On Friday, May 8, 1998, the Ninth Circuit Court of Appeals in San Francisco issued an opinion that has at least temporarily driven a dagger into the heart of virtually every mandatory employment arbitration agreement in the western United States. In Duffield v. Robertson Stephens & Co., 1998 U.S. App. LEXIS 9284 (May 8, 1998), appellate Judge Steven Reinhardt ruled that employees cannot be compelled to submit Title VII discrimination claims to binding arbitration. For the time being, the effect of the ruling is to drastically limit the United States Supreme Court's decision in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), and throw virtually all mandatory workplace arbitration policies and agreements into question, at least with respect to matters arising in those western states within the Ninth Circuit.
Stockbroker Tonyja Duffield had sued her former employer, a securities brokerage firm, for sex discrimination and sexual harassment. When she was hired Ms. Duffield had signed a document that all securities agents had to sign as a condition of employment, agreeing that any dispute with her employer regarding terms and conditions of employment would be submitted to mandatory arbitration. On this basis, the brokerage sought to have her Title VII suit dismissed and the dispute deferred to arbitration. The trial court agreed with the employer and dismissed her case. Following an elaborate analysis, the reviewing court unanimously held that the trial court's dismissal of the case was improper because the document Ms. Duffield had signed was inconsistent with the dictates of Title VII.
Press reports have already indicated that the employer will seek reconsideration of Judge Reinhardt's opinion. That opinion is wholly unprecedented on the appellate level. An eventual appeal to the Supreme Court seems inevitable.
A ruling on a case with related facts that is already before the Supreme Court will be argued later this year. Wright v. Universal Maritime Service Corp., No. 97-889, cert. granted, 66 U.S.L.W. 3575, 1998 U.S. LEXIS 1466 (Mar. 2, 1998). It is quite possible that the Court may deal with Duffield in passing while resolving the Wright case already before it. Or, the Court may allow Duffield to be presented to it separately. The court also has the option of allowing Duffield to stand, of course. However, given the extent of the Ninth Circuit's departure from Gilmer and its progeny, resolution by the Supreme Court is likely. In the meantime, any employer whose employees in the western United States are currently believed to be subject to mandatory arbitration should immediately consult experienced employment law counsel for advice.