Opposition Brief — Cosgrove v. Shearson Lehman Bros.

Supreme Court, U.S, |

FIL

i

AUE 16 a7

No. 97-120 ] ce |

= = —— —

In The

Supreme Court of the United States

October Term, 1996

°

CLAUDIA COSGROVE,

Petitioner,

SHEARSON LEHMAN BROTHERS,

Respondent.

>

On Petition For A Writ Of Certiorari

To The United States Court Of Appeals

For The Sxth Circuit

>

BRIEF IN OPPOSITION

——— —_——— ¢

Lavip K. MONTGOMERY

(Counsel of Record)

R Patrick DeEWIne

KEATING, MUETHING &

Kiexamp, P.L.L.

B00 Provident Tower

Cne East Fourth Street

Gncinnati, Ohio 45202

('13) 579-6400

Attorneys for Shearson

Lehman Brothers

COCKLE LAW GRIEF PRITTING CO. (800) 225-4964

R CALL COLLET (402) 342-2831

TABLE OF CONTENTS

Page

ee Me Es 65.6 kn cine be cds cecnsvseeees i

pe Be ls ky ee rrr ii

REE PE PP TT ETT CLE ET ELT EELS 1

STATEMENT OF THE CASE...........ccccccesccees 1

REASONS FOR DENYING THE WRIT............. 6

I. INDIVIDUAL EMPLOYMENT CONTRACTS

OF WORKERS IN NON-TRANSPORTATION

INDUSTRIES ARE COVERED BY THE FED-

ERAL ARBITRATION ACT .................. 8

Il. THERE IS NO REASON WHY THE ARBITRA-

TION CONTRACT SHOULD NOT BE

RE ey eee oe PTT EP TELE Ee 16

A. A Party May Agree to Arbitrate Employ-

ment Disputes in an Employment Applica-

GaN Wb UUW e deadiemadieNeseccsecscovecseses 17

B. The Fees Paid by Plaintiff Do Not Merit

Review by this Court.................... 20

C. There is No Basis for Plaintiff's Proposed

“Knowing Waiver” Standard............. 23

D. There is No Evidence That Plaintiff's

SRR RES er an ere 26

E. The Arbitration Award Was Not Inade-

quate for Lack of an Extensive Written

GEN ok ce ccecccctsescensccccncecesess 28

ee TTT OTT TLE Te ETT TTT e 30

il

TABLE OF AUTHORITIES

Page

CAsEs:

Albert v. National Cash Register Co., 874 F. Supp.

eS eee 10

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974) .... 15

American Postal Workers Union v. United States

Postal Service, 861 F.2d 211 (9th Cir. 1988)......... 14

Apperson v. Fleet Carrier Corp., 879 F.2d 1344 (6th

Cir.), cert. denied, 493 U.S. 809 (1989).............. 27

Asplundh Tree Expert Co. v. Bates, 71 F.3d 592 (6th

EE ee Peete fee re 9, 11, 20

Borg-Warner Protective Servs. Corp. v. Gottlieb, 1997

WL 949043 (9th Cir. June 25, 1997) ............ 10, 20

Brisentine v. Stone & Webster Engineering, 117 F.3d

SOD Semen Gah Wee occ eccnsacnctctdeibneneiawnsse 15

Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d 282

GD Ce Be vacdacksccnveesesdasssebehhneeetacs 24

Cole v. Burns International Security Services, 105

F.3d 1465 (D.C. Cir. 1997)........ 9, 11, 14, 17, 20, 22

Coleman v. Prudential Bache Sec., Inc., 802 F.2d 1350

CR UUs 0c cnccdccbnncscnnnhanbaauasesesss 24

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213

GORD Scdincncchscenscccteydaquandessbantetesénces 13

Demarest v. Manspeaker, 498 U.S. 184 (1991).......... 18

Dickstein v. DuPont, 443 F.2d 783 (ist Cir. 1971) ..9, 20

Durkin v. Cigna Property & Casualty Insurance Co.,

942 F. Supp 481 (D. Kan. 1996) ................... 10

ili

TABLE OF AUTHORITIES - Continued

Page

Erving v. Virginia Squires Basketball Club, 468 F.2d

reat anncecaebacneicnecsecs 9

General Electric Co. v. United Electrical, Radio &

Machine Workers, 353 U.S. 547 (1957).............. 16

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

SEARS CASTE Sa CN a passim

Golenia v. Bob Baker Toyota, 915 F. Supp. 201 (S.D.

cs 10

Gooch v. United States, 297 U.S. 124 (1936)........... 11

Great Western Mortgage Corp. v. Peacock, 110 F.3d

dis db oan nk Wane on cena s 9, 20, 24

Gustafson v. Alloyd Co., 513 U.S. 561 ED oi os 11

Harrison v. Eddy Potash, Inc., 112 F.3d 1437 (10th

ists newici Sue airline's Mens dads léoc'ec 14

Hydrick v. Management Recruiters International, 738

F. Supp. 1434 (N.D. Ga. 1990) .................... 10

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

NEES Sain doe Walch Gila birs 6 wn bis o.anie oo aa'o me aicile 19

McAdams v. McAdams, 88 N.E. 542 (Ohio idan: an 24

McWilliams v. Logicon, Inc., 1996 WL 439291 (D.

ES es 10

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614 (1985) -:.............. 6, 24, 27, 29

Moses H. Cone Memorial Hospital v. Mercury Con-

struction Corp., 460 U.S. 1 (1983)............... 13,

National Equipment Rental v. Hendrix, 565 F.2d 255

ree db data 0aceobdeeed ccc cc

iv

TABLE OF AUTHORITIES - Continued

Page

Nelson v. Cyprus Bagdad Copper Corp., 1997 WL

Chie et ee es ee ere erry 25

Nicholson v. Labor Ready, Inc., 1997 WL 294393

ihe Se eT eT ros Ti gy or re oe eee 10

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

ND a 6 wha ngin Gaius bhe xdeeneeteetieeesen 9, 15, 20

Orlando v. Interstate Container Corp., 100 F.3d 296

8 | SE ee Pree errr c Sort Nae ee 25

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

POEs cbs cx sate te jes ae rah ee ae eke Okaaabe +e 10

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

SO BOD 0 apuiatikic dee ade nh 1k. 04nd Ceaede eank 6s 9, 20

Posadas de Puerto Rico v. Associacion de Empleados,

ek ee 2 ge | ee erro, rss Pree 14

Prudential Insurance Co. v. Lai, 42 F.3d 1299 (9th

Cir. 1994), cert. denied, 116 S. Ct. 61 (1995)........ 24

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

1997), petition for cert. filed, 65 USLW 3783 and

OG Ge a intact oo vi ign ads ncentes 9, 12, 13, 14

Renteria v. Prudential Insurance Co., 113 F.3d 1104

a ee eee ee rere tert fre Pret eee 25

Rodriguez de Quijas v. Shearson/American Express,

ee, SD GH ee Se hb haRe Ree eer eebicieissss 7

Rojas v. TK Communications, Inc., 87 F.3d 745 (5th

Gh) WUE ‘i'bv ns butdn eed’ bhak.cve bb es Sean baeeee so 9, 20

Scherck v. Alberto-Culver Co., 417 U.S. 506 (1974)..... 13

Vv

TABLE OF AUTHORITIES - Continued

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

Sl MOE R 6 0h 8s Fe eS Ua eN ales Caldew Gia 4, 29

Stedor Enterprises, Ltd. v. Armtex, Inc., 947 F.2d 727

8 a | Bee iene Catan 24

Taylor v. Freeland & Kronz, 503 US. 638 (1992)....... 17

Tenney Engineering, Inc. v. United Electrical Radio &

Machine Workers, 207 F.2d 450 (3d. Cir. 1953)...11, 12

United Electrical Radio & Machine Workers v. Miller

Metal Products, 215 F.2d 221 (4th Cir. 1994)........ 15

Uptown v. Tribilcock, 91 U.S. 45 (1875)............... 24

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

WEE sheen 50 hehe Beek cha NVOE AR OLR AAs Soho kus 19

STATUTES AND RULEs:

Age Discrimination in Employment Act of 1967...... 6

Civil Rights Act of 1964, Title VII............... passim

Civil Rights Act of 1991, § 118............. ae ae

Federal Rule of Civil Procedure 54(d)............... 21

Labor-Management Relation Act (Taft-Hartley

a eg ee See 16

NASD Code of Arbitration Procedure ...3, 4, 20, 28, 29

Ohio Arbitration Act, §§ 2711.01-.16.................. 9

United States Arbitration Act, 9 U.S.C. §§ 1-13.. passim

1S USC. § FEB(GM2) and (Cc)... 2... cc ccccccccccccccs 4

vi

TABLE OF AUTHORITIES - Continued

Page

LEGISLATIVE MATERIALS:

a i ee ee ee ok. 2s Ae 19 |

137 Cong. Rec. H9505, 9548............00cc cece cence 19 |

H.R. Rep. No. 96, 68th Cong., 1st Sess., pt. 1 (1924) .... 13

S. Rep. No. 536, 68th Cong., 1st Sess., pt. 2 (1924) .... 13

MISCELLANEOUS:

48 American Bar Association Report 287 (1923) ..... 12

William Kolakowski, The Federal Arbitration Act

and Individual Employment Contracts: A Better

Means to an Equally Just End, 93 Mich. L. Rev.

RUPE SORA & nk Cee Set a Shea RR Seok oe he 12

10 James W. Moore, et al., Moore’s Federal Practice

fe FT ee, Peer rrr Ce re ae 21

INTRODUCTION

This case presents no basis for certiorari. There is no

split in the courts of appeal on any matter of national

importance and the Petition presents no constitutional

question. Moreover, most of the issues raised in the Peti-

tion were resolved by this Court six years ago in Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 23 (1991).

Section 1 of the Federal Arbitration Act (FAA)

excludes from the Act’s purview “contracts of employ-

ment of seamen, railroad employees, or any other class of

workers engaged in foreign or interstate commerce.” 9

U.S.C. § 1. The first question raised by Petitioner is

whether this language excludes all individual employ-

ment contracts from the FAA. The statutory language, the

legislative history, and the decision of every circuit to

address the issue are all in accord that individual employ-

ment contracts in non-transportation industries fall under

the FAA. Second, Petitioner complains of an assortment

of perceived procedural deficiencies in the arbitration

process. This Court in Gilmer upheld compulsory arbitra-

tion in circumstances nearly identical to the present case.

There is no reason to revisit Gilmer.

¢

STATEMENT OF THE CASE

Plaintiff Claudia Cosgrove (Plaintiff) worked as a

sales assistant for Shearson Lehman Brothers (Shearson),!

a brokerage firm with a branch office in Cincinnati, Ohio.

1 Shearson Lehman Brothers is now known as Smith Barney

Inc. Smith Barney Inc. is a wholly-owned subsidiary of

Traveler’s Group, Inc.

Prior to commencing employment in 1987, Ms. Cosgrove

signed the following employment agreement:

“I hereby agree that any controversy arising out |

of or in connection with my compensation,

employment or termination of employment shall |

be submitted to arbitration before the National

Association of Securities Dealers, Inc., the New

York Stock Exchange, Inc., or the American

Stock Exchange, Inc., and be resolved in accor-

dance with the rules then in effect, of such enti- |

ties. Judgment upon any award rendered by the |

arbitrators may be entered in any court having

jurisdiction thereof.” (JA 93.)

The provision could not have been unfamiliar to Ms.

Cosgrove. This was the second time Ms. Cosgrove had

signed this agreement. (JA 36.) She had signed the agree-

ment for the first time in 1984, and signed it again in 1987

when she reapplied for employment after a brief absence

from the company. (Id.)

In June of 1991, Ms. Cosgrove filed a charge with the

Equal Employment Opportunity Commission (EEOC) and

the Ohio Civil Rights Commission (OCRC) alleging that

she had been denied a pay raise for complaining about

sexual harassment. Shearson offered to settle the matter

by paying Plaintiff the full amount of her lost raise. (JA

125.) As a consequence, the EEOC and the OCRC dis-

missed the claim and issued a right to sue letter. (JA

125-132.)

Plaintiff then filed a lawsuit in the United States

District Court for the Southern District of Ohio alleging

that Shearson had unlawfully retaliated against her for

complaining about sexual harassment in violation of Title

VII and the Ohio employment discrimination laws. (JA

ee ee a ene TST

6-11.) In response to a motion filed by Shearson, the

district court stayed the matter pending arbitration. (JA

64-65.) Subsequently, Plaintiff initiated an arbitration

with the National Association of Securities Dealers

(NASD), an organization which she selected over the

New York Stock Exchange and the American Stock

Exchange.

An arbitration was conducted before a panel of arbi-

trators, duly appointed under NASD rules, and acting

according to NASD procedures. The NASD rules - both

those in effect at the time and at present — provide a full-

range of procedural protections. All parties have a right

to counsel at every stage of proceedings (NASD Code of

Arbitration Procedure, § 27; NASD Code of Arbitration

Procedure, Rule 10316),? parties may attend all hearings

(§ 28; Rule 10317), parties are entitled to conduct written

discovery and document production (§ 32; Rule 10321),

documents to be used at the hearing must be provided to

the other side ten days before the hearing (§ 32(c); Rule

10321(c)), arbitrators and attorneys may subpoena wit-

nesses and materials (§ 31; Rule 10322), witnesses testify

under oath (§ 38; Rule 10327), a verbatim record of the

proceedings is maintained (§ 37; Rule 10326), the names

and backgrounds of the arbitrators are provided to the

parties in advance of the hearing (§ 21; Rule 10310),

2 The NASD rules have been modified somewhat since the

hearing at issue. The first citation in parenthesis in the above

paragraph is to the 1993 rules in effect at the time, the second

citation is to the corresponding present rule. Of particular note,

NASD rules now provide that employment discrimination

claims, like Ms. Cosgrove’s, are to be heard by a panel of

arbitrators, the majority of whom are not connected to the

securities industry. NASD Rules 10202, 10302, 10308.

potential arbitrators must disclose interests, relationships

and circumstances that might preclude them from render-

ing an impartial and objective determination (§ 23; Rule

10321), each party has eight business days to object to any

arbitrator (§ 21; Rule 10311), each party is allowed one

peremptory challenge and unlimited challenges for cause

(§ 22; Rule 10311), and all awards must be in writing and

signed by a majority of the arbitrators (§ 41; Rule 10330).

