In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 00-2839
GLORIA J. MCCASKILL,
Plaintiff-Appellant,
v.
SCI MANAGEMENT CORPORATION,
SCI ILLINOIS SERVICES INCORPORATED,
doing business as EVERGREEN CEMETERY,
SAM SMITH, et al.,
Defendants-Appellees.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 00 C 1543—Suzanne B. Conlon, Judge.
____________
ARGUED JANUARY 26, 2001Œ—DECIDED AUGUST 5, 2002
____________
Before BAUER, MANION, and ROVNER, Circuit Judges.
BAUER, Circuit Judge. Gloria J. McCaskill, an African-
American female, was employed at Evergreen Cemetery
Œ
The panel issued an opinion on April 4, 2002, McCaskill v.
SCI Management Corp., 285 F.3d 623 (7th Cir. 2002). The ap-
pellees then petitioned for rehearing, and a majority of the panel
voted to rehear the case, vacating the panel opinion. McCaskill
v. SCI Management Corp., No. 00-2839, 2002 WL 1362232 (7th
Cir. Jun. 24, 2002). Because the issues in the case remained
the same, it was determined that no further argument was nec-
essary and the matter would be decided on the record. FED. R.
APP. P. 40(a)(4).
2 No. 00-2839
as a pre-need sales person. (Evergreen’s parent company
is SCI.) McCaskill’s duties included selling funeral goods
and services prior to death. She performed these tasks
well and was quickly promoted to a management posi-
tion. After being employed for one year, McCaskill was pre-
sented with a document, which included an arbitration
provision, and was required to sign it as a condition of
continued employment. The arbitration provision stated
that disputes between employee and employer would be
decided by binding arbitration. Also, among other things,
the agreement stated that each party would bear his or her
own legal fees and costs.
In 1999, McCaskill complained to management on be-
half of several other female employees about the sexual
harassment of the female employees by a male supervi-
sor. McCaskill also complained about not receiving cer-
tain sales bonuses. Shortly thereafter, McCaskill’s employ-
ment was terminated. McCaskill filed a complaint with
the Equal Employment Opportunity Commission (EEOC)
and received a right-to-sue letter. McCaskill then filed
suit alleging violations of Title VII, 42 U.S.C. § 1981 and
other employment related provisions of state law.
A. Jurisdiction
The first question we confront is whether there was a
“final decision” over which we may exercise jurisdiction.
Although the parties agree that the district court dis-
missed the case, we must conduct our own independent
inquiry to determine if the order was final. ITOFCA, Inc. v.
MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir.
2000). We pause to note that a district court should al-
ways make clear its intent to dismiss a case, particularly
where dismissal will render an order appealable. See
Salim Oleochemicals v. M/V Shropshire, 278 F.3d 90, 93
(2d Cir. 2002).
No. 00-2839 3
An appeal may be taken from a “final decision with re-
spect to an arbitration”, but not from an interlocutory or-
der staying the action or “compelling arbitration”. 9 U.S.C.
§§ 16(a)(3), (b)(1), (b)(3). A dismissal without prejudice
compelling arbitration is an appealable final decision.
Salim Oleochemicals, 278 F.3d at 91; see also Green Tree
Financial Corp.-Alabama v. Randolph, 513 U.S. 79, 88-89
(2000) (holding “that where, as here, the District Court
has ordered the parties to proceed to arbitration, and
dismissed all the claims before it, that decision is ‘final’
within the meaning of § 16(a)(3), and therefore appeal-
able.”). So we are left with the question of whether the
“order plainly disposed of the entire case on the merits
and left no part of it pending before the court.” Green Tree,
513 U.S. at 86.
The defendants moved to dismiss the complaint and
compel arbitration. The district court entered an order
granting the defendants’ motion to compel arbitration, but
the order failed to state whether the case was also dis-
missed.
Since the district court failed to state in the order that
the matter was dismissed, we look to the proceedings and
rulings to determine if they evidence a clear intent to
dismiss the matter. See Kaplan v. Shure Bros., Inc., 153
F.3d 413, 417 (7th Cir. 1998) (“In this case, a review of
the district court’s orders convinces us that the court’s
dismissal of Kaplan’s action on February 14, 1997 is an
appealable order.”); Spitz v. Tepfer, 171 F.3d 443, 447-48
(7th Cir. 1999) (“Moreover, the tenor of the summary judg-
ment opinion reflects the trial court’s intent to dispose
of all the issues in the lawsuit . . . .”); cf. ITOFCA, Inc.,
235 F.3de at 365 (“Had MegaTrans done so [‘represented
to the Court it would not refile its counterclaims’], we
could have treated the district court’s dismissal of the
counterclaims as having been with prejudice, thus wind-
ing up the litigation and eliminating the bar to our juris-
diction.”).
