Predispute agreements to arbitrate statutory employment claims

New York University Law Review

Volumn 72, Issue 6, 1997, Pages 1344-1375

  Estreicher, Samuel ^a  

^a NEW YORK UNIVERSITY   (United States)

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EID: 0031317268     PISSN: 00287881     EISSN: None     Source Type: Journal    
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References (116)

1. 500 U.S. 20 (1991).
2. 9 U.S.C. §§ 1-16 (1994).
3. 29 U.S.C. §§ 621-634 (1994).
4. 9 U.S.C. § 1 (1994).
5. See O'Neil v. Hilton Head Hosp., 115 F.3d 272, 276 (4th Cir. 1997) (compelling arbitration of claim under federal Family and Medical Leave Act (FMLA), 29 U.S.C. § 2601 (1994 & Supp. 1995)); Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 835-37 (8th Cir. 1997) (affirming dismissal by district court of hospital medical technician's action against former employer alleging violations of Title VII and state antidiscrimination law); Great W. Mortgage Corp. v. Peacock, 110 F.3d 222, 226-27 (3d Cir.) (affirming order of district court compelling arbitration of mortgage consultant's claims against employer pursuant to state sexual harassment law), cert, denied, 1997 U.S. LEXIS 6057 (Oct. 14, 1997); Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1470-72 (D.C. Cir. 1997) (affirming district court order compelling arbitration of discharged security guard's claims against former employer alleging racial discrimination and harassment in violation of Title VII and intentional infliction of emotional distress in violation of state law); Rojas v. TK Communications, Inc., 87 F.3d 745, 747-48 (5th Cir. 1996) (affirming dismissal by district court of disc jockey's action against former employer alleging sexual harassment in violation of Title VII); Matthews v. Rollins Hudig Hall Co., 72 F.3d 50, 53 n.3 (7th Cir. 1995) (reversing denial by district court of employer's motion to compel arbitration of former employee's ADEA and state law fraudulent inducement claims); Asplundh Tree Expert Co. v. Bates, 71 F.3d 592, 596-602 (6th Cir. 1995) (affirming district court order compelling arbitration of contract claims brought by chief executive officer against company which purchased his employer).
6. 415 U.S. 36 (1974).
7. The Older Workers Benefit Protection Act, Pub. L. No. 101-433, § 201, 104 Stat. 978, 983-84 (1990) (codified as amended at 29 U.S.C. § 626(f)(1) (1994)), sets certain minimum standards for postdispute substantive waivers of ADEA claims.
8. 42 U.S.C. §§ 2000e to 2000e-17 (1994).
9. Title I of the Americans with Disabilities Act (ADA), containing the employment provisions, is codified at 42 U.S.C. §§ 12101-12117 (1994).
10. This is the premise of the voluntary postdispute arbitration experiments of the EEOC and state agencies. See EEOC Policy Statement on Alternative Dispute Resolution, 3 EEOC Compliance Manual (BNA) N:3055 (July 17, 1995) (establishing EEOC commitment to Alternative Dispute Resolution (ADR) and setting guidelines for use); Agency is Committed to ADR But Questions Remain, Miller Says, Daily Lab. Rep. (BNA), Jan. 24, 1995, available in LEXIS, BNA Library, DLABRT File (describing ADR pilot program in which four EEOC districts offered mediation in selective discharge cases resulting in 52% settlement rate). For experience under the voluntary arbitration alternative authorized by New York's Human Rights Law, N. Y. Exec. Law § 297, subd. 4, par. A, subpar. ii (McKinney 1993), see Peter A. Prosper & Joel M. Douglas, The Arbitration of Human Rights Complaints: The New York Experience, Arb. J., Dec. 1992, at 26 (describing New York's program); Peter Blackman, Claimants Wanted: Project Tries to Convince Employees to Arbitrate, N.Y. L.J., May 26, 1994, at 5 (reporting that program is wanting for claimants because of minimal promotion and because in arbitration plaintiffs pay counsel, whereas when case is before administrative law judge, plaintiffs have access to free government counsel). For a discussion of the virtues of postdispute mediation, see Dwight Golann, Employment Disputes in Mediating Legal Disputes: Effective Strategies for Lawyers and Mediators (1996); Matthew W. Daus, Mediating Disability Employment Discrimination Claims, Disp. Resol. J., Jan. 1997, at 16, 17-19. For a model of postdispute procedures the author had a hand in drafting, see Center for Public Resources, Inc., Model ADR Procedures: Employment Termination Dispute Resolution Agreement and Procedure (1990).
11. This is the premise of the voluntary postdispute arbitration experiments of the EEOC and state agencies. See EEOC Policy Statement on Alternative Dispute Resolution, 3 EEOC Compliance Manual (BNA) N:3055 (July 17, 1995) (establishing EEOC commitment to Alternative Dispute Resolution (ADR) and setting guidelines for use); Agency is Committed to ADR But Questions Remain, Miller Says, Daily Lab. Rep. (BNA), Jan. 24, 1995, available in LEXIS, BNA Library, DLABRT File (describing ADR pilot program in which four EEOC districts offered mediation in selective discharge cases resulting in 52% settlement rate). For experience under the voluntary arbitration alternative authorized by New York's Human Rights Law, N. Y. Exec. Law § 297, subd. 4, par. A, subpar. ii (McKinney 1993), see Peter A. Prosper & Joel M. Douglas, The Arbitration of Human Rights Complaints: The New York Experience, Arb. J., Dec. 1992, at 26 (describing New York's program); Peter Blackman, Claimants Wanted: Project Tries to Convince Employees to Arbitrate, N.Y. L.J., May 26, 1994, at 5 (reporting that program is wanting for claimants because of minimal promotion and because in arbitration plaintiffs pay counsel, whereas when case is before administrative law judge, plaintiffs have access to free government counsel). For a discussion of the virtues of postdispute mediation, see Dwight Golann, Employment Disputes in Mediating Legal Disputes: Effective Strategies for Lawyers and Mediators (1996); Matthew W. Daus, Mediating Disability Employment Discrimination Claims, Disp. Resol. J., Jan. 1997, at 16, 17-19. For a model of postdispute procedures the author had a hand in drafting, see Center for Public Resources, Inc., Model ADR Procedures: Employment Termination Dispute Resolution Agreement and Procedure (1990).
12. This is the premise of the voluntary postdispute arbitration experiments of the EEOC and state agencies. See EEOC Policy Statement on Alternative Dispute Resolution, 3 EEOC Compliance Manual (BNA) N:3055 (July 17, 1995) (establishing EEOC commitment to Alternative Dispute Resolution (ADR) and setting guidelines for use); Agency is Committed to ADR But Questions Remain, Miller Says, Daily Lab. Rep. (BNA), Jan. 24, 1995, available in LEXIS, BNA Library, DLABRT File (describing ADR pilot program in which four EEOC districts offered mediation in selective discharge cases resulting in 52% settlement rate). For experience under the voluntary arbitration alternative authorized by New York's Human Rights Law, N. Y. Exec. Law § 297, subd. 4, par. A, subpar. ii (McKinney 1993), see Peter A. Prosper & Joel M. Douglas, The Arbitration of Human Rights Complaints: The New York Experience, Arb. J., Dec. 1992, at 26 (describing New York's program); Peter Blackman, Claimants Wanted: Project Tries to Convince Employees to Arbitrate, N.Y. L.J., May 26, 1994, at 5 (reporting that program is wanting for claimants because of minimal promotion and because in arbitration plaintiffs pay counsel, whereas when case is before administrative law judge, plaintiffs have access to free government counsel). For a discussion of the virtues of postdispute mediation, see Dwight Golann, Employment Disputes in Mediating Legal Disputes: Effective Strategies for Lawyers and Mediators (1996); Matthew W. Daus, Mediating Disability Employment Discrimination Claims, Disp. Resol. J., Jan. 1997, at 16, 17-19. For a model of postdispute procedures the author had a hand in drafting, see Center for Public Resources, Inc., Model ADR Procedures: Employment Termination Dispute Resolution Agreement and Procedure (1990).
