IN THE UNITED STATES DISTRICT COURT
               FOR THE DISTRICT OF MASSACHUSETTS
                                
________________
                                )
KAREN J. DELUCA,                )
                                )
     Plaintiff,                 )
                                )
v.                              ) Civil Action No. 00-12100-PBS
                                )
                                )
BEAR STEARNS & CO., INC.,       )
MARK E. MURPHY, BRIAN C.        )
JEROME, ROBERT P. LYONS,        )
BRUCE LISMAN, and KATHY         )
CAVALLO,                        )
                                )
     Defendants.                )
________________)

   BRIEF OF THE U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
    AS AMICUS CURIAE IN OPPOSITION TO DEFENDANTS' MOTION TO
     DISMISS OR, IN THE ALTERNATIVE, TO COMPEL ARBITRATION
            AND STAY PROCEEDINGS PENDING ARBITRATION
                                
                     STATEMENT OF INTEREST
                                
     The U.S. Equal Employment Opportunity Commission
("Commission") is the agency charged with the enforcement of Title
VII of the Civil Rights Act of 1964, 42 U.S.C.  2000e et seq.
("Title VII"), the Age Discrimination in Employment Act of 1967, 42
U.S.C.  621 et seq. ("ADEA"), and other federal anti-
discrimination statutes.  This case raises important issues
concerning the enforceability of agreements purporting to mandate
the arbitration of Title VII and ADEA claims.  Although this case,
in part, implicates state contract law principles, the Commission's
interest in this case is a federal one.  The source of that federal
interest is the Civil Rights Act of 1991, Pub. L. 102-166 ("1991
CRA"), which provides that any agreement to arbitrate a Title VII
or ADEA claim must be "appropriate" and "authorized by law."  See
Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d
1, 19-21 (1st Cir. 1999) (construing the 1991 CRA).  In this case,
there is a compelling argument that the arbitration agreement at
issue did not provide the plaintiff with anything of value to which
the plaintiff was not already entitled and, thus, did not provide
the plaintiff with valid consideration in exchange for the
plaintiff's agreement to arbitrate.  The Commission believes that
an agreement of this nature is neither "appropriate" nor
"authorized by law" within the meaning of the 1991 CRA.  Because
enforcement of the arbitration agreement in this case would
contravene the important federal policy embodied in the 1991 CRA,
the Commission offers its views to the court as amicus curiae.
                           BACKGROUND
     Karen DeLuca began working for Bear Stearns & Co., Inc. ("Bear
Stearns") in 1985 as a retail sales assistant.  Second Amended
Complaint and Jury Demand  8.  In 1997, Bear Stearns presented
DeLuca with a provision from its Employee Handbook, purporting to
require the arbitration of "Claims for [employment] discrimination
including, but not limited to Claims brought under Title VII [and]
the federal Age Discrimination in Employment Act (ADEA)." 
Memorandum of Law in Support of Defendants' Motion to Dismiss or,
in the Alternative, To Compel Arbitration and Stay Proceedings
Pending Arbitration, Exh. A.  The provision designated several
possible arbitral fora, including "the National Association of
Securities Dealers, Inc. [NASD]," of which Bear Stearns is a
member.  Id.  On June 20, 1997, DeLuca signed the arbitration
provision, stating, in the boilerplate language of the provision,
that she had "read the foregoing statements and agree[d] to the
terms as a condition of employment or continued employment."  Id. 
At the time DeLuca signed the provision, Bear Stearns was under a
preexisting duty to arbitrate any employment-related dispute with
DeLuca by virtue of its status as a member of the NASD.  See NASD
Manual-Code of Arbitration Procedure Rules 10101, 10201 (1997).
     DeLuca commenced this action in March 2001, alleging, inter
alia, violations of Title VII and the ADEA.  Second Amended
Complaint and Jury Demand at 1.  Bear Stearns has not defended the
case on the merits.  Instead, the company has moved to dismiss or,
in the alternative, to compel arbitration and stay proceedings
pending arbitration.  The issue before the court is whether the
arbitration agreement, proffered by Bear Stearns in support of its
motion, is enforceable.

