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IN THE SUPREME COURT OF THE UNITED STATES
CIRCUIT CITY STORES, INC.,
SAINT CLAIR ADAMS,
Piled September 19, 2000
Whether the Federal Arbitration Act, 9 U.S.C. I et seq., applies to contracts of employment.
TABLE OF CONTENTS
QUESTION PRESENTED 1
STATEMENT OF THE CASE 1
SUMMARY OF ARGUMENT 4
I. The Legislative Background to the FAA's Coverage Provision and "Contracts of
Employment" Exclusion Provision 10
II. The Language of FAA 1 and 2 Manifests
Congress' Intent to Exclude All Contracts of
Employment From the Act's Coverage 17
A. In 1925, Contracts of Employment Did
Not in Common Parlance "Evidence a
Transaction Involving Commerce 17
B. Congress in FAA I Excluded From the
Act All Contracts of Employment That
Could Have Been Covered Through FAA
m. Circuit City's Proffered Reading of FAA 1 Can Not Be Squared With The Statutory Text.. 28
IV. Respecting Congress' Intent to Exclude All
Employment Contracts From The FAA
Furthers Important Federalism Values 39
V. Circuit City's Policy Arguments Do Not
Illuminate The FAA Congress' Intent 41
TABLE OF AUTHORiTIES
Addyston Pipe & Steel Co. v. United Stares, 175
Alaska S.S. Co v. McHugh, 268 U.S. 23 (1925) .... 21
Allied-Bruce Terminix Cos. v. Dobson, 513 U.S.
265 (1995) passim
Armendariz v. Foundation Health Psychcare Services. Inc. 2000 Cal.
4th(Cal. Sup. Ct. August 24, 2000) 45
Atlantic Coast Line RR. v. Broth, of Locomotive
Eng'rs. 398 U.S. 281 (1970) 41
Baltimore & O.R. Co. v. Baugh, 149 U.S. 368
Brown v. Gerdes, 321 U. 5. 178 (1944) 41
Craft v. Campbell Soup, Co, 177 F.3d 1083 (9th
Cir. 1999) 3,18,27,42,44
Dickstein v. Dupont, 443 F.2d 783 (1st Cir.
Doctor's Associates. Inc. v. Casaroto, 517 U.S.
681 (1996) 44
English v. General Electric, 496 U.S. 72 (1990) 40
Erving v. Va. Squires Basketball Club, 468 F.2d
1064 (2d Cir. 1972) 34
First Employers Liability Cases, 207 U.S. 463
Fort Hal4ax Packing Co. v. Coyne, 482 U.S. I
Fourco Glass Co. v. Transamerica Products
Corp., 353 U.S. 222 (1957) 26
Gade. v. National Solid Wastes Mgmt. Ass'n 505
U.S. 88 (1992) 41
Gatliff Coal. Co. v. Cox. 142 F.2d 876 (6th Cir.
TABLE OF AUTHORITIESContinued
Gilmer v. Interstate/Johnson Lane Corp., 500
U.S. 20 (1991) 3,40
Gooch v. United States, 297 U.S. 124 (1936) 31,35
Great Western Mortgage Corp. v. Peacock, 110
F.3d 222 (3d Cir. 1997) 34
Gregory v. Ashcroft, 501 U.S. 452 (1991) 41
Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186
(1974) 25, 28
Hammer v. Dagenhart, 247 US. 251 (1918) 21
Harrison v. PPG Indus. Inc., 446 U.S. 578
(1980) 32, 33, 35
Helvering v. Stockholms Enskilda Bank, 293 U.S.
84 (1934) 31
Houston. E. & W.T.R. Co. v. United States. 234
Illinois R.R. Co. v. Behrens, 233 U.S. 473
MCI Telecommunications v. American Telephone
& Telegraph Co., 512 US. 218 (1994) 11
McWilliams v. Logcon. Inc., 143 F.3d 573 (10th
Cir. 1998) 34
Medtronic. Inc. v. Lohr, 518 U. 5. 470 (1996) 40
Mitchell v. C.W. Vollmer & Co., 349 U.S. 427
Mitsubishi Motors Corp. v, Soler Chrysler-
Plymouth. Inc., 473 U.S. 614 (1985) 40
Pedersen v. Delaware. L & W R. Co., 229 U.S.
146 (1912) 20
Perrin v. United States, 444 U.S. 37 (1979) 4
Perry v Thomas, 482 U.S. 483 (1987) 41
Prima Paint Corp. v. flood Conklin, 388 U.S.
395 (1967) 39
TABLE OF AUTHORITIESContinued
TABLE OF AUTHORITIESContinued
Public Citizen v. U.S. Dept. of
Justice, 491 U.S.
440 (1989) 38
Rice v. Santa Fe Elevator Corp.,
331 U.S. 21
Russell Motor Car Co. v. United
States, 261 U.S.
514 (1923) 33,35
Second Employers Liability Case
New&H.R.Co.),223U.S.1 (1912) 21,23,41
Shanks v. Delaware. L. & W. R.
Co., 239 U.S.
556 (1916) 20
Silkwood v. Kerr-McGee Corp.,
464 U.S. 238
South Dakota v. Yankton Sioux
Tribe, 522 U.S.
329 (1998) 35
Southern PacWc Co. v. Indus.
251 U.S. 259 (1920) 20
Southern R. Co v. United States,
222 U.S. 20
Southland Corp. v. Keating, 465 US.
Textile Workers Union v. Lincoln
Mills, 353 U.S.
448 (1957) 43
United Paper workers Intl Union v.
U.S. 29 (1987) 43
United States v. Amer Bldg. Maint.
U.S. 271 (1975) 25
Volt Info. Services. Inc. v. Bd. Of
Will v. Michigan Dept of State
Police, 491 U.S.
58 (1989) 41
9 U.S.C. 1-16 passim
42 U.S.C. 7607 (b)(1) 32
Act of June 7, 1872, ch. 322, 17
Act of July 15, 1913, ch. 6, 1, 38
Act of March 4, 1921, ch. 172,
233, 41 Stat.
Clayton Act, ch. 323, 38 Stat. 730
(1914) 19, 22
Erdman Act, ch. 370, 30 Stat, 424
Federal Employers Liability Act,
ch. 976, 32
Stat. 943 (1903) 21
Federal Employers Liability Act,
ch. 3073, 34
Stat. 232 (1906) 22, 39
Federal Employers Liability Act,
ch. 149, 35
Stat. 65 (1908) 22, 23, 32
Hours of Service Act, ch. 2939, 34
Interstate Commerce Act, ch. 104,
24 Stat, 379
Norris-LaGuardia Act, ch. 90, 2,
47 Stat. 70
(1932),codifiedat29U.SC. 102 38
Railway Labor Act, ch. 347, 44
Stat. 577 (1926) 37
Safety Appliance Act. ch. 196 27
Safety Appliance Act, ch. 196. 6,
29 Stat. 85
Safety Appliance Act, ch. 225, 1,
35 Stat. 476
Transportation Act of 1920, ch. 91,
Stat. 469 37
California Fair Employment and
Cal. Govt. Code 12900 et seq
44 Stats. at Large, Pt. 1(1926) 34
64 Cong. Rec. 732 (1922) 11
65 Cong. Rec. 1931 (Feb.5, 1924) 16
TABLE OF AUTHORITIESContinued
65 Cong. Rec. 11080 (June 6, 1924) 16
93 Cong. Rec. 5029 (1947) 26
H.R. 646, 68th Cong. 71st Sess. (1924) 16
H.R. 13922 11
H. Rep. 68-96, 68th Cong., 1st Sess. (1924) 17
H.R. Rep. No. 80-255 (1947) 26
5. 1005, 68th Cong., 1st Sess. (1923) 16
5. 4214, 67th Cong., 4th Sess. 2 (1922) 11, 16
S. Rep. 68-536, 68th Cong., 1st Sess. (1924) 16
Arbitration of Interstate Commercial Disputes,
Joint Hearing's on 5. 1005 and H.R. 646
Before the Subcomm. of the Comm. on the
Judiciary, 68th Cong., 1st Sess. (1924) 15, 16, 17 Sales and
Contracts to Sell in Interstate and
Foreign Commerce, and Federal Commercial
Arbitration: Hearing on 5. 4213 and 5. 4214
before a Subcomm. of the Senate Comm. On
the Judiciary, 67th Cong., 4th Sess. (1923) 11, 13,
45 ABA Rep. 75 (1920)
47 ABA Rep. 293-94 (1922)
48 ABA Rep. 290 (1923)
50 ABA Rep. 356-62 (1925)
50 ABA Rep. 359-60 (1925)
Black 's Law Dictionary (1933)
BNA, The Fair Labor Standards Act (1999)
Paul H. Carrington and Paul H. Haagen, Contract and
Jurisdiction, 1996 Supreme Court Review 331 (1997)
Archibald Cox, Grievance Arbitration in the Federal Courts,
67 Harv. L. Rev. 591 (1954)
TABLE OF AUTHORITIESContinued
Matthew W. Finkin, "Workers' Contracts"
Under the United States Arbitration Act: An
Essay in Historical Clarification, 17 Berkeley
J. Emp. Lab. L. 282 (1996) 13, 14, 37
Matthew Finkin, Employment Contracts Under the FAA
Reconsidered, 48 Lab. L.J. 329
3 EEOC Compliance Manual (BNA) N:3055
(July 17, 1995) 42
Ian MacNeil, American Arbitration Law.
Reformation, Nationalization, Internation-
alization (1992) 11,12
Proceedings of the 24th Annual Convention of
the International Seamen's Union of America
Proceedings of the 26th Annual Convention of
the International Seamen's Union of America
Proceedings of the 27th Annual Convention of
the International Seamen's Union of America
Proceedings of the 45th Annual Convention of
the AFL (1925) 13
The United States Arbitration Law and its
Application, ii ABA Journal 153-56 (March
Webster's First New International Dictionary
BRIEF FOR RESPONDENT
STATEMENT OF THE CASE
This federal court action arises out of a California state court lawsuit brought by a California resident alleging state law employment discrimination claims against his employer.
Respondent Saint Clair Adams ("Mr. Adams") lives in Sonoma County, California. In November 1995, Mr. Adams accepted employment as a salesperson with petitioner Circuit City
Stores, Inc. ("Circuit City") at its retail store in Santa Rosa, California. Ninth Circuit Excerpts of Record ("ER") 4,
5. As a condition of employment, Mr. Adams was required to sign an application form obligating him to submit to arbitration any employment dispute with Circuit City that might
thereafter arise. Joint Appendix ("l.A.") 12-17.
In November 1997, Mr. Adams filed the underlying employment discrimination lawsuit in the Superior Court of the State of California for the County of Sonoma, against Circuit City (a
Virginia corporation with retail stores throughout California and the United States) and three of his Circuit City supervisors (each California residents). ER 2-4.