13. This is the premise of the voluntary postdispute arbitration experiments of the EEOC and state agencies. See EEOC Policy Statement on Alternative Dispute Resolution, 3 EEOC Compliance Manual (BNA) N:3055 (July 17, 1995) (establishing EEOC commitment to Alternative Dispute Resolution (ADR) and setting guidelines for use); Agency is Committed to ADR But Questions Remain, Miller Says, Daily Lab. Rep. (BNA), Jan. 24, 1995, available in LEXIS, BNA Library, DLABRT File (describing ADR pilot program in which four EEOC districts offered mediation in selective discharge cases resulting in 52% settlement rate). For experience under the voluntary arbitration alternative authorized by New York's Human Rights Law, N. Y. Exec. Law § 297, subd. 4, par. A, subpar. ii (McKinney 1993), see Peter A. Prosper & Joel M. Douglas, The Arbitration of Human Rights Complaints: The New York Experience, Arb. J., Dec. 1992, at 26 (describing New York's program); Peter Blackman, Claimants Wanted: Project Tries to Convince Employees to Arbitrate, N.Y. L.J., May 26, 1994, at 5 (reporting that program is wanting for claimants because of minimal promotion and because in arbitration plaintiffs pay counsel, whereas when case is before administrative law judge, plaintiffs have access to free government counsel). For a discussion of the virtues of postdispute mediation, see Dwight Golann, Employment Disputes in Mediating Legal Disputes: Effective Strategies for Lawyers and Mediators (1996); Matthew W. Daus, Mediating Disability Employment Discrimination Claims, Disp. Resol. J., Jan. 1997, at 16, 17-19. For a model of postdispute procedures the author had a hand in drafting, see Center for Public Resources, Inc., Model ADR Procedures: Employment Termination Dispute Resolution Agreement and Procedure (1990).
14. This is the premise of the voluntary postdispute arbitration experiments of the EEOC and state agencies. See EEOC Policy Statement on Alternative Dispute Resolution, 3 EEOC Compliance Manual (BNA) N:3055 (July 17, 1995) (establishing EEOC commitment to Alternative Dispute Resolution (ADR) and setting guidelines for use); Agency is Committed to ADR But Questions Remain, Miller Says, Daily Lab. Rep. (BNA), Jan. 24, 1995, available in LEXIS, BNA Library, DLABRT File (describing ADR pilot program in which four EEOC districts offered mediation in selective discharge cases resulting in 52% settlement rate). For experience under the voluntary arbitration alternative authorized by New York's Human Rights Law, N. Y. Exec. Law § 297, subd. 4, par. A, subpar. ii (McKinney 1993), see Peter A. Prosper & Joel M. Douglas, The Arbitration of Human Rights Complaints: The New York Experience, Arb. J., Dec. 1992, at 26 (describing New York's program); Peter Blackman, Claimants Wanted: Project Tries to Convince Employees to Arbitrate, N.Y. L.J., May 26, 1994, at 5 (reporting that program is wanting for claimants because of minimal promotion and because in arbitration plaintiffs pay counsel, whereas when case is before administrative law judge, plaintiffs have access to free government counsel). For a discussion of the virtues of postdispute mediation, see Dwight Golann, Employment Disputes in Mediating Legal Disputes: Effective Strategies for Lawyers and Mediators (1996); Matthew W. Daus, Mediating Disability Employment Discrimination Claims, Disp. Resol. J., Jan. 1997, at 16, 17-19. For a model of postdispute procedures the author had a hand in drafting, see Center for Public Resources, Inc., Model ADR Procedures: Employment Termination Dispute Resolution Agreement and Procedure (1990).
15. Compare Gibson v. Neighborhood Health Clinics, 121 F.3d 1126 (7th Cir. 1997) (holding that arbitration clause was not enforceable because of lack of consideration in form of any reciprocal employer promise), and Heurtebise v. Reliable Bus. Computers, Inc., 550 N.W.2d 243, 247, 258 (Mich. 1996) (holding that there is no enforceable obligation under Michigan law to submit sex discrimination claim to arbitration where management reserved right to change employee handbook containing arbitration clause and handbook stated that it should not be construed as binding contract; three justices also found violation of state public policy), cert, denied, 117 S. Ct. 1311 (1997), with Lang v. Burlington N. R.R., 835 F. Supp. 1104, 1106 (D. Minn. 1993) (holding that mandatory arbitration policy added to employee handbook 26 years after plaintiff was hired constituted offer accepted by plaintiff through his continued employment and barred post-termination lawsuit, and finding no evidence that provision resulted from fraud or was "inherently unfair"), and Fregara v. Jet Aviation Bus. Jets, 764 F. Supp. 940, 952 (D.N.J. 1991) (finding that grievance and arbitration procedures spelled out in employee handbook providing for appeal to supervisor and then to company's board of adjustment, with provision for selection of impartial referee if board was deadlocked, must be exhausted before fired employee can sue for breach of contract, and stating that "there is nothing futile or illusory about this process"). See generally Samuel Estreicher, Arbitration of Employment Disputes Without Unions, 66 Chi.-Kent L. Rev. 753 (1990); Alfred G. Feliu, Legal Consequences of Nonunion Dispute-Resolution Systems, 13 Employee Rel. L.J. 83 (1987).
16. Compare Gibson v. Neighborhood Health Clinics, 121 F.3d 1126 (7th Cir. 1997) (holding that arbitration clause was not enforceable because of lack of consideration in form of any reciprocal employer promise), and Heurtebise v. Reliable Bus. Computers, Inc., 550 N.W.2d 243, 247, 258 (Mich. 1996) (holding that there is no enforceable obligation under Michigan law to submit sex discrimination claim to arbitration where management reserved right to change employee handbook containing arbitration clause and handbook stated that it should not be construed as binding contract; three justices also found violation of state public policy), cert, denied, 117 S. Ct. 1311 (1997), with Lang v. Burlington N. R.R., 835 F. Supp. 1104, 1106 (D. Minn. 1993) (holding that mandatory arbitration policy added to employee handbook 26 years after plaintiff was hired constituted offer accepted by plaintiff through his continued employment and barred post-termination lawsuit, and finding no evidence that provision resulted from fraud or was "inherently unfair"), and Fregara v. Jet Aviation Bus. Jets, 764 F. Supp. 940, 952 (D.N.J. 1991) (finding that grievance and arbitration procedures spelled out in employee handbook providing for appeal to supervisor and then to company's board of adjustment, with provision for selection of impartial referee if board was deadlocked, must be exhausted before fired employee can sue for breach of contract, and stating that "there is nothing futile or illusory about this process"). See generally Samuel Estreicher, Arbitration of Employment Disputes Without Unions, 66 Chi.-Kent L. Rev. 753 (1990); Alfred G. Feliu, Legal Consequences of Nonunion Dispute-Resolution Systems, 13 Employee Rel. L.J. 83 (1987).
17. Some state arbitration statutes exclude arbitration agreements contained in employment contracts or made a condition of employment. See, e.g., Ariz. Rev. Stat. Ann. § 12-1517 (West 1994); Iowa Code Ann. § 679.1(2)(b) (West 1987); Kan. Stat. Ann. § 5-401(c)(2) (Supp. 1996); Ky. Rev. Stat. Ann. § 417.050 (Michie 1992); S.C. Code Ann. § 15-48-10 (Law. Co-op. 1976 & Supp. 1997). These state law exclusions become material to the issue of arbitrability of employment claims only if the FAA is held not to apply to arbitration agreements contained in most employment contracts. For example, as the Supreme Court of Hawaii recently ruled in Brown v. KFC Nat'l Management Co., 921 P.2d 146 (Haw. 1996), reconsideration denied, 922 P.2d 973 (Haw. 1996), even where the state arbitration statute requires that the arbitration clause be in a written employment contract, "the FAA merely requires that the arbitration provision, but not necessarily the contract out of which the controversy arises, be in writing." Id. at 159. Hence, where the FAA applies, the limitations of state arbitration law have no practical effect.
18. See Judith P. Viadeck, 'Yellow Dog Contracts' Revisited, N.Y. L.J., July 24, 1995, at 7. Professor Stone adopts similar rhetoric in Katherine Van Wezel Stone, Mandatory Arbitration of Individual Employment Rights: The Yellow Dog Contract of the 1990s, 73 Denv. U. L. Rev. 1017 (1996).
19. See Judith P. Viadeck, 'Yellow Dog Contracts' Revisited, N.Y. L.J., July 24, 1995, at 7. Professor Stone adopts similar rhetoric in Katherine Van Wezel Stone, Mandatory Arbitration of Individual Employment Rights: The Yellow Dog Contract of the 1990s, 73 Denv. U. L. Rev. 1017 (1996).
20. Joyce E. Cutler, Arbitration: Suits Challenge Mandatory Arbitration as Depriving Employees of Their Rights, Daily Lab. Rep. (BNA), Mar. 3, 1995, available in LEXIS, BNA Library, DLABRT File (quoting Cliff Palefsky of McGuinn, Hillsman & Palefsky). Mr. Palefsky represents plaintiffs in the pending challenges in Duffield v. Robertson Stephens & Co., No. C95-0109 (N.D. Cal. filed Jan. 11, 1995) (order compelling arbitration), appeal docketed, No. 97-15698 (9th Cir. Apr. 23, 1997); Burton v. A.F.M. Servs., No. 965632 (Cal. Super. Ct. filed Dec. 6, 1994), appeal docketed, No. A073922 (Cal. Ct. App. Apr. 18, 1996).
