William H. Rehnquist: We'll hear argument now in No. 99-1823, Equal Employment Opportunity Commission v. Waffle House, Inc.-- Mr. Clement.
Paul D. Clement: Mr. Chief Justice, and may it please the Court: Respondent Waffle House and Eric Baker agreed to arbitrate rather than litigate disputes between them. That agreement precludes Waffle House and Baker from having an action take place between them in court. But the EEOC was not a party to that agreement. Accordingly, the agreement does not preclude the EEOC's ability to bring a public enforcement action against Waffle House, nor does it limit the remedies available to the EEOC in such an action. Title VII gives the EEOC a public enforcement action that's independent of and, in many respects, superior to the individual employee's cause of action.
Antonin Scalia: Mr. Clement, suppose the individual employee had settled with the employer, not just an agreement to arbitrate, but there had been a complete settlement. They said, you know, in exchange for so much money, I waive any cause of action I had. Would the Government still has... have a cause of action for damages?
Paul D. Clement: We believe the Government would still have a cause of action in that case, though we admit it would be a much more difficult case.
Antonin Scalia: Wow.
Paul D. Clement: Because in the case of settlement, of course, judicial or arbitral resources have already been expended. There's an agreement of the parties that specifically extinguishes the individual's right--
Antonin Scalia: What are the damages? The Government gets damages that have already been paid to the individual to... I don't understand. And these damages go to the individual?
Paul D. Clement: --The... the damages could go to the individual. I think, to give you an example of the kind of case--
Antonin Scalia: So, if he'd settle and get the damages, and then... and then he'd get additional damages recovered for him by the EEOC.
Paul D. Clement: --That's right. But let me give you an example of the kind of case we have in mind, and it may help illustrate why the Government thinks it still may have a cause of action in that situation. If you can imagine a case where an employer has retaliated against an employee and... simply for filing a charge with the EEOC, and then that employee settles that retaliation claim for a nominal amount of money, without any judicial supervision, let's say, it may be that in that kind of case, the EEOC has a legitimate public interest in, nonetheless, bringing an action, getting some additional amount of damages to really take the employer--
Anthony M. Kennedy: Well, but that's... that's a separate wrong. I don't know if that's a really fair answer to Justice Scalia's question. If there's retaliation, I... I would think that's a separate component. But just suppose a case with no retaliation. The... the employee recovers $10,000 and then the EEOC can recover $20,000 more?
Paul D. Clement: --Well, in a case like that, I'm sure as a matter of its prosecutorial discretion, the EEOC would not bring that case.
Anthony M. Kennedy: Well, let's say the prosecutor doesn't exercise his discretion that way that day.
Paul D. Clement: Well, in that case I think they would have cause of action. But again, I want to make clear that we think that's--
Anthony M. Kennedy: And what... and what happens--
Paul D. Clement: --a much more difficult case.
Anthony M. Kennedy: --What would happen... what would happen if the employee recovered $10,000 in the arbitration, then only $5,000 in the litigation? Does he have to give $5,000 back?
Paul D. Clement: I don't think that would follow. But again, I want to make clear that's a much more difficult case because there there's been--
Anthony M. Kennedy: Well, but... but we're asking what the... what the logical consequences of... of your position are, and that's why we're putting the more difficult case so we can test the general proposition. And the general proposition, it seems to me, has to withstand some analysis under these more difficult instances.
Paul D. Clement: --Well, let me do... let me make two responses. One, let me try one more time to defend the general principle, which is simply that Congress in Title VII gave the EEOC a distinct cause of action, and so the extinguishment of the individual employee's cause of action shouldn't automatically extinguish the EEOC's cause of action. But let me hone in on why I think that's so much more of a difficult case because in that case, the individuals settled their claim, so they have no claim to damages in an arbitration proceeding. And so, it might make some sense to say that the EEOC has no claim to damages in a litigation proceeding. What is so anomalous about the decision below and the rule that respondent seeks in this case is that it seeks to limit the EEOC's ability to get victim-specific remedies in court even though those victim-specific remedies are available to the employee in the arbitration. All of the cases that respondent cites--
Sandra Day O'Connor: Well, here we have a case where the employee did not settle, but we were really discussing with you the possibility not presented in this case of a full settlement or a judgment in arbitration, disposing of the victim-specific relief, and asking you why then should EEOC continue to have a cause of action for the victim-specific relief, as opposed to broad injunctive relief, to address the overall problem.
Paul D. Clement: --And I guess I do think there are two reasons why they would still have a cause of action in that situation. One is that Title VII does give the EEOC an independent cause of action. It's quite a remarkable statute in that respect. It's unlike statutes this Court has analyzed in, say, the Newport News Shipbuilder case where it specifically contrasted Title VII as being the rare statute that gives the EEOC a duplicative cause of action to the individual. The second reason, though, is that generally, as a matter of privity, res judicata principles, the reason that you hold one party in... in... to a judgment that they didn't participate in to the consequences of that is because the party in the first action adequately represented the interests of the party that wasn't present. I--
William H. Rehnquist: Well, why did the EEOC decide to get into this case? Is there some sort of a pattern or practice involved that goes beyond this individual establishment?
Paul D. Clement: --My understanding is that the EEOC picked this case because this case... the events here took place in 1994. So, the ADA was still quite new at the time that this... that this case took place, and I think the EEOC was concerned that employers were not sure of what their obligations under the ADA were. So, they picked this case to litigate to help establish what employers' obligations were under the EEOC--
William H. Rehnquist: This is... this is not any broad pattern or practice. This is simply honing in on an individual case?
Paul D. Clement: --That's fair enough. But again, Congress has specifically allowed the EEOC to use its modest litigation resources to vindicate the public interest both in pattern and practice cases or cases that seek injunctive relief and victim-specific cases where there's some aspect of the case that helps illustrate an important principle of law.
David H. Souter: Mr.--
Ruth Bader Ginsburg: --Mr. Clement, may I ask you to back up on how we would get to the point of having a settlement after... or an arbitral determination? I thought when the EEOC sues, then the individual has no right to come to court, that EEOC would be the exclusive litigator. And so, I think it's clear that the... the individual employee couldn't bring a suit, a rival suit, in... in court. Doesn't that extend to arbitration as well? I thought that the... giving the primacy to the EEOC meant it would control this entire claim in all of its aspects, but you answered the question as though, even though the EEOC had filed, the employee could go on on a separate track.
