GILMER v. INTERSTATE/JOHNSON LANE CORP., 500 U.S. 20 (1991) 111 S.Ct. 1647
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 90-18
Argued January 14, 1991
Decided May 13, 1991
Petitioner Gilmer was required by respondent, his employer, to register
as a securities representative with, among others, the New York Stock
Exchange (NYSE). His registration application contained, inter alia,
an agreement to arbitrate when required to by NYSE rules. NYSE Rule
347 provides for arbitration of any controversy arising out of a
registered representative's employment or termination of employment.
Respondent terminated Gilmer's employment at age 62. Thereafter, he
filed a charge with the Equal Employment Opportunity Commission (EEOC)
and brought suit in the District Court, alleging that he had been
discharged in violation of the Age Discrimination in Employment Act of
1967 (ADEA). Respondent moved to compel arbitration, relying on the
agreement in Gilmer's registration application and the Federal
Arbitration Act (FAA). The court denied the motion, based on Alexander
v. Gardner-Denver Co., 415 U.S. 36  which held that an employee's
suit under Title VII of the Civil Rights Act of 1964 is not foreclosed
by the prior submission of his claim to arbitration under the terms of
a collective bargaining agreement  and because it concluded that
Congress intended to protect ADEA claimants from a waiver of the
judicial forum. The Court of Appeals reversed.
Held: An ADEA claim can be subjected to compulsory arbitration. Pp.
24-35.
(a) Statutory claims may be the subject of an arbitration agreement,
enforceable pursuant to the FAA. See, e.g., Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, Inc., 473 U.S. 614. Since the FAA manifests
a liberal federal policy favoring arbitration, Moses H. Cone Memorial
Hospital v. Mercury Construction Corp., 460 U.S. 1, 24, and since
neither the text nor the legislative history of the ADEA explicitly
precludes arbitration, Gilmer is bound by his agreement to arbitrate
unless he can show an inherent conflict between arbitration and the
ADEA's underlying purposes. Pp. 24-26.
(b) There is no inconsistency between the important social policies
furthered by the ADEA and enforcing agreements to arbitrate age
discrimination claims. While arbitration focuses on specific disputes
between the parties involved, so does judicial resolution of claims,
yet both can further broader social purposes. Various other laws,
Page 21
including antitrust and securities laws and the civil
provisions of the Racketeer Influenced and Corrupt Organizations Act
(RICO), are designed to advance important public policies, but claims
under them are appropriate for arbitration. Nor will arbitration
undermine the EEOC's role in ADEA enforcement, since an ADEA claimant
is free to file an EEOC charge even if he is precluded from instituting
suit; since the EEOC has independent authority to investigate age
discrimination; since the ADEA does not indicate that Congress intended
that the EEOC be involved in all disputes; and since an administrative
agency's mere involvement in a statute's enforcement is insufficient to
preclude arbitration, see, e.g., Rodriguez de Quijas v.
Shearson/American Express, Inc., 490 U.S. 477. Moreover, compulsory
arbitration does not improperly deprive claimants of the judicial forum
provided for by the ADEA: Congress did not explicitly preclude
arbitration or other nonjudicial claims resolutions; the ADEA's
flexible approach to claims resolution, which permits the EEOC to
pursue informal resolution methods, suggests that out-of-court dispute
resolution is consistent with the statutory scheme; and arbitration is
consistent with Congress' grant of concurrent jurisdiction over ADEA
claims to state and federal courts, since arbitration also advances the
objective of allowing claimants a broader right to select the dispute
resolution forum. Pp. 27-29.
(c) Gilmer's challenges to the adequacy of arbitration procedures are
insufficient to preclude arbitration. This Court declines to indulge
his speculation that the parties and the arbitral body will not retain
competent, conscientious, and impartial arbitrators, especially when
both the NYSE rules and the FAA protect against biased panels. Nor is
there merit to his argument that the limited discovery permitted in
arbitration will make it difficult to prove age discrimination, since
it is unlikely that such claims require more extensive discovery than
RICO and antitrust claims, and since there has been no showing that the
NYSE discovery provisions will prove insufficient to allow him a fair
opportunity to prove his claim. His argument that arbitrators will not
issue written opinions resulting in a lack of public knowledge of
employers' discriminatory policies, an inability to obtain effective
appellate review, and a stifling of the law's development, is also
rejected, since the NYSE rules require that arbitration awards be in
writing and be made available to the public; since judicial decisions
will continue to be issued for ADEA claimants without arbitration
agreements; and since Gilmer's argument applies equally to settlements
of ADEA claims. His argument that arbitration procedures are
inadequate because they do not provide for broad equitable relief is
unpersuasive as well, since arbitrators have the power to fashion
equitable relief; since the NYSE rules do not restrict the type of
relief an arbitrator may award and provide for collective relief; since
Page 22
the ADEA's provision for the possibility of collective
action does not mean that individual attempts at conciliation are
barred; and since arbitration agreements do not preclude the EEOC
itself from seeking class-wide and equitable relief. Pp. 30-32.
(d) The unequal bargaining power between employers and employees is not
a sufficient reason to hold that arbitration agreements are never
enforceable in the employment context. Cf. e.g., Rodriguez de Quijas,
supra, at 484. Such a claim is best left for resolution in specific
cases. Here, there is no indication that Gilmer, an experienced
businessman, was coerced or defrauded into agreeing to the arbitration
clause. Pp. 32-33.
(e) Gilmer's reliance on Alexander v. Gardner-Denver Co.,
415 U.S. 36, and its progeny, is also misplaced. Those cases involved
the issue whether arbitration of contract-based claims precluded
subsequent judicial resolution of statutory claims, not the
enforceability of an agreement to arbitrate statutory claims. The
arbitration in those cases occurred in the context of a collective
bargaining agreement, and thus there was concern about the tension
between collective representation and individual statutory rights that
is not applicable in this case. And those cases were not decided under
the FAA. Pp. 33-35.
