Marken Gannon v. Circuit City Stores, Inc. 00-3243 IN THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT No. 00-3243 MARKEN GANNON, Plaintiff-Appellee, v. CIRCUIT CITY STORES, INC., Defendant-Appellant. On Appeal from the United States District Court for the Eastern District of Missouri BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS AMICUS CURIAE SUPPORTING THE APPELLEE AND AFFIRMANCE GWENDOLYN YOUNG REAMS Associate General Counsel PHILIP SKLOVER Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel PAUL D. RAMSHAW Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W., Rm. 7816 Washington, D.C. 20507 (202) 663-4736 TABLE OF CONTENTS TABLE OF AUTHORITIES iii STATEMENT OF INTEREST 1 STATEMENT OF THE ISSUE 2 STATEMENT OF THE CASE 2 Nature of the Case 2 Statement of the Facts 4 SUMMARY OF ARGUMENT 6 ARGUMENT 7 THE DISTRICT COURT ACTED PROPERLY IN DENYING CIRCUIT CITY'S MOTION TO COMPEL ARBITRATION 7 CONCLUSION 22 CERTIFICATE OF COMPLIANCE 23 CERTIFICATE OF SERVICE 24 TABLE OF AUTHORITIES FEDERAL CASES Cole v. Burns International Security Servs., 105 F.3d 1465 (D.C. Cir. 1997) 11, 19 Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211 (1986) 11 Derrickson v. Circuit City Stores, Inc., 81 Fair Empl. Prac. Cas. (BNA) 1533, 1999 U.S. Dist. LEXIS 21100 (D. Md. Mar. 19, 1999), aff'd without opinion sub nom. Johnson v. Circuit City Stores, Inc., 203 F.3d 821 (4th Cir.), cert. denied, 120 S. Ct. 2744 (2000) 9, 11, 13 Eisenberg v. Advance Relocation & Storage, No. 00-7216, 2000 WL 1915771 (2d Cir., December 26, 2000) 8 Graham Oil Co. v. ARCO Products Co., 43 F.3d 1244 (9th Cir. 1995) 9, 20 Green Tree Financial Corp. v. Randolph, 121 S. Ct. 513 (2000) 20 Hooters of America, Inc. v. Phillips, 173 F.3d 933 (4th Cir. 1999) 17 Mueller v. Reich, 54 F.3d 438 (7th Cir. 1995) 13 Paladino v. Avnet Computer Technologies, Inc., 134 F.3d 1054 (11th Cir. 1998) 8, 10 Resolution Trust Corp. v. Home Savings, 946 F.2d 93 (8th Cir. 1991) 11 Shankle v. B-G Maintenance Management, 163 F.3d 1230 (10th Cir. 1999) 11, 19 STATE CASES Armendariz v. Foundation Health Psychcare Services, Inc., 6 P.3d 669 (Cal. 2000) 9, 18, 20 Kinney v. United Healthcare Services, Inc., 83 Cal. Rptr. 2d 348) 21 Kisling v. MFA Mutual Insurance Co., 399 S.W.2d 245 (Mo. App. 1966) 16 Latona v. Aetna U.S. Healthcare, Inc., 82 F. Supp. 2d 1089 (C.D. Cal. 1999) 19 Missouri ex rel. State Farm Mutual Insurance Co. v. Craig, 364 S.W.2d 343 (Mo. App. 1963) 16 Rubin v. Blue Cross Hospital Service, Inc., 637 S.W.2d 695 (Mo. 1982) 10 Sosa v. Paulos, 924 P.2d 357 (Utah 1996) 10, 18 STATUTES Federal Arbitration Act, 9 U.S.C. §§ 1 et seq 3 Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq 1 § 703(a) of Title VII, 42 U.S.C. § 2000e-2(a) 7 § 706(g) of Title VII, 42 U.S.C. § 2000e-6(g) 8 42 U.S.C. § 1981a 8 UCC § 2-302 10 OTHER Restatement (Second) Contracts § 208 10 IN THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT No. 00-3243 MARKEN GANNON, Plaintiff-Appellee, v. CIRCUIT CITY STORES, INC., Defendant-Appellant On Appeal from the United States District Court for the Eastern District of Missouri BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS AMICUS CURIAE SUPPORTING THE APPELLEE AND AFFIRMANCE STATEMENT OF INTEREST The Equal Employment Opportunity Commission is the agency charged by Congress with the enforcement of the federal laws prohibiting employment discrimination and retaliation, including Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. The Commission therefore has an interest in protecting employees' and applicants' statutory rights to seek redress for employment discrimination, and in ensuring the effectiveness of the sanctions Congress imposed on employers that violate these laws. Many employers in recent years have required their employees and applicants to agree to mandatory arbitration of their statutory claims. This case addresses the issue of what a district court can and should do when an employer asks it to enforce an arbitration agreement that deprives the employees and applicants of one or more significant statutory rights. The Commission accordingly offers its views. STATEMENT OF THE ISSUE Whether the district court erred in denying the defendant's motion to compel arbitration pursuant to an agreement which, as written, denies defendant's employees a substantial portion of the relief Congress provided for victims of employment discrimination. STATEMENT OF THE CASE Nature of the Case: This is an interlocutory appeal from an order denying the defendant's motion