Lead
I. NATURE OF THE CASE
This conflicts panel was convened to decide if a predispute
Our holding breaks no new ground, but rather is consistent with our state’s public policy, and federal public policy, both of which increasingly and overwhelmingly favor arbitration as an inexpensive and expeditious alternative to litigation. Specifically, our holding furthers the objectives of the Michigan arbitration act (maa),
Our opinion is also consistent with the traditional principles of freedom of contract in the employment context.
While our decision upholds the principle of freedom of contract and advances the public policy that strongly favors arbitration, it does so subject to two conditions generally accepted in the common law: that the agreement waives no substantive rights, and that the agreement affords fair procedures. These conditions are rooted in two critically important bases: (1) our Supreme Court’s decision in Renny v Port Huron Hosp,
Additionally, as we discuss below, contracts providing for compulsory arbitration of discrimination claims must, of course, meet the general rules regarding the validity of contracts. Although other contractual issues raised in this case are beyond the scope of this conflicts panel, we do hold, as a matter of law, that an arbitration agreement that does not diminish the rights and remedies guaranteed by the relevant employment discrimination statute and that is fair procedurally is not an unenforceable contract of adhesion.
After discussing the facts, we will analyze the issues in the following sequence. We begin by discussing the prevailing public policy favoring arbitration that is evidenced in both Michigan and federal law. We then address how this proarbitration policy developed to include claims arising under public interest statutes and trace that development to judicial approval of predispute agreements to arbitrate statutory civil rights claims. Thereafter, we examine the necessary conditions for enforcement of these agreements: (1) a valid arbitration contract, (2) the absence of statutory prohibition against arbitrating particular statutory claims, and (3) the requirements of procedural fairness. Finally, we set forth the specific requirements for procedural fairness and define the standard of review.
II. FACTS AND PROCEEDINGS
Defendant Ryan’s Family Steak Houses, Inc., hired plaintiff as a bread maker in October 1993. At the time he was hired, plaintiff signed an arbitration agreement with Employment Dispute Services, Inc. (eds). The arbitration agreement provided, in pertinent part:
Your potential Employer (“signatory company” or “Company”) has entered into an agreement with Employment Dispute Services, Inc. (eds) to arbitrate and resolve any and all employment-related disputes between the Company’s employees (and job applicants) and the Company. The following Agreement between You and eds is a “selection of forum” agreement by which you agree that employment-related disputes between You and the Company shall be resolved through arbitration. Any arbitration matter shall be heard and decided under the provisions and the authority of the Federal Arbitration Act, 9 USC sec. 1, as applicable.
The purpose of this agreement is to provide You and the Company a forum in which claims or disputes with the Company and any other signatories may be resolved by arbitration rather than litigation. This Agreement does not restrict you from filing a claim or charge with any state or federal agency, for example, Equal Employment Opportunity Commission, state unemployment agency, state workers’ compensation commission, where applicable. Rather, the Agreement applies only to State or Federal court proceedings.
While an employee with Ryan’s Family Steak Houses, Inc., plaintiff sued defendants in the circuit court for race discrimination under the CRA and handicap discrimination under the pwdcra (then known as the Michigan Handicappers’ Civil Rights Act). Plaintiff alleged that he suffers from epilepsy and cognitive defects resulting from a head injury. Plaintiff made a variety of allegations relating to discrimination in the terms of his employment. Plaintiff subsequently resigned his employment and amended his complaint to include a charge of constructive discharge. Plaintiff also raised a common-law claim of intentional infliction of emotional distress.
Defendants moved for summary disposition pursuant to MCR 2.116(C)(7) (agreement to arbitrate) based on the signed arbitration agreement. After ruling that plaintiff had failed to establish that he was incompetent to understand the agreement he had signed, the trial court granted defendants’ motion.
III. ANALYSIS
A. MICHIGAN AND FEDERAL LAW ENDORSE ARBITRATION
1. MICHIGAN COMMON LAW AND STATUTORY LAW STRONGLY FAVOR ARBITRATION
Our Legislature has expressed a strong public policy favoring private voluntary arbitration, and our courts have historically enforced agreements to arbitrate disputes. As early as the nineteenth century, our Supreme Court held: “A parol submission to arbitration is good at common law, and is not forbidden by any statute. ... If [the parties submitted their agreement to a common arbiter], it would be a valid award.” Cady v Walker,
Judicial approval of arbitration has broadened and strengthened in recent decades. This Court stated in EE Tripp Excavating Contractor, Inc v Jackson Co,
The heavily case-loaded courts are no longer jealous of their jurisdiction. Where the parties, by a fair agreement, have adopted a speedy and inexpensivemeans by which to have their disagreements adjusted, we see no public policy reasons for the courts to stand in their way. On the contrary we have a clear expression of public policy in the legislative enactments which provide for statutory arbitration. [Emphasis supplied.]
Judicial approbation of arbitration has grown and now applies to many fields. For example, in the important area of medical malpractice, our Court, in Cox v D'Addario,
Following federal precedent (discussed in detail infra), Michigan law has upheld predispute agreements to arbitrate statutory claims, Scanlon v P & J Enterprises, Inc,
Further, and most importantly for our analysis, the appellate courts of this state have upheld arbitration agreements in the employment context. Moss, supra; Chippewa Valley Schools, supra. Our Supreme Court recently held that employers who establish individual just-cause employment contracts with their employees can require arbitration of employment claims arising out of the employment contract. Renny, supra. Since Renny, this Court has routinely held that just-cause employers can require employees to challenge breaches of just-cause employment through arbitration or other grievance procedures. Carlson v Hutzel Corp of Michigan,
Before analyzing our Legislature’s strong endorsement of arbitration, we will answer plaintiff’s contention that
Michigan statutory law further reinforces this conclusion. Unquestionably, public policy pronouncements of the Michigan Legislature, enacted as statutes, are binding on this Court. Int’l Recovery Systems, Inc v Gabler,
(1) All persons, except infants and persons of unsound mind, may, by an instrument in writing, submit to the decision of I or more arbitrators, any controversy existing between them, which might be the subject of a civil action, except as herein otherwise provided, and may, in such submission, agree that a judgment of any circuit court shall be rendered upon the award made pursuant to such submission.
(2) A provision in a written contract to settle by arbitration under this chapter, a controversy thereafter arising between the parties to the contract, with relation thereto, and in which it is agreed that a judgment of any circuit court may be rendered upon the award made pursuant to such agreement, shall be valid, enforceable and irrevocable save upon such grounds as exist at law or in equity for the rescission or revocation of any contract. Such an agreement shall stand as a submission to arbitration of any controversy arising under said contract not expressly exempt from arbitration by the terms of the contract. Any arbitration had in pursuance of such agreement shall proceed and the award reached thereby shall be enforced under this chapter.
