Amicus Curiae Brief — Circuit City Stores, Inc. v. Adams

(2 FILED

IN THE

= Supreme Court, U.S.

Supreme Court of the G ates

CircuItT City STORES, INC.,

Petitioner,

Vv.

SAINT CLAIR ADAMS,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF AMICI CURIAE OF THE

EQUAL EMPLOYMENT ADVISORY COUNCIL

AND LPA, INC. IN SUPPORT OF PETITIONER

ANN ELIZABETH REESMAN*

DANIEL V. YAGER

HEATHER L. MACDOUGALL

MCGUINESS NORRIS & WILLIAMS, LLP

Suite 1200

1015 Fifteenth Street, N.W.

Washington, D.C. 20005

(202) 789-8600

August 2000 *Counsel of Record

WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001

20°F

TABLE OF CONTENTS

Page

TALES GP AUT IRI TIES occcccccsccscsecccescssseccsesesscencsers ii

INTEREST OF THE AMICI CURITAE..........cc.c0000e0ee0000e 2

OA eS GP TEE CARD oncccccsccccccsecescosressescescsenes 3

SUMMARY OF ARGUMENT .............cccccccccscssssesceseees 4

TET ‘scccsibssvsnenmetuninieninainsanniiiintasiuatiitasiailaaliaass 5

I. THE FEDERAL ARBITRATION ACT IS AP-

PLICABLE TO MOST EMPLOYMENT CON-

Il. ARBITRATION IS AN EFFECTIVE, INDEED

PREFERABLE METHOD OF RESOLVING

INDIVIDUAL EMPLOYMENT DISPUTES

AND SHOULD BE PRESERVED BY THIS

A. Both This Court and Congress Have En-

dorsed Arbitration as a Means of Resolving

Employment Disputes..................ssssssssssssees 7

B. On Balance, Arbitration Is Superior To Liti-

gation For Resolution of Employment Dis-

PURE cnsnssesnserscesnsnenarennmnmnennnetinianseiniteoesnntninns 10

1. Arbitration Agreements Change Proce-

dures, Not Substantive Rights ............... 10

2. Procedurally Fair Arbitration Programs

Offer Significant Benefits Over Litiga-

TOUTE .cxnsnscsconnssatitvedihiiniabinieesnnibesbindintemianatten 12

Ne ccttintcntnssncineonnieninteaguiiiidtiaiaesiadisiidisiiesia, 19

il

TABLE OF AUTHORITIES

FEDERAL CASES Page

Asplundh Tree Expert Co. v. Bates, 71 F.3d 592

SME: STEED spabonesssvesmscenssenesssesconsesenssaneqneseness 6

Cole v. Burns Int'l Sec. Servs., Inc., 105 F.3d 1465

ee Ey TED sabectenessevecnmnevserssemescssnsnmneceel 6,11, 15

Craft v. Campbell Soup Co., 177 F.3d 1083 (9th

aI MEEIEIED ‘ddctaentesicncinerseiercpsenndcuensesesnonesmunesencenscenecs 4

Desiderio v. National Ass'n of Sec. Dealers, \91

F.3d 198 (2d Cir. 1999), petition for cert. filed,

68 U.S.L.W. 3497 (U.S. Jan. 31, 2000) ..0000....... x

Dickstein v. DuPont, 443 F.2d 783 (ist Cir.

ERE SEN es 0 One ae 6

Duffield v. Robertson Stephens & Co., 144 F.3d

1182 (9th Cir.), cert. denied, 525 U.S. 982

STITT ssihiliesaienisdeieeesiasisiaitininiitiehdannaianeninanonnsestennnmmeces 8

Erving v. Virginia Squires Basketball Club, 468

ede SPO GE Gel. BOVE ceccecccccccescccssesessnsessnecees 6

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.

ETI atdiiseduacitniidinestemecsitenssersenenenerecsenenmemnes 7, 10

Hooters of America, Inc. v. Phillips, 173 F.3d 933

Ee TE TUITE cisticacneiesccntescnesicsiensenuaneenagneneebenes 1]

Koveleskie v. SBC Capital Markets, Inc., 167 F.3d

361 (7th Cir.), cert. denied, 120 S. Ct. 44

SUITED ‘scciecsdehelalaiisbnasatiieieseuapannneuneseunengmmenmuensesnses 8

Matthews v. Rollins Hudig Hall Co., 72 F.3d 50

TL: SENET) natuobectincieehisnendienesenscnentenenniecsnmness 6

McKennon v. Nashville Banner Publ'g Co., 115

SES ane eee nee 17

McWilliams v. Logicon, Inc., 143 F.3d 573 (10th

SEI SII telideitnciideaiitnensacmnsenedenmiuitareneniueneninnesenes 6

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985) ......ccccceeee 10

O'Neil v. Hilton Head Hosp., 115 F.3d 272 (4th

SE TEEPE seeistetiinnscntiopsessenpstncncenscemensemmenmenmenens 6

iii

TABLE OF AUTHORITIES—Continued

Page

Paladino v. Avnet Computer Techs., Inc., 134 F.3d

See CEB Gate FRED ccnnsssccscsssessressccssssneesssemeses 6

Patterson v. Tenet Healthcare, 113 F.3d 832 (8th

Ge FRED cennssensesnssecsensssssssnemsssssepesennscsssssernisen 6

Rojas v. TK Communications, 87 F.3d 745 (Sth

Fe GEER canssensennssnsnscesnsssssenensssesscnsssssessesssenessess 6

Rosenberg v. Merrill Lynch, Inc., 170 F.3d 1 (ist

GG, GERI cnswensesussnsvensesenesnsssetenseuspsnessesnesssennsen 8, 11

Seus v. John Nuveen & Co., 146 F.3d 175 (3d Cir.

