Court Opinion

ID: 4398221
Source: CourtListenerOpinion
Date Created: 2019-05-17 18:00:28.511297+00
Date Added: 2024-06-11T13:32:14.376389
License: Public Domain

FOR PUBLICATION

   UNITED STATES COURT OF APPEALS
        FOR THE NINTH CIRCUIT

 DEWITT LAMBERT,                                   No. 18-15203
               Plaintiff-Appellant,
                                                     D.C. No.
                      v.                          3:17-cv-05369-
                                                        VC
 TESLA, INC., DBA Tesla Motors,
 Inc.,
                Defendant-Appellee.                   OPINION

        Appeal from the United States District Court
          for the Northern District of California
         Vince Chhabria, District Judge, Presiding

             Argued and Submitted April 16, 2019
                  San Francisco, California

                       Filed May 17, 2019

Before: SIDNEY R. THOMAS, Chief Judge, MILAN D.
SMITH, JR., Circuit Judge, and KATHRYN H. VRATIL, *
                     District Judge.

            Opinion by Judge Milan D. Smith, Jr.;
            Concurrence by Chief Judge Thomas

    *
      The Honorable Kathryn H. Vratil, United States District Judge for
the District of Kansas, sitting by designation.
2                       LAMBERT V. TESLA

                          SUMMARY **

         Employment Discrimination / Arbitration

    Affirming the district court’s order compelling
arbitration, the panel held that racial discrimination claims
under 42 U.S.C. § 1981 may be subjected to compulsory
arbitration.

    Following the reasoning of EEOC v. Luce, Forward,
Hamilton & Scripps, 345 F.3d 742 (9th Cir. 2003) (en banc),
addressing the arbitrability of Title VII claims, the panel held
that § 1981 claims are arbitrable. Applying the Gilmer test,
Luce, Forward concluded that § 118 of the Civil Rights Act
of 1991, amending both Title VII and § 1981, does not bar
arbitration.

    Concurring, Chief Judge Thomas agreed that Luce,
Forward was dispositive but wrote separately because he
believes that Luce, Forward was wrongly decided. Chief
Judge Thomas wrote that the statutory text of § 118, stating
that arbitration should be encouraged to the extent it is
appropriate and authorized by law, is ambiguous.
Considering the legislative history, compelling arbitration in
§ 1981 actions defies Congress’s intent.

    **
       This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
                     LAMBERT V. TESLA                       3

                        COUNSEL

Noah B. Baron (argued) and Lawrence A. Organ, California
Civil Rights Law Group, San Anselmo, California, for
Plaintiff-Appellant.

Danielle L. Ochs (argued) and Roshni Chaudhari, Ogletree
Deakins Nash Smoak & Stewart P.C., San Francisco,
California, for Defendant-Appellee.

                         OPINION

M. SMITH, Circuit Judge:

    Plaintiff-Appellant DeWitt Lambert filed suit against
Defendant-Appellee Tesla, Inc. (Tesla), alleging violations
of 42 U.S.C. § 1981. Tesla moved to compel arbitration, and
the district court granted the motion. Lambert appealed,
arguing that § 1981 claims cannot be subjected to
compulsory arbitration. Following the reasoning of our en
banc decision in EEOC v. Luce, Forward, Hamilton &
Scripps, 345 F.3d 742 (9th Cir. 2003) (en banc), we hold that
§ 1981 claims are arbitrable.

  FACTUAL AND PROCEDURAL BACKGROUND

    In his complaint, Lambert alleged that he began working
as a production associate in Tesla’s Fremont, California
factory in 2015. His employment contract included an
arbitration provision that “purport[ed] to require the parties
to arbitrate disputes arising between them.”

    During his employment, Lambert, an African American,
claimed that “the other employees consistently harassed
him” due to his race. This abuse took various forms, from
4                   LAMBERT V. TESLA

petty and puerile harassment (employees would stick
Lambert’s tools to a table with adhesive tape and take photos
with his phone without permission) to vicious and
vituperative comments. Lambert’s appeals to Tesla’s human
resources department were unavailing, and he further alleged
that the company “discriminated against and retaliated
against” him and “refus[ed] to promote [him] because of his
race.”