The NASD arbitration rules are subject to the jurisdiction

and oversight of the Securities and Exchange Commis-

sion.?

A three-member panel held a two-day hearing on

Plaintiff’s claims. Ms. Cosgrove exercised a peremptory

challenge to remove one potential arbitrator, and suc-

cessfully challenged another arbitrator for cause. After

the hearing, the panel issued a unanimous written deci-

sion dismissing Plaintiff's complaint. (JA 100-103.) Plain-

tiff never has contended that the NASD rules were

violated in any respect.

Following the arbitration decision, Plaintiff filed a

motion with the district court seeking relief from the stay

in order to pursue her claims in federal court. (JA 66.) Ms.

Cosgrove argued that the FAA and the Ohio Arbitration

Act did not require that her claims be arbitrated, that the

arbitration proceeding was biased because the panel was

comprised of three male stockbrokers from the Cincinnati

area, that one arbitrator had failed to disclose a potential

conflict, and that the panel failed to provide an adequate

written opinion. (JA 67-87.)

3 See 15 U.S.C. § 785(b)(2) and (c); Shearson/American

Express, Inc. v. McMahon, 482 U.S. 220, 234 (1987).

The district court denied Ms. Cosgrove’s motion. (JA

13-26.) It noted that Ms. Cosgrove had “entirely failed to

point out to the Court any conduct or statements on the

part of any of the arbitrators that would provide the hasis

for a finding that the decision reached by the arbitrav.

was in manifest disregard of the law.” (JA 19.) It further

concluded that Ms. Cosgrove had not set forth any of the

grounds sufficient to vacate an arbitral award under

§ 10(a) of the FAA or the Ohio Arbitration Act. (JA 20-26.)

As to Mr. Cosgrove’s complaints about demographic

imbalance in the arbitration panel, the court “refuse[d] to

indulge the presumption that members of certain age,

gender, racial and professional groups-are prima facie

unfit to serve as arbitrators.” (JA 21.)

Ms. Cosgrove appealed to the United States Court of

Appeals for the Sixth Circuit. (JA 27.) The Sixth Circuit, in

an unpublished opinion, affirmed the district court. (Peti-

tion la-5Sa.) Relying upon prior precedent in the Sixth

Circuit, and in numerous other circuits, the court con-

cluded that because “plaintiff was not engaged in the

movement of goods in interstate commerce in the same

manner in which seamen or railroad workers are, dis-

putes related to her employment contract with defendant

are subject to the provisions of the Federal Arbitration

Act.” (Petition 3a.) The court also rejected Plaintiff’s

argument that the award should be vacated because she

had not “knowingly” entered into the agreement. (Peti-

tion 4a-5a.) The court explained that the “plain language”

of the agreement made clear that all employment dis-

putes are to be resolved through arbitration and, that it

“was the second time that Plaintiff had signed such an

agreement.” (Id.) The Sixth Circuit denied Plaintiff's peti-

tion for rehearing and for rehearing en banc. (Petition 8a.)

*

REASONS FOR DENYING THE WRIT

Any discussion of the issues in this case must start

with this Court’s decision in Gilmer. The question in

Gilmer was whether an arbitration clause in a securities

registration application required an employee of a bro-

kerage firm to submit to compulsory arbitration of a

claim under the Age Discrimination in Employment Act

of 1967 (ADEA). 500 U.S. at 20. The Court answered the

question in the affirmative. Id.

In requiring Mr. Gilmer to arbitrate his claims, the

Court noted that the purpose of the FAA “was to reverse

the long-standing judicial hostility to arbitration agree-

ments that had existed at English common law and had

been adopted by American courts, and to place arbitra-

tion agreements upon the same footing as other con-

tracts.” Id. at 24. It was clear “that statutory claims may

be the subject of an arbitration agreement, enforceable

under the FAA.” Id. at 26. “By agreeing to arbitrate a

statutory claim,” the Court explained, “a party does not

forgo the substantive rights afforded by the statute; it

only submits to their resolution in an arbitral, rather than

a judicial, forum.” Id. at 26 (quoting Mitsubishi Motors

Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985)).

To avoid arbitration, a party bears the burden of showiag

that Congress evinced an intention to preclude a waiver

of the judicial remedy with respect to the statute at issue.

Id. at 26. The Court found nothing in the ADEA or its

legislative history to indicate such an intention. Id. at 27.

——

The Court rejected “a host of challenges to the ade-

quacy of arbitration procedures.” Id. at 30. “Such gener-

alized attacks on arbitration,” it noted, “rest on suspicion

of arbitration as a method of weakening the protections

afforded in the substantive law . . . and as such, they are

‘far out of step with our current strong endorsement of

the federal statutes favoring this method of resolving

disputes.’ ” Id. (quoting Rodriguez de Quijas v. Shearson/

American Express, Inc., 490 U.S. 477, 481 (1989)). Thus it

quickly dismissed arguments that arbitration should not

be required because NYSE arbitration panels might be

biased, because parties to such agreements possessed

unequal bargaining power, because discovery may be

more limited in arbitration, because arbitrators will not

issue written opinions, and because arbitration did not

allow for broad equitable relief and class actions. Id. at

30-33.

At the same time Gilmer was being argued, Congress

was considering the 1991 Civil Rights Act. The Gilmer

case was decided five months before the Civil Rights Act

was passed by both Houses of Congress on October 30,

1991, and six months before it was signed into law on

November 21, 1991, by President Bush. There is no indi-

cation in the statute or the legislative history that Con-

gress intended to limit Gilmer in any respect. To the

contrary, Section 118 of the Act explicitly encourages

employers and employees to use arbitration procedures:

“Where appropriate, and to the extent autho-

rized by law, the use of alternative means of

dispute resolution, including . . . arbitration, is

encouraged. ...” Pub. L. 102-166, 105 Stat. 1071,

1081 (1991).

The words “to the extent authorized by law” are not

insignificant. The language manifests a legislative intent

to “encourage” arbitration to the extent allowed by the

present state of the law. At the time of the statute’s

enactment, Gilmer was the law of the land.

Gilmer, and Congress’ subsequent endorsement of the

decision, would seem to be the end of the matter. The

only meaningful difference between this case and Gilmer

is that in Gilmer the arbitration clause was contained in a

securities registration form, rather than in an explicit

employment agreement. Plaintiff has seized upon this

distinction to argue that Ms. Cosgrove’s contract is out-

side of the FAA. Careful examination of the FAA, how-

ever, demonstrates that Congress intended nothing of the

sort.

I. INDIVIDUAL EMPLOYMENT CONTRACTS OF

WORKERS IN NON-TRANSPORTATION INDUS-

TRIES ARE COVERED BY THE FEDERAL ARBI-

TRATION ACT.

Section 1 of the FAA provides that nothing in the Act

“shall apply to contracts of employment of seamen, rail-

road employees, or any other class of workers engaged in

foreign or interstate commerce.” The plain language of

the statute, the legislative history of the FAA, and the

decision of every circuit to address the exclusion’s appli-

cability to individual employment contracts all indicate

that this section was not intended to exclude persons

such as Ms. Cosgrove from the Act’s coverage.