Mr. Adams' First Amended Complaint alleges that each of the defendants subjected him to on-the-job harassment and retaliation based upon his sexual orientation, in violation of, inter
alia, California's Fair Employment and Housing Act, Cal. Govt. Code 12900 et seq., and state common law prohibitions against constructive discharge and intentional infliction of
emotional distress. ER 4, 14-26. Mr. Adams' Complaint also includes a declaratory relief claim, challenging the enforceability of the pre-dispute arbitration provision that Mr. Adams, like
all Circuit City employees, was required to sign as a condition of his employment. Ninth Circuit Supplemental Excerpts of Record ("SER") 1-30; ER
44-48. Mr. Adams' complaint does not allege any federal claims.
In January 1998, Circuit City filed a petition in the United States
District Court for the Northern District of California to enjoin Mr. Adams'
state court action and to compel arbitration of Mr. Adams' claims. Circuit
City invoked that court's diversity jurisdiction and the Federal Arbitration
Act ("FAA"), 9 U.S.C. I et seq.
Mr. Adams opposed Circuit City's petition on the ground, inter alia, that
Circuit City's arbitration provision was an unconscionable contract of
adhesion under California law. Mr. Adams asserted that the arbitration
provision lacked mutuality, because it required employees to arbitrate all
of their employment-related claims against Circuit City without imposing a
corresponding obligation upon Circuit City to arbitrate any of its
employment-related claims against the employees. J.A. 12-14, 21-23. Mr.
Adams also challenged as unconscionable Circuit City's dispute resolution
procedures, which: I) placed a cap on the amount of front pay or punitive
damages an arbitrator could award (J.A. 35-36); 2) imposed a one-year
statute of limitations on all claims, including claims with longer limitations
periods under California law (J.A. 13, 23); 3) obligated employees to pay
half the cost of arbitration, including arbitrator fees and expenses, subject
to cost-shifting only at the arbitrator's discretion (J.A. 33-34); 4) vested
complete discretion in the arbitrator to decide whether to award attorney's
fees to a prevailing employee, even on statutory discrimination claims
(J.A. 34-35); and 5) did not require the arbitrator to provide findings or
reasoning to support the arbitration award (J.A. 32).
The district court rejected Mr. Adams' challenges, relying upon "the
strong state and federal [pro-arbitration] policy, particularly the federal
policy announced in the [Federal] Arbitration Act," and concluding that
Circuit City's mandatory pre-dispute arbitration procedures do not "amount
to the extreme one-sidedness that's required for a finding of
unconscionability as a matter of law." J.A. 50. The district court thereupon
enjoined Mr. Adams' state court action and compelled arbitration. J.A. 43-
The Ninth Circuit reversed. Relying on Craft v. Campbell Soup Co.,
177 F.3d 1083 (9th Cir. 1999) (Opp. App. la-27a), and finding that Mr.
Adams' employment application agreement with Circuit City constituted a
"contractill of employment" within the meaning of the FAA 1 "contracts
of employment" exclusion, the Court of Appeals held that Mr. Adams'
arbitration agreement was not covered by the FAA. J.A. 53-56. The Ninth
Circuit directed the district court to dismiss Circuit City's petition, allowing
Mr. Adams' state law discrimination suit to proceed in the California state
court in which it had been filed. l.A. 56.
This Court granted Circuit City's Petition for Writ of Certiorari, limiting
the grant to the first Question Presented to what extent, if at all, does the
FAA applies to contracts of employment? That question was reserved in
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 n.2 (1991), with
two dissenting Justices reaching the issue and concluding that Congress
did not intend the FAA to cover any workers' contracts of employment. Id.
at 36-43 (Stevens, I., with Marshall, J., dissenting).2
Petitioner refers in its Statement of Facts to an Arbitration Request
Form signed by Mr. Adams after he filed his state court lawsuit. Pet. Br.
5. Mr. Adams represented to the district court that be signed that form as
a protective measure to comply with the statute of limitations. Petitioner
does not contend that Mr. Adams thereby waived any rights.
2 Although petitioner asserts thatit "has not waived" its argument that Mr.
Adams' signed employment application is not a "contract of employment" within
the meaning of the FAA (Pet. Br. 7 n.3), this Court denied certiorari on
petitioner's second Question Presented. This case thus proceeds on the premise
that the Ninth Circuit correctly ruled that the parties' agreement a contract between
an employer and employee that
SUMMARY OF ARGUMENT
Congress enacted the FAA in 1925 to make agreements to arbitrate
commercial disputes enforceable in federal court. When labor objected to
the FAA bill as introduced because it might reach arbitration provisions in
worker contracts of employment, the bill's principal proponents responded
that "[i]t is not intended that this shall be an act referring to labor disputes
at all," and Congress promptly adopted the suggestion that explicit
language be inserted to exclude "workers' contracts" from the scope of
the Act. See infra at pp. 13-15. FAA 1, as enacted, thus excludes
"contracts of employment of seamen, railroad employees, or any other
class of workers engaged in foreign or interstate commerce" from the
Act's coverage. Although FAA 2's coverage provision appeared not to
include contracts of employment at all (because they were not "contracts
evidencing a transaction involving commerce"), any uncertainty in this
regard was resolved by l's explicit exclusion for contracts of
In 1925, the 1 statutory phrase "workers engaged in
commerce" was a well-established term of Commerce Clause art that
encompassed all workers within the commerce power.
applied throughout the employment relationship and created a mechanism for
adjudicating disputes over the interpretation and enforceability of the terms and
conditions of employment (J.A. 12-17) is an FAA "contract of employment." See
Opp. Cert. 4-6. Petitioner warns that if such agreements are deemed "contracts of
employment" for purposes of the FAA I exclusion, employers will circumvent
state law regulation of their employment arbitration agreements by the "artifice" of
having "industry associations or other third party entities" act as "straw men" to
impose such agreements on the employers' workers. Pet. Br. 37. Whether such a
subterfuge would be permitted is not at issue here, although petitioner's warning
underscores the enormous disparity in bargaining power between employers and
their prospective employees a disparity that was brought to Congress' attention
in 1925 as a basis for excluding workers' "contracts of employment" from the
FAA. See iofra at pp. 12-13.
FAA I thus excluded from the Act the contracts of employment of
every worker who might have been covered by the Act. There were no
workers whose contracts of employment could be said to be "contracts
evidencing a transaction involving commerce" under the FAA 2
coverage provision who would not have been excluded as "workers
engaged in . . . commerce" under the FAA 1 exclusion the statutory
phrases "engaged in commerce" and "involving commerce" both reached
to the full extent of the commerce power. Indeed, dictionaries of the
period define "involving" and "engaged in" as synonyms. Considerations
of sound grammar, rather than any intent to limit the scope of FAA l's
exclusion in relation to FAA 2's coverage, explain why Congress used
different words in the two sections; in common parlance, "workers" could
not be said to be "involving" commerce any more than "transactions"
could be said to be "engaged in" commerce.
Application of the canons of ejusdem generis and noscitur a sociis to
FAA l's text does not, as petitioner Circuit City claims, justify
transformation of the broad I exclusion of "any other class of workers
engaged in foreign or interstate commerce~~ into the far more limited
exclusion of ''workers directly engaged in transportation of goods in
commerce." It was well-settled in 1925 that "commerce" includes more
than "transportation." If Congress had meant to exclude only those
workers "engaged in ... transportation," 1 would have said so, using other
statutes of the period as its model. Moreover, I explicitly refers to "any
other class of workers," an expansive term that precludes petitioner's
narrow reading of the I text. And, even if petitioner's statutory
construction argument had some basis in 1 's text or in the statutory
interpretation canons, that argument would still have to be rejected
because it attributes to Congress an intent that makes no sense. Congress
would not have excluded from the FAA the contracts of those workers
most clearly within the 1925 commerce power, while including the
contracts of workers as to whom its commerce power was most doubtful.
None of petitioner's pro-arbitration policy arguments support a
different conclusion, because none are relevant to what the FAA
Congress intended. The only relevant policy in this case is federalism. If
the FAA applies to contracts of employment, that federal law would
preempt the States from exercising their traditional police powers over the
employment relationship. As this Court has emphasized, federal statutes
are not to be interpreted to displace traditional State powers unless
Congress' preemptive intent is "absolutely clear." Given the language,
background, and structure of the FAA, that standard of certainty is not be
This statutory interpretation case turns on two provisions of the Federal
Arbitration Act. The FAA's coverage provision (2), enacted in 1925 and
never amended, states:
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, .
. . 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]
The FAA's definition of "commerce"/exclusion of "contracts of
employment" provision ( I), enacted at the same time and also never
amended, defines "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 any State or
foreign nation, or between the District of Columbia and any State or
Territory or foreign nation," and then states:
but 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. [9 U.S.C. 1]
These provisions make manifest Congress' intent not to have the FAA
apply to any "contracts of employment." In the ordinary meaning that
would have been given to 2 in 1925, a "contract of employment" was
neither a "maritime transaction" nor a "contract evidencing a transaction
involving commerce." And, to the extent 2's language was ambiguous,
and thus open to a construction that included "contracts of employment,"
the 1 "contracts of employment" exclusion cured such ambiguity by
explicitly excluding from the potential coverage of 2 all such contracts
as a class. Considered in the context of pre-1925 Commerce Clause
jurisprudence, Congress' exclusion of the employment contracts of "any
other class of workers engaged in foreign or interstate commerce~~
signified its intent to exclude all "contracts of employment" within
Congress' "commerce power to the full" to borrow the language and logic
of Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 277 (1995). As
the recognized scope of the commerce power has expanded, so has both
the scope of the 2 coverage provision and the scope of the 1
The drafters and principal proponents of the FAA bill made clear that
the legislation was a ''commercial arbitration act,~~ that "it was not the
intention of this bill to make an industrial arbitration in any sense," and that
"[ijf objection appears to the inclusion of workers' contracts in the law's
scheme, it might well be amended by stating 'but nothing herein shall apply
to contracts of employment of seamen, railroad employees or any other
class of workers engaged in interstate or foreign commerce."' See infra at
pp. 13-15. Labor in fact did "objectH ... to the inclusion of workers'
contracts" in the FAA. And, to meet that objection, "the law's scheme" was
amended by Congress through the adoption of the proposed ''contracts of
Against that background, the only rational reading of FAA 1 and 2
is that Congress drafted I and 2 in pan materia to ensure that the FAA
would exclude all contracts of employment from coverage, both then and
in the future. The 1 exclusion responded to labor's concerns about the
disparity in negotiating power between employers and workers. No one
suggested that this imbalance existed only in certain sectors of the
economy within Congress' commerce power but not in others, or that
labor's concerns could be addressed by an FAA exclusion of only some
classes of workers.
To be sure, petitioner Circuit City urges a quite different interpretation
of FAA I and 2. Petitioner begins by asserting that 2's "contract
evidencing a transaction involving commerce" language is general
enough to include ''contracts of employment.'' Petitioner then argues that in
1925, "involving commerce" was a broad term of Commerce Clause art
invoking the full commerce power and that "engaged in commerce" was a
narrow term of art. It follows, claims petitioner, that by reason of this
difference and of the application of the canons of ejusdem generis and
noscitur a sociis to the I "contracts of employment" exclusion provision,
Congress must have intended to exclude from the Act only a subclass of
workers within its commerce power seamen, railroad employees, and
those whom petitioner describes as workers "directly engaged in the
interstate transportation of goods in commerce." But petitioner's reading of
the FAA, as we show below, is fatally flawed in each of its particulars
and as a whole.
