Amicus Curiae Brief — Circuit City Stores, Inc. v. Adams
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No. 99-1379
IN THE
Supreme Court of the United Soil? ane
CIRCUIT 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 OF AMICI CURIAE
LAWYERS’ COMMITTEE FOR CIVIL RIGHTS UNDER LAW;
NAACP LEGAL DEFENSE AND EDUCATIONAL FUND, INC.;
NATIONAL ASSOCIATION FOR THE ADVANCEMENT OF
COLORED PEOPLE; MEXICAN AMERICAN LEGAL DEFENSE
AND EDUCATIONAL FUND; NATIONAL PARTNERSHIP FOR
WOMEN & FAMILIES; NATIONAL WOMEN'S LAW CENTER;
AND NOW LEGAL DEFENSE AND EDUCATION FUND
IN SUPPORT OF RESPONDENT
DANIEL F. KOLB, CO-CHAIR PAUL W. MOLLICA
CHESTER T. LESTER, JR., CO-CHAIR Counsel of Record
JOHN PAYTON, CO-CHAIR MEITES, MULDER, BURGER
NORMAN REDLICH, TRUSTEE & MOLLICA
BARBARA R. ARNWINE 208 South LaSalle Street
THOMAS J. HENDERSON Suite 1410
RICHARD T. SEYMOUR Chicago, Illinois 60604
TERESA A. FERRANTE (312) 263-0272
LAWYERS’ COMMITTEE FOR
CIVIL RIGHTS UNDER LAW
1401 New York Avenue, N.W.
Suite 400
Washington, D.C. 20005
(202) 662-8600
[Additional counsel listed on inside front cover]
BEST AVAILABLE COPY
ELAINE R. JONES
DIRECTOR-COUNSEL
THEODORE M. SHAW
NORMAN J. CHACHKIN
CHARLES STEPHEN RALSTON
NAACP LEGAL DEFENSE AND
EDUCATIONAL FUND, INC.
99 Hudson Street, 16th Floor
New York, New York 10013
(212) 965-2200
DENNIS C. HAYES
GENERAL COUNSEL
NATIONAL ASSOCIATION FOR
THE ADVANCEMENT OF
COLORED PEOPLE
4805 Mt. Hope Drive
Fifth Floor
Baltimore, Maryland 21215
(410) 486-9191
ANTONIA HERNANDEZ, PRESIDENT
VIBIANA ANDRADE,
VICE PRESIDENT, LEGAL PROGRAMS
MALDEF
634 South Spring Street
Eleventh Floer
Los Angeles, California 90014
(213) 629-2516
JUDITH L. LICHTMAN
DONNA R. LENHOFF
NATIONAL PARTNERSHIP
FOR WOMEN & FAMILIES
1875 Connecticut Ave., N.W.
Suite 710
Washington, D.C. 20009
MARCIA D. GREENBERGER
JUDITH C. APPELBAUM
NATIONAL WOMEN’S
LAW CENTER
11 Dupont Circle, N.W.
Suite 800
Washington, D.C. 20036
(202) 588-5180
JULIE GOLDSCHEID
YOLANDA S. WU
DINA BAKST
NOW LEGAL DEFENSE AND
EDUCATION FUND
99 Hudson Street, 12th Floor
New York, New York 10013
(212) 925-6635
Attorneys for Amici
September 19, 2000
BEST AVAILABLE COPY
QUESTIONS PRESENTED
1. Whether Section 1 of the Federal Arbitration Act, 9
U.S.C. § 1, which excludes “contracts of employment of
seamen, railroad employees, or any other class of workers
engaged in foreign or interstate commerce,” bars employers
from enforcing imposed arbitration schemes under the Act?
2. Whether the Act permits enforcement, under the pretext
of “arbitration,” of unregulated dispute-resolution policies that
prevent employees from effectively vindicating their rights,
including imposition of biased arbitrators, shortening of the
limitations period, unfair procedures, excessive forum fees and
arbitrators’ fees, and revocation or limitation of statutory
remedies?
RE AE ARE |
The Court’s Interpretation of Section | of the
FAA Will Affect All Employee-Protective
RED ccccénedecccoccscecsesecceccscs
A. Since 1925, National Regulation of
Employment Has Become
GED cccccdecccccosscccces
B In Non-Union Settings, Statutory
Claims Are Increasingly Subjected to
Unregulated Arbitration Schemes ......
Arbitration Programs Are Often Crafted to
Relieve Employers of Legal Burdens, Rather
Than to Provide Employees a Fair
Opportunity to Vindicate Substantive Rights ....
A. Employers Often Impose Arbitration
B. Excessive Fees Deter Claims ..........
C. Employers Have Revoked Legal
D. Arbitration Often Fails to Provide Fair
E. Judicial Review of Arbitration Awards
ne eeeneeneeneneneeeeeeee
12
-li-
TABLE OF AUTHORITIES
1. Cases
Adair v. United States,
ES Ec nasesaenessceseeueseeees 6
Aetna Ins. Co. v. Kennedy,
et a ochcdeceedenesnseesteese 18
Albemarle Paper Co. v. Moody,
En océncndcedénsecdscceses 22
Alcaraz v. Avnet, Inc.,
933 F. Supp. 1025 (D. N.M. 1996) ............ 22
Alexander v. Gardner-Denver Co.,
SP i ncécdsncecosccesecess 3, 8,14
Alyeska Pipeline Service Co. v. The Wilderness Society,
fl Se re 22
Armendariz v. Foundation Health Psychcare Serv., Inc.,
No. $075942, 2000 WL 1201652 (Cal. Aug. 24,
BED. cacccndccccossenesdescesecaces 5, 10, 20
Bailey v. Federal Nat'l Mortgage Assoc.,
209 F.3d 740 (D.C. Cir. 2000) ............055. 17
Barrentine v. Arkansas-Best Freight Sys., Inc.,
es Ce cetesccccoccesesccccccs 28
Bernhardt v. Polygraphic Co. of Am.,
Be SE a cecccccccesecoscoseoees 27
Bishop v. Smith Barney, Inc.,
No. 97 CIV. 4807(RWS), 1998 WL 50210
Ss HU Gb SEED ocaccdcccoscccccceces 17
Brown v. ITT Consumer Financial Corp.,
211 F.3d 1217 (11th Cir. 2000) ............... 29
California Federal S. & L. Assn. v. Guerra, |
GI ae SPE oc cc bcccccecevccccccosces 10
Campbell v. Cantor Fitzgerald & Co.,
21 F. Supp. 2d 341 (S.D. N.Y. 1998), aff'd,
205 F.3d 1321 (2d Cir. 1999). ...... cee ecees 19
Chisolm v. Kidder, Peabody Asset Mgt., Inc.,
966 F. Supp. 218 (S.D. N.Y. 1997) ............ 29
Christiansburg Garment Co. v. EEOC,
ST oc be nkeedescantetuseses 22
Circuit City Stores, Inc. v. EEOC,
75 F. Supp. 2d 491 (E.D. Va. 1999) ............ 3
Circuit City Stores, Inc. v. Shelton,
No. 1:99-cv-561, 2000 U.S. Dist. LEXIS
7059 (W.D. Mich. May 16, 2000) ........... 3, 24
Cole v. Burns Int'l Security Services,
105 F.3d 1465 (D.C. Cir. 1997) ...... 19, 20, 21, 30
Davis v. LPK Corp.,
76 Fair Empl. Prac. Cas. (BNA) 954 (N.D.
Pt i rttdccneddsedabanesndacidestses 20
DeGaetano v. Smith Barney, Inc.,
983 F. Supp. 459 (S.D. N.Y. 1997) ......... 22, 30
Derrickson v. Circuit City Stores, Inc.,
81 Fair Empl. Prac. Cas. (BNA) 1533 (D. Md.
1999), aff'd sub nom. Johnson v. Circuit City
Stores, Inc., 203 F.3d 821 (4th Cir.), cert.
denied,120 S. Ct. 2744 (2000) ..............45. 4
Desiderio v. Nat'l Assoc. of Securities Dealers,
191 F.3d 198 (2d Cir. 1999), petition for cert.
filed, 68 U.S.L.W. 3497 (Jan. 31, 2000) (No.
PP cnesebscbenscedssadecéconesees 12, 21
DiRussa v. Dean Witter Reynolds Inc.,
121 F.3d 818 (2d Cir. 1997), cert. denied, 522
Ge DEED gavedcduceneceeccecceesees 29
Doctor’s Associates, Inc. v. Casarotto,
Se Eo bdeecceusscscsecéoncees 10
-iv-
Domino Sugar Corp. v. Sugar Workers Local Union 392,
10 F.3d 1064 (4th Cir. 1993) ... 2... . 0. cece eee 7
Duffield v. Robertson Stephens & Co.,
144 F.3d 1182 (9th Cir.), cert. denied,
S2S US. S42 (IGSE) onc cccccccccccees 12, 14, 19
EEOC v. Farmer Bros. Co.,
31 F.3d 891 (9th Cir. 1994) ........ 0.0.0.0 ee 23
EEOC v. Frank's Nursery & Crafts, Inc.,
177 F.3d 448 (6th Cir. 1999) .......... 0c eens 24
EEOC v. Kidder, Peabody & Co., Inc.,
156 F.3d 298 (2d Cir. 1998)... . 22... cece eee 24
EEOC v. Waffle House, Inc.,
193 F.3d 805 (4th Cir. 1999), petition for
cert. filed, 68 U.S.L.W. 3726 (May 15, 2000)
RD FEM o ca ceccccaccosccences sane 9,24
First Options of Chicago v. Kaplan,
i RO TTT TTT TTT Te 29
Floss v. Ryan's Family Steak Houses, Inc.,
211 F.3d 306 (6th Cir. 2000) .............. 11, 25
FDA v. Brown & Williamson Tobacco Corp.,
BEDE. Go, Te Gee cc ccccccccesccccccccess 5
Fuller v. Pep Boys — Manny, Moe & Jack of Delaware, Inc.,
88 F. Supp. 2d 1158 (D. Colo. 2000)........... 20
Gannon v. Circuit City Stores Inc.,
No. 4:00CV330 JCH, , 2000 U.S. Dist.