1998), cert. denied, 525 U.S. 1139 (1999) ........ 8

Tenney Eng’g, Inc. v. United Elec. Radio & Mach.

Workers, 207 F.2d 450 (3d Cir. 1953) .........0000. 5,6

Textile Workers Union v. Lincoln Mills, 353 U.S.

GE CRED cennssesscssssscssssssessnsmmeessemmmnneen 8

United Air Lines, Inc. v. McMann, 434 U.S. 192

CEU UD cassncensssnsenensserecteqeseessmesnsnsesoesssenscnnensesaees 6

United Paperworkers Int'l Union v. Misco, Inc.,

I 6,9

United Steelworkers v. American Manufacturing

CO., 363 U.S. 564 (1960) .......ccccrccssreesscrresereees 8

United Steelworkers v. Enterprise Wheel & Car

Corp... S63 U.S. FBS (UDG) ..cccccccccecocccssccessccseeee 8,9

United Steelworkers v. Warrior & Gulf Navigation

eT Rn ee 8,9

STATUTES

Age Discrimination in Employment Act,

RF een 2,7

BP lice Gee cesenncessccscscsccsssccessceseccssezcscssnsesces 15

Americans with Disabilities Act,

GB UBL. G CSGGS CP BOB rcccsccccssscsscscsssccsssccssscsnsesees 2

of Ft od BLL: . | , Poe 7

iV

TABLE OF AUTHORITIES—Continued

4B UB. © CBE F FGRD ccrcscsssscsssccsssrssscsssssssscsssesses

fb ee

Civil Rights Act of 1991,

GB UBAK.. © Fe eB cennsscsesesnssessscsscssssssscsssssensesases

GB UGC. © GEIRS GBB cccccccsssscsscccscessssessscscsssnessss

Federal Arbitration Act,

ee

DULL. © 8 cccrsssssnsssenssssssevsnscassssesensssssesesssssseneuss

ULB. 6 BD cennsesersscnsssscnnsessenssnssenssnsssenssssccssces

Title VII of the Civil Rights Act of 1964,

43 UBL. 9 Fe 60 Bb Gc ccccsccsccsccssscscessesssesasseses

42 U.S.C. § 2000! -S(k) .........cescrrrsercrscesnrcesssenees

4B UBL. © GGTBB cccssccnsecsssessssscesccsessssesssssnssnsessesesnes

RULES

Oe

JAMS Arbitration Rules and Procedures for Em-

ployment Disputes (2000),

National Rules for the Resolution of Employment

Disputes (American Arbitration Association,

1999),

MISCELLANEOUS

A Due Process Protocol for Mediation and Arbi-

tration of Statutory Disputes Arising Out of the

Employment Relationship, Dispute Resolution

Journal (Oct.-Dec. 1995).........csesssrrrrssssssereeees

17

17

17

17

17

v

TABLE OF AUTHORITIES—Continued

Alternative Dispute Resolution: Employers’ Ex-

periences with ADR in the Workplace, United

States General Accounting Office, GAO/GGD-

a ee

Anna Elento-Sneed, Carlsmith Ball, Here are sug-

gestions for minimizing conflicts over workplace

diversity, Pacific Employment Law Letter (Oct.

SUD csssusensenneeesessansenemsmnemnenpemneremmmneememenatnan

Commission on the Future of Worker-Management

Relations, U.S. Dep’t of Labor and U.S. Dep’t of

Commerce, Report and Recommendations (Dec.

FED crnmenssssermssesenmentenamensegeeesemeenmenananen

Database of Federal Trial Statistics, http://

teddy.law.cornell.edu:8090/questtr7997.htm ....

Equal Employment Opportunity Commission, En-

forcement Statistics, Fiscal Year 1999...............

Harry Shulman, Reason, Contract, and Law in La-

bor Relations, 68 Harv. L. Rev. 999 (1955) ......

Jacqueline R. DeSouza, Alternative Dispute Reso-

lution: Methods to Address Workplace Conflicts

in Health Services Organization, Journal of

Healthcare Management (Sept. 1, 1998)............

Lewis Maltby, Employment Arbitration: Is It

Really Second Class Justice?, Dispute Resolu-

Page

13

14

tion Magazine (Fall 1999)....0........ccsseees 14, 15, 16, 18

Mei L. Bickner et al., Developments in Employ-

ment Arbitration, Dispute Resolution Journal

ee

Michael Barrier, A Working Alternative for Settl-

ing Disputes, Nation’s Business (July 1998) .....

2A Norman J. Singer, Sutherland Stat. Const.

PA

vi

TABLE OF AUTHORITIES—Continued

Page

Richard A. Bales, Compulsory Arbitration: The

Grand Experiment in Employment (Cornell

gg ee passim

Table C-10, Administrative Office of United States

COUN GREE, TER, FEUD cncsesnscscnnsscennssesscscnsscsssess 16

Toby Brink, Alternative Dispute Resolution: Pros

and Cons, Connecticut Employment Law Letter

Te 16

William L. Bedman, From Litigation to ADR:

Brown & Root’ s Experience, Dispute Resolution

pe. 12, 13

www.halliburton.com/corp/whoweare/about_halhis

COTO RD cnceserereenssersesssrsensresemsesmemmmmeetasasenmnes 12

IN THE

Supreme Court of the United States

No. 99-1379

Circuit Ciry STORES, INC.,

Petitioner,

Vv.

