United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 26, 2001 Decided April 17, 2001
No. 00-5094
Borg-Warner Protective Services Corporation,
Appellant
v.
Equal Employment Opportunity Commission,
Appellee
Appeal from the United States District Court
for the District of Columbia
(99cv00861)
Priscilla L. Hapner argued the cause for appellant. With
her on the briefs were John M. Stephen and Thomas P.
Steindler.
Robert J. Gregory, Attorney, Equal Employment Opportu-
nity Commission, argued the cause for appellee. On the brief
were Philip B. Sklover, Associate General Counsel, and Geof-
fery L. J. Carter, Attorney.
Before: Williams, Randolph, and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Randolph.
Concurring opinion filed by Circuit Judge Williams, with
whom Circuit Judge Tatel joins.
Randolph, Circuit Judge: Since 1991, Borg-Warner Pro-
tective Services Corporation has required its employees to
sign, as a condition of employment, some form of an arbitra-
tion agreement or, as the company calls it, a "Pre-Dispute
Resolution Agreement." A typical version of the agreement
provides that if the employee brings suit on an employment-
related claim, Borg-Warner may insist on arbitration pursu-
ant to the Federal Arbitration Act, 9 U.S.C. s 1 et seq.,
before a single arbitrator of "all matters directly or indirectly
related" to the individual's recruitment, employment and ter-
mination, including "claims involving laws against discrimina-
tion ...." The Equal Employment Opportunity Commission
considers such agreements unenforceable in regard to claims
arising under Title VII of the Civil Rights Act of 1964, and
has spelled out its position in a "Policy Statement on Manda-
tory Binding Arbitration of Employment Disputes as a Condi-
tion of Employment" (July 10, 1997) ("Policy Statement").
Borg-Warner brought this action against the EEOC in the
district court seeking a declaratory judgment that its arbitra-
tion agreements were enforceable and that it had not violated
Title VII by insisting that its employees sign such agree-
ments as a condition of their employment. The company also
sought an injunction, nationwide in scope, forbidding "the
EEOC from issuing determinations to the contrary or attack-
ing the facial validity of arbitration agreement[s] through
litigation." According to the complaint, the events precipitat-
ing this action were as follows. On December 10, 1998, Rudy
Lee, a former Borg-Warner employee, filed a charge with the
EEOC's Seattle, Washington, office alleging that Borg-
Warner had discriminated against him on the basis of his
race. After an investigation, the EEOC found insufficient
evidence to support the charge. Although Lee had not
complained about the arbitration agreement, the EEOC Dis-
trict Director issued a "determination," a finding that there
was "reasonable cause" to believe a Title VII violation had
occurred when Borg-Warner required Lee to sign the arbi-
tration agreement as a condition of employment. The EEOC
invited the company and Lee to engage in conciliation to
"eliminate the alleged unlawful practices." In a letter ad-
dressed to Borg-Warner, the EEOC asked the company to
agree to cease using such agreements, and to provide notice
to all employees that it had rescinded its policy favoring
mandatory arbitration. Borg-Warner refused and filed this
action a few days later.
On the EEOC's motion to dismiss for lack of subject matter
jurisdiction, the district court held that the complaint did not
arise under Title VII and so jurisdiction could not rest on 28
U.S.C. s 1331, 28 U.S.C. s 1337 or 28 U.S.C. s 1343. Borg-
Warner Protective Services Corp. v. EEOC, 81 F. Supp. 2d
20, 24-25 (D.D.C. 2000). The court found nothing in Title VII
to give an employer a cause of action against the EEOC. Id.
Borg-Warner could not invoke the Administrative Procedure
Act, the court held, because neither the EEOC's Policy
Statement nor its determination in the Lee case constituted
"final" agency action. Id. at 26-28. The determination was
merely tentative and interlocutory. The Policy Statement did
not finally fix any obligation on the part of Borg-Warner. As
to the company's request for a declaratory judgment, the
court held that although it had subject matter jurisdiction,
Borg-Warner lacked standing because the company has not
alleged injury that could "be redressed by a favorable deci-
sion." Id. at 29.
I.
We have no doubt the district court had subject matter
jurisdiction over Borg-Warner's complaint under 28 U.S.C.
s 1331: "The district courts shall have original jurisdiction of
all civil actions arising under the Constitution, laws, or trea-
ties of the United States." This means, as Professor Mishkin
put it in his classic article, that "the plaintiff must be contend-
ing that a federally ordained rule specifically creates his
cause of action." Paul J. Mishkin, The Federal Question in
the District Courts, 53 Colum. L. Rev. 157, 164 (1953). "Any
national source," he added, "will suffice...." Id. Or as
Justice Holmes wrote in American Well Water Works Co. v.
