James J. NICHOLSON v. CPC INTERNATIONAL INC., a corporation, and James R. Eiszner, Appellants.
No. 88-5588.
United States Court of Appeals, Third Circuit.
Argued Dec. 8, 1988. Decided June 2, 1989. As Amended June 7, 1989.
Rehearing and Rehearing In Banc Denied July 10, 1989.
877 F.2d 221
B. Proceedings Before The Magistrate
We turn next to the issue of whether the proceedings below properly dismissed Favors‘s cause of action. On appeal, Favors argues that the procedural posture of the case was the parties’ motions for summary judgment. He thus asserts that there were disputed issues of material fact concerning the use of excessive force against him by the correctional officers and his due process claims. In short, Favors argues that the district court erred in resolving disputed issues of fact and in making critical credibility determinations. Appellees contend that the case was properly dismissed at the end of the hearing before the Magistrate upon appellees’ motion to dismiss.
We cannot adopt either of these interpretations of the procedural posture upon which the case was decided. The issue, instead, appears to be the question of the propriety of the magistrate‘s actions and the scope of his statutory authority. Bearing in mind that these seemingly important issues were neither effectively raised nor briefed by the parties, we decline to rule on them in this case, but simply affirm the district court‘s judgment of dismissal.
Judgment affirmed.
Carmine A. Iannaccone (Argued), John M. Simon, Hannoch Weisman, P.C., Roseland, N.J., Samuel Estreicher, Cahill Gordon & Reindel on the brief, New York City, for appellants.
Walter L. Leib, Gary E. Roth (Argued), Richard M. Cohen, Leib, Kraus, Grispin & Roth, P.C., Scotch Plains, N.J., for appellee.
Charles A. Shanor, Gen. Counsel, Gwendolyn Young Reams, Associate Gen. Coun-sel, Lorraine C. Davis, Asst. Gen. Counsel, Gale Barron Black (Argued), E.E.O.C.,
Before SLOVITER and BECKER, Circuit Judges, and FULLAM, District Judge *.
OPINION OF THE COURT
SLOVITER, Circuit Judge.
The district court certified for interlocutory appeal under
I.
The plaintiff in this case, James J. Nicholson, was hired by defendant CPC International, Inc. (CPC) as an attorney in 1957. He rose steadily through the corporate ranks and was appointed Vice-President for Corporate Financial Services in 1981. In January 1986, apparently in anticipation of a possible takeover move, Nicholson and the approximately thirty other corporate officers of CPC in domestic locations were presented with an executive employment agreement, which Nicholson signed. The agreement defined, inter alia, compensation, benefits, job title, and termination pro-
* Hon. John P. Fullam, Chief Judge, United States District Court for the Eastern District of Penn-
cedures and benefits,1 and contained an arbitration clause providing that:
Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators in New York City in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators’ award in any court having jurisdiction. The expense of such arbitration shall be borne by the Company.
App. at 107.
Approximately one year after signing this agreement, Nicholson was informed that his position was to be eliminated in a corporate restructuring. Nicholson filed a timely age discrimination charge with the EEOC which was administratively terminated at his request so that he could file suit. He sued CPC and its President in New Jersey Superior Court, raising claims under the ADEA, state antidiscrimination law, and common law breach of contract theories. CPC removed the case to federal court and moved for an order compelling arbitration of all of Nicholson‘s claims pursuant to the clause in the employment agreement.
On April 18, 1988, the district court, per Judge H. Lee Sarokin, denied CPC‘s motion for an order to compel arbitration of the ADEA claim, but granted the motion with respect to all claims arising under state law.2 Judge Sarokin had previously held in Steck v. Smith Barney, Harris Upham & Co., 661 F.Supp. 543 (D.N.J.1987), that the text and legislative history of the ADEA demonstrated that Congress intended that ADEA claims be nonarbitrable. In denying CPC‘s motion for arbitration, Judge Sarokin stated that the Supreme Court‘s opinion in McMahon, 107 S.Ct. at 2332, did not alter the analysis he had used in Steck.
Following the district court‘s ruling, CPC requested the court to certify for interlocutory appeal under
II.
In several recent cases, the Supreme Court discarded its earlier reluctance to order arbitration of statutory claims. In Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987), the Court stated that the Federal Arbitration Act (FAA),
Significantly, the Court in Mitsubishi noted “[t]hat is not to say that all controversies implicating statutory rights are suitable for arbitration.” 473 U.S. at 627, 105 S.Ct. at 3354; see also Gavalik v. Continental Can Co., 812 F.2d 834, 850 (3d Cir.), cert. denied, 484 U.S. 979, 108 S.Ct. 495, 98 L.Ed.2d 492 (1987) (Congress did not intend that plaintiff raising discrimination claim under ERISA be required to exhaust arbitral remedies). Nothing in Mitsubishi or McMahon suggests that the Court was overruling its prior holdings that arbitration agreements do not preclude access to a judicial forum for resolution of claims arising under the Fair Labor Standards Act (FLSA), see Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981); under
We proceed to examine the statutory scheme embodied in the ADEA to ascertain whether Congress intended “to preclude a waiver of judicial remedies for the statutory rights at issue,” a determination which must be made ” ‘from the text or legislative history’ ” of the statute or from “an inherent conflict between arbitration and the statute‘s underlying purposes.” McMahon, 107 S.Ct. at 2337 (quoting Mitsubishi, 473 U.S. at 628, 105 S.Ct. at 3354).
A. The Text of the ADEA
No language in the ADEA speaks directly to the effect of an arbitration agreement.3 On the other hand, the statutory scheme reflects Congress’ careful structuring of the procedure to be followed in enforcing the rights granted by the Act.