SAINT CLAIR ADAMS,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF AMICUS CURIAE OF THE

EQUAL EMPLOYMENT ADVISORY COUNCIL

AND LPA, INC. IN SUPPORT OF PETITIONER

The Equal Employment Advisory Council and LPA, Inc. re-

spectfully submit this brief amici curiae.' The written consent

of all parties has been filed with the Clerk of this Court. The

brief urges reversal of the decision below and thus supports the

position of Petitioner Circuit City Stores, Inc. before this Court.

‘ Counsel for amici curiae authored this brief in its entirety. No person or

entity, other than the amici curiae, their members, or their counsel, made a

monetary contribution to the preparation or submission of the brief.

2

INTEREST OF THE AMICI CURIAE

The Equal Employment Advisory Council (EEAC) is a na-

tionwide association of employers organized in 1976 to promote

sound approaches to the elimination of discriminatory employ-

ment practices. Its membership now includes more than 340 of

the nation’s largest private sector companies, collectively pro-

viding employment to more than 17 million people throughout

the United States. EEAC’s directors and officers include many

of industry’s leading experts in the field of equal employment

opportunity. Their combined experience gives EEAC an un-

matched depth of knowledge of the practical, as well as legal,

considerations relevant to the proper interpretation and applica-

tion of equal employment policies and requirements. EEAC’s

members are firmly committed to the principles of nondiscrimi-

nation and equal employment opportunity.

LPA is a public policy advocacy organization representing

corporate executives interested in human resource policy from

more than 200 leading corporations doing business in the United

States. LPA’s purpose is to provide in-depth information,

analysis, and opinion of current situations and emerging trends

in labor and employment policy. LPA members are typically

companies with business operations in the United States that

have more than $750 million in revenues and more than 2,500

employees. The total number of persons employed by LPA

member companies in the United States is nearly 13 million

Americans, more than 12 percent of the private sector work

force.

All of EEAC’s and LPA’s member companies are employers

subject to Title VII of the Civil Rights Act of 1964 (Title VII),

as amended, 42 U.S.C. § 2000e et seq., the Age Discrimination

in Employment Act of 1967 (ADEA), as amended, 29 U.S.C

§ 621 ef seq., the Americans with Disabilities Act of 1990

(ADA), 42 U.S.C. § 12101 et seq., and other equal employment

Statutes and regulations. Many of these companies have con-

3

tracts with their employees governing some or all terms and

conditions of employment. Some of these contracts include

agreements to arbitrate disputes arising out of the employment

relationship, including statutory claims of discrimination. Other

member companies are considering arbitration as an alternative

wo resolving employee disputes in the courts although they have

not yet implemented an arbitration program. For these reasons,

EEAC’s and LPA’s members have an ongoing interest in pre-

serving the enforceability of agreements calling for arbitration

of employment-related disputes.

Thus, the issue presented in this appeal is extremely impor-

tant to the nationwide constituency that EEAC and LPA repre-

sent. For many years, the Federal Arbitration Act (FAA) has

been the enforcement mechanism for arbitration agreements of

many kinds, including those providing for arbitration of em-

ployment disputes. Contrary to every other circuit court of ap-

peals, the Ninth Circuit below ruled that arbitration agreements

found in employment contracts are not enforceable under the

FAA. This Court’s decision in this case will have a substantial

impact on the future enforceability of agreements to arbitrate

employment claims. EEAC and LPA thus have an interest in,

and a familiarity with, the legal and public policy issues pre-

sented to the Court in this case. Because of their significant ex-

perience in these matters, EEAC and LPA are uniquely situated

to brief this Court on the importance of the issues beyond the

immediate concerns of the parties to the case.

STATEMENT OF THE CASE

Petitioner Circuit City Stores, Inc. (Circuit City) requires its

applicants and employees to agree to take their disputes against

the company to mutually binding arbitration. Pet. App. 2a.

Towards that end, applicants for employment must sign the

“Circuit City Dispute Resolution Agreement” (“DRA”). /d.

Respondent Saint Clair Adams completed Circuit City’s em-

4

ployment application, including the DRA, on October 23, 1995.

Id.

At seme time thereafter, Adams filed suit against Circuit City

in state court in California. Pet. App. 6a. Circuit City peti-

tioned the U.S. District Court for the Northern District of Cali-

fornia to stay the state court action and compel arbitration. /d.

The district court granted the petition. /d.

The U.S. Court of Appeals for the Ninth Circuit reversed.

Pet. App. 4a. Relying on its prior decision in Craft v. Campbell

Soup Co., 177 F.3d 1083, 1094 (9th Cir. 1999), in which it held

the Federal Arbitration Act inapplicable to any labor or em-

ployment contract, the Ninth Circuit concluded that Adams’

agreement with Circuit City was an employment contract to

which the FAA did not apply. Circuit City petitioned this Court

for a writ of certiorari, which was granted.

SUMMARY OF ARGUMENT

The Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, which

makes agreements to arbitrate as enforceable as any other con-

tract, includes within its scope those agreements contained in

employment contracts, save for those involving employees who

actually move goods in interstate commerce. 9 U.S.C. § I.

Every federal court of appeals but one has so interpreted the

FAA, and this Court should reverse the erroneous decision of

the Ninth Circuit.

Both this Court and Congress have endorsed arbitration as a

means of resolving employment disputes, and in the final analy-

Sis, it is far superior to litigation. Not only is arbitration more

efficient and less costly, but plaintiffs actually are more likely to

succeed. Arbitration also stands a better chance of meeting the

ultimate goal of preserving, rather than destroying, the employ-

ment relationship in which both parties have invested so much.