21. For the author's testimony before the Dunlop Commission, see Statement by Professor Samuel Estreicher to the Commission on the Future of Worker-Management Relations Panel on Private Dispute Resolution Alternatives, reprinted in Daily Lab. Rep. (BNA), Sep. 30, 1994, available in LEXIS, BNA Library, DLABRT File. His views on the Dunlop Commission's report are set out in Samuel Estreicher, The Dunlop Report and the Future of Labor Law Reform, 12 Lab. Law. 117 (1996), earlier versions of which were published, all under the same title, in Contemporary Issues in Labor and Employment Law: Proceedings of New York University 48th Annual National Conference on Labor 291-311 (Bruno Stein ed., 1996); Regulation, Mar. 1995, at 28; and Daily Lab. Rep. (BNA), June 5, 1995, available in LEXIS, BNA Library, DLABRT File.
22. For the author's testimony before the Dunlop Commission, see Statement by Professor Samuel Estreicher to the Commission on the Future of Worker-Management Relations Panel on Private Dispute Resolution Alternatives, reprinted in Daily Lab. Rep. (BNA), Sep. 30, 1994, available in LEXIS, BNA Library, DLABRT File. His views on the Dunlop Commission's report are set out in Samuel Estreicher, The Dunlop Report and the Future of Labor Law Reform, 12 Lab. Law. 117 (1996), earlier versions of which were published, all under the same title, in Contemporary Issues in Labor and Employment Law: Proceedings of New York University 48th Annual National Conference on Labor 291-311 (Bruno Stein ed., 1996); Regulation, Mar. 1995, at 28; and Daily Lab. Rep. (BNA), June 5, 1995, available in LEXIS, BNA Library, DLABRT File.
23. Several plaintiffs' bar and union representatives participated in Due Process Protocol for Mediation and Arbitration of Statutory Arbitration Disputes, in 9A Lab. Rel. Rep. (BNA) No. 142, at 534:401 (May 9, 1995) [hereinafter Due Process Protocol]. However, this group could not reach consensus on whether predispute agreements to arbitrate statutory employment claims could be required as a condition of employment. See id. In July 1997, the EEOC restated its long-standing opposition to "agreements that mandate binding arbitration of discrimination claims as a condition of employment." EEOC Policy Statement on Mandatory Arbitration, reprinted in Daily Lab. Rep. (BNA) No. 133, at E-4 (July 11, 1997). Two months earlier, the National Academy of Arbitrators had adopted a similar position. See National Academy of Arbitrators' Statement and Guidelines Adopted May 21, 1997, Daily Lab. Rep. (BNA) No. 103, at E-1 (May 29, 1997). Effective June 1, 1996, the American Arbitration Association (AAA) issued new national rules for the resolution of employment disputes. See American Arbitration Ass'n, National Rules for the Resolution of Employment Disputes (1996) [hereinafter AAA 1996 Rules]. The Association's policy is to "administer dispute resolution programs which meet the due process standards as outlined in these rules and the Due Process Protocol. This includes pre-dispute, mandatory arbitration programs, as a condition of employment." Id. at 3-4. The AAA rules were recently amended "to address technical issues." See American Arbitration Ass'n, National Rules for the Resolution of Employment Disputes (Including Mediation and Arbitration Rules) 4 (1997) [hereinafter AAA 1997 Rules]. Similarly, J.A.M.S./Endispute, while expressing concern "when a company requires all of its employees to arbitrate all employment disputes as an exclusive remedy," apparently will process disputes arising under such programs if a "minimum set of procedures or standards of procedural fairness" are met. These standards are set out in the organization's policy on employment arbitration. See J.A.M.S./Endispute Arbitration Policy, in 9A Lab. Rel. Rep. (BNA), Mar. 26, 1996, at 534:521.
24. See U.S. Dep'ts of Commerce and Labor, Commission on the Future of Worker-Management Relations, Report and Recommendations 31 (Dec. 1994).
25. Although this item is not mentioned in the Dunlop report, employers should not be able by means of an arbitration clause to compel claimants to litigate in a distant, inconvenient forum in circumstances where an express choice of forum clause having the same effect would be unenforceable. See Paul D. Carrington & Paul H. Haagen, Contract and Jurisdiction, 1996 Sup. Ct. Rev. 331, 385-88 (criticizing Supreme Court's failure to address forum location issue, which was not briefed, in Doctor's Associates, Inc. v. Casarotto, 116 S. Ct. 1652 (1996)).
26. Rule 11(a)(i) of the AAA 1997 Rules requires that "[a]rbitrators serving under these rules shall be experienced in the field of employment law." AAA 1997 Rules, note 16, at 15.
27. For example, Brown & Root, a maintenance, construction, and temporary staffing company, pays the costs of the arbitration, except for the expenses of witnesses produced by the employee and a $50 fee paid by the employee (or former employee) if the proceeding is initiated by the employee or the result of a demand served on the company by the employee. See Brown & Root, Inc., Dispute Resolution Plan and Rules 17 (1994) (on file with the New York University Law Review). This company also established a benefit plan to reimburse 90% of attorney's fees incurred up to an annual cap of $2500 per year, with a $25 deductible paid by the employee. See Brown & Root, Inc., Employment Legal Consultation Plan 4-5 (1994) (on file with the New York University Law Review). In Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1485 (D.C. Cir. 1996), Chief Judge Edwards held for the court that, where the predispute agreement is silent or ambiguous on this question and arbitration "occurs only at the option of the employer," the court would interpret the agreement to require the employer to assume the arbitrator's fees and expenses. The court stated: Cole could not be required to arbitrate his public law claims as a condition of employment if the arbitration agreement required him to pay all or part of the arbitrator's fees and expenses. In light of this holding, we find that the arbitration agreement in this case is valid and enforceable. We do so because we interpret the agreement as requiring Burns Security to pay all of the arbitrator's fees necessary for a full and fair resolution of Cole's statutory claims. Id.
28. Rule 32 of the AAA 1997 Rules departs from the Association's customary no-opinion approach in commercial arbitrations and requires that "[t]he award shall be in writing and shall be signed by a majority of the arbitrators and shall provide the written reasons for the award unless the parties agree otherwise." AAA 1997 Rules, supra note 16, at 24. The Association's Guide for Employment Arbitrators (effective for cases filed on or after June 1,1997) further states, "The award must include a statement regarding the disposition of any statutory claims." American Arbitration Ass'n, Guide for Employment Arbitrators 16 (1997).
29. The Supreme Court's Gilmer decision states: "'[A]lthough judicial scrutiny of arbitration awards necessarily is limited, such review is sufficient to ensure that arbitrators comply with the requirements of the statute' at issue." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 n.4 (1991) (quoting Shearson/American Express Inc. v. McMahon, 482 U.S. 220, 232 (1987)). The appropriate standard for review of arbitration of public law disputes remains an important unresolved issue. Some lower courts have recognized a "manifest disregard" standard, a judicially created addition to the statutory grounds for vacating an award set forth in the FAA. See, e.g., Siegel v. Titan Indus. Corp., 779 F.2d 891, 892-93 (2d Cir. 1986) (applying manifest disregard standard in arbitration to determine value of stock held by shareholder). The "manifest disregard"standard requires a showing that "the arbitrator 'understood and correctly stated the law but proceeded to ignore it.'" Id. at 893 (quoting Bell Aerospace Co. v. Local 516, 356 F. Supp. 354, 356 (W.D.N.Y. 1973), rev'd on other grounds, 500 F.2d 921 (2d Cir. 1974)). The Second Circuit has left open the question of whether the "manifest disregard" standard is appropriate for arbitration of certain federal statutory claims. See DiRussa v. Dean Witter Reynolds Inc., No. 96-9068, 1997 U.S. App. LEXIS 20505, at *6-*10 (2d Cir. Aug. 5,1997) (noting that "manifest disregard" doctrine is "severely limited"); cf. Chisolm v. Kidder Peabody Asset Management, Inc., 966 F. Supp. 218, 222-27 (S.D.N.Y. 1997) (applying, though questioning suitability of, "manifest disregard" standard for such claims). Framed for contractual disputes, the "manifest disregard" standard may be too deferential for arbitration of public law claims. By analogy to the National Labor Relations Board's policy of deferring to labor arbitration awards that resolve statutory issues, a preferable approach would be to require that arbitrators give reasons for their disposition of statutory claims and to confirm awards only if they are not "clearly repugnant to the purposes and policies of the Act." Spielberg Mfg. Co., 112 N.L.R.B. 1080, 1082 (1955). (In 1984, the Board softened its own test: "Unless the award is 'palpably wrong,' i.e., unless the arbitrator's decision is not susceptible of an interpretation consistent with the Act, we will defer." Olin Corp., 268 N.L.R.B. 573, 574 (1984) (footnote omitted)). The D.C. Circuit's Cole decision stated (in dictum): "[A]rbitration of statutory claims [is] valid only if judicial review under the 'manifest disregard of the law' standard is sufficiently rigorous to ensure that arbitrators have properly interpreted and applied statutory law." Cole, 105 F.3d at 1487.