to compel the plaintiff to arbitrate the claims of sexual harassment and retaliation that form the basis for this Title VII action. The complaint alleges that the plaintiff's co-workers sexually harassed her and the defendant failed to take appropriate remedial action despite her complaints. Joint Appendix ("JA") 5-6. She also alleges that she was fired in retaliation for her complaints about the harassment. JA 6. The defendant moved, pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., to compel arbitration under an arbitration agreement plaintiff signed in 1998. JA 13-25. On July 10, 2000, the district court denied the company's motion, holding that the agreement's limitation on punitive damages "prevents Plaintiff from effectively vindicating her rights," and that the agreement was therefore unenforceable. JA 50-51. The defendant moved for reconsideration, arguing that, upon the district court's ruling that the provision limiting damages was unlawful, that provision became ineffective, and the court should enforce the agreement without that limitation. JA 52-55. The plaintiff responded that the defendant's "attempt[ ] to render the arbitration agreement enforceable by unilaterally modifying the terms of the agreement" should be rejected because there was no mutual assent or consideration to support the modified agreement. Memorandum in Opposition to Reconsideration (filed July 28, 2000), at 2. The district court agreed that the defendant had "demonstrate[d] neither mutual assent nor consideration," and accordingly denied the motion to reconsider. JA 62-63. Statement of the Facts: Marken Gannon applied to work for Circuit City in May 1998. JA 26, 29. Circuit City informed its applicants that it would not consider their applications unless they signed the company's Dispute Resolution Agreement ("DRA"), and Gannon complied with this requirement. JA 30-32. The agreement provides that Gannon will submit any claims she might have against the company to arbitration pursuant to the rules set out in the agreement. Id. The agreement allows the arbitrator to award punitive damages, but limits such an award to $5,000, or the sum of the back pay and front pay awarded, if that is higher. JA 43. The agreement also limits the time period for which back pay can be awarded to one year. Id. In addition, the agreement requires the employee or applicant to institute arbitration within one year of when she learned, or should have learned, of the facts giving rise to her claim. JA 37. Moreover, the agreement allows the arbitrator to enter an award without writing a decision stating his findings of fact and conclusions of law. JA 42. The agreement also requires the employee to pay half the costs of the arbitration, with that liability being limited to the greater of $500 or three percent of the employee's annual compensation. Id. In addition, Rule 18 of Circuit City's Dispute Resolution Rules and Procedures states (JA 44): In the event that any of these Dispute Resolution Rules and Procedures agreed upon by the Parties is held to be in conflict with a mandatory provision of applicable law, the conflicting Rule or Procedure shall be modified automatically to comply with the mandatory provision of applicable law until such point as these Dispute Resolution Rules and Procedures may be modified in accordance with Rule 19 below. In the event of an automatic modification with respect to a particular Rule or Procedure, the remainder of these Rules and Procedures shall not be affected. An automatic modification of one of these Rules or Procedures shall be applicable only in the jurisdiction in which it is in conflict with a mandatory provision of law. In all other jurisdictions, these Dispute Resolution Rules and Procedures shall apply in full force and effect. Gannon worked for Circuit City for about a year. JA 48. She alleges in this lawsuit that during this year she was subjected to a hostile environment because her male co-workers sexually harassed her. JA 5-6. She claims that she complained to management about this harassment, and that the company failed to take appropriate remedial action. JA 6. Circuit City fired Gannon on May 4, 1999, and Gannon charges that the company fired her in retaliation for her complaints about the harassment. Id. Gannon filed a charge with the Commission in August 1999 alleging sexual harassment, sex discrimination and retaliation. JA 1, 4-10. After receiving a notice of right to sue, JA 11, she filed this lawsuit in February 2000. JA 1, 