Amicus Curiae Brief — Robertson, Stephens & Co. v. Duffield

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In The

Supreme Court of the United States

October Term, 1998

ROBERTSON, STEPHENS & COMPANY,

Petitioner,

Vv.

TONYJA DUFFIELD,

Respondent.

On Writ Of Certiorari

To The United States Court Of Appeals

For the Ninth Circuit

BRIEF OF CHAMBER OF COMMERCE

OF THE UNITED STATES

AS AMICUS CURIAE

IN SUPPORT OF THE PETITION FOR CERTIORARI

Of Counsel:

STEPHEN A. BOKAT PETER A. SUSSER

ROBIN S. CONRAD Counsel of Record

SUSSAN MAHALLATI KYSELA MARK A. DE BERNARDO

NATIONAL CHAMBER JOSEPH P. HARKINS

LITIGATION CENTER, INC. NANCY N. DELOGU

1615 H Street, N.W. LITTLER MENDELSON, P.C.

Washington, D.C. 20062 1225 I Street, N.W.

Telephone: 202-463-5337 Washington, D.C. 20005

Telephone: 202-842-3400

Counsel for Amicus Curiae

Chamber of Commerce

of the United States

TABLE OF CONTENTS

A. The Ninth Circuit’s Use of Pa eaelive

History Rewrote the Plain Meaning of

yale ec ed BES EB ABE 5 Na 4

B. Congress Was, In Fact, Aware of the Gilmer

Decision When It Passed the CRA.....................000+5 8

C. The Underlying Purpose of the CRA

Evinces No Congressional Intent to Preclude

Pre-Dispute Arbitration. ............-:-ssescesseseeneeneeeees 10

ABS |

A. Pedias i tcascand © thew the Co's

Interpretation of the Law as It Exists at the

Time Legislation Is Passed...............s--ssseereeeees 11

B. Subsequent Congressional Efforts to Amend

the CRA Demonstrate | Congress’s

Understanding That Current Law Does Not

Preclude Pre-Dispute Arbitration

PGTORIICIIR, 5.5. snnscccesscsnncnsercoccsnssncsecencetesvorsenseses 12

A. Employers Have a Strong Interest in the

Resolution of this Case Because Until Now

the Courts of Appeals Have Held That Most

Workplace Arbitration Agreements Are

Governed by the Federal Arbitration Act............. 13

B. The Court Should Provide Definitive

C. The Employer Community Is Increasingly

Turning to Alternative Dispute Resolution,

Including Arbitration, to Resolve

Employment Disputes, :....:........0cccccccsssssesssesenseees 16

COMMS 20

TABLE OF AUTHORITIES

CASES

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

CRIP) sipiaiecciceivlibiialniiahtitieedinettescinsbincapeieevuiditiaderceeeees

Alford v. Dean Witter Reynolds, Inc., 939 F.2d 229

CE Sa ED siitilerecsth cen cosh bivnicentinvectsnesiebeidichesersies

Armijo v. Prudential Insurance Co. of America, 72

ee ae

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

mh, RP liana sskaitasecansnhcceiisabhteesaeierneicctens

Bender v. A.G. Edwards & Sons, Inc., 971 F.2d 698

Ce iii ster Caitiesentesetbach gis ddansncncnevieectes

Cannon v. University of Chicago, 441 U.S. 677

NEE LE LIE OTT

OA Nos RD it chcthabitiatntdiassieves ss ineinsndenncnibcinenees

Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S.

| + 7 SS MEER ce SRR ea Ra

Dickstein v. duPont, 443 F.2d 783 (1st Cir. 1971).......

Duffield v. Robertson, Stephens & Company, 144

Bee Be CE i A Peicsemnennnsesosntnstanerennsosssnninioss

Erving v. Virginia Squires Basketball Club, 468

Mie FOGG CR Cae, ETB sso csccccisescccsncecsnccceseconse

Evans v. Jeff D., 475 U.S. 717 (1986)....0-.scscsssssessesescesseseeees 10

Faragher v. City of Boca Raton, 118 §. Ct. 2275

CR aii cai lecstntacincsipeeeliiinitaevinns 12

First Options of Chicago, Inc. v. Kaplan, 514 U.S.

SSG CID ais vcnstssactnsccccsivocssstcustbasiaiarpibapiatriansksecsteaurilccass 8

Franklin v. Gwinnett County Public Schools, 503

UG... GO URDU) cciccvticosédinisapsssbsepicchasevicadsasigqitoienitamikestatce 12

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

20 C1 DE vis cisstkikcleisansisilsnamtomrasencncitctbbalecctoredsdevides passim

Goodyear Atomic Corp. v. Miller, 486 U.S. 174

(1GDO) sic sesiccrincbicectscnctstbvsisniss cabsstbesatcectadbisseeutacisscbiadan 11

Great Western Mortgage Corp. v. Peacock, 110

F.3d 222 (3d Cir.) cert. denied, 118 S. Ct. 299

beg Rr ROR RENT hereeen ror irertes eee eR RAS 14

Independent Federation of Flight Attendants v.