30. For a survey of employer practices, see U.S. General Accounting Office, Pub. No. GAO/HEHS-95-150, Employment Discrimination: Most Private-Sector Employers Use Alternative Dispute Resolution (Report to Congressional Requesters) (July 5, 1995). The 1995 survey found that 10% of firms used arbitration as a dispute resolution mechanism for their nonunion employees, and in one-fourth to one-half of those firms, arbitration was mandatory. See id. at 7. In 1997, the GAO updated its survey, finding that, of firms reporting the use of ADR for employment disputes, 19% used arbitration. See U.S. General Accounting Office, Pub. No. GAO/GGD-97-157, Alternative Dispute Resolution: Employers' Experiences with ADR in the Workplace 2 (Aug. 1997).
31. See generally Lawrence M. Friedman, A History of American Law, 587-88 (1973); Richard A. Epstein, The Historical Origins and Economic Structure of Workers' Compensation Law, 16 Ga. L. Rev. 775 (1982).
32. See generally Lawrence M. Friedman, A History of American Law, 587-88 (1973); Richard A. Epstein, The Historical Origins and Economic Structure of Workers' Compensation Law, 16 Ga. L. Rev. 775 (1982).
33. The "yellow dog" label has a long industrial history. It also has entered political lore. William Safire reminds us of the story about Tom Heflin, a senator from Alabama (and uncle of Howell Heflin), who tried to discourage southern Democrats from bolting the party when it nominated Al Smith, a Catholic, a wet, and (worst of all) a New Yorker. Heflin is reputed to have said, "I'd vote for a yellow dog if he ran on the Democratic ticket." See William Safire, On Language: Blue Dog Demo, N.Y. Times, Apr. 23, 1995, § 6, at 20. In short, it is not the label but the substance that counts.
34. Norris-LaGuardia Act, ch. 90, 72 Stat. 70 (1932) (codified as amended at 29 U.S.C. §§ 101-115 (1994)).
35. As the Supreme Court stated in Gilmer, "'by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum.'" Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)).
36. But see DeGaetano v. Smith Barney Inc., No. 95 Civ. 1613, 1996 U.S. Dist. LEXIS 1140, at *18 (S.D.N.Y. Feb. 5, 1996) (holding that although arbitration procedure did not allow arbitrator to award injunctive relief, attorney's fees, or punitive damages, "[t]he mere fact that these statutory remedies may be unavailable in the arbitral forum does not in itself establish that Title VII claims must be resolved in a court of law"). It is unclear whether this ruling is consistent with the Supreme Court's approach in the Gilmer decision. See supra note 27 and accompanying text. Conceivably, the failure to award attorney's fees or punitive damages in an appropriate case still would be grounds for vacating the award. Cf. DiRussa v. Dean Witter Reynolds, Inc., No. 96-9068, 1997 U.S. App. LEXIS 20505, at *10-*14 (2d Cir. Aug. 5, 1997) (declining to vacate award in plaintiff's favor that did not provide attorney's fees because plaintiff had failed to make clear to arbitrators that attorney's fees were mandatory award for prevailing plaintiffs under ADEA); Amicus Brief of California Employment Law Council at 20-24, Duffield v. Robertson Stephens & Co., No. C95-0109 (N.D. Cal. filed Jan. 11, 1995), appeal docketed, No. 97-15698 (9th Cir. Apr. 23, 1997) (arguing that, in view of § 4 of FAA, procedural adequacy of arbitration should be resolved through judicial review rather than at motion to compel arbitration stage).
37. Joseph R. Grodin, Arbitration of Employment Discrimination Claims: Doctrine and Policy in the Wake of Gilmer, 14 Hofstra Lab. L.J. 1, 29 (1996). Professors Carrington and Haagen adopt a similar view in Carrington & Haagen, supra note 18, at 87-88.
38. Where all employers in a given industry require predispute arbitration agreements as a condition of employment, the employee's practical ability to shop for employers that will not require arbitration is substantially diminished. The Duffield litigation, see supra note 14, raises this issue in the securities industry context, where all registered representatives for now, see infra note 34, must agree to arbitration of employment claims as a condition of employment in that industry. See Plaintiff-Appellant's Opening Brief at 54-59, Duffield v. Robertson Stephens & Co., No. C95-0109 (N.D. Cal. filed Jan. 11, 1995), appeal docketed, No. 97-15698 (9th Cir. Apr. 23, 1997) (arguing that industry-wide requirement of predispute arbitration agreements forced upon plaintiff the "Hobson's choice" of forfeiting constitutional rights or forfeiting employment in securities industry).
39. See Mayer G. Freed & Daniel D. Polsby, Just Cause for Termination Rules and Economic Efficiency, 38 Emory L.J. 1097, 1105-07 (1989) (discussing "perceptual distortion" argument for mandating "just cause" termination rules).
40. Again, at the margin there may be situations where, under the jurisdiction's general law of contracts, the conditions for a valid, enforceable agreement are not met. The question here is whether, as Professors Grodin, see Grodin, supra note 29, at 20-28, and Carrington and Haagen, see Carrington & Haagen, supra note 18, at 401, suggest, we should assume that all predispute arbitration agreements insisted upon by employers as a condition of employment are unenforceable contracts of adhesion.
41. For a critical view of such regulations, see Christopher T. Wonnell, The Contractual Disempowerment of Employees, 46 Stan. L. Rev. 87 (1993).
42. In May 1997, the National Association of Securities Dealers (NASD) formed a special panel to consider whether the NASD should continue to require predispute agreements to arbitrate employment discrimination claims. See Patrick McGeehan, Bias Panel Is Formed by NASD, Wall St. J., May 29, 1997, at C1. Three months later, the NASD proposed eliminating from its U-4 registration form any requirement that registered representatives must agree to arbitrate their statutory employment discrimination claims. See George Gunset, Securities Group Yields on Suits, Chi. Trib., Aug. 8, 1997, § 3, at 1.
43. In May 1997, the National Association of Securities Dealers (NASD) formed a special panel to consider whether the NASD should continue to require predispute agreements to arbitrate employment discrimination claims. See Patrick McGeehan, Bias Panel Is Formed by NASD, Wall St. J., May 29, 1997, at C1. Three months later, the NASD proposed eliminating from its U-4 registration form any requirement that registered representatives must agree to arbitrate their statutory employment discrimination claims. See George Gunset, Securities Group Yields on Suits, Chi. Trib., Aug. 8, 1997, § 3, at 1.
44. See, e.g., Owen M. Fiss, Against Settlement, 93 Yale L.J. 1073, 1089-90 (1984) (criticizing those advocating emphasis on settlement rather than adjudication because settlement fails to fulfill essential public law function).
45. Widespread resort to private arbitration of statutory employment claims, however, would change the calculus and support an argument for mandatory publication of awards.
46. See, e.g., Michael Schuster & Christopher S. Miller, An Empirical Assessment of the Age Discrimination in Employment Act, 38 Ind. & Lab. Re. Rev. 64, 68 (1984) (indicating that majority of complaints under the ADEA are filed by male professionals and managers, and inferring from indirect evidence that most such plaintiffs are white).
47. See, e.g., National Labor Relations Act of 1935, ch. 372, 49 Stat. 449 (codified as amended at 29 U.S.C. §§ 151-169 (1994)); Railway Labor Act of 1926, ch. 347, 44 Stat. 577 (1926) (codified as amended at 45 U.S.C. §§ 151-188 (1994)).
48. See Samuel Estreicher, Unjust Dismissal Laws: Some Cautionary Notes, 33 Am. J. Comp. L. 310, 313, 315, 316 (1985) (describing use of specialized boards and tribunals to adjudicate such matters in Britain, Germany, and France).
49. See James N. Dertouzos & Lynn A. Karoly, RAND Inst. No. R-3989-ICJ, Labor-Market Responses to Employer Liability 46-61 (1992) (arguing that state adoption of wrongful termination doctrine reduces aggregate employment); see also James N. Dertouzos, Elaine Holland & Patricia Ebener, RAND Inst. No. R-3602-ICJ, The Legal and Economic Consequences of Wrongful Termination 48 (1988).
50. See James N. Dertouzos & Lynn A. Karoly, RAND Inst. No. R-3989-ICJ, Labor-Market Responses to Employer Liability 46-61 (1992) (arguing that state adoption of wrongful termination doctrine reduces aggregate employment); see also James N. Dertouzos, Elaine Holland & Patricia Ebener, RAND Inst. No. R-3602-ICJ, The Legal and Economic Consequences of Wrongful Termination 48 (1988).