4 No. 00-2839
There are a number of facts which, when taken togeth-
er, demonstrate that the district court did, in fact, dis-
miss the matter without prejudice. First, there is the
fact that the district court granted SCI’s motion which
actually requested the court to compel arbitration and
dismiss the case. Second, SCI never requested a stay,
and while the district court could have granted a stay, it
did not explicitly do so. Cf. Employers Ins. of Wausau v.
Bright Metal Specialties, Inc., 251 F.3d 1316, 1322 n.6
(11th Cir. 2001) (“Although the district court did not spec-
ify whether the dismissal was with or without prejudice,
the arbitration order clearly disposed of the entire case
on the merits and left no part of it pending before the
court. Moreover, the district court could have, but did
not, stay the case pending arbitration.”). Third, McCaskill
agrees the court dismissed the case. See JTC Petroleum
Co. v. Piasa Motor Fuels, Inc., 190 F.3d 775, 776-77 (7th
Cir. 1999) (“But when we raised this point at argument,
the plaintiff’s lawyer quickly agreed that we could treat
the dismissal of the two claims as having been with prej-
udice, thus winding up the litigation and eliminating the
bar to our jurisdiction.”); Health Cost Controls of Illinois,
Inc. v Washington, 187 F.3d 703, 708-09 (7th Cir. 1999)
(“The parties having thus removed the ambiguity in the
district court’s judgment, that judgment is appealable.”).
Finally, the district court, quoting another court, ended
the opinion with the comment that McCaskill could ap-
peal “subsequent” determinations by the arbitrator. The
quotation regarding subsequent appeals clearly shows
the court felt judicial review was inappropriate at this
time, but the court was noting that McCaskill could seek
subsequent judicial review because it was implicitly dis-
missing the case without prejudice.
When considered as a whole, the “tenor” of the proceed-
ings show that the district court regarded the case dis-
missed because there was nothing left to decide. Cf. CPR
No. 00-2839 5
(USA) Inc. v. Spray, 187 F.3d 245, 253 (2d Cir. 1999)
(holding that “if the district court, having ordered the
parties to arbitrate, has no independent substantive issue
left before it—only issues relating to the validity of the
arbitrator’s award—then the order compelling arbitration
is, effectively, a final order and an immediate appeal will
be proper.”). Therefore, we conclude that a final deci-
sion was entered by the district court, and we have jurisdic-
tion to hear the appeal.
B. Arbitration
Although a whole host of claims were alleged in the com-
plaint and subject to dispute, the proceedings have nar-
rowed the issues down to one, the attorney’s fees clause
in the arbitration agreement.1 The provision at issue
specifies: “Each party may retain legal counsel and shall
pay its own costs and attorneys’ fees, regardless of the
outcome of the arbitration.” The plain terms of the phrase
clearly prohibit recovery of attorney’s fees regardless of
the result or the type of action filed. McCaskill’s substan-
tive objection to the provision is that it limits her ability
to effectively vindicate her rights under Title VII. At oral
argument, SCI conceded that the agreement is unenforce-
able if construed to limit McCaskill’s ability to recov-
er attorney’s fees (provided she prevails) under Title VII.
1
The main issue in this case was not well presented, as SCI has
waived the intertwined issues of severability and construction
of arbitration agreements by the arbitrator and may not now
raise them on rehearing. See International Broth. of Boilermakers,
Iron Ship Builders, Blacksmiths, Forgers and Helpers, AFL-CIO
v. Local Lodge D354, 897 F.2d 1400, 1409 (7th Cir. 1990) (discuss-
ing the purpose of rehearings); see also HM Holdings, Inc. v.
Rankin, 72 F.3d 562, 563 (7th Cir. 1995) (per curiam) (discussing
the purpose of rehearing en banc).
6 No. 00-2839
The agreement clearly bars the plaintiff’s ability to recov-
er any attorney’s fees, and because SCI conceded the
agreement is therefore unenforceable, we need not pro-
ceed any further into an examination of whether Title
VII’s fee-shifting provisions override an arbitration agree-
ment. See First Ins. Funding Corp. v. Federal Ins. Co., 284
F.3d 799, 806 (7th Cir. 2002); Burgin v. Broglin, 900 F.2d
990, 994 n.3 (7th Cir. 1990). The verbal admission by
SCI’s counsel at oral argument is a binding judicial admis-
sion, the same as any other formal concession made dur-
ing the course of proceedings. See Soo Line R. Co. v. St.
Louis Southwestern Ry. Co., 125 F.3d 481, 483 (7th Cir.
