe ok PIG. ccc cee’

Watson v. Fort Worth Bank & Trust, 487 U.S. 977

SEE ¢ 6 oc oo CUSSED S'S 6 JOR DVS.

PAGE

1,24

Other

Report of House Comm. on Education and Labor,

87th Congress, 2d Sess., H. Report No. 1370

(reprinted in Legislative History of Titles VII and

XI of Civil Rights Act of 1964, United States

Equal Opportunity Commission) ..........

House and Senate Committees on Labor and

Public Wellfare, Legislative History of the Equal

Employment Opportunity Act of 1972

See ce cc eee

9 U.S.C. § 1, et seg. (1990)... .. 2.2.2.0.

28 U.S.C. § 1983 (1990) ................

Sn. oc wwe sce couse:

29 U.S.C. §§ 621, 634(1990) .............

29 U.S.C. § 623(aX2) (1990)... 2.2... ee.

29 U.S.C. § 626(b) (1990) ...............

29 U.S.C. § 626(d) (1990) ...............

42 U.S.C. § 20006e et seq. (1990) ...........

42 US.C. § 2000e-2(aX2) (1990) ...........

42 U.S.C. § 2000e-5 (1990)... ............

42 U.S.C. § 2000e-5(f) (1990) .............

PAGE

19

l

INTEREST OF AMICUS CURIAE

The Lawyers’ Committee for Civil Rights Under Law

submits this brief as amicus curiae urging reversal of the

decision by the Court of Appeals for the Fourth Circuit in

Gilmer v. Interstate/Johnson Lane Corporation, 895 F.2d 195

(4th Cir. 1990).!

The Lawyers’ Committee is a nonprofit organization

established in 1963 at the request of the President of the

United States to involve leading members of the bar through-

out the country in the national effort to insure civil rights to

all Americans. It has represented and assisted other lawyers

in representing numerous plaintiffs in administrative pro-

ceedings and lawsuits under Title VII. £.g., Lewis v. Blooms-

burg Mills, Inc., 773 F.2d 561 (4th Cir. 1985); Payne v.

Travenol Laboratories, Inc., 673 F.2d 798 (Sth Cir.), cert.

denied, 459 U.S. 1038 (1982); Sledge v. J.P. Stevens & Co.,

585 F.2d 625 (4th Cir. 1978), cert. denied, 440 U.S. 981

(1979). The Lawyers’ Committee has also represented parties

and participated as an amicus in Title VII cases before this

Court. E.g., Wards Cove Packing Co., Inc. v. Atonio,

490 U.S. 642 (1989); Watson v. Fort Worth Bank & Trust,

487 U.S. 977 (1988); Connecticut v. Teal, 457 U.S. 440

(1982); Hazelwood School District v. United States,

433 U.S. 299 (1977).

The question presented by this case raises important and

recurring issues in all civil rights cases. Whether claims

brought pursuant to the Age Discrimination in Employment

Act, 29 U.S.C. §§ 621-634 (1990). (“ADEA”) are subject to

compulsory arbitration is an issue that potentially affects

every case of employment discrimination brought under a

' Pursuant to Rule 37.3, written consents of the parties to the sub-

mission of this brief as amicus curiae are on file with the Clerk of the

Supreme Court.

2

federal employment discrimination statute which provides

for resolution of claims through the courts, and particularly

Title VII of the Civil Rights Act of 1964 (“Title VII"),

42 U.S.C. §§ 2000e to -17 (1990), the principal focus of the

Lawyers’ Committee's activities.

This Court’s decision will undoubtedly have far reaching

and important implications for present and future employ-

ment discrimination cases in which the Lawyers’ Committee

participates. Morcover, the Lawyers’ Committee has a long-

standing interest in persuading the Court to adopt principles

that will result in the sound administration of the discrimina-

tion laws, so that findings of liability will be obtainable by

persons with legitimate claims and limited resources. Finally,

the Lawyers’ Committee also brings the Court the benefit of

its actual experience in litigating numerous employment dis-

crimination cases, and is therefore in a position to discuss the

relative advantages and disadvantages of resolution of such

cases through arbitration as opposed to the court system.

SUMMARY OF ARGUMENT

In Gilmer, the Fourth Circuit Court of Appeals held that

this Court’s decisions in Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614 (1985); Shear-

son/American Express, Inc. v. McMahon, 482 U.S. 220,

(1987); and Rodriguez De Quijas v. Shearson/American

Express, Inc.,490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed. 2d 526

(1989) endorsing arbitration as a means to resolve commer-

cial disputes had sub silentio overruled this Court's well-

established pronouncements that arbitration cannot be a

compulsory remedy in employment rights cases. E.g., Alex-

ander v. Gardner-Denver Co., 415 U.S. 36 (1974) (Title VII);

Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S.

3

728 (1981), cert. denied, 471 US. 1054 (1985) (Fair Labor

Standards Act); McDonald v. City of West Branch, 466 U.S.

284 (1984) (28 U.S.C. § 1983).