5

ARGUMENT

I. THE FEDERAL ARBITRATION ACT IS APPLI-

CABLE TO MOST EMPLOYMENT CONTRACTS

The Ninth Circuit below ruled incorrectly that the Federal

Arbitration Act (FAA), 9 U.S.C. §§ 1-16, is inapplicable to an

arbitration agreement contained in a contract of employment.’

Every other circuit court of appeals has ruled to the contrary.

Section | of the FAA, which defines “maritime transactions”

and “commerce” for purposes of the FAA, states in pertinent

part that “nothing herein contained shall apply to contracts of

employment of seamen, railroad employees or any other class of

workers engaged in foreign or interstate commerce.” 9 U.S.C.

§ 1. As explained in detail by the Third Circuit in Tenney Engi-

neering, Inc. v. United Electrical Radio & Machine Workers,

207 F.2d 450 (3d Cir. 1953), Congress’ description of the types

of workers excluded from FAA coverage is crucial. The stat:-

tory construction principle of ejusdem generis dictates that

where general words in a statute follow specific words, “the

general words are construed to embrace only objects similar in

nature to those objects enumerated by the preceding specific

words.” 2A Norman J. Singer, Sutherland Stat. Const. § 47.17

(6th ed., 2000). Applying this principle, the Third Circuit rea-

soned that the specific identification of two groups of workers

directly engaged in the transportation of goods in{interstate

commerce, “seamen” and “railroad employees,” delimits the

immediately following phrase “or any other class of workers

engaged in foreign or interstate commerce” to workers who are

likewise occupied in the movement of goods in commerce.

Thus, the exception applies only to workers who are “actually

> We assume, arguendo, that the agreement Adams signed is a “contract of

employment” for purposes of § |. If it is not, then the § | exclusion would be

inapplicable to this case on that basis alone.

6

engaged in the movement of interstate or foreign commerce or

in work so closely related thereto as to be in practical effect part

of it,” in other words, those in the transportation industry.

Tenney, 207 F.2d. at 452.°

Since Tenney, every court of appeals has addressed the issue,

and all but the Ninth Circuit have concluded that the § | limita-

tion only excludes contracts of employment involving workers

who actually move goods in commerce.’ Given the clarity of

the statutory language, there is no need to probe the legislative

history in search of a contrary result. United Air Lines, Inc. v.

McMann, 434 U.S. 192, 199 (1977) (“[L]egislative history . . . is

irrelevant to an unambiguous statute.”).

* Thus, this Court’s footnote in United Paperworkers International Union

v. Misco, Inc., 484 U.S. 29, 40 n.9 (1987), is not incompatible with the Ten-

ney holding. Applying the FAA standard of reviewability to a labor arbitra-

tion award, this Court noted, “The Arbitration Act does not apply to ‘con-

tracts of employment of . . .workers engaged in foreign or interstate com-

merce,’ 9 U.S.C. § 1, but the federal courts have often looked to the Act for

guidance in labor arbitration cases.” The Court in Misco was not ruling on

the scope of the FAA exclusion.

* Dickstein v. DuPont, 443 F.2d 783 (1st Cir. 1971); Erving v. Virginia

Squires Basketball Club, 468 F.2d 1064 (2d Cir. 1972); O'Neil v. Hilton

Head Hosp., 115 F.3d 272 (4th Cir. 1997); Rojas v. TK Communications, 87

F.3d 745 (Sth Cir. 1996); Asplundh Tree Expert Co. v. Bates, 71 F.3d 592

(6th Cir. 1995); Matthews v. Rollirs Hudig Hall Co., 72 F.3d 50 (7th Cir.

1995); Patterson v. Tenet Healthcare, 113 F.3d 832 (8th Cir. 1997);

McWilliams v. Logicon, Inc., 143 F.3d 573 (10th Cir. 1998); Paladino v.

Avnet Computer Techs., Inc., 134 F.3d 1054 (1 1th Cir. 1998); Cole v. Burns

Intl. Sec. Servs., Inc. 105 F.3d 1465 (D.C. Cir. 1997).

7

II. ARBITRATION IS AN EFFECTIVE, INDEED

PREFERABLE METHOD OF RESOLVING INDI-

VIDUAL EMPLOYMENT DISPUTES AND

SHOULD BE PRESERVED BY THIS COURT

A. Both This Court and Congress Have Endorsed

Arbitration as a Means of Resolving Employment

Disputes

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

(1991), this Court concluded that claims under the Age Dis-

crimination in Employment Act (ADEA), 29 U.S.C. § 621 ef

seq., can be subject to compulsory arbitration.’ In so doing, the

Court reiterated its “‘strong endorsement of the federal statutes

favoring this method of resolving disputes.”” 500 U.S. at 30

(quoting Rodriguez de Quijas v. Shearson/American Express,

Inc., 490 U.S. 477, 481 (1989)).

Shortly after Gilmer, Congress too endorsed the use of arbi-

tration to resolve employment discrimination claims. In plain

language, the Civil Rights Act of 1991, Pub. L. 102-166, codi-

fied as 42 U.S.C. § 1981a, which made various amendments to

most of the then-existing federal laws prohibiting discrimination

in employment,° urges employers and employees alike to use

out-of-court methods, including arbitration, to resolve disputes

arising under each of these statutes:

Where appropriate and to the extent authorized by law, the

use of alternative means of dispute resolution, including

* Because the agreement to arbitrate was contained in a securities registra-

tion application, not a contract of employment, the Court “[left] for another

day” the issue of the scope of the FAA § | exemption. 500 U.S. at 25 n.2.