1997); Keller v. United States, 58 F.3d 1194, 1198 n.8 (7th
Cir. 1995) (“Judicial admissions are formal concessions
in the pleadings, or stipulations by a party or its coun-
sel, that are binding upon the party making them. They
may not be controverted at trial or on appeal.”); In re Lefkas
Gen. Partners, 153 B.R. 804 (N.D. Ill.1993) (noting that
judicial admissions are “any ‘deliberate, clear and unequivo-
cal’ statement, either written or oral, made in the course
of judicial proceedings.”). The agreement prohibits the
recovery of attorney’s fees in any situation, thus, based on
SCI’s concession, we find that the arbitration clause is
unenforceable. The district court’s order compelling arbi-
tration is therefore REVERSED and REMANDED for further
proceedings consistent with this opinion.
No. 00-2839 7
ROVNER, Circuit Judge, concurring in the judgment.
Without any majority, the court today reverses and re-
mands the district court’s order compelling arbitration. I
would reverse and remand for the reasons stated in
McCaskill v. SCI Management Corp., 285 F.3d 623 (7th Cir.
2002), reh. granted and op. vacated by McCaskill v. SCI
Management Corp., ___ F.3d ___, 2002 WL 1362232 (7th Cir.
2002), in which Judge Bauer originally joined, and
I reproduce some of that opinion below. I cannot join in
Judge Bauer’s separate opinion on this rehearing,1 which
would reverse a district court’s decision without ever as-
certaining whether that decision was correct—through
an unprecedented expansion of the doctrine of judicial
admissions. In its zeal to circumnavigate the difficult is-
sue presented to it, Judge Bauer’s opinion has seized on a
solitary comment by the appellee, SCI, during oral argu-
ment and transformed it from a candid assessment of
the merits of SCI’s position, into an edict binding this
court from deciding an issue squarely raised by the appel-
lant and argued in the briefs. That holding is simply stun-
ning.
All of the briefs submitted in this case addressed whether
the arbitration agreement, if interpreted to preclude at-
torney’s fees, was unenforceable. In addition, SCI further
1
The dissent remains consistent from that earlier opinion, and
I will not further address it here. I remain convinced that we pos-
sess jurisdiction because the intent of the court is ascertainable
from the order and is consistent with the parties’ own understand-
ing. The parties’ stipulations should be given deference by the
court to the extent that they are factual rather than legal in
nature, as our decision in ITOFCA, Inc. v. MegaTrans Logistics,
Inc., 235 F.3d 360, 363 (7th Cir. 2000) recognizes. Judge Bauer’s
opinion gives preclusive effect to a legal rather than factual state-
ment, and the dissent gives no weight to the parties’ stipulation
as to a factual issue.
8 No. 00-2839
argued that the arbitration agreement should not be in-
terpreted as barring the award of attorney’s fees. At oral
argument, SCI emphasized the latter argument, at one
point acknowledging in response to a question that if
the court interpreted the agreement as barring attorney’s
fees, then the agreement was “inconsistent” with Title VII.
That statement was an accurate assessment of the weak-
ness of SCI’s position in light of the law. Judge Bauer’s
opinion, however, has seized upon that statement at
oral argument, declared that it is a binding “judicial ad-
mission,” and based solely on that “admission,” has deter-
mined that the arbitration agreement is unenforceable. The
problems with that holding are myriad.
First, SCI’s assessment of the law as an appellee cannot
constitute a judicial admission, because it was not a con-
cession as to a fact in issue, but rather a statement of legal
opinion. “The scope of a judicial admission by counsel is
restricted to unequivocal statements as to matters of
fact which otherwise would require evidentiary proof; it
does not extend to counsel’s statements of his conception of
the legal theory of a case.” Michael H. Graham, 30B FED.
PRAC. & PROC. EVID. (Interim ed.) § 7026 (2002). That
understanding of the scope of judicial admissions is a long-
standing one. For instance, in New Amsterdam Casualty
Co. v. Waller, 323 F.2d 20, 24 (4th Cir. 1963), the court
defined judicial admissions as follows:
A judicial admission is usually treated as absolutely
binding, but such admissions go to matters of fact
which, otherwise, would require evidentiary proof. They
serve a highly useful purpose in dispensing with proof
of formal matters and of facts about which there is
no real dispute. . . . The doctrine of judicial admissions
has never been applied to counsel’s statement of his
conception of the legal theory of the case. When counsel
speaks of legal principles, as he conceives them and
which he thinks applicable, he makes no judicial ad-
mission and sets up no estoppel which would prevent
No. 00-2839 9
the court from applying to the facts disclosed by the
proof, the proper legal principles as the Court under-
stands them.