Layne & Bowler Co., 241 U.S. 257, 260 (1916), a "suit arises
under the law that creates the cause of action." These
formulations scarcely exhaust the definitions of federal ques-
tion jurisdiction, see Franchise Tax Board of California v.
Construction Laborers Vacation Trust, 463 U.S. 1, 8-9 (1983),
but they are surely at the heart of the matter.
Borg-Warner's complaint "arises under" federal law in the
following respects. The company alleges a cause of action
based on the Administrative Procedure Act: it contends that
the APA entitles it to judicial review of the EEOC's Policy
Statement and the EEOC's determination that Lee had a
right to sue for a violation of Title VII. Both the APA and
Title VII are federal laws, and so the claims satisfy the
"arising under" requirement. It is of no moment whether
Borg-Warner's claims are meritless or would eventually fail.
A claim does not have to be a good one for the court to have
subject matter jurisdiction over it. See, e.g., Bell v. Hood, 327
U.S. 678 (1946). Borg-Warner's request for a declaratory
judgment also arises under federal law. "Federal courts have
regularly taken original jurisdiction over declaratory judg-
ment suits in which, if the declaratory judgment defendant
[here the EEOC] brought a coercive action to enforce its
rights, that suit would necessarily present a federal question."
Franchise Tax Bd., 463 U.S. at 19.
II.
Subject matter jurisdiction is one thing. Ripeness, stand-
ing, justiciability and the like, all of which the district court
invoked in dismissing the complaint, are quite another. To
put matters into perspective, we need to take stock of the
state of the law regarding arbitration agreements and Title
VII.
The EEOC has been waging a losing battle in its efforts to
convince the courts that agreements like Borg-Warner's can-
not be enforced to require employees to arbitrate Title VII
claims. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.
20 (1991), held that an employer could compel an employee to
arbitrate his claim that the employer had violated the Age
Discrimination in Employment Act (ADEA), 29 U.S.C. s 621
et seq. The Supreme Court considered and rejected Gilmer's
contention that compulsory arbitration of an ADEA claim is
inconsistent with that statute. However, because Gilmer's
arbitration agreement was contained in his application to the
New York Stock Exchange to become a registered securities
representative, the Court reserved the question whether a
compulsory arbitration clause found in an employment con-
tract would be enforceable. 500 U.S. at 25 n.2. Shortly after
Gilmer, Congress passed the Civil Rights Act of 1991, Pub. L.
No. 102-166, 105 Stat. 1071, s 118 of which stated that
"[w]here appropriate and to the extent authorized by law, the
use of alternative means of dispute resolution, including ...
arbitration, is encouraged to resolve disputes arising under"
Title VII. 105 Stat. 1081 (reprinted in notes to 42 U.S.C.
s 1981).
In Cole v. Burns International Security Services, Inc., 105
F.3d 1465 (D.C. Cir. 1997), we relied on Gilmer to affirm a
district court order dismissing an employee's Title VII action
and compelling the employee to arbitrate with his employer
pursuant to a compulsory arbitration agreement. Burns In-
ternational Security Services, the prevailing party in Cole, is
the parent corporation of Borg-Warner and Borg-Warner's
arbitration agreements are about the same as the one we held
enforceable in Cole.
Therefore, if the district court were to grant the relief
Borg-Warner seeks in this case the company would gain
nothing in the District of Columbia. Our decision in Cole
already rejected the EEOC's position. A declaratory judg-
ment saying as much would be redundant. An injunction
against the EEOC (assuming one were proper) is entirely
unnecessary. As far as this jurisdiction is concerned, Borg-
Warner is therefore suffering no injury for which it is entitled
to redress. Nor is Borg-Warner suffering any conceivable
injury in the First Circuit, the Second Circuit, the Third
Circuit, the Fourth Circuit, the Fifth Circuit, the Sixth Cir-
cuit, the Seventh Circuit, the Eighth Circuit, the Tenth
Circuit, or the Eleventh Circuit, all of which have also reject-
ed the EEOC's position. Rosenberg v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 163 F.3d 53 (1st Cir. 1998); Desidero
v. National Ass'n of Securities Dealers, Inc., 181 F.3d 198 (2d
Cir. 1999); Seus v. John Nuveen & Co., 146 F.3d 175, 182 (3d
Cir. 1998); Austin v. Owens-Brockway Glass Container, Inc.,
78 F.3d 875 (4th Cir. 1996); Alford v. Dean Witter Reynolds,
Inc., 939 F.2d 229 (5th Cir. 1991); Willis v. Dean Witter
Reynolds, Inc., 948 F.2d 305 (6th Cir. 1991); Koveleskie v.
