Circuit City Stores v. Saint Clair Adams Brief of Amici Curiae in Support of Respondent

    No. 99-1379

In The

Supreme (ta rt of tlio Mniteii 0tatrs
Circuit City Stores, Inc.,

Petitioner,
v.

Saint Clair Adams,
Respondent.

On Writ of Certiorari to the 
United States Court of Appeals for the Ninth Circuit

B r ie f  o f  A m ic i  C u r ia e

L a w y e r s ’ C o m m it t e e  f o r  C i v i l  R i g h t s  U n d e r  L a w ; 
NAACP L e g a l  D e f e n s e  a n d  E d u c a t i o n a l  F u n d , I n c .;

N a t i o n a l  A s s o c ia t io n  f o r  t h e  A d v a n c e m e n t  o f  
C o l o r e d  P e o p l e ; M e x ic a n  A m e r i c a n  L e g a l  D e f e n s e  

a n d  E d u c a t io n a l  F u n d ; N a t i o n a l  P a r t n e r s h i p  f o r  
W o m e n  &  F a m i l i e s ; N a t i o n a l  W o m e n 's  L a w  C e n t e r ; 

a n d  NOW L e g a l  D e f e n s e  a n d  E d u c a t i o n  F u n d  
I n  S u p p o r t  o f  R e s p o n d e n t

Daniel F. Kolb, Co-Chair 
Chester T. Lester, Jr., Co-Chair 
John Payton, Co-Chair 
Norman Redlich, Trustee 
Barbara R. Arnwine 
Thomas J. Henderson 
Richard T. Seymour 
Teresa A. Ferrante 
Lawyers’ Committee for 

Civil Rights Under Law 
1401 New York Avenue, N.W.
Suite 400
Washington, D.C. 20005 
(202) 662-8600

[Additional counsel listed on inside front cover]

Paul W. Mollica 
Counsel o f Record 

Meites, Mulder, Burger 
& Mollica

208 South LaSalle Street 
Suite 1410
Chicago, Illinois 60604 
(312) 263-0272



Elaine R. Jones
Director-Counsel 

Theodore M. Shaw 
Norman J. Chachkin 
Charles Stephen Ralston 
NAACP Legal Defense and 

Educational Fund, Inc.
99 Hudson Street, 16th Floor 
New York, New York 10013
(212) 965-2200

Dennis C. Hayes 
General Counsel 
National Association for 

the Advancement of 
Colored People 

4805 Mt. Hope Drive 
Fifth Floor
Baltimore, Maryland 21215 
(410) 486-9191

Antonia Hernandez, President 
Vibiana Andrade,
Vice President, Legal Programs 
MALDEF
634 South Spring Street 
Eleventh Floor
Los Angeles, California 90014
(213) 629-2516

Judith L. Lichtman 
Donna R. Lenhoff 
National Partnership 

for Women & Families 
1875 Connecticut Ave., N.W. 
Suite 710
Washington, D.C. 20009

Marcia D. Greenberger 
Judith C. Appelbaum 
National Women’s 

Law Center 
11 Dupont Circle, N.W. 
Suite 800
Washington, D.C. 20036 
(202) 588-5180

Julie Goldscheid 
Yolanda S. Wu 
Dina Bakst
NOW Legal Defense and 

Education Fund 
99 Hudson Street, 12th Floor 
New York, New York 10013 
(212) 925-6635

Attorneys for Amici

September 19, 2000



QUESTIONS PRESENTED

1. Whether Section 1 of the Federal Arbitration Act, 9 
U.S.C. § 1, which excludes “contracts of employment of 
seamen, railroad employees, or any other class of workers 
engaged in foreign or interstate commerce,” bars employers 
from enforcing imposed arbitration schemes under the Act?

2. Whether the Act permits enforcement, under the pretext 
of “arbitration,” of unregulated dispute-resolution policies that 
prevent employees from effectively vindicating their rights, 
including imposition of biased arbitrators, shortening of the 
limitations period, unfair procedures, excessive forum fees and 
arbitrators’ fees, and revocation or limitation of statutory 
remedies?



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TABLE OF CONTENTS

INTEREST OF AMICI CURIAE .............................................1
SUMMARY OF ARGUMENT.............................................. 2
ARGUMENT.............................................................  2
I. Circuit City’s “Dispute Resolution

Agreement” Exemplifies the Peril of 
Unregulated, Imposed Arbitration in the 
Workplace ................................................................... 2

II. The Court’s Interpretation o f Section 1 of the
FAA Will Affect All Employee-Protective 
Legislation................................................................... 5
A. Since 1925, National Regulation of

Employment Has Become 
Commonplace ................................................ 6

B. In Non-Union Settings, Statutory
Claims Are Increasingly Subjected to 
Unregulated Arbitration S chem es................. 8

HI. Arbitration Programs Are Often Crafted to 
Relieve Employers o f Legal Burdens, Rather 
Than to Provide Employees a Fair 
Opportunity to Vindicate Substantive Rights ____ 12
A. Employers Often Impose Arbitration 

Policies Without Employees’
Knowing and Voluntary Consent................. 16

B. Excessive Fees Deter C laim s....................... 19
C. Employers Have Revoked Legal

R em edies.......................................................21
D. Arbitration Often Fails to Provide Fair

and Accountable Procedures ....................... 24
E. Judicial Review of Arbitration Awards

Is Minimal .................................................... 27
CONCLUSION..................................................................... 30



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TABLE OF AUTHORITIES

1. Cases

Adair v. United States,
208 U.S. 161 (1908).....................................................6

Aetna Ins. Co. v. Kennedy,
301 U.S. 389 (1937).................................................  18

Albemarle Paper Co. v. Moody,
422 U.S. 405 (1975).................................. ..............  22

Alcaraz v. Avnet, Inc.,
933 F. Supp. 1025 (D. N.M. 1996) .......................  22

Alexander v. Gardner-Denver Co.,
415 U.S. 36 (1974)..........................................  3 ,8 , 14

Alyeska Pipeline Service Co. v. The Wilderness Society,
421 U.S. 240 (1975).................................................  22

Armendariz v. Foundation Health Psychcare Serv., Inc.,
No. S075942, 2000 WL 1201652 (Cal. Aug. 24,
2000) .............................................................  5, 10,20

Bailey v. Federal Nat 7 Mortgage Assoc.,
209 F.3d 740 (D.C. Cir. 2000)................................  17

Barrentine v. Arkansas-Best Freight Sys., Inc.,
450 U.S. 728 (1981)..........................................   28

Bernhardt v. Polygraphic Co. o f  Am.,
350 U.S. 198(1956).................................................  27

Bishop v. Smith Barney, Inc.,
No. 97 CIV. 4807(RWS), 1998 WL 50210
(S.D.N.Y. Feb. 6, 1998)..........................................  17

Brown v. ITT Consumer Financial Corp.,
211 F.3d 1217 (11th Cir. 2 0 0 0 ).............................. 29

California Federal S. & L. Assn. v. Guerra,
479 U.S. 272 (1987)................    10



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Campbell v. Cantor Fitzgerald & Co.,
21 F. Supp. 2d 341 (S.D. N.Y. 1998), a ff’d,
205 F.3d 1321 (2d Cir. 1999)..................................  19

Chisolm v. Kidder, Peabody Asset Mgt., Inc.,
966 F. Supp. 218 (S.D. N.Y. 1997).......................  29

Christiansburg Garment Co. v. EEOC,
434 U.S. 412 (1978)................................................. 22

Circuit City Stores, Inc. v. EEOC,
75 F. Supp. 2d 491 (E.D. Va. 1999) ....................... 3

Circuit City Stores, Inc. v. Shelton,
No. l:99-cv-561, 2000 U.S. Dist. LEXIS
7059 (W.D. Mich. May 16, 2 0 0 0 ).....................  3, 24

Cole v. Bums In t’l Security Services,
105 F.3d 1465 (D.C. Cir. 1997)........... 19, 20, 21, 30

Davis v. LPK Corp.,
16 Fair Empl. Prac. Cas. (BNA) 954 (N.D.
Cal. 1998).................................................................  20

DeGaetano v. Smith Barney, Inc.,
983 F. Supp. 459 (S.D. N.Y. 1997).................  22, 30

Derrickson v. Circuit City Stores, Inc.,
81 Fair Empl. Prac. Cas. (BNA) 1533 (D. Md.
1999), a ff’d sub nom. Johnson v. Circuit City 
Stores, Inc., 203 F.3d 821 (4th Cir.), cert.
denied, 120 S. Ct. 2744 (2000)..................................4

Desiderio v. Nat 1 Assoc, o f  Securities Dealers,
191 F.3d 198 (2d Cir. 1999), petition fo r  cert, 

filed, 68 U.S.L.W. 3497 (Jan. 31, 2000) (No.
99-1285).............................................................  12, 21

DiRussa v. Dean Witter Reynolds Inc.,
121 F.3d 818 (2d Cir. 1997), cert, denied, 522
U.S. 1049(1998).....................................................  29

Doctor’s Associates, Inc. v. Casarotto,
517 U.S. 681 (1996) 10



Domino Sugar Corp. v. Sugar Workers Local Union 392,
10 F.3d 1064 (4th Cir. 1 9 9 3 ).................................... 7

Duffield v. Robertson Stephens & Co.,
144 F.3d 1182 (9th Cir.), cert, denied,
525 U.S. 982 (1998) ..................................  12,14,19

EEOC v. Farmer Bros. Co.,
31 F.3d 891 (9th Cir. 1994)....................................  23

EEOC v. Frank’s Nursery & Crafts, Inc.,
177 F.3d 448 (6th Cir. 1999 )..................................  24

EEOC v. Kidder, Peabody & Co., Inc.,
156 F.3d 298 (2d Cir. 1998)....................................  24

EEOC v. Waffle House, Inc.,
193 F.3d 805 (4th Cir. 1999), petition for  
cert, filed, 68 U.S.L.W. 3726 (May 15, 2000)
(No. 99-1823)....................................................... 9, 24

First Options o f  Chicago v. Kaplan,
514 U.S. 938(1995)................................................. 29

Floss v. Ryan’s Family Steak Houses, Inc.,
211 F.3d 306 (6th Cir. 2 0 0 0 )............................ 11,25

FDA v. Brown & Williamson Tobacco Corp.,
120 S. Ct. 1291 (2000).................................................5

Fuller v. Pep Boys — Manny, Moe & Jack o f  Delaware, Inc.,
88 F. Supp. 2d 1158 (D. Colo. 2000).....................  20

Gannon v. Circuit City Stores Inc.,
No. 4:00CV330 JCH ,, 2000 U.S. Dist.
LEXIS 12125 (E.D. Mo. July 10, 2000) ................. 4

General Tel. Co. o f the Northwest, Inc. v. EEOC,
446 U.S. 318(1980).................................................  24

Gibson v. Neighborhood Health Clinics, Inc.,
121 F.3d 1126 (7th Cir. 1997)................................  18

Gilmer v. Inter state/Johnson Lane Corp.,
500 U.S. 20 (1991).............................................passim

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-V-

Glennon v. Dean Witter Reynolds, Inc.,
83 F.3d 132 (6th Cir. 1996)....................................  29

Great Western Mortgage Corp. v. Peacock,
110 F.3d 222 (3d Cir. 1997).............................. 18,23

Green v. Ameritech Corp.,
200 F.3d 967 (6th Cir. 2 0 0 0 ).................................. 27

Green Tree Financial Corp.-Alabama v. Randolph,
178 F.3d 1149 (11th Cir. 1999), cert.
granted, 120 S. Ct. 1552 (2000)................... ..........21

Halligan v. Piper Jaffrey Inc.,
148 F.3d 197 (2d Cir. 1997).............................. 18, 30