Paul D. Clement: Well, I had taken the import of the hypothetical as being that the individual had already sued and settled and then, only after that had taken place, that the EEOC decided to initiate a duplicative action. But your question certainly highlights the anomaly of having this predispute arbitration agreement--
Ruth Bader Ginsburg: Can the individual bring a suit? I mean, is the... within the 180 days, doesn't EEOC have total control?
Paul D. Clement: --That's absolutely right. The statute gives the EEOC the exclusive right to initiate a cause of action for the first 180 days and then, for an extended period, until a right to sue letter issues. And that's why in light of the... the congressional determination that... that EEOC had not only a different action, but one that took primacy, that they had the right to initiate the action once they found that there was a determination that the suit would serve the public interest, it seems particularly--
Antonin Scalia: Once they... once they do initiate the action, though, the individual cannot also bring an action. Right? So, what you're saying is that the... that the EEOC suit is independent of the individuals, but somehow the individual suit is not independent of the EEOC's.
Paul D. Clement: --Well, allow... allow me to make two responses. One is it's clear that under the ADA and Title VII, it's not that the EEOC's filing of a suit simply extinguishes the individual's cause of action entirely. They... the individual has a absolute right to intervene in the EEOC's action. So, if those actions were 100 percent duplicative, there would be no need to allow the individual to intervene in the suit.
Antonin Scalia: Exactly. I... I don't know why you think that cuts in your favor rather than against you. It seems to me the whole structure of the thing indicates that there's one cause of action. It can be brought by the EEC or by the individual, but not by both.
Paul D. Clement: I mean--
Antonin Scalia: Not by both successfully, anyway.
Paul D. Clement: --I respectfully disagree because, unlike the ADA, the ADA does not make the EEOC suit the exclusive vehicle and extinguish any cause of action or any basis to get into court for the individual. They can still intervene in the EEOC's action.
William H. Rehnquist: So, you're saying that if the EEOC brings an action in circumstances such as this, an individual who has agreed to arbitrate the claim can intervene and not be bound? The individual is not bound by the arbitration agreement?
Paul D. Clement: No, we do not take that position. To the contrary, we think that the arbitration agreement does preclude in this case Mr. Baker from intervening in the EEOC's action. And I think that's quite a persuasive answer to the argument that the other side has made that somehow allowing the EEOC to sue in these circumstances renders the arbitration agreement a dead letter. It doesn't.
Anthony M. Kennedy: It's a very strange use of the Article III courts to have litigation proceeding in which one of the real parties in interest is not permitted to intervene. That--
Paul D. Clement: Well--
Anthony M. Kennedy: --that strikes me as a... a distortion of the whole case in controversy rule.
Paul D. Clement: --It may be, but I think that is the consequence of the arbitration agreement and the implication of the FAA.
Anthony M. Kennedy: Well, if it is a distortion of the case in controversy rule, then we're in real trouble, aren't we?
Paul D. Clement: Well, even if you disagree with me on... on that particular point and you say that the FAA does not prevent Baker from intervening on this action, it's still true that the arbitration agreement is... has a meaningful benefit to Waffle House because before Waffle House entered that arbitration agreement with Baker, it was subject to a suit in court by either the EEOC or Baker. The agreement with Baker limited Baker to an arbitral forum. But absent a similar agreement with the EEOC, Waffle House has simply no expectation and no basis to keep the EEOC out of court or to limit its remedies in court.
David H. Souter: Do you think it is... do you think it is going to be very comfort to Waffle House to know that, yes, it can't be sued in court by the individual, but the entire prosecutorial power of the United States can be brought to bear on it in... in a suit in court? What Waffle House wants to do is to stay out of court, and that's what they're getting at when they talk about undercutting the... the... in effect, the arbitration agreement.
Paul D. Clement: Well, with respect, if Waffle House wants to stay out of court, then it needs to reach an agreement with every party that has a statutory right to get them into court. And as a practical matter, I still think--
Antonin Scalia: Unless one statutory right is derivative of the other. I mean, that's the... that's the whole issue in the case.
Paul D. Clement: --Yes, and we think there are good--
Antonin Scalia: And you... you keep saying the Government has an independent right to sue, but you know, that begs the question. That... that's the whole issue. It is given a right to sue, but is... is that right to sue derivative of the individual's right so that it disappears when the individual's does?
Paul D. Clement: --And I do not think it is. And it's... and I think in fact the text of Title VII is quite clear.
David H. Souter: Then I think your answer has got to be that the settlement clearly does not bind the Government.
Paul D. Clement: That's exactly right, and that's... that's a well-established principle. I mean, look at... look at Firefighters Local No. 93 against... against the City of Cleveland. The Court says it's a fundamental principle that a settlement cannot bind non-parties to the litigation.
Ruth Bader Ginsburg: How does this compare with the Fair Labor Standards Act where the Secretary of Labor could sue or the individual could sue, say, for a wage and hour violation? Or let's take a violation of the Equal Pay Act. How... how does that work when the Secretary brings a suit?
Paul D. Clement: I think in all of those cases, the statutory scheme works effectively the same. There are independent causes of action given to the Government entity and to the individual. And this Court held in the Tony and Susan Alamo Foundation case that just because the individual forswears a cause of action or right to sue under the Fair Labor Standards Act, that does not preclude the Secretary of Labor from bringing their own independent action.
William H. Rehnquist: Of course, the... the cause of action for... that EEOC has could be vindicated by an equitable remedy.
Paul D. Clement: I... I don't think that's necessarily true. It's certainly not going to be true in every case. And Congress specifically made all forms of relief available to the EEOC in its public enforcement action. The court below drew a distinction between equitable relief on the one hand and victim-specific relief on the other hand to avoid a perceived conflict with the FAA. But with respect, I don't think there is any conflict.
William H. Rehnquist: But in this case then you say EEOC can go into court and that Baker can probably not... not intervene, but the EEOC could get whatever he could have gotten and give it to him.
Paul D. Clement: That is true, but I don't think that is particularly anomalous or limited to this area of law. Take, for example... I mean, this Court has held that an individual can agree to arbitrate his or her civil RICO claim. I wouldn't think, though, that that agreement to arbitrate the civil RICO claim would in any way prevent the Government from bringing a criminal RICO action or prevent the Government from getting a restitution order that agreed to give restitution directly to the victim.
