GILMER v. INTERSTATE/JOHNSON LANE CORP.
No. 90-18
Supreme Court of the United States
Argued January 14, 1991—Decided May 13, 1991
500 U.S. 20
John T. Allred argued the cause and filed a brief for petitioner.
James B. Spears, Jr., argued the cause for respondent. With him on the brief was Robert S. Phifer.*
*Briefs of amici curiae urging reversal were filed for the American Association of Retired Persons by Cathy Ventrell-Monsees and Robert L. Liebross; and for the American Federation of Labor and Congress of Industrial Organizations by Laurence Gold and Marsha S. Berzon.
Briefs of amici curiae urging affirmance were filed for the Center for Public Resources, Inc., by Jay W. Waks; for the Chamber of Commerce of the United States of America by Peter G. Nash, Dixie L. Atwater, Michael J. Murphy, and Stephen A. Bokat; for the Equal Employment Advisory Council et al. by Robert E. Williams, Douglas S. McDowell, Ann Elizabeth Reesman, and Donald L. Goldman; for the Lawyers’ Committee for Civil Rights Under Law by Alan E. Kraus, Nicholas deB. Katzenbach, Robert F. Mullen, David S. Tatel, Thomas J. Henderson, and Richard
JUSTICE WHITE delivered the opinion of the Court.
The question presented in this case is whether a claim under the Age Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602, as amended,
I
Respondent Interstate/Johnson Lane Corporation (Interstate) hired petitioner Robert Gilmer as a Manager of Financial Services in May 1981. As required by his employment, Gilmer registered as a securities representative with several stock exchanges, including the New York Stock Exchange (NYSE). See App. 15-18. His registration application, entitled “Uniform Application for Securities Industry Registration or Transfer,” provided, among other things, that Gilmer “agree[d] to arbitrate any dispute, claim or controversy” arising between him and Interstate “that is required to be arbitrated under the rules, constitutions or by-laws of the organizations with which I register.” Id., at 18. Of relevance to this case, NYSE Rule 347 provides for arbitration of “[a]ny controversy between a registered representative and any member or member organization arising out of the employment or termination of employment of such registered representative.” App. to Brief for Respondent 1.
Interstate terminated Gilmer‘s employment in 1987, at which time Gilmer was 62 years of age. After first filing an age discrimination charge with the Equal Employment Opportunity Commission (EEOC), Gilmer subsequently brought suit in the United States District Court for the Western District of North Carolina, alleging that Interstate had discharged him because of his age, in violation of the
II
The FAA was originally enacted in 1925, 43 Stat. 883, and then reenacted and codified in 1947 as Title 9 of the United States Code. Its purpose was to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements upon the same footing as other contracts. Dean Witter Reynolds Inc. v. Byrd, 470 U. S. 213, 219-220, and n. 6 (1985); Scherk v. Alberto-Culver Co., 417 U. S. 506, 510, n. 4 (1974). Its primary substantive provision states that “[a] written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of
Although all statutory claims may not be appropriate for arbitration, “[h]aving made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.” Ibid. In this regard, we note that the burden is on Gilmer to show that Congress intended to preclude a waiver of a judicial forum for ADEA claims. See McMahon, 482 U. S., at 227. If such an intention exists, it will be discoverable in the text of the ADEA, its legislative history, or an “inherent conflict” between arbitration and the ADEA‘s underlying purposes. See ibid. Throughout such an inquiry, it should be kept in mind that “questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration.” Moses H. Cone, supra, at 24.
III
Gilmer concedes that nothing in the text of the ADEA or its legislative history explicitly precludes arbitration. He
A
Congress enacted the ADEA in 1967 “to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment.”
