Amicus Curiae Brief — Circuit City Stores, Inc. v. Adams
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No. 99-1379
IN THE —
Supreme Court of the Gnited States
Circutt City STORES, INC.,
Vv.
SAINT CLAIR ADAMS,
Petitioner,
Respondent.
On Petition for a Writ of Certiorari to
the United States Court of Appeals
for the Ninth Circuit
BRIEF FOR EMPLOYERS GROUP
AS AMICUS CURIAE IN SUPPORT OF PETITIONER
WILLIAM J. EMANUEL DANIEL H. BROMBERG
HARRY I. JOHNSON, III (Counsel of Record)
JONES, DAY, REAVIS & RICHARD H. SAYLER
POGUE JONES, DAY, REAVIS &
Suite 4600 POGUE
555 West Fifth Street 51 Louisiana Avenue, N.W.
Los Angeles, CA 90013 Washington, D.C. 20001
(213) 489-3939 Telephone (202) 879-3939
Counsel for the Employers Group
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .......... pipe eee
| INTERESTS OF AMICUS CURIAE ............... |
INTRODUCTION AND SUMMARY .... ae
ARGUMENT ... wer eee 4
| THE FAA COVERS EMPLOYMENT
CONTRACTS OF PERSONS NOT
| INVOLVED IN INTERSTATE OR
INTERNATIONAL TRANSPORTATION |... 4
A. The Contract-of-Employment
Exclusion Covers Only Contracts
| of Individuals Engaged in Interstate
or International Transportation 4
B. Section 2 of the FAA Supports
a Narrow Interpretation of the
Exclusion 10
Il EVEN IN 1925, THE EXCLUSION
DID NOT COVER ALL EMPLOYMENT
CONTRACTS SUBJECT TO
CONGRESSIONAL REGULATION 12
lil. THE LEGISLATIVE HISTORY OF THE
FAA IS IRRELEVANT AND, IN ANY
EVENT, CANNOT SUPPORT THE
INTERPRETATION BELOW 16
A. The Legislative History Is Irrelevant
Because the Meaning of the Language
of the Exclusion is Plain __. 16
B. In Any Event, the Legislative History Does
Not Justify an Expansive Interpretation of
eA nt
1. There Is No Material Discussion
of the Exclusion in the
Legislative History. ...............
2. The Historical Materials Cited by the
Ninth Circuit and Supporters of Its
Interpretation Are Confused and
asin ys ado 6 «he 0 + 5-0
I
17
17
30
TABLE OF AUTHORITIES
Page
Cases
A.H. Phillips Co. v. Waliing,
ERLE TRS ere ene ero 7
Addyston Pipe & Steel Co. v. United States,
I i ueeioene 14
Allied-Bruce Terminix Cos. v. Dobson,
EE EEE Ree eee ae
Amalgamated Association of Street, Elec. Ry. &
Motor Coach Employees v. Pennsylvania
Greyhound Lines, 192 F.2d 310 (3d Cir. 1951) ........... §
Armendariz v. Foundation Health
Psychare Servs., Inc., 973 P.2d 51 (Cal. 1999) ..........2
Asplundh Tree Expert Co. v. Bates,
71 F.3d 592 (6th Cir. 1995) ..000 ee. 3, 6
Bennett v. Spear, 520 U.S. 154 (1997) «000.00. ©
Bernhardt v. Polygraphic Co., 350 U.S. 198
(1956) ........... ... 10,13
Brennan v. King, 139 F.3d 258 (Ist Cir. 1998) . wocnenan
Brogan v. United States,
§22 U.S. 398 (1998)... secestenanienineinmtmnnonseen
Brown v. KFC National Management Ce O.
921 P.2d 146 (Haw. 1996) ............. emiennel 3,17
Buck v. Kuykendall, 267 U.S. 307 (1925) ccvveeeeeeeeevveeee D
Circuit City Stores, Inc. v. Ahmed,
195 F.3d 1131 (9th Cir. 1999) | | ee
Cleveland v. United States, 329 U.S. 14 (1947) _ 5
Cole v. Burns International Security Services,
105 F.3d 1465 (D.C. Cir. 1997) ...00........ 3, 6, 12
Craft v. Campbell Soup Co.,
177 F.3d 1083 (9th Cir.1999) oe passim
Dandridge v. Williams, 397 U.S. 471 (1970) ..... 10
IV
TABLE OF AUTHORITIES
(continued)
Page
Dean Witter Reynolds, Inc. v. Byrd.
470 US. 213 (1985) .......... | paenaraee WW. Tee 7
Department of the Air Force v. Rose,
8 LC See 17
Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), 0... 13
Ernst & Ernst v. Hochfelder, 425 U.S. 185 (1976) .......... 19
First Employer's Liability Cases,
I iacinctencinticonensiatshnsnnsnerctonsenisninialeanes 15
Gilmer v. InterstateJohnson Lane Corp.,
SU ce passim
Gonzalez v. Hughes Aircraft Employees Federal
Credit Union, 978 P.2d 1 (Cal. 1999) 0... 2
Gooch v. United States, 297 U.S. 124 (1936) 0000000... 5,7
Great Western Mortgage Corp. v. Peacock,
110 F.3d 222 (3rd Cir. 1997), cert. denied,
ST ee 3
Gustafson v. Alloyd Co., 513 U.S. 561 (1995)
Hammer v. Dagenhart, 247 U.S. 251 (1918)
John Hancock Mutual Life Insurance Co. v.
Harris Trust & Savings Bank, 510 U.S. 86 (1993) ....... 7
caine 13
Jones v. United States, 526 U.S. 227 (1999) 20000. 28
Jones v. United States, 527 U.S. 373 (1999) 22000... 5
Kelly v. Robinson, 479 U.S. 36 (1986) ..00.0..o0ooo oon. 20
Kinney v. United Healthcare Service,
70 Cal. App. 4th 1322 (1999) _............. Pee ee 2
Lee v. Technology Information Group,
978 P.2d 1 (Cal. 1999) 0... Gidiadauienaniaonae 2
Vv
TABLE OF AUTHORITIES
(continued)
Maciewjewski v. Alpha Systems Laboratories, Inc.,
ee 2
Maryland Casualty Co. v. Realty Advisory Board
on Labor Relations, 107 F.3d 979 (2d Cir. 1997) .....3
Matthews v. Rollins Hudig Hall Co.,
i i iladliinne 3
McCaugh v. Hershey Chocolate Co.,
A aS 19
McWilliams v. Logicon, Inc.,
| a | 3
Metropolitan Stevedore Co. v. Rambo,
A 16
Mid-Northern Oil Co. v. J.W. Walker,
ESE AE ETE 5
Moses H. Cone Memorial Hospital v. Mercury
Construction Corp., 460 U.S. 1 (1983) 2.000000. 7
NLRB v. Jones & Laughlin Steel Corp.,
| EEE enn 10
Neal v. Clark,
a cetesens 5
Newport News Shipbuilding & Dry Dock
Co. v. EEOC, 462 U.S. 669 (1983)... 28
O'Neil v. Hilton Head Hospital,
ji) a pf ls | enn ED 3, 12
Paladino v. Avenet Computer Technologies, Inc.
134 F.3d 1054 (11th Cir. 1998) occa 3
Patterson v. Tenet Healthcare, Inc.,
113 F.3d 832 (8th Cir. 1997) 20... 3, 6,7
Pensacola Telegraph Co. v. Western Union
Telegraph Co., 96 U.S. 1 (1877) «00.00.0000... 14
Pension Benefit Guaranty Corp. v. LTV Corp.,
496 U.S. 633 (1990)... 0 SEE 28
ee a
vl
TABLE OF AUTHORITIES
(continued)
Pichly v. Nortech Waste,
986 P.2d 169 (Cal. 1999) .....
Perry v. Thomas,
482 US. 483 (1987) .......
Pittston Coal Group v. Sebben,
488 U.S. 105 (1988) ...
Prima Paint Corp. v. Flood & Conklin
Mfg. Co., 388 U.S. 395 (1967)
Pryner v. Tractor Supply Co.,
109 F.3d 354 (7th Cir. 1997)
Ramirez v. Circuit City Stores, Inc.,
995 P.2d 137 (Cal. 1999)
Ratzlaf v. United States,
510 U.S. 135 (1994) ..........
Real Silk Hosiery Mills v. Portland,
268 U.S. 325 (1925) .........
Rojas v. TK Communications, Inc.,
87 F.3d 745 (Sth Cir. 1996) me
Rubin v. United States, 449 U.S. 424 (1981)