Antonin Scalia: Who had already recovered?
Paul D. Clement: No. Let's... let's take this... let's make it parallel to this case where the individual--
Antonin Scalia: No. I'm assuming a RICO victim who's already been... been compensated, and you think the Government can bring a RICO action in which it gets not just criminal sanctions but also requires the... the RICO defendant to pay again what's already been paid.
Paul D. Clement: --Well, actually they could get the order, and then there are specific provisions in the Federal restitution statute that allow a set-off for amounts that have already been paid or that will be paid.
Antonin Scalia: Oh, well, that's quite different.
Paul D. Clement: But I don't think it--
David H. Souter: Okay. Then let's go back... then let's simply go back to the damages case. You said a second ago in... in response or you... you agreed with the suggestion of mine that in fact the Government can perfectly well sue independently. My question then is, why do you concede that the settlement case in which the individual settles for... for money in lieu of damages is a harder case? Why don't you say no? It's just as easy as this is. And... and in neither case is the agreement between the individual and the defendant binding or affecting in any way what the Government can do.
Paul D. Clement: --Again, we don't think the agreement is binding, but let me give you three reasons--
David H. Souter: But why... but--
Paul D. Clement: --Let me give you three reasons why I think it's a harder case.
David H. Souter: --you did say earlier that you thought the settlement case more difficult. So, I guess I want you to explain why you think it is.
Paul D. Clement: Okay. Let me give you three reasons why I think the settlement case is more difficult. First, there's already been some expenditure of resources in that case, either... likely, either judicial or arbitral. Second, Title VII seems to place particular importance on the EEOC's ability to be able to initiate the action and consider the early stages of litigation. If, for whatever reason, we've gotten to the point where somebody has filed a claim and it's settled, that role has already been filled. The third reason is another particularly important function of the EEOC under Title VII is to act as a safety valve, so if for some reason the individual is not willing or able to sue, maybe out of a fear of retaliation or something, in a particular case that vindicates the public interest, the EEOC has the ability to step in and fill that gap. If there's already been a settlement--
David H. Souter: Well, but in each of the... in each of the cases that you posit, even the third one, the... the essence of the objection to your position is that an agreement has been made between the individual and the defendant. And in the case of the arbitration agreement, an agreement has been made between the individual and the defendant. And I don't see why the one class... the one kind of agreement should be treated any differently from the other kind of agreement in determining whether the Government really is in an autonomous position.
Paul D. Clement: --Well, I actually think there is a reason to treat that one agreement different, which is the agreement to settle a case extinguishes any claim to relief. An arbitration agreement does not. It's simply a forum selection provision. And the anomaly of the Fourth Circuit's ruling is they take an agreement that limits Baker's access to a judicial forum, but does not limit his remedies and somehow transmogrify it into a rule that limits the EEOC's available remedies but not their access to a judicial forum.
David H. Souter: Then your objection is the transmogrification, not to the... not to the recognition of the agreement as such.
Paul D. Clement: Again, we have no... absolutely no objection to having the agreement bind the parties to the agreement.
Ruth Bader Ginsburg: But you do say that the employee could not proceed even in the arbitral forum once the EEOC starts. It's clear in the statute that that's true as to a court action, but you I thought agreed with me that the employee, once the EEOC starts, can't go into the arbitral forum either.
Paul D. Clement: Actually the EEOC is of the opinion that the... that the individual could bring an arbitration action at that point. That is a consequence, though, of the view that they cannot intervene in the EEOC's enforcement action. I think... I think they--
Ruth Bader Ginsburg: So, then the EEOC--
Paul D. Clement: --they have to have one action or the other.
Ruth Bader Ginsburg: --says we can have this... we can have this... you've just told us that the substantive law is the same. And I think you're quite right about that, and... and it's just a question of which forum. But now you're saying it can be both forums simultaneously. The individual can go forward in the arbitration; the EEOC can go forward in the court with all the problems that duplicative litigation can have of potentially conflicting results.
Paul D. Clement: That's equally, of course... I mean, I... I agree that there is that problem. That is equally a problem with the Fourth Circuit's rule, of course, because they said that the EEOC could be in court seeking general injunctive relief while the individual is arbitrating his claim for victim-specific relief.
Antonin Scalia: Well--
Paul D. Clement: But... but I think--
Antonin Scalia: --that doesn't strike me as so terrible. I mean, that... that's entirely understandable. You have two different types of relief being sought in two different forums.
Paul D. Clement: --And... and--
Antonin Scalia: What Justice Ginsburg points out is... is the anomaly of... of the same relief being sought in two different forums.
Paul D. Clement: --Well, and... and I think that... I mean, that may be a product of... that happens when you have an arbitration agreement that limits some parties but not others. That seems to be the case in... in Moses Cone.
Antonin Scalia: Only if we adopt your view of the thing, that the two... that the two are independent. If... if the two are dependent, as the statute makes very clear they are when... when the Government brings... brings the suit first, barring... barring the individual from bringing a separate suit, if the two are... are dependent, then you don't face any of these problems.
Paul D. Clement: Well, fair enough. But in this case, the Government did bring suit first. Baker has never arbitrated. So, that position would lead you to the conclusion that the Fourth Circuit was wrong, that the EEOC can pursue this case, seek victim-specific relief and general injunctive relief, and that it's up to you to determine whether or not Baker gets to intervene in that action. But that is... that is certainly a result that the Government is quite happy with. It seems to me what's really sort of indefensible about the Fourth Circuit's reasoning is they take this forum selection provision and turn it into a restriction on remedies. The... the ADA and Title VII have concurrent jurisdiction. Suppose that an employer and an employee agreed to litigate their case in State court, not Federal court. It wouldn't seem to me that that forum selection clause would bar the EEOC and bind the EEOC and limit them from bringing their public enforcement action in Federal court. It certainly wouldn't seem to me that that agreement to litigate in State court would somehow prevent the EEOC from getting victim-specific damages in Federal court if in fact there was no State court action. But... but in principle, there's no difference between the arbitration agreement and that forum selection clause agreement that picks the State court.
William H. Rehnquist: Except there's a Federal Arbitration Act, and we've said it's designed to encourage arbitration of disputes.