The Fourth Circuit’s ruling is wrong and should be

reversed by this Court.? First, the Fourth Circuit failed to

recognize, contrary to this Court's express holdings in Gard-

ner-Denver, Barrentine and McDonald, that employment

rights cases are different from commercial disputes. There

are public interests at issue in civil rights cases that mandate

public resolution in the courts, with the full panoply of proce-

dural rights and remedies available there that arbitration sim-

ply does not provide. In short, Gardner-Denver and its

progeny are still good law and the Fourth Circuit erred by

assuming they had been silently overruled by Mitsubishi,

McMahon and Rodriguez.

Second, the Fourth Circuit’s ruling ignores the fact that,

as this Court explained in Gardner-Denver, however well-

suited arbitration might be for the resolution of private com-

mercial disputes, arbitration is not an appropriate forum for

adjudicating civil rights violations.

Third, the Fourth Circuit’s holding ignores the funda-

mental inequality in bargaining between employers and

employees. It cannot fairly be assumed that prospective

waivers by individual employees of court remedies in favor of

arbitration are knowing or voluntary.

2 Indeed, it is worth noting that every Circuit that has considered the

issue has ruled exactly opposite to Gilmer and refused to order compul-

sory arbitration in employment rights cases. E.g., Alford v. Dean Witter

Reynolds, 905 F.2d 104 (Sth Cir. 1990) (Title VII); Utley v. Goldman

Sachs & Co., 883 F.2d 184 (ist Cir. 1989), cert. denied, US.

, 110 S. Ct. 842 (1990) (Title VII); Nicholson v. CPC Interna-

tional, Inc., 877 F.2d 221 (3d Cir. 1989) (ADEA); Swenson v. Manage-

ment Recruiters International, Inc., 858 F.2d 1304 (8th Cir. 1988), cert.

denied, US. ,1108.Ct. 143 (1989) (Title VII); Johnson v. Univer-

sity of Wisconsin - Milwaukee, 783 F.2d 59 (7th Cir. 1986) (ADEA).

4

Finally, the Fourth Circuit's approach to statutory inter-

pretation is artificial and stilted. In effect, the Fourth Circuit

ruled that, unless Congress had expressly stated that court

remedies could not be waived by an agreement to arbitrate,

Mitsubishi and the Federal Arbitration Act (“FAA”), 9

U.S.C. §§ 1-15 (1990), require the strict enforcement of pri-

vate contracts to arbitrate. That ruling ignores the FAA’s

own exclusion of employment disputes from its reach and,

even more significantly, Congress’ oft-expressed insistence on

the necessity for court remedies for civil rights violations as

set forth in, among other places, Title VII and its legislative

history.

In this amicus brief, we focus the foregoing arguments

on the Title VII model. This Court has often observed that

the substantive provisions of the ADEA are “derived in haec

verba from Title VII’ and that Title VII precedents apply

“with equal force” to ADEA claimants. Trans World Air-

lines, Inc. v. Thurston, 469 U.S. 111, 121 (1985); Oscar Mayer

and Co. v. Evans, 441 U.S. 750, 756 (1979); Lorillard v. Pons,

434 U.S. 575, 584 (1978). Indeed, the similarities between

the ADEA and Title VII are substantial. Both statutes seek to

eliminate discrimination in the work place, albeit on different

bases; both statutes rely upon the conciliation procedures of

the Equal Employmert Opportunity Commission (“EEOC”);

and both statutes provide for civil actions in the courts to

remedy and enjoin discriminatory employment practices and

procedures. Compare 42 U.S.C. § 2000e-2(aX2) (1990) and

29 U.S.C. § 623(aX2) (1990); 42 U.S.C. § 2000e-5S(f) (1990)

and 29 U.S.C. § 626(b) (1990); and 42 U.S.C. § 2000e-5(f)

(1990) and 29 U.S.C. § 626(d) (1990). Moreover, the Law-

yers’ Committee has extensive experience in litigating Title

VII cases in the trial and appellate courts. That experience

convincingly demonstrates that, contrary to the Fourth Cir-

cuit’s ruling, employment rights cases—whether brought

under ADEA, Title VII or any other civil rights stat-

ute—belong in the courts, not compulsory arbitration.

5

In sum, we respectfully submit that this Court should

reafirm Gardner-Denver, Barrentine and McDonald and

reverse the Fourth Circuit’s decision in Gilmer.

ARGUMENT

I. THE FOURTH CIRCUIT’S DECISION ALLOWING

COMPULSORY ARBITRATION OF ADEA CLAIMS

DISREGARDS THIS COURT’S HOLDINGS IN

GARDNER-DENVER, MCDONALD, AND BARREN-

TINE AND IS CONTRARY TO THE LEGISLATIVE

INTENT OF FEDERAL CIVIL RIGHTS STATUTES.

In Gilmer, the Fourth Circuit held that this Court’s

recent endorsement of private arbitration in commercial

cases in Mitsubishi, McMahon and Rodriguez effectively

overruled this Court’s earlier rejection of compulsory arbitra-

tion in the employment rights area in Gardner-Denver, Bar-

rentine and McDonald. Gilmer, 895 F.2d at 201-02. The

Fourth Circuit further held that, applying the statutory inter-

pretation test espoused by Mitsubishi, it could find no evi-

dence in ADEA of a Congressional preference for court

remedies over arbitration. The Fourth Circuit also summa-

rily rejected the argument that civil rights cases are different

from commercial disputes with respect to the federal court’s

deference to arbitration. Accordingly, the Fourth Circuit

enforced a broadly worded arbitration clause in the employ-

ment contract signed by Mr. Gilmer six years before he was

allegedly terminated unlawfully due to his age, and sent him

to arbitration.’

