IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, KIDDER, PEABODY & CO., INC.

97-6316 IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, v. Plaintiff-Appellant, KIDDER, PEABODY & CO., INC., Defendant-Appellee. On Appeal from the United States District Court for the Southern District of New York BRIEF AMICUS CURIAE OF THE EQUAL EMPLOYMENT ADVISORY COUNCIL IN SUPPORT OF DEFENDANT-APPELLEE Ann Elizabeth Reesman Erin Quinn Gery* MCGUINESS & WILLIAMS 1015 Fifteenth Street, N.W. Suite 1200 Washington, D.C. 20005 Attorneys for Amicus Curiae Equal Employment Advisory Council March 9, 1998 *Counsel of Record

TABLE OF CONTENTS TABLE OF AUTHORITIES... ii ISSUE PRESENTED...2 INTEREST OF THE AMICUS CURIAE...2 STATEMENT OF THE CASE...4 SUMMARY OF ARGUMENT...6 ARGUMENT...8 I. THE FEDERAL ARBITRATION ACT RESTRAINS THE EEOC FROM LITIGATING DUPLICATE CLAIMS FOR MONETARY RELIEF ON BEHALF OF INDIVIDUALS WHO HAVE AGREED TO PURSUE SUCH CLAIMS THROUGH ARBITRATION...8 A. As the District Court Correctly Observed, the EEOC s Limited Enforcement Interest Must Yield to the FAA...8 B. To Allow the EEOC to Maintain This Action Would Destroy the Mutuality of Obligations Undertaken by the Parties to the Arbitration Agreements and Would Thwart the Strong National Policy Expressed in the FAA Favoring Arbitration...12 II. THE PUBLIC INTEREST IN PREVENTING AND REMEDYING DISCRIMINATION IS VINDICATED THROUGH ARBITRATION...15 A. The Supreme Court Already Has Held That the Public Interest Is Served By Vindicating Statutory Employment Disputes Through Arbitration and Without EEOC Involvement...15 B. The EEOC Does Not Serve Any Additional Public Purposes by Filing a Court Suit to Seek the Same Remedies Available to an Individual Through Arbitration...18 CONCLUSION...19

TABLE OF AUTHORITIES CASES Austin v. Owens-Brockway Glass Container, 78 F.3d 875 (4th Cir.), cert. denied, 117 S. Ct. 432 (1996)...3 Citrus Marketing Board v. J. Lauritzen A/S, 943 F.2d 220 (2d Cir. 1991)...10 Cosgrove v. Shearson Lehman Brothers, 105 F.3d 659 (6th Cir.), cert. denied, 118 S. Ct. 169 (1997)... 3, 6, 19 Duffield v. Robertson Stephens & Co., 1997 U.S. Dist. LEXIS 14996 (N.D. Cal. Mar. 13, 1997), appeal docketed, No. 97-15698 (9th Cir.)...6, 19 EEOC v. Armour & Co., 13 FEP Cas. (BNA) 297 (D. Neb. 1974)...20 EEOC v. Frank s Nursery & Crafts, 966 F. Supp. 500 (E.D. Mich. 1997), appeal docketed, No. 97-1698 (6th Cir. Nov. 17, 1997)...6, 15 EEOC v. Goodyear Aerospace Corp., 813 F.2d 1539 (9th Cir. 1987)...21 EEOC v. Huttig Sash & Door Co., 511 F.2d 453 (5th Cir. 1975)...20 EEOC v. Johnson & Higgins, Inc., 91 F.3d 1529 (2d Cir. 1996), cert. denied, 118 S. Ct. 47 (1997)...21 EEOC v. Kidder, Peabody & Co., 979 F. Supp. 245 (S.D.N.Y. 1997)...passim General Telephone Co. v. EEOC, 446 U.S. 318 (1980)...20 Gilmer v. Interstate/Johnson Lane Corp., 895 F.2d 195 (4th Cir. 1990), aff d, 500 U.S. 20 (1991)...9, 13 ii

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)...passim Great Western Mortgage Corp. v. Peacock, 110 F.3d 222 (3d Cir.), cert. denied, 118 S. Ct. 299 (1997)... 3 McCord v. Burlington N. Corp., 58 F.3d 640 (11th Cir. 1995)...3 McCowan v. Sears, Roebuck & Co., 908 F.2d 1099 (2d Cir.), cert. denied, 498 U.S. 897 (1990)...8, 10 Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985)...7 Morrie Mages & Shirlee Mages Foundation v. Thrifty Corp., 916 F.2d 402 (7th Cir. 1990)...10 Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1 (1983)...8, 9 Mueller v. Reich, 54 F.3d 438 (7th Cir. 1995), vacated, remanded on other grounds, 117 S. Ct. 1077 (1997)...11 Oldroyd v. Elmira Savings. Bank, FSB, 13 IER Cas. (BNA) 1025 (2d Cir. 1998)...14 Prudential Insurance Co. of America v. Lai, 42 F.3d 1299 (9th Cir. 1994), cert. denied, 516 U.S. 812 (1995)...3 Southland Corp. v. Keating, 465 U.S. 1 (1984)...14 Sparling v. Hoffman Construction Co, 864 F.2d 635 (9th Cir. 1988)...9 Williams v. Cigna Financial Advisors, 56 F.3d 656 (5th Cir. 1995)...3 iii