* It is worth noting that even if Plaintiff were to prevail in

her expansive reading of the exclusion, the result in this case

Nine different courts of appeal have addressed the

exclusion’s applicability to individual employment con-

tract and every one of these courts currently is of the

view that the exclusion only applies to workers engaged

in the actual transportation of goods in commerce.5 The

would be no different. Ohio has its own arbitration act, Ohio

Rev. Code §§ 2711.01-.14, which closely parallels the FAA with

an important exception - the Ohio Act does not contain any

exclusion comparable to the one found in § 1 of the FAA.

Because the Sixth Circuit found the FAA applicable, it did not

address the Ohio Act.

> See O'Neil v. Hilton Head Hosp., 115 F.3d. 272 (4th Cir. 1997)

(exception “limited to workers engaged in the shipment and

transportation of goods”); Patterson v. Tenet Healthcare, Inc., 113

F.3d. 832 (8th Cir. 1997) (“section 1 applies only to contracts of

employment for those classes of employees that are engaged

directly in the movement of interstate commerce”); Great

Western Mortgage Corp. v. Peacock, 110 F.3d 222, 227 (3d Cir. 1997)

(“the only class of workers included within the exception to the

FAA’s mandatory arbitration provision are those employed

directly in the channels of commerce itself”); Cole v. Burns Int'l

Sec. Servs., 105 F.3d 1465, 1471 (D.C. Cir. 1997) (“FAA exempts

only the employment contracts of workers actually engaged in

the movement of goods in interstate commerce”); Pryner v.

Tractor Supply Co., 109 F.3d 354, 358 (7th Cir. 1997), petition for

cert. filed, 65 USLW 3783 and 66 USLW 3108; Rojas v. TK

Communications, Inc., 87 F.3d 745, 748 (Sth Cir. 1996) (Ҥ 1 is to be

given a narrow reading”); Asplundh Tree Expert Co. v. Bates, 71

F.3d 592, 600-601 (6th Cir. 1995) (exclusion “should be narrowly

construed to apply to employment contracts of seamen, railroad

workers, and any other class of workers actually engaged in the

movement of goods in interstate commerce in the same way that

seamen and railroad workers are”); Erving v. Virginia Squires

Basketball Club, 468 F.2d 1064, 1069 (2d Cir. 1972) (basketball

player “clearly is not involved in the transportation industry”);

Dickstein v. DuPont, 443 F.2d 783, 785 (1st Cir. 1971) (exclusion

does not apply to securities employee not “involved in, or

10

courts of appeal have reached this result primarily by

relying upon the plain language of the statute. The only

plausible reading of the exclusion is that the reference to

“any other class of workers engaged in foreigin or inter-

state commerce” refers only to workers who are engaged

in interstate commerce in the same way as seamen or

railroad employees. Any other reading would effectively

read the terms seamen, railroad workers, and “class of

workers” out of the statute. Indeed, if Congress meant to

exclude all workers to the limits of its commerce powers,

“it could simply have said ‘employment contracts’ and

left it at that. Any workers beyond the reach of the

commerce clause would not be covered by the Act in the

closely related to, the actual movement of goods and interstate

commerce”).

The Ninth Circuit has not expressly addressed the issue, but

a recent unreported case suggests that it would follow the lead

of its sister circuits. In Borg-Warner Protective Servs. Corp. v.

Gottlieb, 1997 WL 349043 (9th Cir. June 25, 1997), the court

compelled arbitration under the FAA of a religious

discrimination claim based upon an arbitration agreement that

the employee signed as a condition of continued employment.

Lower courts in the Ninth Circuit have felt free to interpret the

exclusion narrowly. See Nicholson v. Labor Ready, Inc., 1997 WL

294393 at *2 (N.D. Cal. May 28, 1997); Goienia v. Bob Baker Toyota,

915 F. Supp. 201, 204 (S.D. Cal. 1996). And while the Tenth and

Eleventh Circuits also have not addressed the issue of

individual employment contracts, lower courts in these circuits

also have held the exclusion applies only to transportation

workers. See Durkin v. Cigna Property & Casualty Ins. Co., 942 F.

Supp 481 (D. Kan. 1996) (Langstrum, J.); McWilliams v. Logicon,

Inc., 1996 WL 439291 (D. Kan. July 9, 1996) (Van Bebber, J.);

Albert v. National Cash Register Co., 874 F. Supp. 1324, 1327 (S.D.

Fla. 1994); Hydrick v. Management Recruiters Inc., 738 F. Supp.

1434, 1435 (N.D. Ga. 1990).

eT

11

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

600 (6th Cir. 1995).

Familiar principles of statutory construction — that

are really no more than common sense - support this

reading. It has long been understood that courts should

avoid reading statutory language in a way “which ren-

ders some words altogether redundant.” Gustafson v.

Alloyd Co., 513 U.S. 561 (1995). A related principle of

statutory construction — the rule of ejusdem generis -

teaches that general terms that follow specific ones are to

be read as similar to the specific terms. Gooch v. United

States, 297 U.S. 124, 128 (1936); Cole v. Burns International

Security Services, 105 F.3d 1465, 1470 (D.C. Cir. 1997). Both

principles lead to the conclusion that the phrase “workers

engaged in interstate commerce” can only be understood

in the context of the sentence, and with reference to the

words that precede it.

In light of the plain language of the statute, there is

no need to resort to the legislative history. Nevertheless,

the legislative history also supports a narrow reading of

the exclusion. At the time of the enactment of the FAA, a

comprehensive regulatory scheme, including arbitration

procedures, already existed for seamen. Tenney Engineer-

ing v. United Electrical Radio & Machine Workers, 207 F.2d

450, 452-53 (3d Cir. 1953). The seamen’s union raised

strenuous objection to the statute. Id. at 452. In response

© The seamen apparently were “concerned that arbitrators

would be less favorably inclined toward seamen’s claims than

judges were. Judges favored such claims, the union thought, in

part because of a tradition that seamen were ‘wards in

admiralty,’ in part because of peculiarities of admiralty law that

would make it easy to slip an arbitration clause into a maritime

12

to the objection of the seamen, the American Bar Associa-

tion Committee charged with drafting the legislation

added the exclusion. Id. (citing 48 Am. Bar Ass’n Rep. 287

(1923)). The committee extended the exclusion to railroad

workers who “were also heavily regulated by a statute

(the Railway Labor Act) that included provision for com-

pulsory arbitration of many disputes.” Pryner v. Tractor

Supply Co., 109 F.3d 354, 358 (7th Cir. 1997), petition for

cert. filed, 65 USLW 3783 and 66 USLW 3108. The commit-

tee “rounded out the exclusionary clause by including all

other similar classes of worker.” Tenney, 207 F.2d at

452-53.”

Plaintiff looks for support in isolated statements in

the legislative history that emphasize the FAA’s role in

commercial contracts. (Petition 18-20.)® No doubt,

employment contract without the seaman’s noticing it, and in

part because the maritime industry was already heavily

regulated by federal law.” Pryner, 109 F.3d at 358.

7 “Motor carriers were not comprehensively regulated, but

it may have seemed (and was) only a matter of time before they

would be: hence the expansion of the exclusion from seamen to

railroad to other transportation workers.” Id. at 358.

