# FILED
October 16, 19 97 Cecil Crowson, Jr . App ellate C ou rt Clerk IN THE COU RT OF A PPEA LS OF TENN ESSEE WESTERN SECT ION A T JA CKSON
PATRICIA J. GUNBY ) and JANICE HA MIL, ) ) Plaintiffs/App ellees, ) Shelby Chancery No. 107064-1 R.D. ) VS. ) A ppeal Nos. 02 A01- 9606-CH-00140 ) and 02A

01-9704-CH- 00073 THE EQUITABLE LIFE A SSURANCE ) SOCIETY OF

THE UNIT ED STA

TES, ) DAVID BRY

AN, and BOB D UNHAM, ) ) Defendants/Ap pellants. )
APPEAL FROM THE CH ANCERY COU RT OF S HELBY COUN TY AT MEMPHIS, TEN NESSEE THE HONORABLE NEAL SMALL, C HANCELLOR
STEPHEN H. BILLER MA URICE WEXLER BAKER, DONELSON, BEA RMAN & CALDWELL, P.C. Memphis, Tennessee Attorneys for Appellants
TIM EDWARDS JAM ES F. HORN ER GLASSMA N, JETER, EDWARDS & WA DE Memphis, Tennessee Attorneys for Appellees

REVERSED

ALAN E. HIGHERS , J.

CONCUR: CRA WFORD, P.J., W.S. LILLA RD, J. In these sex ual discrimination/sexual harassment case s, consolidated on appe al,2

Plaintiffs, Patricia G unby (“Gun by”) and J anice H amil (“Hamil”), filed suit against Defendants, The Equitable L ife Assurance Soc iety of the United States

(“The Equitable”), David Bryan ( “Br

yan ”) a nd Bo b Du nham (“D unha m”) , se eki ng d amag es fo r De fe n dants’ alleged acts of sexual discrimin ation and sex ual ha rassment. The Defendants filed a motion to compel arbitr

ation and to stay

the action pending arbi tration or, in the alternat ive, to dismiss. The t rial court denied D efendants’ motions. Defendants appeal thejudgment of the trial court arguing that the trial cour t erred in den ying D efendants’ motion to compel Plai ntiffs to submit their claims for sex ual ha ra ssment and sex ual discri mination to arbitration. For the rea sons stated hereafter, we reverse the judgment of the tr ial court.

FACTS In April 1991, G unby began empl oyment wi th The Equitabl e as a commissioned insurance salesperson. In August 1992, H amil began employment wi th The Equitableas a commis sioned insuran ce sales person . Upon co mmen cing e mpl oyment wi th The Equitable, Plaintiffs exe cuted a contrac t entitled Uni form Application for Securiti es Industry Registration or Transfer (the “contracts”) which provided in part as fo llows:

I agree to ar bitrate any

dispute, clai m or controversy that may a rise between me and my firm, or a customer, or any othe r person, t h at is required to be arbitrated under the rules, constitutions, or by-l aws of the [National Associ ation of Securit ies De alers, Inc. (“NASD” )] . . . as may be amended from time to time.

At the time Plaintiff s signed the contracts, the Code of Arbitration Procedure adopted by the NASD stated in part as f ollows:

This Code of Arbitrati on Procedure i s prescri bed and adopted pursuan t to A rti cleIV, Sect ion 2(b) of th e By -Law s of th e National Association of Securities Dealers, Inc . (the Associati o n) for the arbitr ation of any dis pute, claim or controversyarising out of or in connection with the bus iness of any member of the Associ ation, wi th the excepti on of disputes involv ing the insurance business of any member which is also an in sura nce c omp any: (1) between or among members; (2) betw een or among members and public customers, or other s; and (3) between or among members, register ed clearing agencies with which the Association h as entered into an agreement to3 util ize the Associati on’s arbitr ation fa cilities and procedures, and participants , pledgees or other persons

using the faci lities o f a regist ered cleari ng agency , as these terms are define d und er th e rule s of such a regis tere d cle arin g agen cy. NASD (CCH) § 3701 (June 1, 1990).
During Plaintiffs’ per iod of employment w ith The Equitabl e, the NASD amended i ts Code of Ar bitr

atio n Proced ure, whi ch be cameeff ecti ve on October 1, 1993. NASD’s amended Code of Arbitration Procedure provided forthe a rbi tra tion of “any dispute, claim
or contr oversy ari sing out of or in connection w ith the busines s of any members of the Association, or arisi ng out o f termination of employ ment of associated per sons wit h any member.“ NASD(CCH) § 3703 (October 1, 1993).
ThroughoutPlaintiffs’ employ ment duration w ith The Equitabl e, Bryan s erved as the agencymanager of The Equitab le’s Memphis o peration , and Dunham served as a management employ ee in The Equita ble’s Memphis office.
During Plaintiffs’ e mploymen t with The Equitable, Plaintiff s allege that they were subjected to disparate t erms, conditi ons and opportunities as a result of th eirgender and that they w ere subjected t o sexual har assm ent. Plaintiffs f urther allege that they were constructivelydischarg ed on March 7, 1995. On Febr uary 28, 1996, Plaintiffs filed a complaintagainst Defendants in the Shelby C ounty Chancery

