1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

4-3-1997

Great Western Mtg v. Peacock

Precedential or Non-Precedential:

Docket 96-5273

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Recommended Citation

"Great Western Mtg v. Peacock" (1997). 1997 Decisions. Paper 76.

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1

 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 

 ---------- 

 

 No. 96-5273 

 

 ---------- 

 GREAT WESTERN MORTGAGE 

 CORPORATION 

 v. 

 MICHELE PEACOCK 

 

 Appellant

 ---------- 

 On Appeal from the United States District Court 

 for the District of New Jersey 

 (D.C. Civil No. 96-628) 

 

 ---------- 

 Argued Monday, December 16, 1996 

 BEFORE: STAPLETON, ROTH 

 and GARTH Circuit Judges

 ---------- 

 (Opinion filed April 3, 1997) 

 

 ---------- 

 

 Neil M. Mullin, Esq. (Argued) 

 Christopher P. Lenzo, Esq. 

 Smith Mullin, P.C. 

 200 Executive Drive, Suite 155 

 West Orange, New Jersey 07052 

 Attorneys for Appellant

 
2

 Roger J. Hawke, Esq. (Argued) 

 Elizabeth B. Lynch, Esq. 

 Brown & Wood, LLP 

 One World Trade Center 

 New York, New York 10048 

 

 Attorneys for Appellee

 

 ---------- 

 

 OPINION OF THE COURT 

 

 ---------- 

GARTH, Circuit Judge: 

 This appeal presents the issue of whether a district 

court, pursuant to the Federal Arbitration Act (FAA),1 should 

compel arbitration of a sexual harassment claim based on New 

Jersey's Law against Discrimination. 

 On August 8, 1994, the plaintiff, Michele Peacock, a 

resident of New Jersey, applied for work as a mortgage consultant 

at defendant Great Western Mortgage Corporation, which was 

incorporated in Delaware. At the time of her application, but 

before she had been employed, she signed a Certification 

agreeing: 

to submit any dispute related to my employment, or the 

termination of my employment, to final and binding 

arbitration (thus waiving any right to pursue any other 

administrative and/or legal proceeding), and, as a 

condition of my employment, I agree to sign Great 

Western's Arbitration Agreement upon commencement of my 

employment, and to abide by the Arbitration Agreement 

and Great Western's Binding Arbitration Policy and 

Procedures.2

 

1. 9 U.S.C. § 1 et seq.

2. App. at 22a (emphasis in original). 
3

 On September 1, 1994, Great Western employed Peacock 

and she began work. Thereafter, on September 26, 1994, Peacock 

signed a more detailed form entitled "Great Western Financial 

Corporation and Affiliates Binding Arbitration Agreement" 

(Arbitration Agreement). The Agreement required arbitration of 

all employee discrimination claims, including statutory claims 

and claims based on sex. It provided for binding arbitration in 

all employment-related disputes, including: 

all civil claims, excluding claims under the Workers' 

Compensation Act, but including, and not limited to, 

claims of employment discrimination on the basis of 

race, sex, age, religion, color, national origin, 

disability and veteran status (including claims under 

Title VII of the Civil Rights Act of 1964, the Age 

Discrimination in Employment Act, the Americans with 

Disabilities Act and any other local, state or federal 

law concerning employment or employment 

discrimination), claims based on public policy, 

statutory claims and claims against individuals or 

other entities.3

The Agreement further provided that arbitration had to be 

initiated within one year after an event giving rise to a 

dispute, and that an employee involved in an arbitration could be 

represented by an attorney, at her own expense. Finally, the 

Agreement provided that the arbitrator could not award punitive 

or exemplary damages. 

 According to Peacock, sometime after she commenced 

employment she became the object of sexual harassment. She 

alleges that her supervisor at Great Western, William Belott, 

 

3. Id. at 32a. 
4

made unwelcome advances toward her and threatened reprisal in the 

event that she discussed his behavior with others.4 In addition, 

she claims that the Branch Manager, Alice Morris, knew of 

Belott's advances but failed to take any action against him, and 

that Morris herself made inappropriate comments and suggestions.5

 Peacock retained counsel to represent her in pressing a 

claim for sexual harassment.6 In May 1995 her attorney made 

Great Western aware of Peacock's complaints, and in August 1995 

Great Western responded that after conducting an investigation, 

it "was unable to confirm" her allegations. Great Western 

advised Peacock that if she was not satisfied with the results of 

Great Western's investigation, she could "file a claim in 

arbitration, pursuant to the Binding Arbitration Agreement . . . 

dated 9/26/94." On August 23, 1995, Peacock's counsel filed for 

arbitration on Peacock's behalf. 

 Pursuant to the Arbitration Agreement, Great Western 

submitted the matter to JAMS/ENDISPUTE (JAMS), and on October 9, 

1995, JAMS confirmed that it had received the request to 

arbitrate.7 In the interim, however, Peacock retained another 

 

4. See Complaint and Jury Demand in Michele Peacock v. Great 

Western Mortgage Corporation et al., Superior Court of New Jersey 

Law Division: Essex County, No. L-13441-95, App. at 54a-56a. 

