Opinion ID: 709220
Heading Depth: 1
Heading Rank: 3

Heading: the exception to the arbitration act

Text: 26 Section 1 of the Arbitration Act, 9 U.S.C. Sec. 1, provides as follows: 27 Maritime transactions and commerce defined; exceptions to operation of title. 28 Maritime transactions, as herein defined, means charter parties, bills of lading of water carriers, agreements relating to wharfage, supplies furnished vessels or repairs to vessels, collisions, or any other matters in foreign commerce which, if the subject of controversy, would be embraced within admiralty jurisdiction; commerce, as herein defined, means commerce among the several States or with foreign nations, or in any Territory of the United States or in the District of Columbia, or between any such Territory and another, or between any such Territory and any State or foreign nation, or between the District of Columbia and any State or Territory or foreign nation, but nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce. 29 In Willis, 948 F.2d at 311, another panel of this court said: 30 A review of the legislative history of the FAA confirms that the FAA was never meant to incorporate employment contracts with the requisite effects on interstate commerce within its scope.... Thus, although Congress passed the FAA to ensure that courts honor the contractual agreement of parties who choose to resolve their disputes by arbitration, (citation omitted) it limited the scope of the Act by creating a category of contracts not subject to the Act's strictures. (citation omitted) Among this category of excluded contracts are contracts for employment. 9 U.S.C. Sec. 1. 31 Relying on this pronouncement, Asplundh argues that the exclusionary clause contained in Sec. 1 of the Arbitration Act covers all contracts of employment, and that accordingly, the arbitration clause in the second employment agreement is unenforceable. Although the district judge did not address this issue in her decision of March 30, 1994, she agreed with Asplundh in her order of June 8, 1994 when she concluded that Willis compelled a finding that the arbitration clause is unenforceable under Sec. 1 of the Act. 32 Willis involved a claim of sex discrimination by a registered securities representative against her brokerage firm. The registration form she was required to file with the various national securities exchanges contained an arbitration clause which covered any dispute, claim or controversy between herself, her firm, or a customer. As noted above, the Willis court devoted a section of its opinion to the scope of the exclusionary clause contained in Sec. 1 of the Act, and further concluded that it should be broadly construed to extend to all contracts for employment within the scope of the commerce clause of the United States Constitution. Willis, 948 F.2d at 310-312. This holding was dicta, since the decision in Willis ultimately rested on a determination that the plaintiff's registration form was not an employment contract and thus not covered by the exclusionary language of Sec. 1 of the Act. Id. at 312. 33 We are not required to follow the dicta of Willis which opines that the exclusionary clause of Sec. 1 of the Act applies to all contracts of employment within the scope of the commerce clause. United States v. Tucker, 28 F.3d 1420, 1425 (6th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1426, 131 L.Ed.2d 308 (1995); United States v. Burroughs, 5 F.3d 192, 194 (6th Cir.1993) (one panel of this court is not bound by dicta in a previously published panel opinion); Begley v. Consolidation Coal Co., 826 F.2d 1512, 1517 n. 1 (6th Cir.1987) (each of these prior cases must be considered merely dicta, not binding circuit precedent). 34 Since that issue is essential to the decision of the case before us, we will examine it de novo. We begin by observing that the scope of the exclusionary clause of the Arbitration Act was discussed but not decided in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). Gilmer involved a claim of age discrimination by a registered securities salesman against his employer. In order to perform the duties of his employment, Gilmer was required to register with the New York Stock Exchange (NYSE). His registration application contained an agreement to arbitrate when required by NYSE rules. NYSE rules required arbitration of any dispute arising out of the termination of a registered representative's employment. Gilmer argued that compulsory arbitration of ADEA claims would be inconsistent with the statutory framework and purposes of the ADEA. The Court rejected his arguments and held that an ADEA claim can be subjected to compulsory arbitration. Id., 500 U.S. at 35, 111 S.Ct. at 1656-1657. In a dissenting opinion joined in by Justice Marshall, Justice Stevens concluded that the exclusionary clause of the Arbitration Act exempted employment contracts from the coverage of the Act. Id., 500 U.S. at 40, 111 S.Ct. at 1659-1660. The majority noted the arguments of amici curiae that Section 1 of the Arbitration Act excluded all contracts of employment from the Act's coverage, but further observed that Gilmer did not raise this issue in the lower courts or in his petition for certiorari. Id., 500 U.S. at 25 n. 2, 111 S.Ct. at 1651 n. 2. The majority