The Fourth Circuit first stated its broad reading of Mit-

subishi and its progeny:

. This appeal thus addresses the enforceability of prospective waivers

of judicial remedies. It does not implicate agreements to arbitrate

reached after the dispute has arisen.

6

In a trilogy of recent cases, Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,

105 S. Ct. 3346, 87 L.Ed. 2d 444 (1985); Shear-

son/American Express, Inc v. McMahon, 482 U.S.

220, 107 S. Ct. 2332, 96 L.Ed. 2d 185 (1987); and

Rodriguez de Quijas v. Shearson/American Express,

Inc., US. 109 S. Ct. 1917, 104 L.Ed. 2d 526

(1989), the Supreme Court has endorsed arbitration

as an effective and efficient means of dispute resolu-

tion . . . . An arbitration agreement is unenforce-

able [under Mitsubishi and its progeny] only if

Congress has evinced an intention to preclude

waiver of the judicial forum for a particular statu-

tory right, or if the agreement was procured by fraud

or use of excessive economic power.

7

Gilmer points to three cases decided before the

Supreme Court’s recent trilogy and argues that those

cases are controlling here [citing Gardner-Denver,

Barrentine and McDonald]... . .

We find these cases inapposite. First, none of the

three even mention the FAA... .. .

Second, Gardner-Denver, Barrentine and McDon-

ald all involved arbitration under collective bargain-

ing agreements . . . [C]oncern about the divergent

interests of employee and union simply does not

exist where, as in Gilmer’s case, the individual

employee has agreed to arbitration... . .

For the foregoing reasons we think it clear that

Gardner-Denver, Barrentine, and McDonald do not

control our decision here.

The Fourth Circuit next rejected the contention that 895 F.2d at 201-02.

ADEA's text or regent history evidenced a preference for ) Finally, the Fourth Circuit rejected the notion that there

a judicial forum: is a distinction between commercial disputes and employ-

We find nothing in the text, legislative history, or ment rights cases for purposes of enforcing arbitration

underlying purposes of the ADEA indicating a con- agreements: 4

895 F.2d at 196-97.

gressional intent to preclude enforcement of arbitra-

tion agreements. Arbitration is nowhere mentioned

in the text of the statute, and “[tJhis silence in the

text is matched by silence in the statute’s legislative

history.” . . . Moreover, we see no _ conflict

between arbitration and the underlying purposes of

the ADEA which would preclude arbitration of

ADEA claims.

895 F.2d at 197 (citations omitted).

The Fourth Circuit also summarily dismissed the con-

tinued vitality of Gardner-Denver and its line of cases:

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 stat-

ute. Moreover, the complainants in those cases were

securities customers and persons injured by anti-

trust violations, not employees who are allegedly

victims of discrimination in the workplace.

Although the beneficiaries of statutory protections

~ vary, the principles of statutory interpretation

O not.

895 F.2d at 203.

The Fourth Circuit’s reasoning, we respectfully submit,

is fatally flawed. Civil rights actions, unlike private commer-

cial disputes, involve public interests that require judicial

resolution; for that reason alone, Gardner-Denver and its

progeny remain good law, notwithstanding the Mitsubishi

trilogy of cases. Moreover, as this Court properly recognized

in Gardner-Denver, arbitration simply does not provide ade-

quate procedural and substantive protections for civil rights

cases. Nor can it be said that individual employees, such as

Mr. Gilmer, knowingly and voluntarily waived their right to a

judicial forum for their civil rights claims. Finally, the statu-

tory language and legislative history of the FAA and civil

rights statutes such as Title VII evidence an unambiguous

Congressional preference for judicial remedies.

A. There are Significant Differences Between Civil Rights

and Commercial Disputes That Warrant a Lesser

Deference to Arbitration.

The substantive issue in Mitsubishi was a breach of con-

tract and aniitrust dispute between an automobile manufac-

turer and a car dealer. Mitsubishi, 473 U.S. at 616-20.

Similarly, the underlying substantive issues in both McMa-

hon, 482 U.S. at 222 and Rodriguez, 490 U.S. 477, 104 L.Ed.

2d 526, 533, were alleged violations of the securities laws. At

bottom, each of those cases centered upon a private litigant’s

claim for money damages.‘

4 Indeed, the Mitsubishi Court rejected a claim by the plaintiff that

its antitrust claim raised important public policy issues that should not

be sent to private arbitration:

Notwithstanding its important incidental policing function, the

treble-damages cause of action conferred on private parties by § 4

(footnote continues)

9

As this Court has often stated, however, civil rights cases

are different. Civil rights cases necessarily implicate issues of

public importance that require the public forum of a court-

room and the wide discretion that only a court has to fashion

remedies that go beyond the interests of the private litigants

in order to eradicate employment discrimination in this

country. Civil rights issues should not be addressed in the

relative privacy of arbitration before decisionmakers empow-

ered only to resolve the particular private dispute before

them. Thus, in /nternational Brotherhood of Teamsters v.

