Court Opinion

ID: 2969414
Source: CourtListenerOpinion
Date Created: 2015-09-22 15:48:15.717376+00
Date Added: 2024-06-11T11:40:48.228780
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5RECOMMENDED FOR FULL-TEXT PUBLICATION
            Pursuant to Sixth Circuit Rule 206
   ELECTRONIC CITATION: 2000 FED App. 0154P (6th Cir.)
               File Name: 00a0154p.06

UNITED STATES COURT OF APPEALS
             FOR THE SIXTH CIRCUIT
               _________________

                                ;
                                 
         99-5099
                                 
SHARON FLOSS,
                                 
         Plaintiff-Appellant,
                                 
                                     Nos. 99-5099/5187

                                 
           v.                     >
                                 
                                 
                                 
RYAN’S FAMILY STEAK

       Defendants-Appellees. 
HOUSES, INC., et al.,
                                 
                                 
                                 
                                 
                                 
           99-5187

            Plaintiff-Appellee, 
KYLE DANIELS,

                                 
                                 
                                 
           v.
                                 
                                 
                                 
RYAN’S FAMILY STEAK

        Defendant-Appellant. 
HOUSES, INC.,
                                 
                                1
     Appeal from the United States District Court
  for the Eastern Districts of Kentucky at Covington
              and Tennessee at Knoxville.
  Nos. 98-00038; 98-00294—William O. Bertelsman
          and R. Leon Jordan, District Judges.

                           1
2       Floss v. Ryan’s Family                 Nos. 99-5099/5187
        Steak Houses, et al.

                    Argued: March 9, 2000
               Decided and Filed: May 1, 2000
Before: MARTIN, Chief Judge; SUHRHEINRICH, Circuit
           Judge; GWIN, District Judge.*
                      _________________
                           COUNSEL
ARGUED: Steven L. Schiller, Newport, Kentucky, for
Appellant in 99-5099; Stephen F. Fisher, JACKSON, LEWIS,
SCHNITZLER & KRUPMAN, Greeneville, South Carolina,
for Appellant in 99-5187. Stephen F. Fisher, JACKSON,
LEWIS, SCHNITZLER & KRUPMAN, Greeneville, South
Carolina, for Appellees in 99-5099; April D. Carroll,
RIDENOUR, RIDENOUR & FOX, Clinton, Tennessee, for
Appellee in 99-5187. ON BRIEF: Steven L. Schiller,
Newport, Kentucky, for Appellant in 99-5099; Stephen F.
Fisher, JACKSON, LEWIS, SCHNITZLER & KRUPMAN,
Greeneville, South Carolina, Kelli L. Thompson, BAKER,
DONELSON, BEARMAN, ANDERSON & CALDWELL,
Knoxville, Tennessee, for Appellant in 99-5187. Stephen F.
Fisher, JACKSON, LEWIS, SCHNITZLER & KRUPMAN,
Greeneville, South Carolina, for Appellees in 99-5099; April
D. Carroll, Bruce D. Fox, RIDENOUR, RIDENOUR & FOX,
Clinton, Tennessee, for Appellee in 99-5187.
                      _________________
                          OPINION
                      _________________
  GWIN, District Judge. With these appeals, consolidated
for purposes of decision, the Court reviews whether

    *
     The Honorable James S. Gwin, United States District Judge for the
Northern District of Ohio, sitting by designation.
Nos. 99-5099/5187                   Floss v. Ryan’s Family    3
                                       Steak Houses, et al.