Hammer v. Dagenhart,
247U.S.251 (1918)...................................................6

Hooters o f  America, Inc. v. Phillips,
173 F.3d 933 (4th Cir. 1999).....................  15, 25, 26

Hooters o f  America, Inc. v. Phillips,
39 F. Supp. 2d 582 (D. S.C. 1998), a ff’d,
173 F.3d 933 (4th Cir. 1999)...............  15, 17, 18, 22

Howard v. Illinois CentralR. Co.,
207 U.S. 463 (1908).....................................................6

Int l Union o f  Elect., Radio & Machine Workers v. Ingram 
Mfg. Co., 715 F.2d 886 (5th Cir. 1983),
cert, denied, 466 U.S. 928 (1984) ..............................7

Johnson v. Circuit City Stores, Inc.,
148 F.3d 373 (4th Cir. 1998).............................. 3, 25

Jones v. Fujitsu Network Communications, Inc.,
81 F. Supp. 2d 688 (N.D. Tex. 1999) ........... 11, 20

Kieman v. Piper Jaffray Cos., Inc.,
137 F.3d 588 (8th Cir. 1998)..................................  29

Kinnebrew v. Gulf Insurance Co.,
61 Fair Empl. Prac. Cas. (BNA) 189 (N.D.
Tex. 1994) 23



-vi~

KMC Co. v. Irving Trust Co.,
757 F.2d 752 (6th Cir. 1985)..................................  18

Koveleskie v. SBC Capital Markets, Inc.,
167 F.3d 361 (7th Cir. 1998)............................ 11,21

Kummetz v. Tech Mold, Inc.,
152 F.3d 1153 (9th Cir. 1998)................................ 17

Leonard v. Clear Channel Communications I,
No. 972320-D/A, 1997 WL 581439
(W.D. Tenn. July 23, 1997)....................................  17

McClendon v. Sherwin Williams, Inc.,
70 F. Supp. 2d 940 (E.D. Ark. 1999).....................  16

McDonald v. City o f West Branch,
466 U.S. 284 (1984)................................................. 28

McWilliams v. Logicon, Inc.,
No. CIV. A. 95-2500-GTV, 1997 WL 383150 
(D. Kan. June 4, 1997), affd, 143 F.3d 573
(10th Cir. 1 9 9 8 )....................................................... 20

Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Nixon,
210 F.3d 814 (8th Cir. 2000) ,petition fo r cert.
filed, Aug 25, 2000 (No. 00-317)..................... 11, 24

Miller v. Public Storage Management, Inc.,
121 F.2d215 (5th Cir. 1997)..................................  10

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
413 U.S. 614 (1985)................................................  13

Montes v. Shear son Lehman Brothers, Inc.,
128 F.3d 1456 (11th Cir. 1997) ...........................  29

Morrison v. Circuit City Stores, Inc.,
70 F. Supp. 2d 815 (S.D. Ohio 1999) ..................... 3

Nelson v. Cyprus Bagdad Copper Corp.,
119 F.3d 756 (9th Cir. 1997), cert, denied,
523 U.S. 1072(1998)..............................................  18

New York Central R. Co. v. Winfield,
244 U.S. 147(1917) 6



-Vll-

Nicholson v. CPC Int 7,
877 F.2d 221 (3d Cir. 1989)...................................... 8

Occidental Chemical Corp, v. In t’l Chemical Workers Union,
853 F.2d 1310 (6th Cir. 1988)........ .........................8

Paladino v. Avnet Computer Technologies, Inc.,
134 F.3d 1054 (11th Cir. 1998 ).......................  20, 22

Patterson v. Tenet Healthcare, Inc.,
113 F.3d 832 (8th Cir. 1997).................................. 18

Penn v. Ryan’s Steakhouses, Inc.,
95 F. Supp.2d 940 (N.D. Ind. 2000) ........... 9, 18, 26

Phelps Dodge Corp. v. NLRB,
313 U.S. 177(1941)...................................................6

Phillips v. Cigna Investments Inc.,
27 F. Supp. 2d 345 (D. Conn. 1998) .....................  17

Posadas de Puerto Rico v. Association de Empleados,
873 F.2d 479 (1st Cir. 1989) ....................................7

Prudential Insurance Company o f America v. Lai,
42 F.3d 1299 (9th Cir. 1994), cert, denied,
516 U.S. 812(1995)..........................................  14, 18

Pryner v. Tractor Supply Co.,
109 F.3d 354 (7th Cir.), cert, denied, 522 U.S.
912(1997)  ..............................................  19,23

Rojas v. TK Communications, Inc.,
87 F.3d 745 (5th Cir. 1996)....................................  23

Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith,
170 F.3d 1 (1st Cir. 1 9 9 9 )............. 12, 14, 16, 18, 20

Sens v. John Nuveen & Co.,
146 F.3d 175, 183 (3d Cir. 1998), cert.
denied, 525 U.S. 1139(1999) .........................  12,23

Shankle v. B-G Maintenance Mgt. o f Colorado, Inc.,
163 F.3d 1230 (10th Cir. 1 9 9 9 ).............................. 20

Shaw v. DLJ Pershing,
78 F. Supp.2d 781 (N.D. 111. 1999) 11



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Shearson/American Express Inc. v. McMahon,
482 U.S. 220 (1987)..........................................  16,28

Sheller by Sheller v. Frank’s Nursery & Crafts, Inc.,
957 F. Supp. 150 (N.D. 111. 1997) ............................9

Smith v. Chrysler Financial Corp.,
101 F. Supp. 2d. 534 (E.D. Mich. 2 0 0 0 ) ......... 16, 17

Smith v. Evening News Assn.,
371 U.S. 195 (1962).....................................................7

Sportelli v. Circuit City Stores, Inc.,
No. CIV. A. 97-5850, 1998 WL 54335 (E.D.
Pa. Jan 13, 1998) .........................................................3

Steele v. Louisville & N.R. Co.,
323 U.S. 192(1944).....................................................7

Stirlen v. Supercuts, Inc.,
51 Cal. App. 4th 1519, 60 Cal. Rptr. 2d 138
(1997).................................................................  10,23

Strawn v. AFC Enterprises, Inc.,
70 F. Supp. 2d 717 (S.D. Tex. 1999).....................  10

Swenson v. Management Recruiters In t’l, Inc.,
858 F.2d 1304 (8th Cir. 1988 )....................................8

Textile Workers v. Lincoln Mills,
353 U.S. 448 (1957)..............................................  7, 9

United Food and Commercial Workers, Local Union 
No. 7R v. Safeway Stores, Inc.,
889 F.2d 940 (10th Cir. 1989) ..................................8

United States v. Darby,
312 U.S. 100(1941).....................................................6

United Steelworkers o f Am. v. Enterprise Wheel & Car Co.,
363 U.S. 593 (1960)................................................. 27

Utley v. Goldman Sachs & Co.,
883 F.2d 184 (1st Cir. 1989), cert, denied, 493 U.S. 
1045 (1990) ...............................................................g



Wetzel v. Lou Ehlers Cadillac Group Long Term 
Disability Ins. Pgm.,
2000 WL 1022713 (9th Cir. July 26, 2000)
{en banc) ................................................................. 22

Williams v. Cigna Financial Advisors Inc.,
197 F.3d 752 (5th Cir. 1999)...........................  20, 29

Williams v. Imhojf,
203 F.3d 758 (10th Cir. 2 0 0 0 )................................ 11

Wilson v. New,
243 U.S. 332(1917).....................................................6

Wright v. Circuit City Stores, Inc.,
82 F. Supp. 2d 1279 (N.D. Ala. 2000)...................4

Wright v. Universal Maritime Service Corp,,
525 U.S. 70 (1998).................................... 3,7, 12, 19

Young v. Prudential Ins. Co. o f  America,
297 N.J. Super. 605, 688 A.2d 1069
(App.Div.), cert, denied, 149 N J. 408, 694
A.2d 193 (1997).......................................................  10

2. Statutes, Rules and Legislative Materials

28U.S.C. § 1920 .................................................................  19
42U.S.C. § 1981 .........................................................3,4, 11
42U.S.C. § 1981a(b)(4)...........................................................3
42U.S.C. § 1981a(c)............................................................. 17
42U.S.C. § 1983 ...................................    28
Age Discrimination in Employment Act,

29 U.S.C. §§ 621 etseq. . . .  8, 11, 12, 22, 24, 27, 28 
Age Discrimination in Employment Act,

29 U.S.C. § 626(c)(2).................................................17
Americans With Disabilities Act,

42 U.S.C. §§ 12101 etseq .......................8, 11, 12, 18

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Americans With Disabilities Act,
42U.S.C. § 1 2 2 1 2 ............................................ 12, 19

Black Lung Benefits Act,
30 U.S.C. §§ 901 et seq.............................................. 8

California Fair Employment and Housing Act,
Cal. Gov’t Code §§ 12900 et seq..................5, 9,23

Civil Rights Act of 1964,
42 U.S.C. § 2000h-4 .............................................. 10

Civil Rights Act of 1991, § 118
Pub. L. No. 102-166, 105 Stat. 1071, 1081
(1991)................................................................. 11, 18

Employee Retirement Income Security Act,
29 U.S.C. §§ 1001 etseq ............................... 8, 11,22

Employers’ Liability A c t ......................................................... 6
Equal Credit Opportunity Act,

15 U.S.C. §§ 1691 etseq .......................................... 21
Equal Pay Act of 1963,

29 U.S.C. § 206(d)...............................   11
Fair Labor Standards Act,

29 U.S.C. §§ 201 et seq....................................... 7, 11
Fair Labor Standards Act,

29 U.S.C. § 216(b).............................................. 7, 22
Family and Medical Leave Act,

29 U.S.C. §§ 2601 et seq...................................... 8, 11
Federal Arbitration Act,

9 U.S.C. §§ 1 et seq..........................................passim
Labor Management Relations Act,

2 9 U.S.C. §§ 141 e tseq . ............................................... 7
Labor Management Relations Act,

29 U.S.C. § 185 ........................................................... 7
Labor Management Relations Act,

29 U.S.C. § 187 7



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Norris-LaGuardia Act,
29U.S.C. §§ 101 etseq .................................................7

Railway Labor Act,
45U.S.C. § 151 etseq ...................................................7

Title VII of the Civil Rights Act of 1964,
42 U.S.C. §§ 2000e et seq................................passim

Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-5(b) .............................................11

Title VII of the Civil Rights Act of 1964,
42 U.S.C. §§ 2000e-5(b) to - 5 ( f ) ..............................10

Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-5(f)(l) ........................................ 11

Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-5(f)(5) ........................................ 15

Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-5(g)(l).......................................... 3

Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-5(k) ............................................ 22

Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-6...................................................11

Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-7...................................................10

Title VII of the Civil Rights Act of 1964,
42 U.S.C. § 2000e-12.................................................11

Securities Exchange Act of 1934,
15 U.S.C. § 78s ......................................................... 16

Truth in Lending Act,
15 U.S.C. §§ 1601 etseq ............................................ 21

Virginia Uniform Arbitration Act,
Va . Code Ann. §§ 8.01-581.01 etseq ...................... 4



3. Rules

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Fed. R. Civ. P. 30(a)(2)(A) .................................................... 26
Fed. R. Civ. P. 52(a) ...............................................................27
Fed. R. Civ. P. 54(d)(1)...........................................................19
Supreme Court Rule 37.3(a) ..................................................1

4. Legislative Materials

H.R. Rep. No. 102-40, Part 1,102d Cong. 1st Sess.,
reprinted in 1991 U.S.C.C.A.N. 549 .....................  19

5. Treatises, Law Reviews and Other Sources

Reginald Alleyne, Statutory Discrimination Claims:
Rights “Waived” and Lost in the Arbitration
Forum,
13 HofstraLab. L. J. 381 (1996) .....................  14, 19

