




Subject: 90-18 -- OPINION, GILMER v. INTERSTATE/JOHNSON LANE CORP.

 


NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.

SUPREME COURT OF THE UNITED STATES


No. 90-18



ROBERT D. GILMER, PETITIONER v. INTERSTATE/ JOHNSON LANE CORPORATION

on writ of certiorari to the united states court of appeals for the fourth
circuit

[May 13, 1991]



    Justice White delivered the opinion of the Court.

    The question presented in this case is whether a claim under the Age
Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602, as amended,
29 U. S. C. MDRV 621 et seq., can be subjected to compulsory arbitration
pursuant to an arbitration agreement in a securities registration
application.  The Court of Appeals held that it could, 895 F. 2d 195 (CA4
1990), and we affirm.

I


    Respondent Interstate/Johnson Lane Corporation (Interstate) hired
petitioner Robert Gilmer as a Manager of Financial Services in May 1981.
As required by his employment, Gilmer registered as a securities
representative with several stock exchanges, including the New York Stock
Exchange (NYSE).  See App. 15-18.  His registration application, entitled
"Uniform Application for Securities Industry Registration or Transfer,"
provided, among other things, that Gilmer "agree[d] to arbitrate any
dispute, claim or controversy" arising between him and Interstate "that is
required to be arbitrated under the rules, constitutions or by-laws of the
organizations with which I register."  Id., at 18.  Of relevance to this
case, NYSE Rule 347 provides for arbitration of "[a]ny controversy between
a registered representative and any member or member organization arising
out of the employment or termination of employment of such registered
representative."  App. to Brief for Respondent 1.
    Interstate terminated Gilmer's employment in 1987, at which time Gilmer
was 62 years of age.  After first filing an age discrimination charge with
the Equal Employment Opportunity Commission (EEOC), Gilmer subsequently
brought suit in the United States District Court for the Western District
of North Carolina, alleging that Interstate had discharged him because of
his age, in violation of the ADEA.  In response to Gilmer's complaint,
Interstate filed in the District Court a motion to compel arbitration of
the ADEA claim.  In its motion, Interstate relied upon the arbitration
agreement in Gilmer's registration application, as well as the Federal
Arbitration Act (FAA), 9 U. S. C. MDRV 1 et seq.  The District Court denied
Interstate's motion, based on this Court's decision in Alexander v.
Gardner-Denver Co., 415 U. S. 36 (1974), and because it concluded that
"Congress intended to protect ADEA claimants from the waiver of a judicial
forum."  App. 87.  The United States Court of Appeals for the Fourth
Circuit reversed, finding "nothing in the text, legislative history, or
underlying purposes of the ADEA indicating a congressional intent to
preclude enforcement of arbitration agreements."  895 F. 2d, at 197.  We
granted certiorari, 498 U. S. --- (1990), to resolve a conflict among the
Courts of Appeals regarding the arbitrability of ADEA claims. {1}

