Opinion ID: 201485
Heading Depth: 2
Heading Rank: 2

Heading: Waiver due to EEOC proceedings

Text: 51 Marie urges us to find waiver both from the fact that Allied failed to file for arbitration during the pendency of the EEOC investigation and from the fact that it failed to file for arbitration after the EEOC proceeding had concluded with the EEOC's finding of no violation but before Marie had brought her private civil suit in federal district court. At least two elements of waiver by conduct that this circuit has identified are (1) undue delay in bringing arbitration that is inconsistent with the desire to arbitrate and (2) prejudice to the other party from that delay. See Rankin v. Allstate Ins. Co., 336 F.3d 8, 12 (1st Cir.2003); Menorah, 72 F.3d at 221-22. Since, in this case, there was no undue delay, we need not reach the prejudice issue. 52 The argument that waiver occurred during the pendency of the EEOC proceedings runs contrary to circuit precedent. Brennan v. King, 139 F.3d 258, 263-64 (1st Cir.1998), found no waiver where an employer failed to raise its right to arbitrate with the EEOC during the pendency of EEOC proceedings. As well, since Brennan, the Supreme Court has held that an employer cannot stop the EEOC, a third party, from bringing a public enforcement action against an employer by invoking an arbitration agreement between the employer and the relevant employee. See EEOC v. Waffle House, Inc., 534 U.S. 279, 297-98, 122 S.Ct. 754, 151 L.Ed.2d 755 (2002). The EEOC is a nonparty to the arbitration agreement and therefore cannot be bound by it. See id. at 294, 122 S.Ct. 754. The same logic applies to a preliminary EEOC investigation, which also cannot be halted by an arbitration agreement between the complaining employee and her employer. 53 If the EEOC's investigation of an employer cannot be stopped by invoking an arbitration agreement, then forcing the employee and employer to begin an arbitration proceeding during the pendency of that investigation will automatically result in two adjudications involving the same issue at the same time: (1) the EEOC investigation of the employer at the employee's urging and (2) the arbitration between the employer and the employee that the employer initiated. This is quite inefficient. 11 Further, the EEOC investigation might definitively resolve the claim: the employee might receive a notice that the EEOC did not wish to start an enforcement action, along with a rationale for this decision and a right to sue letter, and determine that she did not want to sue after all. That was not Marie's reaction to her letter, but it may well be the reaction of many employees. And if this were the reaction, then there would be no need for employer-employee arbitration at all. 54 Thus, forcing employers to bring arbitration during the pendency of EEOC investigations is a waste of resources and is contrary to the general purposes of the FAA. 12 See, e.g., Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218-20, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985); Sink v. Aden Enters., 352 F.3d 1197, 1201 (9th Cir.2003). It is also contrary to the scheme established in the federal employment discrimination statutes, which generally is designed to avoid inefficient, duplicative proceedings. See 42 U.S.C. § 2000e-5(f)(1) (employee's private civil lawsuit against employer may only be filed after EEOC has investigated and issued a right to sue letter; no private civil lawsuit may be initiated during the 180-day period allotted for EEOC investigations or after the EEOC has decided to bring a public enforcement action); see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 27, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (explaining similar scheme under 29 U.S.C. § 626, the Age Discrimination in Employment Act). 13 55 We reaffirm that an employer cannot waive its right to arbitration by failing to raise the arbitration defense with the EEOC or by failing to initiate arbitration during the pendency of the EEOC proceedings. The employer's failure to initiate arbitration during the pendency of such proceedings merely reflects a desire to avoid inefficiency and is not action inconsistent with a desire to arbitrate. Our holding here is in accord with the few cases elsewhere to discuss this issue. See, e.g., Brown v. ITT Consumer Fin. Corp., 211 F.3d 1217, 1222-23 (11th Cir.2000); Gonzalez v. GE Group Adm'rs, Inc., 321 F.Supp.2d 165, 171-72 (D.Mass.2004). 56 The same considerations apply after an EEOC investigation has concluded with a finding of no violation. We will not force the employer to make a wasteful, preemptive decision to arbitrate when it has no idea whether a dispute will still exist. As the Brown court stated, in general there is no need for the non-complaining party, the employer, to make a pre-suit demand for arbitration. Brown, 211 F.3d at 1223. 57 Marie has rightly made no claim here that Allied's actions after Marie's lawsuit was filed constitute waiver of Allied's right to arbitrate. The motion to compel arbitration and stay proceedings was made in a reasonably prompt fashion after the lawsuit began.