Ashlea Ebeling, Better Safe Than Sorry,
Forbes, Nov. 30,1998 ..........................................  13

Harry T. Edwards, Where Are We Heading with
Mandatory Arbitration o f Statutory Claims 
in Employment,
16 Ga. St. U.L.Rev. 293 (1999).................  14, 19, 28

Elkouri & Elkouri, How Arbitration Works,
5th Ed. (BNA 1 9 9 6 )..............................................  12

EEOC Notice, No. 915.002, Policy Statement on 
Mandatory Binding Arbitration of 
Employment Discrimination Disputes as a 
Condition of Employment (July 10,1997)
(http://www.eeoc.gov/docs/mandarb.htmll...........11

Jay E. Grenig, 26 West Legal Forms: Alternative Dispute
Resolution, App. 11C at 770 (1995) .....................  26

http://www.eeoc.gov/docs/mandarb.htmll


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Joseph R. Grodin, Arbitration o f Employment Discrimination 
Claims: Doctrine and Policy in the Wake o f  Gilmer, 
14 Hofstra Lab. L. J. 1 (1 9 9 6 ).........................  14,18

Stephen L. Hayford & Michael J. Evers, The Interaction 
Between the Employment-at-Will Doctrine and 
Employer-Employee Agreements to Arbitrate 
Statutory Fair Employment Practices Claims: 
Difficult Choices fo r  At-Will Employers,
73 N.C. L. Rev. 443 (1995).................................... 25

Leslie Kaufman and Anne Underwood, Sign or Hit the
Street, Newsweek, June 30, 1997, at 48 .................9

Adriaan Lanni, Note, Protecting Public Rights in Private
Arbitration, 107 Yale L. J. 1157 (1998) ............... 27

Eduard A. Lopez, Mandatory Arbitration o f Employment
Discrimination Claims: Some Alternative Grounds
fo r  Lai, Duffield and Rosenberg,
4 Employee Rts. & Employment Pol’y
J. 101 (2000) ..................................................... 14, 18

Geraldine Szott Moohr, Arbitration and the Goals o f  
Employment Discrimination Law,
56 Wash. & Lee L. Rev. 395 (1 9 9 9 )............... 14,27

National Academy of Arbitrators, Statement o f the NAA on 
Individual Contracts o f Employment and Guidelines 
on Arbitration o f Statutory Claims Under Employer- 
Promulgated Systems, May 21, 1997,
(http://www.naarb.org/guidelines.htmD.................14

National Academy of Arbitrators, Code o f Professional 
Responsibility fo r Arbitrators ofLabor 
Management Disputes, Art. II, §C(l)(c), 
reprinted at Jay E. Grenig, 26 West Legal Forms: 
Alternative Dispute Resolution, App. 11C at 770 
(1995)......................................................................... 26

http://www.naarb.org/guidelines.htmD


-XIV"

National Academy of Arbitrators, A Due Process Protocol 
fo r  Mediation and Arbitration o f Statutory 
Disputes Arising out o f the Employment 
Relationship, May 9, 1995
(http:// www.naarb.org/protocol.htmD................... 25

George Nicolau, Gilmer v. Inter state/Johnson Lane Corp 
Its Ramifications and Implications fo r  Employees, 
Employers and Practitioners,
1 U. Pa. J. of Lab. and Employ. Law 175 (1998) . 13 

Jenny Strasburg, Proceeding Under Fire, S. F. Examiner,
April 30, 2000 at B 1 ..................................................9

Katherine Van Wezel Stone, Mandatory Arbitration o f  
Individual Employment Rights: The Yellow Dog 
Contracts fo r  the 1990s, 73 Denv. U. L. Rev. 1017
(1996)........................................................... 14, 27, 28

Michael A. Verespej, Sidestepping Court Costs,
Industry Week, Feb. 2, 1998, at 68 ................. .. 9

Stephen J. Ware, Default Rules from Mandatory Rules: 
Privatizing Law Through Arbitration,
83 Minn. L. Rev. 703 (1999).... .............. 14, 28, 29

http://www.naarb.org/protocol.htmD


INTEREST OF AMICI CURIAE1
The Lawyers’ Committee for Civil Rights Under Law is a 

tax-exempt, nonprofit civil rights legal organization founded in 
1963 by the leaders of the American bar at the request of 
President Kennedy, to provide legal representation to the 
victims of civil rights violations.

The National Association for the Advancement o f Colored 
People (NAACP), established in 1909, is the nation’s oldest 
civil rights organization.

The NAACP Legal Defense & Educational Fund, Inc. (the 
“Fund”) is a non-profit corporation that was established for the 
purpose of assisting African Americans in securing their 
constitutional and civil rights.

The Mexican American Legal Defense and Educational 
Fund (MALDEF) is a national not-for-profit organization that 
protects and promotes the civil rights of more than 29 million 
Latinos living in the United States.

The National Partnership for Women & Families, a 
nonprofit, national advocacy organization founded in 1971 as 
the Women’s Legal Defense Fund, promotes equal opportunity 
for women.

The National Women’s Law Center (NWLC) is a non-profit 
legal advocacy organization dedicated to the advancement and 
protection of women's rights and the corresponding elimination 
of sex discrimination from all facets of American life.

NOW Legal Defense and Education Fund (NOW Legal 
Defense) is a leading national non-profit civil rights organiza­

‘The position amici take in tins brief has not been approved or 
financed by petitioner or his counsel. No counsel for any party had any role 
in authoring this brief. The written consents o f  both parties have been filed 
with the Clerk o f  the Court pursuant to Supreme Court Rule 37.3(a).



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tion that uses the power of the law to define and defend 
women's rights.

SUMMARY OF ARGUMENT

The rush by employers over the past decade to impose 
unregulated arbitration on their employees warrants close 
examination of Congress’s policy choice under §1 of the FAA 
to exclude “contracts of employment” from the Act’s scope. In 
Part I of this brief, we highlight some of the more oppressive 
provisions of Circuit City’s “Dispute Resolution Agreement.” 
In Part II, we show the repercussions of this case for all federal 
and state employee-protective legislation.

Finally in Part ID, we show that if  the FAA applies to most 
employment disputes, the courts must shoulder the burden to 
assure that employees do not forgo substantive rights in 
arbitration. To safeguard their rights against employers, 
employees will often have to litigate twice: first to invalidate 
unfair or oppressive arbitration provisions, and second to reach 
the merits of their claims. This regime increases the burden on 
civil rights plaintiffs as well as the courts, at odds with Con­
gressional intent that such claims be facilitated. To enforce 
arbitration of employment law claims, courts must at a mini­
mum insist upon elements that would preclude the abuses 
detailed below. Many current policies, including Circuit 
City’s, fall well short of these due process standards.

ARGUMENT
I. Circuit City’s “Dispute Resolution Agreement” Ex­

emplifies the Peril of Unregulated, Imposed Arbitra­
tion in the Workplace

In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 
31-33 (1991), arbitration between a sophisticated employee (a 
stockbroker) and his employer was enforced because it was



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govemed by a U-4 registration, backed by a panoply of 
procedural safeguards and regulatory oversight by the SEC. By 
contrast, in Alexander v. Gardner-Denver Co., 415 U.S. 36,52 
(1974), arbitration under a collective bargaining agreement 
(“CBA”) did not bar a Title VII judicial forum, because the 
plaintiff did not herself consent to waive her right to suit, and 
had no control over the arbitration. Circuit City’s unconsented 
arbitration policy falls on the Alexander side of the line.2

The Circuit City “Dispute Resolution Agreement” and 
“Dispute Resolution Rules and Procedures” (“DRA,” J.A. 19- 
39) have often been litigated.3 Some courts have refused to 
compel arbitration under the DRA because it caps back pay and 
punitive damage awards below federal limits (DRA Rule 32,
J.A. 35-36).4 As one judge wrote: “Punitive damages and back 
pay are powerful deterrents to employers who might otherwise

2Seealso Wrightv. Universal Maritime Service Corp., 525 U.S. 70, 
80 (1998) (“Gardner-Denver at least stands for the proposition that the right 
to a federal judicial forum is o f  sufficient importance to be protected against 
less-than-explicit union waiver in a CBA”)

3See, e.g., Johnson v. Circuit City Stores, Inc., 148 F.3d 373 (4th 
Cir. 1998), following remand, 203 F.3d 821 (4th Cir.), cert, denied, 120 S. 
Ct. 2744 (2000); Circuit City Stores, Inc. v. Shelton, No. l:99-cv-561,2000 
U.S. Dist. LEXIS 7059 (W.D. Mich. May 16, 2000); Morrison v. Circuit 
City Stores, Inc., 70 F. Supp. 2d 815 (S.D. Ohio 1999); Sportelli v. Circuit 
City Stores, Inc., No. CIV. A. 97-5850, 1998 WL 54335 (E.D. Pa. Jan 13, 
1998). The company has also filed a declaratory judgment action against 
the EEOC to establish the legality o f  the company’s compulsory arbitration 
program, a complaint ultimately dismissed on jurisdictional grounds. 
Circuit City Stores, Inc. v. EEOC, 75 F. Supp. 2d 491 (E.D. Va. 1999).

4The DRA awards back pay “only up to one year from the point at 
which the Associate knew or should have known o f the events giving rise 
to the alleged violation o f  law,” and caps punitive damages at 100% ofback  
and front pay (if  any) or $5000. This provision contradicts Title VII, which 
provides two years’ back pay (42 U.S.C. § 2000e-5(g)(l)), and section 
1981, which does not cap punitive damages (42 U.S.C. § 1981a(b)(4)).



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discriminate on the basis of race. The failure of the Circuit 
City arbitration provision to provide those remedies shields 
Circuit City from the full force of Section 1981 and prevents 
Plaintiff from effectively vindicating her rights.”5

Other provisions of the DRA (1) require employees to pay 
one-half the cost of arbitration, and allow shifting o f all 
arbitration fees and costs to losing employees (DRA Rule 30, 
J.A. 33-34); (2) revoke presumptive and even mandatory 
statutory awards of attorneys’ fees, committing such awards to 
broad arbitral discretion (DRA Rule 31, J.A. 34-35); (3) set a 
blanket one-year limitations period for all claims, irrespective 
of longer statutes of limitations (DRA Rule 6(a); J.A. 23-24); 
(4) impose the terms of the DRA only upon employees, leaving 
Circuit City’s right to sue its employees in court unimpeded 
(DRA Rule 2, J.A. 20-21); (5) reserve the company’s power to 
amend the DRA periodically, without requiring the approval 
of any public regulatory agency or the employees (DRA Rule 
37, J.A. 37-38); and (6) declares—in case any provision be 
found unenforceable—a non-acquiescence rule, allowing Cir­
cuit City to enforce it elsewhere (DRA Rule 36, J.A. 37).6

5 Derrickson v. Circuit City Stores, Inc., 81 Fair Empl. Prac. Cas. 
(BNA) 1533, 1538 (D. Md. 1999), aff’d  sub nom. Johnson v. Circuit City 
Stores, Inc., 203 F.3d 821 (4th Cir.), cert, denied,\20 S. Ct. 2744 (2000); 
Gannon v. Circuit City Stores Inc., No. 4:OOCV330 JCH, 2000 U.S. Dist. 
LEXIS 12125 at *9-11 (E.D. Mo. July 10,2000) (caps on remedies prevent 
worker from “effectively vindicating” rights). Cf. Wright v. Circuit City 
Stores, Inc., 82 F. Supp. 2d 1279, 1287-88 (N.D. Ala. 2000) (striking out 
DRA caps on damages).