(3) The provisions of this chapter shall not apply to collective contracts between employers and employees or associations of employees in respect to terms or conditions of employment. [MCL 600.5001; MSA 27A.5001 (emphasis supplied).]
“The MAA evidences Michigan’s strong public policy favoring arbitration.” Grazia v Sanchez,
This act allows predispute contracts to arbitrate and only excepts collective bargaining and certain real estate disputes from its purview. . . . Because the act allows predispute agreements to arbitrate civil rights claims, it establishes Michigan’s public policy concerning this issue. Obviously, if the Legislature wanted to preclude predispute agreements to arbitrate civil rights claims, it would have excluded such claims by name, just as it excluded collective bargaining agreements and certain real estate claims. The express exclusion of some claims implies inclusion of those not mentioned. . . . Therefore, for this reason also, there is no justification for this Court to substitute its judgment for that of the contracting parties in declaring the parties’ predispute agreement to arbitrate invalid. [.Rushton, supra at 174-175.]
As the foregoing review of Michigan law makes clear, our Legislature and our courts have strongly endorsed arbitration as an inexpensive and expeditious alternative to litigation. Accordingly, the question that naturally calls for close examination is whether, under Michigan law, this overwhelming authority favoring arbitration should apply with equal force to statutory employment discrimination claims. In analyzing this question, we will review the historical development of statutory claims first under federal law and then under Michigan law.
2. FEDERAL LAW STRONGLY FAVORS ARBITRATION
The Federal Arbitration Act (faa), 9 USC 1 et seq., provides, in pertinent part:
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, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. [9 USC 2.]
Obviously, this statute expresses a strong federal policy in favor of arbitration.
a. FEDERAL RECOGNITION OF ARBITRABILITY OF STATUTORY CLAIMS
Opponents of arbitration in this case, as elsewhere, generally acknowledge the public policy favoring arbitration, but claim that it ought not apply to claims arising under public interest statutes such as civil rights statutes. They argue that the public policy advanced by the statutes would be undermined if these disputes were addressed in the relatively private forum of arbitration. These very arguments were thoroughly considered and rejected by the United States Supreme Court in a trio of cases known as the Mitsubishi trilogy
Wilko v Swan,
Wilko has since been overruled, and its entire rationale has been thoroughly discredited and unequivocally rendered obsolete by the Mitsubishi trilogy. In this trilogy, the Supreme Court repudiated its former characterization of arbitration as a second-rate forum in which statutory rights are necessarily diminished. Instead, the Court recognized arbitration as an efficacious means for parties to enforce their statutory rights and held that parties who had agreed to arbitrate would be bound by those agreements. Mitsubishi Motors Corp v Soler Chrysler-Plymouth, Inc,
In addition to strongly endorsing arbitration of statutorily based claims, the Supreme Court also carefully considered and
Most importantly for our purposes, the Court roundly dismissed the suggestion that a waiver of the judicial forum means a waiver of statutory rights: “By 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.” Mitsubishi, supra at 628 (emphasis supplied). In McMahon, supra, and Rodriguez, supra, the plaintiffs argued that the predispute arbitration agreements were void under the two securities statutes’ provisions prohibiting stipulations to waive compliance with the statutes.
Also, like plaintiff and amici here, plaintiffs in the Mitsubishi cases argued that while arbitration of statutory claims would serve the compensatory goals of the statutes, arbitration would undermine their deterrent puipose. In response, the Court in Mitsubishi, supra at 637, reasoned that “so long as the prospective litigant may effectively vindicate its statutory cause of action in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.” The Court in McMahon, supra at 240-241, held that these principles applied to the RICO as well.
In each case in the Mitsubishi trilogy, the Supreme Court concluded that the broad provisions of the faa, coupled with the public policy favoring arbitration, mandated enforcement of the arbitration agreements. Accordingly, the Court held that if the parties had agreed to arbitrate statutory claims, the agreement should be enforced unless the relevant statute prohibited arbitration or the agreement foreclosed effective vindication of statutory rights. Id. at 628.
b. MICHIGAN APPLICATION OF THE MITSUBISHI TRILOGY
This Court adopted the Mitsubishi rationale in Scanlon, supra,
Three years before the Supreme Court decided Mitsubishi, this Court had already rejected the rationale of Wilko and enforced a predispute agreement to arbitrate a statutory claim arising under the Franchise Investment Law. In Mid East Transcontinental, supra,
We do not find the rationale employed by the Court in Wilko to be applicable under the Franchise Investment Law. By agreeing to arbitrate, the franchise holder does not surrender any advantage derived exclusively from the Franchise Investment Law. Where an agreement to arbitrate does not diminish the impact of the law, we see no reason to limit the declared policy favoring the resolution of disputes by arbitration. [Emphasis supplied.]
Our Court thus anticipated the holding in Mitsubishi by upholding an agreement to arbitrate statutory claims provided that the arbitration caused no detrimerit to substantive rights. Michigan law is therefore entirely consistent with Mitsubishi.
In sum, the basic rationale expressed by the Court in Mitsubishi for favoring arbitration, like the rationale expressed in our opinions, is twofold. First the Court endorsed the principle that an agreement to arbitrate a statutory claim does not constitute waiver of substantive rights.
With these general principles established regarding arbitration of statutory claims, we proceed to the question of how the United States Supreme Court applied its rulings in the Mitsubishi trilogy to predispute agreements to arbitrate the type of claim we deal with here — statutory employment discrimination claims.
4. PUBLIC POLICY FAVORING ARBITRATION OF STATUTORY CIVIL RIGHTS CLAIMS
a. GILMER V INTERSTATE/JOHNSON LANE CORP
Relying on Alexander v Gardner-Denver Co,
The critical distinction between the instant case and Gardner-Denver is that the arbitration agreement in Gardner-Denver arose out of a collective bargaining agreement, rather than an individual employment contract. This distinction became salient in Gilmer v Inter state/Johnson Lane Corp, supra, where the Supreme Court significantly narrowed the scope of Gardner-Denver. In Gilmer, supra,
In Gilmer, the Court approved a compulsory arbitration agreement as applied to the plaintiff’s federal Age Discrimination in Employment Act (adea)
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 of 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. [Gilmer, supra at 35 (emphasis supplied).]
The Gilmer Court also noted that the Gardner-Denver Court was concerned that collective bargaining arbitration of civil rights claims might be hampered by competing interests:
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 in the present case. [Id. (emphasis supplied).]