The ADEA vests primary enforcement responsibility with the Equal Employment Opportunity Commission (EEOC),
Although enforcement of the ADEA has shifted from the Secretary of Labor to the EEOC, see Reorg. Plan No. 1 of 1978, 43 Fed.Reg. 19,807, reprinted in 5 U.S.C. App. at 1155 (1982), and in 92 Stat. 3781, the original requirement that the ADEA be enforced pursuant to the enforcement provisions of the FLSA has been fully retained and continues to govern enforcement proceedings under the Act. Our consideration of the effect of the statutory scheme on the arbitrability of ADEA claims is, therefore, informed by the decision of the Supreme Court in Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981), holding that the provisions of the FLSA set forth in
CPC argues that Barrentine is distinguishable in spite of its consideration of the identical remedy provisions as those involved here because claims arising under the ADEA are different in nature from those under the FLSA and because an individual rather than a collective arbitration agreement is involved. We agree that further inquiry into the arbitrability of ADEA claims is warranted, although we must give due regard to the authority provided by Barrentine.
B. The Legislative History of the ADEA
The Court has instructed us to turn to the legislative history as well as the textual provisions of the statute at issue to discern whether there is evidence of Congress’ intent to establish an enforcement scheme that would not be preempted by arbitration. As in the case of the statutory language, we find no direct reference to arbitration and we must therefore draw inferences from Congress’ actions.
A precursor proposal to the ADEA would have added discrimination on the basis of age to the forms of discrimination prohibited by Title VII. After the defeat of this proposal, see 110 Cong.Rec. 2599, 13,492 (1964), reprinted in EEOC, Legislative History of the Age Discrimination in Employment Act 8, 14 (1981) (hereinafter ADEA History), the final version of Title VII enacted into law merely directed the Secretary of Labor to investigate the ex-
Despite an unsuccessful attempt in 1966 to have the proposed statute prohibiting age discrimination enforceable under the FLSA through the Wage and Hour Division of the Department of Labor, Senator Javits again introduced this proposal in 1967. See 113 Cong.Rec. 2199 (1967), reprinted in ADEA History at 64. Senator Yarborough introduced a competing proposal, supported by the Administration, which contained an enforcement scheme modelled after that of the NLRA, and thus would have provided for resolution of claims of age discrimination through administrative proceedings, with hearings conducted by the Department of Labor and review of the Secretary‘s determinations through petition to the courts of appeals. See 113 Cong.Rec. 2795 (1967), reprinted in ADEA History at 69.
The applicable House and Senate committees considered these alternative proposals and opted for the FLSA enforcement scheme proposed by Senator Javits. See H.R.Rep. No. 805, 90th Cong., 1st Sess. 5-6 (1967), reprinted in ADEA History at 78-79, U.S.Code Cong. & Admin.News 1967, p. 2213; Sen.Rep. No. 723, 90th Cong., 1st Sess. 5, 13-14 (1967), reprinted in ADEA History at 109, 117-18. The bills adopting the FLSA scheme which were reported out of these committees became the basis for the ADEA, passed by both houses and signed into law later that year. Thus, Congress made a deliberate policy choice in favor of enforcement of ADEA claims in court proceedings.
Significantly, Congress did not borrow the enforcement scheme of Title VII, which at that time granted aggrieved individuals, but not the EEOC, authority to bring suit against private employers. See The Civil Rights Act of 1964, Title VII, § 706, Pub.L. No. 88-352, 78 Stat. 259-62 (1964).4 Instead, Congress placed primary responsibility for eliminating age discrimination in employment in the hands of the Secretary of Labor (later the EEOC) and gave the Secretary the power to ensure compliance with the ADEA by filing suit, if necessary, on behalf of the aggrieved individual.
In 1978, Congress amended the ADEA to reinforce further the statute‘s focus on public agency enforcement through the courts, adding a provision to toll the statute of limitations for filing suit for up to one year pending completion of agency efforts to effect voluntary compliance. See
C. Inherent Incompatibility
Because the language of the statute and the legislative history, while suggestive, are not conclusive of congressional intent regarding arbitration of ADEA claims, we must examine whether the objectives of the ADEA are inherently incompatible with the displacement by arbitration of a judicial forum for claimants alleging age discrimination. See McMahon, 107 S.Ct. at 2337. Our examination of this factor leads us to conclude that the ADEA is one of the statutory schemes that present the “inherent conflict [with] arbitration” referred to by the Supreme Court in McMahon. Id.
We begin with Congress’ clear intent that compliance with the ADEA be overseen by a public agency. The EEOC‘s obligation to enforce the ADEA goes beyond its authority to investigate and redress a particular employee‘s complaint. Acting under its statutory powers set forth in, e.g.,
As the agency entrusted by Congress with oversight of the age discrimination law, the EEOC has the obligation to report to Congress annually and to submit its recommendations for further legislation.
In cases dealing with Title VII, the Supreme Court has noted the importance of the charge requirement. See EEOC v. Shell Oil Co., 466 U.S. 54, 69, 104 S.Ct. 1621, 1631, 80 L.Ed.2d 41 (1984) (a charge places the EEOC on notice that someone believes a violation has been committed and helps to focus the EEOC investigation); General Telephone Co. v. EEOC, 446 U.S. 318, 326, 100 S.Ct. 1698, 1704, 64 L.Ed.2d 319 (1980) (“the EEOC is not merely a proxy for the victims of discrimination . . . it acts also to vindicate the public interest in preventing employment discrimination.“). The charge serves equally important roles under the ADEA.
Because the filing of a charge is a prerequisite to a court action under the ADEA, see
The EEOC‘s role in conciliation and mediation after filing of the charge is another significant indicator of Congress’ intent as to the procedure it preferred to be followed for age discrimination claims. CPC argues that because the ADEA encourages resolution of age discrimination disputes through “informal methods of conciliation, conference, and persuasion,”
Moreover, no statutory provision gives the EEOC the power to affect the arbitration procedure. In this respect, it is unlike the Securities Exchange Commission, which the Supreme Court noted in McMahon has been given “expansive power to ensure the adequacy of the arbitration procedures employed” by the self-regulatory organizations [SROs], such as the national securities exchanges and the registered securities associations. See 107 S.Ct. at 2341.6
Another principal indicator of the incompatibility of the ADEA with arbitration stems from the inadequacy of arbitration in many cases to enforce the statute effectively. We will assume, as CPC argues, that an arbitrator may award reinstatement of an employee terminated because of age discrimination. Nonetheless, arbitral boards do not have the power to award broad equitable relief which courts have under
Congress’ intent that courts hearing an ADEA action be invested with power to
We do not base our conclusion on any disparagement of the competence or sophistication of modern arbitrators.8 The keystone in determining incompatibility between arbitration and a judicial remedy is the intent of Congress with respect to the particular statute. The holdings of the Court‘s prior opinions in Gardner-Denver and Barrentine were based on the Court‘s examination of the provisions, objectives, and enforcement schemes of the statutes involved, and thus we do not deem it dispositive that those portions of those opinions that reflect the now rejected mistrust of arbitration, see Gardner-Denver, 415 U.S. at 56-59, 94 S.Ct. at 1023-25, and Barrentine, 450 U.S. at 743-45, 101 S.Ct. at 1146-47, may not survive the Court‘s more recent enthusiastic pronouncements on the virtues of commercial arbitration in Mitsubishi and McMahon.
