Opinion ID: 524973
Heading Depth: 2
Heading Rank: 3

Heading: Inherent Incompatibility

Text: 21 Because the language of the statute and the legislative history, while suggestive, are not conclusive of congressional intent regarding arbitration of ADEA claims, we must examine whether the objectives of the ADEA are inherently incompatible with the displacement by arbitration of a judicial forum for claimants alleging age discrimination. See Shearson, 107 S.Ct. at 2337. Our examination of this factor leads us to conclude that the ADEA is one of the statutory schemes that present the inherent conflict [with] arbitration referred to by the Supreme Court in Shearson. Id. 22 We begin with Congress' clear intent that compliance with the ADEA be overseen by a public agency. The EEOC's obligation to enforce the ADEA goes beyond its authority to investigate and redress a particular employee's complaint. Acting under its statutory powers set forth in, e.g., 29 U.S.C. Secs. 209, 211, 216, 217, 625, 626, the EEOC has promulgated regulations pursuant to which it investigates violations of the ADEA and takes measures to secure enforcement. It may receive information concerning alleged violations of the ADEA from any source. 29 C.F.R. Sec. 1626.4 (1988). It may investigate and gather data, inspect establishments and records, interview employees, and impose recordkeeping and reporting requirements. 29 C.F.R. Sec. 1626.15. It is also the agency that must issue interpretative regulations which provide guidance to all employers. 29 U.S.C. Sec. 628. It advises employers, employment agencies and labor organizations of their obligations under the Act and any necessary changes in their policies as employers. 29 C.F.R. Sec. 1626.15. 23 As the agency entrusted by Congress with oversight of the age discrimination law, the EEOC has the obligation to report to Congress annually and to submit its recommendations for further legislation. 29 U.S.C. Sec. 632. Although some of its information may come from investigations which it has independently initiated, see 29 C.F.R. Sec. 1626.4, obviously much of its information will be triggered by investigations based on charges filed in particular cases. Any procedure that detracts from the EEOC charge requirement would undermine Congress' design, since the charge not only informs the EEOC of the particular discrimination but also may identify other unlawful practices. 24 In cases dealing with Title VII, the Supreme Court has noted the importance of the charge requirement. See EEOC v. Shell Oil Co., 466 U.S. 54, 69, 104 S.Ct. 1621, 1631, 80 L.Ed.2d 41 (1984) (a charge places the EEOC on notice that someone believes a violation has been committed and helps to focus the EEOC investigation); General Telephone Co. v. EEOC, 446 U.S. 318, 326, 100 S.Ct. 1698, 1704, 64 L.Ed.2d 319 (1980) (the EEOC is not merely a proxy for the victims of discrimination ... it acts also to vindicate the public interest in preventing employment discrimination.). The charge serves equally important roles under the ADEA. 25 Because the filing of a charge is a prerequisite to a court action under the ADEA, see 29 U.S.C. Sec. 626(d), the statutory scheme insures that the EEOC will receive information about employment practices in the marketplace through the series of charges filed with it. Employees and lawyers for employees will have little incentive to file charges of age discrimination with the EEOC if they cannot thereafter proceed to a judicial forum but instead must arbitrate their claims, a procedure which does not require filing of an EEOC charge. Of course, aggrieved parties can go to the EEOC in any event, as the dissent argues, but they are not likely to do so. The EEOC can continue to investigate, but it will be deprived of the charge as a triggering mechanism. Any process which contributes to employers' avoidance of the scrutiny to which an EEOC charge investigation would subject them is necessarily incompatible with the congressional scheme for the ADEA. 26 The EEOC's role in conciliation and mediation after filing of the charge is another significant indicator of Congress' intent as to the procedure it preferred to be followed for age discrimination claims. CPC argues that because the ADEA encourages resolution of age discrimination disputes through informal methods of conciliation, conference, and persuasion, 29 U.S.C. Sec. 626(b), arbitration, another informal method for resolving disputes, is consistent rather than incompatible with the statutory scheme. CPC's argument misses the point. Congress' intent, as explicitly stated in the text of the statute, is not only that disputes concerning claims of age discrimination be resolved through informal means, but that the EEOC eliminate the discriminatory practice or practices alleged by encouraging voluntary compliance if possible. Id. (emphasis added). It is only through the conciliation process that the EEOC has its opportunity to secure voluntary compliance. 