II


    The FAA was originally enacted in 1925, 43 Stat. 883, and then
reenacted and codified in 1947 as Title 9 of the United States Code.  Its
purpose was to reverse the longstanding judicial hostility to arbitration
agreements that had existed at English common law and had been adopted by
American courts, and to place arbitration agreements upon the same footing
as other contracts.  Dean Witter Reynolds Inc. v. Byrd, 470 U. S. 213,
219-220, and n. 6 (1985); Scherk v. Alberto-Culver Co., 417 U. S. 506, 510,
n. 4 (1974).  Its primary substantive provision states that "[a] written
provision in any maritime transaction or a contract evidencing a
transaction involving commerce to settle by arbitration a controversy
thereafter arising out of such contract or transaction . . . shall be
valid, irrevocable, and enforceable, save upon such grounds as exist at law
or in equity for the revocation of any contract."  9 U. S. C. MDRV 2.  The
FAA also provides for stays of proceedings in federal district courts when
an issue in the proceeding is referable to arbitration, MDRV 3, and for
orders compelling arbitration when one party has failed, neglected, or
refused to comply with an arbitration agreement, MDRV 4.  These provisions
manifest a "liberal federal policy favoring arbitration agreements."  Moses
H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U. S. 1, 24
(1983). {2}
    It is by now clear that statutory claims may be the subject of an
arbitration agreement, enforceable pursuant to the FAA.  Indeed, in recent
years we have held enforceable arbitration agreements relating to claims
arising under the Sherman Act, 15 U. S. C. 15 1-7; MDRV 10(b) of the
Securities Exchange Act of 1934, 15 U. S. C. MDRV 78j(b); the civil
provisions of the Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U. S. C. MDRV 1961 et seq.; and MDRV 12(2) of the Securities Act
of 1933, 15 U. S. C. MDRV 77l(2).  See Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U. S. 614 (1985); Shearson/American Express
Inc. v. McMahon, 482 U. S. 220 (1987); Rodriguez de Quijas v.
Shearson/American Express, Inc., 490 U. S. 477 (1989).  In these cases we
recognized that "[b]y 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."
Mitsubishi, supra, at 628.
    Although all statutory claims may not be appropriate for arbitration,
"[h]aving made the bargain to arbitrate, the party should be held to it
unless Congress itself has evinced an intention to preclude a waiver of
judicial remedies for the statutory rights at issue."  Ibid.  In this
regard, we note that the burden is on Gilmer to show that Congress intended
to preclude a waiver of a judicial forum for ADEA claims.  See McMahon, 482
U. S., at 227.  If such an intention exists, it will be discoverable in the
text of the ADEA, its legislative history, or an "inherent conflict"
between arbitration and the ADEA's underlying purposes.  See ibid.
Throughout such an inquiry, it should be kept in mind that "questions of
arbitrability must be addressed with a healthy regard for the federal
policy favoring arbitration."  Moses H. Cone, 460 U. S., at 24.
III
    Gilmer concedes that nothing in the text of the ADEA or its legislative
history explicitly precludes arbitration.  He argues, however, that
compulsory arbitration of ADEA claims pursuant to arbitration agreements
would be inconsistent with the statutory framework and purposes of the
ADEA.  Like the Court of Appeals, we disagree.
A
    Congress enacted the ADEA in 1967 "to promote employment of older
persons based on their ability rather than age; to prohibit arbitrary age
discrimination in employment; [and] to help employers and workers find ways
of meeting problems arising from the impact of age on employment."  29 U.
S. C. MDRV 621(b).  To achieve those goals, the ADEA, among other things,
makes it unlawful for an employer "to fail or refuse to hire or to
discharge any individual or otherwise discriminate against any individual
with respect to his compensation, terms, conditions, or privileges of
employment, because of such individual's age."  MDRV 623(a)(1).  This
proscription is enforced both by private suits and by the EEOC.  In order
for an aggrieved individual to bring suit under the ADEA, he or she must
first file a charge with the EEOC and then wait at least 60 days.  MDRV
626(d).  An individual's right to sue is extinguished, however, if the EEOC
institutes an action against the employer.  MDRV 626(c)(1).  Before the
EEOC can bring such an action, though, it must "attempt to eliminate the
discriminatory practice or practices alleged, and to effect voluntary
compliance with the requirements of this chapter through informal methods
of conciliation, conference, and persuasion."  MDRV 626(b); see also 29 CFR
MDRV 1626.15 (1990).
    As Gilmer contends, the ADEA is designed not only to address individual
grievances, but also to further important social policies.  See, e. g.,
EEOC v. Wyoming, 460 U. S. 226, 231 (1983).  We do not perceive any
inherent inconsistency between those policies, however, and enforcing
agreements to arbitrate age discrimination claims.  It is true that
arbitration focuses on specific disputes between the parties involved.  The
same can be said, however, of judicial resolution of claims.  Both of these
dispute resolution mechanisms nevertheless also can further broader social
purposes.  The Sherman Act, the Securities Exchange Act of 1934, RICO, and
the Securities Act of 1933 all are designed to advance important public
policies, but, as noted above, claims under those statutes are appropriate
for arbitration.  "[S]o long as the prospective litigant effectively may
vindicate [his or her] statutory cause of action in the arbitral forum, the
statute will continue to serve both its remedial and deterrent function."
Mitsubishi, supra, at 637.
    We also are unpersuaded by the argument that arbitration will undermine
the role of the EEOC in enforcing the ADEA.  An individual ADEA claimant
subject to an arbitration agreement will still be free to file a charge
with the EEOC, even though the claimant is not able to institute a private
judicial action.  Indeed, Gilmer filed a charge with the EEOC in this case.
In any event, the EEOC's role in combating age discrimination is not
dependent on the filing of a charge; the agency may receive information
concerning alleged violations of the ADEA "from any source," and it has
independent authority to investigate age discrimination.  See 29 CFR 15
1626.4, 1626.13 (1990).  Moreover, nothing in the ADEA indicates that
Congress intended that the EEOC be involved in all employment disputes.
Such disputes can be settled, for example, without any EEOC involvement.
See, e. g., Coventry v. United States Steel Corp., 856 F. 2d 514, 522 (CA3
1988); Moore v. McGraw Edison Co., 804 F. 2d 1026, 1033 (CA8 1986); Runyon
v. National Cash Register Corp., 787 F. 2d 1039, 1045 (CA6), cert. denied,
479 U. S. 850 (1986). {3}  Finally, the mere involvement of an
administrative agency in the enforcement of a statute is not sufficient to
preclude arbitration.  For example, the Securities Exchange Commission is
heavily involved in the enforcement of the Securities Exchange Act of 1934
and the Securities Act of 1933, but we have held that claims under both of
those statutes may be subject to compulsory arbitration.  See McMahon;
Rodriguez de Quijas.
    Gilmer also argues that compulsory arbitration is improper because it
deprives claimants of the judicial forum provided for by the ADEA.
Congress, however, did not explicitly preclude arbitration or other
nonjudicial resolution of claims, even in its recent amendments to the
ADEA.  "[I]f Congress intended the substantive protection afforded [by the
ADEA] to include protection against waiver of the right to a judicial
forum, that intention will be deducible from text or legislative history."
Mitsubishi, 473 U. S., at 628.  Moreover, Gilmer's argument ignores the
ADEA's flexible approach to resolution of claims.  The EEOC, for example,
is directed to pursue "informal methods of conciliation, conference, and
persuasion," 29 U. S. C. MDRV 626(b), which suggests that out-ofcourt
dispute resolution, such as arbitration, is consistent with the statutory
scheme established by Congress.  In addition, arbitration is consistent
with Congress' grant of concurrent jurisdiction over ADEA claims to state
and federal courts, see 29 U. S. C. MDRV 626(c)(1) (allowing suits to be
brought "in any court of competent jurisdiction"), because arbitration
agreements, "like the provision for concurrent jurisdiction, serve to
advance the objective of allowing [claimants] a broader right to select the
forum for resolving disputes, whether it be judicial or otherwise."
Rodriguez de Quijas, 490 U. S., at 483.