895 F.2d 195, affirmed.
WHITE, J., delivered the opinion of the Court, in which REHNQUIST,
C.J., and BLACKMUN, O'CONNOR, SCALIA, KENNEDY, and SOUTER, JJ., joined.
STEVENS, J., filed a dissenting opinion, in which MARSHALL, J., joined,
post, p. 36.
John T. Allred argued the cause and filed a brief for
petitioner.
James B. Spears, Jr., argued the cause for respondent.
With him on the brief was Robert S. Phifer.[fn*]
[fn*] Briefs of amici curiae urging reversal were filed for the American
Association of Retired Persons by Cathy Ventrell-Monsees and Robert L.
Liebross; and for the American Federation of Labor and Congress of
Industrial Organizations by Laurence Gold and Marsha S. Berzon.
Briefs of amici curiae urging affirmance were filed for the Center for
Public Resources, Inc., by Jay W. Waks; for the Chamber of Commerce of
the United States of America by Peter G. Nash, Dixie L. Atwater, Michael
J. Murphy, and Stephen A. Bokat; for the Equal Employment Advisory
Council et al. by Robert E. Williams, Douglas S. McDowell, Ann Elizabeth
Reesman, and Donald L. Goldman; for the Lawyers' Committee for
Civil Rights Under Law by Alan E. Kraus, Nicholas deB. Katzenbach,
Robert F. Mullen, David S. Tatel, Thomas J. Henderson, and Richard
T. Seymour; and for the Securities Industry Association, Inc., by A.
Robert Pietrzak and William J. Fitzpatrick.
Page 23
JUSTICE WHITE delivered the opinion of the Court.
The question presented in this case is whether a claim under the Age
Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602, as
amended, 29 U.S.C. § 621 et seq., can be subjected to compulsory
arbitration pursuant to an arbitration agreement in a securities
registration application. The Court of Appeals held that it could,
895 F.2d 195 (CA4 1990), and we affirm.
I
Respondent Interstate/Johnson Lane Corporation (Interstate) hired
petitioner Robert Gilmer as a Manager of Financial Services in May,
1981. As required by his employment, Gilmer registered as a securities
representative with several stock exchanges, including the New York
Stock Exchange (NYSE). See App. 15-18. His registration application,
entitled "Uniform Application for Securities Industry Registration or
Transfer," provided, among other things, that Gilmer "agree[d] to
arbitrate any dispute, claim or controversy" arising between him and
Interstate "that is required to be arbitrated under the rules,
constitutions or by-laws of the organizations with which I register."
Id., at 18. Of relevance to this case, NYSE Rule 347 provides for
arbitration of "[a]ny controversy between a registered representative
and any member or member organization arising out of the employment or
termination of employment of such registered representative." App. to
Brief for Respondent 1.
Interstate terminated Gilmer's employment in 1987, at which time Gilmer
was 62 years of age. After first filing an age discrimination charge
with the Equal Employment Opportunity Commission (EEOC), Gilmer
subsequently brought suit in the United States District Court for the
Western District of North Carolina, alleging that Interstate had
discharged him because of his age, in violation of the
Page 24
ADEA. In response to Gilmer's complaint, Interstate filed in the
District Court a motion to compel arbitration of the ADEA claim. In
its motion, Interstate relied upon the arbitration agreement in
Gilmer's registration application, as well as the Federal Arbitration
Act (FAA), 9 U.S.C. § 1 et seq. The District Court denied Interstate's
motion, based on this Court's decision in Alexander v. Gardner-Denver
Co., 415 U.S. 36 (1974), and because it concluded that "Congress
intended to protect ADEA claimants from the waiver of a judicial
forum." App. 87. The United States Court of Appeals for the Fourth
Circuit reversed, finding "nothing in the text, legislative history, or
underlying purposes of the ADEA indicating a congressional intent to
preclude enforcement of arbitration agreements." 895 F.2d at 197.
We granted certiorari, 498 U.S. 809 (1990), to resolve a conflict
among the Courts of Appeals regarding the arbitrability of ADEA
claims.[fn1]
II
The FAA was originally enacted in 1925, 43 Stat. 883, and then
reenacted and codified in 1947 as Title 9 of the United States Code.
Its purpose was to reverse the longstanding judicial hostility to
arbitration agreements that had existed at English common law and had
been adopted by American courts, and to place arbitration agreements
upon the same footing as other contracts. Dean Witter Reynolds Inc. v.
Byrd, 470 U.S. 213, 219-220, and n. 6 (1985); Scherk v. Alberto-Culver
Co., 417 U.S. 506, 610, n. 4 (1974). Its primary substantive
provision states that "[a] written provision in any maritime transaction
or a contract evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of such contract
or transaction . . . shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the revocation of
Page 25
any contract." 9 U.S.C. § 2. The FAA also provides for stays of
proceedings in federal district courts when an issue in the proceeding
is referable to arbitration, § 3, and for orders compelling
arbitration when one party has failed, neglected, or refused to comply
with an arbitration agreement, § 4. These provisions manifest a
"liberal federal policy favoring arbitration agreements." Moses H.