also concluded that it would be inappropriate to address the scope of the exclusionary clause because the arbitration agreement was not contained in Gilmer's employment contract, and stated, Consequently, we leave for another day the issues raised by amici curiae. Id. 35 The Arbitration Act was originally enacted in 1925 and then reenacted and codified in 1947. Its purpose was to reverse the longstanding 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. As Senior Judge Peck noted in Bacashihua v. U.S. Postal Service, 859 F.2d 402, 404 (6th Cir.1988), 36 The proper interpretation of the exclusionary provision in 9 U.S.C. Sec. 1 has been subject to much debate. The two areas of dispute are whether collective bargaining agreements are contracts of employment within Sec. 1's meaning, and whether workers engaged in ... interstate commerce requires that the workers personally be engaged in interstate commerce. 37 Judge Peck went on to observe that this court had never addressed the interpretation, nor scope, of Sec. 1's exclusionary clause, and he apparently found it unnecessary to do so in Bacashihua, noting that [i]f any class of workers is engaged in interstate commerce, it is postal workers. Id. at 405. Judge Peck, however, did refer to a seminal Third Circuit decision which held that the exclusionary language of Sec. 1 applies only to workers personally engaged in interstate commerce. See Tenney Engineering, Inc. v. United Electrical Radio & Machine Workers of America, Local 437, 207 F.2d 450 (3d Cir.1953). Tenney and other cases of similar import were not cited by the Willis court. 38 In Tenney, 207 F.2d at 453, the Third Circuit noted that in 1925, when the Arbitration Act was first drafted, the concept of Congressional power over activities which affected interstate commerce had not developed to the extent to which it has since. 1 The court in Tenney, 207 F.2d at 452, framed its task as follows: 39 Our problem, therefore, is to determine the meaning which Congress in 1925 intended to give to the phrase workers engaged in foreign or interstate commerce. Was it intended to include only those employees actually engaged in the channels of interstate or foreign commerce or did it comprehend all those engaged in activities affecting such commerce, such as the production of goods destined for sale in it? 40 The court, Id. at 452-453, then discussed the legislative history of the exclusionary clause: 41 The only reference to the clause in question appears in a report of the Bar Association committee in which it was stated: 42 Objections to the bill were urged by Mr. Andrew Furuseth as representing the Seamen's Union, Mr. Furuseth taking the position that seamen's wages came within admiralty jurisdiction and should not be subject to an agreement to arbitrate. In order to eliminate this opposition, the committee consented to an amendment to Section 1 as follows: 'but nothing herein contained shall apply to contracts of employment of seamen, railroad employees or any other class of workers engaged in foreign or interstate commerce.'  43 It thus appears that the draftsmen of the Act were presented with the problem of exempting seamen's contracts. Seamen constitute a class of workers as to whom Congress had long provided machinery for arbitration. (footnote omitted) In exempting them the draftsmen excluded also railroad employees, another class of workers as to whom special procedure for the adjustment of disputes had previously been provided. (footnote omitted) Both these classes of workers were engaged directly in interstate or foreign commerce. To these the draftsmen of the Act added any other class of workers engaged in foreign or interstate commerce. We think that the intent of the latter language was, under the rule of ejusdem generis, to include only those other classes of workers who are likewise engaged directly in commerce, that is, only those other classes of workers who are actually engaged in the movement of interstate or foreign commerce or in work so closely related thereto as to be in practical effect part of it. The draftsmen had in mind the two groups of transportation workers as to which special arbitration legislation already existed and they rounded out the exclusionary clause by excluding all other similar classes of workers. 44 We find this analysis persuasive. 45 Three years later, the Second Circuit followed Tenney in Signal-Stat Corporation v. Local 475, United Electrical Radio & Machine Workers of America, 235 F.2d 298, 302-303 (2d Cir.1956), cert. denied, 354 U.S. 911, 77 S.Ct. 1293, 1 L.Ed.2d 1428 (1957): 46 We incline to agree with the decision and reasoning of the Third Circuit in the Tenney case. This conclusion is consonant with our decisions. Although this court has never passed on the precise issue here involved, we did, in Shirley-Herman Co. v. International Hod Carriers, Bldg. & Common Laborers Union, 2 Cir., 182 F.2d 806, 809, impliedly hold that a collective bargaining agreement constituted a contract of employment; and in Bernhardt v. Polygraphic Co. of America, 2 Cir., 218 F.2d 948, 951-952, reversed on other grounds 350 U.S. 198, 76 S.Ct. 273, 100 L.Ed. 199, we gave a restrictive interpretation to the term, workers as used in the exclusionary clause in Section 1. 47