ARBITRATION IN THE COLLECTIVE BARGAINING CONTEXT
AFTER CIRCUIT CITY STORES, INC. v. ADAMS
ABA LABOR AND EMPLOYMENT LAW SECTION
ANNUAL MEETING
MONDAY AUGUST 6, 2001
JOHN L. QUINN, ESQ.
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ARBITRATION IN THE COLLECTIVE BARGAINING CONTEXT
AFTER CIRCUIT CITY STORES, INC. v. ADAMS1
I.
INTRODUCTION
The Supreme Court=s authoritative pronouncements on interplay between arbitration
in collectively bargained agreements and pursuit of individual statutory rights began with
Alexander v. Gardner-Denver, 415 U.S. 36 (1974). At this time, the Court appeared to
establish a firm barrier between unions= collective rights to arbitrate contractual claims and
individuals= rights to pursue their statutory employment discrimination claims. The Court
then provoked lively debate when it issued its decision in Gilmer v. Interstate/Johnson Lane
Corp., 500 U.S. 20 (1991). In this case, the Court enforced mandatory arbitration of a
statutory employment discrimination claim, based on an arbitration clause contained in an
NYSE securities registration application. Two questions were left unanswered in Gilmer.
The first unanswered question was whether this rule would apply in the collective bargaining
context. The second unanswered question was whether the Federal Arbitration Act, 9
U.S.C. ' 1, would apply to pre-dispute arbitration procedures in employment relationships
outside the collective bargaining context. In Wright v. Universal Maritime Service Corp.,
1
121 S. Ct. 338 (3/21/2001).
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525 U.S. 70 (1998), the Court flirted with an answer to the first question, e.g. the application
of Gilmer in the collective bargaining context but found it unnecessary to reach this issue,
holding that a general arbitration clause negotiated by a union does not create a clear and
unmistakable waiver of an individual=s right to pursue statutory claims in court. This term,
in Circuit City Stores, Inc. v. Adams, Justice Kennedy, writing for a five member majority of
the Court, answered the second question reserved in Gilmer in the affirmative. Thus the
Court read the exclusion contained in '1 of the FAA narrowly, confining its application to
employment contracts for transportation workers only, insuring broad application of the FAA
to all other categories of workers. The Court=s final pronouncement was:
A...arbitration agreements can be enforced under the FAA
without contravening the policies of congressional enactments
giving employees specific protection against discrimination
prohibited by federal law; as we noted in Gilmer, >[b]y agreeing
to arbitrate a statutory claim, a party does not forego the
substantive rights afforded by the statute; it only submits to their
resolution in an arbitral, rather than a judicial forum.= 500 U.S.
at 26.@2
In this arena, the focus has thus shifted from challenges to the enforceability of pre-dispute
arbitration provisions to challenges to the availability of substantive rights, procedural/due
process safeguards, and full remedies.
2
In recognition of the proliferation of arbitration agreements covering statutory employment
discrimination disputes, the National Academy of Arbitrators, without taking a position on
mandatory arbitration, adopted a ADue Process Protocol@ in an effort to ensure a more level playing
field. The Protocol has been endorsed by the American Arbitration Association and the ABA. See,
ABA House of Delegates Resolution No. 112 (February 1997).
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What follows is a more detailed analysis of this evolution towards the arbitral
construct for dispute resolution and some suggestions on what the future may hold in the
collective bargaining context.
II.
THE BEGINNING - GILMER
Crowded court dockets and the expense of traditional litigation have created
substantial pressures for courts and litigants alike to find a quicker and less expensive method
to resolve disputes. During the past decade, a variety of alternative dispute resolution
procedures, more commonly referred to as ADR, have sprung up in many state jurisdictions.3
The Civil Justice Reform Act of 1990, requiring Federal District Courts to examine
utilization of various forms of ADR.,4 added impetus to this movement.
With the growing number of federal statutory provisions regulating employment
discrimination, consideration of the application of ADR to such controversies understandably
came to the fore. The Supreme Court=s decision in Gilmer v. Interstate/Johnson Lane Corp.,
111 S.Ct. 1647 (1991), solidified the focus of attention on this issue. While this case arose
on a rather unique set of facts, it provoked lively public debate and gave some guidance in
the direction of ADR as a method of resolving employment disputes. The same year Gilmer
3
See AGetting off the Gravy Train: The Coming of Age of Alternative Dispute
Resolution,@ The Mississippi Lawyer, Vol. XXXIX, No. 3, December, 1992 - January 1993
at 13.
4
Pub. L. 101-650, Title 1, 104 Stat. 6089.
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was decided, President Bush (Bush I) signed into law the Civil Rights Act of 1991 which
affirmatively recognizes that A...alternative means of dispute resolution, including
...arbitration is encouraged to resolve disputes arising under the acts or provisions of federal
law amended by this title.@5
The discussion in Gilmer continues to animate the debate concerning the arbitration of
employment discrimination claims pursuant to collective bargaining agreements, an issue
which was considered by the Supreme Court some seventeen years earlier in Alexander v.
Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011 (1974).
A.
THE ARBITRAL TRIBUNAL
As the Court recognized in Gilmer, arbitration has been the subject of long-standing
judicial hostility as evidenced by English common law and the common law adopted by
American courts. The Federal Arbitration Act (FAA), 9 U.S.C. ' 1, et seq., was first enacted
in 1925 and was intended to embrace arbitration as an accepted means of resolving disputes.
