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Supreme Court Of The United States Circuit City Stores, Inc. v. Adams Certiorari To The United States Court Of Appeals For The
Ninth Circuit Syllabus A provision in respondent's application for work at petitioner electronics retailer required all employment disputes to be settled by arbitration. After he was hired, respondent filed a state-law employment discrimination action against petitioner, which then sued in federal court to enjoin the state-court action and to compel arbitration pursuant to the Federal Arbitration Act (FAA). The District Court entered the requested order. The Ninth Circuit reversed, interpreting §1 of the FAA-which excludes from that Act's coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce"-to exempt all employment contracts from the FAA's reach. Held: The §1 exemption is confined to transportation workers. Pp. 3-16. (a) The FAA's
coverage provision, §2, compels judicial enforcement of arbitration agreements
"in any ... contract evidencing a transaction involving commerce." In
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, the Court interpreted §2's
"involving commerce" phrase as implementing Congress' intent "to
exercise [its] commerce power to the full." Id., at 277. Pp. 3-5. (b) The Court
rejects respondent's contention that the word "transaction" in §2
extends only to commercial contracts, and that therefore an employment contract
is not a "contract evidencing a transaction involving interstate
commerce" at all. If that were true, the separate §1 exemption that is
here at issue would be pointless. See, e.g., Pennsylvania Dept. of Public
Welfare v. Davenport, 495 U.S. 552, 562. Accordingly, any argument that
arbitration agreements in employment contracts are not covered by the FAA must
be premised on the language of the §1 exclusion itself. Pp. 5-6. (c) The statutory
text forecloses the construction that §1 excludes all employment contracts from
the FAA. Respondent relies on Allied-Bruce's expansive reading of
"involving commerce" to contend that §1's "engaged in ...
commerce" language should have a like reach, exempting from the FAA all
employment contracts falling within Congress' commerce power. This reading of §1
runs into the insurmountable textual obstacle that, unlike §2's "involving
commerce" language, the §1 words "any other class of workers engaged
in ... commerce" constitute a residual phrase, following, in the same
sentence, explicit reference to "seamen" and "railroad
employees." The wording thus calls for application of the maxim ejusdem
generis, under which the residual clause should be read to give effect to the
terms "seamen" and "railroad employees," and should be
controlled and defined by reference to those terms. See, e.g., Norfolk &
Western R. Co. v. Train Dispatchers, 499 U.S. 117, 129. Application of ejusdem
generis is also in full accord with other sound considerations bearing upon the
proper interpretation of the clause. In prior cases, the Court has read
"engaged in commerce" as a term of art, indicating a limited assertion
of federal jurisdiction. See e.g., United States v. American Building
Maintenance Industries, 422 U.S. 271, 279-280. The Court is not persuaded by the
assertion that its §1 interpretation should be guided by the fact that, when
Congress adopted the FAA, the phrase "engaged in commerce" came close
to expressing the outer limits of its Commerce Clause power as then understood,
see, e.g., The Employers' Liability Cases, 207 U.S. 463, 498. This fact alone
does not provide any basis to adopt, "by judicial decision, rather than
amendatory legislation," Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186,
202, an expansive construction of the FAA's exclusion provision that goes beyond
the meaning of the words Congress used. While it is possible that Congress might
have chosen a different jurisdictional formulation had it known that the Court
later would embrace a less restrictive reading of the Commerce Clause, §1's
text precludes interpreting the exclusion provision to defeat the language of §2
as to all employment contracts. The statutory context in which the "engaged
in commerce" language is found, i.e., in a residual provision, and the
FAA's purpose of overcoming judicial hostility to arbitration further compel
that the §1 exclusion be afforded a narrow construction. The better reading of
§1, in accord with the prevailing view in the Courts of Appeals, is that §1 exempts from the FAA only
employment contracts of transportation workers. Pp. 6-12. (d) As the Court's
conclusion is directed by §1's text, the rather sparse legislative history of
the exclusion provision need not be assessed. The Court rejects respondent's
argument that the Court's holding attributes an irrational intent to Congress by
excluding from the FAA's coverage those employment contracts that most involve
interstate commerce, i.e., those of transportation workers, while including
employment contracts having a lesser connection to commerce. It is a permissible
inference that the former contracts were excluded because Congress had already
enacted, or soon would enact, statutes governing transportation workers'
employment relationships and did not wish to unsettle established or developing
statutory dispute resolution schemes covering those workers. As for the residual
exclusion of "any other class of workers engaged in foreign or interstate
commerce," it would be rational for Congress to ensure that workers in
general would be covered by the FAA, while reserving for itself more specific
legislation for transportation workers. Pp. 12-14. (e) Amici argue
that, under the Court's reading, the FAA in effect pre-empts state employment
laws restricting the use of arbitration agreements. That criticism is not
properly directed at today's holding, but at Southland Corp. v. Keating, 465
U.S. 1, holding that Congress intended the FAA to apply in state courts, and to
pre-empt state antiarbitration laws to the contrary. The Court explicitly
declined to overrule Southland in Allied-Bruce, supra, at 272, and Congress has
not moved to overturn Southland in response to Allied-Bruce. Nor is Southland
directly implicated in this case, which concerns the application of the FAA in a
federal, rather than in a state, court. The Court should not chip away at
Southland by indirection. Furthermore, there are real benefits to arbitration in
the employment context, including avoidance of litigation costs compounded by
difficult choice-of-law questions and by the necessity of bifurcating the
proceedings where state law precludes arbitration of certain types of employment
claims but not others. Adoption of respondent's position would call into doubt
the efficacy of many employers' alternative dispute resolution procedures, in
the process undermining the FAA's proarbitration purposes and breeding
litigation from a statute that seeks to avoid it. Allied-Bruce, supra, at 275.
Pp. 14-16. 194 F.3d 1070, reversed and remanded.
Kennedy, J.,
delivered the opinion of the Court, in which Rehnquist, C. J., and O'Connor,
Scalia, and Thomas, JJ., joined. Stevens, J., filed a dissenting opinion, in
which Ginsburg and Breyer, JJ., joined, and in which Souter, J., joined as to
Parts II and III. Souter, J., filed a dissenting opinion, in which Stevens,
Ginsburg, and Breyer, JJ., joined. Opinion of the Court Justice Kennedy
delivered the opinion of the Court. Section 1 of the
Federal Arbitration Act (FAA) excludes from the Act'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. All but one of
the Courts of Appeals which have addressed the issue interpret this provision as
exempting contracts of employment of transportation workers, but not other
employment contracts, from the FAA's coverage. A different interpretation has
been adopted by the Court of Appeals for the Ninth Circuit, which construes the
exemption so that all contracts of employment are beyond the FAA's reach,
whether or not the worker is engaged in transportation. It applied that rule to
the instant case. We now decide that the better interpretation is to construe
the statute, as most of the Courts of Appeals have done, to confine the
exemption to transportation workers. I In October 1995,
respondent Saint Clair Adams applied for a job at petitioner Circuit City
Stores, Inc., a national retailer of consumer electronics. Adams signed an
employment application which included the following provision: "I agree that I will settle any
and all previously unasserted claims, disputes or controversies arising out of
or relating to my application or candidacy for employment, employment and/or
cessation of employment with Circuit City, exclusively by final and binding
arbitration before a neutral Arbitrator. By way of example only, such claims
include claims under federal, state, and local statutory or common law, such as
the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of
1964, as amended, including the amendments of the Civil Rights Act of 1991, the
Americans with Disabilities Act, the law of contract and the law of tort."
App. 13 (emphasis in original). Adams was hired as a sales counselor
in Circuit City's store in Santa Rosa, California. Two years later,
Adams filed an employment discrimination lawsuit against Circuit City in state
court, asserting claims under California's Fair Employment and Housing Act, Cal.
