E.E.O.C. v. Frank's Nursery & Crafts, Inc.

• Decision Date: 23 April 1999
• Docket Number: No. 97-1698,97-1698
• Citation: 177 F.3d 448
• Parties: 79 Fair Empl.Prac.Cas. (BNA) 936, 75 Empl. Prac. Dec. P 45,865 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. FRANK'S NURSERY & CRAFTS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 448

177 F.3d 448

79 Fair Empl.Prac.Cas. (BNA) 936,

75 Empl. Prac. Dec. P 45,865

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. FRANK'S NURSERY & CRAFTS, INC., Defendant-Appellee.

No. 97-1698.

United States Court of Appeals, Sixth Circuit.

Argued Oct. 28, 1998.

Decided April 23, 1999.

Barbara L. Sloan (argued and briefed), Equal Employment Opportunity Commission, Office of the General Counsel, Washington, D.C., for Plaintiff-Appellant. Charles C. DeWitt, Jr. (argued and briefed), Brian B. Smith (briefed), DeWitt, Balke & Vincent, Detroit, Michigan, for Defendant-Appellee. Eric Quinn Gery, McGuiness & Williams, Washington, DC, for amicus curiae.

Before: NELSON, CLAY, and GIBSON, ^* Circuit Judges.

CLAY, J., delivered the opinion of the court, in which JOHN R. GIBSON, J., joined. DAVID A. NELSON, J. (pp. 468-71), delivered a separate opinion concurring in part and dissenting in part.

CLAY, Circuit Judge.

The Equal Employment Opportunity Commission ("EEOC") appeals the order of the district court both dismissing its claims brought on behalf of Carol Adams ("Adams") and a class of similarly situated employees under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(1) (1998) ("Title VII"), and granting the motion of Defendant Frank's Nursery & Crafts ("Frank's") to compel Adams to enter binding arbitration pursuant to the Federal Arbitration Act, 9 U.S.C. § 4 (1998) ("FAA"). For the reasons set forth below, we REVERSE.

I.

On August 16, 1993, Adams, an African American, applied for a position with Frank's, a retailer of lawn and garden products, as an Executive Assistant in the company's Detroit, Michigan facility. Before it would consider Adams for the position, however, Frank's required Adams, as it did all other applicants, to complete and sign an application form that provided for compulsory arbitration of any and all employment claims. Specifically, by signing the form, applicants averred:

I understand and agree that any claim I may wish to file against the Company or any of its employees or agents relative to my employment or termination of employment (including but not limited to any claim for any tort, discrimination, breach of contract, violation of public policy or statutory claim) must be filed no more than six months after either occurrence of which I am complaining or the termination of my employment, whichever occurs first. I specifically agree not to commence any claim more than six months after the date of termination of my employment and waive any statutes of limitation to the contrary. Any and all claims will be submitted for binding and final arbitration before the American Arbitration Association; arbitration will be the exclusive remedy for any and all claims unless prohibited by applicable law.

(J.A. at 28.) Frank's hired Adams on August 30, 1993 as the Executive Assistant to Leonard Cohen, then-Vice President of the Human Resources Department. In addition to assisting Cohen, Adams provided administrative support to the Director of Human Resources and the Manager of Human Resources in her capacity as Executive Assistant.

In January 1995, Frank's replaced Cohen with Carol Cox, who is white. Upon becoming Vice President of Human Resources, Cox created an Executive Administrative Assistant position. Cox did not hire Adams for the position, ¹ claiming that she needed to hire a more highly qualified individual for the job. Cox hired Lorraine Kryszak, an outside applicant who is also white. Adams continued to work for the Director of Human Resources and the Manager of Human Resources and continued to receive the same pay and benefits. On March 14, 1995, Kryszak's first day of work, Adams filed a complaint with the EEOC alleging that Frank's bypassed her for promotion to the position of Executive Administrative Assistant because of her race. Adams subsequently resigned from Frank's on April 4, 1995.

The EEOC investigated the matter and issued a determination on February 9, 1996 which concluded that Frank's bypassed Adams for promotion because of her race and that the arbitration clause in the employment application signed by Adams unlawfully denied individuals their statutorily created rights. The EEOC found that Frank's had failed to establish that Adams was not qualified for the position and that Kryszak was more qualified than Adams. On October 30, 1996, after attempts at conciliation with Frank's had failed, the EEOC filed suit in the district court, alleging that Frank's had engaged in unlawful employment practices by (1) bypassing Adams for promotion to Executive Administrative Assistant because of her race; and (2) requiring Adams and other applicants to sign and comply with an application for employment that requires arbitration of statutory rights afforded them by Title VII.