In re Second Employer's Liability Cases,
223 US. 1(1912)
Southland Corp. v. Keating,
465 US. 1 (1984) ...........
St. Mary's Honor Center v. Hicks,
509 U.S. 502 (1993) ..
Stirlen v. Supercuts, 51 Cal App 4th 1519 (1997) |
The Howick Hall,
10 F.2d 162 (E.D. La. 1925)
Third National Bank in Nashville v. Impac, Lid.,
432 U.S. 312 (1977) ...........
Page
.27
10
;
4
vil
TABLE OF AUTHORITIES
(continued)
Page
United Electrical Radio & Machine Workers v. Miller
Metal Products, Inc., 215 F.2d 221
a ada 24
United States v. Darby,
i a 13
United States v. Gonzales,
TIT SOILS ETS MET SM ATES 16
United States v. Lopez,
TSE ES a LETS oo OO
United States Price,
cl 28
Walters v. Metropolitan Educational — Inc.,
319 U.S. 202 (1997) ................... Seaienneanitl
West Virginia University Hospitals Inc. v. Ce asey,
a ER I a 16
Western Air Lines, Inc. v. Board of Equalization,
ny CN eissiietiniictitticsianilaadudiedvbidecescstiudiite 21
Statutes
Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. on
PUSS. Ob ............ Seite aiatesthots cccssssess PQSSiOn
TE EY
EERO sever Rare ae we TED 07) 8
Transportation Act of 1920, 41 Stat. 456(1920) .............. 9
SIT sscrrisccctnsnstoccosinsessescsontetmameseoreecesscesors WT
SIS II ccccccccsconnscnenensnendusssecesetsnsuvesenatnsee _9
Legislative Materials
A.B. 858, 1999-2000 Reg. Sess. (Cal. May 3, 1999)
<http://www leginfo.ca.gov/pub/
bill/asm/ab 0851-0900/ab 858 bill
20000124 amended sen.pdf> 2
vill
TABLE OF AUTHORITIES
(continued)
Page
Arbitration of Interstate Commercial Disputes,
Hearing before the Joint Committee of Subcommittees
on the Judiciary, 68th Cong., Ist Sess. (1924) .... passim
65 Cony. Rec. H11081 (June 6, 1924) 00.0... 18, 22
66 Cong. Rec. H3004 (Feb. 4, 1925) 0... rte 22
66 Cong. Rec. $2759 (1925) ...........:ccccceeeeccreneeeseteseens 18
BB Comm, Rac. BOT2 ouu....scecccsesrcsssersesscssssrnensens ‘cohen 28, 29
H.R. 68-646 (1923) .............. Ee Cm Ee 17, 22
H.R. Rep. No. 68-96 (1924) 0.0. analiesias ae
Sales and Contracts to Sell in Interstate and
Foreign Commerce, and Federal
Commercial Arbitration, Hearing before
Subcommittee of the Senate Committee
on the Judiciary, 67th Cong., 4th Sess. (1923) ... passim
Letter from Herbert Hoover to Hon. Thomas
Demis, Fam. F0, FORD ns sncsrcssccesccccsssssesesees 36
i ID cocceccst dectencncscnresesesnnssincnnessncesnenarie 17, 22
OO I oi ccssssissascacnssrensnenncnscsnsesostusdadins ane 21
S. Rep. No. 68-536 (1924) ooo oeecccccctesst essen 18, 25
Miscellaneous
47 ABA Reports (1922) .... © ciahiliteniiosn aaa 21
4B ABBA Reports (1923) .......2..2400:cccerercerecesesrssesesessessoreees 22
49 ABA Reports (1924) ......... i iaiesllitalaanimeiicediieliaditales 22, 23
Letter from W_H. Pratt to Hon. Thomas J. Walsh
SII I... sacnamsnsdvosnemnennnnnnonssoesenat 22, 23
$3 ABA Reports (1928) ............:c:cccccecceeneeseeneeeecens passim
A Standard Dictionary of the English Language
SUIT dink scesdcstnecomany euimaseapebidiabebiestevensennennstensnetecsone 1]
American Heritage Dictionary of the
English Language (3d ed. 1992)... 1]
—
1X
TABLE OF AUTHORITIES
(continued)
Page
Harry Baum & Leon Pressman, 7he Enforcement of
Commercial Arbitration Agreements in the
Federal Courts, 8 N.Y.U. L.Q. Rev. 428 (1932) . 17, 20
Henry C. Black, A Law Dictionary (2d ed. 1910) ............ 11
Brief for the American Federation of Labor
and Congress of the Industrial Organizations
as Amicus Curiae in Support of Petitioner,
Gilmer v. Interstate/Johnson Lane Corp.,
No. 90-18 (U.S. Nov. 15, 1990) ooo. passim
Due Process Protocol for Mediation and
Arbitration of Statutory Employment
Disputes, 9A Lab. Rel. Rep. (BNA)
No. 142, at 534 (May 9, 1995) oo... 8
Matthew W. Finkin, Employment Contracts
under the FAA—Reconsidered,
I . 18,21
Matthew W. Finkin, "Workers’ Contracts" Under
the United States Arbitration Act: An Essay in
Historical Clarification, \7 Berkeley J. Emp.
& Lab. L. 282 (1996) ........ SES See 9
John J. George, Motor Carrier Regulation in the
United States (1929) 0.0 edeeeieaiasies 9
| Patrick Hardin, The Developing Labor Law
Rec LA, 7 A 8
James A. King et al., Agreeing to Disagree
on EEO Disputes, 9 Lab. Law 97 (1993) . : wi
Douglas L. Leslie, The Railway Labor Act
panes reins ta sor of. "i AeA ee
lan R. MacNeil, American Arbitration Law
oss 19, 20, 27
| lan P. MacNeil et al., Federal Arbitration
BRISA at ca 24
xX
TABLE OF AUTHORITIES
(continued)
Page
Proceedings of the 26th Annual Convention of
the 26th Annual Convention of the
International Seamen’s Union of America
COI a ccossivesoensesnienniniibesintnpiicdendieitiininnndinentanniinninseie 27
Proceedings of the 45th Annual Convention
of the American Federation of Labor (1925) .............. 27
Report of the New York State Legislative
Committee on Industrial and
ee EI bce siicnesesnsicssdnccntenorenseesevosousetisi 27
David Sherwyn et al., In Defense of Mandatory
Arbitration of Employment Disputes:
Saving the Baby, Tossing out the Bathwater,
and Constructing a New Sink in the Process,
3 U. Penn. J. Lab. & Emp. L. 73 (1999) .........0000..., 29
2A Norman J. Singer, Statutes & Statutory Construction
SFB CG IID a scsecesccssenesencnsscsssesseonsossenecensunoe 6
Robert L. Stern, 7he Commerce Clause and
the National Economy, Part 1,
Gees, ©, Be GG ecscsvescceicsssccenscesnsccessosecns 14
The International Encyclopedia Dictionary (1901) ......... 11
Noah Webster, An American Dictionary of the
English Lang sage (C. Goodrich rev. ed. 1859) ........ 1]
Webster's Third New International Dictionary (1971) ..... 11
Wesley A. Sturges, A 7reatise on Commercial
Arbitration and Awards (1930) ................00c00cceeeeees 25
INTERESTS OF AMICUS CURIAE'
The Employers Group is a_ nonprofit corporation
headquartered in the State of California. With nearly 5,000
member companies employing approximately 2.5 million
employees, the Employers Group is the nation's oldest and
largest human resource management association. Its purpose
is to educate its members about employment law and keep
them informed of employment issues. In addition, the group
routinely represents the interests of its members in the
legislative process and files briefs amicus curiae in cases in
which those interests are implicated.
Many of the Employers Group’s member companies have
agreed in contracts of employment to arbitrate disputes with
their employees. These arbitration agreements enable both
employers and employees »like to avoid the expense of
litigation. Just as importantly, these agreements also help to
promote and preserve cooperative, productive working
environments by resolving disputes quickly before they create
permanent mistrust and estrangement.
California has long been hostile to the enforcement of
arbitration agreements in the employment area. This Court has
already held that the Federal Arbitration Act (FAA), 9 U.S.C.
§ 1 ef seq., preempts a California law barring arbitration of
wage disputes, see Perry v. Thomas, 482 U.S. 483 (1987); see
also Southlan! Corp. v. Keating, 465 U.S. 1, 10-16 (1984)
(holding that the FAA preempts application of a California law
concerning franchise investments), and the California
legislature recently considered legislation prohibiting employers
from even requesting an agreement to arbitrate in most
employment contracts (and rendering any such agreements
' Counsel for both parties have consented to the filing of this brief, and
those consents have been filed with the Clerk of this Court. No counsel
for either party had any role in authoring this brief, and no person other
than the named amicus and its counsel has made any monetary
contribution to the preparation and submission of this brief.