    Lambert filed suit against Tesla in the district court,
alleging violations of 42 U.S.C. § 1981. He also sought a
declaration that his § 1981 claim was nonarbitrable. Tesla
moved the district court to either dismiss Lambert’s action
or compel arbitration. The court concluded that our
precedent permitted the arbitrability of § 1981 claims, and
granted Tesla’s motion to compel arbitration. Lambert v.
Tesla, Inc., No. 17-cv-05369-VC, 2018 WL 317793, at *1
(N.D. Cal. Jan. 8, 2018). This timely appeal followed.

    STANDARD OF REVIEW AND JURISDICTION

    “We review de novo the district court’s order compelling
arbitration.” Harden v. Roadway Package Sys., Inc.,
249 F.3d 1137, 1140 (9th Cir. 2001). We have jurisdiction
pursuant to 9 U.S.C. § 16 and 28 U.S.C. § 1291.

                        ANALYSIS

    “We have become an arbitration nation.” Aspic Eng’g &
Constr. Co. v. ECC Centcom Constructors LLC, 913 F.3d
1162, 1169 (9th Cir. 2019). The question before us is
whether claims under § 1981 should be added to the ever-
expanding list of statutory causes of action already subject
to arbitration.
                     LAMBERT V. TESLA                         5

    “Section 1981 offers relief when racial discrimination
blocks the creation of a contractual relationship.” Domino’s
Pizza, Inc. v. McDonald, 546 U.S. 470, 476 (2006). The
statute provides that “[a]ll persons . . . shall have the same
right in every State and Territory to make and enforce
contracts . . . as is enjoyed by white citizens . . .” 42 U.S.C.
§ 1981(a). It further defines “make and enforce contracts”
as including “the making, performance, modification, and
termination of contracts, and the enjoyment of all benefits,
privileges, terms, and conditions of the contractual
relationship.” Id. § 1981(b).

     Lambert contends that “[t]he district court erred in
failing to give full effect to the text of Section 118 of the
Civil Rights Act of 1991, which limits arbitration to claims
where it is ‘appropriate’ and ‘authorized by law,’” and that
under the Supreme Court’s three-part test set forth in Gilmer
v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991),
§ 1981 claims cannot be arbitrated.

    We first outline the relevant law before considering the
arbitrability of § 1981 claims.

I. Relevant Law

   A. Gilmer

    In Gilmer, the Supreme Court considered whether claims
brought under the Age Discrimination in Employment Act
(ADEA) can be subjected to compulsory arbitration pursuant
to the Federal Arbitration Act (FAA). See id. at 23. The
Court held that they could, but noted that “all statutory
claims may not be appropriate for arbitration.” Id. at 26. In
such cases “the burden is on [the plaintiff] to show that
Congress intended to preclude a waiver of the judicial
forum” based on “the text of the [statute], its legislative
6                    LAMBERT V. TESLA

history, or an ‘inherent conflict’ between arbitration and the
[statute’s] underlying purposes.” Id. (quoting Shearson/Am.
Express, Inc. v. McMahon, 482 U.S. 220, 227 (1987)).
“Throughout such an inquiry,” the Court stressed, “it should
be kept in mind that ‘questions of arbitrability must be
addressed with a healthy regard for the federal policy
favoring arbitration.’” Id. (quoting Moses H. Cone Mem’l
Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)).

    B. Section 118

    Six months after the Court issued Gilmer, Congress
enacted the Civil Rights Act of 1991 (1991 Act), Pub. L. No.
102-166, 105 Stat. 1071, in order to “restore civil rights
limited by then-recent Supreme Court decisions and to
‘strengthen existing protections and remedies available
under federal civil rights laws to provide more effective
deterrence and adequate compensation for victims of
discrimination.’” Luce, Forward, 345 F.3d at 747 (quoting
H.R. Rep. No. 102-40, pt. 2, at 1 (1991), as reprinted in 1991
U.S.C.C.A.N. 694, 694). Section 118 of the 1991 Act stated,
“Where 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
the Acts or provisions of Federal law amended by this title.”
§ 118, 105 Stat. at 1081. Section 118 amended both Title
VII and § 1981. See 105 Stat. at 1071–72, 1081.