DOCKETED CASES Duffield v. Robinson Stephens & Co., Appeal No. 97-15698 (9th Cir.)...3 EEOC v. Franks Nursery & Crafts, Appeal No. 97-1698 (6th Cir.)...4, 19 STATUTES Age Discrimination in Employment Act (ADEA), 29 U.S.C. 621 et seq.,...2, 4, 9 29 U.S.C. 626(b)...11 29 U.S.C. 626(c)...12 Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq....11 29 U.S.C. 211 (b)...11 29 U.S.C. 216 (a)...11 29 U.S.C. 217...11 Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq....3, 5, 8 9 U.S.C. 2...8, 15-16 Title VII of the Civil Rights Act of 1964 (Title VII), 42 U.S.C. 2000e et seq.),...15 15 U.S.C. 77t, 78u...9 MISCELLANEOUS Equal Employment Opportunity Commission, EEOC National Enforcement Plan (Feb 8, 1996)...19 Equal Employment Opportunity Commission, EEOC Notice 915.002: Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment (July 10, 1997)...6, 19 iv

IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT No. 97-6316 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, v. Plaintiff-Appellant, KIDDER, PEABODY & CO., INC., Defendant-Appellee. On Appeal from the United States District Court for the Southern District of New York BRIEF AMICUS CURIAE OF THE EQUAL EMPLOYMENT ADVISORY COUNCIL IN SUPPORT OF DEFENDANT-APPELLEE The Equal Employment Advisory Council respectfully submits this brief amicus curiae with the consent of all parties. Original consent letters have been filed with the Clerk of this Court. The brief urges this Court to uphold the decision below and thus supports the position of Defendant-Appellee before this Court.

ISSUE PRESENTED Whether a federal enforcement agency can proceed to litigate a claim in federal court that is subject to a valid and enforceable arbitration agreement; that is, whether the EEOC can invoke its enforcement role under the ADEA to circumvent the FAA and Supreme Court precedent. INTEREST OF THE AMICUS CURIAE The Equal Employment Advisory Council (EEAC or Council) is an association of employers organized in 1976 to promote sound, practical approaches to eliminating employment discrimination. Its members include about 300 of the nation s largest private sector employers. EEAC's directors and officers include many of industry's foremost experts in the field of equal employment opportunity. Their combined experience gives the Council valuable insight into the practical, as well as legal, issues surrounding the proper interpretation and application of fair employment laws and policies. EEAC s members are all employers subject to the Age Discrimination in Employment Act (ADEA), 29 U.S.C. 621 et seq., and other federal, state, and local laws governing employment. Many of EEAC's members have contracts with their employees governing some or all terms and conditions of employment, including agreements to arbitrate disputes arising out of the employment relationship. EEAC's members are interested in the extent to which such contractual commitments to arbitrate provide the exclusive forum for resolving covered employment disputes, and in the ability or the inability of federal enforcement agencies to ignore or eviscerate the 2

effect of such choice of forum between the parties to a dispute. Thus, the issues presented in this appeal are extremely important to the nationwide corporate constituency that EEAC represents. In the 22 years since its founding, because of its interest in the application of the nation s civil rights laws, EEAC has filed over 425 amicus curiae briefs with the United States Supreme Court, the U.S. Circuit Courts of Appeals, and various state supreme courts. Specifically, because of its interest in the enforcement of agreements to arbitrate employment-related disputes as the primary dispute resolution mechanism for issues covered by such agreements, EEAC filed an amicus curiae brief with the Supreme Court in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), which confirmed that a private agreement to arbitrate claims of employment discrimination is enforceable under the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq. More recently, EEAC has filed amicus briefs in the U.S. Circuit Courts of Appeals in cases involving the enforceability and effect of such arbitration agreements, 1 including their effect on EEOC suits involving arbitrable claims. 2 EEAC thus has an interest in, and a familiarity with, the legal and public policy issues presented to the Court in this case. Because of its significant experience in 1 E.g., Duffield v. Robinson Stephens & Co., Appeal No. 97-15698 (9th Cir.) (enforceability); Cosgrove v. Shearson Lehman Bros., 105 F.3d 659 (6th Cir.), cert. denied, 118 S. Ct. 169 (1997) (enforceability); Austin v. Owens-Brockway Glass Container, 78 F.3d 875 (4th Cir.), cert. denied, 117 S. Ct. 432 (1996) (enforceability of arbitration clause in collective bargaining agreement as applied to statutory discrimination claims); Williams v. Cigna Fin. Advisors, 56 F.3d 656 (5th Cir. 1995) (enforceability); Prudential Ins. Co. of America v. Lai, 42 F.3d 1299 (9th Cir. 1994), cert. denied, 516 U.S. 812 (1995) (enforceability); McCord v. Burlington N. Corp., 58 F.3d 640 (11th Cir. 1995) (clause in collective bargaining agreement); Great Western Mortg. Corp. v. Peacock, 110 F.3d 222 (3d Cir.), cert. denied, 118 S. Ct. 299 (1997) (enforceability). 2 E.g., EEOC v. Frank s Nursery & Crafts, Appeal No. 97-1698 (6th Cir.) (preclusion of EEOC suit on claims subject to mandatory arbitration). 3