111 S. Ct. at 1651. See also Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 13 (1985). A
similar result was achieved in the collective bargaining arena when Justice Douglas
interpreted ' 301 of the Labor- Management Relations Act of 1947 as creating authority in
the Federal Courts to develop a federal common law in labor relations matters, including the
5
See Section 118 of Pub. L. 102-166.
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right to seek specific performance of executory contracts providing for arbitration. See
Textile Workers Union v. Lincoln Mills, 353 U. S. 448 (1957).
Section 2 of the FAA establishes that agreements to arbitrate disputes are enforceable.
Section 3 provides for stays of litigation pending arbitration, and ' 4 provides a statutory
basis for suits to compel arbitration. Of substantial interest was the reach of ' 1 of the FAA
which provides:
ANothing herein contained shall apply to contracts of
employment of seamen, railroad employees, or any other class of
workers engaged in foreign or interstate commerce.@
Until the Supreme Court=s recent decision in Circuit City, there had been an ongoing debate
whether this provision exempts collective bargaining agreements from coverage under the
FAA or merely exempts from coverage collective bargaining agreements covering seamen,
railroad employees, and other similar categories of employees involved in the transportation
industry. In Lincoln Mills of Alabama v. Textile Workers Union of America, 230 F. 2nd 81
(5th Circuit 1956), the Court of Appeals concluded that ' 1 of the FAA excluded collective
bargaining agreements altogether. The Supreme Court reversed the Fifth Circuit but on the
basis of ' 301 of the LMRA. The Court was silent on the applicability of the ' 1 exclusion of
the FAA. In United Paperworkers International Union v. Misco, Inc., 484 U.S. 29 (1987),
the Supreme Court made passing reference to this issue in footnote 9 stating the FAA
A...does not apply to `contracts of employment of ...workers
engaged in foreign or interstate commerce,= 9 U.S.C. ' 1, but
the federal courts have often looked to the Act for guidance in
labor arbitration cases.@ Id. at 40.
In Gilmer, the Supreme Court was asked to reach this issue which was argued by
Amici Curiae, including the AFL-CIO, AARP, and the Lawyers Committee for Civil Rights
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Under Law. Gilmer, 111 S.Ct. at 1657. The Court declined, however, because this issue had
not been raised by the parties below and because the arbitration clause in question was not
found in an employment contract; rather, it was contained in a securities registration
application.6
B.
THE HOLDING IN GILMER
Robert Gilmer went to work for Interstate/Johnson Lane Corp. as manager of financial
services in 1981. He was required to register as a securities representative with a number of
stock exchanges including the New York Stock Exchange. This document provided, inter
alia, that Gilmer would agree to arbitrate A...any dispute, claim or controversy...@ arising
between himself and his employer. This application further provided that any arbitrations
would be conducted pursuant to, here relevant, the rules of the New York Stock Exchange.
NYSE Rule 347 provides for arbitration of any
A...controversy between a registered representative and any
member or member organization rising out of the employment or
termination of employment of such registered representative.@
111 S.Ct. at 1651.
6
Compare Lincoln Mills of Alabama v. Textile Workers Union of America, 230 F. 2d 81
(5th Cir. 1956); United Electrical, Radio & Machine Workers of America v. Miller Metal Products,
Inc., 215 F. 2d 221 (4th Cir. 1954); Amalgamated Association of Street, Electric R. and Motor
Coach Employees of American v. Pennsylvania Greyhound Lines, Inc., 192 F. 2d 310 (3rd Cir.
1951).
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Interstate/Johnson terminated Mr. Gilmer=s employment in 1987 when he was age 62.
After first filing an administrative charge of discrimination with the EEOC, Mr. Gilmer then
brought suit in the United States District Court for the Western District of North Carolina
under the Age Discrimination in Employment Act, 29 U.S.C.' 626, et seq., alleging that he
was terminated because of his age. His employer moved to compel arbitration of his statutory
ADEA claim pursuant to the FAA, NYSE Rule 347, and his stock exchange registration
application. The lower court denied the motion relying on Alexander v. Gardner-Denver
Co., 415 U.S. 36 (1974), but the United States Court of Appeals for the Fourth Circuit
reversed. The Supreme Court granted certiorari A... to resolve a conflict among the courts of
appeals regarding the arbitrability of ADEA claims.@ Gilmer, 111 S.Ct. at 1651.
The Supreme Court initially concluded that it need not reach the issue of the scope of
' 1 of the FAA which purports to exclude certain contracts of employment as it found that
the arbitration provision in question was not contained in a written employment agreement.
Having disposed of this potentially thorny issue, the court moved quickly to recognize Athe
liberal federal policy favoring arbitration agreements@ manifested by the FAA. The Court
was also quick to note that this policy favoring arbitration encompassed contractual and
statutory disputes. The Court noted enforceable arbitration agreements relating to claims
under the Sherman Act, 15 U.S.C. '' 1-7; Section 10(b), of the Securities Exchange Act of
1934, 15 U.S.C. ' 78j(b); the civil provisions of RICO, 18 U.S.C. ' 1961, et seq., and Section
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12 (2) of the Securities Act of 1933, 15 U.S.C. ' 77l(2); citing its earlier decisions in
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614; Shearson/American
Express Inc. v. McMahon, 482 U.S. 220 (1987); and Rodriquez Quijas v. Shearson/American
Express Inc., 490 U.S. 477.
