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

i- SEP | 9 2000

No. 99-1379

— IN THE

SUPREME COURT OF THE UNITED STATES

CIRCUIT CITY STORES, INC.,

Petitioner,

v.

SAINT CLAIR ADAMS,

Respondent.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF AMICUS CURIAE OF AARP

IN SUPPORT OF RESPONDENT

THOMAS W. OSBORNE*

LAURIE A. MCCANN

SALLY P. DUNAWAY

AARP FOUNDATION LITIGATION

MELVIN RADOWITZ

AARP

601 E Street, NW

Washington, DC 20049

(202) 434-2060

Counsel for Amicus Curiae AARP

*Counsel of Record

BEST AVAILABLE COPY

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ........cccccveces ili

INTEREST OF AMICUS CURIAE .............. 1

SUMMARY OF ARGUMENT ................ 3

EE 6 00.0 06 eOS Saeed eceeaseseccsens 3

I. PRE-DISPUTE AGREEMENTS TO ARBITRATE

ARE NOT VOLUNTARY ............... 6

Il. MANDATORY ARBITRATION IS

INCOMPATIBLE WITH THE FULL

ENFORCEMENT OF THE EMPLOYMENT

DISCRIMINATION LAWS ............... 12

DE 6 5G cer b ctw eed etesedecsecves 16

iii

TABLE OF AUTHORITIES

CASES

Albemarle Paper Co. v. Moody,

422 U.S. 405 (1975) ..... \oconeeheb eee een

Alexander v. Gardner-Denver Co.,

415 U.S. 36 (1974), ............. er

Arce [v. Cotton Club of Greenville, Inc.,

883 F.Supp. 117 (N.D. Miss. 1995)] ...........

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

4350 U.S. 728 GSE) . wo cecnseseeeee eee

Brown v. ITT Consumer Financial Corp..,

211 F.3d 1217 (11th Cir. 2000)

Craft v. Campbell Soup Co..,

161 F.3d 1199 @th Cis. 19BQ) ww ccc veceuan

EEOC v. Commercial Office Products Co..,

486 U.S. 107 (1988)

Floss v. Ryan's Family Steak Houses, Inc.,

211 F.3d 306 (6th Cir. 2000)

Gilmer v. Interstate/Johnson Lane Corp.,

Jao U.S. 2D (ISTE) «oo ee cecesseee eee

Graham Oil v. ARCO Products Co.,

43 F.3d 1244 (9th Cir. 1994)

Griggs v. Duke Power Co.,

401 U.S. 424 (1971)

Haskins v. Prudential Insurance Co., of America

2000 WL 1209274 (6th Cir. Aug. 28, 2000)

Se C6 e828 @ 8 8 8 ee ee

ee eceeeeemlee ee et ee Ss SS ee eee

iv

America v. ips,

NORE. 933 an Cir. Dit ietbeedeecevece 14

Koveleskie v. SBC Capital Markets, Inc.,

167 F.3d 361 (7th Cir. 1999) ..........22 2 ees 4

McKennon v. Nashville Banner Public Co. ,

DMD « ccccccccecccceecocces 13

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

eT rr ee eee 6

nis S. Se 8 898) Se a 8

Paladino v. Avnet Computer,

134 F.3d 1054 (11th Cir. 1998) ............4.-. 14

ar A Thomas,

Dice ches eee eeeececccoces« 8

Rodriguez de Quijas v. Shearson/American Express, Inc.,

ff EE a 12

eer Merrill Lynch, Pierce, Fenner & Smith, Inc..,

170 DME cccceececeaceceses 14

Sutton v. United Air Lines, Inc..,

wD 10

Textile Workers Union v. Lincoln Mills of Alabama,

EE « cccccccececeecccceces 4

Tony & Susan Alamo Foundation v. Secretary of Labor,

| ri a i a 7

United Steelworkers of America v. Warrior

and Gulf Navigation Co., 363 U.S. 574 (1960) ...... 13

U.S. Bulk Carriers v. Arguelles,

CETTE cc ccccccccccecececcces 16

.