these matters, EEAC is well situated to brief this Court on the ramifications of the issues beyond the immediate concerns of the parties to the case. STATEMENT OF THE CASE The Equal Employment Opportunity Commission (EEOC or Commission) filed a civil suit against Kidder, Peabody & Co., Inc. (Kidder, Peabody), seeking damages on behalf of various former Kidder, Peabody Investment Banking Department employees for an alleged pattern or practice of age discrimination under the Age Discrimination in Employment Act, 29 U.S.C. 621 et seq.. EEOC v. Kidder, Peabody & Co., 979 F. Supp. 245 (S.D.N.Y. 1997). 3 The former investment bankers on whose behalf the EEOC sought damages all had signed securities industry arbitration agreements (either a Form U-4 or other registration application) when they began working for Kidder, Peabody. These former employees, therefore, could not file their own civil suits against Kidder, Peabody based on allegations of age discrimination. Id. at 246. The district court ruled that, because the former investment bankers were required to arbitrate any ADEA claims, the EEOC had no basis to maintain an independent ADEA suit for monetary relief against Kidder, Peabody. The district court relied on the Supreme Court's decision in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), and the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq. (FAA), noting that the Supreme Court already had considered the various interests underlying the FAA and ADEA (including the EEOC s enforcement role in ADEA cases) in holding that ADEA claims could be arbitrated: 3 The EEOC also initially sought injunctive relief, but it withdrew that claim after learning that Kidder, Peabody had discontinued its investment banking operations. The scope of the EEOC s suit therefore was limited to damages only. Id. at 245-46. 4

the clear implication of Gilmer is that the EEOC may not seek monetary relief on behalf of claimants who have entered into valid arbitration agreements. First, the FAA expresses the strong Congressional preference in favor of enforcing valid arbitration agreements freely entered into by contracting parties. Moreover, the Supreme Court has held that precluding individual suits based on those arbitration agreements is not inconsistent with the ADEA. Nor is it inconsistent with the ADEA for individuals to settle claims with an employer, thereby waiving not only the right to recover in their lawsuit, but also the right to recover in a suit brought by the EEOC on their behalf. That being so, it would frustrate the purposes of the FAA if the Court allowed the EEOC to recover monetary relief where parties have agreed to arbitrate their grievances. 979 F. Supp. at 247 (internal citations omitted). 5

SUMMARY OF ARGUMENT Pre-dispute agreements to arbitrate statutory civil rights claims are lawful, desirable and enforceable under the Federal Arbitration Act (FAA), 9 U.S.C. 1 et. seq. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991). It is readily apparent that EEOC brought this case in an effort to circumvent and (it surely hopes) to effectively nullify the holdings of Gilmer and its progeny a line of decisions that the EEOC simply has never liked. Indeed, despite the Supreme Court s express approval in Gilmer of a mandatory, pre-dispute arbitration agreement essentially identical to the ones involved in this case, EEOC has declared that it remains adamantly opposed to the enforcement of such agreements, Equal Employment Opportunity Commission, EEOC Notice 915.002, 4 and has attempted unsuccessfully in courts throughout the country to block their enforcement with respect to claims under the ADEA and other federal employment laws. 5 Plainly, the EEOC sees in this case a way to get around Gilmer by using its ADEA enforcement authority to bring a suit on behalf of individuals who cannot bring their own suits, because they signed agreements of the sort the EEOC abhors i.e., agreements to arbitrate any and all claims that might arise during their employment (or as a result of its termination), rather than to litigate such claims through the courts. In 4 Equal Employment Opportunity Commission, EEOC Notice 915.002: Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment (July 10, 1997). 5 EEOC v. Frank s Nursery & Crafts, 966 F. Supp. 500 (E.D. Mich. 1997), appeal docketed, No. 97-1698 (6th Cir. Nov. 17, 1997); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991); Cosgrove v. Shearson Lehman Bros., 105 F.3d 659 (6th Cir.), cert. denied, 118 S. Ct. 169 (1997); Duffield v. Robertson Stephens & Co., 1997 U.S. Dist. LEXIS 14996 (N.D. Cal. Mar. 13, 1997), appeal docketed, No. 97-15698 (9th Cir.). 6

