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Ninth Circuit Calls Into Question Its Own Ruling on Compelled Arbitration of Employment Agreements

Volume 1, Issue 8
August 22, 2002

Appellate Court Compels Arbitration of California FEHA Claim

For those employers who either have or are considering the development of an arbitration policy to resolve employment disputes, a recent Ninth Circuit decision has provided hope that employees can eventually be compelled to arbitrate their claims brought under federal civil rights statutes. Currently, through its decision in Duffield v. Robertson Stephens & Co., the Ninth Circuit remains the only federal court that will not enforce agreements to arbitrate Title VII claims. The Duffield decision has come under considerable criticism, particularly in view of last year's Supreme Court decision inCircuit City v. Adams, which held that agreements to arbitrate claims arising under employment contracts are enforceable under the Federal Arbitration Act. Now, the Ninth Circuit itself has called its Duffield ruling into question.

A former employee of Circuit City Stores filed suit in state court claiming a violation of the Fair Employment and Housing Act, which is California's state equivalent to Title VII. Circuit City petitioned a federal court to compel arbitration, and the petition was granted. Upon review by the Ninth Circuit, the employee argued that arbitration could not be compelled pursuant to the Duffielddecision. However the Ninth Circuit pointed out that the employee did not sue under Title VII, and therefore "had not invoked Title VII's enforcement scheme." Therefore, the court held Title VII does not preclude the arbitration of the employee's state discrimination claim. In rendering the decision, two of the judges noted that "Duffield's continuing validity is questionable."

Though Duffield remains good law at the present time, this recent decision indicates that Title VII claims may eventually be subject to compelled arbitration as the Ninth Circuit continues to face increasing pressure to reverse its controversial decision.

Circuit City Stores, Inc. v. Najd, Case No. 99-56571 (June 24, 2002).

Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.