Lastly, the Gilmer Court noted that Gardner-Denver and other collective bargaining cases “were not decided under the faa, which . . . reflects a ‘liberal federal policy favoring arbitration agreements.’ ” Id., quoting Mitsubishi, supra at 625.
As it did in the Mitsubishi trilogy, the Gilmer Court squarely addressed the objections that the plaintiff raised to the validity of predispute agreements to arbitrate statutory employment discrimination claims. Like plaintiff here, the plaintiff in Gilmer questioned whether an employment discrimination plaintiff could obtain a full and fair adjudication of his claim in arbitration. The Gilmer Court’s answer is highly pertinent here, where plaintiff and amici raise many of the same concerns.
First, like plaintiff here, the Gilmer plaintiff argued that the social policies advanced by the civil rights statute would inevitably be thwarted if wronged employees were required to arbitrate their claims. The Court found no “inherent inconsistency” between the adea policies and arbitration. Gilmer, supra at 27. The Court agreed with the plaintiff’s contention that arbitration focuses on “specific disputes between the parties” rather than on broad social issues, but also noted that this is true in litigation. Id. at 27-28. The Court concluded that this limitation does not prevent either arbitration or litigation from furthering “broader social purposes.” Id. at 28, quoting Mitsubishi, supra at 637. We agree with this conclusion.
Second, the Gilmer Court found no inconsistency between arbitration and the administrative role of the Equal Employment Opportunity Commission (eeoc), because the employee bound by an arbitration agreement is still free, as plaintiff is here, to file administrative charges — there with the EEOC, here with the Michigan Department of Civil Rights (mdcr).
Third, the Gilmer Court also rejected the argument that compulsory arbitration wrongly deprived claimants of the judicial forum Congress provided by enacting the adea. The Court concluded that Congress could have precluded compulsory arbitration when it passed the adea, but did not. Id. at 29. Similarly, neither the
The plaintiff in Gilmer also raised a “host of challenges” regarding “the adequacy of arbitration procedures” to adjudicate statutory claims. Importantly, the Court responded:
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.” [Gilmer, supra at 30, quoting Rodriguez, supra at 481.]
The Gilmer Court proceeded to address the specific objections the parties raised to arbitration procedures. We will recount these issues in detail, because we believe they are instructive with respect to formulating arbitration agreements and procedures that are fair.
The plaintiff complained of potential arbitral bias against employees. Gilmer, supra at 30. The Court “ ‘decline [d] 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.’ ” Id., quoting Mitsubishi, supra at 634. The Court analyzed this issue further, however, and was satisfied that the arbitration rules of the New York Stock Exchange (nyse) and the faa provided sufficient safeguards against potential bias. The rules of the NYSE included access to information concerning the arbitrators’ backgrounds, one peremptory challenge per party, and unlimited challenges for cause. Gilmer, supra at 30. Also, as an ultimate safeguard, the FAA, like MCR 3.602(J)(l)(b), authorized courts to overturn arbitration decisions on evidence of partiality or corruption.
The plaintiff in Gilmer complained that he would be hindered by arbitration discovery, which was more limited than discovery in federal courts. The Court found, however, that the nyse discovery provisions, which allowed for “document production, information requests, depositions and subpoenas,” were sufficient to prove a discrimination claim. Gilmer, supra at 31. Relying on the Mitsubishi trilogy, the Court reasoned that if arbitration discovery was sufficient for Rico and antitrust claims, it must also be sufficient for discrimination claims. Finally, the Court stated that “an important counterweight to the reduced discovery in nyse arbitration is that arbitrators are not bound by the rules of evidence.” Id.
The Gilmer plaintiff further argued that arbitration was inadequate because arbitrators are not required to issue written opinions. The Court dismissed this argument because the nyse rules required “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 description of the award issued.” Id. at 31-32. The Court stated that the written opinions would serve to alert the public of discrimination disputes and their outcomes, allow for effective appellate review of arbitral decisions, and advance development of the law. Id.
Finally, the plaintiff in Gilmer argued that arbitration procedures were inadequate to enforce the adea because they did not permit equitable relief. The Court dismissed this argument because the nyse rules did not, in fact, restrict the
In summary, the Gilmer Court extended the Mitsubishi line of authority to predispute agreements to arbitrate statutory employment discrimination claims. Consistent with Mitsubishi, the Gilmer Court further reinforced the public policy favoring arbitration and found no reason why it could not be reconciled with the public policy of the civil rights statutes. It imposed on the party seeking to avoid arbitration the burden of rebutting the presumption that arbitration agreements are enforceable. It declined to find an implicit disapproval of arbitration agreements in the civil rights statutes, and it upheld the arbitration agreement in the absence of any clear statutory prohibition. However, rather than granting carte blanche approval of any predispute employment arbitration agreement, it gave careful consideration to the plaintiffs contentions of what he saw as weaknesses in the arbitration process. The Gilmer Court upheld the agreement because it determined that the plaintiff waived no rights and that the arbitral procedures were fair.
b. GILMER PROGENY
Since the Court’s landmark decision in Gilmer, the vast majority of federal and state courts that have addressed this issue have followed Gilmer and held that statutory employment discrimination claims are subject to predispute compulsory arbitration by way of employment contracts.
Federal district courts in Michigan have also complied with this precedent and adopted Gilmer’s reasoning. Prudential Ins Co of America v Shammas,
Additionally, at least six states have followed Gilmer. See Freeman v Minolta Business Systems, Inc, 699 So 2d 1182 (La App, 1997) (under the faa, court compelled the plaintiff to submit federal and state sexual harassment claims to arbitration); Alamo Rent A Car, Inc v Galarza, 306 NJ Super 384, 389;
Of all these post-Gilmer decisions, we believe Cole to be the most instructive and the most significant because of its comprehensive analysis of the conditions for an enforceable arbitration agreement.
After carefully reviewing the important objections to arbitration, Cole, supra at 144-146, Chief Judge Edwards concluded that “the Supreme Court now has made clear that, as a general rule, statutory claims are fully subject to binding arbitration . . . .” Id. at 146. The court then reviewed the arbitration agreement in question and reiterated the rationale of Mitsubishi and Gilmer in support of arbitration. Like Gilmer, Judge Edwards’ opinion carefully and thoroughly rejects the charge that arbitration is inferior to litigation for the resolution of statutory employment discrimination claims.
