Court Opinion

ID: 185382
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:31:20+00
Date Added: 2024-06-11T11:52:48.062608
License: Public Domain

245 F.3d 831 (D.C. Cir. 2001)
Borg-Warner Protective Services Corporation, Appellantv.Equal Employment Opportunity Commission, Appellee
No. 00-5094
United States Court of Appeals  FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 26, 2001Decided April 17, 2001

Appeal from the United States District Court  for the District of Columbia (99cv00861)
Priscilla L. Hapner argued the cause for appellant.  With  her on the briefs were John M. Stephen and Thomas P.  Steindler.
Robert J. Gregory, Attorney, Equal Employment Opportunity Commission, argued the cause for appellee.  On the brief were Philip B. Sklover, Associate General Counsel, and Geoffery L. J. Carter, Attorney.
Before:  Williams, Randolph, and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Randolph.
Concurring opinion filed by Circuit Judge Williams, with  whom Circuit Judge Tatel joins.
Randolph, Circuit Judge:

1
Since 1991, Borg-Warner Protective Services Corporation has required its employees to  sign, as a condition of employment, some form of an arbitration agreement or, as the company calls it, a "Pre-Dispute  Resolution Agreement."  A typical version of the agreement  provides that if the employee brings suit on an employmentrelated claim, Borg-Warner may insist on arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. 1 et seq.,  before a single arbitrator of "all matters directly or indirectly  related" to the individual's recruitment, employment and termination, including "claims involving laws against discrimination ...."  The Equal Employment Opportunity Commission  considers such agreements unenforceable in regard to claims  arising under Title VII of the Civil Rights Act of 1964, and  has spelled out its position in a "Policy Statement on Mandatory Binding Arbitration of Employment Disputes as a Condition of Employment" (July 10, 1997) ("Policy Statement").

2
Borg-Warner brought this action against the EEOC in the  district court seeking a declaratory judgment that its arbitration agreements were enforceable and that it had not violated  Title VII by insisting that its employees sign such agreements as a condition of their employment.  The company also  sought an injunction, nationwide in scope, forbidding "the  EEOC from issuing determinations to the contrary or attacking the facial validity of arbitration agreement[s] through  litigation."  According to the complaint, the events precipitating this action were as follows.  On December 10, 1998, Rudy  Lee, a former Borg-Warner employee, filed a charge with the  EEOC's Seattle, Washington, office alleging that Borg Warner had discriminated against him on the basis of his  race.  After an investigation, the EEOC found insufficient evidence to support the charge.  Although Lee had not  complained about the arbitration agreement, the EEOC District Director issued a "determination," a finding that there  was "reasonable cause" to believe a Title VII violation had  occurred when Borg-Warner required Lee to sign the arbitration agreement as a condition of employment.  The EEOC  invited the company and Lee to engage in conciliation to  "eliminate the alleged unlawful practices."  In a letter addressed to Borg-Warner, the EEOC asked the company to  agree to cease using such agreements, and to provide notice  to all employees that it had rescinded its policy favoring  mandatory arbitration.  Borg-Warner refused and filed this  action a few days later.

3
On the EEOC's motion to dismiss for lack of subject matter  jurisdiction, the district court held that the complaint did not  arise under Title VII and so jurisdiction could not rest on 28  U.S.C. 1331, 28 U.S.C. 1337 or 28 U.S.C. 1343.  BorgWarner Protective Services Corp. v. EEOC, 81 F. Supp. 2d 20, 24-25 (D.D.C. 2000).  The court found nothing in Title VII  to give an employer a cause of action against the EEOC.  Id.  Borg-Warner could not invoke the Administrative Procedure  Act, the court held, because neither the EEOC's Policy  Statement nor its determination in the Lee case constituted  "final" agency action.  Id. at 26-28.  The determination was  merely tentative and interlocutory.  The Policy Statement did  not finally fix any obligation on the part of Borg-Warner.  As  to the company's request for a declaratory judgment, the  court held that although it had subject matter jurisdiction,  Borg-Warner lacked standing because the company has not  alleged injury that could "be redressed by a favorable decision."  Id. at 29.

I.

4
We have no doubt the district court had subject matter  jurisdiction over Borg-Warner's complaint under 28 U.S.C.  1331:  "The district courts shall have original jurisdiction of  all civil actions arising under the Constitution, laws, or treaties of the United States."  This means, as Professor Mishkin  put it in his classic article, that "the plaintiff must be contending that a federally ordained rule specifically creates his  cause of action."  Paul J. Mishkin, The Federal Question in  the District Courts, 53 Colum. L. Rev. 157, 164 (1953).  "Any  national source," he added, "will suffice...."  Id.  Or as  Justice Holmes wrote in American Well Water Works Co. v.  Layne & Bowler Co., 241 U.S. 257, 260 (1916), a "suit arises  under the law that creates the cause of action."  These  formulations scarcely exhaust the definitions of federal question jurisdiction, see Franchise Tax Board of California v.  Construction Laborers Vacation Trust, 463 U.S. 1, 8-9 (1983),  but they are surely at the heart of the matter.