United States, 431 U.S. 324 (1977), this Court noted in the

Title VII context that: “The primary purpose of Title VII was

‘to assure equality of employment opportunities and to elimi-

nate those discriminatory practices and devices which have

fostered racially stratified job environments to the disadvan-

tage of minority citizens’.” Jd. at 348-49 (citations omitted).

In Teamsters, this Court emphasized the importance of

the courts in enforcing Title VII's legislative mandate to erad-

icate discrimination:

In Griggs v. Duke Power Co., and again in

Albermarle, the Court noted that a primary objective

of Title VII is prophylactic: to achieve equal

employment opportunity and to remove the barriers

that have operated to favor white male employees

(footnote continued)

of the Clayton Act, 15 U.S.C. § 15 and pursued by Soler here by

way of its third counterclaim, seeks primarily to enable an injured

competitor to gain compensation for that injury.

Mitsubishi, 473 U.S. at 635.

Similarly, in McMahon, this Court rejected the argument that

claims brought under the Racketeer Influenced Corrupt Organizations

Act (“RICO”), 18 U.S.C. § 1962 et seg., involved public policy issues

that should not be sent to arbitration, holding that RICO claims are

also mere private money damages claims. McMahon, 482 U.S. at 240-

42.

10

over other employees . . . . An equally important

purpose of the Act is ‘to make persons whole for

injuries suffered on account of unlawful discrimina-

tion.” In determining the specific remedies to be

afforded, a district court is ‘to fashion such relief as

the particular circumstances of a case may require to

effect restitution.’

Thus, the Court has held that the purpose of Con-

gress in vesting broad equitable powers in Title VII

courts was “to make possible the ‘fashion{ing] [of]

the most complete relief possible,’ and that the dis-

trict courts have ‘not merely the power but the duty

to render a decree which will so far as possible elimi-

nate the discriminatory effects of the past as well as

bar like discrimination in the future.’ ”

Id. at 364 (citations omitted). See also Albemarle Paper Co. v.

Moody, 422 U.S. 405, 420-21 (1975) (“Congress’ purpose in

vesting a variety of ‘discretionary’ powers in the courts

was .. . to make possible the fashion{ing] [of] the most

complete relief possible’’).

In short, in each and every civil rights employment case,

there is a public interest present that goes beyond simply

making the plaintiff-victim whole and cequires the fashioning

by a court of a broad remedy designed to prevent any further

discrimination. It is the public policy of the United States, as

enacted in Title VII, ADEA and other civil rights statutes, to

eliminate discrimination from the workplace. That public

policy can only be vindicated in the courts; the private rem-

edy of arbitration can never adequately address that public

interest. As this Court succinctly stated in Gardner-Denver:

The private right of action remains an essential

means of obtaining judicial enforcement of Title

VII. Jn such cases, the private litigant not only

a

—-

redresses his own injury but also vindicates the impor-

tant congressional policy against discriminatory

employment practices.

Gardner-Denver, 415 U.S. at 45 (citations omitted; emphasis

added).

B. The Courts are Far Better Suited Than Private

Arbitrators to Adjudicate Employment Discrimination

Claims.

As this Court expressly held in McDonald v. City of West

Branch, 466 U.S. 284, 290 (1984)—which, notably, was

decided only one year before Mitsubishi—“although arbitra-

tion is well-suited to resolving contractual disputes .. . it

cannot provide an adequate substitute for a judicial proceed-

ing in protecting the federal statutory and constitutional

rights that § 1983 [and other civil rights statutes are] designed

to safeguard.”

First, the federal courts have greater expertise in adjudi-

cating Title VII claims. While arbitrators are experienced in

labor contract and other commercial disputes, they are not, as

a group, well versed in the complexities of Title VII jurispru-

dence. Moreover, arbitraiors perform a role different from

courts in that they are charged with effectuating the intent of

the parties under a contract rather than enforcing the require-

ments of ADEA, Title VII or any other civil rights statute.

See Gardner-Denver, 415 U.S. at 57. Indeed, where the col-

lective bargaining agreement or other employment contract

conflicts with the dictates of ADEA or Title V1, the arbitra-

tor must apply the provisions of the agreement to enforce its

terms. As this Court observed in McDonald, the arbitrator's

expertise “pertains primarily to the law of the shop, not the

law of the land.” 466 U.S. at 290; see also Barrentine, 450

U.S. at 743; Gardner-Denver, 415 U.S. at 57. As noted in

Gardner-Denver:

12

Parties usually choose an arbitrator because they

trust his knowledge and judgment concerning the

demands and norms of industrial relations. On the

other hand, the resolution of statutory or constitu-

tional issues is a primary responsibility of courts,

essary with respect to Title VII, whose broad lan-

guage frequently can be given meaning only by

reference to public law concepts.

415 USS. at 57.

Second, unlike judges, a “substantial proportion of .. .

arbitrators are not lawyers.” Barrentine, 450 U.S. at 743 n.

21. These non-lawyer arbitrators cannot be expected to be

familiar with the extensive body of law interpreting Title VII.

