Gilmer v. Interstate/Johnson Lane Corp.,

Brief Fact Summary.

Man that gets fired sues his company for age discrimination. Defendant attempts to compel arbitration of the dispute based on a registration application to the New York Stock Exchange Plaintiff signed where he agreed to arbitrate any dispute with Defendant.

Synopsis of Rule of Law.

A claim under the Age Discrimination and Employment Act (ADEA) may be subjected to compulsory arbitration pursuant to an agreement in a securities registration application.

Facts.

Plaintiff Gilmer was fired by Defendant Interstate after working there for six years. Plaintiff Gilmer filed an age discrimination claim with the Equal Employment Opportunity Comission (EEOC) and sued Defendant under the Age Discriniation in Employment Act (ADEA) claiming that he was fired because of his age. Defendant Interstate’s filed a motion to compel arbitration citing an agreement that Plaintiff Gilmer signed when he signed his registration application to the New York Stock Exchange which stated the Plaintiff agreed to arbitrate any dispute against Defendant. The district court denied Defendant Interstate’s motion to compel arbitration stating that under Alexander v. Gardner-Denver Co. Congress did not intend to take away ADEA claimants’ ability to file suit in court. The court of appeals reversed, finding no Congressional intent to invalidate arbitration agreements. Plaintiff Gilmer appealed and the United States Supreme Court granted certiorari.

Issue.

Can a claim under the ADEA be subjected to mandatory arbitration based on an agreement in a securities registration application?

Held.

Yes, a claim under the ADEA can be subjected to mandatory arbitration based on an agreement in a securities registration application

Dissent.

Justice Justice Stevens with Justice Marshall dissenting

The court ignores evidence that employment contracts are excluded from the FAA and there is a strong claim that arbitration is not an appropriate venue for ADEA and Title VII claims because arbitration cannot offer broad relief.

Discussion.

1. Since the Federal Arbitration Act (FAA) was passed federal courts have placed arbitration agreements on the same plane as contracts.
2. Therefore an agreement to arbitrate will be upheld even if it waives statutory rights.
3. The court disagrees with Plaintiff Gilmer’s argument that the spirit of the ADEA does not allow litigants to be forced into arbitration.
4. The ADEA does not explicitly forbid arbitration, but it actually encourages flexible resolution of claims brought under the ADEA.
5.  All of Plaintiff Gilmer’s arguments are rejected: it is speculation that arbitration panels are biased, the limited discovery in arbitration is counterbalanced with the absence of evidence rules, it is not true that many ADEA cases are arbitrated so the concern about arbitration stunting ADEA jurisprudence is not justified, and the inequality in bargaining power alone is not enough to invalidate a contract.
6. Therefore holding below is affirmed.