FILED

October 16, 1997

Cecil Crowson, Jr.

Appellate Court Clerk

IN THE COURT OF APPEALS OF TENNESSEE

WESTERN SECTION AT JACKSON

PATRICIA J. GUNBY )

and JANICE HAMIL, ) 

)

Plaintiffs/Appellees, ) Shelby Chancery No. 107064-1 R.D.

)

VS. ) Appeal Nos. 02A01-9606-CH-00140

) and 02A01-9704-CH-00073

THE EQUITABLE LIFE ASSURANCE )

SOCIETY OF THE UNITED STATES, )

DAVID BRYAN, and BOB DUNHAM, )

)

Defendants/Appellants. )

APPEAL FROM THE CHANCERY COURT OF SHELBY COUNTY

AT MEMPHIS, TENNESSEE

THE HONORABLE NEAL SMALL, CHANCELLOR

STEPHEN H. BILLER

MAURICE WEXLER

BAKER, DONELSON, BEARMAN 

& CALDWELL, P.C.

Memphis, Tennessee

Attorneys for Appellants

TIM EDWARDS

JAMES F. HORNER

GLASSMAN, JETER, EDWARDS & WADE

Memphis, Tennessee

Attorneys for Appellees

REVERSED

ALAN E. HIGHERS, J.

CONCUR:

CRAWFORD, P.J., W.S.

LILLARD, J.

In these sexual discrimination/sexual harassment cases, consolidated on appeal,
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Plaintiffs, Patricia Gunby (“Gunby”) and Janice Hamil (“Hamil”), filed suit against

Defendants, The Equitable Life Assurance Society of the United States (“The Equitable”),

David Bryan (“Bryan”) and Bob Dunham (“Dunham”), seeking damages for Defendants’

alleged acts of sexual discrimination and sexual harassment. The Defendants filed a

motion to compel arbitration and to stay the action pending arbitration or, in the alternative,

to dismiss. The trial court denied Defendants’ motions. Defendants appeal the judgment

of the trial court arguing that the trial court erred in denying Defendants’ motion to compel

Plaintiffs to submit their claims for sexual harassment and sexual discrimination to

arbitration. For the reasons stated hereafter, we reverse the judgment of the trial court.

FACTS

In April 1991, Gunby began employment with The Equitable as a commissioned

insurance salesperson. In August 1992, Hamil began employment with The Equitable as

a commissioned insurance salesperson. Upon commencing employment with The

Equitable, Plaintiffs executed a contract entitled Uniform Application for Securities Industry

Registration or Transfer (the “contracts”) which provided in part as follows:

I agree to arbitrate any dispute, claim or controversy that may

arise between me and my firm, or a customer, or any other

person, that is required to be arbitrated under the rules,

constitutions, or by-laws of the [National Association of

Securities Dealers, Inc. (“NASD”)] . . . as may be amended

from time to time. 

At the time Plaintiffs signed the contracts, the Code of Arbitration Procedure

adopted by the NASD stated in part as follows:

This Code of Arbitration Procedure is prescribed and adopted

pursuant to Article IV, Section 2(b) of the By-Laws of the

National Association of Securities Dealers, Inc. (the

Association) for the arbitration of any dispute, claim or

controversy arising out of or in connection with the business of

any member of the Association, with the exception of disputes

involving the insurance business of any member which is also

an insurance company:

(1) between or among members;

(2) between or among members and public customers, or others; and

(3) between or among members, registered clearing agencies

with which the Association has entered into an agreement to
3

utilize the Association’s arbitration facilities and procedures,

and participants, pledgees or other persons using the facilities

of a registered clearing agency, as these terms are defined

under the rules of such a registered clearing agency.

NASD (CCH) § 3701 (June 1, 1990).

During Plaintiffs’ period of employment with The Equitable, the NASD amended its

Code of Arbitration Procedure, which became effective on October 1, 1993. NASD’s

amended Code of Arbitration Procedure provided for the arbitration of “any dispute, claim

or controversy arising out of or in connection with the business of any members of the

Association, or arising out of termination of employment of associated persons with any

member.“ NASD (CCH) § 3703 (October 1, 1993). 