5. Id. at 56a-57a. Morris is alleged to have told Peacock, "If 

you aren't getting any deals from your realtors, walk in with 

your skirt over your head; I bet you get business then," and to 

have ordered Peacock to kiss an appraiser. Id.

6. Great Western asserts that Peacock retained the law firm 

Hannoch Weisman in January of 1995. 

7. App. at 140a. 
5

attorney, whose fees, apparently, were lower than the fees 

charged by Hannoch Weisman. On October 25, 1995, her new counsel 

informed Great Western that "we hereby withdraw all settlement 

offers and that we do not consent to arbitration of this matter." 

 On November 8, 1995, pursuant to the New Jersey Law 

against Discrimination (NJLAD), N.J.S.A. 10:5-1 et seq., Peacock 

filed a complaint against Great Western and supervisors Belott 

and Morris. In the complaint, which was filed in the Superior 

Court of New Jersey, Peacock sought money damages as well as 

declaratory and injunctive relief. In its answer, filed on 

January 30, 1996, Great Western responded, inter alia, that the 

dispute came within the purview of a binding arbitration 

agreement and that Peacock had waived any right she might have 

had to a trial. 

 On February 1, 1996, Great Western filed a petition 

under the FAA in the District of New Jersey to compel arbitration 

and to stay the state proceedings. On April 9, 1996, the 

district court issued an Order compelling arbitration and 

granting the stay.8

 Peacock appeals from that order, contending 1) that the 

FAA does not apply to employment contracts; 2) that she did not 

waive her rights under NJLAD; 3) that because Great Western's 

Arbitration Agreement would deprive Peacock of a two-year statute 

of limitations, a right to discovery, and punitive damages, it is 

void as a matter of public policy; 4) that Great Western waived 

 

8. Great Western Mortgage Corp. v. Peacock, No. 96-0268, Order of 

April 9, 1996 (D.N.J. 1996). 
6

any right to arbitration that it might have had; and 5) that the 

district court erred in denying her motion for a jury trial under 

9 U.S.C. § 4. 

 Great Western filed the petition to compel arbitration 

pursuant to 9 U.S.C. § 4, which provides: 

A party aggrieved by the alleged failure, neglect, or refusal of 

another to arbitrate under a written agreement for 

arbitration may petition any United States district 

court which, save for such agreement, would have 

jurisdiction under Title 28, in a civil action or in 

admiralty of the subject matter of a suit arising out 

of the controversy between the parties, for an order 

directing that such arbitration proceed in the manner 

provided for in such agreement. 

 The district court had diversity jurisdiction over this 

case pursuant to 28 U.S.C. § 1332, and we have jurisdiction of 

this appeal pursuant to 28 U.S.C. § 1291.9 The district court's 

decision is subject to plenary review.10 We affirm. 

I.

 Peacock argues first that the district court erred in 

compelling arbitration of her claim because the FAA does not 

apply to employment contracts. She maintains that she falls 

within the scope of the exceptions to mandatory arbitration 

provided in the FAA. 

 Section 1 of the FAA provides as follows: 

 

9. Trap Rock Industries, Inc. v. Local 825, International Union 

of Operating Engineers, AFL-CIO, 982 F.2d 884, 887 (3d Cir. 

1992). 

10. PaineWebber Inc. v. Faragalli, 61 F.3d 1063, 1065 (3d Cir. 

1995). 
7

"Maritime transactions", as herein defined, means charter 

parties, bills of lading of water carriers, agreements 

relating to wharfage, supplies furnished vessels or 

repairs to vessels, collisions, or any other matters in 

foreign commerce which, if the subject of controversy, 

would be embraced within admiralty jurisdiction; 

"commerce", as herein defined, means commerce among the 

several States or with foreign nations, or in any 

Territory of the United States or in the District of 

Columbia, or between any such Territory and another, or 

between any such Territory and any State or foreign 

nation, or between the District of Columbia and any 

State or Territory or foreign nation, but nothing 

herein contained shall apply to contracts of employment 

of seamen, railroad employees, or any other class of 

workers engaged in foreign or interstate commerce."

11 

(emphasis added). 

Peacock contends that this court has construed the FAA to exclude 

mandatory arbitration of employment contracts. 

 We cannot agree. In Tenney Engineering, Inc. v. United 

Electrical Radio & Machine Workers of America,

12 we held, after 

an analysis of the relevant legislation, that the exceptions 

specified in 9 U.S.C. § 1 refer only to workers actually engaged 

in interstate commerce.13 Tenney involved an employer and 

 

11. 9 U.S.C § 1. 

12. 207 F.2d 450 (3d Cir. 1953)(en banc). 

13. Id. at 452. 
8

employees engaged in the manufacture of goods for sale in 

interstate commerce. The company's employees, who were 

represented by a labor union, were all engaged in the manufacture 

of these goods and in incidental plant maintenance. The 

collective bargaining agreement between the company and the union 

contained an arbitration clause. The company, claiming that a 

strike by its employees violated the collective bargaining 

agreement, brought suit in the district court for the District of 

New Jersey under Section 301 of the Labor Management Relations 

Act. The union moved for a stay of the suit, pending arbitration 

under Title 9. 