LEXIS 12125 (E.D. Mo. July 10,2000) ......... 4
General Tel. Co. of the Northwest, Inc. v. EEOC,
GE Bc edcccecccsccoteccececs 24
Gibson v. Neighborhood Health Clinics, Inc.,
121 F.3d 1126 (7th Cir. 1997) ................ 18
Gilmer v. Interstate/Johnson Lane Corp.,
500 U.S. 20 (1991) 2... ccc cee eens passim
i A A li —-
- — ——eor
-V-
Glennon v. Dean Witter Reynoids, Inc.,
83 F.3d 132 (6th Cir. 1996) ...............4.. 29
Great Western Mortgage Corp. v. Peacock,
110 F.3d 222 (3d Cir. 1997) ............... 18, 23
Green v. Ameritech Corp.,
200 F.3d 967 (6th Cir. 2000) ................. 27
Green Tree Financial Corp.-Alabama v. Randolph,
178 F.3d 1149 (11th Cir. 1999), cert.
granted,120 S. Ct. 1552 (2000) ............... 21
Halligan v. Piper Jaffrey Inc.,
148 F.3d 197 (2d Cir. 1997) ............... 18, 30
Hammer v. Dagenhart,
ee Es Succeesceescosesoceceees 6
Hooters of America, Inc. v. Phillips,
173 F.3d 933 (4th Cir. 1999) ........... 15, 25, 26
Hooters of America, Inc. v. Phillips,
39 F. Supp. 2d 582 (D. S.C. 1998), aff'd,
173 F.3d 933 (4th Cir. 1999) ........ 15, 17, 18, 22
Howard v. Illinois Central R. Co.,
Be accu concedddestecceecc ces 6
Int'l Union of Elect., Radio & Machine Workers v. Ingram
Mfg. Co., 715 F.2d 886 (Sth Cir. 1983),
cert. denied, 466 U.S. 928 (1984) .............. 7
Johnson v. Circuit City Stores, Inc.,
148 F.3d 373 (4th Cir. 1998) ............... 3, 25
Jones v. Fujitsu Network Communications, Inc.,
81 F. Supp. 2d 688 (N.D. Tex. 1999) ....... 11, 20
Kiernan v. Piper Jaffray Cos., Inc.,
137 F.3d 588 (8th Cir. 1998) ................. 29
Kinnebrew v. Gulf Insurance Co.,
67 Fair Empl. Prac. Cas. (BNA) 189 (N.D.
Wes RED KWoebereceesoecaedccesaceesonces 23
-vi-
KMC Co. v. Irving Trust Co.,
757 F.2d 752 (6th Cir. 1985) ............0068- 18
Koveleskie v. SBC Capital Markets, Inc.;
167 F.3d 361 (7th Cir. 1998) .............. i1, 21
Kummetz v. Tech Mold, Inc.,
152 F.3d 1153 (9th Cir. 1998) ............005. 17
Leonard v. Clear Channel Communications I,
No. 972320-D/A, 1997 WL 581439
(W.D. Tenn. July 23, 1997) .........0-e ee eeee 17
McClendon v. Sherwin Williams, Inc.,
70 F. Supp. 2d 940 (E.D. Ark. 1999) ........... 16
McDonald v. City of West Branch,
GIG TE, BOC ¢ cc ccccccccceccccccscess 28
McWilliams v. Logicon, Inc.,
No. CIV. A. 95-2500-GTV, 1997 WL 383150
(D. Kan. June 4, 1997), aff'd, 143 F.3d 573
CORE GED cnc ccccendecevceccsesecesess 20
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Nixon,
210 F.3d 814 (8th Cir. 2000), petition for cert.
filed, Aug 25, 2000 (No. 00-317) ..........-. 11,24
Miller v. Public Storage Management, Inc.,
SS Fea er ee SUSE ccccccicdecevcess 10
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
GID as GOO c eee cccdcectcvnssccccees 13
Montes v. Shearson Lehman Brothers, Inc.,
128 F.3d 1456 (11th Cir. 1997) .............. 29
Morrison v. Circuit City Stores, Inc.,
70 F. Supp. 2d 815 (S.D. Ohio 1999) ........... 3
Nelson v. Cyprus Bagdad Copper Corp.,
119 F.3d 756 (9th Cir. 1997), cert. denied,
Se es SIU oc Sh crccccccenccacecces 18
New York Central R. Co. v. Winfield,
I NS os cicuntdodadccccaeeans 6
Nicholson v, CPC Int'l,
og fb Te re 8
Occidental Chemical Corp. v. Int’l Chemical Workers Union,
853 F.2d 1310 (6th Cir. 1988) ................. 8
Paladino v. Avnet Computer Technologies, Inc.,
134 F.3d 1054 (11th Cir. 1998) ............ 20, 22
Patterson v. Tenet Healthcare, Inc.,
te Bere 18
Penn v. Ryan's Steakhouses, Inc.,
95 F. Supp.2d 940 (N.D. Ind. 2000) ...... 9, 18, 26
Phelps Dodge Corp. v. NLRB,
Pe Es o6eeyeckseedéentevakeuce 6
Phillips v. Cigna Investments Inc.,
27 F. Supp. 2d 345 (D. Conn. 1998) ........... 17
Posadas de Puerto Rico v. Association de Empleados,
Sie Ce See CHG, TOD oc cc cccccvcccccces 7
Prudential Insurance Company of America v. Lai,
42 F.3d 1299 (9th Cir. 1994), cert. denied,
EE 6s bo wh Whun eed ceases 14, 18
Pryner v. Tractor Supply Co.,
109 F.3d 354 (7th Cir.), cert. denied, 522 U.S.
I ee a ee ee aces 19, 23
Rojas v. TK Communications, Inc.,
Oe eee SP, BED ds kn dceccdcccccces 23
Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith,
170 F.3d 1 (Ist Cir. 1999) ....... 12, 14, 16, 18, 20
Seus v. John Nuveen & Co.,
146 F.3d 175, 183 (3d Cir. 1998), cert.
denied, $25 U.S. 1139 (1999) ............. 12, 23
Shankle v. B-G Maintenance Mgt. of Colorado, Inc.,
163 F.3d 1230 (10th Cir. 1999) ............... 20
Shaw v. DLJ Pershing,
78 F. Supp.2d 781 (N.D. Ill. 1999) ............ 11
-Viii-
Shearson/American Express Inc. v. McMahon,
Se Eb a iw vendaseesesenne . 16, 28
Sheller by Sheller v. Frank’s Nursery & Crafts, Inc.,
957 F. Supp. 150 (ND. Ill. 1997) .............. )
_ Smith v. Chrysler Financial Corp.,
101 F. Supp. 2d. 534 (E.D. Mich. 2000) ..... 16, 17
Smith v. Evening News Assn.,
ft 8 ee eee 7
Sportelli v. Circuit City Stores, Inc.,
No. CIV. A. 97-5850, 1998 WL 54335 (E.D.
Pt CD ndivadscdusbnbucswekeusiees 3
Steele v. Louisville & N.R. Co.,
7h peuerduduethabnaes 7
Stirlen v. Supercuts, Inc.,
51 Cal. App. 4th 1519, 60 Cal. Rptr. 2d 138
DE ohioenéeasenssesksedeheeeendeees 10, 23
Strawn v. AFC Enterprises, Inc.,
70 F. Supp. 2d 717 (S.D. Tex. 1999) ........... 10
Swenson v. Management Recruiters Int'l, Inc.,
858 F.2d 1304 (8th Cir. 1988) ................. 8
Textile Workers v. Lincoln Mills,
I Aes bacdécescecesaendes< 7,9
United Food and Commercial Workers, Local Union
No. 7R v. Safeway Stores, Inc.,
889 F.2d 940 (10th Cir. 1989) ................ 8
United States v. Darby,
ee ob cd dercduccscacacecends 6
United Steelworkers of Am. v. Enterprise Wheel & Car Co.,
ee PE ind bce neesseuceosccdsnas 27
Utley v. Goldman Sachs & Co.,
883 F.2d 184 (1st Cir. 1989), cert. denied, 493 U.S.
SPEED kc cedustnadbiceckcchececcacenss 8
=e Ne eer
-ix-
Wetzel v. Lou Ehlers Cadilluc Group Long Term
Disability Ins. Pgm.,
2000 WL 1022713 (9th Cir. July 26, 2000)
DE. dcubudeatindnedepecedeestess 640 22
Williams v. Cigna Financial Advisors Inc.,
197 F.3d 752 (Sth Cir. 1999) .............. 20, 29
Williams v. Imhoff,
203 F.3d 758 (10th Cir. 2000) ................ 11
Wilson v. New,
es eet ced dedatuceeneds 6
Wright v. Circuit City Stores, Inc.,
82 F. Supp. 2d 1279 (N.D. Ala. 2000) ........... 4
Wright v. Universal Maritime Service Corp.,
4 ee 3, 7, 12, 19
Young v. Prudential Ins. Co. of America,
297 N.J. Super. 605, 688 A.2d 1069
(App.Div.), cert. denied, 149 N.J. 408, 694
666 4.40-400400000600060460%% 10
2. Statutes, Rules and Legislative Materials
I a dS 19
ELI Oe IIPS 3,4, 11
Pe re 3
cs duadedaddanawaves 17
| SB ie Reem aan pen ee 28
Age Discrimination in Employment Act,
29 U.S.C. §§ 621 et seg. ... 8, 11, 12,22, 24, 27, 28
Age Discrimination in Employment Act,
i es +p ccebenenséccseceees 17
Americans With Disabilities Act,
42 U.S.C. §§ 12101 et seg............ 8, 11, 12,18
-X-
Americans With Disabilities Act,
ER BERS cc ccccccvesccesssccess 12, 19
Biack Lung Benefits Act,
ee Be NEE, ov cen cccccvccccdovceye 8
California Fair Employment and Housing Act,
CAL. GOv’T CODE §§ 12900 ef seg. ........ 5, 9, 23
Civil Rights Act of 1964,
GRUB. CRIS ccccccccccccccccesscees 10
Civil Rights Act of 1991, § 118
Pub. L. No. 102-166, 105 Stat. 1071, 1081
RD kobe vecivnnciveccieneisocecesees 11,18
Employee Retirement Income Security Act,
SUB, Be ee GEE cc cc cv ccsecsnns 8, 11,22
Employers’ Liability Act ...........6-eeeeeeeee eee 6
Equal Credit Opportunity Act,
BS ULB. Be BERS EGOS. 2 ccc ccccsccceccvcess 21
Equal Pay Act of 1963,
SPU BE. BAe cc cccccccccccscccscsecess 11
Fair Labor Standards Act,
PUBL. TAG GEE, 0c cc cccscccccscccss 7,11
Fair Labor Standards Act,
BUI BAD occ cccccccsccccsscccses 7, 22
Family and Medical Leave Act,
29 U.S.C. §§ 2601 ef seg. ......- cece eeeeee 8, 11
Federal Arbitration Act,
DULBL. GE RIG 6 occ ccccccccccsccss passim
Labor Management Relations Act,
PO UBL. Be O68 GEE oo ccc cccccccvccessess 7
Labor Management Relations Act,
| PPPPTTTTTTI TTT Tee 7
Labor Management Relations Act,
DUBE. OG ccccccccccecctccseveccsseces 7
-Xxi-
Norris-LaGuardia Act,
BP es Be OOO OOD ov cccccccccccccscccves 7
Railway Labor Act,
Gy ee OF I os vo scevecccccouseccecse 7
Title VII of the Civil Rights Act of 1964,
42 USS.C. §§ 2000 ef seg. ............... passim
Title VII of the Civil Rights Act of 1964,
GB UBL, GB ABSROGED occ ccccccccccccvccess 11
Title VII of the Civil Rights Act of 1964,
42 U.S.C. §§ 2000e-5(b) to -5(f) .. 2... 2. eee 10
Title VII of the Civil Rights Act of 1964,
42 UBL. § FBGGOGIT) 2. nc ccccccccvcccccs 11
Title VII of the Civil Rights Act of 1964,
42 US.C. § 2000e-5(f)(5) ................08. 15
Title VII of the Civil Rights Act of 1964,
42 US.C. § 2000e-S(aM1) .. ccc cccccccccccs 3
Title VII of the Civil Rights Act of 1964,
42 US.C. § 20000-S(k) ......... ccc cece cece 22
Title VII of the Civil Rights Act of 1964,
TD is BIS occ cccccccesccccccesecs 11
Title VII of the Civil Rights Act of 1964,
Sy ee IT 60 6 ekebdecwcccccccessces 10
Title VII of the Civil Rights Act of 1964,
Se ey EEN bon ecccccccecccvetseuce 11
Securities Exchange Act of 1934,
PUNE 06s GKbRedhsncavenescuseoces 16
Truth in Lending Act,
15 U.S.C. §§ 1601 ef seg... .......... cece eee 21
Virginia Uniform Arbitration Act,
VA. CODE ANN. §§ 8.01-581.01 et seg. .......... 4
-xii-
3. Rules
Fed. R. Civ. P. 30(aX(2)(A) ...... ec cece eee ce eee eee 26
i ccc. cece eis eeeeceesoceecees 27
ie cc ccteeeusneeesoesescecess 19
Supreme Court Rule 37.3(a) .... 2.6.6.0 cece ec eeeeeees l
4. Legislative Materials
H.R. Rep. No. 102-40, Part I, 102d Cong. ist Sess.,
reprinted in 1991 U.S.C.C.AN. 549 ........... 19
5. Treatises, Law Reviews and Other Sources
- Reginald Alleyne, Statutory Discrimination Claims:
Rights “Waived” and Lost in the Arbitration
Forum,
13 Hofstra Lab. L. J. 381 (1996) ........... 14, 19
Ashlea Ebeling, Better Safe Than Sorry,
DL DE, DUR EEE so ccceccccccececccess 13
Harry T. Edwards, Where Are We Heading with
Mandatory Arbitration of Statutory Claims
in Employment,
16 Ga. St. U.L.Rev. 293 (1999) ......... 14, 19, 28