employees effectively waived their rights to bring actions in
federal court under the Americans with Disabilities Act, 42
U.S.C. § 12101, et seq. (“ADA”), and the Fair Labor
Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”). At the
district court, the plaintiffs attempted to sue their former
employer, Ryan’s Family Steak Houses, Inc. (“Ryan’s”).
However, when applying for employment at Ryan’s, both
plaintiffs had signed a form indicating they would arbitrate all
employment-related disputes. In both cases, Ryan’s filed a
motion to compel arbitration.
  Finding no valid arbitration agreement, the United States
District Court for the Eastern District of Tennessee refused to
require Plaintiff-Appellee Kyle Daniels to arbitrate his claim
under the ADA. In contrast, the United States District Court
for the Eastern District of Kentucky found that Plaintiff-
Appellant Sharon Floss was required to arbitrate her dispute
and could thus not pursue her claim under the FLSA in
federal court.
   Ryan’s now appeals the district court’s refusal to require
Daniels to arbitrate his ADA claim. Similarly, Floss appeals
the district court’s order requiring her to submit her FLSA
claim to arbitration. Because we find neither Daniels nor
Floss validly waived their right to bring an action in federal
court, we REVERSE the district court’s order requiring Floss
to arbitrate her claim, and AFFIRM the district court’s order
refusing to require Daniels to submit his claim to arbitration.
                               I.
  In support of its argument that the plaintiffs agreed to waive
their right to bring an action in federal court and instead
agreed to arbitrate all employment disputes, Ryan’s relies
upon a document identified as the “Job Applicant Agreement
to Arbitration of Employment-Related Disputes.” Ryan’s
includes this purported agreement in its employment
application packet. Only those applicants who sign the
4       Floss v. Ryan’s Family                  Nos. 99-5099/5187          Nos. 99-5099/5187               Floss v. Ryan’s Family     17
        Steak Houses, et al.                                                                                  Steak Houses, et al.

agreement are considered for employment at Ryan’s.1 Both                   disputes, including those involving federal statutory claims.
Daniels and Floss acknowledge signing the agreement.                       Yet an employer cannot seek to do so in such a way that
                                                                           leaves employees with no consideration for their promise to
  The employee’s agreement to arbitrate is not with Ryan’s.                submit their disputes to arbitration. Here, we find that Floss
Instead, the agreement runs between the employee and a third-              and Daniels did not receive any consideration for their
party arbitration services provider, Employment Dispute                    promise to arbitrate their disputes. We thus refuse to enforce
Services, Inc. (“EDSI”). In the agreement, EDSI agrees to                  their promise in favor of Ryan’s.
provide an arbitration forum in exchange for the employee’s
agreement to submit any dispute with his potential employer                  The judgment of the United States District Court for the
to arbitration with EDSI. Although Ryan’s is not explicitly                Eastern District of Tennessee in case 99-5187 is
identified as a party to the agreement, the agreement says the             AFFIRMED, and the judgment of the United States District
employee’s potential employer is a third-party beneficiary of              Court for the Eastern District of Kentucky in case 99-5099 is
the employee’s agreement to waive a judicial forum and                     REVERSED.
arbitrate all employment-related disputes.
  The agreement gives EDSI complete discretion over
arbitration rules and procedures. The agreement says that all
arbitration proceedings will be conducted under “EDSI Rules
and Procedures.” The agreement then gives EDSI the
unlimited right to modify the rules without the employee’s
consent.
  In July 1994, Kyle Daniels applied for employment with
Ryan’s and received2 this agreement as part of the employment
application packet. Similarly, Ryan’s gave Sharon Floss the
agreement when she applied for employment in December
1997. Both Daniels and Floss signed the agreement and
began their employment at Ryan’s shortly thereafter.

    1
      A notice on the inside cover of the packet informs applicants that
they must agree to the terms and conditions outlined in the agreement in
order to be considered for employment with Ryan’s.
    2
     The agreement received by Daniels designated Employment Dispute
Resolution, Inc. (“EDR”) as the arbitration services provider. EDR is
now apparently referred to as Employment Dispute Services, Inc.
(“EDSI”).
16       Floss v. Ryan’s Family                   Nos. 99-5099/5187           Nos. 99-5099/5187                      Floss v. Ryan’s Family            5
         Steak Houses, et al.                                                                                           Steak Houses, et al.