51. See, e.g., Lewis Maltby, Paradise Lost - How the Gilmer Court Lost the Opportunity for Alternative Dispute Resolution to Improve Civil Rights, 12 N.Y.L. Sch. J. Hum. Rts. 1, 10 (1994) (arguing that best approach is to allow only "knowing and voluntary" waivers of statutory rights); Lewis L. Maltby, American Civil Liberties Union, Statement of the American Civil Liberties Union Submitted to the Commission on the Future of Worker-Management Relations 4 (Apr. 6, 1994) (on file with the New York University Law Review) (insisting that ADR programs are only acceptable if truly "voluntary").
52. See, e.g., Lewis Maltby, Paradise Lost - How the Gilmer Court Lost the Opportunity for Alternative Dispute Resolution to Improve Civil Rights, 12 N.Y.L. Sch. J. Hum. Rts. 1, 10 (1994) (arguing that best approach is to allow only "knowing and voluntary" waivers of statutory rights); Lewis L. Maltby, American Civil Liberties Union, Statement of the American Civil Liberties Union Submitted to the Commission on the Future of Worker-Management Relations 4 (Apr. 6, 1994) (on file with the New York University Law Review) (insisting that ADR programs are only acceptable if truly "voluntary").
53. The Ninth Circuit, in Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299 (9th Cir. 1994), held that a waiver of the judicial forum must be a knowing one, and because the NASD rules at the time did not expressly refer to arbitration of employment claims, there was no knowing waiver in that case. See id. at 1304-05. On October 1, 1993, the Securities and Exchange Commission amended its NASD rules to provide "for the arbitration of any dispute, claim or controversy arising out of or in connection with the business of any member of [NASD] or arising out of the employment or termination of employment of associated person(s) with any member." Kuehner v. Dickinson & Co., 84 F.3d 316, 320-21 (9th Cir. 1996) (enforcing arbitration under new rule); see Williams v. Cigna Fin. Advisors, Inc., 56 F.3d 656, 658 (5th Cir. 1995) (quoting amended NASD rule). See supra note 34 for discussion of subsequent proposal by NASD to eliminate from its registration forms any requirement that registered representatives agree to arbitrate statutory employment discrimination claims.
54. 500 U.S. 20 (1991).
55. Id. at 23.
56. Id.
57. See id. at 24.
58. 415 U.S. 36 (1974).
59. See Gilmer, 500 U.S. at 24 (citing Gardner-Denver). The courts of appeals are presently divided over whether Gilmer requires a reconsideration of Gardner-Denver's holding, at least in a case where the collective bargaining agreement authorizes the arbitrator expressly to consider statutory claims and the individual employee to pursue arbitration irrespective of the union's wishes. Compare, e.g., Brisentine v. Stone & Webster Eng'g Corp., 117 F.3d 519, 526-27 (11th Cir. 1997) (arbitration clause does not bar ADA lawsuit where employee has not "agreed individually to the contract containing the arbitration clause"; the agreement does not "authorize the arbitrator to resolve federal statutory claims"; and the agreement does not "give the employee the right to insist on arbitration if the federal statutory claim is not resolved to his satisfaction in any grievance process"), and Pryner v. Tractor Supply Co., 109 F.3d 354, 363 (7th Cir. 1997) (labor arbitration does not preclude lawsuit of Title VII and ADA claims unless employee "consents to have them arbitrated"), with Martin v. Dana Corp., 114 F.3d 421 (3d Cir. 1997) (requiring arbitration of Title VII claim where collective agreement authorizes arbitrator to resolve statutory claim and employee can insist on arbitration), vacated & reh'g en bane granted, No. 96-1746, 1997 WL 368629 (3d Cir. July 1, 1997), and Austin v. Owens-Brockway Glass Container, Inc., 78 F.3d 875, 879 (4th Cir.), cert, denied, 117 S. Ct. 432 (1996) (requiring arbitration of Title VII and ADA claims where collective agreement requires that employer comply with "all laws preventing discrimination"). For an alternative to Gardner-Denver in the union-represented sector, see Committee on Labor and Employment Law of the Association of the Bar of the City of New York, Arbitration of Statutory Discrimination Claims Under Collective Bargaining Agreements: Comments to the Secretary of Labor on the Report and Recommendations of the Commission on the Future of Worker-Management Relations, 51 Record of N.Y.C.B.A. 154 (Mar. 1996) (offering interesting "election of remedies" proposal).
60. See Gilmer v. Interstate/Johnson Lane Corp., 895 F.2d 195, 197 (4th Cir. 1990).
61. See Gilmer, 500 U.S. at 23.
62. If the NASD proposal to eliminate mandatory arbitration of discrimination claims, see supra note 34, is ultimately approved by the SEC, registered representatives who are required by their employers to agree to predispute arbitration clauses will be treated the same as employees in other industries subject to the FAA. Note should also be taken of the Duffield litigation, see supra note 14, where plaintiff argued that Gilmer involved only a rejection of facial challenge to securities industry arbitration in a context where the record was bare regarding procedural deficiencies of arbitration under NASD or NYSE auspices. See Plaintiff-Appellant's Opening Brief at 38-39, Duffield v. Robertson Stephens & Co., No. C95-0109 (N.D. Cal. filed Jan. 11, 1995), appeal docketed, No. 97-15698 (9th Cir. Apr. 23, 1997). Moreover, in a recent pair of rulings authored by Judge Reinhardt, panels of the Ninth Circuit appear to have extended the Lai requirement of a "knowing waiver" to require that "the employee must explicitly agree to waive the specific right in question." Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756, 760-62 (9th Cir. 1997) (employee handbook required that new employee "read and understand" its contents but did not explicitly require that employee agree to its contents); Renteria v. Prudential Ins. Co. of Am., 113 F.3d 1104, 1106-08 (9th Cir. 1997) (registered representative did not make "knowing waiver" because she signed U-4 agreement prior to October 1, 1993 amendment of NASD Code, even though document bound plaintiff to arbitrate all disputes listed in NASD Code "as may be amended from time to time"). Other courts are likely to find a "knowing waiver" if the arbitration agreement expressly refers to employment disputes, whether or not the specific statute that is the basis for a later claim is explicitly listed. See, e.g., Mugnano-Bornstein v. Crowell, 677 N.E.2d 242 (Mass. App. Ct. 1997) (finding employee, by signing arbitration agreement specifically referring to employment disputes, to have agreed to submit sexual harassment and gender discrimination claims to arbitration).
63. 29 U.S.C. §§ 2601-2653 (1994).
64. 29 U.S.C. §§ 2001-2009 (1994).
65. For an attempt to distinguish claims under Title VII from claims under ADEA for arbitrability purposes, see Patrick O. Gudridge, Title VII Arbitration, 16 Berkeley J. Emp. & Lab. L. 209 (1995). Hortatory language endorsing alternative dispute resolution in provisions of the Civil Rights Act of 1991, Pub. L. No. 102-166, § 118, 105 Stat. 1071, 1081 (1991) (codified at 42 U.S.C. § 12212 (1994)), cannot fairly be read to change preexisting law with respect to predispute arbitration. Because Congress did not amend Title VII to restrict arbitration-indeed, section 118 is, if anything, supportive of arbitration "[w]here appropriate and to the extent authorized by law"-statements such as those contained in the conference committee report on the pre-Gilmer 1990 version of the 1991 law do not resolve the arbitrability issue: The Conferees emphasize . . . that the use of alternative dispute resolution mechanisms is intended to supplement not supplant, the remedies provided by Title VII. Thus, for example, the Conferees believe that any agreement to submit disputed issues to arbitration, whether in the context of a collective bargaining agreement or in an employment contract, does not preclude the affected person from seeking relief under the enforcement provisions of Title VII. This view is consistent with the Supreme Court's interpretation of Title VII in Alexander v. Gardner-Denver . . . . The Conferees do not intend this section to be used to preclude rights and remedies that would otherwise be available. Conf. Rep. on S. 2104, Civil Rights Act of 1990, reprinted in 136 Cong. Rec. H8050 (daily ed. Sept. 26, 1990) (submitted by Rep. Hawkins) (emphasis added). In the debates over the 1991 law, some legislators were supportive of Gilmer. See 137 Cong. Rec. H9548 (daily ed. Nov. 7, 1991) (remarks of Rep. Hyde); 137 Cong. Rec. S15,478 (daily ed. Oct. 30, 1991) (remarks of Sen. Dole). Others were disapproving. See 137 Cong. Rec. H9530 (daily ed. Nov. 7, 1991) (remarks of Rep. Edwards); Stephen Breyer, On the Uses of Legislative History in the Interpretation of Statutes, 65 S. Cal. L. Rev. 845, 845-46 (1992) (quoting Judge Harold Leventhal's observation that legislative history of this type is akin to "looking over a crowd and picking out your friends").