_ Petitioner's premise that "involving commerce" and "engaged in
foreign and interstate commerce" were critically different Commerce
Clause "terms of art" in 1925 the first
broad and the second narrow is historically insupportable. Congress had
never used (and has not since used) the Commerce Clause phrase
"involving commerce" except in the FAA. And, the phrase persons
"engaged in commerce" was the common phrase that Congress used at
that time to invoke the full extent of its commerce power.
_ Petitioner misuses the canons of e]usdem generis and noscitur a
sociis to work an impermissible transformation of the statutory phrase
"any other class of workers engaged in foreign or interstate commerce"
into the quite different phrase "any other class of workers engaged in
transportation of goods in foreign or interstate commerce." The term
''commerce~ is specifically defined in the very sentence of the FAA
containing the statutory phrase that petitioner seeks to transform, and
neither that definition nor common usage limits "commerce" to "the
transportation of goods." Moreover, Congress in 1925 had considerable
experience enacting statutes limited to the transportation industry or
transportation industry workers only, and thus had models readily
available if that was FAA l's intended limited scope. And, neither of
petitioner's canons provide a basis for limiting Congress' expansive phrase
"any other class of workers engaged in . . . commerce." As this Court has
recognized, Congress uses the phrase "any other" to delineate a broad
category defined in its own terms, not a category limited by narrow
reference to surrounding statutory terms.
_ Petitioner does not offer any explanation for, or response to, the
statements by the drafters and principal proponents of the FAA that: the
Act was enacted to facilitate commercial arbitration, not employment
arbitration; and that labor's objection to FAA coverage of the latter
agreements would be fully resolved as indeed that objection was by
excluding workers' contracts of employment as a class from the FAA's
_ Finally, petitioner's interpretation of FAA I and 2 renders the Act
entirely irrational with respect to which workers' employment contracts
are covered. Petitioner attributes to Congress the supremely unlikely
intention of regulating under the FAA, and thereby displacing state
lawmaking authority to regulate, workers at the fringes (at best) of
Congress' commerce power (those workers not ''engaged in'' commerce
but nonetheless having contracts of employment "evidencing transactions
involving commerce"), while excluding from the FAA, and thereby
preserving state lawmaking authority over, the transportation industry
workers who are at the core of Congress' commerce power. Congress, of
course, never stated any such intention or offered any rationale for this
purported distinction between transportation workers and other workers.
Nor does petitioner suggest any cogent post hoc explanation for why
Congress may have formed such an extraordinary intention or drawn such
an inexplicable distinction. The entire weight of petitioner's argument for
FAA coverage here, and for the corresponding preemption of California
law, thus rests upon the proposition that Congress inverted basic
federalism principles for no discernible substantive purpose.
I. The Legislative Background To The FAA's Coverage Provision
And "Contracts Of Employment" Exclusion
Congress enacted the FAA 75 years ago, when the scope of the
Commerce Clause power to regulate "foreign and interstate commerce"
was narrow and the current set of conventions for delineating the
Commerce Clause scope of congressional enactments had not been
established. It therefore facilitates an understanding of the FAA's
Commerce Clause provisions to place the FAA in its historical context at
the outset by retracing the steps taken in drafting and amending the
federal arbitration bill and then to turn to the statutory text and to the
question of the proper interpretation of that text as the enacting Congress
would have understood it.3
Throughout the early part of the 20th century, the common law rule in
many states prohibited judicial enforcement of pre-dispute arbitration
agreements. This common law rule, which left the business community no
enforceable means of settling commercial disputes other than through
litigation, became the subject of growing criticism throughout the
commercial bar. In 1920, the American Bar Association ("ABA")
therefore directed its Committee on Commerce, Trade and Commercial
Law to prepare a report and to draft legislation to promote ''the further
extension of the principle of commercial arbitration." Report of the 43rd
Annual Meeting of the ABA, 45 ABA Rep. 75 (1920).
The result of the ABA Committee's efforts was the proposal for federal
commercial arbitration legislation that became the FAA. On December
20, 1922, that federal arbitration bill, drafted by the ABA Committee in
consultation with Secretary of Commerce Herbert Hoover, was
simultaneously introduced by Senator Sterling in the Senate (5. 4214) and
by Representative Mills in the House
See e.g., Perrin v. United States, 444 U.S. 37, 42 (1979) (statutory
language must be construed in its historical context as the enacting Congress
would have understood it); MCI Telecommunications v. American Telephone &
Telegraph Co., 512 U.S. 218, 228 (1994).
Sales and Contracts to Selt in Interstate and Foreign Conm3erce. and Federal
Commercial Arbitration: Hearing on S. 42t3 and S. 4214 before a Subeomin. of
the Senate Comm. on the Judiciary (hereinafter "Hearing"), 67th Cong., 4th Sess.
2 (1923); 64 Cong. Rec. 732, 797 (1922); 47 ABA Rep. 293-94 (1922). A
history of the ABA's efforts is set forth at 50 ABA Rep. 356-62 (1925) and in Ian
MacNeil, American Arbitration Law:
Reformation, Nationalization, Internationalization (t992) ("MacNeit"); see also
Hearing at 2-3. The business community's perceived need for less costly and time-
consuming means of resolving commercial disputes,
As introduced, 2 of the FAA bill made valid and enforceable "written
provisions for arbitration" in "any contract or maritime transaction or
transaction involving commerce," and 1 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 any State or foreign nation, or between the District
of Columbia and any State or Territory or foreign nation."
Shortly after the bill's introduction, it came to the attention of Andrew
Furuseth, president of the International Seamen's Union of America. Mr.
Furuseth strongly objected to the bill's potential "compulsory labor" impact
on "the seaman
the railroadman . . . [and] sundry other workers in 'interstate and Foreign
[T]he bill provides for the re-introduction of forced or compulsory
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 railroadman
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
and the commercial orientation of the proposed legislation, are discussed
throughout the ABA Reports of the period and the FAA's legislative history, as
well as in the contemporary accounts of its drafters. See MacNeil 29-31, 31-42,
83-121 (1992); Paul H. Carrington and Paul H. Haagen, Contract and
Jurisdiction, 1996 Supreme Court Review 331, 34 (1997); Gilmer, 500 U.S. at
39 (Stevens, J., dissenting); The United States Arbitration Law and Its
Application, t I ABA Journal t53-56 (March 1925); 48 ABA Rep. 290 (1923); 50
ABA Rep. 359-60 (1925).
of America 203-05 (1923) (Appendix to Convention Proceedings)
Labor's objections were promptly heard by Congress and promptly
addressed. At the January 31, 1923 Senate Judiciary Committee hearing
on the proposed FAA, Mr.
W.H.H. Piatt, Chair of the ABA Committee that had drafted the bill, told
Mr. Piatt: . . . [T]here is another matter I should call to your
attention. Since you introduced this bill there has been an objection
raised against it that I think should be met here, to wit, the official
head or whatever he is of that part of the labor union that has to do
with the ocean
the seamen Sen. Sterling: Mr. Furuseth
Mr. Piatt: Yes, some such name as that. He has objected to it and
criticized it on the ground that the bill in its present form would
affect, in fact, compel arbitration of the matters in agreement
between the stevedores and their employers. Now it was not the
intention of this bill to make an industrial arbitration in any sense,
and so I suggest that insofar as the committee is concerned, if your
honorable committee should feel
See also Proceedings of the 27th Annuat Convention of the International
Seamen's Union of America 100 (1924); Matthew W. Finkin, "Workers'
Contracts" Under the United States Arbitration Act:
An Essay in Historical Clarification, 17 Berkeley J. Emp. Lab. L. 282, 284
(1996) ("Finkin I"). The American Federation of Labor ("AFL") expressed similar
objections. See Proceedings of the 45th Annual Convention of the AFL 52
(1925). And, labor was not alone in questioning the voluntariness of arbitration
agreements in employment contracts. See, e.g., Hearing at 9 (Senator Walsh: "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").
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."
It is not intended that this shall be an act referring to labor disputes,
at all. It is purely an act to give the merchants the right or the
privilege of sitting down and agreeing with each other as to what
their damages are, if they want to do it. Now, that is all there is in
this. [Hearing at 9 (emphasis supplied).]6
In a letter to Senator Sterling also dated January 31, 1923 (reprinted in
the Committee Hearing record in both 1923 and 1924), Secretary of
Commerce Hoover made the almost identical point made by Mr. Piatt, and
offered an almost identical suggestion, in the exact language that became
the FAA I "contracts of employment" exclusion:
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, at its
convention in San Francisco last August, a draft of a law prepared
by its committee on commerce, trade, and commercial law and
approved of by a large number of associations of business men. It
was introduced in the Senate by you as 5. 4214 and in the House of
Representatives by Congressman Mills as H.R. 13522.
6 Although one of petitioner's alnici curiae read Mr. Piatt's reference to "labor
disputes" as limited to collective bargaining disputes, the meaning was broader. In
fact, the contracts to which Mr. Furuseth was referring, called "shipping articles,"
were individual contracts of hire of individual seamen. See Proceedings of the
24th Annual Convention of the International Seamen's Union of America 27-28
(1921). By signing such articles, the individual seaman hound himself to serve
on the voyage described in the articles. Id. at 88; Finkin I, 17 Berkeley J. Emp.
Lab. L. at 287, 292-93; see also 29 U.S.C. 113 ("labor dispute" encompasses
disagreements over individual contracts of employment).
The clogging of our courts is such that the delays amount to a
virtual denial of justice. I append an excerpt of the American Bar
Association report which would seem to support that statement. I
believe the emergency exists for prompt action and I sincerely hope
that this Congress may be able to relieve the serious situation.
If objection appears to the inclusion of workers' contracts in the law's
scheme, it might well be amended by stating "but nothing herein shall
apply to contracts of employment of seamen, railroad employees or
any other class of workers engaged in interstate or foreign
If the bill proves to have some defects (and we know most
legislative measures do), it might well, by reason of the emergency,
be passed and amended later in the light of further experience. . . .
[Hearing at 14 (emphasis supplied)].
Secretary Hoover's proposed exclusionary language was added to the
FAA bill by the Senate Committee as an amendment to 1 of the bill.
The federal arbitration bill was not finally acted upon in the 1922-23
session of Congress. The bill was therefore reintroduced in the next
session in December 1923, in both the House and Senate, this time with
Secretary Hoover's 1 "contracts of employment" exclusion language. See
Arbitration of interstate Commercial Disputes, Joint Hearings on 5. 1005
and H.R. 646 before the Subcomm. of the Comm. on the Judiciary
(hereafter "Joint Hearing"), 68th Cong., 1st Sess. 2 (1924). Thereafter, in
the Senate Committee, an additional amendment was made to the 2
coverage section (which had originally referred to a written arbitration
provision "in any contract or maritime transaction or transaction involving
commerce") by substituting for the original the current phrase, "in any
maritime transaction or a contract evidencing a transaction involving
commerce, thereby clarifying that the bill only reached "contracts
evidencing a transaction involving commerce." See 5. 4214, 67th Cong.,
4th Sess. 2 (1922); 5. 1005, 68th Cong., 1st Sess. (1923); H.R. 646, 68th
Cong., 1st Sess. (1924); 5. Rep. 68-536, 68th Cong., 1st Sess. (1924).