2
unenforceable)? Arbitration agreements in employment
contracts have also repeatedly been attacked i California
courts as unconscionable contracts of adhesion and as contrary
to public policy. See, e.g., Kinney v. United HealthCare
Serv., 70 Cal. App. 4th 1322 (1999) (unconscionable), Stirlen
v. Supercuts, 51 Cal App. 4th 1519 (1997) (unconscionable
and contrary to public policy). In fact, the California Supreme
Court is currently considering an unconscionability claim in
Armendariz v. Foundation Health Psychcare Servs., Inc., 973
P.2d 51 (Cal. 1999), and it has deferred consideration of a
number of similar claims pending its ruling in that case.’ As a
consequence, if this Court were to find that all contracts of
employment are excluded from the coverage of the FAA, many
agreements to arbitrate involving the Employers Group's
member companies could become unenforceable. Because of
the importance of this issue to its members and to the country
as a whole, the Employers Group has a vital interest in the
question presented in this case.
INTRODUCTION AND SUMMARY
Ten years ago, several amici questioned whether the FAA.
applies to any employment contracts. See Gilmer v. Interstate
Johnson Lane Corp., 500 U.S. 20, 25 n2 (1991). Such
contracts, the amici argued, are not covered by the FAA
because they fall within the exclusion of “contracts of
employment of seamen, railroad employees, or any other class
of workers engaged in foreign or interstate commerce” in
2 See AB. 858, 1999-2000 Reg. Sess., § 2 (Cal. May 3, 1999)
<http://www.leginfo.ca.gov/pub/bill/asm/ab_0851-
0900/ab 858 bill 20000124 amended_sen.pdf>.
3 See, e.g., Ramirez v. Circuit City Stores, Inc., 995 P.2d 137 (Cal. 2000),
Maciejewski v. Alpha Sys. Lab, Inc., 986 P.2d 170 (Cal. 1999); Pichly v.
Nortech Waste, 986 P.2d 169 (Cal. 1999); Lee v. Technology Integration
Group, 978 P.2d 1 (Cal. 1999), Gonzales v. Hughes Aircraft Employees
Federal Credit Union, 978 P.2d 1 (Cal. 1999).
3
Section | of the Act. 9 U.S.C. § 1. Although this Court
decided to “leave for another day the issue raised by amici
curiae,” Gilmer, 500 U.S. at 25 n.2, eleven circuits and one
state supreme court have since determined or reaffirmed that
this exclusion covers only contracts of individuals employed in
the interstate or international transportation of goods and
people.* Indeed, the Ninth Circuit is the only circuit
considering the issue after Gilmer to find that the contract-of-
employment exclusion covers all employment contracts.
The Ninth Circuit adopted this anomalous position in a 1999
decision captioned Craft v. Campbell Soup Co., 177 F.3d 1083
(9th Cir. 1999), which the per curiam decision below followed
without comment. See Circuit City Stores, Inc. v. Ahmed, 195
F.3d 1131, 1132 (9th Cir. 1999). While most courts have
focused on the language of the exclusion in Section 1, in
Campbell Soup the Ninth Circuit took a different tack. It
focused upon history, arguing that an expansive reading of the
exclusion is supported by the historical understanding of its
language, the historical scope of Congress’ commerce power,
and the Act’s legislative history. See 177 F.3d at 1084-90. As
demonstrated below, these historical arguments are irrelevant
because the meaning of the text of the exclusion is plain. In
* See Brennan v. King, 139 F.3d 258, 264 n.5 (1st Cir. 1998); Maryland
Cas. Co. v. Realty Advisory Bd. on Labor Relations, 107 F.3d 979, 982
(2d Cir. 1997), Great Western Mortgage Corp. v. Peacock, 110 F.3d 222,
227 (3d Cir. 1997), cert. denied, 522 U.S. 915 (1997); O'Neil v. Hilton
Head Hosp., \15 F.3d 272, 274 (4th Cir. 1997); Rojas v. TK
Communications, Inc., 87 F.3d 745, 748 (5th Cir. 1996), Asplundh Tree
Expert Co. v. Bates, 71 F.3d 592, 600-01 (6th Cir. 1995); Matthews v.
Rollins Hudig Hall Co., 72 F.3d 50, 53 n.3 (7th Cir. 1995); Patterson v.
Tenet Healthcare, Inc., 113 F.3d 832, 835-36 (8th Cir. 1997); McWilliams
v. Logicon, Inc., 143 F.3d 573, 576 (10th Cir. 1998); Paladino v. Avnet
Computer Tech., Inc., 134 F.3d 1054, 1060-61 (11th Cir. 1998)(op. of
Cox, J. and Tjoflat, J.); Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465,
1472 (D.C. Cir. 1997), Brown v. KFC Nat'l Management Co., 921 P.2d
146, 156 & n.13 (Haw. 1996).
4
addition, the historical arguments are without merit. First,
there is no material difference between the current
understanding of the language of the exclusion and the
understanding in 1925 when the FAA was first enacted.
Second, even in 1925, the commerce power was not as
circumscribed as the Ninth Circuit suggested in Campbell
Soup. Finally, the legislative history is ambiguous and
contradictory, and it therefore fails to provide a basis for
departing from the plain language of the contract-of-
employment exclusion.
ARGUMENT
I. THE FAA COVERS EMPLOYMENT CONTRACTS
OF PERSONS NOT INVOLVED IN INTERSTATE OR
INTERNATIONAL TRANSPORTATION.
Although the Ninth Circuit holds that the Federal Arbitration
Act does not apply to any contracts of employment, neither the
decision below nor the Campbell Soup opinion actually
analyzes the language of the contract-of-employment exclusion.
This is not surprising: that language clearly does not cover all
employment contracts. Moreover, contrary to the suggestion
in Campbell Soup, Section 2 of the FAA does not indicate
otherwise. Indeed, that section supports the more limited
reading of the exclusion that every other court of appeals to
consider the question has adopted.
A. The Contract-of-Employment Exclusion Covers
Only Contracts of Individuals Engaged in
Interstate or International Transportation.
The final sentence of Section | of the FAA provides:
nothing herein contained shall apply to contracts of
" employment of seamen, railroad employees, or any other
class of workers engaged in foreign or interstate commerce.
9 U.S.C. § 1. As the heading of Section | suggests, and the
context makes clear, this passage does not simply limit the
5
definitions of “maritime transactions” and “commerce” in the
rest of Section 1; the exclusion limits the application of the
statute as a whole. See Amalgamated Ass'n. of Street, Elec.
Ry. & Motor Coach Employees v. Pennsylvania Greyhound
Lines, 192 F.2d 310, 312 (3d Cir. 1951) (noting that the
heading was enacted into positive law in 1947). Even more
pertinently, under well-settled rules of statutory interpretation,
this exclusion does not encompass all contracts of employment,
but is instead limited to contracts governing the employment of
individuals engaged in the interstate or international
transportation of goods and people.
As this Court recently reiterated, “[s]tatutory language must
be read in context” because “a phrase gathers meaning from the
words around it.” Jones v. United States, 527 U.S. 373, 389
(1999) (quotation omitted); see also Neal v. Clark, 95 U.S.
704, 708 (1877) (“It is a familiar rule in the interpretation of
_. . Statutes that a passage will be interpreted by reference to
that which precedes and follows it.”) (quotation omitted). As
a consequence, when words in a statute are “grouped in a list,”
those words “should be given related meaning.” Third Nat'l
Bank in Nashville v. Impac, Lid., 432 U.S. 312, 322 (1977).
And when a statutory list contains several specific terms
followed by a general one, it has long been recognized that “the
general term should be understood as a reference to subjects
akin to the one with specific enumeration.” Brogan v. United
States, 522 U.S. 398, 404 n.2 (1998) (quotation omitted); see
also Cleveland v. United States, 329 U.S. 14, 18 (1946)
(noting that “general words are confined to the class and may
not be used to enlarge it”); Gooch v. United States, 297 U.S.
124, 128 (1936) (noting that this principle “limits general terms
which follow specific ones to matters similar to those
specified”); Mid-Northern Oil Co. v. Walker, 268 U.S. 45, 48-
49 (1925) (same).
This principle, which is often referred to as the “ejusdem
generis” or “of the same kind” rule, is based upon a sound,
6
practical consideration: if the general term in a list is construed
to its widest »xtent, it may render the more specific terms
preceding it superfluous. It is, however, a “cardinal principle
of statutory. construction” that, unless absolutely necessary,
courts must not ignore any portion of a statute or render it
meaningless, instead, they must “give effect, if possible, to
every clause and word of a statute.” Bennett v. Spear, 520
U.S. 154, 173 (1997) (quotation omitted), see also Walters v.
Metropolitan Educ. Enter., Inc., 519 U.S. 202, 209 (1997)
Accordingly, when a general term is preceded by specific terms
encompassed by that term, under the ejusdem generis principle,
the general term is normally interpreted to embrace only objects
similar in scope to the specific terms. See 2A Norman J.