CPC seeks to distinguish Gardner-Denver, Barrentine and McDonald because in those cases arbitration was required by a collective bargaining agreement. CPC argues that in Gardner-Denver, the Court was unwilling to leave employees’ protec-
tion of the right against race discrimination to labor unions who had their own history of such discrimination. See also Barrentine, 450 U.S. at 742, 101 S.Ct. at 1445 (Court noted that labor unions do not always pursue goals compatible with those of individual union members). However, it does not follow, as CPC argues, that the arbitration requirement in individually negotiated employment contracts is therefore comparable to that contained in a contract entered into in a commercial context. The disparity in bargaining power between an employer and an individual employee is well known. Older employees who have invested many years of their career with a particular employer may lack any realistic option to refuse to sign a standard form arbitration agreement presented to them by their employers. New employees who need the job may be in a similar position. Although this may not constitute the type of duress which renders a contract voidable, we cannot close our eyes to the realities of the workplace.
Nor are we persuaded by CPC‘s argument that “the majority of ADEA claimants, like Mr. Nicholson, are upper-middle-class, professional/managerial employees,” Brief of Defendants-Appellants at 40, who do not need to be protected from the consequences of their well-informed, voluntary decisions to agree to employment contracts containing arbitration clauses. While it is unlikely that Nicholson, an attorney and sophisticated and experienced executive, was unaware of the nature of the agreement he entered into with CPC, we would be ill-advised to fashion a general rule of law on the basis of the characteristics of a particular plaintiff.9
Where Congress intended that certain executive-level employees should not be subject to the requirements of the ADEA, it
Our analysis of the factors which Mitsubishi and McMahon instruct us to consider, particularly the inherent incompatibility of the statute with arbitral enforcement and remedies, leads us to conclude that Congress did not intend that a contractual arbitration provision should preclude a claimant from access to a judicial forum. In so holding, we join several of our sister circuits which have reached similar conclusions with respect to the ADEA. See, e.g., Criswell v. Western Airlines, Inc., 709 F.2d 544, 547-49 (9th Cir.1983), aff‘d on other grounds, 472 U.S. 400, 105 S.Ct. 2743, 86 L.Ed.2d 321 (1985); Cooper v. Asplundh Tree Expert Co., 836 F.2d 1544, 1553 (10th Cir.1988); cf. Swenson v. Management Recruiters International, Inc., 858 F.2d 1304, 1305-07 (8th Cir.1988) (Title VII claims not subject to arbitration under individual employment contract).
The issue before us, an employee‘s prospective waiver of a judicial forum for ADEA claims, is not comparable to the enforceability of an individual‘s release of a potential ADEA claim for alleged acts of discrimination that already transpired. See, e.g., Coventry v. United States Steel Corp., 856 F.2d 514 (3d Cir.1988); EEOC v. Cosmair, Inc., 821 F.2d 1085, 1091 (5th Cir.1987); Runyan v. National Cash Register Corp., 787 F.2d 1039, 1045 (6th Cir.) (in banc), cert. denied, 479 U.S. 850, 107 S.Ct. 178, 93 L.Ed.2d 114 (1986).10 The prospective waiver at issue here involves relinquishment of the employee‘s rights with respect to potential future disputes, which the employee may not have fully anticipated. Therefore, the cases approving retroactive waivers of ADEA claims are not persuasive on the issue of whether prospective waiver is permissible. The EEOC‘s proposed rule, see note 10 supra, would have allowed releases of claims without the Commission‘s supervision or approval, provided that such releases “do not provide for the release of prospective rights or claims.”
In conclusion, our examination of the text, legislative history, and objectives of the ADEA have led us to conclude that the right to a judicial forum under the ADEA is not subject to displacement by a prospective agreement to arbitrate disputes contained in individual employment contracts.
We find the dissent, albeit lengthy, unpersuasive and in response merely reiterate the following:
No Supreme Court case requires us to close the doors of the federal courts in an ADEA action merely because the employer has included an arbitration clause in an employment contract. The dissent relies on cases arising in a business context. The closest analogous Supreme Court cases dealing with employees’ statutory rights point in the other direction. - All of the other court of appeals cases to consider whether an agreement to arbitrate precludes the employee from a judicial forum for resolution of ADEA claims reach the same result as the majority does here.
- The dissent overlooks the fact that the EEOC, the agency entrusted with oversight of the ADEA, has filed an amicus curiae brief which strongly supports Nicholson‘s position and requests this court to hold “that arbitration cannot displace judicial enforcement as the exclusive means for resolving claims under the ADEA.” EEOC Amicus Brief at 17.
- If this court holds Nicholson‘s arbitration agreement effectively precludes him from bringing his ADEA claim in a judicial forum, we may assume that many employers will prepare similar employment contracts, thereby shifting enforcement of the ADEA away from the courts to arbitration. If this is a result desired by Congress, we should wait for Congress to explicitly so state.
III.
Nicholson requests that we extend our review to that portion of the district court‘s interlocutory order holding that Nicholson‘s state law claims were arbitrable, even though this portion of the order was not certified for review by the district court. Nicholson argues that it is nonetheless properly before us because we stated in Merican, Inc. v. Caterpillar Tractor Co., 713 F.2d 958, 962 n. 7 (3d Cir.1983), cert. denied, 465 U.S. 1024, 104 S.Ct. 1278, 79 L.Ed.2d 682 (1984), that on a section 1292(b) appeal, “we consider all grounds which might require a reversal of the order appealed from.”
