|CIRCUIT CITY STORES, INC. V. ADAMS (99-1379) 532 U.S. 105 (2001)
194 F.3d 1070, reversed and remanded.
[ Kennedy ]
[ Stevens ]
[ Souter ]
The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
CIRCUIT CITY STORES, INC. v. ADAMS
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
A provision in respondents application for work at petitioner electronics retailer required all employment disputes to be settled by arbitration. After he was hired, respondent filed a state-law employment discrimination action against petitioner, which then sued in federal court to enjoin the state-court action and to compel arbitration pursuant to the Federal Arbitration Act (FAA). The District Court entered the requested order. The Ninth Circuit reversed, interpreting §1 of the FAAwhich excludes from that Acts coverage contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerceto exempt all employment contracts from the FAAs reach.
Held: The §1 exemption is confined to transportation workers. Pp. 316.
(a) The FAAs coverage provision, §2, compels judicial enforcement of arbitration agreements in any contract evidencing a transaction involving commerce. In Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, the Court interpreted §2s involving commerce phrase as implementing Congress intent to exercise [its] commerce power to the full. Id., at 277. Pp. 35.
(b) The Court rejects respondents contention that the word transaction in §2 extends only to commercial contracts, and that therefore an employment contract is not a contract evidencing a transaction involving interstate commerce at all. If that were true, the separate §1 exemption that is here at issue would be pointless. See, e.g., Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552, 562. Accordingly, any argument that arbitration agreements in employment contracts are not covered by the FAA must be premised on the language of the §1 exclusion itself. Pp. 56.
(c) The statutory text forecloses the construction that §1 excludes all employment contracts from the FAA. Respondent relies on Allied-Bruces expansive reading of involving commerce to contend that §1s engaged in
commerce language should have a like reach, exempting from the FAA all employment contracts falling within Congress commerce power. This reading of §1 runs into the insurmountable textual obstacle that, unlike §2s involving commerce language, the §1 words any other class of workers engaged in
commerce constitute a residual phrase, following, in the same sentence, explicit reference to seamen and railroad employees. The wording thus calls for application of the maxim ejusdem generis, under which the residual clause should be read to give effect to the terms seamen and railroad employees, and should be controlled and defined by reference to those terms. See, e.g., Norfolk & Western R. Co. v. Train Dispatchers, 499 U.S. 117, 129. Application of ejusdem generis is also in full accord with other sound considerations bearing upon the proper interpretation of the clause. In prior cases, the Court has read engaged in commerce as a term of art, indicating a limited assertion of federal jurisdiction. See e.g., United States v. American Building Maintenance Industries, 422 U.S. 271, 279280. The Court is not persuaded by the assertion that its §1 interpretation should be guided by the fact that, when Congress adopted the FAA, the phrase engaged in commerce came close to expressing the outer limits of its Commerce Clause power as then understood, see, e.g., The Employers Liability Cases, 207 U.S. 463, 498. This fact alone does not provide any basis to adopt, by judicial decision, rather than amendatory legislation, Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186, 202, an expansive construction of the FAAs exclusion provision that goes beyond the meaning of the words Congress used. While it is possible that Congress might have chosen a different jurisdictional formulation had it known that the Court later would embrace a less restrictive reading of the Commerce Clause, §1s text precludes interpreting the exclusion provision to defeat the language of §2 as to all employment contracts. The statutory context in which the engaged in commerce language is found, i.e., in a residual provision, and the FAAs purpose of overcoming judicial hostility to arbitration further compel that the §1 exclusion be afforded a narrow construction. The better reading of §1, in accord with the prevailing view in the Courts of Appeals, is
that §1 exempts from the FAA only employment contracts of transportation workers. Pp. 612.
(d) As the Courts conclusion is directed by §1s text, the rather sparse legislative history of the exclusion provision need not be assessed. The Court rejects respondents argument that the Courts holding attributes an irrational intent to Congress by excluding from the FAAs coverage those employment contracts that most involve interstate commerce, i.e., those of transportation workers, while including employment contracts having a lesser connection to commerce. It is a permissible inference that the former contracts were excluded because Congress had already enacted, or soon would enact, statutes governing transportation workers employment relationships and did not wish to unsettle established or developing statutory dispute resolution schemes covering those workers. As for the residual exclusion of any other class of workers engaged in foreign or interstate commerce, it would be rational for Congress to ensure that workers in general would be covered by the FAA, while reserving for itself more specific legislation for transportation workers. Pp. 1214.
(e) Amici argue that, under the Courts reading, the FAA in effect pre-empts state employment laws restricting the use of arbitration agreements. That criticism is not properly directed at todays holding, but at Southland Corp. v. Keating, 465 U.S. 1, holding that Congress intended the FAA to apply in state courts, and to pre-empt state antiarbitration laws to the contrary. The Court explicitly declined to overrule Southland in Allied-Bruce, supra, at 272, and Congress has not moved to overturn Southland in response to Allied-Bruce. Nor is Southland directly implicated in this case, which concerns the application of the FAA in a federal, rather than in a state, court. The Court should not chip away at Southland by indirection. Furthermore, there are real benefits to arbitration in the employment context, including avoidance of litigation costs compounded by difficult choice-of-law questions and by the necessity of bifurcating the proceedings where state law precludes arbitration of certain types of employment claims but not others. Adoption of respondents position would call into doubt the efficacy of many employers alternative dispute resolution procedures, in the process undermining the FAAs proarbitration purposes and breeding litigation from a statute that seeks to avoid it. Allied-Bruce, supra, at 275. Pp. 1416.
194 F.3d 1070, reversed and remanded.
Kennedy, J., delivered the opinion of the Court, in which Rehnquist, C. J., and OConnor, Scalia, and Thomas, JJ., joined. Stevens, J., filed a dissenting opinion, in which Ginsburg and Breyer, JJ., joined, and in which Souter, J., joined as to Parts II and III. Souter, J., filed a dissenting opinion, in which Stevens, Ginsburg, and Breyer, JJ., joined.