Govt. Code Ann. §12900 et seq. (West 1992 and Supp. 1997), and other claims
based on general tort theories under California law. Circuit City filed suit in
the United States District Court for the Northern District of California,
seeking to enjoin the state-court action and to compel arbitration of
respondent's claims pursuant to the FAA, 9 U.S.C. § 1-16. The District Court
entered the requested order. Respondent, the court concluded, was obligated by
the arbitration agreement to submit his claims against the employer to binding
arbitration. An appeal followed. While respondent's
appeal was pending in the Court of Appeals for the Ninth Circuit, the court
ruled on the key issue in an unrelated case. The court held the FAA does not
apply to contracts of employment. See Craft v. Campbell Soup Co., 177 F.3d 1083
(1999). In the instant case, following the rule announced in Craft, the Court of
Appeals held the arbitration agreement between Adams and Circuit City was
contained in a "contract of employment," and so was not subject to the
FAA. 194 F.3d 1070 (1999). Circuit City petitioned this Court, noting that the
Ninth Circuit's conclusion that all employment contracts are excluded from the
FAA conflicts with every other Court of Appeals to have addressed the question.
See, e.g., McWilliams v. Logicon, Inc., 143 F.3d 573, 575-576 (CA10 1998);
O'Neil v. Hilton Head Hospital, 115 F.3d 272, 274 (CA4 1997); Pryner v. Tractor
Supply Co., 109 F.3d 354, 358 (CA7 1997); Cole v. Burns Int'l Security Servs.,
105 F.3d 1465, 1470-1472 (CADC 1997); Rojas v. TK Communications, Inc., 87 F.3d
745, 747-748 (CA5 1996); Asplundh Tree Co. v. Bates, 71 F.3d 592, 596-601 (CA6
1995); Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (CA2
1972); Dickstein v. duPont, 443 F.2d 783, 785 (CA1 1971); Tenney Engineering,
Inc. v. United Elec. & Machine Workers of Am., 207 F.2d 450 (CA3 1953). We
granted certiorari to resolve the issue. 529 U.S. 1129 (2000). II A Congress enacted
the FAA in 1925. As the Court has explained, the FAA was a response to hostility
of American courts to the enforcement of arbitration agreements, a judicial
disposition inherited from then-longstanding English practice. See, e.g.,
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 270-271 (1995); Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). To give effect to this
purpose, the FAA compels judicial enforcement of a wide range of written
arbitration agreements. The FAA's coverage provision, §2, provides that "[a] written provision in any
maritime transaction or a contract evidencing a transaction involving commerce
to settle by arbitration a controversy thereafter arising out of such contract
or transaction, or the refusal to perform the whole or any part thereof, or an
agreement in writing to submit to arbitration an existing controversy arising
out of such a contract, transaction, or refusal, 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. We had occasion in
Allied-Bruce, supra, at 273-277, to consider the significance of Congress' use
of the words "involving commerce" in §2. The analysis began with a
reaffirmation of earlier decisions concluding that the FAA was enacted pursuant
to Congress' substantive power to regulate interstate commerce and admiralty,
see Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 405 (1967),
and that the Act was applicable in state courts and pre-emptive of state laws
hostile to arbitration, see Southland Corp. v. Keating, 465 U.S. 1 (1984).
Relying upon these background principles and upon the evident reach of the words
"involving commerce," the Court interpreted §2 as implementing
Congress' intent "to exercise [its] commerce power to the full."
Allied-Bruce, supra, at 277. The instant case,
of course, involves not the basic coverage authorization under §2 of the Act,
but the exemption from coverage under §1. The exemption clause provides the Act
shall not apply "to contracts of employment of seamen, railroad employees,
or any other class of workers engaged in foreign or interstate commerce." 9
U.S.C. § 1. Most Courts of Appeals conclude the exclusion provision is limited
to transportation workers, defined, for instance, as those workers
"actually engaged in the movement of goods in interstate commerce."
Cole, supra, at 1471. As we stated at the outset, the Court of Appeals for the
Ninth Circuit takes a different view and interprets the §1 exception to exclude
all contracts of employment from the reach of the FAA. This comprehensive
exemption had been advocated by amici curiae in Gilmer, where we addressed the
question whether a registered securities representative's employment
discrimination claim under the Age Discrimination in Employment Act of 1967, 81
Stat. 602, as amended, 29 U.S.C. § 621 et seq., could be submitted to
arbitration pursuant to an agreement in his securities registration application.
Concluding that the application was not a "contract of employment" at
all, we found it unnecessary to reach the meaning of §1. See Gilmer, supra, at
25, n. 2. There is no such dispute in this case; while Circuit City argued in
its petition for certiorari that the employment application signed by Adams was
not a "contract of employment," we declined to grant certiorari on
this point. So the issue reserved in Gilmer is presented here. B Respondent, at the
outset, contends that we need not address the meaning of the §1 exclusion
provision to decide the case in his favor. In his view, an employment contract
is not a "contract evidencing a transaction involving interstate
commerce" at all, since the word "transaction" in §2 extends
only to commercial contracts. See Craft, 177 F.3d, at 1085 (concluding that §2
covers only "commercial deal[s] or merchant's sale[s]"). This line of
reasoning proves too much, for it would make the §1 exclusion provision
superfluous. If all contracts of employment are beyond the scope of the Act
under the §2 coverage provision, the separate exemption for "contracts of
employment of seamen, railroad employees, or any other class of workers engaged
in ... interstate commerce" would be pointless. See, e.g., Pennsylvania
Dept. of Public Welfare v. Davenport, 495 U.S. 552, 562 (1990) ("Our cases
express a deep reluctance to interpret a statutory provision so as to render
superfluous other provisions in the same enactment"). The proffered
interpretation of "evidencing a transaction involving commerce,"
furthermore, would be inconsistent with Gilmer v. Interstate/Johnson Lane Corp.,
500 U.S. 20 (1991), where we held that §2 required the arbitration of an age
discrimination claim based on an agreement in a securities registration
application, a dispute that did not arise from a "commercial deal or
merchant's sale." Nor could respondent's construction of §2 be reconciled
with the expansive reading of those words adopted in Allied-Bruce, 513 U.S., at
277, 279-280. If, then, there is an argument to be made that arbitration
agreements in employment contracts are not covered by the Act, it must be
premised on the language of the §1 exclusion provision itself. Respondent,
endorsing the reasoning of the Court of Appeals for the Ninth Circuit that the
provision excludes all employment contracts, relies on the asserted breadth of
the words "contracts of employment of ... any other class of workers
engaged in ... commerce." Referring to our construction of §2's coverage
provision in Allied-Bruce-concluding that the words "involving
commerce" evidence the congressional intent to regulate to the full extent
of its commerce power-respondent contends §1's interpretation should have a
like reach, thus exempting all employment contracts. The two provisions, it is
argued, are coterminous; under this view the "involving commerce"
provision brings within the FAA's scope all contracts within the Congress'
commerce power, and the "engaged in ... commerce" language in §1 in
turn exempts from the FAA all employment contracts falling within that
authority. This reading of §1,
however, runs into an immediate and, in our view, insurmountable textual
obstacle. Unlike the "involving commerce" language in §2, the words
"any other class of workers engaged in ... commerce" constitute a
residual phrase, following, in the same sentence, explicit reference to
"seamen" and "railroad employees." Construing the residual
phrase to exclude all employment contracts fails to give independent effect to
