Cole v. Burns Intern. Sec. Services

• Decision Date: 11 February 1997
• Docket Number: No. 96-7042,96-7042
• Citation: 323 U.S.App.D.C. 133,105 F.3d 1465,1997 WL 51684
• Parties: 72 Fair Empl.Prac.Cas. (BNA) 1775, 70 Empl. Prac. Dec. P 44,572, 323 U.S.App.D.C. 133, 65 USLW 2526 Clinton COLE, Appellant, v. BURNS INTERNATIONAL SECURITY SERVICES, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1465

105 F.3d 1465

72 Fair Empl.Prac.Cas. (BNA) 1775,

70 Empl. Prac. Dec. P 44,572, 323 U.S.App.D.C. 133,

65 USLW 2526

Clinton COLE, Appellant, v. BURNS INTERNATIONAL SECURITY SERVICES, et al., Appellees.

No. 96-7042.

United States Court of Appeals District of Columbia Circuit.

Argued Nov. 4, 1996.

Decided Feb. 11, 1997.

Appeal from the United States District Court for the District of Columbia (No. 95cv01785).

David A. Branch argued the cause and filed the briefs, Avon Lake, OH, for appellant.

Harold P. Coxson, Jr. argued the cause and filed the brief, Washington, DC, for appellees. Francis T. Coleman, Jr. entered an appearance.

Before: EDWARDS, Chief Judge, SILBERMAN and HENDERSON, Circuit Judges.

Opinion for the Court filed by Chief Judge EDWARDS.

Opinion concurring in part and dissenting in part filed by Circuit Judge HENDERSON.

HARRY T. EDWARDS, Chief Judge:

TABLE OF CONTENTS

I. SUMMARY OF OPINION

II. BACKGROUND

III. DISCUSSION

A. THE SCOPE OF SECTION 1 OF THE FAA

B. THE ENFORCEABILITY OF CONDITIONS OF EMPLOYMENT REQUIRING INDIVIDUAL EMPLOYEES TO ARBITRATE CLAIMS RESTING ON STATUTORY RIGHTS

1. THE ROLE OF ARBITRATION: COLLECTIVE BARGAINING AND STATUTORY CLAIMS DISTINGUISHED

2. THE VALIDITY OF THE AGREEMENT TO ARBITRATE IN THIS CASE

3. THE OBLIGATION TO PAY ARBITRATORS' FEES

4. JUDICIAL REVIEW

IV. CONCLUSION

I. SUMMARY OF OPINION

This case raises important issues regarding whether and to what extent a person can be required, as a condition of employment, to (1) waive all rights to a trial by jury in a court of competent jurisdiction with respect to any dispute relating to recruitment, employment, or termination, including claims involving laws against discrimination, and (2) sign an agreement providing that, at the employer's option, any such employment disputes must be arbitrated. At its core, this appeal challenges the enforceability of conditions of employment requiring individuals to arbitrate claims resting on statutory rights. The issues at hand bring into focus the seminal decision of Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), and call into question the limits of the Supreme Court's holdings in that case.

In this case, the appellant, Clinton Cole, seeks to overturn an order of the District Court dismissing his complaint under Title VII of the Civil Rights Act of 1964, as amended, and compelling arbitration of his disputes with Burns International Security Services ("Burns" or "Burns Security"). Although Cole seemingly raised a viable action under Title VII, the District Court held that his statutory claims of employment discrimination should be dismissed pursuant to the Federal Arbitration Act ("FAA" or "Act"). The District Court held that section 1 of the Act does not exempt all "employment" contracts and that Cole's job was not in an exempt category, and, therefore, Cole was bound by the agreement he had signed with Burns allowing the employer to opt for arbitration. In reaching this conclusion, the trial court found that the arbitration agreement was a valid and enforceable contract.

We agree with the District Court that section 1 of the FAA does not exclude all contracts of employment from the coverage of the FAA. Every circuit court to squarely address this issue has held that section 1 excludes from the coverage of the FAA only the employment contracts of workers actually engaged in the movement of goods in interstate commerce. Additionally, the Supreme Court's interpretation of section 2 of the FAA in Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995), strongly supports this narrow interpretation of section 1. Finally, although the Supreme Court did not address the issue of section 1's scope in Gilmer, the majority's decision suggests that the Court would be inclined to accept the narrow interpretation we adopt.

