Rent-A-Center, Inc. v. Iowa Civil Rights Commission

IN THE SUPREME COURT OF IOWA
No. 13–0412

Filed February 28, 2014

RENT-A-CENTER, INC.,

Appellee,

vs.

IOWA CIVIL RIGHTS COMMISSION,

Appellant.

Appeal from the Iowa District Court for Polk County, Robert B.

Hanson, Judge.

The Iowa Civil Rights Commission appeals the district court’s order

remanding for dismissal its enforcement action against an employer.

REVERSED AND REMANDED WITH INSTRUCTIONS.

Thomas J. Miller, Attorney General, and Katie A. Hlavka Fiala,

Assistant Attorney General, for appellant.

Edward F. Berbarie and Robert F. Friedman of Littler Mendelson,

P.C., Dallas, Texas, Mary L. Harokopus and Andrew M. Trusevich, Plano,

Texas, Frank B. Harty and Debra L. Hulett of Nyemaster Goode P.C., Des

Moines, for appellee.

Russell E. Lovell II, Des Moines, and David S. Walker, Windsor
Heights, for amicus curiae National Association for the Advancement of

Colored People.
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MANSFIELD, Justice.

In this case, we must decide whether the Iowa Civil Rights

Commission (ICRC) can pursue an enforcement action under the Iowa

Civil Rights Act against an employer when the complaining employee

signed an agreement with the employer to arbitrate all employment-

related claims. The ICRC accepted the administrative law judge’s finding

that the agreement did not limit the ICRC’s rights because the ICRC was

not a party to the agreement. On judicial review, the district court

disagreed. It found the Federal Arbitration Act (FAA) preempted state law
and remanded the matter to the ICRC with instructions to dismiss the

matter pending arbitration by the parties. The ICRC appealed.

Because the ICRC was not a party to the agreement and its

interest is not derivative of the employee’s, we find the agreement does

not limit its ability to bring claims against the employer. Iowa law

authorizing ICRC enforcement is thus not preempted by the FAA.

Accordingly, we reverse the district court’s order and remand the case

with instructions to affirm the commission’s order.

I. Facts and Procedural History.

Nicole Henry began working for Rent-A-Center, Inc. (RAC) in

Council Bluffs in approximately April 2007. On June 19, 2007, as a

condition of her continued employment, Henry signed a Mutual

Agreement to Arbitrate Claims (Arbitration Agreement) with RAC. The

Arbitration Agreement stated that Henry agreed to arbitrate “all claims

for violation of any federal, state or other governmental law, statute,

regulation or ordinance” arising out of or related to her employment with

RAC that “would have been justiciable under applicable state or federal
law.” It further stated that neither party would
 3
initiate or prosecute any lawsuit or adjudicative
administrative action (other than an administrative charge of
discrimination to the Equal Employment Opportunity
Commission or an administrative charge within the
jurisdiction of the National Labor Relations Board) in any
way arising out of or related to any claim covered by [the]
Agreement.

The Arbitration Agreement also said that nothing in it would “be

construed to relieve any party of the duty to exhaust administrative

remedies by filing a charge or complaint with an administrative agency

and obtaining a right to sue notice, where otherwise required by law.”

After her employment began, Henry became pregnant. On

November 15, Henry provided RAC with a note from her doctor that

imposed a twenty-pound lifting restriction on her for the duration of her

pregnancy. Henry alleges the district manager told her “the company

usually does not accommodate restrictions or limitations caused by non-

work related temporary health conditions, and that [she] should go apply

for unemployment immediately.” The next day, according to Henry, she

“was sent home because the corporate office made the final decision not

to accommodate [her], yet the company has been accommodating a

pregnant store manager.” As an assistant manager, Henry contends she

had performed many duties on a daily basis that did not require heavy
lifting.

Henry alleges that after she was sent home, the company gave her

a choice between unpaid leave and termination. She chose unpaid leave.

On February 4, 2008, Henry filed a complaint with the ICRC, alleging

RAC had discriminated against her because of her pregnancy. The ICRC

cross-filed Henry’s complaint with the Federal Equal Employment

Opportunity Commission (EEOC) under a workshare agreement between
the EEOC and the ICRC.
 4

After attempts to resolve the complaint were unsuccessful, the

ICRC filed a statement of charges with the Iowa Department of

Inspections and Appeals (DIA) on December 17, 2010. The statement

charged RAC with violations of Iowa Code sections 216.6(1) and

216.6(2)(d) “based upon its requiring Nicole Henry to take a leave of

absence from her employment upon her presenting a doctor’s note that

she had a pregnancy-related disability.” See Iowa Code § 216.6(1), (2)(d)

(2007). Henry’s complaint to the ICRC was attached to and expressly

incorporated in the statement of charges. In the caption on the
statement, Henry’s name appeared as the complainant above that of the

ICRC.

Once the statement of charges was filed, Henry could no longer

obtain a release from the ICRC to commence her own action against RAC

in district court. See Iowa Code § 216.16(3)(a)(3) (2011) (stating the ICRC

shall not issue a release for the right to commence an action after notice

of hearing has been served on a respondent). Henry did not attempt to

intervene in the administrative proceeding against RAC. See Iowa

Admin. Code r. 161—4.26(1) (allowing an individual to file a motion to

intervene in a contested case).

On February 8, 2011, RAC filed a motion to dismiss the ICRC’s

charges, or in the alternative, compel arbitration. Attached to the motion

was an authenticated copy of the Arbitration Agreement.

