Circuit City Stores, Inc. v. Adams
Encyclopedia
Circuit City Stores, Inc. v. Adams, , was a United States Supreme Court
case decided in 2001. The case concerned whether the "section one exemption" of the Federal Arbitration Act
applied to an employment contract of an employee at Circuit City Stores. The Court held that the exemption was limited to the specific listing of professions contained in the text. This meant that general employment contracts, like the one Adams sued under, would have to be arbitrated in accordance with the federal statute.
application with Circuit City. A provision in Adams' application required all employment disputes to be settled by arbitration
. Specifically, it stated:
In 1997, Adams filed an employment discrimination
lawsuit against Circuit City in California state court, alleging violations of state employment law. Circuit City then filed suit in Federal District Court, seeking to enjoin the state-court action and to compel arbitration of Adams' claims under the Federal Arbitration Act
. The District Court entered an order to that effect because it decided that Adams was obligated by the arbitration agreement. In reversing, the Ninth Circuit Court of Appeals found that the arbitration agreement between Adams and Circuit City was contained in a "contract of employment," and thus not subject to the Act under section 1 of the Act. Section 1 of the FAA 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. Circuit City appealed
to the Supreme Court which agreed to hear the case.
wrote the majority opinion
, reversing the Ninth Circuit and holding that the exception did not apply to this case. The main reason for this finding was the decision that section one's exemption would only be confined to "transportation workers". "The wording of [section one] calls for the application of the maxim ejusdem generis, the statutory canon that 'where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words...'". Under this method of reading the statute
, he would be able to reach an understanding of what the exemption meant. He wrote, "Under this rule of construction the residual clause should be read to give effect to the terms 'seamen' and 'railroad employees,' and should itself be controlled and defined by reference to the enumerated categories of workers which are recited just before it; the interpretation of the clause pressed by respondent fails to produce these results". Therefore, section one "exempts from the FAA
only contracts of employment of transportation workers". Kennedy's decision was joined by four other Justices to create a 5-justice majority.
wrote a dissent, with which Justices Ruth Bader Ginsburg
and Stephen Breyer
joined. Justice David Souter
joined all sections of Stevens' dissent besides a critique of previous decision of the Supreme Court in arbitration case law. Stevens examined the history of arbitration and the purpose of it throughout the century. The Federal Arbitration Act was designed, he explained, to maintain the enforceability of contractual agreements. But private arbitration is a whole other situation. Stevens wrote, "As the history of the legislation indicates, the potential disparity in bargaining power between individual employees and large employers was the source of organized labor’s opposition to the Act, which it feared would require courts to enforce unfair employment contracts". He went on to quote the former Chief Justice of the Israeli Supreme Court, Aharon Barak
in supporting the idea that the Court should look at the purpose of the act rather than its pure statutory language.
Justice Souter wrote a separate dissent which was joined by the other three Justices who signed onto Stevens' dissent as listed above. He mainly attacked the method of the majority's statutory reading and its failure to look at the statute "as a whole". He wrote, "It is imputing something very odd to the working of the congressional brain to say that Congress took care to bar application of the Act to the class of employment contracts it most obviously had authority to legislate about in 1925..." With that understanding of the Act, he would have affirmed the decision and holding of the Ninth Circuit.
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
case decided in 2001. The case concerned whether the "section one exemption" of the Federal Arbitration Act
Federal Arbitration Act
In United States law, the Federal Arbitration Act is a statute that provides for judicial facilitation of private dispute resolution through arbitration. It applies in both state courts and federal courts, as was held in Southland Corp. v. Keating...
applied to an employment contract of an employee at Circuit City Stores. The Court held that the exemption was limited to the specific listing of professions contained in the text. This meant that general employment contracts, like the one Adams sued under, would have to be arbitrated in accordance with the federal statute.
Background
In 1995, Saint Clair Adams, who was hired as a sales counselor, signed an employmentEmployment
Employment is a contract between two parties, one being the employer and the other being the employee. An employee may be defined as:- Employee :...
application with Circuit City. A provision in Adams' application required all employment disputes to be settled by arbitration
Arbitration
Arbitration, a form of alternative dispute resolution , is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons , by whose decision they agree to be bound...
. Specifically, it stated:
In 1997, Adams filed an employment discrimination
Employment discrimination
Employment discrimination is discrimination in hiring, promotion, job assignment, termination, and compensation. It includes various types of harassment....
lawsuit against Circuit City in California state court, alleging violations of state employment law. Circuit City then filed suit in Federal District Court, seeking to enjoin the state-court action and to compel arbitration of Adams' claims under the Federal Arbitration Act
Federal Arbitration Act
In United States law, the Federal Arbitration Act is a statute that provides for judicial facilitation of private dispute resolution through arbitration. It applies in both state courts and federal courts, as was held in Southland Corp. v. Keating...