We recently rejected a similar argument. See Sperling v. Hoffman-La Roche Inc., 862 F.2d at 443-44. We held there that because the issues involved in the certified and noncertified portions of the order were not closely related, concurrent review was not appropriate. Id. at 443-44. In this case as well, the analysis required to consider the arbitrability of the state law claims presented by Nicholson is different from that for his claim arising under the ADEA.
Furthermore, Congress recently enacted a statute which provides that the courts of appeals have jurisdiction over interlocutory orders declining to order arbitration but not over those compelling arbitration. Judicial Improvements and Access to Justice Act, P.L. No. 100-702, § 1019, 102 Stat. 4670-71 (1988), to be codified at
IV.
For the reasons set forth above, we will affirm the district court‘s order declining to compel arbitration of Nicholson‘s claim under the ADEA.
BECKER, Circuit Judge, dissenting.
I join in Parts I and III of the majority opinion. However, I respectfully dissent from Part II because I believe that arbitration agreements covering claims arising under the Age Discrimination in Employment Act (“ADEA“),
I agree with the majority that there is no language in the text of the ADEA relevant to the question whether an employee may prospectively waive a judicial forum. Maj.Op. at 224-25. I also agree with the majority‘s assumption that the Supreme Court‘s directive to look to the “text” of the statute encompasses examination of both the language and the structure of the Act for the purpose of determining whether Congress intended to preclude waivers of the judicial forum. Id. at 224 n. 3. Additionally, I agree with the majority‘s conclusion that after examination of the text and structure of the ADEA, “further inquiry into the arbitrability of ADEA claims is warranted.” Id. at 225.
I take issue, however, with the majority‘s conclusion that Barrentine v. Arkansas-Best Freight System, Inc., 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981), which held that an individual‘s Fair Labor Standards Act (“FLSA“),
ing brought pursuant to the terms of a collective-bargaining agreement“). However, the majority does not squarely address CPC‘s argument that Barrentine is distinguishable from this case. I believe it is important to elaborate on why these cases do not provide meaningful guidance here.
In Barrentine, the Supreme Court was faced with the task of reconciling the duty to arbitrate grievances under a collective bargaining agreement pursuant to section 301 of the Labor-Management Relations Act (“LMRA“),
Thus, the Court in Barrentine faced a very different task than the one before us today. While section 301 of the LMRA and the realities of the collective bargaining process shaped the result in that case, section 301 only applies to collective bargaining agreements and therefore Alexander, Barrentine, and McDonald are not binding on our result today. See Coulson, Fair Treatment: Voluntary Arbitration of Employee Claims, 33 Arb.J., Sept. 1978, at 23, 25 (“The often-cited holding in Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974), would not be applicable [to arbitration outside the collective bargaining context], except as dictum.“). Rather, the Federal Arbitration
The Arbitration Act, standing alone, . . . mandates enforcement of agreements to arbitrate statutory claims. Like any statutory directive, the Arbitration Act‘s mandate may be overridden by a contrary congressional command. The burden is on the party opposing arbitration, however, to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue. If Congress did intend to limit or prohibit waiver of a judicial forum for a particular claim, such an intent “will be deducible from [the statute‘s] text or legislative history,” or from an inherent conflict between arbitration and the statute‘s underlying purposes.
Shearson, 107 S.Ct. at 2337 (citations omitted). See also de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989).3
Neither the majority nor the dissent in Shearson at any time cited to either Alexander, Barrentine, or McDonald. The majority suggests that the Court‘s silence indicates that Shearson did not overrule these cases. Maj.Op. at 224. In my view, the Court‘s silence bespeaks the fact that these cases are readily distinguishable from the inquiry into the binding effect pursuant to the FAA of an individually negotiated arbitration agreement. Barrentine, I respectfully submit, cannot adequately guide us in our inquiry into whether the ADEA contains a “contrary congressional command” to enforcement of the FAA.
The majority looks to Barrentine because it explicated what procedures are required under the FLSA in the context of collective bargaining, and the ADEA was derived in part from the FLSA. Even though portions of the FLSA provide some of the ADEA‘s complicated enforcement mechanisms, this Court has rejected the notion that we should in every instance interpret the “ADEA consistently with the FLSA in areas where the ADEA is not explicit.” Coventry v. United States Steel Corp., 856 F.2d 514, 521 n. 8 (3d Cir.1988) (refusing to follow FLSA precedent completely precluding private waivers of ADEA substantive rights). Our ultimate duty therefore under Shearson and Coventry is to analyze the text, history and the purposes of the ADEA. As the following discussion illustrates, the application of the FLSA in Barrentine is not particularly helpful to this inquiry.
The rationales underlying Barrentine are either distinguishable from this case or are brought into question by the Court in Shearson. In McDonald, the Court laid out four justifications for its decision in Barrentine and Alexander: (1) “[a]n arbitrator may not . . . have the expertise required to resolve the complex legal questions that arise in § 1983 actions“; (2) “arbitral factfinding is generally not equivalent to judicial factfinding [because] . . . ‘the record of the arbitration proceedings is not as complete . . . and rights and procedures common to civil trials . . . are often severely limited or unavailable’ “; (3) the arbitrator‘s job is to enforce the agreement and, even if the public law is in conflict with the bargain, the arbitrator nonetheless must enforce the contract; and (4) in the case of arbitration pursuant to a collective
The majority concedes that the first two justifications are no longer viable. See Maj.Op. at 229; they were expressly rejected by the Court in Shearson, as examples of “a general suspicion of the desirability of arbitration and the competence of arbitral tribunals” and are “difficult to reconcile . . . with [the] Court‘s subsequent decisions involving the Arbitration Act.” Shearson, 107 S.Ct. at 2340. The Court found in Shearson and Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), that “arbitral tribunals are readily capable of handling the factual and legal complexities of antitrust [and securities] claims, notwithstanding the absence of judicial instruction and supervision.” Id.; Mitsubishi, 473 U.S. at 633-34, 105 S.Ct. at 3357. I do not believe that an ADEA dispute presents anymore complexity in terms of facts or law than an antitrust dispute. The adjudications of both may entail a welter of complex statistical and theoretical analyses. Often, however, the ADEA dispute will be simpler.