SBC Capital Markets, Inc., 167 F.3d 361 (7th Cir. 1999);
Patterson v. Tenet Healthcare, Inc., 113 F.3d 832 (8th Cir.
1997); Metz v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
39 F.3d 1482 (10th Cir. 1994); Bender v. A.G. Edwards &
Sons, Inc., 971 F.2d 698 (11th Cir. 1992). Each of those
courts of appeals agrees with us that Title VII claims may be
subject to mandatory arbitration.1
The Supreme Court's decision in Circuit City Stores, Inc. v.
Adams, 2001 WL 273205 (Mar. 21, 2001), adds to the weight
of these precedents. The Court held that s 1 of the Federal
Arbitration Act, 9 U.S.C. s 1, did not exempt contracts of
employment except those involving transportation workers, a
position we had reached in Cole, which the Court cited. Id. at
*3. As to statutory claims, the Court reiterated "that arbi-
tration agreements can be enforced under the FAA without
contravening the policies of congressional enactments giving
employees specific protection against discrimination prohibit-
ed by federal law...." Id. at *10. Not only does that broad
statement encompass Title VII and all other federal laws
__________
1 Even if any one of these court of appeals had not ruled on this
question, the Policy Statement still would have no effect on Borg-
Warner in that particular jurisdiction. The existence (or non-
existence) of the Policy Statement does not affect the EEOC's
ability to file an amicus brief arguing the same position. In fact, if
we credit the EEOC's representation about how it litigates this
issue, its amicus briefs hardly even mention the Policy Statement.
forbidding discrimination, but also the arbitration agreement
in Circuit City Stores expressly stated that Title VII disputes
were subject to mandatory arbitration.
The Ninth Circuit is the only court of appeals to hold that
Title VII disputes cannot be made subject to compulsory
arbitration agreements. See Duffield v. Robertson Stephens
& Co., 144 F.3d 1182 (9th Cir. 1998). We cannot say whether
the Ninth Circuit will continue to adhere to Duffield in the
face of the Supreme Court's Circuit City decision (which
overruled another Ninth Circuit case). We do know that
although the EEOC maintained in its "determination" in the
Lee case that requiring employees to sign an agreement to
arbitrate future Title VII claims was itself a violation of Title
VII, Duffield does not so hold. Duffield ruled only that such
agreements are "unenforceable" with respect to Title VII
claims. 144 F.3d at 1199.
A.
Borg-Warner's first claim, set out as Count I of its com-
plaint, alleges that the EEOC's determination letter to Lee--
stating that there was reasonable cause to believe that Borg-
Warner was violating Title VII in requiring employees to sign
the arbitration agreement--exceeded its authority under Title
VII. (The EEOC's Policy Statement does not take the
position that requiring employees to sign the agreement is
itself a violation of Title VII; as in Duffield, it states only
that such agreements are unenforceable with respect to Title
VII claims. Policy Statement at 3101, 3106.) This portion of
Borg-Warner's complaint fails, the district court ruled, be-
cause the determination is merely interlocutory and not final.
Borg-Warner, 81 F. Supp. 2d at 26.
The court relied upon Georator Corp. v. EEOC, 592 F.2d
765, 767 (4th Cir. 1979), which held that an EEOC determina-
tion of reasonable cause is not "final agency action" because
"standing alone, it is lifeless and can fix no obligation nor
impose any liability on the plaintiff." A Supreme Court
opinion, which the parties failed to mention, adds further
support to the court's ruling. Federal Trade Commission v.
Standard Oil, 449 U.S. 232 (1980), held that the FTC's
determination that there was reasonable cause to believe the
company was violating the pertinent statute and its later
issuance of an administrative complaint did not constitute
final agency action within the meaning of s 704 of the APA.
"It represents a threshold determination that further inquiry
is warranted and that a complaint should initiate proceed-
ings." Id. at 241. If the FTC's complaint in Standard Oil
"had no legal force or practical effect upon [the company's]
daily business other than the disruptions that accompany any
major litigation," id. at 243, the EEOC's determination in the
matter of Lee had even less effect. At least the complaint in
Standard Oil served "to initiate the proceedings," id. at 242.
The EEOC's determination is even further removed: rather
than initiating proceedings, it merely informed Lee that he
had a right to bring a complaint. While there may be other
reasons for rejecting this portion of Borg-Warner's com-
plaint, it is perfectly clear that the EEOC's determination is
not final agency action. That is enough to sustain the district
court's judgment.
B.
