Opinion ID: 2174415
Heading Depth: 2
Heading Rank: 4

Heading: arbitrating federal statutory claims

Text: For many years, the Supreme Court did not favor enforcing arbitration agreements. In 1953, holding that a claim under the Securities Act of 1933 could not be arbitrated, the Court opined that arbitration was an inadequate forum in which to enforce such a statutory claim. Wilko v. Swan, 346 U.S. 427, 435-37, 74 S.Ct. 182, 98 L.Ed. 168 (1953), overruled by Rodriguez de Quijas v. Shearson/American Express, Inc. ., 490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989). But the Supreme Court has since abandoned that view. In fact, since 1985, the Supreme Court has consistently upheld agreements to arbitrate federal statutory claims under the FAA. See Gilmer, 500 U.S. at 35, 111 S.Ct. 1647 (Age Discrimination in Employment Act of 1967); Rodriguez de Quijas, 490 U.S. at 481, 109 S.Ct. 1917 (Securities Act of 1933); McMahon, 482 U.S. at 238, 241, 107 S.Ct. 2332 (Securities and Exchange Act of 1934 and Racketeer Influenced and Corrupt Organizations Act); Mitsubishi Motors Corp., 473 U.S. at 640, 105 S.Ct. 3346 (Sherman Antitrust Act). By agreeing to arbitrate a statutory claim, 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. Mitsubishi Motors Corp., 473 U.S. at 628, 105 S.Ct. 3346. Moreover, the duty to enforce arbitration agreements is not diminished when a party bound by an agreement raises a claim founded on statutory rights. McMahon, 482 U.S. at 226, 107 S.Ct.2332. The Supreme Court has also articulated a test for determining whether a federal statute may override the FAA's directive to enforce arbitration agreements. McMahon, 482 U.S. at 226-27, 107 S.Ct. 2332. In essence, this test requires the party opposing arbitration to show a clear congressional intent to override the FAA's mandate to enforce binding arbitration agreements. McMahon, 482 U.S. at 227, 107 S.Ct. 2332. According to the Supreme Court, this congressional intent must be evidenced in the statute's text or history or through an inherent conflict between arbitration and the statute's purposes. McMahon, 482 U.S. at 227, 107 S.Ct. 2332. The McMahon court applied this test to claims under the Securities Exchange Act of 1934. Looking first for textual support, the Court concluded that the Exchange Act's text did not prohibit arbitration. McMahon, 482 U.S. at 227, 107 S.Ct. 2332. The parties opposing arbitration argued that an arbitration agreement would necessarily waive the statutory provision granting the district court jurisdiction over Exchange Act claims. Consequently, they argued, this would violate the statute's express prohibition against waiving the Exchange Act's provisions. The Court rejected this argument and concluded that these statutory provisions did not conflict with the FAA. McMahon, 482 U.S. at 229-30, 107 S.Ct. 2332. Continuing, the Court concluded that the legislative history did not express a clear intent to preclude arbitration. McMahon, 482 U.S. at 238, 107 S.Ct. 2332. And, finally, finding no conflict between the Exchange Act's underlying purpose and the FAA, the Court held the securities claims were subject to arbitration. McMahon, 482 U.S. at 230, 238, 107 S.Ct. 2332. The Court followed a similar analysis with the plaintiffs' RICO claims, holding those claims subject to binding arbitration as well. McMahon, 482 U.S. at 242, 107 S.Ct. 2332. The issue next arose in Gilmer, 500 U.S. at 20, 111 S.Ct. 1647. The plaintiff argued that his claims under the Age Discrimination in Employment Act of 1967 were not subject to arbitration under the FAA but conceded that nothing in the statute's text or legislative history supported his argument. Gilmer, 500 U.S. at 26, 111 S.Ct. 1647. Rather, he argued three reasons why the ADEA irreconcilably conflicted with the FAA: (1) the statute's important social purposes, (2) its provisions for informal dispute resolution, and (3) the potential for disparity in bargaining power between employers and employees. Gilmer, 500 U.S. at 26-33, 111 S.Ct. 1647. The Supreme Court rejected all three arguments and held that even age-discrimination claims can be subject to binding arbitration. Gilmer, 500 U.S. at 35, 111 S.Ct. 1647. The Supreme Court has not applied this analysis to decide whether the Magnuson-Moss Act supersedes otherwise proper binding arbitration agreements under the FAA. Likewise, this is an issue of first impression for this Court.