5
Borg-Warner's complaint "arises under" federal law in the  following respects.  The company alleges a cause of action  based on the Administrative Procedure Act:  it contends that  the APA entitles it to judicial review of the EEOC's Policy  Statement and the EEOC's determination that Lee had a  right to sue for a violation of Title VII.  Both the APA and  Title VII are federal laws, and so the claims satisfy the  "arising under" requirement.  It is of no moment whether  Borg-Warner's claims are meritless or would eventually fail. A claim does not have to be a good one for the court to have  subject matter jurisdiction over it.  See, e.g., Bell v. Hood, 327 U.S. 678 (1946).  Borg-Warner's request for a declaratory  judgment also arises under federal law.  "Federal courts have  regularly taken original jurisdiction over declaratory judgment suits in which, if the declaratory judgment defendant  [here the EEOC] brought a coercive action to enforce its  rights, that suit would necessarily present a federal question." Franchise Tax Bd., 463 U.S. at 19.

II.

6
Subject matter jurisdiction is one thing.  Ripeness, standing, justiciability and the like, all of which the district court  invoked in dismissing the complaint, are quite another.  To  put matters into perspective, we need to take stock of the  state of the law regarding arbitration agreements and Title  VII.

7
The EEOC has been waging a losing battle in its efforts to  convince the courts that agreements like Borg-Warner's cannot be enforced to require employees to arbitrate Title VII  claims.  Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), held that an employer could compel an employee to  arbitrate his claim that the employer had violated the Age  Discrimination in Employment Act (ADEA), 29 U.S.C. 621  et seq.  The Supreme Court considered and rejected Gilmer's  contention that compulsory arbitration of an ADEA claim is  inconsistent with that statute.  However, because Gilmer's  arbitration agreement was contained in his application to the  New York Stock Exchange to become a registered securities  representative, the Court reserved the question whether a  compulsory arbitration clause found in an employment contract would be enforceable. 500 U.S. at 25 n.2.  Shortly after  Gilmer, Congress passed the Civil Rights Act of 1991, Pub. L.  No. 102-166, 105 Stat. 1071, 118 of which stated that  "[w]here appropriate and to the extent authorized by law, the  use of alternative means of dispute resolution, including ...  arbitration, is encouraged to resolve disputes arising under"  Title VII.  105 Stat. 1081 (reprinted in notes to 42 U.S.C.  1981).

8
In Cole v. Burns International Security Services, Inc., 105 F.3d 1465 (D.C. Cir. 1997), we relied on Gilmer to affirm a  district court order dismissing an employee's Title VII action  and compelling the employee to arbitrate with his employer  pursuant to a compulsory arbitration agreement.  Burns International Security Services, the prevailing party in Cole, is  the parent corporation of Borg-Warner and Borg-Warner's  arbitration agreements are about the same as the one we held  enforceable in Cole.

9
Therefore, if the district court were to grant the relief  Borg-Warner seeks in this case the company would gain  nothing in the District of Columbia.  Our decision in Cole  already rejected the EEOC's position.  A declaratory judgment saying as much would be redundant.  An injunction  against the EEOC (assuming one were proper) is entirely  unnecessary.  As far as this jurisdiction is concerned, BorgWarner is therefore suffering no injury for which it is entitled to redress.  Nor is Borg-Warner suffering any conceivable  injury in the First Circuit, the Second Circuit, the Third  Circuit, the Fourth Circuit, the Fifth Circuit, the Sixth Circuit, the Seventh Circuit, the Eighth Circuit, the Tenth  Circuit, or the Eleventh Circuit, all of which have also rejected the EEOC's position.  Rosenberg v. Merrill Lynch, Pierce,  Fenner & Smith, Inc., 163 F.3d 53 (1st Cir. 1998);  Desidero  v. National Ass'n of Securities Dealers, Inc., 181 F.3d 198 (2d  Cir. 1999);  Seus v. John Nuveen & Co., 146 F.3d 175, 182 (3d  Cir. 1998);  Austin v. Owens-Brockway Glass Container, Inc.,  78 F.3d 875 (4th Cir. 1996);  Alford v. Dean Witter Reynolds,  Inc., 939 F.2d 229 (5th Cir. 1991);  Willis v. Dean Witter  Reynolds, Inc., 948 F.2d 305 (6th Cir. 1991);  Koveleskie v.  SBC Capital Markets, Inc., 167 F.3d 361 (7th Cir. 1999); Patterson v. Tenet Healthcare, Inc., 113 F.3d 832 (8th Cir.  1997);  Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,  39 F.3d 1482 (10th Cir. 1994);  Bender v. A.G. Edwards &  Sons, Inc., 971 F.2d 698 (11th Cir. 1992).  Each of those  courts of appeals agrees with us that Title VII claims may be  subject to mandatory arbitration.1