As to Borg-Warner's alleged cause of action under the
APA to review the EEOC's Policy Statement, we will assume
that the Policy Statement is a "rule" within the meaning of 5
U.S.C. s 551(13) and we will also assume that it represents
the EEOC's "final" position regarding arbitration of Title VII
claims--that, in other words, it constitutes "final agency
action." 5 U.S.C. s 704; Bennet v. Spear, 520 U.S. 154
(1997). Even so, Borg-Warner still must establish that it is
"aggrieved" by the EEOC's policy position. See 5 U.S.C.
s 702.
The EEOC's Policy Statement carries no special weight in
the courts: if it has any force, it is derived from the power of
the EEOC's reasoning to persuade. Christensen v. Harris
Co., 529 U.S. 576, 587 (2000) (quoting Skidmore v. Swift &
Co., 323 U.S. 134, 140 (1944)). The EEOC tells us that in its
amicus briefs it therefore pays scant attention to its Policy
Statement; its efforts are devoted to mounting arguments
that, it hopes, will convince. What injury then is the Policy
Statement inflicting on Borg-Warner? As we have written,
in the District of Columbia and in the geographic areas
covered by all the circuits except the Ninth, the answer is
none.
Borg-Warner seems to recognize as much, which is why it
wants us to concentrate our attention on the state of affairs in
the Ninth Circuit. But even in the Ninth Circuit, Borg-
Warner's problem is not with the EEOC's Policy Statement.
It is with Duffield. The only plausible harm to the company
consists in its inability to enforce its arbitration agreements
with its employees who are working within the geographical
limits of the Ninth Circuit. But that harm is not being
caused by the EEOC's Policy Statement. It results directly
from the Duffield decision.
Borg-Warner claims that as "a result of the Policy ...,
[Borg-Warner] can be subjected to stiffer legal and monetary
penalties in future litigation challenging the Agreement since
both the Policy and Determination may be admissible to show
that [its] use of the Agreement is unlawful and utilized with
reckless indifference to the law." We think this is much too
speculative. The Policy Statement does not declare--as did
the EEOC's determination in the Lee case--that having
employees sign such agreements itself violates Title VII.
The Policy Statement instead concludes that agreements
compelling arbitration of Title VII claims are "inconsistent"
with or "contrary to" Title VII. See Policy Statement
("agreements that mandate binding arbitration of discrimina-
tion claims as a condition of employment are contrary to the
fundamental principles evinced in these laws") ("the Commis-
sion believes that such agreements are inconsistent with the
civil rights laws") ("the Commission will continue to challenge
the legality of specific agreements"). At oral argument, the
EEOC's attorney said that the Commission carefully worded
its Policy Statement so that it did not maintain that an
employer violates Title VII by conditioning employment on
the employee's signing of an agreement to arbitrate. All the
Policy Statement was intended to convey, he added, was the
EEOC's view that such agreements are unenforceable.2
Even if the Policy Statement treated arbitration agreements
as "illegal" that would not support Borg-Warner's argument.
To say that an agreement is illegal is not to say that
employers who require employees to sign the agreements as
a condition of employment are guilty of violating Title VII.
Calling an unenforceable agreement "illegal" is "misleading
insofar as it suggests that some penalty is necessarily im-
posed on one of the parties, apart from the court's refusal to
enforce the agreement. In some cases, the conduct that
renders the agreement unenforceable is a crime, but this is
not necessarily or even usually so." E. Allan Farnsworth,
Contracts s 5.1 (2d ed. 1990).
Even Duffield does not say that companies requiring em-
ployees to sign arbitration agreements are guilty of violating
Title VII. Although the Duffield court refused, with respect
to Title VII claims, to enforce a general arbitration agree-
ment, the court enforced the same agreement in regard to
state law claims. See 144 F.3d at 1203. In the face of that
ruling, we cannot see how an employer exposes itself to
__________
2 We credit counsel's statement of how the EEOC views its Policy
Statement. After oral argument, the EEOC supplied us with some
of its filings in EEOC v. Luce, Forward, Hamilton & Scripps, LLP,
122 F. Supp. 2d 1080 (C.D. Cal. 2000), a case now on appeal to the
Ninth Circuit. Invoking res judicata, the district court there
rejected the EEOC's argument for punitive damages. Two items
are of note. First, in support of the claim for punitive damages the
EEOC cited its Policy Statement, stating that it put employers "on
notice regarding the EEOC's position concerning most discrimina-
tion issues." Plaintiff's Opposition to Defendant's Motion for Sum-
mary Judgment, at 15. This statement does not contradict the
representation made by the EEOC's counsel at oral argument in
this case. The question we have been considering is what position
the EEOC did express in the Policy Statement. Second, the
district court enjoined the employer in Luce from requiring pro-
spective employees to sign mandatory arbitration agreements re-
garding Title VII claims. In doing so the court did not cite the
Policy Statement. It cited only Duffield. 122 F. Supp. 2d at 1093.