The Court in Shearson also rejected the notion previously asserted in Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953), that arbitration should not go forward on a statutory claim because there may not be ” ‘a complete record of [the] proceedings’ ” Shearson, 107 S.Ct. at 2340 (quoting Wilko, 346 U.S. at 436, 74 S.Ct. at 187), or because the usual civil trial procedures are not completely available. “[T]he streamlined procedures of arbitration do not entail any consequential restriction on substantive rights.”4 107 S.Ct. at 2340; see also Mitsubishi, 473 U.S. at 628, 105 S.Ct. at 3354. As the Supreme Court recently stated in de Quijas that “[t]o the extent that [a court‘s decision not to enforce an arbitration agreement] rest[s] on suspicion of arbitration as a method of weakening the protections afforded in the substantive law to would-be complainants, it has fallen far out of step with our current strong endorsement of the federal statutes favoring this method of resolving disputes.” 109 S.Ct. at 1920.
The third justification, that the arbitrator must enforce the bargain over the public law is also at odds with the Court‘s later arbitration of statutory rights cases. As the Court in Shearson stated, “there is no reason to assume at the outset that arbitrators will not follow the law” 107 S.Ct. at 2340; see also Mitsubishi, 473 U.S. at 636-37 & n. 19, 105 S.Ct. at 3358-59, particularly in light of the availability of judicial review.5 Thus, “[b]y agreeing to arbi-
The fourth justification, that arbitration pursuant to a collective bargaining agreement does not sufficiently protect the rights of the individual, in my view, retains its validity post-Shearson, but is distinguishable from this case. In Barrentine, as well as Alexander and McDonald, the Court held that an individual‘s right to pursue a statutory right in federal court was not cut off by arbitration of the substance of the claim pursuant to a collective bargaining agreement. As the Court in McDonald pointed out, the union‘s interests are not identical to the individual‘s, 466 U.S. at 291, 104 S.Ct. at 1803; see also Barrentine, 450 U.S. at 742, 101 S.Ct. at 1445 (the union might not “support the claim vigorously” and might sacrifice individual‘s interests for collective interests); Alexander, 415 U.S. at 58 n. 19, 94 S.Ct. at 1024 n. 19 (“interests of individual employee may be subordinated to the collective interests of the bargaining unit“), and therefore the employee may be deprived of any forum in which his claim can be vigorously asserted if he is foreclosed from going to court following the union‘s arbitration of his claim.
In short, the procedural waiver was, at least in some cases, tantamount to a waiver
- Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made.
of substantive rights. As one commentator on the Alexander decision has stated:
The Court‘s willingness to depart from its long pattern of promotion of arbitration makes sense only when one considers the unstated reasons for its decision. Rather than the legislative history, the determinant appears to have been the Court‘s distrust, based on a lengthy record of failure to prosecute, of the sincerity of unions in dealing with racial grievances.... [T]he union-controlled arbitral process cannot be counted on to vindicate these rights against discrimination. Because arbitrators are generally selected by agreement between employer and union, and receive their compensation from them, institutional pressures are created which render suspect the efficacy of the arbitral process as a remedy for racial discrimination.
Citron, Deferral of Employee Rights to Arbitration: An Evolving Dichotomy by the Burger Court?, 27 Hastings L.J. 369, 384 (1975).
This fourth justification for the Barrentine line of cases is inapposite to this case. Nicholson was not involved in a collective bargaining agreement or represented by a union. Arbitration in this case is pursuant to an agreement entered into and signed by the party asserting his statutory rights. A union has not interposed a grievance procedure not individually suited to him and he need not rely on a third party such as a union for the vigorous representation of his rights.6
To summarize, Barrentine does not support a conclusion in this case that the mandate of the FAA has been overridden. First, the task in Barrentine, accommodation of individual rights in the context of the collective labor machinery, is very different from the task required under Shearson of determining whether the ADEA overrides the FAA‘s mandate to enforce private arbitration agreements. Second, the rationales underlying Barrentine are either undercut by Shearson or clearly distinguishable from this case. Barrentine‘s distrust of the arbitral process is rejected in Shearson; and Nicholson entered into his arbitration agreement individually, not through a union or collective bargaining agreement, and will individually pursue his claim.
II. LEGISLATIVE HISTORY; THE 1978 AMENDMENT OF THE ADEA
As the majority notes, there is no reference to arbitration in the legislative history of the ADEA. The majority asserts, however, that the 1978 amendment adding a provision for the tolling of the statute of limitations provides an indication that judicial resolution is preferred. The majority states that “Congress intended that extrajudicial methods of seeking resolution of age discrimination claims should not impede ultimate resolution of those claims in a judicial forum when extrajudicial methods proved inadequate.” Maj.Op. at 226. I do not draw the same conclusion from the legislative history of the amendment.
As the majority correctly points out, the amendment was intended to make certain that age discrimination claims reached an adjudicatory forum “in the event the conciliation process fails” or in the event “those who have violated the Act [delay and postpone] conciliation and thereby possibly
avoid liability.” Sen.Rep. No. 493, 95th cong., 1st Sess. 13 (1977), reprinted in ADEA History at 446. I do not believe that this language means that the Congress was concerned that extrajudicial methods must not “impede ultimate resolution of those claims in a judicial forum.” Maj.Op. at 226. Rather, the more logical inference in my view is that Congress passed the tolling amendment because it was concerned about the abuse of the extrajudicial methods which impeded any resolution of those claims. Thus, the amendment was passed in response to fears that employers were improperly stalling conciliation attempts beyond the statute of limitations. The tolling provision was added to ensure that claimants achieved resolution of their claims despite delays and not, as the majority suggests, because informal mechanisms were perceived as inherently inferior to judicial resolution. Therefore, the history supports no conclusion with respect to congressional preference for a judicial forum over a nonjudicial forum, and hence I disagree with the majority that the legislative history is “suggestive” of a congressional intent to preclude waiver of a judicial forum and to override the mandate of the FAA. See Maj.Op. at 227.
