Source: https://supreme.findlaw.com/supreme_court/briefs/99-1235/99-1235fo3/text.html
Timestamp: 2019-04-22 18:33:59+00:00

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GRA L Supreme Court U.S.
752 (5th Cir. 1999), cert. denied, 120 5. Ct.
Equal Credit Opportunity Act, 15 U.S.C.
Employment Contracts Survive a "Fairness"
The Equal Employment Advisory Council respectfully submits this brief amicus curiae.2 The written consent of all parties has been filed with the Clerk of this Court. The brief urges reversal of the decision below and thus supports the position of Petitioners before this Court.
Counsel for amicus curiae authored this brief in its entirety. No person or entity, other than the amicus curiae, its members, or its cO~nS~I, made a monetary contribution to the preparation or submission of the brief.
The Equal Employment Advisory Council (EEAC) is a nationwide association of employers organized in 1976 to promote sound approaches to the elimination of discriminatory employment practices. Its membership now includes more than 325 of the nation's largest private sector companies, collectively providing employment to more than 17 million people throughout the United States. EEAC's directors and officers include many of industry's leading experts in the field of equal employment opportunity. Their combined experience gives EEAC an unmatched depth of knowledge of the practical, as well as legal, considerations relevant to the proper interpretation and application of equal employment policies and requirements. EEAC's members are firmly committed to the principles of nondiscrimination and equal employment opportunity.
All of EEAC's members are employers subject to the Age Discrimination in Employment Act of 1967 (ADEA), as amended, 29 U.S.C. 621 et seq., Title VII of the Civil Rights Act of 1964 (Title VII), as amended, 42 U.S.C. 2000e et seq., and other equal employment statutes and regulations. Many of EEAC's members have contracts with their employees governing some or all terms and conditions of employment. Some of these contracts include agreements to arbitrate disputes arising out of the employment relationship including statutory claims of discrimination.
Thus, the issues presented in this appeal are extremely important to the nationwide constituency that EEAC represents. While the case arose in the context of a commercial arbitration agreement, this Court's decision is likely to affect agreements to arbitrate employment-related claims as well. EEAC thus has an interest in, and a familiarity with, the legal and public policy issues presented to the Court in this case. Because of its significant experience in these matters, EEAC is uniquely situated to brief this Court on the importance of the issues beyond the immediate concerns of the parties to the case.
Respondent Larketta Randolph financed her purchase of a mobile home through Petitioner Green Tree Financial Corp.
Alabama, which is a wholly-owned subsidiary of Petitioner Green Tree Financial Corporation (hereinafter collectively "Green Tree."). Pet. App. 2a. Her retail installment contract with the seller of the mobile home, which names Green Tree as the assignee, provides for binding arbitration of "[aill disputes, claims, or controversies arising from or relating to this Contract. .. .~' Pet. App. 2a-3a.
or dismiss the action. Id. The motion to compel and dismissed with prejudice. Pet. App. 4a-5a. Green Tree moved to dismiss jurisdiction. Pet. App. 5a.
The Eleventh Circuit heard the appeal and reversed the district court's ruling. First, the Court of Appeals concluded that it had jurisdiction, holding that the district court's order was an appealable 'iinal decision" under 1 6(a)(3) of the Federal Arbitration Act (FAA), 9 U.S.C. 16(a)(3). Pet. App. ISa. Second, the Court of Appeals ruled that the arbitration agreement was unenforceable because it was silent as to the payment of arbitration fees and costs, making it possible that "Randolph might be required to bear substantial costs of the arbitration even if she were to prevail - . . ." Pet. App. 19a. This Court granted certiorari.
The majority view, that an order compelling arbitration under the Federal Arbitration Act, 9 U.S.C. 1-16, is an appealable order only if it is issued in an independent" proceeding, is the only logical approach. Under that view, the order in the instant case, which was "embedded" in a broader proceeding, was interlocutory and not appealable, so that the court below lacked jurisdiction to hear the appeal.
Commission, a multifactional task force that issued "due process" standards for employment arbitration, the primary national organizations supplying arbitrators, and others.