the statute's enumeration of the specific categories of workers which precedes
it; there would be no need for Congress to use the phrases "seamen"
and "railroad employees" if those same classes of workers were
subsumed within the meaning of the "engaged in ... commerce" residual
clause. The wording of §1 calls for the application of the maxim ejusdem
generis, the statutory canon that "[w]here general words follow specific
words in a statutory enumeration, the general words are construed to embrace
only objects similar in nature to those objects enumerated by the preceding
specific words." 2A N. Singer, Sutherland on Statutes and Statutory
Construction §47.17 (1991); see also Norfolk & Western R. Co. v. Train
Dispatchers, 499 U.S. 117, 129 (1991). Under this rule of construction the
residual clause should be read to give effect to the terms "seamen"
and "railroad employees," and should itself be controlled and defined
by reference to the enumerated categories of workers which are recited just
before it; the interpretation of the clause pressed by respondent fails to
produce these results. Canons of
construction need not be conclusive and are often countered, of course, by some
maxim pointing in a different direction. The application of the rule ejusdem
generis in this case, however, is in full accord with other sound considerations
bearing upon the proper interpretation of the clause. For even if the term
"engaged in commerce" stood alone in §1, we would not construe the
provision to exclude all contracts of employment from the FAA. Congress uses
different modifiers to the word "commerce" in the design and enactment
of its statutes. The phrase "affecting commerce" indicates Congress'
intent to regulate to the outer limits of its authority under the Commerce
Clause. See, e.g., Allied-Bruce, 513 U.S., at 277. The "involving
commerce" phrase, the operative words for the reach of the basic coverage
provision in §2, was at issue in Allied-Bruce. That particular phrase had not
been interpreted before by this Court. Considering the usual meaning of the word
"involving," and the pro-arbitration purposes of the FAA, Allied-Bruce
held the "word 'involving,' like 'affecting,' signals an intent to exercise
Congress' commerce power to the full." Ibid. Unlike those phrases, however,
the general words "in commerce" and the specific phrase "engaged
in commerce" are understood to have a more limited reach. In Allied-Bruce
itself the Court said the words "in commerce" are "often-found
words of art" that we have not read as expressing congressional intent to
regulate to the outer limits of authority under the Commerce Clause. Id., at
273; see also United States v. American Building Maintenance Industries, 422
U.S. 271, 279-280 (1975) (the phrase "engaged in commerce" is "a
term of art, indicating a limited assertion of federal jurisdiction");
Jones v. United States, 529 U.S. 848, 855 (2000) (phrase "used in
commerce" "is most sensibly read to mean active employment for
commercial purposes, and not merely a passive, passing, or past connection to
commerce"). It is argued that
we should assess the meaning of the phrase "engaged in commerce" in a
different manner here, because the FAA was enacted when congressional authority
to regulate under the commerce power was to a large extent confined by our
decisions. See United States v. Lopez, 514 U.S. 549, 556 (1995) (noting that
Supreme Court decisions beginning in 1937 "ushered in an era of Commerce
Clause jurisprudence that greatly expanded the previously defined authority of
Congress under that Clause"). When the FAA was enacted in 1925, respondent
reasons, the phrase "engaged in commerce" was not a term of art
indicating a limited assertion of congressional jurisdiction; to the contrary,
it is said, the formulation came close to expressing the outer limits of
Congress' power as then understood. See, e.g., The Employers' Liability Cases,
207 U.S. 463, 498 (1908) (holding unconstitutional jurisdictional provision in
Federal Employers Liability Act (FELA) covering the employees of "every
common carrier engaged in trade or commerce"); Second Employers' Liability
Cases, 223 U.S. 1, 48-49 (1912); but cf. Illinois Central R. Co. v. Behrens, 233
U.S. 473 (1914) (noting in dicta that the amended FELA's application to common
carriers "while engaging in commerce" did not reach all employment
relationships within Congress' commerce power). Were this mode of interpretation
to prevail, we would take into account the scope of the Commerce Clause, as then
elaborated by the Court, at the date of the FAA's enactment in order to
interpret what the statute means now. A variable
standard for interpreting common, jurisdictional phrases would contradict our
earlier cases and bring instability to statutory interpretation. The Court has
declined in past cases to afford significance, in construing the meaning of the
statutory jurisdictional provisions "in commerce" and "engaged in
commerce," to the circumstance that the statute predated shifts in the
Court's Commerce Clause cases. In FTC v. Bunte Brothers, Inc., 312 U.S. 349
(1941), the Court rejected the contention that the phrase "in
commerce" in §5 of the Federal Trade Commission Act, 38 Stat. 719, 15
U.S.C. § 45 a provision enacted by Congress in 1914, should be read in as
expansive a manner as "affecting commerce." See Bunte Bros., supra, at
350-351. We entertained a similar argument in a pair of cases decided in the
1974 Term concerning the meaning of the phrase "engaged in commerce"
in §7 of the Clayton Act, 38 Stat. 731, 15 U.S.C. § 18 another 1914
congressional enactment. See American Building Maintenance, supra, at 277-283;
Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 199-202 (1974). We held that
the phrase "engaged in commerce" in §7 "means engaged in the
flow of interstate commerce, and was not intended to reach all corporations
engaged in activities subject to the federal commerce power." American
Building Maintenance, supra, at 283; cf. Gulf Oil, supra, at 202 (expressing
doubt as to whether an "argument from the history and practical purposes of
the Clayton Act" could justify "radical expansion of the Clayton Act's
scope beyond that which the statutory language defines"). The Court's
reluctance to accept contentions that Congress used the words "in
commerce" or "engaged in commerce" to regulate to the full extent
of its commerce power rests on sound foundation, as it affords objective and
consistent significance to the meaning of the words Congress uses when it
defines the reach of a statute. To say that the statutory words "engaged in
commerce" are subject to variable interpretations depending upon the date
of adoption, even a date before the phrase became a term of art, ignores the
reason why the formulation became a term of art in the first place: The plain
meaning of the words "engaged in commerce" is narrower than the more
open-ended formulations "affecting commerce" and "involving
commerce." See, e.g., Gulf Oil, supra, at 195 (phrase "engaged in
commerce" "appears to denote only persons or activities within the
flow of interstate commerce"). It would be unwieldy for Congress, for the
Court, and for litigants to be required to deconstruct statutory Commerce Clause
phrases depending upon the year of a particular statutory enactment. In rejecting the
contention that the meaning of the phrase "engaged in commerce" in §1
of the FAA should be given a broader construction than justified by its evident
language simply because it was enacted in 1925 rather than 1938, we do not mean
to suggest that statutory jurisdictional formulations "necessarily have a
uniform meaning whenever used by Congress." American Building Maintenance
Industries, supra, at 277. As the Court has noted: "The judicial task in
marking out the extent to which Congress has exercised its constitutional power
over commerce is not that of devising an abstract formula." A. B.
Kirschbaum Co. v. Walling, 316 U.S. 517, 520 (1942). We must, of course,
construe the "engaged in commerce" language in the FAA with reference
to the statutory context in which it is found and in a manner consistent with
the FAA's purpose. These considerations, however, further compel that the §1
exclusion provision be afforded a narrow construction. As discussed above, the
location of the phrase "any other class of workers engaged in ...