6Circuit City has left itself an alternative if  the Court finds that the 
FAA does not apply to contracts o f employment. The DRA separately 
provides that its terms may be enforced under the Uniform Arbitration Act 
o f  Virginia, Va . Co d e  A n n . § 8.01-581.01 etseq. (DRA Rule 34, J.A. 36- 
37). The Virginia Act, unlike the FAA, applies expressly to employment 
cases. Id. But the California Supreme Court held just a month ago that



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All of these provisions redound to Circuit City ’ s advantage, 
and this is no accident because the company set the terms 
unilaterally. Respondent had to “consent” to the DRA as a 
mandatory condition of applying to work (J.A. 11). Circuit 
City’s DRA is a far cry from the intention—announced by the 
Court in Gilmer, 500 U.S. at 26—that employees under 
arbitration policies would not “forgo the substantive rights 
afforded by” state and federal labor and employment laws.

II. The Court’s Interpretation of Section 1 of the FAA Will
Affect All Employee-Protective Legislation

To interpret the exclusion in §1 of “contracts of employ­
ment of seamen, railroad employees, or any other class of 
workers engaged in foreign or interstate commerce,” the Court 
must place the FAA against the backdrop of numerous federal 
laws enacted since 1925 protecting workers’ rights. It is 
appropriate for the Court to consult such subsequent enact­
ments here, as it did in last Term in FDA v. Brown & William­
son Tobacco Corp., 120 S. Ct. 1291 (2000). There, the Court 
relied upon tobacco legislation passed by Congress subsequent 
to the Food, Drug, and Cosmetics Act: “At the time a statute 
is enacted, it may have a range of plausible meanings. Over 
time, however, subsequent acts can shape or focus those 
meanings. The ‘classic judicial task of reconciling many laws 
enacted over time, and getting them to “make sense” in 
combination, necessarily assumes that the implications of a 
statute may be altered by the implications of a later statute.’” 
Id. at 1306 (citation omitted). As the Court construes the §1 
exclusion in the FAA, it must harmonize this section with a

arbitration o f claims under the state’s Fair Employment and Housing Act, 
Ca l . Go v ’t Co d e  § 12900 et seq. (such as this case) are subject to rigorous 
due process standards. Armendariz v. Foundation Health Psychcare Serv., 
Inc., No. S075942, 2000 WL 1201652 (Cal. Aug. 24, 2000).



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body of national laws regulating employment o f persons in 
interstate commerce.

A. Since 1925, National Regulation of Employment Has 
Become Commonplace

Congress enacted the FAA in 1925 against a legal backdrop 
of minimal federal regulation of employment.7 The Court 
declared unconstitutional — as exceeding Congress’s com­
merce clause powers — laws banning “yellow dog” contracts 
and child labor. See Adair v. United States, 208 U.S. 161,179 
(1908) (no connection between interstate commerce and 
membership in a labor organization), overruled by Phelps 
Dodge Corp. v. NLRB, 313 U.S. 177 (1941); Hammer v. 
Dagenhart, 247 U.S. 251, 276 (1918) (no regulation o f “local 
matters” by prohibiting movement in interstate commerce”), 
overruled by United States v. Darby, 312 U.S. 100 (1941); 
Howard v. Illinois Central R. Co., 207 U.S. 463, 504 (1908) 
(striking down Employers’ Liability Act because provisions 
applied to all employees of common carriers, even if  they did 
not work directly in interstate commerce). Obversely, the 
Court upheld federal labor laws directly incident to regulating 
interstate common carriers, such as railroads.8

By the mid-twentieth century, when Congress reenacted the 
FAA (July 30,1947, ch. 392, §1,61 Stat. 669), the federal role

7 Employment was considered primarily a local matter and the 
commerce clause was deemed to authorize Congressional action to protect 
workers only in the channels o f  interstate commerce.

sSee, e.g., New York Central R. Co. v. Winfield, 244 U.S. 147,148  
(1917) (“[i]t is settled that under the commerce clause o f the Constitution 
Congress may regulate the obligation o f  common carriers and the rights o f  
their employees arising out o f  injuries sustained by the latter where both are 
engaged in interstate commerce”); Wilson v. New, 243 U.S. 332,349 (1917) 
(finding eight-hour-day law for interstate rail workers to fall within 
Congress’s power “to deal not only with the carrier, but with its servants”).



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in labor relations had transformed dramatically. In the crucible 
of the Great Depression and the Second World War, Congress 
passed a host of statutes to protect workers’ rights. See, e.g., 
the Noms-LaGuardia Act, 29 U.S.C. §§ 101 et seq. (enacted 
1932); Labor-Management Relations Act, 29 U.S.C. §§ 141 et 
seq. (enacted 1947); Fair Labor Standards Act, 29 U.S.C. §§ 
201 et seq. (enacted 1938). These acts included a private right 
of action.9 In addition, this Court in 1944 implied a cause of 
action for the breach o f duty of fair representation under the 
Railway Labor Act, 45 U.S.C. § 151 et seq. See Steele v. 
Louisville & N.R. Co., 323 U.S. 192, 206-07 (1944). See also 
Smith v. Evening News Assn., 371 U.S. 195, 199 (1962) 
(recognizing employee’s individual right to sue employer along 
with union for breach of CBA under § 185 of the LMRA).

Against the backdrop o f these new laws, courts were 
circumspect about applying the FAA to the workplace. See, 
e.g., Textile Workers v. Lincoln Mills, 353 U.S. 448,450 (1957) 
(applying § 185 of the LMRA to a CBA without mentioning 
FAA), and id. at 466 (Frankfurter, J., dissenting) (concluding 
that FAA did not apply to labor contracts). Even to­
day—unacknowledged by the petitioners’ brief (at 8, 11, 37- 
38)—courts continue to hold that CBAs are excluded from the 
FAA.10 A contrary decision of this Court would work a major

9See LMRA, 29 U.S.C. §§ 185,187 (action for breach o f  CBA or 
for unfair labor practices); FLSA, 29 U.S.C. § 216(b) (action for violations 
o f  wage and hour laws).

,0The Court noted in Wright v. Universal Maritime Service Corp., 
525 U.S. 70 ,78 n. 1 (1998), that the Fourth Circuit holds that the FAA does 
not apply to labor contracts. At least five federal courts o f  appeals so hold, 
even with contracts outside the transportation industry. See, e.g., Posadas 
de Puerto Rico v. Association de Empleados, 873 F.2d 479, 482 (1st Cir. 
1989) (hotels); Domino Sugar Corp. v. Sugar Workers Local 392, 10 F.3d 
1064,1067(4thCir. 1993)(sugargrowers);In t’lUnionofElectrical, Radio 
& Machine Workers v. Ingram Mfg. Co., 715 F.2d 886,889 (5th Cir. 1983),



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and unknown transformation on this line of cases.

In the half-century since the re-enactment of the FAA, the 
federal role in employment matters has continued to widen. 
The legislative response to the 1960’s civil rights movement 
blossomed into a series of statutes dedicated to the elimination 
of employment discrimination. See, e.g., Age Discrimination 
in Employment Act, 29 U.S.C. §§ 621 et seq.; Title VII o f the 
Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq.', Ameri­
cans With Disabilities Act, 42 U.S.C. §§ 12101 et seq. 
Employee benefits were also mandated and regulated on a 
national level during this period. See, e.g., Employee Retire­
ment Income Security Act, 29 U.S.C. §§ 1001 et seq. ', Family 
and Medical Leave Act, 29 U.S.C. §§ 2601 et seq.; Black Lung 
Benefits Act, 30 U.S.C. §§ 901 et seq. Each of these statutes 
created private rights of action. Before Gilmer, the lower 
courts viewed such statutes as the reserve of the judiciary and 
refused to compel arbitration of those claims.11 This view 
found support in the Court’s unanimous decision in Alexander 
v. Gardner-Denver Co., 415 U.S. 36 (1974).

B. In Non-Union Settings, Statutory Claims Are In­
creasingly Subjected to Unregulated Arbitration 
Schemes

The labor market quickly flooded with arbitration policies

cert, denied, 466 U.S. 928 (1984); Occidental Chemical Corp. v. Int’l 
Chemical Workers Union, 853 F.2d 1310, 1315 (6th Cir. 1988) (chemical 
workers); United Food and Commercial Workers, Local Union No. 7R v. 
Safeway Stores, Inc., 889 F.2d 940, 943 (10th Cir. 1989) (supermarkets).

"See, e.g., Utley v. Goldman Sachs & Co., 883 F.2d 184,187 (1st 
Cir. 1989), cert, denied, 493 U.S. 1045 (1990); Nicholson v. CPC Int’l, 877 
F.2d 221, 227 (3d Cir. 1989); Swenson v. Management Recruiters In t’l, 
Inc., 858 F.2d 1304, 1306-07 (8th Cir. 1988).



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in the wake o f Gilmer,12 often appearing as boilerplate in job 
applications such as at Circuit City (J.A. 12-17).13 These 
provisions are especially pernicious in low-wage, entry level 
jobs, where the applicant or employee has no bargaining power 
and lacks the legal sophistication even to know what to bargain 
about.14 Arbitration has long been used at union shops as a 
substitute for strikes, (Textile Workers, 353 U.S. at 455), but 
unions, unlike individuals, know the dangers to avoid.

Since Gilmer, federal courts have become the beachhead of 
employers’ nationwide campaign to privatize the resolution of 
employment disputes. In this case, plaintiff sued in state court 
under California’s Fair Employment and Housing Act, C a l . 
G o v ’t  C o d e  § 12900 et seq. (West 2000). This is the sort of 
legislation Congress meant to foster when it adopted the Civil

nSee, e.g., Jenny Strasburg, Proceeding Under Fire, S. F. 
E x a m in e r , April 30,2000 at B 1 (American Arbitration Association reports 
in 1999 having heard 1,950 employment arbitration cases nationally, 950 
stemming from imposed arbitration policies and 300 involving Title VII 
claims); Michael A. Verespej, Sidestepping Court Costs, INDUSTRY Week, 
Feb. 2 ,1998, at 68 (more than 400 employers, with a combined 4.5 million 
employees, have subscribed to some form o f alternative dispute resolution 
for employment claims, mostly within the past two years); Leslie Kaufman 
and Anne Underwood, Sign or Hit the Street, NEWSWEEK, June 30, 1997, 
at 48 (noting that employers such as ITT, JCPenney, Brown & Root, and 
Renaissance Hotels adopted arbitration systems for employment disputes).

13With no little irony, Circuit City notifies applicants that they 
“may wish to seek legal advice before signing ,” (J.A. 14) despite the folly 
in telling job aspirants to retain counsel before submitting a job application.

14 See EEOC v. Waffle House, Inc., 193 F.3d 805, 816 (4th Cir. 
1999), petition fo r cert filed, 68 U.S.L.W. 3726 (May 1, 2000) (No. 99- 
1823) (King, J., dissenting) (employee who signed arbitration “agreement” 
was $5.50-an-hour grill operator);Penn v. Ryan’sFamilySteakhouses, Inc., 
95 F. Supp. 2d 940, 941 (N.D. Ind. 2000) (waiter at chain restaurant); 
Shelter by Shelter v. Frank’s Nursery & Crafts, Inc., 957 F. Supp. 150,154  
(N.D. 111. 1997) (teenage cashiers). Cf Gilmer, 500 U.S. at 33 (broker was 
sophisticated “businessman”).



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Rights Act.15 California Federal S. & L. Assn. v. Guerra, 479 
U.S. 272, 282-3 (1987) (noting “the importance Congress 
attached to state antidiscrimination laws in achieving Title 
VTTs goal of equal employment opportunity”). Indeed, under 
California law, the DRA was likely unenforceable because of 
its limits on remedies and discovery. Armendariz v. Founda­
tion Health Psychcare Serv., Inc., No. S075942, 2000 WL 
1201652 (Cal. Aug. 24, 2000) (Mosk, J.). Circuit City re­
sponded with a federal-court action to enforce the DRA.

