Craft v. Campbell Soup Co.
99 Daily Journal DAR 5098, 161 L.R.R.M. (BNA) 2403, 177 F.3d 1083 (1998)
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Rule of Law:
The Federal Arbitration Act (FAA) does not apply to any labor or employment contracts. The exclusion in Section 1 of the FAA for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce" exempts all employment contracts from the FAA's coverage.
Facts:
- Anthony I. Craft was an employee of Campbell Soup Company.
- Craft was a member of the Food Process Workers and Warehousemen and Helpers Local Union 228.
- A collective bargaining agreement (CBA) between Campbell Soup and the Union contained a nondiscrimination clause.
- The CBA specified that disputes arising under the nondiscrimination clause were subject to the agreement's grievance and arbitration procedure.
- Craft filed a grievance alleging racial discrimination and harassment by Campbell Soup.
- While the grievance was pending arbitration, Craft initiated a separate legal action.
Procedural Posture:
- Anthony I. Craft sued Campbell Soup Company in U.S. District Court, alleging Title VII race discrimination and various state law claims.
- Campbell Soup filed a motion for summary judgment, arguing Craft's claims must be arbitrated pursuant to the collective bargaining agreement.
- The district court granted summary judgment to Campbell Soup on the state law claims.
- The district court denied Campbell Soup's motion for summary judgment as to the Title VII claims, ruling that arbitration could not be compelled.
- Campbell Soup, as the appellant, filed an interlocutory appeal of the district court's denial to the U.S. Court of Appeals for the Ninth Circuit, with Craft as the appellee.
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Issue:
Does the Federal Arbitration Act (FAA) apply to collective bargaining agreements and other employment contracts, thereby providing a basis for appellate jurisdiction over an interlocutory order denying a motion to compel arbitration?
Opinions:
Majority - Per Curiam
No. The Federal Arbitration Act (FAA) does not apply to labor or employment contracts. The court's reasoning is based on a historical interpretation of the FAA as enacted in 1925. First, the FAA's coverage provision in § 2 applies to a "contract evidencing a transaction involving commerce," which the court interprets as referring to commercial deals between merchants, not employment relationships. Second, Congress's Commerce Clause power in 1925 was narrowly understood to extend only to workers directly involved in the transportation of goods in interstate commerce. Since § 1 of the FAA explicitly excludes these very workers, the court concludes that Congress intended to exclude all employment contracts over which it had jurisdiction at the time. Finally, the legislative history confirms the Act's purpose was to address commercial, not labor, disputes.
Dissenting - Brunetti
Yes. The Federal Arbitration Act (FAA) applies to most employment contracts, with a narrow exception only for transportation workers. The plain language of the § 1 exclusion, which specifically lists "seamen" and "railroad employees," would be rendered meaningless surplusage if the general catch-all phrase "any other class of worker engaged in...commerce" were interpreted to exclude all employment contracts. Standard rules of statutory construction, such as ejusdem generis, support limiting the general phrase to workers similar to those listed—i.e., transportation workers. Furthermore, the use of the broad phrase "involving commerce" in the § 2 coverage provision, versus the narrower phrase "engaged in...commerce" in the § 1 exclusion, indicates a clear congressional intent to give the exclusion a more limited scope than the Act's overall coverage.
Analysis:
This Ninth Circuit decision created a significant circuit split by holding that the FAA's § 1 exclusion applies to all employment contracts, a position contrary to the majority of other circuits which limited the exclusion to transportation workers. The court's reasoning was uniquely grounded in a historical interpretation of the FAA and the Commerce Clause as they existed in 1925. This case is now primarily studied as the leading example of the broad-exclusion argument that was ultimately rejected by the Supreme Court in Circuit City Stores, Inc. v. Adams (2001), which held that the § 1 exclusion is in fact narrow and applies only to transportation workers.