Singer, Statutes & Statutory Construction § 47:17, at 272-74
(6th ed. 2000). In this way, both the specific and the general
terms are given meaning because the specific terms define the
class to which the general term extends. See id. at 283-85.
The ejusdem generis principle plainly applies to the FAA’s
contract-of-employment exclusion. That exclusion contains a
list in which specific terms (“seamen” and “railroad
employees”) precede a general term (“any other class of
workers engaged in foreign or interstate commerce”), and, as
several courts of appeals have noted, if the general term in the
exclusion were interpreted to extend to its fullest scope, it
would “rob the rest of the exclusion clause of all significance.”
Rojas v. TK Communications, Inc., 87 F.3d 745, 748 (Sth Cir.
1996) (quotation omitted), accord Cole v. Burns Int'l. Sec.
Serv., 105 F.3d 1465, 1471 (D.C. Cir. 1997); Patterson v.
Tenet Healthcare, Inc., 113 F.3d 832, 836 (8th Cir. 1997),
Asplundh Tree Expert v. Bates, 71 F.3d 592, 598 (6th Cir.
1995),
Two additonal considerations support application of the
ejusdem generis principle here. First, the exclusion does not
simply refer to “any class of workers engaged in foreign or
interstate commerce”; it refers to “any other class of workers
7
engaged in foreign or interstate commerce,” 9 U.S.C. § |
(emphasis added), thereby indicating a limitation on the scope
of the excluded class that is linked to the workers previously
enumerated in the exclusion. Second, the exclusion carves out
an exception to social legislation and must therefore be
narrowly construed. See, e.g, John Hancock Mut. Life Ins.
Co. v. Harris Trust & Sav. Bank, 510 U.S. 86, 97 (1993), A.H.
Phillips Inc. v. Walling, 324 U.S. 490, 493 (1945). Thus,
under the ejusdem generis principle, the exclusion’s reference
to “any other class of workers engaged in foreign or interstate
commerce” should be read in light of the prior references to
“seamen” and “railroad workers” to extend only to the class of
workers typified by seamen and railroad workers, that is, to
workers involved in the transportation of goods and persons in
interstate and foreign commerce.
It is, of course, true that the ejusdem generis principle is
only a rule of construction used in ascertaining the intent of
Congress and that it “may not be used to defeat the obvious
purpose of legislation” Gooch, 297 U.S. at 128. A narrow
reading of the exclusion, however, furthers rather than defeats
the goal of the FAA. The Act was intended primarily to
“ensure judicial enforcement of privately made agreements to
arbitrate” and secondarily to “promote the expeditious
resolution of claims” without the “costliness and delays of
litigation.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213,
219-20 (1985) (quotation omitted), see also Moses H. Cone
Mem 'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23 (1983)
(noting the FAA’s “statutory policy of rapid and unobstructed
enforcement of arbitration agreements”). Application of the
ejusdem generis rule furthers both of these goals because it
narrows the scope of the exclusion for contracts of
employment, thereby ensuring that more agreements to
arbitrate will be enforced and more costly litigation avoided in
spite of any state laws hostile to arbitration. Cf Southland,
465 US. at 16 (holding that the FAA preempts “state
legislative attempts to undercut the enforceability of arbitration
agreements’).
Moreover, it makes good sense to apply the FAA to
contracts of employment. Arbitration gives parties the flex-
ibility to choose decisionmakers with specialized expertise that
judges may lack and to tailor procedures to particular disputes.
See, e.g , James A. King et al , Agreeing to Disagree on EEO
Disputes, 9 Lab. Law. 97, 100 (1993), see also Due Process
Protocol for Mediation and Arbitration of Statutory
Employment Disputes, 9A Lab. Rel. Rep. (BNA) No. 142, at
534.401 (May 9, 1995) (recommending procedures for
arbitrating employment disputes involving statutory rights)
Just as importantly, because arbitration is quicker and cheaper
than litigation, it is more accessible to employees and more
economical for employers, and it avoids much of the
psychological stress and reputational harms associated with
litigation that can poison the employment relationship. See,
e.g, David Sherwyn ef al, Jn Defense of Mandatory
Arbitration of Employment Disputes: Saving the Baby, Tossing
Out the Bathwater, and Constructing a New Sink in the
Process, 3 U. Penn J. Lab & Emp. L. 73, 81-82, 91-99
(1999), King, Agreeing to Disagree, 9 Lab. Law. at 99-101.
Indeed, it is because of these many advantages that arbitration
has become “the primary mechanism for resolving disputes
arising under collective bargaining agreements.” | Patrick
Hardin, 7he Developing Labor Law \008 (3d ed. 1992).
In addition, Congress had good reason to exclude seamen
and railroad workers from the FAA. While the Act makes
agreements to arbitrate future disputes as well as any resulting
awards enforceable, see 9 U.S.C. §§ 2, 13, earlier statutes
treated seamen and railroad workers differently One statute
made certain arbitration agreements between seamen and their
employers voluntary for seamen, see 46 U.S.C. § 651; The
Howick Hail, \0 F.2d 162, 163 (E.D. La. 1925), and while a
second statute made arbitration mandatory for employment
9
disputes involving railroads, it provided no mechanism for
enforcement. See Transportation Act of 1920, 41 Stat. 456,
469-74 (1920), Douglas L. Leslie, The Railway Labor Act 36-
37 (1995).
Ignoring these considerations, the Ninth Circuit argued in
Campbell Soup that a narrow interpretation of the contract-of-
employment exclusion makes little sense because transportation
workers besides railroad workers and seamen were not
subjected to any statutory dispute resolution scheme in 1925.
See 177 F.3d at 1092. However, as Chief Judge Posner
pointed out, Congress may have anticipated that modes of
transportation such as airplanes and motor carriers would,
when they matured, be subjected to comprehensive regulation
See Pryner v. Tractor Supply Co., 109 F 3d 354, 358 (7th Cir.
1997).° In any event, there is no rule requiring that exceptions
to economic legislation be narrowly tailored to the same broad
principle. See, e.g., Dandridge v. Williams, 397 US. 471,
484-85 (1970). Indeed, Congress can, and does, carve out
Statutory exceptions based on no principle beyond political
* Citing a law review article, the Ninth Circuit asserted that motor
transportation was already “a critical subject of Congress’ interstate
commerce power” in 1925. See Compbell Soup, 177 F 3d at 1092 (citing
Matthew W. Finkin, “Workers’ Contracts” under the United States
Arbitration Act: An Essay in Historical Clarification, \7 Berkeley J. Emp.
& Lab. L. 282, 291(1996)). That article, however, says only that “|t}he
interstate transportation of goods and passengers by motor carner was not
an insignificant part of interstate commerce,” Finkin, Workers’ Contracts,
17 Berkeley J. Empl. & Lab. L. at 291, and while it asserts that the
“visibility of these enterprises politically was heightened by the legal
contest over their regulatory status at the time,” id. at 291 & n.40, it cites
only a decision of this Court applying the dormant commerce clause to
state regulation of interstate carners in support of that assertion See id
(citing Buck v. Kuykendall, 267 U.S. 307 (1925)). Moreover, according
to an authority cited by the article, no federal regulation of interstate
carners had even been proposed when the FAA was debated and enacted.
See John J. George, Motor Carrier Regulation in the United States 234-46
(1929).
10
influence and power. As a consequence, the Ninth Circuit's
criticism provides no justification for refusing to apply the
ejusdem generis principle to the contract-of-employment
exclusion.
B. Section 2 of the FAA Supports a Narrow
Interpretation of the Exclusion.
In Campbell Soup, the Ninth Circuit argued that Section 2
of the FAA supports an expansive interpretation of the
contract-of-employment exclusion because that section does
not cover contracts of employment. See 177 F.3d at 1084-85.
In fact, just the opposite is true. Section 2 covers contracts of
employment, and it supports a narrow interpretation of the
contract-of-employment exception.
The Ninth Circuit’s reading of the contract-of-employment
exclusion cannot be reconciled with the structure of the FAA.
As this Court has recognized, Section 2 is the “primary
substantive provision” of the Act, Gilmer, 500 U.S. at 24, and
the other portions of the Act are therefore interpreted in light
of the limitations upon the scope of Section 2, see Bernhardt
v. Polygraphic Co. of Am., 350 U.S. 198, 201 (1956).
Consequently, if Section 2 did not cover contracts of
employment, the contract-of-employment exclusion in Section
| would be superfluous. See Prima Paint Corp. v. Flood &
Conklin Mfg. Co., 388 U.S. 395, 401 n.7 (1967). Asa
“cardinal principle of statutory construction is to save and not
to destroy,” NLRB v. Jones & Laughlin Steel Corp., 301
U.S. 1, 30 (1937), the Ninth Circuit’s interpretation must be
rejected unless it is compelled by the plain language of the
Statute.