 The district court denied the stay and refused to 

compel arbitration. In vacating the district court's judgment, 

Judge Maris, writing for this court, held that the employees were 

not included within the class of those excepted from the 

operation of the FAA, and hence were required to arbitrate their 

disputes: 

In the case before us the plaintiff's employees are engaged in 

the production of goods for subsequent sale in 

interstate commerce. Thus while their activities will 

undoubtedly affect interstate commerce they are not 

acting directly in the channels of commerce itself. 

They are, therefore, not a "class of workers engaged in 

. . . interstate commerce" within the meaning of 

Section 1 of title 9."14

 Peacock, in her initial brief, makes no reference to 

our Tenney decision. Rather, Peacock argues that our later case 

of Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc.15

 

14. Id. at 453. 

15. 7 F.3d 1110 (3d Cir. 1993). 
9

holds squarely that "the FAA by its own terms does not apply to 

employment contracts." Pritzker, however, was an appeal which 

did not involve employment contracts. Rather, it held that the 

asset management contracts in that case could be subjected to 

arbitration.16 Hence, even if Pritzker sought to overrule 

Tenney--which it could not17--the holding of Pritzker has no 

reference to employment contracts, and hence has no bearing on 

the issue here. 

 We are satisfied that Tenney is still the controlling 

law in this Circuit as well as others. See, e.g., Dancu v. 

Coopers & Lybrand,

18 citing and following Tenney,19 as well as 

authorities in the First, Second, Fifth, Sixth, and Seventh 

 

16. Id. at 1120. 

17. In this Circuit a published opinion can be overruled only by 

the court sitting en banc, and not by a subsequent panel 

decision. Internal Operating Procedure 9.1. See also O.Hommel 

Company v. Ferro Corporation, 659 F.2d 340, 354 (3d Cir. 

1981)("Yet a panel of this court cannot overrule a prior panel 

precedent."), cert. denied, 455 U.S. 1017 (1982). 

18. 778 F. Supp. 832 (E.D. Pa. 1991), aff'd, 972 F.2d 1330 (3d 

Cir. 1992). 

19. Id. at 834. 
10

Circuits.20 In addition, any number of district courts have 

enforced arbitration agreements in employment contracts.21

As a consequence, in this Circuit, in particular, as well as in 

the other Circuits which follow Tenney, the only class of workers 

included within the exception to the FAA's mandatory arbitration 

provision are those employed directly in the channels of commerce 

itself. Peacock does not fall within this classification. 

Accordingly, the district court did not err in compelling 

arbitration by holding that the mandatory arbitration provision 

of the FAA applied to Peacock's employment agreement. 

II.

 Peacock also argues that the Arbitration Agreement does 

not bind her, because she claims to have been coerced into 

signing it. She claims that she was unaware of the rights she 

was waiving, and that her waiver was involuntary. First, because 

at the time she applied to work at Great Western she was not 

 

20. See, e.g., Rojas v. TK Communications , Inc., 87 F.3d 745, 

747-48 (5th Cir. 1996); Asplundh Tree Expert Co. v. Bates, 71 

F.3d 592, 597-99 (6th Cir. 1995); Bacashihua v. United States 

Postal Service, 859 F.2d 402, 405 (6th Cir. 1988); Miller Brewing 

Co. v. Brewery Workers' Local Union No. 9, AFL-CIO, 739 F.2d 

1159, 1162 (7th Cir. 1984), cert. denied, 469 U.S. 1160 (1985); 

Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 

(2d Cir. 1972); and Dickstein v. duPont, 443 F.2d 783, 785 (1st 

Cir. 1971). 

21. See, e.g., Powers v. Fox Television Stations, Inc., 923 F. 

Supp. 21, 23-24 (S.D.N.Y. 1996)(enforcing arbitration of claims 

of age discrimination brought under New York State Human Rights 

Law); Crawford v. West Jersey Health Sys., 847 F. Supp. 1232, 

1242-43 (D.N.J. 1994)(enforcing arbitration of Title VII and 

NJLAD claims); Cherry v. Wertheim Schroder and Co., 868 F. Supp. 

830, 834-35 (D.S.C. 1994)(enforcing arbitration of Title VII and 

state law sexual harassment claims). 
11

informed of the provisions of the Arbitration Agreement, although 

she signed the Certification agreeing to abide by arbitration. 

Second, she argues that neither the Arbitration Agreement itself, 

nor the employee handbook which details the agreement,22 informed 

her of the New Jersey statutory rights she was being asked to 

waive. In her brief Peacock suggests that if she had been 

advised specifically of her rights under NJLAD, she would have 

sought legal advice.23 

 Peacock argues further that her waiver of statutory 

rights was coerced because she would not have been hired if she 

had not agreed to sign Great Western's Arbitration Agreement when 

she applied for a position with the company. She also charges 

that she would have been fired if she had refused to sign the 

Arbitration Agreement after beginning employment. We agree with 

the district court, however, that Peacock has neither alleged nor 

come forward with evidence to prove any facts that would 

constitute "grounds . . . at law or in equity for the revocation 

of any contract." 9 U.S.C. § 2. 