                             <<@>>
                            ARGUMENT
     THE ARBITRATION AGREEMENT BETWEEN DELUCA AND BEAR STEARNS IS
     UNENFORCEABLE WITH RESPECT TO DELUCA'S TITLE VII AND ADEA
     CLAIMS.

     A.  Under The 1991 CRA, An Agreement To Arbitrate A Title VII       Or ADEA Claim
Is Enforceable, If At All, Only "Where      Appropriate And To The Extent Authorized By Law"

     Historically, pre-dispute agreements purporting to mandate the arbitration of Title VII or
ADEA claims were deemed unenforceable as against public policy.  See, e.g., Utley v. Goldman
Sachs & Co., 883 F.2d 184 (1st Cir. 1989).  In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20
(1991), the Supreme Court altered the legal landscape, holding that there was no per se barrier to the
enforcement of a pre-dispute agreement mandating the arbitration of an ADEA claim.  The Court
has since made clear that most employment contracts, containing pre-dispute arbitration provisions,
fall within the ambit of the Federal Arbitration Act, 9 U.S.C.  1, et seq. ("FAA").  See Circuit City
Stores, Inc. v. Adams, 121 S. Ct. 1302 (2001).   
     Although current Supreme Court precedent supports the view that there is no per se bar to
the enforcement of agreements mandating the arbitration of Title VII and ADEA claims, federal law
imposes at least some limitations on the enforcement of particular arbitration agreements.  First, any
agreement that requires the arbitration of a federal statutory claim must ensure that the "prospective
litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum'" such
that "the statute will continue to serve both its remedial and deterrent function.'" Gilmer, 500 U.S.
at 28 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 (1985)). 
Thus, the agreement must provide for "neutral arbitrators," "for more than minimal discovery," and
"for all of the types of relief that would otherwise be available in court."  Cole v. Burns Int'l Sec.
Servs., 105 F.3d 1465, 1482 (D.C. Cir. 1997).  Second, any such arbitration agreement must meet
certain minimum standards of enforceability.  Those standards are derived from a variety of federal
sources, including the "substantive law of arbitrability" under the FAA, Moses H. Cone Mem'l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983), federal common law waiver standards, see,
e.g., Leasing Serv. Corp. v. Crane, 804 F.2d 828, 832-33 (4th Cir. 1986) (waiver of the right to a jury
trial must be "voluntary and informed"), and federal statutory provisions (other than the FAA)
regulating the use of arbitration agreements in particular statutory contexts.     
     <<@>>
     One such federal statutory provision is the 1991 CRA.  In Section 118 of that Act, Congress
addressed the use of arbitration procedures with respect to claims of discrimination under Title VII
and the ADEA.  Congress stated that arbitration was "encouraged" but only "[w]here appropriate
and to the extent authorized by law."  Pub. L. 102-166, 118.  By its plain terms, the 1991 CRA
requires that any arbitration agreement, involving Title VII or ADEA claims, be "appropriate" and
"authorized by law."   
     In Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,  the First Circuit construed the
arbitration language of Section 118 of the 1991 CRA.  The court rejected the view that the 1991
CRA precludes the mandatory arbitration of Title VII and ADEA claims in all circumstances.  170
F.3d at 7-12.  The court ruled, however, that the 1991 CRA imposes limitations on the enforcement
of arbitration agreements, in these statutory contexts, beyond those "expressed in the FAA or at
common law."  Id. at 19.  The court construed the language of Section 118, particularly the term
"appropriate," as reflecting "Congress' concern that agreements to arbitrate employment
discrimination claims" meet certain federal standards of enforceability.  Id. at 19-21.  Applying this
understanding of Section 118, the court held that the arbitration agreement at issue in that case was
not "appropriate" within the meaning of Section 118 and, thus, not enforceable, because it failed to
provide the statutory plaintiff with adequate notice of the "range of claims subject to arbitration." 
Id. 
     Rosenberg establishes that there are minimal federal standards, derived from the 1991 CRA,
that have to be met as a precondition to enforcing an agreement to arbitrate.  Those federal standards
provide an extra layer of protection to the statutory claimant, reflecting a congressional concern not
found in either the common law or the FAA's "general federal arbitration law."  Id. at 19-20.  The
limiting language of Section 118 has "some teeth," id. at 21; it reflects (and reinforces) Congress'
concern that employees not be unfairly coerced into arbitration arrangements that would strip them
of their "right to go to court" to enforce "statutory and constitutional" protections.  H.R. Rep. No.
40(I), 102d Cong., 1st Sess. 104 (1991), reprinted in 1991 U.S.C.C.A.N. 549, 642 (explaining the
purpose of Section 118).      
     In holding that the language of the 1991 CRA imposes statutory limitations on the use of
mandatory arbitration agreements implicating federal claims of employment discrimination, the First
Circuit was following in the path marked out by the Supreme Court. In Wright v. Universal Maritime
Serv. Corp., 525 U.S. 70 (1998), the Supreme Court held that a federal statutory claimant was not
required to arbitrate his claim under the arbitration provision of a collective bargaining agreement. 
The Court relied, in part, on a provision in the Americans with Disabilities Act ("ADA"), 42 U.S.C.
 12212, which contains the identical "[w]here appropriate and to the extent authorized by law"
language found in Section 118 of the 1991 CRA.  The Court ruled that a "union waiver of employee
rights to a federal judicial forum for employment-discrimination claims," if not "clear and
unmistakable," is "not appropriate,' within the meaning of this provision of the ADA."  Id. at 82
n.2.  Although the Court did not delineate the precise impact of the "[w]here appropriate" language
"in areas outside collective bargaining," id., it made clear that this language constrains, to a degree,
the use of mandatory arbitration agreements in these statutory contexts. 
     B.  For An Agreement To Arbitrate To Be "Appropriate" And        "Authorized By
Law," Within The Meaning Of The 1991 CRA,         The Agreement Must Provide The
Employee With Valid           Consideration In Exchange For The Employee's Agreement
To        Arbitrate