. The District Court entered an order to that effect because it decided that Adams was obligated by the arbitration agreement. In reversing, the Ninth Circuit Court of Appeals found that the arbitration agreement between Adams and Circuit City was contained in a "contract of employment," and thus not subject to the Act under section 1 of the Act. Section 1 of the FAA 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. Circuit City appealed
Certiorari
Certiorari is a type of writ seeking judicial review, recognized in U.S., Roman, English, Philippine, and other law. Certiorari is the present passive infinitive of the Latin certiorare...
to the Supreme Court which agreed to hear the case.
Opinion of the Court
Justice Anthony KennedyAnthony Kennedy
Anthony McLeod Kennedy is an Associate Justice of the United States Supreme Court, having been appointed by President Ronald Reagan in 1988. Since the retirement of Sandra Day O'Connor, Kennedy has often been the swing vote on many of the Court's politically charged 5–4 decisions...
wrote the majority opinion
Majority opinion
In law, a majority opinion is a judicial opinion agreed to by more than half of the members of a court. A majority opinion sets forth the decision of the court and an explanation of the rationale behind the court's decision....
, reversing the Ninth Circuit and holding that the exception did not apply to this case. The main reason for this finding was the decision that section one's exemption would only be confined to "transportation workers". "The wording of [section one] calls for the application of the maxim ejusdem generis, the statutory canon that 'where general words follow specific words in a statutory enumeration, the general words are construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words...'". Under this method of reading the statute
Statute
A statute is a formal written enactment of a legislative authority that governs a state, city, or county. Typically, statutes command or prohibit something, or declare policy. The word is often used to distinguish law made by legislative bodies from case law, decided by courts, and regulations...
, he would be able to reach an understanding of what the exemption meant. He wrote, "Under this rule of construction the residual clause should be read to give effect to the terms 'seamen' and 'railroad employees,' and should itself be controlled and defined by reference to the enumerated categories of workers which are recited just before it; the interpretation of the clause pressed by respondent fails to produce these results". Therefore, section one "exempts from the FAA
Federal Arbitration Act
In United States law, the Federal Arbitration Act is a statute that provides for judicial facilitation of private dispute resolution through arbitration. It applies in both state courts and federal courts, as was held in Southland Corp. v. Keating...
only contracts of employment of transportation workers". Kennedy's decision was joined by four other Justices to create a 5-justice majority.
Dissenting opinions
Justice John Paul StevensJohn Paul Stevens
John Paul Stevens served as an Associate Justice of the Supreme Court of the United States from December 19, 1975 until his retirement on June 29, 2010. At the time of his retirement, he was the oldest member of the Court and the third-longest serving justice in the Court's history...
wrote a dissent, with which Justices Ruth Bader Ginsburg
Ruth Bader Ginsburg
Ruth Joan Bader Ginsburg is an Associate Justice of the Supreme Court of the United States. Ginsburg was appointed by President Bill Clinton and took the oath of office on August 10, 1993. She is the second female justice and the first Jewish female justice.She is generally viewed as belonging to...
and Stephen Breyer
Stephen Breyer
Stephen Gerald Breyer is an Associate Justice of the U.S. Supreme Court. Appointed by President Bill Clinton in 1994, and known for his pragmatic approach to constitutional law, Breyer is generally associated with the more liberal side of the Court....
joined. Justice David Souter
David Souter
David Hackett Souter is a former Associate Justice of the Supreme Court of the United States. He served from 1990 until his retirement on June 29, 2009. Appointed by President George H. W. Bush to fill the seat vacated by William J...
joined all sections of Stevens' dissent besides a critique of previous decision of the Supreme Court in arbitration case law. Stevens examined the history of arbitration and the purpose of it throughout the century. The Federal Arbitration Act was designed, he explained, to maintain the enforceability of contractual agreements. But private arbitration is a whole other situation. Stevens wrote, "As the history of the legislation indicates, the potential disparity in bargaining power between individual employees and large employers was the source of organized labor’s opposition to the Act, which it feared would require courts to enforce unfair employment contracts". He went on to quote the former Chief Justice of the Israeli Supreme Court, Aharon Barak
Aharon Barak
Aharon Barak is a Professor of Law at the Interdisciplinary Center in Herzliya and a lecturer in law at the Hebrew University of Jerusalem, the Yale Law School, and the University of Toronto Faculty of Law....
in supporting the idea that the Court should look at the purpose of the act rather than its pure statutory language.
Justice Souter wrote a separate dissent which was joined by the other three Justices who signed onto Stevens' dissent as listed above. He mainly attacked the method of the majority's statutory reading and its failure to look at the statute "as a whole". He wrote, "It is imputing something very odd to the working of the congressional brain to say that Congress took care to bar application of the Act to the class of employment contracts it most obviously had authority to legislate about in 1925..." With that understanding of the Act, he would have affirmed the decision and holding of the Ninth Circuit.