8 For a thorough analysis of this issue see William

Kolakowski, The Federal Arbitration Act & Individual Employment

Contracts: A Better Means to an Equally Just End, 93 Mich. L. Rev.

2171, 2187 n. 101 (1995). Mr. Kolakowski concludes that

“Congress contemplated something much broader” than an Act

that dealt only with commercial disputes. Plaintiff relies most

heavily on certain statements by Mr. Piatt, Chairman of the ABA

Committee. (Petition 18-19.) But as Mr. Kolakowski points out

“there was almost no debate on the FAA when it was brought to

the House and Senate floors — making it . .. dangerous to impute

the intentions of the bill’s drafters to the entire Congress.”

Kolakowski, supra at 2186.

13

Congress’ primary concern was with commercial con-

tracts. But there is ample evidence of a congressional

understanding that the FAA would reach other types of

contracts as well. For example, the Senate Report notes

“the settlement of disputes by arbitration appeals to cor-

porate interests as well as individuals.” S. Rep. No. 536,

68th Cong., 1st Sess., pt. 2, at 3 (1924). The House Report

states “[t]he purpose of this bill is to make valid and

enforceable agreements for arbitration contained in con-

tracts involving interstate commerce. . . or which may be

the subject of litigation in the federal courts.” H.R. Rep.

No. 96, 68th Cong., 1st Sess., pt. 1, at 2 (1924).

To read the exclusion in the manner Plaintiff suggests

would be at odds with Congress’ intent in passing the

FAA. The FAA represented “a liberal federal policy favor-

ing arbitration agreements.” Moses H. Cone Memorial Hos-

pital v. Mercury Construction Corp., 460 U.S. 1, 24 (1983).

The purpose of the FAA was to override longstanding

judicial hostility to arbitration agreements and place arbi-

tration on equal footing with other contract provisions.

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 219 (1984);

Scherck v. Alberto-Culver Co., 417 U.S. 506, 510-511 (1974).

Congress also recognized the benefit of arbitration in

allowing parties to avoid “the costliness and delays of

litigation.” Id. at 511 (quoting H.R. Rep. No. 96, supra at 1,

2); see also S. Rep. No. 536, supra at 3. Plaintiff’s suggested

reading would “give the exclusion a breathtaking scope”

that “would not answer to any concern expressed to or by

Congress in the debates leading up to the passage of the

arbitration act.” Pryner, 109 F.3d at 358.9

9 For example, “[i]t would mean that an arbitration clause

in an employment contract between a giant multinational

14

There is no inconsistency in reading the exclusion

narrowly, and commerce broadly in other sections of the

Act. (Petition 16-17.) The FAA is a broad, remedial statute

intended to overcome judicial hostility to arbitration;

thus it makes sense for the Act to extend to the limits of

Congress’ commerce power. On the other hand, the exclu-

sion is the result of a legislative bargain intended to

appease the seamen union. The bargain was at odds with

Congress’ overall goal in passing the statute. The terms of

the bargain should not be altered by later courts.

In her zeal to obtain certiorari, Plaintiff attempts to

manufacture a split in the circuits. (Petition 12-15.) But

there is no split about the applicability of the FAA to

individual employment contracts, such as the one Ms.

Cosgrove signed. As the D.C. Circuit put it earlier this

year, “every circuit to consider this issue squarely has

found that § 1 of the FAA exempts only the employment

contracts of workers actually engaged in the movement

of goods in interstate commerce.” Cole v. Burns Interna-

tional Security Services, 105 F.3d 1465, 1471 (D.C. Cir.

1997).

Any confusion that exists concerns collective bar-

gaining agreements (CBAs). Three courts of appeal have

suggested that CBAs are excluded from FAA coverage.?!°

corporation and its chief executive officer would . . . not be

enforceable in federal court.” Pryner, 109 F.3d at 358.

10 See, e.g., Harrison v. Eddy Potash, Inc., 112 F.3d 1437, 1454

(10th Cir. 1997); Posadas de Puerto Rico v. Associacion de

Empleados, 873 F.2d 479, 482, 484-85 (1st Cir. 1989); American

Postal Workers Union v. United States Postal Service, 861 F.2d 211,

215 n.2 (9th Cir. 1988). The decisions of these circuits are notable

for their almost complete lack of analysis of the issue. Their

15

The position of these courts reflects a long-standing judi-

cial sense that arbitration in the collective bargaining

context differs from other types of arbitration. See, e.g.,

Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974); Brisen-

tine v. Stone & Webster Engineering, 117 F.3d 519 (11th Cir.

1997). In Gardner-Denver, a case which did not involve the

FAA, see Gilmer, 500 U.S. at 35, this Court held that the

mandatory grievance and arbitration clause in a CBA did

not preclude a later Title VII lawsuit. The Gilmer Court

distinguished Gardner-Denver by explaining that CBAs

were different from individual employment contracts.

The Court noted that a union arbitrator acting under a

CBA is only authorized to resolve contractual claims, not

statutory ones. Id. In addition, the Court recognized a

tension between the interests of the union that negotiated

the CBA and the interests of the employee. Id. No doubt

similar concerns motivated the three courts of appeal that

still are on record as holding that CBAs are outside of the

FAA.

Petitioner may be correct that there is little basis in

the statutory language to differentiate collective bargain-

ing agreements from individual employee contracts. But

this is not a question presented by the case at bar. If this

cursory treatment contrasts sharply with the extensive analysis

engaged in by the courts of appeal that have found

the exception applies only to workers involved in the

transportation of goods.

The Fourth Circuit once held that CBAs are excluded from

the ambit of the FAA. See, e.g., United Elec. Radio & Mach. Workers

v. Miller Metal Prods., 215 F.2d 221 (4th Cir. 1994). A recent

decision in that Court, however, casts considerable doubt on

whether Miller Metal remains good law. See O'Neil v. Hilton Head

Hosp., 115 F.3d 272 n.1 (4th Cir. 1997).

16

Court feels it important to straighten out perceived con-

fusion concerning CBAs, it could much more appro-

priately do so in a case that involved collective

bargaining agreements.'!

II. THERE IS NO REASON WHY THE ARBITRATION

CONTRACT SHOULD NOT BE ENFORCED.

In the second section of her brief, Plaintiff seeks strict

limits on parties’ ability to enter into arbitration contracts

and rigorous prohibitions on the procedures to which

they may agree. The basis on which she seeks review is a

bit puzzling. Plaintiff acknowledges that the FAA pro-

vides that arbitration agreements are “valid, irrevocable

and enforceable, save upon such grounds as exist at law

or in equity for the revocation of any contact.” 9 U.S.C.

§ 2. Yet Petitioner urges a level of judicial scrutiny of

arbitration contracts that far exceeds traditional norms of

contract law. Perhaps her challenge is based upon some

vague notion of due process or an expansive view of the

Seventh Amendment. But nowhere does she even attempt

to locate a constitutional or statutory basis for her claims.

11 Even if this case presented the question of the exclusion’s

applicability to CBAs, which it does not, the issue hardly seems

worthy of this Court’s attention. Even without the FAA, § 301 of

the Taft-Hartley Act apparently provides an independent basis

to enforce arbitration provision in CBAs. See General Elec. Co. v.