     Rosenberg establishes the critical point that mandatory arbitration agreements, implicating
Title VII and ADEA claims, are subject to limitations imposed by the "[w]here appropriate and to
the extent authorized by law" language of Section 118 of the 1991 CRA.  Rosenberg holds that one
such limitation is that the waiver of the judicial forum be achieved through an explicit delineation
of the rights and claims affected by the arbitration agreement.  170 F.3d at 19-21.  Rosenberg leaves
open the question of what other limitations might be subsumed within the Section 118 language. 
Id.  In our view, an additional limitation derived from that language is that the arbitration agreement
be supported by valid consideration.         
     It is well-established in federal law that any waiver (or release) of a federal statutory claim
or right must meet certain requirements designed to ensure that the waiver is made in a knowing and
voluntary fashion.  One such requirement is that the waiver be supported by adequate consideration. 
See, e.g., Rivera-Flores v. Bristol-Myers Squibb Carribean, 112 F.3d 9, 12-13 & n.4 (1st Cir. 1997);
Smart v. Gillette Co. Long-Term Disability Plan, 70 F.3d 173, 180-82 & n.3 (1st Cir. 1995). 
Specifically, "the consideration given in exchange for the waiver [must] exceed[] employee benefits
to which the employee was already entitled by contract or law.'"  Livingston v. Adirondack Beverage
Co., 141 F.3d 434, 438 (2d Cir. 1998); accord Gormin v. Brown-Forman Corp., 963 F.2d 323, 326-
27 (11th Cir. 1992); Torrez v. Public Serv. Co. of New Mexico, Inc., 908 F.2d 687, 689-90 (10th Cir.
1990); Coventry v. United States Steel Corp., 856 F.2d 514, 522-24 (3d Cir. 1988).
     Courts have often applied this consideration requirement in invalidating particular waiver
agreements affecting federal statutory claims.  In W.B. v. Matula, 67 F.3d 484 (3d Cir. 1995), for
example, the court refused to grant summary judgment on the basis of a settlement agreement
affecting a claim under the federal Individuals with Disabilities Education Act.  The court found that
there was "a dispute of fact as to whether the [defendant] gave any consideration for the alleged
waiver" in that the defendant "appears simply to have consented, at long last, to the evaluation and
classification to which [the plaintiff] was statutorily entitled."  Id. at 498.  Similarly, in Bledsoe v.
Palm Beach County Soil and Water Conservation Dist., 133 F.3d 816, 820 (11th Cir. 1998), the court
refused to enforce a waiver agreement where "there was no evidence in the record of any
consideration given to [the plaintiff] in exchange for his allegedly waiving his rights under the ADA
and the Rehabilitation Act."  The court stressed that the statutory claimant must be provided with
consideration in addition to the "benefits to which the [claimant] was already entitled.'" Id. at 819. 
In other cases, denying enforcement of a waiver agreement, courts have invoked the "well-
established principle of federal law that a promise to perform a preexisting duty is not sufficient
consideration" for an agreement to waive a federal statutory claim.  E.g., General Intermodal
Logistics Corp. v. Mainstream Shipyards & Supply, Inc., 748 F.2d 1071, 1074-77 (5th Cir. 1984);
see also  Gorman v. Earmark, Inc., 968 F. Supp. 58, 64 (D. Conn. 1997) (refusing to enforce
agreement waiving federal claims where the waiver was "extracted" from the plaintiff without
"additional consideration").
     The consideration requirement was well-entrenched in federal law at the time Congress
enacted the 1991 CRA.  See, e.g., Bormann v. AT&T Communications, Inc., 875 F.2d 399, 401-03
(2d Cir. 1989) (citing the consideration requirement in referring to the "general consensus" in the
