No more the independent and virtuous judiciary? Triaging antidiscrimination policy in a post-Gilmer world.

• Author: Edenfield, Paul L.

All the rights secured to the citizens under the Constitution are worth nothing, and a mere bubble, except guaranteed to them by an independent and virtuous Judiciary. Andrew Jackson (1) INTRODUCTION

Ten years ago, Gilmer v. Interstate/Johnson Lane Corp. (2) conferred upon arbitrators a sacred trust normally reserved unto the public judiciary--to effectuate the antidiscrimination policy of Congress and to vouchsafe the statutory rights of protected classes of employees otherwise menaced by the biases of employers. Gilmer mandated de rigueur court enforcement of pre-hire contracts to arbitrate statutory employment disputes, providing only scant judicial review of arbitration procedures and rulings. (3) By its Gilmer decision, the Court did not merely ratify pre-employment arbitration agreements under principles of freedom of contract: With the Court's removal of judicial barriers to their enforcement, these agreements are becoming staples of the employment relationship; thus the Court has essentially inaugurated a new private judiciary, endowed with the authority to adjust claims arising under public antidiscrimination law, and, in order to justify its entrustment of the nation's public laws to private actors, the Court has placed its faith in the ability of arbitrators to exercise this authority as independently and virtuously as the judiciary. (4) The Court presumed that arbitrators would be a panacea for the woes of employment litigation--that they would adjudicate fairly and wisely, as well as cheaply and quickly, the burgeoning number of employment discrimination cases threatening to overwhelm the federal courts.

In Gilmer, a Supreme Court troubled by the rising number of docket-clogging discrimination suits (5) invoked the 1925 Federal Arbitration Act (FAA) (6) and the FAA's mandate that courts defer to arbitration as they would to any other contract, (7) in order to leverage reform of the nation's system of public adjudication of antidiscrimination claims. (8) Title VII and other antidiscrimination laws were enacted well after the FAA, in a climate in which the FAA's arbitration doctrine was essentially moribund, yet the Court imputed to Congress the desire that antidiscrimination claims be arbitrable under the FAA. (9) But the Court also held that parties may not contractually forfeit substantive statutory rights and concluded that arbitration was inappropriate, even where agreed upon by the parties, if the arbitrators could not guarantee the statutory rights of employees. Nonetheless the Court exposited only a minimally exacting standard for review of arbitration decisions. (10) The Court justified this loose standard of review by professing its confidence that arbitrators would largely be fair and impartial. However, this wish appears hopelessly sanguine in view of the weaknesses of arbitration as a statutory forum. This Note argues that the deficiencies of the arbitral tribunal, conveniently ignored by the Court, have precluded the effectuation of Title VII and other antidiscrimination statutes. The Court, in its effort to resolve the inefficiencies of a swamped system of public adjudication of employment claims, has swung the pendulum of antidiscrimination jurisprudence too far in the direction of efficiency at the expense of fairness.

Outwardly, the Supreme Court appealed to freedom of contract principles, (11) embodied in the FAA, as the basis for its decision. Congress gave arbitration agreements--historically viewed as benighted by a judiciary that saw arbitrators as usurpers of judicial power (12)--a status equal to all other contractual agreements when it passed the FAA, thereby trumping judicial reticence toward arbitration and permitting parties to contract for economically efficient outcomes, including self-selection of dispute resolution mechanism. (13) According to the Supreme Court, Congress intended the FAA to apply not just to commercial disputes, but to a wide range of matters, including employer-employee disputes. The courts could no longer carve out special exemptions for enforcement of arbitration agreements between employers and employees--only universally applicable grounds for negating contracts could be invoked to defeat these agreements. This was true for agreements to arbitrate statutory disputes as well as other kinds of disputes, unless the statute in question was expressly construed to preclude arbitration of claims arising thereunder. (14)