That conception of judicial admissions has persisted
throughout the cases leading up to this decision. See, e.g.,
New York State Organization for Women v. Terry, 159 F.3d
86, 97 n.7 (2d Cir. 1998) (“This argument relies on a mis-
understanding of the nature of judicial admissions, which
are statements of fact rather than legal arguments made
to a court.”); Solon v. Gary Community School Corp., 180
F.3d 844, 858 (7th Cir. 1999) and Keller v. United States,
58 F.3d 1194, 1198-99 n.8 (7th Cir. 1995) (quoting FED.
PRAC. & PROC., and stating that judicial admissions “ ‘have
the effect of withdrawing a fact from contention.’ ”); Mac-
Donald v. General Motors Corp., 110 F.3d 337, 341 (6th Cir.
1997) (holding that counsel’s statement on an issue of
negligence was not a judicial admission because it consti-
tuted a legal opinion or conclusion rather than a matter
of fact); Guidry v. Sheet Metal Workers International As-
sociation, Local No. 9, 10 F.3d 700, 716 (10th Cir. 1993)
modified on other grounds, 39 F.3d 1078, 1081 n.3 (10th
Cir. 1994) (rehearing en banc) (“Judicial admissions are
formal admissions . . . which have the effect of withdraw-
ing a fact from issue and dispensing wholly with the
need for proof of the fact. [citations omitted] Because the
matter Mr. Guidry claims was admitted is a proposition
of law, the doctrine of judicial admission is not applic-
able.”) The statement at oral argument in this case was
similarly a statement of legal opinion, not a stipulation of
fact. As such, it is not a judicial admission binding on the
appellee, and certainly is not binding on this court.
In fact, even if the statement had been one of fact, and
therefore fell within the doctrine of judicial admission, it
would not be binding on this court. The alleged “admission”
was nothing more than a one sentence response to a
hypothetical question at oral argument in which the court
10 No. 00-2839
asked the appellee to assume that the arbitration agree-
ment was construed as preventing an award of attorney’s
fees to the plaintiff, and then asked if the arbitration
clause would be unenforceable because it deprived the
plaintiff of the opportunity to seek her Title VII rem-
edies. The appellee responded affirmatively that such
a scenario would be inconsistent with Title VII, but em-
phasized that the court should not construe the agree-
ment in that manner. That brief response to the court’s
question is not the sort of deliberate, clear, and unambig-
uous statement evincing an intentional waiver that has
been held sufficient to constitute a judicial admission. See
Crowe v. Coleman, 113 F.3d 1536, 1542 (11th Cir. 1997)
(“waivers and concessions made in appellate oral argument
need to be unambiguous before they are allowed to change
the outcome of an appeal from a reversal to an affirm-
ance.”); see also Martinez v. Bally’s Louisiana, Inc., 244 F.3d
474, 476 (5th Cir. 2001) (“A statement made by counsel
during the course of trial may be considered a judicial
admission if it was made intentionally as a waiver, releas-
ing the opponent from proof of fact.”); MacDonald, 110 F.3d
at 340 (declaring that “[i]n order to qualify as judicial
admissions, an attorney’s statements must be deliberate,
clear, and unambiguous” and must constitute a deliberate
voluntary waiver.); Moose Lodge No. 107 v. Irvis, 407 U.S.
163, 170 (1972) (“[W]e are loath to attach conclusive weight
to the relatively spontaneous responses of counsel to
equally spontaneous questioning from the Court during
oral argument.”). In fact, SCI never repudiated the ar-
guments in its brief, in which it contested the proposi-
tion that the agreement was unenforceable. Even if judi-
cial admissions extended to legal opinions, which is clearly
false, the statement at issue here cannot be character-
ized as an unambiguous, intentional waiver of the argu-
ments made in its brief.
Finally, even if the statement satisfied all of the above
criteria, it would not bind this court because the court
No. 00-2839 11
has the discretion to consider the issue despite the judi-
cial admission. See Solon, 180 F.3d at 858 (recognizing
that court may allow party to withdraw a judicial admis-
sion); Martinez, 244 F.3d at 477 (same); New Amsterdam
Casualty Co., 323 F.2d at 24 (“a court, unquestionably, has
the right to relieve a party of his judicial admission if
it appears that the admitted fact is clearly untrue and
that the party was laboring under a mistake when he
made the admission.”). Here, it is unimaginable that if
we believed that the district court decision was correct
on the law, we would nevertheless reverse that decision
because the appellee thought we would. The court would
undoubtedly in that scenario exercise its discretion and
decide the issue. In fact, we have repeatedly held that
on review of summary judgment, we may affirm the
decision of the district court on any ground apparent in the
record. Vargas-Harrison v. Racine Unified School Dist., 272
F.3d 964, 974 (7th Cir. 2001). Of course, all of this discus-
sion is hypothetical in nature, because for good reason the
doctrine of judicial admissions does not apply to legal
opinions of the parties.