that EDSI’s promise did not create a binding obligation. We                     Daniels ceased working at Ryan’s on August 13, 1997. On
agree.                                                                        that date, Daniels claims he attempted to resume his
                                                                              employment with Ryan’s after taking a medical leave to treat
   EDSI’s promise to provide an arbitral forum is fatally                     his viral hepatitis. However, Daniels says Ryan’s terminated
indefinite. Though obligated to provide some type of arbitral                 him upon his return to the restaurant.
forum, EDSI has unfettered discretion in choosing the nature
of that forum. Specifically, EDSI has reserved the right to                      Floss ceased working at Ryan’s on January 23, 1998. Floss
alter the applicable rules and procedures without any                         left her position with Ryan’s after a confrontation with two
obligation to notify, much less receive consent from, Floss                   management employees.         According to Floss, these
and Daniels. EDSI’s right to choose the nature of its                         management employees intimidated and harassed her after
performance renders its promise illusory. As Professor                        learning that she had complained to the United States
Williston has explained:                                                      Department of Labor regarding Ryan’s pay practices.
  Where a promisor retains an unlimited right to decide                         On February 17, 1998, Floss sued Ryan’s in the United
  later the nature or extent of his performance, the promise                  States District Court for the Eastern District of Kentucky for
  is too indefinite for legal enforcement. The unlimited                      violation of the Fair Labor Standards Act.3 Floss claimed that
  choice in effect destroys the promise and makes it merely                   Ryan’s (1) did not pay employees legally-required minimum
  illusory.                                                                   and overtime wages, (2) failed to pay employees for certain
                                                                              hours worked, and (3) retaliated against her because she
1 SAMUEL WILLISTON, CONTRACTS § 43, at 140 (3d ed.                            complained of these practices to the United States Department
1957).                                                                        of Labor. Floss sued in both her individual capacity and on
                                                                              behalf of similarly-situated Ryan’s employees.
  EDSI’s illusory promise does not create a binding
obligation. The purported arbitration agreement therefore                        On May 19, 1998, Daniels filed his action against Ryan’s
lacks a mutuality of obligation. Without a mutuality of                       in the United States District Court for the Eastern District of
obligation, the agreement lacks consideration and,                            Tennessee. In this action, Daniels asserted a claim under the
accordingly, does not constitute an enforceable arbitration                   ADA, alleging that Ryan’s terminated him on account of his
agreement.8                                                                   handicapped status despite his ability to perform the essential
                                                                              functions of his      job with or without reasonable
                                   V.                                         accommodation.4
  Ryan’s has pursued an acceptable objective in an
unacceptable manner. An employer may enter an agreement
with employees requiring the arbitration of all employment
                                                                                  3
                                                                                    Floss also asserted state-law claims for false imprisonment and
                                                                              intentional infliction of emotional distress, naming as codefendants the
     8                                                                        two management employees involved in the alleged confrontation.
     Floss insists that the district court erred in determining as a matter
of law that she was not fraudulently induced to sign the agreement.               4
Because the agreement is unenforceable on other grounds, we do not                  Daniels also asserted a claim under a state disability discrimination
address this argument.                                                        statute.
6       Floss v. Ryan’s Family                     Nos. 99-5099/5187           Nos. 99-5099/5187               Floss v. Ryan’s Family     15
        Steak Houses, et al.                                                                                      Steak Houses, et al.