ELKOURI & ELKOURI, HOW ARBITRATION WORKS,
DCE CEE occccsccevescescccccces 12
EEOC NOTICE, No. 915.002, POLICY STATEMENT ON
MANDATORY BINDING ARBITRATION OF
EMPLOYMENT DISCRIMINATION DISPUTES AS A
ener OF EMPLOYMENT saad 10, 1997)
Jay E. Gan 26 West Legal Forme: Alternative Dispute
Resolution, App. 11C at 770 (1995) ........... 26
o —~ _-, _ = ee
-Xiii-
Joseph R. Grodin, Arbitration of Employment Discrimination
Claims: Doctrine and Policy in the Wake of Gilmer,
14 Hofstra Lab. L. J. 1 (1996) ............. 14, 18
Stephen L. Hayford & Michael J. Evers, The Interaction
Between the Employment-at-Will Doctrine and
Employer-Employee Agreements to Arbitrate
Statutory Fair Employment Practices Claims:
Difficult Choices for At-Will Employers,
Ta WAS. Le. Rav. 445 (1GBS) 2c cccccccccccccess 25
Leslie Kaufman and Anne Underwood, Sign or Hit the
Street, Newsweek, June 30, 1997, at 48 ......... 9
Adriaan Lanni, Note, Protecting Public Rights in Private
Arbitration, 107 Yale L. J. 1157 (1998) ........ 27
Eduard A. Lopez, Mandatory Arbitration of Employment
Discrimination Claims: Some Alternative Grounds
for Lai, Duffield and Rosenberg,
4 Employee Rts. & Employment Pol’y
PNUD Sieccancccceccocscccscccees 14, 18
Geraldine Szott Moohr, Arbitration and the Goals of
Employment Discrimination Law,
56 Wash. & Lee L. Rev. 395 (1999) ........ 14, 27
National Academy of Arbitrators, Statement of the NAA on
Individual Contracts of Employment and Guidelines
on Arbitration of Statutory Claims Under Employer-
Promulgated Systems, May 21, 1997,
National Academy of Arbitrators, Code of Professional
Responsibility for Arbitrators of Labor
Management Disputes, Art. Il, §C(1)(c),
reprinted at Jay E. Grenig, 26 West Legal Forms:
Alternative Dispute Resolution, App. 11C at 770
ETP TT TTT OOTP eT eT TTT TIT T 26
-xiv-
National Academy of Arbitrators, A Due Process Protocol
for Mediation and Arbitration of Statutory
Disputes Arising out of the Employment
Relationship, May 9, 1995
(http:// www.naarb.org/protocol.html).......... 25
George Nicolau, Gilmer v. Interstate/Johnson Lane Corp.:
Its Ramifications and Implications for Employees,
Employers and Practitioners,
1 U. Pa. J. of Lab. and Employ. Law 175 (1998) . 13
Jenny Strasburg, Proceeding Under Fire, S. F. EXAMINER,
April 30, 2000 at Bl... 0... cece e eee eee eee 9
Katherine Van Wezel Stone, Mandatory Arbitration of
Individual Employment Rights: The Yellow Dog
Contracts for the 1990s, 73 Denv. U. L. Rev. 1017
CRED oncccescecvecncetaeceseceoses 14, 27, 28
Michael A. Verespej, Sidestepping Court Costs,
Industry Week, Feb. 2, 1998, at68 ............. 9
Stephen J. Ware, Default Rules from Mandatory Rules:
Privatizing Law Through Arbitration,
83 Minn. L. Rev. 703 (1999) ........... 14, 28, 29
i ee
INTEREST OF AMICI CURIAE'
The Lawyers’ Committee for Civil Rights Under Law is a
tax-exempt, nonprofit civil rights legal organization founded in
1963 by the leaders of the American bar at the request of
President Kennedy, to provide legal representation to the
victims of civil rights violations.
The National Association for the Advancement of Colored
People (NAACP), established in 1909, is the nation’s oldest
civil nghts organization. |
The NAACP Legal Defense & Educational Fund, Inc. (the
“Fund”) is a non-profit corporation that was established for the
purpose of assisting African Americans in securing their
constitutional and civil rights.
The Mexican American Legal Defense and Educational
Fund (MALDEF) is a national not-for-profit organization that
protects and promotes the civil rights of more than 29 million
Latinos living in the United States.
The National Partnership for Women & Families, a
nonprofit, national advocacy organization founded in 1971 as
the Women’s Legal Defense Fund, promotes equal opportunity
for women.
The National Women’s Law Center (NWLC) is anon-profit
legal advocacy organization dedicated to the advancement and
protection of women's rights and the corresponding elimination
of sex discrimination from all facets of American life.
NOW Legal Defense and Education Fund (NOW Legal
Defense) is a leading national non-profit civil rights organiza-
'The position amici take in this brief has not been approved or
financed by petitioner or his counsel. No counsel for any party had any role
in authoring this brief. The written consents of both parties have been filed
with the Clerk of the Court pursuant to Supreme Court Rule 37.3(a).
2.
tion that uses the power of the law to define and defend
women's rights.
SUMMARY OF ARGUMENT
The rush by employers over the past decade to impose
unregulated arbitration on their employees warrants close
examination of Congress’s policy choice under §1 of the FAA
to exclude “contracts of employment” from the Act’s scope. In
Part I of this brief, we highlight some of the more oppressive
provisions of Circuit City’s “Dispute Resolution Agreement.”
In Part II, we show the repercussions of this case for all federal
and state employee-protective legislation.
Finally in Part III, we show that if the FAA applies to most
employment disputes, the courts must shoulder the burden to
assure that employees do not forgo substantive rights in
arbitration. To safeguard their rights against employers,
employees will often have to litigate twice: first to invalidate
unfair or oppressive arbitration provisions, and second to reach
the merits of their claims. This regime increases the burden on
civil rights plaintiffs as well as the courts, at odds with Con-
gressional intent that such claims be facilitated. To enforce
arbitration of employment law claims, courts must at a mini-
mum insist upon elements that would preclude the abuses
detailed below. Many current policies, including Circuit
City’s, fall well short of these due process standards.
ARGUMENT
I. Circuit City’s “Dispute Resolution Agreement” Ex-
emplifies the Peril of Unregulated, Imposed Arbitra-
tion in the Workplace
In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20,
31-33 (1991), arbitration between a sophisticated employee (a
stockbroker) and his employer was enforced because it was
-3-
governed by a U-4 registration, backed by a panoply of
procedural safeguards and regulatory oversight by the SEC. By
contrast, in Alexander v. Gardner-Denver Co., 415 U.S. 36, 52
(1974), arbitration under a collective bargaining agreement
(“CBA”) did not bar a Title VII judicial forum, because the
plaintiff did not herself consent to waive her right to suit, and
had no control over the arbitration. Circuit City’s unconsented
arbitration policy falls on the Alexander side of the line.’
The Circuit City “Dispute Resolution Agreement” and
“Dispute Resolution Rules and Procedures” (“DRA,” J.A. 19-
39) have often been litigated.’ Some courts have refused to
compel arbitration under the DRA because it caps back pay and
punitive damage awards below federal limits (DRA Rule 32,
J.A. 35-36).* As one judge wrote: “Punitive damages and back
pay are powerful deterrents to employers who might otherwise
*See also Wright v. Universal Maritime Service Corp., 525 U.S. 70,
80 (1998) (“Gardner- -Denver at least stands for the proposition that the right
to a federal judicial forum is of sufficient importance to be protected against
less-than-explicit union waiver in a CBA”)
*See, e.g., Johnson v. Circuit City Stores, Inc., 148 F.3d 373 (4th
Cir. 1998), following remand, 203 F.3d 821 (4th Cir.), cert. denied,120 S.
Ct. 2744 (2000); Circuit City Stores, Inc. v. Shelton, No. 1:99-cv-561, 2000
U.S. Dist. LEXIS 7059 (W.D. Mich. May 16, 2000); Morrison v. Circuit
City Stores, Inc., 70 F. Supp. 2d 815 (S.D. Ohio 1999); Sportelli v. Circuit
- City Stores, Inc., No. CTV. A. 97-5850, 1998 WL 54335 (E.D. Pa. Jan 13,
1998). The company has also filed a declaratory judgment action against
the EEOC to establish the legality of the company’ fa peer
program, a complaint ultimately dismissed on
Circuit City Stores, Inc. v. EEOC, 75 F. Supp. 2d 491 (E.D. Va. 1999).
“The DRA awards back pay “only up to one year from the point at
which the Associate knew or should have known of the events giving rise
to the alleged violation of law,” and caps punitive damages at 100% of back
and front pay (if any) or $5000. This provision contradicts Title VII, which
provides two years’ back pay (42 U.S.C. § 2000e-5(g)(1)), and section
1981, which does not cap punitive damages (42 U.S.C. § 1981a(b)(4)).
4
discriminate on the basis of race. The failure of the Circuit
City arbitration provision to provide those remedies shields
Circuit City from the full force of Section 1981 and prevents
Plaintiff from effectively vindicating her rights.”
Other provisions of the DRA (1) require employees to pay
one-half the cost of arbitration, and allow shifting of all
arbitration fees and costs to losing employees (DRA Rule 30,
J.A. 33-34); (2) revoke presumptive and even mandatory
statutory awards of attorneys’ fees, committing such awards to
broad arbitral discretion (DRA Rule 31, J.A. 34-35); (3) set a
blanket one-year limitations period for all claims, irrespective
of longer statutes of limitations (DRA Rule 6(a); J.A. 23-24);
(4) impose the terms of the DRA only upon employees, leaving
Circuit City’s right to sue its employees in court unimpeded
(DRA Rule 2, J.A. 20-21); (5) reserve the company’s power to
amend the DRA periodically, without requiring the approval
of any public regulatory agency or the employees (DRA Rule
37, J.A. 37-38); and (6) declares—in case any provision be
found unenforceable—a non-acquiescence rule, allowing Cir-
cuit City to enforce it elsewhere (DRA Rule 36, J.A. 37).°
5 Derrickson v. Circuit City Stores, Inc.,81 Fair Emp). Prac. Cas.
(BNA) 1533, 1538 (D. Md. 1999), aff'd sub nom. Johnson v. Circuit City
Stores, Inc., 203 F.3d 821 (4th Cir.), cert. _ ied,120 S. Ct. 2744 (2000);
Gannon v. Circuit City Stores Inc., No. 4:00CV330 JCH, 2000 U.S. Dist.