The contrary position offered by Judge Bauer would
mean that one party’s characterization of the law would
necessarily bind this court and dictate the outcome of
the appeal. I have been unable to find any other case in
which a statement at oral argument was used in this
manner, and the cases cited by his opinion all involve is-
sues of fact, not law. The repercussions of such a holding
would be widespread if the court actually followed this
approach in all cases. For example, imagine the scenario
in which a district court grants summary judgment to
an employer in a discrimination case. The plaintiff then
appeals, and the issues identified by the plaintiff on ap-
peal are fully briefed. At oral argument, however, the
employer opines that it believes it will lose on one of
those issues. Under Judge Bauer’s approach today, we
12 No. 00-2839
would be bound by that “judicial admission” and would
be required to remand the district court’s correct decision
for a trial on the merits. Or consider the scenario, not un-
common, in which an appellee wrongly declares that a
controlling Supreme Court case is inapplicable, and argues
instead based on other cases. Would we as a court then
ignore the controlling Supreme Court case because of that
“judicial admission?” That is unlikely to happen in this
court, nor should it, and it should not happen in this case
either. These examples illustrate the folly of expanding
the judicial admission doctrine beyond its application to
facts, to control aspects of law. Judge Bauer’s opinion rep-
resents an unfortunate expansion of the judicial admis-
sion doctrine that was designed to streamline the judicial
process. By allowing the reversal of even a proper dis-
trict court decision, the expanded judicial admission ap-
proach betrays that purpose and sacrifices judicial effi-
ciency and clarity in the law, for no gain.
The enforceability of the arbitration agreement was
raised by the appellant in this case and briefed by both
parties. The court has the responsibility to decide that
issue, rather than reversing because the appellee thinks
it is going to lose. SCI should lose, for the reasons stated
in the opinion originally issued by this court, but the dis-
trict court deserves better than to see its decision remanded
based on a party’s, rather than the court’s, assessment
of the law. For the convenience of the reader, I reproduce
the relevant part of the prior opinion in this case address-
ing the merits of the enforcement issue, followed by some
closing comments:
The arbitration agreement at issue here provides for
the arbitration of a number of employment-related dis-
putes, including those based on harassment or discrimina-
tion. It excludes other types of claims likely to be brought
by SCI, such as disputes related to noncompetition or
confidentiality agreements, and “any claim by the Com-
pany against the Employee which is based upon fraud,
No. 00-2839 13
theft or other dishonest conduct of employee.” Agreement
¶ 2. The arbitration agreement further specifies as follows:
Each party may retain legal counsel and shall pay its
own costs and attorneys’ fees, regardless of the outcome
of the arbitration. Each party shall pay one-half of the
compensation to be paid to the arbitrator(s), as well as
one-half of any other costs relating to the administra-
tion of the arbitration proceeding (e.g., room rental,
court reporter, etc.).
Agreement, ¶ 4. Some courts have refused to enforce ar-
bitration agreements which mandate that the parties
each pay half the costs of arbitration, while others have
considered whether the cost-shifting provision renders the
arbitration proceedings inaccessible for that individual. See,
e.g., Green Tree Financial Corp.-Alabama v. Randolph,
531 U.S. 79 (2000); Brown v. Wheat First Securities, Inc.
257 F.3d 821 (D.C. Cir. 2001); Bradford v. Rockwell Semi-
conductor Systems, Inc., 238 F.3d 549 (4th Cir. 2001);
Rosenberg v. Merrill Lynch, Pierce, Fenner & Smith, 170
F.3d 1 (1st Cir. 1999); Koveleskie v. SBC Capital Markets,
Inc., 167 F.3d 361 (7th Cir. 1999); Shankle v. B-G Mainte-
nance Management of Colorado, Inc., 163 F.3d 1230 (10th
Cir. 1999); Cole v. Burns International Security Services,
Inc., 105 F.3d 1465 (D.C. Cir. 1997). We need not address
the issue here, however, because the attorney’s fees pro-
vision renders the agreement unenforceable.
In Gilmer v. Interstate Johnson Lane Corp., 500 U.S. 20,
26 (1991), the Supreme Court held that claims under fed-
eral statutes may be appropriate for arbitration as long
as the litigant may effectively vindicate her statutory
cause of action in the arbitral forum, and the statute will
continue to serve its remedial and deterrent purposes.