  In both actions, Ryan’s filed motions to compel arbitration.                 mutuality of obligation, a contract based on reciprocal
In ruling on these motions, the respective district courts                     promises lacks consideration. See Dobbs v. Guenther, 846
reached different conclusions as to whether the agreements                     S.W.2d 270, 276 (Tenn. Ct. App. 1992); David Roth’s Sons,
were enforceable.                                                              Inc. v. Wright and Taylor, Inc., 343 S.W.2d 389, 390 (Ky. Ct.
                                                                               App. 1961). Put more succinctly, such a contract “must be
  In Daniels’s action, the district court ruled that the                       binding on both or else it is binding on neither.” Morgan v.
agreement was not enforceable. The court reasoned that                         Morgan, 218 S.W.2d 410, 412 (Ky. Ct. App. 1949).
EDSI did not provide Daniels with any consideration for his
promise to arbitrate his dispute with Ryan’s. Though EDSI                         Promises may fail to create legally binding obligations for
promised to provide an arbitration forum, the court found that                 a variety of reasons. See 17A AM. JUR. 2D Contracts § 139
only Ryan’s and EDSI, rather than Daniels, actually benefitted                 (1991). Most notably, a promise may in effect promise
from that promise. The court also found that the arbitration                   nothing at all. Such an illusory promise arises when a
document did not bind EDSI. Specifically, the court noted                      promisor retains the right to decide whether or not to perform
that the agreement gave EDSI an unlimited right to                             the promised act. See Trumbull v. Century Marketing Corp.,
unilaterally modify or amend the rules and procedures of the                   12 F. Supp. 2d 683, 686 (N.D. Ohio 1998) (holding that
arbitration proceeding without providing notice to Daniels.                    employer’s promise in employee handbook to arbitrate
Finally, the court noted that even if enforceable, the                         disputes did not create binding obligation when employer
agreement was not sufficiently clear so as to represent a                      retains right to revoke arbitration provision); David Roth’s
knowing and intelligent waiver of Daniels’s right to pursue                    Sons, Inc., 343 S.W.2d at 391 (noting that a promise absent
his disability discrimination claim in federal court.                          any fixed obligation to perform “is illusory in the sense that
                                                                               [the promisor] has made no legally enforceable commitment,
  However, the district court in Floss’s case enforced the                     and justice demands the other party should not be bound”).
agreement.5 The court rejected Floss’s argument that claims                    A promise is also illusory when its indefinite nature defies
under the FLSA could not be made subject to mandatory                          legal enforcement. See Kovacs v. Freeman, 957 S.W.2d 251,
arbitration.                                                                   254 (Ky. 1997) (“Under Kentucky law, an enforceable
                                                                               contract must contain definite and certain terms setting forth
  Both Ryan’s and Floss now appeal the rulings adverse to                      promises of performance to be rendered by each party.”);
them.                                                                          Jamestowne On Signal, Inc. v. First Federal Savings & Loan
                                                                               Ass’n, 807 S.W.2d 559, 564 (Tenn. Ct. App. 1990) (“‘Courts
                                                                               will not uphold agreements which are indefinite and uncertain
                                                                               as to the obligations imposed on the parties thereto.’”)
                                                                               (quoting Union State Bank v. Woell, 434 N.W.2d 712 (N.D.
                                                                               1989).
    5                                                                            In the purported agreement at issue in this case, EDSI
      The district court enforced the agreement under the Federal              offered its promise to provide an arbitral forum as
Arbitration Act (“FAA”). See 9 U.S.C. § 2. The FAA authorizes federal
district courts to stay a proceeding if any matter raised therein is subject   consideration for Floss and Daniels’s promise to submit any
to an arbitration agreement and to issue an order compelling arbitration if    dispute they may have with their employer to arbitration with
a party has filed suit in contravention of an arbitration agreement. See 9     EDSI. In ruling in favor of Daniels, the district court found
U.S.C. §§ 3 and 4.
14   Floss v. Ryan’s Family               Nos. 99-5099/5187       Nos. 99-5099/5187                        Floss v. Ryan’s Family        7
     Steak Houses, et al.                                                                                     Steak Houses, et al.