doing so, however, EEOC would subvert not only the mutual obligations the parties undertook when they signed their arbitration agreements, but also the important public policies expressed in the Federal Arbitration Act. Indeed, allowing the EEOC to advance a lawsuit for monetary relief when the underlying claim is subject to mandatory arbitration would frustrate the central purpose of the FAA, which is to enforce contractual agreements to trade[] the procedures and opportunity for review of the courtroom for the simplicity, informality and expedition of arbitration. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985). The Commission concedes, as it must, that arbitration is simply a choice of the forum in which statutory rights may be vindicated. Appellant s Brief at 17, and see Gilmer, 500 U.S. at 26. The procedural differences between arbitration and judicial resolution do not undermine the ability of arbitral resolution to vindicate statutory civil rights. Gilmer, 500 U.S. at 28, 30-32. To the contrary, the Supreme Court has expressed its confidence in the ability of arbitration to serve both the remedial and deterrent functions of pursuing ADEA claims such as the ones at issue. Therefore, the EEOC does not serve any additional public function by filing a court suit to seek the same remedies available to an individual through arbitration. Although the EEOC was not a signatory to the arbitration agreements in this case, it cannot evade their preclusive effect on the filing of a civil suit to address issues that must be arbitrated. McCowan v. Sears, Roebuck & Co., 908 F.2d 1099 (2d Cir.), cert. denied, 498 U.S. 897 (1990). Otherwise, no arbitration agreement truly would be enforceable, for a party wishing to avoid his contractual obligation would merely have 7

to convince the EEOC to sue his employer in his stead. The district court correctly observed that it would frustrate the purposes of the FAA if the Court allowed the EEOC to recover monetary relief where parties have agreed to arbitrate their grievances. 979 F. Supp. at 247. Particularly because the EEOC s suit is limited to damages, the Commission s limited enforcement interest must yield to the FAA. ARGUMENT I. THE FEDERAL ARBITRATION ACT RESTRAINS THE EEOC FROM LITIGATING DUPLICATE CLAIMS FOR MONETARY RELIEF ON BEHALF OF INDIVIDUALS WHO HAVE AGREED TO PURSUE SUCH CLAIMS THROUGH ARBITRATION A. As the District Court Correctly Observed, The EEOC s Limited Enforcement Interest Must Yield to the FAA The Federal Arbitration Act (FAA), 9 U.S.C. 1 et. seq., requires that a written contract to settle by arbitration a controversy thereafter arising... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. 9 U.S.C. 2. The FAA is a congressional declaration of a liberal federal policy favoring arbitration agreements,.... Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). Agreements to arbitrate statutory claims, including claims under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. 621 et. seq., are enforceable under the FAA. Gilmer v. Interstate/ Johnson Lane Corp., 500 U.S. 20 (1991). The fact that the EEOC has a role in enforcing the ADEA does not diminish the presumption of arbitrability under the FAA. Generally, arbitrability is not precluded by the presence of an agency with statutory powers of enforcement, see 15 U.S.C. 77t, 8

78u (Securities and Exchange Commission (SEC) right to bring enforcement actions). Gilmer, 895 F.2d 195, 198 (4th Cir. 1990), aff d, 500 U.S. 20 (1991). More specifically, nothing in the ADEA indicates that Congress intended that the EEOC be involved in all employment disputes. 500 U.S. at 28. Gilmer thus recognized that the EEOC s enforcement interest may be subordinated to the federal policy favoring arbitration. Although the EEOC was not a signatory to the arbitration agreements between Kidder, Peabody and its former employees, it cannot escape their preclusive effect on the filing of a civil suit to address issues that must be arbitrated. As the Supreme Court has noted, [u]nder the Arbitration Act, an arbitration agreement must be enforced notwithstanding the presence of other persons who are parties to the underlying dispute but not to the arbitration agreement. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983). See also Sparling v. Hoffman Constr. Co, 864 F.2d 635, 638 (9th Cir. 1988) (district court may dismiss complaint or grant summary judgment when all claims are subject to arbitration). This Court previously has articulated a common sense reading of the balance between arbitration and conflicting litigation in McCowan v. Sears, Roebuck and Co., 908 F.2d 1099, 1106 (2d Cir.), cert. denied, 498 U.S. 897 (1990). 6 It held that where a lawsuit is brought involving issues covered by a valid arbitration agreement, the litigation must yield to the issue s resolution in arbitration. To hold otherwise would do 6 The McCowan Court s holding on the source of authority for staying litigation in favor of arbitration has been clarified by later decision. E.g., Citrus Mktg. Bd. v. J. Lauritzen A/S, 943 F.2d 220, 224 (2d Cir. 1991) (district court s inherent power to control its docket, not 9 U.S.C. 3, is the source of authority to stay litigation involving issues referable to arbitration). However, the Court s common sense treatment of issues that arise both in the lawsuit and under the arbitration agreement was not eroded by the Citrus Mktg. Bd. decision. 9