Court alle ging v iolations of the Tennessee Human Ri ghts Act, T.C .A. § 4-21-101 et seq.

LAW The sole issue before this Court is as follows: whether the trial c ourt erred in denying Defe ndan ts’ moti ons t o com pel Plai ntiffs to submit their claims for sex ual harassment and sex ual discri mination to arbi tration.

In Gilmer

v. Interstate/Johnson Lane C orp. , 111 S.Ct. 1647 ( 1991), the Unit ed States Supreme Court a ddressed an is sue similar to the one in the c ase at bar. The Plai ntiff, Gilmer, a former register ed securiti es representat ive, filed suit for discrimi nation4

under the Age Di scriminati on in Employment Act of 1967 (“AD EA”), 29 U.S .C. § 621 et seq

. The sole issue presented for rev iew in Gilmer

was whether a claim under the ADEA could be subjected to compulsory arbitrati on pursuant to an a rbitration agreementin a securi ties registr ation application. Defen dant, Interstate/Joh nson Lane Corporation (“Intersta te”), hired Gilmer

as the manager of its fina ncial services department in May 1981. As required byInterstate, Gilmer registered as a securities represent ative wit h sev eral stock
ex changes, including the New York Stock Exchange (“N YSE”). G ilmer’s registrati on application entit led “U niform A pplic ation fo r Secu riti es Indu stry Regi strat ion or

Tr ansfe r” provided, inter alia , tha t Gilm er “ag ree[ d] to arbit rate any di sput e, cla im or cont rover sy” arising betwe en h im and Interstate “that is required to be arb itrated under the rules, constitutions

or by-l aws of the o rgani zatio ns wi th which I register.” Gilmer , 111 S.Ct. at 1650. Rule 347 of the NYSE pr ovided for the arbitration of “[a]ny contr oversy between a registered representati ve and any membe r or me mb er organiz ation arisi ng out of the employment

or terminati on of employment of such registered rep resentative.” Id . at 1650- 51. In 1987, Interstate terminated Gi lmer’s employ ment. Gilmer w as sixty-two years o f age. After fili ng an age discriminat ion charge with the Eq ual Employment Opportunity Commission (“EEOC”) , Gilmer filed suit in the U nited StatesDistric t Court for

the W estern District of North Carol ina, alleg ing that Inter state had discha rged him becau se of his age, in violati on of the ADEA. Rel ying upon the arbitrati on agreement containe d in Gilmer’s registr ation application a nd upon the Federal Arbitrati on Act (“FA A”), 9 U.S. C. § 1 et seq , Interstate filed a

motion to comp el arb itrat ion of G ilmer ’s AD EA cla im. Th e dis trict court denied Interstate’s

motion to compel ar bitration bas ed upon Alexa nde r v. Gardner-De nver Co. , 94 S.Ct. 1011 ( 1974) and its pr ogeny. In holding that

the age disc rimination c laim was subject to compulsory arbitratio n pu rsuant to the arbitration agreeme nt in Gilmer’s securities

registr ation applicat ion, the Unite d States Supreme C ourt stated: It is by now

clear that statutory c laims may be the subject of an arbitrati on a greement, enforceab le pursuant to the FAA. Indeed, in recent ye ars we hav e held enforceable ar bitration agreementsrelating to claims ari sing under the Sherman Act, 15 U.S.C. §§ 1-7; § 10(b) of t he Securities Exchange Act of 1934, 15 U.S.C. § 78j(b); the civi l provi sions of the Rack eteer Influenced and Corrupt O rganiz ations Act ( RIC O), 18 U.S.C. § 1961 et seq .; and § 12(2) of the S ecurities A ct of 1933, 15 U.S.C. § 77 l