As the court below acknowledged, a substantial majority of the circuit courts of appeals would have concluded that they lacked jurisdiction to hear the appeal in the instant case. By adopting the opposite view, the Court of Appeals placed itself in the minority and outside the realm of logic.
policy favoring arbitration agreements' . .. guaranteeing the enforcement of private contractual arrangements. .. ." Id. at 625 (citations omitted). Indeed, "'[tihe preeminent concern of Congress in passing the Act was to enforce private agreements into which parties had entered,' a concern which 'requires that (this Court] rigorously enforce agreements to arbitrate."' Id. at 625-26 (citation omitted).
district court order. Pub. L. 100-702, Title X, 10 19(a), Nov.
Title 1111, 325(a)(1), Dec. 1, 1990, Stat. 5120, now 9 U.S.C.
agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equily for the revocation of any contract.
9 IZIS.C. 2 (1999 & Supp. 2000).
9 U.S.C. 16 (1999 & Supp. 2000). The statute thus authorizes an appeal in cases in which the district court has disallowed arbitration, 9 U.S.C. 16(a)(l) and (2), and denies an appeal where the district court has allowed the arbitration to proceed. 9 U.S.C. 16(b).
judge has dismissed the case rather than merely granting a stay pending arbitration. Pet. App. 9a.
The majority view is more in keeping with the rest of 16, since it allows arbitration to proceed without further delay where there are issues to be arbitrated. Moreover, the majority view provides a logical, systematic way of distinguishing which cases are appealable and which are not, in a way that furthers the federal policy favoring arbitration.
In contrast, the minority's approach effectively creates an anomaly that depends solely on how the district court characterizes the end of its current involvement in the case. If the district court dismisses the action, in the minority view the decision is "final" and therefore appealable, but if the court merely stays the action, it is not. Since in either case the district court has ruled in favor of arbitration, its disposition of the remainder of the case, which should not affect the next stage, in fact dictates how the case should proceed. This seems illogical.
Sections 3 and 4 of the FAA, 9 U.S.C. 3 and 4, are the logical comparators here. Section 3 provides for a court to stay a pending action if it is subject to arbitration. If the court refuses a stay, the order is immediately appealable under 16 (a)(I)(A). If the court grants the stay, the order is not appealable, pursuant to 16(b)(l). Similarly, Section 4 allows a party seeking to enforce an arbitration agreement to petition the district court for an order compelling arbitration. If arbitration is denied, the order is immediately appealable under 16(a)(l)(B). If the petition is granted, however, the order is interlocutory and not appealable, pursuant to 16(b)(2).
arbitrator to decide, and to allow an immediate appeal only if arbitration has been denied, or if the only issue anywhere near the table is whether or not to arbitrate, e.g. a declaratory judgment proceeding concluding that an arbitration agreement is valid and enforceable as to future disputes that have yet to arise. The Eleventh Circuit's decision to the contrary is illogical, given this Court's prior interpretations of the FAA, and should be reversed.
The court below ruled that the arbitration agreement was unenforceable because it was silent as to the allocation of arbitration fees and costs. This conclusion directly contravenes the federal policy favoring arbitration and is unsupportable.
As this Court has recognized repeatedly, "[the FAA's] provisions manifest a 'liberal federal policy favoring arbitration agreements.'" Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Accordingly, "'questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration.'" Id. at 26 (quoting Moses H. Cone Mem 'I Hosp. at 24).
preclude a waiver of judicial remedies for the statutory rights at issue." Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)). Indeed, this Court unequivocally rejected Gilmer's general challenges to the arbitration process as an adequate means of vindicating statutory rights, even those under statutes "designed to advance important public policies." Quoting Mitsubishi Motors, this Court stated that 'lislo long as the prospective litigant effectively may vindicate his or her statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function." Gilmer, 500 U.S. at 28 (quoting Mitsubishi Motors, 473 U.S. at 637).
