Source: https://www.law.cornell.edu/supct/html/99-1379.ZS.html
Timestamp: 2019-04-23 16:28:28+00:00

Document:
A provision in respondents application for work at petitioner electronics retailer required all employment disputes to be settled by arbitration. After he was hired, respondent filed a state-law employment discrimination action against petitioner, which then sued in federal court to enjoin the state-court action and to compel arbitration pursuant to the Federal Arbitration Act (FAA). The District Court entered the requested order. The Ninth Circuit reversed, interpreting §1 of the FAAwhich excludes from that Acts coverage contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerceto exempt all employment contracts from the FAAs reach.
Held: The §1 exemption is confined to transportation workers. Pp. 316.
contract evidencing a transaction involving commerce. In Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, the Court interpreted §2s involving commerce phrase as implementing Congress intent to exercise [its] commerce power to the full. Id., at 277. Pp. 35.
(b) The Court rejects respondents contention that the word transaction in §2 extends only to commercial contracts, and that therefore an employment contract is not a contract evidencing a transaction involving interstate commerce at all. If that were true, the separate §1 exemption that is here at issue would be pointless. See, e.g., Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552, 562. Accordingly, any argument that arbitration agreements in employment contracts are not covered by the FAA must be premised on the language of the §1 exclusion itself. Pp. 56.
that §1 exempts from the FAA only employment contracts of transportation workers. Pp. 612.
(d) As the Courts conclusion is directed by §1s text, the rather sparse legislative history of the exclusion provision need not be assessed. The Court rejects respondents argument that the Courts holding attributes an irrational intent to Congress by excluding from the FAAs coverage those employment contracts that most involve interstate commerce, i.e., those of transportation workers, while including employment contracts having a lesser connection to commerce. It is a permissible inference that the former contracts were excluded because Congress had already enacted, or soon would enact, statutes governing transportation workers employment relationships and did not wish to unsettle established or developing statutory dispute resolution schemes covering those workers. As for the residual exclusion of any other class of workers engaged in foreign or interstate commerce, it would be rational for Congress to ensure that workers in general would be covered by the FAA, while reserving for itself more specific legislation for transportation workers. Pp. 1214.
(e) Amici argue that, under the Courts reading, the FAA in effect pre-empts state employment laws restricting the use of arbitration agreements. That criticism is not properly directed at todays holding, but at Southland Corp. v. Keating, 465 U.S. 1, holding that Congress intended the FAA to apply in state courts, and to pre-empt state antiarbitration laws to the contrary. The Court explicitly declined to overrule Southland in Allied-Bruce, supra, at 272, and Congress has not moved to overturn Southland in response to Allied-Bruce. Nor is Southland directly implicated in this case, which concerns the application of the FAA in a federal, rather than in a state, court. The Court should not chip away at Southland by indirection. Furthermore, there are real benefits to arbitration in the employment context, including avoidance of litigation costs compounded by difficult choice-of-law questions and by the necessity of bifurcating the proceedings where state law precludes arbitration of certain types of employment claims but not others. Adoption of respondents position would call into doubt the efficacy of many employers alternative dispute resolution procedures, in the process undermining the FAAs proarbitration purposes and breeding litigation from a statute that seeks to avoid it. Allied-Bruce, supra, at 275. Pp. 1416.
Kennedy, J., delivered the opinion of the Court, in which Rehnquist, C. J., and OConnor, Scalia, and Thomas, JJ., joined. Stevens, J., filed a dissenting opinion, in which Ginsburg and Breyer, JJ., joined, and in which Souter, J., joined as to Parts II and III. Souter, J., filed a dissenting opinion, in which Stevens, Ginsburg, and Breyer, JJ., joined.

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