Deborah Patterson v. Tenet Healthcare ( 1997 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 96-2587
___________
Deborah Patterson, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the
* Western District of Missouri.
Tenet Healthcare, Inc., *
*
Appellee. *
___________
Submitted: January 15, 1997
Filed: May 12, 1997
___________
Before WOLLMAN and FLOYD R. GIBSON, Circuit Judges, and MONTGOMERY,1
District Judge.
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WOLLMAN, Circuit Judge.
Deborah Patterson appeals from the district court’s2 order dismissing her
employment discrimination claims against her former employer, Tenet Healthcare, Inc.
(Tenet). We affirm.
1
The HONORABLE ANN D. MONTGOMERY, United States District Judge
for the District of Minnesota, sitting by designation.
2
The Honorable Scott O. Wright, United States District Judge for the Western
District of Missouri.
I.
Patterson became employed in 1989 as a medical technologist at Columbia
Regional Hospital, which is owned and operated by Tenet. On March 5, 1993, she
received a copy of Tenet’s employee handbook and signed an arbitration clause set
forth on the last page of the handbook.
On July 26, 1993, and again on January 18, 1994, Patterson filed charges with
the Equal Employment Opportunities Commission (EEOC) and Missouri Commission
on Human Rights (MCHR) after receiving treatment she believed to be discriminatory
and retaliatory. On December 8, 1994, Patterson filed a grievance through Tenet’s
internal grievance apparatus, the “Fair Treatment Procedure.” Patterson’s grievance
proceeded through investigation and discussion to a hearing before the Fair Treatment
Committee. Patterson was terminated nine days prior to the hearing, and she amended
her grievance to include her termination. Her grievance was ultimately denied.
Patterson did not submit her claim to the final step of the Fair Treatment
Procedure, binding arbitration, and instead filed suit in the district court, alleging
violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (Title
VII), and the Missouri Human Rights Act, Mo. Rev. Stat. § 213.010 et seq. (MHRA).
Finding that Patterson had agreed to arbitrate, that the Federal Arbitration Act (FAA)
governed Patterson’s claims arising out of her employment with Tenet, and that these
claims were arbitrable, the district court dismissed Patterson’s complaint. On appeal,
Patterson argues that she did not agree to arbitrate and that the FAA does not govern
her claims.
II.
We first consider whether Patterson and Tenet agreed to arbitrate. Under the
FAA, ordinary contract principles govern whether parties have agreed to arbitrate,
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see Daisy Mfg. Co., Inc. v. NCR Corp., 29 F.3d 389, 392 (8th Cir. 1994), principles
that in this case are derived from Missouri law. See First Options of Chicago, Inc. v.
Kaplan, 115 S. Ct. 1920, 1924 (1995). Two portions of the handbook are at issue in
determining whether such a contract exists. Page 3 provides:
[This handbook] is not intended to constitute a legal contract with any
employee or group of employees because that can only occur with a
written agreement executed by a facility Executive Director and an AMI[3]
Senior Executive Officer. As regards the Fair Treatment Procedure, AMI
is committed to accepting the obligation to support and assure access to
the binding arbitration procedure for solving disputes, if necessary.
Situations may arise from time to time which, in the Company’s
judgement require procedures or actions different than those described in
this document or other written policies. Since the Company maintains the
sole and exclusive discretion to exercise the customary functions of the
management in all areas of employment and Company operations, the
judgement of management shall be controlling in all such situations.
Employees have access to a grievance procedure described in this
document that affords the opportunity to have any employment related
disputes submitted to binding arbitration.
Page 31 of the handbook contains the following heading:
IMPORTANT!
Acknowledgment Form
Upon receipt, please sign and present the acknowledgment form of this
handbook to the Human Resources Department.
....
3
AMI was the predecessor of Tenet.
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. . . No written agreement concerning employment terms or conditions is
valid unless signed by a facility executive director, and senior officer of
AMI, and no written statement or agreement in this handbook concerning
employment is binding, since provisions are subject to change, and as all
AMI employees are employed on an “at will” basis. . . . The company
reserves the right to amend, supplement, or rescind any provisions of this
handbook as it deems appropriate in its sole and absolute discretion.
I understand AMI makes available arbitration for resolution of grievances.
I also understand that as a condition of employment and continued
employment, I agree to submit any complaints to the published process
and agree to abide by and accept the final decision of the arbitration
panel as ultimate resolution of my complaint(s) for any and all events that
arise out of employment or termination of employment.
The district court found that this arbitration clause, which Patterson signed,
created a binding contract to arbitrate.
