Craft v. Campbell Soup Co.

• Decision Date: 02 December 1998
• Docket Number: No. 98-15060,98-15060
• Parties: 159 L.R.R.M. (BNA) 2961, 78 Fair Empl.Prac.Cas. (BNA) 713, 79 Fair Empl.Prac.Cas. (BNA) 1508, 137 Lab.Cas. P 10,321, 98 Cal. Daily Op. Serv. 8794, 98 Daily Journal D.A.R. 12,217 Anthony I. CRAFT, Plaintiff-Appellee, v. CAMPBELL SOUP COMPANY, a Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1199

161 F.3d 1199

159 L.R.R.M. (BNA) 2961, 78 Fair

Empl.Prac.Cas. (BNA) 713,

79 Fair Empl.Prac.Cas. (BNA) 1508,

137 Lab.Cas. P 10,321,

98 Cal. Daily Op. Serv. 8794,

98 Daily Journal D.A.R. 12,217

Anthony I. CRAFT, Plaintiff-Appellee, v. CAMPBELL SOUP COMPANY, a Corporation, Defendant-Appellant.

No. 98-15060.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 10, 1998.

Decided Dec. 2, 1998.

Steven B. Berlin, Littler Mendelson, San Francisco, California, for defendant-appellant.

John E. Linneball, Ross & Associates, San Francisco, California, for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of California; Garland E. Burrell, District Judge, Presiding. D.C. No. CV 96-1500 GEB.

Before: BRUNETTI, TASHIMA, and GRABER, Circuit Judges.

Per Curiam Opinion; Dissent by Judge BRUNETTI.

PER CURIAM:

We must decide the threshold issue of whether we have jurisdiction to hear Campbell Soup Company's ("Campbell Soup") interlocutory appeal from the district court's denial of its motion for summary judgment. Because we conclude that appellate jurisdiction is lacking, we dismiss the appeal.

As there is no final judgment or any other applicable exception to the final judgment rule, this court has jurisdiction only if the Federal Arbitration Act ("FAA") applies. See 9 U.S.C. § 16 (providing for interlocutory appeal under the FAA). Our jurisdiction therefore hinges on the proper interpretation of the FAA in relation to employment contracts, which is a question of first impression in our circuit. See Kummetz v. Tech Mold, Inc., 152 F.3d 1153, 1155 n. 2 (9th Cir.1998) ("Whether § 1 of the FAA broadly excludes arbitration agreements within contracts of employment is an open question in this circuit.") (citing Nelson v. Cyprus Bagdad Copper Corp., 119 F.3d 756, 759 n. 4 (9th Cir.1997)).

I.

Anthony I. Craft was an employee of Campbell Soup and a member of the Food Process Workers and Warehousemen and Helpers Local Union 228 (the "Union"). The collective bargaining agreement ("CBA") between Campbell Soup and the Union includes a nondiscrimination clause which provides that "[d]isputes under this provision shall be subject to the grievance and arbitration procedure [provided in the CBA]." ¹

Craft filed a grievance alleging racial discrimination, harassment, health and safety concerns, and other claims. The grievance was not resolved in the initial grievance stages and the Union referred it to arbitration. While the grievance was still pending, Craft filed this action in district court. He alleged claims for race discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. ("Title VII"), and state law claims for assault and emotional distress. ²

The district court granted Campbell Soup summary judgment on Craft's supplemental state law claims. Following the majority view, however, the court held that arbitration of Craft's Title VII claims could not be compelled. ³ Accordingly, it denied Campbell Soup's summary judgment motion as to those claims. Campbell Soup appeals that interlocutory order denying its motion for summary judgment on Craft's Title VII claims. ⁴

II.

"When interpreting a statute, this court looks first to the words that Congress used." Sanchez v. Pacific Powder Co., 147 F.3d 1097, 1099 (9th Cir.1998). "Rather than focusing just on the word or phrase at issue, this court looks to the entire statute to determine Congressional intent." Id.

Applying those principles here, we begin with § 2 of the FAA, which provides for the enforcement of certain arbitration provisions:

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, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

9 U.S.C. § 2 (emphasis added).

A collective bargaining agreement or an individual employment contract would not seem to fall within the ordinary concept of a contract "evidencing a transaction," even though it often involves interstate commerce. As pertinent, "transaction" commonly means "[a] business deal; an act involving buying and selling." Webster's Int'l Dictionary 2688 (2d ed. unabridged 1939). See The Century Dictionary and Cyclopedia 6426 (revised and enlarged ed.1911) ("1. The management or settlement of an affair; a doing or performing: as, the transaction of business. -2. A completed or settled matter or item of business ...."); see also United States v. Boos, 127 F.3d 1207, 1210 (9th Cir.1997) (generally, words in a statute are given their common and ordinary definition), cert. denied, --- U.S. ----, 118 S.Ct. 734, 139 L.Ed.2d 672 (1998). In summary, the coverage section of the FAA, § 2, appears not to encompass employment contracts at all.