Despite Congress’s express solicitude toward state civil 
rights enforcement, employers now use imposed arbitration 
policies as a shield against those very state laws, as well as 
other state employee welfare statutes.16 The FAA has been 
held to preempt all contrary state laws regarding arbitration, so 
all state employee-protective statutes (even those that specifi­
cally preclude arbitration of employees’ claims)17 * must bend to 
federal supremacy. See, e.g., Doctor’s Associates, Inc. v.

]5See 42 U.S.C. § 2000e-5(b) to -5(f) (EEOC cooperation with 
State and local authorities); 42 U.S.C. § 2000e-7 (“[njothing in this 
subchapter shall be deemed to exempt or relieve any person from any 
liability, duty, penalty, or punishment provided by any present or future law 
o f any State or political subdivision o f  a State . . .”); 42 U.S.C. § 2000h-4 
(disclaiming Congressional intent “to occupy the field in which any such 
title operates to the exclusion o f  State laws on the same subject matter”)

16See, e.g., Miller v. Public Storage Management, Inc., 121 F.2d 
215,219 (5th Cir. 1997) (anti-retaliation claim); Strawn v. AFC Enterprises, 
Inc., 70F. Supp. 2d 717,727-28 (S.D. Tex. 1999) (workers’ compensation); 
Young v. Prudential Ins. Co. o f  America, 297 N  J. Super. 605, 622, 688 
A.2d 1069,1079 (App.Div.) (whistleblower statute), cert, denied, 149 N J. 
408, 694 A.2d 193 (1997); Stirlen v. Supercuts, Inc., 51 Cal. App. 4th
1519, 1525, 60 Cal. Rptr. 2d 138, 140 (1997) (labor code).

11 See generally Brief o f  the States o f  California, etc. as Amici 
Curiae in Support o f Respondent (setting forth state laws barring or limiting 
arbitration o f  employment law claims).



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Casarotto, 517U.S. 681,687 (1996). It has even been invoked 
to prevent a state civil rights agency from enforcing state law.18

Under federal law, the effects of imposed arbitration have 
been most pronounced in civil rights cases (e.g. Title VII, 
ADA, ADEA), but have also touched other statutes.19 Its use 
intrudes upon a joint public/private mechanism for enforcing 
Title VII rights crafted by Congress. This joint mechanism (1) 
authorizes the EEOC to investigate and conciliate claims of 
discrimination, to interpret the law (42 U.S.C. §§ 2000e-5(b) 
and 2000e-12) and to litigate claims (id. § 2000e-5(f)(l)); (2) 
grants the Justice Department enforcement authority (id. §§ 
2000e-5(f)(l) and 2000e-6); and (3) establishes a private right 
of action (id. § 2000e-5(f)(l)).20

This deliberate structure does not contemplate imposition 
of arbitration. Congress in 1991 authorized arbitration of 
discrimination claims “where appropriate” in the Civil Rights 
Act of 1991,21 but never endorsed imposed arbitration policies

! 8In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Nixon, 210F.3d  
814, 818-19 (8tb. Cir. 2000), petition for cert, filed, August 25, 2000 (No. 
00-317) the employer successfully enjoined, under the FAA, the Missouri 
Commission on Human Rights from proceeding with administrative action 
under state law on behalf o f an employee who signed a Form U-4 to obtain 
monetary or equitable relief.

]9See, e.g., Floss v. Ryan’s Family Steak Houses, Inc., 211 F.3d 
306, 313 (6th Cir. 2000) (FLSA); Williams v. Imhoff, 203 F.3d 758, 767 
(10th Cir. 2000) (ERISA); Koveleskie v. SBC Capital Markets, Inc., 167 
F.3d 361, 369 (7th Cir. 1998) (Equal Pay Act); Jones v. Fujitsu Network 
Commun., Inc., 81 F. Supp. 2d 688, 693 (N.D. Tex. 1999) (FMLA); Shaw 
v. D U  Pershing, 78 F. Supp. 781, 782 (N.D. 111. 1999) (Section 1981).

20 EEOC NOTICE, N o . 915.002, Policy Statement on Mandatory 
Binding Arbitration o f  Employment Discrimination Disputes as a Condition 
o f Employment (July 10,1997) (http://www.eeoc.gov/docs/mandarb.html).

)

21The amendment authorizes, but does not require, alternative

http://www.eeoc.gov/docs/mandarb.html


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such as Circuit City’s, particularly unregulated schemes that 
seek to shield employers from the remedies enacted by Con­
gress.22 While this Court declined conclusively to interpret 
these provisions of the Civil Rights Act of 1991 in Wright v. 
Universal Maritime Service Corp., 525 U.S. 70,82 n.2 (1998), 
it declined to find an arbitration clause in a CBA, stating that 
“absent a clear waiver, it is not ‘appropriate’. . . to find an 
agreement to arbitrate.” Congress’s insistence upon “appro­
priate” dispute resolution demands something more than 
acquiescence to imposed, unregulated arbitration policies.

III. Arbitration Programs Are Often Crafted to Re­
lieve Employers of Legal Burdens, Rather than to 
Provide Employees a Fair Opportunity to Vindi­
cate Substantive Rights

The FAA does not define“arbitration,” but a respected 
treatise describes it as a ‘“ simple proceeding voluntarily chosen 
by the parties who want a dispute determined by an impartial 
judge of their own mutual selection, whose decision, based on 
the merits o f the case, they agree in advance to accept as final 
and binding.’” Elkouri & Elkouri, How Arbitration 
Works, 5th Ed. at 2 (BNA 1996) (citation omitted). The

dispute resolution (including arbitration) under Title VII, ADEA and the 
ADA. Pub. L. No. 102-166, § 1 1 8 ,105Stat. 1071,1081 (1991); 42 U.S.C. 
§ 12212 (“where appropriate and to the extent authorized by law, . . . 
arbitration. . .  is encouraged to resolve disputes arising under” these acts).

22The Ninth Circuit interprets these provisions affirmatively to 
preclude imposed arbitration under Title VII. Duffield v. Robertson 
Stephens & Co., 144 F.3d 1182,1190 (9th Cir.), cert, denied, 525 U.S. 982 
(1998). That court so far stands alone in its view. See, e.g., Desiderio v. 
Nat’l Assoc, o f  Securities Dealers, 191 F.3d 198, 203-06 (2d Cir. 1999); 
Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1,11 
(1st Cir. 1999); Seus v. John Nuveen & Co., 146 F.3d 175, 183 (3d 
Cir. 1998), cert, denied, 525 U.S. 1139 (1999).



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reality in the workplace is far different. There is no sign that 
the FAA was meant to shield anything labeled “arbitration” 
regardless of voluntariness, impartiality, and fidelity to the law.

The Gilmer Court expected that arbitration would constitute 
only a change in forum, presuming that parties would ‘“not 
forgo the substantive rights afforded by the [ADEA].’” Gilmer, 
500 U.S. at 26 (quoting Mitsubishi Motors Corp. v. Soler 
Chrysler-Plymouth, Inc., 473 U.S. 614,628 (1985)). Support­
ers of arbitration thought that fair procedures would attract 
employees, leading to speedy resolutions.23 The Court left to 
future, case-by-case development whether particular arbitral 
fora afforded employees a fair opportunity to present claims 
and obtain remedies. Id. at 31-32.

Contrary to these expectations, though, employers like 
Circuit City have subverted the concept of arbitration to pursue 
an agenda inimical to civil rights. The judicial task of policing 
these arbitrations is immense, given the employers’ over­
whelming temptation to draft their policies in a way that gives 
them an “edge” and limits their risk even if an employee 
manages to win, and in the absence of any administrative body 
with authority to curb such abuses. Employers are forcing 
workers to bear the costs of arbitration, suffer shortened periods 
of limitations, surrender rights to damages and attorneys’ fees,

23 George Nicolau, past president o f the National Academy o f  
Arbitrators, observed that a voluntary arbitration system living up to the 
promise o f  Gilmer would attract employees who desired a prompt, 
inexpensive hearing of their claims. George Nicolau, Gilmer v. 
Interstate/Johnson Lane Corp.: Its Ramifications and Implications for  
Employees, Employers and Practitioners, 1 U.Pa. J. o f Lab. and Employ. 
Law 175,189-90 (1998). See also Ashlea Ebeling, Better Safe Than Sorry, 
FORBES,Nov. 30,1998, at 162 (voluntary program for 65,000 United Parcel 
Service employees led to 197 claims, 75% resolved in program, and no 
lawsuits.)



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or proceed under one-sided rules.24 Such abuses led the 
National Academy o f Arbitrators in 1997 to urge abandonment 
of imposed pre-dispute arbitration for employment discrimina­
tion claims.25 Without regulatory safeguards, an “agreement” 
to arbitrate becomes an impermissible prospective waiver of 
civil rights. Alexander, 415 U.S. at 51-52 (Title VII rights “not 
susceptible of prospective waiver”).

Even if  courts oversee arbitrations, employees face an 
expensive, uphill battle to enforce their rights. Those wishing 
to challenge agreements must hire counsel, spend money, and 
endure extensive, extra-merits litigation just to win the right to 
start all over again in court. This runs contrary to the mandate 
of Title VII to expedite litigation of claims, and to waive filing 
fees, appoint counsel, and pay for attorneys’ fees so that the

“ Commentators have written widely about the expansion o f  
arbitration in the civil rights arena. See, e.g., Reginald Alleyne, Statutory 
Discrimination Claims: Rights "Waived” and Lost in the Arbitration 
Forum, 13 HofstraLab. L. J. 381 (1996); Joseph R. Grodm, Arbitration o f  
Employment Discrimination Claims: Doctrine and Policy in the Wake o f  
Gilmer, 14 Hofstra Lab. L. J. 1 (1996); Harry T. Edwards, Where Are We 
Heading with Mandatory Arbitration o f Statutory Claims in Employment, 
16 Ga. St. U.L.Rev. 293 (1999); Eduard A. Lopez, Mandatory Arbitration 
o f Employment Discrimination Claims: Some Alternative Grounds for Lai, 
Duffield and Rosenberg, 4 Employee Rts. & Employment Pol’y J. 101 
(2000); Geraldine Szott Moohr, Arbitration and the Goals o f  Employment 
Discrimination Law, 56 Wash. & Lee L. Rev. 395 (1999); Katherine Van 
W ezel Stone, Mandatory Arbitration o f  Individual Employment Rights: The 
Yellow Dog Contracts for the 1990s, 73 Denv. U. L. Rev. 1017 (1996); 
Stephen J. Ware, Default Rules from Mandatory Rules: Privatizing Law 
Through Arbitration, 83 Minn. L. Rev. 703, 719-25 (1999).

25Statement oftheNAA on Individual Contracts o f  Employment and 
Guidelines on Arbitration o f  Statutory Claims Under Employer- 
Promulgated Systems, May 21, 1997 (http://www.naarb.org/
guidelines.html) (opposing “mandatory employment arbitration as a 
condition o f  employment when it requires waiver o f  direct access to either 
a judicial or administrative forum for the pursuit o f  statutory rights”).

http://www.naarb.org/


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courts will be open to victims who could not otherwise afford 
to litigate their claims. See 42 U.S.C. § 2000e-5(f)(5).