III. INHERENT INCOMPATIBILITY
The majority holds that the objectives of the ADEA are inherently incompatible with waiver of a judicial forum and enforcement of a private arbitration agreement. First, the majority asserts that the administrative scheme of the ADEA evidences congressional intent that the EEOC should not be precluded from involvement in a case by arbitration and that the EEOC cannot regulate arbitration in the way that the SEC can, making Shearson distinguishable.
Cooper v. Asplundh Tree Expert Co., 836 F.2d 1544, 1553 (10th Cir.1988), extended Alexander to the ADEA without addressing the distinction between arbitration pursuant to a collective bargaining agreement and arbitration pursuant to a individually negotiated agreement to arbitrate. Criswell v. Western Airlines, Inc., 709 F.2d 544 (9th Cir.1983), aff‘d on other grounds, 472 U.S. 400, 105 S.Ct. 2743, 86 L.Ed.2d 321 (1985), extended the Alexander, Barrentine, McDonald line of cases to claims involving the ADEA in the context of a collective bargaining agreement, hence it is inapposite.
I do not believe that the majority has accurately characterized the role of the EEOC, the power of an arbitrator to craft equitable relief, or our role in evaluating the agreement. I therefore do not believe the majority, or Nicholson, has persuasively shown that the ADEA is inherently incompatible with enforcement of private arbitration agreements pursuant to the FAA.
A. The Administrative Scheme of the ADEA
The majority describes the many activities in which the EEOC is engaged, e.g., investigation, inspection of records, taking measures to secure enforcement and concludes that there is a clear congressional “intent that compliance with the ADEA be overseen by a public agency.” Maj.Op. at 227. I find this logic unpersuasive. The mere fact of the EEOC‘s many activities does not compel the conclusion that Congress intended that the EEOC must be involved in every instance of age discrimination in this country. The SEC is heavily involved in the enforcement of the Securities Exchange Act of 1934, but the Supreme Court did not find that the SEC‘s elaborate administrative scheme in itself precluded enforcement of private arbitration agreements in Shearson.
Significantly, the EEOC itself has made a formal proposal that courts enforce voluntary nonprospective waivers of all substantive ADEA rights without EEOC su-
pervision, which would effectively circumvent EEOC involvement. See
In Coventry, we stated that:
the legislative history reflects the intent of the act‘s sponsors to achieve swift disposition of disputes and to avoid delays which, as one sponsor noted, “plague so many of our agencies, such as the EEOC and the NLRB. The EEOC, for example, is already years behind in disposing of its docket. Such delay is always unfortunate, but is particularly so in the case of older citizens to whom, by definition, relatively few productive years are left.” . . . Another sponsor of the legislation . . . noted that the Act should allow the employee to “resolve the dispute himself or work out a compromise with an employer.”
Id. (citations omitted). I conclude therefore that the ADEA does not support the assertion that the EEOC must be or was intended to be necessarily involved in all or most age discrimination disputes.
I also question what I understand to be the majority‘s presumption that enforcement of Nicholson‘s arbitration agreement effectively bypasses the EEOC‘s procedures. See Maj.Op at 227 (“Any procedure
Moreover, even though Nicholson withdrew his charge, the EEOC has the independent authority as the enforcement agency of the ADEA to continue its investigation and to pursue whatever remedies it deems necessary resulting from alleged age discrimination by CPC. See
not signed away the EEOC‘s power to bring suit under the ADEA (nor could he) and CPC makes no argument that he has (or can). Rather, he has only signed away his individual right to bring suit, a right which is secondary to the enforcement powers of the EEOC. See Rogers v. Exxon Research & Engineering Co., 550 F.2d 834, 841 (3d Cir.1977) (“The thrust of the ADEA‘s enforcement provisions is that private lawsuits are secondary to administrative remedies and suits brought by the [EEOC].“) cert. denied, 434 U.S. 1022, 98 S.Ct. 749, 54 L.Ed.2d 770 (1978). The arbitration agreement does not immunize CPC from EEOC‘s exercise of its enforcement obligations. Therefore, Nicholson‘s arbitration agreement does not undercut the EEOC‘s involvement with or oversight of ADEA claims.
The majority also states that “[em]ployees and lawyers for employees will have little incentive to file charges of age discrimination with the EEOC if they cannot thereafter proceed to a judicial forum but instead must arbitrate their claims....” Maj.Op. at 227. This is an empirical statement for which the majority does not provide the basis. However, to the extent that an employee believes that an arbitral forum is less favorable to ADEA claims than a judicial forum, it would seem to me that the employee would have an incentive to seek EEOC assistance in a case in which access to a judicial forum is foreclosed to him through enforcement of an arbitration agreement.8
With respect to the right to bring a charge to the EEOC even though a party has signed an arbitration agreement. I think it is notable that CPC has not argued
In sum, I believe that the majority has significantly overstated the consequences to EEOC involvement and enforcement arising from an individual‘s decision to agree to arbitration of ADEA claims. I would not conclude on this ground that enforcement of Nicholson‘s arbitration agreement runs counter the purposes of the ADEA.
Buttressing its conclusion that arbitration of ADEA claims is not appropriate, the majority asserts that the EEOC has no power to regulate arbitration proceedings like the power conferred on the SEC as discussed in Shearson. Maj.Op. at 228 & n. 6. First, I do not believe that the power of an administrative agency to regulate arbitration can be dispositive of whether the FAA will be enforced. There is no administrative agency issuing regulations with respect to or overseeing either RICO or antitrust arbitrations, but the Court has found that arbitration was acceptable in those cases. See Shearson, 107 S.Ct. at 2346; Mitsubishi, 473 U.S. at 632-37, 105 S.Ct. at 3356-59.