10
The Supreme Court's decision in Circuit City Stores, Inc. v.  Adams, U.S., 121 S. Ct. 1302, L.Ed.2d(2001), adds to the weight  of these precedents.  The Court held that 1 of the Federal  Arbitration Act, 9 U.S.C. 1, did not exempt contracts of  employment except those involving transportation workers, a  position we had reached in Cole, which the Court cited.  Id. at 1306.  As to statutory claims, the Court reiterated "that arbitration agreements can be enforced under the FAA without  contravening the policies of congressional enactments giving  employees specific protection against discrimination prohibited by federal law...."  Id. at 1313.  Not only does that broad  statement encompass Title VII and all other federal laws forbidding discrimination, but also the arbitration agreement  in Circuit City Stores expressly stated that Title VII disputes  were subject to mandatory arbitration.

11
The Ninth Circuit is the only court of appeals to hold that  Title VII disputes cannot be made subject to compulsory  arbitration agreements.  See Duffield v. Robertson Stephens  & Co., 144 F.3d 1182 (9th Cir. 1998).  We cannot say whether  the Ninth Circuit will continue to adhere to Duffield in the  face of the Supreme Court's Circuit City decision (which  overruled another Ninth Circuit case).  We do know that  although the EEOC maintained in its "determination" in the  Lee case that requiring employees to sign an agreement to  arbitrate future Title VII claims was itself a violation of Title  VII, Duffield does not so hold.  Duffield ruled only that such  agreements are "unenforceable" with respect to Title VII  claims. 144 F.3d at 1199.

A.

12
Borg-Warner's first claim, set out as Count I of its complaint, alleges that the EEOC's determination letter to Lee-stating that there was reasonable cause to believe that BorgWarner was violating Title VII in requiring employees to sign  the arbitration agreement--exceeded its authority under Title  VII.  (The EEOC's Policy Statement does not take the  position that requiring employees to sign the agreement is  itself a violation of Title VII;  as in Duffield, it states only  that such agreements are unenforceable with respect to Title  VII claims. Policy Statement at 3101, 3106.)  This portion of  Borg-Warner's complaint fails, the district court ruled, because the determination is merely interlocutory and not final. Borg-Warner, 81 F. Supp. 2d at 26.

13
The court relied upon Georator Corp. v. EEOC, 592 F.2d 765, 767 (4th Cir. 1979), which held that an EEOC determination of reasonable cause is not "final agency action" because  "standing alone, it is lifeless and can fix no obligation nor  impose any liability on the plaintiff."  A Supreme Court  opinion, which the parties failed to mention, adds further  support to the court's ruling.  Federal Trade Commission v. Standard Oil, 449 U.S. 232 (1980), held that the FTC's  determination that there was reasonable cause to believe the  company was violating the pertinent statute and its later  issuance of an administrative complaint did not constitute  final agency action within the meaning of 704 of the APA. "It represents a threshold determination that further inquiry  is warranted and that a complaint should initiate proceedings."  Id. at 241.  If the FTC's complaint in Standard Oil  "had no legal force or practical effect upon [the company's]  daily business other than the disruptions that accompany any  major litigation," id. at 243, the EEOC's determination in the  matter of Lee had even less effect.  At least the complaint in  Standard Oil served "to initiate the proceedings," id. at 242. The EEOC's determination is even further removed:  rather  than initiating proceedings, it merely informed Lee that he  had a right to bring a complaint.  While there may be other  reasons for rejecting this portion of Borg-Warner's complaint, it is perfectly clear that the EEOC's determination is  not final agency action.  That is enough to sustain the district  court's judgment.

B.

14
As to Borg-Warner's alleged cause of action under the  APA to review the EEOC's Policy Statement, we will assume  that the Policy Statement is a "rule" within the meaning of 5  U.S.C. 551(13) and we will also assume that it represents  the EEOC's "final" position regarding arbitration of Title VII  claims--that, in other words, it constitutes "final agency  action."  5 U.S.C. 704;  Bennet v. Spear, 520 U.S. 154  (1997). Even so, Borg-Warner still must establish that it is  "aggrieved" by the EEOC's policy position.  See 5 U.S.C.  702.

