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Gilmer v. Interstate/Johnson Lane Corp. (full text) :: 500 U.S. 20 (1991) :: Justia US Supreme Court Center Log In
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Gilmer v. Interstate/Johnson Lane Corp. 500 U.S. 20 (1991)
U.S. Supreme CourtGilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)Gilmer v. Interstate/Johnson Lane CorporationNo. 90-18Argued Jan. 14, 1991Decided May 13, 1991500 U.S. 20CERTIORARI TO THE UNITED STATES COURT OF APPEALS
(b) There is no inconsistency between the important social policies furthered by the ADEA and enforcing agreements to arbitrate age discrimination claims. While arbitration focuses on specific disputes between the parties involved, so does judicial resolution of claims, yet both can further broader social purposes. Various other laws, Page 500 U. S. 21 including antitrust and securities laws and the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), are designed to advance important public policies, but claims under them are appropriate for arbitration. Nor will arbitration undermine the EEOC's role in ADEA enforcement, since an ADEA claimant is free to file an EEOC charge even if he is precluded from instituting suit; since the EEOC has independent authority to investigate age discrimination; since the ADEA does not indicate that Congress intended that the EEOC be involved in all disputes; and since an administrative agency's mere involvement in a statute's enforcement is insufficient to preclude arbitration, see, e.g., Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U. S. 477. Moreover, compulsory arbitration does not improperly deprive claimants of the judicial forum provided for by the ADEA: Congress did not explicitly preclude arbitration or other nonjudicial claims resolutions; the ADEA's flexible approach to claims resolution, which permits the EEOC to pursue informal resolution methods, suggests that out-of-court dispute resolution is consistent with the statutory scheme; and arbitration is consistent with Congress' grant of concurrent jurisdiction over ADEA claims to state and federal courts, since arbitration also advances the objective of allowing claimants a broader right to select the dispute resolution forum. Pp. 500 U. S. 27-29.
(c) Gilmer's challenges to the adequacy of arbitration procedures are insufficient to preclude arbitration. This Court declines to indulge his speculation that the parties and the arbitral body will not retain competent, conscientious, and impartial arbitrators, especially when both the NYSE rules and the FAA protect against biased panels. Nor is there merit to his argument that the limited discovery permitted in arbitration will make it difficult to prove age discrimination, since it is unlikely that such claims require more extensive discovery than RICO and antitrust claims, and since there has been no showing that the NYSE discovery provisions will prove insufficient to allow him a fair opportunity to prove his claim. His argument that arbitrators will not issue written opinions resulting in a lack of public knowledge of employers' discriminatory policies, an inability to obtain effective appellate review, and a stifling of the law's development, is also rejected, since the NYSE rules require that arbitration awards be in writing and be made available to the public; since judicial decisions will continue to be issued for ADEA claimants without arbitration agreements; and since Gilmer's argument applies equally to settlements of ADEA claims. His argument that arbitration procedures are inadequate because they do not provide for broad equitable relief is unpersuasive as well, since arbitrators have the power to fashion equitable relief; since the NYSE rules do not restrict the type of relief an arbitrator may award and provide for collective relief; since the Page 500 U. S. 22 ADEA's provision for the possibility of collective action does not mean that individual attempts at conciliation are barred; and since arbitration agreements do not preclude the EEOC itself from seeking class-wide and equitable relief. Pp. 500 U. S. 30-32.
WHITE, J., delivered the opinion of the Court, in which REHNQUIST, C.J., and BLACKMUN, O'CONNOR, SCALIA, KENNEDY, and SOUTER, JJ., joined. STEVENS, J., filed a dissenting opinion, in which MARSHALL, J., joined, post, p. 500 U. S. 36. Page 500 U. S. 23
Interstate terminated Gilmer's employment in 1987, at which time Gilmer was 62 years of age. After first filing an age discrimination charge with the Equal Employment Opportunity Commission (EEOC), Gilmer subsequently brought 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 Page 500 U. S. 24 ADEA. In response to Gilmer's complaint, Interstate filed in the District Court a motion to compel arbitration of the ADEA claim. In its motion, Interstate relied upon the arbitration agreement in Gilmer's registration application, as well as the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. The District Court denied Interstate's motion, based on this Court's decision in Alexander v. Gardner-Denver Co., 415 U. S. 36 (1974), and because it concluded that "Congress intended to protect ADEA claimants from the waiver of a judicial forum." App. 87. The United States Court of Appeals for the Fourth Circuit reversed, finding
"[a] written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of Page 500 U. S. 25 any contract."