27 Moreover, no statutory provision gives the EEOC the power to affect the arbitration procedure. In this respect, it is unlike the Securities Exchange Commission, which the Supreme Court noted in Shearson has been given expansive power to ensure the adequacy of the arbitration procedures employed by the self-regulatory organizations [SROs], such as the national securities exchanges and the registered securities associations. See 107 S.Ct. at 2341. 6 28 Another principal indicator of the incompatibility of the ADEA with arbitration stems from the inadequacy of arbitration in many cases to enforce the statute effectively. We will assume, as CPC argues, that an arbitrator may award reinstatement of an employee terminated because of age discrimination. Nonetheless, arbitral boards do not have the power to award broad equitable relief which courts have under 29 U.S.C. Secs. 626(b). For example, courts, but not arbitrators, possess power to issue injunctive relief to bar employers from future acts of discrimination. The power of arbitrators does not extend beyond the particular grievants and the particular dispute before them, and arbitrators cannot prohibit an employer from applying discriminatory practices to other employees. See American Arbitration Association, Commercial Arbitration Rules 17 (1981), reproduced in App. at 127 (AAA rules provide that arbitrators' remedies confined to the scope of the agreement of the parties.). 7 29 Congress' intent that courts hearing an ADEA action be invested with power to resolve the problem of age discrimination effectively is reflected in the statutory provision authorizing maintenance of a collective action, i.e., a suit by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. 29 U.S.C. Sec. 216(b) (1982). We have recently held that to effectuate this provision, courts may authorize notice to be sent to putative class members. See Sperling v. Hoffman-La Roche Inc., 862 F.2d 439 (3d Cir.1988), cert. granted, --- U.S. ----, 109 S.Ct. 1526, 103 L.Ed.2d 832 (1989). In short, Congress intended the EEOC and the courts to eliminate discriminatory practices from the workplace, a role that arbitration cannot accomplish as effectively. 30 We do not base our conclusion on any disparagement of the competence or sophistication of modern arbitrators. 8 The keystone in determining incompatibility between arbitration and a judicial remedy is the intent of Congress with respect to the particular statute. The holdings of the Court's prior opinions in Gardner-Denver and Barrentine were based on the Court's examination of the provisions, objectives, and enforcement schemes of the statutes involved, and thus we do not deem it dispositive that those portions of those opinions that reflect the now rejected mistrust of arbitration, see Gardner-Denver, 415 U.S. at 56-59, 94 S.Ct. at 1023-25, and Barrentine, 450 U.S. at 743-45, 101 S.Ct. at 1146-47, may not survive the Court's more recent enthusiastic pronouncements on the virtues of commercial arbitration in Mitsubishi and Shearson. 31 CPC seeks to distinguish Gardner-Denver, Barrentine and McDonald because in those cases arbitration was required by a collective bargaining agreement. CPC argues that in Gardner-Denver, the Court was unwilling to leave employees' protection of the right against race discrimination to labor unions who had their own history of such discrimination. See also Barrentine, 450 U.S. at 742, 101 S.Ct. at 1445 (Court noted that labor unions do not always pursue goals compatible with those of individual union members). However, it does not follow, as CPC argues, that the arbitration requirement in individually negotiated employment contracts is therefore comparable to that contained in a contract entered into in a commercial context. The disparity in bargaining power between an employer and an individual employee is well known. Older employees who have invested many years of their career with a particular employer may lack any realistic option to refuse to sign a standard form arbitration agreement presented to them by their employers. New employees who need the job may be in a similar position. Although this may not constitute the type of duress which renders a contract voidable, we cannot close our eyes to the realities of the workplace. 32 Nor are we persuaded by CPC's argument that the majority of ADEA claimants, like Mr. Nicholson, are upper-middleclass, professional/managerial employees, Brief of Defendants-Appellants at 40, who do not need to be protected from the consequences of their well-informed, voluntary decisions to agree to employment contracts containing arbitration clauses. While it is unlikely that Nicholson, an attorney and sophisticated and experienced executive, was unaware of the nature of the agreement he entered into with CPC, we would be ill-advised to fashion a general rule of law on the basis of the characteristics of a particular plaintiff. 