    C. Luce, Forward

    Although we have not yet addressed the arbitrability of
§ 1981 claims, our en banc opinion in Luce, Forward is
highly instructive. There, we considered the arbitrability of
Title VII claims. Luce, Forward, 345 F.3d at 744.
                     LAMBERT V. TESLA                       7

    As part of our analysis, we determined that our previous
decision on the arbitrability of Title VII claims, Duffield v.
Robertson Stephens & Co., 144 F.3d 1182 (9th Cir. 1998),
was “wrongly decided.” Luce, Forward, 345 F.3d at 745.
The Duffield court—considering, as part of Gilmer’s three-
part test, the relevant statutory purpose—had determined
that the 1991 Act was at odds with compulsory arbitration
agreements, remarking,

       It [] would be “at least a mild paradox” to
       conclude that in the very Act of which the
       “primary purpose” was “to strengthen
       existing protections and remedies available
       [to employees under Title VII],” Congress
       “encouraged” the use of a process whereby
       employers condition employment on their
       prospective employees’ surrendering their
       rights to a judicial forum for the resolution of
       all future claims of race or sex discrimination
       and force those employees to submit all such
       claims to compulsory arbitration.

Duffield, 144 F.3d at 1192–93 (second alteration in original)
(citations omitted) (first quoting Pryner v. Tractor Supply
Co., 109 F.3d 354, 363 (7th Cir. 1997); and then quoting
H.R. Rep. No. 102-40, pt. 2, at 1, as reprinted in 1991
U.S.C.C.A.N. at 694).        Luce, Forward rejected this
reasoning, concluding that Duffield’s presumption “that
allowing compulsory arbitration weakens the 1991 Act is
inconsistent with the Supreme Court’s endorsement of
arbitration.” Luce, Forward, 345 F.3d at 750 (citing Gilmer,
500 U.S. at 30).

   As for the statutory text—another of the Gilmer
considerations—we disagreed with Duffield’s assertion that
8                       LAMBERT V. TESLA

the text of § 118 “is, at a minimum, ambiguous,” Duffield,
144 F.3d at 1193, writing,

         [A]lthough the Court decided Gilmer close in
         time to the passage of the 1991 Act, we must
         “assume that Congress is aware of existing
         law when it passes legislation.” Gilmer was
         decided in May 1991 and the 1991 Act was
         not enacted until November of that year.
         During this intervening six months, Congress
         surely became aware that Gilmer . . .
         provided the Supreme Court’s prevailing
         assessment of employment arbitration
         agreements. Moreover, the legal landscape
         encompassed by the phrase, “to the extent
         authorized by law,” must also include the
         FAA.

Luce, Forward, 345 F.3d at 751–52 (citation omitted)
(quoting Miles v. Apex Marine Corp., 498 U.S. 19, 32
(1990)). 1 We “therefore conclude[d] that the text of § 118
does not present any ambiguity suggesting that it may be
intended to preclude compulsory arbitration.” Id. at 752.

    Finally, we rejected Duffield’s reliance on the legislative
history of the 1991 Act (the third Gilmer consideration),
concluding that “this history should not be relied on to
establish that Congress intended to preclude waiver of a

    1
       We further noted that, “as other courts have pointed out, it would
be ironic to interpret statutory language encouraging the use of
arbitration and containing no prohibitory language as evincing Congress’
intent to preclude arbitration of Title VII claims.” Luce, Forward, 345
F.3d at 752.
                      LAMBERT V. TESLA                         9

judicial forum in derogation of a clear and unambiguous
statute.” Id. at 753.

    Consequently, as had “[a]ll of the other circuits,” we
concluded that Title VII does not bar compulsory arbitration
agreements. Id. at 748.