Preemptive litigation may even be instigated by the 
employer. The Lawyers’ Committee once represented a female 
employee at a Hooters restaurant, Annette Phillips, who was 
sued by her employer (the parent company, Hooters of Amer­
ica, or “HO A”) for declaratory judgment to enforce its corpo­
rate arbitration policy against her then-pending sexual harass­
ment claim. HOA filed its complaint on November 4, 1996. 
Hooters o f  America, Inc. v. Phillips, 39 F. Supp. 2d 582, 588 
(D.S.C. 1998). HOA moved for a preliminary injunction to 
restrain Phillips from filing any state or federal court action 
relating to her former employment, and to compel arbitration 
of her claims under the FAA, 9 U.S.C. § 4. Id. After briefing 
described as “extensive” and “voluminous” by the district 
judge (id. at 591), there followed discovery and a three-day 
evidentiary hearing, including expert witnesses testifying about 
the standards of fairness in arbitration and the operation and 
relative fairness o f Hooters’ arbitration agreement (id. at 592- 
93). Extensive findings in Phillips’ favor were entered on 
March 12, 1998. Id. Over a year later, on April 8, 1999, the 
Fourth Circuit affirmed, in an opinion that excoriated the 
company’s program as “utterly lacking in the rudiments of 
even-handedness.” Hooters o f America v. Phillips, 173 F.3d 
933, 935 (4th Cir. 1999).26 Thus, it took two and a half years

26The Fourth Circuit affirmed findings o f  the district court that 
Hooters’ mles allowed the employer exclusively to (1) avoid filing any 
written response to the employee’s claim, (2) avoid disclosing its witnesses, 
(3) control the list o f  arbitrators, (4) expand the scope o f the arbitration to 
include new claims against the employee, (5) move for summary judgment, 
(6) create a record at the arbitration, (7) bring suit in court to overturn the 
award based on a preponderance o f the evidence, (8) cancel the arbitration 
agreement on 30 days notice, and (9) modify the procedures immediately 
without notice to the employee. Hooters, 173 F.3d at 938-39.



-16-

of hammer-and-tongs litigation just to restore the employee’s 
right to bring a Title VII action.

Arbitration of employment law claims is distinctive. There 
is usually no union to safeguard the process. Unlike arbitration 
of claims in the securities field, as in Gilmer—regulated by the 
SEC (15 U.S.C. § 78s; Shearson/American Express Inc. v. 
McMahon, 482 U.S. 220, 233-34 (1987))—there is no over­
arching federal executive authority to oversee arbitration and 
no self-regulatory organizations authorized by statute. And 
unlike arbitration in the commercial and consumer fields, there 
is a certain predestination to employment cases: people can 
often avoid entering into installment contracts or buying 
software, but nearly every grown person has to work.

A. Employers Often Impose Arbitration Policies 
Without Employees’ Knowing and Voluntary 
Consent

Employers usually impose arbitration unilaterally, by 
distributing employment manuals or written policies with 
arbitration provisions. Circuit City obtains its employees’ 
“consent” to the DRA by making them sign an acknowledg­
ment at the same time they apply for a job.27 Some employers 
even conceal the details of the arbitration policy and fail to 
inform employees what rights they may be waiving.28

27 “Circuit City does not consider an application for employment 
unless the Dispute Resolution Agreement is signed.” (Affid. o f  Pamela G. 
Parsons, Assoc. General Counsel to Circuit City, J.A. 11.) See also Smith 
v. Chrysler Financial Corp., 101 F. Supp. 2d. 534, 537 (E.D. Mich. 2000) 
(arbitration policy described in brochure mailed to 18,000 employees); 
McClendon v. Sherwin Williams, Inc., 70 F. Supp. 2d 940, 943 (E.D. Ark. 
1999) (arbitration policy “communicated to employees by dissemination o f  
the [employee] handbook,” and employee accepted policy “by continuing 
to stay on the job”).

See Rosenberg, 170 F.3d at 19-20 (employer falsely certified28



-17-

Courts in some cases have declined to enforce such 
imposed arbitration. In Bailey v. Federal Nat 7 Mortgage 
Assoc., 209 F.3d 740 (D.C. Cir. 2000), the court held that the 
plaintiff had not consented to arbitrate under the employer’s 
new policy where he expressly disaffirmed it in writing shortly 
after the policy was adopted. The court looked askance at the 
argument that the employee accepted the policy by remaining 
in the defendant’s employ, doubting that an employer “could 
terminate a current employee solely because of his or her 
refusal to accept the new arbitration policy.” Id. at 746. In 
Kummetz v. Tech Mold, Inc., 152 F.3d 1153, 1155 (9th Cir. 
1998), the court reversed summary judgment, finding that the 
policy in question made no explicit reference to arbitration or 
waiver and consigned the details of the program to a separate 
publication.29 Yet other courts have upheld such policies, 
substituting the fictitious “consent” of continuing to work.30

Courts have also split over whether relinquishment of the 
federal judicial forum and jury right31 requires a knowing and

to court that it provided employee with a copy o f NYSE mles); Hooters, 39 
F. Supp. 2d at 611-12 (rules not disclosed). Circuit City’s application (J.A. 
13-18) nowhere declares those legal rights (such as rights to a jury trial, 
attorneys’ fees, discovery, and damages) sacrificed by the DRA.

29See also Smith, 101 F. Supp. 2d at 539 (no mutual assent to 
policy); Phillips v. Cigna Investments Inc., 27 F. Supp. 2d 345,353-59 (D. 
Conn. 1998) (employee didnotlose legitimate expectation to judicial forum 
by continuing to work after employer promulgated arbitration policy).

2,0Bishop v. Smith Barney, Inc., No. 97 CIV. 4807(RWS), 1998 WL 
50210 (S.D.N.Y. Feb. 6, 1998) (enforcing arbitration clause in employee 
manual without individual assent; written company policy sufficient under 
FAA); Leonard v. Clear Channel Communications I, No. 972320-D/A, 
1997 WL 581439 (W.D. Tenn. July 23, 1997) (enforcing unsigned, 
unacknowledged arbitration agreement in employment manual).

31 See, e.g., 29 U.S.C. § 626(c)(2) (jury trial authorized for ADEA  
cases); 42 U.S.C. § 1981a(c)(jury trial for Title VIIandADA cases seeking



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voluntary waiver, or is governed instead by ordinary contract 
principles. Some circuits have applied a contract standard, 
holding that arbitration must be compelled except in cases 
tainted by fraud or coercion,32 while other circuits remain on 
the fence.33 But the Ninth Circuit, in Prudential Insurance 
Company o f America v. Lai, 42 F.3d 1299, 1304-5 (9th Cir. 
1994), cert, denied, 516U.S. 812 (1995), held that the “text and 
legislative history of Title VII” required that an employee 
“knowingly agree[] to submit such disputes to arbitration.”34

The knowing and voluntary standard follows from the 
standard applied generally to the waiver of a civil jury trial.35 
A waiver standard also comports with the history of the Civil 
Rights Act of 1991. Section 118 of the Act approves, “[wjhere 
appropriate and to the extent authorized by law, the use of 
alternative means of dispute resolution, including,. . .arbitra­

compensatory or punitive damages).

32See, e.g., Patterson v. Tenet Healthcare, Inc., 113 F.3d 832,834- 
35 (8th Cir. 1997); Great Western Mortgage Corp. v. Peacock, 110 F.3d 
222, 229-30 (3d Cir. 1997).

33Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 
F.3d 1,18 (1st Cir. 1999); Halligan v. Piper Jaffrey Inc., 148 F.3d 197,203  
(2d Cir. 1997); Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 
1126, 1129-30 (7th Cir. 1997).

24See also Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756, 
760-61 (9th Cir. 1997) (applying Lai to ADA), cert, denied, 523 U.S. 1072 
(1998); Hooters, 39 F. Supp. 2d at 612 (applying knowing and voluntary 
standard); Penn, 95 F. Supp. 2d at 950.

35See Aetna Ins. Co. v. Kennedy, 301 U.S. 389,393 (1937) (“as the 
right o f  jury' trial is fundamental, courts indulge every reasonable 
presumption against waiver”); KMC Co. v. Irving Trust Co., 757 F.2d 752, 
756 (6th Cir. 1985) (courts “overwhelmingly appl[y] the knowing and 
voluntary standard” to determine “the validity o f  a contractual waiver o f  [a 
civil] jury trial”); Grodin, supra note 12, at 36-9; Lopez, supra note 12 at 
127-34.



-19-

tion.”36 The Seventh Circuit interpreted this provision in 
Pryner v. Tractor Supply Co., 109 F.3d 354, 363 (7th Cir.), 
cert, denied, 522 U.S. 912 (1997), to hold that arbitration 
would not be “appropriate when it is not agreed to by the 
worker but instead is merely imposed” by a CBA. The Pryner 
court took a page from history, observing that “by being forced 
into binding arbitration [employees] would be surrendering 
their right to trial by jury—a right that civil rights plaintiffs . . .  
fought hard for and finally obtained in the 1991 amendments to 
Title VII.” Id. at 362. Wright left this question open.

B. Excessive Fees Deter Claims
Employers often try to shift some or all of the costs of 

arbitration to the complaining party. Rule 30 of Circuit City’s 
DRA requires the parties to split fees 50-50 and authorizes the 
arbitrator to shift all arbitration fees and costs to the losing side. 
J.A. 33-34.37 The prospect that an employee might have to

36See also H.R. Rep. No. 102-40, Part I, 102d Cong. 1st Sess., 
reprinted in 1991 U.S.C.C.A.N. 549, 635 (stating that this section was 
“intended to supplement, not supplant, the remedies provided by Title 
VII”); 42 U.S.C. § 12212 (same provision for the ADA).

37 Compare Fed. R. Civ. P. 54(d)(1) and 28 U.S.C. § 1920 
(authorizing shifting o f  narrowly enumerated costs). Arbitration costs can 
be steep. See, e.g., Duffield v. Robertson Stephens & Co. (9th Cir), Docket 
No. 97-15687, Appellant’s Opening Brief at 34-36 (record o f proceeding 
established that arbitrators in the securities field charge fees starting from 
$ 1000 per half-day, mounting up to $82,800 in one complex case, and such 
fees are imposed on each party.) Colev. Bums Int 7 Security Services, 105 
F.3d 1465, 1480 n.8 (D.C. Cir. 1997) (noting estimates for arbitrators fees 
inatypical employment case from $3,750 to$14,000); Campbellv. Cantor 
Fitzgerald & Co., 21 F. Supp. 2d 341,345 (S.D.N.Y. 1998), aff’d, 205 F.3d 
1321 (2d Cir. 1999) (after thirty sessions over sixteen months, arbitrators 
rule against employee without written explanation and assessed employee 
$45,000 in hearing fees); Alleyne, supra note 12, at 410-11 (noting that 
arbitrators fees can run from hundreds to thousands o f  dollars); Edwards, 
supra note 12, at 306-07 (citing arbitrations where fees ran into tens o f



-20-

deposit, on demand, thousands o f dollars just for the privilege 
of arbitrating a claim will assuredly deter claims.38

Some courts bar companies from charging forum costs to 
the employee, striking down such agreements entirely.39 Others 
simply sever such provisions from the agreement.40

Yet other circuits take the position that fee-splitting does 
not, standing by itself, invalidate an arbitration policy.41 As the

thousands o f  dollars).

38 See, e.g., Armendariz v. Foundation Health Psyehcare Serv., 
Inc., No. S075942,2000 WL 1201652 (Cal. Aug. 24,2000) (“[t]he payment 
o f  large, fixed, forum costs, especially in the face o f  expected meager 
awards, serves as a significant deterrent to the pursuit o f  [civil rights] 
claims”).

39 See, e.g., Shankle v. B-G Maintenance Mgt. o f  Colorado, Inc., 
163 F.3d 1230, 1234-34 (10th Cir. 1999) (contract requiring plaintiff to 
shoulder one-half o f  arbitrator’s fee, between $1,875 and $5,000, held 
unenforceable); Paladino v. Avnet Computer Technologies, Inc., 134 F.3d 
1054,1062 (1 1th Cir. 1998) (refusing to compel arbitration under contract 
that imposed “hefty” arbitration costs and “steep filing fees” on employee); 
Davis v. LPK Corp., 76 Fair Empl. Prac. Cas. (BNA) 954 (N.D. Cal. 1998) 
(invalidating agreement where employee had to bear one-half o f  the 
arbitrator’s fee).