to arbitrate the dispute in a contract which evidences a                                             II.
transaction in interstate commerce.” Hartford Lloyd’s Ins.
Co. v. Teachworth, 898 F.2d 1058, 1061 (5th Cir. 1990).              Before turning to the merits of these appeals, we consider
                                                                  whether Floss timely filed her notice of appeal. Ryan’s says
  Floss and Daniels say the arbitration agreements they           Floss failed to file her appeal within thirty days of the
signed as part of their employment applications with Ryan’s       issuance of the final order from which she appeals, as
are unenforceable. In deciding whether the agreements are         required by Federal Rule of Appellate Procedure 4(a)(1)(A).
enforceable, we examine applicable state-law contract
principles. See Perry v. Thomas, 482 U.S. 483, 492 n.9, 107          On October 20, 1998, the district court issued an order
S.Ct. 2520, 2527 n.9, 96 L. Ed. 2d 426 (1987); Avedon               staying Floss’s FLSA action pending arbitration. On
Engineering, Inc., 126 F.3d at 1287; Shulze and Burch Biscuit     December 21, 1998, the court, at Floss’s request, issued a
Co. v. Tree Top, Inc., 831 F.2d 709, 715 (7th Cir. 1987);         final order dismissing her action. Floss filed her notice of
Coastal Indus., Inc. v. Automatic Steam Products Corp., 654       appeal on January 21, 1999.
F.2d 375, 377-78 (5th Cir. 1981). Thus, we review both
Kentucky and Tennessee law to decide if Floss and Daniels           Ryan’s says that the district court’s order granting a stay
have executed valid arbitration agreements.                       constituted a final order with regard to the arbitrability of
                                                                  Floss’s FLSA claim. The second order dismissing Floss’s
   Consideration is an essential element of every contract. See   action was, according to Ryan’s, superfluous. Because Floss
Price v. Mercury Supply Co., 682 S.W.2d 924, 933 (Tenn. Ct.       did not file her notice of appeal within thirty days of the stay
App. 1984); Cuppy v. General Accident Fire & Life                 order, Ryan’s argues that Floss’s appeal is untimely.
Assurance Corp., 378 S.W.2d 629, 632 (Ky. Ct. App. 1964).
In other words, a promise is legally enforceable only if the        We disagree. Floss could not have filed a notice of appeal
promisor receives in exchange for that promise some act or        based on the district court’s stay order. An interlocutory order
forbearance, or the promise thereof. See Kozy v. Werle, 902       granting a stay pending arbitration is not appealable. See 9
S.W.2d 404, 411 (Tenn. Ct. App. 1995) (“Consideration             U.S.C. § 16(b); Arnold v. Arnold Corp., 920 F.2d 1269, 1275
consists when the promisee does something that he is under        (6th Cir. 1990) (noting that interlocutory order directing
no legal obligation to do or refrains from doing [that] which     parties to arbitrate dispute is not appealable). And contrary to
he has a legal right to do.”); Sutton v. First Nat’l Bank of      Ryan’s suggestion, the district        court’s stay order was
Crossville, 620 S.W.2d 526, 531 (Tenn. Ct. App. 1981) (“‘It       interlocutory rather than final.6 “[A] final order is one that
is invariably held that the promise of one party is a valid       dismisses an action in deference to arbitration.” Arnold, 920
consideration for the promise of the other party.’”) (quoting     F.2d at 1275 (internal quotations omitted). The district
Dark Tobacco Growers' Co-op Assn. v. Mason, 263 S.W. 60,          court’s stay order did no such thing.
67 (Tenn. 1924)); Phillips v. Phillips, 171 S.W.2d 458, 464
(Ky. Ct. App. 1943) (defining consideration as a legal right
given to the promisor the exercise of which he is otherwise
not entitled).
                                                                      6
                                                                        This Court has found that a stay order may constitute a final order
  A promise constitutes consideration for another promise         when the stay delays the enforcement of a judgment pending the
only when it creates a binding obligation. Thus, absent a         clarification of that judgment. See M&C Corp. v. Erwin Behr GmbH &
                                                                  Co., 143 F.3d 1033, 1036-37 (6th Cir. 1998). Such is not the case here.
8     Floss v. Ryan’s Family                Nos. 99-5099/5187       Nos. 99-5099/5187                   Floss v. Ryan’s Family    13
      Steak Houses, et al.                                                                                 Steak Houses, et al.