Under Missouri law, employee handbooks generally are not considered
contracts, because they normally lack the traditional prerequisites of a contract.
See Johnson v. McDonnell Douglas Corp., 745 S.W.2d 661, 662 (Mo. 1988) (en banc).
An employer’s unilateral act of publishing a handbook is not a contractual offer to the
employee. See id. Rather, a contract is only formed with the traditional elements of
offer, acceptance, and consideration. See id. at 662-63.
Patterson points to the statement on page 3 of the handbook that “[the handbook]
is not intended to constitute a legal contract,” and to the statement on page 31 that “no
written statement or agreement in this handbook concerning employment is binding,”
as evidence that the handbook did not create a binding contract.
We conclude, however, that the arbitration clause is separate from the other
provisions of the handbook and that it constitutes an enforceable contract. See
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Amicizia Societa Navegazione v. Chilean Nitrate & Iodine Sales Corp., 274 F.2d 805,
808-09 (2d Cir. 1960) (citing Robert Lawrence Co. v. Devonshire Fabrics, Inc., 271
F.2d 402 (2d Cir. 1959)) (arbitration clause may constitute separate and enforceable
contract). First, the arbitration clause is separate and distinct. It is set forth on a
separate page of the handbook and introduced by the heading, “IMPORTANT!
Acknowledgment Form.” This page is removed from the handbook after the employee
signs it and is stored in a file. In addition, there is a marked transition in language and
tone from the paragraph preceding the arbitration clause to the arbitration clause itself.
Although the preceding paragraph discusses the company’s reservation of its “right to
amend, supplement, or rescind” any handbook provisions, the arbitration clause uses
contractual terms such as “I understand,” “I agree,” I “agree to abide by and accept,”
“condition of employment,” “final decision,” and “ultimate resolution.” We believe
that the difference in language used in the handbook and that employed in the
arbitration clause would sufficiently impart to an employee that the arbitration clause
stands alone, separate and distinct from the rest of the handbook. The reservation of
rights language refers to the handbook provisions relating to employment, not to the
separate provisions of the arbitration agreement.
III.
The next question is whether the FAA governs the agreement to arbitrate. The
purpose of the FAA “was 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). The
FAA provides that an agreement to arbitrate disputes arising out of contracts involving
maritime or interstate commerce “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. Section 1 of the FAA, however, exempts from FAA enforcement
“contracts of employment of seamen, railroad employees, or any other class of workers
engaged in foreign or interstate commerce.” 9 U.S.C. § 1. The district court held that
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section 1 exempts only those employees directly engaged in the movement of maritime
or interstate commerce and therefore found that the FAA governed Patterson’s claims.
We have not heretofore addressed the question whether section 1 of the FAA
should be interpreted broadly or narrowly. We are persuaded by the reasoning of those
circuits which have held that section 1 applies only to contracts of employment for
those classes of employees that are engaged directly in the movement of interstate
commerce. See Great Western Mortgage Corp. v. Peacock, No. 96-5273, 1997 WL
153012 at *4 (3d Cir. Apr. 3, 1997) (reaffirming Tenney Engineering, Inc. v. United
Elec. Radio & Mach. Workers of Amer., Local 437, 207 F.2d 450, 452 (3d Cir. 1953)
(en banc)); Cole v. Burns Int’l Sec. Servs., 105 F.3d 1465, 1472 (D.C. Cir. 1997);
Rojas v. TK Communications, Inc., 87 F.3d 745, 748 (5th Cir. 1996); Asplundh Tree
Expert Co. v. Bates, 71 F.3d 592, 600-601 (6th Cir. 1995); Miller Brewing Co. v.
Brewery Workers Local Union No. 9, AFL-CIO, 739 F.2d 1159, 1162 (7th Cir. 1984);
Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir. 1972);
Dickstein v. duPont, 443 F.2d 783, 785 (1st Cir. 1971). Only the Fourth Circuit has
interpreted section 1 broadly. See United Elec. Radio & Machine Workers of Amer.
v. Miller Metal Prods., 215 F.2d 221, 224 (4th Cir. 1954). That ruling, however, was
explicitly limited to the collective bargaining context. See id.
As the District of Columbia Circuit has explained, two well-established canons
of statutory construction compel a narrow interpretation. See Cole, 105 F.3d at 1470.
The first canon counsels avoiding a reading which would render some words entirely
redundant. See id. A broad reading of section 1 would run counter to this canon, for
if the phrase “‘any other class of workers engaged in foreign or interstate commerce’--
extended to all workers whose jobs have any effect on commerce, the specific inclusion
of seamen and railroad workers would have been unnecessary.” Id. See also Rojas,
87 F.3d at 748 (quoting Albert v. National Cash Register Co., 874 F. Supp. 1324, 1327
(S.D. Fla. 1994)) (“‘[i]t is quite impossible to apply a broad meaning to the term
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“commerce” in Section 1 and not rob the rest of the exclusion clause of all
significance.’”).