Se a TID. THR CO) eee 10

Keene Corp. v. United States, 508 U.S. 200 (1993)............... 12

Landgraf v. USI Film Products, 511 U.S. 244

CRSIG) Bro air erent ba nace ieee tints 6, 9

Library of Congress v. Shaw, 478 U.S. 310 (1986)............... 10

Lorance v. AT & T Technologies, 490 U.S. 900

Ei: Sb WGA SER ee SE SIRS ora TE Eee 10

Mago vy. Shearson Lehman Hutton, Inc., 956 F.2d

932 (9G Ct: Te ee aa 13

Martin v. Chesny, 473 U.S. 1 (1985) ..cccccsscsssescsssvessssueecsssncees 10

Martin v. Wilks, 490 U.S. 755 (1989) .........cccscscsssessesesssreneeees 10

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

Es RIPEN iccinticcongplibailes taki dabei dbibadh cslalbidedilbsnsninsarensessnsorvens 14

Miles v. Apex Marine Corp., 498 U.S. 19 (1990) .........cc00+ 11

Miller Brewing Co. v. Brewery Workers Local

Union No. 9, AFL-CIO, 739 F.2d 1159 (7th Cir.

1984), cert. denied, 469 U.S. 1160 (1985).............ccceseees 14

Mitsubishi Motors Corp. v. Soler Chrysler-

Plymouth, Inc., 473 U.S. 614 (1985).......cccccccsccesssccseerseeenees 7

Mouton v. Metropolitan Life Insurance Co., 147

ce ee EP Rae A Mirdccacicenssipnisnscostavanewarsecessasiniensace 2,15

Oncale v. Sundowner Offshore Services, Inc., 118 S.

See IED AaccicsinsimeinscieinbinivseiaienensrxeniinalldabiiniowbekhontysGecons« 9

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

a i cabal asia niccicnaitnicds ccibnastnntitmanscgiaptateen 14

Patterson v. McLean Credit Union, 491 U.S. 164........... 10, 15

Patterson v. Tenet Healthcare, Inc., 113 F.3d 832

SAR, SBIR NEEDS Sethe SERIE ee re 2

Price Waterhouse v. Hopkins, 490 U.S. 228 (1989).............. 10

Pryner v. Tractor Supply Co., 109 F.3d 354 (7th

Rais Sarr caiiehics tat doceigpiinaniliedaadlc nbd aiaeisiansaicceneconmishtninimanensicts 13

Rodriguez de Quijas v. Shearson/American Express

Bae, I Es SEF CL iicicctsitenchind ssarsddtcnsonsndiniesncesiosness 7

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

Cl. 19NGY is as ak ets Se gents 14

Rosenberg v. Merrill Lynch, Pierce, Fenner &

Smith, Inc., 995 F. Supp. 190 (D. Mass. 1998)................. 2

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

1900) is hg Se aS 2, 11, 14, 15

Shearson/American Express, Inc. v. McMahon, 482

U.S. ZOOPER IGT nes sScsttatiencsvcccssstiovetinsoesciabeiaabsesabbcioabuvedeees 7

Wards Cove Packing Co. v. Atonio, 490 U.S. 642

Ce sj Re i AER ER So ME SE Ne eg Po Reema Ee LE 10

Wright v. Universal Maritime Service Corp., cert.

granted, 118 S. Ct. 1162 (U.S. March 2, 1998)

CI DI ass si cccccaccicclcscasdectuititiccsedesimebibcacesbcicls boathectnes 1

STATUTES

BZ UIG.CA, © ISG Cae iin cercestepecesce 5

Age Discrimination in Employment Act, 29 U.S.C.

OS RE OE OO iin sisssincccsldLaseckeniisuabesbsstcnsablicktnadsieal 4, 5,9, 13

Americans with Disabilities Act, 42 U.S.C.

OO AZT Oc ea A A ee; 5

Civil Rights Act of 1870, 42 U.S.C. § 1981 oo... eeeeeeeee 5

Civil Rights Act of 1991, Pub. L. 102-166, 105 Stat.

ROTA COU i eS set rl 5

Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. ................ passim

Title VII of the Civil Rights Act of 1964, 42 U.S.C.

ey Ee NH ieenslenaonis oschahbiduslbbibicsinaevesssceasacbarhecessiie 2

LEGISLATIVE MATERIALS

137 Cong. Rec. H9530 (daily ed. Nov.7,1991)

(statement of Representative Don Edwards).......................-+ 9

137 Cong. Rec. H9548 (daily ed. Nov. 7, 1991)

(statement of Representative Henry Hyde).........................- 8

137 Cong. Rec. $15472, $15478 (daily ed. Oct. 30,

1991) (statement of Senator Robert Dole) .....................00000 8

H.R. 3748, 104th Cong., 2d Sess. (1996)................cccccssseneeees 13

H.R. Rep. No. 40(1), 102d Cong., 1st Sess. (April

24, 1991) (Education and Labor Committee) ..................... 6

H.R. Rep. No. 40(I1), 102d Cong., Ist Sess. (May

17, 1991) (Judiciary Committee) ...............ccccceeeeseceeeeeees 6, 11

S. 2012, S. 2327, and H.R. 4981/S. 2405, 103d

a a cenatoounalindsl 13

S. 366, 104th Cong., Ist Seas. (1995) ............0000s0.sssscecsscosesees 13

OTHER AUTHORITIES

1997 EEOC Policy Statement, No. 915.002, July

UND 2 SADR rere ore eC oy ae CC Ty Ta sec ee ee eee 16

Darryl Van Duch, Paralysis for EEOC Feared,

POG © hn J., PME 2A, ESSE, OE, 20 once ccs cccccccccccicsccscescceee 17

Equal Employment Opportunity Commission

National Enforcement Plan, January 15, 1997................... 16

John Zinsser, Employment Dispute Resolution

Systems: Experience Grows But Some Questions

Persist, Negotiation J. (April 1996) ...........c.scsssssereeeseees 17

R. Gaull Silberman, Susan Murphy, and Susan

Adams, Alternative Dispute Resolution of

Employment Discrimination Claims, 54 La. L.