   Floss filed her appeal within thirty days of the district        bias exists. In light of EDSI’s role in determining the pool of
court’s final order dismissing her action; therefore, her appeal    potential arbitrators, any such bias would render the arbitral
is timely.                                                          forum fundamentally unfair. See Cole v. Burns Int’l Security
                                                                    Services, 105 F.3d 1465, 1482 (D.C. Cir. 1997) (“At a
                              III.                                  minimum, statutory rights include both a substantive
                                                                    protection and access to a neutral forum in which to enforce
  We review de novo a district court’s decisions regarding          those protections.”).
both the existence of a valid arbitration agreement and the
arbitrability of a particular dispute. See Bobbie Brooks, Inc. v.     Moreover, EDSI’s current rules require an employee to
Int’l Ladies’ Garment Workers Union, 835 F.2d 1164, 1170            generally pay one-half of the arbitrators’ fees as a condition
(6th Cir. 1987) (stating that district court’s finding that a       of pursuing a dispute. Such a fee structure could potentially
contract exists is subject to de novo review); M&C Corp. v.         prevent an employee from prosecuting a federal statutory
Erwin Behr GmbH & Co., 143 F.3d 1033, 1037 (6th Cir.                claim against an employer. Recognizing as much, the District
1998) (“A determination of the arbitrability of a dispute is        of Columbia Circuit has refused to countenance an
subject to de novo review.”).                                       employer’s requirement that employees submit their disputes
                                                                    to arbitration as a condition of employment absent that
                              IV.                                   employer’s agreement to bear the full costs of the arbitrators’
                                                                    fees. See Cole, 105 F.3d at 1484-85.
   In deciding whether to compel arbitration of a federal
statutory claim, we initially consider whether the statutory           Though we have concerns with both the fee structure and
claim is generally subject to compulsory arbitration. If the        potential bias of EDSI’s arbitral forum, we need not decide
statutory claim is not exempt from mandatory arbitration, we        whether these deficits prevent the arbitration of Floss and
next consider whether the parties have executed a valid             Daniels’s statutory claims. As explained below, Floss and
arbitration agreement and, if so, whether the statutory claim       Daniels are not contractually obligated to submit their federal
falls within the scope of that agreement. See Mitsubishi            statutory claims to arbitration in EDSI’s arbitral forum. Thus,
Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614,        Floss and Daniels need not establish the unsuitability of
628, 105 S. Ct. 3346, 3355, 87 L. Ed. 2d 444 (1985) (stating           EDSI’s arbitral forum in order to litigate their statutory claims
that courts should consider both whether the parties have           in federal court.
agreed to arbitrate a federal statutory claim and whether that
claim is generally subject to compulsory arbitration).                                             B.
                               A.                                     The Federal Arbitration Act declares that arbitration
                                                                    agreements “shall be valid, irrevocable, and enforceable, save
  Mandatory arbitration of federal statutory claims continues       upon grounds that exist at law or in equity for the revocation
to generate considerable debate among courts and                    of any contract.” 9 U.S.C. § 2. However, “the FAA was not
commentators. At bottom, this debate centers on the efficacy        enacted to force parties to arbitrate in the absence of an
of resolving “public disputes in private fora.” Harry               agreement.” Avedon Engineering, Inc. v. Seatex, 126 F.3d
Edwards, Where Are We Heading With Mandatory                        1279, 1286 (10th Cir. 1997). Indeed, “[t]he sine qua non of
Arbitration of Statutory Claims in Employment?, 16 GA. ST.          the FAA’s applicability to a particular dispute is an agreement
U. L. REV. (forthcoming April 2000) (emphasis in original).
12       Floss v. Ryan’s Family                   Nos. 99-5099/5187           Nos. 99-5099/5187                Floss v. Ryan’s Family           9
         Steak Houses, et al.                                                                                     Steak Houses, et al.