4-10. SUMMARY OF ARGUMENT Circuit City's arbitration agreement is a contract of adhesion that relieves its drafter of a substantial portion of the potential liability for employment discrimination that Congress chose to impose on employers. A court asked to enforce such a contract has the discretion to refuse enforcement. The district court acted well within its discretion in denying Circuit City's motion in this case. Circuit City argues that the district court was required to give effect to the DRA's severability provision and grant its motion, but the district court acted properly in rejecting this argument. First, the provision on its face does not provide for severability where, as here, a provision of the agreement has been held unlawful by a district court. Circuit City's construction of the severability provision should also be rejected because it would deprive the federal courts of their power to declare unenforceable contracts that violate public policy. Moreover, refusing to give effect to the severability provision is the best way for courts to provide an incentive for employers imposing adhesive arbitration agreements on their employees to draft agreements that comply with federal law. ARGUMENT THE DISTRICT COURT ACTED PROPERLY IN DENYING CIRCUIT CITY'S MOTION TO COMPEL ARBITRATION. Circuit City does not contest the district court's decision that the limitation on punitive damages is unlawful. It argues only that the district court erred in not blue-penciling the challenged provision and then enforcing the remainder of the DRA. The company contends that under the FAA and Missouri contract law, the district court should have enforced the agreement's severability provision, which, the company maintains, automatically deleted the unlawful provision and required enforcement of the remainder of the agreement. The district court, however, acted properly in denying Circuit City's motion to compel arbitration. In enacting Title VII, Congress declared employment discrimination unlawful. § 703(a) of Title VII, 42 U.S.C. § 2000e-2(a) ("It shall be an unlawful employment practice for an employer-(1) . . . to discriminate against any individual . . . because of such individual's race, color, religion, sex, or national origin . . . ."). In Title VII and in the Civil Rights Act of 1991, Congress authorized the courts to impose significant monetary liability on employers who discriminate. § 706(g) of Title VII, 42 U.S.C. § 2000e-6(g) (authorizing courts to award back pay starting two years before the charge was filed); 42 U.S.C. § 1981a (authorizing courts to award up to $300,000 in compensatory and punitive damages). Nowhere in Title VII or the 1991 Act did Congress allow employers to exempt themselves from this liability by requiring their employees to waive their rights to seek full Title VII remedies. See Eisenberg v. Advance Relocation & Storage, No. 00-7216, 2000 WL 1915771, *5 (2d Cir., December 26, 2000) ("'employment contracts, no matter what the circumstances that justify their execution or what the terms, may not be used to waive protections granted to an individual under [Title VII]'") (quoting Spirides v. Reinhardt, 613 F.2d 826, 832 (D.C. Cir. 1979). What Circuit City attempted to do in the DRA - and indeed succeeded in doing for years - was to unilaterally exempt itself from a substantial portion of the financial liability for discrimination that Congress chose to impose on employers. See cases cited at JA 20-21. The agreement therefore clearly violated public policy. See Paladino v. Avnet Computer Techs., Inc., 134 F.3d 1054, 1062 (11th Cir. 1998) (arbitration agreement divesting arbitrator of jurisdiction to award Title VII relief is "an impermissible waiver of Title VII rights"); Derrickson v. Circuit City Stores, Inc., 81 Fair. Empl. Prac. Cas. (BNA) 1533, 1537-38, 1999 U.S. Dist. LEXIS 21100, *14-17 (D. Md. Mar. 19, 1999) (Circuit City's DRA is unenforceable because its limitation on relief "shields Circuit City from the full force of Section 1981 and prevents Plaintiff from effectively vindicating her rights"), aff'd without opinion sub nom. Johnson v. Circuit City Stores, Inc., 203 F.3d 821 (4th Cir.), cert. denied, 120 S. Ct. 2744 (2000); Armendariz v. Foundation Health Psychcare Serv., Inc., 6 P.3d 669, 682-83 (Cal. 2000) (the drastic limitation on statutory relief for employment discrimination in the arbitration agreement defendant imposed "is contrary to public policy and unlawful"); cf. Graham Oil Co. v. ARCO Prods. Co., 43 F.3d 