Arbitration of Employment Disputes After Gilmer
| Publication year | 1991 |
| Pages | 2277 |
| Citation | Vol. 11 No. 1991 Pg. 2277 |
1991, November, Pg. 2277. Arbitration of Employment Disputes after Gilmer
In a decision of major importance that greatly expands the role of arbitration in the enforcement of employee statutory rights, the U.S. Supreme Court recently upheld an arbitration agreement in which the employee was required to arbitrate his employment dispute with his employer. This article discusses Gilmer v. Interstate Johnson Lane Corp.(fn1) and its potential impact on the labor and employment practitioner.
In Gilmer, a stockbroker brought suit against his employer, claiming that his termination violated the Age Discrimination in Employment Act ("ADEA").(fn2) Although the Gilmer decision represents a clear departure from the Court's previous ruling in Alexander v. Gardner-Denver(fn3) (discussed below), the Court's historically suspicious view of arbitration in the employment context is slowly giving way to judicial endorsement of the benefits of arbitration.
In response to overcrowded dockets and escalating litigation costs, the U.S. Supreme Court gradually has come to endorse alternative dispute resolution---including binding arbitration---as a means of resolving a variety of disputes.(fn4) In Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,(fn5) the Court enforced the private arbitration clause in a commercial contract, rather than allowing the plaintiff to ignore the agreement and sue
In each of these three cases, the Court invoked the Federal Arbitration Act(fn11) ("FAA") and adopted its liberal policy favoring arbitration. The Court reasoned that by agreeing to arbitrate a claim,
However, in Gilmer, the Supreme Court for the first time has expanded the role of arbitration, extending its application to employment discrimination statutes.a party does not forgo the substantive right afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum.(fn12)
The issue in Gilmer was an age discrimination complaint filed by a stockbroker against his employer. As part of his registration application with the New York Stock Exchange ("NYSE"), one of the things the plaintiff agreed to was mandatory arbitration---when required by NYSE rules---of any controversy arising out of his employment or termination of employment.(fn13) The arbitration clause stated as follows:
Rule 347 of the NYSE states in pertinent part thatI agree to arbitrate any dispute, claim or controversy that may arise between me and my firm... required to be arbitrated under the rules, constitution, or bylaws of the organizations with which I register.
[a]ny controversy between a registered representative and any member . . . arising out of the employment or termination of employment of such registered representative by and with such member . . . shall be settled by arbitration.
When the sixty-two-year-old Gilmer was terminated, he sued his former employer in the U.S. District Court for the Western District of North Carolina, claiming a violation of the ADEA. The employer moved to compel arbitration. The district court, relying on Gardner-Denver, denied arbitration. The Fourth Circuit Court of Appeals reversed, finding nothing in the text, legislative history or underlying purpose of the ADEA indicating a congressional intent to preclude enforcement of arbitration agreements.(fn14)
The Supreme Court granted certiorari.(fn15) In a 7-2 decision, the Court affirmed the Fourth Circuit, found Gil-
mer's ADEA claim subject to the compulsory arbitration agreement contained in his securities registration application and held that under FAA § I,(fn16) he was required to...
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