LEXIS 12125 at *9-11 (E.D. Mo. July 10, 2000) (caps on remedies prevent
worker from “effectively vindicating” rights). C/ Wright v. Circuit City
Stores, Inc., 82 F. Supp. 2d 1279, 1287-88 (N.D. Ala. 2000) (striking out
DRA caps on damages).
*Circuit City has left itself an alternative if the Court finds that the
FAA does not apply to contracts of employment. The DRA separately
provides that its terms may be enforced under the Uniform Arbitration Act
of Virginia, VA. CODE ANN. § 8.01-581.01 et seg. (DRA Rule 34, J.A. 36-
37). The Virginia Act, unlike the FAA, applies expressly to employment
cases. Id. But the California Supreme Court held just a month ago that
_-
-5-
All of these provisions redound to Circuit City’s advantage,
and this is no accident because the company set the terms
unilaterally. Respondent had to “consent” to the DRA as a
mandatory condition of applying to work (J.A. 11). Circuit
City’s DRA isa far cry from the intention—announced by the
Court in Gilmer, 500 U.S. at 26—that employees under
arbitration policies would not “jsorgo the substantive rights
afforded by” state and federal labor and employment laws.
Il. The Court’s Interpretation of Section 1 of the FAA Will
Affect All Employee-Protective Legislation
To interpret the exclusion in §1 of “contracts of employ-
ment of seamen, railroad employees, or any other class of
workers engaged in foreign or interstate commerce,” the Court
must place the FAA against the backdrop of numerous federal
laws enacted since 1925 protecting workers’ rights. It is
appropriate for the Court to consult such subsequent enact-
ments here, as it did in last Term in FDA v. Brown & William-
son Tobacco Corp., 120 S. Ct. 1291 (2000). There, the Court
relied upon tobacco legislation passed by Congress subsequent
to the Food, Drug, and Cosmetics Act: “At the time a statute
is enacted, it may have a range of plausible meanings. Over
time, however, subsequent acts can shape or focus those
meanings. The ‘classic judicial task of reconciling many laws
enacted over time, and getting them to “make sense” in
combination, necessarily assumes that the implications of a
statute may be altered by the implications of a later statute.’”
Id. at 1306 (citation omitted). As the Court construes the §1
exclusion in the FAA, it must harmonize this section with a
arbitration of claims under the state’s Fair Employment and Housing Act,
CAL. GOV’T CODE § 12900 et seq. (such as this case) are subject to rigorous
due process standards. Armendariz v. Foundation Health Psychcare Serv.,
Inc., No. $075942, 2000 WL 1201652 (Cal. Aug. 24, 2000).
A.
body of national laws regulating employment of persons in
interstate commerce.
A. Since 1925, National Regulation of Employment Has
Become Commonplace
Congress enacted the FAA in 1925 against a legal backdrop
of minimal federal regulation of employment.’ The Court
declared unconstitutional — as exceeding Congress’s com-
merce clause powers — laws banning “yellow dog” contracts
and child labor. See Adair v. United States, 208 U.S. 161, 179
(1908) (mo connection between interstate commerce and
membership in a labor organization), overruled by Phelps
Dodge Corp. v. NLRB, 313 U.S. 177 (1941); Hammer v.
Dagenhart, 247 U.S. 251, 276 (1918) (no regulation of “local
matters” by prohibiting movement in interstate commerce”),
overruled by United States v. Darby, 312 U.S. 100 (1941);
Howard v. Illinois Central R. Co., 207 U.S. 463, 504 (1908)
(striking down Employers’ Liability Act because provisions
applied to all employees of common carriers, even if they did
not work directly in interstate commerce). Obversely, the
Court upheld federal labor laws directly incident to regulating
interstate common carriers, such as railroads.*
By the mid-twentieth century, when Congress reenacted the
FAA (July 30, 1947, ch. 392, § 1, 61 Stat. 669), the federal role
’ Employment was considered primarily a local matter and the
commerce clause was deemed to authorize Congressional action to protect
workers only in the channels of interstate commerce.
"See, e.g., New York Central R. Co. v. Winfield, 244 U.S. 147, 148
(1917) (“{iJt is settled that under the commerce clause of the Constitution
Congress may regulate the obligation of common carriers and the rights of
their employees arising out of injuries sustained by the latter where both are
engaged in interstate commerce”); Wilson v. New, 243 U.S. 332, 349 (1917)
(finding eight-hour-day law for interstate rail workers to fall within
Congress’s power “to deal not only with the carrier, but with its servants”).
xX
in labor relations had transformed dramatically. In the crucible
of the Great Depression and the Second World War, Congress
passed a host of statutes to protect workers’ rights. See, e.g.,
the Norris-LaGuardia Act, 29 U.S.C. §§ 101 et seg. (enacted
1932); Labor-Management Relations Act, 29 U.S.C. §§ 141 et
seq. (enacted 1947); Fair Labor Standards Act, 29 U.S.C. §§
201 et seg. (enacted 1938). These acts included a private right
of action.’ In addition, this Court in 1944 implied a cause of
action for the breach of duty of fair representation under the
Railway Labor Act, 45 U.S.C. § 151 et seg. See Steele v.
Louisville & N.R. Co., 323 U.S. 192, 206-07 (1944). See also
Smith v. Evening News Assn., 371 U.S. 195, 199 (1962)
(recognizing employee’s individual right to sue employer along
with union for breach of CBA under § 185 of the LMRA).
Against the backdrop of these new laws, courts were
circumspect about applying the FAA to the workplace. See,
e.g., Textile Workers v. Lincoln Mills, 353 U.S. 448, 450 (1957)
(applying § 185 of the LMRA to a CBA without mentioning
FAA), and id. at 466 (Frankfurter, J., dissenting) (concluding
that FAA did not apply to labor contracts). Even to-
day—unacknowledged by the petitioners’ brief (at 8, 11, 37-
38)—courts continue to hold that CBAs are excluded from the
FAA.” A contrary decision of this Court would work a major
*See LMRA, 29 U.S.C. §§ 185, 187 (action for breach of CBA or
for unfair labor practices); FLSA, 29 U.S.C. § 216(b) (action for violations
of wage and hour laws).
°The Court noted in Wright v. Universal Maritime Service Corp.,
525 U.S. 70, 78 n.1 (1998), that the Fourth Circuit holds that the FAA does
not apply to labor contracts. At least five federal courts of appeals so hold,
even with contracts outside the transportation industry. See, e.g., Posadas
de Puerto Rico v. Association de Empleados, 873 F.2d 479, 482 (1st Cir.
1989) (hotels); Domino Sugar Corp. v. Sugar Workers Local 392, 10 F.3d
1064, 1067 (4th Cir. 1993) (sugar growers); Jnt’] Union of Electrical, Radio
& Machine Workers v. Ingram Mfg. Co., 715 F.2d 886, 889 (5th Cir. 1983),
-8-
and unknown transformation on this line of cases.
In the half-century since the re-enactment of the FAA, the
federal role in employment matters has continued to widen.
The legislative response to the 1960’s civil rights movement
blossomed into a series of statutes dedicated to the elimination
of employment discrimination. See, e.g., Age Discrimination
in Employment Act, 29 U.S.C. §§ 621 et seg.; Title VII of the
Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seg.; Ameri-
cans With Disabilities Act, 42 U.S.C. §§ 12101 ef seg.
Employee benefits were also mandated and regulated on a
national level during this period. See, e.g., Employee Retire-
ment Income Security Act, 29 U.S.C. §§ 1001 et seg.; Family
and Medical Leave Act, 29 U.S.C. §§ 2601 et seg.; Black Lung
Benefits Act, 30 U.S.C. §§ 901 et seg. Each of these statutes
created private rights of action. Before Gilmer, the lower
courts viewed such statutes as the reserve of the judiciary and
refused to compel arbitration of those claims." This view
found support in the Court’s unanimous decision in Alexander
v. Gardner-Denver Co., 415 U.S. 36 (1974).
B. In Non-Union Settings, Statutory Claims Are In-
creasingly Subjected to Unregulated Arbitration
Schemes
The labor market quickly flooded with arbitration policies
cert. denied, 466 U.S. 928 (1984); Occidental Chemical Corp. v. Int'l
Chemical Workers Union, 8£3 F.2d 1310, 1315 (6th Cir. 1988) (chemical
workers); United Food and Commercial Workers, Local Union No. 7R v.
Safeway Stores, Inc., 889 F.2d 940, 943 (10th Cir. 1989) (supermarkets).
"'See, e.g., Utley v. Goldman Sachs & Co., 883 F.2d 184, 187 (1st
Cir. 1989), cert. denied, 493 U.S. 1045 (1990); Nicholson v. CPC Int'l, 877
F.2d 221, 227 (3d Cir. 1989); Swenson v. Management Recruiters Int'l,
Inc., 858 F.2d 1304, 1306-07 (8th Cir. 1988).
ee See, a,
-9-
in the wake of Gilmer,”” often appearing as boilerplate in job
applications such as at Circuit City (J.A. 12-17)." These
provisions are especially pernicious in low-wage, entry level
jobs, where the applicant or employee has no bargaining power
and lacks the legal sophistication even to know what to bargain
about.'* Arbitration has long been used at union shops as a
substitute for strikes, (Textile Workers, 353 U.S. at 455), but
unions, unlike individuals, know the dangers to avoid.
Since Gilmer, federal courts have become the beachhead of
employers’ nationwide campaign to privatize the resolution of
employment disputes. In this case, plaintiff sued in state court
under California’s Fair Employment and Housing Act, CAL.
Gov’T CoDE § 12900 et seg. (West 2000). This is the sort of
legislation Congress meant to foster when it adopted the Civil
"See, e.g., Jenny Strasburg, Proceeding Under Fire, S. F.
EXAMINER, April 30, 2000 at B1 (American Arbitration Association reports
in 1999 having heard 1,950 employment arbitration cases nationally, 950
stemming from imposed arbitration policies and 300 involving Title VII
claims); Michael A. Verespej, Sidestepping Court Costs, INDUSTRY WEEK,
Feb. 2, 1998, at 68 (more than 400 employers, with a combined 4.5 million
employees, have subscribed to some form of alternative dispute resolution
for employment claims, mostly within the past two years); Leslie Kaufman
and Anne Underwood, Sign or Hit the Street, NEWSWEEK, June 30, 1997,
at 48 (noting that employers such as ITT, JCPenney, Brown & Root, and
Renaissance Hotels adopted arbitration systems for employment disputes).
"With no little irony, Circuit City notifies applicants that they
“may wish to seek legal advice before signing ,” (J.A. 14) despite the folly
in telling job aspirants to retain counsel before submitting a job application.
'* See EEOC v. Waffle House, Inc., 193 F.3d 805, 816 (4th Cir.
1999), petition for cert filed, 68 U.S.L.W. 3726 (May 1, 2000) (No. 99-
1823) (King, J., dissenting) (employee who signed arbitration “agreement”
was $5.50-an-hour grill operator); Penn v. Ryan's Family Steakhouses, Inc.,
95 F. Supp. 2d 940, 941 (N.D. Ind. 2000) (waiter at chain restaurant);
Sheller by Sheller v. Frank’s Nursery & Crafts, Inc., 957 F. Supp. 150, 154
(N.D. Ill. 1997) (teenage cashiers). Cf. Gilmer, 500 U.S. at 33 (broker was
sophisticated “businessman”’).