II. Arbitrability of § 1981 Claims

    In its brief order compelling arbitration, the district court
relied on Luce, Forward and concluded that our “reasoning
is binding here: if Title VII claims can be subjected to
arbitration based on section 118 and the logic of Luce,
Forward, so can section 1981 claims.” Lambert, 2018 WL
317793, at *1. We agree. Applying Gilmer through the lens
of Luce, Forward leads to the conclusion that § 1981 claims,
like Title VII claims, are arbitrable.

    Gilmer held that the nonarbitrability of a statute can be
ascertained from “the text of the [statute], its legislative
history, or an ‘inherent conflict’ between arbitration and the
[statute’s] underlying purposes.” 500 U.S. at 26 (quoting
McMahon, 482 U.S. at 227). Here, the 1991 Act amended
§ 1981 to include § 118, which encourages arbitration efforts
“[w]here appropriate and to the extent authorized by law.”
§ 118, 105 Stat. at 1081 (codified at Notes to 42 U.S.C.
§ 1981). When considering this same arbitration provision
in the context of Title VII, we concluded in Luce, Forward
that “[n]othing in the text directly demonstrates a
congressional intent to preclude compulsory arbitration
agreements.” 345 F.3d at 751. The language is clear, and
“[b]ecause the text of § 118 is unambiguous, we are
precluded from considering legislative history.” Id. at 753;
see also Ratzlaf v. United States, 510 U.S. 135, 147–48
(1994) (“[W]e do not resort to legislative history to cloud a
statutory text that is clear.”); Desiderio v. Nat’l Ass’n of Sec.
10                     LAMBERT V. TESLA

Dealers, Inc., 191 F.3d 198, 205–06 (2d Cir. 1999)
(concluding that Title VII’s legislative history need not be
considered because the text of the arbitration provision is
“clear”).

    Even if we were to proceed with the Gilmer inquiry and
consider the relevant statutory purpose, 2 Luce, Forward
would be persuasive. In Luce, Forward, we saw no conflict
between Title VII and arbitration, explaining that “the view
that compulsory arbitration weakens Title VII conflicts with
the Supreme Court’s stated position that arbitration affects
only the choice of forum, not substantive rights.” Luce,
Forward, 345 F.3d at 750; see also Gilmer, 500 U.S. at 26
(“[B]y 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.” (quoting Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985))).
Title VII and § 1981 both “express the federal policy against
discriminatory employment practices,” and “legislative
enactments in this area have long evinced a general intent to
accord parallel or overlapping remedies against
discrimination.” Johnson v. Ry. Express Agency, Inc.,
421 U.S. 454, 470–71 (1975) (Marshall, J., concurring in
part and dissenting in part) (quoting Alexander v. Gardner-
Denver Co., 415 U.S. 36, 47 (1974)). Accordingly, just as
Luce, Forward found no conflict between Title VII and
arbitration, so we find no conflict between § 1981 and
arbitration.

     2
       We note that the Gilmer Court continued with an analysis of
statutory purpose even though “Gilmer concede[d] that nothing in the
text of the ADEA or its legislative history explicitly precludes
arbitration.” 500 U.S. at 26–27.
                         LAMBERT V. TESLA                             11

    In short, we are bound to apply the reasoning of Luce,
Forward to the case before us. In Gilmer, the Supreme
Court determined that the ADEA—which, incidentally,
features language identical to § 118, see 42 U.S.C.
§ 12212—“can be subjected to compulsory arbitration.”
Luce, Forward, 345 F.3d at 751 (citing Gilmer, 500 U.S. at
26). The 1991 Act, § 118 included, was enacted shortly
thereafter, with Congress “aware that Gilmer” and the FAA
informed the relevant legal landscape. Id. at 751–52.
Because the unambiguous language of § 118 applies to
§ 1981, and the statutory purpose of § 1981 does not evince
a preclusion of arbitrability, Gilmer and Luce, Forward
compel our conclusion: § 1981 claims can be subjected to
compulsory arbitration. 3

