Court rules federal suits can trump arbitration agreements

Tuesday, January 15, 2002

Associated Press WriterWASHINGTON (AP) -- A federal anti-discrimination agency may step in to win back pay or other help for workers who have signed away the right to sue their employers, a divided Supreme Court ruled Tuesday.

The 6-3 ruling clarifies the reach of the federal Equal Employment Opportunity Commission, and curbs the ability of employers to keep workplace disputes out of the courts.

The high court held that the EEOC may sue for money in federal court on behalf of a short-order cook who was fired after he had a seizure at work. The cook had agreed when he was hired that any on-the-job dispute would be resolved by arbitration, but the EEOC can ignore that agreement, Justice John Paul Stevens wrote in the majority opinion.

The court's decision means that in some cases the EEOC can circumvent an arbitration agreement to do for an individual wronged worker what the worker is unable or perhaps unwilling to do for himself.

The EEOC is "the master of its own case," and free to decide for itself whether it is in the public's interest to pursue a given lawsuit, Stevens wrote on behalf of himself and Justices Sandra Day O'Connor, Anthony M. Kennedy, David H. Souter, Ruth Bader Ginsburg and Stephen Breyer.

"It is the public agency's province, not that of the court, to determine whether public resources should be committed to the recovery of victim-specific relief," Stevens wrote.

Justice Clarence Thomas, who once headed the EEOC, dissented. The EEOC must "take a victim of discrimination as it finds him," Thomas wrote on behalf of himself, Chief Justice William H. Rehnquist and Justice Antonin Scalia.

"I cannot agree that the EEOC may do on behalf of an employee that which an employee has agreed not to do for himself," Thomas wrote.

Arbitration agreements like the one Eric Scott Baker signed when applying for a job at a Waffle House restaurant cover an estimated 10 percent of the American work force, and are increasingly popular with employers.

Many of those covered by arbitration agreements are low-wage workers like Baker. He agreed to arbitration as a condition of getting his minimum-wage job as a grill operator in West Columbia, S.C.

Baker suffers from a seizure disorder as a result of an automobile accident. He had a seizure on the job in 1994, and was quickly fired for what Waffle House said were his own safety and the good of the restaurant

Instead of arbitration, Baker took his case to the EEOC, which sued in federal court for what it called a violation of the Americans with Disabilities Act. Waffle House should have made reasonable allowances for Baker's medical problem, so that he could go on working, the EEOC argued.

A federal appeals court said while the EEOC could use Baker's case to try to win broad concessions from Waffle House in other discrimination cases, the arbitration agreement prevented the EEOC from winning reinstatement, back pay or money damages for Baker himself.

The EEOC, backed first by the Democratic Clinton administration and then by the Republican Bush administration, appealed to the Supreme Court.

The EEOC is charged by Congress with investigating all manner of discrimination, and pursuing both individual solutions and broad, general fixes. The government argued that the EEOC should be free to prosecute an individual case it found egregious, with or without an arbitration agreement.

The agency ought to be able to make examples out of employers who discriminate, by making them answer the charges in court and pay money if they lose, the government argued. The government also noted that the EEOC was not a party to the agreement Baker signed, and argued that the agency should not have to abide by it.

Waffle House argued that the requirements of the arbitration agreement were clear, and that a federal law governing arbitration enforcement backs up their claim.

Businesses generally regard arbitration as a cheaper, faster and more predictable alternative to the court system. Civil rights groups and other advocates for workers say employees often do not read the fine print and do not know what rights they are signing away.

Arbitration is a largely administrative process, in which both sides submit arguments to an independent outsider, whose decisions are final.

Employees, including Baker, who sign binding arbitration agreements usually agree to foot half the cost of bringing a case.

Partly as a result of previous Supreme Court decisions, binding arbitration contracts usually are truly binding.

The case is EEOC v. Waffle House, 99-1823.

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Supreme Court: http://www.supremecourtus.gov

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