Cone Memorial Hospital v. Mercury Construction Corp.,
460 U.S. 1, 24 (1983).[fn2]
Page 26
It is by now clear that statutory claims may be the subject of an
arbitration agreement, enforceable pursuant to the FAA. Indeed, in
recent years, we have held enforceable arbitration agreements relating
to claims arising under the Sherman Act, 15 U.S.C. § 1-7; § 10(b) of
the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b); the civil
provisions of the Racketeer Influenced and Corrupt Organizations Act
(RICO), 18 U.S.C. § 1961 et seq.; and § 12(2) of the Securities Act of
1933, 15 U.S.C. § 771(2). See Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614 (1985); Shearson/American
Express Inc. v. McMahon, 482 U.S. 220 (1987); Rodriguez de Quijas v.
Shearson/American Express, Inc., 490 U.S. 477 (1989). In these cases,
we recognized that, "[b]y agreeing to arbitrate a statutory claim, a
party does not forgo the substantive rights afforded by the statute; it
only submits to their resolution in an arbitral, rather than a judicial,
forum." Mitsubishi, 473 U.S., at 628.
Although all statutory claims may not be appropriate for arbitration,
"[h]aving made the bargain to arbitrate, the party should be held
to it unless Congress itself has evinced an intention to preclude
a waiver of judicial remedies for the statutory rights at issue."
Ibid. In this regard, we note that the burden is on Gilmer to
show that Congress intended to preclude a waiver of a judicial forum
for ADEA claims. See McMahon, 482 U.S., at 227. If such an intention
exists, it will be discoverable in the text of the ADEA, its
legislative history, or an "inherent conflict" between arbitration and
the ADEA's underlying purposes. See ibid. Throughout such an inquiry,
it should be kept in mind that "questions of arbitrability must be
addressed with a healthy regard for the federal policy favoring
arbitration." Moses H. Cone, supra, at 24.
III
Gilmer concedes that nothing in the text of the ADEA or its
legislative history explicitly precludes arbitration. He
Page 27
argues, however, that compulsory arbitration of ADEA claims pursuant to
arbitration agreements would be inconsistent with the statutory
framework and purposes of the ADEA. Like the Court of Appeals, we
disagree.
A
Congress enacted the ADEA in 1967 "to promote employment of older
persons based on their ability rather than age; to prohibit arbitrary
age discrimination in employment; [and] to help employers and workers
find ways of meeting problems arising from the impact of age on
employment." 29 U.S.C. § 621(b). To achieve those goals, the ADEA,
among other things, makes it unlawful for an employer "to fail or
refuse to hire or to discharge any individual or otherwise
discriminate against any individual with respect to his
compensation, terms, conditions, or privileges of employment,
because of such individual's age." § 623(a)(1). This
proscription is enforced both by private suits and by the EEOC.
In order for an aggrieved individual to bring suit under the ADEA,
he or she must first file a charge with the EEOC, and
then wait at least 60 days. § 626(d). An individual's right to sue is
extinguished, however, if the EEOC institutes an action against the
employer. § 626(c)(1). Before the EEOC can bring such an action,
though, it must "attempt to eliminate the discriminatory practice or
practices alleged, and to effect voluntary compliance with the
requirements of this chapter through informal methods of conciliation,
conference, and persuasion." § 626(b); see also
29 C.F.R. § 1626.15 (1990).
As Gilmer contends, the ADEA is designed not only to address individual
grievances, but also to further important social policies. See, e.g.,
EEOC v. Wyoming, 460 U.S. 226, 231 (1983). We do not perceive any
inherent inconsistency between those policies, however, and enforcing
agreements to arbitrate age discrimination claims. It is true that
arbitration focuses on specific disputes between the parties involved.
Page 28
The same can be said, however, of judicial resolution of
claims. Both of these dispute resolution mechanisms nevertheless also
can further broader social purposes. The Sherman Act, the Securities
Exchange Act of 1934, RICO, and the Securities Act of 1933 all are
designed to advance important public policies, but, as noted above,
claims under those statutes are appropriate for arbitration.
"[S]o long as the prospective litigant effectively may vindicate
[his or her] statutory cause of action in the arbitral forum, the
statute will continue to serve both its remedial and deterrent
function." Mitsubishi, supra, at 637.
We also are unpersuaded by the argument that arbitration will undermine
the role of the EEOC in enforcing the ADEA. An individual ADEA
claimant subject to an arbitration agreement will still be free to file
a charge with the EEOC, even though the claimant is not able to
institute a private judicial action. Indeed, Gilmer filed a charge
with the EEOC in this case. In any event, the EEOC's role in combating
age discrimination is not dependent on the filing of a charge; the
agency may receive information concerning alleged violations of the
ADEA "from any source," and it has independent authority to investigate
age discrimination. See 29 C.F.R. § 1626.4, 1626.13 (1990). Moreover,
nothing in the ADEA indicates that Congress intended that the EEOC be
involved in all employment disputes. Such disputes can be settled, for
example, without any EEOC involvement. See, e.g., Coventry v. United
States Steel Corp., 856 F.2d 514, 522 (CA3 1988); Moore v. McGraw
Edison Co., 804 F.2d 1026, 1033 (CA8 1986); Runyan v. National Cash
Register Corp., 787 F.2d 1039, 1045 (CA6), cert. denied, 479 U.S. 850
(1986).[fn3] Finally, the mere involvement of an administrative
Page 29
agency in the enforcement of a statute is not sufficient to
preclude arbitration. For example, the Securities Exchange Commission
is heavily involved in the enforcement of the Securities Exchange Act
of 1934 and the Securities Act of 1933, but we have held that claims
under both of those statutes may be subject to compulsory arbitration.
See Shearson/American Express Inc. v. McMahon, 482 U.S. 220 (1987);
Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477
(1989).
Gilmer also argues that compulsory arbitration is improper because it
deprives claimants of the judicial forum provided for by the ADEA.