commerce" in a residual provision, after specific categories of workers
have been enumerated, undermines any attempt to give the provision a sweeping,
open-ended construction. And the fact that the provision is contained in a
statute that "seeks broadly to overcome judicial hostility to arbitration
agreements," Allied-Bruce, 513 U.S., at 272-273, which the Court concluded
in Allied-Bruce counseled in favor of an expansive reading of §2, gives no
reason to abandon the precise reading of a provision that exempts contracts from
the FAA's coverage. In sum, the text
of the FAA forecloses the construction of §1 followed by the Court of Appeals
in the case under review, a construction which would exclude all employment
contracts from the FAA. While the historical arguments respecting Congress'
understanding of its power in 1925 are not insubstantial, this fact alone does
not give us basis to adopt, "by judicial decision rather than amendatory
legislation," Gulf Oil, supra, at 202, an expansive construction of the
FAA's exclusion provision that goes beyond the meaning of the words Congress
used. While it is of course possible to speculate that Congress might have
chosen a different jurisdictional formulation had it known that the Court would
soon embrace a less restrictive reading of the Commerce Clause, the text of §1
precludes interpreting the exclusion provision to defeat the language of §2 as
to all employment contracts. Section 1 exempts from the FAA only contracts of
employment of transportation workers. C As the conclusion
we reach today is directed by the text of §1, we need not assess the
legislative history of the exclusion provision. See Ratzlaf v. United States,
510 U.S. 135, 147-148 (1994) ("[W]e do not resort to legislative history to
cloud a statutory text that is clear"). We do note, however, that the
legislative record on the §1 exemption is quite sparse. Respondent points to no
language in either committee report addressing the meaning of the provision, nor
to any mention of the §1 exclusion during debate on the FAA on the floor of the
House or Senate. Instead, respondent places greatest reliance upon testimony
before a Senate subcommittee hearing suggesting that the exception may have been
added in response to the objections of the president of the International
Seamen's Union of America. See Hearing on S. 4213 and S. 4214 before a
Subcommittee of the Senate Committee on the Judiciary, 67th Cong., 4th Sess., 9
(1923). Legislative history is problematic even when the attempt is to draw
inferences from the intent of duly appointed committees of the Congress. It
becomes far more so when we consult sources still more steps removed from the
full Congress and speculate upon the significance of the fact that a certain
interest group sponsored or opposed particular legislation. Cf. Kelly v.
Robinson, 479 U.S. 36, 51, n. 13 (1986) ("[N]one of those statements was
made by a Member of Congress, nor were they included in the official Senate and
House Reports. We decline to accord any significance to these statements").
We ought not attribute to Congress an official purpose based on the motives of a
particular group that lobbied for or against a certain proposal-even assuming
the precise intent of the group can be determined, a point doubtful both as a
general rule and in the instant case. It is for the Congress, not the courts, to
consult political forces and then decide how best to resolve conflicts in the
course of writing the objective embodiments of law we know as statutes. Nor can we accept
respondent's argument that our holding attributes an irrational intent to
Congress. "Under petitioner's reading of §1," he contends,
"those employment contracts most involving interstate commerce, and thus
most assuredly within the Commerce Clause power in 1925 ... are excluded from
[the] Act's coverage; while those employment contracts having a less direct and
less certain connection to interstate commerce ... would come within the Act's
affirmative coverage and would not be excluded." Brief for Respondent 38
(emphases in original). We see no paradox
in the congressional decision to exempt the workers over whom the commerce power
was most apparent. To the contrary, it is a permissible inference that the
employment contracts of the classes of workers in §1 were excluded from the FAA
precisely because of Congress' undoubted authority to govern the employment
relationships at issue by the enactment of statutes specific to them. By the
time the FAA was passed, Congress had already enacted federal legislation
providing for the arbitration of disputes between seamen and their employers,
see Shipping Commissioners Act of 1872, 17 Stat. 262. When the FAA was adopted,
moreover, grievance procedures existed for railroad employees under federal law,
see Transportation Act of 1920, §§ 300-316, 41 Stat. 456, and the passage of a
more comprehensive statute providing for the mediation and arbitration of
railroad labor disputes was imminent, see Railway Labor Act of 1926, 44 Stat.
577, 46 U.S.C. § 651 (repealed). It is reasonable to assume that Congress
excluded "seamen" and "railroad employees" from the FAA for
the simple reason that it did not wish to unsettle established or developing
statutory dispute resolution schemes covering specific workers. As for the
residual exclusion of "any other class of workers engaged in foreign or
interstate commerce," Congress' demonstrated concern with transportation
workers and their necessary role in the free flow of goods explains the linkage
to the two specific, enumerated types of workers identified in the preceding
portion of the sentence. It would be rational for Congress to ensure that
workers in general would be covered by the provisions of the FAA, while
reserving for itself more specific legislation for those engaged in
transportation. See Pryner v. Tractor Supply Co., 109 F.3d, at 358 (Posner, C.
J.). Indeed, such legislation was soon to follow, with the amendment of the
Railway Labor Act in 1936 to include air carriers and their employees, see 49
Stat. 1189, 45 U.S.C. § 181-188. III Various amici,
including the attorneys general of 22 States, object that the reading of the §1
exclusion provision adopted today intrudes upon the policies of the separate
States. They point out that, by requiring arbitration agreements in most
employment contracts to be covered by the FAA, the statute in effect pre-empts
those state employment laws which restrict or limit the ability of employees and
employers to enter into arbitration agreements. It is argued that States should
be permitted, pursuant to their traditional role in regulating employment
relationships, to prohibit employees like respondent from contracting away their
right to pursue state-law discrimination claims in court. It is not our
holding today which is the proper target of this criticism. The line of argument
is relevant instead to the Court's decision in Southland Corp. v. Keating, 465
U.S. 1 (1984), holding that Congress intended the FAA to apply in state courts,
and to pre-empt state antiarbitration laws to the contrary. See id., at 16. The question of
Southland's continuing vitality was given explicit consideration in
Allied-Bruce, and the Court declined to overrule it. 513 U.S., at 272; see also
id., at 282 (O'Connor, J., concurring). The decision, furthermore, is not
directly implicated in this case, which concerns the application of the FAA in a
federal, rather than in a state, court. The Court should not chip away at
Southland by indirection, especially by the adoption of the variable statutory
interpretation theory advanced by the respondent in the instant case. Not all of
the Justices who join today's holding agreed with Allied-Bruce, see 513 U.S., at
284 (Scalia, J., dissenting); id., at 285 (Thomas, J., dissenting), but it would
be incongruous to adopt, as we did in Allied-Bruce, a conventional reading of
the FAA's coverage in §2 in order to implement proarbitration policies and an
unconventional reading of the reach of §1 in order to undo the same coverage.
In Allied-Bruce the Court noted that Congress had not moved to overturn
Southland, see 513 U.S., at 272; and we now note that it has not done so in
response to Allied-Bruce itself. Furthermore, for
parties to employment contracts not involving the specific exempted categories
set forth in §1, it is true here, just as it was for the parties to the
contract at issue in Allied-Bruce, that there are real benefits to the
enforcement of arbitration provisions. We have been clear in rejecting the
supposition that the advantages of the arbitration process somehow disappear
when transferred to the employment context. See Gilmer, 500 U.S., at 30-32.
Arbitration agreements allow parties to avoid the costs of litigation, a benefit
that may be of particular importance in employment litigation, which often
involves smaller sums of money than disputes concerning commercial contracts.
These litigation costs to parties (and the accompanying burden to the Courts)
would be compounded by the difficult choice-of-law questions that are often
presented in disputes arising from the employment relationship, cf. Egelhoff v.