The DIA’s administrative law judge (ALJ) issued a decision on April

19, denying RAC’s motion to dismiss or compel arbitration on the ground

that the ICRC was not a party to the Arbitration Agreement and therefore

not bound by it.
RAC appealed the ALJ’s order to the ICRC on April 25 and

requested a stay of proceedings. On August 31, however, the ICRC
 5

upheld the ALJ’s decision. It reasoned: (1) the ICRC was not a party to

the Arbitration Agreement, (2) the ICRC could lawfully initiate

proceedings on behalf of persons in Iowa when it believed discrimination

had occurred, (3) the remedial actions available to the ICRC are not

available to the arbitrator and are important to protect RAC’s Iowa

workers from discriminatory practices, (4) an arbitrator does not have the

same public interest to end discrimination that the ICRC has, and

(5) Henry could not waive the enforcement rights statutorily vested in the

ICRC.
On September 30, RAC filed a petition in district court for judicial

review of the ICRC’s order. See Iowa Code § 17A.19 (providing for

judicial review of agency action). RAC’s petition alleged that the

Arbitration Agreement and the FAA required that the ICRC’s charges be

adjudicated by an arbitrator. See 9 U.S.C. §§ 1–16 (2012).

After hearing oral arguments from the parties, the district court

issued a ruling on March 5, 2013, granting RAC’s requested relief. The

court found the FAA preempted state law granting jurisdiction to the

ICRC over Henry’s complaint. In the decision, the court acknowledged a

prior United States Supreme Court decision which held the FAA did not

bar the EEOC from seeking victim-specific relief in an administrative

proceeding for the benefit of a complainant who had signed an

arbitration agreement with his employer. See E.E.O.C. v. Waffle House,

Inc., 534 U.S. 279, 122 S. Ct. 754, 151 L. Ed. 2d 755 (2002). Yet the

district court found that decision did not apply to a state agency such as

the ICRC. The district court therefore remanded the matter to the ICRC

with instructions to dismiss the proceeding until Henry and RAC had
arbitrated their dispute.

The ICRC appealed. We retained the case.
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II. Standard of Review.

This case involves questions of legal interpretation. If an agency

has not been clearly vested with discretion to interpret a law, we do not

give deference to the agency’s interpretation and will substitute our own

judgment if we conclude the agency made an error of law. See Iowa Code

§ 17A.19(10)(c); Renda v. Iowa Civil Rights Comm’n, 784 N.W.2d 8, 14–15

(Iowa 2010).

The ICRC concedes neither it nor the DIA have been clearly vested

with the authority to interpret the relevant provisions of the Iowa Civil
Rights Act or federal law, such as the FAA. Therefore, we shall give no

deference to the ICRC’s or the DIA’s legal interpretations in this case.

III. Analysis.

The present controversy involves whether the FAA and the

Arbitration Agreement bar the ICRC from bringing nonarbitration claims

against RAC relating to Henry’s employment. RAC argues, and the

district court agreed, that the ICRC could not assert claims outside

arbitration that Henry had agreed to arbitrate. RAC contends the terms

of the FAA-protected Arbitration Agreement would be nullified if the ICRC

and the DIA could adjudicate these claims, rather than having them

decided by an arbitrator. In RAC’s view, the FAA preempts any state law

that would grant authority for the ICRC to bring nonarbitration claims

against RAC that relate to matters covered by the Henry–RAC Arbitration

Agreement.

The ICRC, on the other hand, denies that it is bringing an action

on behalf of Henry. Rather, it maintains it has brought an independent

public enforcement action. Because it was not a party to the Arbitration
Agreement, the ICRC insists it cannot be bound to arbitrate claims

against RAC.
 7

We turn first to the ICRC’s function and its claims against RAC.

A. The ICRC. The ICRC is entrusted by the legislature with

interpreting, administering, and enforcing the Iowa Civil Rights Act,

which was designed “ ‘to eliminate unfair and discriminatory practices in

public accommodations (and) employment.’ ” Estabrook v. Iowa Civil

Rights Comm’n, 283 N.W.2d 306, 308 (Iowa 1979) (quoting 1965 Iowa

Acts ch. 121 (preface)); see also Iowa Code § 216.5 (outlining the powers

and duties of the ICRC). The Act is intended to “correct a broad pattern

of behavior rather than merely affording a procedure to settle a specific
dispute.” Renda, 784 N.W.2d at 19 (internal quotation marks omitted).

Among the powers and duties of the ICRC set forth in Iowa Code

section 216.5 are the following:

2. To receive, investigate, mediate, and finally
determine the merits of complaints alleging unfair or
discriminatory practices.

....

5. To hold hearings upon any complaint made against
. . . an employer, . . . to subpoena witnesses and compel
their attendance at such hearings, to administer oaths and
take the testimony of any person under oath, and to compel
such . . . employer . . . to produce for examination any books
and papers relating to any matter involved in such
complaint.

Iowa Code § 216.5(2), (5).

A complaint of discrimination or unfair practice may be filed with

ICRC by any aggrieved person. Id. § 216.15(1). Alternatively, the ICRC

itself, a commissioner of the ICRC, or the attorney general may initiate a

complaint. Id. When a complaint is filed, the ICRC staff completes an

investigation and submits a recommendation to an ALJ, who then makes
a determination whether there is probable cause to believe a

discriminatory practice has occurred. Id. § 216.15(3)(a). If the ALJ
 8

concurs that probable cause exists, the ICRC “shall promptly endeavor to

eliminate the discriminatory or unfair practice by conference,

conciliation, and persuasion.” Id. § 216.15(3)(c).

If the ICRC is unsuccessful in its attempts to resolve the

complaint, the ICRC director, with the approval of a commissioner, may

issue a notice of charges and require the respondent to answer those

charges at an administrative hearing. Id. § 216.15(6). “The case in

support of such complaint shall be presented at the hearing by one of the

commission’s attorneys or agents.” Id. § 216.15(7). The Iowa Attorney
General’s criminal justice bureau prosecutes the charges on behalf of the

ICRC. Iowa Admin. Code r. 61—1.3(3)(e) (“The civil rights unit is a

separate unit within the criminal justice bureau. . . . It furnishes legal

advice to the civil rights commission and its staff, prosecutes civil rights

cases, and represents the commission in cases in which it is a party or is

interested.”).

