Case Study:
Waffle House fired Eric Baker when he suffered a seizure on the job within a month of being hired. He filed a discrimination complaint with the Equal Employment Opportunity Commission (EEOC) alleging that his discharge violated the Americans with Disabilities Act of 1990 (ADA). The EEOC pursued the claim and filed suit in federal court requesting injunctive relief to prevent Waffle House from discriminating against other employees now and in the future, to get Baker reinstated on the job, to collect damages on behalf of Baker, and to punish Waffle House for discriminating against Baker. Waffle House moved to stay the EEOC’s suit and compel arbitration based on Baker’s employment contract that required employment disputes to be settled by binding arbitration. The district court denied Waffle House’s request for relief. The Fourth Circuit Court of Appeals also held for the EEOC but limited the EEOC to injunctive relief against Waffle House and precluded the agency from seeking victim-specific relief. The court held that the Federal Arbitration Act (FAA), which favored enforcement of private arbitration agreements, outweighed the EEOC’s right to enforce private, rather than public, interests. In other words, EEOC could proceed but Baker’s arbitration agreement limited Baker’s recovery to that which would be determined in an arbitration. Justice Stevens delivered the opinion of the Court: The question presented is whether an agreement between an employer and an employee to arbitrate employment-related disputes bars the Equal Employment Opportunity Commission (EEOC) from pursuing victimspecific judicial relief, such as backpay, reinstatement, and damages, in an enforcement action alleging that the employer has violated Title I of the Americans with Disabilities Act of 1990 (ADA). In his application for employment with respondent, Eric Baker agreed that “any dispute or claim” concerning his employment would be “settled by binding arbitration.” As a condition of employment, all prospective Waffle House employees are required to sign an application containing a similar mandatory arbitration agreement. Baker began working as a grill operator at one of respondent’s restaurants on August 10, 1994. Sixteen days later he suffered a seizure at work and soon thereafter was discharged. Baker did not initiate arbitration proceedings, nor has he in the seven years since his termination, but he did file a timely charge of discrimination with the EEOC alleging that his discharge violated the ADA. After an investigation and an unsuccessful attempt to conciliate, the EEOC filed an enforcement action against respondent in the Federal District Court for the District of South Carolina. Baker is not a party to the case. The EEOC’s complaint alleged that respondent engaged in employment practices that violated the ADA, including its discharge of Baker “because of his disability,” and that its violation was intentional, and “done with malice or with reckless indifference to [his] federally protected rights.” The complaint requested the court to grant injunctive relief to “eradicate the effects of [respondent’s] past and present unlawful employment practices,” to order specific relief designed to make Baker whole, including backpay, reinstatement, and compensatory damages, and to award punitive damages for malicious and reckless conduct. Congress has directed the EEOC to exercise the same enforcement powers, remedies, and procedures that are set forth in Title VII of the Civil Rights Act of 1964 when it is enforcing the ADA’s prohibitions against employment discrimination on the basis of disability. The FAA directs courts to place arbitration agreements on equal footing with other contracts, but it “does not require parties to arbitrate when they have not agreed to do so.” Because the FAA is “at bottom a policy guaranteeing the enforcement of private contractual arrangements,” we look first to whether the parties agreed to arbitrate a dispute, not to general policy goals, to determine the scope of the agreement. Although ambiguities in the language of the agreement should be resolved in favor of arbitration, we do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated. “Arbitration under the [FAA] is a matter of consent, not coercion.” Here there is no ambiguity. No one asserts that the EEOC is a party to the contract, or that it agreed to arbitrate its claims. It goes without saying that a contract cannot bind a nonparty. Accordingly, the proarbitration policy goals of the FAA do not require the agency to relinquish its statutory authority if it has not agreed to do so. [T]he statutory language is clear; the EEOC has the authority to pursue victim-specific relief regardless of the forum that the employer and employee have chosen to resolve their disputes. Rather than attempt to split the difference, we are persuaded that, pursuant to Title VII and the ADA, whenever the EEOC chooses from among the many charges filed each year to bring an enforcement action in a particular case, the agency may be seeking to vindicate a public interest, not simply provide makewhole relief for the employee, even when it pursues entirely victim-specific relief. To hold otherwise would undermine the detailed enforcement scheme created by Congress simply to give greater effect to an agreement between private parties that does not even contemplate the EEOC’s statutory function. It is true, as respondent [has] argued, that Baker’s conduct may have the effect of limiting the relief that