Opinion ID: 764164
Heading Depth: 3
Heading Rank: 2

Heading: Inapplicability of Preclusion Principles

Text: 43 As the district court could not, under the FAA, order into arbitration a dispute between two parties that never agreed to arbitrate, we must now consider the other potential grounds for its dismissal of the EEOC's complaint. Through its citation of EEOC v. Harris Chernin, Inc., 10 F.3d 1286 (7th Cir.1993), the district court apparently acted to give preclusive effect to the contract between Adams and Frank's so as to prevent the EEOC from bringing its claim on grounds otherwise covered by that contract. In Harris Chernin, the Seventh Circuit followed the Third Circuit in holding that  'if a person first litigates in his own behalf, that person may be precluded from claiming any of the benefits of a judgment in a subsequent action that is brought or defended by a party representing him.'  Id. at 1291 (quoting EEOC v. U.S. Steel Corp., 921 F.2d 489, 493 (3d Cir.1990)). We believe the representative claim preclusion cited in those cases does not apply to this kind of case. We instead find that principles of preclusion cannot bar the EEOC from suing to make whole an individual who has agreed to arbitrate her own claim of discrimination, where that individual has neither initiated nor participated in an arbitration proceeding in the first place. 44 Under federal res judicata, or claim preclusion, a final judgment on the merits bars further claims by parties or their privies based on the same cause of action. See Montana v. United States, 440 U.S. 147, 153, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979). The doctrine precludes litigation of claims that were previously available to the parties, regardless of whether they were asserted or determined in the first proceeding. Brown v. Felsen, 442 U.S. 127, 131, 99 S.Ct. 2205, 60 L.Ed.2d 767 (1979). Because res judicata ensures the finality of decisions, see id., it is essential that, at a minimum, the party or privy bound by the doctrine enjoy a full and fair opportunity to participate in some adjudication or resolution of the claim in question. Montana, 440 U.S. at 153. Prior proceedings may bind a nonparty as a privy where the relationship between the nonparty and a party is such as to legally entitle the latter to stand in judgment for the former, or where the nonparty's interests were adequately represented by a party with the same interests. See Hansberry v. Lee, 311 U.S. 32, 41-43, 61 S.Ct. 115, 85 L.Ed. 22 (1940). 45 As we view this case, preclusion cannot apply because the EEOC and Adams are not in privity, and because they do not possess identical causes of action or interests. See Kimberly-Clark Corp., 511 F.2d at 1359. While it is clear that the EEOC did not have a legal relationship with Adams entitling Adams to sign an arbitration agreement on its behalf, the EEOC's interest in suing on Adams' behalf extends beyond protecting Adams' interest to the interest of the public in general. As the Supreme Court has observed: 46 the EEOC is authorized to proceed in a unified action and to obtain the most satisfactory overall relief even though competing interests are involved and particular groups may appear to be disadvantaged.... The EEOC exists to advance the public interest in preventing and remedying employment discrimination, and it does so in part by making the hard choices where conflicts of interest exist. 47 General Telephone, 446 U.S. at 331. Adams could not adequately represent the EEOC's broad interest when she waived her own right to sue, just as she could not represent the same interests that the EEOC seeks to further by bringing a private Title VII suit. Given a statutory framework and history that vests in the EEOC and not private individuals the power and responsibility to represent not only individual but also public interests whenever it sues in its own name, we cannot conclude that the EEOC and Adams, without more, are privies. 48 Moreover, there is no question that the present case does not involve a prior suit or even a prior arbitration that raised or resolved the issues raised in the EEOC's complaint. 8 Therefore, claim preclusion cannot apply to the EEOC in this case as it has where the aggrieved individual filed suit in federal court on his own before the EEOC commenced its litigation. See, e.g., Harris Chernin, 10 F.3d at 1289 (precluding EEOC suit where employee filed suit on the same claim prior to the EEOC and lost on summary judgment); U.S. Steel Co., 921 F.2d at 492 (precluding EEOC suit where private suits by aggrieved individuals on the same claim lost on the merits);EEOC v. Huttig Sash & Door Co., 511 F.2d 453, 456 (5th Cir.1975) (speculating res judicata would bar EEOC suit where employee had had his suit adjudicated). 49 As res judicata could not properly provide a basis for the district court's preclusion of the EEOC's claim for relief on behalf of Adams, we turn to the possible application of judicial estoppel by the doctrine of election of remedies to preclude the EEOC in this case. Under the doctrine of election of remedies, an individual having two coexistent but inconsistent remedies chooses to exercise one, in which event he loses the right to thereafter exercise the other. Black's Law Dictionary 518 (6th ed.1990). As the Court has explained it, the doctrine refers to situations where an individual pursues remedies that are legally or factually inconsistent. Alexander v. Gardner-Denver Co., 415 U.S. 36, 49-50, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974). 9 Significantly, courts have long recognized not only the demise of this doctrine, but also its inapplicability to actions brought under Title VII. See Newman v. Avco Corp., 451 F.2d 743, 746-47 & n. 1 (6th Cir.1971). 50 Regardless, we observe that Adams neither filed suit against Frank's nor pursued an arbitral remedy against Frank's that led to a substantive resolution of her claim of discrimination. While Adams certainly possessed the power to arbitrate her claims at any time by initiating the arbitral process with Frank's, she did not elect that remedy. By signing her arbitration agreement, Adams merely traded a judicial forum for an arbitral one--she did not pursue an arbitral remedy just by signing an agreement to arbitrate in the event that she suffered a violation of her statutory rights. Cf. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 628, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985) (By agreeing to arbitrate a statutory claim, a party does not forego the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum.). Adams therefore stands in the same shoes as an individual who possesses the right to sue but never files a complaint. Since election of remedies could not preclude such an individual, we cannot say that Adams elected an arbitral remedy in this case. 51 Nor can we say that Adams elected the remedy pursued by the EEOC. As the statutory framework illustrates, when the EEOC decides to retain exclusive jurisdiction by exercising its statutory right to sue under Title VII, it implements Congress' purpose by taking the power to protect the public from unlawful employment discrimination out of the hands of the private individual aggrieved by such discrimination. Congress created such a scheme on the basis of its determination that placing the impetus on individuals to enforce Title VII was not sufficient, partly because private employers successfully relied on the failure of aggrieved employees to sue. See H. Rep. No. 92-238, at 8, reprinted in 1972 U.S.C.C.A.N. 2137, 2144. Indeed, even if Adams had not signed an agreement to arbitrate, she would not have been free to choose a judicial remedy for herself once the EEOC filed its suit on her behalf. 52 Of the numerous grounds for preclusion that we have discussed, none apply to this case. While Adams could not be an adequate representative of the EEOC, she never adjudicated or arbitrated her claim of discrimination in any event. And, while she did not elect the remedy of arbitration in that she did not initiate an arbitration proceeding, she also did not elect the judicial remedy initiated by the EEOC in this case. Under these circumstances, we conclude that principles of preclusion by the doctrines of res judicata and election of remedies cannot justify the district court's dismissal of the EEOC's action for monetary relief.