We have noted that the “legislative intent was to permit the

commission to be selective in the cases singled out to process through

the agency, so as to better impact unfair or discriminatory practices with

highly visible and meritorious cases.” Estabrook, 283 N.W.2d at 311.

The ICRC, not the complainant, decides whether and how far to pursue

an administrative action. See Iowa Admin. Code r. 161—3.8(3) (stating a

complainant may withdraw a complaint, but that does not prevent the

ICRC “from continuing the investigation and initiating a complaint on its

own behalf against the original respondent, as provided for in the Act,

whenever it deems it in the public interest”); id. r. 161—3.12(2)(c) (noting

the ICRC can close a case “as satisfactorily adjusted when the
respondent has made an offer of adjustment acceptable to the executive

director or designee but not to the complainant”); id. r. 161—4.2(1)(a), (d)
 9

(indicating the ICRC’s attorney prepares the statement of charges and

the ICRC can elect not to prosecute some charges despite a probable

cause finding).

The Iowa Civil Rights Act authorizes the ICRC to order a

respondent found to have engaged in a discriminatory or unfair practice

to cease and desist and “to take the necessary remedial action as in the

judgment of the commission will carry out the purposes” of the Act. Iowa

Code § 216.15(9)(b). Such remedies include:

(1) Hiring, reinstatement or upgrading of employees
with or without pay. Interim earned income and
unemployment compensation shall operate to reduce the pay
otherwise allowable.

....

(5) Extension to all individuals of the full and equal
enjoyment of the advantages, facilities, privileges, and
services of the respondent denied to the complainant
because of the discriminatory or unfair practice.

(6) Reporting as to the manner of compliance.

(7) Posting notices in conspicuous places in the
respondent’s place of business in form prescribed by the
commission and inclusion of notices in advertising material.

(8) Payment to the complainant of damages for an
injury caused by the discriminatory or unfair practice which
damages shall include but are not limited to actual damages,
court costs and reasonable attorney fees.

Id. § 216.15(9)(a).

A complainant can seek a release—a so-called right-to-sue letter—

to pursue his or her own independent action in district court once sixty

days have elapsed from the filing of the initial complaint, provided the

ALJ has not made a finding of no probable cause. See id. § 216.16(1)–(3)

(outlining the process for a complainant to obtain a release to pursue
relief in district court); Ackelson v. Manley Toy Direct, L.L.C., 832 N.W.2d
 10

678, 680 n.1 (Iowa 2013). If the ICRC grants a right-to-sue letter, the

agency cannot pursue further action on the complaint. See Iowa Code

§ 216.16(4).

In this case, Henry brought her complaint to the attention of the

ICRC on February 4, 2008. She never sought a right-to-sue letter. On

December 17, 2010, the ICRC filed its statement of charges against RAC.

Those charges incorporated Henry’s administrative complaint. Henry did

not seek to intervene in the action. See Iowa Admin. Code r. 161—

4.26(1) (authorizing intervention in a contested case proceeding).
B. Overview of the FAA. Section 2 of the FAA provides:

A written provision in . . . a contract evidencing a transaction
involving commerce to settle by arbitration a controversy
thereafter arising out of such contract or transaction . . . .
shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any
contract.

9 U.S.C. § 2. The United States Supreme Court has indicated that

section 2 of the FAA “is a congressional declaration of a liberal federal

policy favoring arbitration agreements.” Moses H. Cone Mem’l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941, 74 L. Ed. 2d

765, 785 (1983). In enacting the FAA, “Congress intended to place

arbitration agreements upon the same footing as other contracts, where

[they] belong.” Heaberlin Farms, Inc. v. IGF Ins. Co., 641 N.W.2d 816,

818–19 (Iowa 2002) (internal quotation marks omitted).

The Supreme Court has repeatedly stated that, under the FAA,

parties who have contracted to arbitrate claims arising between them are

bound to do so. See, e.g., Nitro-Lift Techs., L.L.C. v. Howard, 568 U.S.

___, ___, 133 S. Ct. 500, 503, 184 L. Ed. 2d 328, 332–33 (2012) (per
curiam); Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 445–

46, 126 S. Ct. 1204, 1209, 163 L. Ed. 2d 1038, 1044 (2006); First
 11

Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943, 115 S. Ct. 1920, 1923–

24, 131 L. Ed. 2d 985, 993 (1995).

However, the Court has also said that the enforceability of an

arbitration agreement flows from the consent of the parties to the

agreement. See, e.g., Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559

U.S. 662, 684, 130 S. Ct. 1758, 1775, 176 L. Ed. 2d 605, 624 (2010) (“[A]

party may not be compelled under the FAA to submit to class arbitration

unless there is a contractual basis for concluding that the party agreed

to do so.”); Waffle House, 534 U.S. at 294, 122 S. Ct. at 764, 151 L. Ed.
2d at 769 (“Arbitration under the [FAA] is a matter of consent, not

coercion. . . . It goes without saying that a contract cannot bind a

nonparty.” (Citation and internal quotation marks omitted.)); First

Options, 514 U.S. at 943, 115 S. Ct. at 1924, 131 L. Ed. 2d at 993

(“[A]rbitration is simply a matter of contract between the parties; it is a

way to resolve those disputes—but only those disputes—that the parties

have agreed to submit to arbitration.”); Volt Info. Scis., Inc. v. Bd. of Trs.

of Leland Stanford Junior Univ., 489 U.S. 468, 474–75, 109 S. Ct. 1248,

1253, 103 L. Ed. 2d 488, 497 (1989) (noting a party cannot be compelled

to arbitrate issues if the parties did not require such arbitration in their

agreement); AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643,

648–49, 106 S. Ct. 1415, 1418, 89 L. Ed. 2d 648, 655 (1986)

(“[A]rbitrators derive their authority to resolve disputes only because the

parties have agreed in advance to submit such grievances to

arbitration.”).