Issues arising under Title VII, ADEA and other civil rights

statuies must be resolved in light of volumes of legislative

history and decades of legal interpretation. Though an arbi-

trator may be competent to resolve many preliminary factual

questions, he may lack the competence to decide the ultimate

legal issue in a civil rights case. See Barrentine, 450 US. at

743. That lack of competence is unacceptable in cases of such

paramount public concern.

In addition, even if competent to resolve the complex

legal issues presented by civil rights cases, arbitrators can add

nothing to the development of the law in the civil rights area,

and may even detract from that development. Arbitration

decisions are not often publicly reported and they conse-

quently cannot contribute to either the public knowledge of

discrimination law or the ever-growing body of decisions that

guide law-abiding employers in their personnel decisions.

Further, because arbitrators are not bound by the principles

of stare decisis, they necessarily will detract from legal cer-

tainty in the employment discrimination field. Thus, manda-

tory submission of Title VII and ADEA claims to arbitration

13

will frustrate rather than further the “legislative purposes” of

federal civil rights statutes, which “require[s] . . . the prin-

cipled application of standards consistent with those pur-

poses . . . . Important national goals would be frustrated by

a regime of discretion than ‘produce[d] different results for

breaches of duty in situations that cannot be differentiated in

policy.” ” Albermarle, 422 U.S. at 417 (citation omitted).

Third, unlike the courts, arbitrators lack the authority to

enforce fully the important individual rights protected by

Title VII. An arbitrator’s power is both derived from, and

limited by, the collective bargaining agreement or other con-

tract. McDonald, 466 U.S. at 290; Barrentine, 450 U.S. at

744; Gardner-Denver, 415 U.S. at 53. Arbitrators lack the

broad discretionary power granted to the courts by Title VII

and ADEA. In Gardner-Denver, this Court recognized the

severe limitations on the authority of the arbitrator to stray

from the employment agreement to invoke public laws that

conflict with the contract between the parties:

{A]n arbitrator is confined to interpretation and

application of the collective bargaining agreement;

he does not sit to dispense his own brand of indus-

trial justice. He may of course look for guidance

from many sources, yet his award is legitimate only

so long as it draws its essence from the collective

bargaining agreement. When the arbitrator’s words

manifest an infidelity to this obligation, courts have

no choice but to refuse enforcement of the award.

415 U.S. at 53 (quoting United Steelworkers of America v.

Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960)); see

also McDonald, 466 U.S. at 291-92; Barrentine, 450 U.S. at

744. Accordingly, if the individual rights guaranteed by

ADEA or Title VII conflict with the parties’ employment

agreement, the arbitrator must enforce the agreement even if

14

to do so requires a ruling contrary to the public policies

underlying Title VII. McDonald, 466 U.S. at 291; Barrentine,

450 U.S. at 744.

Arbitrators also lack the power that courts have to hold a

recalcitrant defendant in contempt, both during and after

Title VII or ADEA actions, for willfully refusing to obey court

orders. 42 U.S.C. § 2000e-5 (1964).

Fourth, subsequent judicial review of an arbitrator's

decision is severely limited. An arbitrator’s decision is final

and binding on the employer and employee, thereby prohibit-

ing de novo review by the courts. Gardner-Denver, 415 U.S. at

54. Moreover, arbitrators have no obligation to any reviewing

court to give reasons for their decision or award. See McDon-

ald, 466 U.S. at 290-91; Gardner-Denver, 415 U.S. at 57-58.

Accordingly, the role of the appellate courts in developing

and articulating the important public policies at issue in Title

VII, ADEA and other civil rights cases would be sharply

circumscribed, if not almost entirely eliminated, by a rule

that allowed employers routinely to insert enforceable arbi-

tration clauses into employment contracts.

Finally, the procedural tools available to Title VII,

ADEA and other civil rights claimants in judicial proceedings

are not available in arbitration, which is, as a result, an inade-

quate substitute for judicial factfinding. McDonald, 466 U.S.

at 291-92; Barrentine, 450 U.S. at 738; Gardner-Denver, 415

U.S. at 57-58. As the McDonald Court observed:

{A}rbitral factfinding is generally not equivalent to

judicial factfinding. As we explained in Gardner-

Denver, “[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, cross-

15

examination, and testimony under oath, are often

severely limited or unavailable.” 415 U.S. at 57-58,

94S. Ct. 1011, 39 L.Ed. 2d 147.

466 U.S. at 291.

The absence of court procedures in arbitrations limits

the remedies available under ADEA, Title VII and other civil

rights statutes and promotes inefficiency, if not injustice. For

example, the class action device under Rule 23 of the Federal

Rules of Civil Procedure provides for the resolution of multi-

ple claims of discrimination in a single action. The class

action procedure also permits the court to fashion a class-

wide remedy affecting numerous employees nationwide.

There is no similar procedure in arbitration. Absent the class

action device, many meritorious employment discrimination

complaints may well go unremedied, either because (a) none

of the individual claims warrants the expense of a contested

arbitration proceeding or (b) the lack of any possible attor-

neys’ fee award discourages lawyers from bringing such

claims on behalf of discrimination victims.