The reintroduced bill continued to be presented as commercial
arbitration legislation. Page after page of the printed record of the Joint
Hearing emphasized the benefits of commercial arbitration and the need
for the bill to secure those benefits. On the floor of Congress, the sponsors
of the legislation repeatedly pointed to the bill's commercial character and
to the benefits for merchants of voluntary arbitration agreements.
Representative Graham, Chair of the House Committee on the Judiciary,
This bill simply provides for one thing, and that is to give an
opportunity to enforce an agreement in commercial contracts and
admiralty contracts an agreement to arbitrate, when voluntarily
placed in the document by the parties to it
It creates no new legislation; grants no new rights, except a
remedy to enforce an agreement in commercial contracts and in
admiralty contracts. [65 Cong. Rec. 1931 (Feb. 5, 1924) (emphasis
Similarly, Representative Mills of New York, who had introduced the bill
in the House, said in response to a request for an explanation of its
This bill 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. 11080 (June 6, 1924) (emphasis supplied).]
In short, the sponsors of the FAA and the members of Congress who
spoke and voted for its passage stated that it was a commercial arbitration
bill to deal with disputes arising out of commercial transactions: "The
farmer who will sell his carload of potatoes, from Wyoming, to the dealer
in the State of New Jersey, for instance." Joint Hearing at 7. The
legislative history does not contain a single reference suggesting that the
FAA provided for employment arbitration or covered any worker
contracts of employment. Nor did labor voice any objection to the FAA
bill as amended to include the I "contracts of employment" exclusion.
See Joint Hearing at 24 (noting absence of objectors); H. Rep. 68-96, 68th
Cong. 1st Sess. 2 (1924) (same).
II. The Language of FAA 1 and 2 Manifests Congress' Intent to
Exclude All Contracts Of Employment From the Act's
As we have seen, Mr. Piatt, Chair of the ABA Committee that drafted
the FAA bill, averred that "it was not the intention of this bill to make an
industrial arbitration in any sense," and Secretary Hoover, who
participated in the drafting effort, added that, "If objection appears to the
inclusion of workers' contracts in the law's scheme, it might well be
amended by" adding the "contracts of employment" exclusion language
that was then added to I of the bill and enacted into law. We turn now
to the text of the FAA 2 coverage provision and the I exclusion
provision, which make manifest that the FAA does not cover workers'
contracts of employment as a class.
A. In 1925, Contracts of Employment Did Not in Common
Parlance "Evidence a Transaction Involving Commerce"
The FAA 2 coverage provision is phrased in unusual language.
Rather than straightforwardly providing for the coverage of "written
[arbitration] provisions~~ in "maritime contracts and other contracts
involving commerce," 2 as amended and then enacted covers written
arbitration provisions "in any maritime transaction or a contract
evidencing a transaction involving commerce." In other words, 2 does
not cover "contracts.., involving commerce as a class; only those
"evidencing a transaction involving commerce~~ as a class.
Standing alone, 2's text thus raises the threshold question of whether a
contract of employment would fairly and properly have been considered
either a "marine transaction" or a "contract evidencing a transaction
involving commerce" in 1925. In Craft v. Campbell Soup Co., supra, the
Ninth Circuit answered that question "no," after looking to the ordinary
and accepted meaning in 1925 of the FAA's undefined terms "marine
transaction" and "contract evidencing a transaction":
As pertinent, when Congress passed the FAA in 1925, the term
"transaction" commonly meant "[a] business deal; an act involving
buying and selling." Webster's Int'l Dictionary 2688 (2d ed.
unabridged 1939). See also The Century Dictionary and Cyclopedia
6426 (revised and enlarged ed. 1911) ("1. The management or
settlement of an affair; a doing or performing: as, the transaction of
business. 2. A completed or settled matter or item of business An
employment relationship, however, is not commonly referred to as a
"business deal" or as "an act involving buying and selling." Instead,
the connotation of the phrase "transaction involving commerce" as
Congress would have understood it in 1925 was of a commercial
deal or merchant's sale. Therefore, the coverage section of the
FAA, 2, appears not to encompass employment contracts at all.
See Archibald Cox, Grievance Arbitration in the Federal Courts, 67
Harv. L. Rev. 591, 599 (1954) ("It is hard enough to think of any
collective bargaining agreement or employment contract as
evidence of a transaction involving commerce.") (internal quotation
marks omitted); Henry H. Drummonds, The Sister Sovereign States:
Preemption and the Second Twentieth Century Revolution in the Law
of the American Workplace, 62 Fordham L. Rev. 469, 557 (1993)
("[T]he FAA's reference to 'transaction involving commerce' might
not have been understood in 1924 as including employment
contracts."). ~l77 F.3d at
Neither petitioner Circuit City nor any of its amici curiae provide
anything of substance to support a contrary reading of "maritime
transaction" or "contract evidencing a transaction involving commerce."
The Texas Employment Law Council does put forward the suggestion that
2 by its terms applies to contracts of employment because such contracts
"evidence a transaction" comprising the "buying and selling of labor."
TELC Br. 4. But, that reading both suggests an uncommon understanding
of the term "transaction" and ignores that Congress by 1925 had declared
that "[t]he labor of a human being is not a commodity or article of
commerce." See Clayton Act, ch. 323, 6, 38 Stat. 731 (1914), 15 U.S.C.
B. Congress in FAA 1 Excluded From the Act All
Contracts of Employment That Could Have Been
Covered Through FAA 2
Any suggestion that FAA 2's general language was tntended to
encompass workers' employment contracts was put to rest when Congress
adopted Secretary Hoover's amendment to FAA 1, stating: "but nothing
herein contained shall apply to contracts of employment of seamen,
railroad employees, or any other class of workers engaged in foreign or
This language, at a minimum, eliminates from the potential reach of the
Act all contracts of employment of seamen as a class and all such
contracts of railroad employees as a class.
Petitioner would have it that in Gilmer this Coun implicitly held that the
employee contract there "evidenced a transaction involving commerce. Pet. Br. 37.
But the question whether FAA 2 applies to contracts of employment was not
raised in Gilmer, as the contract there was not a "contract of employment" between
employer and employee, but (as the Gilmer Conil emphasized) a registration
statement between a broker and a national securities exchange which allowed the
broker to sell securities in interstate commerce through interstate means of
That much is beyond question, regardless of how FAA 2's "contract
evidencing a transaction" language is construed.
The only point now in dispute is whether the final phrase of the I
exclusion further eliminates from the potential reach of the FAA the
employment contracts of all other workers within Congress' commerce
power as a class, or only the contracts of the limited subclass of workers
who transport goods in interstate commerce.
I. The FAA was drafted against the background of this Court's
Commerce Clause decisions, which held that Congress had the commerce
power to enact federal legislation regulating workers (and other persons)
"engaged in" tnterstate commerce and only such workers (and other
persons). In the face of those decisions, Congress' use of the common
statutory term "workers engaged in . . . commerce in 1 expressed its intent
to exclude from the FAA's regulatory ambit the full class of workers within
its 1925 commerce power. By excluding all workers "engaged in"
interstate and foreign commerce, the FAA Congress renounced any intent
to exercise its constitutionally-permissible regulatory authority over
workers employment contracts.
(a) Prior to the enactment of the FAA, this Court had repeatedly held
that Congress' commerce power was limited to persons directly in the
"channels" of interstate and foreign commerce (e.g., transportation and
communication) or whose endeavors were so closely related to the
channels of commerce "as to be practically a part of it." Shanks v.
Delaware, L. & W. R. Co., 239 U.S. 556, 558 (1916). An electric lineman
working at a powerhouse supplying current to interstate trolley cars was
within the commerce power (Southern Pacific Co. v. Indus. Accident
Comm., 251 U.S. 259, 262-63 (1920)), as was an iron worker repairing a
bridge over which interstate railroads traveled (Pedersen v. Delaware, L &
WR. Co., 229 U.S. 146, 152-53 (1912)). But
workers who performed work at any remove from the channels of
commerce, such as workers who produced goods for interstate shipment
and use, were beyond the Commerce Clause's scope. In Hammer v.
Dagenhart, 247 U.S. 251 (1918), for example, this Court struck down a
child labor law that regulated the employment relationships of workers
who produced goods shipped in interstate commerce, explaining that "[tihe
making of goods and the mining of coal are not commerce, nor does the
fact that these things are to be afterwards shipped or used in interstate
commerce, make their production a part thereof." Id. at 272.
In its early 20th century Commerce Clause cases, moreover, this Court
used the phrase persons "engaged in commerce~~ to describe the class of
persons constitutionally subject to the commerce power, as distinct from
the class of persons outside the commerce power whom Congress could
not constitutionally subject to Commerce Clause regulatory statutes. See,
eg, Second Employers Liability Cases (Mondou v. New York, N.H. & H. R.
Co.), 223 U.S. 1, 48-49 (1912) ("Congress, in the exertion of its power in
interstate commerce, may regulate the relations of common carriers by
railroad, and their employees, while both are engaged in such commerce,
subject always to the . . . qualification that the particulars in which those
relations are regulated must have a real or substantial connection with the
interstate commerce in which the carriers and employees are engaged").8
Against that jurisprudential background, Congress by 1925 was
accustomed to invoking its full commerce power through the statutory term
persons "engaged in commerce." For example, the 1903 version of the
Federal Employers' Liability Act, ch. 976, 32 Stat. 943 (1903), applied to
"every common carrier engaged in [interstate] trade or commerce."
See also id. at 46-47; First Employers Liability Cases, 207 U.S. 463, 501
(1907); Alaska S.S. Co. v. McHugh. 268 U.S. 23, 27 (1925).
(Emphasis supplied). The Safety Appliance Act, ch. 196, 1, 27 Stat. 531
(1893), referred to common carriers "engaged in interstate commerce by
railroad." (Emphasis supplied). And, several provisions of the Clayton Act
used the phrase "engaged in" to identify classes of persons and companies
covered by the Act. See, e.g., Clayton Act, ch. 323, 2, 38 Stat. 730 (1914)
("any person engaged in commerce.. ."); id. 7, 38 Stat. 731 ("No
corporation engaged in commerce shall acquire. . ."); id., 10, 38 Stat. 734
("No common carrier engaged in commerce shall have any dealings in
The FAA I exclusion is of a piece with those statutes. Because the
term "engaged in commerce" was understood in 1925 to state the full
reach of the commerce power with regard to workers, Congress' use of
that phrase in 1 shows its intent to exclude all workers' employment
contracts that it could constitutionally reach. See Cox, supra, 67 Harv. L.