The Gilmer Court proclaimed that it would enforce agreements to arbitrate statutory
issues unless the party resisting arbitration could bear the burden of proving that Congress
intended to exempt such issues from arbitration. Accordingly, the Court placed the burden
on Mr. Gilmer to show that Congress intended to preclude a waiver of access to a judicial
forum for claims under the ADEA. The Court concluded that Gilmer had established no
such intent in the text of the ADEA, its legislative history, or any conflict between the
ADEA=s statutory scheme and the arbitration process. Accordingly, the Court affirmed the
judgement of the Fourth Circuit compelling arbitration of Mr. Gilmer=s statutory ADEA
claim.
Of great significance to the issue at hand, the impact of Gilmer on arbitration in the
collective bargaining context, the Court went to substantial lengths to distinguish Alexander
v. Gardner-Denver Co. on which the District Court had relied in refusing to compel
arbitration.
C.
ALEXANDER V. GARDNER-DENVER DISTINGUISHED
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The Court rejected Mr. Gilmer=s reliance on Alexander v. Gardner-Denver and its
progeny Barrentine v. Arkansas-Best Freight System Inc., 450 U.S. 728 (1981), (submission
of grievances through arbitration did not preclude the filing of wage claims under the Fair
Labor Standards Act) and McDonald v. the City of West Branch, 466 U.S. 284 (1984),
(Court declined to give preclusive effect to discharged police officer=s adverse arbitration
award in a suit under 42 U.S.C. ' 1983 alleging wrongful discharge for exercising First
Amendment rights).
At the outset, the Court made it very clear that Alexander v. Gardner-Denver may no
longer be relied upon for the proposition that the arbitration process is inferior to the judicial
process for resolving statutory claims.7
The factors which the Gilmer Court found
distinguished Alexander v. Gardner-Denver were:
1.
In Alexander v. Gardner-Denver, there was no agreement to arbitrate statutory
claims, only contract claims. Because the parties had not agreed to submit such claims to
arbitration, the labor arbitrator was not authorized to resolve such claims.
2.
Because arbitration in Alexander v. Gardner-Denver and its progeny occurred
in the context of collective bargaining agreements, employees were represented by their
7
A[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.@ 111 S.Ct. at 1656 n. 5 citing Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 626-7 (1985).
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Unions, necessarily invoking tension between collective contract rights and individual
statutory rights.8
3.
Alexander v. Gardner-Denver and its progeny were not decided under the
FAA which has been held to embody a Aliberal federal policy favoring arbitration
agreements.@ Gilmer, 111 S.Ct. at 1657.
Justice Stevens filed a vigorous dissent in which Justice Marshal joined. The
dissenting justices faulted the court for failing to reach the issue of the scope of the exclusion
contained in ' 1 of the FAA. They stated that, consistent with early judicial interpretations
of the FAA, both individual contracts of employment and collective bargaining agreements
were within the scope of the ' 1 exclusion. The dissenting justices also took issue with the
majority in stating that the ' 1 exclusion should be interpreted to cover any agreement by an
employee to arbitrate disputes with their employer rising out of the employment relationship,
A...particularly where such agreements to arbitrate are conditions of employment.@ Id. at
1659. Moreover, the dissenting justices expressed their belief that compulsory arbitration is
in conflict with the congressional purposes underlying Title VII, the ADEA, and other antidiscrimination laws, quoting Chief Justice Burger:
AFinally, 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 have practiced discrimination to
8
Compare Emporium Capwell Co. v. WACO, 420 U.S. 50 (1975); J. I. Case Co. v. NLRB,
321 U.S. 332 (1944).
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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 have long perpetuated invidious
discrimination would have made the foxes guardians of the
chickens.@ Barrentine v. Arkansas-Best Freight Systems, Inc.,
450 U.S. 728, 750 (1981) (Burger, C. J., dissenting).
As the dissent in Gilmer makes clear, the majority worked quite hard at a construction
of Mr. Gilmer=s arbitration Aagreement@ that would avoid the application of the exclusion
contained in ' 1 of the FAA. The analysis by the Supreme Court demonstrated strong
support for arbitration and foreshadowed the narrow reading given to the FAA ' 1 exclusion
in Circuit City.9 The dissent also made it clear that the majority no longer accepts the policy
argument found in Alexander v. Gardner-Denver, that the congressional purpose of
eliminating employment discrimination is better served by preserving access to the courts and
to arbitral tribunals.
D.
LESSONS IN GILMER FOR THE COLLECTIVE BARGAINING CONTEXT?
In Allied-Bruce Terminix Companies v. Dobson, the Supreme Court enforced a predispute arbitration in a termite contract even though a state statute invalidated such agreements.
The Court held that the FAA preempted the state statute and noted that the FAA should be
broadly applied to overcome judicial hostility to the enforcement of arbitration agreements.
9
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Gilmer certainly suggested that, absent an arbitration clause in a collective bargaining
agreement which clearly contemplates the arbitrability of statutory issues, a labor arbitrator
would be without authority to hear such claims. In the Steelworkers Trilogy,10 the Supreme
Court made it clear that the Courts will compel arbitration where it can be determined that
the agreement between the parties fairly encompasses the claim to be arbitrated. See also
Fairweather, Practice and Procedure in Labor Arbitration (BNA 3rd Edition 1991) at 27.