66. For an attempt to distinguish claims under Title VII from claims under ADEA for arbitrability purposes, see Patrick O. Gudridge, Title VII Arbitration, 16 Berkeley J. Emp. & Lab. L. 209 (1995). Hortatory language endorsing alternative dispute resolution in provisions of the Civil Rights Act of 1991, Pub. L. No. 102-166, § 118, 105 Stat. 1071, 1081 (1991) (codified at 42 U.S.C. § 12212 (1994)), cannot fairly be read to change preexisting law with respect to predispute arbitration. Because Congress did not amend Title VII to restrict arbitration-indeed, section 118 is, if anything, supportive of arbitration "[w]here appropriate and to the extent authorized by law"-statements such as those contained in the conference committee report on the pre-Gilmer 1990 version of the 1991 law do not resolve the arbitrability issue: The Conferees emphasize . . . that the use of alternative dispute resolution mechanisms is intended to supplement not supplant, the remedies provided by Title VII. Thus, for example, the Conferees believe that any agreement to submit disputed issues to arbitration, whether in the context of a collective bargaining agreement or in an employment contract, does not preclude the affected person from seeking relief under the enforcement provisions of Title VII. This view is consistent with the Supreme Court's interpretation of Title VII in Alexander v. Gardner-Denver . . . . The Conferees do not intend this section to be used to preclude rights and remedies that would otherwise be available. Conf. Rep. on S. 2104, Civil Rights Act of 1990, reprinted in 136 Cong. Rec. H8050 (daily ed. Sept. 26, 1990) (submitted by Rep. Hawkins) (emphasis added). In the debates over the 1991 law, some legislators were supportive of Gilmer. See 137 Cong. Rec. H9548 (daily ed. Nov. 7, 1991) (remarks of Rep. Hyde); 137 Cong. Rec. S15,478 (daily ed. Oct. 30, 1991) (remarks of Sen. Dole). Others were disapproving. See 137 Cong. Rec. H9530 (daily ed. Nov. 7, 1991) (remarks of Rep. Edwards); Stephen Breyer, On the Uses of Legislative History in the Interpretation of Statutes, 65 S. Cal. L. Rev. 845, 845-46 (1992) (quoting Judge Harold Leventhal's observation that legislative history of this type is akin to "looking over a crowd and picking out your friends").
67. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)).
68. See, e.g., Patterson v. Tenet Healthcare, Inc. 113 F.3d 832 (8th Cir. 1997) (requiring arbitration of Title VII and state law discrimination claims; finding support in section 118 of the Civil Rights Act of 1991); Great W. Mortgage Corp. v. Peacock, 110 F.3d 222 (3d Cir.) (requiring arbitration of claim brought under New Jersey Law Against Discrimination), cert, denied, 1997 U.S. LEXIS 6057 (Oct. 14, 1997); Pritzker v. Merrill Lynch, Pierce, Fenner & Smith Inc., 7 F.3d 1110 (3d Cir. 1993) (requiring arbitration of claims under Employee Retirement Income Security Act); Saari v. Smith Barney, Harris Upham & Co., 968 F.2d 877 (9th Cir. 1992) (requiring arbitration of claim of retaliation for refusal to take lie detector test allegedly in violation of Employee Polygraph Protection Act); Alford v. Dean Witter Reynolds, Inc., 939 F.2d 229 (5th Cir. 1991) (requiring arbitration of claims under Title VII); see also McNulty v. Prudential-Bache Sec. Inc., 871 F. Supp. 567 (E.D.N.Y. 1994) (requiring arbitration of sales representative's claim that he was demoted for failure to meet production quota on account of time out for jury service allegedly in violation of federal Jury Systems Improvement Act, 28 U.S.C. § 1875 (1994)).
69. Gilmer, 500 U.S. at 33. Although Justice White's opinion appears to leave open some room, the context makes clear that challenges to arbitration agreements covered by the FAA are confined to the narrow straits of § 2 of the statute; [T]he FAA's purpose was to place arbitration agreements on the same footing as other contracts. Thus, arbitration agreements are enforceable save upon such grounds as exist at law or in equity for the revocation of any contract. Of course, courts should remain attuned to well-supported claims that the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds for revocation of any contract. There is no indication in this case, however, that Gilmer, an experienced businessman, was coerced or defrauded into agreeing to the arbitration clause in his registration application. As with the claimed procedural inadequacies discussed above, this claim of unequal bargaining power is best left for resolution in specific cases. Id. (internal quotes and citations omitted). States can apply customary contract doctrines such as fraud and unconscionability. However, as the Court reaffirmed in Doctor's Assocs., Inc. v. Casarotto, 116 S. Ct. 1652, 1656-57 (1996), the FAA preempts any state law that targets arbitration agreements for different regulatory treatment than other contracts. See infra note 93. For a survey of state law contract defenses, see Jonathan E. Breckenridge, Note, Bargaining Unfairness and Agreements to Arbitrate: Judicial and Legislative Application of Contract Defenses to Arbitration Agreements, 1991 Ann. Surv. Am. L. 925, 973-81.
70. 500 U.S. at 26.
71. 29 U.S.C. § 626(f)(1) (1994).
72. See Williams v. Cigna Fin. Advisors, Inc., 56 F.3d 656 (5th Cir. 1995).
73. 9 U.S.C. § 1 (1994).
74. See Gilmer, 500 U.S. at 25 n.2.
75. Id.
76. See id. (citing Dickstein v. duPont, 443 F.2d 783 (1st Cir. 1971)); Malison v. Prudential-Bache Securities, Inc., 654 F. Supp. 101 (W.D.N.C. 1987); Legg, Mason & Co. v. Mackall & Coe, Inc., 351 F. Supp. 1367 (D.D.C. 1972); Tonetti v. Shirley, 219 Cal. Rptr. 616 (Ct. App. 1985). These decisions acknowledged that employment contracts were involved, but read the exclusionary clause as limited to employees in transportation industries. See Estreicher, supra note 11, at 753-54.
77. But cf. supra note 34.
78. For example, Garry Ritzky is a risk and human resources manager for Turner Brothers Trucking Inc., a company that participates in a peer review adjudication program maintained by Employment Dispute Resolution, Inc. (EDR), an alternative dispute resolution firm based in Atlanta. Ritzky writes: This company operates as a third-party entity that contracts with employees and employers separately to provide binding arbitration of all employment-related disputes, including personal injury, age, race, sex, disability and religion. The concept is based on the third-party arrangement used by stockbrokers . . . and all investors who use their services. Garry M. Ritzky, Reducing Employment-Related Litigation Risks, Risk Mgmt., Aug. 1994, at 49, 50 (discussing benefits of employment dispute resolution). The program comes complete with a defense fund shared by participating employers and involves training of employees who become adjudicators available for other companies. EDR provides a list of three trained nonexempt employees from other companies, three trained management employees from other companies, and three retired judges/attorneys. EDR, founded by Lynn Laughlin (formerly counsel with the Jackson Lewis firm), is reported to have a half dozen companies as clients in addition to Turner. See Wade Lambert, Employee Pacts to Arbitrate Sought by Firms, Wall St. J., Oct. 22,1992, at B1; see also Stephanie Overman, Why Grapple with the Cloudy Elephant?: Alternative Dispute Resolution, HR Magazine, Mar. 1993, at 60.
79. For example, Garry Ritzky is a risk and human resources manager for Turner Brothers Trucking Inc., a company that participates in a peer review adjudication program maintained by Employment Dispute Resolution, Inc. (EDR), an alternative dispute resolution firm based in Atlanta. Ritzky writes: This company operates as a third-party entity that contracts with employees and employers separately to provide binding arbitration of all employment-related disputes, including personal injury, age, race, sex, disability and religion. The concept is based on the third-party arrangement used by stockbrokers . . . and all investors who use their services. Garry M. Ritzky, Reducing Employment-Related Litigation Risks, Risk Mgmt., Aug. 1994, at 49, 50 (discussing benefits of employment dispute resolution). The program comes complete with a defense fund shared by participating employers and involves training of employees who become adjudicators available for other companies. EDR provides a list of three trained nonexempt employees from other companies, three trained management employees from other companies, and three retired judges/attorneys. EDR, founded by Lynn Laughlin (formerly counsel with the Jackson Lewis firm), is reported to have a half dozen companies as clients in addition to Turner. See Wade Lambert, Employee Pacts to Arbitrate Sought by Firms, Wall St. J., Oct. 22,1992, at B1; see also Stephanie Overman, Why Grapple with the Cloudy Elephant?: Alternative Dispute Resolution, HR Magazine, Mar. 1993, at 60.
