• Ninth Circuit Okays Mandatory Arbitration Agreements
  • April 30, 2003 | Author: Amy Wright Littrell
  • Law Firm: Ford & Harrison LLP - Tampa Office
  • Falling in line with the other Federal Appeals Courts and the U.S. Supreme Court, the Ninth Circuit Court of Appeals has held that employers may require employees to sign agreements to arbitrate Title VII claims as a condition of their employment. See EEOC v. Luce, Forward, Hamilton & Scripps. The decision overruled the Ninth Circuit's 1998 ruling in Duffield v. Robertson Stephens that prohibited employers from requiring employees to agree to arbitrate Title VII claims as a requirement of employment. The court also vacated a permanent injunction issued against Luce, Forward, based on the Duffield decision, prohibiting it from requiring employment applicants to sign an agreement to arbitrate Title VII claims. The court also held that the former employee did not engage in a protected activity when he refused to sign the arbitration agreement and therefore could not bring a claim for retaliation under Title VII.

    The court in Luce, Forward noted that the Duffield decision was at odds with other Ninth Circuit decisions and that other Federal Appeals Courts have repudiated Duffield's holding. The court also held that the U.S. Supreme Court's decision in Circuit City Stores v. Adams implicitly overruled Duffield. The Ninth Circuit found that Circuit City's holding that arbitration agreements can be enforced under the Federal Arbitration Act without contravening the policies underlying the federal anti-discrimination laws could not be reconciled with Duffield's holding that Congress intended Title VII to preclude compulsory arbitration of discrimination claims.

    This decision will be welcome news for employers in the Ninth Circuit, which encompasses nine Western states, including California. California employers, however, should be aware that the California legislature has approved a bill limiting arbitration of discrimination claims under state law and has sent the bill to Governor Gray Davis. The bill would make it unlawful for employers to refuse to hire an applicant or retaliate against an employee who refuses to waive rights under California's Fair Employment and Housing Act (FEHA) as part of an employer-required arbitration system. The bill would apply to all private employers in California with five or more employees. The California Chamber of Commerce called the bill a job killer and warned that it would likely be preempted by the Federal Arbitration Act. The governor has until September 30, 2002 to decide whether he will sign the bill, veto it, or let it become law without his signature.