BROV, TSSF CFI aiessicacs ics blak Ad bsecin ee DA ie caseekie 18

Stephen Breyer, On the Uses of Legislative History

in Interpreting Statutes, 65 S. Cal. L. Rev. 845,

O61 (ISSR ci a eh ec 10

Summary of Enforcement Data and Budget and

Staffing Information for the EEOC: FY 1991

through FY 1997, Office of Communications and

Legislative Affairs, Equal Employment

Opportunity Commission (December 8, 1997).................. 17

Theodore J. St. Antoine, Mandatory Arbitration of

Employee Discrimination Claims: Unmitigated

Evil or Blessing In Disguise?, 15 Thomas M.

I ERNE TN, as tccetntscrsesnnenes 19

U.S. General Accounting Office, Employment

Discrimination: Most Private-Sector Employers

Use Alternative Dispute _—_ Resolution,

GAO/HESH-95-150 (July 5, 1995)..........cccccsseeeeccesseeseees 17

INTEREST OF THE AMICUS"

The Chamber of Commerce of the United States (“the

Chamber”) is the world’s largest business federation. The

Chamber has substantial membership in each of the 50 states,

and through its federation of members represents more than

3,000,000 businesses and professional organizations of every

size and in every sector of the economy. The Chamber,

therefore, serves as the principal voice of American

employers.

Among its activities, the Chamber represents the interests

of members on matters pending before the judiciary and the

other branches of government. The Chamber has participated

as an amicus curiae in numerous cases before this Court,

including cases similar to this case, such as Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) and Wright

v. Universal Maritime Service Corp., cert. granted, 118 S. Ct.

1162 (U.S. March 2, 1998) (No. 97-889).

Since the Court decided Gilmer more than seven years

ago, many of the Chamber’s members have adopted

alternative dispute resolution (“ADR”) programs for their

employees, including arbitration. An increasing number of

those employers require employees to agree to arbitration

before a dispute arises, in order to obtain employment. Still

more employers are developing or considering ADR

' The Chamber hereby certifies, in accordance with Supreme Court

Rule 37.6, that no counsel for a party authored this brief in whole or

in part, and no person or entity other than the Chamber of

Commerce of the United States, its members, or its counsel has

made a monetary contribution to the preparation or submission of

is brief.

amie ui ied, Wdieaih Gilsdid ‘cintnie “ad cuaiiah' ws Oe

Chamber’s participation as an amicus curiae, are attached, in

accordance with Supreme Court Rule 37.2(a).

programs, which may include pre-dispute arbitration

agreements.

The decision of the U.S. Court of Appeals for the Ninth

Circuit below conflicts with subsequent decisions of two

Circuits. The Duffield decision also conflicts with the

previous decisions of at least two other Circuits.* It has left

employers uncertain about the enforceability of arbitration

agreements as they apply to employment discrimination

claims, in both the Ninth Circuit and in other Circuits that

have yet to address the issue.”

A definitive ruling from this Court on the issue presented

in the petition for certiorari would not only resolve the dispute

between the parties, but also would provide guidance to the

entire employer community regarding when, and to what

extent, agreements to arbitrate claims arising under Title VII

and other employment discrimination statutes are legally

binding. Consequently, the Chamber urges the Court to grant

certiorari to consider the important issue raised in this case.

SUMMARY OF THE FACTS

Tonyja Duffield, a successful and sophisticated securities

broker, brought this action against her former employer,

Robertson, Stephens & Co., alleging employment

discrimination on the basis of sex. Robertson, Stephens

moved to compel arbitration of her claims, in accordance with

> See Mouton v. Metropolitan Life Ins. Co., 147 F.3d 453 (5th Cir.

1998); Seus v. John Nuveen & Co., 146 F.3d 175 (3d Cir. 1998).

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

Cole v. Burns Int'l Sec. Sves., 105 F.3d 1465 (D.C. Cir. 1997).

> An additional case, which is consistent with Duffield, is pending

before the U.S. Court of Appeals for the First Circuit. See

Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 995 F.

Supp. 190 (D. Mass. 1998), appeal pending.

the arbitration agreement contained in her application for

licensure as a securities broker® and her employment contract.

The U.S. District Court for the Northern District of

California agreed that Ms. Duffield’s employment

discrimination claims were subject to arbitration as a matter of

contract, but certified the question of whether the Civil Rights

Act of 1991 (“CRA”) precludes arbitration to the U.S. Court

of Appeals for the Ninth Circuit. On May 8, 1998, Judge

Stephen Reinhardt issued an opinion for the court stating that

the legislative history of the CRA demonstrated that the U.S.

Congress intended to preclude compulsory agreements to

submit Title VII claims to arbitration. See 144 F.3d 1182 (9th

Cir. 1998). Therefore, Ms. Duffield did not have to arbitrate

her Title VII and related state law discrimination claims.

Robertson, Stephens & Co. timely filed a petition for

certiorari seeking to overturn the Ninth Circuit’s decision. As

discussed below, the Chamber supports this petition.

