Gilmer v. Interstate/Johnson Lane Corp., 88-1796

Decision Date28 March 1990
Docket NumberNo. 88-1796,88-1796
Citation895 F.2d 195
Parties52 Fair Empl.Prac.Cas. 26, 52 Empl. Prac. Dec. P 39,601, 58 USLW 2467 Robert D. GILMER, Plaintiff-Appellee, v. INTERSTATE/JOHNSON LANE CORPORATION, formerly known as Interstate Securities Corporation, Defendant-Appellant.
CourtU.S. Court of Appeals — Fourth Circuit

James Bernard Spears, Jr. (Robert S. Phifer, Haynsworth, Baldwin, Miles, Johnson, Greaves and Edwards, P.A., Greenville, S.C., on brief), for defendant-appellant.

W.R. Loftis, Jr. (John T. Allred, Robin E. Shea, Petree, Stockton & Robinson, Winston-Salem, N.C., on brief), for plaintiff-appellee.

Before WIDENER and WILKINSON, Circuit Judges, and YOUNG, Senior United States District Judge for the District of Maryland, sitting by designation.

WILKINSON, Circuit Judge:

The question before us is whether an agreement between an individual employee and his employer compelling arbitration of all claims arising out of employment is enforceable when the claim against the employer is one for violation of the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. Secs. 621 et seq. (1982 & Supp.1986). The district court ruled that such an arbitration agreement is not enforceable in the face of a claim arising under the ADEA. Because we find no congressional intent to preclude enforcement of arbitration agreements in the ADEA's text, its legislative history, or its underlying purposes, see Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987), we reverse the judgment of the district court.


Robert D. Gilmer was hired by Interstate/Johnson Lane in May 1981 as a manager of financial services. As required for his employment, Gilmer registered as a securities representative with the New York Stock Exchange. Gilmer's application for his securities registration contained an arbitration clause pursuant to which he agreed to the arbitration of any disputes between himself and his employer arising out of his employment or the termination of his employment. 1

In November 1987, Gilmer's employment was terminated. In August 1988, he brought suit against Interstate in federal court alleging that his termination violated the ADEA. Interstate filed a motion to compel arbitration as authorized under the Federal Arbitration Act, 9 U.S.C. Secs. 1 et seq. The district court denied the motion, ruling that arbitration procedures are inadequate for the final resolution of rights created by the ADEA and that Congress intended to protect ADEA plaintiffs from waiver of the judicial forum.

Interstate appeals. 28 U.S.C. Sec. 1292(a)(1).


In a trilogy of recent cases, Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987), and Rodriguez de Quijas v. Shearson/American Express, Inc., --- U.S. ----, 109 S.Ct. 1917, 104 L.Ed.2d 526 (1989), the Supreme Court has endorsed arbitration as an effective and efficient means of dispute resolution. 2 The Court has emphasized that the Federal Arbitration Act (FAA) "establishes a 'federal policy favoring arbitration,' " McMahon, 107 S.Ct. at 2337 (quoting Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941, 74 L.Ed.2d 765 (1983)), which "is at bottom a policy guaranteeing the enforcement of private contractual arrangements," Mitsubishi, 473 U.S. at 625, 105 S.Ct. at 3353. Under the FAA, enforcement of an arbitration agreement is equally appropriate whether the parties have agreed to arbitrate rights created by contract or by statute, since "[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum." Id. at 628, 105 S.Ct. at 3354-55. An arbitration agreement is unenforceable only if Congress has evinced an intention to preclude waiver of the judicial forum for a particular statutory right, or if the agreement was procured by fraud or use of excessive economic power. See id. at 627-28, 105 S.Ct. at 3354-55; McMahon, 107 S.Ct. at 2337.

The McMahon Court established the framework for determining whether an arbitration agreement is enforceable under the FAA. The Court ruled that the Act standing alone mandates enforcement of arbitration agreements, but that Congress can override this mandate by indicating that it is precluding waiver of the judicial forum for the particular statutory right at issue. The burden is on the party opposing arbitration to show that Congress intended to preclude waiver. Congressional intent is to be deduced from the statute's text or legislative history, or from an inherent conflict between arbitration and the statute's underlying purposes. McMahon, 107 S.Ct. at 2337-38 (citing Mitsubishi, 473 U.S. at 628, 632-37, 105 S.Ct. at 3356-59).