-10-
Rights Act.'* California Federal S. & L. Assn. v. Guerra, 479
U.S. 272, 282-3 (1987) (noting “the importance Congress
attached to state antidiscrimination laws in achieving Title
VII’s goal of equal employment opportunity”). Indeed, under
California law, the DRA was likely unenforceable because of
its limits on remedies and discovery. Armendariz v. Founda-
tion Health Psychcare Serv., Inc., No. $075942, 2000 WL
1201652 (Cal. Aug. 24, 2000) (Mosk, J.). Circuit City re-
sponded with a federal-court action to enforce the DRA.
Despite Congress’s express solicitude toward state civil
rights enforcement, employers now use imposed arbitration
policies as a shield against those very state laws, as well as
other state employee welfare statutes.'° The FAA has been
held to preempt all contrary state laws regarding arbitration, so
all state employee-protective statutes (even those that specifi-
cally preclude arbitration of employees’ claims)'’ must bend to
federal supremacy. See, e.g., Doctor’s Associates, Inc. v.
'SSee 42 U.S.C. § 2000e-5(b) to -5(f) (EEOC cooperation with
State and local authorities); 42 U.S.C. § 2000e-7 (“[nJothing in this
subchapter shall be deemed to exempt or relieve any person from any
liability, duty, penalty, or punishment provided by any present or future law
of any State or political subdivision of a State . . .”); 42 U.S.C. § 2000h-4
(disclaiming Congressional intent “to occupy the field in which any such
title operates to the exclusion of State laws on the same subject matter”).
"See, e.g., Miller v. Public Storage Management, Inc., 121 F.2d
215,219 (Sth Cir. 1997) (anti-retaliation claim); Strawn v. AFC Enterprises,
Inc.,70F. Supp. 24717, 727-28 (S.D. Tex. 1999) (workers’ compensation);
Young v. Prudential Ins. Co. of America, 297 N.J. Super. 605, 622, 688
A.2d 1069, 1079 (App.Div.) (whistleblower statute), cert. denied, 149 N.J.
408, 694 A.2d 193 (1997); Stirlen v. Supercuts, Inc., 51 Cal. App. 4th
1519, 1525, 60 Cal. Rptr. 2d 138, 140 (1997) (labor code).
"See generally Brief of the States of California, etc. as Amici
Curiae in Support of Respondent (setting forth state laws barring or limiting
arbitration of employment law claims).
— ee
—S—k et Va See
-11-
Casarotto, 517 U.S. 681, 687 (1996). It has even been invoked
to prevent a state civil rights agency from enforcing state law.'*
Under federal law, the effects of imposed arbitration have
been most pronounced in civil rights cases (e.g. Title VII,
ADA, ADEA), but have also touched other statutes.'® Its use
intrudes upon a joint public/private mechanism for enforcing
Title VII rights crafted by Congress. This joint mechanism (1)
authorizes the EEOC to investigate and conciliate claims of
discrimination, to interpret the law (42 U.S.C. §§ 2000e-5(b)
and 2000e-12) and to litigate claims (id. § 2000e-5(f)(1)); (2)
grants the Justice Department enforcement authority (id. §§
2000e-5(f)(1) and 2000e-6); and (3) establishes a private right
of action (id. § 2000e-5(f)(1)). 7°
This deliberate structure does not contemplate imposition
of arbitration. Congress in 1991 authorized arbitration of
discrimination claims “where appropriate” in the Civil Rights
Act of 1991,”' but never endorsed imposed arbitration policies
"In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Nixon, 210F.3d
814, 818-19 (8th Cir. 2000), petition for cert. filed, August 25, 2000 (No.
00-317) the employer successfully enjoined, under the FAA, the Missouri
Commission on Human Rights from proceeding with administrative action
under state law on behalf of an employee who signed a Form U-4 to obtain
monetary or equitable relief.
"See, e.g., Floss v. Ryan's Family Steak Houses, Inc., 211 F.3d
306, 313 (6th Cir. 2000) (FLSA); Williams v. Imhoff, 203 F.3d 758, 767
(10th Cir. 2000) (ERISA); Koveleskie v. SBC Capital Markets, Inc., 167
F.3d 361, 369 (7th Cir. 1998) (Equal Pay Act); Jones v. Fujitsu Network
Commun., Inc., 81 F. Supp. 2d 688, 693 (N.D. Tex. 1999) (FMLA); Shaw
v. DLJ Pershing, 78 F. Supp. 781, 782 (N.D. Ill. 1999) (Section 1981).
” EEOC NOTICE, NO. 915.002, Policy Statement on Mandatory
Binding Arbitration of Employment Discrimination Disputes as a Condition
of Employment (July 10, 1997) (http://www.eeoc.gov/docs/mandarb.html).
*'The amendment authorizes, but does not require, alternative
-12-
such as Circuit City’s, particularly unregulated schemes that
seek to shield employers from the remedies enacted by Con-
gress.” While this Court declined conclusively to interpret
these provisions of the Civil Rights Act of 1991 in Wright v.
Universal Maritime Service Corp., 525 U.S. 70, 82 n.2 (1998),
it declined to find an arbitration clause in a CBA, stating that
“absent a clear waiver, it is not ‘appropriate’. . . to find an
agreement to arbitrate.” Congress’s insistence upon “appro-
priate” dispute resolution demands something more than
acquiescence to imposed, unregulated arbitration policies.
Ill. Arbitration Programs Are Often Crafted to Re-
lieve Employers of Legal Burdens, Rather than to
Provide Employees a Fair Opportunity to Vindi-
cate Substantive Rights
The FAA does not define“arbitration,” but a respected
treatise describes it as a “‘simple proceeding voluntarily chosen
by the parties who want a dispute determined by an impartial
judge of their own mutual selection, whose decision, based on
the merits of the case, they agree in advance to accept as final
and binding.” ELKOURI & ELKOURI, HOW ARBITRATION
WORKS, 5TH ED. at 2 (BNA 1996) (citation omitted). The
dispute resolution (including arbitration) under Title VII, ADEA and the
ADA. Pub. L. No. 102-166, § 118, 105 Stat. 1071, 1081 (1991); 42 U.S.C.
§ 12212 (“where appropriate and to the extent authorized by law, .. .
arbitration . . . is encouraged to resolve disputes arising under” these acts).
The Ninth Circuit interprets these provisions affirmatively to
preclude imposed arbitration under Title VII. Duffield v. Robertson
Stephens & Co., 144 F.3d 1182, 1190 (9th Cir.), cert. denied, 525 U.S. 982
(1998). That court so far stands alone in its view. See, e.g., Desiderio v.
Nat’l Assoc. of Securities Dealers, 191 F.3d 198, 203-06 (2d Cir. 1999),
Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 11
(1st Cir. 1999); Seus v. John Nuveen & Co., 146 F.3d 175, 183 (3d
Cir.1998), cert. denied, 525 U.S. 1139 (1999).
-13-
reality in the workplace is far different. There is no sign that
the FAA was meant to shield anything labeled “arbitration”
regardless of voluntariness, impartiality, and fidelity to the law.
The Gilmer Court expected that arbitration would constitute
only a change in forum, presuming that parties would “‘not
forgo the substantive rights afforded by the [ADEA].’” Gilmer,
500 U.S. at 26 (quoting Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)). Support-
ers of arbitration thought that fair procedures would attract
employees, leading to speedy resolutions.” The Court left to
future, case-by-case development whether particular arbitral
fora afforded employees a fair opportunity to present claims
and obtain remedies. Jd. at 31-32.
Contrary to these expectations, though, employers like
Circuit City have subverted the concept of arbitration to pursue
an agenda inimical to civil rights. The judicial task of policing
these arbitrations is immense, given the employers’ over-
whelming temptation to draft their policies in a way that gives
them an “edge” and limits their risk even if an employee
manages to win, and in the absence of any administrative body
with authority to curb such abuses. Employers are forcing
workers to bear the costs of arbitration, suffer shortened periods
of limitations, surrender rights to damages and attorneys’ fees,
3 .
: George Nicolau, past president of the National Academy of
Arbitrators, observed that a voluntary arbitration system living up to the
promise of Gilmer would attract employees who desired a prompt,
inexpensive hearing of their claims. George Nicolau, Gilmer vy.
Interstate/Johnson Lane Corp.: Its Ramifications and Implications for
Employees, Employers and Practitioners, 1 U.Pa. J. of Lab. and Employ.
Law 175, 189-90 (1998). See also Ashlea Ebeling, Better Safe Than Sorry,
FORBES, Nov. 30, 1998, at 162 (voluntary program for 65,000 United Parcel
Se aan Sh ngngee, ate
-14-
or proceed under one-sided rules.” Such abuses led the
National Academy of Arbitrators in 1997 to urge abandonment
of imposed pre-dispute arbitration for employment discrimina-
tion claims.*> Without regulatory safeguards, an “agreement”
to arbitrate becorr ss an impermissible prospective waiver of
civil rights. Alexander, 415 U.S. at 51-52 (Title VII rights “not
susceptible of prospective waiver”).
Even if courts oversee arbitrations, employees face an
expensive, uphill battle to enforce their rights. Those wishing
to challenge agreements must hire counsel, spend money, and
endure extensive, extra-merits litigation just to win the nght to
start all over again in court. This runs contrary to the mandate
of Title VII to expedite litigation of claims, and to waive filing
fees, appoint counsel, and pay for attorneys’ fees so that the
Commentators have written widely about the expansion of
arbitration in the civil nights arena. See, e.g., Reginald Alleyne, Statutory
Discrimination Claims: Rights “Waived” and Lost in the Arbitration
Forum, 13 Hofstra Lab. L. J. 381 (1996); Joseph R. Grodin, Arbitration of
Employment Discrimination Claims: Doctrine and Policy in the Wake of
Gilmer, 14 Hofstra Lab. L. J. 1 (1996); Harry T. Edwards, Where Are We
Heading with Mandatory Arbitration of Statutory Claims in Employment,
16 Ga. St. U.L.Rev. 293 (1999); Eduard A. Lopez, Mandatory Arbitration
of Employment Discrimination Claims: Some Alternative Grounds for Lai,
Duffield and Rosenberg, 4 Employee Rts. & Employment Pol’y J. 101
(2000); Geraldine Szott Moohr, Arbitration and the Goals of Employment
Discrimination Law, 56 Wash. & Lee L. Rev. 395 (1999); Katherine Van
Wezel Stone, Mandatory Arbitration of Individual Employment Rights: The
Yellow Dog Contracts for the 1990s, 73 Denv. U. L. Rev. 1017 (1996);
Stephen J. Ware, Default Rules from Mandatory Rules: Privatizing Law
Through Arbitration, 83 Minn. L. Rev. 703, 719-25 (1999).
25 Statement of the NAA on Individual Contracts of Employment and
Guidelines on Arbitration of Statutory Claims Under Employer-
Promulgated Systems, May 21, 1997 (http://www.naarb.org/
guidelines.html) (opposing “mandatory employment arbitration as a
condition of employment when it requires waiver of direct access to either
a judicial or administrative forum for the pursuit of statutory rights”).
-15-
courts will be open to victims who could not otherwise afford
to litigate their claims. See 42 U.S.C. § 2000e-5(f)(5).