We have acknowledged the provisions of the FAA apply in state

courts and preempt inconsistent state laws. Heaberlin Farms, 641
N.W.2d at 818–19 (stating the FAA preempts state law by operation of

the Supremacy Clause where state law is in conflict with the provisions
 12

of the FAA); see also Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 109,

121 S. Ct. 1302, 1306, 149 L. Ed. 2d 234, 243 (2001) (holding the FAA

covers all employment contracts with arbitration clauses within the

reach of Congress’s commerce power except for those of transportation

workers). Yet, when discussing the FAA and arbitration agreements, we

have also noted “arbitration is a matter of contract and parties cannot be

compelled to arbitrate a question which they have not agreed to

arbitrate.” Bullis v. Bear, Stearns & Co., 553 N.W.2d 599, 601–02 (Iowa

1996) (internal quotation marks omitted) (noting the question of whether
a nonsignatory to an arbitration agreement could be bound to the

agreement was a matter of contract and agency law).

C. EEOC v. Waffle House. In Waffle House, as we have already

mentioned, the United States Supreme Court held an arbitration

agreement between an employer and an employee did not bar the EEOC

from bringing an enforcement action against the employer to obtain relief

for the employee. 534 U.S. at 297, 122 S. Ct. at 766, 151 L. Ed. 2d at

771. That case began when an employee was discharged after suffering

a seizure at work. Id. at 282–83, 122 S. Ct. at 758, 151 L. Ed. 2d at

761–62. He filed a timely charge of disability discrimination with the

EEOC, which ultimately brought a civil action asking the court to grant

relief to the employee, including backpay, reinstatement, and

compensatory damages. Id. at 283–84, 122 S. Ct. at 758, 151 L. Ed. 2d

at 762.

The employer filed a petition under the FAA to stay the suit and

compel arbitration. Id. at 284, 122 S. Ct. at 759, 151 L. Ed. 2d at 762.

The district court denied the employer’s motion. Id. On appeal, the
United States Court of Appeals for the Fourth Circuit reversed, holding

the EEOC was “precluded from seeking victim-specific relief in court
 13

because the policy goals expressed in the FAA required giving some effect

to [the employee]’s arbitration agreement.” Id. The Fourth Circuit

distinguished between “victim-specific relief” and “broad injunctive

relief,” finding that in the former area, the FAA’s policies outweighed

those of Title VII of the Civil Rights Act of 1964. Id. at 290, 122 S. Ct. at

762, 151 L. Ed. 2d at 766.

The Supreme Court reversed the Fourth Circuit. In a key passage,

the Court explained,

Absent some ambiguity in the agreement, however, it is the
language of the contract that defines the scope of disputes
subject to arbitration. For nothing in the statute authorizes
a court to compel arbitration of any issues, or by any parties,
that are not already covered in the agreement. The FAA does
not mention enforcement by public agencies; it ensures the
enforceability of private agreements to arbitrate, but
otherwise does not purport to place any restriction on a
nonparty’s choice of a judicial forum.

Id. at 289, 122 S. Ct. at 762, 151 L. Ed. 2d at 766 (citation omitted).

Later in its opinion, the Court returned to this theme:

Because the FAA is at bottom a policy guaranteeing the
enforcement of private contractual arrangements, we look
first to whether the parties agreed to arbitrate a dispute, not
to general policy goals, to determine the scope of the
agreement. While ambiguities in the language of the
agreement should be resolved in favor of arbitration, we do
not override the clear intent of the parties, or reach a result
inconsistent with the plain text of the contract, simply
because the policy favoring arbitration is implicated.
Arbitration under the [FAA] is a matter of consent, not
coercion. Here there is no ambiguity. No one asserts that
the EEOC is a party to the contract, or that it agreed to
arbitrate its claims. It goes without saying that a contract
cannot bind a nonparty. Accordingly, the proarbitration
policy goals of the FAA do not require the agency to
relinquish its statutory authority if it has not agreed to do
so.

Id. at 294, 122 S. Ct. at 764, 151 L. Ed. 2d at 769 (citations and internal
quotation marks omitted). In short, the Court did not base its analysis
 14

on clashing federal policies but emphasized, rather, that the EEOC had

not been a party to the employee–employer arbitration agreement. The

Court went on to add that the EEOC’s claim was not “merely derivative”

of the employee’s claim, nor did the EEOC simply “stand in the

employee’s shoes” or act as “a proxy” for the employee. Id. at 297–98,

122 S. Ct. at 766, 151 L. Ed. 2d at 771.

There are considerable similarities between Title VII and the Iowa

Civil Rights Act. Just as the EEOC in Waffle House exercised

enforcement powers, remedies, and procedures set forth in Title VII to
enforce federal prohibitions against discrimination in the workplace, the

ICRC has been authorized by the legislature to interpret, administer, and

enforce the Iowa Civil Rights Act to eliminate discriminatory and unfair

practices in employment in Iowa. Compare Waffle House, 534 U.S. at

285, 122 S. Ct. at 759, 151 L. Ed. 2d at 763, with Estabrook, 283 N.W.2d

at 308. As the Supreme Court put it in Waffle House,

[W]henever the EEOC chooses from among the many charges
filed each year to bring an enforcement action in a particular
case, the agency may be seeking to vindicate a public
interest, not simply provide make-whole relief for the
employee, even when it pursues entirely victim-specific relief.

534 U.S. at 296, 122 S. Ct. at 765, 151 L. Ed. 2d at 770. Likewise, the
ICRC is “selective in the cases singled out to process through the

agency,” Estabrook, 283 N.W.2d at 311, and, while it may pursue victim-

specific relief, it does so to enforce the Iowa Civil Rights Act, which is

intended to “correct a broad pattern of behavior rather than merely

affording a procedure to settle a specific dispute,” Renda, 784 N.W.2d at

19 (internal quotation marks omitted).