Wright v. Universal Maritime Service Corp..,

fis ~§ £ae Sse 3

FEDERAL STATUTES

Age Discrimination Employment Act (ADEA),

es «och ub 6 eon eeees es 2,3,8

29 U.S.C. § 626(f)(1MA-H) ..............4-. 6

Civil Rights Act of 1991 (CRA),

Gy ls Ss «ek dedeeeash uke ue 9,10

Fair Labor Standards Act (FLSA),

er es EE, 6 6 600.64 46 6ebb400eEws 7

Federal Arbitration Act (FAA),

Pe ate ob 6c ue eeee ts oe cee 2, 3, 4, 5, 6

National Labor Relations Act (NLRA),

PP we a s4edens sound neeewe 6

Norris-La Guardia Act,

en <<<... vdeunekinaauueen 6

Older Workers Benefit Protection Act of 1990 (OWBPA),

29 U.S.C. § GRGEMIMA-EDD 2. wc cdc ccc ccccces 6

STATE STATUTES

Gb Es GP vc ciedu vebonsstaeeeneet 7

MISCELLANEOUS

Marc Bendick et al., No Foot in the Door: An

Experimental Study of Employment Discrimination

Against Older Workers, Journal of Aging & Social

Policy, Vol. 10(4) 1999, at 20, (citation omitted) ... 2

Paul D. Carrington, The Dark Side of Contract Law,

Robert N. i Employment Arbitration After

Gilmer: Have Courts Come to the

United States?, 15 Hofstra Lab. &

Employment L.J. 345, 365 (Spring 1998) ........ 4

EEOC, Policy Statement on Mandatory Binding

irbitration of Discriminati

rg wh Condition of Employment

133 Daily Lab. Rep. (BNA) E-,

National of Arbitrators (NAA) Statement of

y 21, 1997) 103 Daily Lab.

Rep. (BNA) in chad cde ceebeceketeen see u

tees een ee ae Soe

Recommendations,

pp. 28-29, (December 1994) ................ 15

Sales and Contracts to Sell in Interstate and Foreign

Commerce, and Federal Commercial Arbitration,

on S. 4213 and S. 4214 before a Subcomm.

ais ines Gets ab the aaiies 67th Cong.,

rh NS eo Rd ee re wae 5

SEC Rel. No. 34-40109, 63 Fed. Reg. 35299,

ee ee i aeons 4

SEC Rel. No. 34-40858, 64 Fed. Reg. 1051,

ot cee rae a oe 4

S. Rep. 101-79, 101st Cong., Ist Sess. (1989)... . 6, 7,9

137 Cong. Rec. H9526 (Daily ed. Nov. 7, 1991)

(statement of Rep. Edwards).............-.++:. 10

1

No. 99-1379

IN THE

SUPREME COURT OF THE UNITED STATES

CIRCUIT CITY STORES, INC.,

Petitioner,

,

v.

SAINT CLAIR ADAMS,

Respondent.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF AMICUS CURIAE OF AARP

IN SUPPORT OF RESPONDENT

INTEREST OF AMICUS CURIAE”

AARP is a membership organization of more

than thirty-four million people age 50 or older that is

dedicated to addressing the needs and interests of Americans

over the age of 50. One of AARP's primary objectives is to

achieve dignity and equality in the work place through

Y The consents of the parties have been filed with the Clerk of the

Court. Pursuant to Supreme Court Rule 37.6, Amicus Curiae AARP

states that no counsel for any party authored this brief in whole or in

part and that no party or entity other than amicus curiae, its members,

or counsel made a monetary contribution to the preparation or

submission of this brief.

2

positive attitudes, practices, and policies regarding work and

retirement. Through its research, publications, and training

programs, AARP seeks to eliminate ageist stereotypes,

encourage employers to hire and to retain older workers, and

help workers overcome the obstacles they encounter because

of age. AARP supports the rights of older workers and the

public policies designed to protect their rights and to preserve

the legal means to enforce them.