Section 1 of the FAA, however, contains definitions and, with respect to "commerce," concludes that "nothing herein shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." 9 U.S.C. § 1. This latter provision suggests that Congress intended for § 2 to apply to some collective bargaining agreements and employment contracts. Viewed as a whole, the statute is ambiguous.

Courts have developed two interpretations of these ambiguous provisions: (1) Congress did not intend for the FAA to apply to any employment contracts; and (2) Congress intended for the FAA to apply to all employment contracts, except for the contracts of employees who actually work in interstate commerce. Craft does not actually work in interstate commerce. Thus, if the latter view applies, the FAA governs this action, and we have jurisdiction to decide this appeal. If, on the other hand, the FAA does not apply to employment contracts, then the FAA's interlocutory appeal provision, 9 U.S.C. § 16(a)(1)(B), would not give us jurisdiction to decide this appeal.

Courts that have adopted the latter view have relied on a contemporary understanding of the terms used in the FAA. ⁵ The FAA, however, is not a modern statute. The FAA, including § 1, was enacted in 1925, before the Supreme Court dramatically expanded the meaning of interstate commerce in the 1930s.

Thus, to understand Congress' intent in enacting the FAA and the employment exclusion clause, we need to understand the meaning of the phrase "engaged in ... interstate commerce," as Congress understood the phrase in 1925. Before Congress enacted the FAA, the Supreme Court decided Hammer v. Dagenhart, 247 U.S. 251, 38 S.Ct. 529, 62 L.Ed. 1101 (1918), overruled by United States v. Darby, 312 U.S. 100, 117, 61 S.Ct. 451, 85 L.Ed. 609 (1941). In Hammer, the Court invalidated a federal child labor law, holding that Congress' commerce power did not extend to intrastate employees whose work involved interstate commerce. Hammer defined the scope of the commerce clause as quite limited:

Commerce consists of intercourse and traffic ... and includes the transportation of persons and property, as well as the purchase, sale and exchange of commodities. The making of goods and the mining of coal are not commerce, nor does the fact that these things are to be afterwards shipped, or used in interstate commerce, make their production a part thereof. Over interstate transportation, or its incidents, the regulatory power of Congress is ample, but the production of articles, intended for interstate commerce, is a matter of local regulation.

Id. at 272, 38 S.Ct. 529 (quotations omitted). Similarly, in Howard v. Illinois Cent. R.R., 207 U.S. 463, 28 S.Ct. 141, 52 L.Ed. 297 (1908)(the first employer liability case), workers not directly involved in interstate commerce were deemed outside of Congress' Commerce Clause power. Howard rejected the idea that "one who engages in interstate commerce thereby submits all of his business concerns to the regulating power of Congress," id. at 502, 28 S.Ct. 141, and held the employer liability act unconstitutional, because it included subjects outside of Congress' constitutional power to regulate. Id. at 504, 28 S.Ct. 141.

This narrow understanding of Congress' Commerce Clause power continued through the period of the drafting and enacting of the FAA. In United Leather Workes' Int'l Union v. Herkert & Meisel Trunk Co., 265 U.S. 457, 464, 44 S.Ct. 623, 68 L.Ed. 1104 (1924), the Court held that an illegal strike of leather workers preventing the manufacture of goods did not interfere with interstate commerce, as it did not interfere with the "free transport and delivery of the products." Congress' Commerce Clause power at the time of the FAA's enactment was clearly limited to the actual interstate movement of goods. Thus, an act promulgated in the mid-1920s, which excluded workers "engaged in interstate commerce," extended its reach to the outer limit of Congress' power under the Commerce Clause, because all classes of employees who were not actually working in interstate commerce were already outside the reach of the FAA. Because Congress drafted the employment exclusion clause to exclude all employment contracts which it then had the power to regulate, Congress clearly intended that the FAA not apply to any contracts of employment.

From a historical context, then, § 1 was clearly intended to exempt all employment contracts over which Congress had interstate commerce power.

The legislative history of the FAA also indicates that the Act's purpose was solely to bind merchants who were involved in commercial dealings. See Local 205, United Elec. Workers v. General Elec. Co., 233 F.2d 85, 99 (1st Cir.1956) (noting that...