B


    In arguing that arbitration is inconsistent with the ADEA, Gilmer also
raises a host of challenges to the adequacy of arbitration procedures.
Initially, we note that in our recent arbitration cases we have already
rejected most of these arguments as insufficient to preclude arbitration of
statutory claims.  Such generalized attacks on arbitration "res[t] on
suspicion of arbitration as a method of weakening the protections afforded
in the substantive law to would-be complainants," and as such, they are
"far out of step with our current strong endorsement of the federal
statutes favoring this method of resolving disputes."  Rodriguez de Quijas,
supra, at 481.  Consequently, we address these arguments only briefly.
    Gilmer first speculates that arbitration panels will be biased.
However, "[w]e decline to indulge the presumption that the parties and
arbitral body conducting a proceeding will be unable or unwilling to retain
competent, conscientious and impartial arbitrators."  Mitsubishi, supra, at
634.  In any event, we note that the NYSE arbitration rules, which are
applicable to the dispute in this case, provide protections against biased
panels.  The rules require, for example, that the parties be informed of
the employment histories of the arbitrators, and that they be allowed to
make further inquiries into the arbitrators' backgrounds.  See 2 CCH New
York Stock Exchange Guide MDRV 2608, p. 4314 (Rule 608) (1991) (hereinafter
2 N. Y. S. E. Guide).  In addition, each party is allowed one peremptory
challenge and unlimited challenges for cause.  Id., at MDRV 2609 (Rule
609).  Moreover, the arbitrators are required to disclose "any
circumstances which might preclude [them] from rendering an objective and
impartial determination."  Id., at MDRV 2610, p. 4315 (Rule 610).  The FAA
also protects against bias, by providing that courts may overturn
arbitration decisions "[w]here there was evident partiality or corruption
in the arbitrators."  9 U. S. C. MDRV 10(b).  There has been no showing in
this case that those provisions are inadequate to guard against potential
bias.
    Gilmer also complains that the discovery allowed in arbitration is more
limited than in the federal courts, which he contends will make it
difficult to prove discrimination.  It is unlikely, however, that age
discrimination claims require more extensive discovery than other claims
that we have found to be arbitrable, such as RICO and antitrust claims.
Moreover, there has been no showing in this case that the NYSE discovery
provisions, which allow for document production, information requests,
depositions, and subpoenas, see 2 N. Y. S. E. Guide MDRV 2619, pp. 4318 --
4320 (Rule 619); Securities and Exchange Commission Order Approving
Proposed Rule Changes By New York Stock Exchange, Inc., Nat. Assn. of
Security Dealers, Inc., and the American Stock Exchange, Inc., Relating to
the Arbitration Process and the Use of Predispute Arbitration Clauses, 54
Fed. Reg. 21144, 21149-21151 (1989), will prove insufficient to allow ADEA
claimants such as Gilmer a fair opportunity to present their claims.
Although those procedures might not be as extensive as in the federal
courts, by agreeing to arbitrate, a party "trades the procedures and
opportunity for review of the courtroom for the simplicity, informality,
and expedition of arbitration."  Mitsubishi, supra, at 628.  Indeed, an
important counterweight to the reduced discovery in NYSE arbitration is
that arbitrators are not bound by the rules of evidence.  See 2 N. Y. S. E.
Guide MDRV 2620, p. 4320 (Rule 620).
    A further alleged deficiency of arbitration is that arbitrators often
will not issue written opinions, resulting, Gilmer contends, in a lack of
public knowledge of employers' discriminatory policies, an inability to
obtain effective appellate review, and a stifling of the development of the
law.  The NYSE rules, however, do require that all arbitration awards be in
writing, and that the awards contain the names of the parties, a summary of
the issues in controversy, and a description of the award issued.  See 2 N.
Y. S. E. Guide MDRV 2627(a), (e), p. 4321 (Rule 627(a), (e)).  In addition,
the award decisions are made available to the public.  See id., at MDRV
2627(f), p. 4322 (Rule 627(f)).  Furthermore, judicial decisions addressing
ADEA claims will continue to be issued because it is unlikely that all or
even most ADEA claimants will be subject to arbitration agreements.
Finally, Gilmer's concerns apply equally to settlements of ADEA claims,
which, as noted above, are clearly allowed. {4}
    It is also argued that arbitration procedures cannot adequately further
the purposes of the ADEA because they do not provide for broad equitable
relief and class actions.  As the court below noted, however, arbitrators
do have the power to fashion equitable relief.  895 F. 2d, at 199-200.
Indeed, the NYSE rules applicable here do not restrict the types of relief
an arbitrator may award, but merely refer to "damages and/or other relief."
2 N. Y. S. E. Guide MDRV 2627(e), p. 4321 (Rule 627(e)).  The NYSE rules
also provide for collective proceedings.  Id., at MDRV 2612(d) (Rule
612(d)).  But "even if the arbitration could not go forward as a class
action or class relief could not be granted by the arbitrator, the fact
that the [ADEA] provides for the possibility of bringing a collective
action does not mean that individual attempts at conciliation were intended
to be barred."  Nicholson v. CPC Int'l Inc., 877 F. 2d 221, 241 (CA3 1989)
(Becker, J., dissenting).  Finally, it should be remembered that
arbitration agreements will not preclude the EEOC from bringing actions
seeking class-wide and equitable relief.