More than forty percent of AARP's members, most of

whom are protected by the Age Discrimination in

loyment Act (ADEA) and other federal and state laws

biting - -— discrimination, remain active in the

work force. proper interpretation and application of

these statutes are of paramount importance to the millions” of

older workers who rely on them to remedy invidious bias in

the work place. Mandatory, pre-dispute arbitration provisions

in employment contracts, such as the one at issue in this case,

a afforded workers under the ADEA and

other f civil rights laws and undermine vhe enforcement

system Congress designed to eliminate employment

discrimination in society. Workers should not be forced to

decide between their jobs and enforcement of their statutory

rights, the stark choice presented by mandatory arbitration

agreements. If arbitration is to occur it should be post-dispute

and voluntary. In this way employees will have a true choice

of forum for resolving employment discrimination claims that

is consistent with both the letter and the spirit of the nation’s

antidiscrimination laws. For these reasons, AARP files this

brief amicus curiae urging the Court to affirm the decision of

the court below holding that the Federal Arbiuation Act

(FAA) does not apply to employment disputes.

¥ “As of 1995, approximately 41 million members of the nation’s

civilian workforce were age 45 or older.” Marc Bendick, et al., No

Foot in the Door: An Experimental Study of Employment

Discrimination Against Older Workers, Journal of Aging & Social

Policy, Vol. 10(4) 1999, at 20, (citation omitted).

et, es —_—

3

SUMMARY OF ARGUMENT

The legislative history of the FAA could not be clearer:

The FAA was not intended to apply t» arbitration clauses in

employment contracts. The reason for this exclusion is that

the equality of bargaining power presumed to exist between

the parties to the commercial contracts to which the FAA was

intended to apply is totally lacking in the employer-employee

relationship outside of the collective bargaining arena.

inequality of bargaining power between employer and

employee vitiates any voluntariness on the part of the

employee who, as a practical matter, is forced to arbitrate

statutory claims under the civil rights laws or forfeit the job.

The “take it or leave it" nature of such agreements denies

employees a forum in which they will be able to fully

vindicate their statutory rights.

ARGUMENT

The first section of the FAA states:

[NJothing 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. Al Gilmer v. Interstate/Johnson Lane

Corp., 500 U.S. 20 (1991), upheld a provision that required

arbitration of a claim under the ADEA, the court made it

clear that it was not addressing the question presented here,

i.e., the applicability of the FAA to employment contracts

containing such provisions. The Gilmer court refused to

consider the question because the arbitration provision at issue

was not in a contract of emplo . in Gilmer’s

securities registration application. era to

v. Universal Maritime Service Corp., 119 S. Ct. 391, 397 n.

4

2 (1998).*’ In his dissent in Gilmer, Justice Stevens concluded

that the language of section 1 of the FAA meant that

"arbitration clauses contained in employment agreements are

specifically exempt from coverage of the FAA ...." 500 U.S.

at 36 (Stevens, J., dissenting). 4” Justice Frankfurter reached

a similar conclusion: "[w]hen Congress passed legislation to

enable arbitration agreements to be enforced by the federal

courts, it saw fit to exclude this remedy with respect to labor

contracts." Textile Workers Union v. Lincoln Mills of

Alabama, 353 U.S. 448, 466 (1957) (Frankfurter, J.,

dissenting).