United Elec., Radio & Mach. Workers, 353 U.S. 547 (1957); see also

Pryner, 109 F.3d at 357 (concluding that FAA applies generally to

CBAs of workers involved in non-transportation industries, but

“federal common law under the aegis of § 301 is used to

determine any substantive issues in proceedings to vacate or

enforce the arbitration award”).

ee a Oe ne eo oo ~ -

17

Plaintiff worries that employers may “structure arbi-

tration in ways that systematically disadvantage

employees.” (Petition at 21) quoting Cole v. Burns Interna-

tional Security Services, 105 F.3d 1465, 1477 (D.C. Cir.

1997)). The present case is singularly inappropriate for

this Court to address such a concern. The arbitration

provision applied equally to both parties to the contract.

There is no evidence that the arbitration proceeding was

unfair, biased, or in any way inequitable. To the contrary,

the arbitration took place under carefully circumscribed

NASD Rules which were subject to the oversight of the

Securities Exchange Commission, and procedurally

equivalent to those upheld by this Court in Gilmer. While

there may be cases where arbitration is so one-sided that

substantial questions are raised, this is not such a case.

A. A Party May Agree to Arbitrate Employment

Disputes in an Employment Application.

Plaintiff takes the position that the arbitration agree-

ment is unenforceable because it was “extracted as a

condition of employment.” (Petition 23-24). This proposi-

tion was never advanced below. Because she did not raise

the issue below, the record is not developed as to whether

Ms. Cosgrove was in fact required to sign an arbitration

provision to obtain employment with Shearson, whether

Shearson would have denied her employment if she had

refused to sign the provision, or even whether all Shear-

son employees signed such agreements. There is not a

shred of evidence in the record that Plaintiff objected to

the arbitration provision when it was presented to her.

Absent exceptional circumstances, this Court will not

consider matters not raised below. Taylor v. Freeland &

18

Kronz, 503 U.S. 638, 645 (1992); Demarest v. Manspeaker,

498 U.S. 184, 189 (1991). Plaintiff has not set forth any

exceptional circumstances.

This Court in Gilmer upheld an agreement to arbi-

trate disputes that the employee signed as a condition of

employment. Gilmer was “required by his employment”

to register “as a securities representative with several

stock exchanges, including the New York Stock

Exchange.” Gilmer, 500 U.S. at 23. In order to register

with these exchanges, Gilmer was required to agree to

arbitrate any disputes under the rules of these organiza-

tions. Id. The Court dismissed Mr. Gilmer’s concern that

employers could use their superior economic position to

extract such provision from employees. Id. at 33. “Mere

inequality in bargaining power” the Court explained, “is

not a sufficient reason to hold that arbitration agreements

are never enforceable in the employment context.” Id. at

23.

Contrary to Plaintiff’s suggestion (Petition 23-24),

there is not a single word in the 1991 Civil Rights Act that

suggests Congress meant to preclude an employee from

entering into a pre-dispute agreement to arbitrate any

later employment dispute. When Congress passed the

1991 Civil Rights Act it was almost certainly aware that in

Gilmer this Court had upheld an employment agreement

under which a pre-dispute agreement to arbitrate was

effectively a condition of employment. Congress did not

indicate any intention to reverse or limit Gilmer in the

1991 Act, although it expressly overruled several other

19

Supreme Court decisions.!? Instead Section 118 expressly

encourages arbitration to the extent allowed by law. Cer-

tainly, the few isolated, and ambiguous partisan state-

ments, that Plaintiff culls from the legislative history are

not sufficient to rewrite the FAA and to overrule prior

decisions of this Court.!5

The law in this regard is so clear that every court of

appeals that has addressed the issue - at least eight

12 The initial sections of the 1991 Act announce an intention

to reverse this Court’s decision in Wards Cove Packing Co., Inc. v.

Atonio, 490 U.S. 642 (1989), and the law also limits or reverses,

such decisions as Patterson v. McLean Credit Union, 491 U.S. 164

(1989), and Lorance v. AT&T Technologies, Inc., 490 U.S. 900

(1989).

13 Plaintiff relies primarily upon one sentence in the House

Conference Report to the effect that arbitration does not

preclude resort to the enforcement provisions of Title VII.

(Petition 23-24.) As an initial matter, a plausible reading of the

language is simply that its drafters meant only to preserve the

right to file a claim with the EEOC. Regardless, committee

reports are of only limited usefulness to understanding

legislative intent in this situation. The 1991 Civil Rights Act was

a carefully crafted compromise between a Democratic Congress

and a Republican President that became law only after the

President had vetoed an earlier version of the legislation. The

legislation changed substantially from the time the language

petitioner cites was initially inserted in the conference report,

and final passage of the legislation that ultimately became law.

In light of the finely-tuned compromise, it is necessary to

interpret what was enacted into law, not what is contained in a

committee report. In fact, other portions of the legislative

history refer to Gilmer in reference to § 118 with evident

approval. See 137 Cong. Rec. H9505, 9548 (legislative history

inserted by Representative Henry Hyde); 137 Cong. Rec. 15472,

15477 (legislative history representing views of 13 Republican

Senators and the Administration).

20

different circuits — has held arbitration clauses that were

no less a condition of employment than Plaintiff’s to be

fully enforceable.'4

B. The Fees Paid by Plaintiff Do Not Merit

Review by this Court.

The costs and fees for the arbitration proceeding

came to $3,200.00. Acting pursuant to Section 34(c) of the

NASD Code, the arbitration panel assessed these fees

equally between the parties, each paying $1,600.00. Plain-

tiff suggests that this division of fees somehow makes the

writ appropriate.

As an initial matter, Plaintiff failed to raise the issue

below. She did not raise it before the district court when

14 See, e.g., Borg-Warner Protective Servs. Corp. v. Gottlieb,

1997 WL 949043 (9th Cir. June 25, 1997) (enforcing arbitration

agreement that employee signed “as a condition of continued

employment”); O'Neil v. Hilton Head Hosp., 115 F.3d 272 (4th Cir.

1997) (enforcing arbitration agreement that employee signed in

employee handbook); Patterson v. Tenet Healthcare, Inc., 113 F.3d

832 (8th Cir. 1997) (same); Great Western Mortgage Corp. v.

Peacock, 110 F.3d 222, 228 (3d Cir. 1997) (rejecting argument that

arbitration agreement was unenforceable because employee

“would not have been hired” if she had refused to sign the

agreement); Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1467

(D.C. Cir. 1997) (enforcing arbitration agreement that an

employee signed “as a condition of employment”); Rojas v. TK

Communications, Inc., 87 F.3d 745, 746 (5th Cir. 1996) (enforcing

arbitration agreement in employment agreement); Asplundh Tree

Expert Co. v. Bates, 71 F.3d 592, 593 (6th Cir. 1995) (same);

Dickstein v. DuPont, 443 F.2d 783, 784, 785 (1st Cir. 1971)

(enforcing arbitration clause in securities application that

employee was required to submit “as a condition precedent to

his employment”).

21

she sought to avoid Shearson’s motion for a stay pening

arbitration (JA 43-52), she did not raise it in the district

court when she sought to vacate the arbitration award (JA

66-88), she did not raise it on appeal in the Sixth Circuit,

and she did not raise it in her request for rehearing and

rehearing en banc in the Sixth Circuit. Plaintiff has not

demonstrated any exceptional circumstances, and should

not be allowed to raise the issue for the first time before

this Court.