Further, Cole squarely answered the plaintiff’s contention that an agreement may be so procedurally unfair that it eviscerates the very rights guaranteed by the statute. The Cole court emphasized — correctly in our view — that Gilmer “cannot be
We believe that all of the factors addressed in Gilmer are satisfied here. In particular, we note that the arbitration arrangement (1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum. Thus, an employee who is made to use arbitration as a condition of employment, “effectively may vindicate [his or her] statutory cause of action in the arbitral forum.” [Id. at 150, quoting Gilmer, supra,500 US 28 .]
The Cole court not only answered effectively the objections to arbitration, it also emphasized the positive aspects of arbitration. In concluding that arbitration can effectively vindicate employees’ statutory rights, the court in Cole, supra at 156, quoted from the report of the Dunlop Commission,
“[L]itigation has become a less-than-ideal method of resolving employees’ public law claims. As spelled out in the Fact Finding Report, employees bringing public law claims in court must endure long waiting periods as governing agencies and the overburdened court system struggle to find time to properly investigate and hear the complaint. Moreover, the average profile of employee litigants . . . indicates that lower-wage workers may not fare as well as higher-wage professionals in the litigation system; lower-wage workers are less able to afford the time required to pursue a court complaint, and are less likely to receive large monetary relief from juries. Finally, the litigation model of dispute resolution seems to be dominated by “ex-employee” complainants, indicating that the litigation system is less useful to employees who need redress for legitimate complaints, but also wish to remain in their current jobs.” [Emphasis supplied.]
The court also commented that arbitration “offers employees a guarantee that there will be a hearing on the merits of their claims,” a guarantee not found in litigation, “where relatively few employees survive the procedural hurdles necessary to take a case to trial in the federal courts.” Cole, supra at 156. The court concluded that “it is perhaps misguided to mourn the Supreme Court’s endorsement of the arbitration of complex and important public law claims.” Id.
Having found these advantages to arbitration, the Cole court called on arbitrators, as we do, to “step up to the challenges presented by the resolution of statutory issues” and “be vigilant to protect the important rights embodied in the laws entrusted to their care.” Id. It also exhorted arbitrators, as we do, to “actively
[Appointing agencies like aaa [American Arbitration Association] must be certain that only persons who are able to satisfy these criteria are added to arbitrator-panel lists. For if arbitrators and agencies do not meet these obligations, the courts will have no choice but to intercede. [Id. (emphasis supplied).]
In light of this history of Michigan and federal statutes and case law that strongly favors arbitration, we return to the three prerequisites to a valid agreement to arbitrate civil rights claims under Michigan law.
B. CONDITIONS FOR ENFORCEABLE ARBITRATION AGREEMENT
We conclude, from the state and federal authorities reviewed thus far, that predispute agreements to arbitrate statutory employment discrimination claims are valid if: (1) the parties have agreed to arbitrate the claims (there must be a valid, binding, contract covering the civil rights claims), (2) the statute itself does not prohibit such agreements, and (3) the arbitration agreement does not waive the substantive rights and remedies of the statute and the arbitration procedures are fair so that the employee may effectively vindicate his statutory rights.
1. REQUIREMENT OF VALID CONTRACT
Plaintiff and amici argue incorrectly that the contract in question is an unenforceable adhesion contract as a matter of law. Courts will not invalidate contracts as adhesion contracts where the challenged provision is reasonable. Rehmann, Robson & Co v McMahan,
2. NEITHER THE CRA NOR THE PWDCRA INHIBIT ARBITRATION OF CLAIMS
As we have seen in our discussion of the Mitsubishi trilogy, Gilmer, and Scanlon, courts will not preclude arbitration absent an express statutory prohibition.
Neither the CRA nor the pwdcra contains such a provision. Section 803
Furthermore, the maa gives broad approval to arbitration agreements of all sorts, making express exceptions only for collective labor contracts and certain real estate disputes.
We therefore turn to the issue of fair arbitration procedures.
3. PROCEDURAL FAIRNESS
As we have said, to be valid, predispute agreements to arbitrate must not waive rights under the statute and the procedures must be fair. Accordingly, because the validity and enforceability of predispute arbitration agreements in the employment discrimination context depends on the employee’s opportunity for “fair adjudication,” prudent employers should give careful thought to the terms and procedures of their arbitration agreements. Given the wide range of employment situations, and the narrow scope of the question before this conflicts panel, it would not be prudent for us to attempt to catalog exhaustively all the circumstances in which arbitration agreements will or will not satisfy our ruling.
(1) Clear notice to the employee that he is waiving the right to adjudicate discrimination claims in a judicial forum and opting instead to arbitrate these claims. Renny, supra at 437.
(2) The right to representation by counsel, MCR 3.602(G).
(3) A neutral arbitrator. MCR 3.602(J)(l)(b) provides that arbitration awards shall be vacated if there was “evident partiality by an arbitrator, appointed as a neutral.” Additionally, MCR 3.602(E)(1) requires that the arbitrator “be sworn to hear and fairly consider the matters submitted and to make a just award according to his or her best understanding.”
(4) Reasonable discovery. MCR 3.602(F)(2) contemplates discovery by providing that the arbitrator may permit the taking of depositions for use of evidence. Arbitrators also have subpoena power pursuant to MCR 2.506. MCR 3.602(F)(1).
(5) A fair arbitral hearing. As stated above, MCR 3.602(E)(1) requires arbitrators to swear to hear and decide the matter fairly. MCR 3.602(F) affords the arbitrator subpoena powers, so that parties will be able to summon witnesses.
Unlike the court in Cole, supra at 151-154, we will not include, among the fairness requirements, a rule that the employer must pay the fees of the arbitrator and arbitration service. However, as a practical matter, claimants will have the opportunity to shift these fees to the employer. MCR 3.602(M) provides:
The costs of the [arbitration] proceedings may be taxed as in civil actions, and, if provision for the fees and expenses of the arbitrator has not been made in the award, the court may allow compensation for the arbitrator’s services as it deems just. The arbitrator’s compensation is a taxable cost in the action.
Furthermore, both the CRA and the pwdcra provide that the court may award complainants reasonable attorney fees. MCL 37.2802; 37.1606(3); MSA 3.548(802); 3.550(606)(3). Because, under our ruling, arbitration agreements may not waive an employee’s right or remedy
Just as employers should model their arbitration procedures to survive challenges based on fairness, employers must also anticipate that judicial review of arbitral awards will ensure that statutory rights are not waived and procedures are fair. To do this, it follows that judicial review here will be less deferential to the arbitrator’s judgment than in the collective bargaining context.