Whether the court correctly interpreted the Ninth Circuit's opinion
remains to be seen.
punitive damages by having employees sign such an agree-
ment. Furthermore, the notion that Borg-Warner could be
held liable in punitive damages for insisting upon an arbitra-
tion agreement in the face of the Supreme Court's Circuit
City opinion and the decisions of eleven courts of appeals
upholding such agreements is, we think, far-fetched. (The
California Supreme Court, observing that the Ninth Circuit
was in "minority of one," also rejected Duffield and indicated
that Title VII claims may be subject to mandatory arbitration
agreements. Armendariz v. Foundation Health Psychare
Servs., Inc., 6 P.3d 669, 677 (Cal. 2000).)
The short of the matter is that Borg-Warner is not ag-
grieved by the existence of the EEOC's Policy Statement. It
is not suffering any legally cognizable injury from the Policy
Statement, and for that reason the district court properly
dismissed its complaint. Given this disposition, we do not
address any questions of comity between this circuit and the
Ninth, or the propriety of a federal court in the District of
Columbia enjoining the EEOC from adhering to a litigating
position in the Ninth Circuit that the court of appeals for that
circuit has sustained.
Affirmed.
Williams, Circuit Judge, with whom Circuit Judge Tatel
joins, concurring: Because the EEOC's use of its Policy
Statement appears more complicated than stated above, I
write separately.
The Policy Statement may not explicitly state that employ-
ment contracts requiring arbitration of discrimination claims
violate Title VII, but the EEOC apparently believes that it
could honestly be read to that effect. The EEOC has cited it
in at least one brief in support of precisely that argument. In
October 2000 the EEOC submitted a brief in the Central
District of California that expressly asks the court for puni-
tive damages because the defendant allegedly "unlawfully
retaliated against Mr. Lagatree [an applicant for employ-
ment] by denying him employment ... based on his refusal to
sign an employment agreement compelling mandatory arbi-
tration of future claims of employment discrimination ..., in
violation of Title VII." EEOC v. Luce, Forward, Hamilton &
Scripps, LLP, No. 00-1322 at 2 (C.D. Cal. Oct. 23, 2000)
(plaintiff's opposition to defendant's motion for summary
judgment) (submitted under Circuit Rule 28(j)). In the sec-
tion specifically addressing punitive damages, the brief states:
[I]t is also important to note that the EEOC had publish-
ed a Policy Statement on July 10, 1997, two months
before Luce terminated Mr. Lagatree, on "Mandatory
Arbitration of Employment Disputes as a Condition of
Employment", which concluded that these unilateral
agreements harms [sic] both the individual civil rights
claimant and the public interest in eradicating discrimi-
nation. These policy statements put employers on notice
regarding the EEOC's position concerning most discrimi-
nation issues.
Id. at 15. Although the EEOC did not explicitly say in its
brief that the Policy Statement concludes that these agree-
ments violate Title VII, its citation to the Policy Statement--
in an argument supporting the imposition of punitive damages
on an employer who insisted on such agreements--must
mean that the EEOC briefwriter believed that competent
judges could be persuaded to believe that it reached that
conclusion.1
As the preceding opinion notes, however, EEOC counsel
before us took a quite different position--one that we believe
is better supported by the Policy Statement's language. He
declared, "This agreement [referring to the Policy Statement]
does not purport to do that [make an assertion of illegality],
and I hope it doesn't do that." Tr. at 31. Indeed, he said
that the Policy Statement "was vetted very carefully to make
sure that it didn't say it [an employer's insistence on an
arbitration agreement] was illegal under Title VII." Id. at
28.
Because the formulation of the Commission's position be-
fore a court of appeals is a more material commitment than
the filing of a district court brief, and counsel certainly did
not file a corrective letter despite the panel's prolonged
interrogation on the issue, it seems reasonable to take the
EEOC's position before us as its true position, a proposition
helpful, though not necessarily essential, to the ultimate
judgment here.
1 Although the district court rejected EEOC's argument for
punitive damages because of res judicata, the court declined to
interpret Duffield as holding "only that mandatory arbitration
agreements are unenforceable" and held that injunctive relief was
appropriate because requiring employees to enter into mandatory
arbitration agreements is "unlawful under Title VII." EEOC v.
Luce, Forward, Hamilton & Scripps, LLP, 122 F. Supp. 2d 1080,
1091, 1093 (C.D. Cal. 2000).