SUMMARY OF THE ARGUMENT

The Ninth Circuit interpreted a provision of the CRA that

states that employers and employees are “encouraged” to use

various ADR methods to resolve employment discrimination

claims, and concluded that this provision actually prohibits

enforcement of agreements to arbitrate, when such agreements

are made before a dispute arises. Its opinion is based upon a

selective and forced reading of the legislative history of

Section 118 of the CRA. Because this Court, in Gilmer,

endorsed the use of ADR to resolve age discrimination claims

° The application, known as the U-4, is an agreement similar to the

that Robert Gilmer (petitioner in the Gilmer case) and

thousands of other securities brokers have signed as a condition of

their registration with the New York Stock Exchange and the

National Association of Securities Dealers.

during Congress’s debate on the CRA, the legislative history

of Section 118 is far from clear. A fair and reasonable reading

of the legislative history indicates that different Members of

Congress understood the provision differently, at different

times. In this circumstance, the Court should avoid relying on

legislative history and instead apply the plain meaning of the

statute, as passed by the full Congress. Otherwise, this Court

might approve an interpretation that the statute means almost

the opposite of what it says.

Given the unhelpful nature of the CRA’s legislative

history, and the strong interest in ensuring that those who are

bound by the law can understand what it requires of them, the

Court should grant certiorari. It is critical for employers that

the Court consider whether Section 118 of the CRA means

what it says, as two other Circuits have held, or whether —

based on the sketchy, contradictory, and inconclusive

comments of various legislators — Section 118 somehow

precludes pre-dispute arbitration agreements for employment

discrimination claims.

J A OCCLIUE Lc

Use of Legislative History

Rewrote the Plain Meaning of Section 118.

Despite the Ninth Circuit’s proclaimed reliance upon this

Court’s decision in Gilmer v. Interstate/Johnson Lane Corp.,

500 U.S. 20 (1991), which enforced arbitration of a claim

under the Age Discrimination in Employment Act, 29 U.S.C.

§§ 621 et seg. (“ADEA”), the appeals court reached the

opposite result with respect to a claim under Title VII of the

Civil Rights Act of 1964 (“Title VII’), as amended by the

Civil Rights Act of 1991.’

Section 118 of the CRA states:

Where er and to oa extent

authorized by law, the use of alternative

of dispute resolution, including

settlement negotiations, conciliation,

facilitation, mediation, factfinding, minitrials,

and arbitration, is encouraged to resolve

disputes arising under the Acts or provisions

of Federal law amended by this title.

(emphasis added). ®

Pub. L. 102-166, 105 Stat. 1071, 1081 (1991), reprinted in the

notes to 42 U.S.C.A. § 1981 (West 1994). Judge Reinhardt

concluded that this language evinces a Congressional intent to

preclude pre-dispute arbitration agreements as they apply to

Title VII claims.

Relying principally on two U.S. House of Representatives

Committee Reports, prepared near the time that the legislation

was drafted, this conclusion rests on an _ erroneous

interpretation of the CRA’s legislative history. Moreover,

reliance upon legislative history is both unnecessary and

inappropriate in this case.

The Court issued the Gilmer decision on May 13, 1991.

The U.S. Senate passed the CRA on October 30, 1991. The

House of Representatives passed the CRA on November 7,

7 42 U.S.C.A. §§ 20006 ef seg. (West 1994).

* The major civil rights statutes amended by the CRA are: the Age

Discrimination in Employment Act, 29 U.S.C. §§ 621 ef seq.; the

Civil Rights Act of 1870, 42 U.S.C. § 1981; Title VII of the Civil

Rights Act of 1964, 42 U.S.C. $§ 2000¢ et seg.; and the Americans

with Disabilities Act, 42 U.S.C. §§ 12111 et seq.

1991. President Bush signed the CRA into law on November

21, 1991. Therefore, Gilmer predates the passage of the CRA

by almost six months. Nevertheless, the Ninth Circuit relied

upon Committee Reports issued before, and a few days after,

Gilmer to conclude that Congress intended to codify the

Court’s earlier decision in Alexander v. Gardner-Denver Co.,

415 U.S. 36 (1974).? Gardner-Denver had held that arbitration

agreements contained in collective bargaining agreements do

not preclude Title VII employment discrimination claims

brought in court.

This reasoning is flawed, for a variety of reasons. Most

troubling for employers charged with following the law is the

appeals court’s willingness to look beyond the plain meaning

of the statute to “discover” alternative meanings. As this

Court has noted, “[e]lementary considerations of fairness

dictate that individuals should have an opportunity to know

what the law is and to conform their conduct accordingly;

settled expectations should not be lightly disrupted.”

Landgraf v. USI Film Products, 511 U.S. 244, 265 (1994)

(rejecting retroactive application of the CRA absent a clear

Congressional intent to apply the new statute retroactively).

Also problematic, the statutory phrase “to the extent

authorized by law” does not necessarily refer to either

Gardner-Denver or Gilmer. It could refer to arbitration of

statutory disputes generally. At the time that the CRA was

drafted, there was ample law supporting the use of arbitration

® No Senate Committee Report was issued on the bill that became

the CRA. However, two House Committees issued reports

approving the bill. See H.R. Rep. No. 40(1), 102d Cong., Ist Sess.

(April 24, 1991) (Education and Labor Committee); H.R. Rep. No.

40(II), 102d Cong., Ist Sess. (May 17, 1991) (Judiciary Committee).

to resolve statutory disputes, albeit not disputes arising under

the civil rights laws.'°

Furthermore, Judge Reinhardt acknowledged that Section

118 “does not automatically lend itself to a fixed definition. It

most likely codifies the ‘law’ as Congress understood it at the

time it either drafted or passed the provision.” 144 F.3d at

1194 (emphasis added). The Ninth Circuit never analyzed,

however, which point in time should prevail for statutory

interpretation purposes when, as here, Congress drafts and

then passes a cross-reference to decisional law; which changes

significantly in the interim. The Ninth Circuit’s focus on the

Committee Reports at the drafting stage is misplaced in this

unusual context of a cross-reference provision coupled with an

intervening change in the law.