With respect to judicial review of arbitral awards in general, our Supreme Court has promulgated court rules for approving or vacating awards. MCR 3.602(J)(1) provides that the reviewing court is required to vacate an arbitration award if:
(a) the award was procured by corruption, fraud, or other undue means;
(b) there was evident partiality by an arbitrator, appointed as a neutral, corruption of an arbitrator, or misconduct prejudicing a party’s rights;
(c) the arbitrator exceeded his or her powers; or
(d) the arbitrator refused to postpone the hearing on a showing of sufficient cause, refused to hear evidence material to the controversy, or otherwise conducted the hearing to prejudice substantially a party’s rights. [Emphasis supplied.]
Furthermore, this court rule has been interpreted to mean that certain errors of law by the arbitrator will invalidate the arbitral award. For example, in DAIIE v Gavin,
If the appellate judiciary has any proper function at all, it is to correct material error. In determining whether to reduce to judgment the awards of statutory arbitrators, one of the court’s functions, perhaps its most important, is to determine whether the award rests upon an error of law of such materiality that it can be said that the arbitrators “exceeded their powers.” Thus, in statutory arbitration, the arbitrators are not free to ignore controlling principles of law, either intentionally or unintentionally, even with the consent of the parties, and expect an ultimate judicial imprimatur as well.
Thus, in discharging their duty, arbitrators can fairly be said to exceed their power whenever they act beyond the material terms of the contract from which they primarily draw their authority, or in contravention of controlling principles of law.
After articulating its rationale, the Court set forth the standard of review, which we adopt here:
The character or seriousness of an error of law which will invite judicial action to vacate an arbitration award under the formula we announce today must be error so material or so substantial as to have governed, the award, and but for which the award would have been substantially otherwise. [Id. at 443 (emphasis supplied).]
This Court recently held that the Gavin standard of judicial review applies to review of an arbitral award in a statutory discrimination suit. In Collins v Blue Cross Blue Shield of Michigan,
Accordingly, we hold that a predispute agreement to arbitrate a statutory employment discrimination claim will be reviewed under the standard enunciated by our Supreme Court in Gavin.
Finally, as a necessary corollary to our holding regarding the standard of judicial review, we also hold that arbitral awards must be in writing and contain findings of fact and conclusions of law. Without such a written opinion, courts would be unable to meaningfully apply the appropriate standard of review.
IV. CONCLUSION
We summarize our holding.
(1) Predispute agreements to arbitrate statutory employment discrimination claims are valid as long as the employee does not waive any rights or remedies under the statute
(2) to ensure that employees have a fair opportunity to vindicate effectively statutory rights, the arbitration procedures must include: (1) clear notice, (2) right to counsel, (3) reasonable discovery, (4) a fair hearing, and (5) a neutral arbitrator;
(3) if arbitral awards are challenged, the standard of judicial review will be the standard articulated in Gavin, supra; and
(4) to allow for sufficient review, arbitral awards must be in writing and contain findings of fact and conclusions of law.
We therefore remand to the trial court to determine whether plaintiff’s agreement is enforceable in light of our opinion.
Remanded. We do not retain jurisdiction.
Notes
We use the term “predispute” arbitration agreement to distinguish this type from an arbitration agreement that the parties enter into after the dispute arises.
MCL 37.2101 et seq.; MSA 3.548(101) et seq.
MCL 37.1101 et seq.; MSA 3.550(101) et seq.
MCL 600.5001 et seq.-, MSA 27A.5001 et seq.
In § m.B.2 of this opinion, infra at 158-159 we discuss how neither the cra nor the pwdcra prohibit predispute agreements to arbitrate claims arising under these statutes.
For example, in Sands Appliance Services v Wilson,
On appeal, plaintiff raised issues relating to his allegation of incompetence. We do not address these issues, because they are beyond the scope of this special conflicts panel.
Defendants suggest that we resolve this issue by holding that the arbitration contract is enforceable under the faa and that the faa preempts state law prohibiting arbitration. The United States Supreme Court held in Southland Corp v Keating,
National public policy has strongly evinced a longstanding endorsement of arbitration in the employment context. The Steelworkers trilogy established arbitration as the key means to resolving collective bargaining agreements. United Steelworkers of America v Enterprise Wheel & Car Corp,
Mitsubishi Motors Corp v Soler Chrysler-Plymouth, Inc,
15 USC 77a et seq.
The pertinent statutes were as follows: in Mitsubishi, the Sherman Antitrust Act, 15 USC 1 et seq.; in McMahon, the Securities Act of 1933, supra, and the Racketeer Influenced and Corrupt Organizations Act, 18 USC 1961 et seq.; in Rodriguez, the Securities Exchange Act of 1934, 15 USC 78j(b).
15 USC 77n; 15 USC 78cc(a).
In addition to the concerns discussed in this opinion, the Mitsubishi cases involved concerns that are not relevant to the instant case. In Mitsubishi, the Sherman Act claim was to be submitted to an international arbitration panel, hence, the Court had to consider whether the integrity of American law could be upheld in an international forum. In McMahon and Rodriguez, the Court considered whether arbitration would undermine the criminal enforcement provisions of the Rico and the securities statutes. The Court’s decision to uphold arbitration even over these considerations underscores the favored position of arbitration.
Judicial review of civil rights arbitration will be discussed in greater detail, infra at 163-166.
MCL 445.1501 et seq.; MSA 19.854(1) et seq.
The Gilmer Court’s position that arbitration need not curtail a claimant’s substantive rights represents a complete reversal of the Court’s statement in Alexander v Gardner-Denver Co,
Similarly, in Betty v Brooks & Perkins,
The restriction on compulsory arbitration of statutory claims in the collective bargaining context is not absolute. In Moss v Dep’t of Mental Health,
29 USC 621 et seq.
The arbitration agreement in this case does not restrict the employee’s right to seek administrative relief through the mdcr or the EEOC. We agree with Gilmer, however, that arbitration agreements are not valid if they restrict mdcr enforcement of the cra. We disagree with the decision in Equal Employment Opportunity Comm v Frank’s Nursery & Crafts, Inc, 966 F Supp 500 (ED Mich, 1997), to the extent that it upholds provisions of an arbitration agreement that prevented a plaintiff from seeking relief through the eeoc or the mdcr.