80. For example, Garry Ritzky is a risk and human resources manager for Turner Brothers Trucking Inc., a company that participates in a peer review adjudication program maintained by Employment Dispute Resolution, Inc. (EDR), an alternative dispute resolution firm based in Atlanta. Ritzky writes: This company operates as a third-party entity that contracts with employees and employers separately to provide binding arbitration of all employment-related disputes, including personal injury, age, race, sex, disability and religion. The concept is based on the third-party arrangement used by stockbrokers . . .
81. See supra note 12.
82. See, e.g., Todd H. Thomas, Using Arbitration to Avoid Litigation, 44 Lab. L.J. 3, 13-14 & n.58 (1993).
83. As the Court noted in Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468 (1989), the FAA "contains no express pre-emptive provision, nor does it reflect a congressional intent to occupy the entire field of arbitration." Id. at 477. Volt held that parties to an arbitration agreement covered by the FAA could elect to be governed by a state arbitration statute because such choice of law clauses did not conflict with the pro-arbitration policy of federal law. See id. at 479.
84. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26 (1991) (citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)).
85. See id. at 39 (Stevens, J., dissenting). In his dissent, Justice Stevens also quoted a portion of the hearings on the proposed bill: The trouble about the matter is that a great many of these contracts that are entered into are really not [voluntary] things at all. Take an insurance policy; there is a blank in it. You can take that or you can leave it. The agent has no power at all to decide it. Either you can make that contract or you can not make any contract. It is the same with a good many contracts of employment. A man says, "These are our terms. All right, take it or leave it." Well, there is nothing for the man to do except to sign it; and then he surrenders his right to have his case tried by the court, and has to have it tried before a tribunal in which he has no confidence at all. Id. (emphasis added) (quoting Sales and Contracts to Sell in Interstate and Foreign Commerce, and Federal Commercial Arbitration: Hearings on S. 4213 and S. 4214 Before a Subcomm. of the Senate Comm. on the Judiciary, 67th Cong. 9 (1923) (statement of Sen. Walsh)).
86. 9 U.S.C. § 1 (1994).
87. Shanks v. Delaware, Lackawanna, & W. R.R. Co., 239 U.S. 556, 558 (1916) (construing Federal Employers' Liability Act of 1908).
88. 71 F.3d 592 (6th Cir. 1995).
89. Id. at 600-01.
90. See Signal-Stat Corp. v. Local 475, United Elec. Radio & Mach. Workers of Am., 235 F.2d 298, 302 (2d Cir. 1956) (determining that employees of automotive electrical equipment manufacturers were not involved in interstate commerce and hence not within § 1 exclusion); Tenney Eng'g, Inc. v. United Elec. Radio & Mach. Workers of Am., 207 F.2d 450, 452-53 (3d Cir. 1953) (holding that employees engaged in production of goods for subsequent sale in interstate commerce were not exempt under § 1). These rulings were reaffirmed in later cases. See, e.g., Miller Brewing Co. v. Brewery Workers Local Union No. 9, 739 F.2d 1159, 1162 (7th Cir. 1984) (explaining that § 1 exclusion applied only to workers in transportation industries); Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir. 1972) (holding exclusionary language of § 1 not to apply to contract of professional basketball player); Dickstein v. duPont, 443 F.2d 783, 785 (1st Cir. 1971) (explaining that § 1 exemption applied only to employees involved in, or closely related to, actual movement of goods in interstate commerce).
91. 353 U.S. 448 (1957).
92. The union in Lincoln Mills offered the FAA as an alternative basis for enforcing the employer's executory promise to arbitrate. See David E. Feller, End of the Trilogy. The Declining State of Labor Arbitration, Arb. J., Sept. 1993, at 18, 19 (discussing union reliance primarily on section 301 of the Labor Management Relations Act of 1947, ch. 120, 61 Stat. 136, 156-57 (codified as amended at 29 U.S.C. § 185 (1994)), "because of the hostility of the courts to arbitration under the FAA. As a back-up [the union] also argued that the exclusion in Section 1 of the FAA of contracts of employment applied only to individual contracts and was inapplicable to collective bargaining agreements."). The union also relied, in the alternative, on the "transportation industry only" reading of § 1: [If] the Court should find that the exemption of contracts of employment contained in Section 1 of the Act was intended to exempt all labor arbitration because those who drafted it would not have recognized the distinction . . . between collective agreements and contracts of hire, then, on the same principles, the exemption should be read as covering only what it was intended to cover, that is, contracts of seamen, railroad employees, and other workers engaged directly in foreign or interstate commerce. It cannot simultaneously be urged that the 1925 exemption should be read as it would have been read in 1925, but that the class of workers affected by the exemption should not be limited to the class of workers intended to be covered by the 1925 language. The workers in this case are not engaged in interstate commerce. They are engaged in industry affecting interstate commerce . . . . Petitioner's Brief at 58-59, Lincoln Mills (No. 211).
93. 29 U.S.C. § 185 (1994).
94. 948 F.2d 305 (6th Cir. 1991).
95. See id. at 310-11. Section 2 makes enforceable a written arbitration provision in "a contract evidencing a transaction involving commerce." 9 U.S.C. § 2 (1994).
96. 513 U.S. 265 (1995).
97. See id. at 275. Thus, Professor Finkin argues: In 1925, Congress had no power to legislate regarding contracts of employment of accountants or secretaries even if they worked for railroads or steamship companies, or of deliverymen if they did not cross state lines. It was irrelevant whether or not the statute dealt with employees "in" interstate commerce, "engaged in" interstate commerce, or who were "involved in" interstate commerce, for however the statute was phrased, these employees were wholly outside the power of Congress to regulate at the time, and Congress could not have intended to include them. It should follow that as the Court expanded the scope of the commerce power to reach all these employees, the scope of the exemption expanded as well, leaving their status just as Congress contemplated, i.e., as not reached by the arbitration act. Matthew W. Finkin, Employment Contracts Under the FAA - Reconsidered, 48 Lab. L.J. 329, 333 (June 1997). A somewhat different argument for excluding FAA coverage is suggested by Rushton v. Meijer, Inc., No. 199684, 1997 WL 476366, at *9 (Mich. App. Aug. 19, 1997) (arguing that store's floor detective's duties "did not facilitate, affect, or arise out of interstate or foreign commerce"). The suggestion cannot be squared, however, with the Supreme Court's Dobson ruling.
98. Tenney Eng'g, Inc. v. United Elec. Radio & Mach. Workers of Am., 207 F.2d 450, 452 (3d Cir. 1953). As the court stated in Tenney: Seamen constitute a class of workers as to whom Congress had long provided machinery for arbitration. In exempting them the draftsmen excluded also railroad employees, another class of workers as to whom special procedure for the adjustment of disputes had previously been provided. Both these classes of workers were engaged directly in interstate or foreign commerce. To these the draftsmen of the Act added "any other class of workers engaged in foreign or interstate commerce." We think that the intent of the latter language was, under the rule of ejusdem generis, to include only those other classes of workers who are likewise engaged directly in commerce, that is, only those other classes of workers who are actually engaged in the movement of interstate or foreign commerce or in work so closely related thereto as be in practical effect part of it. The draftsmen had in mind the two groups of transportation workers as to which special arbitration legislation already existed and they rounded out the exclusionary clause by excluding all other similar classes of workers. Id. at 452-53. The Sixth Circuit quoted this passage with approval in Asplundh Tree Expert Co. v. Bates, 71 F.3d 592, 598 (6th Cir. 1995). Chief Judge Edwards of the D.C. Circuit and Chief Judge Posner of the Seventh Circuit take a similar view in, respectively, Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1471 (D.C. Cir. 1997) (upholding parties' arbitration agreement and supporting narrow reading of exclusionary clause based in part on reasoning of Tenney) and Pryner v. Tractor Supply Co., 109 F.3d 354, 358 (7th Cir. 1997) (finding that legislative history supports narrow reading of exclusionary clause).
99. See Sales and Contracts to Sell in Interstate and Foreign Commerce, and Federal Commercial Arbitration: Hearings on S. 4213 and S. 4214 Before a Subcomm. of the Senate Comm. on the Judiciary, 67th Cong. 9 (1923) (statement of W.H.H. Piatt, chairman of the Committee of Commerce, Trade, and Commercial Law of the American Bar Association).
100. Id. (emphasis added).
101. See Arbitration of Interstate Commercial Disputes: Joint Hearings on S. 1005 and H.R. 646 Before the Subcomms. of the Comms. on the Judiciary, 68th Cong. 2 (1924) (including recitation of bill text that contained exclusionary clause).
102. See Matthew W. Finkin, "Workers' Contracts" Under the United States Arbitration Act: An Essay in Historical Clarification, 17 Berkeley J. of Emp. & Lab. L. 282, 295-96 (1996).