In this context, the focus should be on the point in time

when legislation is passed by Congress as a whole. Given the

sequence of events here, “no amount of commentary from

individual legislators or committees” -hould undo “[t}he text

adopted tv the full Congress.” Seus, 146 F.3d at 182.

The text of Section 118 shows that Congress in fact

intended to “encourage” arbitration of employment

discrimination claims. Clearly, Congress also entrusted

enforcement, in appropriate circumstances, to the courts. A

case-by-case determination of “appropriate circumstances” is

See, e.g., the Federal Arbitration Act, 9 U.S.C. §§ 1 ef seg.

(“FAA”); Rodriguez de Quijas v. Shearson/American Express Inc.,

490 U.S. 477 (1989) (Securities Act claims are arbitrable under the

FAA); Shearson/American Express, Inc. v. McMahon, 482 U.S. 220

(1987) (Racketeer Influenced and Corrupt Organizations Act claims

are arbitrable under the FAA); Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) (Sherman Act claims

are arbitrable under the FAA). Gilmer advanced this established

policy in favor of arbitration of statutory claims in the midst of the

lengthy debate on the CRA.

eminently suited to the judicial function. See Gilmer, 500

U.S. at 26 (courts determine arbitrability — mindful that federal

policy favors arbitration and that the party opposing it bears

the burden to show Congressional preclusion as to statutory

claims).

The Ninth Circuit’s interpretation of Section 118

contradicts what the provision states in straightforward and

understandable language. Congress wanted employers and

employees to utilize ADR. The Duffield decision creates

confusion for those the law was intended to regulate, i.e., the

parties who were “encouraged” to adopt arbitration clauses

and other ADR programs by the CRA and by Gilmer.

B. Congress Was, In Fact, Aware of the Gilmer

Decision When It Passed the CRA.

The legislative history of the CRA, as well as a

comprehensive review of the Congressional Record for 1991,

demonstrate that Congress was, in fact, aware of the Gilmer

decision, and had analyzed its effect before the full Congress

passed the CRA. References to Gilmer appear in the

statements issued by both the majority and minority in

Congress when the engrossed legisiation was transmitted to

President Bush for his signature. The problem is that their

positions on Gilmer are contradictory. Compare 137 Cong.

Rec. $15472, $15478 (daily ed. Oct. 30, 1991) (statement of

Senator Robert Dole) (arbitration encouraged where parties

knowingly and voluntarily elect to use those methods, in

accordance with Gilmer), and 137 Cong. Rec. H9548 (daily

ed. Nov. 7, 1991) (statement of Representative Henry Hyde)

'! See also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938,

944 (1995) (courts determine the arbitrability of parties’ dispute

unless the parties clearly and unmistakably submitted that issue to

arbitration).

I a Se ee ae

(same) with 137 Cong. Rec. H9530 (daily ed. Nov. 7, 1991)

(statement of Representative Don Edwards) (rejecting Gilmer

as applied to Title VII claims and stating that Section 118

applies only to agreements entered into after an employment

discrimination dispute has arisen).

Additional references to the decision appear elsewhere in

the Congressional Record of 1991. For example, the House

Select Committee on Aging held hearings to discuss the

impact of Gilmer on September 24, 1991, more than a month

before the full House passed the CRA.'”

Yet, reliance upon individual legislators’ views is

inappropriate. Canvassing the legislative history to see which

Senator or Representative thought Section 118 embraced

Gardner-Denver and which Senator or Representative thought

the provision embraced Gilmer would be fruitless. “...[{I]t is

ultimately the provisions of our laws rather than the principal

concerns of our legislators by which we are governed.”

Oncale v. Sundowner Offshore Services, Inc., 118 S. Ct. 998,

1002 (1998) (holding that the plain language of Title VII

prohibits same-sex sexual harassment, despite the argument

that Congress did not intend such a broad meaning when it

passed the statute). Relying on the ambiguous and conflicting

statements of individual legislators — conceivably with 435

different views in the House and 100 in the Senate — is a

misuse of legislative history. See Landgraj, 511 U.S. at 262-

263 (noting that “frankly partisan” statements about the

meaning of the CRA’s final language could not possibly be

'2 See H.R. Rep. 102-1093, Activities of the House Select

Committee on Aging in the 102nd Congress, December 31, 1992,

page 49 (stating, “The Committee also examined the impact of the

U.S. Supreme Court’s decision in Gilmer v. Interstate/Johnson Lane

Corp., No. 90-18 (May 13, 1991)).” However, the House Select

Committee on Aging reported no conclusion about the relationship

between Gilmer and Section 118 of the CRA, which — by its terms —

applies to the ADEA.

read as general agreement, rather, they suggest an agreement

to disagree).'°

The only meaningful conclusion to be drawn from the

legislative record here is that, although some legislators may

have understood Section 118 to embrace Gardner-Denver at

the time that the CRA was drafted, disagreement prevailed

about whether Gilmer expanded arbitration of employment

discrimination claims at the time of passage.

C. The Underlying Purpose of the CRA Evinces No

Congressional Intent to Preclude Pre-Dispute

Arbitration.

It is ironic that the Ninth Circuit read a provision of the

CRA that encourages the use of ADR to impliedly overrule

this Court’s decision in Gilmer. The CRA was passed in

response to several Supreme Court decisions interpreting the

civil rights laws, in particular Wards Cove Packing Co. v.