The language of Section 2 is, however, more than broad
enough to encompass contracts of employment. By its terms,
Section 2 applies to any “contract evidencing a transaction
involving commerce.” 9 U.S.C. § 2. The term “transaction”
can refer to any “communicative action or activity involving
11
two parties or two things reciprocally affecting or influencing
each other.” Webster's Third New Int'l Dictionary 2425
(1971); see also American Heritage Dictionary of the English
Language 1899 (3d ed. 1992) (defining “transaction” to
include any “[c]ommunication involving two or more people
that affects all those involved”). Because the parties to an
employment contract exchange mutually binding promises,
thereby “reciprocally affecting or influencing each other,”
SN Sa ee
“transaction.”
In Campbell Soup, the Ninth Circuit reached a different
conclusion based upon the supposed understanding of the word
“transaction” in 1925 when the FAA was passed. According
to the court of appeals, at that time the word “transaction”
referred only to “business deals” or to acts “involving buying
and selling.” 177 F.3d at 1085. An employment contract is,
however, a sort of business deal. Even more importantly, in
1925, the term “transaction” had a much broader meaning than
the Ninth Circuit admits. Although the term could be used to
apply to the buying and selling of goods, it also applied more
generally to “the doing, performing or carrying out of
anything.” The International Encyclopedia Dictionary 4150
(1901) (emphasis added); see also Noah Webster, An American
Dictionary of the English Language 1166 (C. Goodrich rev.
ed. 1859) (defining “transaction” to mean “[t}]he doing or
performing of any business” or “management of any affair”), A
Standard Dictionary of the English Language 1915 (1903)
(“the conduct or management of any undertaking or business
affair”) (emphasis added). Moreover, in legal usage, the term
referred to “[w]hatever may be done by one person which
affects another’s nights, and out of which a cause of action may
arise.” Henry C. Black, A Law Dictionary 1166 (2d ed. 1910).
Thus, the Ninth Circuit’s reliance on the historical
understanding of the term is misplaced because even in 1925,
Section 2’s reference to “transaction” could easily have been
interpreted to encompass contracts of employment.
12
ll. EVEN IN 1925, THE EXCLUSION DID NOT
COVER ALL EMPLOYMENT CONTRACTS
SUBJECT TO CONGRESSIONAL REGULATION.
In Campbell Soup, the Ninth Circuit argued that the FAA
should not be interpreted to cover any contracts of employment
now because the statute did not reach such contracts when it
was enacted in 1925. See 177 F.3d at 1086-88. According to
the Ninth Circuit, at that time Congress’ power to regulate
pursuant to the Commerce Clause was “limited to employees
who actually transported people or goods in interstate
commerce.” /d at 1087. Since Section | excludes
employment contracts involving such individuals, the Ninth
Circuit reasoned that Congress did not intend the FAA to apply
to any employment contracts and that the Act should not be
interpreted to cover any employment contracts under the more
expansive Commerce Clause power now recognized. See id
at 1087-88. This argument suffers from three defects.
First, the Ninth Circuit's argument ignores the language of
the exclusion. As other courts of appeals have recognized, if
Congress had intended to exclude all employment contracts
from the FAA, it “could simply have said ‘nothing herein shall
apply to contracts of employment.’” Cole, 105 F.3d at 1471-
72. accord O'Neil, 115 F 3d at 274; Rojas, 37 F.3d at 748.
Section 1, however, provides that “nothing herein contained
shall apply to contracts of employment of seamen, railroad
employees, or any other class of workers engaged in foreign
or interstate commerce.” 9 U.S.C. § 1 (emphasis added). In
light of the cardinal rule that courts must “avoid a reading
which renders some words altogether redundant,” Gustafson
v. Alloyd Co., 513 U.S. 561, 574 (1995), these additional
words of limitation cannot be ignored and the exclusion
therefore cannot be interpreted to reach all employment
contracts.
Second, the argument incorrectly assumes that when
Congress enacted the FAA, it viewed its power to regulate
13
arbitration agreements in employment contracts as limited to
the area of interstate and international transportation.
This assumption is based on this Court’s interpretation of the
scope of the Commerce Clause prior to 1937. See Campbell
Soup, 177 F.3d at 1086-87. Congress did not, however, rely
solely upon the Commerce Clause in enacting the FAA. As
Justice O’Connor has demonstrated, when it passed the FAA,
“Congress thought it was exercising its power to dictate either
procedure or ‘general federal law’ in federal courts.”
_ Southland, 465 U.S. at 23 (O’Connor, J., dissenting); see also
H.R. Rep. No. 68-96, at 1 (1924) (“Whether an agreement for
arbitration shall be enforced or not is a question of
procedure... .”). While this view proved incorrect—this
Court later held that the duty to arbitrate is substantive rather
than procedural, see Bernhardt, 350 U.S. at 202-04, and that
there is no general federal common law, see Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938)—Congress’ reliance on its
supposed power to prescribe procedure and general federal
common law nonetheless undermines the Ninth Circuit’s
assumption that Congress doubted its power to include
employment contracts outside the transportation sector in the
FAA.
In any event, even in 1925 Congress’s authority under the
Commerce Clause was far broader than the Ninth Circuit
assumed. Although during this period this Court sometimes
characterized certain economic activities as beyond the scope
of Congress’ power under the Commerce Clause, see, e.g.,
Hammer v. Dagenhart, 247 U.S. 251, 272 (1918), overruled
by United States v. Darby, 312 U.S. 100 (1941), its decisions
in the period were "not marked . . . by a coherent or consistent
course of interpretation." United States v. Lopez, 514 U.S.
549, 568 (1995) (Kennedy, J., concurring); see generally
Robert L. Stern, 7he Commerce Clause and the National
Economy, Part I, 49 Harv. L. Rev. 645, 647-53 (1946).
14
Even more importantly, this Court has never suggested that
commerce was limited to transportation. To the contrary, by
1925 it was well settled that interstate commerce “includes not
only the transportation of persons and property and the
navigation of public waters for that purpose, but also the
purchase, sale, and exchange of commodities.” Addyston Pipe
& Steel Co. v. United States, 175 U.S. 211, 241 (1899), see
also Real Silk Hosiery Mills v. Portland, 268 U.S. 325, 335
(1925) (“The negotiation of sales of goods which are in other
States, for the purpose of introducing them into the State in
which the negotiation is made, is interstate commerce.”)
(quotation omitted). Moreover, by 1925 transportation was
not the only “instrumentality” of commerce recognized by this
Court: nearly fifty years before that time, this Court recognized
that telegraphs were also instrumentalities of commerce. See
Pensacola Tel. Co. v. Western Union Tel. Co., 96 U.S. 1, 9
(1877). Thus, under any interpretation of the Commerce
Clause, Congress’ authority stretches beyond interstate
transportation to encompass interstate communications as well
as the buying and selling of goods across state lines.
Although Congress did not attempt in 1925 to regulate
employment in these areas, it had clear authority to do so.
According to the decisions of this Court at the time, Congress’
power to regulate under the Commerce Clause extended to
“every instrument and agent by which such commerce is carried
on,” and the men who performed or made possible the various
“act[s] of interstate commerce” were treated as “agents. . . of
commerce” subject to congressional regulation. /n re Second
Employer's Liab. Cases, 223 US. 1, 47-48 (1912).
Consequently, in 1925 Congress possessed recognized
authority under the Commerce Clause to enact legislation
concerning the “conditions under which _ those
agents .. . perform the work of interstate commerce” so long
as that legislation had a “real or substantial connection with the
interstate commerce.” /d. at 48-49, see also First Employer's
Liab. Cases, 207 U.S. 463, 495 (1908) (noting that Congress
1S
has the “power to regulate the relation of master and servant,
to the extent that regulations adopted by Congress on the
subject are solely confined to interstate commerce”). Thus, the
employment of individuals engaged in interstate sales and
interstate communications was every bit as subject to
regulation by Congress as the employment of individuals
engaged in interstate transportation.
Third, there is no reason to assume that Congress intended
the contract-of-employment exclusion to expand in tandem
with Section 2. The Ninth Circuit’s opinion assumes that, if
Section | excluded all employment contracts in 1925, it should
continue to exclude all employment contracts covered by that
Section despite the subsequent liberalization of this Court's
interpretation of the Commerce Clause. Statutory exceptions
are, however, generally interpreted narrowly. See supra p. 7.
Even more importantly, the language of Section 2 is broader
than the language of the contract-of-employment exclusion.