violence to the strong policy favoring arbitration. See also Morrie Mages & Shirlee Mages Found. v. Thrifty Corp., 916 F.2d 402, 407 (7th Cir. 1990) ( Section 3 of the FAA plainly requires that a district court stay litigation where issues presented in the litigation are the subject of an arbitration agreement. [emphasis in original]). Because the EEOC s suit raises the same issues that are subject to arbitration agreements enforceable under the FAA, the EEOC s enforcement interest must yield to the strong national policy favoring arbitration. The Commission asserts that the district court s determination that the issues below were arbitrable has no effect whatever on the Commission s enforcement activities; however, the EEOC provides no direct support for that sweeping proposition. Instead, it relies on general provisions of the ADEA, such as the EEOC s authority to litigate an age discrimination claim even when the Commission has not received a charge. The Commission, however, fails to reconcile that authority -- which may be proper in instances where potential violations of the statute would otherwise go unredressed -- with the FAA or the principles that guided this Court in McCowan to avoid suit on issues that are referable to arbitration. Further, although the Commission disavows any agency relationship with the investment bankers on whose behalf it seeks monetary relief in this action, the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq. (and thus the ADEA) 7 does indeed contemplate an agency relationship when the enforcing agency seeks to collect money on behalf of victims of an alleged statutory violation. See, e.g., Mueller v. 7 The ADEA, under 626(b), incorporates the enforcement provisions of the FLSA ( 211 (b), 216 (except 216 (a)), and 217). 10

Reich, 54 F.3d 438, 441 (7th Cir. 1995) (Department of Labor is empowered to sue to enforce FLSA on behalf of employees aggrieved by violations of the Act and specifically to recover as their agent, unpaid minimum wages or overtime compensation. ), citing Tony & Susan Alamo Foundation v. Secretary of Labor, 105 S. Ct. 1953 (1985), vacated, remanded on other grounds, 117 S. Ct. 1077 (1997). Importantly, the EEOC s suit began as an action seeking injunctive relief to benefit a broad class, and seeking monetary relief on behalf of various individual investment bankers. 8 However, after Kidder, Peabody discontinued its investment banking operations, the EEOC withdrew its claim for injunctive relief and limited its suit to damages. 979 F. Supp. at 246. Particularly after the claim for injunctive relief was dropped, the EEOC s suit became merely an alternative action to the arbitration proceedings that had been initiated by several of the former investment bankers, thus creating an even stronger argument that the Commission s limited enforcement interest must yield to the strong presumption in favor of arbitration. The Commission concedes as much in its Appeal Brief at 16, stating that it ought not be barred from seeking relief... at least with respect to the six employees who never invoked arbitration. Because the Commission s interest here is relatively small, 979 F. Supp. at 247 ( the public interest in vindicating the damage right of an individual is relatively small ), it cannot 8 If this case did not involve arbitrable claims, the Commission s suit would cut off the investment bankers right to file separate civil actions (29 U.S.C. 626(c)), however that fact has no bearing on the resolution of this case. The investment bankers already are barred from instituting their own civil actions by virtue of their agreements to arbitrate instead. The central issue here is whether the Commission can use its enforcement powers to upend the FAA. The EEOC has not cited any authority, controlling or persuasive, that would permit such a result. 11

