- The Washington Times - Thursday, March 22, 2001

Employees who agree to let an arbitrator resolve any workplace disputes cannot change their mind and sue in court when they encounter a problem, the Supreme Court ruled yesterday.

"Arbitration agreements allow parties to avoid the costs of litigation, a benefit that may be of particular importance in employment litigation," Justice Anthony M. Kennedy wrote in explaining the court's 5-4 ruling.

The majority which also included Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor, Antonin Scalia and Clarence Thomas rejected the argument by Circuit City worker Saint Clair Adams that the ruling "attributes an irrational intent to Congress."

The main dissent, written by Justice John Paul Stevens, accused the majority of "playing ostrich" and ignoring how the law was passed over objections of organized labor.

"When the court simply ignores the interest of the unrepresented employee, it skews its interpretation with its own policy preferences," Justice Stevens wrote for himself and Justices Ruth Bader Ginsburg and Stephen G. Breyer.

Justice David H. Souter filed a separate dissent.

The highly technical decision, welcomed by the business community, hinged on defining what Congress meant in 1925 when it exempted from the Federal Arbitration Act (FAA) workers engaged in foreign or interstate commerce.

The decision blocks Mr. Adams, a salesman for Richmond-based Circuit City Stores, from having a California state court consider his 1997 discrimination complaint that charges he was harassed at work because of sexual orientation.

His six-page job application in 1995 included an arbitration agreement that he signed.

While deciding the state issue, the court did not resolve the related issue of whether federal job-discrimination laws trump those arbitration clauses and the 1925 law.

The same five-justice majority that recently upheld a number of state prerogatives rejected the argument from 22 state attorneys general that states should be free to forbid workers from bargaining away their legal rights under state law.

"When the FAA was enacted in 1925 … 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," Justice Kennedy said in explaining the court's split decision.

The court said Congress had the greatest power over workers in interstate commerce and may have excluded them simply because specific laws already applied to such workers.

The ruling reversed a decision by the 9th U.S. Circuit Court of Appeals and permits companies to enforce employee arbitration agreements that prevent workers from taking many legal claims to court.

"The ruling is a major victory for businesses, employers and employees because arbitration is more convenient, less time consuming and cheaper than lawsuits to settle grievances," said Washington lawyer Lawrence Z. Lorber, who represented the United States Chamber of Commerce in the case.

"Businesses should be aware that they are no more likely to win an arbitration hearing than a court case," he warned.

Opponents of the decision included the NAACP Legal Defense Fund; AARP, which represents older and retired workers; and the U.S. Justice Department, which took its stand during the Clinton administration.

"Today's decision will adversely affect all employees and is especially bad for older workers," AARP Executive Director Horace Deets said. He said workers should be free to go to court. "It is a tremendous setback in the fight against workplace discrimination."

Circuit City's lawyer, David E. Nagle of Richmond, referred questions to a corporate officer who was not available to comment.

Millions of workers have arbitration contracts with employers, including those signed on job applications and those negotiated by unions.

Supporters say arbitration is less complex and less expensive than lawsuits, but employee groups say the process can be tilted toward employers and deny workers some rights.


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