Additionally, both the federal civil rights laws and the Iowa Civil
Rights Act allow victims to bring their own lawsuits if a certain time
 15

period has passed without agency action. Compare 42 U.S.C. § 2000e–

5(f)(1) (allowing an action to be brought by the complainant after the

statutorily prescribed time period if the EEOC dismisses the charges or

takes no action), with Iowa Code § 216.16(2) (allowing an action for relief

to be brought by the complainant after the complaint has been on file for

sixty days and the ICRC issues a release). But once either the EEOC or

the ICRC initiates proceedings, the agency, not the complainant, is the

“master of its own case” and determines the course of the case. Waffle

House, 534 U.S. at 291, 122 S. Ct. at 763, 151 L. Ed. 2d at 761.
Compare 42 U.S.C. § 2000e–5(b) (noting the EEOC can file its own

charge), 42 U.S.C. § 2000e–(f)(1) (giving the EEOC exclusive rights over a

case for 180 days or until a right-to-sue letter has been issued), and Gen.

Tel. Co. of the Nw., Inc. v. EEOC, 446 U.S. 318, 331, 100 S. Ct. 1698,

1706–07, 64 L. Ed. 2d 319, 330 (1980) (“EEOC enforcement actions are

not limited to the claims presented by the charging parties. Any

violations that the EEOC ascertains in the course of a reasonable

investigation of the charging party’s complaint are actionable.”), with

Iowa Code § 216.16(2) (noting the ICRC has control of the claim for sixty

days before a complainant can seek the right to sue), Iowa Admin. Code

r. 161—3.12(2)(c) (“A complaint may be closed as satisfactorily adjusted

when the respondent has made an offer of adjustment acceptable to the

executive director or designee but not to the complainant.”), and Iowa

Admin. Code r. 161—4.2(1)(a), (d) (indicating the ICRC’s attorney

prepares the statement of charges and can elect not to prosecute some

charges even when probable cause has been found). Both the EEOC and

the ICRC may decide to pursue a matter even when the original
complainant has “disavowed any desire to seek relief.” Waffle House,

534 U.S. at 291, 122 S. Ct. at 763, 151 L. Ed. 2d at 767. Compare 29
 16

C.F.R. § 1626.13 (2013) (“Because the Commission has independent

investigative authority, . . . it may continue any investigation and may

secure relief for all affected persons notwithstanding a request by a

charging party to withdraw a charge.” (Citation omitted.)), with Iowa

Admin. Code r. 161—3.8(3) (authorizing a claimant to withdraw a

complaint, but indicating the ICRC can still file its own complaint against

the original respondent when it deems it in the public interest).

At the same time, both the federal and the Iowa civil rights laws

afford some protection to settlements between employers and employees.
In Waffle House, the Court noted that if an employee “had accepted a

monetary settlement, any recovery by the EEOC would be limited

accordingly.” 534 U.S. at 296, 122 S. Ct. at 766, 151 L. Ed. 2d at 770.

The Court stressed, “[I]t goes without saying that the courts can and

should preclude double recovery by an individual.” Id. at 297, 122 S. Ct.

at 766, 151 L. Ed. 2d at 770 (internal quotation marks omitted).

Likewise, in Board of Supervisors v. Iowa Civil Rights Commission, this

court held that a settlement of a civil rights claim through a negotiated

salary increase could not be challenged by the ICRC as discriminatory for

“some period of time.” 584 N.W.2d 252, 257 (Iowa 1998).

Given these similarities, the ICRC urges that Waffle House controls

here. It should not make a difference, according to the ICRC, that the

enforcement action was brought by a state civil rights agency rather than

a federal one. As we read the Supreme Court’s opinion, we are inclined

to agree. The essential point of Waffle House is that the FAA’s reach does

not extend to a public agency that is neither a party to an arbitration

agreement nor a stand-in for a party. 534 U.S. at 289, 294, 122 S. Ct. at
762, 764, 151 L. Ed. 2d at 766, 769. True, at one point the Court refers

to “the detailed [Title VII] enforcement scheme created by Congress.” Id.
 17

at 296, 122 S. Ct. at 765, 151 L. Ed. 2d at 770. But this paragraph of

the Court’s opinion needs to be read in its entirety:

The compromise solution reached by the Court of
Appeals turns what is effectively a forum selection clause
into a waiver of a nonparty’s statutory remedies. But if the
federal policy favoring arbitration trumps the plain language
of Title VII and the contract, the EEOC should be barred
from pursuing any claim outside the arbitral forum. If not,
then the statutory language is clear; the EEOC has the
authority to pursue victim-specific relief regardless of the
forum that the employer and employee have chosen to
resolve their disputes. Rather than attempt to split the
difference, we are persuaded that, pursuant to Title VII and
the ADA, whenever the EEOC chooses from among the many
charges filed each year to bring an enforcement action in a
particular case, the agency may be seeking to vindicate a
public interest, not simply provide make-whole relief for the
employee, even when it pursues entirely victim-specific relief.
To hold otherwise would undermine the detailed enforcement
scheme created by Congress simply to give greater effect to
an agreement between private parties that does not even
contemplate the EEOC’s statutory function.

Id. at 295–96, 122 S. Ct. at 765, 151 L. Ed. 2d at 769–70.

Even here, the Court criticizes the Fourth Circuit for creating “a

waiver of a nonparty’s statutory remedies” and “giv[ing] greater effect to

an agreement between private parties” than the agreement itself would

allow. Id. Hence, we do not view the Court’s reasoning as based upon

the notion that Title VII trumps the FAA in this area. Rather, the Court
relied on the inherent limitations of the FAA and the underlying

arbitration agreement. That being the case, it should not matter whether

a federal or a state civil rights enforcement regime is at issue.

Nonparties don’t have to arbitrate.