As Gilmer contends, the ADEA is designed not only to address individual grievances, but also to further important social policies. See, e. g., EEOC v. Wyoming, 460 U. S. 226, 231 (1983). We do not perceive any inherent inconsistency between those policies, however, and enforcing agreements to arbitrate age discrimination claims. It is true that arbitration focuses on specific disputes between the parties in-
We also are unpersuaded by the argument that arbitration will undermine the role of the EEOC in enforcing the ADEA. An individual ADEA claimant subject to an arbitration agreement will still be free to file a charge with the EEOC, even though the claimant is not able to institute a private judicial action. Indeed, Gilmer filed a charge with the EEOC in this case. In any event, the EEOC‘s role in combating age discrimination is not dependent on the filing of a charge; the agency may receive information concerning alleged violations of the ADEA “from any source,” and it has independent authority to investigate age discrimination. See 29 CFR §§ 1626.4, 1626.13 (1990). Moreover, nothing in the ADEA indicates that Congress intended that the EEOC be involved in all employment disputes. Such disputes can be settled, for example, without any EEOC involvement. See, e. g., Coventry v. United States Steel Corp., 856 F. 2d 514, 522 (CA3 1988); Moore v. McGraw Edison Co., 804 F. 2d 1026, 1033 (CA8 1986); Runyan v. National Cash Register Corp., 787 F. 2d 1039, 1045 (CA6), cert. denied, 479 U. S. 850 (1986).3 Finally, the mere involvement of an administrative
Gilmer also argues that compulsory arbitration is improper because it deprives claimants of the judicial forum provided for by the ADEA. Congress, however, did not explicitly preclude arbitration or other nonjudicial resolution of claims, even in its recent amendments to the ADEA. “[I]f Congress intended the substantive protection afforded [by the ADEA] to include protection against waiver of the right to a judicial forum, that intention will be deducible from text or legislative history.” Mitsubishi, 473 U. S., at 628. Moreover, Gilmer‘s argument ignores the ADEA‘s flexible approach to resolution of claims. The EEOC, for example, is directed to pursue “informal methods of conciliation, conference, and persuasion,”
In arguing that arbitration is inconsistent with the ADEA, Gilmer also raises a host of challenges to the adequacy of arbitration procedures. Initially, we note that in our recent arbitration cases we have already rejected most of these arguments as insufficient to preclude arbitration of statutory claims. Such generalized attacks on arbitration “res[t] on suspicion of arbitration as a method of weakening the protections afforded in the substantive law to would-be complainants,” and as such, they are “far out of step with our current strong endorsement of the federal statutes favoring this method of resolving disputes.” Rodriguez de Quijas, supra, at 481. Consequently, we address these arguments only briefly.
Gilmer first speculates that arbitration panels will be biased. However, “[w]e decline to indulge the presumption that the parties and arbitral body conducting a proceeding will be unable or unwilling to retain competent, conscientious and impartial arbitrators.” Mitsubishi, supra, at 634. In any event, we note that the NYSE arbitration rules, which are applicable to the dispute in this case, provide protections against biased panels. The rules require, for example, that the parties be informed of the employment histories of the arbitrators, and that they be allowed to make further inquiries into the arbitrators’ backgrounds. See 2 CCH New York Stock Exchange Guide ¶ 2608, p. 4314 (Rule 608) (1991) (hereinafter 2 N. Y. S. E. Guide). In addition, each party is allowed one peremptory challenge and unlimited challenges for cause. Id., ¶ 2609, at 4315 (Rule 609). Moreover, the arbitrators are required to disclose “any circumstances which might preclude [them] from rendering an objective and impartial determination.” Id., ¶ 2610, at 4315 (Rule 610). The FAA also protects against bias, by providing that courts may overturn arbitration decisions “[w]here there was evident partiality or corruption in the arbitrators.”
Gilmer also complains that the discovery allowed in arbitration is more limited than in the federal courts, which he contends will make it difficult to prove discrimination. It is unlikely, however, that age discrimination claims require more extensive discovery than other claims that we have found to be arbitrable, such as RICO and antitrust claims. Moreover, there has been no showing in this case that the NYSE discovery provisions, which allow for document production, information requests, depositions, and subpoenas, see 2 N. Y. S. E. Guide ¶ 2619, pp. 4318-4320 (Rule 619); Securities and Exchange Commission Order Approving Proposed Rule Changes by New York Stock Exchange, Inc., Nat. Assn. of Securities Dealers, Inc., and the American Stock Exchange, Inc., Relating to the Arbitration Process and the Use of Predispute Arbitration Clauses, 54 Fed. Reg. 21144, 21149-21151 (1989), will prove insufficient to allow ADEA claimants such as Gilmer a fair opportunity to present their claims. Although those procedures might not be as extensive as in the federal courts, by agreeing to arbitrate, a party “trades the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.” Mitsubishi, supra, at 628. Indeed, an important counterweight to the reduced discovery in NYSE arbitration is that arbitrators are not bound by the rules of evidence. See 2 N. Y. S. E. Guide ¶ 2620, p. 4320 (Rule 620).