While the Courts are fairly deferential to an arbitrator=s determination of the parties
contractual rights, an award is subject to being set aside if the arbitrator exceeds his
contractually conferred authority. In Steelworkers v. Enterprise Wheel & Car Corp., the
Court held:
AAn arbitrator is confined to interpretation and application of
the collective bargaining agreement; he does not seek to
dispense his own brand of industrial justice. He may of course
look for guidance from many sources, yet his award is legitimate
only so long as it draws its essence from a collective bargaining
agreement. When the arbitrator=s words manifest an infidelity
10
Steelworkers v. American Manufacturing Co., 363 U.S. 564 (1960); Steelworkers v.
Warrior & Gulf Navigation Co., 363 U.S. 574 (1960); Steelworkers v. Enterprise Wheel & Car
Corp., 363 U.S. 593 (1960).
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to this obligation, courts have no choice but to refuse
enforcement of the award.@ 363 U.S. 593, 597 (1960).
These principals were reaffirmed in AT&T Technologies v. Communications Workers, 475
U.S. 643 (1986).
In addition to paying very close attention to what the parties have agreed to arbitrate,
the Courts have also continued to recognize the tension between collectively bargained rights
and individual statutory rights. The dichotomy between collectively bargained contract
rights and individual statutory rights is reflected in the Supreme Court=s decision in AllisChalmers Corp. v. Lueck, 471 U.S. 202 (1985). In this case, the Supreme Court held that an
employee, seeking to pursue a state tort claim substantially dependent on the analysis of the
terms of collective bargaining agreement, would be required, as a matter of federal law, to
exhaust his or her collectively bargained grievance/arbitration procedures. However, where
the state law claim being pursued by an employee is not inextricably intertwined with the
terms of a collectively bargained labor agreement, no such resort to the grievance and
arbitration process is required. Thus, in Lingle v. Magic Chef, Norge Division, 486 U.S. 399
(1988), an arbitrator found that the discharge of an employee for allegedly submitting a false
workers compensation claim was without just cause. The arbitrator granted the employee
reinstatement with full back pay as provided in his labor agreement. While the grievance
was pending under the labor agreement, the employee filed a state court claim alleging
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retaliatory discharge under the Illinois workers compensation statute. In finding no ' 301
pre-emption,11 the Supreme Court held that the retaliatory discharge claim was independent
of the collective bargaining agreement, although both the statutory claim and the contract
claim arose out of the same set of facts.
Similarly, in W. R. Grace & Co. v. Rubber Workers Local 759, 461 U.S. 757 (1983),
the Supreme Court enforced an arbitration award deciding contractual seniority issues in
favor of the Union even though the employer had been acting in compliance with an EEOC
conciliation agreement granting female employees preferential seniority rights. Compare
Emporium Capwell Co. v. WACO, 420 U.S. 50 (1975); J. I. Case Co. v. NLRB, 321 U.S. 332
(1942). In fact, it is this potential conflict between the collective interests of labor
organizations and individual interests of the employees that they represent which caused the
federal judiciary to create the doctrine of fair representation. Thus, in Steele v. Louisville &
Nashville Railroad, 323 U.S. 192 (1944), which arose under the Railway Labor Act, 46 U.S.
' 151, et seq., the Court created the duty of fair representation doctrine to address concerns
with a Union=s right to act as an exclusive collective bargaining representative and an
individual employee=s right to be free from racial discrimination. Wallace Corp. v. NLRB
similarly recognized that, under the NLRA, exclusive bargaining agents are Acharged with
11
See 29 U.S.C. ' 185.
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the responsibility of representing [employee] interests fairly and impartially@ 323 U.S. 248,
255 (1944). In Vaca v. Sipes, 386 U.S. 171 (1967), the Supreme Court enunciated the
current standard for DFR claims arising under ' 301 and declared that the courts had
concurrent jurisdiction with the NLRB concerning a Union=s duty of fair representation.
Nowhere would the potential for conflict of individual statutory rights and collectively
bargained rights be greater than under the Americans with Disabilities Act, 42 U.S.C.
'12101, et seq. The plain meaning of the statute, its implementing regulations, and
Interpretive Guidance contemplate that the statutory obligations of Unions and employers to
reasonably accommodate qualified individuals with disabilities may be in conflict with express
terms of their collective bargaining agreement. The Interpretive Guidance recognizes that
the terms of an agreement (i.e. which may be in conflict with a proposed accommodation)
may be a factor to consider in determining whether an accommodation is reasonable.12 Thus,
under a collective bargaining agreement which makes shift assignments on the basis of
seniority, a twenty-year employee, who is otherwise contractually entitled to bid off of a night
shift job onto a day shift job, may be on a collision course with the statutory obligation to
accommodate a new hire who requires daylight working hours to accommodate his night
vision problems. The Courts, however, have been much more deferential to the integrity of
collective bargaining agreements and their seniority driven provisions. See, e.g., Davis v.
12
See Interpretive Guidance ' 1630.15(d).
