Craft v. Campbell Soup Co.

• Decision Date: 02 December 1998
• Docket Number: No. 98-15060.,98-15060.
• Parties: Anthony I. CRAFT, Plaintiff-Appellee, v. CAMPBELL SOUP COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

177 F.3d 1083

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

No. 98-15060.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted August 10, 1998.

Filed December 2, 1998.

Amended May 27, 1999.

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

John E. Linneball and Gerald Lynn Ross, Ross & Associates, San Francisco, California, for the plaintiff-appellee.

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

ORDER

PER CURIAM.

A judge of this court called for en banc review. A vote was taken and a majority of the non-recused active judges did not vote in favor of en banc review. The sua sponte call for en banc review is therefore DENIED.

The opinion filed on December 2, 1998, 161 F.3d 1199, is amended in accordance with the amended opinion attached hereto.

OPINION

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), cert. denied, ___ U.S. ___, 118 S.Ct. 1511, 140 L.Ed.2d 665 (1998)).

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 ("Union"). The collective bargaining agreement ("CBA") between Campbell Soup and the Union includes a nondiscrimination clause which provides in part that "disputes 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 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.

A.

"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).

The FAA does not define the phrase "contract evidencing a transaction involving commerce," so we turn to the "ordinary, contemporary and common meaning" of that phrase. See United States v. Iverson, 162 F.3d 1015, 1022 (9th Cir.1998). 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 if it involves interstate commerce.

As pertinent, when Congress passed the FAA in 1925, the term "transaction" commonly meant "a business deal; an act involving buying and selling." Webster's Int'l Dictionary 2688 (2d ed. unabridged 1939). See also 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 . . . ." ). An employment relationship, however, is not commonly referred to as a "business deal" or as "an act involving buying and selling." Instead, the connotation of the phrase "transaction involving commerce"—as Congress would have understood it in 1925—was of a commercial deal or merchant's sale. Therefore, the coverage section of the FAA, § 2, appears not to encompass employment contracts at all. See Archibald Cox, Grievance Arbitration in the Federal Courts, 67 Harv. L.Rev. 591, 599 (1954) ("It is hard enough to think of any collective bargaining agreement or employment contract as evidence of a transaction involving commerce.") (internal quotation marks omitted); Henry H. Drummonds, The Sister Sovereign States: Preemption and the Second Twentieth Century Revolution in the Law of the American Workplace, 62 Fordham L.Rev. 469, 557 (1993) ("The FAA's reference to `transaction involving commerce' might not have been understood in 1924 as including employment contracts.").

Section 1 of the FAA, however, contains definitions and, with respect to "commerce," concludes that "nothing herein contained 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 might suggest 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 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 transport people or goods in interstate commerce. Craft does not actually transport people or goods 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.⁵

B.

Courts that have adopted the latter view have relied on a contemporary understanding of the terms used in the FAA.⁶ The FAA, however, is not a modern statute. As noted above, the FAA, including §§ 1 and 2, was enacted in 1925, before the Supreme Court dramatically expanded the meaning of interstate commerce in the 1930s. Thus, to understand whether Congress intended for the FAA to apply to employment contracts, we need to understand Congress' commerce power 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, 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 (citation and internal quotation marks 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), employees not directly working 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 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 Workers' Int'l Union v. Herkert & Meisel Trunk Co., 265 U.S. 457, 464-65, 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." Thus, Congress' Commerce Clause...