The Court overturns Alexander v. Gardner-Denver and opens the door to forcing employees to arbitrate claims when an employer violates their workplace rights.

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Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)
 

Relevant Facts: A stockbroker brought suit in federal court alleging his employer had discriminated against him in violation of the Age Discrimination in Employment Act (ADEA). The NYSE representative application he was legally required to sign in order to work as a broker included an arbitration clause covering employment disputes. The employer moved to compel arbitration under the FAA, and was denied. The district court, relying on Alexander v. Gardner-Denver, concluded Congress intended to protect ADEA claimants from waiver of the judicial forum. The Court of Appeals reversed.

 

Question Before The Court: Whether forced arbitration clauses in employment contracts that prevent workers from bringing statutory claims against an employer in a judicial forum are enforceable.

 

The Opinion: The Court placed the burden on the worker alleging discrimination to show that Congress intended to protect his right to go to court against his more-powerful employer. The employee raised many arguments against the appropriateness of arbitration procedures in ADEA cases. The plaintiff began by arguing that compulsory arbitration is improper as it deprives claimants of the judicial forum provided for by the ADEA. Further, the plaintiff argued, the ADEA is not just about individual claims, but also furthers important social policies. The Court was unconvinced, providing, “Congress did not explicitly preclude arbitration or other non-judicial resolution of claims. . . . We do not perceive any inherent inconsistency between [the ADEA’s important social] policies, however, and enforcing agreements to arbitrate age discrimination claims.”

 

While the plaintiff’s expressed concerns that the arbitrator could be biased in favor of the employer, the Court explained, “We don’t presume parties and the arbitral body will be unable to retain competent and impartial arbitrators.” The Court argued that because the arbitration clause in this particular case provided the employee one preemptory challenge and specified that the NYSE arbitration rules would be utilized, the employee retained adequate protections against bias. The employee also argued that because discovery is more limited in arbitration than federal court, it may become too difficult to prove an ADEA claim in arbitration. The Court observed that age discrimination claims likely require no more discovery than complex RICO or anti-trust claims, which the Court had recently held to be arbitrable. The plaintiff highlighted that the lack of written opinions and public scrutiny of arbitrators’ decisions would stifle important developments in ADEA case law, to which the Court responded that other ADEA cases will come along and those future cases will be public and contribute to that body of law.

 

Lastly, the worker objected to the enforceability of this forced arbitration clause on the grounds that the contract was a product of unequal bargaining power between an employee and employer. The Court was unmoved, providing that “mere inequity in bargaining power . . . is not sufficient reason to hold arbitration agreements are never enforceable in the employment context.”

 

The Court ignored that its own jurisprudence, and not any action of Congress, expanded the jurisdictional reach of the FAA to the states. The majority contended that “concurrent state and federal jurisdiction . . . indicates Congress’ desire to ‘allow claimants a broader right to select the forum for resolving disputes.” The Court ruled that employees could be compelled to arbitrate ADEA claims, asserting, “It is by now clear that statutory claims may be the subject of an arbitration agreement, enforceable pursuant to the FAA. . .. Although all statutory claims may not be appropriate for arbitration, having made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.”

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