Rev. at 598.
(b) Petitioner Circuit City responds that the statutory phrase "engaged
in ... commerce" was used in the amended Federal Employers' Liability Act
("FELA") to signify less than the full commerce power. Pet. Br. 17-18,
citing FELA, as amended, 35 Stat. 65 (emphasis supplied). But petitioner
misreads both the language of FELA and this Court's FELA Commerce
Clause cases. The amended FELA Commerce Clause provisions were not,
as petitioner asserts, "virtually identical" to FAA 1 (Pet. Br. 17); rather,
the FELA provisions were distinctly different from FAA 1, and that
difference was decisive in this Court's FELA cases.
The starting point is the 1906 version of FELA, which made "every
common carrier engaged in trade or commerce
liable to any of its employees" for injuries caused by the employer's
negligence, without regard to whether the injured employee was himself
engaged in commerce. FELA, ch. 3073, 1, 34 Stat. 232 (1906) (emphasis
Court held the 1906 FELA unconstitutional, because Congress did not have
the Commerce Clause power to extend the Act's "all-embracing"
provisions to employees who were not themselves engaged in commerce.
First Employers Liability Cases, 207 U.S. at 497. This version of FELA
was invalidated because it "sought to regulate the liability of tnterstate
carriers for injuries to any employee even though his employment had no
connection whatever with interstate commerce." Houston, E. & W.T.R. Co.
v. United States, 234 U.S. 342, 353 (1913).
In response to this Court's ruling, Congress amended FELA to cover
only employers and workers engaged in commerce and to add a temporal
limitation. The amended Act, which is the version upon which petitioner
relies, applied to "every common carrier by railroad, while engaging in
commerce between any of the several States ...," and it made such railroad
liable for negligence only to an employee "suffering injury while he is
employed by such carrier in such commerce." FELA, ch. 149, 1, 35 Stat.
65 (1908) (emphasis supplied). Petitioner's FELA argument entirely
ignores the temporal limitations in the amended FELA Commerce Clause
provisions and their significance.
In the Second Employers Liability Cases, this Court upheld the
constitutionality of the amended FELA after concluding that "Congress, in
the exertion of its power in interstate commerce, may regulate the
relations of common carriers by railroad, and their employees, while both
are engaged in such commerce . . ." 223 U.S. at 48-49 (emphasis supplied).
In subsequent cases, the Court explained that in amending FELA to make
it constitutional, Congress had cut back FELA's scope further than
necessary to comply with the Commerce Clause, and that Congress could
have saved FELA without adding the temporal limitation viz, by providing
that FELA covered railroads engaged in commerce and their workers
engaged in commerce without regard to the
job function the worker was performing at the moment of injury.9 None of
these cases, however, held that the FELA phrases "engaging in commerce"
and "employed . . . in
commerce," absent the temporal limitation ("while engaging in commerce"
and "while employed by such carrier in such commerce"), extended to less
than the full extent of the commerce power.
The sum of the matter is this. At the time here in question, this Court and
Congress routinely used the term, persons "engaged in commerce," to
delineate the full class of persons within the commerce power. We know of
no case or statute in which that phrase was taken to be an invocation of less
than the full commerce power. Although the amended FELA was held to
be a limited invocation of the commerce power, that was only by reason of
FELA's temporal limitation to workers "suffering injury while engaged in
[interstate] commerce." (Emphasis supplied). Nothing in FELA or this
court's FELA cases comes close to showing that, as of 1925, the phrase
"workers engaged in commerce" invoked less than Congress' full
2. Because the recognized scope of the Commerce Clause in 1925 was
narrower than the recognized scope of the Commerce Clause today, the
question next arises whether the FAA I and 2 Commerce Clause
provisions should be read
For example, in Illinois RB. Co. v. Bebrens, 233 U.S. 473 (1913), the Court
recognized that Congress constitutionally could have extended FIILA to workers,
like the decedent there, who performed closely related interstate and intrastate
functions. But the Court concluded that Congress instead, as a statutory matter,
had limited the Act beneath what the Commerce Clause permitted by adding the
element of "whether the particular service being performed at the time of injury,
isolatedly considered, was in interstate or intrastate commerce.' Id. at 477. This
temporal limitation, which is not present in FAA 1, is how the FELA Congress
manifested its intent not to apply the amended Act's protections to all injuries
suffered in workplace accidents by railroad workers engaged in interstate commerce.
Id. at 478.
dynamically (as expanding with the modem Commerce Clause's scope) or
statically (as preserved in the limited 1925 Commerce Clause's scope). That
question is resolved by this Court's analysis in Allied-Bruce Terminix, which
concluded, in a rationale that applies with equal force to FAA 1, that the
FAA 2 coverage provision should be read dynamically.
Petitioner would pretermit inquiry into the FAA Congress' intent by citing
two 1970's Clayton Act cases, which petitioner characterizes as holding that the
statutory phrase "engaged in commerce" must always be construed as if the
enacting Congress had adopted that language today, regardless of the scope of the
Commerce Clause or the actual intent of Congress at the actual time of enactment.
Pet. Br. 15. Petitioner misstates both cases, neither of which reached the Allied-
Bruce Terminix issue.
In Gulf Oil Corp. v. Copp. Paving Co., 419 U.S. 186 (1974), the Government
argued that the Clayton Act's "engaged in commerce" language manifested
Congress' intent to reach to the full extent of its commerce power because, when
that Act was adopted in 1914, "the 'in commerce' language was thought to be
coextensive with the reach of the Commerce Clause." 419 U.S. at 201. This Court
acknowledged that "[tlhis argument from the history ... of the Clayton Act is neither
without force nor without at least a measure of support," but did not decide the
issue because there was no showing that the activity at issue was within the
commerce power as now understood. Id. at 201-02. Later that Term, the
Government made the same argument in United States v. Amer. Bldg. Maint.
Indus., 422 U.S. 271, 277 (1975), but again the Court did not reach it; this time
because the Clayton Act had been amended and reenacted in 1950: "[Wlhether or
not Congress in enacting the Clayton Act in 1914 intended to exercise fully its
power to regulate commerce, . . . the fact is that when section 7 [of the Clayton ActI
was reenacted in 1950, the phrase engaged in commerce' had long since become a
Commerce Clause term of art, indicating a limited assertion of federal jurisdiction,"
and Congress by deliberately choosing to preserve that language in the course of
making ~'sweeping changes" to the Clayton Act indicated its ~'intent, at least in
1950, not to apply . . . the Clayton Act to the full range of corporations potentially
subject to the commerce power." Id. at 279-82 (emphasis supplied).
Unlike Clayton Act 7, FAA 1 and 2 have never been substantively
amended and reenacted. When Congress in 1947 reenacted the FAA into positive
law in Title 9, codifying the Statutes At Large into the U.S. Code
In Allied-Bruce Terminix, the Court considered the FAA 2 term
"involving commerce" a Commerce Clause term that, unlike "engaged in
commerce," had no accepted meaning in 1925 and has never been used
since. 513 U.S. at 273. As the first step in its analysis, the Court determined,
from the "language, background and structure" of the Act, that Congress in
FAA 2 intended "to exercise [its] commerce power to the full." Id. at 277.
That being so, the Court held in the second part of its analysis that although
"[t]he pre-New Deal Congress that passed the Act in 1925 might well have
thought the Commerce Clause did not stretch as far as has turned out to be
so," the scope of the 2 Commerce Clause provision must be read as
"expand[ing] along with the expansion of the Commerce Clause itself." Id.
without any change in language, that reenactment was not substantive but part of
a series of housekeeping bills to "enact into positive law all of the titles of the
United States Code." H.R. Rep. No. 80-255 1 (1947). The House Judiciary
Committee thus explained: "No attempt is made in this bill to make amendments in
existing law. That is left to amendatory acts to be introduced after the approval of
this bill." See also 93 Cong. Rec. 5029, 5043 (1947) (remarks of Rep. Robison)
("This bill makes no change in existing law"). This Court has properly rejected
efforts to squeeze substantive significance from such a recodification. See Fourco
Glass Co. v. Transamerica Products Corp., 353 U.S. 222, 227-28 (1957). Just
as Congress' codification of the FAA cannot be made into a substantive
reenactment, that codification of the Act without amendment cannot be made into
congressional acquiescence in petitioner's proffered construction of FAA 1.
Indeed, in t947, the only reported appellate decision on the issue held, contrary to
petitioner's position, that the FAA does not cover employment contracts at all. See
Gatliff Coal. Co. v. Cox, 142 F.2d 876, 882 (6th Cir. 1944). If congressional
silence in 1947 meant anything, it was that Congress approved the construction
of 1 that excluded all contracts of employment within the commerce power from
the coverage of the Act.
When the FAA was enacted in 1925, the Commerce Clause scope of
the 2 coverage provision and 1 exclusion provision were coterminous.
The "language, background, and structure" of the Act demonstrate that
both provisions were an "exercise [of] Congress' commerce power to the
full." Id. at 273, 277. Thus, even if a worker's contract of employment
could be considered a "contract evidencing a transaction involving
commerce," the employment contract would still be excluded from the
FAA by 1, because the worker would necessarily be a "worker engaged
commerce. All employment contracts that could be said to be covered by
FAA 2 therefore were excluded by I.
To maintain the FAA's statutory scheme which excludes all contracts
of employment by I that could be said to covered by 2 the 1
Commerce Clause provision must expand just the 2 provision expands. As
the Ninth Circuit concluded in Craft, a contrary interpretation of the FAA,
that reads 2's Commerce Clause provision dynamically while reading 1's
statically "would require us to hold [contrary to all reason] that Congress
intended to include some employment contracts within the scope of the
FAA prospectively, even though it initially excluded all employment
contracts[, and to] attribute to Congress the ability to foresee the New
Deal's expansion of the Commerce Clause." See 177 F.3d at 1088
(emphasis in original)."
Even if petitioner were correct that the scope of the FAA 1 exclusion
should be based on what the term "engaged in commerce" is deemed to signify in
post-1930s statutes (without regard to what the FAA Congress intended or how
I relates to 2 in the FAA statutory scheme), the 1 exclusion would go well
beyond the exclusion of transportationof-goods-in-commerce workers. In modern
terms, the workers "en gaged in commerce" are those "within the flow of interstate
commerce the practical, economic continuity in the generation of goods and ser
vices for interstate markets and their transport and distribution to
III. Circuit City's Proffered Reading Of FAA 1 Can Not Be
Squared With The Statutory Text
Petitioner Circuit City would have the final phrase of the FAA 1
exclusion "any other class of workers engaged in foreign or interstate
commerce" say something quite different from what its words say: "any
other class of workers directly engaged in the interstate transportation of
goods in commerce." Petitioner would effect this dramatic transformation
of the statutory language through a two-part analysis but neither part of
this analysis can survive scrutiny.