A further alleged deficiency of arbitration is that arbitrators often will not issue written opinions, resulting, Gilmer contends, in a lack of public knowledge of employers’ discriminatory policies, an inability to obtain effective appellate review, and a stifling of the development of the law. The NYSE rules, however, do require that all arbitration awards be in writing, and that the awards contain the names of the parties, a summary of the issues in controversy, and a
It is also argued that arbitration procedures cannot adequately further the purposes of the ADEA because they do not provide for broad equitable relief and class actions. As the court below noted, however, arbitrators do have the power to fashion equitable relief. 895 F. 2d, at 199-200. Indeed, the NYSE rules applicable here do not restrict the types of relief an arbitrator may award, but merely refer to “damages and/or other relief.” 2 N. Y. S. E. Guide ¶ 2627(e), p. 4321 (Rule 627(e)). The NYSE rules also provide for collective proceedings. Id., ¶ 2612(d), at 4317 (Rule 612(d)). But “even if the arbitration could not go forward as a class action or class relief could not be granted by the arbitrator, the fact that the [ADEA] provides for the possibility of bringing a collective action does not mean that individual attempts at conciliation were intended to be barred.” Nicholson v. CPC Int‘l Inc., 877 F. 2d 221, 241 (CA3 1989) (Becker, J., dissenting). Finally, it should be remembered that arbitration agreements will not preclude the EEOC from bringing actions seeking class-wide and equitable relief.
C
An additional reason advanced by Gilmer for refusing to enforce arbitration agreements relating to ADEA claims is
IV
In addition to the arguments discussed above, Gilmer vigorously asserts that our decision in Alexander v. Gardner-Denver Co., 415 U. S. 36 (1974), and its progeny—Barrentine v. Arkansas-Best Freight System, Inc., 450 U. S. 728 (1981), and McDonald v. West Branch, 466 U. S. 284 (1984)—preclude arbitration of employment discrimination claims. Gilmer‘s reliance on these cases, however, is misplaced.
In Gardner-Denver, the issue was whether a discharged employee whose grievance had been arbitrated pursuant to
“In submitting his grievance to arbitration, an employee seeks to vindicate his contractual right under a collective-bargaining agreement. By contrast, in filing a lawsuit under Title VII, an employee asserts independent statutory rights accorded by Congress. The distinctly separate nature of these contractual and statutory rights is not vitiated merely because both were violated as a result of the same factual occurrence.” 415 U. S., at 49-50.
We also noted that a labor arbitrator has authority only to resolve questions of contractual rights. Id., at 53-54. The arbitrator‘s “task is to effectuate the intent of the parties” and he or she does not have the “general authority to invoke public laws that conflict with the bargain between the parties.” Id., at 53. By contrast, “in instituting an action under Title VII, the employee is not seeking review of the arbitrator‘s decision. Rather, he is asserting a statutory right independent of the arbitration process.” Id., at 54. We further expressed concern that in collective-bargaining arbitration “the interests of the individual employee may be subordinated to the collective interests of all employees in the bargaining unit.” Id., at 58, n. 19.5
There are several important distinctions between the Gardner-Denver line of cases and the case before us. First, those cases did not involve the issue of the enforceability of an agreement to arbitrate statutory claims. Rather, they involved the quite different issue whether arbitration of contract-based claims precluded subsequent judicial resolution of statutory claims. Since the employees there had not agreed to arbitrate their statutory claims, and the labor arbitrators were not authorized to resolve such claims, the arbitration in those cases understandably was held not to preclude subsequent statutory actions. Second, because the arbitration in those cases occurred in the context of a collective-bargaining agreement, the claimants there were represented by their unions in the arbitration proceedings. An important concern therefore was the tension between collective representation and individual statutory rights, a concern not applicable to the present case. Finally, those cases were not decided under the FAA, which, as discussed above, reflects a “liberal federal policy favoring arbitration agreements.” Mitsubishi, 473 U. S., at 625. Therefore, those cases provide no basis for refusing to enforce Gilmer‘s agreement to arbitrate his ADEA claim.