The legislative history expressly supports this

construction. At the Senate Judiciary Subcommittee hearings

on the bill which eventually became the FAA, the chair of the

American Bar Association committee responsible for drafting

the bill stated that it was not intended to "be an act referring

to labor disputes at all. It is purely an act to give the

¥ 500 U.S. at 25 n.2 As pointed out in Koveleskie v. SBC Capital

Markets, Inc., 167 F.3d 361 (7th Cir. 1999), the Securities and

Exchange Commission (SEC) approved changes to both the National

Association of Securities Dealers (NASD) and the New York Stock

Exchange (NYSE) arbitration rules considered in Gilmer. Under the

amendments, statutory employment-related discrimination claims are

arbitrable only if the parties agree to arbitration after the dispute has

arisen; absent such agreement, however, arbitration of such claims is

not compulsory. The NASD rule change went into effect on January

1, 1999. See SEC Rel. No. 34-40109, 63 Fed.Reg. 35299, 1998 WL

339422. The NYSE rule change was approved by the SEC on

December 29, 1998. See SEC Rel. No. 34-40858, 64 Fed.Reg. 1051,

1999 WL 3315.

* See Robert N. Covington, Employment Arbitration After Gilmer:

Have Labor Courts Come to the United States?, 15 Hofstra Lab. &

Employment L.J. 345, 365 (Spring 1998) ("On the whole, Justice

Stevens ... and federal district courts like the court in Arce [v. Cotton

Club of Greenville, Inc., 883 F. Supp. 117 (N.D. Miss. 1995)], would

seem to have the better argument: that the Federal Arbitration Act was

not meant to cover contracts of employment.")

———

5

merchants the right or privilege of sitting down and agreeing

with each other as to what their damages are, if they want to

do it." Sales and Contracts to Sell in Interstate and Foreign

Commerce, and Federal Commercial Arbitration, Hearing on

S. 4213 and S. 4214 before a Subcomm. of the Senate Comm.

on the Judiciary, 67th Cong., 4th Sess. (1923) (hereinafter

F nadag gy ), at 9, quoted in Gilmer, 500 U.S. at 539

(Stevens, J., dissenting).

At that same hearing, Senator Walsh stated:

The trouble about the matter is that a great

many of these contracts that are entered

into are really not [voluntary] things at all.

Take an insurance policy; there is a blank

in it. You can take that or you can leave

it. The agent has no power at all to decide

it. Either you can make that contract or

you can not make any contract. It is the

same with a good many contracts of

employment. A man says, ‘These are our

terms. All right, take it or leave it.’

Well, there is nothing for the man to do

except to sign it; and then he surrenders

his right to have his case tried by the

court, and has to have it tried before a

tribunal in which he has no confidence at

all.

Senate Hearing, at 9.

After analyzing Congress’ intent in enacting the FAA

by examining the "historical context" of the phrase "engaged

in . . interstate commerce, " the Ninth Circuit concluded that

section 1 of the FAA “was clearly intended to exempt all

employment contracts over which Co had interstate

commerce power." Craft v. Campbell Co., 161 F.3d

1199, 1202-03 (9th Cir. 1998). While the other circuits have

concluded for other reasons that the FAA does apply to

employment disputes, it is clear that at the time of the

enactment of the FAA, no one envisioned the use of dispute

6

resolution clauses mandating arbitration to strip essentially

powerless workers of rights that were enacted for their

protection.

Moreover, the Court’s conclusion in Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc. , 473 U.S. 614, 628

(1985), that "by agreeing to arbitrate a statutory claim, 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," presupposes both the voluntary agreement of

the party to arbitrate claims and the ability to fully vindicate

Statutory rights in this forum. Where "agreements" to

arbitrate are conditions of employment, it is clear that neither

condition is satisfied.

I. PRE-DISPUTE AGREEMENTS TO ARBITRATE

ARE NOT VOLUNTARY.

This nation’s entire body of labor law has been created

in response to the inequality of bargaining power between

employers and individual employees. For example, in the

National Labor Relations Act, at 29 U.S.C. §151 (NLRA),

Congress proclaimed that the purpose of the statute is to

"restor[e] equality of bargaining power between employers

x4 employees." In the Norris-La Guardia Act, at 29 U.S.C.