Preemptive litigation may even be instigated by the
employer. The Lawyers’ Committee once represented a female
employee at a Hooters restaurant, Annette Phillips, who was
sued by her employer (the parent company, Hooters of Amer-
ica, or “HOA”) for declaratory judgment to enforce its corpo-
rate arbitration policy against her then-pending sexual harass-
ment claim. HOA filed its complaint on November 4, 1996.
Hooters of America, Inc. v. Phillips, 39 F. Supp. 2d 582, 588
(D.S.C. 1998). HOA moved for a preliminary injunction to
restrain Phillips from filing any state or federal court action
relating to her former employment, and to compel arbitration
of her claims under the FAA, 9 U.S.C. § 4. Id. After briefing
described as “extensive” and “voluminous” by the district
judge (id. at 591), there followed discovery and a three-day
the standards of fairness in arbitration and the operation and
relative fairness of Hooters’ arbitration agreement (id. at 592-
93). Extensive findings in Phillips’ favor were entered on
March 12, 1998. Jd. Over a year later, on April 8, 1999, the
Fourth Circuit affirmed, in an opinion that excoriated the
company’s program as “utterly lacking in the rudiments of
even-handedness.” Hooters of America v. Phillips, 173 F.3d
933, 935 (4th Cir. 1999).”* Thus, it took two and a half years
**The Fourth Circuit affirmed findings of the district court that
Hooters’ rules allowed the employer exclusively to (1) avoid filing any
written response to the employee's claim, (2) avoid disclosing its witnesses,
(3) control the list of arbitrators, (4) expand the scope of the arbitration to
include new claims against the employee, (5) move for summary judgment,
(6) create a record at the arbitration, (7) bring suit in court to overturn the
award based on a preponderance of the evidence, (8) cancel the arbitration
agreement on 30 days notice, and (9) modify the procedures i j
without notice to the employee. Hooters, 173 F.3d at 938-39.
-16-
of hammer-and-tongs litigation just to restore the employee’s
right to bring a Title VII action.
Arbitration of employment law claims is distinctive. There
is usually no union to safeguard the process. Unlike arbitration
of claims in the securities field, as in Gilmer—tregulated by the
SEC (15 U.S.C. § 78s; Shearson/American Express Inc. v.
McMahon, 482 U.S. 220, 233-34 (1987))}—there is no over-
arching federal executive authority to oversee arbitration and
no self-regulatory organizations authorized by statute. And
unlike arbitration in the commercial and consumer fields, there
is a certain predestination to employment cases: people can
often avoid entering into installment contracts or buying
software, but nearly every grown person has to work.
A. Employers Often Impose Arbitration Policies
Without Employees’ Knowing and Voluntary
Consent
Employers usually impose arbitration unilaterally, by
distributing employment manuals or written policies with
arbitration provisions. Circuit City obtains its employees’
“consent” to the DRA by making them sign an acknowledg-
ment at the same time they apply for a job.”” Some employers
even conceal the details of the arbitration policy and fail to
inform employees what rights they may be waiving.”
7” “Circuit City does not consider an application for employment
unless the Dispute Resolution Agreement is signed.” (Affid. of Pamela G.
Parsons, Assoc. General Counsel to Circuit City, J.A. 11.) See also Smith
v. Chrysler Financial Corp., 101 F. Supp. 2d. 534, 537 (E.D. Mich. 2000)
(arbitration policy described in brochure mailed to 18,000 employees);
McClendon v. Sherwin Williams, Inc., 70 F. Supp. 2d 940, 943 (E.D. Ark.
1999) (arbitration policy “communicated to employees by dissermination of
the [employee] handbook,” and employee accepted policy “by continuing
to stay on the job”).
%* See Rosenberg, 170 F.3d at 19-20 (employer falsely certified
-17-
Courts in some cases have declined to enforce such
imposed arbitration. In Bailey v. Federal Nat'l Mortgage
Assoc., 209 F.3d 740 (D.C. Cir. 2000), the court held that the
plaintiff had not consented to arbitrate under the employer’s
new policy where he expressly disaffirmed it in writing shortly
after the policy was adopted. The court looked askance at the
argument that the employee accepted the policy by remaining
in the defendant’s employ, doubting that an employer “could
terminate a current employee solely because of his or her
refusal to accept the new arbitration policy.” Jd. at 746. In
Kummetz v. Tech Mold, Inc., 152 F.3d 1153, 1155 (9th Cir.
1998), the court reversed summary judgment, finding that the
policy in question made no explicit reference to arbitration or
waiver and consigned the details of the program to a separate
publication.” Yet other courts have upheld such policies,
substituting the fictitious “consent” of continuing to work.”
Courts have also split over whether relinquishment of the
federal judicial forum and jury right’' requires a knowing and
to court that it provided employee with a copy of NYSE rules); Hooters, 39
F. Supp. 2d at 61 1-12 (rules not disclosed). Circuit City’s application (J.A.
13-18) nowhere declares those legal rights (such as rights to a jury trial,
attorneys’ fees, discovery, and damages) sacrificed by the DRA.
*See also Smith, 101 F. Supp. 2d at 539 (no mutual assent to
policy); Phillips v. Cigna Investments Inc., 27 F. Supp. 2d 345, 353-59 (D.
Conn. 1998) (employee did not lose legitimate expectation to judicial forum
by continuing to work after employer promulgated arbitration policy).
*° Bishop v. Smith Barney, Inc., No. 97 CIV. 4807(RWS), 1998 WL
50210 (S.D.N.Y. Feb. 6, 1998) (enforcing arbitration clause in employee
oan ae ; Clear Channel Communications I, No. 972320-D/A,
1439 (W.D. Tenn. July 23, 1997) (enforcing unsigned,
unacknowledged arbitration agreement in employment manual).
*'See, e.g., 29 U.S.C. § 626(c\(2) (jury trial authorized for ADEA
cases); 42 U.S.C. § 1981a(c) (jury trial for Title VII and ADA cases seeking
-18-
voluntary waiver, or is governed instead by ordinary contract
principles. Some circuits have applied a contract standard,
holding that arbitration must be compelled except in cases
tainted by fraud or coercion,”” while other circuits remain on
the fence.”? But the Ninth Circuit, in Prudential Insurance
Company of America v. Lai, 42 F.3d 1299, 1304-5 (9th Cir.
1994), cert. denied, 516 U.S. 812 (1995), held that the “text and
legislative history of Title VII’ required that an employee
“knowingly agree[] to submit such disputes to arbitration.””
The knowing and voluntary standard follows from the
standard applied generally to the waiver of a civil jury trial.”
A waiver standard also comports with the history of the Civil
Rights Act of 1991. Section 118 of the Act approves, “[wJhere
appropriate and to the extent authorized by law, the use of
alternative means of dispute resolution, including, . . .arbitra-
compensatory or punitive damages).
See, e.g., Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 834-
35 (8th Cir. 1997); Great Western Mortgage Corp. v. Peacock, 110 F.3d
222, 229-30 (3d Cir. 1997).
> Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170
F.3d 1, 18 (Ist Cir. 1999); Halligan v. Piper Jaffrey Inc., 148 F.3d 197, 203
(2d Cir. 1997); Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d
1126, 1129-30 (7th Cir. 1997).
“See also Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756,
760-61 (9th Cir. 1997) (applying Lai to ADA), cert. denied, 523 U.S. 1072
(1998); Hooters, 39 F. Supp. 2d at 612 (applying knowing and voluntary
standard); Penn, 95 F. Supp. 2d at 950.
*°See Aetna Ins. Co. v. Kennedy, 301 U.S. 389, 393 (1937) (“as the
right of jury trial is fundamental, courts indulge every reasonable
presumption against waiver”); KMC Co. v. Irving Trust Co., 757 F.2d 752,
756 (6th Cir. 1985) (courts “overwhelmingly appl[y] the knowing and
voluntary standard” to determine “the validity of a contractual waiver of [a
civil] jury trial”); Grodin, supra note 12, at 36-9; Lopez, supra note 12, at
127-34.
ee
-19-
tion.” The Seventh Circuit interpreted this provision in
Pryner v. Tractor Supply Co., 109 F.3d 354, 363 (7th Cir.),
cert. denied, 522 U.S. 912 (1997), to hold that arbitration
would not be “appropriate when it is not agreed to by the
wor'<er but instead is merely imposed” by a CBA. The Pryner
court took a page from history, observing that “by being forced
into binding arbitration [employees] would be surrendering
their right to trial by jury—a right that civil rights plaintiffs . . .
fought hard for and finally obtained in the 1991 amendments to
Title VIL.” Jd. at 362. Wright left this question open.
B. Excessive Fees Deter Claims
Employers often try to shift some or all of the costs of
arbitration to the complaining party. Rule 30 of Circuit City’s
DRA requires the parties to split fees 50-50 and authorizes the
arbitrator to shift all arbitration fees and costs to the losing side.
J.A. 33-34.” The prospect that an employee might have to
*See also H.R. Rep. No. 102-40, Part I, 102d Cong. Ist Sess
reprinted in 1991 U.S.C.C.AN. 549, 635 (stating that this section was
intended to supplement, not supplant, the remedies provided by Title
VII"); 42 U.S.C. § 12212 (same provision for the ADA).
x7 .
_- Compare Fed. R. Civ. P. 54(d)(1) and 28 U.S.C. § 1920
(authorizing shifting of narrowly enumerated costs). PA st ag
be steep. See, e.g., Duffield v. Robertson Stephens & Co. (9th Cir), Docket
No. 97-15687, Appellant’s Opening Brief at 34-36 (record of proceeding
established that arbitrators in the securities field charge fees starting from
$1000 per half-day, mounting up to $82,800 in one complex case, and such
fees are imposed on each party.) Cole v. Burns Int'l Security Services, 105
F.3d 1465, 1480 n.8 (D.C. Cir. 1997) (noting estimates for arbitrators fees
in a typical employment case from $3,750 to $14,000); Campbell v. Cantor
Fitzgerald & Co., 21 F. Supp. 2d 341, 345 (S.D.N.Y. 1998), aff'd, 205 F.3d
1321 (2d Cir. 1999) (after thirty sessions over sixteen months, arbitrators
$45,000 in hearing fees); Alleyne, supra note 12, at 410-11 (noting that
arbitrators fees can run from hundreds to thousands of dollars); Edwards,
supra note 12, at 306-07 (citing arbitrations where fees ran into tens of
-20-
deposit, on demand, thousands of dollars just for the privilege
of arbitrating a claim will assuredly deter claims.”*
Some courts bar companies from charging frum costs to
the employee, striking down such agreements entirely.” Others
simply sever such provisions from the agreement.“
Yet other circuits take the position that fee-splitting does
not, standing by itself, invalidate an arbitration policy.“' As the
thousands of dollars).
*® See, e.g., Armendariz v. Foundation Health Psychcare Serv.,
Inc., No. 8075942, 2000 WL 1201652 (Cal. Aug. 24, 2000) (“[t]he payment
of large, fixed, forum costs, especially in the face of expected meager
awards, serves as a significant deterrent to the pursuit of [civil rights]
claims”).