A.

 In calling on the courts to resolve these matters, 

Peacock misunderstands the narrow scope of the inquiry involved 

in the arbitration process. Under the FAA the district court 

must be satisfied that the parties entered into a valid 

 

22. Great Western claims to have provided Peacock with a copy of 

the employee handbook, but Peacock denies having received it. 

23. Appellant's Brief at 21-22. 
12

arbitration agreement. In conducting this inquiry the district 

court decides only whether there was an agreement to arbitrate, 

and if so, whether the agreement is valid. 9 U.S.C. § 2. In so 

deciding, the district court is not to consider the merits of the 

claims giving rise to the controversy, but is only to determine, 

as we have stated, whether there is a valid agreement to 

arbitrate. Once such an agreement is found, the merits of the 

controversy are left for disposition to the arbitrator.24 

Moreover, there is a strong presumption in favor of arbitration, 

and doubts "concerning the scope of arbitrable issues should be 

resolved in favor of arbitration."25

B.

 The district court here held that Peacock and Great 

Western had agreed to arbitrate, and that Peacock's claims fall 

within the scope of the Arbitration Agreement. The record 

discloses that Peacock effectively agreed to arbitration on three 

occasions: first, as a condition of her employment by Great 

Western, she agreed to sign the Arbitration Agreement upon 

beginning employment. Second, she then signed the Arbitration 

Agreement itself, after she was employed. Finally, after about 

 

24. See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 

395 (1967). 

25. Moses H. Cone Memorial Hospital v. Mercury Construction 

Corp., 460 U.S. 1, 24-25 (1983); see also Dean Witter Reynolds 

Inc. v. Byrd, 470 U.S. 213, 218 (1985)("By its terms, the Act 

leaves no place for the exercise of discretion by a district 

court, but instead mandates that district courts shall direct the 

parties to proceed to arbitration on issues as to which an 

arbitration agreement has been signed."). 
13

one year of employment, on August 23, 1995, Peacock's attorney 

initiated arbitration by invoking the Arbitration Agreement, when 

he filed for arbitration on her behalf. 

 The record reveals that Peacock was a college graduate, 

having received a Bachelor of Science degree in Business 

Administration after four and one-half years of college. She 

does not contend that she failed to read the document containing 

the Arbitration Agreement, or that she had not read the 

arbitration provisions. Indeed, Peacock had no reservations 

about signing any agreements which specified necessary conditions 

of employment. As her Certification in lieu of Affidavit 

discloses, Peacock decided to arbitrate her dispute with Great 

Western because "I could not afford the fee that my first law 

firm, Hannoch Weisman, would have charged me to challenge the 

arbitration agreement."26 Hence, Peacock agreed to arbitration 

not because of coercion on the part of Great Western, as she 

claims, but because of the fees that she would have been charged 

had she resorted to other legal proceedings. Moreover, during 

this period of time she was represented by counsel. 

 Peacock adduced no evidence and made no argument that 

the terms of the Arbitration Agreement were kept from her. 

Although her brief on appeal argues that Peacock had remained 

generally ignorant of the details of the Arbitration Agreement--

and suggests that Great Western deliberately kept her in the dark 

until her "job hung in the balance"27--it is clear that she made 

 

26. Supplemental Certification of Michele Peacock, App. at 187a. 

27. Appellant's Brief at 23. 
14

no effort to find out the terms of the Arbitration Agreement to 

which she had agreed as a condition of her employment. Indeed, 

Peacock's attorney agreed that Peacock would have signed anything 

in order to be hired.28

 At oral argument before the district court her attorney 

also conceded that she could have asked to see a copy of the 

Arbitration Agreement before she started working, and there was, 

and is, no issue presented that she had not read the employment 

papers which she had signed.29 

C.

 The true thrust of Peacock's argument is that signing 

the Certification and the Arbitration Agreement was a condition 

of Great Western's employment, which she accepted only because 

she was the weaker of the two parties to the employment 

contract.30 Yet, as the Supreme Court has made clear in Gilmer 

 

28. App. at 166a. 

29. App. at 165a. Further, the Certification in the employment 

application begins by instructing applicants to read the 

Certification carefully before signing, and to ask for assistance 

with any questions respecting its terms. The Certification goes 

on to state clearly that by agreeing to binding arbitration an 

applicant was "waiving any right to pursue any other 

administrative and/or legal proceeding." Id. at 22a. 