40 See, e.g., Fuller v. Pep Boys — Manny, Moe & Jack o f  
Delaware, Inc., 88 F. Supp. 2d 1158, 1162-63 (D. Colo. 2000); Jones v. 
Fujitsu Network Commun., Inc., 81 F. Supp. 2d 688,693 (N.D. Tex. 1999). 
Still others interpret the offending sections equitably to relieve the 
employee’s burden. See, e.g., Cole, 105 F.3dat 1485 (court interprets fees 
provision from agreement to apply only to employer); McWilliams v. 
Logicon, Inc., No. CIV. A. 95-2500-GTV, 1997 WL 383150, at *2 (D. Kan. 
June 4, 1997) ($1,300 fee shifted to employer), affd, 143 F.3d 573 (10th 
Cir. 1998).

41 See, e.g., Williams v. Cigna Financial Advisors Inc., 197F.3d 
752, 763 (5th Cir. 1999), cert denied, 120 S.Ct. 1833(2000). (approving 
apportionment o f one-half o f  forum fees, $3,150, on employee); Rosenberg 
v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1, 16 (1st Cir. 
1999) (holding that prospect o f fee-splitting did not render policy



-21-

D.C. Circuit held in Cole, 105 F.3d at 1485, a plaintiff “could 
not be required to agree to arbitrate his public law claims as a 
condition o f employment if the arbitration agreement required 
him to pay all or part of the arbitrator’s fees and expenses.” 
Indeed, “there is no reason to think that the [Gilmer] Court 
would have approved a program of mandatory arbitration of 
statutory claims . . .  in the absence of employer agreement to 
pay arbitrator’s fees.” Id. at 1468.

This Court recently granted certiorari in Green Tree 
Financial Corp.-Alabama v. Randolph,ITS, F.3d 1149 (11th 
Cir. 1999), cert, granted, 120 S. Ct. 1552 (2000), a case raising 
the fee issue under the Truth in Lending Act, 15 U.S.C. § 1601 
et seq. and the Equal Credit Opportunity Act, 15 U.S.C. § 1691 
et seq. The loan company admitted that decisions regarding 
apportionment fees and costs would be entirely in the discretion 
of the arbitrator, and such uncertainty led the court below to 
find the arbitration clause unenforceable. To require a plaintiff, 
especially an impecunious one, to amass a reserve of thousands 
of dollars just to commence a claim sacrifices substantive 
rights, and would lead to the wholesale abandonment of claims. 
How much worse, then, are policies such as Circuit City’s that 
explicitly shift the burden to employees?

C. Employers Have Revoked Legal Remedies
In Gilmer, the Court particularly noted that the New York 

Stock Exchange (“NYSE”) rules did “not restrict the types of 
relief an arbitrator may award.” 500 U.S. at 32. See also 
Desideriov. N at’l Assoc, o f Securities Dealers, 191 F. 3d 198, 
205 (2d Cir. 1999), petition fo r cert filed, 68 U.S.L.W., 3497 
(Jan. 31, 2000)(No. 99-1285) (reaffirming need for full set of

unenforceable); Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361,362  
(7th Cir. 1999) (allowing fee-splitting).



-22-

statutory remedies under Title VII in arbitration). A full 
panoply o f remedies and statutory safeguards are essential to 
deter and remedy employment discrimination. Albemarle 
Paper Co. v. Moody, 422 U.S. 405, 416 (1975) (remedies 
available under Title VII constitute a “complex legislative 
design directed at an historical evil of national proportions”).

Yet employers have sought to whittle down statutory 
remedies through artful and unequal crafting o f arbitration 
agreements. Circuit City’s DRA caps back pay and punitive 
damage awards below federal limits (J.A. 35-36); makes the 
award of attorneys’ fees wholly within the discretion of the 
arbitrator42 (J.A. 34-35); and chops down the limitations period 
to one year (J.A. 23-24). Other employers have likewise limited 
employees’ remedies.43

Indeed, Circuit City's decision to cap the limitations period 
at one year regardless of the claim directly implicates the 
employees' substantive rights. Employer torts and statutory 
violations can carry longer statutes of limitations.44 In Mr.

42See Alyeska Pipeline Service Co. v. The Wilderness Society, 421 
U.S. 240,261 n.34 (1975) (noting that under section 16(b) oftheFLSA, 29 
U.S.C. § 216(b), which also governs ADEA, award o f fees to prevailing 
party is “mandatory”); Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 
416-417 (1978) (under § 706(k) o f  Title VII a prevailing plaintiff ordinarily 
is to be awarded attorney’s fees in all but very unusual circumstances).

42See Paladino, 134 F.3d at 1060-62 (policy provides only for 
contract damages); Hooters, 39 F. Supp. 2d at 612 (policy prevented full 
recovery o f  damages and attorneys fees); DeGaetano v. Smith Barney, Inc., 
983 F. Supp. 459,464-70 (S.D.N.Y. 1997) (policy barred award o f  statutory 
attorneys’ fees); Alcaraz v. Avnet, Inc., 933 F. Supp. 1025, 1027-28 
(D.N.M. 1996) (policy did not provide frill range o f  Title VII damages).

44 See, e.g., Wetzel v. Lou Ehlers Cadillac Group Long Term 
Disability Ins. Pgm., 2000 WL 1022713 (9th Cir. July 26,2000) (en banc) 
(four-year statute o f  limitations for actions on written contract applies to 
ERISA action to recover disability benefits under written contractual policy



-23-

Adams' case, he would not necessarily have been required to 
commence a FEHA action within a year, because the timely 
filing of a charge tolls the limitations period. EEOCv. Farmer 
Bros. Co., 31 F.3d 891, 902 (9th Cir. 1994) (limitations period 
for plaintiffs FEHA claim tolled for more than four years 
during EEOC's investigation). But the DRA trumps all such 
rules. See Stirlen v. Supercuts Inc., 51 Cal. App. 4th 1519, 
1542,60 Cal. Rptr. 2d 138 (IstDist. 1997) (finding comparable 
one-year limitation on employees' claims under arbitration 
agreement unconscionable under California law).

Courts have even given tacit approval to this approach, 
determining that such terms—despite falling short of statutory 
norms—may be enforced by an arbitrator. In Great Western 
Mortgage Corp. v. Peacock, 110 F.3d 222 (3d Cir. 1997), the 
arbitration agreement included provisions waiving the em­
ployee’s right to attorneys fees and punitive damages. The 
court referred the matter to arbitration to determine whether the 
plaintiff had agreed to abandon statutory rights. Id. at231-32.45

By referring these matters to arbitration, these courts may 
have simply deferred litigation until the time to enforce the 
award, contrary to the expectation that arbitration should afford 
prompt and inexpensive relief. Pryner, 109 F.3d at 362 (noting 
the “spectre” o f satellite litigation). The promise of such review 
may prove ephemeral, as we shall see in section E below.

in California).

45 See also Seus v. John Nuveen & Co., Inc., 146 F.3d 175,187- 
88 (3d Cir. 1998) (reserving disputes over alleged inadequacies or 
unfairness of agreement to arbitrator); Rojas v. TK Communications, Inc., 
87 F.3d 745, 749 (5th Cir. 1996) (directing ADEA plaintiff to pursue his 
unconscionability claim with the arbitrator); Kinnebrew v. Gulf Insurance 
Co., 67 Fair Empl. Prac. Cas. (BNA) 189,191 (N.D. Tex. 1994) (referring 
claim to arbitration under policy that bars punitive damages, injunctive 
relief and attorneys fees).



-24-

The Gilmer Court also assumed that the EEOC would be 
available as a backstop to private arbitration policies. “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.” 
Gilmer, 500 U.S. at 28. But some courts hold that arbitration 
policies preclude (in varying degrees) even the government 
from obtaining relief on behalf of the employee.46

Against these cases, the Sixth Circuit has held that an 
arbitration agreement has no collateral effect on the EEOC and 
that it may independently seek to vindicate and remedy 
violations of civil rights.47 This Court has already noted that 
the Commission represents the public at large, not individual 
victims of alleged discrimination in its suits. General Tel. Co. 
o f the Northwest, Inc. v. EEOC, 446U.S. 318,326 (1980). The 
Court should avoid an interpretation of the FAA that derogates 
the EEOC’s and parallel state civil rights agencies’ independ­
ent, public roles in enforcing anti-discrimination laws.

D. Arbitration Often Fails to Provide Fair and Ac­
countable Procedures

Gilmer established that arbitration may substitute for civil

46 See, e.g., Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Nixon, 
210 F.3d 814, 818-19 (8th Cir. 2000) (barring state agency from obtaining 
individual relief for complainant); EEOC v. Waffle House, Inc., 193 F.3d at 
812 (barring EEOC from litigating individual claim unless it was prepared 
to seek “large-scale injunctive relief’ on behalf o f  entire class); EEOC v. 
Kidder, Peabody & Co., Inc., 156 F.3d 298, 302 (2d Cir. 1998) (barring 
EEOC from obtaining monetary damages).

47 EEOCv. Frank’s Nursery & Crafts, Inc., 177 F.3d 448,458-59  
(6th Cir. 1999). See also Circuit City Stores, Inc. v. Shelton, No. l:99-cv- 
561,2000 U.S. Dist. LEXIS 7059 (W.D. Mich. May 16,2000) (dismissing 
company’s petition to compel arbitration where plaintiffs only action was 
to file charge with EEOC).



-25-

litigation only when the arbitral forum affords fundamental 
procedural protections. 500 U.S. at 30-32.48 But as long as 
employers are free to impose arbitration on employees, they 
can pile on onerous terms while shackling employees to them:

1. Employers refuse to bind themselves to procedures that 
employees must follow. Rule 2 of the DRA says that “claims 
o f an [employee] . . .  shall be settled exclusively by final and 
binding arbitration,” but no reciprocal provision applies to the 
company. J.A. 20-21; Johnson v. Circuit City Stores, 148F.3d 
373,378 (4th Cir. 1998) (DRA “ does not appear to require the 
arbitration of any claims Circuit City might have against 
Johnson”).

2. Employers reserve to themselves the power to alter the 
procedures at their discretion. Under DRA Rule 37 (J.A. 37- 
3 8), “Circuit City may alter or terminate the Agreement” at the 
end of each calendar year merely by tendering 30 days’ written 
notice to employees. See also Floss v. Ryan's Family Steak 
Houses, Inc., 211 F.3d 306, 315-16 (6th Cir. 2000) (employer 
“reserved the right to alter the applicable rules and procedures 
without any obligation to notify, much less receive consent 
from,” employees); Hooters, 173 F.3d at 938-39 (same).

3. Absence o f  neutral arbitrators. Gilmer authorized

iZSee A Due Process Protocol for Mediation and Arbitration o f  
Statutory Disputes Arising out o f the Employment Relationship, May 9, 
1995 (http:// www.naarb.org/protocol.html) (signed by representatives o f  
the National Academy o f Arbitrators, the American Arbitration Association, 
the Labor and Employment Law Section of the American Bar Association, 
and other organizations). See also Stephen L. Hayford & Michael J. Evers, 
The Interaction Between the Employment-at-Will Doctrine and Employer- 
Employee Agreements to Arbitrate Statutory Fair Employment Practices 
Claims: Difficult Choices for At-Will Employers, 73 N.C. L. Rev. 443,489- 
90 (1995) (enforceable arbitration system would have to include right to 
counsel, adequate discovery, mutual selection o f arbitrator, ability to call 
witnesses, and anti-retaliation commitment to cooperating witnesses).

http://www.naarb.org/protocol.html


-26-

arbitration against a backdrop of NYSE rules that provided for 
disclosure of the arbitrator’s professional backgrounds, a right 
to strike arbitrators, and a duty upon arbitrators to disclose 
potential conflicts. 500 U.S. at 30. Yet some policies have 
given employers nearly unfettered control over who shall sit as 
arbitrators. See, e.g., Hooters, 173 F.3dat941 (employermade 
up list of arbitrators itself); Penn, 95 F. Supp. 2d at 945-48 
(employer’s agent controlled who appeared on the lists of 
arbitrators).