Section 2 covers any written arbitration provision in “a contract
evidencing a contract involving commerce.” 9 U.S.C. § 2. As
this Court has recognized, this section's reference to
transactions “involving commerce” is “broader than the often-
found words of art ‘in commerce,” and therefore “cover[s]
more than only persons or activities within the flow of
interstate commerce.” Allied-Bruce Terminix Cos. v. Dobson,
513 U.S. 265, 272 (1995) (quotation omitted). As the
exclusion refers only to employees “engaged in foreign or
interstate commerce,” 9 U.S.C. § 1 (emphasis added), it is
plainly more limited. Thus, even if the exclusion had covered
all employment contracts that Congress could have regulated
in 1925, it would by no means follow that the exclusion should
continue to be read to cover all employment contracts covered
by the more broadly worded Section 2.
16
il. THE LEGISLATIVE HISTORY OF THE FAA IS
IRRELEVANT AND, IN ANY EVENT, CANNOT
SUPPORT THE INTERPRETATION BELOW
In Campbell Soup, the Ninth Circuit asserted that the
legislative history of the FAA supports its expansive reading of
the contract-of-employment exclusion. See 177 F.3d at 1089-
90. The legislative history is, however, irrelevant because
where, as here, the language of the statute is unambiguous,
“there is no reason to resort to legislative history.” United
States v. Gonzales, 520 U.S. 1, 6 (1997). In any event, unlike
the language of the exclusion, the legislative history is
ambiguous and confused.
A. The Legislative History Is Irrelevant Because the
Meaning of the Language of the Exclusion Is Plain.
As this Court has repeatedly recognized, the best evidence
of Congress’ intent is “the statutory text adopted by both
Houses of Congress and submitted to the President.” West
Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 98-99
(1991). Accordingly, courts should “not resort to legislative
history to cloud a statutory text that is clear.” Ratzlaf v.
United States, 510 U.S. 135, 147-48 (1994). Instead, “when
a Statute speaks with clarity to an issue, judicial inquiry into the
statute's meaning, in all but the most extraordinary
circumstances, is finished.” Metropolitan Stevedore Co. v.
Rambo, 515 U.S. 291, 295 (1995) (quotation omitted). As
demonstrated above, the text of the FAA’s contract-of-
employment exclusion belies any suggestion that all contracts
of employment are excluded from the Act. Instead, the plain
language of Section | shows that the exclusion covers only
contracts of employment of individuals such as railroad
workers and seamen who are engaged in the interstate and
international movement of goods and persons. See
supra pp. 4-12. As there is no suggestion of any extraordinary
circumstances justifying disregard of this plain meaning, there
17
is no need even to address the legislative history of the
exclusion.
B. In Any Event, the Legislative History Does Not
Justify an Expansive Interpretation of the
Exclusion.
The legislative history of the FAA offers little, if any,
support for the Ninth Circuit’s expansive interpretation of the
exclusion. The legislative history as a whole is sparse, and in
the little legislative history that exists, there is almost no
mention of the contract-of-employment exclusion. Moreover,
“[a]s is so often the case,” the historical materials that exist
“cut[ ] both ways.” Department of the Air Force v. Rose, 425
U.S. 352, 388-89 (1976) (Blackmun, J., dissenting). As a
consequence, the legislative history offers no basis for
disregarding the plain language of the exclusion.
1. There Is No Material Discussion of the
Exclusion in the Legislative History.
The legislative history of the FAA is limited. As two
commentators noted shortly after the Act was passed, it is
“remarkable how so important and far reaching legislation can
emerge from Congress with such a dearth of intelligent
discussion.” Harry Baum & Leon Pressman, 7he Enforcement
of Commercial Arbitration Agreements in the Federal Courts,
8 N.Y.U. L.Q. Rev. 428, 430 n.121 (1932). The bills that
became the Federal Arbitration Act, or the “United States
Arbitration Act” as it was originally titled (see 43 Stat. 883,
886 (1925)), were introduced in December 1923. See S. 68-
1005 (1923); H.R. 68-646 (1923). After House and Senate
subcommittees of the respective judiciary committees held a
joint hearing on the bills the next month, see Arbitration of
Interstate Commercial Disputes, Hearing on H.R. 646 and
S. 1005 before the Joint Comm. of Subcommittees on the
Judiciary, 68th Cong., Ist Sess. (1924) (memorandum from
Julius Henry Cohen) [hereinafter “1924 Joint Hearing”, the
18
two committees issued short (two- and four-page) reports on
the bills, see H.R. Rep. No. 68-96 (1924), S. Rep. No. 68-536
(1924), which were then passed unanimously by both Houses
without any substantive debate, see 66 Cong. Rec. $2759-62
(1925), 65 Cong. Rec. H1 1080-82 (1924)
Even more pertinently, as one of the Ninth Circuit's own
authorities concedes, there is “virtually no official legislative
history” concerning the contract-of-employment exclusion.
Matthew W. Finkin, Employment Contracts under the
F-AA—Reconsidered, 48 Lab. L.J. 329, 329 (1997). Neither of
the committee reports mentions the exclusion, much less
explains its purpose or scope. There is no mention of the
exclusion in the little discussion of the Act that occurred on the
House and Senate floors. And none of the witnesses at the
joint hearing discussed it. Indeed, the only mention of the
exclusion in all of the legislative history of the bills that became
the FAA is in one sentence of one of the letters reprinted in the
transcript of the joint hearing. See 1924 Joint Hearing 21
(reprinting a January 31, 1923 letter from Herbert Hoover to
Senator Thomas Sterling).
In purporting to rely upon the legislative history of the FAA,
the Ninth Circuit in Campbell Soup looked to testimony at a
1923 hearing before a subcommittee of the Senate judiciary
committee concerning a precursor of the FAA introduced in the
prior Congress. See Campbell Soup, 177 F.3d at 1089-90
(discussing Sales and Contracts to Sell in Interstate and
Foreign Commerce, and Federal Commercial Arbitration,
Hearing before Subcomm. of the Senate Comm. on the
Judiciary, 67th Cong., 4th Sess. (1923) [hereinafter “1923
Senate Hearing”]). Although members of this Court have
consulted those hearings before, see Gilmer 500 U.S. at 39
(Stevens, J., dissenting); Southland, 465 U.S. at 25 n.7, 27 n.12
(O’Connor, J., dissenting), the testimony at those hearings is of
limited value. Such testimony reflects the views of the
witnesses, not the views of the members of Congress who
19
enacted the legislation in question. Accordingly, this Court has
repeatedly held that testimony of this sort deserves “little
weight.” Ernst & Ernst v. Hochfelder, 425 U.S. 185, 203-04
n.24 (1976); see also Kelly v. Robinson, 479 U.S. 36, 51 n.13
(1986) (“declin{ing] to accord any significance to these
statements” of witnesses at hearings); McCaugh v. Hershey
Chocolate Co., 283 U.S. 488, 493-94 (1931) (characterizing
such statements as “without weight”).
One commentator has suggested that the FAA should be |
interpreted differently because the bills that became the FAA —
were proposed by an American Bar Association committee in
1922 and enacted with only minor revisions. See lan R.
MacNeil, American Arbitration Law 107-09 (1992); see
generally id. at 83-101 (discussing the ABA’s successful
campaign to enact the FAA). According to this commentator,
- the FAA was really a “legislation of adhesion,” and therefore “if
we wish to ascertain Congress’s intention and purpose, our
focal point must be what Congress understood to be the goals
of those presenting the fully drafted statute.” Jd. at 108.
There are two flaws in this argument. First, the contract-of-
employment exclusion was not part of the ABA's original
proposal in 1922, it was instead proposed at the 1923 hearing
before the Senate Judiciary Committee in response to criticism
from the head of the International Seamen’s Union. See 1923
Senate Hearing at 9; MacNeil, American Arbitration Law 89-
91. Moreover, even though the witness making this later
proposal was an ABA official, the ABA’s position on the
exclusion was not consistent. As explained more fully below,
see infra pp. 23-25, although the witness who initially
proposed the exclusion asserted that the FAA was not
intended to be an “act referring to labor disputes at all,” 1923
Senate Hearing at 9, the ABA committee that proposed the
FAA in 1922 later stated that it had “originally favored the
application of the law generally to agreements to arbitrate
industrial controversy as well as commercial controversy.” 53
20
ABA Reports 351 (1928). Thus, even if the intent of the ABA
were relevant in general under the “legislation-of-adhesion”
theory, it is by no means clear that its intent concerning the
exclusion would be.
Second, whether or not Congress simply adopted the views
of the ABA, it would be both improper and unfair to base an
interpretation of the FAA on testimony at the 1923 Senate
hearing. There were only three senators present at that
hearing, see 1923 Senate Hearing at 1, and while the transcript
of the hearing was presumably distributed to members of
Congress, there is no mention of that hearing in the legislative
history of the FAA. Indeed, all three witnesses who testified in
1923 before the Senate judiciary committee reappeared in
1924 at the joint hearing before subcommittees of the judiciary
committees of both Houses and for the most part repeated their
prior testimony. See MacNeil, American Arbitration Law 92-
93. Asa consequence, an ordinary citizen seeking to determine
the meaning of the FAA would have no way of knowing about
the Senate hearing in 1923, much less a reason to suspect that
the testimony by a witness at that hearing would define the
meaning and scope of the exclusion in Section | of the FAA.