9 U.S.C. § 2. The FAA also provides for stays of proceedings in federal district courts when an issue in the proceeding is referable to arbitration, § 3, and for orders compelling arbitration when one party has failed, neglected, or refused to comply with an arbitration agreement, § 4. These provisions manifest a "liberal federal policy favoring arbitration agreements." Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U. S. 1, 460 U. S. 24 (1983). [Footnote 2] Page 500 U. S. 26
Gilmer concedes that nothing in the text of the ADEA or its legislative history explicitly precludes arbitration. Page 500 U. S. 27 He argues, however, that compulsory arbitration of ADEA claims pursuant to arbitration agreements would be inconsistent with the statutory framework and purposes of the ADEA. Like the Court of Appeals, we disagree.
As Gilmer contends, the ADEA is designed not only to address individual grievances, but also to further important social policies. See, e.g., EEOC v. Wyoming, 460 U. S. 226, 460 U. S. 231 (1983). We do not perceive any inherent inconsistency between those policies, however, and enforcing agreements to arbitrate age discrimination claims. It is true that arbitration focuses on specific disputes between the parties involved. Page 500 U. S. 28 The same can be said, however, of judicial resolution of claims. Both of these dispute resolution mechanisms nevertheless also can further broader social purposes. The Sherman Act, the Securities Exchange Act of 1934, RICO, and the Securities Act of 1933 all are designed to advance important public policies, but, as noted above, claims under those statutes are appropriate for arbitration.
We also are unpersuaded by the argument that arbitration will undermine the role of the EEOC in enforcing the ADEA. An individual ADEA claimant subject to an arbitration agreement will still be free to file a charge with the EEOC, even though the claimant is not able to institute a private judicial action. Indeed, Gilmer filed a charge with the EEOC in this case. In any event, the EEOC's role in combating age discrimination is not dependent on the filing of a charge; the agency may receive information concerning alleged violations of the ADEA "from any source," and it has independent authority to investigate age discrimination. See 29 CFR §§ 1626.4, 1626.13 (1990). Moreover, nothing in the ADEA indicates that Congress intended that the EEOC be involved in all employment disputes. Such disputes can be settled, for example, without any EEOC involvement. See, e.g., Coventry v. United States Steel Corp., 856 F.2d 514, 522 (CA3 1988); Moore v. McGraw Edison Co., 804 F.2d 1026, 1033 (CA8 1986); Runyan v. National Cash Register Corp., 787 F.2d 1039, 1045 (CA6), cert. denied, 479 U.S. 850 (1986). [Footnote 3] Finally, the mere involvement of an administrative Page 500 U. S. 29 agency in the enforcement of a statute is not sufficient to preclude arbitration. For example, the Securities Exchange Commission is heavily involved in the enforcement of the Securities Exchange Act of 1934 and the Securities Act of 1933, but we have held that claims under both of those statutes may be subject to compulsory arbitration. See McMahon; Rodriguez de Quijas.
Rodriguez de Quijas, 490 U.S. at 490 U. S. 483. Page 500 U. S. 30
Mitsubishi, supra, 473 U.S. at 473 U. S. 634. In any event, we note that the NYSE arbitration rules, which are applicable to the dispute in this case, provide protections against biased panels. The rules require, for example, that the parties be informed of the employment histories of the arbitrators, and that they be allowed to make further inquiries into the arbitrators' backgrounds. See 2 CCH New York Stock Exchange Guide ¦ 2608, p. 4314 (Rule 608) (1991) (hereinafter 2 N.Y.S.E. Guide). In addition, each party is allowed one peremptory challenge and unlimited challenges for cause. Id. at ¦ 2609 (Rule 609). Moreover, the arbitrators are required to disclose "any circumstances which might preclude [them] from rendering an objective and impartial determination." Id. at ¦ 2610, p. 4315 (Rule 610). The FAA also protects against bias by providing that courts may overturn arbitration decisions "[w]here there was evident partiality or corruption in the arbitrators." 9 U.S.C. Page 500 U. S. 31 § 10(b). There has been no showing in this case that those provisions are inadequate to guard against potential bias.
Gilmer also complains that the discovery allowed in arbitration is more limited than in the federal courts, which he contends will make it difficult to prove discrimination. It is unlikely, however, that age discrimination claims require more extensive discovery than other claims that we have found to be arbitrable, such as RICO and antitrust claims. Moreover, there has been no showing in this case that the NYSE discovery provisions, which allow for document production, information requests, depositions, and subpoenas, see 2 N.Y.S.E. Guide ¦ 2619, pp. 4318-4320 (Rule 619); Securities and Exchange Commission Order Approving Proposed Rule Changes By New York Stock Exchange, Inc., Nat. Assn. of Security Dealers, Inc., and the American Stock Exchange, Inc., Relating to the Arbitration Process and the Use of Predispute Arbitration Clauses, 54 Fed.Reg. 21144, 21149-21151 (1989), will prove insufficient to allow ADEA claimants such as Gilmer a fair opportunity to present their claims. Although those procedures might not be as extensive as in the federal courts, by agreeing to arbitrate, a party "trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration." Mitsubishi, supra, at 473 U. S. 628. Indeed, an important counterweight to the reduced discovery in NYSE arbitration is that arbitrators are not bound by the rules of evidence. See 2 N.Y.S.E. Guide ¦ 2620, p. 4320 (Rule 620).