overcome the presumption favoring arbitration of the issues encompassed by the EEOC s suit. B. To Allow the EEOC to Maintain This Action Would Destroy the Mutuality of Obligations Undertaken by Parties to the Arbitration Agreements and Would Thwart the Strong National Policy Expressed in the FAA Favoring Arbitration As discussed in the preceding section, the strong national policy favoring arbitration creates a presumption in favor of enforcing agreements to arbitrate. Courts should be reluctant... to imply in a statute an intention to preclude enforcement of arbitration agreements where Congress has not expressed one, particularly in light of the countervailing intention expressed by Congress in the FAA. Gilmer v. Interstate/Johnson Lane Corp., 895 F.2d 195, 197 (4th Cir. 1990), aff d, 500 U.S. 20 (1991). The ADEA is silent with respect to the EEOC s enforcement powers where an arbitrable issue is concerned. However, to permit the EEOC to sue an employer in court to litigate issues that are covered by arbitration agreements between individuals and the employer and thus are the proper subject of arbitration, effectively would preclude enforcement of arbitration agreements by giving the EEOC s enforcement powers preemptive effect over the FAA. As the district court correctly observed, just the opposite result is dictated by the FAA, as explained below. Because the former investment bankers were required to arbitrate any ADEA claims, the district court ruled that the EEOC had no basis to maintain an independent ADEA suit on the same issues against Kidder, Peabody, reasoning, the clear implication of Gilmer is that the EEOC may not seek monetary relief on behalf of claimants who have entered into valid arbitration agreements. First, the FAA expresses the strong Congressional preference in favor of enforcing valid arbitration agreements freely entered into by contracting parties. Moreover, the Supreme Court has held that precluding individual suits based on those arbitration agreements is not inconsistent with the ADEA. Nor is it inconsistent with the ADEA for individuals to settle claims with an employer, thereby 12

waiving not only the right to recover in their lawsuit, but also the right to recover in a suit brought by the EEOC on their behalf. That being so, it would frustrate the purposes of the FAA if the Court allowed the EEOC to recover monetary relief where parties have agreed to arbitrate their grievances. EEOC v. Kidder, Peabody & Co., 979 F. Supp. 245, 247 (S.D.N.Y. 1997) (internal citations omitted). The district court s decision gives appropriate weight to the viability of arbitration agreements as a means of resolving employment disputes without litigation. Contracts to arbitrate are not to be avoided by allowing one party to ignore the contract and resort to the courts. Such a course could lead to prolonged litigation, one of the very risks the parties, by contracting for arbitration, sought to eliminate. Southland Corp. v. Keating, 465 U.S. 1, 7 (1984). See also Oldroyd v. Elmira Sav. Bank, FSB, 13 IER Cas. (BNA) 1025 (2d Cir. 1998) ( There is a strong federal policy favoring arbitration as an alternative means of dispute resolution ), and cases cited therein. Although it was the investment bankers, rather than the EEOC, who signed arbitration agreements, permitting the EEOC to seek any of the relief these individuals could obtain through arbitration would be the equivalent of allowing the bankers to ignore their agreement to arbitrate and instead claim relief, via the EEOC, by resorting to the courts. 9 The only other federal court to decide the issue presented in this case reached the same conclusion as did the district court below, and dismissed the EEOC s direct 9 The EEOC s argument that it cannot be required to submit to arbitration any dispute which [it] has not agreed so to submit, (Appellant s Br. at 9, quoting AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 648 (1986)), is correct, but beside the point. No one is asking the EEOC to arbitrate with Kidder, Peabody, only to refrain from suing Kidder, Peabody on issues that are subject to mandatory arbitration, and to give proper deference to the Federal Arbitration Act s guarantee that all written agreements to arbitrate shall be valid, irrevocable and enforceable.... 9 U.S.C. 2. 13

enforcement suit. EEOC v. Frank s Nursery & Crafts, 966 F. Supp. 500 (E.D. Mich. 1997), appeal docketed, No. 97-1698 (6th Cir. Nov. 17, 1997). In a situation strikingly similar to the present case i.e., where the EEOC sued solely on behalf of an individual who had signed a valid arbitration agreement (although the statute at issue was Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. 2000e et seq.), the court ruled that to the extent that Adams is bound by her agreement to arbitrate, so is the EEOC. To decide otherwise would render agreements to arbitrate voidable at the whim of the EEOC. Therefore, to the extent Adams is seeking substantive relief for alleged racial discrimination she must proceed to arbitration per her signed agreement and the EEOC may not pursue the same claim for the same relief on her behalf in this Court. 966 F. Supp. at 505. Here, as in Frank s Nursery, the EEOC s right to proceed must be subordinated to the arbitration agreements covering the very claims the EEOC seeks to vindicate, for to rule otherwise would improperly exalt the EEOC s nominal interest in those claims over the important policies of the FAA. Individuals who sign valid, enforceable agreements to arbitrate ought not be aided by the courts in evading their contractual obligations through the simple expedient of filing a charge, allowing a third party to file suit on their behalf, and waiting to collect monetary damages they could have pursued through arbitration. The rule cannot be that only after an individual actually has invoked arbitration is the Commission barred from further action to recover monetary relief on the individual s behalf, for such a rule would gut the Federal Arbitration Act. It would create an exception that would swallow the rule that a written agreement to arbitrate shall be 14