C


    An additional reason advanced by Gilmer for refusing to enforce
arbitration agreements relating to ADEA claims is his contention that there
often will be unequal bargaining power between employers and employees.
Mere inequality in bargaining power, however, is not a sufficient reason to
hold that arbitration agreements are never enforceable in the employment
context.  Relationships between securities dealers and investors, for
example, may involve unequal bargaining power, but we nevertheless held in
Rodriguez de Quijas and McMahon that agreements to arbitrate in that
context are enforceable.  See 490 U. S., at 484; 482 U. S., at 230.  As
discussed above, the 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."  9 U. S. C. MDRV 2.  "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 the revocation of any contract.' "  Mitsubishi, 473 U.
S., at 627.  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.

IV


    In addition to the arguments discussed above, Gilmer vigorously asserts
that our decision in Alexander v. GardnerDenver Co., 415 U. S. 36 (1974),
and its progeny -- Barrentine v. Arkansas-Best Freight System, Inc., 450 U.
S. 728 (1981), and McDonald v. City of West Branch, 466 U. S. 284 (1984) --
preclude arbitration of employment discrimination claims.  Gilmer's
reliance on these cases, however, is misplaced.
    In Gardner-Denver, the issue was whether a discharged employee whose
grievance had been arbitrated pursuant to an arbitration clause in a
collective-bargaining agreement was precluded from subsequently bringing a
Title VII action based upon the conduct that was the subject of the
grievance.  In holding that the employee was not foreclosed from bringing
the Title VII claim, we stressed that an employee's contractual rights
under a collective-bargaining agreement are distinct from the employee's
statutory Title VII rights:

"In submitting his grievance to arbitration, an employee seeks to vindicate
his contractual right under a collective-bargaining agreement.  By
contrast, in filing a lawsuit under Title VII, an employee asserts
independent statutory rights accorded by Congress.  The distinctly separate
nature of these contractual and statutory rights is not vitiated merely
because both were violated as a result of the same factual occurrence."
415 U. S., at 49-50.