A further alleged deficiency of arbitration is that arbitrators often will not issue written opinions, resulting, Gilmer contends, in a lack of public knowledge of employers' discriminatory policies, an inability to obtain effective appellate review, and a Page 500 U. S. 32 stifling of the development of the law. The NYSE rules, however, do require that all arbitration awards be in writing, and that the awards contain the names of the parties, a summary of the issues in controversy, and a description of the award issued. See 2 N.Y.S.E. Guide ¦ 2627(a), (e), p. 4321 (Rule 627(a), (e)). In addition, the award decisions are made available to the public. See id. at ¦ 2627(f), p. 4322 (Rule 627(f)). Furthermore, judicial decisions addressing ADEA claims will continue to be issued, because it is unlikely that all, or even most, ADEA claimants will be subject to arbitration agreements. Finally, Gilmer's concerns apply equally to settlements of ADEA claims, which, as noted above, are clearly allowed. [Footnote 4]
It is also argued that arbitration procedures cannot adequately further the purposes of the ADEA, because they do not provide for broad equitable relief and class actions. As the court below noted, however, arbitrators do have the power to fashion equitable relief. 895 F.2d at 199-200. Indeed, the NYSE rules applicable here do not restrict the types of relief an arbitrator may award, but merely refer to "damages and/or other relief." 2 N.Y.S.E. Guide ¦ 2627(e), p. 4321 (Rule 627(e)). The NYSE rules also provide for collective proceedings. Id. at 2612(d) (Rule 612(d)). But
An additional reason advanced by Gilmer for refusing to enforce arbitration agreements relating to ADEA claims is Page 500 U. S. 33 his contention that there often will be unequal bargaining power between employers and employees. Mere inequality in bargaining power, however, is not a sufficient reason to hold that arbitration agreements are never enforceable in the employment context. Relationships between securities dealers and investors, for example, may involve unequal bargaining power, but we nevertheless held in Rodriguez de Quijas and McMahon that agreements to arbitrate in that context are enforceable. See 490 U.S. at 490 U. S. 484; 482 U.S. at 482 U. S. 230. As discussed above, the FAA's purpose was to place arbitration agreements on the same footing as other contracts. Thus, arbitration agreements are enforceable "save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.
In Gardner-Denver, the issue was whether a discharged employee whose grievance had been arbitrated pursuant to Page 500 U. S. 34 an arbitration clause in a collective bargaining agreement was precluded from subsequently bringing a Title VII action based upon the conduct that was the subject of the grievance. In holding that the employee was not foreclosed from bringing the Title VII claim, we stressed that an employee's contractual rights under a collective bargaining agreement are distinct from the employee's statutory Title VII rights:
Id. at 415 U. S. 54. We further expressed concern that, in collective bargaining arbitration, "the interests of the individual employee may be subordinated to the collective interests of all employees in the bargaining unit." Id. at 415 U. S. 58, n.19. [Footnote 5] Page 500 U. S. 35
Affirmed. Page 500 U. S. 36
Notwithstanding the apparent waiver of the issue below, I believe that the Court should reach the issue of the coverage of the FAA to employment disputes because resolution of the Page 500 U. S. 37 question is so clearly antecedent to disposition of this case. On a number of occasions, this Court has considered issues waived by the parties below and in the petition for certiorari because the issues were so integral to decision of the case that they could be considered "fairly subsumed" by the actual questions presented. See, e.g., Teague v. Lane, 489 U. S. 288, 489 U. S. 300 (1989) ("The question of retroactivity with regard to petitioner's fair cross-section claim has been raised only in an amicus brief. Nevertheless, that question is not foreign to the parties, who have addressed retroactivity with respect to petitioner's Batson claim. Moreover, our sua sponte consideration of retroactivity is far from novel" (citations omitted)); Batson v. Kentucky, 476 U. S. 79, 476 U. S. 84-85, n. 4 (1986) (notwithstanding petitioner's seemingly deliberate failure to raise the equal protection issue, "[w]e agree with the State that resolution of petitioner's claim properly turns on application of equal protection principles, and express no view on the merits of any of petitioner's Sixth Amendment arguments"); Mapp v. Ohio, 367 U. S. 643, 367 U. S. 646, n. 3 (1961) ("Although appellant chose to urge what may have appeared to be the surer ground for favorable disposition, and did not insist that Wolf [v. Colorado, 338 U. S. 25 (1949)] be overruled, the amicus curiae, who was also permitted to participate in the oral argument, did urge the Court to overrule Wolf."). See also R. Stern, E. Gressman, & S. Shapiro, Supreme Court Practice § 6.26 (6th ed.1986) (describing rule concerning need for presenting questions below and in petition for certiorari, and deviations from rule).