In sum, as this Court has already recognized, arbitration

is not an appropriate forum for the resolution of the critically

important public and private interests at stake in employ-

ment discrimination cases. Gardner-Denver and its progeny

were correctly decided; the Fourth Circuit erred in conclud-

ing that Mitsubishi, McMahon and Rodriguez sub silentio

overruled those decisions; and this Court should reaffirm the

continued viability of Gardner-Denver and its line of cases.

C. The Inequality of Bargaining Leverage Between

Employers and Employees Justifies Less Deference to the

FAA.

In Gilmer, the Fourth Circuit distinguished Gardner-

Denver and its progeny, in part, on the ground that those cases

arose in the context of collective bargaining agreements,

—

16

whereas this case arises out of an individual employment

contract. 895 F.2d at 201. That distinction misses the point.

The individual employment contract situation presents a

more, not less, compelling reason to disfavor a claimed

waiver of judicial remedies in favor of arbitration.

Unlike the usual presumption in commercial cases, it is

virtually always the case in employment rights disputes that

the employer has substantially greater bargaining leverage

than does the employee. That is, in fact, the fundamental

premise of this nation’s labor laws. As Congress recognized

in enacting the Norris-La Guardia Act, “the individual unor-

ganized worker is commonly helpless to exercise actual lib-

erty of contract and to protect his freedom of labor, and

thereby to obtain acceptable terms and conditions of employ-

ment.” 29 U.S.C. § 102 (1973). See also Barrentine, 450 U.S.

at 735.

Thus, when an employer insists upon a broad arbitration

clause in an individual employment contract, the employee

ordinarily has little choice but to agree and, in most instances,

little knowledge of the statutory rights he is giving up. Con-

trary to the Fourth Circuit’s conclusion, that is all the more

reason to be suspicious of arbitration clauses in individual

employment contracts and to hold, as this Court did in Gard-

ner-Denver, that an employee’s right to a judicial forum in

civil rights cases is “not susceptible of oreranie waiver.”

415 US. at 51-52. .

D. The Text and Legislative History of the FAA and Title

VII Amply Demonstrate a Congressional Preference for

a Judicial Remedy.

Even in commercial cases, the Mitsubishi decision recog-

nized that the presumption in favor of arbitration is not

irrebuttable:

That is not to say that all controversies implicat-

ing statutory rights are suitable for arbitration.

17

There is no reason to distort the process of contract

interpretation, however, in order to ferret out the

inappropriate. Just as it is the congressional policy

manifested in the Federal Arbitration Act that

requires courts liberally to construe the scope of

arbitration agreements covered by that Act, it is the

congressional intention expressed in some other

statute on which the courts must rely to identify any

category of claims as to which agreements to arbi-

trate will be held unenforceable.

Mitsubishi, 473 U.S. at 627.

In the employment context, there is ample evidence ir

the text and legislative history of the FAA and Title YTl to

lead inescapably to the conclusion that employment di® +» :i-

nation cases should be heard in the courts, rather thax in

arbitration. For that reason alone, the Fourth Circuit’s deci-

sion in Gilmer should be reversed.

1. The FAA exempts employment disputes.

The Fourth Circuit’s decision in Gilmer was expressly

predicated on the “federal policy favoring arbitration”

enacted in the Federal Arbitration Act. Gilmer, 895 F.2d at

201. Section 1 of the FAA, however, explicitly excludes from

the Act all “contracts of employment of seamen, railroad

employees, or any other class of workers engaged in foreign or

interstate commerce.” 9 U.S.C. § 1 (emphasis added).

The unambiguous intent of Section | of the FAA is to

exempt from the federal policy favoring arbitration employ-

ment contracts of workers engaged in interstate commerce.°

5 The purpose of Section | to exclude all employment contracts from

the FAA is apparent from the plain language of the statute. That pur-

pose is confirmed by the legislative history of Section | which is dis-

cussed in detail in the Amicus Brief of the American Association of

Retired Persons.

18

Although some courts of appeals long ago held that Section :

of the FAA applied only to workers in the transportation

industry, that conclusion was based upon an incomplete read-

ing of the legislative history and ignored the plain language of

Section |. See, e.g., Tenney Engineering, Inc. v. United Elec-

trical, Radio and Machine Workers’ of America, 207 F.2d 450

(3d Cir. 1953) (en banc). More recently, however, this Court

and several lower federal courts have recognized that the

employment contract exemption of Section | of the FAA is

far broader than the transportation industry and in fact cov-

ers collective bargaining agreements in all industries engaged

in interstate commerce. See, e.g., United Paperworkers Int’!

Union, AFL-CIO v. Misco, Inc., 484 U.S. 29 n.9 (1987); Occi-

dental Chemical Corp. v. Int'l Chemical Workers Union, 853

F.2d 1310, 1315-16 (6th Cir. 1988); American Postal Workers

Union v. United States Postal Service, 823 F.2d 466, 469 (11th

Cir. 1987); Derwin v. General Dynamics Corp., 719 F.2d 484,

488 n.3 (1st Cir. 1983). Although the issue has not yet arisen

in any decision by this Court, it is equally clear that Section |

of the FAA exempts individual employment contracts. In

short, Section | of the FAA itself evidences Congress’ intent

to exempt employment rights disputes from compulsory

arbitration.