circuit courts concerning the enforceability of waiver agreements under the ADEA).  It is reasonable
to assume that Congress, in enacting the 1991 CRA, was aware of this established requirement.  See
Miles v. Apex Marine Corp., 498 U.S. 19, 32 (1990) (courts "assume that Congress is aware of
existing law when it passes legislation").  It is also reasonable to assume that Congress had that
requirement in mind when it used the terms "appropriate" and "authorized by law" in Section 118,
given the obvious connection between a waiver agreement qua waiver agreement and an arbitration
agreement, which does in fact waive valuable federal rights, including the right to a jury trial.  See
Ramirez-de-Arellano v. American Airlines, Inc., 133 F.3d 89, 90-91 (1st Cir. 1997) (treating an
arbitration agreement as a type of "waiver" agreement in holding that the waiver of the right to
"pursue . . . claims in federal court" must be "voluntary and intentional").  Indeed, in enacting
Section 118, Congress repeatedly invoked the principle of "voluntariness" on which the
consideration requirement rests.  See, e.g., 137 CONG. REC. 30661, 30665 (1991) (section-by-
section analysis of Rep. Edwards) (Section 118 encourages the use of "voluntary arbitration"); 137
CONG. REC. 29034, 29040 (1991) (section-by-section analysis of Sen. Dole) (Section 118
encourages arbitration "where the parties knowingly and voluntarily elect to use" arbitration); see
also Statement of the President of the United States, Signing Ceremony, Pub. L. 102-166 (Nov. 21,
1991), reprinted in 1991 U.S.C.C.A.N. 768, 769 (Section 118 encourages "voluntary agreements
between employers and employees to rely on" arbitration).  The terms "appropriate" and "authorized
by law" are plainly broad enough to encompass the type of consideration requirement found in the
federal waiver cases.  These terms should be read as incorporating, into the limitations imposed by
Section 118, the well-established requirement in federal law of adequate consideration.
     Notably, a consideration requirement is codified in the amendments made to the ADEA by
the Older Workers Benefit Protection Act, Pub. L. 101-433 ("OWBPA").  Those amendments state
that an agreement to waive "any right or claim" under the ADEA will not be considered "knowing
and voluntary" unless "the individual waives rights or claims only in exchange for consideration in
addition to anything of value to which the individual already is entitled."  29 U.S.C.  626(f)(1)(D). 
Although the OWBPA does not, by its terms, apply to arbitration agreements, see Rosenberg, 170
F.3d at 12-14,  the OWBPA was enacted by the same Congress that first deployed (in the ADA) the
"[w]here appropriate and to the extent authorized by law" language, the very language that was used
just one year later in the 1991 CRA.  See supra p.8.  It is reasonable to assume that, in using the
terms "appropriate" and "authorized by law," Congress meant, at a minimum, to adopt the type of
consideration requirement imposed by the OWBPA amendments.  
     Plainly, the requirement of adequate consideration is central to any federal waiver agreement. 
Such a requirement is particularly vital where the individual is ceding away the right to a jury trial,
a right that has constitutional implications.  The individual is doing so, moreover, in a context that
has the potential for coercion, given the superior bargaining power exercised by most employers. 
A consideration requirement serves as a bulwark against the employer using its superior bargaining
position to coerce a waiver of the judicial right of action established under statutes such as Title VII
and the ADEA.  This Court should hold that a consideration requirement is incorporated in the 1991
CRA.
  