Second, we find that the disputed arbitration agreement is valid. In doing so, we are mindful of the clear distinctions between arbitration of labor disputes under a collective bargaining agreement and mandatory arbitration of individual statutory claims outside of the context of collective bargaining. We are also cognizant of the numerous concerns that have been voiced by arbitrators, legal commentators, the Equal Employment Opportunity Commission ("EEOC"), and National Labor Relations Board ("NLRB") regarding the potential inequities and inadequacies of arbitration in individual employment cases, as well as their concerns about the competence of arbitrators and the arbitral forum to enforce effectively the myriad of public laws protecting workers and regulating the workplace. Nonetheless, in this case, we are constrained by Gilmer to find the arbitration agreement enforceable. We do not read Gilmer as mandating the enforcement of all mandatory agreements to arbitrate statutory claims; rather, we read Gilmer as requiring the enforcement of arbitration agreements that do not undermine the relevant statutory scheme. The agreement in this case meets that standard.

We note that this case raises an issue not directly presented in Gilmer or any other Supreme Court case to date: can an employer require an employee to arbitrate all disputes and also require the employee to pay all or part of the arbitrators' fees? We hold that it cannot. In Gilmer and other securities industry cases, the employers routinely paid all arbitrators' fees, so the matter was not in dispute. However, there is no reason to think that the Court would have approved a program of mandatory arbitration of statutory claims in Gilmer in the absence of employer agreement to pay arbitrators' fees. Because public law confers both substantive rights and a reasonable right of access to a neutral forum in which those rights can be vindicated, we find that employees cannot be required to pay for the services of a "judge" in order to pursue their statutory rights. In this case, the parties' contract does not address explicitly the payment of the arbitrators' fees; however, because ambiguity in a contract should be resolved against the drafter--here, the employer--and ambiguity should be resolved in favor of a legal construction of the parties' agreement, we interpret the arbitration agreement at issue as requiring Burns to pay all arbitrators' fees associated with the resolution of Cole's claims. ¹ So construed, the contract is valid.

The dissent objects to our reaching the question as to who bears the burden of paying for an arbitrator's services, presumably because in some cases an employee might not be required to pay the arbitrator's compensation. This argument clearly misses the point. In our view, an employee can never be required, as a condition of employment, to pay an arbitrator's compensation in order to secure the resolution of statutory claims under Title VII (any more than an employee can be made to pay a judge's salary). If there is any risk that an arbitration agreement can be construed to require this result, this would surely deter the bringing of arbitration ² and constitute a de facto forfeiture of the employee's statutory rights. The only way that an arbitration agreement of the sort at issue here can be lawful is if the employer assumes responsibility for the payment of the arbitrator's compensation.

Cole has also argued that the arbitration agreement should not be enforced because the arbitrator's rulings, even as to the meaning of public law under Title VII, will not be subject to judicial review. Cole is wrong on this point. The nearly unlimited deference paid to arbitration awards in the context of collective bargaining is not required, and not appropriate, in the context of employees' statutory claims. In this context, the Supreme Court has assumed that arbitration awards are subject to judicial review sufficiently rigorous to ensure compliance with statutory law. Indeed, Burns has conceded such review in this case. Because the courts will always remain available to ensure that arbitrators properly interpret the dictates of public law, an agreement to arbitrate statutory claims of discrimination is not unconscionable or otherwise unenforceable.

II. BACKGROUND

Clinton Cole used to work as a security guard at Union Station in Washington, D.C. for a company called LaSalle and Partners ("LaSalle"). In 1991, Burns Security took over LaSalle's contract to provide security at Union Station and required all LaSalle employees to sign a "Pre-Dispute Resolution Agreement" in order to obtain employment with Burns. The Pre-Dispute Resolution Agreement ("agreement" or "contract"), in relevant part, provides:

In consideration of the Company employing you, you and the Company each agrees that, in the event either party (or its representatives, successors or assigns) brings an action in a court of competent jurisdiction relating to your recruitment, employment with, or termination of employment from the Company, the plaintiff in such action agrees to waive his, her or its right to a trial by jury, and further agrees that no demand, request or motion will be made for trial by jury.

In consideration of the Company employing you, you further agree that, in the event that you seek relief in a court of competent jurisdiction for a dispute covered by this Agreement, the Company may, at any time within 60 days of the service of your complaint upon the Company, at its option, require all or part of the dispute to be arbitrated by one arbitrator in accordance with the rules of the American Arbitration Association. You agree that the option to arbitrate any dispute is governed by the Federal Arbitration Act, and fully enforceable. You understand and agree that, if the Company exercises its option, any dispute arbitrated will be heard solely by the arbitrator, and not by a court.

This pre-dispute resolution agreement will cover all matters directly or indirectly related to your recruitment, employment or...