Atonio, 490 U.S. 642 (1989). See Pub L. 102-166, 105 Stat.

1071 (1991).'* It is illogical to conclude that an Act which

'3 See also Stephen Breyer, On the Uses of Legislative History in

Interpreting Statutes, 65 S. Cal. L. Rev. 845, 861 (1991)

(concluding that where “legislative history is vague, or seriously

conflicting, do not use it”).

= According to the House Judiciary Committee Report, on which

the Ninth Circuit relied for other points, the CRA also was intended

to overrule the Supreme Court’s decision in Patterson v. McLean

Credit Union, 491 U.S. 164 (1989); modify the decision in Price

Waterhouse v. Hopkins, 490 U.S. 228 (1989); limit the holding of

Martin v. Wilks, 490 U.S. 755 (1989); overrule Lorance v. AT & T

Technologies, 490 U.S. 900 (1989); clarify Independent Federation

of Flight Attendants v. Zipes, 491 U.S. 754 (1989); and otherwise

limit or codify the holdings in Crawford Fitting Co. v. J.T. Gibbons,

Inc., 482 U.S. 437 (1987), Evans v. Jeff D., 475 U.S. 717 (1986),

of Congress v. Shaw, 478 U.S. 310 (1986), and Martin v.

Chesny, 473 U.S. 1 (1985). H.R. Report No. 102-40 (I) (May 17,

was explicitly adopted to modify the law enunciated in those

decisions also overruled, by implication, a new, pro-ADR

decision. Moreover, it is bizarre to conclude that Congress

sought to accomplish this purpose by including a provision to

“encourage” alternative dispute resolution mechanisms. See

Seus v. John Nuveen & Co., 146 F.3d 175, 183 (3d Cir. 1998)

(flatly rejecting the argument that the “straightforward

declaration of the full Congress [in Section 118] can be

interpreted to mean that the [FAA] is impliedly repealed with

respect to agreements to arbitrate Title VII claims which were

executed by an employee as a condition of securing

employment”).

In sum, the underlying purpose of the Act evinces no

Congressional intent to overrule Gilmer and to preclude pre-

A. Congress Is Presumed to Know the Court’s

Interpretation of the Law as It Exists at the Time

Legislation Is Passed.

The Court cannot assume that Congress is ignorant of the

state of the law when Congress passes legislation referencing

other law. Goodyear Atomic Corp. v. Miller, 486 U.S. 174,

184-85 (1990). Indeed, Congress is presumed to be

knowledgeable about existing law pertinent to the legislation

that it enacts. Jd. See also Miles v. Apex Marine Corp., 498

U.S. 19, 32 (1990). The Court can expect no less of a body of

1991). Gilmer, decided four days before the Report was issued, was

not mentioned.

elected representatives than it does of a citizenry presumed to

know the law. Cannon v. University of Chicago, 441 U.S.

677, 696-97 (1979). When Congress amends a statute in one

respect, but provides no modification in another upon which

the Court has ruled, the Court presumes that Congress was

aware of the judicial interpretation in the latter respect and, in

effect, adopted it. Faragher v. City of Boca Raton, 118 S. Ct.

2275, 2286 (1998) quoting Keene Corp. v. United States, 508

U.S. 200 (1993); cf Franklin v. Gwinnett County Public

Schools, 503 U.S. 60, 72 (1992) (holding that Congress

ratified the Court’s decision in Cannon v. University of

Chicago, by failing to overturn that decision when it amended

the civil rights statute at issue in other respects).

This presumption is a reasonable, appropriate, and

necessary one. Without it, statutes would invite continual

attack and reinterpretation, and statutory interpretation would

devolve into an inconclusive inquiry into the legal knowledge

of individual legislators. In essence, this is what happened in

the appeals court, which failed to apply the presumption.

Because Gilmer constituted “the law” at the time of

passage of the CRA, arbitration of statutory discrimination

claims was — and is — indeed “authorized by law” and

“encouraged” by Section 118.

B. Subsequent Congressional Efforts to Amend the

CRA Demonstrate Congress’s Understanding That

Current Law Does Not Preclude Pre-Dispute

Arbitration Agreements.

Since Gilmer, and subsequent to the enactment of the

CRA, various members of Congress have introduced

legislation intended to amend the law to preclude the use of

arbitration agreements for claims brought under Title VII and

other statutes, such as the Americans with Disabilities Act and

the ADEA.'> However, none of these initiatives has become

law.

Significantly, though, each of these bills has been

introduced as an effort to amend, rather than to clarify, the

relevant statutes. These efforts further reflect Congress’s

awareness that the plain language of the CRA simply does not

preclude arbitration of employment discrimination claims.

The courts generally have agreed. Indeed, prior to Judge

Reinhardt’s decision in this case, each of the Courts of

Appeals to consider the issue, including the Ninth Circuit,

shared the view that agreements to arbitrate Title VII claims

are enforceable. '®

A. - eee Have a Strong Interest in the Resolution

of this Case Because Until Now the Courts of

Appeals Have Held That Most Workplace

Arbitration Agreements Are Governed by the

Federal Arbitration Act.

The Federal Arbitration Act, which embodies the federal

policy in favor of arbitration agreements, clearly applies to the

facts of this case. Gilmer, 500 U.S. at 25, n.2 (finding that the

'S See, e.g., H.R. 3748, 104th Cong., 2d Sess. (1996); S. 366, 104th

Cong., Ist Sess. (1995); and S. 2012, S. 2327, and H.R. 4981/S.