The $1,600 that Plaintiff was required to pay seems

neither unfair or excessive. Plaintiff’s claim was dis-

missed in its entirety. It is only fair that Plaintiff should

pay one-half of the costs of the proceeding. Nor are such

fees likely to discourage legitimate claims against

employers. A losing party in a civil judicial action is

required to pay not only her own costs, but also the other

side’s costs as a “matter of course.” Fed. R. Civ. P. 54(d).

Such costs typically include filing and docket fees, costs

for transcripts of proceedings and depositions, court

reporter fees, witness fees and travel expenses, and costs

for photocopying of documents. See 10 James W. Moore,

et al., Moore’s Federal Practice § 54.103 (3d ed. 1997). As a

losing plaintiff in a judicial proceeding, Ms. Cosgrove

almost certainly would have paid more than $1,600 in

costs.

Moreover, Plaintiff would have incurred much higher

attorneys’ fees in a judicial action. A principal advantage

of arbitration is that parties typically incur much smaller

attorneys’ fees. But for her repeated attempts to avoid her

agreement to arbitrate, Plaintiff undoubtedly would have

saved attorneys’ fees many times over which she was

required to pay in arbitration fees. Arbitration with its

lower attorney costs is almost certainly more likely to

22

encourage the filing of legitimate claims than a regime

that limits parties to costly judicial proceedings. This is

particularly true when one considers the potential for

deep-pocket defendants to “bleed” plaintiffs with limited

financial resources through extensive motion practice and

discovery in judicial proceedings. Plaintiff entered into a

bargain for arbitration instead of a judicial proceeding.

There is no reason for this Court to relieve her of the

consequences of her voluntary agreement.

It is true that the D.C. Circuit in the case of Cole v.

Burns International Security Services, 105 F.3d 1465 (D.C.

Cir. 1997), interpreted an arbitration agreement to require

that an employer pay all arbitration fees. Many of the

circumstances that motivated the D.C. Circuit, however,

are not present in this case. In Cole, the court expressed

concern that the employee may have to pay all the arbi-

tration fees, id. at 1483, and noted that unlike the arbitra-

tion in Gilmer the SEC did not have authority to “oversee

and regulate” the arbitration rules, id. at 1465 n. 9. Nei-

ther circumstance exists in this case.

It may be that the D.C. Circuit’s decision in Cole was

incorrect. But this case — with its undeveloped record on

the issue and altogether reasonable fee structure — hardly

seems an appropriate case for this Court to assess the

wisdom of Cole. Furthermore, the Cole decision was

decided only months ago and the D.C. Circuit is the only

court of appeals to have weighed in on the issue. Even if

this Court is interested in the issues presented by Cole, it

makes sense to wait until other circuits have had a chance

to address the matter and the issues are more clearly

presented.

23

C. There Is No Basis for Plaintiff's Proposed

“Knowing Waiver” Standard.

Plaintiff asks this Court to mandate a searching

review into the subjective understanding of a party to an

arbitration contract that has never been applied with any

other type of contract. (Petition 25-27.) The review Plain-

tiff seeks is directly contrary to the FAA’s command that

arbitration contracts are only avoidable on “such grounds

as exist . . . for the revocation of any contract.” There is

absolutely no basis for this Court to ignore the FAA and

abandon familiar principles of contract law.

There is no ambiguity in the agreement Ms. Cosgrove

signed. She agreed to arbitrate “any controversy arising

out of or in connection with [her] compensation, employ-

ment or termination of employment.” This Court in

Gilmer upheld nearly identical language. Mr. Gilmer’s

contract required the arbitration of “any dispute, claim or

controversy” which was required to be arbitrated by any

of the organizations with which he registered. 500 U.S. at

23. A rule of the NYSE provided for the arbitration of

disputes “arising out of the employment or termination

of employment of such registered representative.” Id. at

23. The agreement Ms. Cosgrove signed is more explicit

than the agreement signed by Mr. Gilmer, because in

Gilmer reference was required to the NYSE rule to clarify

that the arbitration clause encompassed employment dis-

putes. Nevertheless, the Gilmer Court did not feel any

need to undertake the searching inquiry that Plaintiff

suggests is required in this case. Rather, the Court reiter-

ated that the contract could be avoided only under cir-

cumstances “that would provide ground for revocation of

any contract.” Id. at 33.

24

Plaintiff does not allege that any such grounds exist

in this case. It is a bedrock principle of contract law that

an individual may not avoid his contractual obligations

simply by claiming that he did not know what the con-

tract contained, “lest contracts would not be worth the

paper on which they are written.” Uptown v. Tribilcock, 91

U.S. 45, 50 (1875); McAdams v. McAdams, 88 N.E. 542, 544

(Ohio 1909).15 Any other result would allow a party to

avoid a valid arbitration agreement simply by contending

that he did not read the agreement.

Plaintiff’s argument rests on an elemental misunder-

standing arbitration — that arbitration somehow deprives

a party of a fundamental right. This contention has been

flatly rejected by this Court. “By agreeing to arbitrate or a

statutory claim, a party does not forego the substantive

rights afforded by the statute; it only submits to the

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

Mitsubishi, 473 U.S. at 627 (quoted with approval in

Gilmer, 500 U.S. at 26).

Plaintiff’s reliance on Prudential Insurance Co. v. Lai,

42 F.3d 1299, 1304-1305 (9th Cir. 1994), cert. denied, 116

S. Ct. 61 (1995), is unavailing. There is broad language in

Lai to the effect that an agreement to arbitrate must be

knowing. The determinative factor in Lai, however, was

15 Courts routinely have required parties to submit their

disputes to arbitration notwithstanding claims that one party

did not understand the agreement to arbitrate. See Great Western

Mortgage Corp. v. Peacock, 110 F.3d 222, 228 (3d Cir. 1997);

Coleman v. Prudential Bache Sec., Inc., 802 F.2d 1350, 1352 (11th

Cir. 1996); Stedor Enterprises, Ltd. v. Armtex, Inc., 947 F.2d 727,

733 (4th Cir. 1991); Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d

282, 287-88 (9th Cir. 1988).

25

that the arbitration clause “did not even refer to employ-

ment disputes.” Id. at 1305; see also Renteria v. Prudential

Insurance Co., 113 F.3d 1104, 1107 (9th Cir. 1997).16 In

contrast, Plaintiff’s employment contract made specific

reference to “any controversy arising out of or in connec-

tion with . . . employment.” Certainly, a claim for retalia-

tion against one’s employer arises in connection with

employment.

Nor is there anything to Plaintiff’s assertion that the

contract did not make clear that arbitration would pre-

empt her right to a judicial forum. The agreement explic-

itly stated that “[j]udgment upon any award rendered by

the arbitrators may be entered in any Court having juris-

diction thereof.” Plaintiff's argument that her agreement

© The other cases cited by Plaintiff are equally

unpersuasive. In Nelson v. Cyprus Bagdad Copper Corp., 1997 WL

381177 (9th Cir. July 10, 1997), the arbitration provision was

found in an employee handbook. The employee signed only an

acknowledgment of receipt of the handbook which

characterized the handbook “as a ‘guideline’ to the company’s

unilaterally promulgated policies and procedures.” Orlando v.