§i02, Congress declared that because "the individual

unorganized worker is commonly helpless to exercise actual

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

thereby to obtain acceptable terms and conditions of

employment,” it is the public policy of the United States that

"he shall be free from the interference, restraint, or coercion

of, employers of labor." In its deliberations regarding the

adoption of the protections relating to workers’ waivers of

rights and claims which were eventually enacted in the Older

Workers Benefit Protection Act of 1990 (OWBPA), codified

at 29 U.S.C. § 626(f)(1)(A-H), "[cJongress recognized the

significant inequalities in bargaining power that exist between

employers and employees ...." S. Rep. 101-79, 101st Cong.,

Ist Sess. 4 (1989). In the OWBPA context, as in the NLRA,

Norris - LaGuardia Act, and FAA, Congress was concerned

about the employer’s coercion of the individual worker. "The

7

Committee’s major concern in this regard is that early retirees

or employees being offered the chance to participate in exit

incentive or other group termination programs can effectively

be forced to waive their right to file a claim when the

employer conditions such participation on the signing of a

waiver." Id. at 9.

California, where this case arose, has similarly

acknowledged the inability of individual employees to bargain

on an equal basis with employers:

[T]he public policy of this State is

declared as follows: Negotiations of terms

and conditions of labor should result en

voluntary agreement between employer

and employees. Governmental authority

has permitted and encouraged employers

to organize in the corporate and other

forms of capital control. In dealing with

such employers, the individual

unorganized worker is helpless to exercise

actual liberty of contract and to protect his

freedom of labor, and thereby obtain

acceptable terms and conditions of

employment ....

Cal. Lab. Code § 923 (emphasis added).

The Court has similar . > inherent

inequality between employees and employers as a ful

mre of the employment statutes. Finding that a

waiver of rights under the Fair Labor Standards Act, 29

U.S.C. § 201 et seg. (FLSA), was contrary to public policy,

the Court concluded that ae eS ee

superior bargaining power to coerce employees to ... waive

Geir queteclions water tee Att." Tony & Susan Alamo

Foundation v. Secretary of Labor, 471 U.S. 290, 302 (1985).

Justice O’Connor shared this concern in the case of a state

statute intended to protect employees "from the exploitative

employer who would demand that a prospective employee

sign away in advance his right to resort to the judicial system

8

for redress of an employment grievance." Perry v. Thomas,

482 U.S. 483, 495 (1987) (O’Connor, J., dissenting). In

Oubre v. Entergy Operations, Inc., 118 S. Ct. 838, 844

(1998), the Court acknowledged that the OWBPA "reflects

concern about the conditions (of knowledge and free choice)

surrounding the making of a contract to waive an age

discrimination claim."

Given this legislatively and judicially recognized lack of

bargaining power on the part of individual employees like

Respondent Adams, and the concomitant opportunity for

coercion on the part of the employer, it cannot be seriously

maintained that the employee’s "agreement" to a predispute

arbitration clause is voluntary in the sense of the free assent

required for a valid waiver of statutory rights.

In the employment context, it is, indeed, a "false

assumption” that if the worker rejects the proffered arbitration

clause, "another employer would offer a worker a job where

his or her statutory rights woula be enforceable... ." Paul

D. Carrington, The Dark Side of Contract Law, Trial, May

2000, at 73, 74. This false assumption operates with

particular force in the case of an older worker’ who has lost

a job and who has finally obtained an interview for another

job after searching much longer than his younger counter

parts.” Given the older applicant’s lower probability of

successfully obtaining a job comparable to his former

2 A person age forty or older protected by the ADEA, 29 U.S.C.

§ 621 ef seq.

Time Magazine reported that most older workers who are replaced

by younger people willing to work for less money “eventually find

some kind of new employment. Trouble is, they have to search long

and hard, and then they must often settle for low-paid, low-skilled

work.” “Time Select Careers: Unmasking Age Bias,” at 3, Time,

Sept. 7, 1998. One study found that in Philadelphia in 1994 it took

people 50 and older an average of 25 weeks to find a new job,

compared to 18 weeks for people under 40. Money, July 1996,

at 121.