30. We note that the only condition of employment challenged by 

Peacock is the binding arbitration requirement. She nowhere 

claims that the other conditions of employment--which required 

Peacock, among other things, to be fingerprinted, to pass a 

physical examination, to take a drug test, to agree to credit 

checks, to be bonded, and to allow Great Western to contact her 

references in the course of a background investigation--were 

either coerced or unenforceable. 
15

v. Interstate/Johnson Lane Corp.,

31 more than a disparity in 

bargaining power is needed in order to show that an arbitration 

agreement was not entered into willingly. See also Pritzker v. 

Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1118 

(3d Cir. 1993) (rejecting argument that arbitration clause was 

adhesive merely because there was a disparity in bargaining 

power). 

 In Gilmer, Gilmer had been required by his employer to 

register as a securities representative with the New York Stock 

Exchange (NYSE). His registration application required Gilmer to 

arbitrate controversies with respect to employment or termination 

of employment. When Gilmer's employment was terminated at age 62 

he brought suit in district court, claiming a violation of the 

Age Discrimination in Employment Act of 1967. In response, his 

employer moved to compel arbitration, relying upon Gilmer's 

registration application and the FAA. Although the district 

court denied Gilmer's motion, the court of appeals reversed that 

ruling, and the Supreme Court, in turn, affirmed the court of 

appeals. The Court held that statutory claims such as Gilmer's 

may be the subject of an arbitration agreement and enforceable 

under the FAA, and that "[m]ere inequality in bargaining power 

. . . is not a sufficient reason to hold that arbitration 

agreements are never enforceable in the employment context."32

 

31. 500 U.S. 20, 33 (1991). 

32. 500 U.S. at 33. 
16

 The Court noted that Gilmer, who was an experienced 

businessman, had not been coerced or defrauded into agreeing to 

arbitrate. Similarly, the record in this case reveals no 

indication that Peacock, who was a Business Administration 

graduate with four and one-half years of college education, was 

coerced or defrauded when she agreed to arbitrate any controversy 

that might arise out of her employment with Great Western.33 She 

does not allege that Great Western misled her or concealed 

anything from her, and as we have recounted earlier, Peacock had 

effectively agreed to arbitration on three separate occasions. 

See IIB, supra. 

 The district court did not err in ruling that Peacock 

had willingly agreed to arbitrate under Great Western's 

Arbitration Agreement. 

III.

 Nor is there merit to Peacock's claims that New 

Jersey's public policy, as expressed in NJLAD,34 is offended by 

requiring her to arbitrate her sexual harassment claim. Peacock 

 

33. The kind of "fraud or overwhelming economic power that would 

provide grounds 'for the revocation of any contract,'" as the 

Supreme Court stated the matter in Mitsubishi Motors Corp. v. 

Soler Chrysler-Plymouth Inc., 473 U.S. 614, 627 (1985)(quoting 9 

U.S.C. § 2), is not present in the instant case. See also

Coleman v. Prudential Bache Securities, Inc., 802 F.2d 1350, 1352 

(11th Cir. 1986)("absent a showing of fraud or mental 

incompetence," a party to an arbitration agreement will be held 

bound to its terms). 

34. New Jersey's LAD provides that practices of discrimination 

entailing race, creed, color, national origin, ancestry, age, 

sex, or affectional or sexual orientation, among others, are 

proscribed and actionable. N.J.S.A. 10:5-1 et seq.
17

argues that New Jersey public policy is expressed clearly in 

NJLAD, and that because attorney's fees, a two-year statute of 

limitations, discovery, and punitive damages are all available 

under NJLAD, any agreement like the Arbitration Agreement which 

prospectively deprives an employee of these rights runs counter 

to that public policy. She also contends that, apart from NJLAD, 

New Jersey's standards for establishing waiver of a jury trial 

are not met by the Arbitration Agreement. Peacock, accordingly, 

concludes that her agreement to arbitrate is unenforceable. We 

disagree with Peacock that the waiver embodied in the Arbitration 

Agreement of certain rights afforded by New Jersey law renders 

the Agreement unenforceable under the FAA. 

 First, it is evident that the FAA is meant to have a 

preemptive effect, albeit a narrow one. In enacting the FAA, 

Congress declared "a national policy favoring arbitration" and 

"withdrew the power of the states to require a judicial forum for 

the resolution of claims which the contracting parties agreed to 

resolve by arbitration."35 Thus, a court considering a motion 

made under Section 4 of the FAA, see n.25, supra, may be called 

upon to decide whether the FAA preempts some state law 

unfavorable to arbitration. 

 It is also clear that the FAA will preempt such laws. 

The Supreme Court, in Mastrobuono v. Shearson Lehman Hutton, 

Inc., 115 S.Ct. 1212 (1995), Perry v. Thomas, 482 U.S. 483 

(1987), and Southland Corp. v. Keating, 465 U.S. 1 (1984), has 

 

35.Southland Corp. v. Keating, 465 U.S. 1, 10 (1984). 
18

held that arbitration agreements within the scope of the FAA may 

be enforced even if they conflict with state law policies that 

would preclude arbitration. 