Williams v. Cigna Financial Advisors Inc., 197 F.3d 752,
763 (5th Cir. 1999). See also Equal Employment Opportunity
Commission v. Waffle House, 534 U.S.279, 122 S. Ct. 754,
14 No. 00-2839
761 (2002) (narrowly construing impact of arbitration agree-
ment to hold that the existence of an arbitration agree-
ment between private parties does not affect the EEOC’s
right to seek all remedies). One of the remedies provided
by Title VII is that attorney’s fees may be awarded to a
prevailing plaintiff, 42 U.S.C. § 2000e-5(k), and we noted
in Dunning v. Simmons Airlines, Inc., 62 F.3d 863, 872
(7th Cir. 1995), that a prevailing party should ordinarily
recover attorney’s fees absent special circumstances ren-
dering such an award unjust. In Dunning, we emphasized
the importance of the fees provision to the purposes of
Title VII:
Attorney’s fees in Title VII litigation are not limited
to a proportion of the monetary damages assessed
in the case because, as Congress has recognized, a
plaintiff in any civil rights suit acts “not for himself
alone but also as a ‘private attorney general,’ vindicat-
ing a policy that Congress considered of the highest
importance.” [citations omitted] . . . A rule of propor-
tionality would make it difficult, if not impossible, for
individuals with meritorious civil rights claims but
relatively small potential damages to obtain redress
from the courts. This is totally inconsistent with Con-
gress’ purpose in enacting § 1988. Congress recognized
that private-sector fee arrangements were inade-
quate to ensure sufficiently vigorous enforcement of
civil rights. In order to ensure that lawyers would be
willing to represent persons with legitimate civil rights
grievances, Congress determined that it would be
necessary to compensate lawyers for all time reasonably
expended on a case.
Id. at 873 n.13. The right to attorney’s fees therefore
is integral to the purposes of the statute, and often is
central to the ability of persons to seek redress from
violations of Title VII. In recognition of the importance of
the attorney’s fees provisions to the remedial and deterrent
No. 00-2839 15
effect of Title VII, counsel for SCI conceded at oral argu-
ment that if we construe the arbitration agreement as
not allowing the arbitrator to award attorney’s fees, then
the agreement deprives the plaintiff of remedies under
Title VII and is unenforceable.
The attorney’s fees provision in the arbitration agree-
ment quite plainly does just that. It mandates that each
party shall pay its own attorney’s fees regardless of the
outcome of the arbitration. SCI attempts to avoid that
plain language with a novel interpretation. According to
SCI, the provision regulates only what McCaskill is re-
sponsible for paying, not what she may be awarded, and
thus it is possible for an arbitrator to award her attorneys’
fees consistent with the arbitration agreement, as long
as she uses that award to pay her attorneys. That defies
the plain meaning of the words. SCI has identified no
other context in which a court would hold that a provi-
sion requiring a person to pay her own attorney’s fees
actually means the opposing party may be required to pay
the fees to her, and then she must pay her own attorney.
The provision obviously means that neither party can be
required to pay the attorney’s fees of the other party, either
directly or through the straw man approach advocated
by SCI.
In fact, the Ninth Circuit reached that conclusion re-
garding a similar clause in Graham Oil Co. v. ARCO
Products Co., a Div. of Atlantic Richfield Co., 43 F.3d
1244 (9th Cir. 1994). The arbitration agreement in Graham
Oil was part of a distributor agreement with a franchisee,
and provided that each party would bear its own attor-
ney’s fees. Id. at 1247. The court recognized that franchi-
sees may agree to an arbitral forum for resolving stat-
utory disputes, but stated that they may not be forced
“to surrender the statutorily-mandated rights and bene-
fits that Congress intended them to possess.” Id. The court
held that the attorney’s fees clause purported to forfeit
16 No. 00-2839
the statutorily-mandated right to recover attorney’s fees
provided under the Petroleum Marketing Practices Act
(PMPA). Id. It further noted that the right to attorney’s
fees was important to the effectuation of the PMPA’s pol-
icies, specifically the purpose of deterring a franchiser
from improperly contesting meritorious claims, and ac-
cordingly held that the clause contravened the PMPA. Id.
at 1248. The court then held that the attorney’s fees
clause, as well as two other contravening clauses, were not
severable from the arbitration agreement as a whole—
a claim not even raised in this case and therefore not be-
fore us here.
Similar to Graham Oil, the clause here purports to for-
feit McCaskill’s statutory right to attorney’s fees, a rem-
edy that we have already recognized is essential to fulfill
the remedial and deterrent functions of Title VII. Because
the provision prevents her from effectively vindicating
her rights in the arbitral forum by preemptively deny-
ing her remedies authorized by Title VII, the arbitration
agreement is unenforceable.
I note that this position has recently been challenged
in dicta in Metro East Center for Conditioning and Health
v. Qwest Communications Intern., Inc., ___ F.3d ___, 2002
WL 1378752 (7th Cir. 2002). Metro East relies on the
Supreme Court’s decision in Evans v. Jeff D., 475 U.S. 717
(1986), stating that Evans, “a case the McCaskill court did
not mention, holds that plaintiffs may forego attorney’s
fees under 42 U.S.C. §1988,” and arguing from that prop-
osition that employees can contract away their remedies.