1244, 1247-48 (9th Cir. 1995) (when defendant franchisor imposed on plaintiff franchisee a contract purporting to strip plaintiff of rights afforded plaintiff in statute Congress enacted to protect franchisees, defendant violated the letter and spirit of the statute). Furthermore, the DRA is a classic contract of adhesion. "An adhesion contract is a form contract created by the stronger of the contracting parties," usually drafted by the latter's lawyers, and "offered on a 'take this or nothing' basis." Rubin v. Blue Cross Hosp. Serv., Inc., 637 S.W.2d 695, 697 (Mo. 1982). The weaker party is not allowed to negotiate the terms of the contract; he "has no choice but to conform" or "adhere" to the form contract's terms, or else abandon the transaction. Id. The terms of an adhesion contract "unexpectedly or unconscionably limit the obligations and liability of the drafting party." Id. A court faced with an adhesion contract containing a term that violates federal law and public policy has several remedial options. It can strike or modify the offensive term and then enforce the contract as amended, or it can declare the agreement unenforceable. Restatement (Second) Contracts § 208 (stating those options); UCC § 2-302 (same); Sosa v. Paulos, 924 P.2d 357, 365 n.4 (Utah 1996) (noting that many courts apply the options described in UCC § 2-302 to contracts not themselves governed by the UCC). Since the DRA was a contract of adhesion that clearly violated public policy, the district court acted well within its discretion in refusing to enforce the DRA. See, e.g., Paladino, 134 F.3d at 1062 (declaring defendant's arbitration agreement unenforceable because it "insulates [defendant] from Title VII damages and equitable relief" and therefore constitutes "an impermissible waiver of Title VII rights"); Derrickson, 81 Fair. Empl. Prac. Cas. (BNA) at 1538, 1999 U.S. Dist. LEXIS 21100, at *14-17 (declaring Circuit City's DRA unenforceable because of its substantial limits on punitive damages and back pay); cf. Shankle v. B-G Maint. Mgmt., 163 F.3d 1230, 1234-35 (10th Cir. 1999) (declaring unenforceable defendant's arbitration agreement because it required employee to pay half of the arbitrator's fee and thus "failed to provide an accessible [alternative] forum, . . . a result [which] clearly undermines the remedial and deterrent functions of the federal anti-discrimination laws"); Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465, 1482-85 (D.C. Cir. 1997) (implying that court would have declared defendant's arbitration agreement unenforceable had it "required [employee] to pay all or part of the arbitrator's fees and expenses"); Connolly v. PBGC, 475 U.S. 211, 224 (1986) ("If the regulatory statute is otherwise within the powers of Congress . . . , its application may not be defeated by private contractual provisions."); Resolution Trust Corp. v. Home Sav., 946 F.2d 93, 96 (8th Cir. 1991) ("In general, a contract entered in violation of federal statutory or regulatory law is unenforceable."). Circuit City argues that the severability provision in Rule 18 of the DRA required the district court to modify the agreement and then enforce it. The district court properly rejected this argument. First, Circuit City's contention that Rule 18 automatically modified the agreement once the district court declared it unenforceable strains the language of the provision. According to Circuit City, the severability provision means that as soon as the district court decided that the limitation on punitive damages is unlawful, that provision was automatically deleted from the contract within that court's "jurisdiction." The company argues that once the unlawful provision was deleted, nothing prevented the court from enforcing the arbitration agreement as modified. CC Brf. at 5. The severability provision states: An automatic modification of one of these Rules or Procedures shall be applicable only in the jurisdiction in which it is in conflict with a mandatory provision of law. In all other jurisdictions, these Dispute Resolution Rules and Procedures shall apply in full force and effect. J.A. 44 (emphasis added). Circuit City's contention that the district court's decision automatically modified the limitation on damages pursuant to this provision makes no sense since district court decisions are not binding within any geographic "jurisdiction." Mueller v. Reich, 54 F.3d 438, 441 (7th Cir. 1995) ("[D]istrict court decisions are not authoritative as precedents, even at the district