9 USC 10(b).
This is true not only for the securities registration agreements addressed in Gilmer, but also for other categories of employment-related contracts. We comment on this distinction only because the Court of Appeals for the Fifth Circuit opined, in Alford v Dean Witter Reynolds, Inc, 939 F2d 229, 230, n * (CA 5, 1991), that the faa’s exclusion for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” (9 USC 1) might preclude compulsory arbitration when the agreement is made between the employer and employee, as opposed to the Gilmer situation where the agreement was included in the employees’ contract with a securities exchange. However, in Rojas v TK Communications, Inc,
42 USC 12101 et seq.
As discussed above, Gilmer distinguished Gardner-Denver on the ground that the latter case involved a collective bargaining agreement rather than an individual contract. Since Gilmer, parties have raised the issue whether and to what extent Gardner-Denver remains viable authority. See Pryner v Tractor Supply Co,
Some federal courts, including the United States District Court for the Eastern District of Michigan, have maintained that Gardner-Denver remains an
For example, in Duffield, supra,
We are not persuaded by this reasoning. Instead, we agree with the reasoning in Frank’s Nursery, supra,
Various other cases have refused to enforce arbitration clauses on grounds of general contract principles, e.g., because the particular contract provision did not extend to the plaintiffs particular cause of action, or because the parties had not actually entered into a legally binding contract. These cases are consistent with Gilmer, and we do not regard them as “resisting this trend.”
We note that Cole was written by one of this country’s leading and respected authorities on the subject of arbitration and employment discrimination, Chief Judge Harry T. Edwards of the United States Court of Appeals for the District of Columbia.
For additional information concerning the Department of Labor Commission on the Future of Worker-Management Relations (Dunlop Commission), see Cole, supra at 151, n 11. For the text of the report see http://www.irl.comell.edu/library/e_archive/Dunlop.html.
Furthermore, a contract is an adhesion contract only if the party agrees to the contract because he has no meaningful choice to obtain the desired goods or services elsewhere. Morris v Metriyakool,
As a practical matter, the enforceability of a predispute agreement to arbitrate statutory civil rights questions will turn on whether the contract preserves substantive rights and remedies and is procedurally fair. If it satisfies these conditions, then it is reasonable, and it will be enforceable even if the employee did not have meaningful choice in signing it. Rehmann, Robson & Co v McMahan,
MCL 600.5001, 600.5005; MSA 27A.5001, 27A.5005.
The endless variety in the nature of businesses, the sophistication of employees, and the types of disputes that may be arbitrated persuade us that we cannot and should not promulgate a blueprint for all arbitrations. In this connection, we think it appropriate to paraphrase Judge Irving R. Kaufman:
When dealing with . . . principles [of fairness], it is apparent that we cannot paint with broad strokes. The lines are fine and must be so marked. Guide-posts can be established when virgin ground is being explored, and the conclusion in a particular case can be reached only after painstaking analysis of the facts and precise application of precedent. [United States v Standard Oil Co,136 F Supp 345 , 367 (SD NY, 1955).]
For example, Patterson, supra,
The Dunlop Commission has set forth seven conditions, including a neutral arbitrator with relevant legal knowledge, a fair method of cost sharing, and a written opinion. See Cole, supra at 151, n 11, for additional authorities on this subject. The aaa National Rules for the Resolution of Employment Disputes provide for appropriate discovery, a written award, and the full range of remedies available under the relevant statute. Cole, supra at 148.
Though MCR 3.602 is applicable only to statutory arbitration pursuant to MCL 600.5001(2); MSA 27A.5001(2), we nevertheless reference MCR 3.602 as illustrative of our Legislature’s and our Supreme Court’s dedication to procedural due process in arbitral hearings. The guidelines for procedural fairness we set forth are accordingly deduced from and are peculiarly applicable to our common-law tradition of arbitration, Renny, Cole, and Gilmer, additionally, some of these guidelines mirror the MCR 3.602 provisions.
The enforceability of an arbitration agreement may, in some circumstances, turn on whether the employee was given adequate notice and knowingly waived his right to litigate claims in court. Kummetz v Tech Mold, Inc,
Traditionally, judicial review of an arbitral award under a collective bargaining agreement is very limited. See Steelworkers trilogy; Gogebic Medical Care Facility v AFSCME Local 992, AFL-CIO,
Initially, a federal district court decided that the arbitrator made no error of law and confirmed the arbitration award. Collins v Blue Cross Blue Shield of Michigan, 916 P Supp 638 (ED Mich, 1995). Subsequently, the district court’s judgment was vacated for want of subject-matter jurisdiction.
Similarly, the federal courts have recognized a need for heightened judicial review of arbitration awards when statutory civil rights are at stake. The Cole court adopted a “manifest disregard of the law” standard that is “sufficiently rigorous to ensure that arbitrators have properly interpreted and applied statutory law.” Cole, supra at 155. Utilizing the “manifest disregard” standard, the court in Halligan v Piper Jaffray, Inc,
See Halligan, supra (arbitrators’ failure to explain their award was a factor in court’s determination that arbitrators disregarded the law).
Including, for example, a complainant’s right to attorney fees as provided by MCL 37.2802; 37.1606(3); MSA 3.548(802); 3.550(606)(3). We note further that we have already held in § I.B.1, supra at 157, that contracts to arbitrate employment discrimination claims must satisfy general contract rules and that those contracts that satisfy our ruling do not constitute unenforceable adhesion contracts.
Dissenting Opinion
(dissenting). I respectfully dissent. I agree with Justice Cavanagh’s opinion in Heurtebise v Reliable Business Computers, Inc,
I. MICHIGAN’S CONSTITUTION AND PUBLIC POLICY ENSURES CIVIL RIGHTS PLAINTIFFS ACCESS TO THE COURTS
In his opinion in Heurtebise, Justice CAVANAGH set forth in detail Michigan’s “long history of stalwartly defending individuals from invidious discrimination in their pursuit of basic civil liberties . . . [and] faithfully defending an aggrieved individual’s right to a judicial forum to remedy unlawful discrimination.” Heurtebise, supra at 414. In this section, I do not attempt to duplicate Justice Cavanagh’s excellent chronicle of Michigan’s vigorous and sustained protection of its citizens’ civil liberties. Rather, I merely emphasize some of the significant events in Michigan’s civil rights jurisprudence in order to demonstrate that requiring employees to waive prospectively their right to pursue civil rights claims in a judicial forum is inconsistent with Michigan’s declared public policy.
Our Supreme Court has stated that civil rights claims should be given the “highest priority.” Holmes v Haughton Elevator Co,
In subsequent cases, the Court reiterated that where illegal discrimination has occurred, the victim has a civil right of action for damages, even where the civil rights statute does not specifically provide a right to damages for the injury. See St John v General Motors Corp,
By the adoption of the 1963 Constitution, the people of Michigan further strengthened Michigan’s policy of protecting its citizens from discrimination. The constitution provides:
No person shall be denied the equal protection of the laws; nor shall any person be denied the enjoyment of his civil or political rights or be discriminatedagainst in the exercise thereof because of religion, race, color or national origin. The legislature shall implement this section by appropriate legislation. [Const 1963, art 1, § 2.]