The second applicable canon is the rule of ejusdem generis, which “‘limits
general terms which follow specific ones to matters similar to those specified.’” Cole,
105 F.3d at 1471 (quoting Gooch v. United States, 297 U.S. 124, 128 (1936)).
Applying this rule, the phrase “any other class of workers engaged in foreign or
interstate commerce” is modified by the preceding terms “seamen” and “railroad
employees,” and therefore the phrase includes “only those other classes of workers
who are likewise engaged directly in . . . the movement of interstate or foreign
commerce or in work so closely related thereto as to be in practical effect part of it.”
Tenney, 207 F.2d at 452.
Moreover, as the Cole court pointed out, the Supreme Court’s decision in Allied-
Bruce Terminix Cos., Inc. v. Dobson, 115 S. Ct. 834 (1995), supports a narrow
interpretation of the exclusionary clause in section 1. There, the Court, construing
section 2 of the FAA, compared the words “involving commerce” used in section 2
with the words “in commerce.” It concluded that the words “involving commerce” are
broader than “in commerce” and that “[t]hey therefore cover more than ‘“only persons
or activities within the flow of interstate commerce.”’” Id. at 839 (emphasis in original)
(quoting United States v. American Bldg. Maintenance Indus., 422 U.S. 271, 276
(1975) (in turn quoting Gulf Oil Corp. v. Copp Paving Co., Inc., 419 U.S. 186, 195
(1974))). This analysis suggests that for the words “in commerce” as used in section
1, the converse is true--that the latter words of art describe only those workers actually
involved “within the flow” of interstate commerce. See Cole, 105 F.3d at 1471-72.
Patterson argues that the legislative history of section 1 reveals that Congress
intended to exempt all employment contracts from the FAA. Even assuming that the
legislative history may be so read, see Gilmer, 500 U.S. at 39-40 (Stevens, J.,
dissenting), we agree with the D.C. Circuit that “In a case such as this, where the
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statutory text does not admit of serious ambiguity, and where firmly established case
law is absolutely clear on the meaning of the statute, legislative history is, at best,
secondary, and, at worst, irrevelant.” Cole, 105 F.3d at 1472 (citing Davis v. Michigan
Dep’t of Treasury, 489 U.S. 803, 808-09 n.3 (1989)).
Accordingly, we hold that section 1 does not exclude the arbitration agreement
between Patterson and Tenet from the coverage of the FAA and that the arbitration
agreement is thus enforceable.
IV.
Finally, we determine whether Patterson’s discrimination claims are arbitrable.
Our analysis on this point is controlled by Gilmer, in which the Supreme Court held that
arbitration of a stock broker’s claim under the Age Discrimination in Employment Act
(ADEA), 29 U.S.C. § 621 et seq., is not inconsistent with the statute’s framework or
purposes. “It is by now clear that statutory claims may be the subject of an arbitration
agreement, enforceable pursuant to the FAA.” 500 U.S. at 26.
The Court distinguished its holding in Alexander v. Gardner-Denver Co., 415
U.S. 36 (1974), that arbitration procedures under a collective bargaining agreement
(CBA) do not preclude a civil remedy for a violation of Title VII. See Alexander, 415
U.S. at 59-60. One concern with enforcing arbitration under a CBA is that the
arbitration agreement is obtained by a union that represents the majority’s interests
rather than the individual’s interests, which creates “tension between collective
representation and individual statutory rights.” Gilmer, 500 U.S. at 34-35; see
Alexander, 415 U.S. at 51; Pryner v. Tractor Supply Co., 109 F.3d 354, 364 (7th Cir.
1997). Another concern is that labor arbitrators are generally only authorized under
CBAs to resolve contractual, and not statutory, claims. Gilmer, 500 U.S. at 34.
Accordingly, we have held that arbitration agreements contained within a CBA do not
bar civil claims under Title VII. See Varner v. National Super Markets, Inc., 94 F.3d
-8-
1209, 1213 (8th Cir. 1996), cert. denied, 117 S. Ct. 946 (1997); Stacks v. Southwestern
Bell Yellow Pages, Inc., 27 F.3d 1316, 1326 n.3 (8th Cir. 1994).