D. Subsequent United States Supreme Court Decisions. Still,

RAC contends that several later Supreme Court cases have clarified the

law and establish that the FAA has preemptive force here.
 18

The first of these cases, Preston v. Ferrer, involved a contract

dispute between two private parties: an attorney in the entertainment

industry, Preston; and his client, Ferrer, a TV personality. 552 U.S. 346,

350, 128 S. Ct. 978, 981–82, 169 L. Ed. 2d 917, 923 (2008). Preston

sought fees allegedly due under the parties’ contract and invoked the

contract’s arbitration provision. Id. at 350, 128 S. Ct. at 982, 169 L. Ed.

2d at 923. Ferrer countered by filing a petition with the California Labor

Commissioner that claimed Preston was acting as an unlicensed talent

agent and, therefore, the contract was invalid under the California Talent
Agencies Act. Id. The California courts determined the labor commission

had “exclusive original jurisdiction” over the dispute. Id. at 351, 128 S.

Ct. at 982, 169 L. Ed. 2d at 924 (internal quotation marks omitted). The

Supreme Court granted certiorari “to determine whether the FAA

overrides a state law vesting initial adjudicatory authority in an

administrative agency.” Id. at 351–52, 128 S. Ct. at 982–83, 169 L. Ed.

2d at 924.

The Court noted the arbitration agreement provided that “ ‘any

dispute . . . relating to the . . . validity, or legality’ of the agreement ‘shall

be submitted to arbitration.’ ” Id. at 352, 128 S. Ct. at 983, 169 L. Ed.

2d at 924. “[T]he question is simply who decides whether Preston acted

as personal manager or as talent agent.” Id. at 352, 128 S. Ct. at 983,

169 L. Ed. 2d at 925. The Court held that Ferrer could not avoid

arbitration on that question. Id. at 353–54, 128 S. Ct. at 983–84, 169 L.

Ed. 2d at 925–26; see also Buckeye Check Cashing, Inc., 546 U.S. at 446,

126 S. Ct. at 1209, 163 L. Ed. 2d at 1044 (finding questions about the

validity of a contract in its entirety are to be decided “by an arbitrator,
not a court”); Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395,

403–404, 87 S. Ct. 1801, 1806, 18 L. Ed. 2d 1270, 1277 (1967)
 19

(indicating the FAA “does not permit the federal court to consider claims

of fraud in the inducement of the contract generally”).

The Court observed that, in Ferrer’s case, the labor commissioner

would serve as an impartial arbiter, in contrast to the EEOC’s “role of an

agency, not as adjudicator but as prosecutor, pursuing an enforcement

action in its own name” in Waffle House. Preston, 552 U.S. at 359, 128

S. Ct. at 987, 169 L. Ed. 2d at 929. It also made clear that “the

arbitration clause in [Ferrer’s] contract . . . leaves undisturbed the Labor

Commissioner’s independent authority to enforce the [Talent Agencies
Act]. And so it may.” Id. at 358–59, 128 S. Ct. at 986–87, 169 L. Ed. 2d

at 928–29. The Court pointed out that the enforcement of the arbitration

agreement as between the parties “does not displace any independent

authority the Labor Commissioner may have to investigate and rectify

violations of the [Talent Agencies Act].” Id. at 359 n.7, 128 S. Ct. at 987

n.7, 169 L. Ed. 2d at 929 n.7.

The Court further noted that “Preston’s petition presents precisely

and only a question concerning the forum in which the parties’ dispute

will be heard.” Id. at 359, 128 S. Ct. at 987, 169 L. Ed. 2d at 929. The

Court added:

[We] disapprove the distinction between judicial and
administrative proceedings drawn by Ferrer and adopted by
the appeals court. When parties agree to arbitrate all
questions arising under a contract, the FAA supersedes state
laws lodging primary jurisdiction in another forum, whether
judicial or administrative.

Id.

According to RAC’s interpretation of Preston, because RAC and

Henry agreed to arbitrate all employment disputes, the FAA preempts
state law granting administrative jurisdiction to the ICRC over matters

related to Henry’s employment with RAC. We do not share this view.
 20

In Preston, a private individual sought to rely on state law to avoid

having to arbitrate a specific issue he had agreed to arbitrate. Id. at 353–

54, 128 S. Ct. at 983–84, 169 L. Ed. 2d at 925–26. The California Labor

Commissioner would have determined only whether the parties’ contract

was valid—a question committed to the arbitrator by the contract itself.

Id. at 352, 359, 128 S. Ct. at 983, 987, 169 L. Ed. 2d at 924, 929. By

contrast, here, the ICRC is not only a forum. Rather, like the EEOC in

Waffle House, it is a public agency acting in its prosecutorial capacity to

bring an enforcement action against RAC, independent of Henry’s own
claims, in order to protect the public interest under the Iowa Civil Rights

Act. Preston carves out this specific situation and makes clear it is not

covered by the Court’s holding. See id. at 359 n.7, 128 S. Ct. at 987 n.7,

169 L. Ed. 2d at 929 n.7.

RAC also directs us to another case where the litigants were

parties to an arbitration agreement. See AT&T Mobility LLC v.

Concepcion, 563 U.S. ___, 131 S. Ct. 1740, 179 L. Ed. 2d 742 (2011).

The Concepcions had entered a contract for the sale and servicing of cell

phones with AT&T which “provided for arbitration of all disputes between

the parties, but required that claims be brought in the parties’ ‘individual

capacity, and not as a plaintiff or class member in any purported class or

representative proceeding.’ ” Id. at ___, 131 S. Ct. at 1744, 179 L. Ed. 2d

at 749. The Concepcions disputed certain charges incurred and filed a

complaint against AT&T in federal district court that was later

consolidated with a class action. Id. at ___, 131 S. Ct. at 1744, 179 L.

