Stephens & Co. Duffield v. Robertson

The Supreme Court's decision in the Gilmer case was handed down just before the Civil Rights Act of 1991 was passed. The judge conceded that the decisions in Gilmer and Gardner may not coincide with Congress' intend as written "to the extent authorized by law." But, "even a cursory glance" at Section 118's legislative history makes it clear that Congress "in no way intended to incorporate" Gilmer's holding into Title VII. In fact, in reporting the bill to the House of Representatives, the House Committee on Education and Labor unambiguously said that "[t]his view is consistent with the Supreme Court's interpretation of Title VII in Alexander v. Gardner-Denver Co." Not only that, Congress specifically rejected a proposal allowing employers to enforce compulsory arbitration agreements, and "it did so in the most emphatic terms," concluding with the phrase, "American workers should not be forced to choose between their jobs and their civil rights." Further, the chairman of the reporting committee, Congressman Edwards, said "No approval whatsoever is intended of the Supreme Court's recent decision in Gilmer. . . . " Judge Reinhardt concluded that "it is the unusual force and clarity of the statute's legislative history that is ultimately dispositive in this case."

But in response, the securities firm urged the court to ignore the legislative history and conclude that Section 118 must be read as adopting Gilmer. Its view was that "to the extent authorized by law" was merely an elastic phrase which contracted and expanded with the ebb and flow of court decisions. Reinhardt said the defendant's interpretation meant that Section 118, "without a single word being changed, nevertheless was instantaneously transmogrified, and took on exactly the opposite meaning," on the day Gilmer was announced, and he rejected it. "Any such `through the looking glass' construction would entail a gross perversion of the legislative process."

In the end, Reinhardt said, the Gilmer requirement that such court decisions must be based on statutory language and legislative history is "the most compelling reason" to reject the view of Robertson, Stephens & Co. The legislative history of the Civil Rights Act of 1991 makes it "absolutely clear" that Congress intended to codify the Gardner approach--that is, to announce that Gardner was the law governing compulsory arbitration in Title VII cases. In the light of this, Reinhardt held that Form U-4 is unenforceable.