9

position,” it is completely unrealistic to expect that he would

turn down a job because the employer conditioned it on his

accepting mandatory arbitration of all statutory claims that

might arise. To the contrary, when confronted with the

employer’s proclamation of arbitration as a condition of

employment, the only realistic choice for the older employee

or applicant is to accept the arbitration clause or lose the job.

The National Academy of Arbitrators, the nation’s

leading professional organization of labor-management

arbitrators, while strongly supporting arbitration in the

collective bargaining context, has condemned the concept of

— pre-dispute arbitration agreements for individual

workers.

In 1997, the Academy passed a resolution stating: "The

National Academy of Arbitrators opposes mandatory

employment arbitration as a condition of employment when it

requires waiver of direct access to either a judicial or

administrative forum for pursuit of statutory rights." National

Academy of Arbitrators (NAA) Statement of Guidelines (May

21, 1997) 103 Daily Lab. Rep. (BNA) E-1 (May 29, 1997).

According to the president of the NAA, the business of

arbitrators is fairness "and the absence of fairness, wherever

it occurs, should be our concern." Jd. In connection with the

issuance of the Guidelines, the former president of the NAA

pointed out that arbitrators are accustomed to a system

involving parties of equal power and that mandating

arbitration as a condition of employment is "not as fair" as

traditional, [i.e., truly voluntary post dispute] arbitration. Jd.

In 1991, after the Gilmer decision, Congress passed the

Civil Rights Act of 1991 (CRA), which, inter alia, expressly

gave employees the right to a jury trial in discrimination

claims brought under Title VII. 42 U.S.C. §198la(c).

Y In discussing the “unfair and abusive waiver practices” that led to

the adoption of the OWBPA, Congress found that “once out of work,

these older Americans have less than a 50/50 chance of ever finding

new employment.” S. Rep. 101-79, 10ist Cong., 1st Sess. 4 (1989).

10

Although the CRA encouraged the use of all forms of

alternate dispute resolution, as explained by Representative

Edwards, "The section contemplates the use of voluntary

arbitration to resolve specific disputes after they have arisen,

not coercive attempts to force employees in advance to forego

statutory rights." 137 Cong. Rec. H9526 (Daily ed. Nov. 7,

1991) (statement of Rep. Edwards) (emphasis added).

The Equal Employment Opportunity Commission

(EEOC), the federal agency charged with enforcing the

nation’s employment laws, has issued an extensive policy

statement condemning mandatory arbitration of civil rights

claims. At the same time, the EEOC reaffirmed its support

for voluntary arbitration and other alternative approaches to

resolve employment discrimination disputes. EEOC, Policy

Statement on Mandatory Binding Arbitration of Employment

Discrimination Disputes as a Condition of Employment, 133

Daily Lab. Rep (BNA) E-4, July 11, 1997) [hereinafter

EEOC Policy Statement]. This Court traditionally gives

"great deference” to the EEOC’s i retation of the civil

rights laws enforcing employee rights. EEOC v. Commercial

Office Products Co., 486 U.S. 107 (1988); Albemarle Paper

Co. v. Moody, 422 USS. 405, 431 (1975); Griggs v. Duke

Power Co., 401 U.S. 424, 434 (1971) #

In the EEOC Policy Statement, the agency stated that

"agreements that mandate binding arbitration of

discrimination claims as a condition of employment are

contrary to the fundamental principles evinced" in the

"nation’s employment discrimination laws." 133 Daily Lab.

Rep. (BNA) E-4, July 11, 1997.

¥ Sutton v. United Air Lines, Inc., 119 S.Ct. 2139 (1999), does not

affect the deferential consideration traditionally afforded EEOC

policies, since in that case the Court found no need to address the

question of what deference is due such agency determinations. IJd., at

2145. ¥

ee

11

The Commission further found that:

The imposition of mandatory arbitration

agreements as a condition of employment

substitutes a private dispute resolution

system for the public justice system

intended by Congress to govern the

enforcement of the employment

discrimination laws. The private arbitral

system differs in critical ways from the

f as -

structurally biased feshane applicants and

employees.