The 1963 Constitution recognized the importance of access to the courts in the protection of civil rights. The constitutional provision creating the Michigan Civil Rights Commission, which is charged with the enforcement of art 1, § 2, provides: “Nothing in this section shall be construed to diminish the right of any party to direct and immediate legal or equitable remedies in the courts of this state.” Const 1963, art 5, § 29 (emphasis added). While the Supreme Court has stated that the clear intent of this statement was to permit claimants to seek relief in the courts without first exhausting administrative remedies, Nummer v Dep’t of Treasury,
In sum, Michigan long ago adopted a policy of ensuring its citizens access to the courts for the redress of unlawful discrimination. Indeed, as Justice Cavanagh stated, “the constitutionally guaranteed direct access to a judicial forum is so interwoven with the enforcement of civil rights in Michigan that we cannot separate them without potentially harming substantive civil rights.” Id. at 438. A contract that is contrary to public policy is illegal and void. Federoff v Ewing,
II. FEDERAL POLICY IS NOT UNIFORMLY IN FAVOR OF THE MANDATORY ARBITRATION OF CIVIL RIGHTS CLAIMS
The majority states that federal law strongly favors arbitration. However, while most federal courts have enforced mandatory arbitration agreements in statutory civil rights claims, this result is contrary to the intent of Congress. The legislative history of the 1991 Civil Rights Act, Pub L 102-166, 42 USC 1981 et seq., indicates that Congress wanted to ensure the right of workers to go to court and disapproved of the mandatory predispute arbitration of statutory civil rights claims.
Although the 1991 Civil Rights Act contained a provision encouraging resolution of disputes through alternative dispute resolution mechanisms “[w]here appropriate and to the extent authorized by law,”
Moreover, there is direct evidence that Congress did not favor mandatory, predispute arbitration of civil rights claims. In addressing substitute language proposed by the Republican minority, the House Committee on Education and Labor stated that the majority version
includes a provision encouraging the use of alternative means of dispute resolution to supplement, rather than supplant, the rights and remedies provided by Title vn. The Republican substitute, however, encourages the use of such mechanisms “in place of judicial resolution.” Thus, under the latter proposal employers could refuse to hire workers unless they signed a binding statement waiving all rights to file Title vii complaints. Such a rule would fly in the face of Supreme Court decisions holding that workers have the right to go to court, rather than being forced into compulsory arbitration, to resolve important statutory and constitutional rights, including equal opportunity rights. American workers should not be forced to choose between their jobs and their civil rights. [HR Rep No. 40(1), 102d Cong, 1st Sess, p 104 (1991), reprinted in 1991 US Code Cong & Ad News 549 (emphasis added; citations omitted).]
Thus, Congress explicitly rejected a proposed amendment that would have permitted mandatory predispute arbitration agreements and instead chose only to encourage voluntary agreements.
III. GILMER VINTERSTATE/JOHNSON LANE CORP
As the majority opinion notes, the United States Supreme Court’s position has relatively recently undergone a metamorphosis from a presumption against arbitration to one in favor of arbitration. The Court’s previous opinion of arbitration as a second-rate means of resolving disputes is exemplified in Alexander v Gardner-Denver Co,
The majority relies on Gilmer v Interstate/Johnson Lane Corp,
In fact, in Gilmer the Supreme Court acknowledged that “all statutory claims may not be appropriate for arbitration.” Id. at 26. The Court did not specify any statutory claims that are inappropriate for arbitration. However, it did state that arbitration agreements should not be enforced where Congress intended to preclude the waiver of a judicial forum for a particular claim. Evidence of this intention can be found in the text of the statute, its legislative history, or an “inherent conflict” between arbitration and the statute’s underlying purposes. See id.
IV. MANDATORY PREDISPUTE ARBITRATION AGREEMENTS ARE BAD POLICY
Arbitration is essentially a streamlined method of adjudication. Parties opt for arbitration in hopes of obtaining a faster and less costly resolution of their dispute. By choosing arbitration, it is expected that the parties have considered their alternatives and decided that the benefits of arbitration outweigh the sacrifice of the protections available in the traditional legal system. However, where mandatory predispute arbitration agreements are required as a condition of employment, it is a fallacy that prospective workers make an informed, rational decision to enter into the agreements. Before a person has begun working for an employer, the possibility of suffering from unlawful discrimination in the course of employment seems extremely remote. Thus, before a dispute arises, the average employee cannot meaningfully evaluate exactly what is being waived and the practical effect of the waiver.
Moreover, arbitration is essentially a private process and therefore does not allow development of the law. The courts play an essential role in the enforcement of civil rights laws by establishing precedents that give guidance to other companies and employees and by allowing public scrutiny of corporate policies, thus giving companies a strong incentive to eliminate discriminatory practices.
Finally, the vaunted advantages of arbitration are not guaranteed. Although “arbitration can often be superior, as an empirical matter it is not clear that binding arbitration is necessarily faster, cheaper, and otherwise better than litigation.”
Significantly, while the EEOC,
The public rights embodied in state and federal employment law — such as freedom from discrimination in the workplace and minimum wage and overtime standards — are an important part of the social and economic protections of the nation. Employees required to accept binding arbitration of such disputes would face what for many would be aninappropriate choice: give up your right to go to court, or give up your job. . . .
Binding arbitration agreements should not be enforceable as a condition of employment.22
V. THE FEDERAL ARBITRATION ACT DOES NOT PREEMPT MICHIGAN LAW IN THIS CASE
The majority concludes that Michigan law permits the parties’ arbitration agreement and therefore does not address whether the Federal Arbitration Act (FAA), 9 USC 1 et seq., is implicated in this case. Because my analysis of Michigan law leads to a different conclusion, I now address whether, under the facts of this case, Michigan law is preempted by the faa. I conclude that it is not.
Section 2 of the FAA provides: “A written provision in any . . . 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 any contract.” 9 USC 2. The Supreme Court has held that the faa was intended to apply in state as well as federal courts.
An examination of the circumstances surrounding the passage of the faa
This bill simply provides for one thing, and that is to give an opportunity to enforce an agreement in commercial contracts and admiralty contracts — an agreement to arbitrate, when voluntarily placed in the document by the parties to it .... It creates no new legislation; grants no new rights, except a remedy to enforce an agreement in commercial contracts and in admiralty contracts.”29
Secretary of Commerce Herbert Hoover, an active supporter of the bill, wrote to the Senate subcommittee: “If objection appears to the inclusion of workers’ contracts in the law’s scheme, it might well be amended by stating ‘but nothing herein contained shall apply to contracts or employment of seamen, railroad employees, or any other class of workers engaged in interstate or foreign commerce.’ ”
Hoover’s proposed language was adopted, and the FAA became law on February 12, 1925. Decades later, courts were required to determine whether the exemption in § 1 excludes all contracts of employment, or only those employees who are engaged in transporting goods across state or international lines. The United States Supreme Court has yet to rule on this issue,
In sum, because plaintiffs duties did not involve interstate or foreign commerce, and because the faa. was never intended to apply to employment contracts, I would find that the Michigan law is not preempted by federal law in this case.