    We also noted that a labor arbitrator has authority only to resolve
questions of contractual rights.  Id., at 53-54.  The arbitrator's "task is
to effectuate the intent of the parties" and he or she does not have the
"general authority to invoke public laws that conflict with the bargain
between the parties."  Id., at 53.  By contrast, "in instituting an action
under Title VII, the employee is not seeking review of the arbitrator's
decision.  Rather, he is asserting a statutory right independent of the
arbitration process."  Id., at 54.  We further expressed concern that in
collective-bargaining arbitration "the interests of the individual employee
may be subordinated to the collective interests of all employees in the
bargaining unit."  Id., at 58, n. 19. {5}
    Barrentine and McDonald similarly involved the issue whether
arbitration under a collective-bargaining agreement precluded a subsequent
statutory claim.  In holding that the statutory claims there were not
precluded, we noted, as in Gardner-Denver, the difference between
contractual rights under a collective-bargaining agreement and individual
statutory rights, the potential disparity in interests between a union and
an employee, and the limited authority and power of labor arbitrators.
    There are several important distinctions between the Gardner-Denver
line of cases and the case before us.  First, those cases did not involve
the issue of the enforceability of an agreement to arbitrate statutory
claims.  Rather, they involved the quite different issue whether
arbitration of contract-based claims precluded subsequent judicial
resolution of statutory claims.  Since the employees there had not agreed
to arbitrate their statutory claims, and the labor arbitrators were not
authorized to resolve such claims, the arbitration in those cases
understandably was held not to preclude subsequent statutory actions.
Second, because the arbitration in those cases occurred in the context of a
collective-bargaining agreement, the claimants there were represented by
their unions in the arbitration proceedings.  An important concern
therefore was the tension between collective representation and individual
statutory rights, a concern not applicable to the present case.  Finally,
those cases were not decided under the FAA, which, as discussed above,
reflects a "liberal federal policy favoring arbitration agreements."
Mitsubishi, 473 U. S., at 625.  Therefore, those cases provide no basis for
refusing to enforce Gilmer's agreement to arbitrate his ADEA claim.
V
    We conclude that Gilmer has not met his burden of showing that
Congress, in enacting the ADEA, intended to preclude arbitration of claims
under that Act.  Accordingly, the judgment of the Court of Appeals is
Affirmed.


 
 
 
 
------------------------------------------------------------------------------
1
    Compare the decision below with Nicholson v. CPC Int'l Inc., 877 F. 2d
221 (CA3 1989).

2
    Section 1 of the FAA provides that "nothing herein contained shall
apply to contracts of employment of seamen, railroad employees, or any
other class of workers engaged in foreign or interstate commerce."  9 U. S.
C. MDRV 1.  Several amici curiae in support of Gilmer argue that that
section excludes from the coverage of the FAA all "contracts of
employment."  Gilmer, however, did not raise the issue in the courts below,
it was not addressed there, and it was not among the questions presented in
the petition for certiorari.  In any event, it would be inappropriate to
address the scope of the MDRV 1 exclusion because the arbitration clause
being enforced here is not contained in a contract of employment.  The FAA
requires that the arbitration clause being enforced be in writing.  See 9
U. S. C. 15 2, 3.  The record before us does not show, and the parties do
not contend, that Gilmer's employment agreement with Interstate contained a
written arbitration clause.  Rather, the arbitration clause at issue is in
Gilmer's securities registration application, which is a contract with the
securities exchanges, not with Interstate.  The lower courts addressing the
issue uniformly have concluded that the exclusionary clause in MDRV 1 of
the FAA is inapplicable to arbitration clauses contained in such regis
tration applications.  See, e. g., Dickstein v. DuPont, 443 F. 2d 783 (CA1
1971); Malison v. Prudential-Bache Securities, Inc., 654 F. Supp. 101, 104
(WDNC 1987); Legg, Mason & Co. v. Mackall & Coe, Inc., 351 F. Supp. 1367
(DC 1972); Tonetti v. Shirley, 219 Cal. Rptr. 616, 618, 173 Cal. App. 3d
1144 (1985); see also Stokes v. Merrill Lynch, Pierce, Fenner & Smith, 523
F. 2d 433, 436 (CA5 1975).  We implicitly assumed as much in Perry v.
Thomas, 482 U. S. 483 (1987), where we held that the FAA required a former
employee of a securities firm to arbitrate his statutory wage claim against
his former employer, pursuant to an arbitration clause in his registration
application.  Unlike the dissent, see post, at 4-6, we choose to follow the
plain language of the FAA and the weight of authority, and we therefore
hold that MDRV 1's exclusionary clause does not apply to Gilmer's
arbitration agreement.  Consequently, we leave for another day the issue
raised by amici curiae.

3
    In the recently enacted Older Workers Benefit Protection Act, Pub. L.
101-433, 104 Stat. 978, Congress amended the ADEA to provide that "[a]n
individual may not waive any right or claim under this Act unless the
waiver is knowing and voluntary."  See MDRV 201.  Congress also specified
certain conditions that must be met in order for a waiver to be knowing and
voluntary.  Ibid.

4
    Gilmer also contends that judicial review of arbitration decisions is
too limited.  We have stated, however, that "although 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.  Shearson American Express Inc. v. McMahon, 482 U. S. 220, 232
(1987).