continue to serve both its remedial and deterrent function.”)                   With its informal nature, arbitration is widely-accepted as
(quoting Mitsubishi, 473 U.S. at 637).                                        a sound method for resolving essentially private disputes,
                                                                              such as those arising from collective bargaining agreements
  Both Floss and Daniels argue that the specific arbitration                  and other contracts. Yet, for some, this informality renders
forum provided by the current version of the EDSI Rules and                   arbitration suspect as a forum for resolving statutory claims,
Procedures does not allow them to effectively vindicate their                 which typically implicate important public interests. As one
claims under the FLSA and the ADA. They say the                               jurist and commentator has explained:
procedures allow for the appointment        of a biased and
incompetent panel of arbitrators,7 as well as unduly limit the                  When public laws are enforced in private fora, however,
participants’ discovery opportunities.                                          we have no assurance that the underlying public interests
                                                                                are fully satisfied. This is not to say that private fora are
  We have serious reservations as to whether the arbitral                       incapable of resolving disputes in a manner protective of
forum provided under the current version of the EDSI Rules                      the public interest. However, conflicts that are resolved
and Procedures is suitable for the resolution of statutory                      through mediation and arbitration usually are not subject
claims. Specifically, the neutrality of the forum is far from                   to public scrutiny, so we do not know whether such
clear in light of the uncertain relationship between Ryan’s and                 resolutions are consistent with prevailing interpretations
EDSI. Floss and Daniels suggest that EDSI is biased in favor                    of public law or whether the procedures followed were
of Ryan’s and other employers because it has a financial                        inequitable.
interest in maintaining its arbitration service contracts with
employers. Though the record does not clearly reflect                         Id. (emphasis in original) (footnote omitted).
whether EDSI, in contrast to the American Arbitration
Association, operates on a for-profit basis, the potential for                   For a time, skepticism regarding the role of arbitration in
                                                                              resolving statutory claims held sway. This skepticism is
                                                                              perhaps best reflected in the Supreme Court’s approach to the
     7                                                                        mandatory arbitration of statutory claims. The Court rejected
      Under EDSI’s current procedures, a panel of three “adjudicators”        arbitration as the lone forum for vindicating claims under
preside over every arbitration proceeding. Each adjudicator is selected
from one of three “selection pools.” One pool consists of supervisors or      Title VII of the 1964 Civil Rights Act and the Securities Act
managers of an employer who has entered into an arbitration agreement         of 1933. See Alexander v. Gardner-Denver Co., 415 U.S. 36,
with EDSI. A second pool consists of nonsupervisory employees of an           47, 94 S. Ct. 1011, 1019, 39 L. Ed. 2d 147 (1974); Wilko v.
employer who is a signatory to an EDSI arbitration agreement. A third         Swan, 346 U.S. 427, 438, 74 S. Ct. 182, 188-89, 98 L. Ed. 168
pool consists of attorneys, retired judges, and “other competent              (1953). In so holding, the Court explained that arbitrators’
professional persons” not associated with either party. If the dispute
involves more than $20,000, only licensed attorneys are included in this      inexperience with legal concepts coupled with the lack of
third pool.                                                                   stringent procedural safeguards rendered an arbitral forum, in
     The selection process begins with EDSI furnishing both parties a list    the context of the statutory claims at issue, an unsuitable
of potential adjudicators organized according to each selection pool.         replacement for a court of law. See Gardner-Denver, 415 U.S
Information regarding each adjudicator’s recent employment history and        at 57; Wilko, 346 U.S. at 435-36.
related biographical information is provided to the parties along with this
list. The parties may then move to strike any adjudicator for cause.
Following the removal of any adjudicators for cause, the parties each           However, the tide soon turned. In a trio of cases decided in
strike a name from the list until only one name remains from each             the 1980s, the Supreme Court enforced arbitration agreements
selection pool.
10    Floss v. Ryan’s Family                 Nos. 99-5099/5187        Nos. 99-5099/5187                Floss v. Ryan’s Family       11
      Steak Houses, et al.                                                                                Steak Houses, et al.