Indeed, the authors of one of the most comprehensive earlier
law review articles on the FAA were unaware of the 1923
Senate hearing and therefore described the contract-of-
employment exclusion as “curious as it is unaccounted for in
any discussion.” Baum & Pressman, 7he Enforcement of
Commercial Arbitration Agreements, 8 N.Y.U. L.Q. Rev. at
435. In short, the 1923 Senate hearings constitute a form of
secret history that has no place in a truly democratic system.
In its amicus brief in Gilmer, the AFL-CIO wandered even
further afield, citing the proceedings from its own convention
in 1925 and that of the International Seamen’s Union two years
before. See Brief for the American Federation of Labor and
Congress of Industrial Organizations as Amicus Curiae in
Support of Petitioner, Gilmer v. InterstateJohnson Lane
21
Corp., No. 90-18, at 10-24 (U.S. Nov. 15, 1990) [hereinafter
“AFL-CIO Br.”]. This Court has, however, consistently held
that material outside the legislative process, whether or not
contemporaneous, has little relevance. See, e.g., Gustafson,
513 US. at 580 (“If legislative history is to be considered, it is
preferable to consult the documents prepared by Congress
when deliberating.”), see also Western Air Lines, Inc. v. Board
of Equalization, 480 U S. 123, 131 n.* (1987) (noting that “the
post hoc statements of interested onlookers [are] entitled to no
weight”). Indeed, construing the FAA based upon statements
by union leaders at their national conventions is a little bit like
construing a nuclear energy bill in light of a speech by Ralph
Nader before a Green Party convention. In any event, as one
of the Ninth Circuit’s own authorities concedes, there is no
evidence suggesting that anyone in Congress relied upon the
materials cited by the AFL-CIO. See Finkin, Workers’
Contracts, 17 Berkeley J. Emp. & Lab. L. at 295.61. Thus,
the historical materials upon which the Ninth Circuit relied in
Campbell Soup have no value.
2. The Historical Materials Cited by the Ninth
Circuit and Supporters of Its Interpretation
Are Confused and Ambiguous
Even taken at face value, the historical materials cited by the
Ninth Circuit and other supporters of a broad interpretation of
the contract-of-employment exclusion are far too confused and
ambiguous to provide a basis for interpreting the exclusion.
1. In Campbell Soup, the Ninth Circuit relied upon the
1923 Senate hearing and an amendment to Section 2 of the
Act. See 177 F.3d at 1089-90. The ABA's 1922 proposal,
which was introduced in Congress in December 1922, made
any written arbitration provision in a “contract or maritime
transaction or transaction involving commerce” valid,
irrevocable, and enforceable. S. 67-4214 § 2 (1922), accord
47 ABA Reports 315 (1922). Ultimately, however, Section 2
was revised to refer to written arbitration provisions in “any
22
-~_—-
maritime transaction or a contract evidencing a transaction
involving commerce” 9 USC. § 2. Assuming that this
amendment was made in response to the protests of the
International Seamen's Union, the Ninth Circuit concluded that
Congress amended Section 2 to make clear that the FAA did
not apply to any contracts of employment See Campbell
Soup, 177 F 3d at 1089-90
In fact, the amendment of Section 2 was entirely
independent of the response to the seamen’s protest. The
contract-of-employment exclusion was included in the
arbitration bills introduced in 1923 See S 68-1005 §1,HR
68-646 § |, see also 48 ABA Reports 287, 302 (1923) (noting
that the ABA consented to the contract-of-employment
exclusion in response to the seamen’s protest) Although those
bills contained an amended Section | thta included the
exclusion, the language of Section 2 remained the same See
S 68-1005 § 2, HR 68-646 § 2, accord 48 ABA Reports 302
Moreover, there was no mention of an amendment to Section
2 in the January 1924 joint hearing, and the House bill was
enacted without the amended Section 2, See 65 Cong Rec
H11081-82
According to a letter from the chairman of the ABA
committee that proposed the FAA, the amendment to Section
2 was suggested by a senator absent from the January 1924
joint hearing sometime after that hearing See Letter from
W H Piatt to Hon Thomas J. Walsh, March 7, 1924, reprinted
in 49 ABA Reports 283-84 (1924), see also 1924 Joint
Hearing at | (noting that “Senator Walsh, of Montana, is
detained at another hearing”). In addition, when this
amendment was considered by the House, it was not treated as
substantive See 66 Cong Rec. H3004 (Feb. 4, 1925)
Moreover, far from disagreeing, the ABA committee stated
that the change was a technical one, a simple “improvement in
the language of the legislation” Letter from Piatt to Walsh,
March 7, 1924, reprinted in 49 ABA Reports 283. Thus,
23
contrary to the Ninth Circuit's suggestion, the historical
matenals do not suggest that the amendment to Section 2 had
anything to do with the contract-of-employment exclusion.
2 The Ninth Circuit also reads too much into the testimony
at the 1923 Senate hearing in which the contract-of-
employment exclusion was suggested At that hearing, Senator
Sterling, the sponsor of the FAA in the Senate, asked W.H.
Piatt, the chairman of the ABA committee that proposed the
FAA, whether he was aware of a letter the Senator had
received from a constituent. The following colloquy ensued.
Mr PIATT. No, sir, but there is another matter I should
call to your attention Since you introduced this bill
there has been an objection raised against it that | think
should be met here, to wit, the official head, or whatever
he is, of that part of the labor union that has to do with
the ocean—the seamen —
Senator STERLING. Mr. Furuseth?
Mr PIATT. Yes, some such name as that He has
objected to it, and criticised it on the ground that the
bill in its present form would affect, in fact compel,
arbitration of the matters of agreement between the
stevedores and their employers. Now, it was not the
intention of the bill to have any such effect as that. It
was not the intention of the bill to make an industrial
arbitration in any sense, and so | suggest that in as far as
the committee is concerned, if your honorable
committee should feel that there is any danger of that,
they should add to the bill the following language, “but
nothing herein contained shall apply to seamen or any
class of workers in interstate and foreign commerce.” It
is not intended that this shall be an act referring to labor
disputes, at all It is purely an act to give the merchants
the right or the privilege of sitting down and agreeing
24
with each other as to what their damages are, if they
want to do it. Now, that is all there ts in this.
1923 Joint Hearing at 9
Quoting the last few sentences of this testimony, the Ninth
Circuit concluded that the bill was not intended to apply to
employment contracts of any sort See Campbell Soup, \77
F 3d at 1089-90 It is not, however, clear that Mr. Piatt’s
testimony was so broad. Earlier, Piatt had stated that the bill
was not intended to require an “industrial arbitration,” which
could be understood to be a reference to arbitration under
collective bargaining agreements. Indeed, Senator Sterling
appeared to understand the proposal in this way: later in the
hearing, he referred to the witness's “suggested amendment in
regard to the /abor associations” 1923 Joint Hearing at 10
(emphasis added)
This conclusion is reinforced by a 1928 ABA proposal for a
“United States Industrial Arbitration Act.” 53 ABA Reports at
381. That proposal would have extended the FAA to cover
arbitration provisions in written agreements “made by an
employer or organization of employers with an organization of
employees.” Id. at 376 (emphasis added). As collective
bargaining agreements are agreements between employers and
organizations of employees, the ABA’s committee on
commerce—which in 1928 still included Julius Henry Cohen,
the primary draftsman of the FAA (see id, 1924 Joint Hearing
at 15)}—-plainly understood the term “industrial arbitration” to
refer to arbitration under collective bargaining agreements, not
individual contracts of employment. Accordingly, there is
some basis in the historical materials for the position that the
contract-of-employment exclusion covers only collective
bargaining agreements. See, e.g., United Elec., Radio & Mach.
Workers v. Miller Metal Prods., Inc., 215 F.2d 221, 224 (4th
Cir. 1954),1 lan R. MacNeil e¢ ai., Federal Arbitration Law
§ 11.22, at 11:6 (1999).
25
Furthermore, even if Mr. Piatt’s testimony had clearly
indicated Ais understanding that the ABA’s proposal would not
cover any individual employment contracts, it is by no means
clear that his view was shared by the ABA as a whole.
Certainly, the ABA’s standing committee on commerce, which
proposed the FAA, took a different view on whether the bill
was intended to cover employment contracts. As indicated
above, see supra pp. 19-20, the committee later said its original
proposal was supposed to cover such contracts:
From the foregoing it will appear that the Association
originally favored the application of the law generally to
agreements to arbitrate industrial controversy as well as
commercial controversy... .