Paul D. Clement: Well, in fairness, I don't think that the FAA embodies a self-executing preference for arbitration. The--
William H. Rehnquist: No, but... a... a favoring where the... where an arbitration agreement has been entered into, as it was here.
Paul D. Clement: --Well, that's true. But I think the purpose of the FAA, as I understand it, was to put arbitration contracts on an equal footing with other contracts, not to give them some special private place. And we think that that forum selection clause that picked the State forum would be enforceable between the parties, but we just don't think it makes any sense to say that that agreement between the parties somehow leaps out and bars the EEOC from bringing a Federal enforcement action, or even more puzzlingly I think, restricting the remedies available to the EEOC in that public enforcement action. It seems to me that at... at bottom Title VII gives the EEOC a right to bring a public enforcement action.
Antonin Scalia: The trouble is it's not a public enforcement action to the extent that it is seeking damages for this individual. To that extent, it... it's an action that seeks to compensate this individual for the damage he has suffered. Now, that... that has some public benefit I... I assume, just as his own suit, should he recover, would have such... some public benefit. But to call it a public enforcement action seems to me quite unrealistic.
Paul D. Clement: With fairness, I think that's a position that Congress rejected in Title VII itself. If Congress wanted to say that the only time that the EEOC vindicates the public interest is when it seeks general injunctive relief, it would have been quite easy for Congress to limit the EEOC to general injunctive relief or limit it to bringing pattern and practice cases. Instead, it gave it the right--
Antonin Scalia: Why? That would have been very foolish. Why... why require two separate suits: one... one by the private individual, the other by the... by the agency? If the agency is going to be in there, it may as well go for the whole ball.
Paul D. Clement: --Well--
Antonin Scalia: But... but to say that the portion of it that compensates the individual is essentially, you know, a vindication of the public doesn't seem to me... doesn't seem to me reasonable. And... and that is demonstrated by the fact that if the agency brings the suit, the individual can't because he's going to be getting his individual relief.
Paul D. Clement: --Again, with all respect, I disagree. I think restitution statutes reflect and vindicate the public interest, even though the restitution goes to the victim, and not the Government. It's the fact that the--
Ruth Bader Ginsburg: If the model... if the model is the Fair Labor Standards Act, which antedated these discrimination acts by many years, where the Secretary can sue for the money to go into the pocket of the employee, I thought that those were characterized as public interest actions.
Paul D. Clement: --That's absolutely right. I mean, every time a wrongdoer pays money, the payment of that money serves a public interest that's independent of the destination of the payment, whether it goes to the individual who was wronged or some sort of public enforcement action. And again, I suggest the example of a retaliation action. In a retaliation action, when an employer has retaliated against an employee for filing a charge with the EEOC, the EEOC clearly vindicates the public interest when it files suit to take the employer to task for the retaliation. And that's true even if the retaliation and the most effective remedies are victim-specific. In a case like that, you really need the victim-specific remedies because, after all, it is clear as day from Title VII itself that an employer can't retaliate against an employee for filing a charge. So, to simply get an injunction that says that is of somewhat limited utility. On the other hand, to get back pay, compensatory and capped punitive damages I think does vindicate the public interest.
Anthony M. Kennedy: Well, what are your best authorities for the proposition that when litigation has been concluded, another party can recommence the litigation alleging its own injury?
Paul D. Clement: I guess I would point--
Anthony M. Kennedy: --some other areas. You cited the Firefighters case?
Paul D. Clement: --Yes. I would... I would direct you to Local No. 93 v. City of Cleveland. There's a statement in that case that I think was just meant to reflect a general principle that parties to a litigation can't, through a settlement, bind a non-party to the litigation.
Anthony M. Kennedy: Well, but that was because the other parties had their own injury of a pecuniary nature, as I recall the case. I... I don't see the case cited.
John Paul Stevens: As a practical matter, how often does the EEOC seek victim-specific relief in the form of monetary damages after there's been a settlement between the victim and the other side?
Paul D. Clement: I'm actually aware of no case where that's happened.
John Paul Stevens: This is all a hypothetical.
Paul D. Clement: This is all hypothetical. And what we're concerned about is a case like this one where there is an arbitration agreement, but the individual has never even sought to arbitrate. I think that's a much easier case. I'd like to reserve the remainder of my time for rebuttal.
John Paul Stevens: Very well, Mr. Clement. Mr. Gordon, we'll hear from you.
David L. Gordon: Mr. Chief Justice, and may it please the Court: The answer to the question presented today is found in the broad terms and policies of the Federal Arbitration Act. The question, of course, is what effect does Mr. Baker's arbitration agreement have on the EEOC's litigation remedies. The Fourth Circuit correctly held that the EEOC could bring in court a claim for broad-based injunctive relief and declaratory relief. However, because Mr. Baker had agreed to arbitrate his claims, he could not seek relief in court specifically for Mr. Baker. Now, I... I listened carefully to Mr. Clement's argument about the issue of settlement of a claim, and I must respectfully disagree with the authority and line of cases that he's citing. As a matter of fact, the position, as I understand it from Mr. Clement, is that an individual can settle a claim and then the EEOC can later sue on behalf of that individual and recover relief for that individual. And that particular principle, if that is what the EEOC is espousing today, contradicts their own policy guidance--
John Paul Stevens: Mr. Gordon, if I understood him correctly, he did take that position, but he said you don't have to take that position to prevail in this case. Is that right?
David L. Gordon: --Well, perhaps I perceived it differently, Your Honor. But I... I do think that from our position it's very important for the Court to understand that the cases are almost uniform for the proposition that if an individual settles a case--
Ruth Bader Ginsburg: Mr. Gordon, but that's so highly hypothetical because the likelihood that the employee would have proceeded... if the EEOC in the beginning is the only one who can bring an action in court, EEOC brings an action. Now, even if it's limited only to injunctive relief, isn't it clear that the basic finding of fact, was there discrimination, has to be made for any kind of relief. And are you going to permit a viable set of proceedings to determine that question? Once the EEOC brings in... the case in court, mustn't its suit be given primacy to determine the basic question, was there discrimination in violation of the act?