covering claims under the Sherman Act, see Mitsubishi                 the underlying purposes of the statute. McMahon, 482 U.S.
Motors Corp., 473 U.S. at 640, the Securities Act of 1933, see        at 227.
Rodriguez de Quijas v. Shearson/American Express, Inc., 490
U.S. 477, 483, 109 S. Ct. 1917, 1921, 104 L. Ed. 2d 526 (1989),             Here, Floss argues that a conflict exists between arbitration
the Securities Exchange Act of 1934, see Shearson/American            and her claim under the FLSA. Specifically, Floss insists that
Express, Inc. v. McMahon, 482 U.S. 220, 238, 107 S.Ct.                an arbitral forum does not sufficiently allow for the
2332, 2344, 96 L. Ed. 2d 185 (1987), and the civil provisions           furtherance of the important social policies implicated by the
of the Racketeering Influenced Corrupt Organizations Act              minimum wage provisions of the FLSA. Floss contends that
(“RICO”), see McMahon, 473 U.S. at 242. These holdings                a claim under these provisions involves not only an attempt
led the Court to declare in 1991 that “[i]t is now well settled       to receive an individual remedy, but also an effort to promote
that statutory claims may be the subject of an arbitration            a minimum standard of living for the nation’s lowest paid
agreement, enforceable by the FAA.”                Gilmer v.          workers. According to Floss, requiring a party to seek
Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct.             resolution of a minimum wage claim under the FLSA in an
1647, 1652, 114 L. Ed. 2d 26 (1991).                                    arbitral forum will thwart the latter objective.
  The Court addressed its growing acceptance of mandatory               Floss’s argument does not persuade. Though a claim under
arbitration for statutory claims in Gilmer v. Interstate/Johnson      the FLSA certainly serves a purpose beyond providing relief
Lane Corp., in which the Court upheld the mandatory                   to an individual claimant, we fail to see how the broader
arbitration of claims under the Age Discrimination in                 policies furthered by such a claim are hindered when that
Employment Act, 29 U.S.C. § 621, et seq. See id. at 27. In            claim is resolved through arbitration. As the Supreme Court
permitting the compulsory arbitration of statutory claims, the        has held, both judicial and arbitral fora “can further broader
Court recognized that by “‘agreeing to arbitrate a statutory          social purposes.” Gilmer, 500 U.S. at 28. Indeed, the Court
claim, a party does not forgo the substantive rights afforded         has upheld the compulsory arbitration of various statutory
by the statute; it only submits to their resolution in an arbitral,   claims that further both individual and societal interests,
rather than a judicial, forum.’” Id. at 26 (quoting Mitsubishi,       including claims under the Sherman Act and RICO. Floss
473 U.S. at 628). And the Court dismissed generalized attacks         offers no compelling reason for drawing a distinction between
on the suitability of arbitral fora as arising from a “‘suspicion     these statutes and the FLSA.
of arbitration as a method of weakening the protections
afforded in the substantive law to would-be complainants.’”              However, even if arbitration is generally a suitable forum
Id. at 30 (quoting Rodriguez de Quijas, 490 U.S. at 481).             for resolving a particular statutory claim, the specific arbitral
Such a suspicion, the Court observed, was “far out of step”           forum provided under an arbitration agreement must
with the “current strong endorsement” of arbitration. Id.             nevertheless allow for the effective vindication of that claim.
                                                                      Otherwise, arbitration of the claim conflicts with the statute’s
   Yet not all statutory claims are amenable to mandatory             purpose of both providing individual relief and generally
arbitration. See Mitsubishi, 473 U.S. at 627-28. In creating          deterring unlawful conduct through the enforcement of its
a statutory cause of action, Congress may choose to mandate           provisions. See Gilmer, 500 U.S. at 28 (“[S]o long as the
a judicial forum for its resolution. See id. at 628. Such an          prospective litigant effectively may vindicate [his or her]
intent is typically evidenced in the statutory text, legislative      statutory cause of action in the arbitral forum, the statute will
history, or by an “inherent conflict” between arbitration and