     <<@>>
     C.  The Arbitration Agreement In This Case Did Not Provide      DeLuca With Valid
Consideration In Exchange For Her                Agreement To Arbitrate Her Title VII And ADEA
Claims

     Based on the foregoing, it is clear that the arbitration agreement in this case fails the
consideration requirement incorporated in Section 118 of the 1991 CRA and, thus, is unenforceable. 
DeLuca signed the arbitration agreement in June 1997.  At that time, Bear Stearns, by virtue of its
membership agreement with the NASD, was under a preexisting obligation to arbitrate any dispute
"arising out of the employment or termination of employment of associated person(s)."  NASD
Manual-Code of Arbitration Procedure Rule 10101 (1997).  DeLuca was such an "associated
person."  See NASD By-Laws, Article I(q) (1997) (defining an "associated person of a member" as
"any natural person engaged in the investment banking or securities business who is directly or
indirectly . . . controlled by such member").  As an "associated person," moreover, DeLuca was a
third-party beneficiary of Bear Stearns' obligation to arbitrate, entitled to invoke the NASD
arbitration procedure and bind Bear Stearns to the results of that procedure.  See Spear, Leeds &
Kellogg v. Central Life Assurance Co., 85 F.3d 21, 25-28 (2d Cir. 1996) (arbitration rules of the
New York Stock Exchange create "enforceable contract rights for non-members," who are "third
party beneficiaries" of the member firm's agreement to be bound by the exchange's arbitration rules;
non-members are entitled, in appropriate circumstances, to "insist on arbitration" of their claims with
the member firm); Kidder, Peabody & Co. v. Zinsmeyer Trusts Partnership, 41 F.3d 861, 863-64 
(2d Cir. 1994) (customer of member firm is an "intended third-party beneficiary" of a member firm's
agreement with the NASD to submit to binding arbitration; thus, customer may compel arbitration
of its dispute with a member firm even in the absence of a specific agreement with the member firm);
Broadcort Capital Corp. v. Dutcher, 859 F. Supp. 1517, 1519 n.6 (S.D.N.Y. 1994) (customer may
insist upon arbitration of a dispute with a member firm as a "third party beneficiary of [the member
firm's] contract with the NASD to resolve disputes through arbitration").  Thus, by entering into an
arbitration agreement with DeLuca, Bear Stearns merely agreed to do what it had a preexisting duty
to do under its membership agreement with the NASD -- submit to binding arbitration with respect
to any employment-related dispute with an "associated person."  It did not provide DeLuca with any
new benefit to which she was not already entitled, e.g., the right to invoke binding arbitration
procedures against Bear Stearns.  As such, there was no consideration for DeLuca's agreement to
arbitrate Title VII and ADEA claims.  Cf. Michalski v. Circuit City Stores, Inc., 177 F.3d 634, 637
(7th Cir. 1999) (consideration requirement met where the employer agreed to be bound by arbitration
procedure and employer was not under a preexisting obligation to arbitrate).
     Nor is adequate consideration supplied by the fact that DeLuca agreed to arbitration as "a
condition of employment or continued employment."  Although an "employer's specific promise to
continue to employ an at-will employee may provide valid consideration for an employee's promise
to forgo certain rights," Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1132 (7th Cir.
1997), it appears that, in this case, DeLuca was not in fact an at-will employee at all but, under
Massachusetts law, was entitled to retain her employment absent "good cause" for her dismissal. 
Plaintiff's Memorandum in Opposition to Defendants' Motion to Dismiss or, in the Alternative,
Compel Arbitration and Stay Proceedings Pending Arbitration at 14-15.  Under these circumstances,
any promise of continued employment - short of an absolute guarantee of permanent employment --
