Gilmer v. Interstate/Johnson Lane Corp.
500 U.S. 20 (1991)
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Rule of Law:
Claims arising under a federal statute, such as the Age Discrimination in Employment Act (ADEA), are subject to compulsory arbitration pursuant to a valid pre-dispute arbitration agreement. A party can only avoid arbitration if they demonstrate that Congress intended to preclude a waiver of a judicial forum for that specific statutory right.
Facts:
- In May 1981, Interstate/Johnson Lane Corporation (Interstate) hired Robert Gilmer as a Manager of Financial Services.
- As a required condition of his employment, Gilmer registered as a securities representative with the New York Stock Exchange (NYSE).
- His NYSE registration application included a clause requiring him to arbitrate any dispute or controversy with his employer arising out of his employment or termination.
- This clause was mandated by NYSE Rule 347.
- In 1987, Interstate terminated Gilmer's employment.
- At the time of his termination, Gilmer was 62 years old.
Procedural Posture:
- Gilmer first filed an age discrimination charge with the Equal Employment Opportunity Commission (EEOC).
- Gilmer then filed a lawsuit in the United States District Court for the Western District of North Carolina, alleging Interstate violated the ADEA.
- Interstate filed a motion in the District Court to compel arbitration based on the agreement in Gilmer's securities registration application.
- The District Court denied Interstate's motion to compel arbitration.
- Interstate, as appellant, appealed the denial to the United States Court of Appeals for the Fourth Circuit.
- The Court of Appeals reversed the District Court's decision, holding that the ADEA did not preclude the enforcement of the arbitration agreement.
- The Supreme Court granted certiorari to resolve a conflict among the circuit courts.
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Issue:
Is a claim brought under the Age Discrimination in Employment Act of 1967 (ADEA) subject to compulsory arbitration pursuant to an arbitration agreement in a securities registration application?
Opinions:
Majority - Justice White
Yes. A claim under the ADEA can be subjected to compulsory arbitration. By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute, but merely submits to their resolution in an arbitral, rather than a judicial, forum. The Federal Arbitration Act (FAA) establishes a liberal federal policy favoring arbitration. The burden is on the party opposing arbitration, Gilmer in this case, to show that Congress intended to preclude a waiver of a judicial forum for ADEA claims. Such an intention must be discoverable in the statute's text, legislative history, or an 'inherent conflict' between arbitration and the statute's purposes. The Court found no such intention, concluding that arbitration is not inconsistent with the ADEA's framework or purpose, nor does it undermine the EEOC's enforcement role. The Court distinguished the case from Alexander v. Gardner-Denver Co., noting that Gardner-Denver involved arbitration of contractual rights under a collective-bargaining agreement, not an individual's agreement to arbitrate statutory claims.
Dissenting - Justice Stevens
No. Claims under the ADEA should not be subject to compulsory arbitration. The Federal Arbitration Act (FAA) contains an exclusion in Section 1 for 'contracts of employment,' which should be interpreted to cover all agreements related to the employment relationship, including the registration application at issue here since it was a condition of employment. The majority's narrow interpretation that the clause was not in a 'contract of employment' ignores this reality. The FAA's legislative history indicates it was intended for commercial disputes between merchants of equal bargaining power, not for employment disputes. Furthermore, compulsory arbitration frustrates the purposes of the ADEA, as arbitration generally does not allow for the broad, class-wide injunctive relief that courts can provide to eradicate discrimination, thereby undermining the important role of the judiciary in enforcing civil rights.
Analysis:
This landmark decision significantly expanded the enforceability of mandatory, pre-dispute arbitration agreements in the employment context. By holding that ADEA claims are arbitrable, the Court signaled that most federal statutory employment claims would also be subject to arbitration, fundamentally shifting many employment disputes from public courts to private arbitral forums. The ruling narrowed the precedent of Alexander v. Gardner-Denver, confining its applicability to the collective-bargaining context. Consequently, this case prompted the widespread adoption of mandatory arbitration clauses in employment contracts across many industries, sparking ongoing debate about access to justice and employee rights.
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