In contrast, an arbitration agreement such as the one Patterson entered into
represents the interests of the individual. See Gilmer, 500 U.S. at 35; Pryner, 109 F.3d
at 363 (“[W]orkers’ statutory rights . . . . are arbitrable if the worker consents to have
them arbitrated.”). In addition, the arbitration agreement in the present case does not
limit the arbitrator solely to interpretation of the contract. See Gilmer, 500 U.S. at 35.
The CBA cases, therefore, “provide no basis for refusing to enforce [an individual
consentual] agreement to arbitrate.” Id.
Thus, we agree with those post-Gilmer decisions which have ruled that Title VII
claims, like ADEA claims, are subject to individual consentual agreements to arbitrate.
See Cole, 105 F.3d at 1481-82; Austin v. Owens-Brockway Glass Container, Inc., 78
F.3d 875, 882 (4th Cir.), cert. denied, 117 S. Ct. 432 (1996); Metz v. Merrill Lynch,
Pierce, Fenner & Smith, Inc., 39 F.3d 1482, 1487 (10th Cir. 1994); Bender v. A.G.
Edwards & Sons, Inc., 971 F.2d 698, 700 (11th Cir. 1992) (per curiam); Mago v.
Shearson Lehman Hutton, Inc., 956 F.2d 932, 935 (9th Cir. 1992); Willis v. Dean
Witter Reynolds, Inc., 948 F.2d 305, 308 (6th Cir. 1991); and Alford v. Dean Witter
Reynolds, Inc., 939 F.2d 229, 230 (5th Cir. 1991) (after remand for reconsideration in
light of Gilmer). Gilmer necessarily rejected “‘[a]ny broad public policy arguments
against such a conclusion.’” Metz, 39 F.3d at 1487 (quoting Alford, 939 F.2d at 230).
“‘Congress closely modeled the ADEA upon Title VII,’” and “‘[t]he statutes are
similar both in their aims and in their substantive prohibitions.’” Metz, 39 F.3d at 1487
(quoting Cooper v. Asplundh Tree Expert Co., 836 F.2d 1544, 1553-54 (10th Cir.
1988)). Moreover, the arbitrability of Title VII claims finds support in the Civil Rights
Act of 1991, which states that “the use of alternative means of dispute resolution,
including . . . arbitration, is encouraged to resolve disputes arising under the Acts or
provisions of federal law amended by this title.” Pub. L. No. 102-166, § 118, 105 Stat.
1071, 1081 (1991).
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In Swenson v. Management Recruiters Int’l, Inc., 858 F.2d 1304 (8th Cir. 1988),
we held that an employee was not bound by an arbitration agreement with respect to
her Title VII claims. We were concerned that the arbitral forum was unable to
adequately “assist[] victims of discrimination” or to “pay sufficient attention to the
transcendent public interest in the enforcement of Title VII.” Id. at 1307. Gilmer,
however, instructs us that both of these goals will be met through arbitration. First,
resolution of a claim in an arbitral forum must “‘effectively . . . vindicate [the
employee’s] statutory cause of action.’” Gilmer, 500 U.S. at 28 (quoting Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 637 (1985)). This
vindication must be accomplished through the use of neutral arbitrators, adequate
discovery, adequate types of relief, and the reassurance that coercion which would
allow the revocation of any contract would likewise relieve an employee from an
arbitration agreement. See Gilmer, 500 U.S. at 30-33; see also Cole, 105 F.3d at 1482.
Second, the public policy of the statute will be carried out through suits of employees
who are not parties to arbitration agreements, through EEOC actions, and through the
vindication of individual claims through arbitration. See Gilmer, 500 U.S. at 31-32.
So long as such vindication takes place, “‘the statute will continue to serve both its
remedial and deterrent function.’” Id. at 28 (quoting Mitsubishi, 473 U.S. at 637).
Although one panel of this court ordinarily cannot overrule another panel, this
rule does not apply when the earlier panel decision is cast into doubt by a decision of
the Supreme Court. See City of Timber Lake v. Cheyenne River Sioux Tribe, 10 F.3d
554, 557 (8th Cir. 1993). Gilmer has effectively overruled our holding in Swenson, and
thus we hold that Patterson’s Title VII claims are subject to arbitration. Similarly,
Patterson’s claims under the MHRA are arbitrable. State anti-discrimination laws that
parallel Title VII are explicitly made a part of Title VII’s enforcement scheme, and
therefore the FAA has the same application to claims under these state laws as to
claims under Title VII. See Prudential Ins. Co. of Amer. v. Lai, 42 F.3d 1299, 1303
at n.1 (9th Cir. 1994), cert. denied, 116 S. Ct. 61 (1995).
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The judgment is affirmed.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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