Rent-A-Center, Inc. v. Iowa Civil Rights Commission
843 N.W.2d 727
Iowa2014Background
- Nicole Henry, an assistant manager at Rent-A-Center (RAC), signed a mutual arbitration agreement covering "all claims" arising from employment as a condition of continued employment.
- Henry alleged RAC discriminated against her for pregnancy-related lifting restrictions; she filed a complaint with the Iowa Civil Rights Commission (ICRC), which cross-filed with the EEOC.
- The ICRC filed a statement of charges against RAC; after that filing Henry could not obtain a right-to-sue letter and did not intervene in the administrative proceeding.
- RAC moved to dismiss or compel arbitration; the Department of Inspections and Appeals (DIA) ALJ and the ICRC denied the motion, reasoning the ICRC was not a party to the arbitration agreement and had independent enforcement authority.
- The district court held the Federal Arbitration Act (FAA) preempted the ICRC’s enforcement action and remanded with instructions to dismiss pending arbitration; the ICRC appealed.
- The Iowa Supreme Court reversed, holding the FAA does not bar a state agency that is not a party to an arbitration agreement from pursuing independent enforcement actions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FAA preempts ICRC enforcement when employee signed arbitration agreement | ICRC: it brings an independent public enforcement action and is not bound by the parties' arbitration agreement | RAC: FAA and the arbitration agreement require arbitration of claims arising from Henry’s employment, preempting ICRC jurisdiction | Held: FAA does not preempt ICRC; agency not a party and may pursue independent enforcement remedies |
| Whether ICRC’s claims are derivative of Henry’s private claim | ICRC: its interest is independent and public, not merely derivative of Henry’s | RAC: ICRC’s relief overlaps employee-specific claims and thus should be arbitrated | Held: ICRC’s interest is not derivative; it may seek victim-specific and public remedies under statutory authority |
| Whether precedent (EEOC v. Waffle House) controls | ICRC: Waffle House permits agencies to sue despite employee–employer arbitration agreements | RAC: Distinguish Waffle House; argue later cases limit its scope | Held: Waffle House controls the principle that nonparty agencies need not arbitrate; subsequent cases are distinguishable |
| Effect of later Supreme Court FAA decisions (Preston, Concepcion, etc.) | ICRC: those cases address parties’ disputes or state rules that directly alter arbitration terms, not agency enforcement by nonparty | RAC: those cases show FAA supersedes state laws assigning forum jurisdiction | Held: Court distinguishes those decisions; they do not strip statutory agency enforcement power when agency is not party to arbitration agreement |
Key Cases Cited
- E.E.O.C. v. Waffle House, Inc., 534 U.S. 279 (2002) (agency enforcement action not barred by employee–employer arbitration agreement when agency is not a contracting party)
- Preston v. Ferrer, 552 U.S. 346 (2008) (FAA supersedes state law vesting initial adjudicatory authority in an administrative forum when parties agreed to arbitrate contractual disputes)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (state rules that frustrate fundamental attributes of arbitration, such as prohibiting class waivers, are preempted by the FAA)
- Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) (validity of a contract generally is for arbitrator when parties agreed to arbitrate)
- Nitro-Lift Techs., L.L.C. v. Howard, 568 U.S. 17 (2012) (state courts must follow FAA precedent that arbitrability and contract-based disputes are for arbitrators when parties committed them to arbitration)