David L. Gordon: --Your Honor, we do not believe it should be given primacy when an individual has signed an arbitration agreement in which he says I agree that all claims arising out of my employment shall be resolved in arbitration. We don't see any reason why that case needs to wait for the EEOC to--
Ruth Bader Ginsburg: Well, because one of them has power to bind the other. Does it not? I mean, suppose the EEOC proceeds and there is a finding that discrimination, unlawful under the statute, occurred. That would be binding on the employer in any other forum, wouldn't it be?
David L. Gordon: --Well, Your Honor, it should be, but the EEOC doesn't take that position, as I understand it. As I understand their position, whatever happens in their court proceeding is an independent action and that Mr. Baker really doesn't have any control over. And they're doing their own thing in court.
Ruth Bader Ginsburg: But we're not talking about Mr. Baker. We're talking about the employer who has been found to have been a discriminator. That would have issue preclusive effect against the employer in any other forum. We're not talking about the individual now, but we're talking about the employer who has been found to be a discriminator in a Federal district court.
David L. Gordon: It would, Your Honor, if there were findings of fact that were common to the other proceeding.
Ruth Bader Ginsburg: But the other way around, if the arbitrator, say, finds no discrimination in that arbitration forum, couldn't bind the EEOC because the EEOC wasn't party to that litigation. Am I right about that?
David L. Gordon: Well, I would have to disagree with you on that because I believe that in the arbitration, if there were... an adjudication was made as to Mr. Baker and in... as in this particular case... if I may use this case as the example, in this particular case, Mr. Baker is the only game in town here. The EEOC is seeking relief solely on behalf of Mr. Baker. All damages will go to Mr. Baker.
Ruth Bader Ginsburg: Let's... let's cut out the relief aspect of it and again concentrate on the issue, was there discrimination or not, as to which there might be injunctive remedies. If Mr.... Mr. Baker loses on that, that can't preclude the EEOC from getting the determination, was there discrimination. So, the only point I'm making is when you've got one show that will be binding and the other that can't preclude the EEOC from litigating that basic question, whatever remedies would attach to it, doesn't it follow that the EEOC's suit must be allowed to go forward and have the question of discrimination determined in that forum?
David L. Gordon: Your Honor, I... I still believe that there's no reason to wait in this case, that the arbitration can go forward to resolve Mr. Baker's individual claims, that the EEOC, under the Fourth Circuit rule, can go forward and have the claims for broad-based injunctive relief heard there. And I... I must say that there may be separate issues being litigated in that EEOC court proceeding because--
Ruth Bader Ginsburg: But isn't it true that for any relief, there must be a finding that the employer has violated the act?
David L. Gordon: --There must be, but in the court proceeding, there's going to be a broader finding, that there is some pattern or practice of discrimination going on that may or... may or may not apply to Mr. Baker. If it does apply to Mr. Baker, I would agree with you. Then that particular ruling would have some collateral estoppel effect in the arbitration.
Anthony M. Kennedy: Well, what... what is your position... maybe you've answered this. What is your position if the employer and the employee arbitrate and there's a finding of no liability, no wrong on... no wrong committed by the employer? The EEOC then sues. Is the EEOC not bound by the liability finding?
David L. Gordon: Your Honor, in that particular case, if the arbitrator makes a ruling that there was some practice--
Anthony M. Kennedy: No. My hypothetical is the arbitrator rules for the employer. No discrimination. There was no firing in violation of the ADA. The employer was taking... the employee was taking money or something. That... that was the reason. Can the EEOC then re-litigate the issue of liability?
David L. Gordon: --Not that particular very issue of liability, but what I'm... what I'm anticipating--
Anthony M. Kennedy: And why... and why is that?
David L. Gordon: --What I... what I'm anticipating--
Anthony M. Kennedy: Why is it that the employer cannot... that the EEOC cannot re-litigate the raw finding of liability?
David L. Gordon: --I am anticipating from your hypothetical that a specific finding is being made about Mr. Baker being discriminated against based on the facts and circumstances of his case. What I am anticipating going in the court proceeding is some claim for broad-based injunctive relief that may... may involve Mr. Baker and may not.
Anthony M. Kennedy: I just want to make it clear what your position is. Is it your position that when the EEOC sues in... in the Federal court and there has been a previous finding of... of non-liability on the part of the employer, that the employer did not discriminate against this person, is the EEOC bound in court by that finding?
David L. Gordon: Your Honor, the EEOC, to the extent that it's bringing a public enforcement action, something involving a pattern or practice of discrimination, something--
Anthony M. Kennedy: Suppose it's not. Suppose it's just interested in this--
David L. Gordon: --Just--
Anthony M. Kennedy: --employee and it's going to base the injunction on the wrong that the employer allegedly committed against this employee, but the arbitrator has found that there is no such violation.
David L. Gordon: --If it... if the injunction is solely based on relief specific to Mr. Baker and the facts of his case, yes, it would be binding.
Anthony M. Kennedy: And what's your authority for that proposition?
David L. Gordon: Well, Your Honor, the... the authority would be that based on general principles of collateral estoppel where there's been... these issues have been litigated and--
Ruth Bader Ginsburg: Against a particular person. I thought the basic principle of preclusion was that someone who has not litigated cannot be bound. You would have to establish that there was some kind of privity between the employee and the EEOC, but I think that would be certainly unprecedented. The main rule is you have a right to a day in court, not two days in court, and if the EEOC has not been a party in the arbitral forum, I don't see how it can be bound, unless you're making up some new preclusion rule.
David L. Gordon: --No, Your Honor, I'm not making--
Anthony M. Kennedy: Or unless you say the statutory scheme necessarily finds that there is privity because the EEOC's interests in this case, where there's no broad pattern or practice, are allied solely with those of the... of the employee. But it's... it's a little odd to say that a party in privity is... is bound if that party cannot intervene in those proceedings when it's a public agency. But it seems to me that that has to be your... your proposition.
David L. Gordon: --Well, it is and it runs throughout our brief, Your Honor, and it runs throughout what I'm... what I'm going to say to the Court is that basically what... what is happening here, in the... in the terms of seeking individual relief, is that the EEOC is acting on behalf of Mr. Baker.
David H. Souter: Why... why--
Antonin Scalia: --The EEOC is... is effectively a party to the earlier proceeding since its right in the later proceeding is purely derivative of the right of... of the individual employee. That's essentially what you're urging.