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Florida Power & Light Co., 205 F. 3d 1301 (11th Cir. 2000); Cassidy v. Detroit Edison Co.,
138 F. 3d 629 (6th Cir. 1998); compare, Barnett v. U.S. Air, Inc., 228 F. 3d 1105 (9th Cir.
2000).
III.
A.
WRIGHT V. UNIVERSAL MARITIME SERVICE
POST-GILMER DECISIONS SET THE STAGE
A survey of the post-Gilmer decisions demonstrates that the circuit courts extended its
holding to claims arising under Title VII. Compare, Sues v. John Nuveen & Co., 146 F. 3d
175 (3rd Cir. 1998); Alford v. Dean Witter, 939 F. 2d 229 (5th Cir. 1991); Willis v. Dean
Witter, 948 F. 2d 305 (6th Cir. 1991); Mago v. Shearson Lehman, 956 F. 2d 932 (9th Cir.
1992); Metz v. Merrill Lynch, 39 F. 3d 1482 (10th Cir. 1994); Bender v. A.G. Edwards, 971 F.
2d 698 (11th Cir. 1992). However, the circuit courts, with the exception of the Fourth
Circuit, adhered to the principles in Gardner-Denver, declining to extend Gilmer to cases
involving collectively bargained arbitration agreements. In Brisentine v. Stone & Webster
Engineering Corp., 117 F.3d 519, 6 A.D. 1878 (11th Cir. 1997), the court held that the
arbitration clause contained in the collective bargaining agreement was not a bar to access to
the federal courts for litigation of individual statutory employment claims unless the
plaintiff/employee has agreed personally to arbitral resolution of his claims. See also Penny v.
United Parcel Service, 128 F.3d 408, 7 A.D., 718 (6th Cir. 1997); Pryner v. Tractor Supply
Co., 109 F.3d 354, 73 FEP 615 (7th Cir. 1997), cert denied, 522 U.S. 912, (1997); Varner v.
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National Supermarkets, Inc., 94 F.3d 1209, 71 FEP 1367 (8th Cir. 1996); Harrison v. Eddie
Potashe, 112 F.3d 1437, 73 FEP 1384 (10th Cir. 1997); Peterson v. BMI Refractories, 132
F.3d 1405, 75 FEP 1322 (11th Cir. 1998); Foreman v. Babcock & Wilcox Co., 117 F.3d 800,
7 A.D. 231 (5th Cir. 1997), cert. denied, 522 U.S. 1115 (1998); Benson v. Northwest Airlines,
Inc., 62 F.3d 1108, 4 A.D. 1234 (8th Cir. 1995); Eckles v. Consolidated Rail Corp., 94 F.3d
1041, 5 A.D. 1367 (7th Cir. 1996); Milton B. Scrivner, Inc., 53 F.3d 1118, 4 A.D. 432 (10th
Cir. 1995).
The Fourth Circuit decision in Austin v. Owens-Brockway Glass Container, Inc., 78
F.3d 875, 7 FEP 272 (4th Cir.), cert. denied, 519 U.S. 980 (1996), did require an employee to
litigate their federal statutory employment claims under the union=s collective bargaining
agreement and its arbitration clause rather than to pursue same in court. In Wright v.
Universal Maritime Service Corp., 121 F.3d 702 (4th Cir. 1997), consistent with Austin, the
Fourth Circuit held that the district court had properly dismissed the plaintiff/employee=s
ADA claim for failure to exhaust the grievance and arbitration procedures contained in his
collective bargaining agreement, even though the collective bargaining agreement did not
expressly refer to the arbitration of statutory employment claims. Subsequently, in Brown v.
Trans World Airlines, 127 F.3d 337, 74 FEP 1675 (4th Cir. 1997), the Fourth Circuit cut
back substantially on the rule announced in Austin and followed in Wright and held that an
employee will not be required to take his federal statutory claims to the grievance and
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arbitration procedure in his collective bargaining agreement where the non-discrimination
clause contained in the collective bargaining agreement does not expressly refer to statutory
employment rights, distinguishing Austin on the grounds that the collective bargaining
agreement in Austin did expressly contemplate statutory employment claims. With the
Fourth Circuit, even substantially limited by the Brown decision, appearing to be somewhat
of an aberration, the Supreme Court decided to grant cert. in Wright v. Universal Maritime
Service Corp., no. 97-889.
B.
THE HOLDING IN WRIGHT V. UNIVERSAL MARITIME SERVICE
The question not decided in Gilmer, whether a collectively bargained arbitration
agreement could waive an individual=s right to pursue statutory employment claims in court,
was asked in Wright but was not answered.
In 1992, the plaintiff pursued a disability claim under the Longshore and Harbor
Workers Compensation Act, 33 U.S.C.' 901, et seq., and ultimately obtained a recovery.
Thereafter, he also obtained Social Security disability benefits. In 1995, he reported to his
union=s hiring hall and was briefly referred out to work before employers refused to accept his
referral to work. This action prompted him to file suit under the ADA, alleging disability
discrimination. In view of an arbitration provision that provided:
Athis Agreement is intended to cover all matters affecting wages,
hours, and other terms and conditions of employment.@
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The district court held that the plaintiff=s statutory claims were precluded by this arbitration
provision. The Fourth Circuit, relying on Gilmer and its own prior rulings, affirmed. With
the conflict in the circuits, the Supreme Court granted certiorari.