4. Arbitrary limits on discovery. The NYSE rules under 
review in Gilmer expressly provided for “document production, 
information requests, depositions and subpoenas,” sufficient to 
afford a “fair opportunity” for employees to present their 
claims. 500 U.S. at 31. But other policies have omitted such 
procedures. Circuit City, for instance, authorizes only three 
depositions as opposed to the ten depositions ordinarily 
allowed in Federal court. Compare J.A. 26-27, DRA Rule 
13(b), with Fed. R. Civ. P. 30(a)(2)(A). See also Hooters, 173 
F.3d at 938 (employer had no obligation to provide lists of 
witnesses or respond to plaintiffs written claim); Penn, 95 F. 
Supp. 2d at 948-49 (finding discovery provisions “severely 
limited”). Because employees typically know less about an 
employment decision than the employer itself, arbitrary limits 
on discovery may doom their claims.

5. Secrecy o f arbitration decisions. Arbitration awards are 
typically confidential {see J.A. 31, DRA Rule 23),49 and courts 
have not generally required arbitrators to memorialize their

49See Code o f  Professional Responsibilityfor Arbitrators o f  Labor 
Management Disputes, art. II, § C (l)(c) (making it a “violation o f  
professional responsibility for an arbitrator to make public an award without 
consent o f the parties”), reprinted at Jay E. Grenig, 26 West Legal Forms: 
Alternative Dispute Resolution, App. 11C at 770 (1995).



-27-

findings in writing.50 By contrast, district courts must issue 
findings of fact and conclusions of law as a public record. See 
Fed. R. Civ. P. 52(a).

The publication of decisions in the civil rights field guides 
employees and employers alike about what conduct is lawful.51 
Conversely, cutting off publication of decisions impedes 
voluntary efforts to comply with the law.52

E. Judicial Review of Arbitration Awards Is Minimal

Gilmer recognized that judicial review was a corrective to 
errant arbitrators. 500 U.S. at 30-31. Yet the awards of 
commercial and labor arbitrations, based on interpretation of 
agreements freely bargained by the parties, have long been 
accorded deferential judicial review. See, e.g., United 
Steelworkers, 363 U.S. at 597-99 (where arbitrator’s award 
concerns construction of CB A, court lacks authority to overrule 
the arbitrator’s interpretation); Bernhardt v. Polygraphic Co. o f  
Am., 350 U.S. 198, 203 n.4 (1956) (no review of arbitrator’s

50 See, e.g., United Steelworkers o f  America v. Enterprise Wheel & 
Car Co., 363 U.S. 593,976 n.8 (1960) (“[arbitrators have no obligation to 
the court to give their reasons for an award”); Green v. Ameritech Corp., 
200 F.3d 967, 974-76 (6th Cir. 2000) (affirming award in state law civil 
rights case that lacked findings and conclusions, even though arbitration 
policy expressly required arbitrator to “explain” decision).

51 Gilmer, 500 U.S. at 31-32 (enforcement o f  U-4 would not hurt 
civil rights enforcement because NYSE rules require written and publicly 
available arbitration awards, and because “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”).

52 See Moohr, supra note 12 (stressing the public goal o f  
eradicating employment discrimination over simple goal dispute resolution 
in individual discrimination cases);Van Wetzel Stone, supra note 12, at 
1043-47 (discussing educational function o f civil rights opinions); Adriaan 
Lanni, Protecting Public Rights in Private Arbitration, 107 Yale L. J. 1157, 
1160-61 (1998) (encouraging disclosure of arbitration decisions).



-28-

error in interpreting contract). This area must be reevaluated in 
light of the expansion of imposed arbitration into the civil 
rights arena.

Review of arbitration awards of statutory claims, as the 
Court reminds us, must rise to a level “sufficient to ensure that 
arbitrators comply with the requirements of the statute.” 
McMahon, 482 U.S. at 232. See Gilmer, 500 U.S. at 32 n.4 
(same point in context of ADEA). The proper level of review, 
according to the Court, must be higher in a case reviewing a 
statutory claim than in one reviewing a garden-variety labor 
dispute; in the latter case, arbitrators have “authority only to 
resolve questions of contractual rights.” Id. at 34. See, e.g., 
McDonald v. City o f West Branch, 466 U.S. 284, 290 (1984) 
(rejecting suggestion that arbitration can “provide an adequate 
substitute for a judicial proceeding in protecting the federal 
statutory and constitutional rights that § 1983 is designed to 
safeguard”); Barrentine v. Arkansas-Best Freight Sys., Inc., 450 
U.S. 728, 737 (1981) (“[wjhile courts should defer to an 
arbitral decision where the employee’s claim is based on rights 
arising out of the collective bargaining agreement, different 
considerations apply where the employee’s claim is based on 
rights arising out of a statute designed to provide minimum 
substantive guarantees to individual workers”).

It is widely known that arbitrators often do not apply the 
law and follow their own precepts of fairness. See, e.g, Ware, 
supra note 12, at 719-25 (summarizing empirical research and 
case law supporting this conclusion); Van Wetzel Stone, supra 
note 12, at 1040 (citing Congressional study that most arbitra­
tors in the securities industry had no background in labor and 
employment law). Most arbitrators lack legal training, do not 
keep up with legal developments and lack accountability for 
their decisions. See Edwards, supra note 12, at 297-98.



-29-

Moreover, the degree of scrutiny that awards presently 
receive for legal error is feather-light, curtailing even further 
the incentive to follow the law. Under the FAA, courts may 
only review legal errors for “manifest disregard of the law.” 
First Options o f  Chicago v. Kaplan, 514 U.S. 938, 942 (1995) 
(noting “manifest disregard” standard). Manifest disregard 
focuses not on legal error per se, but on the narrower issue of 
whether the arbitrator deliberately defied the law. Typical is 
the Eleventh Circuit’s recent decision in Montes v. Shear son 
Lehman Brothers, Inc., 128 F.3d 1456,1461 (11th Cir. 1997), 
holding that reversal o f an award for manifest disregard of the 
law requires proof that the arbitrator was “conscious of the law 
and deliberately ignore[d] it.” See also Brown v. ITT Consumer 
Financial Corp., 211 F.3d 1217, 1223 (11th Cir. 2000) 
(reaffirming that application of wrong legal test in race 
discrimination case must be “intentional” or “conscious” to be 
reviewable as “manifest disregard”). Other circuits apply 
equally stingy standards of review.53 If the arbitrator issues no 
written opinion, or a one-sentence award (and thereby leaves no 
record of what legal standards were followed), it leaves nothing 
for the court to review and insulates the award from reversal. 
Ware, supra note 12, at 721 (“[i]n most cases in which an 
arbitrator does not apply the law, it will be virtually impossible

53See, e.g., Williams, 197 F.3d at 761-72 (summarizing law); 
Kieman v. Piper Jaffray Cos., Inc., 137 F.3d 588, 594 (8th Cir. 1998) 
(applying deferential “manifest disregard” standard to civil rights case); 
DiRussa v. Dean Witter Reynolds Inc. ,121 F.3d 818, 821 (2d Cir. 1997) 
(applying deferential standard to affirm award that where employee 
prevailed, but arbitrator awarded no attorneys’ fees), cert, denied, 522 U.S. 
1049 (1998); Glennon v. Dean Witter Reynolds, Inc., 83 F.3d 132,136 (6th 
Cir. 1996) (“[a]n arbitration panel only acts in manifest disregard o f the law 
i f  the applicable legal principle is clear and well-settled and it refuses to 
follow that legal principle”); Chisolm v. Kidder, Peabody Asset Mgt., Inc., 
966 F. Supp. 218, 224-29 (S.D.N.Y. 1997) (rejecting argument for 
heightened scrutiny o f  judicial review in civil rights cases).



-30-

for a court to discover that the arbitrator did not apply the 
law”). Standing against this tide is the approach taken by the 
D.C. Circuit in Cole. While noting that courts ordinarily defer 
to arbitrator’s awards, the court held that the manifest disregard 
standard is somewhat elastic and “must be defined in light of 
the bases underlying the Court’s decisions in Gilmer-type 
cases.” Cole, 105 F.3d at 1487. As the court noted:

The nearly unlimited deference paid to arbitration 
awards in the context of collective bargaining is not 
required, and not appropriate, in the context of em­
ployees’ statutory claims. In this context, the Supreme 
Court has assumed that arbitration awards are subj ect to 
judicial review sufficiently rigorous to ensure compli­
ance with statutory law. [Id. at 1468-69.]

Thus, “there will be some cases in which novel or difficult 
legal issues are presented demanding judicial judgment. In 
such cases, the courts are empowered to review an arbitrator’s 
award to ensure that its resolution of public law issues is 
correct.” Id. at 1487. See Halligan v. Piper Jaffrey Inc., 148
F.3d 197,204 (2d Cir. 1997) (vacating for “manifest disregard” 
award for employer in civil rights case); DeGaetano, 983 F. 
Supp. at 462-64 (failure to award attorneys’ fees to prevailing 
plaintiff after award was requested was in manifest disregard of 
the law).

CONCLUSION
For the foregoing reasons, the undersigned amici respect­

fully request that the judgment of the United States Court of 
Appeals for the Ninth Circuit be affirmed.

Respectfully submitted,



Daniel F. Kolb, Co-Chair 
Chester T. Lester, Jr., 

Co-Chair
John Payton, Co-Chair 
Norman Redlich, Trustee 
Barbara R. Amwine 
Thomas J. Henderson 
Richard T. Seymour 
Teresa A. Ferrante 
Lawyers’ Committee for 

Civil Rights Under Law 
1401 New York Avenue, 

N.W., Suite 400 
Washington, D.C. 20005 
(202) 662-8600

Paul W. Mollica
Counsel o f Record 

Meites, Mulder, Burger & 
Mollica

208 South LaSalle Street 
Suite 1410
Chicago, Illinois 60604 
(312) 263-0272

Dennis C. Hayes 
General Counsel 
National Association for 

the Advancement of 
Colored People 

4805 Mt. Hope Drive 
Fifth Floor
Baltimore, Maryland 21215 
(410)486-9191

Elaine R. Jones 
Director-Counsel 

Theodore M. Shaw 
Norman J. Chachkin 
Charles Stephen Ralston 
NAACP Legal Defense and 

Educational Fund, Inc.
99 Hudson Street, 16th Floor 
New York, New York 10013
(212) 965-2200

Antonia Hernandez, 
President 

Vibiana Andrade, 
Vice-President, Legal 
Programs 

MALDEF
634 South Spring Street 
Eleventh Floor 
Los Angeles, California 
90014
(213) 629-2516

Judith L. Lichtman 
Donna R. Lenhoff 
National Partnership for 

Women & Families 
1875 Connecticut Ave, N.W. 
Suite 710
Washington, D.C. 20009 
(202) 986-2600



Marcia D. Greenberger 
Judith C. Appelbaum 
National Women’s Law 

Center
11 Dupont Circle, NW .
Suite 800
Washington, D.C. 20036 
(202) 588-5180

Julie Goldscheid 
Yolanda S. Wu 
Dina Bakst
NOW Legal Defense and 

Education Fund 
99 Hudson Street, 12th Floor 
New York, New York 10013 
(212) 925-6635

Attorneys fo r  Amici

September 19, 2000