Congress, however, did not explicitly preclude arbitration or other
nonjudicial resolution of claims, even in its recent amendments to the
ADEA. "[I]f Congress intended the substantive protection afforded [by the
ADEA] to include protection against waiver of the right to a
judicial forum, that intention will be deducible from text or
legislative history." Mitsubishi, 473 U.S., at 628. Moreover,
Gilmer's argument ignores the ADEA's flexible approach to resolution of
claims. The EEOC, for example, is directed to pursue "informal methods
of conciliation, conference, and persuasion," 29 U.S.C. § 626(b),
which suggests that out-of-court dispute resolution, such as arbitration,
is consistent with the statutory scheme established by Congress. In
addition, arbitration is consistent with Congress' grant of concurrent
jurisdiction over ADEA claims to state and federal courts, see
29 U.S.C. § 626(c)(1) (allowing suits to be brought "in any court of
competent jurisdiction"), because arbitration agreements,
"like the provision for concurrent jurisdiction, serve to advance
the objective of allowing [claimants] a broader right to select
the forum for resolving disputes, whether it be judicial or
otherwise." Rodriguez de Quijas, supra, at 483.
Page 30
B
In arguing that arbitration is inconsistent with the ADEA, Gilmer also
raises a host of challenges to the adequacy of arbitration procedures.
Initially, we note that, in our recent arbitration cases, we have
already rejected most of these arguments as insufficient to preclude
arbitration of statutory claims. Such generalized attacks on
arbitration "res[t] on suspicion of arbitration as a method of
weakening the protections afforded in the substantive law to would-be
complainants," and, as such, they are "far out of step with our current
strong endorsement of the federal statutes favoring this method of
resolving disputes." Rodriguez de Quijas, supra, at 481.
Consequently, we address these arguments only briefly.
Gilmer first speculates that arbitration panels will be biased.
However, "[w]e decline to indulge the presumption that the parties and
arbitral body conducting a proceeding will be unable or unwilling
to retain competent, conscientious and impartial arbitrators."
Mitsubishi, supra, at 634. In any event, we note that
the NYSE arbitration rules, which are applicable to the dispute in this
case, provide protections against biased panels. The rules require,
for example, that the parties be informed of the employment histories
of the arbitrators, and that they be allowed to make further inquiries
into the arbitrators' backgrounds. See 2 CCH New York Stock Exchange
Guide ¶ 2608, p. 4314 (Rule 608) (1991) (hereinafter 2 N.Y.S.E. Guide).
In addition, each party is allowed one peremptory challenge and
unlimited challenges for cause. Id., at ¶ 2609 (Rule 609). Moreover,
the arbitrators are required to disclose "any circumstances which might
preclude [them] from rendering an objective and impartial
determination." Id., ¶ 2610, at 4315 (Rule 610). The FAA also
protects against bias by providing that courts may overturn arbitration
decisions "[w]here there was evident partiality or corruption in the
arbitrators." 9 U.S.C. § 10 (b).
Page 31
There has been no showing in this case that those provisions are
inadequate to guard against potential bias.
Gilmer also complains that the discovery allowed in arbitration is more
limited than in the federal courts, which he contends will make it
difficult to prove discrimination. It is unlikely, however, that age
discrimination claims require more extensive discovery than other
claims that we have found to be arbitrable, such as RICO and antitrust
claims. Moreover, there has been no showing in this case that the NYSE
discovery provisions, which allow for document production, information
requests, depositions, and subpoenas, see 2 N.Y.S.E. Guide ¶ 2619, pp.
4318-4320 (Rule 619); Securities and Exchange Commission Order
Approving Proposed Rule Changes By New York Stock Exchange, Inc., Nat.
Assn. of Security Dealers, Inc., and the American Stock Exchange, Inc.,
Relating to the Arbitration Process and the Use of Predispute
Arbitration Clauses, 54 Fed. Reg. 21144, 21149-21151 (1989), will prove
insufficient to allow ADEA claimants such as Gilmer a fair opportunity
to present their claims. Although those procedures might not be as
extensive as in the federal courts, by agreeing to arbitrate, a party
"trades the procedures and opportunity for review of the courtroom for
the simplicity, informality, and expedition of arbitration."
Mitsubishi, supra, at 628. Indeed, an important counterweight to the
reduced discovery in NYSE arbitration is that arbitrators are not bound
by the rules of evidence. See 2 N.Y.S.E. Guide ¶ 2620, p. 4320
(Rule 620).
A further alleged deficiency of arbitration is that arbitrators often
will not issue written opinions, resulting, Gilmer contends, in a lack
of public knowledge of employers' discriminatory policies, an inability
to obtain effective appellate review, and a stifling of
the development of the law. The NYSE rules, however, do require that
all arbitration awards be in writing, and that the awards contain the
names of the parties, a summary of the issues in controversy, and a
Page 32
description of the award issued. See id., ¶¶ 2627(a), (e),
at 4321 (Rules 627(a), (e)). In addition, the award decisions are made
available to the public. See id., ¶ 2627(f), at 4322
(Rule 627(f)). Furthermore, judicial decisions addressing ADEA claims will
continue to be issued, because it is unlikely that all, or even most, ADEA
claimants will be subject to arbitration agreements. Finally, Gilmer's
concerns apply equally to settlements of ADEA claims, which, as noted
above, are clearly allowed.[fn4]
It is also argued that arbitration procedures cannot adequately further
the purposes of the ADEA, because they do not provide for broad
equitable relief and class actions. As the court below noted, however,
arbitrators do have the power to fashion equitable relief.
895 F.2d at 199-200. Indeed, the NYSE rules applicable here do not restrict the
types of relief an arbitrator may award, but merely refer to "damages
and/or other relief." 2 N.Y.S.E. Guide ¶ 2627(e), p. 4321
(Rule 627(e)). The NYSE rules also provide for collective proceedings. Id.