court level."). The more reasonable and natural interpretation of the quoted sentences is that an unlawful provision is automatically modified only when a federal court of appeals declares it unlawful, because a court of appeals is the lowest federal court that issues decisions declaring what "the mandatory provision[s] of applicable law" are within a particular "jurisdiction." Nor does this record contain any evidence to support Circuit City's assertions in its brief that the company in fact interprets its severability provision the way it now claims it does. The record contains no evidence, for example, that, as soon as the district court in this case entered its decision, the company notified all its employees in the Eastern District of Missouri that the provision limiting punitive damages no longer applied to them. Nor is there evidence that the company issued any such notice in Maryland when the district court there entered its decision in Derrickson v. Circuit City, 81 Fair. Empl. Prac. Cas. (BNA) 1533, 1999 U.S. Dist. LEXIS 2110 (D. Md. Mar. 19, 1999). Circuit City's brief suggests that the company interpreted Rule 18 in the same way in Derrickson that it has urged the district court and this Court to interpret it in this case. CC Brf. at 9, n. 6, sentence 4 (referring back to the Derrickson decisions). But the record demonstrates that Circuit City did not interpret Rule 18 the same way in Derrickson. Circuit City did not consider the district court's decision in Derrickson "final" -- and evidently did not consider Rule 18's automatic-modification provision triggered -- until the Supreme Court denied certiorari. The "ruling" referred to in the fourth sentence of footnote 6 cannot be the district court's ruling, because the district court ruling clearly did not strike the damages limitations "for any arbitration within the Fourth Circuit." Id. (emphasis added). Indeed, Larry Hosey, Circuit City's Senior Corporate Counsel and Arbitration Coordinator, stated under oath that the company did not consider the March 1999 district court decision, or even the January 2000 Fourth Circuit decision, "final" until the Supreme Court denied certiorari at the end of June 2000, and Hosey implied that the company did not consider Rule 18 triggered until then either. JA 57, ¶¶ 3-5.<1> If Circuit City did not consider the district court's decision in Derrickson final (and Rule 18 triggered) until the Supreme Court denied certiorari, the district court in this case had reasonable grounds for suspecting that the company does not really interpret Rule 18 the way it has claimed in this action that it does. Even assuming, however, that the severability provision could be interpreted as Circuit City claims, the district court still acted properly in refusing to enforce it. It is true, as Circuit City asserts, that there are Missouri cases enforcing severability clauses. None of those cases, however, was like this one, where an employer requires all its employees and applicants to sign a contract of adhesion that exempts the employer from a substantial portion of the potential liability imposed on it by Congress.<2> In this factual setting, the severability provision itself violates public policy because it attempts to limit the authority and discretion of the court to which the company applies for enforcement. As stated above, a court asked to enforce a contract containing a provision violating federal law and public policy normally has several options: it can declare the entire contract unenforceable, or it can delete or reform the offending provision and enforce the contract as amended. By including the subject severability provision in its agreement, Circuit City is attempting to deprive the courts of the discretion they normally have to declare the entire agreement unenforceable. The courts should not permit Circuit City to do this. Moreover, giving effect to severability provisions in adhesive arbitration agreements like this one would have the socially undesirable result of failing to create an incentive for employers drafting such agreements to obey the law. As is clear from some of the compelled arbitration agreements courts have reviewed recently, some employers will attempt to deprive their employees and applicants of as many statutory rights as they can. See, e.g., Hooters of America, Inc. v. Phillips, 173 F.3d 933, 938 (4th Cir. 1999) (defendant promulgated arbitration rules "so egregiously unfair as to constitute a complete default of its contractual