Egelhoff, post, at 7 (noting possible "choice-of-law problems"
presented by state laws affecting administration of ERISA plans), and the
necessity of bifurcation of proceedings in those cases where state law precludes
arbitration of certain types of employment claims but not others. The
considerable complexity and uncertainty that the construction of §1 urged by
respondent would introduce into the enforceability of arbitration agreements in
employment contracts would call into doubt the efficacy of alternative dispute
resolution procedures adopted by many of the Nation's employers, in the process
undermining the FAA's proarbitration purposes and "breeding litigation from
a statute that seeks to avoid it." Allied-Bruce, supra, at 275. 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; as we noted in Gilmer, " '[b]y agreeing to arbitrate a
statutory claim, a party does not forgo the substantive rights afforded by the
statute; it only submits to their resolution in an arbitral, rather than a
judicial, forum." 500 U.S., at 26 (quoting Mitsubishi Motors Corp. v. Soler
Chrysler&nbhyph;Plymouth, Inc., 473 U.S. 614, 628 (1985)). Gilmer, of
course, involved a federal statute, while the argument here is that a state
statute ought not be denied state judicial enforcement while awaiting the
outcome of arbitration. That matter, though, was addressed in Southland and
Allied-Bruce, and we do not revisit the question here. * * * For the foregoing
reasons, the judgment of the Court of Appeals for the Ninth Circuit is reversed,
and the case is remanded for further proceedings consistent with this opinion. It is so ordered. Stevens, J., Dissenting Justice Stevens,
with whom Justice Ginsburg and Justice Breyer join, and with whom Justice Souter
joins as to Parts II and III, dissenting. Justice Souter has
cogently explained why the Court's parsimonious construction of §1 of the
Federal Arbitration Act (FAA or Act) is not consistent with its expansive
reading of §2. I join his opinion, but believe that the Court's heavy reliance
on the views expressed by the Courts of Appeals during the past decade makes it
appropriate to comment on three earlier chapters in the history of this
venerable statute. I Section §2 of the
FAA makes enforceable written agreements to arbitrate "in any maritime
transaction or a contract evidencing a transaction involving commerce." 9
U.S.C. § 2. If we were writing on a clean slate, there would be good reason to
conclude that neither the phrase "maritime transaction" nor the phrase
"contract evidencing a transaction involving commerce" was intended to
encompass employment contracts.1 The history of the
Act, which is extensive and well-documented, makes clear that the FAA was a
response to the refusal of courts to enforce commercial arbitration agreements,
which were commonly used in the maritime context. The original bill was drafted
by the Committee on Commerce, Trade, and Commercial Law of the American Bar
Association (ABA) upon consideration of "the further extension of the
principle of commercial arbitration." Report of the Forty-third Annual
Meeting of the ABA, 45 A. B. A. Rep. 75 (1920) (emphasis added). As drafted, the
bill was understood by Members of Congress to "simply provid[e] for one
thing, and that is to give an opportunity to enforce an agreement in commercial
contracts and admiralty contracts." 65 Cong. Rec. 1931 (1924) (remarks of
Rep. Graham) (emphasis added).2 It is no surprise, then, that when the
legislation was first introduced in 1922,3 it did not mention employment
contracts, but did contain a rather precise definition of the term
"maritime transactions" that underscored the commercial character of
the proposed bill.4 Indeed, neither the history of the drafting of the original
bill by the ABA, nor the records of the deliberations in Congress during the years preceding the ultimate
enactment of the Act in 1925, contains any evidence that the proponents of the
legislation intended it to apply to agreements affecting employment. Nevertheless, the
original bill was opposed by representatives of organized labor, most notably
the president of the International Seamen's Union of America,5 because of their
concern that the legislation might authorize federal judicial enforcement of
arbitration clauses in employment contracts and collective-bargaining
agreements.6 In response to those objections, the chairman of the ABA committee
that drafted the legislation emphasized at a Senate Judiciary Subcommittee
hearing that "[i]t is not intended that this shall be an act referring to
labor disputes at all," but he also observed that "if your honorable
committee should feel that there is any danger of that, they should add to the
bill the following language, 'but nothing herein contained shall apply to seamen
or any class of workers in interstate and foreign commerce.' " Hearing 9.
Similarly, another supporter of the bill, then Secretary of Commerce Herbert
Hoover, suggested that "[i]f objection appears to the inclusion of workers'
contracts in the law's scheme, it might be well amended by stating 'but nothing
herein contained shall apply to contracts of employment of seamen, railroad
employees, or any other class of workers engaged in interstate or foreign
commerce.' " Id., at 14. The legislation was reintroduced in the next
session of Congress with Secretary Hoover's exclusionary language added to §1,7
and the amendment eliminated organized labor's opposition to the proposed law.8 That amendment is
what the Court construes today. History amply supports the proposition that it
was an uncontroversial provision that merely confirmed the fact that no one
interested in the enactment of the FAA ever intended or expected that §2 would
apply to employment contracts. It is particularly ironic, therefore, that the
amendment has provided the Court with its sole justification for refusing to
give the text of §2 a natural reading. Playing ostrich to the substantial
history behind the amendment, see ante, at 12 ("[W]e need not assess the
legislative history of the exclusion provision"), the Court reasons in a
vacuum that "[i]f all contracts of employment are beyond the scope of the
Act under the §2 coverage provision, the separate exemption" in §1
"would be pointless," ante, at 5. But contrary to the Court's
suggestion, it is not "pointless" to adopt a clarifying amendment in
order to eliminate opposition to a bill. Moreover, the majority's reasoning is
squarely contradicted by the Court's approach in Bernhardt v. Polygraphic Co. of
America, 350 U.S. 198, 200, 201, n. 3 (1956), where the Court concluded that an
employment contract did not "evidence 'a transaction involving commerce'
within the meaning of §2 of the Act," and therefore did not "reach
the further question whether in any event petitioner would be included in 'any
other class of workers' within the exceptions of §1 of the Act." The irony of the
Court's reading of §2 to include contracts of employment is compounded by its
cramped interpretation of the exclusion inserted into §1. As proposed and
enacted, the exclusion fully responded to the concerns of the Seamen's Union and
other labor organizations that §2 might encompass employment contracts by
expressly exempting not only the labor agreements of "seamen" and
"railroad employees," but also of "any other class of workers
engaged in foreign or interstate commerce." 9 U.S.C. § 1 (emphasis added).
Today, however, the Court fulfills the original-and originally unfounded-fears
of organized labor by essentially rewriting the text of §1 to exclude the
employment contracts solely of "seamen, railroad employees, or any other
class of transportation workers engaged in foreign or interstate commerce."
See ante, at 11. In contrast, whether one views the legislation before or after
the amendment to §1, it is clear that it was not intended to apply to
employment contracts at all. II A quarter century
after the FAA was passed, many Courts of Appeals were presented with the
question whether collective-bargaining agreements were "contracts of
employment" for purposes of §1's exclusion. The courts split over that
question, with at least the Third, Fourth, and Fifth Circuits answering in the
affirmative,9 and the First and Sixth Circuits answering in the negative.10 Most
of these cases neither involved employees engaged in transportation nor turned
on whether the workers were so occupied. Indeed, the general assumption seemed
to be, as the Sixth Circuit stated early on, that §1 "was deliberately
worded by the Congress to exclude from the [FAA] all contracts of employment of
workers engaged in interstate commerce." Gatliff Coal Co. v. Cox, 142 F.2d
876, 882 (1944). The contrary view
that the Court endorses today-namely, that only employees engaged in interstate
transportation are excluded by §1-was not expressed until 1954, by the Third
Circuit in Tenney Engineering, Inc. v. Electrical Workers, 207 F.2d 450, 452
(1953). And that decision, significantly, was rejected shortly thereafter by the
Fourth Circuit. See Electrical Workers v. Miller Metal Products, Inc., 215 F.2d
221, 224 (1954). The conflict among the Circuits that persisted in the 1950's
thus suggests that it may be inappropriate to attach as much weight to recent
Court of Appeals opinions as the Court does in this case. See ante, at 1, 3, 4. Even more
important than the 1950's conflict, however, is the way in which this Court
tried to resolve the debate. In Textile Workers v. Lincoln Mills of Ala., 353
U.S. 448 (1957), the Court granted certiorari to consider the union's claim
that, in a suit brought under §301 of the Labor Management Relations Act, 1947
(LMRA), a federal court may enforce the arbitration clause in a
collective-bargaining agreement. The union argued that such authority was
implicitly granted by §301 and explicitly granted by §2 of the FAA. In support
of the latter argument, the union asked the Court to rule either that a
collective-bargaining agreement is not a "contrac[t] of employment"
within the meaning of the exclusion in §1, or that the exclusion is limited to
transportation workers.11 The Court did not accept either argument, but held
that §301 itself provided the authority to compel arbitration. The fact that
the Court relied on §301 of the LMRA, a statutory provision that does not
mention arbitration, rather than the FAA, a statute that expressly authorizes
the enforcement of arbitration agreements, strongly implies that the Court had
concluded that the FAA simply did not apply because §1 exempts labor contracts.