I. Petitioner contends that the 2 coverage provision ("involving
commerce") was a Commerce Clause term of art signifying a broader
invocation of the commerce power than was signified by the I
exclusion provision ("engaged in commerce"), and that Congress
therefore must have intended to create a gap between the 2 coverage
provision and the 1 exclusion provision a gap occupied by an FAA-
covered subclass of workers who were not themselves "engaged in
commerce," but who nonetheless had contracts of employment
"evidencing a transaction involving commerce. This contention is wrong
from beginning to end.
First, "involving commerce" was not a Commerce Clause term of art in
1925, much less a term with an established broad meaning. The phrase
"involving commerce" had never been used in a Commerce Clause
provision prior to 1925, and has never been so used since. Nor is
"involving commerce defined in the FAA to have a special meaning;
Act defines "commerce" for all the Act's purposes, it does so without
separately defining "involving commerce" or "engaged in commerce."
Second, and equally to the point, the phrase "workers engaged in
commerce," as we have shown, was a common Commerce Clause term
that was understood in 1925 to state the full reach of Congress' commerce
power over workers. See supra at pp. 20-22. In the Commerce Clause
jurisprudence at the time, there was no place within the scope of Congress'
commerce power beyond "engaged in commerce" for "involving
commerce" to have reached.
Third, in the common parlance of 1925, "involving" and "engaged"
were often used as synonyms. Dictionaries of the period define "engaged"
as, e.g., "involved"; define "engage" as, e.g., to "involve oneself' or to
"become involved"; and define "involve" to include, among its usages, "to
engage thoroughly."'2 Congress in FAA 2 thus used the term ''involving
commerce,'' based on its commonly understood usage, to express the same
commerce power reach as the FAA 1 term of art, "engaged in
Where the terms "involving" and "engaged in" differed, then as now,
was in their proper use in grammatical context which explains why
Congress used different words in FAA I and 2 to express the same
exercise of its commerce power. Grammatically, Congress could not have
used the same connective in both provisions. A "transaction" is not said to
be "engaged in" something, yet workers are said to be
the consumer." Gulf Oil Corp. v. Copp Paving Co., supra, 419 U.S. at 195;
Mitchell v. C.W. Volimer & Co., 349 U.S. 427, 429 (1955). Workers like Mr.
Adams, who sell goods that are manufactured in other states and countries and
shipped interstate both before and after the point of sale, would therefore be
excluded. See, e.g., BNA, The Fair Labor Standards Act, 3.111 at 105-13
(1999) (collecting cases concerning which workers are "engaged in commerce" for
pu~oses of the FLSA, 29 U.S.C. 206(a), 207(a)(l)).
See, e.g., Webster's First New International Dictionary (1917) (emphasis
supplied) (defining "engaged" as: " ... 4. Involved defining "engage" as: ". . . 2. To
embark in a business; to take part; to employ or involve one's self. . . . 4. To
become involved or entangled"; and defining "involve" as ". . . 7. To engage
thoroughly; to occupy, employ or absorb."); Black's Law Dictionary (1933)
(defining 'engage" as "To employ or involve one's self )
"engaged in" something. Because "contracts evidencing a transaction
involving commerce" is sound English usage while "contracts evidencing a
transaction engaged in commerce" is not the former is what 2 says. And,
because it is both customary English usage, and was the normal convention
at the time, to speak of workers "engaged in commerce~~ rather than
workers ''involving commerce,'' the former is what I says. The fact that
the FAA uses two terms, each in a syntactically appropriate way, can not
be taken to signify a congressional intent to legislate more broadly in the 2
coverage provision than in the I exclusion provision and by so doing, to
create a gap between the two.
2. Although petitioner Circuit City devotes much of its brief to the
supposed distinction between "involving commerce~~ as a broad
Commerce Clause term and ''engaged in commerce" as a narrow term, that
distinction, even if correct (and it is not), would move petitioner only a
small part of the way toward its statutory interpretation goal.
Demonstrating the existence of a gap between the Commerce Clause
provisions in FAA 1 and 2 does nothing to delineate which workers
who were not themselves "engaged in
commerce" under I would nonetheless be covered by the FAA by virtue
of having contracts of employment "evidencing a transaction involving
commerce" under 2.
Because petitioner's first argument could not, even if valid, explain
which workers Congress intended the FAA to cover, petitioner goes on to
its second argument, based on the twin canons of ejusdem generis and
noscitur a sociis and on the guideline that where a statute has two equally
plausible interpretations, courts should reject the one that would result in
statutory surplusage. See Pet. Br. 23-23.
Canons of construction are aids to construing ambiguous statutory
language, not a means "to defeat the obvious purpose of legislation" by
imposing a limiting construction on language not reasonably susceptible to
that limitation. See,
e.g., Gooch v. United States, 297 U.S. 124, 128-29 (1936); I-Ielvering v.
Stockholms Enskilda Bank, 293 U.S. 84, 88-89 (1934). And, the statutory
term "workers engaged in
commerce cannot be deconstructed by the canons of construction to mean
"workers engaged in transportation of goods in commerce."
First, "commerce" is a statutory term that is specifically defined in FAA
I and a term that was well understood in 1925 to include more than just
the interstate transportation of goods. See, e.g., Addyston Pipe & Steel Co.
v. United States, 175 U.S. 211, 241 (1899) ("Interstate commerce ...
includes not only the transportation of persons and property and the
navigation of public waters for that purpose, but also the purchase, sale,
and exchange of commodities"). That being so, as the statutes of the time
attest, where Congress intended to limit a Commerce Clause provision to
the class of workers engaged in the "interstate transportation of goods in
commerce," that is what Congress said. Yet, Congress in the FAA did not
choose to define the excluded "any other class of workers" as workers
"engaged in the interstate or foreign transportation of goods." Instead, the
FAA Congress used the common, well-understood, and more
comprehensive phrase, "workers engaged in foreign or interstate
Among the many statutes of the period that Congress could have taken as a
model to limit FAA 1 to transportation workers only, had that been its intent,
were: Act of July 15, 1913, eb. 6, 1, 38 Stat. 103 ("The provisions of this
chapter shall apply to any common carrier or carriers.
engaged in the transportation of passengers or property wholly by railroad,
or partly by railroad and partly by water ); Hours of Service Act, ch. 2939, 34
Stat. 1415, 1415-17 (1907) (applying to "common carrier[s] . . . and [their]
employees, engaged in the transportation of passengers or property by
railroad" in interstate commerce""); Interstate Commerce Act, ch. 104, 1, 24 Stat.
379 (1887) (applying "to any common carrier or carriers engaged in the
transportation of passengers or property wholly by railroad; or partly by water
when both are used, under a common control, management, or arrangement, for a
Second, petitioner's argument that FAA I excludes transportation-
of-goods-in-commerce workers only cannot be squared with the plain
language of a crucial phrase in FAA I
"any other class of workers," which is a term of breadth, not limitation.
When Congress uses the phrase "any other" to describe a residual
category, it does so to indicate that the category (here, "any other class of
workers engaged in
commerce") stands on its own, unlimited by reference to prior statutory
In Harrison v. PPG Indus., Inc., 446 U.S. 578 (1980), for example, this
Court rejected efforts to apply ejusdem generis to the phrase "any other
final action" in 307(b)(l) of the Clean Air Act Amendments of 1997,
which provides for direct review of actions by the EPA Administrator
under specifically enumerated provisions of the Act and for such review
of "any other final action of the Administrator under this Act 42 U.S.C.
7607 (b)(l) (emphasis supplied). Petitioner in Harrison made the ejusdem
generis argument that the term "any other final action" must be read as
to only final actions like the specifically enumerated actions. The Court
rejected the argument, concluding that the "fundamental" problem with
applying ejusdem generis to the statutory text was the modifier "any":
"[T]he phrase, 'any other final action,' in the absence of legislative history
to the contrary, must be construed to mean exactly what it says, namely
any other final action." Id. at 588-89 (emphasis in original).
Similarly, in Russell Motor Car Co. v. United States, 261 U.S. 514
(1923), this Court rejected a proposed application of the noscitur a sociis
canon to a statute granting the President power "[t]o modify, suspend,
cancel or requisition any existing or future contract." While
acknowledging that the term "requisition" is used in connection with
private contracts rather than government contracts, the Court concluded
that because Congress used the expansive phrase "any," Congress did not
mean to limit the statutory power to private contracts. As the Court stated,
"any existing or future contract,' read with literal exactness, includes all
contracts, whether private or governmental." Id. at 519-22.
carriage or shipment ); Safety Appliance Act, ch. 196, 1, 27 Stat. 531 (1893)
(applying to every common carrier "engaged in interstate commerce by
railroad"); id. 2, 3,27 Stat. 531 (1893); id. 6,29 Stat. 85 (1896) ("Any
common carrier engaged in interstate commerce by railroad ); id. ch. 225, 1,
35 Stat. 476 (1908) ("It shall be unlawful for any common carrier engaged in
interstate or foreign commerce by railroad.."); FELA, ch. 149, 1, 2, 35 Stat.
65 (1908) ("Every common carrier by railroad ); Erdman Act, ch. 370, 1, 30
Stat. 424 (1898) ("any common carrier or carriers and their officers, agents, and
employees, except masters of vessels and seamen, . . . engaged in the
transportation of passengers or property wholly by railroad, or partly by
railroad and partly by water," and defining employees to "include all persons
actually engaged in any capacity in train operation or train service of any
description"); Act of March 4, 1921, ch. 172, 233,41 Stat. 1445 (ICC shall
formulate regulations for transportation of explosives "which shall be binding
upon all common carriers engaged in interstate or foreign commerce which
trafisport explosives or other dangerous articles
So too in FAA 1, if the legislative intent had been to exclude only a
limited subclass of the class of workers engaged in commerce, the FAA
Congress would not have expansively and unambiguously described the
residual class as "any other class of workers engaged in commerce."
Third, petitioner's ejusdem generis argument depends upon the false
premise that the sole characteristic shared by "seamen" and "railroad
employees" is that both classes of workers transport goods in commerce.
In truth, those two classes of workers share several more relevant
common characteristics, not the least of which is that in 1925, seamen and
railroad employees were the only private-sector classes of
workers whom Congress could regulate under the Commerce Clause that
Congress had previously regulated.t4
It is far more likely that the FAA Congress included the references in
I to "seamen" and "railroad employees" for emphasis and to provide the
two preeminant examples of the classes of "workers engaged in . . .
commerce" that were excluded from the FAA, than that Congress included
those references to make a veiled statement of an implicit intent to exclude
transportation-of-goods-in-commerce workers only. That likelihood
becomes all but a certainty when it is remembered that labor initially
objected to the FAA bill because its provisions might cover "the seaman[,]
the railroadman[, and] sundry other workers in 'interstate and Foreign
Commerce"' (supra at p. 12) language that is
"' See 44 Stats. at Large, Pt. I (1926) (showing laws in effect on December 7,
1925), at 1437-43, 1447-55 (railroad employees), 1510-26 (seamen). Petitioner
never explains why Congress would have referred to "seamen" and "railroad
workers" as shorthand for describing the narrow class of workers directly engaged
in the transportation of goods in interstate commerce, given that railroads and
ships obviously move passengers as well. Nor does petitioner explain why
"seamen" and "railroad employees" would not be characterized as employees of
common carriers a characterization that includes providers of telephone and
telegraph service. See First Employers Liability Cases, 207 U.S. at 497; Interstate
Commerce Act, ch. 104, 24 Stat. 382 (1887), as amended.