valid, irrevocable, and enforceable,.... 9 U.S.C. 2. Indeed, the predictable effect of such a rule would be to make arbitration agreements, like the ones in this case, a dead letter a result that apparently would suit the EEOC s purposes, but would fly in the face of Gilmer and the FAA. II. THE PUBLIC INTEREST IN PREVENTING AND REMEDYING DISCRIMINATION IS VINDICATED THROUGH ARBITRATION A. The Supreme Court Already Has Held That the Public Interest Is Served by Vindicating Statutory Employment Disputes Through Arbitration and Without the EEOC s Involvement As parties to valid, enforceable arbitration agreements covering their allegations of age discrimination, the former investment banking employees had the means and the opportunity to vindicate fully their discrimination claim against Kidder, Peabody; indeed some of them have done so. 979 F. Supp. at 246, n.1. As the Supreme Court has explained, so long as the prospective litigant effectively may vindicate [his or her] statutory cause of action in the arbitral forum, the [ADEA] will continue to serve both its remedial and deterrent function. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991) (emphasis added), quoting Mitsubishi Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614, 628 (1985). Gilmer forecloses the EEOC s argument that it must be permitted to litigate such claims in court to ensure a proper financial deterrent to potential discriminating employers. See, e.g., Appellant s Br. at 12 and 18. 10 10 See Appellant s Br. at 12 ( [t]he EEOC s litigation, on the other hand, is guided principally by the goal of deterrence ), and 18 (... the reasonably certain threat of a backpay award... provides the spur or catalyst which causes employers... to endeavor to eliminate [illegal discrimination]. Surely Congress did not intend that employers could so easily exempt themselves from such an essential prong of the EEOC s enforcement authority. ). The EEOC s sweeping rhetoric ignores the essential fact that 15

Moreover, the Commission s suggestion, that only it can bring the proper forces to bear to remedy discrimination -- and that it must do so here via litigation, is but another generalized attack[] on arbitration, of the sort the Supreme Court rejected in Gilmer as reflecting a suspicion of arbitration as a method of weakening the protections afforded in the substantive law to would-be complainants. Gilmer, 500 U.S. at 30. As such, EEOC s argument is far out of step with [the Court s] current strong endorsement of the federal statutes favoring this method of resolving disputes. Id. At its heart, the present appeal seeks this Court s blessing to use the Commission s enforcement authority under the ADEA as a tool for avoiding valid, voluntary contractual agreements and Supreme Court precedent. This appeal is neither about age discrimination nor about providing relief to possible victims of discrimination, for those matters can be addressed quite adequately in arbitration. Rather, the EEOC s participation in this case is but another in a long line of attempts by the Commission to circumvent Gilmer, a decision the EEOC clearly does not like. The EEOC has unloosed its arsenal against mandatory arbitration of employment disputes, despite the unquestionable legality of such arbitration agreements. Through direct suits against employers that utilize mandatory arbitration, 11 amicus briefs 12 and policy statements, 13 the EEOC repeatedly has voiced backpay is a typical remedy available in arbitration, providing just the deterrent or spur or catalyst the EEOC seeks. 11 E.g., EEOC v. Frank s Nursery & Crafts, Appeal No. 97-1698 (6th Cir.) (preclusion of EEOC suit on claims subject to mandatory arbitration). 12 Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991); Cosgrove v. Shearson Lehman Bros., 105 F.3d 659 (6th Cir.), cert. denied, 118 S. Ct. 169 (1997); Duffield v. Robertson Stephens & Co., 1997 U.S. Dist. LEXIS 14996 (N.D. Cal. Mar. 13, 1997), appeal docketed, No. 97-15698 (9th Cir.). 16

its opposition to mandatory, pre-dispute agreements such as the one the Supreme Court enforced in Gilmer, which requires an individual to arbitrate claims arising under the statutes the Commission enforces. See also EEOC, EEOC National Enforcement Plan (Feb. 8, 1996) (setting as a national litigation priority [c]laims addressing the legality of agreements that mandate binding arbitration of employment discrimination disputes imposed as a condition of initial or continued employment. ) (emphasis added). 14 The Commission s efforts reflect a stubborn refusal to accept the Supreme Court s judgment that such agreements are entirely lawful and enforceable. Yet the concerns that underlie EEOC s intransigent stance are illusory. For, as the Supreme Court noted in Gilmer, arbitrators traditionally have enjoyed broad powers to provide appropriate relief, and the applicable arbitration rules did not limit the type or amount of relief an arbitrator could award upon finding a statutory violation. Gilmer, 500 U.S. at 32. Therefore, in a suit such as the present one, where the EEOC seeks the same relief as the individuals have, or could have, sought through arbitration, the agreed-upon arbitration process is fully capable of effectively vindicating the public and private interests served by the ADEA. Absent a distinct and unserved public interest, or a danger that individuals may lack the incentive to seek redress of numerous yet 13 E.g., Equal Employment Opportunity Commission Notice 915.002: Policy Statement on Mandatory Binding Arbitration of Employment Discrimination Disputes as a Condition of Employment (July 10, 1997). 14 The Commission s opposition notwithstanding, mandatory predispute arbitration agreements covering claims under the ADEA indisputably have been legal since, at the very latest, 1991, for that is precisely the type of agreement the Supreme Court approved and enforced in Gilmer, 500 U.S. 20. Moreover, Gilmer s agreement, like the ones involved in this case, was required as a condition of his employment, id. at 21, yet the Supreme Court plainly saw that as no reason to declare it unenforceable. 17