(2). See Mitsubishi Motors Corp . v. Sol er Chrysler -Plymou th, Inc

. , 473 U.S. 614, 105 S.Ct. 3346, 875 L.Ed.2d 444 (1985); Shearson/Am erican E xpress Inc. v. McM ahon , 482 U.S. 220, 107 S.Ct. 2332, 96 L.E d.2 d 18 5 (1987); Rodrigue

z 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 recogniz ed that “by agreement toarbitrate a statut ory claim , a party does not forgo the su bstantive r ights afforded by the statute; it onl y submitsto their re solution in an arbitral, rather than a judicial forum.” Mitsubishi , 473 U.S., at 628, 105 S.Ct., at

3354. Gilmer , 111 S.Ct. at 16 52.

In a strikingly similar case to the case sub judice , the United States Court of Appeals forthe Sixth Circuit i n Willis v. Dean Witter R eynolds, Inc. , 948 F.2d 305 (6t h Cir. 1991) addressed the issue of w he ther a r egistered s ecurities r epresentative’s claims of sexual harassmentand sexual discriminat ion against her brokerag e firm were subject to arbitration pursuantto the securi ties regi stration form that she was required to execute in order to perform her work as an account executi ve. Plai nt iff, Linda W illis (“Willis”), originally filed an action for sexual harassm ent, sexual d iscriminat ion, co mmon law contract claim s of outrage and breach of contract i n stat e trial court. Defendant, Dean Witter Reynolds, Inc. (“De an Witter”), removed the case to federal court and filed a motion t o compel arbitration based upon W illis’ execution of a Securities Registration Form U-4 and upon W illis’ registration with various national s ecurities e xchanges, including the NYSE. The arbit ratio n clau se of theU-4 F orm s tated: “I agr ee to arbitrat e any disput e, claim or controversythat may arise between me and my firm, or a custo mer, or any other person, that is required t o be arbitrate d under the rul es, constituti ons, or by- laws of the organizations with which I register.” Id . at 306. Rul e 347 of the NYSE R ules prov ided:

Any controver

sy betw een a registered represe ntative and an y me mber or member organization arising out of the em plo ymen t or term ination of employ ment of such regi stered repres entati v e byand with such member or membe r organizatio n shal l be settled by arbitration, at the instance of any such party, in accordance with the arbitration procedure presc rib ed elsewhere in these Rules. Id

. Willis thereafter filed a motion for leave to amend her complain t to add a clai m under Title VII. The distr ict court s ubsequen tly grante d Willis’ motion to amend her complaint, granted Dean Witter’s motion to compel arbitrati on on Willis’ breach of contr act claims, a nd denied Dean W itter’s motion to compel ar bitration as to Willis’ sex ual harassment, sexual6

discriminat ion and Title VII c laims. Id . In holding that the district court’s d enial of Dean W itter’s motion to arbitrate Willis’ d iscriminat ion claims w as in error, the Sixth Circuit Court of Appeals relie d largely upon the Supreme Cou rt’s decis ion in Gilmer and stated: The plaintiff’s arguments which suggest tha t something inherenti n Title VII precludes the enf orcement of valid arbitration a gree ments in circumstances where the FAA is otherwis e applicable w as rejected in Gilmer . Further, while § 1 of the FAA exc lud es “ contracts of employ ment” from the scope of the FAA, the Supreme Court has sq uarely hel d that arbitration agreements contained in a se cu rities r egistrati on application such as the one at iss ue in this cas e do not constitute cont rac

ts fo r empl oyment. Thus, § 1 of the FAA does n ot exempt Willis’ dis crimination claims from her agreement to ar bitrate. Id . at 312.

In the present cas e, Plaintiffs arg ue that Alexander v. Gardner-Denver

Co. , 94 S.Ct. 1011 (1974), and its progeny prohibit enforcement of the arbitrati on provis ions contained within the contracts

Plaintiffs exe cuted regar ding Pl ai ntiffs’ claims of sex ual harassment and s exual disc rimination. In Alexander , the Supreme Cour t addressed the i ssue of whether a union employee was forecl osed from pursuing an action under Title VII of the Civil Rights A ct of 1964 (“Titl e VII”), 42 U .S.C. § 2000e et seq ., after he had been unsuccessful in an arbitrati on compelled by his collec

tive barg aining ag reement. In holding that the employee’s statutory right to a trial de novo under Title VII is not foreclo sed by pri or submission of a claim to final arbitration under the nondiscrimination clause of acolle ctive bargaining agreem ent, t he Supreme Court stated that “[t]here is no s uggestion in the statutory scheme that a pri or arbitral decision eit her forecloses an indivi dual’s rig ht to sue
or divests federal co ur ts of jurisdiction.” Alexander , 94 S.Ct. at 101 9. In addressi ng Plaintiffs’ argument that the Supreme Court’ s decision i n Alexander prohibits t he enforcementof the arbitrati on provis ions contained w ithin the contracts Pl aintiffs executed regardingPlaintiffs’ claims of sex ual harassment and sexual discrimin ation, we note that the Supreme Court in Gilmer and the Sixt h Circuit