The artificiality of petitioner's ejusdem generis analysis is also highlighted by
the very court of appeal cases upon which it relies, which formulate differently the
scope of the FAA 1 exclusion, based on how the case characterizes the
connection between seamen and railroad employees. See Dickstein v. DuPont, 443
F.2d 783, 785 (1st Cir. 1971) ("employees ... involved in, or closely related to,
the actual movement of goods in interstate commerce"); Frying v. Va. Squires
Basketball Club, 468 F.2d 1064, 1069 (2d Cit. 1972) ("actually in the
transportation industry"); Great Western Mortgage Corp. v. Peacock, 110 F.3d
222, 227 (3d Cir. 1997) ("employed directly in the channels of commerce");
McWilliams v. Logicon, Inc., 143 F.3d 573, 576 (10th Cir. 1998) ("employees
actually engaged in the channels of interstate commerce").
tracked almost word-for-word in the I exclusion, as proposed by
Secretary Hoover to resolve fully labor's objection to the inclusion of
"workers' contracts" in the bill, and as enacted.
Fourth, petitioner cannot support its proffered construction of I by
relying on the proposition that statutes should be construed to avoid
surplusage. There is no rule against redundancies requiring Congress to
write statutes in the fewest words possible.tS Nor is there any law of
conciseness authorizing the courts to rewrite statutory provisions that make
their point in more words than necessary, when each of those words
serves a legitimate statutory purpose such as providing detail, emphasis,
or example, or reassuring objectors and potential opponents that their
objections have been met and that there is no basis for opposition. See,
e.g., South Dakota v. Yankton Sioux Tribe, 522 U.S. 329, 347-48 (1998).
Russell Motor Car Co., supra, Gooch, supra, and Harrison, supra, are more
than sufficient to show that there is a wide congressional prerogative to
draft statutory provisions with some redundancies, where that drafting
approach, in Congress' judgment, effectively communicates its legislative
To he sure, where there are two equally plausible constructions of
statutory language, the courts will incline to
Indeed, there are redundancies throughout the FAA, as in many statutes
throughout the period. See Southern R. Co. v. United States, 222 U.S. 20, 25-26
(1911) (construing scope of Safety Appliance Act broadly to encompass all
railroads engaged in interstate commerce, despite "redundant" clause "in
connection with" that could be read as imposing limitation, because broader
reading "is in accord with the manifest purpose" of statute). For example, in FAA
1 itself, there was no need for Congress to have referred to: "workers engaged in
foreign or interstate commerce" (because "commerce" was defined earlier in that
paragraph), or to "any other class of workers" rather than simply "any other . .
the version that does not result in surplusage or redundant statutory
language as more likely reflecting Congress' true intent. Here, however,
petitioner never gets to the threshold point of establishing the plausibility of
its proffered construction. For the reasons stated above, there is no textual
basis for reading the FAA 1 exclusion of "seamen, railroad employees, or
any other class of workers engaged in foreign or interstate commerce" as
excluding only transportation-of-goods-in-commerce workers, or for
concluding that Congress intended such a limited exclusion. The mere fact
that Congress could have written FAA I in fewer words is far too
slender a reed upon which to base petitioner's wholesale rewriting of the
statutory text to say something quite different from what its actual words
Indeed, while petitioner attempts to give its surplusage argument a
measure of credibility by offering alternative versions of I that Congress
might have enacted to exclude all worker contracts of employment, its own
proffered construction of the exclusion provision could also have been
drafted differently and far more directly if Congress had truly intended
to exclude transportation-of-goods-in-commerce workers only. Petitioner
suggests that if Congress had meant to exclude all contracts of
employment, FAA I might have stated: "nothing herein contained shall
apply to contracts of employment" or to parallel the 2 coverage provision
while using conventional Commerce Clause language "nothing herein
contained shall apply to contracts of employment of workers engaged in
foreign or interstate commerce." Pet. Br. 22-23. But by the same token, if
Congress had meant to exclude only transportation-of-goods-in-commerce
workers from the FAA, Congress could easily have stated "nothing herein
contained shall apply to contracts of employment of workers engaged in
the transportation of goods in interstate commerce" language that would
make the point far more clearly and directly than the text of FAA I as
petitioner would have it read.
Fifth, and finally, petitioner's construction of the FAA 1 exclusion as
being limited only to transportation-of-goods-in-commerce workers fails
because it attributes to Congress an intent that makes no sense. There is
nothing in the legislative record or in logic that begins to explain why
Congress would have singled out only the employment contracts of
transportation-of-goods-in-commerce workers to be excluded from the
FAA.'6 And, construing the FAA I exclusion as
IS Petitioner itself characterizes as "[clonjecture," "speculat[ionl," and
"surmiseEl" the only explanation that it offers that Congress excluded seamen and
railroad employees because federal legislation already provided a mechanism for
enforcing those workers' employment arbitration agreements, and that Congress
excluded "any other class of workers" to "round out" the list in the expectation
that "motor carriers" and other like transportation workers would soon unionize
and obtain similar federal arbitration legislation. Pet. Br. at 26-27. As pointed out
by Prof. Finkin and others, there is no support in the legislative history for this
explanation, and it makes no sense. See Finkin I, 17 Berkeley J. Emp. Lab. L.
282, 291-92 (1996); Matthew Finkin, Employment Contracts Under the FAA
Reconsidered, 48 Lab.L.J. 329, 331 (1997). In 1925, the only class of
employees covered by a federal arbitration law were seamen
and the seamen's statute did not provide for judicial enforcement of arbitration.
See Act of June 7, 1872, ch. 322, 17 Stat. 262,267,46 U.S.C. 651. Seamen's
Union President Furuseth was strongly opposed to such enforceability, and his
principal objection to the original version of the FAA bill was that it would likely
make enforceable arbitration awards entered against workers such as his members.
See supra at p. 12. Although the Railway Labor Act later included a mandatory
arbitration provision, that provision was not enacted until 1926 (Railway Labor
Act, eb. 347, 44 Stat. 577 (1926)), one year after the FAA was enacted. In 1925
railroad employees were governed by the Transportation Act of
1920, ch. 91, 300, 41 Stat. 469, which made no provision for enforcement of
arbitration clauses in disputes affecting individual railroad employees. And,
whether Congress gave thought to truck drivers, bus drivers, or other workers in
the motor transport industry in adopting the 1 exclusion, the fact remains that in
1925 there were no federal arbitration laws applicable to those workers, or to any
other class of workers either within or outside the transportation industry. It
therefore made little sense for Congress to group any other class of workers with
narrower than the FAA 2 coverage provision leads to a result that is
paradoxical at best. Under petitioner's reading of I, those employment
contracts most involving interstate commerce, and thus most assuredly
within the Commerce Clause power in 1925 (viz., contracts of employees
engaged in interstate transportation) are excluded from Act's coverage;
while those employment contracts having a less direct and less certain
connection to interstate commerce as to which federal regulation in 1925
would have been least supportable
would come within the Act's affirmative coverage and would not be
excluded. Limiting coverage to those contracts least evidently within the
reach of the federal constitutional authority justifying federal regulation is
so anomalous that this Court should not attribute such an intent to Congress
without the clearest evidence of such intent. Public Citizen v. U.S. Dept. of
Justice, 491 U.S. 440, 452-55 (1989).
In contrast, reading FAA 1 for what it quite evidently says makes
perfect contextual sense, since there are entirely logical reasons for
Congress to have excluded workers' contracts of employment as a class
from the FAA. The historical record demonstrates that the proponents of
the 1 exclusion drafted that language to satisfy objectors that the FAA
would not cover employment contracts at all. The underlying grounds for
that objection were the same whether the worker was a "seaman," a
"railroadman" or one of the "sundry other workers in interstate or foreign
commerce (supra, at p. 12) the perceived disparity in bargaining power
between worker and employer.t7 The disparity in bargaining
"railroad employees" as three classes of workers covered by a non-FAA federal
7 In 1925, the heyday of the "yellow dog contract," Congress fully
understood the disparity in bargaining power between employer and employee.
Indeed, just six years after enacting the FAA, Congress declared that "under
prevailing economic conditions, . . . the individual unorganized worker is
commonly helpless to exercise actual liberty of contract and to protect his freedom
of labor, and thereby to obtain
power between worker and employer that was the root of the objection to
FAA coverage of worker employment contracts was a general concern
not a concern limited to workers engaged in the transportation of goods in
commerce. Thus, only a general exclusion of all workers' "contracts of
employment" from the Act would satisfy the objectors and that is what the
I exclusion accomplishes, reading its words for what they say.
IV. Respecting Congress' Intent to Exclude All Employinent
Contracts From the FAA Furthers Important Federalism
Ultimately, this case is as much about federalism and the States' power
to regulate workers' contracts of employment under their own laws and in
their own courts as it is about the enforceability of employment arbitration
provisions. Many of petitioner's amici curiae misanalyze this case by
proceeding as if the question were whether mandatory pre-dispute
employment arbitration agreements will be enforceable or unenforceable,
with the answer turning on whether the FAA covers such agreements. But
that is to presume, contrary to
acceptable terms and conditions of employment Norris-LaGuardia Act, ch. 90,
2, 47 Stat. 70 (1932), cod/fled at 29 U.S.C. 102; see also FELA, ch. 3073, 34
Stat. 232 (1906) (invalidating workers' waivers of statutory FELA rights).
Congress in broadly excluding all "contracts of employment" from the reach of the
FAA, evidently concluded, as the Seamen's Union and American Federal of Labor
had urged, that the presumed level of voluntariness in commercial arbitration
agreements between merchants did not exist in employment arbitration agreements
between employers and employees. See Prima Paint Corp. v. Flood & Conklin,
388 U.S. 395, 402 n.9 (1967) ("We note that categories of contracts otherwise
within the Arbitration Act but in which one of the parties characteristically has little
bargaining power are expressly excluded from the reach of the Act. See I ").
fact, that state law uniformly makes employment arbitration agreements
What this case is about, then, is whether challenges to the enforceability
of most individual employment arbitration agreements will be governed by
the FAA or by state law. A holding that Congress in the FAA preserved the
States' authority to regulate individual employment contracts will not make
arbitration provisions in those contracts uniformly unenforceable it will
allow the States to decide issues of enforceability and procedure under
their own laws, pursuant to their own policies.'9 At the same time, federal
courts will be precluded from invoking the FAA to enjoin state court
adjudication of cases filed by state residents alleging state-law employment
claims as the district court did here.
Even in ordinary statutory interpretation cases, Congress will not be
presumed to have intended to displace state law. See, e.g., English v.