2. The legislative history of TYtle VII evidences a clear

preference for judicial remedies.

In enacting Title VII, the model for ADEA,*® Congress

made plain that its purpose in passing employment rights

legislation was not just to adjudicate private wrongs and rem-

edies but also to eradicate discrimination at all levels of

employment, nationwide. As the 1964 Report of the House

Committee on Education and Labor explained:

® As discussed above, the legislative history and judicial construc-

tion of Title VII are directly relevant to the interpretation of ADEA, as

this Court has often recognized. See p. 4, supra.

cc MT en

19

The committee finds that testimony ‘ece:ved

regarding the need for this legislation cowid scarcely

be mors cogent and convincing. The conclusion

inescapably to be drawn from 98 witnesses in 12

days of hearings, held in various sections of the

country as well as in Washington, and from many

statements filed without oral testimony, is that in all

likelihood fully 50 percent of the people of the

United States in search of employment suffer some

kind of job opportunity discrimination because of

their race, religion, color, national origin, ancestry,

or age. It shculd be made clear that the evidence

poured in from all parts of the Nation - East, West,

North, and South. This act cannot then be viewed as

an act intended merely to correct abuses in any one

section of the country. Clear enunciation and imple-

mentation of a national policy on equal employment

opportunity are obviously long overdue at this point

in the history of the United States.

In short, this act proposes active steps toward

achievement of basic constitutional and moral trans-

forming from the theoretical into the actual the fun-

damental principles which are the very foundation of

American democracy - and undertakes to remove

deficiencies and to attain positive benefits necessary

to internal well-being and to continued world

leadership.

H.R. Rep. No. 1370, 87th Cong., 2d Sess. 1-2, 5(1962),

(reprinted in Legislative History of Titles VII and XI of Civil

Rights Act of 1964 at 2155-56, 2159 (emphasis added).

In enacting Title VII, Congress relied upon the availabil-

ity of federal court actions to achieve its goal of eliminating

employment discrimination. As explained by Mr. Justice

Powell, writing for the Court in Gardner-Denver:

— 20

Congress enacted Title VII . . . to assure equal-

ity of employment opportunities by eliminating

those practices and devices that discriminate on the

basis of race, color, religion, sex, or national ori-

gin . . Cooperation and voluntary compliance

were selected as the preferred means for achieving

this goal. To this end, Congress created the Equal

lished a procedure whereby existing state and local

equal employment opportunity agencies, as well as

the Commission, would have an opportunity to set-

tle disputes through conference, conciliation, and

aa creat tate

to file a lawsuit .

Even in its amended form, however, Title VII

does not provide the Commission with direct pow-

ers of enforcement. The Commission cannot adju-

dicate claims or impose administrative sanctions.

Rather, final responsibility for enforcement of Title

VII is vested with federal courts. The Act authorizes

courts to issue injunctive relief and to order such

affirmative action as may be appropriate to remedy

the effects of unlawful employment practices... .

Taken together, these provisions make plain that fed-

eral courts have been assigned plenary powers to

secure compliance with Title VII.

415 US. at 44-45 (citations omitted; emphasis added).

Indeed, the legislative history of the 1972 Equal Employ-

ment Opportunities Enforcement Act is replete with refer-

ences to the particular qualities of federal courts which, in

Congress’ judgment, made them the best forum for adjudicat-

ing civil rights cases. For example, the 1972 House Commit-

tee on Education and Labor Report states:

21

The problem Title VII seeks to correct is not one

susceptible to the kind of policy balancing that is

usual in the administration of law regulating utilities

or other situations involving competing interests.

Racial discrimination does not occupy the status of

an “interest” under our system of law. It is a grave

injustice which should be eliminated in as quick and

efficient a manner as possible.

The appropriate forum to resolve civil rights ques-

tions, questions of employment discrimination as

well as such matters as public accommodations,

school desegregation, fair housing, and voting rights,

is a court. Civil rights issues usually arouse strong

emotions. United States district court proceedings

provide procedural safeguards: [ederal judges are

well known in their areas and enjoy great respect; the

forum is convenient for the litigants and is impar-

tial; the proceedings are public, and the judge has

power to resolve the problem and fashion a com-

plete remedy.

The district court approach has a great advantage

over an administrative hearing procedure in securing

the needed evidence. The Federal Rules of Civil Pro-

cedure, with respect to discovery, would greatly

facilitate the collection of evidence for trial... .

Discovery procedures take less time than adminis-

trative fact-gathering techniques, and the contempt

powers of the court operate to inhibit any intimida-

tion of witnesses, which is a rather difficult problem

that is often real, but seldom apparent.

22

H.R. Rep. No. 92-238, 92d Cong., Ist Sess. 62-63 (1971),

(reprinted in Legislative History of the Equal Employment

Opportunity Act of 1972 at 62-63) (1972) (emphasis added)

(hereinafter “1972 Act Legis. Hist.”’).