Id. at E-7 (emphasis added). Further, "[t)he terms of the

private agreement defining the arbitrator's authority and the

arbitral process are characteristically set by the more powerful

ee oon eee ae On 6 GE

d "agreements are imposed by employers because they

believe them to be in their interest, and they are made

possible by the employer’s superior bargaining power." /d.

The EEOC Policy Statement concluded:

The use of unilaterally imposed

b —

*F employment distin inding arbi

K ye ory

individual civil rights claimant and the

public interest in eradicating

discrimination. Those whom the law seeks

to regulate should not be permitted to

exempt themselves from federal

enforcement of civil rights laws.

Id. at E-9 (emphasis added).

sixteen years before the EEOC Policy Statement:

12

Plainly, it would not comport with the

congressional objectives behind a statute

seeking to enforce civil rights protected by

Title VII to allow the very forces that had

practiced discriminatio™. to contract away

the right to enforce civil rights in the

courts. For federal courts to defer to

arbitral decisions reached by the same

combination of forces that had long

perpetuated invidious discrimination

would have made the foxes guardians of

the chickens.

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

728, 750 (1981) (Burger, C.J., dissenting).

In summary, it is quite clear that the drafters of the

FAA and the Congress that enacted it did not intend for it to

apply to employment disputes. The reason for excepting

employment disputes from the coverage of the FAA, the

unequal bargaining power of employers and employees with

its potential for coercion and abuse of the weaker party by the

stronger, is at least as valid today as it was at the time of the

FAA’s enactment. Allowing employers who seek to exploit

their power over the work place unilaterally to impose

mandatory arbitration in all employment disputes is not only

bad law, but bad public policy as well.

Il. MANDATORY ARBITRATION IS

INCOMPATIBLE WITH THE FULL

ENFORCEMENT OF THE EMPLOYMENT

DISCRIMINATION LAWS.

In Gilmer, this Court decried "generalized attacks on

arbitration" that “‘res[t] on suspicion of arbitration as a

method of weakening the protections afforded in substantive

law to would-be complainants.’" 500 U.S. hay ay

Rodriguez de Quijas v. Shearson/American Express, Inc. , 4

U.S. 477, 481 (1989). This criticism has been squarely

answered by the EEOC Policy Statement, which

unequivocally concludes: "Mandatory arbitration of

13

employment discrimination disputes ‘privatizes’ enforcement

of the federal discrimination laws, thus

i lic enforcement of the laws." 133 Daily

Lab. Rep. (BNA) July 11, 1997, at E-7. The EEOC

NS eee

differ significantly from the judicial forum." Jd.

In McKennon v. Nashville Banner Pub. Co., 513 U.S.

352,358-59 (1995), the Court emphasized the importance of

SS Sy es eee oe ee ee ae

ws:

t

not a public tribunal imposed the parties by superior

authority which the parties are to accept. He has no

general charter to administer justice for a community which

transcends the parties phe et ghee ng eb me

of Am. v. Warrior and Gulf Navigation Co.. 363

U.S. 574, 581 (1960).

14

of arbitral decisions is severely limited, leaving "higher courts

and Congress unable to act to correct errors in statutory

interpretation. The risks for the vigorous enforcement of the

civil rights laws is profound." 133 Daily Lab. Rep. at E-7,

July 11, 1997 (emphasis added).

