Monday, February 10, 2003
Ninth Circuit to Hear Law Firm Arbitration Dispute En Banc
By KENNETH OFGANG, Staff Writer/Appellate Courts
A limited en banc panel of the Ninth U.S. Circuit Court of Appeals will decide whether a potential employee can be compelled as a condition of employment to sign an agreement to arbitrate federal statutory claims arising from the employment relationship, the court said Friday.
Chief Judge Mary M. Schroeder, in a brief order, said a majority of the court’s unrecused active judges had agreed to grant en banc review of a Sept. 4 panel ruling upholding the use of such an agreement by the law firm of Luce, Forward, Hamilton & Scripps.
The panel ruled 2-1 that U.S. District Judge Florence Marie Cooper of the Central District of California and the Equal Employment Opportunity Commission erred in concluding that Duffield v. Robertson Stephens & Co., 144 F.3d 1182 (9th Cir. 1998), precluded the firm from requiring an employee or potential employee to sign the agreement.
Duffield held that federal anti-discrimination claims under Title VII of the Civil Rights Act of 1964, as amended in 1991, are not subject to mandatory binding arbitration.
The EEOC sued Luce Forward in February 2000, alleging that it had violated Title VII by withdrawing its offer to employ Donald C. Lagatree as a full-time secretary in the firm’s Los Angeles office. The action was illegal, the commission claimed, because it was a consequence of Lagatree’s refusal to sign a standard employment agreement containing a provision requiring that the worker submit “all claims arising from or related to his employment” to binding arbitration.
The commission suit was filed six months after this district’s Court of Appeal ruled that Luce Forward†and another firm sued by Lagatree, Long Beach’s Keesal, Young, & Logan, did not violate state law by requiring current and prospective employees to sign the agreements.
Terminated by Keesal
Lagatree worked at Keesal for three years, but was fired in June 1997, three months before Luce Forward offered to hire him. While Keesal conceded that he was a good employee, it terminated him because he wouldn’t sign a form—which every other employee, including lawyers, agreed to, the firm’s managing partner said—requiring him to submit future claims involving his employment with the firm to arbitration.
Unlike the Luce Forward agreement, however, Keesal’s form excepted “discrimination claims, wage and hour claims, and other related statutory claims.”
The panel majority in the EEOC’s suit, Judge Stephen Trott and visiting District Judge James M. Fitzgerald of the District of Alaska, concluded that Duffield had been “implicitly overruled” by Circuit City Stores v. Adams, 532 U.S. 105 (2001). Judge Harry Pregerson dissented, arguing that the earlier ruling is still the law of the circuit.
Trott noted that 10 federal appeals courts and the high courts of California and Nevada had repudiated Duffield, leaving it “like Bikini Atoll-ignominiously alone awaiting remediation” by the Supreme Court.
Circuit City, he explained, held that the Federal Arbitration Act applies to employment agreements outside the transportation industry, which has a unique exemption. The court, he noted, explicitly said that “arbitration agreements can be enforced under the FAA without contravening the policies of congressional enactments giving employees specific protection against discrimination prohibited by federal law.”
Pregerson argued that Circuit City’s comments on employment discrimination are dicta, since there were no discrimination claims in that case. “Duffield and Circuit City are cases of the proverbial apples and oranges: different law, different issues, and different, yet compatible holdings,” he wrote.
Pregerson noted that Congress, before it passed the 1991 act, rejected an amendment that would have specifically authorized employers to include mandatory arbitration clauses in their agreements. He also pointed out that the Supreme Court denied review in Duffield.
Attorneys on appeal were Charles A. Bird of Luce Forward’s San Diego office and Robert F. Walker of the Los Angeles office of Paul, Hastings, Janofsky & Walker for the law firm, and Dori K. Bernstein for the EEOC.
The case is Equal Employment Opportunity Commission v. Luce, Forward, Hamilton & Scripps, 00-57222.
Copyright 2003, Metropolitan News Company