In its complaint, the EEOC requested (1) a permanent injunction enjoining Frank's from engaging in employment discrimination on the basis of race; (2) a permanent injunction enjoining Frank's from requiring prospective applicants or employees to sign an arbitration agreement limiting the right to sue under Title VII; (3) an order requiring Frank's to institute and carry out policies, practices and programs providing equal employment opportunities to African Americans and eradicating the effects of past and present employment discrimination; and (4) an order requiring Frank's to "make whole" Adams by providing backpay with prejudgment interest, as well as compensatory damages beyond backpay and punitive damages. Adams did not intervene in the EEOC's lawsuit, nor did she file a claim in arbitration or otherwise attempt to privately settle a claim of discrimination against Frank's. The parties do not dispute that more than six months have passed since Frank's failed to promote Adams or since Adams terminated her employment, and that under the terms of the agreement to arbitrate included in Adams' employment application, time would bar any attempt by Adams to seek relief through arbitration.

On November 21, 1996, without answering the EEOC's complaint and before discovery could begin, Frank's moved the district court to compel Adams to arbitrate in accordance with the terms of the application for employment Adams signed in 1993 and pursuant to the Federal Arbitration Act, 9 U.S.C. § 4 (1998) ("FAA"). The EEOC filed a response in opposition, and Frank's filed a reply brief. In its reply brief, Frank's asked the district court to grant summary judgment in favor of Frank's on the EEOC's claim of classwide discrimination on the grounds that the challenged employment application is enforceable as a matter of law.

The district court issued a Memorandum Opinion and Order on April 21, 1997, granting Frank's' motions for summary judgment and to compel arbitration and dismissing the EEOC's complaint in its entirety. In its opinion, the district court arrived at three distinct conclusions affecting this appeal. First, the district court deemed enforceable, in light of Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), the arbitration provision in the employment application used by Frank's. ² Second, the district court held that the EEOC was bound by Adams' agreement to arbitrate in its effort to bring an employment discrimination claim on her behalf. Third, the district court concluded that while, as a general principle, the EEOC could sue for injunctive relief on behalf of a class of individuals, the EEOC could not do so in this case because it had not identified a class of individuals that suffered discrimination on the basis of race under Frank's' employment policies. The EEOC filed timely notice of appeal to this Court on June 20, 1997. ³

II.

We review de novo a district court's determination that a dispute is arbitrable. See M & C Corp. v. Erwin Behr GmbH & Co., 143 F.3d 1033, 1037 (6th Cir.1998). Moreover, questions of statutory construction are subject to de novo review, see United States v. Moore, 73 F.3d 666, 668 (6th Cir.1996), as are questions regarding the proper interpretation of a contract. See First Am. Nat'l Bank v. Fidelity & Deposit Co., 5 F.3d 982, 984 (6th Cir.1993).

Before this Court, the EEOC challenges only two of the district court's conclusions. First, the EEOC argues that the district court erred by holding that Adams' agreement to arbitrate precludes the EEOC from recovering "substantive relief" such as compensatory and punitive damages, and back pay with prejudgment interest. Second, the EEOC argues that the district court erred by barring the EEOC from recovering general injunctive relief aimed at stopping discrimination on the basis of race at Frank's because the EEOC failed to identify a class of individuals who had suffered such discrimination. It is important to note before we proceed that the EEOC does not challenge on appeal the conclusion that courts may enforce arbitration clauses included in employment applications that job applicants must sign before the employer will consider hiring them for the jobs sought. ⁴ Accordingly we express no opinion on the merits of that particular claim.

III.

This case requires us to address the extensive power of the EEOC to remedy unlawful employment discrimination under Title VII, and to consider specifically whether a single employee may, by entering into a private arbitration agreement with her employer, divest the EEOC of that congressional grant of authority. The district court in the present action asserted that because Adams signed away her right to sue for substantive relief under Title VII in her employment application, the EEOC cannot pursue such relief where its claim against Frank's depends on Adams' substantive claim of discrimination. The district court concluded, and Frank's argues, that, under the FAA, "to the extent that Adams is seeking substantive relief for alleged racial discrimination, she must proceed to arbitration per her signed agreement...