Id. at *5. Evans went unmentioned in the initial Mc-
Caskill opinion because it is unrelated to the arbitra-
tion issue decided in McCaskill. In Evans, the Court ad-
dressed whether it could enforce a consent decree that
waived attorney’s fees in exchange for relief on the merits
greater than could reasonably be expected at trial. The
Court held that Congress did not intend to ban “all fee
No. 00-2839 17
waivers offered in connection with substantial relief on the
merits.” 475 U.S. at 730. Instead, the Court held that
Congress enacted the fee-shifting provision as “ ‘an integral
part of the remedies necessary to obtain’ compliance with
civil rights laws [citation omitted] to further the same
general purpose—promotion of respect for civil rights—that
led it to provide damages and injunctive relief,” and that
the exchange of fees for other relief to which he indis-
putably is not entitled is no more objectionable than a
concession on damages to secure broader injunctive re-
lief. Id. at 731-32. Thus, the Court recognized that attor-
ney’s fees were an integral part of the arsenal of remedies,
and that they could be subject to the negotiations con-
cerning those remedies. That is a far cry from a blanket
waiver in an arbitration agreement required as a condi-
tion of employment. In fact, the Court explicitly distin-
guished the case before it from one involving a policy of
demanding a fee waiver. Id. at 740. The Evans Court rec-
ognized the importance of the fees provision among the
remedies available to a litigant and therefore supports
the holding that an arbitration agreement eliminating
that right fails to provide the litigant with a forum in
which she can effectively vindicate her statutory rights.
For the reasons set forth in this opinion, I believe that
the district court’s order compelling arbitration should be
reversed and remanded and accordingly I concur in the
judgment.
18 No. 00-2839
MANION, Circuit Judge, dissenting. My colleagues agree
that although the district court neither dismissed the
case nor ordered a stay following its order to compel
arbitration, the decision is nevertheless final and thus
appealable because SCI moved to dismiss instead of re-
questing a stay and because McCaskill agrees the court
dismissed the case. They also agree, for very differ-
ent reasons, to reverse the district court’s order compel-
ling arbitration and to remand for further proceedings,
presumably a trial on the merits. Because the district
court did not either dismiss the case or order a stay pend-
ing arbitration, in my view its order is not a final deci-
sion and is thus not appealable. This court should re-
mand and direct that the district court either dismiss the
case or order a stay.
Longstanding federal policy strongly favors arbitra-
tion. Green Tree Fin. Corp.-Alabama, et al. v. Randolph, 531
U.S. 79, 91 (2000) (citing Moses H. Cone Mem’l Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Section 16
of the Federal Arbitration Act (“FAA”) governs appel-
late review of arbitration orders. It provides, in relevant
part, that an appeal may be taken from “a final decision
with respect to an arbitration . . . .” 9 U.S.C. § 16(a)(3). In
addition, an appeal may not be taken from an interlocutory
order “compelling arbitration . . . .” 9 U.S.C. § 16(b)(3).
The FAA does not define the term “final decision.” In
Green Tree, the Supreme Court interpreted the phrase
according to its well-established, plain meaning, i.e., a de-
cision which “ends the litigation on the merits and leaves
nothing more for the court to do but execute the judgment.”
531 U.S. at 86 (citations omitted). In addressing a dis-
trict court’s order compelling arbitration and dismissing
the case with prejudice, the Supreme Court held that
such an order is a “final decision” and thus is immediately
appealable pursuant to the FAA. Id. The Court noted,
however, that if a district court enters a stay instead of
No. 00-2839 19
a dismissal, that order is not a final, appealable decision
under the FAA. Id. at 87, n.2.1 See Salim Oleochemicals
v. M/V Shropshire, 278 F.3d 90 (2d Cir. 2002) (order
compelling arbitration and dismissing without prej-
udice was an appealable decision under the FAA); ATAC
Corp. v. Arthur Treacher’s, Inc., 280 F.3d 1091 (6th Cir.
2002) (order staying proceedings pending arbitration not
appealable under the FAA); Interactive Flight Tech., Inc.
v. Swissair Swiss Air Transp. Co., Ltd., 249 F.3d 1177
(9th Cir. 2001) (order compelling arbitration and dismiss-
ing case without prejudice appealable under the FAA);
Employers Ins. of Wausau v. Bright Metal Specialties,
Inc., 251 F.3d 1316 (11th Cir. 2001) (order compelling
arbitration and dismissing the case deemed appealable
under the FAA).
Here, notwithstanding the court’s assumption to the
contrary, the district court did not actually dismiss the
case. The court clearly could have ordered a stay. 9 U.S.C.
