Opinion ID: 1989619
Heading Depth: 1
Heading Rank: 3

Heading: May the Plaintiff be Required to Arbitrate?

Text: The issue of requiring Bryant to arbitrate (aside from the waiver issue) involves two subissues: whether he may be held to an arbitration requirement that was not included in his original NASD application and whether a discrimination claimant may be required to arbitrate in any event. The district court based its decision on a federal arbitration statute, 9 U.S.C. § 2 (FAA), which provides: 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 any contract. A. Bryant's claim he did not agree to arbitrate. Clearly, a party cannot be compelled to arbitrate an issue under the FAA without an agreement to arbitrate. Whether an agreement to arbitrate is binding on the parties depends on general principles of contract law. Bullis v. Bear, Stearns & Co., 553 N.W.2d 599, 601-02 (Iowa 1996). When Bryant signed his application to be registered with the National Association of Securities Dealers, he agreed to be bound by the regulations of the association. One of the regulations of the NASD was the Code of Arbitration, quoted above, which clearly required arbitration of disputes. We agree with the district court that Bryant bound himself to the arbitration provision when he signed his NASD application. B. The claim that discrimination claims are not subject to arbitration under the federal act. One count of Bryant's amended petition alleges his retirement fund was reduced by American Express in retaliation for Bryant's claim of disability discrimination and implies that the retaliation itself was an act of discrimination. Discrimination claims, Bryant argues, may not be forced into arbitration because the legislative history of the ADA [Americans with Disabilities Act] would reveal that Congress did not intend to preclude access to a judicial forum by sanctioning voluntary agreements to arbitrate such disputes. The Supreme Court, however, has rejected this argument. In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), the Court considered an analogous claimone under the Age Discrimination in Employment Act (ADEA). The issue in Gilmer was whether a person could be subjected to compulsory arbitration pursuant to an arbitration agreement in a securities registration application almost identical to the one at issue here. Gilmer was sixty-two and had worked for the defendant for six years when his employment was terminated in 1987. Id. at 23, 111 S.Ct. at 1651, 114 L.Ed.2d at 35. As a condition of his employment, Gilmer had registered as a securities representative with several stock exchanges, including the New York Stock Exchange. The application signed by Gilmer provided that he `agree[d] to arbitrate any dispute, claim or controversy' arising between him and Interstate `that is required to be arbitrated under the rules, constitutions or bylaws of the organization with which I registered.' Id. at 23, 111 S.Ct. at 1650, 114 L.Ed.2d at 35. Gilmer sued Interstate, alleging he was discharged because of his age in violation of the ADEA, and Interstate sought to compel arbitration pursuant to the agreement in Gilmer's securities registration application and the FAA. Id. at 23-24, 111 S.Ct. at 1651, 114 L.Ed.2d at 35. The Court in Gilmer observed that an exclusionary clause under the FAA for employment contracts would not apply because the agreement between Gilmer and Interstate regarding arbitration arose out of the securities registration, not an employment contract. Id. at 25 n. 2, 111 S.Ct. at 1652 n. 2, 114 L.Ed.2d at 36 n. 2. Gilmer involved a claim for age discrimination, rather than disability discrimination, as in the present case. Nevertheless, we believe Gilmer is controlling on the issue of the scope of the FAA. First, Gilmer held that the exclusion in the FAA for employment contracts was not applicable because, as here, the arbitration agreement was in the application for registration not in the employment contract itself. In addition, Gilmer noted the purpose [of the FAA] was to reverse the long standing judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts. Gilmer, 500 U.S. at 24, 111 S.Ct. at 1651, 114 L.Ed.2d at 36. The provisions of the FAA, moreover, manifest a `liberal federal policy favoring arbitration agreements.' Id. at 25, 111 S.Ct. at 1651, 114 L.Ed.2d at 36 (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765, 785 (1983)). Gilmer noted that statutory claims, such as Bryant's (based on a disability discrimination statute), clear[ly] ... may be the subject of an arbitration agreement, enforceable pursuant to the FAA. 500 U.S. at 26, 111 S.Ct. at 1652, 114 L.Ed.2d at 37. In fact, the Court noted a wide variety of statutory claims have been held subject to arbitration under the FAA. These statutes include the Sherman Act, the Securities Exchange Act of 1934, civil proceedings under the RICO Act, and the Securities Act of 1933. Id. In these cases, `a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.' Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S.Ct. 3346, 3354, 87 L.Ed.2d 444, 456 (1985)). Further, the societal interests underlying the civil rights laws, and the fairness of the enforcement procedures, were preserved in the arbitration process under the FAA. Gilmer, 500 U.S. at 27-33, 111 S.Ct. at 1652-55, 114 L.Ed.2d at 37-41. Federal circuit courts of appeal have applied Gilmer to various categories of civil rights claims. See Patterson v. Tenet Healthcare, Inc., 113 F.3d 832, 838 (8th Cir.1997) (employee who signed arbitration clause in employee handbook required to arbitrate Title VII claim under Gilmer ); Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1467 (D.C.Cir.1997) (interpreting FAA section 1 exclusion for employer/employee claims narrowly and holding employment contract requiring employees to sign agreement to arbitrate was valid; employee required to arbitrate Title VII claims); Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 39 F.3d 1482, 1487-88 (10th Cir.1994) (holding Gilmer required employee's Title VII claim to be arbitrated when employee signed securities registration form, which required disputes to be arbitrated); Bender v. A.G. Edwards & Sons, Inc., 971 F.2d 698, 700 (11th Cir.1992) (holding employee who brought sexual harassment claim against employer and who agreed to arbitrate disputes in her NASD registration as a stockbroker was bound to arbitrate under FAA and Gilmer; no significant distinction between ADEA, as in Gilmer, and the civil rights provisions of Title VII); Mago v. Shearson Lehman Hutton Inc., 956 F.2d 932, 935 (9th Cir.1992) (holding under Gilmer that employee did not meet burden of showing Congress intended to preclude arbitration of claim under Title VII); Willis v. Dean Witter Reynolds, Inc., 948 F.2d 305, 312 (6th Cir.1991) (holding Gilmer required employee's Title VII claim to be arbitrated, given employee signed securities registration form as condition of employment); Alford v. Dean Witter Reynolds, Inc., 939 F.2d 229, 230 (5th Cir.1991) (on remand from Supreme Court in light of Gilmer, court held it would compel arbitration under FAA of stockbroker's Title VII claim against employer when employee agreed to arbitrate disputes by signing securities registration form); see also Johnson v. Piper Jaffray, Inc., 530 N.W.2d 790, 801 (Minn.1995) (employee who signed NASD arbitration agreement as a condition of employment was required to arbitration Title VII claims pursuant to Gilmer ). Other circuits, however, have taken a more restrictive view of arbitration in civil rights cases. See, e.g., Gibson v. Neighborhood Health Clinics, Inc., 121 F.3d 1126, 1132 (7th Cir.1997) (holding employee who signed arbitration agreement but did not do so as bargained-for consideration and did not have opportunity to read arbitration agreement was not bound to arbitrate Title VII and ADA claims against employer); Renteria v. Prudential Ins. Co. of America, 113 F.3d 1104, 1108 (9th Cir.1997) (employee who was required to sign arbitration agreement as condition of employment was not bound to arbitrate Title VII claim because arbitration agreement did not describe the disputes subject to arbitration; thus no knowing agreement to arbitrate); Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756, 762 (9th Cir. 1997) (holding employee did not knowingly agree to arbitrate ADA claim by signing form acknowledging receipt of employee handbook including arbitration provisions); Prudential Ins. Co. of America v. Lai, 42 F.3d 1299, 1305 (9th Cir.1994) (same). Bryant relies on the seventh and ninth circuit cases to support his argument that he did not knowingly agree to arbitrate his claims because the arbitration provision was not found in the document he signed. American Express responds that Bryant was not prevented from reading the NASD Code of Arbitration, which was incorporated into his application. He simply chose not to. An agreement to arbitrate is to be treated like any other contract, Gilmer, 500 U.S. at 24, 111 S.Ct. at 1651, 114 L.Ed.2d at 36, and a failure to fully read and consider the contract cannot relieve him of its provisions. This rule applies to contracts, such as the present one, that incorporate documents by reference. Failure to read a contract before signing it will not, as a rule, affect its binding force. Indeed, the courts appear to be unanimous in holding that a person who, having the capacity and an opportunity to read a contract, is not misled as to its contents and who sustains no confidential relationship to the other party cannot avoid the contract on the ground of mistake if he signs it without reading it, at least in the absence of special circumstances excusing his failure to read it. This rule has been carried to the extent of holding that in the absence of fraud or circumstances savoring of fraud, one entering into a contract which refers for some of its terms to an extraneous document, outside the contract paper, is bound also thereby, even though he omits to inform himself as to the contents of that document or the nature of those terms and conditions when it is possible for him to do so. 17A Am.Jur.2d Contracts § 225, at 229-30 (1991) (emphasis added) (footnotes omitted). We conclude that Bryant's application form, which incorporated by reference the requirement for arbitration, was binding on him, and the court correctly held that his Title VII claim was properly to be subjected to arbitration.