claims? Second, even if federal law does not generally preclude
arbitration of these claims, is this specific agreement unconscionable
such that it should not be enforced?
I. Does Federal Law Preclude Arbitration?*fn1
The starting point in examining the federal law is the Federal
Arbitration Act ("FAA"). The FAA, originally enacted in 1925, provides
that an arbitration provision in a written contract is enforceable. See
9 U.S.C. § 2 ("A written provision in any . . . contract evidencing a
transaction involving commerce to settle by arbitration a controversy
thereafter arising out of such contract . . . shall be valid,
irrevocable, and enforceable, save upon such grounds as exist at law or
in equity for the revocation of any contract"). The FAA permits a federal
court to stay proceedings when an issue in the litigation is arbitrable,
see 9 U.S.C. § 3, and authorizes a court to compel arbitration. See
9 U.S.C. § 4. The Act was intended "to reverse the longstanding
judicial hostility to arbitration agreements" and "to place arbitration
agreements upon the same footing as other contracts." Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991) 24.
The FAA is now generally seen as embodying a presumption in favor of
arbitration. Much of the current law of the FAA can be traced to Gilmer
where the United States Supreme Court reviewed a claim brought by a
securities dealer against his employer under the Age Discrimination in
Employment Act of 1967 ("ADEA"), 29 U.S.C. § 621 et seq. The
plaintiff was seeking to avoid arbitration, but the Court held that an
arbitration clause is not rendered unenforceable merely because the
plaintiff seeks to enforce a statutory right. See Gilmer, 500 U.S. at 26;
("It is by now clear that statutory claims maybe the subject of an
arbitration agreement enforceable pursuant to the FAA."). The Court
reasoned that by entering an arbitration agreement the parties have not
sacrificed any substantive rights conferred by the underlying statute,
but instead have merely agreed to submit their claims to an arbitrator
rather than a court. See id. (quoting Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth. Inc., 473 U.S. 614, 628 (1985)). The Court ultimately
determined that the ADEA did not preclude application of the FAA.
To overcome the FAA's presumption that a court should enforce an
arbitration provision, a plaintiff bringing a statutory claim must
demonstrate, through the text of the statute, legislative history, and
the underlying purpose of the law, that Congress intended to preclude a
waiver of judicial remedies for the statutory right involved. See id.
(citing Mitsubishi, 473 U.S. at 628; Shearson/American Express. Inc. v.
McMahon, 482 U.S. 220, 227 (1987)).
The presumption in favor of arbitration was overcome in Duffield v.
Robertson Stephens & Co., 144 F.3d 1182 (9th Cir. 1998), where the Ninth
Circuit held that under the Civil Rights Act of 1991, "employees may not
be required, as a condition of employment to waive their right to bring
future Title VII claims in court." Id. at 1190. This conclusion was based
on a lengthy examination of the text and legislative history of the Civil
Rights Act of 1991 which revealed a congressional
intention to "preclude a waiver of a judicial forum" for Title VII
claims. Id. Defendant admits that Duffield would preclude arbitration of
this action, but contends that Duffield was overruled by Circuit City
Stores, Inc. v. Adams, 532 U.S. 105 (2001).
Accordingly, the question before this Court is whether Circuit City
overruled Duffield or whether Duffield remains the law of this circuit
Two California district court opinions have concluded that Circuit City
overruled Duffield. See Eftekhari v. Peregrine Financials & Securities.
Inc., 2001 WL 1180640 (N.D. Cal. 2001); Olivares v. Hispanic Broadcasting
Corp., 2001 WL 477171 (C.D. Cal. 2001). This Court agrees. In arguing for
the opposite result plaintiff relies on an overly constricted view of the
Court's ruling in Circuit City.
The dispute presented in Circuit City concerned interpretation of
section 1 of the FAA which exempts from the FAA's coverage "contracts of
employment of seamen, railroad employees, or any other class of workers
engaged in foreign or interstate commerce." 9 U.S.C. § 1. This
presented a potential contradiction between the introductory specific
language ("seamen, railroad employees") and the later broader language
("any other class of workers engaged in . . . interstate commerce"). The
Court concluded that the general language "embrace[d] only . . . those
objects enumerated by the preceding specific words," and held that only
contracts of transportation workers were excluded from the FAA Circuit
City, 121 S.Ct. at 1308-09.
The holding of Duffield was not squarely presented to the Court in
Circuit City. Ciruit City clarified the scope of the FAA by restricting
the exception set out in section 1 to transportation workers. By
contrast, Duffield relied not on the scope of the FAA, but rather the
language and legislative history of the Civil Rights Act of 1991.*fn2
While the focus may have been different Circuit City implicitly
overruled Duffield. Circuit City expresses a strong federal presumption
in favor of enforcing arbitration agreements. The presumption holds for
statutory claims of employment discrimination. Circuit City itself
involved a FEHA antdiscrimination claim, a statute very similar to Title
VII. As the Court in Circuit City:
The Court has been quite specific in holding 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.
Id. at 1313. This language speaks specifically to the arbitration of
federal statutory employment discrimination claims. On the basis of this
reasoning, expounded in the context of a decision to compel arbitration
of an employment discrimination claim, the Court concludes that Circuit
City implicitly overruled Duffield. See Scott v. Burns Intern. Sec.
Services, Inc., 165 F. Supp.2d 1133, 1137-38 (D. Haw. 2001).