The Court began its analysis by recognizing the tension between the line of cases
beginning with Gardner-Denver and the line of cases beginning with Gilmer. In so doing,
Justice Scalia, writing for the Court, made reference to Athe radical change, over two
decades, in the Court=s receptivity to arbitration....@ The Court also stated that the
presumption of arbitrability found under ' 301 of the Labor Management Relations Act, 29
U.S.C. ' 185(a), does not extend beyond its principal justification B that arbitrators are
better suited to interpreting the terms of collective bargaining agreements than the courts.
The Court reasoned that where, as in this case, the issues to be decided depend on the
interpretation of federal employment discrimination statutes, this presumption does not
apply. While recognizing this clear distinction between collectively bargained contractual
rights on the one hand and individual statutory rights on the other hand, the Court refused
to reaffirm the continuing vitality of AGardner-Denver=s seemingly absolute prohibition of
union waiver of employees= federal forum rights....@ Also significant, the Court stated, citing
Gilmer, that this issue does not involve a Asubstantive right.@ In its carefully worded
conclusion, the Court held:
AWhether or not Gardner-Denver=s seeming absolute
prohibition of union waiver of employees= federal forum rights
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survives Gilmer, Gardner-Denver at least stands for the
proposition that the right to a federal forum is of sufficient
importance to be protected against less-than-explicit union
waiver in a CBA.@
The Court announced that it would require a Aclear and unmistakable waiver@ of this right.
Because, on the facts of the case, it found no such waiver, the Court declined to reach the
issue of whether such a waiver would be enforceable.
1.
POST-WRIGHT DEVELOPMENTS
With the exception of the Fourth Circuit, the circuits appear
to have uniformly concluded that there is nothing left of Austin,
following the Supreme Court=s ruling in Wright. See, Bratten v. SSI
Services, Inc., 185 F. 3d 625 (6th Cir. 1999); Quint v. A. E. Staley
Mfg. Co., 172 F. 3d 1 (1st Cir. 1999).
Moreover, as of the present,
with the exception of the Fourth Circuit as noted infra in Section
IV., C., no circuit court appears to have found a clear and
unmistakable waiver of employees= right to a judicial forum in a
case before it.
See, Bratten, supra; Quint, supra; Rogers v. New
York University, 220 F. 3d 73 (2nd Cir. 2000); Durham Life Insurance
Co. v. Evans, 166 F. 3d 139 (3rd Cir. 1999); Brown v. ABF Freight
Systems, Inc., 183 F. 3d 319 (4th Cir. 1999); but see, Carson v.
Giant Food, Inc., 175 F. 3d 325 (4th Cir. 1999)(court still citing
Austin); Kennedy v. Superior Printing Co., 215 F. 3d 650 (6th Cir.
2000); Bell v. Conopco, Inc., 186 F. 3d 1099 (8th Cir. 1999);
Communications Workers of America v. Southwestern Bell, (No. 002914,
8th
Cir.
5/22/01)(injunction
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following grant of summary judgement against individual employee=s
employment discrimination claims, reversed on appeal); Weaver v.
Florida Power & Light, 172 F. 3d 771 (11th Cir. 1999).
In Carson v. Giant Food, Inc., supra, the Fourth Circuit,
citing Austin as well as Wright, held that Aa clear unmistakable
waiver,@ as contemplated by Wright, could be established in two
ways; first, by an agreement containing an explicit arbitration
clause in which the parties agree to submit to all federal causes
of action arising out of employment; second, by a general clause
requiring
arbitration
coupled
with
a
provision
whish
makes
unmistakably clear that discrimination statutes are part of the
agreement.
See also, Brown v. ABF Freight Systems, Inc., 183 F. 3d
319 (4th Cir. 1999).
4.
A.
CIRCUIT CITY STORES, INC. V. ADAMS
THE COURT=S RULING
Saint Clair Adams filled out an employment application for a
job at Circuit City which required him to:
A...settle any and all previously unasserted
claims, disputes or controversies out of or
relating to my application or candidacy for
employment, employment and/or cessation of
employment with Circuit city, exclusively by
final and binding arbitration before a neutral
Arbitrator. By way of example only, such
claims include claims under federal, state,
and local statutory or common law, such as the
Age Discrimination in Employment Act, Title
VII of the Civil Rights Act of 1964, as
amended, including the Civil Rights Act of
1991, the Americans with Disabilities Act, the
law of contract and the law of tort.@
(Emphasis in the original).
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Two years later, Adams filed suit in state court against his
Circuit City alleging employment discrimination, pursuant to the
California Fair Employment and Housing Act, Cal. Govt. Code Ann. ''
12900, et seq., along with state tort claims.
Circuit City filed
suit in federal district court, pursuant to the FAA, 9 U.S.C. '' 116,
seeking
to
enjoin
his
arbitration of his claims.
District
of
California
state-court
action
and
to
compel
The District Court for the Northern
granted
the
requested
relief.
Adams
appealed to the United States Court of Appeals for the Ninth
Circuit which reversed, based on its ruling in Craft v. Campbell
Soup Co., 177 F. 3d 1083 (1999), that ' 1 of the FAA exempts
contracts of employment.
Citing a split in the circuits, Circuit
City petitioned the Supreme Court, which granted certiorari to
decide this issue, the issue reserved in Gilmer.