Second, I believe that the majority has misconstrued the Court‘s discussion of the power of the SEC in Shearson. In Shearson, the Court justified its severe undermining of the Wilko decision in part on the basis that the SEC “had only limited authority over the rules governing self-regulatory organizations (SROs)” at the time of the Wilko decision, but now has “expansive power to ensure the adequacy of the arbitration procedures employed by the SROs.” Shearson, 107 S.Ct. at 2341. The majority seems to assume that the Supreme Court implied that the Congress must explicitly grant the power to oversee arbitration for the administrative agency charged with carrying out the dictates of the Act to engage in rulemaking with respect to arbitration. That, however, is not my understanding of the discussion of the SEC‘s powers in Shearson.
I believe that the Court was emphasizing not that the SEC had a new-found power to regulate arbitration of securities claims, but rather that Congress had extended the SEC‘s power to govern self-regulatory organizations, which in turn oversaw arbitration. Thus, I do not think that we need conclude from Shearson that the Congress must explicitly delegate rulemaking authority with respect to arbitration. To the contrary, and despite the majority‘s protestations, see Maj.Op. at 228 n. 6, there is no language in the Securities Exchange Act sections cited by the Supreme Court, sections 78s(b)(2) and (c), expressly granting the power to regulate arbitration. Rather, the provisions provide broad ranging power for the SEC to oversee and review all of the rules implemented by self-regulatory organizations.
Similarly, the EEOC has been given broad ranging power with respect to implementation of rules and regulations administering the ADEA. See
One possible response to this contention is that even if the EEOC issued regulations with respect to arbitration of ADEA claims, it would not have the means to police private arbitration of ADEA claims. Yet this is also true of the SEC. As Justice Blackmun in his partial dissent in Shearson pointed out, the SEC “neither polices nor monitors the results of these arbitrations for possible misapplication of securities laws or for indications of how investors fare in these proceedings.” Shearson, 107 S.Ct. at 2357. Therefore, I do not believe that the power to police is necessary to a finding that the EEOC has sufficient power to issue regulations relating to the conduct of arbitrations in the ADEA context.
The EEOC‘s power to regulate arbitration of ADEA claims would be somewhat different from the SEC‘s powers to regulate arbitration; “the SEC has specifically approved the arbitration procedures of the New York Stock Exchange, the American Stock Exchange, and the National Association of Securities Dealers,” Shearson, 107 S.Ct. at 2341, exercising its regulatory power over each of the self-regulatory organizations. The EEOC‘s power would be more direct as there is no intermediate organization issuing arbitration rules. I conclude, therefore, that Nicholson‘s and the majority‘s attempt to distinguish this
case from Shearson on the basis of the EEOC‘s purported inferior powers to regulate arbitration of ADEA claims is unavailing.
B. The Powers of the Arbitrator and the Possibility of Collective Action
The majority asserts that arbitration of an individual‘s ADEA claim is unacceptable, because arbitrators lack the broad equitable powers of courts under
First, the rules of the AAA provide explicitly for the provision of broad equitable remedies by an arbitrator. See AAA, Commercial Arbitration Rules, Rule 43, Scope of Award (1988) (“The arbitrator may grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties. . . .“) (emphasis added).10 Where the scope of the agreement is broad and includes statutory disputes, as this one does, I believe that the arbitrator‘s powers are sufficient to provide redress for the injuries caused.11 I conclude therefore that arbitrators are no less capable of effecting the goal of the ADEA of eliminating age discrimination than courts or the EEOC in the case of arbitration pursuant to a broad arbitration clause.
Second, arbitrations may in fact go forward as class actions. See generally M. Hill & A. Sinicropi, Remedies in Arbitration 240-41 (1981).12 If a class action arbitration were to go forward, relief would
However, 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 Act provides for the possibility of bringing a collective action does not mean that individual attempts at conciliation were intended to be barred. Section 216(b) provides an opportunity to proceed collectively, not “an invitation to plaintiffs that they could not refuse.” Bird v. Shearson Lehman/American Express, Inc., 871 F.2d 292, 299 (2d Cir.1989) (Cardamone, J., dissenting).
In sum, I do not find that the majority‘s assertion about the insufficiency of the arbitrator‘s remedial powers or its assertion about the possibility of collective action militates against the enforcement of agreements to arbitrate ADEA claims.13
C. The Standard Governing Waivers of the Procedural Forum
I have now explained at some length why I believe that waiver of the judicial forum
In fact, the agreement does not speak to the form his arbitration may take.
Notes
- Where the award was procured by corruption, fraud, or undue means.
- Where there was evident partiality or corruption in the arbitrators, or either of them.
- Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced.
Under ordinary contract principles, waivers must generally be knowing and voluntary to be enforceable. See Coventry, 856 F.2d at 521 (” ‘waiver’ . . . connotes some kind of voluntary knowing relinquishment of a right“) (quoting Green v. United States, 355 U.S. 184, 191, 78 S.Ct. 221, 226, 2 L.Ed.2d 199 (1957)). The Court in Mitsubishi and Shearson, applying the language of the FAA,
agreements should not be enforced are as compelling with respect to voluntary arbitration as they are with respect to compulsory arbitration arising out of an agreement to arbitrate. Thus, I believe that the reasoning of the majority logically calls for a ban on arbitration of ADEA claims at any time, even when the employee voluntarily enters into arbitration. Yet that, I am certain, was not the intent of Congress. See Coventry, 856 F.2d at 522 n. 8 (ADEA sponsor “noted that the Act should allow the employee to ‘resolve the dispute himself or work out a compromise with an employer’ ” (citation omitted)); Note, Waiver of Rights Under the Age Discrimination in Employment Act of 1967, 86 Colum.L.Rev. 1067, 1079 (“incorporation of Title VII‘s conciliation provision [into ADEA] should . . . be interpreted as reflecting a favorable attitude toward all recognized mechanisms of out-of-court dispute resolution“).
We delineated what is meant by “voluntarily and knowingly” in Coventry:
whether a waiver has been ‘knowingly and willfully’ made has been predicated upon an evaluation of several indicia arising from the circumstances and conditions under which the release was executed. Among those factors . . . are general principles of contract construction such as the clarity and lack of ambiguity of the language . . . and the absence of fraud or undue influence.