2405, 103d Cong., 2d Sess. (1994).

° See Mago v. Shearson Lehman Hutton, Inc., 956 F.2d 932 (9th

Cir. 1992) (interpreting Gilmer and concluding that Congress did

not intend to preclude Title VII claims); see also Pryner v. Tractor

Supply Co., 109 F.3d 354 (7th Cir. 1997); Cole v. Burns Int'l Sec.

Sves., 105 F.3d 1465 (D.C. Cir. 1997); Bender v. A.G. Edwards &

Sons, Inc., 971 F.2d 698, 700 n.1 (11th Cir. 1992); Alford v. Dean

Witter Reynolds, Inc., 939 F.2d 229 (Sth Cir. 1991).

FAA applied to the securities industry U-4 registration form).

Section 1 of the FAA, however, excludes at least some

contracts of employment from its scope. 9 U.S.C. § 1 states

“...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.”

Although the Court has never had occasion to decide whether

the Section 1 exclusion applies to a// contracts of employment,

see Gilmer at 36-37 (Stephens, J. dissenting), nearly every

Circuit has determined that the exclusion should be construed

narrowly.'’

In these Circuits, most employment contracts will be held

to fall within the scope of the Act. Therefore, although this

case directly affects the arbitration agreement used in the

securities industry, most employers have a substantial interest

in the resolution of the underlying issue of whether the CRA

carves out employment discrimination claims from the FAA.

See Seus, 146 F.3d at 178-179.

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

Paladino v. Avnet Computer Tech Inc., 134 F.3d 1054, 1069-71

(11th Cir. 1998) (majority concurrence); Great Western Mortgage

Corp. v. Pegcack, 110 F.3d 222, 226-27 nn.20-21 (3d Cir.), cert.

denied, 118 S. Ct. 299 (1997); Cole v. Burns Int’l Sec. Svcs., 105

F.3d 1465 (D.C. Cir. 1997); Rojas v. TK Communications, Inc., 87

F.3d 745, 747-48 (Sth Cir. 1996); Asplundh Tree Expert Co. v.

Bates, 71 F.3d 592, 600 (6th Cir. 1995); Miller Brewing Co. v.

Brewery Workers Local Union No. 9, AFL-CIO, 739 F.2d 1159

1162 (7th Cir. 1984), cert. denied, 469 U.S. 1160 (1985); Erving v.

Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir.

1973); Dickstein v. duPont, 443 F.2d 783, 785 (1st Cir. 1971).

B. The Court Should Provide Definitive Guidance

With Respect to Employment Piscrimination

Legislation.

As this Court has noted, adherence to principles of stare

decisis is particularly important in the context of civil rights

legislation, because Congress is always free to overrule the

Court’s statutory interpretations. Patterson v. McLean Credit

Union, 491 U.S. 164, 172-73. Although Gilmer is a relatively

new precedent, it is not so new, nor its effect so limited, that

the validity of the Court’s decision should be lightly

disregarded. “It is this Court’s responsibility to say what a

statute means, and once the Court has spoken, it is the duty of

other courts to respect that understanding of the governing rule

of law.” Rivers v. Roadway Express, 511 U.S. 298, 312

(1994).

Until now, pursuant to Gilmer and the FAA, the law on the

arbitrability of statutory claims under individual employment

agreements was clear. Any ambiguity in such an agreement

regarding the arbitrability of a dispute was to be resolved in

favor of arbitration. Section 118, by its terms, simply

reinforced this principle. See Mouton v. Metropolitan Life

Insurance Co., 147 F.3d 453, 456 (Sth Cir. 1998) (“‘all

ambiguities must be resolved in favor of arbitrability’”’)

quoting Armijo v. Prudential Insurance Co. of America, 72

F.3d 793, 798 (10th Cir. 1995); see also Seus v. John Nuveen

& Co., 146 F.3d 175, 180 (3d Cir. 1998).

Nonetheless, the Ninth Circuit’s decision here, and the

position taken by the Equal Employment Opportunity

Commission (“EEOC’’), have led to confusion and uncertainty

regarding the use of pre-dispute arbitration agreements in the

non-unionized workplace.

The EEOC, which participated in the proceedings below as

an amicus curiae, has taken the position that Section 118

evinces a Congressional intent to preclude pre-dispute

arbitration agreements for Title VII claims. In addition, the

EEOC has taken the position that arbitration of claims under

the Americans with Disabilities Act and the Age

Discrimination in Employment Act is likewise unenforceable.

1997 EEOC Policy Statement, No. 915.002, July 10, 1997.

Furthermore, the agency has made it a priority to participate in

cases in which pre-dispute arbitration agreements are invoked,

seeking to invalidate those agreements. See Equal

Employment Opportunity Commission National Enforcement

Plan, posted at www.eeoc.gov/nep.html (listing cases

challenging obligations to arbitrate among the agency’s top

priorities) (last updated on January 15, 1997). The Ninth

Circuit’s opinion in this case, coupled with the EEOC’s

commitment to challenging pre-dispute arbitration agreements

as unenforceable when applied to statutory civil rights claims,

make it certain that courts will now disagree about this issue,

unless the Court grants certiorari and ges definitive

guidance.

C. The Employer Community Is Increasingly Turning

to Alternative Dispute Resolution, Including

Arbitration, to Resolve Employment Disputes.

Employers, reasonably believing that arbitration can more

swiftly and cost-effectively resolve employee disputes — and

improve employee relations — are increasingly turning to

ADR, including mandatory arbitration. Arbitration

agreements, implemented so as to preserve the substantive

rights of those they protect, should not be discouraged. See

Cole, 105 F.3d at 1482-83.