the EEOC may obtain in court. If, for example, he had failed to mitigate his damages, or had accepted a monetary settlement, any recovery by the EEOC would be limited accordingly. As we have noted, it “goes without saying that the courts can and should preclude double recovery by an individual.” But no question concerning the validity of his claim or the character of the relief that could be appropriately awarded in either a judicial or an arbitral forum is presented by this record. Baker has not sought arbitration of his claim, nor is there any indication that he has entered into settlement negotiations with respondent. It is an open question whether a settlement or arbitration judgment would affect the validity of the EEOC’s claim or the character of relief the EEOC may seek. The only issue before this Court is whether the fact that Baker has signed a mandatory arbitration agreement limits the remedies available to the EEOC. The text of the relevant statutes provides a clear answer to that question. They do not authorize the courts to balance the competing policies of the ADA and the FAA or to second-guess the agency’s judgment concerning which of the remedies authorized by law that it shall seek in any given case. Moreover, it simply does not follow from the cases holding that the employee’s conduct may affect the EEOC’s recovery that the EEOC’s claim is merely derivative. We have recognized several situations in which the EEOC does not stand in the employee’s shoes. And, in this context, the statute specifically grants the EEOC exclusive authority over the choice of forum and the prayer for relief once a charge has been filed. The fact that ordinary principles of res judicata,* mootness, or mitigation may apply to EEOC claims does not contradict these decisions, nor does it render the EEOC a proxy for the employee. The judgment of the Court of Appeals is reversed, and the case is remanded for further proceedings consistent with this opinion. It is so ordered. Justice Thomas, with whom the Chief Justice and Justice Scalia join, dissenting: Because Congress has not given the EEOC the authority to usurp the traditional role of courts to determine what constitutes “appropriate” relief in a given case, it is necessary to examine whether it would be “appropriate” to allow the EEOC to obtain victim-specific relief for Baker here, notwithstanding the fact that Baker, by signing an arbitration agreement, has waived his ability to seek such relief on his own behalf in a judicial forum. For two reasons, I conclude it is not “appropriate” to allow the EEOC to do on behalf of Baker that which Baker is precluded from doing for himself. To begin with, when the EEOC litigates to obtain relief on behalf of a particular employee, the Commission must take that individual as it finds him. Whether the EEOC or an employee files a particular lawsuit, the employee is the ultimate beneficiary of victim-specific relief. The relevance of the employee’s circumstances therefore does not change simply because the EEOC, rather than the employee himself, is litigating the case, and a court must consider these circumstances in fashioning an “appropriate” remedy. As a result, the EEOC’s ability to obtain relief is often limited by the actions of an employee on whose behalf the Commission may wish to bring a lawsuit. If an employee signs an agreement to waive or settle discrimination claims against an employer, for example, the EEOC may not recover victim-specific relief on that employee’s behalf. Not only would it be “inappropriate” for a court to allow the EEOC to obtain victim-specific relief on behalf of Baker, to do so in this case would contravene the “liberal federal policy favoring arbitration agreements” embodied in the FAA. By allowing the EEOC to pursue victim-specific relief on behalf of Baker under these circumstances, the Court eviscerates Baker’s arbitration agreement with Waffle House and liberates Baker from the consequences of his agreement. Waffle House gains nothing and, if anything, will be worse off in cases where the EEOC brings an enforcement action should it continue to utilize arbitration agreements in the future. This is because it will face the prospect of defending itself in two different forums against two different parties seeking precisely the same relief. It could face the EEOC in court and the employee in an arbitral forum. I respectfully dissent.
For Critical Analysis
Q1. Waffle House requested a stay and a motion to compel arbitration. What was it asking for?
Q2. Do you agree with Waffle House’s argument that although the EEOC was not a party to the arbitration agreement, it is still effectively bound by it (Justice Thomas’s dissent)? Or do you agree with the EEOC that Waffle House is free to pursue all remedies without regard to whether an employee has signed an arbitration agreement (Justice Stevens’s majority opinion)? Explain which position you agree with and why.
Q3. When Baker was given the pre-employment agreement with the arbitration clause, do you think he understood what he was signing? Does it matter?
Q4. If Baker had refused to sign the employment agreement, would he still have been hired? If he had simply struck the clause and then signed, would he have been hired?
Q5. Why did Waffle House require the arbitration clause in its employment contracts? Why might an employee be concerned about such a clause? Why might an employee be pleased with such a clause?
Your answer must be typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.