David L. Gordon: It is, Your Honor, and... and essentially the EEOC is standing in the shoes of Mr. Baker when you look at this case because it is... if you look at the joint appendix, page 51 and 52, the interrogatory responses from the EEOC, you see that they acknowledge they are seeking... when asked what... what damages are you seeking in this case, we are seeking relief on behalf of Mr. Baker.
Stephen G. Breyer: That... that happens to be in this case. They might have said that. Doesn't the EEOC also pursue a public interest? I mean, can't the EEOC... imagine individuals who don't want to bring suits. They don't care. They're cowed or they just don't care. And the EEOC says, I don't care whether you want to bring a suit or not; we're bringing it. Now, isn't that part of the EEOC's job to see that employers don't discriminate? And isn't there a public interest in that, as well as the private interest?
David L. Gordon: There is, Your Honor. There's a public interest in a case such as that, and there's also a public interest in any claim that an individual brings to vindicate the anti-discrimination--
Stephen G. Breyer: But isn't there a public interest? Didn't Congress set this statute up so that it is more is involved than a simple tort action or a simple contract action? There's a public policy in the United States against this kind of discrimination embodied in many laws, and this is one of those laws.
David L. Gordon: --True, Your Honor, but that public interest can be vindicated just as effectively in arbitration.
Stephen G. Breyer: That's the question. If a person then in your view says to the EEOC, my employer discriminated against me because I'm black or because of gender or whatever, no doubt, but I like peace; I don't want to bother him; I'm a little worried about it; okay, drop it, if the EEOC says, I don't want to drop it, do they not have that right?
David L. Gordon: They can continue to pursue that claim for broad-based injunctive relief involved. But... but here's the rub.
Stephen G. Breyer: I'm talking about can they not get appropriate relief. That's what the statute says.
David L. Gordon: It does say that, and the relief would not be appropriate where an individual has signed an agreement to arbitrate.
Stephen G. Breyer: I'm not... I'm asking you my question, not your question. I, at the moment, have an individual who doesn't care, doesn't really want the suit brought, says to the EEOC drop it, forget it. The EEOC says, we don't want to forget it. There's... I'm just repeating myself. So, what's the answer to my case? [Laughter]
David L. Gordon: Well... well, the answer to your case I think is found in the Federal Arbitration Act because this individual agreed to arbitrate--
Stephen G. Breyer: I'm not... there is no arbitration agreement in my case. It's a person. You're quite right. As soon as you answer my question, I'm then going to ask you why does it matter that there's an arbitration agreement. [Laughter] But I'd like you to start with my case.
David L. Gordon: --All right. Your Honor, if... may I ask you to again assert your proposition?
Stephen G. Breyer: The person is lazy, frightened, or whatever and says to the EEOC, I don't want you to bring this action to get me reinstated. Forget it. Drop it. I'm indifferent. Does the EEOC have the legal power to say we don't care? We have a public interest here. We want to bring this suit anyway because we don't think it's right for the employer to discriminate against you. We want to make an example of him. Okay?
David L. Gordon: Yes.
Stephen G. Breyer: They can do that.
David L. Gordon: They can do that.
Stephen G. Breyer: Fine. Now, my question is, when they can do that, why does it matter if there's an arbitration agreement since once you... all right. Go ahead. Why does it matter?
David L. Gordon: Well, there is, of course, the... the strong Federal policy favoring arbitration, the text of the Federal Arbitration Act that says, we're going to enforce agreements.
Stephen G. Breyer: And, of course, my example is designed to show that all those interests have to do with the private interest of the individual perhaps.
Antonin Scalia: Mr. Gordon--
Stephen G. Breyer: --Not the other. That's why I asked--
Antonin Scalia: --I think... I think it is your position, is it not, that the... that the agency would not be able to bring such a suit if the individual had already sued and had been compensated, or indeed, if the... if the individual had already settled?
David L. Gordon: True.
Antonin Scalia: Isn't that your position?
David L. Gordon: True.
Antonin Scalia: And... and your further position is that the... that the conclusion of an arbitration agreement is similar to a settlement, that the agency's ability to bring the later suit depends on what the individual, on whose behalf it sues, has given away.
David L. Gordon: That is correct.
Stephen G. Breyer: Good. That's perfect. That's just my question. Why is this arbitration agreement more like the settlement than it is like the instance we both agreed, the indifferent employee?
David L. Gordon: Your Honor, the EEOC in these cases... and I hope I can be responsive to your question. The EEOC in these cases takes its employee as it finds it, and in this particular case, the employee has an arbitration agreement. And individual conduct can limit the ability of the EEOC to seek remedies in a case. It happens in a number of different contexts.
Ruth Bader Ginsburg: But the remedy... I think we've agreed that what we're not talking about here is the substantive law... the substantive right and the remedy. It is simply a choice of forum clause. And if you have two parties that have a substantive right, who can assert the substantive right, one of them is bound by a choice of forum clause. That's where that party must go. And the other one is not so bound. Then how do you stop the EEOC from choosing its forum? The same question with respect to suppose it had been a State human rights commission that is going into the State court, and the employer says, no, State human rights commission, you can't do that because this employee has signed an agreement to arbitrate.
David L. Gordon: Your Honor, the... the notion of the importance of the Federal Arbitration Act is that these agreements have to be put on the same footing as other contracts, and we must give force to an arbitration agreement such as this. And to allow parties to come up with ways to get around these agreements completely undercuts the Federal Arbitration Act. And I... I would disagree with your premise, if I... if I may, respectfully, that arbitration is a forum selection clause. It's a lot more than that. It is a... it is a method of resolving employment disputes.
Ruth Bader Ginsburg: But do you... procedural mode, but do you... you don't contest, do you, that Title VII or the disability act or the... whatever Federal law is the law that the arbitrator is to apply so that the substantive law to be applied, whether you're in court or in arbitration, is the same? It would be Title VII. It would be the Disabilities Act. You're not suggesting that the arbitrator can apply some other brand of Federal law than the Federal court would apply, are you?
David L. Gordon: No, I'm not. But--
Ruth Bader Ginsburg: So, we're talking about the forum and forums have rules of procedure, which can be different, but the substantive law is the same. It is Title VII or the Disabilities Act.