Court of Appeals in W illis addressed this
same argument. The Supr eme Court in Gilm er stated that t he Alexander line of cases involved the issue of whether the arbitration o f contract -based cl aims precluded subsequent jud icial res olution ofstatutory claims, not

the enforceabili ty of an agreement7

to arbitrate statutory claims. In distingui shing the Gilmer case from the Alexander line of cases, the Supreme Court stated:

First, [the Alexander

line ofcases] did not involve the i ssue of the enforceability of an agreeme nt to arbitrate statutory claims. Rather, they inv

olved the q uite different iss ue whether arbitration of cont r act-based cla ims precluded subsequent judicia l reso lution of statutor y claims. Since the employees there had not agreed to arbitrate their statutor y claims, and the labor arbitrators were not authorized to resolve such claims, the arbitrati on in those case s understandably was held not to preclude subsequent statutory actions. Second, because th e arbitration in those cases occurr ed in t he co ntex t of a collective-bargaini ng agre em ent, the claimants there were represented by their

unions in the a rbitration proceedings . An important con cern therefore w as the tension bet

ween collecti ve representati on and indiv idual statutor y rig hts, a concern no t a pplicable to the present case. Finally, those cases were not d ecided under th e FAA , which, as discussed above, reflects a “liberal federal poli cy f avoring arbitrati on agreements.” Mitsubishi , 473 U.S., at 62 5, 105 S.Ct., at 3353. Therefore, those cases provide no basis for refusing to enfo rce Gilmer’s ag reement

to arb itrat e his A DEA cl aim. Gilmer , 111 S.Ct. at 1657. Similarly, the Sixth Circuit Court of Appeals in W illis cited the foregoing quotation from Gilmer and held that theSupreme Court’ s holding i n Alexander was inappl icable to the fact s in W illis

. See W illis , 948 F.2d at 307- 308.

Plai ntiffs further argu e that the contra cts they ex ecuted are contract s of adhesion,
ones which ar

e dictated by

employers in the field of securities sales and which are forced upon all persons seeking and obtaining employmen t in the securiti es field. The Supreme Court addressed a

similar argument in Gilmer and stated that “ [t]he unequal ba rgaining power between employers and employees is not a s ufficient reason to h old that arbit ration agreementsare never enforceable in the em ployment context.” Gilmer , 111 S.Ct. at 1650. Here, as in Gilmer , the re is n o ind icat ion t hat P lain tif fs we re coerc ed or defrauded into agreeing to the arbitr

ation clause contained wi thin the contra cts the y executed. We, therefore, find this

argument of the Pl aintiffs to be w ithout merit.

I n the instant case, the securities registration con tracts that the Plaintiff s signe d upon commencing thei r employment w ith The Equitabl e were thesame contracts that the plai ntiff in Gilm e r

and the plainti ff in W illis had signed. Because the Suprem e Court in Gilmer held that Gil mer’s age di scriminati on claim was subject to compu lsory ar bi tration8

pursuantto the arbitrat ion agreement i n the securities registr ation applicat ion that Gilmer had executed and be cause the Six th Circui t C our t of Appeals in W illis held that W illis’ sexual harassment, sexual discrimination an d Title VII claims were subject to arbi tration pursuantto the arbitration agreement in the securi ties reg istration application that W illis had ex ecuted, we find that the Supreme Co urt’s analy sis and concl usions in Gilmer and the Sixth Ci rcuit’s r

easoning in W illis compel the conclusion t hat the arbitrat ion provi sions contain ed within t he contracts P laintiffs exec uted apply eq ually to P laintiffs’ sex ual harassmentand sexual discriminat ion claims. Furthermore, the Tennessee Human R ights Act specifically provides that it embodies the policies of the Federal Ci vil Ri ghts Act of 1964, 1968 and 1972. T.C.A. § 4-21-101 (a) (1). We, therefore, hold t hat the P laintiffs’ claim s of sexual har

assment and sex ual discrimin ation shall besubmitted to arbitration in accordance with the contracts signed by the Plaintif fs.

The judgment of the trial court is hereb y reversed and this matter is r emanded t o the tria l c ourt for entry of an appropriate o rder. Cost s on appeal are t axed to the Appe llee s fo r which execu tion may is sue i f ne cess ary.

HIGHERS, J. CONCUR: CRAWFORD, P.J., W.S. LILLARD, J.