The lesson of Gilmer and its antecedents is that if there is a way to enforce the agreement, the court should do so, resolving doubts in favor of arbitration. The U.S. Court of Appeals for the District of Columbia Circuit did exactly that in Cole v. Burns International Security Services, 105 F.3d 1465 (D.C. Cir. 1997). Despite its disapproval of the arbitration agreement's silence on the allocation of costs, the D.C. Circuit enforced the agreement. Having determined that "ambiguity in a contract should be resolved against the drafterhere, the employerand ambiguity should be resolved in favor of a legal construction of the parties' agreement," id. at 1468, the D.C. Circuit concluded, "we interpret the arbitration agreement at issue as requiring Burns to pay all arbitrators' fees associated with the resolution of Cole's claims," id, and sent the case to arbitration.
The court below took the exact opposite approach. Rather than construing the agreement in a way that allowed it to be upheld, the court below resolved its doubts against arbitration. For this reason alone, the decision below must be reversed.
In reaching its erroneous conclusion, the Court of Appeals started from the mistaken premise, shared by the D.C. Circuit in Cole and the Tenth Circuit in Shankle v. B-G Maintenance Mgmt. Inc., 163 F.3d 1230 (10th Cir. 1999) (holding an em-ployment arbitration agreement unenforceable because it re-quired the employee to pay half of the arbitrator's fees), that requiring complainants to shoulder some of the arbitrator's fee somehow trammels their statutory rights. This view is at odds with the holdings of other courts, as well as with the prevailing wisdom of those who have studied arbitration systems.
For example, in Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 170 F.3d 1 (1st Cir. 1999), the First Circuit found the New York Stock Exchange's (NYSE) arbitration procedures adequate to resolve employment discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e et seq., despite the contention that "plaintiffs are charged forum fees, which may be as high as $3,000 per day and tens of thousands of dollars per case."
and thus is no reason to refuse to enforce the agreement. See also Koveleskie v. SBC Capital Mkts., Inc., 167 F.3d 361, 366 (7th Cir.) (applying Rosenberg), cert. denied, 120 5. Ct. 44 (1999); Williams v. CIGNA Fin. Advisors, Inc., 197 F.3d 752, 763 (5th Cir. 1999) (specifically disagreeing with Cole and Shankle and concluding that "Gilmer does not so clearly imply that no part of arbitral forum fees may ever be assessed against federal anti-discrimination claimants, although it plainly indicates that an arbitral cost allocation scheme may not be used to prevent effective vindication of federal statutory claims"), cert. denied, 120 5. Ct. 1833 (2000).
arbitrator should determine allocation of fees. The designating agency, by negotiating the parties' share of costs and collecting such fees, might be able to reduce the bias potential of disparate contributions by forwarding payment to the mediator and/or arbitrator without disclosing the parties' share therein.
Relationship, Dispute Resolution Journal 37, 39 (Oct-Dec.
Association; Arnold Zack, President, Nat. Academy of Arbitrators.
Dispute Resolution Journal (October-December 1995) at 39. Interestingly, the D.C. Circuit in Cole v. Bums, dismisses this diverse group as 'islome commentators" in rejecting their conclusion that fee-splitting is a benefit rather than a detriment. 105 F.34 at 1485 (D.C. Cir. 1997).
While the National Academy of Arbitrators' "Guidelines on Arbitration of Statutory Ciaims Under Employer-Promulgated Systems" do not specifically address the question of costs, it refers arbitrators to the "Due Process Protocol" for guidance on questions of due process. National Academy of Arbitrators, "Guidelines on Arbitration of Statutory Claims Under Employer-Promulgated Systems" (May 21, 1997) at 1I.F.
6 The current filing fee for a single-arbitrator case is $500 "unless the plan provides otherwise." Administrative Fee Schedule, American Arbitration Association, National Rules for the Resolution of Employment Disputes (eff. January I, 1999).
majority erred in concluding that "the AAA hedged on this question."
to commercial, real estate and construction cases contain similar language at Rule 30. httD://www.iamsadr.com/comDrehensive arb rules.asp.
on Financial Seivices Arbitrations provide that "With respect to the cost of the arbitration, the procedure must allocate costs in a way that does not preclude access by the consumer to the procedures" at Rule 6. httD://www.iamsadr.comlfinnunimum stds.asp.
neutrality will not be affected by the fee arrangements" and requires the employer to "make clear that the employee has the right to contribute up to one-half of all administrative and arbitrator fees and expenses." Id. (emphasis added). JAMS, too, endorses the Due Process Protocol. Id. at D.