53 ABA Reports at 351.
The committee also noted that New York’s arbitration
statute “appl[ies] to a// agreements to arbitrate, whether in the
commercial or industrial field” 53 ABA Reports at 351
(emphasis added), see also Wesley A. Sturges, A 7reatise on
Commercial Arbitrations and Awards § 32, at 108 n.24 (1930)
(“It is clear that a future disputes agreement is not taken out of
the application of the New York statute because it is in an
employment contract.”’) (citations omitted). As the New York
statute formed the model for the FAA, see S. Rep. No. 68-536,
at 3, it follows that the ABA’s original bill was also intended
to cover arbitration provisions in employment agreements and
that Mr. Piatt’s suggestions to the contrary in the 1923 Senate
hearing were either an idiosyncratic personal view or a
disingenuous evasion. In either event, his testimony does not
provide a basis for concluding that Congress or even the ABA
intended the exclusion in Section | to cover all employment
contracts.
3. In Campbell Soup, the Ninth Circuit also relied on a
letter that Herbert Hoover sent to the Senate Committee on the
Judiciary in 1923, which was reprinted in the 1924 joint
26
hearings. See 177 F.3d at 1090, see also 1923 Senate Hearing
at 14. As noted above, see supra p. 18, this letter contains a
sentence referring to the contract-of-employment exclusion:
“[i]f objection appears to the inclusion of workers’ contracts in
the law’s scheme, it might be well amended by stating, ‘but
nothing herein contained shall apply to contracts of
employment of seamen, railroad employees, or any other class
of workers engaged in interstate or foreign commerce.’” Letter
from Herbert Hoover to Hon. Thomas Sterling, Jan. 31, 1923,
reprinted in 1923 Senate Hearing at 21. Focusing on the
phrase “workers’ contracts,” the Ninth Circuit concluded that
the exclusion was intended to cover all employment contracts.
See Campbell Soup, 177 F.3d at 1090. This awkward phrase,
which was written on the day of the Senate hearing in 1923,
will not support the weight that the Ninth Circuit places upon
it. As this Court has noted in an analogous context, the
language of such an informal communication should not be
dissected as if it were in the United States Code. See Sv.
Mary's Honor Center v. Hicks, 509 U.S. 502, 515 (1993).
4. In its amicus brief in the Gilmer case, the AFL-CIO
cited some historical materials not relied upon by the Ninth
Circuit. See AFL-CIO Br. at 16-24. None of the arguments
drawn from those materials has merit.
a. The AFL-CIO noted that there was “nothing to
indicate that labor’s opposition was limited to the narrow range
of labor contracts that would be excluded” under a narrow
interpretation of the contract-of-employment exclusion. AFL-
CIO Br. at 17-18. The basis for lavor’s objection to the FAA,
the AFL-CIO asserted, was “the fear that weak unions, or
individuals, would be compelled to submit to arbitration
clauses, and that arbitral decision-makers would as a practical
matter be under the control of the employers.” /d. at 18 (citing
53 ABA Reports at 351-52). The AFL-CIO’s brief cites,
however, to views expressed in 1928 in support of this
assertion. See 53 ABA Reports at 352 & n.*. Moreover, the
27
contemporaneous historical materials cited by the AFL-CIO do
not speak at all about weak unions, they talk about the unequal
bargaining power between workers and their employers. See
Proceedings of the 26th Annual Convention of the International
Seamen’s Union of America 203-04 (1923); Proceedings of the
4Sth Annual Convention of American Federation of Labor 52
(1925). This Court has, however, already rejected the
suggestion that Congress did not intend to apply the FAA
simply because of a disparity in bargaining power. See Gilmer,
500 U.S. at 33 (“Mere inequality in bargaining power . . . is not
a sufficient reason to hold that arbitration agreements are never
enforceable in the employment context.”); see also MacNeil,
American Arbitration Law 90 & nn.47-48 (noting that
Congress did not respond to concerns about unequal bargaining
power in construction, freight, and insurance contracts). Thus,
the AFL-CIO’s suggestion that Congress included the contract-
of-employment exclusion out of concern for unequal bargaining
power is simply incorrect.
b. The AFL-CIO also observed that the subject matter
of the 1924 joint hearing was “described as ‘Arbitration of
Interstate Commercial Disputes” and that the testimony at the
hearing “reflects the commercial nature of the bill.” AFL-CIO
Br. at 20 (quoting and emphasizing 1924 Joint Hearing at 1).
The title of the 1924 hearing was, however, virtually the same
as the title of the Senate hearing the year before even though
the latter hearing was prior to the addition of the contract-of-
employment exclusion. See 1923 Senate Hearing at | (hearing
entitled “Federal Commercial Arbitration”). More
fundamentally, as this Court has repeatedly recognized, the fact
that the legislative history of a statute focuses upon one subject
(here, commercial arbitration) does not mean that the statute is
necessarily limited to that subject. See, e.g., Pittston Coal
Group v. Sebben, 488 U.S. 105, 115-16 (1988) (“It is not the
law that a statute can have no effects which are not explicitly
mentioned in its legislative history .. . .”); Newport News
Shipbuilding & Dry Dock Co. v. EEOC, 462 U.S. 669, 679
28
(1983) (noting that Congress’ focus on one problem “does not
create a ‘negative inference’ limiting the scope of the Act to the
specific problems that motivated its enactment”).
c. Finally, the AFL-CIO relied on the ABA's 1928
proposal for an industrial arbitration act and a 1942 proposal
to amend the FAA to extend to “‘labor controversies.”” AFL-
ClO Br at 23-24 (quoting 88 Cong. Rec. 2072). As this Court
has repeatedly stressed, however, “subsequent legislative
history is a hazardous basis for inferring the intent of an earlier
Congress.” Jones v. United States, 526 U.S. 227, 236 (1999)
(quotations omitted), accord Pension Benefit Guar. Corp. v.
LIV Corp., 496 U.S. 633, 650 (1990); United States v. Price,
361 US. 304, 313 (1960). Moreover, such post-enactment
history is “a particularly dangerous ground on which to rest an
interpretation of a prior statute when it concerns, as it does
here, a proposal that does not become law.” Pension Benefit
Guar. Corp., 496 U.S. at 650.
In any event, neither the ABA proposal nor the 1942
proposed amendments offers the AFL-CIO’s expansive
interpretation of the contract-of-employment exclusion any
support. As noted above, the ABA proposal for an industrial
arbitration act dealt with collective bargaining agreements, not
individual employment contracts. See supra pp. 24-25.
Similarly, the 1942 proposed amendments would have
extended the FAA to cover written arbitration agreements
“entered into by a labor organization with an employer or
group of employers engaged in commerce or by one labor
union with another labor union.” 88 Cong. Rec. 2072
(emphasis added).° Thus, the post-enactment history cited by
° Indeed, this proposal appears to have been motivated by concerns over
the enforcement of agreements to engage in interest arbitration—that is,
arbitration of the terms of a new agreement rather than arbitration of the
meaning of the terms of an existing agreement—not conventional
(continued...)
29
the AFL-CIO provides more support for the position that the
contract-of-employment exclusion was limited to collective
bargaining agreements than it does for the Ninth Circuit’s
expansive interpretation—thereby demonstrating why the
legislative history of the contract-of-employment exclusion is
too confusing and ambiguous to provide any useful guidance.
The exclusion should instead be interpreted in light of its plain
language, the structure of the FAA, and the applicable rules of
construction, all of which preclude the anomalous
interpretation adopted below.
* (continued)
arbitration of disputes arising under individual employment contracts.
See 88 Cong. Rec. at 2072 (citing a 1940 report of the Nev York State
Legislative Committee on Industrial and Labor Relations); see also Report
of the New York State Legislative Comm. on Industrial and Labor
Relations 38-41 (1940) (noting that New York’s arbitration law did not
cover interest arbitration at that time). Accordingly, the 1942 proposed
amendments would have extended the FAA to cover agreements to
arbitrate “controversies concerning past, present, or future rates of pay,
wages, hours of employment.” 88 Cong. Rec. 2073 (emphasis added).
30
CONCLUSION
For the reasons stated above, this Court should interpret the
exclusion in Section | of the Federal Arbitration Act to be
limited to contracts of employment for individuals engaged in
interstate or international transportation and reverse the
decision of the United States Court of Appeals for the Ninth
Circuit in this case.
Respectfully submitted,
DANIEL H. BROMBERG
(Counsel of Record)
RICHARD H. SAYLER
JONES, DAY, REAVIS &
POGUE
51 Louisiana Avenue, N.W.
Washington, D.C. 20001
Telephone (202) 879-3939
WILLIAM J. EMANUEL
HARRY I. JOHNSON, III
JONES, DAY, REAVIS &
POGUE
Suite 4600
555 West Fifth Street
Los Angeles, CA 90013
(213) 489-3939
Counsel for Amicus Curiae
Employers Group
August 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.