     3
       Tesla observes that, “[w]hile there is a dearth of legal precedents
on this issue, the few courts addressing the arbitrability of Section 1981
claims under Gilmer have agreed that such claims are subject to
compulsory arbitration.” See, e.g., Winfrey v. Bridgestone/Firestone,
Inc., No. 99-1405, 1999 WL 1295310, at *2 (8th Cir. Dec. 23, 1999)
(citing Gilmer to “reject [the] argument that [] Title VII and § 1981
claims cannot be subjected to . . . mandatory arbitration provisions”);
Cirino v. L. Gordon Holdings, Inc., No. 13-CV-4800, 2014 WL
2880291, at *3 (E.D. Pa. June 25, 2014) (“The text of [§ 118] ‘evinces a
clear Congressional intent to encourage arbitration of’ federal
discrimination claims, including those under § 1981.” (quoting Seus v.
John Nuveen & Co., Inc., 146 F.3d 175, 182 (3d Cir. 1998))); Shaw v.
DLJ Pershing, 78 F. Supp. 2d 781, 782 (N.D. Ill. 1999) (“Considering
this interpretation of § 118 . . . this court can find no reason that the
Seventh Circuit’s reasoning in Koveleskie [v. SBC Capital Mkts., Inc.,
167 F.3d 361 (7th Cir. 1999)] as to Title VII claims would not apply with
equal force to claims brought pursuant to 42 U.S.C. § 1981, which is
another Act amended by the 1991 [Act].”). The district court in Shaw
also provided a practical rationale for this approach: “As § 1981 claims
are often brought in conjunction with Title VII claims, this result []
12                      LAMBERT V. TESLA

     Lambert’s primary argument is that a proper application
of Gilmer to § 1981 requires analysis not of § 118 and the
1991 Act, but rather the statute that created § 1981—the
Civil Rights Act of 1866. Although he marshals an
impressive array of primary and secondary sources in
support of his investigation, the exercise itself is
fundamentally flawed. Ignoring § 118 in favor of analysis
of the pre-amendment § 1981 would be flatly inconsistent
with Luce, Forward, which considered Title VII as part of
the contemporary legal landscape. See 345 F.3d at 751–52
(noting that “the legal landscape encompassed by the phrase,
‘to the extent authorized by law,’ must” include both Gilmer
and the FAA). As Tesla observes, “Lambert’s suit arises
under Section 1981, as amended, not earlier versions and not
entirely different legislation like the 1866 [Civil Rights
Act].” 4 Given this fact, as well as our reasoning in Luce,
Forward, Lambert’s analytical perambulations are
ultimately unpersuasive. 5

safeguards against multiple proceedings and possibly disparate
outcomes.” 78 F. Supp. 2d at 782.

    4
      Tesla also reasonably points out that, if Lambert were correct that
§ 1981 claims can never be arbitrated, then § 118 would be meaningless,
because it would serve to encourage arbitration for claims where it is
never permitted.
     5
       Additionally, Lambert cites to our decision in Ashbey v. Archstone
Prop. Mgmt., Inc. for the proposition that § 118 is not “an unfettered
endorsement of alternative dispute resolutions.” 785 F.3d 1320, 1323
(9th Cir. 2015). But that opinion proceeded to explain that the “where
appropriate” limiter in § 118 “signals a plaintiff cannot waive his right
to a judicial forum for Title VII claims unless he does so ‘knowingly.’”
Id. (quoting Prudential Ins. Co. of Am. v. Lai, 42 F.3d 1299, 1305 (9th
Cir. 1994)). In other words, Ashbey stands for the uncontroversial
proposition that procedural safeguards exist to protect plaintiffs from
                       LAMBERT V. TESLA                            13

                         CONCLUSION

    Luce, Forward compels the same application of § 118 to
§ 1981 as to Title VII. We therefore conclude that the
district court correctly determined that § 1981 claims can be
subjected to compulsory arbitration.

    AFFIRMED.

THOMAS, Chief Circuit Judge, concurring:

    I agree that this court’s decision in EEOC v. Luce,
Forward, Hamilton & Scripps, 345 F.3d 742 (9th Cir. 2003)
(en banc), compels us to hold that § 1981 claims are
arbitrable. I therefore concur in the majority opinion. I write
separately because I believe that Luce, Forward was
wrongly decided.