obligation to draft arbitration rules . . . in good faith"). Courts should discourage this tendency because it violates federal law and public policy. Circuit City's DRA relieves the company of a substantial portion of its statutory liability for discrimination, and then includes a severability clause. If courts reviewing such agreements honor the severability clause, there will be no disincentive for employers to draft agreements that preserve employees' and applicants' statutory rights. As the California Supreme Court stated recently, An employer will not be deterred from routinely inserting such a deliberately illegal clause into the arbitration agreements it mandates for its employees if it knows that the worst penalty for such illegality is the severance of the clause after the employee has litigated the matter. In that sense, the enforcement of a form arbitration agreement containing such a clause drafted in bad faith (i.e., with knowledge of [the clause's] illegality) would be condoning, or at least not discouraging, an illegal scheme, and severance would be disfavored unless it were for some other reason in the interests of justice. Armendariz, 6 P.3d at 697 n.13 (parenthetical definition of "bad faith" appears earlier in the same footnote). Similarly, in Sosa v. Paulos, 924 P.2d 357 (Utah 1996), a medical malpractice action, the court ruled that the arbitration agreement that the defendant surgeon had the plaintiff sign was procedurally and substantively unconscionable, but the surgeon asked the court to honor the agreement's severability clause and compel arbitration anyway. In rejecting his request, the court reasoned (924 P.2d at 364): Under [defendant's] theory, any party in a stronger bargaining position would have an incentive to engage in procedurally unconscionable behavior to induce a weaker party to sign an agreement containing extremely unfavorable terms. So long as the stronger party includes a severance clause, it will always reap the full benefit of its overreaching agreement unless the weaker party files a lawsuit successfully challenging the agreement's terms under the exacting doctrine of substantive unconscionability. Furthermore, even if a court finds certain terms substantively unconscionable, these terms can be severed and the stronger party will still get the benefit of its unbargained-for agreement. In other words, a severance clause enforced in this fashion would encourage procedural and substantive overreaching because the stronger party will have nothing to lose by trying to intimidate. Cf. Latona v. Aetna U.S. Healthcare, Inc., 82 F. Supp. 2d 1089, 1096-97 (C.D. Cal. 1999) (when a large corporation requires its employees to sign an illegal agreement, the two parties' unequal knowledge of the law and unequal ability and inclination to litigate mean that the agreement "will tend to secure employee compliance with its illegal terms in the vast majority of cases"). Finally, it is important to note that the limitation on punitive damages is not the only aspect of the DRA challenged by Gannon. Accordingly, even under Circuit City's approach, the district court could not enforce the agreement without considering plaintiff's other challenge to the agreement. Gannon argued below that the DRA is unenforceable also because it requires the employee to pay one-half of the costs of arbitration, with her liability limited to $500 or three percent of her annual income. Courts have relied on clauses requiring the employee to share forum costs to find arbitration agreements unenforceable. See, e.g., Cole, 105 F.3d at 1481-85 (holding that "an arbitrator's compensation and expenses must be paid by the employer alone"); Shankle, 163 F.3d at 1233-35 (finding arbitration agreement unenforceable because it required the employee to pay one-half of the arbitrator's fees); cf. Green Tree Fin. Corp. v. Randolph, 121 S. Ct. 513, 522 (2000) ("It may well be that the existence of large arbitration costs could preclude a litigant . . . from effectively vindicating her federal statutory rights in the arbitral forum."). More important, the fact that Circuit City's DRA deprives employees and applicants of more than one statutory right is significant because courts are especially likely to deny enforcement of arbitration agreements that deprive employees of more than one statutory right.<3> As the Armendariz court reasoned, "[s]uch multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer's advantage." 