5
    The Court in Alexander v. Gardner-Denver Co., 415 U. S. 36 (1974), also
expressed the view that arbitration was inferior to the judicial process
for resolving statutory claims.  Id., at 57-58.  That "mistrust of the
arbitral process," however, has been undermined by our recent arbitration
decisions.  McMahon, 482 U. S., at 231-232.  "[W]e are well past the time
when judicial suspicion of the desirability of arbitration and of the
competence of arbitral tribunals inhibited the development of arbitration
as an alternative means of dispute resolution."  Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 626-627 (1985).





Subject: 90-18 -- DISSENT, GILMER v. INTERSTATE/JOHNSON LANE CORP.

 


 
SUPREME COURT OF THE UNITED STATES


No. 90-18



ROBERT D. GILMER, PETITIONER v. INTERSTATE/ JOHNSON LANE CORPORATION

on writ of certiorari to the united states court of appeals for the fourth
circuit

[May 13, 1991]



    Justice Stevens, with whom Justice Marshall joins, dissenting.

    Section 1 of the Federal Arbitration Act (FAA) states:

"[N]othing herein contained shall apply to contracts of employment of
seamen, railroad employees, or any other class of workers engaged in
foreign or interstate commerce."  9 U. S. C. MDRV 1.


The Court today, in holding that the FAA compels enforcement of arbitration
clauses even when claims of age discrimination are at issue, skirts the
antecedent question of whether the coverage of the Act even extends to
arbitration clauses contained in employment contracts, regardless of the
subject matter of the claim at issue.  In my opinion, arbitration clauses
contained in employment agreements are specifically exempt from coverage of
the FAA, and for that reason respondent Interstate/Johnson Lane Corporation
cannot, pursuant to the FAA, compel petitioner to submit his claims arising
under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U. S. C.
MDRV 621 et seq., to binding arbitration.
I
    Petitioner did not, as the majority correctly notes, ante, at 3-4, n.
2, raise the issue of the applicability of the FAA to employment contracts
at any stage of the proceedings below.  Nor did petitioner raise the
coverage issue in his petition for writ of certiorari before this Court.
It was amici who first raised the argument in their briefs in support of
petitioner prior to oral argument of the case.  See Brief for American
Federation of Labor and Congress of Industrial Organizations as Amicus
Curiae; Brief for American Association of Retired Persons as Amicus Curiae;
Brief for Lawyers' Committee for Civil Rights Under Law as Amicus Curiae
17-18.
    Notwithstanding the apparent waiver of the issue below, I believe that
the Court should reach the issue of the coverage of the FAA to employment
disputes because resolution of the question is so clearly antecedent to
disposition of this case.  On a number of occasions, this Court has
considered issues waived by the parties below and in the petition for
certiorari because the issues were so integral to decision of the case that
they could be considered "fairly subsumed" by the actual questions
presented.  See, e. g., Teague v. Lane, 489 U. S. 288, 300 (1989) ("The
question of retroactivity with regard to petitioner's fair cross section
claim has been raised only in an amicus brief.  Nevertheless, that question
is not foreign to the parties, who have addressed retroactivity with
respect to petitioner's Batson claim.  Moreover, our sua sponte
consideration of retroactivity is far from novel" (citations omitted));
Batson v. Kentucky, 476 U. S. 79, 84-85, n. 4 (1986) (notwithstanding
petitioner's seemingly deliberate failure to raise the equal protection
issue, "[w]e agree with the State that resolution of petitioner's claim
properly turns on application of equal protection principles and express no
view on the merits of any of petitioner's Sixth Amendment arguments"); Mapp
v. Ohio, 367 U. S. 643, 646, n. 3 (1961) ("Although appellant chose to urge
what may have appeared to be the surer ground for favorable disposition and
did not insist that Wolf be overruled, the amicus curiae, who was also
permitted to participate in the oral argument, did urge the Court to
overrule Wolf").  See also R. Stern, E. Gressman, & S. Shapiro, Supreme
Court Practice MDRV 6.26 (6th ed. 1986) (describing rule concerning need
for presenting questions below and in petition for certiorari, and
deviations from rule).
    Only this Term, the Court has on at least two occasions decided cases
on grounds not argued in any of the courts below or in the petitions for
certiorari.  In Arcadia v. Ohio Power Co., 498 U. S. --- (1990), we decided
the case on an issue that not only was not raised below or in any of the
papers in this Court, but that also was not raised at any point during oral
argument before the Court.  "In our view, however," the decided question
was "antecedent to these [issues presented] and ultimately dispositive of
the present dispute."  Id., at ---.  Similarly, in McCleskey v. Zant, 499
U. S. --- (1991), the Court issued a decision on a question which the
parties had not argued below and evidently had not anticipated would be at
issue in this Court, "since respondent did not even mention Sykes or
cause-and-prejudice in its brief or at oral argument, much less request the
Court to adopt this standard."  Id., at --- (Marshall, J., dissenting).
    In my opinion the considerations in favor of reaching an issue not
presented below or in the petition for certiorari are more compelling in
this case than in the cited cases.  Here the issue of the applicability of
the FAA to employment contracts was adequately briefed and raised by the
amici in support of petitioner.  More important, however, is that
respondent and its amici had full opportunity to brief and argue the same
issue in opposition.  See Brief for Respondent 42-50; Brief for Securities
Industry Association, Inc. as Amicus Curiae 18-20; Brief for Equal
Employment Advisory Council et al. as Amici Curiae 14-16.  Moreover, the
Court amply raised the issue with the parties at oral argument, at which
both sides were on notice and fully prepared to argue the merits of the
question.  Finally, as in Arcadia, the issue whether the FAA even covers
employment disputes is clearly "antecedent . . . and ultimately
dispositive" of the question whether courts and respondent may rely on the
FAA to compel petitioner to submit his ADEA claims to arbitration.
II
    The Court, declining to reach the issue for the reason that petitioner
never raised it below, nevertheless concludes that "it would be
inappropriate to address the scope of the MDRV 1 exclusion because the
arbitration clause being enforced here is not contained in a contract of
employment. . . . Rather, the arbitration clause at issue is in Gilmer's
securities registration application, which is a contract with the
securities exchanges, not with Interstate."  Ante, at 3, n. 2.  In my
opinion the Court too narrowly construes the scope of the exclusion
contained in MDRV 1 of the FAA.
    There is little dispute that the primary concern animating the FAA was
the perceived need by the business community to overturn the common-law
rule that denied specific enforcement of agreements to arbitrate in
contracts between business entities.  The Act was drafted by a committee of
the American Bar Association (ABA), acting upon instructions from the ABA
to consider and report upon "the further extension of the principle of
commercial arbitration."  Report of the Forty-third Annual Meeting of the
ABA, 45 A. B. A. Rep. 75 (1920).  At the Senate Judiciary Subcommittee
hearings on the proposed bill, the chairman of the ABA committee
responsible for drafting the bill assured the Senators that the bill "is
not intended [to] be an act referring to labor disputes, at all.  It is
purely an act to give the merchants the right or the privilege of sitting
down and agreeing with each other as to what their damages are, if they
want to do it.  Now that is all there is in this."  Hearing on S. 4213 and
S. 4214 before a Subcommittee of the Senate Committee on the Judiciary,
67th Cong., 4th Sess., 9 (1923).  At the same hearing, Senator Walsh
stated:

"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."  Ibid.


    Given that the FAA specifically was intended to exclude arbitration
agreements between employees and employers, I see no reason to limit this
exclusion from coverage to arbitration clauses contained in agreements
entitled "Contract of Employment."  In this case, the parties conceded at
oral argument that Gilmer had no "contract of employment" as such with
respondent.  Gilmer was, however, required as a condition of his employment
to become a registered representative of several stock exchanges, including
the New York Stock Exchange (NYSE).  Just because his agreement to
arbitrate any "dispute, claim or controversy" with his employer that arose
out of the employment relationship was contained in his application for
registration before the NYSE rather than in a specific contract of
employment with his employer, I do not think that Gilmer can be compelled
pursuant to the FAA to arbitrate his employment-related dispute.  Rather,
in my opinion the exclusion in MDRV 1 should be interpreted to cover any
agreements by the employee to arbitrate disputes with the employer arising
out of the employment relationship, particularly where such agreements to
arbitrate are conditions of employment.
    My reading of the scope of the exclusion contained in MDRV 1 is
supported by early judicial interpretations of the FAA.  As of 1956, three
Courts of Appeals had held that the FAA's exclusion of "contracts of
employment" referred not only to individual contracts of employment, but
also to collectivebargaining agreements.  See Lincoln Mills of Ala. v.
Textile Workers Union of America, 230 F. 2d 81 (CA5 1956), rev'd, 353 U. S.
448 (1957); United Electrical, Radio & Machine Workers of America v. Miller
Metal Products, Inc., 215 F. 2d 221 (CA4 1954); Amalgamated Assn. of
Street, Electric R. and Motor Coach Employees of America v. Pennsylvania
Greyhound Lines, Inc., 192 F. 2d 310 (CA3 1951).  Indeed, the application
of the FAA's exclusionary clause to arbitration provisions in
collective-bargaining agreements was one of the issues raised in the
petition for certiorari and briefed at great length in Lincoln Mills and
its companion cases, Goodall-Sanford, Inc. v. Textile Workers, 353 U. S.
550 (1957), and General Electric Co. v. Electical Workers, 353 U. S. 547
(1957).  Although the Court decided the enforceability of the arbitration
provisions in the collective-bargaining agreements by reference to MDRV 301
of the Labor Management Relations Act, 1947, 29 U. S. C. MDRV 185, it did
not reject the Courts of Appeals' holdings that the arbitration provisions
would not otherwise be enforceable pursuant to the FAA since they were
specifically excluded under MDRV 1.  In dissent, Justice Frankfurter
perceived a