That was how Justice Frankfurter, who of course was present during the
deliberations on the case, explained the disposition of the FAA issues. See 353
U.S., at 466-468 (dissenting opinion).12 Even if Justice
Frankfurter's description of the majority's rejection of the applicability of
the FAA does not suffice to establish Textile Workers as precedent for the
meaning of §1, his opinion unquestionably reveals his own interpretation of the
Act. Moreover, given that Justice Marshall and I have also subscribed to that
reading of §1,13 and that three more Members of this Court do so in dissenting
from today's decision, it follows that more Justices have endorsed that view
than the one the Court now adopts. That fact, of course, does not control the
disposition of this case, but it does seem to me that it is entitled to at least
as much respect as the number of Court of Appeals decisions to which the Court
repeatedly refers. III Times have
changed. Judges in the 19th century disfavored private arbitration. The 1925 Act
was intended to overcome that attitude, but a number of this Court's cases
decided in the last several decades have pushed the pendulum far beyond a
neutral attitude and endorsed a policy that strongly favors private
arbitration.14 The strength of that policy preference has been echoed in the
recent Court of Appeals opinions on which the Court relies.15 In a sense,
therefore, the Court is standing on its own shoulders when it points to those
cases as the basis for its narrow construction of the exclusion in §1. There is
little doubt that the Court's interpretation of the Act has given it a scope far
beyond the expectations of the Congress that enacted it. See, e.g., Southland
Corp. v. Keating, 465 U.S. 1, 17-21 (1984) (Stevens, J., concurring in part and
dissenting in part); id., at 21-36 (O'Connor, J., dissenting). It is not
necessarily wrong for the Court to put its own imprint on a statute. But when
its refusal to look beyond the raw statutory text enables it to disregard
countervailing considerations that were expressed by Members of the enacting
Congress and that remain valid today, the Court misuses its authority. As the
history of the legislation indicates, the potential disparity in bargaining
power between individual employees and large employers was the source of
organized labor's opposition to the Act, which it feared would require courts to
enforce unfair employment contracts. That same concern, as Justice Souter points
out, see post, at 6-7, n. 2, underlay Congress' exemption of contracts of
employment from mandatory arbitration. When the Court simply ignores the
interest of the unrepresented employee, it skews its interpretation with it own
policy preferences. This case
illustrates the wisdom of an observation made by Justice Aharon Barak of the
Supreme Court of Israel. He has perceptively noted that the
"minimalist" judge "who holds that the purpose of the statute may
be learned only from its language" has more discretion than the judge
"who will seek guidance from every reliable source." Judicial
Discretion 62 (Y. Kaufmann transl. 1989). A method of statutory interpretation
that is deliberately uninformed, and hence unconstrained, may produce a result
that is consistent with a court's own views of how things should be, but it may
also defeat the very purpose for which a provision was enacted. That is the sad
result in this case. I respectfully
dissent. Notes 1. Doing so, in any event, is
not precluded by our decision in Allied-Bruce Terminix Cos. v. Dobson, 513 U.S.
265 (1995). While we held that §2 of the FAA evinces Congress' intent to
exercise its full Commerce Clause power, id., at 277, the case did not involve a
contract of employment, nor did it consider whether such contracts fall within
either category of §2's coverage provision, however broadly construed, in light
of the legislative history detailed ante, at 2-5. 2. Consistent with this
understanding, Rep. Mills, who introduced the original bill in the House,
explained that it "provides that where there are commercial contracts and
there is disagreement under the contract, the court can [en]force an arbitration
agreement in the same way as other portions of the contract." 65 Cong.
Rec., at 11080 (emphasis added). And before the Senate, the chairman of the New
York Chamber of Commerce, one of the many business organizations that requested
introduction of the bill, testified that it was needed "to enable business
men to settle their disputes expeditiously and economically, and will reduce the
congestion in the Federal and State courts." Hearing on S. 4213 and S. 4214
before a Subcommittee of the Senate Committee on the Judiciary, 67th Cong., 4th
Sess., 2 (1923) (Hearing) (emphasis added). See also id., at 14 (letter of H.
Hoover, Secretary of Commerce) ("I have been, as you may know, very
strongly impressed with the urgent need of a Federal commercial arbitration act.
The American Bar Association has now joined hands with the business men of this
country to the same effect and unanimously approved" the bill drafted by
the ABA committee and introduced in both Houses of Congress (emphasis added)). 3. S. 4214, 67th Cong., 4th
Sess. (1922) (S. 4214); H. R. 13522, 67th Cong., 4th Sess. (1922) (H. R. 13522).
See 64 Cong. Rec. 732, 797 (1922). 4. "[M]aritime
transactions" was defined as "charter parties, bills of lading of
water carriers, agreements relating to wharfage, supplies furnished vessels or
repairs to vessels, seamen's wages, collisions, or any other matters in foreign
or interstate commerce which, if the subject of controversy, would be embraced
within admiralty jurisdiction." S. 4214, §1; H. R. 13522, §1. Although
there was no illustrative definition of "contract evidencing a transaction
involving commerce," the draft defined "commerce" as
"commerce among the several States or with foreign nations, or in any
Territory of the United States or in the District of Columbia, or between any
such Territory and another, or between any such Territory and any State or
foreign nation, or between the District of Columbia and any State or Territory
or foreign nation." S. 4214, §1; H. R. 13522, §1. Considered together,
these definitions embrace maritime and nonmaritime commercial transactions, and
with one possible exception do not remotely suggest coverage of employment
contracts. That exception, "seamen's wages," was eliminated by the
time the bill was reintroduced in the next session of Congress, when the
exclusions in §1 were added. See Joint Hearings on S. 1005 and H. R. 646 before
the Subcommittees of the Committees on the Judiciary, 68th Cong., 1st Sess., 2
(1924) (Joint Hearings); see also infra, at 4. These definitions were enacted as
amended and remain essentially the same today. 5. He stated: "[T]his bill
provides for reintroduction of forced or involuntary labor, if the freeman
through his necessities shall be induced to sign. Will such contracts be signed?
Esau agreed, because he was hungry. It was the desire to live that caused
slavery to begin and continue. With the growing hunger in modern society, there
will be but few that will be able to resist. The personal hunger of the seaman,
and the hunger of the wife and children of the railroad man will surely tempt
them to sign, and so with sundry other workers in 'Interstate and Foreign
Commerce.' " Proceedings of the 26th Annual Convention of the International
Seamen's Union of America 203-204 (1923) (emphasis added). 6. See Hearing 9. See also
Textile Workers v. Lincoln Mills of Ala., 353 U.S. 448, 466-467, n. 2 (1957)
(Frankfurter, J., dissenting). 7. See Joint Hearings 2. 8. Indeed, in a postenactment
comment on the amendment, the Executive Council of the American Federation of
Labor reported: "Protests from the American
Federation of Labor and the International Seamen's Union brought an amendment
which provides that 'nothing herein contained shall apply to contracts of
employment of seamen, railroad employees or any other class of workers engaged
in foreign or interstate commerce.' This exempted labor from the provisions of
the law, although its sponsors denied there was any intention to include labor
disputes." Proceedings of the 45th Annual Convention of the American
Federation of Labor 52 (1925). 9. Lincoln Mills of Ala. v.
Textile Workers, 230 F.2d 81, 86 (CA5 1956), rev'd on other grounds, 353 U.S.