§ 3. Had the court issued the stay, as I see it under the
appropriate procedure when compelling arbitration, any
appeal at this stage would be barred. See Green Tree,
531 U.S. at 87, n.2. There is nothing in the district
court’s opinion that would allow us to infer that the
court intended to dismiss the case. SCI filed a motion to
compel arbitration and to dismiss the case. The district
court’s order, however, merely compelled arbitration. The
1
In resolving questions of finality, we have asked whether an
appeal is from an “embedded” (those involving a request for ar-
bitration and other relief) or “independent” (a request to order
arbitration solely) proceeding. Previously, an order compelling
arbitration in an independent proceeding was appealable, whereas
one in an embedded proceeding was interlocutory. See Napleton
v. General Motors Corp., 138 F.3d 1209, 1212 (7th Cir. 1998). The
Supreme Court, however, rejected this distinction in Green Tree.
531 U.S. at 88.
20 No. 00-2839
order does not address, in any manner whatsoever, SCI’s
request for a dismissal of the case. While it is true that
SCI’s attorney stated at oral argument that the district
court’s opinion effectively dismissed the case, it is well
settled that parties cannot agree to jurisdiction, nor can
an attorney’s assertion at oral argument establish finality
in order to create appellate jurisdiction. See ITOFCA, Inc.
v. MegaTrans Logistics, Inc., 235 F.3d 360, 363 (7th Cir.
2000). Rather, we have consistently held that “[i]t is our
threshold and independent obligation to make that deter-
mination even [when] both parties agreeably [consider
an] order to be final and appealable.” ITOFCA, 235 F.3d
at 363 (citations omitted).
Additionally, the district court’s indication that McCaskill
could appeal subsequent determinations by the arbitra-
tor is not evidence that it intended to dismiss. Rather, the
statement is entirely consistent with the statutory pro-
cedure permitting judicial review of any final determina-
tion by the arbitrator. Had the court ordered a stay pend-
ing arbitration, all of the issues not resolved by this
split opinion would then properly come before the dis-
trict court, and perhaps before us, for full briefing and
adjudication. Once a court determines that there is a va-
lid and enforceable agreement to arbitrate and that the
claims fall within the scope of the agreement, We Care Hair
Dev., Inc. v. Engen, 180 F.3d 838, 844 (7th Cir. 1999), it
can compel arbitration. At that point the statute pro-
vides only that the court order a stay pending arbitration.
9 U.S.C. § 3. That should have and very well could have
been what the court had in mind when it issued its order to
compel arbitration. Based on the record, we do not know
that the court intended to dismiss the case.
Without a dismissal of the underlying case, the district
court’s order compelling arbitration remains an interlocu-
tory order under Section 16(b)(3) of the FAA, and under
Green Tree, we are not permitted to exercise jurisdiction
No. 00-2839 21
over this case. Of course, as previously noted, the district
court may also grant a stay under Section 3 of the FAA, in
which case we would not have jurisdiction since it would
not be appealable. 9 U.S.C. §16(b)(1); Green Tree, 531
U.S. at 87, n.2.2 In any case, it is incumbent upon dis-
trict courts to fully address and clearly dispose of a mo-
tion filed by a litigant for the parties’ benefit, to conserve
its own judicial resources and to aid this court on review.
See Salim Oleochemicals, 278 F.3d at 93 (urging “district
courts in these circumstances to be as clear as possible
about whether they truly intend to dismiss an action or
mean to grant a stay . . . or whether they mean to do
something else entirely.”). See also Dustrol, Inc. v. Cham-
pagne-Webber, Inc., 2002 WL 122500, *4 (N.D. Tex. Jan.
24, 2002) (citing Green Tree, district court clearly states
that “the court dismisses this case because there are no
longer any unadjudicated claims presently before the
court.”).
2
I pause to take note of an issue left unresolved by the Supreme
Court in Green Tree, i.e., whether a district court may dismiss
a case under the FAA at all. Green Tree, 531 U.S. at 87 n.2 (de-
clining to address whether district court should have entered a
stay, rather than a dismissal). The plain language of the FAA
gives a court only the power to grant a stay. See 9 U.S.C. § 3. In
contrast, nothing in the FAA refers to the district court’s power to
dismiss a case. See also Stephen H. McClain, Under a New
Supreme Court Decision, Litigants Seeking Arbitration of a Dis-
pute can Control the Timing of an Appeal, 48-Aug. Fed. Law. 22,
25 (2001) (noting that, during oral argument of Green Tree, some
of the justices questioned whether or not a stay was required
under the FAA). This court has also questioned whether there is
any statutory authority for dismissing a case when compelling
arbitration. See Kroll v. Doctor’s Assoc., Inc., 3 F.3d 1167, 1172
(7th Cir. 1993). The uncertainty surrounding a district court’s
ability, or authority, to dismiss a case under the FAA is yet
another reason to decline jurisdiction over this appeal.
22 No. 00-2839
Accordingly, I conclude that the order is not final in this
case and would remand the case back to the district court
for further disposition or clarification of its order.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-97-C-006—8-5-02