Interstate Container Corp., 100 F.3d 296 (3d Cir. 1996), dealt with

an arbitration provision in a collective bargaining agreement.

The court simply concluded as a matter of contract

interpretation that the CBA did not make the union’s grievance

procedure final or binding. Thus, the court declined to grant “an

expansive interpretation of the collective bargaining agreement

when the collective bargaining agreement provide[d] no such

basis for such a construction.” Id. at 30. The case of National

Equipment Rental v. Hendrix, 565 F.2d 255 (2d Cir. 1977), did not

involve arbitration, and thus the court was not bound to act

with the FAA’s “healthy regard for the federal policy favoring

arbitration.” See Moses H. Cone Memorial Hosp. v. Mercury Constr.

Corp., 460 U.S. 1, 24 (1983).

26

was not knowing must either be premised on an assump-

tion that (1) she did not bother to read the contract she

signed, or (2) that she did not understand the clear

import of the English language. Neither has ever been _

grounds to avoid a contract.!7

D. There Is No Evidence That Plaintiff's Panel

Was Biased.

Plaintiff complains that her panel consisted of per-

sons who had once worked in local brokerage firms.

(Petition 27-28.) Most telling in this regard is what Plain-

tiff does not assert in her Petition. She does not allege any

specific instances of bias in the proceedings, nor does she

allege any particular circumstances rendering the arbitra-

tors who decided her case incapable of rendering a fair

and just result. Rather, her contention is that a panel

comprised of arbitrators who had once worked for a

brokerage firm is automatically biased against other for-

mer brokerage-firm employees.

In Gilmer, this Court rejected a nearly identical argu-

ment. Responding to Mr. Gilmer’s claim that arbitration

panels selected under NYSE rules would be biased, the

Court “decline[d] to indulge the presumption that the

parties and arbitral body conducting a proceeding will be

unable or unwilling to retain competent, conscientious

17 Under Plaintiff’s theory, an arbitration provision would

have to explicitly mention any law under which an arbitratable

dispute might arise, meticulously describe arbitration

procedures, and outline the possible results of such arbitration.

(Petition 26-27.) If this were the law, arbitration provisions

would become so comprehensive and legalistic as to be

incomprehensible to most non-lawyers.

te hi te eee BG MTS am. ato

27

and impartial arbitrators.” Gilmer, 500 U.S. at 30 (quoting

Mitsubishi, 473 U.S. at 634). “In any event,” the Court

continued, “we note that the NYSE arbitration rules,

which are applicable to the dispute in this case, provide

protections against biased panels.” Id. It explained that

the NYSE rules require “disclosure of the employment

histories of arbitrators,” allow parties further to inquire

into arbitrators’ backgrounds, allow peremptory chal-

lenges and unlimited challenges for cause, and require

arbitrators to disclose any circumstances which might

preclude them from rendering an objective and impartial

determination. Id. Although Plaintiff did not exercise her

contractual right to proceed to arbitration under the

NYSE Rules, the NASD procedures she selected are vir-

tually identical to those upheld in Gilmer. See supra at 3-4.

As in Gilmer, “there has been no showing in this case that

[the NASD provisions] are inadequate to guard against

potential bias.” 500 U.S. at 31.

In the Sixth Circuit, an arbitrator’s award may be

reversed if it “was rendered by an arbitration panel with

‘demonstrated bias’ . . . or ‘evident partiality.”” Apperson

v. Fleet Carrier Corp., 879 F.2d 1344, 1353 (6th Cir.), cert.

denied, 493 U.S. 809 (1989). The district court applied this

standard, and found that Plaintiff had failed to put forth

such evidence. The district court pointed out, Ms. Cos-

grove failed “to allege any statements or conduct which

would indicate a relationship between the arbitrators’

race, age or gender, and their ability to perform their

duties impartially and conscientiously.” (JA 21.) “[A] pre-

sumption of bias based solely on indicia such as race,

gender, age and profession,” explained the court, is “an

evil at least as insidious as the one Plaintiff seeks to

remedy.” (Id.)

28

Plaintiff's argument is a bit like contending that a

judge cannot fairly decide a case involving a corporation

because while in private practice he represented corpora-

tions in the same industry. The presumption of bias that

Plaintiff suggests has never been adopted by any court. It

is telling that Plaintiff’s brief does not cite a single case

that supports her position in this regard.

This question is particularly inappropriate for cer-

tiorari. There is no split in the courts of appeal on this

issue. And since Plaintiff’s case has been decided, the

NASD rules have been modified to provide for a panel of

public arbitrators in employment discrimination cases

like Ms. Cosgrove’s.!®

E. The Arbitration Award Was Not Inadequate for

Lack of an Extensive Written Opinion.

The arbitration panel issued a written award. The

award contained an extensive summary of the factual

allegation of each party, a description of the relief

requested, a description of the award, and an assessment

of forum fees. In Gilmer, this Court rejected the argument

that this type of decision was inadequate. The Court

found it sufficient that a NYSE Rule required “that all

arbitration awards be in writing, and that the awards

contain the names of the parties, summary of the issues in

controversy, and description of the award issued.” Gilmer,

500 U.S. at 31-32.

Plaintiff does not offer any basis for this Court to

reconsider its position in Gilmer. NASD rules require a

18 NASD Rules 10202, 10302, 10308.

29

verbatim transcript of all testimony. The transcript and

written award, along with pleadings and discovery mate-

rials provide sufficient basis for a court to exercise the

“limited” review, Shearson/American Express, Inc. v.

McMahon, 482 U.S. 220, 232 (1987), that is granted to such

awards.

The lack of a written award hardly makes arbitration

defective. If Plaintiff had received the jury trial she

sought, she would not have received a written decision.

And as the Gilmer Court pointed out, concerns about a

lack of written decisions “apply equally to settlements

which are clearly allowed.” 500 U.S. at 32.

It is true that arbitrators do not issue the same sorts

of decisions that judges sometimes do. No doubt, how-

ever, the informality of arbitration awards is one factor in

helping keep arbitration inexpensive and expeditious. As

this Court put it in Mitsubishi, a party “trades the pro-

cedure and opportunity for review of the courtroom for

the simplicity, informality, and expedition of arbitration.”

473 U.S. at 628.

Nor is there any merit to Plaintiff’s professed concern

that arbitration will diminish the deterrent effect of Title

VII. Arbitration awards are available to the public under

NASD Rules. NASD Rule 10330(f). Furthermore, federal

courts continue to issue hundreds of decisions in Title VII

cases each year. As in Gilmer, “judicial decisions will

continue to be issued because it is unlikely that all or

even most [statutory discrimination] claims will be

30

subject to arbitration agreements.” Gilmer, 500 U.S. at 32.

Certainly, there is no danger of a lack of written case law

on Title VII.

CONCLUSION

For all of these reasons, the Petition for Writ of

Certiorari should be denied.

Respectfully submitted,

Davip K. MONTGOMERY

(Counsel of Record)

R. Patrick DEWINE

KEATING, MUETHING &

Kvekamp, P.L.L.

1800 Provident Tower

One East Fourth Street

Cincinnati, Ohio 45202

(513) 579-6400

Attorneys for Shearson

Lehman Brothers