448 (1957); Electrical Workers v. Miller Metal Products, Inc., 215 F.2d 221, 224
(CA4 1954); Electric R. & Motor Coach Employees v. Pennsylvania Greyhound
Lines, Inc., 192 F.2d 310, 313 (CA3 1951). Apparently, two other Circuits shared
this view. See Mercury Oil Refining Co. v. Oil Workers, 187 F.2d 980, 983 (CA10
1951); Shirley-Herman Co. v. Hod Carriers, 182 F.2d 806, 809 (CA2 1950). 10. Electrical Workers v.
General Elec. Co., 233 F.2d 85, 100 (CA1 1956), aff'd on other grounds, 353 U.S.
547 (1957); Hoover Motor Express Co., Inc. v. Teamsters, 217 F.2d 49, 53 (CA6
1954). 11. See Brief for Petitioner in
Textile Workers v. Lincoln Mills of Ala., O.T. 1956, No. 211, pp. 53-59. 12. In Justice Frankfurter's
words, "Naturally enough, I find rejection, though not explicit, of the
availability of the Federal Arbitration Act to enforce arbitration clauses in
collective-bargaining agreements in the silent treatment given that Act by the
Court's opinion. If an Act that authorizes the federal courts to enforce
arbitration provisions in contracts generally, but specifically denies authority
to decree that remedy for 'contracts of employment,' were available, the Court
would hardly spin such power out of the empty darkness of §301. I would make
this rejection explicit, recognizing that when Congress passed legislation to
enable arbitration agreements to be enforced by the federal courts, it saw fit
to exclude this remedy with respect to labor contracts." Textile Workers v.
Lincoln Mills of Ala., 353 U.S., at 466 (dissenting opinion). 13. See Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 36, 38-41 (1991) (dissenting
opinion). 14. See, e.g., Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20 (1991); Rodriguez de Quijas v.
Shearson/American Express, Inc., 490 U.S. 477 (1989); Shearson/American Express
Inc. v. McMahon, 482 U.S. 220 (1987); Mitsubishi Motors Corp. v. Soler
Chrysler&nbhyph;Plymouth, Inc., 473 U.S. 614 (1985); Southland Corp. v.
Keating, 465 U.S. 1 (1984); Moses H. Cone Memorial Hospital v. Mercury Constr.
Corp., 460 U.S. 1 (1983); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388
U.S. 395 (1967). 15. See, e.g., O'Neil v. Hilton
Head Hosp., 115 F.3d 272, 274 (CA4 1997) ("The circuit courts have
uniformly reasoned that the strong federal policy in favor of arbitration
requires a narrow reading of this section 1 exemption. Thus, those courts have
limited the section 1 exemption to seamen, railroad workers, and other workers
actually involved in the interstate transportation of goods"). Souter, J., Dissenting Justice Souter,
with whom Justice Stevens, Justice Ginsburg, and Justice Breyer join,
dissenting. Section 2 of the
Federal Arbitration Act (FAA or Act) provides for the enforceability of a
written arbitration clause in "any maritime transaction or a contract
evidencing a transaction involving commerce," 9 U.S.C. § 2 while §1
exempts from the Act's coverage "contracts of employment of seamen,
railroad employees, or any other class of workers engaged in foreign or
interstate commerce." Whatever the understanding of Congress's implied
admiralty power may have been when the Act was passed in 1925, the commerce
power was then thought to be far narrower than we have subsequently come to see
it. As a consequence, there are two quite different ways of reading the scope of
the Act's provisions. One way would be to say, for example, that the coverage
provision extends only to those contracts "involving commerce" that
were understood to be covered in 1925; the other would be to read it as
exercising Congress's commerce jurisdiction in its modern conception in the same
way it was thought to implement the more limited view of the Commerce Clause in
1925. The first possibility would result in a statutory ambit frozen in time,
behooving Congress to amend the statute whenever it desired to expand
arbitration clause enforcement beyond its scope in 1925; the second would
produce an elastic reach, based on an understanding that Congress used language
intended to go as far as Congress could go, whatever that might be over time. In Allied-Bruce
Terminix Cos. v. Dobson, 513 U.S. 265 (1995), we decided that the elastic
understanding of §2 was the more sensible way to give effect to what Congress
intended when it legislated to cover contracts "involving commerce," a
phrase that we found an apt way of providing that coverage would extend to the
outer constitutional limits under the Commerce Clause. The question here is
whether a similarly general phrase in the §1 exemption, referring to contracts
of "any ... class of workers engaged in foreign or interstate
commerce," should receive a correspondingly evolutionary reading, so as to
expand the exemption for employment contracts to keep pace with the enhanced
reach of the general enforceability provision. If it is tempting to answer yes,
on the principle that what is sauce for the goose is sauce for the gander, it is
sobering to realize that the Courts of Appeals have, albeit with some fits and
starts as noted by Justice Stevens, ante, at 6-7 (dissenting opinion),1
overwhelmingly rejected the evolutionary reading of §1 accepted by the Court of
Appeals in this case. See ante, at 3 (opinion of the Court) (citing cases). A
majority of this Court now puts its imprimatur on the majority view among the
Courts of Appeals. The number of
courts arrayed against reading the §1 exemption in a way that would allow it to
grow parallel to the expanding §2 coverage reflects the fact that this minority
view faces two hurdles, each textually based and apparent from the face of the
Act. First, the language of coverage (a contract evidencing a transaction
"involving commerce") is different from the language of the exemption
(a contract of a worker "engaged in ... commerce"). Second, the
"engaged in . . . commerce" catchall phrase in the exemption is placed
in the text following more specific exemptions for employment contracts of
"seamen" and "railroad employees." The placement possibly
indicates that workers who are excused from arbitrating by virtue of the catchall exclusion must
resemble seamen and railroad workers, perhaps by being employees who actually
handle and move goods as they are shipped interstate or internationally. Neither hurdle
turns out to be a bar, however. The first objection is at best inconclusive and
weaker than the grounds to reject it; the second is even more certainly
inapposite, for reasons the Court itself has stated but misunderstood. A Is Congress
further from a plenary exercise of the commerce power when it deals with
contracts of workers "engaged in . . . commerce" than with contracts
detailing transactions "involving commerce?" The answer is an easy
yes, insofar as the former are only the class of labor contracts, while the
latter are not so limited. But that is not the point. The question is whether
Congress used language indicating that it meant to cover as many contracts as
the Commerce Clause allows it to reach within each class of contracts addressed.
In Allied-Bruce we examined the 1925 context and held that "involving
commerce" showed just such a plenary intention, even though at the time we
decided that case we had long understood "affecting commerce" to be
the quintessential expression of an intended plenary exercise of commerce power.
Allied-Bruce, supra, at 273-274; see also Wickard v. Filburn, 317 U.S. 111
(1942). Again looking to
the context of the time, I reach the same conclusion about the phrase
"engaged in commerce" as a description of employment contracts
exempted from the Act. When the Act was passed (and the commerce power was
closely confined) our case law indicated that the only employment relationships
subject to the commerce power were those in which workers were actually engaged
in interstate commerce. Compare The Employers' Liability Cases, 207 U.S. 463,
496, 498 (1908) (suggesting that regulation of the employment relations of
railroad employees "actually engaged in an operation of interstate
commerce" is permissible under the Commerce Clause but that regulation of a
railroad company's clerical force is not), with Hammer v. Dagenhart, 247 U.S.