Ed. 2d at 749–50. AT&T moved to compel arbitration with the

Concepcions, who argued in response that the agreement to arbitrate
was “unconscionable and unlawfully exculpatory under California law

because it disallowed classwide procedures.” Id. at ___, 131 S. Ct. at
 21

1745, 179 L. Ed. 2d at 750. Relying on the California Supreme Court’s

decision in Discover Bank v. Superior Court, 113 P.3d 1100 (Cal. 2005),

the district court denied AT&T’s motion to compel arbitration because

“AT&T had not shown that bilateral arbitration adequately substituted

for the deterrent effects of class actions.” Concepcion, 563 U.S. at ___,

131 S. Ct. at 1745, 179 L. Ed. 2d at 750. The Ninth Circuit agreed and

found the FAA did not preempt the Discover Bank rule invalidating the

arbitration agreement under California law. Id.

The United States Supreme Court took a different view. It
determined the Discover Bank rule stood “as an obstacle to the

accomplishment and execution of the full purposes and objectives of

Congress” and was therefore preempted by the FAA. Id. at ___, 131 S. Ct.

at 1753, 179 L. Ed. 2d at 759 (citation and internal quotation marks

omitted). The Court conceded that the rule did not prohibit arbitration

outright; it merely invalidated arbitration clauses that did not allow for

classwide arbitration. Id. at ___, 131 S. Ct. at 1750, 179 L. Ed. 2d at

755. Nonetheless, analogizing the Discover Bank rule to a state law

requiring arbitration to comply with the Federal Rules of Civil Procedure,

which the Concepcions admitted would be unenforceable, the Court

found that superimposing classwide procedures on traditional bilateral

arbitration would make the process slower and more costly, and entail

greater risk. Id. at ___, 131 S. Ct. at 1750–52, 179 L. Ed. 2d at 756–58.

“It is not reasonably deniable that requiring consumer disputes to be

arbitrated on a classwide basis will have a substantial deterrent effect on

incentives to arbitrate,” the Court said. Id. at ___ n.8, 131 S. Ct. at 1752

n.8, 179 L. Ed. 2d at 758 n.8. In short, Concepcion indicates that
“[s]tates cannot require a procedure that is inconsistent with the FAA,
 22

even if it is desirable for unrelated reasons.” Id. at ___, 131 S. Ct. at

1753, 179 L. Ed. 2d at 758.

RAC reads Concepcion as invalidating state laws that shift

particular disputes from consensual bilateral arbitration to another

forum. In RAC’s view, mandating state civil rights enforcement through

administrative and judicial proceedings is analogous to prohibiting

arbitration agreements that do not allow classwide arbitration: Both

ultimately intrude upon the role of traditional arbitration.

We do not read Concepcion so broadly. The problem in Concepcion
was that the state law operated directly on the parties’ arbitration

agreement and required something different from the relatively informal

process contemplated by the FAA and agreed to by the parties. It

interfered with “the enforcement of arbitration agreements according to

their terms so as to facilitate streamlined proceedings.” Id. at ___, 131 S.

Ct. at 1748, 179 L. Ed. 2d at 753. Here, by contrast, RAC cannot point

to any provision in the Arbitration Agreement that would not be enforced

according to its terms. RAC, rather, seeks relief against a nonparty, a

situation not addressed by Concepcion.

RAC also relies on some recent summary reversals by the United

States Supreme Court of state supreme court decisions declining to order

arbitration. In Sonic-Calabasas A, Inc. v. Moreno, the California Supreme

Court had refused to enforce a waiver of a state administrative wage-

claim process in an arbitration agreement between an employee and an

employer. 247 P.3d 130, 152 (Cal.), rev’d, 563 U.S. ___, 132 S. Ct. 496,

181 L. Ed. 2d 343 (2011). Under this process, an employee with a claim

for unpaid wages could obtain an informal hearing before the California
Labor Commissioner, with the employer having a right of de novo review

before the superior court. Id. at 133. The California Supreme Court
 23

found that the arbitration agreement could take effect only after the wage

claim was initially addressed by the labor commissioner; thus, an appeal

would go to arbitration rather than the superior court. Id. at 137–38.

The United States Supreme Court vacated the judgment and remanded

the case “for further consideration in light of AT&T Mobility LLC v.

Concepcion.” Moreno, 563 U.S. at ___, 132 S. Ct. at 496, 181 L. Ed. 2d at

343.

RAC maintains that because the statute in Moreno authorized the

labor commissioner in some circumstances to prosecute wage claims
after receiving them, see 247 P.3d at 134, the Supreme Court’s remand

for further consideration in light of Concepcion indicates matters

assigned to arbitration by employee–employer arbitration agreements are

not subject to administrative enforcement in a different forum. We

disagree. The California Supreme Court’s decision did not turn on any

independent authority of the labor commissioner to prosecute wage

claims. Rather, it focused on the fact that the California legislature had

established an administrative “gateway” for wage claims and reasoned

that the FAA did not bar a state from requiring parties to proceed

through that gateway before commencing arbitration between

themselves. Id. at 151.

In a per curiam opinion, the Supreme Court vacated a West

Virginia highest court decision that refused to enforce predispute

arbitration agreements in cases alleging personal injury or wrongful

death against nursing homes. See Marmet Health Care Ctr., Inc. v.