According to the United States General Accounting Office

(“GAO”), in 1994 an estimated 52 percent of large employers

(defined as those with more than 100 employees) utilized

some type of alternative dispute resolution process to resolve

discrimination complaints. Roughly 80 percent of those

a a

employers used mediation, about 39 percent used peer review

panels, and approximately 19 percent used arbitration. See

U.S. General Accounting Office, Employment Discrimination:

Most Private-Sector Employers Use Alternative Dispute

Resolution, GAO/HESH-95-150, (July 5, 1995).'® According

to the GAO study, employer interest in alternative dispute

resolution grew correspondingly with the volume of

discrimination charges filed with the EEOC and the length of

time for the agency to complete its review of each charge.'°

Other scholars have noted an increasing willingness on the

part of employers to develop ADR programs in order to

reduce legal fees, decrease turnover, and improve employee

relations. See, e.g., John Zinsser, Employment Dispute

Resolution Systems: Experience Grows But Some Questions

Persist, Negotiation J. (April 1996) at 151, 153 (discussing

Brown & Root’s motivation for developing a four-step

mandatory dispute resolution program, which can culminate in

arbitration).

'8 This publication is available through the GAO website at

WWW.ga0.g0V.

The number of discrimination charges filed with the EEOC grew

by 43 percent between fiscal years 1991 and 1994. By fiscal 1997,

the average time to process a charge of discrimination was 358 days.

Summary of Enforcement Data and Budget and Staffing Information

for the EEOC: FY 1991 through FY 1997, Office of

Communications and Legislative Affairs, Equal Employment

Opportunity Commission (December 8, 1997). In order to reduce its

backlog, the agency adopted a “triage” system to dispose of many

charges on an expedited basis. The EEOC announced on August

12, 1998 that it has cut its inventory of discrimination charges

almost in half — from almost 111,000 charges in 1995 to just under

58,000 today. Nonetheless, a lack of funding and a failure to

appoint new Commissioners have left practitioners concerned about

the agency’s continued ability to function. See Darryl Van Duch,

Paralysis for EEOC Feared, Nat’! L. J., August 24, 1998, at 1, 21.

Data regarding the outcomes of arbitration of employment

discrimination claims is not yet widely available. Among the

employers that have shared data on their ADR programs,

however, it is clear that arbitration can achieve a swift

resolution of employment discrimination claims, while

-imultaneously providing employees with inexpensive access

to a hearing and a neutral factfinder. For example, Brown &

Root found that it was able to cut its legal fees by 40 percent

in the first two years of its program, while its cost in

settlements and adverse judgments remained steady. In

addition, the company credited the program with saving its

employment relationship with 300 employees. Id. at 161.

Some experts have suggested that alternative dispute

resolution overall is more likely to benefit employees —

especially those with modest financial resources — than to

benefit employers, by expanding employees’ access to

remedies. Noting that employees often prefer swift, less

expensive, private relief to becoming part of “test” cases, three

former EEOC officials concluded that, “(t]he reality is that a

more informal, simpler, and less confrontational system like

ADR will encourage more valid complaints of discrimination

to come forward. For many individuals, ADR expands access

to the legal system.” R. Gaull Silberman, Susan Murphy, and

Susan Adams, Alternative Dispute Resolution of Employment

Discrimination Claims, 54 La. L. Rev. 1533, 1558 (1994).

Thus, ADR is not unfair or one-sided. Professor Theodore

J. St. Antoine has observed that employers, too, alter the

procedural landscape when they agree to pre-dispute

arbitration. Citing the findings of the Commission on the

Future of Worker-Management Relations (the “Dunlop

Commission”), St. Antoine suggests that employers are

unlikely to agree to binding arbitration after a dispute is filed

in court because, in most cases, the claim will go nowhere or

the employer will prevail on summary judgment. As a result,

most employees’ discrimination cases never reach a judicial

hearing on the merits. “For employers, the desired trade-off

[in consenting to pre-dispute arbitration] is the one big case

against the many smaller ones.” Concluding that the majority

of ordinary employees may fare better in arbitration than in

litigation, he counsels against rejecting pre-dispute arbitration,

at least before more empirical evidence is gathered. See

Theodore J. St. Antoine, Mandatory Arbitration of Employee

Discrimination Claims: Unmitigated Evil or Blessing In

Disguise?, 15 Thomas M. Cooley Law Rev. 1, 8 (1998).

In sum, the increase in mandatory arbitration programs is

not only an outgrowth of Gilmer and the CRA; it also is a very

practical reaction to ever-burgeoning employment

discrimination litigation. Arbitration agreements, as long as

they provide an accessible, fair, and neutral forum for the

resolution of such claims,”’ have proven to be effective in

many cases. In the future, they may well become the preferred

method of dispute resolution for both employers and

employees. The Ninth Circuit’s tortured interpretation of

Section 118, if allowed to stand, will stifle this very positive

development for all concerned.

20 See Cole, 105 F.3d at 1483-86 (enforcing a pre-dispute arbitration

agreement as to Title VII claim, but interpreting the agreement to

provide that the employer pays the arbitrator’s fees for both parties).

CONCLUSION

For the foregoing reasons, the Chamber of Commerce of

the United States respectfully urges the Court to grant

certiorari, so that the Court may consider whether Section 118

of the Civil Rights Act of 1991 permits or prohibits the

enforcement of pre-dispute arbitration agreements.

Respectfully submitted,