¶ 2612(d) at 4317 (Rule 612(d)). But "even if the arbitration
could not go forward as a class action or
class relief could not be granted by the arbitrator, the fact that
the [ADEA] provides for the possibility of bringing a collective
action does not mean that individual attempts at conciliation were
intended to be barred." Nicholson v. CPC Int'l Inc.,
877 F.2d 221, 241 (CA3 1989) (Becker, J., dissenting). Finally, it
should be remembered that arbitration agreements will not preclude the
EEOC from bringing actions seeking classwide and equitable relief.
C
An additional reason advanced by Gilmer for refusing to enforce
arbitration agreements relating to ADEA claims is
Page 33
his contention that there often will be unequal bargaining power between
employers and employees. Mere inequality in bargaining power, however,
is not a sufficient reason to hold that arbitration agreements are
never enforceable in the employment context. Relationships between
securities dealers and investors, for example, may involve unequal
bargaining power, but we nevertheless held in Rodriguez de Quijas and
McMahon that agreements to arbitrate in that context are enforceable.
See 490 U.S., at 484; 482 U.S., at 230. As discussed above, the FAA's
purpose was to place arbitration agreements on the same footing as
other contracts. Thus, arbitration agreements are enforceable "save
upon such grounds as exist at law or in equity for the revocation of
any contract." 9 U.S.C. § 2. "Of course, courts should remain
attuned to well-supported claims that the agreement to arbitrate
resulted from the sort of fraud or overwhelming economic power that
would provide grounds "for the revocation of any contract.'"
Mitsubishi, 473 U.S., at 627. There is no indication in this case,
however, that Gilmer, an experienced businessman, was coerced or
defrauded into agreeing to the arbitration clause in his registration
application. As with the claimed procedural inadequacies discussed
above, this claim of unequal bargaining power is best left for
resolution in specific cases.
IV
In addition to the arguments discussed above, Gilmer vigorously asserts
that our decision in Alexander v. Gardner-Denver Co., 415 U.S. 36
(1974), and its progeny  Barrentine v. Arkansas-Best Freight
System, Inc., 450 U.S. 728 (1981), and McDonald v. City of
West Branch, 466 U.S. 284 (1984)  preclude arbitration of
employment discrimination claims. Gilmer's reliance on these cases,
however, is misplaced.
In Gardner-Denver, the issue was whether a discharged employee whose
grievance had been arbitrated pursuant to
Page 34
an arbitration clause in a collective bargaining agreement was precluded
from subsequently bringing a Title VII action based upon the conduct that
was the subject of the grievance. In holding that the employee was not
foreclosed from bringing the Title VII claim, we stressed that an
employee's contractual rights under a collective bargaining agreement
are distinct from the employee's statutory Title VII rights:
"In submitting his grievance to arbitration, an employee seeks to
vindicate his contractual right under a collective bargaining
agreement. By contrast, in filing a lawsuit under Title VII, an
employee asserts independent statutory rights accorded by
Congress. The distinctly separate nature of these contractual and
statutory rights is not vitiated merely because both were violated
as a result of the same factual occurrence." 415 U.S., at 49-50.
We also noted that a labor arbitrator has authority only to resolve
questions of contractual rights. Id., at 53-54. The arbitrator's "task
is to effectuate the intent of the parties," and he or she does not
have the "general authority to invoke public laws that conflict with
the bargain between the parties." Id., at 53. By contrast,
"in instituting an action under Title VII, the employee is not
seeking review of the arbitrator's decision. Rather, he is
asserting a statutory right independent of the arbitration
process." Id., at 54. We further expressed concern that, in
collective bargaining arbitration, "the interests of the individual
employee may be subordinated to the collective interests of all employees
in the bargaining unit." Id., at 58, n. 19.[fn5]
Page 35
Barrentine and McDonald similarly involved the issue whether
arbitration under a collective bargaining agreement precluded a
subsequent statutory claim. In holding that the statutory claims there
were not precluded, we noted, as in Gardner-Denver, the difference
between contractual rights under a collective bargaining agreement and
individual statutory rights, the potential disparity in interests
between a union and an employee, and the limited authority and power of
labor arbitrators.
There are several important distinctions between the Gardner-Denver
line of cases and the case before us. First, those cases did not
involve the issue of the enforceability of an agreement to arbitrate
statutory claims. Rather, they involved the quite different issue
whether arbitration of contract-based claims precluded subsequent
judicial resolution of statutory claims. Since the employees there had
not agreed to arbitrate their statutory claims, and the labor
arbitrators were not authorized to resolve such claims, the arbitration
in those cases understandably was held not to preclude subsequent
statutory actions. Second, because the arbitration in those cases
occurred in the context of a collective bargaining agreement, the
claimants there were represented by their unions in the arbitration
proceedings. An important concern therefore was the tension between
collective representation and individual statutory rights, a concern
not applicable to the present case. Finally, those cases were not
decided under the FAA, which, as discussed above, reflects a "liberal
federal policy favoring arbitration agreements." Mitsubishi,
473 U.S. at 625. Therefore, those cases provide no basis for refusing to
enforce Gilmer's agreement to arbitrate his ADEA claim.
V
We conclude that Gilmer has not met his burden of showing that
Congress, in enacting the ADEA, intended to preclude arbitration of
claims under that Act. Accordingly, the judgment of the Court of
Appeals is
Affirmed.
[fn1] Compare the decision below with Nicholson v. CPC Int'l Inc.,
877 F.2d 221 (CA3 1989).
[fn2] Section 1 of the FAA provides that "nothing herein contained shall
apply to contracts of employment of seamen, railroad employees, or any
other class of workers engaged in foreign or interstate commerce."