103. Consider Judge Posner's reaction to Professor Finkin's essay in Pryner v. Tractor Supply Co., 109 F.3d 354 (7th Cir.), cert, denied, 1997 WL 275009 (Oct. 14, 1997): Professor Finkin argues that the prevailing view, which limits the exclusion in section 1 to employment contracts in transportation, is wrong. His review of the legislative history . . . has persuaded him that Congress's intention was to exclude all employment contracts. Yet, as he acknowledges, the impetus for the exclusion came entirely from the seafarers union, 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 maritime law that would make it easy to slip an arbitration clause into a maritime employment contract without the seaman's noticing it, and in part because the maritime employment relation was already heavily regulated by federal law. It was soon noticed that the railroad industry's labor relations were also heavily regulated - by a statute (the Railway Labor Act) that included provisions for compulsory arbitration of many disputes. Motor carriers were not yet 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. It seems to us, as it did to the Third Circuit [in the Tenney decision], that this history supports rather than undermines limiting "engaged in foreign or interstate commerce" to transportation. Id. at 358.
104. Professor Finkin acknowledges: No "paper trail" has been left of the history of the exemption. A search of the files of the Commerce Department, the Senate Judiciary Committee, then Secretary Hoover, Senator Walsh (who left a voluminous archive), the legislative files of the AF of L, and Victor Olander (for the files of the [International Seamen's Union]) yielded a scanty record bearing upon the Act and no record whatsoever concerning the exemption. Finkin, supra note 88, at 295 n.61 (emphasis added). For Senator Walsh's statement, see supra note 71.
105. See United Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 40 n.9 (1987) (quoting § 1 exclusion and observing that "the federal courts have often looked to the [FAA] for guidance in labor arbitration cases"). The clear implication is that § 1 excludes collective bargaining agreements. Consider also the Fourth Circuit's assessment of the legislative purpose in United Elec. Radio & Mach. Workers of Am. v. Miller Metal Prods., 215 F.2d 221 (4th Cir. 1954): It appears that the exclusion clause of the Arbitration Act was introduced into the statute to meet an objection of the Seafarers International Union; and certainly such objection was directed at including collective bargaining agreements rather than individual contracts of employment under the provisions of the statute. The terms of the collective bargaining agreement become terms of the individual contracts of hiring made subject to its provisions and the controversies as to which arbitration would be appropriate arise in almost all instances, not with respect to the individual contracts of hiring, but with respect to the terms engrafted on them by the collective bargaining agreement. It is with respect to the latter that objection arises to the compulsory submission to arbitration which the Arbitration Act envisages. No one would have serious objection to submitting to arbitration the matters covered by the individual contracts of hiring divorced from the provisions grafted on them by the collective bargaining agreements. Id. at 224 (emphasis added) (quoted with approval in Kropfelder v. Snap-Tools Corp., 859 F. Supp. 952, 957 (D. Md. 1994)). On the other hand, the Court in Miller Metal Products was "[not] impressed by the argument that the excepting clause of the statute should be construed as not applying to employees engaged in the production of goods for interstate commerce as distinguished from workers engaged in transportation in interstate commerce, as held by the majority in Tenney . . . ." Miller Metal Products, 215 F.2d at 224. Attempting to qualify this language, the district court in Kropfelder v. Snap-on Tools Corp., 859 F. Supp. 952 (D. Md. 1994), suggested, "[t]hat statement was made in the context of arbitration agreements contained in collective bargaining agreements." Id. at 957 n.11.
106. 482 U.S. 483 (1987) (holding that FAA preempted anti-arbitration provision of California wage payment law so as to compel arbitration).
107. In Doctor's Associates., Inc. v. Casarotto, 116 S. Ct. 1652 (1996), the Supreme Court examined a Montana statute that declared arbitration clauses unenforceable unless they contained a prominent notice on the first page of the agreement stating that the contract was subject to arbitration. The Court held (8-1) that the statute was preempted by § 2 of the FAA, 9 U.S.C. § 2 (1994), because it singled out arbitration for regulation not applicable to contracts generally. See id. at 1656-57.
108. Section 704(a) of Title VII provides in pertinent part that an employer may not discriminate against the employee (or former employee) "because he has opposed any practice made an unlawful employment practice by this subchapter [so-called opposition clause], or because he has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under this subchapter [so-called participation clause]." 42 U.S.C. § 2000e-3(a) (1994). The legal issue would be whether an employer's insistence on a predispute arbitration clause, or in its adherence once a dispute has arisen, violates either the "opposition" or "participation" clause.
109. Civ. A. No. H-95-755, 67 Fair Empl. Prac. Cas. (BNA) 1243 (S.D. Tex. Apr. 19, 1995) (granting preliminary injunction preventing employer from requiring employees to agree to dispute resolution procedure that interferes with employees' right to file complaints with EEOC).
110. Consider, however, some of the decisions rejecting an "election of remedies" approach for union-represented employees. See, e.g., EEOC v. Board of Governors of State Colleges and Univs., 957 F.2d 424 (7th Cir. 1992) (holding that collective bargaining agreement prohibiting grievances from proceeding to arbitration if employee filed lawsuit or age-bias charge with EEOC violated ADEA); EEOC v. General Motors Corp., 826 F. Supp. 1122 (N.D. Ill. 1993) (determining that employer violated anti-retaliation provisions of Title VII and ADEA by withdrawing access to internal dispute resolution procedure when employees filed charges with EEOC). Employers (and unions) should be prevented from withholding contractual processes simply because employees have filed charges with the EEOC or other enforcement agencies. But query whether the anti-retaliation provisions should bar the parties to a collective bargaining relationship from establishing a program for internal resolution of disputes that, if invoked by employees, forecloses any later court suit, provided that the arbitrator has the authority to consider statutory issues and award statutory remedies for violations. For a related proposal, see supra note 48.
111. See Older Workers Benefit Protection Act, 29 U.S.C. § 626(f)(4) (1994) (stating that "No waiver may be used to justify interfering with the protected right of an employee to file a charge or participate in an investigation or proceeding conducted by the [EEOC]"); EEOC v. Cosmair, Inc., 821 F.2d 1085, 1089-90 (5th Cir. 1987) (holding employee waiver of right to file charge with EEOC void as against public policy). The validity of postdispute settlement agreements that preclude the filing of charges with the EEOC is the subject of EEOC v. Astra U.S.A., Inc., 929 F. Supp. 512 (D. Mass. 1996) (issuing preliminary injunction restraining employer from enforcing settlement agreements prohibiting employees from assisting EEOC in its investigation of sexual harassment charges), aff'd in part and vacated in part, 94 F.3d 738 (1st Cir. 1996) (dissolving injunction but affirming that nonassistance covenants prohibiting employee communication with EEOC are void as against public policy).
112. No. 92 Civ. 9243, 1997 WL 620809 (S.D.N.Y. Oct. 6, 1997) (holding that EEOC may not seek only monetary relief on behalf of individual employees who have signed binding predispute arbitration agreements); accord EEOC v. Frank's Nursery & Crafts, Inc., 966 F. Supp. 500 (E.D. Mich. 1997).
113. The Supreme Court in Gilmer stated that "arbitration agreements will not preclude the EEOC from bringing actions seeking class-wide and equitable relief," Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 32 (1991), but did not resolve whether such agreements could preempt an EEOC action seeking monetary relief on behalf of individual employees who had agreed to arbitration. Cf. EEOC v. Harris Chemin, Inc., 10 F.3d 1286, 1290-92 (7th Cir. 1993) (holding that prior ADEA judgment precluded subsequent EEOC action seeking individual relief for employee, as opposed to injunctive relief against further violation). Because in the Kidder, Peabody litigation the employer had gone out of business, and no theory of successor liability was pursued against the purchaser of its assets, the EEOC conceded that it lacked any basis for seeking injunctive or other prospective relief. See EEOC v. Kidder, Peabody & Co., No. 92 Civ. 9243, 1997 WL 620809 (S.D.N.Y. Oct. 6, 1997).
114. See supra note 16.
115. See Center for Public Resources, Institute for Dispute Resolution, Employment ADR: A Dispute Resolution Program for Corporate Employers (1995).
116. Rather than play this leadership role in prodding companies to develop arbitration systems meeting essential adjudicative quality standards, the EEOC is content to rail against the prevailing winds and state its implacable opposition to predispute arbitration of employment discrimination claims. See EEOC Policy Statement on Mandatory Binding Arbitration, reprinted in Daily Lab. Rep. (BNA) No. 133, at E-4 (July 11, 1997) (setting forth position that agreements mandating binding arbitration of discrimination claims as condition of employment are contrary to the policy of the employment discrimination laws).