However, the underlying legitimacy of the Court's decision in employment settings is premised not merely on contractualism--no more than the wholesale waiver of one's Title VII fights would be permitted on contract grounds alone. (15) Rather it is also premised on the supplemental idea that arbitrators are as independent and virtuous as the public judiciary, and hence that the substantive legal rights established by Title VII are uncompromised under an arbitral regime. (16) It is the Court's claim as to the high caliber of arbitrators-as-jurists which legitimates the idea that private individuals can stand in the shoes of the judiciary. Congress passed Title VII with an eye toward the social good--even at the expense of administrative costs of adjudication. (17) Thus, economic efficiency justifications for arbitration, which underlie the FAA, are tenable only insofar as the congressional intent with respect to antidiscrimination law is vindicated by arbitrators who are fair, impartial, and competent stand-in judges. (18) So the Supreme Court, in holding the FAA applicable to statutory claims, had to make allowances for the preservation of the competing statutory mandates of antidiscrimination law. However, by setting such a low bar for judicial review of arbitration rulings, the Court assumed that, for the most part, the contracting parties will mutually select a fair tribunal, or else the arbitration community, through its standards of professionalism, will ensure the provision of competent umpires.

It is indisputable.that mandatory arbitration clauses have grown widespread in the wake of the Court's Gilmer ruling. (19) The Supreme Court declined to extend special protection to employees, holding pre-hire contracts to be as enforceable as all other contract agreements. Without judicial limitations on pre-hire contracts to arbitrate statutory claims, agreements which employers believe to be in their economic interest, employers insist on arbitration clauses as a condition of employment. (20) The resulting proliferation of these agreements means that, absent government intervention, arbitration has become the law of the land for many employees. The foisting of arbitration on powerless or unwitting employees may comport with traditional market principles of contractualism, but bears little regard for informed employee choice or the public good. (21) Contrary to the Supreme Court, which believes that in an overwhelming majority of cases employees will opt to contract for fair and neutral statutory tribunals, this Note contends that information asymmetries may cause employees to agree unwittingly to undesirable forums in a great number of instances. Further, even when employees make informed agreements, these agreements may not sufficiently take into account the public good. Finally, since the contracting parties alone cannot guarantee the effectuation of the public good, this Note also considers whether the current roster of professional arbitrators can independently safeguard the public good, and concludes that arbitrators lack the qualities necessary to adequately stand in for the judiciary on matters of public law.

Some arbitration opponents, skeptical of the idea that arbitrators should be the seat of such grave responsibility to interpret employment statutes, endeavored to curtail the scope of arbitral authority by construing congressional intent to cabin the reach of the FAA. In Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., a precursor to Gilmer involving arbitration of statutory disputes in a commercial--rather than employment--setting, the Court held that "[h]aving made the bargain to arbitrate, the party should be held to it unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." (22) Thus contract principles were to control forum selection ubiquitously across all statutes, unless Congress affirmatively stated otherwise. Gilmer definitively extended this doctrine to employment disputes, an area previously in doubt because of concerns over whether the contractual modification of a judicial forum was appropriate in an employment setting where vast discrepancies of bargaining power existed. In response to this doctrine, the Ninth Circuit, in Duffield v. Robertson Stephens & Co., (23) resorted to a peculiar interpretation of the legislative meaning of the 1991 Title VII amendments, holding that these amendments evinced just such a desire to preclude waiver of a judicial forum for antidiscrimination cases arising under Title VII. The decision, however, has been roundly rejected by most other circuits, which found that Congress indicated no such intention. (24)

The Third Circuit epitomizes the circuits' stance as to the primacy of contract law for forum selection, even with respect to antidiscrimination claims. That court reiterated the Supreme Court's holding that only universally applicable grounds in state law could suffice to void an arbitration contract, noting that even a radical imbalance of benefits was not sufficient to invalidate a contract, absent a universal state doctrine to that effect. (25) Section two of the FAA compels courts to enforce arbitration agreements "save upon such grounds as exist at law or in equity for the revocation of any contract." (26) Notably, few states appear to offer any means of escaping a contract merely by virtue of it being one of adhesion. (27)

In Circuit City Stores, Inc. v. Adams, the Ninth...