251, 271-276 (1918) (invalidating statute that had the "necessary
effect" of "regulat[ing] the hours of labor of children in factories
and mines within the States"). Thus, by using "engaged in" for
the exclusion, Congress showed an intent to exclude to the limit of its power to
cover employment contracts in the first place, and it did so just as clearly as
its use of "involving commerce" showed its intent to legislate to the
hilt over commercial contracts at a more general level. That conclusion is in
fact borne out by the statement of the then-Secretary of Commerce, Herbert
Hoover, who suggested to Congress that the §1 exclusion language should be
adopted "[i]f objection appears to the inclusion of workers' contracts in
the law's scheme." Sales and Contracts to Sell in Interstate and Foreign
Commerce, and Federal Commercial Arbitration: Hearing on S. 4213 and S. 4214
before a Subcommittee of the Senate Committee on the Judiciary, 67th Cong., 4th
Sess., 14 (1923) (hereinafter Hearing on S. 4213 et al.). The Court cites
FTC v. Bunte Brothers, Inc., 312 U.S. 349 (1941), United States v. American
Building Maintenance Industries, 422 U.S. 271 (1975), and Gulf Oil Corp. v. Copp
Paving Co., 419 U.S. 186 (1974), for the proposition that "engaged in"
has acquired a more restricted meaning as a term of art, immune to tampering
now. Ante, at 9-10. But none of the cited cases dealt with the question here,
whether exemption language is to be read as petrified when coverage language is
read to grow. Nor do the cases support the Court's unwillingness to look beyond
the four corners of the statute to determine whether the words in question
necessarily " 'have a uniform meaning whenever used by Congress,' "
ante, at 10 (quoting American Building Maintenance, supra, at 277). Compare
ante, at 12 ("[W]e need not assess the legislative history of the exclusion
provision") with, e.g., American Building Maintenance, supra, at 279-283
(examining legislative history and agency enforcement of the Clayton Act before
resolving meaning of "engaged in commerce"). The Court has no
good reason, therefore, to reject a reading of "engaged in" as an
expression of intent to legislate to the full extent of the
commerce power over employment contracts. The statute is accordingly entitled to
a coherent reading as a whole, see, e.g., King v. St. Vincent's Hospital, 502
U.S. 215, 221 (1991), by treating the exemption for employment contracts as
keeping pace with the expanded understanding of the commerce power generally. B The second hurdle
is cleared more easily still, and the Court has shown how. Like some Courts of
Appeals before it, the majority today finds great significance in the fact that
the generally phrased exemption for the employment contracts of workers
"engaged in commerce" does not stand alone, but occurs at the end of a
sequence of more specific exemptions: for "contracts of employment of
seamen, railroad employees, or any other class of workers engaged in foreign or
interstate commerce." Like those other courts, this Court sees the sequence
as an occasion to apply the interpretive maxim of ejusdem generis, that is, when
specific terms are followed by a general one, the latter is meant to cover only
examples of the same sort as the preceding specifics. Here, the same sort is
thought to be contracts of transportation workers, or employees of transporters,
the very carriers of commerce. And that, of course, excludes respondent Adams
from benefit of the exemption, for he is employed by a retail seller. Like many
interpretive canons, however, ejusdem generis is a fallback, and if there are
good reasons not to apply it, it is put aside. E.g., Norfolk & Western R.
Co. v. Train Dispatchers, 499 U.S. 117, 129 (1991).2 There are good reasons
here. As Adams argued, it is imputing something very odd to the working of the
congressional brain to say that Congress took care to bar application of the Act
to the class of employment contracts it most obviously had authority to
legislate about in 1925, contracts of workers employed by carriers and handlers
of commerce, while covering only employees "engaged" in less obvious
ways, over whose coverage litigation might be anticipated with uncertain
results. It would seem to have made more sense either to cover all coverable
employment contracts or to exclude them all. In fact, exclusion might well have
been in order based on concern that arbitration could prove expensive or
unfavorable to employees, many of whom lack the bargaining power to resist an
arbitration clause if their prospective employers insist on one.3 And excluding
all employment contracts from the Act's enforcement of mandatory arbitration
clauses is consistent with Secretary Hoover's suggestion that the exemption
language would respond to any "objection . . . to the inclusion of workers'
contracts." The Court tries to
deflect the anomaly of excluding only carrier contracts by suggesting that
Congress used the reference to seamen and rail workers to indicate the class of
employees whose employment relations it had already legislated about and would
be most likely to legislate about in the future. Ante, at 13-14. This
explanation, however, does nothing to eliminate the anomaly. On the contrary,
the explanation tells us why Congress might have referred specifically to the
sea and rail workers; but, if so, it also indicates that Congress almost
certainly intended the catchall phrase to be just as broad as its terms, without
any interpretive squeeze in the name of ejusdem generis. The very fact, as
the Court points out, that Congress already had spoken on the subjects of
sailors and rail workers and had tailored the legislation to the particular
circumstances of the sea and rail carriers may well have been reason for
mentioning them specifically. But making the specific references was in that
case an act of special care to make sure that the FAA not be construed to modify
the existing legislation so exactly aimed; that was no reason at all to limit
the general FAA exclusion from applying to employment contracts that had not
been targeted with special legislation. Congress did not need to worry
especially about the FAA's effect on legislation that did not exist and was not
contemplated. As to workers uncovered by any specific legislation, Congress
could write on a clean slate, and what it wrote was a general exclusion for
employment contracts within Congress's power to regulate. The Court has
understood this point before, holding that the existence of a special reason for
emphasizing specific examples of a statutory class can negate any inference that
an otherwise unqualified general phrase was meant to apply only to matters
ejusdem generis.4 On the Court's own reading of the history, then, the
explanation for the catchall is not ejusdem generis; instead, the explanation
for the specifics is ex abundanti cautela, abundance of caution, see Fort
Stewart Schools v. FLRA, 495 U.S. 641, 646 (1990). Nothing stands in
the way of construing the coverage and exclusion clauses together, consistently
and coherently. I respectfully dissent. Notes 1. Compare, e.g., Asplundh Tree
Expert Co. v. Bates, 71 F.3d 592, 600-601 (CA6 1995) (construing exclusion
narrowly), with Willis v. Dean Witter Reynolds, 948 F.2d 305, 311-312 (CA6 1991)
(concluding, in dicta, that contracts of employment are generally excluded), and
Gatliff Coal Co. v. Cox, 142 F.2d 876, 882 (CA6 1944) ("[T]he Arbitration Act excluded employment
contracts"). See also Craft v. Campbell Soup Co., 177 F.3d 1083, 1086, n. 6
(CA9 1999) (noting intracircuit inconsistency). 2. What is more, the Court has
repeatedly explained that the canon is triggered only by uncertain statutory
text, e.g., Garcia v. United States, 469 U.S. 70, 74-75 (1984); Gooch v. United
States, 297 U.S. 124, 128 (1936), and that it can be overcome by, inter alia,
contrary legislative history, e.g., Watt v. Western Nuclear, Inc., 462 U.S. 36,
44, n. 5 (1983). The Court today turns this practice upside down, using ejusdem
generis to establish that the text is so clear that legislative history is
irrelevant. Ante, at 12. 3. Senator Walsh expressed this
concern during a subcommittee hearing on the FAA: "
' The trouble about the matter is that a great many of these contracts that are
entered into are really not voluntary things at all ... . It is the same with a
good many contracts of employment. A man says, " There are our terms. All
right, take it or leave it." Well, there is nothing for the man to do
except to sign it; and then he surrenders his right to have his case tried by
the court, and has to have it tried before a tribunal in which he has no
confidence at all.' " Hearing on S. 4213 et al., at 9. 4. In Watt v. Western Nuclear,
Inc., supra, at 44, n. 5, the Court concluded that the ejusdem generis canon did
not apply to the words "coal and other minerals" where "[t]here
were special reasons for expressly addressing coal that negate any inference
that the phrase 'and other minerals' was meant to reserve only substances
ejusdem generis," namely that Congress wanted "to make clear that coal
was reserved even though existing law treated it differently from other
minerals." |
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Editor: Ross Runkel, Professor of Law Emeritus. email Ross@LawMemo.Com, Phone 503-399-8028. Copyright LawMemo, Inc.
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