15
The EEOC's Policy Statement carries no special weight in  the courts:  if it has any force, it is derived from the power of  the EEOC's reasoning to persuade.  Christensen v. Harris  Co., 529 U.S. 576, 587 (2000) (quoting Skidmore v. Swift &  Co., 323 U.S. 134, 140 (1944)). The EEOC tells us that in its  amicus briefs it therefore pays scant attention to its Policy Statement;  its efforts are devoted to mounting arguments  that, it hopes, will convince.  What injury then is the Policy  Statement inflicting on Borg-Warner?  As we have written,  in the District of Columbia and in the geographic areas  covered by all the circuits except the Ninth, the answer is  none.

16
Borg-Warner seems to recognize as much, which is why it  wants us to concentrate our attention on the state of affairs in  the Ninth Circuit.  But even in the Ninth Circuit, BorgWarner's problem is not with the EEOC's Policy Statement. It is with Duffield.  The only plausible harm to the company  consists in its inability to enforce its arbitration agreements  with its employees who are working within the geographical  limits of the Ninth Circuit. But that harm is not being  caused by the EEOC's Policy Statement.  It results directly  from the Duffield decision.

17
Borg-Warner claims that as "a result of the Policy ...,  [Borg-Warner] can be subjected to stiffer legal and monetary  penalties in future litigation challenging the Agreement since  both the Policy and Determination may be admissible to show  that [its] use of the Agreement is unlawful and utilized with  reckless indifference to the law."  We think this is much too  speculative.  The Policy Statement does not declare--as did  the EEOC's determination in the Lee case--that having  employees sign such agreements itself violates Title VII. The Policy Statement instead concludes that agreements  compelling arbitration of Title VII claims are "inconsistent"  with or "contrary to" Title VII.  See Policy Statement  ("agreements that mandate binding arbitration of discrimination claims as a condition of employment are contrary to the  fundamental principles evinced in these laws") ("the Commission believes that such agreements are inconsistent with the  civil rights laws") ("the Commission will continue to challenge  the legality of specific agreements").  At oral argument, the  EEOC's attorney said that the Commission carefully worded  its Policy Statement so that it did not maintain that an  employer violates Title VII by conditioning employment on  the employee's signing of an agreement to arbitrate.  All the  Policy Statement was intended to convey, he added, was the EEOC's view that such agreements are unenforceable.2 Even if the Policy Statement treated arbitration agreements  as "illegal" that would not support Borg-Warner's argument. To say that an agreement is illegal is not to say that  employers who require employees to sign the agreements as  a condition of employment are guilty of violating Title VII. Calling an unenforceable agreement "illegal" is "misleading  insofar as it suggests that some penalty is necessarily imposed on one of the parties, apart from the court's refusal to  enforce the agreement.  In some cases, the conduct that  renders the agreement unenforceable is a crime, but this is  not necessarily or even usually so."  E. Allan Farnsworth,  Contracts 5.1 (2d ed. 1990).

18
Even Duffield does not say that companies requiring employees to sign arbitration agreements are guilty of violating  Title VII.  Although the Duffield court refused, with respect  to Title VII claims, to enforce a general arbitration agreement, the court enforced the same agreement in regard to  state law claims.  See 144 F.3d at 1203.  In the face of that  ruling, we cannot see how an employer exposes itself to punitive damages by having employees sign such an agreement. Furthermore, the notion that Borg-Warner could be  held liable in punitive damages for insisting upon an arbitration agreement in the face of the Supreme Court's Circuit  City opinion and the decisions of eleven courts of appeals  upholding such agreements is, we think, far-fetched.  (The  California Supreme Court, observing that the Ninth Circuit  was in "minority of one," also rejected Duffield and indicated  that Title VII claims may be subject to mandatory arbitration  agreements.  Armendariz v. Foundation Health Psychare  Servs., Inc., 6 P.3d 669, 677 (Cal. 2000).)

19
The short of the matter is that Borg-Warner is not aggrieved by the existence of the EEOC's Policy Statement.  It  is not suffering any legally cognizable injury from the Policy  Statement, and for that reason the district court properly  dismissed its complaint.  Given this disposition, we do not  address any questions of comity between this circuit and the  Ninth, or the propriety of a federal court in the District of  Columbia enjoining the EEOC from adhering to a litigating  position in the Ninth Circuit that the court of appeals for that  circuit has sustained.