Throughout Plaintiffs’ employment duration with The Equitable, Bryan served as the

agency manager of The Equitable’s Memphis operation, and Dunham served as a

management employee in The Equitable’s Memphis office. 

During Plaintiffs’ employment with The Equitable, Plaintiffs allege that they were

subjected to disparate terms, conditions and opportunities as a result of their gender and

that they were subjected to sexual harassment. Plaintiffs further allege that they were

constructively discharged on March 7, 1995. On February 28, 1996, Plaintiffs filed a

complaint against Defendants in the Shelby County Chancery Court alleging violations of

the Tennessee Human Rights Act, T.C.A. § 4-21-101 et seq.

LAW

The sole issue before this Court is as follows: whether the trial court erred in

denying Defendants’ motions to compel Plaintiffs to submit their claims for sexual

harassment and sexual discrimination to arbitration. 

In Gilmer v. Interstate/Johnson Lane Corp., 111 S.Ct. 1647 (1991), the United

States Supreme Court addressed an issue similar to the one in the case at bar. The

Plaintiff, Gilmer, a former registered securities representative, filed suit for discrimination
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under the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 621 et seq.

The sole issue presented for review in Gilmer was whether a claim under the ADEA could

be subjected to compulsory arbitration pursuant to an arbitration agreement in a securities

registration application. Defendant, Interstate/Johnson Lane Corporation (“Interstate”),

hired Gilmer as the manager of its financial services department in May 1981. As required

by Interstate, Gilmer registered as a securities representative with several stock

exchanges, including the New York Stock Exchange (“NYSE”). Gilmer’s registration

application entitled “Uniform Application for Securities Industry Registration or Transfer”

provided, inter alia, that Gilmer “agree[d] to arbitrate any dispute, claim or controversy”

arising between him and Interstate “that is required to be arbitrated under the rules,

constitutions or by-laws of the organizations with which I register.” Gilmer, 111 S.Ct. at

1650. Rule 347 of the NYSE provided for the arbitration of “[a]ny controversy between a

registered representative and any member or member organization arising out of the

employment or termination of employment of such registered representative.” Id. at 1650-

51. In 1987, Interstate terminated Gilmer’s employment. Gilmer was sixty-two years of

age. After filing an age discrimination charge with the Equal Employment Opportunity

Commission (“EEOC”), Gilmer filed suit in the United States District Court for the Western

District of North Carolina, alleging that Interstate had discharged him because of his age,

in violation of the ADEA. Relying upon the arbitration agreement contained in Gilmer’s

registration application and upon the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq,

Interstate filed a motion to compel arbitration of Gilmer’s ADEA claim. The district court

denied Interstate’s motion to compel arbitration based upon Alexander v. Gardner-Denver

Co., 94 S.Ct. 1011 (1974) and its progeny. In holding that the age discrimination claim was

subject to compulsory arbitration pursuant to the arbitration agreement in Gilmer’s

securities registration application, the United States Supreme Court stated:

It is by now clear that statutory claims may be the subject of an

arbitration agreement, enforceable pursuant to the FAA.

Indeed, in recent years we have held enforceable arbitration

agreements relating to claims arising under the Sherman Act,

15 U.S.C. §§ 1-7; § 10(b) of the Securities Exchange Act of

1934, 15 U.S.C. § 78j(b); the civil provisions of the Racketeer

Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.

§ 1961 et seq.; and § 12(2) of the Securities Act of 1933, 15

U.S.C. § 77l (2). See Mitsubishi Motors Corp. v. Soler

Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87
5

L.Ed.2d 444 (1985); Shearson/American Express Inc. v.

McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185

(1987); Rodriguez de Quijas v. Shearson/American Express,

Inc., 490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989).