9 33 Where Congress intended that certain executive-level employees should not be subject to the requirements of the ADEA, it created an explicit statutory exemption. See 29 U.S.C. Sec. 631(c). Unlike Nicholson, many ADEA plaintiffs are not highly paid executives. The congressional proponents of the ADEA and the Secretary of Labor's seminal report repeatedly emphasized that age discrimination pervaded the economy and constituted a serious problem for older employees earning higher salaries and benefits, both because employers can reap the greatest financial benefits from replacing these employees with younger, lower paid ones, and because these employees will have difficulty finding a comparable position if discharged. See Secretary's Report at 5-6, 15, reprinted in ADEA History at 22-23, 32; 112 Cong.Rec. 20,825 (1966), reprinted in ADEA History at 56; 113 Cong.Rec. 34,749, 34,752 (1969), reprinted in ADEA History at 160, 163. In fact, older employees in highly paid positions may be in a particularly vulnerable position in that employers will have a greater incentive to seek to replace them with younger employees earning lower salaries. 34 Our analysis of the factors which Mitsubishi and Shearson instruct us to consider, particularly the inherent incompatibility of the statute with arbitral enforcement and remedies, leads us to conclude that Congress did not intend that a contractual arbitration provision should preclude a claimant from access to a judicial forum. In so holding, we join several of our sister circuits which have reached similar conclusions with respect to the ADEA. See, e.g., Criswell v. Western Airlines, Inc., 709 F.2d 544, 547-49 (9th Cir.1983), aff'd on other grounds, 472 U.S. 400, 105 S.Ct. 2743, 86 L.Ed.2d 321 (1985); Cooper v. Asplundh Tree Expert Co., 836 F.2d 1544, 1553 (10th Cir.1988); cf. Swenson v. Management Recruiters International, Inc., 858 F.2d 1304, 1305-07 (8th Cir.1988) (Title VII claims not subject to arbitration under individual employment contract). 35 The issue before us, an employee's prospective waiver of a judicial forum for ADEA claims, is not comparable to the enforceability of an individual's release of a potential ADEA claim for alleged acts of discrimination that already transpired. See, e.g., Coventry v. United States Steel Corp., 856 F.2d 514 (3d Cir.1988); EEOC v. Cosmair, Inc., 821 F.2d 1085, 1091 (5th Cir.1987); Runyan v. National Cash Register Corp., 787 F.2d 1039, 1045 (6th Cir.) (in banc), cert. denied, 479 U.S. 850, 107 S.Ct. 178, 93 L.Ed.2d 114 (1986). 10 The prospective waiver at issue here involves relinquishment of the employee's rights with respect to potential future disputes, which the employee may not have fully anticipated. Therefore, the cases approving retroactive waivers of ADEA claims are not persuasive on the issue of whether prospective waiver is permissible. The EEOC's proposed rule, see note 10 supra, would have allowed releases of claims without the Commission's supervision or approval, provided that such releases do not provide for the release of prospective rights or claims. 29 C.F.R. Sec. 1627.16(c)(1) (1988). Thus, it appears that the EEOC's proposed rule would have prohibited the prospective waiver which the dissent seeks to enforce in this case. 11 36 In conclusion, our examination of the text, legislative history, and objectives of the ADEA have led us to conclude that the right to a judicial forum under the ADEA is not subject to displacement by a prospective agreement to arbitrate disputes contained in individual employment contracts. 37 We find the dissent, albeit lengthy, unpersuasive and in response merely reiterate the following:1. No Supreme Court case requires us to close the doors of the federal courts in an ADEA action merely because the employer has included an arbitration clause in an employment contract. The dissent relies on cases arising in a business context. The closest analogous Supreme Court cases dealing with employees' statutory rights point in the other direction. 38 2. All of the other court of appeals cases to consider whether an agreement to arbitrate precludes the employee from a judicial forum for resolution of ADEA claims reach the same result as the majority does here. 39 3. The dissent overlooks the fact that the EEOC, the agency entrusted with oversight of the ADEA, has filed an amicus curiae brief which strongly supports Nicholson's position and requests this court to hold that arbitration cannot displace judicial enforcement as the exclusive means for resolving claims under the ADEA. EEOC Amicus Brief at 17. 40 4. If this court holds Nicholson's arbitration agreement effectively precludes him from bringing his ADEA claim in a judicial forum, we may assume that many employers will prepare similar employment contracts, thereby shifting enforcement of the ADEA away from the courts to arbitration. If this is a result desired by Congress, we should wait for Congress to explicitly so state.