David L. Gordon: --That's true, Your Honor, but... but still if we... if we go forward with the rule that's proposed by the EEOC, in... in my view we will be flying in the face of the Court's decisions in Gilmer, the Court's decision in Circuit City, the plain text of the Federal Arbitration Act. We will be discouraging rather than encouraging arbitration, and--
Antonin Scalia: Mr.... Mr. Gordon, I assume that giving up the whole cause of action is the greater and giving up the forum is the lesser. Isn't your response that if... if the EEOC is bound by a settlement agreement, a fortiori it should be bound by an agreement only to bring the suit in a particular forum, if indeed its action is derivative of the individual's action. The greater includes the lesser, and surely giving up the whole cause of action, if that binds the EEOC, is greater than giving up simply the forum in which the cause of action can be brought.
David L. Gordon: --True, and if you take a step back... and let's... let's take the more general... general example where there... there hasn't been a claim filed and where an individual is having a dispute with his employer. And the employer says, I will give you $300 in exchange for a... a settlement agreement, a release of all claims. It doesn't involve where an EEOC charge has been filed or where there's a court case going on. The EEOC and the courts take the position that that particular scenario would preclude it from later seeking relief on behalf of that individual in court.
Stephen G. Breyer: Why is this greater? You agreed that this is a... this is the greater, the arbitration. The way I'm seeing it, which you can correct, is that the word in the statute is appropriate relief, and that there's a spectrum. On the one hand, we have the indifferent employee. Next is the one with an arbitration agreement who doesn't enforce it. Next is the one who is in the middle of arbitration. Next is the one who has been through arbitration and gotten some money, and finally, at the far end we have a settlement. And whether each of those is appropriate, circumstances for the EEOC to proceed might differ one from the other. But certainly the arbitration case is in the middle. It's not way over at the extreme. So, what... what is your response?
David L. Gordon: I can't accept the spectrum analysis, if... if I may. I have to revert to the fact that... that the individual signed the agreement to arbitrate. Once signing that agreement to arbitrate, then he must pursue his individual claims in that forum and he cannot hand off the ball to the EEOC and have the EEOC do for him what he cannot do for himself, which is get individual relief in court. That was the bargain that Waffle House made with this employee.
Ruth Bader Ginsburg: Would that carry over to, say, wage and hour claims? Equal pay... I guess the Equal Pay Act is the closest.
David L. Gordon: Your Honor--
Ruth Bader Ginsburg: Could the Secretary of Labor also be in privity with the individual employee who hasn't... who has been denied equal pay?
David L. Gordon: --Under the... under the wage/hour laws--
Ruth Bader Ginsburg: Yes.
David L. Gordon: --there... there are different interests there. For example, the... the Department of Labor has to approve a settlement of a wage/hour claim because of the public policy involved in making sure that the lowest wage earners in our society get a particular wage. It's different on an ADA claim, for example. The EEOC does not have to approve the settlement of a claim.
Ruth Bader Ginsburg: How about an Equal Pay Act claim?
David L. Gordon: Equal Play Act claim, Your Honor, I believe would be covered under the Department of Labor scenario.
David H. Souter: Mr. Gordon, may I just ask you a question sort of about the other end of this case? Let's assume that... well, let's assume that there are parallel proceedings going on and that the EEOC suit comes to resolution first. Now, you... you are... you at least agree that the... that the EEOC can get what I think you have described as sort of generalized equitable remedies on... on... in... in the public interest. Would those remedies... let's... let's assume a case in which the EEOC sues on behalf of the individual who is subject to the particular arbitration agreement, say, in this case, but also brings in a... in effect, a... a class-wide claim and said, you know, there are... we'll prove that there are hundreds of other individuals who have suffered the same... what is it... Title I violation that this individual suffered. Can the... and let's assume that in... in the... the EEOC suit, that they prove that. Can the EEOC get generally class-wide remedy as... as part of its general equitable relief?
David L. Gordon: Yes.
David H. Souter: Would that include back pay?
David L. Gordon: No, it would not where there's been--
David H. Souter: Why not?
David L. Gordon: --When there's been an arbitration agreement.
David H. Souter: Well, not back pay for this individual. Back pay for everybody in the class except this individual. This is just... I just want to know what your position is.
David L. Gordon: Our position would be, Your Honor, that for those individuals who have signed arbitration agreements, then any relief specific to them must be awarded in arbitration. For those individuals who have not signed arbitration agreements, then that EEOC class-wide relief action could encompass their claim for relief in court. But to give force to the arbitration agreements that have been signed by the individuals, the... the general--
David H. Souter: Okay, but then... then I... is it also your position that the... that the general equitable relief could not include an injunction to rehire all of those who were improperly fired?
David L. Gordon: --The... the equitable relief specific to the individual... specific to the individual--
David H. Souter: Well, the injunction is just a general injunction. It says, rehire the people in this class whom you unlawfully fired in... in violation of this title. Can... can they get that relief on your theory? Can the EEOC get that relief on your theory?
David L. Gordon: --It could if the relief was broad-based and not--
David H. Souter: Well, in my example, it's broad-based in the sense that it applies to everyone in the class, but in order to enforce it, it will have to be enforced against specific individuals. Somebody quite apart from this proceeding will come forward and say, I'm one of them. You've got to rehire me. Can the injunction be... be enforced in that case?
David L. Gordon: --Yes, it could, but--
David H. Souter: Then why can't back pay be enforced in that case?
David L. Gordon: --But... but... well, it would be enforced in arbitration. The relief specific to the individual would be enforced in arbitration.
David H. Souter: No. You... if I... if I understood what you just said... maybe I didn't... the... the injunction to rehire those who were improperly fired could be enforced in... in court. In other words, there's an injunction and a court that issued the injunction can enforce it. Is that correct?
David L. Gordon: The determination would be in court.
David H. Souter: All right. Then why... why would not a similar determination and a similar power effect a back pay... generalized back pay order? Give back pay to all of those... not this guy, but to all of those in the class generally who were improperly fired.
David L. Gordon: Well, it could, Your Honor. In court a determination such as that could be made that these individuals have been discriminated against and therefore remedies are available to them. But the actual determination of the remedies must be made in arbitration for those individuals who signed arbitration--
David H. Souter: I can understand why you say that, but I don't understand why you say that a... a general equitable order to rehire could be enforced in court and would not have to be remitted to an arbitral forum.
