Duffield v. Robertson Stephens & Co.
98 Daily Journal D.A.R. 4837
(9th Cir., May 8, 1998)
The federal appellate court in San Francisco last week weighed in on a question that has been the subject of considerable disagreement among judges and lawyers: whether private employers can require their employees to arbitrate discrimination claims under Title VII, rather than take them to court.
Siding with a stockbroker alleging sexual harassment, the Ninth Circuit Court of Appeals held in Duffield v. Robertson Stephens & Co. that the Civil Rights Act of 1991, which amended Title VII, precludes the use of such agreements as a mandatory condition of employment. The Court noted that employers and employees remain free to elect arbitration of Title VII claims after such a dispute arises, and that such arbitration awards are fully enforceable.
To reach its decision, the Court looked through the records of the Congres-sional debate leading up to the vote on the 1991 Act, especially a committee report's statement that American workers should not be "forced to choose between their jobs and their civil rights." Partly by overruling a series of Supreme Court decisions that had narrowed the scope of Title VII, the Act strengthened the substantive and procedural rights of plaintiffs in employment discrimination cases. For example, the Act provides for compensatory and punitive damages in such cases, as well as a right to a jury trial.
But the Act also specifically provides that "where appropriate and to the extent authorized by law," alternative dispute resolution such as arbitration "is encouraged to resolve disputes arising under the Act." Much of the debate among the federal courts has been whether this provision indicates acceptance or approval of compulsory arbitration agreements.
The Ninth Circuit in Duffield said the word "encouraged" was not that strong. To the contrary, the Court determined that the legislative history of the Act made clear that Congress intended to augment the remedies available to claimants under the Act, not to restrict them. The Court relied, for example, on another statement in the Congressional Committee report, emphasizing that "the use of alternative dispute mechanisms is . . . intended to supplement, not supplant, the remedies provided in Title VII."
Although the Duffield decision is based almost entirely on the legislative history of the Civil Rights Act of 1991, the Court also applied its holding to the plaintiff's claims under the California Fair Employment and Housing Act (FEHA). In a footnote, the Court reasoned: "Duffield's sexual discrimination and sexual harassment claims under Title VII appear to be identical to those she brings under the FEHA. Because T[p]arallel state anti-discrimination laws are explicitly made part of Title VII's enforcement scheme,' FEHA claims are arbitrable to the same extent as Title VII claims."
The Court's decision applies only to arbitration agreements that a prospective employee must sign to get the job. The Court defined such agreements as those "under which employers compel their prospective employees as a condition of employment to waive their right to litigate future employment related disputes in a judicial forum." Thus, the decision does not affect situations where employees "agree, or otherwise elect, after disputes have arisen to submit them to arbitration." Nor did the Court preclude the use of truly voluntary arbitration agreements P "in which at the time of hiring employers give prospective employees the choice to opt in advance for arbitration of all future employment related disputes or for retention of their statutory right to litigate such disputes."
Finally, the Court's holding is limited to claims under Title VII and state civil rights laws; the Court held that private employers can require employees to agree in advance to arbitrate state law tort and contract claims, though the same court has held in other recent decisions that a provision mandating arbitration of employment disputes must be explicitly presented to the employee, and the employee must knowingly and explicitly agree to waive the right to a trial.