* See, e.g., Shankle v. B-G Maintenance Mgt. of Colorado, Inc.,
163 F.3d 1230, 1234-34 (10th Cir. 1999) (contract requiring plaintiff to
shoulder one-half of arbitrator’s fee, between $1,875 and $5,000, held
unenforceable); Paladino v. Avnet Computer Technologies, Inc., 134 F.3d
1054, 1062 (11th Cir. 1998) (refusing to compel arbitration under contract
that imposed “hefty” arbitration costs and “steep filing fees” on employee);
Davis v. LPK Corp., 76 Fair Empl. Prac. Cas. (BNA) 954 (N.D. Cal. 1998)
(invalidating agreement where employee had to bear one-half of the
arbitrator’s fee).
“ — See, e.g., Fuller v. Pep Boys — Manny, Moe & Jack of
Delaware, Inc., 88 F. Supp. 2d 1158, 1162-63 (D. Colo. 2000); Jones v.
Fujitsu Network Commun., Inc., 81 F. Supp. 2d 688, 693 (N.D. Tex. 1999).
Still others interpret the offending sections equitably to relieve the
employee’s burden. See, e.g., Cole, 105 F.3d at 1485 (court interprets fees
provision from agreement to apply only to employer); McWilliams v.
Logicon, Inc., No. CIV. A. 95-2500-GTV, 1997 WL 383150, at *2 (D. Kan.
June 4, 1997) ($1,300 fee shifted to employer), aff'd, 143 F.3d 573 (10th
Cir. 1998).
“See, e.g., Williams v. Cigna Financial Advisors Inc., 197 F.3d
752, 763 (Sth Cir. 1999), cert denied, 120 S.Ct. 1833(2000). (approving
apportionment of one-half of forum fees, $3,150, on employee); Rosenberg
v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 16 (Ist Cir.
1999) (holding that prospect of fee-splitting did not render policy
-21-
D.C. Circuit held in Cole, 105 F.3d at 1485, a plaintiff “could
not be required to agree to arbitrate his public law claims as a
condition of employment if the arbitration agreement required
him to pay all or part of the arbitrator’s fees and expenses.”
Indeed, “there is no reason to think that the [Gilmer] Court
would have approved a program of mandatory arbitration of
statutory claims . . . in the absence of employer agreement to
pay arbitrator’s fees.” Jd. at 1468.
This Court recently granted certiorari in Green Tree
Financial Corp.-Alabama v. Randolph,178 F.3d 1149 (11th
Cir. 1999), cert. granted, 120S. Ct. 1552 (2000), a case raising
the fee issue under the Truth in Lending Act, 15 U.S.C. § 1601
et seq. and the Equal Credit Opportunity Act, 15 U.S.C. § 1691
et seq. The loan company admitted that decisions regarding
apportionment fees and costs would be entirely in the discretion
of the arbitrator, and such uncertainty led the court below to
find the arbitration clause unenforceable. To require a plaintiff,
especially an impecunious one, to amass a reserve of thousands
of dollars just to commence a claim sacrifices substantive
rights, and would lead to the wholesale abandonment of claims.
How much worse, then, are policies such as Circuit City’s that
explicitly shift the burden to employees? 7
C. Employers Have Revoked Legal Remedies
In Gilmer, the Court particularly noted that the New York
Stock Exchange (“NYS!-”) rules did “not restrict the types of
relief an arbitrator may award.” 500 U.S. at 32. See also
Desiderio v. Nat'l Assoc. of Securities Dealers, 191 F.3d 198,
205 (2d Cir. 1999), petition for cert filed, 68 U.S.L.W., 3497
(Jan. 31, 2000)(No. 99-1285) (reaffirming need for full set of
unenforceable); Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361, 362
(7th Cir. 1999) (allowing fee-splitting).
-22-
statutory remedies under Title VII in arbitration). A full
panoply of remedies and statutory safeguards are essential to
deter and remedy employment discrimination. Albemarle
Paper Co. v. Moody, 422 U.S. 405, 416 (1975) (remedies
available under Title VII constitute a “complex legislative
design directed at an historical evil of national proportions”).
Yet employers have sought to whittle down statutory
remedies through artful and unequal crafting of arbitration
agreements. Circuit City’s DRA caps back pay and punitive
damage awards below federal limits (J.A. 35-36); makes the
award of attorneys’ fees wholly within the discretion of the
arbitrator” (J.A. 34-35); and chops down the limitations period
to one year (J.A. 23-24). Other employers have likewise limited
employees’ remedies.”
Indeed, Circuit City's decision to cap the limitations period
at one year regardless of the claim directly implicates the
employees’ substantive rights. Employer torts and statutory
violations can carry longer statutes of limitations.“ In Mr.
“See Alyeska Pipeline Service Co. v. The Wilderness Society, 421
U.S. 240, 261 n.34 (1975) (noting that under section 16(b) of the FLSA, 29
U.S.C. § 216(b), which also governs ADEA, award of fees to prevailing
party is “mandatory”); Christiansburg Garment Co. v. EEOC, 434 U.S. 412,
416-417 (1978) (under § 706(k) of Title VII a prevailing plaintiff ordinarily
is to be awarded attorney’s fees in all but very unusual circumstances).
“See Paladino, 134 F.3d at 1060-62 (policy provides only for
contract damages); Hooters, 39 F. Supp. 2d at 612 (policy prevented full
recovery of damages and «ttorneys fees); DeGaetano v. Smith Barney, Inc.,
983 F. Supp. 459, 464-70(S.D.N.Y. 1997) (policy barred award of statutory
attorneys’ fees); Alcaraz v. Avnet, Inc., 933 F. Supp. 1025, 1027-28
(D.N.M. 1996) (policy did not provide full range of Title VII damages).
“ See, e.g., Wetzel v. Lou Ehlers Cadillac Group Long Term
Disability Ins. Pgm., 2000 WL 1022713 (9th Cir. July 26, 2000) (en banc)
(four-year statute of limitations for actions on written contract applies to
ERISA action to recover disability benefits under written contractual policy
-23-
Adams’ case, he would not necessarily have been required to
commence a FEHA action within a year, because the timely
filing of a charge tolls the limitations period. EEOC v. Farmer
Bros. Co., 31 F.3d 891, 902 (9th Cir. 1994) (limitations period
for plaintiffs FEHA claim tolled for more than four years
during EEOC's investigation). But the DRA trumps all such
rules. See Stirlen v. Supercuts Inc., 51 Cal. App. 4th 1519,
1542, 60 Cal. Rptr. 2d 138 (1st Dist. 1997) (finding comparable
one-year limitation on employees’ claims under arbitration
agreement unconscionable under California law).
Courts have even given tacit approval to this approach,
determining that such terms—despite falling short of statutory
norms—may be enforced by an arbitrator. In Great Western
Mortgage Corp. v. Peacock, 110 F.3d 222 (3d Cir. 1997), the
arbitration agreement included provisions waiving the em-
ployee’s right to attorneys fees and punitive damages. The
court referred the matter to arbitration to determine whether the
plaintiff had agreed to abandon statutory rights. Jd. at 231-32.*°
By referring these matters to arbitration, these courts may
have simply deferred litigation until the time to enforce the
award, contrary to the expectation that arbitration should afford
prompt and inexpensive relief. Pryner, 109 F.3d at 362 (noting
the “spectre” of satellite litigation). The promise of such review
may prove ephemeral, as we shall see in section E below.
in California).
“ See also Seus v. John Nuveen & Co., Inc., 146 F.3d 175, 187-
88 (3d Cir. 1998) (reserving disputes over alleged inadequacies or
unfairness of agreement to arbitrator); Rojas v. TK Communications, Inc.,
87 F.3d 745, 749 (Sth Cir.1996) (directing ADEA plaintiff to pursue his
unconscionability claim with the arbitrator); Kinnebrew v. Gulf Insurance
Co., 67 Fair Empl. Prac. Cas. (BNA) 189, 191 (N.D. Tex. 1994) (referring
claim to arbitration under policy that bars punitive damages, injunctive
relief and attorneys fees).
-24-
The Gilmer Court also assumed that the EEOC would be
available as a backstop to private arbitration policies. “An
individual ADEA claimant subject to an arbitration agreement
will still be free to file a charge with the EEOC, even though
the claimant is not able to institute a private judicial action.”
Gilmer, 500 U.S. at 28. But some courts hold that arbitration
policies preclude (in varying degrees) even the government
from obtaining relief on behalf of the employee.“
Against these cases, the Sixth Circuit has held that an
arbitration agreement has no collateral effect on the EEOC and
that it may independently seek to vindicate and remedy
violations of civil rights.*’ This Court has already noted that
the Commission represents the public at large, not individual
victims of alleged discrimination in its suits. General Tel. Co.
of the Northwest, Inc. v. EEOC, 446 U.S. 318, 326 (1980). The
Court should avoid an interpretation of the FAA that derogates
the EEOC’s and parallel state civil rights agencies’ independ-
ent, public roles in enforcing anti-discrimination laws.
D. Arbitration Often Fails to Provide Fair and Ac-
countable Procedures
Gilmer established that arbitration may substitute for civil
“ See, e.g., Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Nixon,
210 F.3d 814, 818-19 (8th Cir. 2000) (barring state agency from obtaining
individual relief for complainant); EEOC v. Waffle House, Inc., 193 F.3d at
812 (barring EEOC from litigating individual claim unless it was prepared
to seek “large-scale injunctive relief” on behalf of entire class); EEOC v.
Kidder, Peabody & Co., Inc., 156 F.3d 298, 302 (2d Cir. 1998) (barring
EEOC from obtaining monetary damages).
“ EEOC v. Frank's Nursery & Crafts, Inc., 177 F.3d 448, 458-59
(6th Cir. 1999). See also Circuit City Stores, Inc. v. Shelton, No. 1:99-cv-
561, 2000 U.S. Dist. LEXIS 7059 (W.D. Mich. May 16, 2000) (dismissing
company’s petition to compel arbitration where plaintiff's only action was
to file charge with EEOC).
-25-
litigation only when the arbitral forum affords fundamental
procedural protections. 500 U.S. at 30-32." But as long as
employers are free to impose arbitration on employees, they
can pile on onerous terms while shackling employees to them:
1. Employers refuse to bind themselves to procedures that
employees must follow. Rule 2 of the DRA says that “claims
of an [employee] . . . shall be settled exclusively by final and
binding arbitration,” but no reciprocal provision applies to the
company. J.A. 20-21; Johnson v. Circuit City Stores, 148 F.3d
373, 378 (4th Cir. 1998) (DRA “ does not appear to require the
arbitration of any claims Circuit City might have against
Johnson”).
2. Employers reserve to themselves the power to alter the
procedures at their discretion. Under DRA Rule 37 (J.A. 37-
38), “Circuit City may alter or terminate the Agreement” at the
end of each calendar year merely by tendering 30 days’ written
notice to employees. See also Floss v. Ryan's Family Steak
Houses, Inc., 211 F.3d 306, 315-16 (6th Cir. 2000) (employer
“reserved the right to alter the applicable rules and procedures
without any obligation to notify, much less receive consent
from,” employees); Hooters, 173 F.3d at 938-39 (same).
3. Absence of neutral arbitrators. Gilmer authorized
“See A Due Process Protocol for Mediation and Arbitration of
Statutory Disputes Arising out of the Employment Relationship, May 9,
1995 (http:// www.naarb.org/protocol.html) (signed by representatives of
the National Academy of Arbitrators, the American Arbitration Association,
the Labor and Employment Law Section of the American Bar Association,
and other organizations). See also Stephen L. Hayford & Michael J. Evers,
The Interaction Between the Employment-at-Will Doctrine and Employer-
Employee Agreements to Arbitrate Statutory Fair Employment Practices
Claims: Difficult Choices for At-Will Employers, 73 N.C. L. Rev. 443, 489-
90 (1995) (enforceable arbitration system would have to include right to
counsel, adequate discovery, mutual selection of arbitrator, ability to call
witnesses, and anti-retaliation commitment to cooperating witnesses).