6 P.3d at 697. See also Graham Oil Co., 43 F.3d at 1248-49 (declining to sever the illegal provisions and enforce the arbitration agreement in part because the agreement was "a highly integrated unit containing three different illegal provisions," and those provisions "represent[ed] an attempt by [defendant] to achieve through arbitration what Congress has expressly forbidden, . . . an 'integrated scheme to contravene public policy'" (citation omitted)); Kinney v. United Healthcare Servs., Inc., 83 Cal. Rptr. 2d 348, 355 (where arbitration agreement contained several offensive provisions, court concluded that the "strong public policy favoring arbitration . . . 'is manifestly undermined by provisions in arbitration clauses which seek to make the arbitration process itself an offensive weapon in one party's interest'" (citation omitted)). Accordingly, if this Court were to find the DRA's limitation on punitive damages by itself insufficient to justify the district court's ruling, it would have to remand the case to the district court and direct that court to determine whether the fact that the DRA deprives employees and applicants of more than one statutory right would lead it to exercise its discretion to find the agreement unenforceable. CONCLUSION For the reasons stated above, the Commission respectfully urges this Court to affirm the district court's ruling and remand this case for further proceedings. Respectfully submitted, GWENDOLYN YOUNG REAMS Associate General Counsel PHILIP SKLOVER Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel PAUL D. RAMSHAW Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W., Rm. 7816 Washington, D.C. 20507 (202) 663-4736 CERTIFICATE OF COMPLIANCE I, Paul D. Ramshaw, attorney for the Equal Employment Opportunity Commission as amicus curiae, hereby certify that according to my word processor, the relevant portions of this brief contain 4,279 words. Paul D. Ramshaw November 27, 2000 CERTIFICATE OF SERVICE I hereby certify that two copies of the foregoing brief were served by mailing them on this date first class, postage prepaid, to the following counsel of record: David E. Nagle Ross E. Longood LeCLAIR RYAN 707 East Main St., 11th Floor Richmond, VA 23219 W. Stephen Cannon Pamela G. Parsons CIRCUIT CITY STORES, INC. 9950 Mayland Dr. Richmond, VA 23233 Gregory A. Rich WEINHAUS & DOBSON 906 Olive St., Suite 900 St. Louis, MO 63101 Paul D. Ramshaw Equal Employment Opportunity Commission 1801 L Street, N.W., Room 7816 Washington, DC 20507 (202) 663-4737 1 June 25, 20011 Hosey did not state in his affidavit when the company considered Rule 18 triggered (JA 57, ¶ 4). The rule could not have bee considered triggered before the Fourth Circuit decision (because ¶ 4 of the affidavit addresses a modification effective within the whole Fourth Circuit), and Circuit City more likely considered it triggered only after the Supreme Court denied certiorari, because that is when the company considered the district court and Fourth Circuit decisions "final," and that is when the company - for reasons of administrative convenience - decided to modify the damages limitation on a nationwide basis. (This is also the order in which Hosey discussed these events.) JA 57, ¶¶ 3-5. 2 The only recent Missouri case Circuit City cites on this point is Kisling v. MFA Mutual Ins. Co., 399 S.W.2d 245 (Mo. App. 1966). CC Brf. at 10-14. The unlawful contract provision in Kisling was a "judgment prohibition" in an automobile insurance policy. The judgment prohibition voided the insured's uninsured-motorist coverage if the insured, without the insurance company's consent, sued and secured a judgment against the driver who allegedly caused the accident. An earlier Missouri Court of Appeals decision had declared such judgment prohibitions against public policy because they deprive the potentially negligent driver of a day in court without that person's consent. Missouri ex rel. State Farm Mutual Ins. Co. v. Craig, 364 S.W.2d 343, 345-46 (Mo. App. 1963). Thus the unlawful provision in Kisling was not one that relieved the contract's drafter of federal (or state) statutory liability. 3 The Commission notes that there are other problems with Circuit City's DRA in addition to the ones plaintiff raised below. For example, the DRA: (a) reduces substantially the company's liability for back pay; (b) shortens substantially the time the employee can wait before suing or filing for arbitration; and (c) deprives the employee in many instances of a written decision subject to review for conformity with the law.