856 F.2d at 522 (citations omitted); see also Lancaster v. Buerkle Buick Honda Co., 809 F.2d 539, 541 (8th Cir.) (ADEA substantive waiver valid where there was no “exploitation or overreaching“), cert. denied, 482 U.S. 928, 107 S.Ct. 3212, 96 L.Ed.2d 699 (1987); Moore v. McGraw Edison Co., 804 F.2d 1026, 1033 (8th Cir.1986) (ADEA sub-
The majority intimates that the disparity in bargaining power between age discrimination claimants and employers may be insufficient to void the contract to arbitrate, and then states that “we cannot close our eyes to the realities of the workplace.” Maj.Op. at 229. I certainly agree that the relative bargaining powers of the parties is relevant to consideration whether to enforce a contract to arbitrate. That is one of the necessary criteria in determining whether a contract was entered into voluntarily and knowingly. See supra at 241-42. I would urge district courts to enter into that inquiry with care in the context of age discrimination cases. I do not believe, however, that in the context of enforcement of an arbitration agreement the mere fact of a disparity of bargaining power is dispositive.
Even if there is a disparity in bargaining power between the employer and the employee when the arbitration agreement is entered into, and, as the majority points out, there often may be, enforcement of the arbitration agreement is not at odds with ADEA‘s text, legislative history or
achieving eradication of discrimination is satisfied and therefore we need not adopt Coventry‘s higher standard for procedural waivers.
As the majority points out, the central purpose of the ADEA is the elimination of age discrimination. This purpose is reiterated in the statute. See
But that does not end our inquiry. We must also ask whether the ADEA has a secondary purpose of monitoring enforcement of arbitration agreements into which parties have freely entered and of invalidating agreements to arbitrate because the employee was at a bargaining disadvantage from the employer. I think not, and believe that the following hypothetical helps explain my conclusion. A civil rights statute could be passed with the intent that federal courts provide exclusive federal jurisdiction, because state courts historically were not providing adequate protection of civil rights. Presumably, an agreement signed by a person protected by the statute, waiving his or her right to go to federal court in favor of state court, would not be enforced, because enforcing the agreement in that instance would completely undermine the purpose of the act. In that instance, Congress would have evinced an intent to intervene in the normal contracting relationship, refusing to permit enforcement of an agreement bargaining away the right to go to federal court and creating in effect an irrebuttable presumption of an improper disparity in bargaining power where parties negotiate over the appropriate forum. Such a statute could be said to have two central purposes, guaranteeing a right to a federal forum for vindication of civil rights and elimination of discrimination. The ADEA does not share the first purpose, but only the second: elimination of discrimination. Because its goals can be effectively achieved through a variety of forums and through individual bargaining as to the proper forum, I cannot conclude that the ADEA prohibits normal market forces to operate where parties bargain over this type of forum-selection clause.
In fact, there is legislative history to support the conclusion that Congress intended the ends of the ADEA to be achieved simply by bargaining between employee and employer without supervision by any sort of neutral arbiter. See Coventry, 856 F.2d at 522 n. 8 (“The Act should allow the employee to ‘resolve the dispute himself or work out a compromise with an employer.’ ” (quoting Sen. Williams, 123 Cong.Rec. S17275 (daily ed. Oct. 19, 1977)). The purpose of the ADEA, in my view, is not to prevent employees from bargaining away their procedural forums (as opposed to substantive rights) such that any disparity in bargaining power will automatically void an individually negotiated agreement, but rather to find an end to age discrimination through private enforcement and EEOC enforcement. Similarly, the Court in Shearson found that the potential for broker overreaching could be grounds for revocation, but concluded that it was insufficient to void the arbitration agreement under ordinary contract principles. 107 S.Ct. at 2339; de Quijas, 109 S.Ct. at 1920 (right to select forum is waivable despite “rationale that the Securities Act was intended to place buyers of
The majority‘s concern that an “employee may not have fully anticipated” the future dispute, see Maj.Op. at 230, is not in my view a factor going to whether arbitration should be enforced in general, but more appropriately a factor to be considered by the court when it addresses the issue of whether the waiver was voluntary and knowing in the particular case. See, e.g., Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d 282, 287 (9th Cir.1988) (addressing claim that agreement was not entered into voluntarily).
The majority‘s concern that the dispute may not have been anticipated is an oblique criticism of the fact that the waiver in this case is prospective. In general, substantive rights cannot be waived prospectively. See Coventry, 856 F.2d at 522-25 (permitting waiver of substantive rights at the time of settlement, after discrimination has occurred); S. 54, 101st Cong., 1st Sess. § (f)(2)(B) (1989) (settlement of substantive rights may only occur if “the agreement does not waive rights or claims that may arise after the date the agreement is entered into“); H.R. 1432, 101st Cong., 1st Sess. § (f)(2)(B) (1989); see also Alexander, 415 U.S. at 51, 94 S.Ct. at 1021 (waiver of individual‘s procedural rights tantamount to waiver of substantive rights cannot be entered into by union prospectively). However, the FAA permits waiver of procedural rights in favor of arbitration both prospectively and nonprospectively. See
I therefore would apply general contract principles and conclude that if enforcement of an agreement to arbitrate was entered into voluntarily and knowingly, it does not undermine the goals of the ADEA and we must enforce it despite a disparity in bargaining power.
IV. CONCLUSION
In summary, ” ‘[t]here is nothing in the record before us, nor in the facts of which we can take judicial notice, to indicate that the arbitral system . . . would not afford the plaintiff the rights to which he is entitled.’ ” de Quijas, 109 S.Ct. at 1921 (quoting Wilko, 346 U.S. at 439, 74 S.Ct. at 189 (Frankfurter, J., dissenting)). None of the majority‘s arguments in support of a congressional intent to preclude enforcement of the FAA with respect to ADEA claims is convincing and Nicholson has failed to carry his burden in this regard. Where no contrary congressional intent has been shown, we are constrained to ” ‘rigorously enforce agreements to arbitrate.’ ” Shearson, 107 S.Ct. at 2337 (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 1242, 84 L.Ed.2d 158 (1985)). I would therefore enforce Nicholson‘s agreement to arbitrate his ADEA claim and direct the district court to stay its proceedings accordingly.