V
We conclude that Gilmer has not met his burden of showing that Congress, in enacting the ADEA, intended to preclude arbitration of claims under that Act. Accordingly, the judgment of the Court of Appeals is
Affirmed.
Section 1 of the Federal Arbitration Act (FAA) states:
“[N]othing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.”
9 U. S. C. § 1 .
The Court today, in holding that the FAA compels enforcement of arbitration clauses even when claims of age discrimination are at issue, skirts the antecedent question whether the coverage of the Act even extends to arbitration clauses contained in employment contracts, regardless of the subject matter of the claim at issue. In my opinion, arbitration clauses contained in employment agreements are specifically exempt from coverage of the FAA, and for that reason respondent Interstate/Johnson Lane Corporation cannot, pursuant to the FAA, compel petitioner to submit his claims arising under the Age Discrimination in Employment Act of 1967 (ADEA),
I
Petitioner did not, as the majority correctly notes, ante, at 25, n. 2, raise the issue of the applicability of the FAA to employment contracts at any stage of the proceedings below. Nor did petitioner raise the coverage issue in his petition for writ of certiorari before this Court. It was amici who first raised the argument in their briefs in support of petitioner prior to oral argument of the case. See Brief for American Federation of Labor and Congress of Industrial Organizations as Amicus Curiae; Brief for American Association of Retired Persons as Amicus Curiae; Brief for Lawyers’ Committee for Civil Rights Under Law as Amicus Curiae 17-18.
Notwithstanding the apparent waiver of the issue below, I believe that the Court should reach the issue of the coverage of the FAA to employment disputes because resolution of the
Only this Term, the Court has on at least two occasions decided cases on grounds not argued in any of the courts below or in the petitions for certiorari. In Arcadia v. Ohio Power Co., 498 U. S. 73 (1990), we decided the case on an issue that not only was not raised below or in any of the papers in this Court, but that also was not raised at any point during oral argument before the Court. “In our view, however,” the decided question was “antecedent to these [issues presented] and ultimately dispositive of the present dispute.” Id., at
In my opinion the considerations in favor of reaching an issue not presented below or in the petition for certiorari are more compelling in this case than in the cited cases. Here the issue of the applicability of the FAA to employment contracts was adequately briefed and raised by the amici in support of petitioner. More important, however, is that respondent and its amici had full opportunity to brief and argue the same issue in opposition. See Brief for Respondent 42-50; Brief for Securities Industry Association, Inc., as Amicus Curiae 18-20; Brief for Equal Employment Advisory Council et al. as Amici Curiae 14-16. Moreover, the Court amply raised the issue with the parties at oral argument, at which both sides were on notice and fully prepared to argue the merits of the question. Finally, as in Arcadia, the issue whether the FAA even covers employment disputes is clearly “antecedent . . . and ultimately dispositive” of the question whether courts and respondent may rely on the FAA to compel petitioner to submit his ADEA claims to arbitration.
II
The Court, declining to reach the issue for the reason that petitioner never raised it below, nevertheless concludes that “it would be inappropriate to address the scope of the § 1 exclusion because the arbitration clause being enforced here is not contained in a contract of employment. . . . Rather, the arbitration clause at issue is in Gilmer‘s securities registration application, which is a contract with the securities exchanges, not with Interstate.” Ante, at 25, n. 2. In my
There is little dispute that the primary concern animating the FAA was the perceived need by the business community to overturn the common-law rule that denied specific enforcement of agreements to arbitrate in contracts between business entities. The Act was drafted by a committee of the American Bar Association (ABA), acting upon instructions from the ABA to consider and report upon “the further extension of the principle of commercial arbitration.” Report of the Forty-third Annual Meeting of the ABA, 45 A. B. A. Rep. 75 (1920). At the Senate Judiciary Subcommittee hearings on the proposed bill, the chairman of the ABA committee responsible for drafting the bill assured the Senators that the bill “is not intended [to] be an act referring to labor disputes, at all. It is purely an act to give the merchants the right or the privilege of sitting down and agreeing with each other as to what their damages are, if they want to do it. Now that is all there is in this.” Hearing on S. 4213 and S. 4214 before a Subcommittee of the Senate Committee on the Judiciary, 67th Cong., 4th Sess., 9 (1923). At the same hearing, Senator Walsh stated:
“The trouble about the matter is that a great many of these contracts that are entered into are really not [voluntary] things at all. Take an insurance policy; there is a blank in it. You can take that or you can leave it. The agent has no power at all to decide it. Either you can make that contract or you can not make any contract. It is the same with a good many contracts of employment. A man says, ‘These are our terms. All right, take it or leave it.’ Well, there is nothing for the man to do except to sign it; and then he surrenders his right to have his case tried by the court, and has to have it tried before a tribunal in which he has no confidence at all.” Ibid.