-26-
arbitration against a backdrop of NYSE rules that provided for
disclosure of the arbitrator’s professional backgrounds, a right
to strike arbitrators, and a duty upon arbitrators to disclose
potential conflicts. 500 U.S. at 30. Yet some policies have
given employers nearly unfettered control over who shall sit as
arbitrators. See, e.g., Hooters, 173 F.3d at 941 (employer made
up list of arbitrators itself); Penn, 95 F. Supp. 2d at 945-48
(employer’s agent controlled who appeared on the lists of
arbitrators).
4. Arbitrary limits on discovery. The NYSE rules under
review in Gilmer expressly provided for “document production,
information requests, depositions and subpoenas,” sufficient to
afford a “fair opportunity” for employees to present their
claims. 500 U.S. at 31. But other policies have omitted such
procedures. Circuit City, for instance, authorizes only three
depositions as opposed to the ten depositions ordinarily
allowed in Federal court. Compare J.A. 26-27, DRA Rule
13(b), with Fed. R. Civ. P. 30(a)(2)(A). See also Hooters, 173
F.3d at 938 (employer had no obligation to provide lists of
witnesses or respond to plaintiff's written claim); Penn, 95 F.
Supp. 2d at 948-49 (finding discovery provisions “severely
limited”). Because employees typically know less about an
employment decision than the employer itself, arbitrary limits
on discovery may doom their claims.
5. Secrecy of arbitration decisions. Arbitration awards are
typically confidential (see J.A. 31, DRA Rule 23),” and courts
have not generally required arbitrators to memorialize their
“See Code of Professional Responsibility for Arbitrators of Labor
Management Disputes, art. I, § C(1)(c) (making it a “violation of
professional responsibility for an arbitrator to make public an award without
consent of the parties”), reprinted at Jay E. Grenig, 26 West Legal Forms:
Alternative Dispute Resolution, App. 11C at 770 (1995).
-27-
findings in writing.” By contrast, district courts must issue
findings of fact and conclusions of law as a public record. See
Fed. R. Civ. P. 52(a).
The publication of decisions in the civil rights field guides
employees and employers alike about what conduct is lawful.*!
Conversely, cutting off publication of decisions impedes
voluntary efforts to comply with the law.”
E. Judicial Review of Arbitration Awards Is Minimal
Gilmer recognized that judicial review was a corrective to
errant arbitrators. 500 U.S. at 30-31. Yet the awards of
commercial and labor arbitrations, based on interpretation of
agreements freely bargained by the parties, have long been
accorded deferential judicial review. See, e.g., United
Steelworkers, 363 U.S. at 597-99 (where arbitrator’s award
concerns construction of CBA, court lacks authority to overrule
the arbitrator’s interpretation); Bernhardt v. Polygraphic Co. of
Am., 350 U.S. 198, 203 n.4 (1956) (no review of arbitrator’s
® See, e.g., United Steelworkers of America v. Enterprise Wheel &
Car Co., 363 U.S. 593, 976 n.8 (1960) (“[a}rbitrators have no obligation to
the court to give their reasons for an award”); Green v. Ameritech Corp.,
200 F.3d 967, 974-76 (6th Cir. 2000) (affirming award in state law civil
policy expressly required arbitrator to “explain” decision).
"Gilmer, 500 U.S. at 31-32 (enforcement of U-4 would not hurt
civil nights enforcement because NYSE rules require written and publicly
available arbitration awards, and because “judicial decisions addressing
ADEA claims will continue to be issued because it is unlikely that all or
even most ADEA claimants will be subject to arbitration agreements”).
% See Moohr, supra note 12 (stressing the public goal of
in individual discrimination cases);Van Wetzel Stone, supra note 12, at
1043-47 (discussing educational function of civil rights opinions); Adriaan
Lanni, Protecting Public Rights in Private Arbitration, 107 Yale L. J. 1157,
1160-61 (1998) (encouraging disclosure of arbitration decisions).
-28-
error in interpreting contract). This area must be reevaluated in
light of the expansion of imposed arbitration into the civil
rights arena.
Review of arbitration awards of statutory claims, as the
Court reminds us, must rise to a level “sufficient to ensure that
arbitrators comply with the requirements of the statute.”
McMahon, 482 U.S. at 232. See Gilmer, 500 U.S. at 32 n.4
(same point in context of ADEA). The proper level of review,
according to the Court, must be higher in a case reviewing a
statutory claim than in one reviewing a garden-variety labor
dispute; in the latter case, arbitrators have “authority only to
resolve questions of contractual rights.” Jd. at 34. See, e.g.,
McDonald v. City of West Branch, 466 U.S. 284, 290 (1984)
(rejecting suggestion that arbitration can “provide an adequate
substitute for a judicial proceeding in protecting the federal
statutory and constitutional rights that § 1983 is designed to
safeguard’’); Barrentine v. Arkansas-Best Freight Sys., Inc., 450
U.S. 728, 737 (1981) (“[w]hile courts should defer to an
arbitral decision where the employee’s claim is based on rights
arising out of the collective bargaining agreement, different
considerations apply where the employee’s claim is based on
rights arising out of a statute Gesigned to provide minimum
substantive guarantees to individual workers”).
It is widely known that arbitrators often do not apply the
law and follow their own precepts of fairness. See, e.g, Ware,
supra note 12, at 719-25 (summarizing empirical research and
case law supporting this conclusion); Van Wetzel Stone, supra
note 12, at 1040 (citing Congressional study that most arbitra-
tors in the securities industry had no background in labor and
employment law). Most arbitrators lack legal training, do not
keep up with legal developments and lack accountability for
their decisions. See Edwards, supra note 12, at 297-98.
-29-
Moreover, the degree of scrutiny that awards presently
receive for legal error is feather-light, curtailing even further
the incentive to follow the law. Under the FAA, courts may
only review legal errors for “manifest disregard of the law.”
First Options of Chicago v. Kaplan, 514 U.S. 938, 942 (1995)
(noting “manifest disregard” standard). Manifest disregard
focuses not on legal error per se, but on the narrower issue of
whether the arbitrator deliberately defied the law. Typical is
the Eleventh Circuit’s recent decision in Montes v. Shearson
Lehman Brothers, Inc., 128 F.3d 1456, 1461 (11th Cir. 1997),
holding that reversal of an award for manifest disregard of the
law requires proof that the arbitrator was “conscious of the law
and deliberately ignore[d] it.” See also Brown v. ITT Consumer
Financial Corp., 211 F.3d 1217, 1223 (11th Cir. 2000)
(reaffirming that application of wrong legal test in race
discrimination case must be “intentional” or “conscious” to be
reviewable as “manifest disregard”). Other circuits apply
equally stingy standards of review.” If the arbitrator issues no
written opinion, or a one-sentence award (and thereby leaves no
record of what legal standards were followed), it leaves nothing
for the court to review and insulates the award from reversal.
Ware, supra note 12, at 721 (“[iJn most cases in which an
arbitrator does not apply the law, it will be virtually impossible
*See, e.g., Williams, 197 F.3d at 761-72 (summarizing law);
Kiernan v. Piper Jaffray Cos., Inc., 137 F.3d 588, 594 (8th Cir. 1998)
(applying deferential “manifest disregard” standard to civil rights case);
DiRussa v. Dean Witter Reynolds Inc.,121 F.3d 818, 821 (2d Cir. 1997)
(applying deferential standard to affirm award that where employee
prevailed, but arbitrator awarded no attorneys’ fees), cert. denied, 522 U.S.
1049 (1998); Glennon v. Dean Witter Reynolds, Inc., 83 F.3d 132, 136 (6th
Cir. 1996) (“[a}n arbitration panel only acts in manifest disregard of the law
if the applicable legal principle is clear and well-settled and it refuses to
follow that legal principle”); Chisolm v. Kidder, Peabody Asset Mgt., Inc.,
966 F. Supp. 218, 224-29 (S.D.N.Y. 1997) (rejecting argument for
heightened scrutiny of judicial review in civil rights cases).
-30-
for a court to discover that the arbitrator did not apply the
law”). Standing against this tide is the approach taken by the
D.C. Circuit in Cole. While noting that courts ordinarily defer
to arbitrator’s awards, the court held that the manifest disregard
standard is somewhat elastic and “must be defined in light of
the bases underlying the Court’s decisions in Gilmer-type
cases.” Cole, 105 F.3d at 1487. As the court noted:
The nearly unlimited deference paid to arbitration
awards in the context of collective bargaining is not
required, and not appropriate, in the context of em-
ployees’ statutory claims. In this context, the Supreme
Court has assumed that arbitration awards are subject to
judicial review sufficiently ngorous to ensure compli-
ance with statutory law. [/d. at 1468-69.]
Thus, “there will be some cases in which novel or difficult
legal issues are presented demanding judicial judgment. In
such cases, the courts are empowered to review an arbitrator’s
award to ensure that its resolution of public law issues is
correct.” Jd. at 1487. See Halligan v. Piper Jaffrey Inc., 148
F.3d 197, 204 (2d Cir. 1997) (vacating for “manifest disregard”
award for employer in civil rights case); DeGaetano, 983 F.
Supp. at 462-64 (failure to award attorneys’ fees to pre ,
plaintiff after award was requested was in manifest disregard of
the law).
CONCLUSION
For the foregoing reasons, the undersigned amici respect-
fully request that the judgment of the United States Court of
Appeals for the Ninth Circuit be affirmed.
Respectfully submitted,
— ee: eee -
Daniel F. Kolb, Co-Chair
Chester T. Lester, Jr.,
Co-Chair
John Payton, Co-Chair
Norman Redlich, Trustee
Barbara R. Arnwine
Thomas J. Henderson
Richard T. Seymour
Teresa A. Ferrante
Lawyers’ Committee for
Civil Rights Under Law
1401 New York Avenue,
N.W., Suite 400
Washington, D.C. 20005
(202) 662-8600
Paul W. Mollica
Counsel of Record
Meites, Mulder, Burger &
Mollica
208 South LaSalle Street
Suite 1410
Chicago, Illinois 60604
(312) 263-0272
Dennis C. Hayes
Genera! Counsel
National Association for
the Advancement of
Colored People
4805 Mt. Hope Drive
Fifth Floor
Baltimore, Maryland 21215
(410) 486-9191
Elaine R. Jones
‘' Director-Counsel
Theodore M. Shaw
Norman J. Chachkin
Charles Stephen Ralston
NAACP Legal Defense and
Educational Fund, Inc.
99 Hudson Street, 16th Floor
New York, New York 10013
(212) 965-2200
Los Angeles, California
90014
(213) 629-2516
Judith L. Lichtman
Donna R. Lenhoff
National Partnership for
Women & Families
1875 Connecticut Ave, N.W.
Suite 710
Washington, D.C. 20009
(202) 986-2600
Marcia D. Greenberger
Judith C. Appelbaum
National Women’s Law
Center
11 Dupont Circle, N.W.
Suite 800
Washington, D.C. 20036
(202) 588-5180
Julie Goldscheid
Yolanda S. Wu
Dina Bakst
NOW Legal Defense and
Education Fund
99 Hudson Street, 12th Floor
New York, New York 10013
(212) 925-6635
Attorneys for Amici
September 19, 2000
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.