failed as consideration because it provided DeLuca with nothing more than a benefit to which she
was already entitled.  Further, even with respect to an at-will employee, the agreement at issue must
explicitly provide that the employer "promise[s] to continue [an individual's] employment in
exchange for her promise to submit claims to arbitration."  Gibson, 121 F.3d at 1132.  It is not
enough, to constitute valid consideration, that the agreement states that the employee agrees to
arbitration "as a condition of employment and continued employment;" the agreement must state that
the employer "agrees to provide [the employee] with continued employment" in return for the
employee's agreement to arbitrate.  O'Neal v. Hilton Head Hosp., 115 F.3d 272, 275 (4th Cir. 1997). 
The arbitration agreement signed by DeLuca contains no such provision.       This case underscores
the importance of insisting upon strict adherence to the requirement of adequate consideration.  Bear
Stearns seeks to enforce a waiver of DeLuca's right to have her case heard in a judicial forum, which
may include the right to try the case before a jury.  Yet, in exchange for DeLuca's forfeiture of this
valuable right, Bear Stearns has given up nothing.  This strongly suggests that DeLuca's agreement
to arbitrate was not voluntary and, thus, should not be enforced.  Bear Stearns, of course, could have
provided additional consideration for DeLuca's agreement to arbitrate.  The company, for example,
could have provided DeLuca with a lump-sum bonus or an upward adjustment in her salary.  Or, it
could have provided DeLuca with greater remedial protection in the arbitral forum, e.g., enhanced
damages or expanded discovery opportunities, as part of the agreement to arbitrate.  What it could
not do was force DeLuca to forgo her right to pursue her Title VII and ADEA claims in court without
providing DeLuca with meaningful consideration in exchange for her agreement to arbitrate.
                             <<@>>
                           CONCLUSION
     Section 118 of the 1991 CRA incorporates a requirement of adequate consideration.  The
agreement in this case fails for want of consideration.  This Court should deny enforcement of the
arbitration agreement with respect to DeLuca's Title VII and ADEA claims.   
                                Respectfully Submitted,

                                GWENDOLYN YOUNG REAMS
                                Acting Deputy General Counsel
                                        
                                PHILIP B. SKLOVER
                                Associate General Counsel

                                VINCENT J. BLACKWOOD
                                Assistant General Counsel



                              ______________
                                ROBERT J. GREGORY
                                Senior Attorney

                                EQUAL EMPLOYMENT OPPORTUNITY
                                   COMMISSION
                                1801 L Street, N.W.
                                Washington, D.C. 20507
June 28, 2001                   (202) 663-4059

                             <<@>>
                     CERTIFICATE OF SERVICE
                                
     I, Robert J. Gregory, hereby certify that on this 28th day of June, 2001, copies of the attached
brief were sent by overnight mail, postage prepaid, to the following counsel of record:
                      Nancy S. Shilepsky
                      Barbara A. Robb
                      Perkins, Smith & Cohen, LLP
                      One Beacon Street
                      Boston, MA 02108-3106

                      Barry Y. Weiner
                      Christopher P. Litterio
                      Shapiro, Israel & Weiner, P.C.
                      100 No. Washington Street
                      Boston, MA 02114



                              ____________
                                Robert J. Gregory