 However, while Congress's intention in enacting the FAA 

was to provide federal court enforcement of a waiver of the right 

to a judicial forum respecting a state statutory claim, the 

preemptive effect of the FAA is restricted to the question of 

arbitrability, and as previously discussed, whether the agreement 

to arbitrate is valid. See IIA, supra. The "FAA preempts state 

laws which 'require a judicial forum for the resolution of claims 

which the contracting parties agreed to resolve by arbitration.'" 

Volt Information Sciences, Inc. v. Board of Trustees of Leland 

Stanford Junior Univ., 489 U.S. 468, 478 (1989)(quoting Southland 

Corp. v. Keating, 465 U.S. 1, 10 (1984)). Thus, a court 

compelling arbitration should decide only such issues as are 

essential to defining the nature of the forum in which a dispute 

will be decided. 

 The FAA does not otherwise preempt state law. "The FAA 

contains no express preemptive provision, nor does it reflect a 

congressional intent to occupy the entire field of arbitration." 

Volt, 489 U.S. at 477. Once a dispute is determined to be 

validly arbitrable, all other issues are to be decided at 

arbitration. Since the purpose of the FAA is to ensure that 

agreements to arbitrate are enforced, a court compelling 

arbitration should preserve the remaining disputed issues for the 

arbitrator to decide. Any argument that the provisions of the 

Arbitration Agreement involve a waiver of substantive rights 
19

afforded by the state statute may be presented in the arbitral 

forum. It would be anomalous for a court to decide that a claim 

should be referred to an arbitrator rather than a court, and 

then, by deciding issues unrelated to the question of forum, 

foreclose the arbitrator from deciding them. 

 Second, we note that in the absence of a state law 

which discourages the enforcement of arbitration agreements, no 

question of preemption, as such, is presented. The issue in such 

cases is whether a waiver of state law rights is enforceable 

under the FAA, rather than whether state law rights are 

themselves preempted by the FAA. The instant controversy 

presents such a case. 

 Peacock has failed to demonstrate any New Jersey policy 

against arbitration of claims such as hers. Accordingly, we 

reject her argument that the Arbitration Agreement is void as a 

matter of public policy. Clearly, as we just described, the 

waiver of a state law right to a judicial forum for the 

resolution of state claims is enforceable under the FAA. Thus, 

Peacock, by agreeing to arbitration on three occasions, 

effectively waived her right to a jury trial.36 Likewise, the 

 

36. In addition to insisting that she was entitled to a jury 

trial as a matter of New Jersey's public policy, Peacock also 

claims that she was entitled to a jury trial to determine whether 

the parties agreed to arbitrate. Her request is grounded on 

Section 4 of the FAA, which provides: "If the making of the 

arbitration agreement or the failure, neglect, or refusal to 

perform the same be in issue, the court shall proceed summarily 

to the trial thereof." 9 U.S.C. § 4. She claims that the 

district court ignored her request for a jury trial. 

 The record clearly reveals, however, that there could 

be no material dispute of fact as to Peacock's having agreed to 

arbitrate. The arguments raised by Peacock, contending that she 

did not so agree, were properly discounted by the district court, 
20

waiver of the state-created right that Peacock claims to 

litigation-type discovery is also enforceable under the FAA.37

 As to the waiver of state law rights unrelated to the 

provision of a judicial forum, we hold only that the inclusion of 

such waivers in a document described as an "Arbitration 

Agreement" cannot be asserted to avoid the arbitration agreed to 

therein. Rather, the party challenging the validity of such 

waivers must present her challenge to the arbitrator, who will 

determine the validity and enforceability of the waiver of 

asserted state law rights. Thus, here we leave it to the 

(..continued) 

and are rejected by us. Because no material dispute of fact as 

to her agreement was discerned by the district court--nor is any 

discerned by us--the district court properly denied her request 

for a jury trial. 

 In Doctor's Associates, Inc. v. Jabush, 89 F.3d 109, 

114 (2d Cir. 1996), a party resisting a motion to compel 

arbitration sought a jury trial. The court ruled that a party 

does not become entitled to a jury trial under the FAA merely by 

demanding one, but bears the burden of demonstrating that there 

is a genuine issue as to whether there was an agreement to 

arbitrate. The Second Circuit held that to "establish a genuine 

issue entitling a party to a jury trial, 'an unequivocal denial 

that the agreement [to arbitrate] had been made [is] needed, and 

some evidence should [be] produced to substantiate the denial.'" 

 (citing and quoting Interbras Cayman Co. v. Orient Victory 

Shipping Co., S.A., 663 F.2d 4, 7 (2d Cir. 1981). See also

Doctor's Associates, Inc. v. Stuart, 85 F.3d 975, 983-84 (2d Cir. 

1996)(party resisting arbitration does not get a jury trial 

merely by demanding one)(citations omitted); Dillard v. Merrill 

Lynch, Pierce, Fenner & Smith Inc., 961 F.2d 1148, 1154 (5th Cir. 

1992)(party resisting arbitration bears "the burden of showing 

that he is entitled to a jury trial under § 4 of the Arbitration 

Act," and must produce at least some evidence in support of 

factual allegations)(quoting Bhatia v. Johnston, 818 F.2d 418, 

422 (5th Cir. 1987)), cert. denied, 506 U.S. 1079 (1993). 