The Department believes that requiring the parties to share the fees and expenses of the mediator or arbitrator helps ensure impartiality. In cases in which the Department is a party or a participant. DOL generally expects that it would pay one-half of the mediator or arbitrator's fees and expenses. The Department invites comment on whether permitting the negotiation of a different arrangement is advisable. To reduce the possibility of bias based on disparate contributions, payment would be forwarded to the mediator or arbitrator by the sponsor of the roster (or by the Department, when it is not a party or participant), without disclosing the parties' respective shares.
Administered by the Department of Labor, 62 Fed. Reg.
6690, 6694 (February 12, 1997).
Not surprisingly, then, both reports by the U.S. General Accounting Office (GAO) on the degree of use of alternative dispute resolution in private employment observe that cost-sharing is the norm. In preparing a 1995 report to Congress based on a random sample of 2,000 private sector employers, the GAO followed up with companies that reported using arbitration, and compared those companies' policies to the quality standards identified by the Dunlop Commission.
To ensure impartiality of the arbitrator, the Commission proposes that both the employee and the employer contribute to the arbitrator's fee. Ideally, the employee contribution should be capped in proportion to the employee's salary to avoid discouraging claims by low-wage workers.
Seven policies do not address cost sharing. In four policies, the employer pays for all arbitration costs; costs are to be shared equally in nine policies; and the employee share is either capped or limited to less than half the costs in the remaining six policies. For example, one employer pays all costs in excess of $50. Another firm pays 80 percent of the arbitration costs, while the employee is responsible for 20 percent.
pays all costs if the employee prevails and shares costs equally if the employee does not, but caps the employee's share at two days' base pay. Id. at 53-54.
The D.C. Circuit in Cole scoffed at the concern that payment of the arbitrator's fee by the employer would compromise the neutrality of the process. 105 F.3d at 1485. The concern is not necessarily that all arbitrators are potentially unethical and bound to rule in the direction of their paychecks, although such an outcome is conceivable. On the contrary, however, the relevant concern may be the far likelier occurrence that an employee will perceive the process as biased if the employer pays the "judge." See Russell Evans, Engalla v. Permanente Medical Group, Inc.: Can Arbitration Clauses in Employment Contracts Survive a "Fairness" Analysis, 50 Hastings L.J. 635, 665 (March 1999) (noting that "the perception of arbitrator partiality could arise where the employer alone pays all arbitration costs and fees").
As a practical matter, any party who knows that the arbitrator is being paid entirely by the other side cannot help but question whether he or she is getting a fair hearing. Where the rights involve statutory claims of employment discrimination, for example, the employee undoubtedly will view the entire process, from inception to outcome, as dominated and controlled by the employer who from the beginning is footing the bills. This explains, for example, positions such as that of JAMS, which requires that the employee be permitted to pay his or her fair share of the costs if so inclined. So, too, the Department of Labor's inquiry whether allowing the parties to negotiate some payment scheme other than fifty-fifty would ever be advisable.
responsible at the outset for some of the cost, subject to a final allocation by the arbitrator in the award. Only in this way can each party feel that he or she is an equal participant in a neutral forum.
The availability of judicial review then serves as a safeguard against the imposition of unreasonable fees, as the First Circuit pointed out in Rosenberg. 170 F.3d at 16. See also Koveleskie, 167 F.3d at 366. This Court already has concluded that "although judicial scrutiny of arbitration awards necessarily is limited, such review is sufficient to ensure that arbitrators comply with the requirements of the statute." Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 232 (1987) (quoted in Gilmer, 500 U.S. at 32 n.4).
Given the prevailing wisdom that each party to an arbitration agreement can reasonably be expected to bear some of the cost, the court below erred in concluding that an arbitration clause that does not allocate fees is unenforceable.
For the reasons set forth respectfully submits that reversed.

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