David L. Gordon: --The determination could be made in court, but the determination of what specific equitable relief, whether this person should be reinstated or... or this person should not, that should be made in arbitration.
David H. Souter: So, in... the only thing that on your theory then that is totally within the control of the court would be totally prospective relief, e.g., an order, don't do this again for anybody. That would be enforceable in court.
David L. Gordon: Yes.
David H. Souter: And purely in court.
David L. Gordon: That would be.
David H. Souter: And let's say... let's say a claim is made then later on that that order has been violated, that the title has been violated again, and the injunction against violating the title has been... has been violated. And let's assume that the employee who claims that... that he is the subject of that violation has also signed an arbitration agreement. Does it have to go to arbitration?
David L. Gordon: Well, in that particular case, Your Honor, I believe there would be contempt--
David H. Souter: Right.
David L. Gordon: --of the injunction. The contempt would be enforced in court.
David H. Souter: But why isn't your... why isn't your claim to the vindication of the arbitration agreement the same in the future case as it was in the past case?
David L. Gordon: Because the relief that is awarded to a particular individual is awarded in arbitration. Assuming that relief was awarded, then that would probably end the participation of the arbitrator at that point.
Antonin Scalia: The contempt action wouldn't be brought by either the EEOC or... or the individual, I assume. It would be brought by the United States attorney or, as we have said, some attorney appointed by the court.
David L. Gordon: Your Honor, the Court... the Court should not allow... and I think this is the central... central theme of... of our argument here. The Court should not allow the EEOC and its charging party who comes to it with an arbitration agreement to frustrate the purposes of the Federal Arbitration Act by making this end run around the agreement. Mr. Baker entered into a private agreement with Waffle House to resolve any disputes he has arising out of his employment. The Court--
Ruth Bader Ginsburg: Mr. Gordon, in... in the history of the anti-discrimination acts, there was legislative history that said the EEOC should be the main player; that is, they should be the main enforcer of these anti-discrimination laws. Now, that model, which would have taken a lot more money than Congress has appropriated to carry out... but that model simply could not be realized under your view of things because the Federal Arbitration Act would always take primacy, I think you... you put it. But the notion that the EEOC ought to be running these discrimination actions... they are the main show, and then the individual actions can supplement that. But... but you couldn't have that model effected under your view of it because the arbitration agreement could always come in and interfere with it.
David L. Gordon: --Well, I think we should... should take account of what the EEO still is able to do under the Fourth Circuit's rule. The EEOC is still able to effectuate the public interest by seeking broad-based injunctive relief. The EEOC is still able to get an injunction telling an employer that you are to certain things with the way you run your business. The EEOC still has the opportunity to tell an employer that you must report back to us on a regular basis to tell us how you're complying with the employment discrimination laws. Injunctive relief is not a toothless remedy. But I will... I will say one other thing.
Antonin Scalia: Excuse me. Does it have to wait for the... for the arbitration to be completed before it brings such a suit?
David L. Gordon: Before the EEOC brings a public--
Antonin Scalia: Before it brings such a suit based upon the violation against an employee who has signed an arbitration agreement.
David L. Gordon: --No, Your Honor. It could... it could file its own action for broad-based injunctive relief if it wished.
Antonin Scalia: And... and injunctive relief based upon the violation that is the same subject as the arbitration proceeding.
David L. Gordon: It could if there is a pattern and practice involved in that scenario.
Antonin Scalia: I don't know what you mean.
David L. Gordon: Well, if there is a policy, for example, that is the root cause of--
Antonin Scalia: Well, that's fine. It says that policy is reflected in this one instance, and... and it's the same instance that's... that's before arbitration. What happens?
David L. Gordon: --Well, in that case, Your Honor, if the only... if I'm... if the only game in town is that Mr. Baker was discriminated against, and that's it, and there are no general... general... there's no general relief being sought, we're just mad about the employment decision directed toward him, then if the EEOC was in court just on that theory and was unable to show any broader application, then that... the court should dismiss that case.
William H. Rehnquist: Thank you, Mr. Gordon. Mr. Clement, you have 4 minutes remaining.
Paul D. Clement: Thank you, Mr. Chief Justice. I want to first pick up on Justice Souter's hypothetical about the contempt proceeding. It seems to me that if that were enforced by civil compensatory contempt, rather than a criminal contempt action brought by the U.S. attorney, that he'd... he'd have the same problem at the end of the day. Respondents invoke the proposition that the EEOC has to take the victim as we find him. The problem with that is that principle applies with respect to damages problems, like a failure to mitigate, that apply to the individual employee whether or not he arbitrates or litigates and applies equally to an EEOC enforcement action and to the individual claim. What's so unique about this is that respondent is attempting to take an agreement that does not restrict Baker's ability to get any remedy in the arbitration proceeding and turn it into a restriction on the remedies available to the EEOC in its action. The problem is, this is not, at bottom, a restriction on damages or a problem with remedies. It is a forum selection clause. And you have a statutory structure that allows two people to initiate an action. When one of those parties has signed a forum selection clause and hasn't even initiated the action, it seems that even in the general case there would be no reason to restrict the other party's access to forums or their remedies. That would seem to be a fortiori true for a statute like Title VII that gives the EEOC a right of first refusal over the initiation of the action. Another point I'd like to emphasize is that, as Justice Stevens made clear, there are currently no suits pending against employers in a situation where there has been a previous settlement. In fact, there are only 450 suits currently in the entirety of the EEOC's docket, and I think that puts this case in perspective. In the literally 99 cases out of 100, an employer's arbitration agreement will govern and the only Title VII claim that will be brought is the employee's claim in arbitration. In the 1 case out of 100, in the extreme case where there's some important public principle at stake or there's particularly egregious conduct, the EEOC's public enforcement action serves as a valuable safety valve that allows it to preserve the possibility of precedent-setting in public judicial proceedings. The third and final point I'd like to make is that whatever the answer is in the settlement context, there's absolutely no reason to take a restriction that only restricts the available forum and not the remedies and turn it into a restriction on remedies but not the forum. Here respondent seeks not only to bind the EEOC to the results of an arbitration, but to prevent the EEOC from seeking all remedies even when there hasn't been any arbitration proceeding initiated at all. For those reasons, we ask you to reverse.
William H. Rehnquist: Thank you, Mr. Clement. The case is submitted.