9 U.S.C. § 1. Several amici curiae in support of Gilmer argue
that that section excludes from the coverage of the FAA all "contracts
of employment." Gilmer, however, did not raise the issue in the courts
below, it was not addressed there, and it was not among the questions
presented in the petition for certiorari. In any event, it would be
inappropriate to address the scope of the § 1 exclusion, because the
arbitration clause being enforced here is not contained in a contract
of employment. The FAA requires that the arbitration clause being
enforced be in writing. See 9 U.S.C. § 2, 3. The record before us
does not show, and the parties do not contend, that Gilmer's employment
agreement with Interstate contained a written arbitration clause.
Rather, the arbitration clause at issue is in Gilmer's securities
registration application, which is a contract with the securities
exchanges, not with Interstate. The lower courts addressing the issue
uniformly have concluded that the exclusionary clause in § 1 of the FAA
is inapplicable to arbitration clauses contained in such registration
applications. See, e.g., Dickstein v. DuPont, 443 F.2d 783 (CA1 1971);
Malison v. Prudential-Bache Securities, Inc., 654 F. Supp. 101, 104
(W.D.N.C. 1987); Legg, Mason & Co. v. Mackall & Coe, Inc., 351 F. Supp. 1367
(DC 1972); Tonetti v. Shirley, 219 Cal.Rptr. 616, 618, 173 Cal.App.3d 1144
(1985); see also Stokes v. Merrill Lynch, Pierce, Fenner & Smith,
523 F.2d 433, 436 (CA6 1975). We implicitly assumed as much in Perry
v. Thomas, 482 U.S. 483 (1987), where we held that the FAA required a
former employee of a securities firm to arbitrate his statutory wage
claim against his former employer, pursuant to an arbitration clause in
his registration application. Unlike the dissent, see post, at 38-41,
we choose to follow the plain language of the FAA and the weight of
authority, and we therefore hold that § 1's exclusionary clause does
not apply to Gilmer's arbitration agreement. Consequently, we leave
for another day the issue raised by amici curiae.
[fn3] In the recently enacted Older Workers Benefit Protection Act,
Pub.L. 101-433, 104 Stat. 978, Congress amended the ADEA to provide
that "[a]n individual may not waive any right or claim under this Act
unless the waiver is knowing and voluntary." See § 201. Congress also
specified certain conditions that must be met in order for a waiver to
be knowing and voluntary. Ibid.
[fn4] Gilmer also contends that judicial review of arbitration decisions
is too limited. We have stated, however, that, "although judicial
scrutiny of arbitration awards necessarily is limited, such review
is sufficient to ensure that arbitrators comply with the requirements
of the statute" at issue. Shearson/American Express Inc. v. McMahon,
482 U.S. 220, 232 (1987).
[fn5] The Court in Alexander v. Gardner-Denver Co.,
also expressed the view that arbitration was inferior to the judicial
process for resolving statutory claims. 415 U.S., at 57-58. That "mistrust
of the arbitral process," however, has been undermined by our recent
arbitration decisions. McMahon, 482 U.S., at 231-232.
"[W]e are well past the time when judicial suspicion of the
desirability of arbitration and of the competence of arbitral
tribunals inhibited the development of arbitration as an
alternative means of dispute resolution." Mitsubishi Motors Corp.
v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626-627 (1985).
Page 36
JUSTICE STEVENS, with whom JUSTICE MARSHALL joins, dissenting.
Section 1 of the Federal Arbitration Act (FAA) states:
"[N]othing herein contained shall apply to contracts of employment
of seamen, railroad employees, or any other class of workers
engaged in foreign or interstate commerce. 9 U.S.C. § 1.
The Court today, in holding that the FAA compels
enforcement of arbitration clauses even when claims of age
discrimination are at issue, skirts the antecedent question of whether
the coverage of the Act even extends to arbitration clauses contained
in employment contracts, regardless of the subject matter of the claim
at issue. In my opinion, arbitration clauses contained in employment
agreements are specifically exempt from coverage of the FAA, and, for
that reason, respondent Interstate/Johnson Lane Corporation cannot,
pursuant to the FAA, compel petitioner to submit his claims arising
under the Age Discrimination in Employment Act of 1967 (ADEA),
29 U.S.C. § 621 et seq., to binding arbitration.
I
Petitioner did not, as the majority correctly notes, ante at 25, n. 2,
raise the issue of the applicability of the FAA to employment contracts
at any stage of the proceedings below. Nor did petitioner raise the
coverage issue in his petition for writ of certiorari before this
Court. It was amici who first raised the argument in their briefs in
support of petitioner prior to oral argument of the case. See Brief
for American Federation of Labor and Congress of Industrial
Organizations as Amicus Curiae; Brief for American Association of
Retired Persons as Amicus Curiae; Brief for Lawyers' Committee for
Civil Rights Under Law as Amicus Curiae 17-18.
Notwithstanding the apparent waiver of the issue below, I believe that
the Court should reach the issue of the coverage of the FAA to
employment disputes because resolution of the
Page 37
question is so clearly antecedent to disposition of this case. On a number
of occasions, this Court has considered issues waived by the parties below
and in the petition for certiorari because the issues were so integral
to decision of the case that they could be considered "fairly subsumed"
by the actual questions presented. See, e.g., Teague v. Lane,
489 U.S. 288, 300 (1989) ("The question of retroactivity with regard to
petitioner's fair cross-section claim has been raised only in an amicus
brief. Nevertheless, that question is not foreign to the parties, who
have addressed retroactivity with respect to petitioner's Batson claim.