Brown, 565 U.S. ___, ___, 132 S. Ct. 1201, 1202, 182 L. Ed. 2d 42, 44

(2012) (per curiam), vacating Brown ex rel. Brown v. Genesis Healthcare
Corp., 724 S.E.2d 250 (W. Va. 2011). The Supreme Court stated the

West Virginia court’s “interpretation of the FAA was both incorrect and
 24

inconsistent with clear instruction in the precedents of this Court.” Id. at

___, 132 S. Ct. at 1203, 182 L. Ed. 2d at 45. The following term, the

Supreme Court also vacated an Oklahoma Supreme Court decision that

declared noncompetition agreements in two employment contracts null

and void, rather than leaving that determination to the arbitrator in the

first instance. See Nitro-Lift Techns., 568 U.S. at ___, 133 S. Ct. at 501,

184 L. Ed. 2d at 330–31, vacating 273 P.3d 20 (Okla. 2011). The

Supreme Court determined the Oklahoma court had disregarded its FAA

precedents and, quoting Preston, noted it had been established that
“when parties commit to arbitrate contractual disputes, it is a mainstay

of the Act’s substantive law that attacks on the validity of the contract,

as distinct from attacks on the validity of the arbitration clause itself, are

to be resolved ‘by the arbitrator in the first instance, not by a federal or

state court.’ ” Id. at ___, 133 S. Ct. at 503, 184 L. Ed. 2d at 332 (quoting

Preston, 552 U.S. at 349, 128 S. Ct. at 981, 169 L. Ed. 2d at 923).

We see Marmet and Nitro-Lift as readily distinguishable. Both

reflect efforts by states to displace the arbitration forum in an action

between the parties to the arbitration agreement. Neither involves, as

here, the independent responsibility of a government agency to enforce

state civil rights law.

E. Application of Waffle House in Other State Courts. It is

also worth considering the views of other state supreme courts. How

have they addressed the authority of state agencies to bring independent

enforcement actions on matters that private parties by agreement

committed to arbitration? Although the sample size is small, two state

supreme courts applying Waffle House have found that state agencies
retain their independent enforcement authority, even when the
 25

proceeding was initiated by a complaint from an individual who had

agreed to arbitrate the dispute.

In People v. Coventry First LLC, the New York Court of Appeals

reasoned that Waffle House stood for two basic propositions: (1) “pro-

arbitration policy goals do not require a government agency to give up its

statutory enforcement authority in favor of arbitration if it has not

consented to do so,” and (2) “the government agency may seek relief

specific to a victim who agreed to arbitrate claims, because . . . that relief

is best understood as part of the vindication of a public interest.”
Coventry First, 915 N.E.2d 616, 619 (N.Y. 2009). There, the state

attorney general commenced an action against life insurance settlement

providers, alleging fraudulent and anticompetitive conduct and seeking

damages “ ‘on behalf of the owners of life insurance policies who have

been damaged by the schemes.’ ” Id. at 618. Coventry First moved to

compel arbitration on all claims for victim-specific relief because the life

insurance policyholders had agreed in writing to arbitrate any disputes

with the providers. Id.

In affirming the lower courts’ denial of arbitration, the New York

court found that the attorney general’s authority to protect the public

interest was comparable to that of the EEOC in Waffle House and held

that he could seek injunctive and victim-specific relief against Coventry

First. Id. at 619. It concluded the agreement of the private parties

“cannot alter the Attorney General’s statutory role or the remedies that

he is empowered to seek.” Id.

In a case with facts similar to those here, the Massachusetts

Supreme Judicial Court found that Waffle House applied to a state civil
rights agency’s enforcement powers. See Joulé, Inc. v. Simmons, 944

N.E.2d 143, 149 (Mass. 2011). In Joulé, a former employee alleged her
 26

employer had terminated her employment for discriminatory reasons and

lodged a complaint with the Massachusetts Commission Against

Discrimination (MCAD). Id. at 145. The employer responded by filing a

court action and a motion to compel arbitration based on the employee’s

agreement to arbitrate the claim under the arbitration provision

contained in her employment agreement. Id. The employee resisted the

motion to compel arbitration and MCAD intervened. Id. at 147. The trial

court concluded MCAD had authority to conduct an investigation and

adjudication, unaffected by the arbitration agreement. Id. It further
decided the employee was not precluded from participating in the MCAD

matter as a party. Id. The employer appealed.

The Supreme Judicial Court of Massachusetts concluded MCAD

could “conduct its own, independent proceeding based on [the

complainant’s] complaint,” even if the complainant was bound by a valid

arbitration agreement to have her own employment discrimination claims

decided by the arbitrator. Id. at 145. Relying on Waffle House, the court

stated “[e]ven where there is a clear and unmistakable provision in an

employment agreement requiring arbitration of discrimination claims . . .

it would not affect the MCAD’s authority . . . [to proceed] with its

investigation and resolution of [the complainant’s] discrimination

complaint—including, if evidence warrants, granting relief specific to [the

complainant].” Id. at 149. However, the court found the employee could

not intervene as a party in the proceeding because it would “contravene

the requirement of the arbitration provision that she resolve her own

disputes with [her employer] through arbitration.” Id. at 151. The

employee was not prevented from assisting the MCAD with its
investigation or testifying in the hearing before the MCAD. Id.
 27

We agree with the reasoning of the above-mentioned cases. The

Court’s rationale in Waffle House allows the ICRC to proceed with “its

investigation and resolution” of Henry’s claims against RAC, “including, if

evidence warrants, granting relief specific to” Henry. See id. at 149. The

agreement between the parties—Henry and RAC—“does not displace any

independent authority” the ICRC has “to investigate and rectify

violations” of the Act. See Preston, 552 U.S. at 359 n.7, 128 S. Ct. at 987

n.7, 169 L. Ed. 2d at 929 n.7. No one argues that the ICRC was a party

to the Arbitration Agreement. “Accordingly, the proarbitration policy
goals of the FAA do not require the agency to relinquish its statutory

authority if it has not agreed to do so.” Waffle House, 534 U.S. at 294,

122 S. Ct. at 764, 151 L. Ed. 2d at 769.

IV. Conclusion.

The FAA does not mandate arbitration per se; it mandates that

arbitration agreements be enforced. See 9 U.S.C. § 2. Thus, the FAA

does not require arbitration of a proceeding brought by an entity that is

not bound to arbitrate under generally applicable principles of contract

law. For the reasons stated herein, we reverse the district court’s

judgment and remand the case to the district court with instructions to

affirm the ICRC’s order.

REVERSED AND REMANDED WITH INSTRUCTIONS.