Gilmer v. Interstate/Johnson Lane Corp.Annotate this Case
500 U.S. 20 (1991)
U.S. Supreme Court
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)
Gilmer v. Interstate/Johnson Lane Corporation
Argued Jan. 14, 1991
Decided May 13, 1991
500 U.S. 20
CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
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. 500 U. S. 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, 460 U. S. 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. 500 U. S. 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,
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. 500 U. S. 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 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. 500 U. S. 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 490 U. S. 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. P. 500 U. S. 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. 500 U. S. 33-35.
895 F.2d 195, (CA4 1990) 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. 500 U. S. 36.
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.
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
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. [Footnote 1]
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, 470 U. S. 219-220, and n. 6 (1985); Scherk v. Alberto-Culver Co.,417 U. S. 506, 417 U. S. 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
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, 460 U. S. 24 (1983). [Footnote 2]
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, supra, 473 U.S. at 473 U. S. 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 482 U. S. 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, 460 U.S. at 460 U. S. 24.
Gilmer concedes that nothing in the text of the ADEA or its legislative history explicitly precludes arbitration.
He 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.
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 CFR § 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, 460 U. S. 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.
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, 473 U.S. at 473 U. S. 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 CFR §§ 1626.4, 1626.13 (1990). Moreover, nothing in the ADEA indicates that Congress intended that the EEOC be involved in all employment disputes. Such disputes can be settled, for example, without any EEOC involvement. See, e.g., Coventry v. United States Steel Corp., 856 F.2d 514, 522 (CA3 1988); Moore v. McGraw Edison Co., 804 F.2d 1026, 1033 (CA8 1986); Runyan v. National Cash Register Corp., 787 F.2d 1039, 1045 (CA6), cert. denied, 479 U.S. 850 (1986). [Footnote 3] Finally, the mere involvement of an administrative
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 McMahon; Rodriguez de Quijas.
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 473 U. S. 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, 490 U.S. at 490 U. S. 483.
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 490 U. S. 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, 473 U.S. at 473 U. S. 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
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