37. Indeed, given that Great Western argues that informal 

discovery will be available at arbitration, there appears to be 

no point at issue here. Appellee's Brief at 42; App. at 66a-67a. 

See Gilmer, 500 U.S. at 31 (less extensive, more informal 

discovery available in arbitral forum does not render arbitral 

forum inadequate to vindicate statutory rights). 
21

arbitrator to determine whether Peacock has waived her right to 

attorney's fees38 or to a two-year statute of limitations.39

 We also do not rule on whether Peacock has waived her 

right to punitive damages under NJLAD--a waiveable state right 

not preempted by the FAA. The availability of punitive damages 

is not relevant to the nature of the forum in which the complaint 

will be heard. Thus, availability of punitive damages cannot 

enter into a decision to compel arbitration. NJLAD provides that 

a victim of unlawful discrimination may be awarded punitive 

damages, but the issue of whether this right has been waived, see

Swarts v. Sherwin-Williams Co., 581 A.2d 1328, 1331 (N.J. Super. 

Ct. App. Div. 1990), is separate and apart from the issue of 

whether an employee has agreed to an arbitral forum, and hence, 

is for the arbitrator to decide. See Mastrobuono, 115 S.Ct. 1212 

(1995). 

 

38. Peacock asserts that NJLAD's provision for attorney's fees 

makes the Arbitration Agreement inconsistent with New Jersey 

public policy. Great Western has acknowledged in this 

proceeding, however, that the Arbitration Agreement authorizes 

the arbitrator to award counsel fees. 

39. Peacock actually filed her claim within the one-year period 

provided for in the Arbitration Agreement. 
22

IV.

 Finally, we are obliged to address one last argument 

made by Peacock. Peacock argues that, for two reasons, Great 

Western had waived its right to arbitrate. First she asserts 

that Great Western breached the Arbitration Agreement by failing 

to submit her claim to JAMS within ten days after receiving it 

from her.40 In light of the fact that we are affirming the Order 

of the district court compelling arbitration, the issue of 

whether Great Western used its best efforts to commence 

arbitration in a timely fashion is for the arbitrator to 

determine.41

 Her second claim is that Great Western, by failing to 

seek another arbitrator after JAMS refused to arbitrate the 

dispute,42 waived its right to seek arbitration. 

 

40. Great Western's Arbitration Policy provides that Great 

Western, within ten business days of receiving a demand for 

arbitration, should "use its best efforts to commence arbitration 

proceedings by submitting the dispute to the Judicial Arbitration 

& Mediation Services ("J.A.M.S.") or, if applicable, a comparable 

arbitration service." App. at 66a. 

41. Peacock's initial request for arbitration was made in a 

letter dated August 23, 1995. On September 7, 1995--ten business 

days later--Great Western indicated to Peacock's prior counsel 

that the matter had been forwarded to Great Western's Legal 

Department for processing. 

42. According to Peacock, Great Western's arbitration policy 

failed to meet JAMS's standards of procedural fairness, and JAMS 

refused to accept her case for arbitration. Peacock points to the 

following statement of JAMS standards, in particular: 

 "These minimum standards for employer-wide arbitration 

procedures are: 

 1. The rights and remedies that would otherwise be 

available to an individual under applicable federal, state or 

local law should remain available under the arbitration clause, 

unless the individual employee would retain the right to pursue 

the unavailable remedies in court. We are particularly concerned 

that the clause maintains the right to try to win exemplary 
23

 This argument, which is tantamount to claiming that 

Great Western waived its right to compel arbitration, is without 

merit. Peacock adduces no evidence that would allow us to find 

that Great Western had waived its right to compel arbitration. 

Courts deciding whether a party has waived a right to compel 

arbitration must make an initial determination as to whether the 

conditions of waiver have been met, and waiver under the FAA is 

not to be lightly inferred.43 

 Even if we were to accept Peacock's argument that Great 

Western failed to request a second arbitrator after JAMS refused 

to accept arbitration, Peacock did not establish waiver. Peacock 

 provides no record evidence either of the date on which JAMS 

refused to arbitrate, or of the date on which Great Western 

was informed of JAMS's refusal to arbitrate her claim. 

 Moreover, the record reveals that JAMS's refusal to 

arbitrate came long after Peacock herself withdrew the matter 

from arbitration,44 and that Great Western did attempt to secure 

another arbitrator.45 Thus, while Peacock fails to indicate 

(..continued) 

damages (e.g., punitive damages, which the Civil Rights Act of 

1991 allow [sic] as available damages in certain circumstances; 

and, double damages for 'willful' conduct under the federal age 

discrimination statutes), but only if such damages are available 

under the relevant law." Appellant's Brief at 33-34. 

43. PaineWebber Inc. v. Faragalli, 61 F.3d 1063, 1068 (3d Cir. 

1995)(citations omitted). 