That day has arrived.

* 42 U.S.C. § 1981; Title VII of the Civil Rights Act of 1964 (Title VII),

42 U.S.C. § 2000e et seq.; the Age Discrimination in Employment Act

(ADEA), 29 U.S.C. § 621 et seq.; and Title I of the Americans with Disabili-

ties Act (ADA), 42 U.S.C. §§ 12111 - 12117.

8

settlement negotiations, conciliation, facilitation, media-

tion, factfinding, minitrials, and arbitration, is encouraged

to resolve disputes arising under the Acts or provisions of

Federal law amended by this title.

Pub. L. 102-166, § 118, codified as 42 U.S.C. § 1981 note (Al-

ternative Means of Dispute Resolution) (emphasis added). The

identical language appears in Section 513 of the Americans with

Disabilities Act (ADA), 42 U.S.C. § 12212, which is applicable

to all titles of the ADA.’

This is not surprising. Arbitration has long been the preferred

method of resolving workplace disputes. Since this Court’s

holdings in Textile Workers Union v. Lincoln Mills, 353 U.S.

448 (1957), and the Steelworkers Trilogy,” strong federal policy,

’ For this reason, the Ninth Circuit also erred in Duffield v. Robertson

Stephens & Co., 144 F.3d 1182 (9th Cir.), cert. denied, 525 U.S. 982 (1998),

holding that the Civil Rights Act of 1991 precludes mandatory, binding arbi-

tration of statutory discrimination claims. To reach this conclusion, the Ninth

Circuit reasoned creatively that mandatory arbitration was not “authorized by

law” at the time the section was drafted, regardless of the fact that Gilmer

had been decided by the time the law was passed. Id. at 1196. So far, the

First, Second, Third, and Seventh Circuits have addressed the same issue and

have flatly disagreed with the Ninth Circuit. Seus v. John Nuveen & Co.,

146 F.3d 175, 183 (3d Cir. 1998), cert. denied, 525 U.S. 1139 (1999); Kove-

leskie v. SBC Capital Markets, Inc., 167 F.3d 361, 365 (7th Cir.), cert. de-

nied, 120 S. Ct. 44 (1999); Rosenberg v. Merrill Lynch, Inc., 170 F.3d 1, 10-

11 (1st Cir. 1999); Desiderio v. National Ass'n of Sec. Dealers, 191 F.3d

198, 203-04 (2d Cir. 1999), petition for cert. filed, 68 U.S.L.W. 3497 (U.S.

Jan. 31, 2000) (No. 99-1285).

* The first of the Steelworkers Trilogy was United Steelworkers v. Ameri-

can Manufacturing Co., 363 U.S. 564 (1960). In that case, the Supreme

Court concluded that only by giving “full play” to the means chosen for set-

tlement - arbitration - would the congressional policy in Section 203(d) of the

Labor Management Relations Act (“LMRA” or “Taft-Hartley Act’’) be effec-

tuated. /d. at 566. Therefore, the Court granted the union’s petition to com-

pel arbitration. Likewise, in United Steelworkers v. Warrior & Gulf Naviga-

tion Co., 363 U.S. 574 (1960), the union petitioned the Court to compel arbi-

tration by the employer. The Court noted that the “present federal policy is

9

endorsed by both congressional and Supreme Court action, has

favored resolving labor disputes by way of mandatory arbitra-

tion. See also United Paperworkers Int'l Union v. Misco, Inc.,

484 U.S. 29, 37 (1987). Since then, arbitration clauses con-

tained within collective bargaining agreements have become

commonplace. Moreover, mandatory arbitration is much more

than a substitute for work stoppages and litigation. Professor

Harry Shulman declared in 1955:

To consider . . . arbitration as a substitute for court litiga-

tion or as the consideration for a no-strike pledge is to take

a foreshortened view of it. In a sense it is a substitute for

both - but in the sense in which a transportation airplane is

a substitute for a stagecoach. The arbitration is an integral

part of the system of self-government. And the system is

designed to aid management in its quest for efficiency, to

assist union leadership in its participation in the enterprise,

and to secure justice for the employees. It is a means of

making collective bargaining work and thus preserving

private enterprise in a free government.

Harry Shulman, Reason, Contract, and Law in Labor Rela-

tions, 68 Harv. L. Rev. 999, 1024 (1955). These words ring just

as true today as they did forty-five years ago.

to promote industrial stabilization through the collective bargaining agree-

ment.” /d. at 578 (footnote omitted). The Court then remarked that a “major

factor in achieving industrial peace is the inclusion of a provision for arbitra-

tion of grievances in the collective bargaining agreement.” /d. (footnote omit-

ted). In addition, the Court noted that mandatory arbitration clauses were

enforceable pursuant to Section 301 of the LMRA. /d. at 582-83. Finally, in

United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960),

the Court narrowly construed its judicial review power of decisions made by

arbitrators pursuant to collectively-bargained arbitration clauses. /d. at 596.

10

B. On Balance, Arbitration Is Superior To Litiga-

tion For Resolution of Employment Disputes

1. Arbitration Agreements Change Procedures,

Not Substantive Rights

As the Court observed in Gilmer, “by agreeing to arbitrate, a

party ‘trades the procedures and opportunity for review of the

courtroom for the simplicity, informality, and expedition of arbi-

tration.” 500 U.S. at 31. In so doing, “a party does not forgo

the substantive rights afforded by the statute; it only submits to

their resolution in an arbitral, rather than a judicial, forum.”

