81 N.Y.2d 623 (1993)
In cases governed by the Federal Arbitration Act (FAA), the arbitrability of statutory discrimination claims is determined by reference to Congress’s intent regarding alternative dispute resolution for that class of claims.
Summary
This case addresses whether an arbitration clause in a U-4 form, signed as part of a securities industry registration, is enforceable for disputes involving claims of unlawful discrimination. The Court of Appeals of New York held that, in light of Supreme Court precedent, specifically Gilmer v. Interstate/Johnson Lane Corp., the FAA mandates enforcement of such arbitration agreements unless Congress intended to preclude a waiver of judicial forum for the specific statutory right at issue. The court overruled its prior holding in Matter of Wertheim & Co. v. Halpert to the extent it conflicted with this principle.
Facts
Alphonse Fletcher, Jr., an African-American equity trader, alleged racial discrimination by Kidder, Peabody & Co. Rita Reid, a registered securities representative, claimed gender discrimination by Goldman, Sachs & Co. Both Fletcher and Reid had signed U-4 forms containing broad arbitration clauses as part of their securities industry registration. These forms committed all disputes “arising out of [his] employment” to arbitration. Both then brought suit in court, alleging violations of New York’s Human Rights Law.
Procedural History
In Fletcher, the trial court denied the motion to compel arbitration, citing public policy concerns. The Appellate Division reversed, granting the motion to compel arbitration. In Reid, both the trial court and the Appellate Division compelled arbitration, relying on Gilmer. The Court of Appeals consolidated the appeals.
Issue(s)
1. Whether the FAA preempts state law regarding the enforceability of arbitration clauses in disputes involving statutory discrimination claims.
2. Whether Congress intended to preclude a waiver of a judicial forum for claims arising under the New York Human Rights Law (Executive Law § 296 (1)(a)), which prohibits employment discrimination, and analogous federal laws such as Title VII of the Civil Rights Act.
3. Whether the U-4 form signed by Reid was a contract of employment excluded from the FAA’s coverage under Section 1.
Holding
1. Yes, because in situations where the FAA is applicable, it preempts state law on the subject of the enforceability of arbitration clauses.
2. No, because there is no evidence in the legislative history of Title VII or its amendments indicating a congressional intent to override the general rule that anticipatory contracts to arbitrate are enforceable under the FAA.
3. No, because the Supreme Court in Gilmer specifically stated that the U-4 form is a contract with the securities exchanges, not a contract of employment, and thus not excluded from the FAA’s coverage.
Court’s Reasoning
The court relied heavily on Gilmer v. Interstate/Johnson Lane Corp., which established that statutory claims are subject to arbitration if the agreement to arbitrate is governed by the FAA, unless Congress intended to preclude a waiver of judicial remedies for the statutory right at issue. The court stated, “Under that methodology, the party seeking to avoid enforcement of an arbitration clause governed by the FAA must demonstrate a congressional intent ‘to preclude a waiver of a judicial forum’ for disputes based on a particular statutory right.”
The court found no evidence in the legislative history of Title VII indicating that Congress intended to preclude arbitration of discrimination claims. It noted that the 1991 amendments to the Civil Rights Act, which authorize the use of alternative dispute resolution methods, do not shed light on Congress’ intentions regarding anticipatory agreements to arbitrate future disputes.
Regarding the U-4 form, the court cited Gilmer‘s holding that it is a contract with the securities exchanges, not a contract of employment, and therefore not subject to the FAA’s exclusion for employment contracts. The court dismissed arguments about the adequacy of the arbitral forum, stating that Congress has already considered and balanced those concerns in enacting the FAA. Quoting Mitsubishi Motors v. Soler Chrysler-Plymouth, the court stated that agreeing to arbitration “trades th[ose] procedures and [the] opportunity for review * * * for the simplicity, informality, and expedition of arbitration”.