    Because the majority in Luce, Forward determined that
the statutory text of § 118 is unambiguous, it did not consider
the legislative history of the Civil Rights Act of 1991. See
id. at 753. Section 118, however, merely states that
arbitration should be “encouraged” to the extent it is
“appropriate” and “authorized by law.” § 118, 105 Stat. at
1081. As the dissenters in Luce, Forward noted, these terms
are “at a minimum, ambiguous.” Id. at 756 (Pregerson, J.,
dissenting) (quoting Duffield v. Roberston Stephens & Co.,
144 F.3d 1182, 1193 (9th Cir. 2003) (overruled by Luce,
Forward, 345 F.3d at 745)); see also, id. at 764 (Reinhardt,
J., dissenting) (noting that the terms in § 118 are

unconscionable arbitration—a far cry from Lambert’s assertion that
§ 118’s “where appropriate” language requires a prolonged, substantive
examination of a statute’s pre-amendment history and purpose.
14                       LAMBERT V. TESLA

“unquestionably ambiguous”). The dissenters determined,
and I agree, that pursuant to Gilmer v. Interstate/Johnson
Lane Corp., 500 U.S. 20, 23 (1991), the Luce, Forward
majority should have recognized this ambiguity and moved
on to consider § 118's legislative history. See Luce,
Forward, 345 F.3d at 756 (Pregerson, J., dissenting); id. at
764–66 (Reinhardt, J., dissenting).

    Section 118's legislative history explicitly states that, in
order to prevent employment discrimination, Congress
intended “to supplement, rather than supplant, the rights and
remedies provided by Title VII.” Id. at 766 (Reinhardt, J.,
dissenting) (quoting H.R. Rep. No. 102-40 pt. I, at 104
(1991)); id. at 760 (Pregerson, J., dissenting) (quoting the
same). As did the Luce, Forward dissenters, I recognize that
Congress “plainly thought that the [1991] Act did not allow
employers to force their workers to sign compulsory
arbitration clauses forfeiting their right to trial by jury in
Title VII cases.” Id. at 766 (Reinhardt, J., dissenting).

    Viewed in this light, compelling arbitration in Section
1981 actions more acutely defies Congress’s intent than does
compelling arbitration in Title VII actions. As the majority
in Luce, Forward noted, the EEOC may pursue Title VII
claims in a judicial forum on behalf of individuals, even if
the individual agreed to mandatory arbitration. Id. at 750.
Thus, those bringing claims under Title VII retain some
ability to choose the judicial forum in which their claims will
be heard. The same is not true for Section 1981 claims,
which must be brought by private litigants. 1 As a result of

     1
       What is more, an individual has good reason to bring an action for
racial discrimination under Section 1981 as opposed to Title VII since
the statute of limitations for bringing a Section 1981 claim is longer than
for a Title VII claims. Compare Jones v. R.R. Donnelley & Sons Co.,
                         LAMBERT V. TESLA                               15

our holding, an individual who signs an arbitration clause
will be stripped of any ability to pursue a racial
discrimination claim under Section 1981 in a court of law.

     Our decision today signifies a further departure from the
increased choice of fora Congress intended to bring about in
the 1991 Act. However, bound by Luce, Forward, we are
left with no option to hold otherwise. Therefore, I concur.

541. U.S. 369, 382–84 (2004) (concluding that Section 1981 claims are
subject to a four-year statute of limitations) with 42 U.S.C. § 2000e-
5(e)(1) (Title VII claims must be brought within 180 days after the
alleged unlawful act). In addition, a plaintiff may be able to recover
more damages under Section 1981. See Patterson v. McLean Credit
Union, 491 U.S. 164, 182 n.4 (1989), superseded on other grounds by
statute, Civil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat. 1071
(1991) (noting that a plaintiff is limited to backpay in a Title VII action,
but may recovery plenary compensatory, as well as punitive damages, in
a Section 1981 action).