small violations (as may be true in certain FLSA cases), the enforcing agency should not be spending its limited resources to duplicate actions for interests already adequately protected. B. The EEOC Does Not Serve Any Additional Public Purposes by Filing a Court Suit to Seek the Same Remedies Available to an Individual Through Arbitration To be sure, the EEOC is empowered to sue for the public interest, which can be broader than the interests of particular charging parties. However, this is not the same as saying that every suit the EEOC brings is necessarily, or by definition, more encompassing than the suit that could be brought by the charging party. 15 As the Supreme Court noted in General Telephone Co. v. EEOC, 446 U.S. 318 (1980) (a Title VII case seeking a permanent injunction and remedial action in addition to money damages), the EEOC may seek relief for a broad class of individuals in some cases, because the Commission, as representative of the public, is the interested party and its interest transcends the private interests at stake. Such is not the case here, however, where the EEOC limits its claim only to seeking monetary relief for a small group of individuals whose interests otherwise are protected. 16 15 See, e.g., EEOC v. Huttig Sash & Door Co., 511 F.2d 453, 455 (5th Cir. 1975) (holding that the EEOC cannot file its own Title VII suit when the EEOC raises no substantially different issues and seeks no relief other than for the private party ); EEOC v. Armour & Co., 13 FEP Cas. (BNA) 297 (D. Neb. 1974) (dismissing EEOC Title VII suit that duplicated suit previously filed by charging party). 16 The EEOC s reliance on this Court s decision in EEOC v. Johnson & Higgins, Inc., 91 F.3d 1529 (2d Cir. 1996), cert. denied, 118 S. Ct. 47 (1997), is misplaced for the same reason General Telephone offers no support. In Johnson & Higgins the EEOC s superior interest was in pursuing injunctive relief. See also EEOC v. Goodyear Aerospace Corp., 813 F.2d 1539 (9th Cir. 1987) (EEOC s suit could continue for injunctive relief after the charging party settled her claim, but EEOC claim for backpay on behalf of charging party was rendered moot). 18

The EEOC apparently contends that the public interest that it is capable of representing demands that the Commission use its enforcement powers to seek monetary relief for statutory violations in every case it desires to litigate, without regard to the status and ability of the individuals for whose benefit such money is sought to claim the same relief for themselves. The Commission s contention, however, was flatly and correctly rejected by the district court when it dismissed the EEOC s suit, holding that the public interest in vindicating the damage right of an individual is relatively small. 979 F. Supp. at 247. To the extent there may be a public interest in the individuals discrimination claims, the Supreme Court has expressed its confidence that such can be vindicated fully through the arbitration process that the individuals have agreed to utilize; the public interest does not require Commission involvement or oversight. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991). CONCLUSION For all of the foregoing reasons, the Equal Employment Advisory Council respectfully urges the Court to affirm the district court s order. Respectfully submitted, Ann Elizabeth Reesman Erin Quinn Gery* MCGUINESS & WILLIAMS 1015 Fifteenth Street, N.W. Suite 1200 Washington, D.C. 20005 Attorneys for Amicus Curiae Equal Employment Advisory Council 19

March 9, 1998 *Counsel of Record 20

CERTIFICATE OF SERVICE This is to certify that two (2) copies of the Brief Amicus Curiae of the Equal Employment Advisory Council in Support of Appellee were served by first class mail, postage prepaid, on the following counsel of record: C. Gregory Stewart, Esquire Lorraine C. Davis, Esquire Paul D. Ramshaw, Esquire United States Equal Employment Opportunity Commission 1801 L Street, N.W. Room 7010 Washington, DC 20507 George A. Stohner, Esquire Michael A. Putetti, Esquire Renee M. Johnson, Esquire Morgan, Lewis & Bockius, LLP 101 Park Avenue New York, NY 10178 Mark S. Dichter, Esquire Morgan, Lewis & Bockius, LLP 2000 One Logan Square Philadelphia, PA 19103 March 9, 1998 Ann Elizabeth Reesman Erin Quinn Gery* MCGUINESS & WILLIAMS 1015 Fifteenth Street, N.W. Suite 1200 Washington, D.C. 20005 Attorneys for Amicus Curiae Equal Employment Advisory Council * Counsel of Record