provisions manifest a liberal federal policy favoring arbitration agreements." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25, 114 L. Ed. 2d 26, 111 S. Ct. 1647 (1991) (internal quotation omitted).
In Gilmer, the Supreme Court held that claims brought under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., are subject to compulsory arbitration pursuant to arbitration agreements. Gilmer, 500 U.S. at 23. As the Supreme Court framed the issue, the plaintiff's age discrimination claims were subject to arbitration under the FAA unless Congress "evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." Id. at 26 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 87 L. Ed. 2d 444, 105 S. Ct. 3346 (1985)). Finding that the plaintiff had not demonstrated that this was the case, the Court held that his age discrimination claims were subject to compulsory arbitration. 500 U.S. at 35.
Prior to Gilmer, the New York Court of Appeals had held arbitration agreements unenforceable with regard to claims of unlawful discrimination. See Matter of Wertheim & Co. v. Halpert, 48 N.Y.2d 681, 421 N.Y.S.2d 876, 397 N.E.2d 386 (1979). More recently, in light of Gilmer, the Court of Appeals limited this holding, declaring that "our 1979 decision in Wertheim should no longer be followed in cases governed by the FAA." Fletcher v. Kidder, Peabody & Co., Inc., 81 N.Y.2d 623, 601 N.Y.S.2d 686, 688, 619 N.E.2d 998, cert. denied, 126 L. Ed. 2d 455, 114 S. Ct. 554 (1993).
Powers maintains that his case is not governed by the FAA, and that therefore Wertheim still precludes the enforcement of the arbitration clause contained in his employment agreement. Powers relies on language in § 1 of the FAA which provides that "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. Powers reads this language to exclude all employment contracts from the FAA's coverage.
Apparently, New York state courts have not directly addressed the scope of the § 1 exclusion. However, the Second Circuit has repeatedly held that the exclusion applies only to employees actually working in the transportation industry. See Erving v. Virginia Squires Basketball Club, 468 F.2d 1064, 1069 (2d Cir. 1972); Signal-Stat Corp. v. Local 475, United Electrical, Radio & Machine Workers of America, 235 F.2d 298 (2d Cir. 1956), cert. denied, 354 U.S. 911 (1957). This holding has been followed by courts in this circuit. See DiCrisci v. Lyndon Guar. Bank of New York, 807 F. Supp. 947 (W.D.N.Y. 1992); Allendale Nursing Home, Inc. v. Local 1115 Joint Board, 377 F. Supp. 1208 (S.D.N.Y. 1974).
The reasoning employed in these decisions is persuasive. As the court noted in DiCrisci, both the language and legislative history of the FAA suggest that the § 1 exclusion was not intended to embrace all employment contracts. See DiCrisci, 807 F. Supp. at 953. As a matter of statutory interpretation, "the reference to 'seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce,' suggests that Congress intended to refer to workers engaged in commerce in the same way that seamen and railroad workers are." Id. at 953. Moreover, the exclusion was apparently added at the prodding of the Seamen's Union, which believed that contract disputes involving seamen fell under the admiralty jurisdiction, and should not be referable to arbitration. See Signal-Stat Corp., 235 F.2d at 302. "This suggests that the exclusion may have arisen from some relatively narrow concerns over certain classes of workers, rather than broad concerns over employment contracts generally." DiCrisci, 807 F. Supp. at 953.
These decisions indicate that the § 1 language was not intended to exclude all employment contracts from the FAA's coverage, but only those involving employees working in the transportation industry. As Powers was not employed in this industry, his employment contract is not excluded from the FAA's coverage.
B. The Arbitration Clause
As noted, the arbitration clause contained in Powers' employment contract provides for arbitration of all disputes "arising out of or in connection with this agreement...." Powers contends that his discrimination claim is not arbitrable under this agreement because it is not related to the agreement itself. In support of this argument, Powers notes that he concedes that Fox terminated his employment in a manner that did not violate this agreement. Further, he notes that there will be no need to interpret or apply the terms of the employment contract in order to resolve his claim on its merits.
Powers' interpretation of the arbitration clause would limit its applicability to breach of contract claims, and is unduly restrictive. Powers' employment relationship with Fox existed solely by virtue of the employment agreement. Accordingly, his claim that this employment relationship was unlawfully terminated clearly "aris[es] out of or in connection with" this agreement.
Had the parties intended to draft an arbitration clause limited to breach of contract claims, they could easily have done so. Instead, they drafted an extremely broad clause, which must be interpreted in light of the strong federal policy favoring arbitration. See Local 333 v. McAllister Brothers, Inc., 671 F. Supp. 309, 312 (S.D.N.Y. 1987) ("Where the scope of the arbitration clause is broad, the court must find that the parties bargained to have any dispute that arguably falls within the scope of the arbitration clause settled by arbitration, absent compelling proof to the contrary").
This federal policy dictates that arbitration "should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 650, 89 L. Ed. 2d 648, 106 S. Ct. 1415 (1986) (quotation omitted). Because this is hardly the case here, Powers' argument that his dispute did not "arise out of or in connection with" his employment agreement is rejected.
The instant dispute falls within the scope of the FAA, and clearly "aris[es] out of or in connection with" Powers' employment contract. Accordingly, pursuant to § 4 of the FAA, Fox's motion to compel arbitration is granted. Pursuant to § 3 of the FAA, Fox's motion to stay the action pending arbitration is also granted.
Shira A. Scheindlin
Dated: New York, New York
January 5, 1996