My reading of the scope of the exclusion contained in § 1 is supported by early judicial interpretations of the FAA. As of 1956, three Courts of Appeals had held that the FAA‘s exclusion of “contracts of employment” referred not only to individual contracts of employment, but also to collective-bargaining agreements. See Lincoln Mills of Ala. v. Textile Workers Union of America, 230 F. 2d 81 (CA5 1956), rev‘d, 353 U. S. 448 (1957); United Electrical, Radio & Machine Workers of America v. Miller Metal Products, Inc., 215 F. 2d 221 (CA4 1954); Amalgamated Assn. of Street, Electric R. and Motor Coach Employees of America v. Pennsylvania Greyhound Lines, Inc., 192 F. 2d 310 (CA3 1951). Indeed, the application of the FAA‘s exclusionary clause to arbitration provisions in collective-bargaining agreements was one of the issues raised in the petition for certiorari and
“rejection, though not explicit, of the availability of the Federal Arbitration Act to enforce arbitration clauses in collective-bargaining agreements in the silent treatment given that Act by the Court‘s opinion. If an Act that authorizes the federal courts to enforce arbitration provisions in contracts generally, but specifically denies authority to decree that remedy for ‘contracts of employment,’ were available, the Court would hardly spin such power out of the empty darkness of § 301. I would make this rejection explicit, recognizing that when Congress passed legislation to enable arbitration agreements to be enforced by the federal courts, it saw fit to exclude this remedy with respect to labor contracts.” Textile Workers v. Lincoln Mills, 353 U. S., at 466.
III
Not only would I find that the FAA does not apply to employment-related disputes between employers and employees in general, but also I would hold that compulsory arbitration conflicts with the congressional purpose animating the ADEA, in particular. As this Court previously has noted, authorizing the courts to issue broad injunctive relief is the cornerstone to eliminating discrimination in society. Albemarle Paper Co. v. Moody, 422 U. S. 405, 415 (1975). The ADEA, like Title VII of the Civil Rights Act of 1964, au-
“Plainly, it would not comport with the congressional objectives behind a statute seeking to enforce civil rights protected by Title VII to allow the very forces that had practiced discrimination to contract away the right to enforce civil rights in the courts. For federal courts to defer to arbitral decisions reached by the same combination of forces that had long perpetuated invidious discrimination would have made the foxes guardians of the chickens.” Barrentine v. Arkansas-Best Freight System, Inc., 450 U. S. 728, 750 (1981) (dissenting opinion).
In my opinion the same concerns expressed by Chief Justice Burger with regard to compulsory arbitration of Title VII claims may be said of claims arising under the ADEA. The Court‘s holding today clearly eviscerates the important role played by an independent judiciary in eradicating employment discrimination.
IV
When the FAA was passed in 1925, I doubt that any legislator who voted for it expected it to apply to statutory claims, to form contracts between parties of unequal bargaining power, or to the arbitration of disputes arising out of the employment relationship. In recent years, however, the Court
¹ See Perry v. Thomas, 482 U. S. 483, 493 (1987) (STEVENS, J., dissenting); id., at 494 (O‘CONNOR, J., dissenting); Southland Corp. v. Keating, 465 U. S. 1, 36 (1984) (O‘CONNOR, J., dissenting) (“[T]oday‘s exercise in judicial revisionism goes too far“).
² See Shearson/American Express Inc. v. McMahon, 482 U. S. 220, 252-253 (1987) (BLACKMUN, J., concurring in part and dissenting in part); id., at 268 (STEVENS, J., concurring in part and dissenting in part); Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U. S. 477, 486 (1989) (STEVENS, J., dissenting).