20
Affirmed.

Notes:

1
 Even if any one of these court of appeals had not ruled on this  question, the Policy Statement still would have no effect on BorgWarner in that particular jurisdiction.  The existence (or nonexistence) of the Policy Statement does not affect the EEOC's  ability to file an amicus brief arguing the same position.  In fact, if  we credit the EEOC's representation about how it litigates this  issue, its amicus briefs hardly even mention the Policy Statement.

2
 We credit counsel's statement of how the EEOC views its Policy  Statement.  After oral argument, the EEOC supplied us with some  of its filings in EEOC v. Luce, Forward, Hamilton & Scripps, LLP,  122 F. Supp. 2d 1080 (C.D. Cal. 2000), a case now on appeal to the  Ninth Circuit.  Invoking res judicata, the district court there  rejected the EEOC's argument for punitive damages.  Two items  are of note.  First, in support of the claim for punitive damages the  EEOC cited its Policy Statement, stating that it put employers "on  notice regarding the EEOC's position concerning most discrimination issues." Plaintiff's Opposition to Defendant's Motion for Summary Judgment, at 15.  This statement does not contradict the  representation made by the EEOC's counsel at oral argument in  this case.  The question we have been considering is what position  the EEOC did express in the Policy Statement.  Second, the  district court enjoined the employer in Luce from requiring prospective employees to sign mandatory arbitration agreements regarding Title VII claims.  In doing so the court did not cite the  Policy Statement.  It cited only Duffield. 122 F. Supp. 2d at 1093. Whether the court correctly interpreted the Ninth Circuit's opinion  remains to be seen.

21
Williams, Circuit Judge, with whom Circuit Judge Tatel  joins, concurring:

22
Because the EEOC's use of its Policy  Statement appears more complicated than stated above, I  write separately.

23
The Policy Statement may not explicitly state that employment contracts requiring arbitration of discrimination claims  violate Title VII, but the EEOC apparently believes that it  could honestly be read to that effect.  The EEOC has cited it  in at least one brief in support of precisely that argument.  In  October 2000 the EEOC submitted a brief in the Central  District of California that expressly asks the court for punitive damages because the defendant allegedly "unlawfully  retaliated against Mr. Lagatree [an applicant for employment] by denying him employment ... based on his refusal to  sign an employment agreement compelling mandatory arbitration of future claims of employment discrimination ..., in  violation of Title VII."  EEOC v. Luce, Forward, Hamilton &  Scripps, LLP, No. 00-1322 at 2 (C.D. Cal. Oct. 23, 2000)  (plaintiff's opposition to defendant's motion for summary  judgment) (submitted under Circuit Rule 28(j)).  In the section specifically addressing punitive damages, the brief states:

24
[I]t is also important to note that the EEOC had published a Policy Statement on July 10, 1997, two months before Luce terminated Mr. Lagatree, on "Mandatory Arbitration of Employment Disputes as a Condition of Employment", which concluded that these unilateral agreements harms [sic] both the individual civil rights claimant and the public interest in eradicating discrimination.  These policy statements put employers on notice regarding the EEOC's position concerning most discrimination issues.

25
Id. at 15.  Although the EEOC did not explicitly say in its  brief that the Policy Statement concludes that these agreements violate Title VII, its citation to the Policy Statement-in an argument supporting the imposition of punitive damages  on an employer who insisted on such agreements--must  mean that the EEOC briefwriter believed that competent  judges could be persuaded to believe that it reached that  conclusion.1

26
As the preceding opinion notes, however, EEOC counsel  before us took a quite different position--one that we believe  is better supported by the Policy Statement's language.  He  declared, "This agreement [referring to the Policy Statement]  does not purport to do that [make an assertion of illegality],  and I hope it doesn't do that."  Tr. at 31.  Indeed, he said  that the Policy Statement "was vetted very carefully to make  sure that it didn't say it [an employer's insistence on an  arbitration agreement] was illegal under Title VII."  Id. at  28.

27
Because the formulation of the Commission's position before a court of appeals is a more material commitment than  the filing of a district court brief, and counsel certainly did  not file a corrective letter despite the panel's prolonged  interrogation on the issue, it seems reasonable to take the  EEOC's position before us as its true position, a proposition  helpful, though not necessarily essential, to the ultimate  judgment here.

Notes:

1
  Although the district court rejected EEOC's argument for  punitive damages because of res judicata, the court declined to  interpret Duffield as holding "only that mandatory arbitration  agreements are unenforceable" and held that injunctive relief was  appropriate because requiring employees to enter into mandatory  arbitration agreements is "unlawful under Title VII."  EEOC v.  Luce, Forward, Hamilton & Scripps, LLP, 122 F. Supp. 2d 1080,  1091, 1093 (C.D. Cal. 2000).