# Opposition Brief — Cosgrove v. Shearson Lehman Bros.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1997
- **Citation:** 522 U.S. 864

## Text

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386013_1089%3A2. Public record. Not legal advice.