We find nothing in the text, legislative history, or underlying purposes of the ADEA indicating a congressional intent to preclude enforcement of arbitration agreements. Arbitration is nowhere mentioned in the text of the statute, and "[t]his silence in the text is matched by silence in the statute's legislative history." McMahon, 107 S.Ct. at 2344. Nor is there any statement on the part of Congress to indicate that a federal judicial forum is the only appropriate forum for vindication of the rights created by the ADEA. Moreover, we see no conflict between arbitration and the underlying purposes of the ADEA which would preclude arbitration of ADEA claims.

The Third Circuit majority in Nicholson v. CPC Int'l, Inc., 877 F.2d 221 (3d Cir.1989), which refused to enforce arbitration of an ADEA claim, conceded that in the statutory language and legislative history of the ADEA it could "find no direct reference to arbitration" and that it was therefore forced to "draw inferences from Congress' actions." Id. at 225. Courts should be reluctant, however, to imply in a statute an intention to preclude enforcement of arbitration agreements where Congress has not expressed one, particularly in light of the countervailing intention expressed by Congress in the FAA. Gilmer has nonetheless advanced numerous arguments why we should do so, and we shall proceed to address them.


Gilmer argues, in reliance upon Nicholson, that congressional intent to preclude waiver of the judicial forum can be surmised from the role Congress has established for the Equal Employment Opportunity Commission (EEOC) in the enforcement of the ADEA. The ADEA empowers the EEOC to investigate age discrimination claims and to bring enforcement actions to ensure compliance with the statute's provisions. 29 U.S.C. Sec. 626(a), (b). The EEOC is authorized to inspect places of employment, to question employees, and to impose recordkeeping and reporting requirements on employers. 29 U.S.C. Sec. 626(a). It may also endeavor to effect voluntary compliance with ADEA provisions through informal methods of conciliation, conference, and persuasion. 29 U.S.C. Sec. 626(b). Gilmer contends, again by reference to Nicholson, that if arbitration agreements are enforced, the EEOC will no longer be able to function as a protector of employee rights under the ADEA. He argues that since filing a charge with the EEOC is not a prerequisite for arbitral action as it is for judicial action under the ADEA, an employee who is required to adhere to his agreement and proceed to arbitration will no longer file a charge. Thus, he maintains, the EEOC will be deprived of the charge both as an incentive to undertake conciliation and as notification in case it wishes to institute an enforcement action.

We disagree. The EEOC's continued effectiveness is not now, nor has it ever been, dependent on its participation in the resolution of all claims under the ADEA. For example, it is well-settled that an individual may voluntarily settle his ADEA claims without EEOC involvement. See Moore v. McGraw Edison Co., 804 F.2d 1026, 1033 (8th Cir.1986); Runyan v. National Cash Register Corp., 787 F.2d 1039, 1044-45 (6th Cir.1986). Arbitration can achieve much the same vindication of individual rights and relief of agency dockets as voluntary, non-supervised settlements. See Coventry v. United States Steel Corp., 856 F.2d 514, 522 n. 8 (3d Cir.1988). Of course, nothing about the arbitral process would preclude an individual from filing a general charge against his employer with the EEOC which the EEOC would be empowered to investigate, conciliate, or enforce through litigation. We do not think, however, that implementation of the statutory purpose is dependent upon the EEOC's involvement in each and every allegation of age discrimination. For example, if the ADEA complainant prevails at arbitration, the EEOC may indeed be deprived of a charge; however, it is difficult to see what difference EEOC involvement would have made in the vindication of that litigant's rights.

Further, we think it clear that Congress contemplated that entities other than the EEOC and federal courts would play important roles in remedying age discrimination. See Mathis v. Allied Wholesale Distributors, Inc., 680 F.Supp. 1545, 1547 (M.D.Ga.1988) (state courts possess concurrent jurisdiction over ADEA suits). The premise of the Federal Arbitration Act is the availability to parties of multiple forums rather than the imposition upon them of a single forum. If litigants believe that arbitration offers a prompter, more expert, and less expensive way to resolve their differences, Congress has decreed that such an option be open to them. See Mitsubishi, 473 U.S. at 628, 105 S.Ct. at 3334-55. We are reluctant to conclude that the mere fact of administrative involvement in a statutory scheme of enforcement operates as an implicit exception to the presumption of arbitral...

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