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473

U.S. 614, 628 (1985) (quoted in Gilmer, 500 U.S. at 26). Gil-

mer put to rest any further contest over whether arbitration pro-

cedures are, as a general principle, adequate to resolve statutory

claims; they are. 500 U.S. at 26. Rather, Gilmer properly left

issues of “procedural inadequacies” to be resolved in individual

cases. Id. at 33.

Towards this end, a multifactional task force of individuals

designated by dispute resolution organizations, plaintiffs, man-

agement, labor and government, developed a “Due Process Pro-

tocol” designed to establish standards for the use of mediation

and arbitration to resolve employment disputes. A Due Process

Protocol for Mediation and Arbitration of Statutory Disputes

Arising Out of the Employment Relationship, Dispute Resolu-

tion Journal (Oct.-Dec. 1995) at 37, 39.”

* Members of the Task Force and signatories to the Due Process Protocol

were:

Co-Chairs: Christopher A. Barreca, Partner, Paul, Hastings, Janofsky

& Walker, Rep., Council of Labor & Employment Section, American

Bar Association; Max Zimny, General Counsel, International Ladies’

Garment Workers’ Union Association, Rep., Council of Labor & Em-

ployment Section, American Bar Association; Arnold Zack, President,

National Academy of Arbitrators. Members: George H. Friedman,

Senior Vice President, American Arbitration Association; Joseph Gar-

True to this Court’s direction, the lower courts reviewing

such claims have not been reticent about refusing to compel ar-

bitration under rules they viewed as lopsided. E.¢., Hooters of

America, Inc. v. Phillips, 173 F.3d 933 (4th Cir. 1999) (finding

that the employer that was responsible for setting the terms of

the arbitration contract that covered employment-related claims,

had breached its duty of good faith by creating contract terms so

unreasonable that a fair resolution of claims by a neutral deci-

sionmaker was impossible).

Likewise, courts have enforced arbitration agreements but

reformed their terms if they viewed the procedures as too bur-

densome on the employee. E.g¢., Cole v. Burns Int'l Sec. Servs.,

105 F.3d 1465, 1485 (D.C. Cir. 1997) (granting motion to com-

pel but requiring employer to pay the costs of arbitration).

Closely related are cases in which a court refuses to enforce an

arbitration agreement because the employee did not have ade-

quate notice of its terms. Rosenberg v. Merrill Lynch, Inc., 170

F.3d | (Ist Cir. 1999) (refusing to enforce a mandatory, predis-

pute arbitration agreement contained in the securities industry

registration form U-4 because the employer had not provided a

copy of the rules that required the employee specifically to arbi-

trate employment discrimination disputes).

rison, President, National Employment Lawyers Association; Michael

F. Hoellering, General Counsel, American Arbitration Association;

Charles F. Ipavec, Arbitrator, Neutral Co-Chair, Arbitration Comm-

ittee of Labor & Employment Section, ABA; Wilma Liebman, Special

Assistant to the Director, Federal Mediation & Conciliation Service;

Lewis Maltby, Director, Workplace Rights Project, American Civil

Liberties Union; Robert D. Manning, Angoff, Goldman, Manning,

Pyle, Wanger & Hiatt, P.C., Union Co-Chair, Arbitration Committee of

Labor & Employment Section, ABA; W. Bruce Newman, Rep., Soci-

ety of Professionals in Dispute Resolution; Carl E. VerBeek, Partner,

Varnum Riddering Schmidt & Howlett, Management Co-Chair, Arbi-

tration Committee of Labor & Employment Section, ABA.

Dispute Resolution Journal (Oct.-Dec. 1995) at 39.

12

2. Procedurally Fair Arbitration Programs Of-

fer Significant Benefits Over Litigation

Employment arbitration programs that are scrupulously fair

are of substantial benefit to employees. As discussed below,

avoiding the time, expense and stress of litigation can be

advantageous for employees as well as employers.

One of the first comprehensive in-house corporate programs

for resolving employment disputes is that developed and im-

plemented by Brown & Root, a Houston-based company em-

ploying between 25,000 and 30,000 employees. Richard A.

Bales, Compulsory Arbitration: The Grand Experiment in Em-

ployment (Cornell Univ. Press, 1997) at 102."" After spending

almost $450,000 to defend successfully a sexual harassment and

tort claim case in 1992, Brown & Root decided that there had to

be a better way, and “began a concerted effort to examine alter-

natives to the litigation system for resolving employment mat-

ters.” William L. Bedman, From Litigation to ADR: Brown &

Root’ s Experience, Dispute Resolution Journal (Oct.-Dec. 1995)

at 8. As the company’s in-house labor counsel explained, tort-

type litigation “as a system of employment dispute resolution, is

highly inefficient, both economically and morally.” /d. at 11.

Not only was litigation extremely expensive for both employer

and employee, but it irreversibly damaged employment relation-

ships. /d.

In designing its process, Brown & Root interviewed approxi-

mately 300 employees from all over the company, both indi-

vidually and in “focus groups,” to obtain their views on the

company’s current approach to workplace conflict and their re-

actions to various alternative methods. /d. at 9. From this, the

company developed a four-step program that encourages early

" Brown & Root is a subsidiary of Halliburton, Inc. See

www. halliburton.com/corp/whoweare/about_halhistory4 asp

13

resolution by agreement, with arbitration as a last resort. Bales

at 104-05. The company will not send a lawyer to the arbitra-

tion if the employee is unrepresented by counsel. Bales at 109.

If the employee does have an attorney, the company will reim-

burse an employee up to $2,500 per year for ninety percent of

his or her legal expenses for preparing and presenting the em-

ployee’s case at arbitration. /d.