Only this Term, the Court has, on at least two occasions, decided cases on grounds not argued in any of the courts below or in the petitions for certiorari. In Arcadia v. Ohio Power Co., 498 U. S. 73 (1990), we decided the case on an issue that not only was not raised below or in any of the papers in this Court, but that also was not raised at any point during oral argument before the Court. "In our view, however," the decided question was "antecedent to these [issues presented,] and ultimately dispositive of the present dispute." Id. at Page 500 U. S. 38 498 U. S. 77. Similarly, in McCleskey v. Zant, 499 U. S. 467 (1991), the Court issued a decision on a question which the parties had not argued below and evidently had not anticipated would be at issue in this Court,
Ante at 500 U. S. 25, n. 2. In my Page 500 U. S. 39 opinion, the Court too narrowly construes the scope of the exclusion contained in § 1 of the FAA.
Ibid. Page 500 U. S. 40
My reading of the scope of the exclusion contained in § 1 is supported by early judicial interpretations of the FAA. As of 1956, three Courts of Appeals had held that the FAA's exclusion of "contracts of employment" referred not only to individual contracts of employment, but also to collective bargaining agreements. See Lincoln Mills of Ala. v. Textile Workers Union of America, 230 F.2d 81 (CA5 1956), rev'd, 353 U. S. 353 U.S. 448 (1957); United Electrical, Radio & Machine Workers of America v. Miller Metal Products, Inc., 215 F.2d 221 (CA4 1954); Amalgamated Assn. of Street, Electric R. and Motor Coach Employees of America v. Pennsylvania Greyhound Lines, Inc., 192 F.2d 310 (CA3 1951). Indeed, the application of the FAA's exclusionary clause to arbitration provisions in collective bargaining agreements was one of the issues raised in the petition for certiorari and Page 500 U. S. 41 briefed at great length in Lincoln Mills and its companion cases, Goodall-Sanford, Inc. v. Textile Workers, 353 U. S. 550 (1957), and General Electric Co. v. Electrical Workers, 353 U. S. 547 (1957). Although the Court decided the enforceability of the arbitration provisions in the collective bargaining agreements by reference to § 301 of the Labor Management Relations Act, 1947, 29 U.S.C. § 185, it did not reject the Courts of Appeals' holdings that the arbitration provisions would not otherwise be enforceable pursuant to the FAA, since they were specifically excluded under § 1. In dissent, Justice Frankfurter perceived a
Not only would I find that the FAA does not apply to employment-related disputes between employers and employees in general, but also I would hold that compulsory arbitration conflicts with the congressional purpose animating the ADEA, in particular. As this Court previously has noted, authorizing the courts to issue broad injunctive relief is the cornerstone to eliminating discrimination in society. Albemarle Paper Co. v. Moody, 422 U. S. 405, 422 U. S. 415 (1975). The ADEA, like Title VII of the Civil Rights Act of 1964, authorizes Page 500 U. S. 42 courts to award broad, class-based injunctive relief to achieve the purposes of the Act. 29 U.S.C. § 626(b). Because commercial arbitration is typically limited to a specific dispute between the particular parties, and because the available remedies in arbitral forums generally do not provide for class-wide injunctive relief, see Shell, ERISA and Other Federal Employment Statutes: When is Commercial Arbitration an "Adequate Substitute" for the Courts?, 68 Texas L.Rev. 509, 568 (1990), I would conclude that an essential purpose of the ADEA is frustrated by compulsory arbitration of employment discrimination claims. Moreover, as Chief Justice Burger explained:
When the FAA was passed in 1925, I doubt that any legislator who voted for it expected it to apply to statutory claims, to form contracts between parties of unequal bargaining power, or to the arbitration of disputes arising out of the employment relationship. In recent years, however, the Court Page 500 U. S. 43 "has effectively rewritten the statute", [Footnote 2/1] and abandoned its earlier view that statutory claims were not appropriate subjects for arbitration. See Mitsubishi Motors v. Soler Chrysler-Plymouth, Inc., 473 U. S. 614, 473 U. S. 646-651 (1985) (STEVENS, J., dissenting). Although I remain persuaded that it erred in doing so, [Footnote 2/2] the Court has also put to one side any concern about the inequality of bargaining power between an entire industry, on the one hand, and an individual customer or employee, on the other. See ante at 500 U. S. 32-33. Until today, however, the Court has not read § 2 of the FAA as broadly encompassing disputes arising out of the employment relationship. I believe this additional extension of the FAA is erroneous. Accordingly, I respectfully dissent.