In these cases we recognized that “by agreement to arbitrate

a statutory claim, a party does not forgo the substantive rights

afforded by the statute; it only submits to their resolution in an

arbitral, rather than a judicial forum.” Mitsubishi, 473 U.S., at

628, 105 S.Ct., at 3354.

Gilmer, 111 S.Ct. at 1652.

In a strikingly similar case to the case sub judice, the United States Court of Appeals

for the Sixth Circuit in Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305 (6th Cir. 1991)

addressed the issue of whether a registered securities representative’s claims of sexual

harassment and sexual discrimination against her brokerage firm were subject to

arbitration pursuant to the securities registration form that she was required to execute in

order to perform her work as an account executive. Plaintiff, Linda Willis (“Willis”),

originally filed an action for sexual harassment, sexual discrimination, common law contract

claims of outrage and breach of contract in state trial court. Defendant, Dean Witter

Reynolds, Inc. (“Dean Witter”), removed the case to federal court and filed a motion to

compel arbitration based upon Willis’ execution of a Securities Registration Form U-4 and

upon Willis’ registration with various national securities exchanges, including the NYSE.

The arbitration clause of the U-4 Form stated: “I agree to arbitrate any dispute, claim or

controversy that may arise between me and my firm, or a customer, or any other person,

that is required to be arbitrated under the rules, constitutions, or by-laws of the

organizations with which I register.” Id. at 306. Rule 347 of the NYSE Rules provided:

Any controversy between a registered representative and any

member or member organization arising out of the employment

ortermination of employment of such registered representative

by and with such member or member organization shall be

settled by arbitration, at the instance of any such party, in

accordance with the arbitration procedure prescribed

elsewhere in these Rules.

Id. Willis thereafter filed a motion for leave to amend her complaint to add a claim under

Title VII. The district court subsequently granted Willis’ motion to amend her complaint,

granted Dean Witter’s motion to compel arbitration on Willis’ breach of contract claims, and

denied Dean Witter’s motion to compel arbitration as to Willis’ sexual harassment, sexual
6

discrimination and Title VII claims. Id. In holding that the district court’s denial of Dean

Witter’s motion to arbitrate Willis’ discrimination claims was in error, the Sixth Circuit Court

of Appeals relied largely upon the Supreme Court’s decision in Gilmer and stated:

The plaintiff’s arguments which suggest that something

inherent in Title VII precludes the enforcement of valid

arbitration agreements in circumstances where the FAA is

otherwise applicable was rejected in Gilmer. Further, while §

1 of the FAA excludes “contracts of employment” from the

scope of the FAA, the Supreme Court has squarely held that

arbitration agreements contained in a securities registration

application such as the one at issue in this case do not

constitute contracts for employment. Thus, § 1 of the FAA

does not exempt Willis’ discrimination claims from her

agreement to arbitrate.

Id. at 312.

In the present case, Plaintiffs argue that Alexander v. Gardner-Denver Co., 94 S.Ct.

1011 (1974), and its progeny prohibit enforcement of the arbitration provisions contained

within the contracts Plaintiffs executed regarding Plaintiffs’ claims of sexual harassment

and sexual discrimination. In Alexander, the Supreme Court addressed the issue of

whether a union employee was foreclosed from pursuing an action under Title VII of the

Civil Rights Act of 1964 (“Title VII”), 42 U.S.C. § 2000e et seq., after he had been

unsuccessful in an arbitration compelled by his collective bargaining agreement. In holding

that the employee’s statutory right to a trial de novo under Title VII is not foreclosed by prior

submission of a claim to final arbitration under the nondiscrimination clause of a collective

bargaining agreement, the Supreme Court stated that “[t]here is no suggestion in the

statutory scheme that a prior arbitral decision either forecloses an individual’s right to sue

or divests federal courts of jurisdiction.” Alexander, 94 S.Ct. at 1019. In addressing

Plaintiffs’ argument that the Supreme Court’s decision in Alexander prohibits the

enforcement of the arbitration provisions contained within the contracts Plaintiffs executed

regarding Plaintiffs’ claims of sexual harassment and sexual discrimination, we note that

the Supreme Court in Gilmer and the Sixth Circuit Court of Appeals in Willis addressed this

same argument. The Supreme Court in Gilmer stated that the Alexander line of cases

involved the issue of whether the arbitration of contract-based claims precluded

subsequent judicial resolution of statutory claims, not the enforceability of an agreement
7

to arbitrate statutory claims. In distinguishing the Gilmer case from the Alexander line of

cases, the Supreme Court stated:

First, [the Alexander line of cases] did not involve the issue of

the enforceability of an agreement to arbitrate statutory claims.