During its first two years in existence, nearly 1,000 employ-

ees used the program, which led to a resolution of over 75% of

the cases in the first eight weeks following the employee’s first

contact with the program. Bedman at 13. Only about 15 cases

went to arbitration, where the company’s “win/loss record” was

comparable to its prior record in litigation of such cases. /d.

Subsequent data reflect that the company’s percentage of wins

actually has declined slightly. Bales at 112.

At the same time, the company reports substantial savings,

not just in litigation costs, but in “human capital”, given the

number of relationships with employees that the program has

preserved. /d. at 113. Employees who have used the Brown &

Root program also have reported that they were satisfied by its

procedures. Alternative Dispute Resolution: Employers’ Ex-

periences with ADR in the Workplace, United States General

Accounting Office, GAO/GGD-97-157 (Aug. 1997) at 40.

As a result, Brown & Root’s process has been described by

one commentator as “a mode! dispute resolution system.” Bales

at 113 (emphasis added). The success of Brown & Root’s pro-

gram has made it “one of the most admired and studied ADR

programs.” Michael Barrier, A Working Alternative for Settling

Disputes, Nation’s Business (July 1998), available in LEXIS,

NEWS Library, NATBUS File, at *2. In the years since Gilmer,

countless other employers have developed ADR programs using

Brown & Root’s system as a guide.

Brown & Root’s experience demonstrates graphically why

employment disputes should not be resolved in the same way as

14

a car crash. Unlike two automobile drivers who collide, em-

ployers and employees both have a strong interest in preserving

a positive relationship with each other. Employers invest sub-

stantial funds, as well as the time and effort of a variety of per-

sonnel, in training each employee to do the best possible job.

Simultaneously, employees invest their time, their effort, and

considerable emotional capital in learning their craft and devel-

oping their careers. All of this can be destroyed irretrievably by

the acrimony and scorched earth tactics of drawn-out litigation.

What do employers get out of litigation? Even a victory in

court can cost hundreds of thousands of dollars. One survey

showed that the average cost to an employer of litigating a seri-

ously contested employment discrimination case is $130,000.

Jacqueline R. DeSouza, Alternative Dispute Resolution: Meth-

ods to Address Workplace Conflicts in Health Services Organi-

zations, Journal of Healthcare Management (Sept. 1, 1998),

available in LEXIS, NEWS Library, ASAPII File, at *2. Yet

the sum total of their victory is that they have successfully de-

fended against a claim that might have cost more. They still ex-

perience a net loss, taking into consideration not only the money

spent for legal fees, and the productivity cost stemming from the

time commitment of employees involved in the case as wit-

nesses, but the loss of their substantial investment in the plain-

tiff as an employee.

What do employees get out of litigation? Far less than even a

50/50 chance of a favorable verdict. Plaintiffs in federal em-

ployment litigation win in only about 40 percent of jury trials."’

And only a tiny fraction of cases even reach a jury. “Employers

win 98 percent of cases which are resolved through summary

judgment.” Lewis Maltby, Employment Arbitration: Is It

' Source: Database of Federal Trial Statistics, http://eddy.law.

cornell.edu:8090/questtr7997 .htm (results of trials from 1985-1997).

15

Really Second Class Justice?, Dispute Resolution Magazine

(Fall 1999) at 23, 24."

Despite these odds, a prospective plaintiff in an employment-

related lawsuit still has to anticipate fees and expenses as a cost

of pursuing litigation. The federal statutes prohibiting employ-

ment discrimination provide an award of attorney's fees only for

the prevailing plaintiff,'’ and few plaintiffs prevail. As a result,

employment discrimination plaintiffs must either pay their liti-

gation expenses out of pocket or find an attorney willing to take

the case on a contingent fee basis, which may be difficult given

the limited chance of success. For many individuals, the costs

involved in litigation may be prohibitive.

Employees are more likely to get their “day in court” in arbi-

tration than they are in the judicial system. “Arbitration also

offers employees a guarantee that there will be a hearing on the

merits of their claims; no such guarantee exists in litigation

where relatively few employees survive the procedural hurdles

necessary to take a case to trial in the federal courts.” Cole v.

Burns Int'l Sec. Servs., 105 F.3d 1465, 1488 (D.C. Cir. 1997).

Moreover, they are also more likely to get an explanation of the

outcome in arbitration, since most employer-sponsored arbitra-

’ The EEOC finds “no reasonable cause” in 59.5 percent of the charges

filed with it. Equal Employment Opportunity Commission, Enforcement

Statistics, Fiscal Year 1999. This strongly suggests that the agency may be

the recipient of a fair number of gripes that, while legitimate, do not represent

unlawful conduct, and that the charges are filed by employees who have no

other choice but to characterize their grievance as discrimination. Through

the use of ADR processes, sensible employers are providing these employees

with an outlet for their concerns.

' E.g.,42 U.S.C. § 2000e-5(k) (Title VII); 42 U.S.C. § 12117(a) (ADA)

(incorporating 42 U.S.C. § 2000e-5 by reference). See also 29 U.S.C.

§ 626(b) (ADEA) (incorporating by reference 29 U.S.C. § 216(b) providing

for a “reasonable attorney's fee” “in addition to any judgment awarded to the

plaintiff”).

16

tion programs, as well as the AAA Rules, require the arbitrator

to produce a written opinion. Mei L. Bickner et al., Develop-

ments in Employment Arbitration, Dispute Resolution Journal

(Jan. 1997) available in LEXIS, ADR Library, DRJNL File, at

*16. A jury, of course, does not do so.