Resolution of the issue presented involved an exercise in
statutory construction.
Specifically, the court analyzed the
construction of the ' 1 clause which provides that the FAA shall
not
apply
Ato
contracts
of
employment
of
seamen,
railroad
employees, or any other class of workers engaged in foreign or
interstate commerce.@
Simply stated, the question presented was,
does this exemption apply to all contracts of employment or only to
contracts covering transportation workers moving goods in foreign
and interstate commerce.
The former reading would exempt all
contracts of employment, while the latter would only exempt a very
narrow piece of the employment universe.
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Justice
Kennedy,
writing
for
the
five
member
majority,
reversed and remanded the judgement of the Ninth Circuit. He first
rejected a narrow reading of ' 2 coverage provision which would
relegate it to covering only commercial contracts, necessarily
excluding employment contracts from coverage.
He concluded that
such a reading would be inconsistent with Gilmer which did not
involve a Acommercial deal or merchant=s sale.@ He also concluded
that this reading would be inconsistent with the Court=s decision
in Allied-Bruce Terminix Cos. v. Dobson , 513 U.S. 265, 277 (1995),
which reasoned that the phrase Ainvolving commerce@ in the ' 2
coverage provision conveyed a congressional intention to exercise
the full extent of its commerce power.
Placing reliance of the
further reading of congressional intent contained in the FAA to
counter A...the hostility of American courts to the enforcement of
arbitration
agreements,@
the
Court
applied
the
canon
construction, ejusdem generis, to the ' 1 exemption clause.
of
Thus
the Abirds of a feather, flock together@ rule was applied to
justify the conclusion that:
A...the location of the phrase >any other
class of workers engaged in ... commerce= in a
residual provision, after specific categories
of workers have been enumerated, undermines
any attempt to give the provision a sweeping,
open-ended construction.@
And the final conclusion that
A...the text of the FAA forecloses the
construction of ' 1 followed by the Court of
Appeals
in
the
case
under
review,
a
construction
which
would
exclude
all
employment contracts from the FAA.@
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Finally, the majority rejected the states rights argument
advanced by, inter alia, the attorneys general of twenty-two
States, holding that Congress intended to pre-empt state law
regulating the arbitration of employment discrimination claims.
There were two dissenting opinions. Justice Stevens dissented,
joined by Justices Ginsberg and Breyer, with Justice Souter joining
as to Parts II and III.
Justice Souter dissented separately, with
Justices Stevens, Ginsberg, and Breyer joining.
criticized
the
majority
for
relying
on
a
Justice Stevens
rule
of
statutory
construction that avoided consideration of clear congressional
intent to exempt contracts of employment from the reach of the FAA.
Justice Souter challenged the wisdom of the majority=s expansive
reading of the ' 2 coverage provision coupled with the very
restrictive reading of the ' 1 exemption provision.
He reasoned
that the statute was A...entitled to a coherent reading as a
whole...@ which would establish that both the coverage provision
and the exemption provision would reflect congressional intent to
regulate to the full extent of its commerce power.
this
reading
would
be
consistent
with
actual
He noted that
expressions
of
congressional intent, including the testimony of then-Secretary of
Commerce,
Herbert
Hoover.
Justice
Souter
reasoned
that
the
majority improperly applied the rule of ejusdem generis, reasoning
that the inclusion of specifics, followed by a more general phrase
in the exemption provision, was ex abundanti cautela, out of an
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abundance of caution, citing Fort Stewart Schools v. FLRA, 495 U.S.
641 (1990).
B.
IMPLICATIONS OF ADAMS FOR COLLECTIVE BARGAINING
Adams, like so many other decisions this term is a 5 to 4
split decision.
While the math suggests that the change of a
single vote could turn it around, the doctrine of stare decisis and
the institutional interests of the Court make it unlikely that this
result will change.
Moreover, on the strength of this decision,
the already steady flow of the movement toward mandatory predispute ADR agreements will probably accelerate rapidly.
The
National Academy of Arbitrator=s adoption of its Due Process
13
Protocol, which has been widely accepted,
coupled with significant
efforts to provide arbitrators with the substantive expertise
needed to decide statutory employment discrimination disputes, has
already added to the momentum.
Reading both the lines, and in-between the lines, it is clear
that, at this time, a majority of the Court strongly favors the
arbitration process and other ADR procedures as an alternative to
litigation. While the majority in Adams purports to rely on tightly
reasoned
rules
of
statutory
construction,
a
closer
analysis
demonstrates that perhaps the result was more important than how
they got there.
Thus, while the Court states:
AAs the conclusion we reach today is directed
by the text of ' 1, we need not assess the
legislative
history
of
the
exclusion
13
See fn.1, supra.
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provision. See Ratzlaf v. United States, 510
U.S. 135, 147-8 (1994)(>[W]e do not resort to
legislative history to cloud a statutory text
that is clear=).@
The Court places great reliance on its reading of congressional
intent found in the FAA to oppose Athe hostility of American courts
to the enforcement of arbitration agreements.@
The Court also
places great reliance on congressional intent to support its
conclusion that the ' 2 coverage provision should be construed to
reflect the full exercise of Congress= commerce power.
Thus, while
the professed lack of need to consider legislative history is
belied by the Court=s own reasoning, it is understandable.