Moreover, our sua sponte consideration of retroactivity is far from
novel" (citations omitted)); Batson v. Kentucky, 476 U.S. 79, 84-85, n.
4 (1986) (notwithstanding petitioner's seemingly deliberate failure to
raise the equal protection issue, "[w]e agree with the State that
resolution of petitioner's claim properly turns on application of equal
protection principles, and express no view on the merits of any of
petitioner's Sixth Amendment arguments"); Mapp v. Ohio, 367 U.S. 643,
646, n. 3 (1961) ("Although appellant chose to urge what may have
appeared to be the surer ground for favorable disposition, and did not
insist that Wolf be overruled, the amicus curiae,
who was also permitted to participate in the oral argument, did
urge the Court to overrule Wolf."). See also R. Stern,
E. Gressman, & S. Shapiro, Supreme Court Practice § 6.26 (6th ed. 1986)
(describing rule concerning need for presenting questions below and in
petition for certiorari, and deviations from rule).
Only this Term, the Court has, on at least two occasions, decided cases
on grounds not argued in any of the courts below or in the petitions
for certiorari. In Arcadia v. Ohio Power Co., 498 U.S. 73 (1990), we
decided the case on an issue that not only was not raised below or in
any of the papers in this Court, but that also was not raised at any
point during oral argument before the Court. "In our view, however,"
the decided question was "antecedent to these [issues presented,] and
ultimately dispositive of the present dispute." Id., at
Page 38
77. Similarly, in McCleskey v. Zant, 499 U.S. 467 (1991), the Court
issued a decision on a question which the parties had not argued below
and evidently had not anticipated would be at issue in this Court,
"since respondent did not even mention [Wainwright v.] Sykes,
[433 U.S. 72], or cause-and-prejudice in its brief or at oral argument,
much less request the Court to adopt this standard."
Id., at 522-523 (MARSHALL, J., dissenting).
In my opinion, the considerations in favor of reaching an issue not
presented below or in the petition for certiorari are more compelling
in this case than in the cited cases. Here the issue of the
applicability of the FAA to employment contracts was adequately briefed
and raised by the amici in support of petitioner. More important,
however, is that respondent and its amici had full opportunity to brief
and argue the same issue in opposition. See Brief for Respondent
42-50; Brief for Securities Industry Association, Inc. as Amicus Curiae
18-20; Brief for Equal Employment Advisory Council et al. as Amici
Curiae 14-16. Moreover, the Court amply raised the issue with the
parties at oral argument, at which both sides were on notice and fully
prepared to argue the merits of the question. Finally, as in Arcadia,
the issue whether the FAA even covers employment disputes is clearly
"antecedent . . . and ultimately dispositive" of the question whether
courts and respondent may rely on the FAA to compel petitioner to
submit his ADEA claims to arbitration.
II
The Court, declining to reach the issue for the reason that petitioner
never raised it below, nevertheless concludes that
"it would be inappropriate to address the scope of the § 1
exclusion, because the arbitration clause being enforced here is
not contained in a contract of employment. . . . Rather, the
arbitration clause at issue is in Gilmer's securities registration
application, which is a contract with the securities exchanges,
not with Interstate." Ante, at 25, n. 2. In my
Page 39
opinion, the Court too narrowly construes the scope of the exclusion
contained in § 1 of the FAA.
There is little dispute that the primary concern animating the FAA was
the perceived need by the business community to overturn the common law
rule that denied specific enforcement of agreements to arbitrate in
contracts between business entities. The Act was drafted by a
committee of the American Bar Association (ABA), acting upon
instructions from the ABA to consider and report upon "the further
extension of the principle of commercial arbitration." Report of the
Forty-third Annual Meeting of the ABA, 45 A.B.A. Rep. 75 (1920). At the
Senate Judiciary Subcommittee hearings on the proposed bill, the
chairman of the ABA committee responsible for drafting the bill assured
the Senators that the bill "is not intended [to] be an act referring to
labor disputes, at all. It is purely an act to give the merchants the
right or the privilege of sitting down and agreeing with each other as
to what their damages are, if they want to do it. Now that is all there
is in this." Hearing on S. 4213 and S. 4214 before a Subcommittee of the
Senate Committee on the Judiciary, 67th Cong., 4th Sess., 9 (1923). At
the same hearing, Senator Walsh stated:
"The trouble about the matter is that a great many of these
contracts that are entered into are really not [voluntary] things
at all. Take an insurance policy; there is a blank in it. You
can take that or you can leave it. The agent has no power at all
to decide it. Either you can make that contract or you can not
make any contract. It is the same with a good many contracts of
employment. A man says, "These are our terms. All right, take it
or leave it." Well, there is nothing for the man to do except to
sign it; and then be surrenders his right to have his case tried
by the court, and has to have it tried before a tribunal in which
he has no confidence at all." Ibid.
Page 40
Given that the FAA specifically was intended to exclude arbitration
agreements between employees and employers, I see no reason to limit
this exclusion from coverage to arbitration clauses contained in
agreements entitled "Contract of Employment." In this case, the
parties conceded at oral argument that Gilmer had no "contract of
employment" as such with respondent. Gilmer was, however, required as
a condition of his employment to become a registered representative of
several stock exchanges, including the New York Stock Exchange (NYSE).
Just because his agreement to arbitrate any "dispute, claim or
controversy" with his employer that arose out of the employment
relationship was contained in his application for registration before
the NYSE, rather than in a specific contract of employment with his
employer, I do not think that Gilmer can be compelled pursuant to the
FAA to arbitrate his employment-related dispute. Rather, in my opinion
the exclusion in § 1 should be interpreted to cover any agreements by
the employee to arbitrate disputes with the employer arising out of the
employment relationship, particularly where such agreements to
arbitrate are conditions of employment.