"rejection, though not explicit, of the availability of the Federal
Arbitration Act to enforce arbitration clauses in collective-bargaining
agreements in the silent treatment given that Act by the Court's opinion.
If an Act that authorizes the federal courts to enforce arbitration
provisions in contracts generally, but specifically denies authority to
decree that remedy for `contracts of employment,' were available, the Court
would hardly spin such power out of the empty darkness of MDRV 301.  I
would make this rejection explicit, recognizing that when Congress passed
legislation to enable arbitration agreements to be enforced by the federal
courts, it saw fit to exclude this remedy with respect to labor contracts."
Textile Workers v. Lincoln Mills, 353 U. S., at 466 (Frankfurter, J.,
dissenting).


III
    Not only would I find that the FAA does not apply to employment-related
disputes between employers and employees in general, but also I would hold
that compulsory arbitration conflicts with the congressional purpose
animating the ADEA, in particular.  As this Court previously has noted,
authorizing the courts to issue broad injunctive relief is the cornerstone
to eliminating discrimination in society.  Albemarle Paper Co. v. Moody,
422 U. S. 405, 415 (1975).  The ADEA, like Title VII, authorizes courts to
award broad, class-based injunctive relief to achieve the purposes of the
Act.  29 U. S. C. MDRV 626(b).  Because commercial arbitration is typically
limited to a specific dispute between the particular parties and because
the available remedies in arbitral forums generally do not provide for
class-wide injunctive relief, see Shell, ERISA and Other Federal Employment
Statutes: When is Commercial Arbitration an "Adequate Substitute" for the
Courts?, 68 Texas L. Rev. 509, 568 (1990), I would conclude that an
essential purpose of the ADEA is frustrated by compulsory arbitration of
employment discrimination claims.  Moreover, as Chief Justice Burger
explained:

"Plainly, it would not comport with the congressional objectives behind a
statute seeking to enforce civil rights protected by Title VII to allow the
very forces that had practiced discrimination to contract away the right to
enforce civil rights in the courts.  For federal courts to defer to
arbitral decisions reached by the same combination of forces that had long
perpetuated invidious discrimination would have made the foxes guardians of
the chickens."  Barrentine v. Arkansas-Best Freight System, Inc., 450 U. S.
728, 750 (1981) (Burger, C. J., dissenting).


In my opinion the same concerns expressed by Chief Justice Burger with
regard to compulsory arbitration of Title VII claims may be said of claims
arising under the ADEA.  The Court's holding today clearly eviscerates the
important role played by an independent judiciary in eradicating employment
discrimination.
IV
    When the FAA was passed in 1925, I doubt that any legislator who voted
for it expected it to apply to statutory claims, to form contracts between
parties of unequal bargaining power, or to the arbitration of disputes
arising out of the employment relationship.  In recent years, however, the
Court "has effectively rewritten the statute", {1} and abandoned its
earlier view that statutory claims were not appropriate subjects for
arbitration.  See Mitsubishi Motors v. Soler Chrysler-Plymouth, Inc., 473
U. S. 614, 646-651 (1985) (Stevens, J., dissenting).  Although I remain
persuaded that it erred in doing so, {2} the Court has also put to one side
any concern about the inequality of bargaining power between an entire
industry, on the one hand, and an individual customer or employee, on the
other.  See ante, at 10-11.  Until today, however, the Court has not read
MDRV 2 of the FAA as broadly encompassing disputes arising out of the
employment relationship.  I believe this additional extension of the FAA is
erroneous.  Accordingly, I respectfully dissent.

 
 
 
 
 


------------------------------------------------------------------------------
1
    See Perry v. Thomas, 482 U. S. 483, 493 (1987) (Stevens, J.,
dissenting); id., at 494 (O'Connor, J., dissenting); Southland Corp. v.
Keating, 465 U. S. 1, 36 (1984) (O'Connor, J., dissenting) ("[T]oday's
exercise in judicial revisionism goes too far").

2
    See Shearson/American Express Inc. v. McMahon, 482 U. S. 220, 252-253
(1987) (Blackmun, J., concurring in part and dissenting in part); id., at
268 (Stevens, J., concurring in part and dissenting in part); Rodriguez de
Quijas v. Shearson/American Express, Inc., 490 U. S. 477, 486 (1989)
(Stevens, J., dissenting).