Thus
if, as Justice Souter noted, the Court had considered the actual
legislative history of the FAA, including the testimony of thenSecretary of Commerce Herbert Hoover, they would not have been able
to decide this case as they did, although it is very clear they
wanted to.
by
the
Even the states= rights argument was given short shrift
majority
which
relied
on
their
reading
intended to pre-empt state law in this area.
that
Congress
14
What does this mean for arbitration of statutory employment
discrimination claims in the collective bargaining context?
While
Adams makes no mention of Gardner-Denver, it would be unwise to
dismiss
its
significance
in
this
arena.
Gilmer
expressly
reaffirmed Gardner-Denver but that did not end the debate, judicial
and otherwise, that led to the Fourth Circuit=s decision in Austin
14
Some may find this legal analysis and deference to states= rights reminiscent of Bush v. Gore,
531 U.S. 98 (2000).
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and the flirtation with extension of Gilmer by the supreme Court in
Wright v. Universal Maritime Service.
C.
THE FOURTH CIRCUIT STRIKES AGAIN
In fact, in Safrit v. Cone Mills Corp., 248 F. 3d 306 (4th Cir.
2001), on the strength of Austin, Wright, and now Adams, the Fourth
Circuit reached the issue reserved in Wright, i.e. it both found
language in a collective bargaining agreement that constitutes a
clear and unmistakable waiver of an individual=s access to a
judicial forum and determined that it was appropriate to enforce
such a provision.
In this case, Lori Safrit worked at Cone Mills
pursuant to a collective bargaining agreement negotiated by her
union,
United
(UNITE!).
Needle
Trades,
Industrial,
and
Textiles
Union
She became a fixer trainee (a non-traditional job for a
female employee, promising better pay) in 1994.
She claimed that
she was not properly trained and was denied job opportunities
extended to male counterparts.
She pursued a grievance through the
contractual grievance procedure which was resolved at the fourth
step of this process based on her employer=s commitment to correct
earlier deficiencies in the training program.
She believed that
her employer continued to discriminate after this settlement was
reached and returned to her union seeking enforcement of the
previous grievance and a remedy for continuing discrimination.
The
union did not file a second grievance but recommended that she seek
legal representation to pursue relief outside the
bargaining agreement.
collective
She filed a charge with the EEOC and
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subsequently filed a complaint in the U. S. District Court for the
Middle District of North Carolina alleging discrimination on the
basis of gender. Her employer filed a motion for summary judgement
seeking
to
bar
her
lawsuit
and
to
compel
arbitration.
The
employer=s motion was granted and Safrit appealed.
The Fourth Circuit affirmed, finding that her collective
bargaining agreement contained a Aclear and unmistakable waiver@ of
her right to a judicial forum based on the two-part test found in
Carson v. Giant Food, Inc., supra.
The arbitration provision in
her collective bargaining agreement stated that the company and the
union:
Aagree that they will not discriminate against
any employee with regard to race, color,
religion, age, sex, national origin or
disability....The parties further agreed [sic]
that they will abide by all the requirements
of Title VII of the Civil Rights Act of 1964.@
While the court found a clear and unmistakable waiver, it did not
specify which of the tests in Carson applied.
Nor did the court
give any mention to issue of arbitration remedies as opposed to
statutory remedies, due process protocols, or whether the union
15
would even agree to pursue her case in arbitration.
In justifying
its affirmation of the right to proceed where the Supreme Court has
not yet gone, e.g. enforcing a union=s alleged waiver of an
15
The concern about the willingness of the union to proceed to arbitration is significant in view of
the closure of the plant where the plaintiff worked. Does a union meet its fiduciary obligation to
Ahold its money and property solely for the benefit of the organization and its members...@ as
required by the Landrum-Griffin Act, 29 U.S.C. ' 501, if it expends its members= dues money to
pursue an individual statutory claim for a member, where her plant has already closed?
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individual=s statutory right to a judicial forum, the court relied
heavily on Austin.
It did so, even though the other circuits have
long since concluded that Austin is no longer good law after the
Supreme Court=s decision in Wright.
The court cited Austin for the
proposition that an arbitration provision is a term and condition
of employment, i.e. a right about which a union may bargain which
may be Apart of a natural tradeoff that a union must make in
exchange for other benefits.@
It further cited Austin for the
proposition that, because a union can negotiate away the collective
right to strike for the life of a contract in return for an
arbitration provision, it necessarily follows that a union can also
negotiate away individual statutory rights, including the right to
a judicial forum to pursue employment discrimination claims.
The Fourth Circuit seems to ride rough-shod over the careful
analysis of the Aclear and unmistakable waiver@ standard enunciated
The complete disregard for the
by the Supreme Court in Wright.
issues
related
to
remedies,
adherence
to
minimal
fairness
standards, or the dicey issue of whether a union will agree to
arbitrate or is even able to afford to arbitrate all statutory
claims that its members may seek to pursue, suggests less than
proper heed to the final admonition of the Court in Adams:
Aas we noted in Gilmer, >[b]y agreeing to
arbitrate a statutory claim, a party does not
forego the substantive rights afforded by the
statute,; it only submits to their resolution
in an arbitral, rather than a judicial
forum.=@
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It remains to be seen whether this decision by the Fourth
Circuit continues to be an aberration as compared to the other
circuits, or whether it ultimately leads to the dissolution
of Gardner-Denver.
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