Rather, they involved the quite different issue whether

arbitration of contract-based claims precluded subsequent

judicial resolution of statutory claims. Since the employees

there had not agreed to arbitrate their statutory claims, and the

labor arbitrators were not authorized to resolve such claims,

the arbitration in those cases understandably was held not to

preclude subsequent statutory actions. Second, because the

arbitration in those cases occurred in the context of a

collective-bargaining agreement, the claimants there were

represented by their unions in the arbitration proceedings. An

important concern therefore was the tension between

collective representation and individual statutory rights, a

concern not applicable to the present case. Finally, those

cases were not decided under the FAA, which, as discussed

above, reflects a “liberal federal policy favoring arbitration

agreements.” Mitsubishi, 473 U.S., at 625, 105 S.Ct., at 3353.

Therefore, those cases provide no basis for refusing to enforce

Gilmer’s agreement to arbitrate his ADEA claim.

Gilmer, 111 S.Ct. at 1657. Similarly, the Sixth Circuit Court of Appeals in Willis cited the

foregoing quotation from Gilmer and held that the Supreme Court’s holding in Alexander

was inapplicable to the facts in Willis. See Willis, 948 F.2d at 307-308.

Plaintiffs further argue that the contracts they executed are contracts of adhesion,

ones which are dictated by employers in the field of securities sales and which are forced

upon all persons seeking and obtaining employment in the securities field. The Supreme

Court addressed a similar argument in Gilmer and stated that “[t]he unequal bargaining

power between employers and employees is not a sufficient reason to hold that arbitration

agreements are never enforceable in the employment context.” Gilmer, 111 S.Ct. at 1650.

Here, as in Gilmer, there is no indication that Plaintiffs were coerced or defrauded into

agreeing to the arbitration clause contained within the contracts they executed. We,

therefore, find this argument of the Plaintiffs to be without merit.

In the instant case, the securities registration contracts that the Plaintiffs signed

upon commencing their employment with The Equitable were the same contracts that the

plaintiff in Gilmer and the plaintiff in Willis had signed. Because the Supreme Court in

Gilmer held that Gilmer’s age discrimination claim was subject to compulsory arbitration
8

pursuant to the arbitration agreement in the securities registration application that Gilmer

had executed and because the Sixth Circuit Court of Appeals in Willis held that Willis’

sexual harassment, sexual discrimination and Title VII claims were subject to arbitration

pursuant to the arbitration agreement in the securities registration application that Willis

had executed, we find that the Supreme Court’s analysis and conclusions in Gilmer and

the Sixth Circuit’s reasoning in Willis compel the conclusion that the arbitration provisions

contained within the contracts Plaintiffs executed apply equally to Plaintiffs’ sexual

harassment and sexual discrimination claims. Furthermore, the Tennessee Human Rights

Act specifically provides that it embodies the policies of the Federal Civil Rights Act of

1964, 1968 and 1972. T.C.A. § 4-21-101 (a)(1). We, therefore, hold that the Plaintiffs’

claims of sexual harassment and sexual discrimination shall be submitted to arbitration in

accordance with the contracts signed by the Plaintiffs.

The judgment of the trial court is hereby reversed and this matter is remanded to

the trial court for entry of an appropriate order. Costs on appeal are taxed to the

Appellees for which execution may issue if necessary.

 

HIGHERS, J.

CONCUR:

 

CRAWFORD, P.J., W.S.

 

LILLARD, J.