My reading of the scope of the exclusion contained in § 1 is supported
by early judicial interpretations of the FAA. As of 1956, three Courts
of Appeals had held that the FAA's exclusion of "contracts of
employment" referred not only to individual contracts of employment,
but also to collective bargaining agreements. See Lincoln Mills of
Ala. v. Textile Workers Union of America, 230 F.2d 81 (CA5 1956),
rev'd, 353 U.S. 448 (1957); United Electrical, Radio & Machine Workers
of America v. Miller Metal Products, Inc., 215 F.2d 221 (CA4 1954);
Amalgamated Assn. of Street, Electric R. and Motor Coach Employees of
America v. Pennsylvania Greyhound Lines, Inc., 192 F.2d 310 (CA3
1951). Indeed, the application of the FAA's exclusionary clause to
arbitration provisions in collective-bargaining agreements was one of
the issues raised in the petition for certiorari and
Page 41
briefed at great length in Lincoln Mills and its companion cases,
Goodall-Sanford, Inc. v. Textile Workers, 353 U.S. 550 (1957), and
General Electric Co. v. Electrical Workers, 353 U.S. 547 (1957).
Although the Court decided the enforceability of the arbitration
provisions in the collective bargaining agreements by reference to §
301 of the Labor Management Relations Act, 1947, 29 U.S.C. § 185, it
did not reject the Courts of Appeals' holdings that the arbitration
provisions would not otherwise be enforceable pursuant to the FAA,
since they were specifically excluded under § 1. In dissent, Justice
Frankfurter perceived a
"rejection, though not explicit, of the availability of the Federal
Arbitration Act to enforce arbitration clauses in collective
bargaining agreements in the silent treatment given that Act by
the Court's opinion. If an Act that authorizes the federal courts
to enforce arbitration provisions in contracts generally, but
specifically denies authority to decree that remedy for `contracts
of employment,' were available, the Court would hardly spin such
power out of the empty darkness of § 301. I would make this
rejection explicit, recognizing that, when Congress passed
legislation to enable arbitration agreements to be enforced by the
federal courts, it saw fit to exclude this remedy with respect to
labor contracts." Textile Workers v. Lincoln Mills,
353 U.S., at 466.
III
Not only would I find that the FAA does not apply to employment-related
disputes between employers and employees in general, but also I would
hold that compulsory arbitration conflicts with the congressional
purpose animating the ADEA, in particular. As this Court previously
has noted, authorizing the courts to issue broad injunctive relief is
the cornerstone to eliminating discrimination in society. Albemarle
Paper Co. v. Moody, 422 U.S. 405, 415 (1975). The ADEA, like Title
VII of the Civil Rights Act of 1964, authorizes
Page 42
courts to award broad, class-based injunctive relief to achieve the
purposes of the Act. 29 U.S.C. § 626(b). Because commercial arbitration
is typically limited to a specific dispute between the particular parties,
and because the available remedies in arbitral forums generally do not
provide for class-wide injunctive relief, see Shell, ERISA and Other
Federal Employment Statutes: When is Commercial Arbitration an
"Adequate Substitute" for the Courts?, 68 Texas L.Rev. 509, 568 (1990),
I would conclude that an essential purpose of the ADEA is frustrated by
compulsory arbitration of employment discrimination claims. Moreover,
as Chief Justice Burger explained:
"Plainly, it would not comport with the congressional objectives
behind a statute seeking to enforce civil rights protected by
Title VII to allow the very forces that had practiced
discrimination to contract away the right to enforce civil rights
in the courts. For federal courts to defer to arbitral decisions
reached by the same combination of forces that had long
perpetuated invidious discrimination would have made the foxes
guardians of the chickens." Barrentine v. Arkansas-Best
Freight System, Inc., 450 U.S. 728, 750 (1981) (dissenting
opinion).
In my opinion, the same concerns expressed by Chief Justice Burger with
regard to compulsory arbitration of Title VII claims may be said of
claims arising under the ADEA. The Court's holding today clearly
eviscerates the important role played by an independent judiciary in
eradicating employment discrimination.
IV
When the FAA was passed in 1925, I doubt that any legislator who voted
for it expected it to apply to statutory claims, to form contracts
between parties of unequal bargaining power, or to the arbitration of
disputes arising out of the employment relationship. In recent years,
Page 43
however, the Court "has effectively rewritten the statute",[fn1] and
abandoned its earlier view that statutory claims were not appropriate
subjects for arbitration. See Mitsubishi Motors v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 646-651 (1985) (STEVENS,
J., dissenting). Although I remain persuaded that it erred in doing
so,[fn2] the Court has also put to one side any concern about the
inequality of bargaining power between an entire industry, on the one
hand, and an individual customer or employee, on the other. See ante
at 32-33. Until today, however, the Court has not read § 2 of the FAA
as broadly encompassing disputes arising out of the employment
relationship. I believe this additional extension of the FAA is
erroneous. Accordingly, I respectfully dissent.
[fn1] See Perry v. Thomas, 482 U.S. 483, 493 (1987) (STEVENS, J.,
dissenting); id. at 494 (O'CONNOR, J., dissenting); Southland Corp. v.
Keating, 465 U.S. 1, 36 (1984) (O'CONNOR, J., dissenting)
("[T]oday's exercise in judicial revisionism goes too far").
[fn2] See Shearson/American Express Inc. v. McMahon, 482 U.S. 220,
252-253 (1987) (BLACKMUN, J., concurring in part and dissenting in part);
id. at 268 (STEVENS, J., concurring in part and dissenting in part);
Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477,
486 (1989) (STEVENS, J., dissenting).
Page 44