44. Certification of Neil Mullin, App. at 90a. 

45. Great Western's counsel, just two days after the district 

court Order compelling arbitration of Peacock's claim, informed 

Peacock's counsel that in light of JAMS's refusal to arbitrate, 

and pursuant to Paragraph 3 of the Arbitration Agreement, the 

parties were required to select a new arbitrator. 

Letter, April 11, 1996, Record Ex. B. 
24

either precisely when JAMS refused to arbitrate, or when that 

knowledge was made known to Great Western, it was not until 

February 1996 that Peacock's second attorney certified that JAMS 

had made him aware of its policies just several weeks earlier.46

 Peacock, of course, had by that time, long since withdrawn her 

claim from arbitration by her counsel's letter of October 25, 

1995. 

 In other words, the arbitration process stalled neither 

because JAMS refused to arbitrate, nor because Great Western 

waived arbitration, but because Peacock refused to continue the 

arbitration process. Thus, no inference can be drawn that Great 

Western had waived its right to compel arbitration. 

 Next, the record makes clear that Great Western's 

response was always to insist that the only forum in which 

Peacock's complaints could be heard was the arbitral forum. In 

fact, in response to the letter of May 18, 1995, in which 

Peacock's allegations of sexual harassment were first made known 

to Great Western, Great Western advised Peacock that she could 

bring her claim to an arbitrator.47 Once Peacock filed her claim 

and then withdrew from arbitration, Great Western was consistent 

in preserving its right to an arbitral forum. Thus Great 

 

46. The Certification of Peacock's attorney, Neil Mullin, dated 

February 26, 1996, states: "Several weeks ago, I was advised by a 

Mr. Elston of JAMS/Endispute that the Great Western 'arbitration 

policy' and the alleged 'arbitration agreement' between Michele 

Peacock and Great Western failed to meet JAMS/Endispute's minimum 

standards. Mr. Elston advised me that consequently, 

JAMS/Endispute would not entertain arbitration in this matter." 

App. at 90a. 

47. App. at 44a. 
25

Western, as its brief on appeal demonstrates, informed JAMS of 

its intention to preserve its right to arbitration: 

. . . Peacock initiated the arbitration on August 25, 1995 . . . 

. On October 25, 1995, her new counsel purported to 

rescind all three arbitration agreements . . . . On 

November 8, 1995, Peacock filed suit against Great 

Western in New Jersey Superior Court and resisted all 

efforts to compel arbitration . . . . 

 Upon learning it had been sued, Great Western sent 

a letter to JAMS/Endispute, dated December 6, 1995, 

advising it that Peacock was now refusing to arbitrate. 

 Great Western stated in its letter that: 

The defendants will respond to this lawsuit and assert the 

enforceability of the Arbitration Agreement. 

However, until such time as the enforceability of 

the Arbitration Agreement is resolved, 

JAMS/ENDISPUTE need not take any action on this 

file.48

 Indeed, Great Western attempted to preserve its right 

to an arbitral forum by seeking to compel arbitration in state 

court49 as well as in federal court. Moreover, after becoming 

aware of JAMS's refusal to arbitrate Peacock's claim, Great 

Western notified Peacock's counsel of the need to refer the 

dispute to another arbitration service.50

 Given the burden that Peacock bears in demonstrating 

waiver, and her lack of evidence in support of her assertions, we 

are satisfied that Great Western clearly preserved the right to 

 

48. Appellee's Brief at 43-44 (citations omitted); Supplemental 

Appendix, annexed thereto, at 7. 

49. App. at 100a. 

50. See n.45 supra. 
26

refer Peacock's claim to arbitration. As we have stated, waiver 

is not to be lightly inferred.51 Indeed, a party waives the 

right to compel arbitration only in the following circumstances: 

when the parties have engaged in a lengthy course of litigation, 

when extensive discovery has occurred, and when prejudice to the 

party resisting arbitration can be shown.52

 In this case, none of these factors have been shown. 

Great Western did not initiate any litigation, and in response to 

Peacock's suit in state court, Great Western responded vigorously 

by moving for a stay of proceedings and for an order compelling 

arbitration in both state and federal courts. There has been no 

discovery initiated by Great Western, no litigation on the 

merits, and no prejudice which has inured to Peacock. In short, 

the record discloses that Great Western has not waived its right 

to compel arbitration of Peacock's claims. 

 

51. PaineWebber Inc. v. Faragalli, 61 F.3d 1063, 1068 (3d Cir. 

1995)(citations omitted). 

52. Id. at 1068-69; Gavlik Const. Co. v. H.F. Campbell Co., 526 

F.2d 777, 783-84 (3d Cir. 1975)(rejecting argument that party 

compelling arbitration waived right by filing third-party 

complaint, because prejudice was not shown); Hoxworth v. Blinder, 

Robinson & Co. Inc., 980 F.2d 912, 925-27 (3d Cir. 1992)(party 

waived right to compel arbitration because by contesting the 

merits in litigation, party opposing arbitration had been 

prejudiced). 
27

V.

 The district court's Order of April 9, 1996, which, 

among other provisions, compels arbitration, will be affirmed.