General Electric, 496 U.S. 72, 82-83 (1990); Silkwood v. Kerr-McGee
Corp., 464 U.S. 238, 256 (1984). This presumption against preemption is
heightened in areas of traditional state concern, where this Court has
always "[s]tarted with the assumption that the historic police powers of the
States were not to be superseded.. . unless that
Ill Although many state arbitration laws parallel the FAA, several States have
enacted specific laws, cited in the State Attorneys' General Amicus Brief, regulating
the enforceability of employment arbitration agreements, including arbitration
agreements imposed unilaterally as a condition of employment. If the FAA applies
to employment contracts of workers other than seamen, railroad employees, and
workers directly engaged in toreign and interstate transportation of goods, those
State laws will be preempted to the extent the law applies to classes of workers
covered by the FAA. Southland Corp. v. Keating, 465 U.S. 1, 16 & n. 11(1984).
19 Of course, in a case involving federal statutory rights as to which
Congress "evinced an intention to preclude a waiver of judicial remedies"
(Gilmer, 500 U.S. at 26, quoting Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985)), the federal anti-
waiver rule would govern by reason of the Supremacy Clause.
was the clear and manifest purpose of Congress." Medtronic,
Inc. v. Lohr, 518 U.S. 470, 485 (1996), quoting Rice v. Santa
Fe Elevator Corp., 331 U.S. 218, 230 (1947); Gregory v.
Ashcroft, 501 U.S. 452, 460 (1991); Will v. Michigan Dept. of
State Police, 491 U.S. 58, 65 (1989).
Regulation of the individual employer-employee relationship has long
been the province of the States.20 And, for the reasons already stated, there
is no "clear and manifest" evidence in the text or legislative history of the
FAA that Congress in 1925 intended to cover employment contracts, and
thereby preempt state law.2t
V. Circuit City's Policy Arguments Do Not Illuminate the FAA
Petitioner Circuit City and its amici curiae conclude with a series of
pro-arbitration policy arguments to justify their reading of the FAA. Those
arguments are neither
See, e.g., Fort Hal(fax Packing Co. v. Coyne, 482 U.S. 1, 21(1987) (the
establishment of labor standards falls within the traditional police powers of the
State"); Gade v. National Solid Wastes Mgmt. Ass'n, 505 U.S. 88, 96 (1992);
Second Employers Liability Cases, 223 U.S. at 54-56. The States also have a
considerable interest in providing their residents with access to a state court judicial
system to adjudicate claims within those courts' jurisdiction. See Atlantic Coast
Line R.R. v. Broth, of Locomotive Eng'rs, 398 U.S. 281, 285 (1970); Baltimore &
OR. Co. v. Bough, 149 U.S. 368, 401 (1893); Brown v. Gerdes, 321 U.S. 178,
188-89 (1944) (Frankfurter, J., concurring); cf. Perry v. Thomas, 482 U.S. at 494
(O'Connor, J., dissenting).
Indeed, several members of this Court have questioned whether the 1925
Congress, which enacted the FAA at a time when arbitration was thought to be a
purely procedural matter to be decided by the forum court, intended to preempt any
state laws. See Perry v. Thomas, 482 U.S. at 493, (Stevens, J. dissenting); id. at
494 (O'Connor, J., dissenting); Southland Corp., 465 U.S. at 36 (O'Connor, J.,
joined by Rehnquist, C.J., dissenting); Allied-Bruce Terminix, 513 U.S. at 283
(O'Connor, J., dissenting); id. at 284-85 (Scalia, J., dissenting); id. at 293
(Thomas, J., joined by Scalia, J, dissenting).
relevant to elucidating the intent of the 1925 Congress nor persuasive on
their own terms.
I. Petitioner and its amici curiae cite several cases describing a
"liberal federal policy favoring arbitration," and argue that this policy
compels a narrow construction of the FAA 1 exclusion.22 But that
argument is circular, since the source of the federal policy is the FAA
itself, and the boundaries of that policy must therefore be co-extensive
with the FAA's coverage and exclusion provisions. Just as the federal
policy favoring arbitration does not apply to employment arbitration
agreements of "seamen" and "railroad employees," so is it inapplicable to
"any other class of workers" that Congress excluded from the Act's
coverage. The Court cannot start with petitioner's conclusion that the
FAA's "policy favoring arbitration" applies to employment contracts and
reason backward to construe the intended scope of the Act. As the Ninth
Circuit stated in Craft:
[Defendant] argues that 2 of the FAA contains a broad policy
favoring arbitration. Thus, interpreting the FAA to exclude
employment contracts would conflict with that policy. However, the
argument is circular; the very question to be answered is whether 2
and its broad policy apply to employment contracts at all. See Perry
v. Thomas, 482 U.S. 483, 489 (1987) ("Section 2, therefore, embodies
a clear federal policy of requiring arbitration unless the agreement
to arbitrate is not part of a contract" satisfying the requirements of
that section.) (emphasis added). We decline to bootstrap a policy
argument to expand the scope of 2. [177 F.3d at 1085-86 n.5
(emphasis in original)]
As several of respondent's amici point out, that policy is more accurately
characterized, where it applies, as a policy favoring knowing and voluntary
arbitration, based on the premise that arbitration is a matter of "consent not
coercion." Volt Info. Services, Inc. v. Bd. of Trustees, 489 U.S. 468, 479 (1989);
see EEOC Policy Statement on Alternative Dispute Resolution, 3 EEOC
Compliance Manual (BNA) N:3055 (July 17, 1995).
2. Petitioner argues that a national employer that requires all workers to
sign "a standardized arbitration agreement as a condition of employment
should not be faced with "conflicting and inconsistent state law," and that
the importance of uniformity and predictability in employment relations
suggests that Congress intended the FAA to cover all but a narrow
category of contracts of employment. Pet. Br.
34. The immediate flaw in this argument is that it bears no relation to
what Congress actually intended in 1925. The only workers over whom
Congress might have had authority to impose a nationwide statute were,
like seamen and railroad employees, workers engaged in foreign and
interstate commerce. Yet Congress explicitly excluded those workers from
the FAA. A perceived need for national uniformity in the enforcement of
employment arbitration agreements could
not have been a motivating factor underlying the FAA.
Even if FAA I were as narrowly construed as petitioner urges,
national uniformity would not be achieved. National employers are
already subject to different employment statutes and common law
principles in the different States.
We also note that additional non-uniformity would be created if petitioner's
position were adopted. Heretofore, this Court has proceeded on the assumption
that FAA I excludes all collective bargaining agreements ("CBAs") as a type of
"contract of employment." See Textile Workers Union v. Lincoln Mills, 353 U.S.
448, 466-67 & n.2 (1957) (Frankfurter, J., dissenting) (perceiving in the Court's
silence about the FAA, after full briefing, a "rejection though not explicit of the
availability of the . . . Arbitration Act to enforce arbitration clauses in collective
bargaining agreements"); United Paperworkers Int'l Union v. Misco, 484 U.S. 29,
40 n.9 (1987) ("The Arbitration Act does not apply to 'contracts of employment' ...
but the federal courts have often looked to the Act for guidance in labor arbitration
cases). If the FAA were construed to cover CBAs subject to a transportation-of-
goods~incommerce workers exclusion only, disputes regarding a single CBA
could be treated differently for example, with respect to an interlocutory appeal
from a refusal to order arbitration depending upon the particular job of the
Mr. Adams' principal state law claim in this case, for example, is based on
discriminatory same-sex retaliation and harassment a claim recognized in
California but not in many other states. Moreover, the FAA itself does not
apply a uniform federal standard to issues of enforceability, but borrows
general state unconscionability law to determine whether arbitration
agreements are "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; Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 686-87 (1
3. Many of petitioner's amici offer an impassioned defense of
employment arbitration and its perceived benefits and supposed fairness to
workers. No one disputes that arbitration can be an excellent alternative to
litigation when both parties voluntarily choose to arbitrate their disputes
under fair procedures that ensure the protection of legal rights. But the
paternalistic suggestion that employers unilaterally impose pre-dispute
mandatory arbitration clauses on their workers for the benefit of those
workers is not credible. Many academics and virtually all worker
advocates dispute the assertion that workers benefit from their employers'
24 While some of petitioner's amici make a related "reliance" argument, few
employers order their business in reliance upon having federal rather than state law
apply in the first instance to a question of arbitral enforceability. Cf. Allied-Bruce
Terminix, 513 U.S. at 284-85 (Scalia, J., dissenting). Moreover, while those amici
claim to have relied upon what they characterize as a virtually unbroken line of
appellate authority, both the Ninth Circuit in Craft, 177 F.3d at 1086 n.6, t087,
and the Concerned Scholars in their Brief Amicus Curiae, point out that the
position of the various circuits on the FAA 1 exclusion issue has diverged
widely over the years. See also Br. in Opp. at 6-7 n.2. In addition, although this
Court has had several opportunities to decide the issue itself since 1957, it has
either expressly reserved the issue or has suggested, by its silence, that the FAA
I exclusion is broad, and not limited to transportation workers.
imposition of such "agreements." Permitting employers with vastly superior
resources and bargaining power to dictate to their workers, as a condition
of employment, the terms and procedures under which those workers may
seek redress for the employers' own legal violations, thereby unilaterally
substituting their own systems of justice for the legal enforcement
mechanisms that Congress and the States have created, is not consistent
with the goal of "fairness" extolled by petitioner's amici.
Although the enforceability of petitioner's arbitration provisions is
not an issue presented to this Court, Circuit City's one-sided arbitration
rules (J.A. at 13-14, 19-38) starkly demonstrate how unfair unilaterally-
imposed predispute arbitration terms can be, when dictated by an
economically powerful employer to workers and job applicants who have
no power to negotiate and no alternative but to quit their jobs or work
elsewhere. See Armendariz v. Foundation Health Psychcare Services,
Inc., 2000 Cal. LEXIS 6120, __ Cal.4th (Cal. Sup. Ct. August 24, 2000).
But, for the reasons stated, it should be the California state court, not the
federal district court, that makes the enforceability determination in this
See, e.g., Briefs Amicus Curiae of the Lawyers' Committee for Civil Rights,
Concerned Scholars, National Employment Lawyers Association, and American
Association of Retired Persons, and authorities cited therein. Largely based on
concerns of procedural and substantive unfairness resulting from mandatory pre-
dispute arbitration programs imposed on workers by their economically more
powerful employers, the EEOC, the National Academy of Arbitrators, and the
Society of Professionals in Dispute Resolution have each announced policies
opposing the enforceability of condition-of-employment arbitration programs with
regard to statutory discrimination claims.
For the forcgoing reasons, the judgment of the United
States Court of Appeals for the Ninth Circuit should be
STEVEN L. ROBINSON
LAW OFFICES OF JOsEPI I L. ALIOTO AND ANGELA AIlolo
700 Montgomery Street
San Francisco, CA 94111
MIChAEL Run IN (Coon tel of Record)
NUSSBAUM, RUBIN & DEMAIN
177 Post Street, Suite 300
San Francisco, CA 94105
Ct.ii~i~ PAt .EtSK Y
MCGtJINN, IIILLSMAN &
535 Pacific Avenue
San Francisco, CA 94133
Aetorneys for Respondent