Judge McDonald recognizes that he took a contrary position in this Court’s opinion in Heurtebise v Reliable Business Computers, Inc,
The majority notes that despite federal court decisions enforcing predispute arbitration agreements in federal civil rights cases, Congress has not amended the statute. However, this is undoubtedly more reflective of the fact that the Republicans attained a congressional majority in the 1994 elections than it is of the intent of the Congress that passed the 1991 Civil Rights Act.
This provision is codified as a historical and statutory note to 42 USC 1981.
See 42 USC 1981a(c)(1).
Rosenberg v Merrill Lynch, Pierce, Fenner & Smith, Inc,
Despite this legislative history, the majority of courts have not hesitated to enforce arbitration agreements in title vn claims. See, e.g., Sens v John Nuveen & Co, Inc,
The purpose of the Act was uniformly to expand employees’ rights and “to increase the possible remedies available to civil rights plaintiffs.” [Prudential Ins Co of America v] Lai [42 F3d 1299 , 1304 (CA 9, 1994)] (emphasis added). It thus would be “at least a mild paradox,” Pryner[ v Tractor Supply Co,109 F3d 354 , 363 (CA 7, 1997)], to conclude that in the very Act of which the “primary purpose” was “to strengthen existing protections and remedies available [to employees under Title vn],” H.R. Rep. No. 40(II) at 1, 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. It seems far more plausible that Congress meant to encourage voluntary agreements to arbitrate — agreements such as those that employers and employees enter into after a dispute has arisen because both parties consider arbitration to be a more satisfactory or expeditious method of resolving the disagreement. [Duffield v Robertson Stephens & Co,144 F3d 1182 , 1192-1193 (CA 9, 1998).]
Haagen, New wineskins for new wine: The need to encourage fairness in mandatory arbitration, 40 Ariz L R 1039, 1043 (1998).
See Macneil, American Arbitration, p 172; see also Barrentine v Arkansas-Best Freight Systems, Inc,
Gilmer, supra at 25, n 2. The majority’s failure to reach the issue was criticized by Justice Stevens, who wrote: “The Court today . . . skirts the antecedent question whether the coverage of the [Federal Arbitration] Act even extends to arbitration clauses contained in employment contracts, regardless of the subject matter of the claim at issue.” Id. at 36 (Stevens, J., dissenting).
See id. at 25, n 2.
Grodin, Arbitration of employment discrimination claims: Doctrine and policy in the wake of
Eeoc Policy Statement on Mandatory Binding Arbitration of Discrimination Disputes as a Condition of Employment, Notice No 915.002 (July 10, 1997), § V, pp 12-13, see http://www.eeoc.gov/docs/mandarb.txt (hereafter eeoc Policy Statement); Cole, Incentives and arbitration: The case against enforcement of executory arbitration agreements between employers and employees, 64 UMKC L R 449, 474-479 (1996).
Eeoc Policy Statement, § V, p 13, n 15; Cole, supra at 478.
Haagen, supra at 1053.
Eeoc Policy Statement, § IV, pp 6-8; Garrison, The employee’s perspective: Mandatory arbitration constitutes little more than a waiver of a worker’s rights, 52 Disp Resolution J 15, 18 (Fall 1997).
Eeoc Policy Statement, § IV, p 8.
Sternlight, Panacea or corporate tool?: Debunking the Supreme Court’s preference for binding arbitration, 74 Wash U L Q 637, 678 (1996).
Haagen, supra.
Eeoc Policy Statement, p 1.
Commission on the Future of Worker-Management Relations, Report and Recommendations, § 4, pp 32-33, see http://www.ilr. Comell.edu/library/e_archive/Dunlop/section4.html.
Statement and Guidelines of the National Academy of Arbitrators (adopted May 21, 1997), 103 Daily Lab Rep (BNA) E-1 (May 29, 1997), see http://www.naarb.org/guidelines.html.
Report of the Commission on the Future of Worker-Management Relations, pp 32-33.
See Southland Corp v Keating,
Several members of the Supreme Court have pointed out that the Court has ignored congressional intent in interpreting § 2 of the faa. Justice O’Connor has stated: “[T]he Court has abandoned all pretense of ascertaining congressional intent with respect to the Federal Arbitration Act, building instead, case by case, an edifice of its own creation.” Allied-Bruce Terminix Cos, Inc v Dobson,
For a comprehensive review of the circumstances surrounding the exemption’s submission and passage, see Finkin, “Workers’ contracts” under the United States Arbitration Act: An essay in historical clarification, 17 Berkeley J Emp & Lab L 282 (1996).
Stempel, Reconsidering the employment contract exclusion in section 1 of the Federal Arbitration Act: Correcting the judiciary’s failure of statutory vision, 1991 J Disp Resol 259, 294-295; Sternlight, supra at 647.
Finkin, supra at 296; Stempel, supra; Sternlight, supra.
Finkin, supra at 284.
Finkin, supra at 285, quoting Hearing on S. 4213 and S. 4214 Before the Subcomm of the Senate Comm on the Judiciary, 67th Cong, 4th Sess 9 (1923).
Cole, supra at 466, quoting 65 Cong Rec 1931 (1924).
Finkin, supra, at 297, quoting Letter from Herbert Hoover, Secretary of the Department of Commerce, to Senator Thomas Sterling (Jan. 31, 1923).
In Gilmer, supra, the Court ruled that the exclusionary clause of § 1 did not apply because the arbitration clause at issue was contained in a contract with the securities exchange, rather than the plaintiffs employer. The Court therefore decided to “leave for another day” the question whether § 1 excludes all contracts of employment from the coverage of the faa. Id. at 25, n 2.
See McWilliams v Logicon, Inc,
We recognize that a panel of this Court recently adopted the majority view and held that “the exclusionary provision in 9 USC 1 is limited to employees directly engaged in the movement of goods in interstate commerce.” DeCaminada v Coopers & Lybrand, LLP,
See Craft v Campbell Soup Co,
See generally United States v Lopez,
Finkin, supra at 298.
See id.
Id.