The EEOC also described other aspects of arbitration

that limit claimants’ rights in important respects, including the

unavailability of a jury trial, significantly limited discovery,

and the unsuitability of arbitration for resolving class or

pattern or practice discrimination claims.” Jd. Mandatory

arbitration "may, in fact, protect systemic discriminators by

forcing claims to be adjudicated one at a time, in isolation,

without reference to a broader - and more accurate - view of

the employer’s conduct." Jd. In addition, unlike a judicial

proceeding, "results cannot but be influenced by the fact that

the employer, and not the employee, is a ial source of

future business for the arbitrator." Jd. Finally, “unlike

voluntary post-dispute arbitration - which must be fair enough

% Mandatory arbitration agreements in recent years have included, for

example, the following elements: (1) the reservation of the right to

change the rules without any obligation to notify, much less receive

consent from the employee, (Floss v. Ryan’s Family Steak Houses,

Inc., 211 F.3d 306 (6th Cir. 2000)); (2) failure to state that statutory

claims were included in the agreement to arbitrate, (Brown v. ITT

Consumer Financial Corp., 211 F. 3d 1217 (11th Cir. 2000)); Haskins

v. Prudential Insurance Co. of America, 2000 WL 1209274 (6th Cir.

Aug. 28, 2000), (3) a limitation on the damages an employee may

recover, i.e., no tort damages, or no punitive damages (Paladino v.

Avnet Computer, 134 F.3d 1054 (11th Cir. 1998)); Hooters of America

v. Phillips, 173 F.3d 933 (4th Cir. 1999), (4) limitations on the

discovery available prior to the arbitration, which inevitably works to

the disadvantage of the plaintiff (/d.); (5) controlling the panel of

arbitrators (Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,

170 F.3d 1 (1st Cir. 1999)); (6) shortening the statute of limitations

(Graham Oil v. ARCO Products Co., 43 F.3d 1244 (9th Cir. 1994));

and (7) forbidding the arbitrator from awarding attorneys fees or costs,

regardless of whether statutes provide such remedies to prevailing

plaintiffs (Paladino, Hooters of America, Graham Oil).

—

15

to be attractive to the employee - the employer imposing

mandatory arbitration is free to manipulate the arbitral

mechanism to its benefit." Jd.

The EEOC Policy Statement pointed out that the

agency's conclusions were consistent with the analysis of the

the potential for abuse of ADR created by

the imbalance of power between employer

and employee, and the resulting unfairness

to employees who, voluntarily or

otherwise, submit their disputes to ADR.

Presidential Commission on the Future of Worker-

Management Relations: Report and Recommendations, pp.

28-29, (December 1994). Given this concern, the Dunlop

16

This Court has also concluded that

[t]he [dhe purpose end procedure of Title VII indicate

intended federal courts to exercise

final seaponsibility for enforcement of Title VII;

deferral to arbitral decisions would be

inconsistent with that goal. Furthermore, we

have long recognized that ‘the choice of forums

inevitably affects the scope of the substantive

right to be vindicated.’

po ny / v. Gardner-Denver Co., 415 U.S. 36, 56 (1974),

Bast U.S. Bulk Carriers v. Arguelles, 400 U.S. 351, 359-

1) (Harlan, J., concurring). Additionally, "{alrbitral

ae while well suited to the resolution of contractual

disputes, make arbitration a comparatively 2a by Title VII"

forum for the final resolution of rights created by Title VII"

because "the specialized of arbitrators pertains

competence

primary to the low of tao chap, ant Gn low of tho tna.” Id. Id.

at 56-57.

CONCLUSION

The legislative history of the FAA strongly supports the

conclusion that Congress intended to exempt employment

disputes from mandatory arbitration. While Dy tae

agreements to arbitrate may be truly voluntary, the

of individual workers to so-called "voluntary" ae a

agreements to arbitrate statutory claims is vitiated by the

coercive nature of the ea relationship, which

is characterized by the unequal bargaining power of the

The arbitral process, by its nature, is generally not

& forum in which employess ae sblo to Selly vindicet thet

ent Pate thes =

the FAA by holding that it does not compel arbitration of

employment disputes.

September 19, 2000

17

Respectfully submitted,

Thomas W. Osborne*

Sally P. Dunaway

Laurie A. McCann

AARP Foundation Litigation

Melvin Radowitz

AARP

601 E Street, NW

W , DC 20049

(202) 4 2060

Counsel for Amicus Curiae

AARP

*Counsel of Record