During Congressional debate of the 1972 amendments

to Title VII, Congress’ insistence on the availability of a fed-

eral court remedy was frequently expressed. Thus, in favor-

ing judicial enforcement over cease and desist power vested

in the EEOC, Congressman Erlenborn noted:

There are those who say that the cease-and-desist

approach is much preferable; that the courts cannot

do the job of guaranteeing equal opportunity for

employment .. . . [I}f the courts are so inefficient

and unable to grant relief in this area, why is it that

over the past many years great strides have been

made in the civil rights field primarily through [the]

Federal courts?

1972 Act Legis. Hist. at 248.

Congressman Gerald R. Ford made a similar

observation:

In this kind of situation [Title VII cases], discre-

tion is very, very important. I happen to believe the

system of justice in the courts is‘ better forum for

that, rather than leaving it in the hands of an agency

which has the right to investigate, to prosecute, to

make a decisioa and then to enforce it. I strongly

prefer the use of the courts for enforcement, rather

than the agency itself.

1972 Act Legis. Hist. at 263.

Likewise, in the Senate, Senator Dominick, the leading

proponent of an amendment requiring federal court enforce-

ment instead of agency cease and desist power, explained his

preference for a judicial remedy as follows:

23

This approach is superior for several reasons.

First it provides a combination of the expertise of

the EEOC in investigating, processing, and concili-

ating unfair employment cases with the expertise

and independence of the Federal courts. The equal

employment area is one which produces strong emo-

tions among all parties . . . . J believe that these

strong emotions should be tempered by restraint

when the adjudication of rights is at issue. The Fed-

eral courts are best able to provide the tempering

restraint which will allow for a rational resolution of

the issues of any given case.

1972 Act Legis. Hist. at 333.

There are many advantages to allowing the courts

to decide whether ~. .ot a charge [of discrimination]

has been substam:ated and then let it issue and

enforce the cease-and-desist order. First of all, it is a

fact that the courts have done a good job in dealing

with civil rights questions, including Title VII ques-

tions. This use of the courts would assure an impar-

tial tribunal, thus guaranteeing each side the due

process of law.

1972 Act Legis. Hist. at 682 (emphasis added).

Similarly, Senator Fannin observed that “t]he district

court judges have shown in recent years their capacity to

resolve civil rights disputes . . . because of the respect with

which the Federal judiciary is viewed, their decisions have

greater immediate impact and moral sanctions than would

the decision of an executive administrative agency.”

1972 Act Legis. Hist. at 699.

24

In short, Congress’ insistence upon the resolution of

employment discrimination cases, as evidenced by the legis-

lative history of Title VII, is beyond dispute. To be sure,

there is no explicit reference to a preference for a judicial

remedy over arbitration in the text of Title VII or ADEA. But

that reflects a distinction without a difference. It is facile at

vest to suggest, as did the Fourth Circuit in Gilmer, that a

choice of a judicial rather than administrative forum “says

nothing about Congress’ attitude toward arbitration.” 895

F.2d at 199. Each of the reasons expressed by Congress in

1972 for preferring the courts over an EEOC remedy applies

just as well to the arbitration alternative: The courts are

public while administrative proceedings are private; the

courts receive far greater public respect as a general rule than

do arbitrators; the Federal Rules of Civil Procedure provide

far greater discovery rights than are « ailable in arbitration;

and the courts have greater remedial , wers, and experience

in employing those powers in the employment discrimination

field, than do arbitrators.

CONCLUSION

The Fourth Circuit’s decision in Gilmer, if allowed to

stand by this Court, could well sound a death knell for the

public, judicial enforcement of anti-employment discrimina-

tion laws in this country. If the Fourth Circuit’s ruling is not

reversed, employers can be expected to include as a matter of

course in their employment contracts broad arbitration

clauses and to insist upon the arbitration of all employment

discrimination disputes. In that fashion, employers will

escape the extensive discovery so often needed to prove a

discrimination case, see Wards Cove Packing Co. v. Atonio,

490 U.S. 642 (1989), the public scrutiny of a court trial aiid

the power of the court system to fashion wide-ranging reme-

dies in order to eliminate past and future discrimination.

25

This Court, we submit, should not countenance such a

reversal in this country’s commitment to equal employment

opportunity. The availability of a judicial forum for the

resolution of employment discrimination disputes is, and

always has been, essential to the enforcement of ADEA, Titie

VII and all other civil rights statutes. The Fourth Circuit's

decision in Gilmer should be reversed and the continuing

viability of Gardner-Denver and its progeny affirmed.

Respectfully submitted,

ROBERT F. MULLEN ALAN E. KRAUS*

DAVID S. TATEL NICHOLAS peB. KATZENBACH

Co-Chairmen LAURA J. LOKKER

PETER C. HARVEY

NORMAN REDLICH

T RIKER, DANZIG, SCHERER,

rustee HYLAND & PERRETTI

BARBARA R. ARNWINE Headquarters Plaza

THOMAS or HENDERSON One Speedwell Avenue

RICHARD T. SEYMOUR Morristown, N.J.

07962-1981

LAWYERS’ COMMITTEE FOR (201) 538-0800

Washington, DC 20005

(202) 371-1212

Attorneys for Amicus Curiae

Lawyers’ Committee for Civil Rights

Under Law

November 15, 1990

*Counsel of Record.