Not only are employees more likely to be heard in arbitration

—but also, they are more likely to succeed. Employees are

more successful in employment arbitration than they are in

court. Partly because arbitration procedures typically do not

provide for summary judgment, “far more employees win in ar-

bitration than in court, and overall, employees who take their

disputes to arbitration collect more than those who go to court.”

Maltby at 24. This fact is particularly significant given the lim-

ited grounds on which a reviewing court may vacate an arbitra-

tion award. 9 U.S.C. § 10.

Moreover, the speed with which disputes are resolved through

arbitration far outpaces the judicial system. The federal courts

take an average of 21 months to complete a civil case through

jury trial, although ten percent of cases take more than 46

months. Table C-10'*, Administrative Office of United States

Courts (Sept. 30, 1999). “An arbitration award usually is issued

within nine months after the time an arbitrator is selected.”

Toby Brink, Alternative Dispute Resolution: Pros and Cons,

Connecticut Employment Law Letter (Mar. 2000) available in

LEXIS, 2NDARY Library, MSMITH File, at *3. The alacrity

benefits both sides, but particularly employees, who can less

afford a lengthy battle.

Most employees simply cannot afford to pay the attorney’s

fees and costs that it takes to litigate a case for several

years. Even when an employee is able to engage an attor-

'* U.S. District Courts—Time Intervals From Filing to Trial of Civil Cases

in Which Trials Were Completed, by District, During the 12-Month Period

Ending September 30, 1999.

17

ney on a contingency fee basis . . . the employee nonethe-

less often must pay for litigation expenses, and put work-

ing and personal life on hold until the litigation is com-

plete.

Bales, supra, at 153-54.

For the same reason, the liberal discovery offered under the

Federal Rules of Civil Procedure is a two-edged sword for em-

ployees. Discovery in arbitration typically is somewhat limited

in comparison. Compare Fed. R. Civ. P. 26-37 with Rule 7, Na-

tional Rules for the Resolution of Employment Disputes (“AAA

Rules”) (American Arbitration Association, 1999) (“The arbitra-

tor shall have the authority to order such discovery, by way of

deposition, interrogatory, document production, or otherwise, as

the arbitrator considers necessary to a full and fair exploration of

the issues in dispute, consistent with the expedited nature of ar-

bitration.”) and Rule 13, JAMS Arbitration Rules and Proce-

dures for Employment Disputes (“JAMS Rules”) (2000) (pro-

viding for good faith, voluntary exchange of relevant docu-

ments, exhibits, and names of witnesses, and for one deposition

as of right). While more exhaustive discovery arguably might

expose hidden evidence the employee needs to support her

claim, typically it is the employer who has an incentive to test

the limits of the discovery process, perhaps merely for purposes

of delay and creating additional expense, or even in a quest for

after-acquired evidence to limit available remedies and drive

down ithe potential damages award. Cf. McKennon v. Nashville

Banner Publ’ g Co., 513 U.S. 352 (1995).

Similarly, the more relaxed procedural and evidentiary rules

used in arbitration cannot help but benefit the employee, at least

one not represented by counsel. E.g., Rule 24, AAA Rules

(“conformity to legal rules of evidence shall not be necessary”);

Rule 18(d), JAMS Rules (“The Arbitrator may be guided . . . by

the Federal Rules of Evidence . . .; however, strict conformity to

such rules of evidence is not required, except that the Arbitrator

will apply the law relating to privileges and work product.”).

18

Indeed, as some employment arbitration programs such as

Brown & Root’s have shown, the procedural rules can be simple

enough that neither party needs or wants a lawyer.

As a practical matter, “[a]rbitration thus provides access to a

forum for adjudicating employment disputes for employees

whom the litigation system has failed.” Bales at 159 (footnote

omitted).

Procedural rights, such as the right to trial by jury, exten-

sive (and often excessive) discovery, and formal rules of

procedure and evidence, mean little to employees who

cannot find an attorney to take their case, and who, there-

fore, feel that the doors to justice are closed to them. Arbi-

tration gives these employees a ready opportunity to have

their claims heard.

Id. See also Commission on the Future of Worker-Management

Relations, U.S. Dep’t of Labor and U.S. Dep’t of Commerce,

Report and Recommendations (Dec. 1994) (also known as the

“Dunlop Commission Report’) at 30 (describing litigation as “a

less-than-ideal method of resolving” statutory employment

claims, due to long delays and costs).

“Over the years, there have been many things which everyone

knew were true that turned out to be wrong. The idea that em-

ployees are better off in court than in arbitration may well be

one of them.” Maltby at 24. In a recent newsletter directed to

its employer clients, a U.S. law firm said, “Try not to panic if an

administrative complaint or lawsuit is filed. Just remember,

litigation is simply the ‘American way’ of resolving disputes

between employers and employees.” Anna Elento-Sneed,

Carlsmith Ball, Here are suggestions for minimizing conflicts

over workplace diversity, Pacific Employment Law Letter (Oct.

1999), available in LEXIS, 2NDARY Library, MSMITH File, at

*3-4. Some employers have found a better way.

19

CONCLUSION

For the reasons set forth above, the amici curiae Equal Em-

ployment Advisory Council and LPA, Inc. respectfully submit

that the decision below should be reversed.

Respectfully submitted,

ANN ELIZABETH REESMAN*

DANIEL V. YAGER

HEATHER L. MACDOUGALL

MCGUINESS NORRIS & WILLIAMS, LLP

Suite 1200

1015 Fifteenth Street, N.W.

Washington, D.C. 20005

(202) 789-8600

August 2000 *Counsel of Record