Claim Under FEHA May Be Subjected To Compulsory Arbitration

The United States Court of Appeals for the Ninth Circuit recently addressed the issue of whether a claim under California’s Fair Employment and Housing Act (FEHA) can be subjected to compulsory arbitration when the plaintiff does not allege a violation of Title VII of the Civil Rights Act. (Circuit City Stores, Inc. v. Najd, 2002 WL 1358657.)

Facts

Circuit City had employed Monir Najd for approximately ten years when the company began its “Associate Issue Resolution Program.” In 1995, Circuit City gave Najd a packet of information about the program, including a Dispute Resolution Agreement (Agreement) which subjects all employee-related legal disputes to final, binding arbitration. Najd had the choice to opt out by returning the form to corporate headquarters. Although Najd acknowledged in writing that he had received the program information, he did not exercise his right to opt out.

Najd claims that beginning in 1997, his new supervisor continually harassed him because of his ethnicity. In 1998, Najd was terminated from his employment.

Najd filed a lawsuit in state court alleging that Circuit City violated the FEHA. Circuit City filed a petition in federal court to compel Najd to submit his claims to binding arbitration pursuant to the Federal Arbitration Act. The district court granted Circuit City’s petition.

The Appellate Decision

In a prior decision, the Ninth Circuit Court of Appeals held that the Civil Rights Act of 1991 precludes compulsory arbitration of Title VII claims. (Duffield v. Robertson Stephens & Co., 144 F.3d 1182, (9th Cir. 1998).) In the Duffield case, the Ninth Circuit further concluded that FEHA claims that are filed with a Title VII claim are also nonarbitrable because “parallel state anti-discrimination laws are explicitly made part of Title VII’s enforcement scheme.”

Here, however, the Court upheld the district court’s decision because it determined that the Duffield decision did not apply Najd’s FEHA claim, as he did not also sue under Title VII. The Court also questioned the continuing validity of the holding in Duffield, noting that recent United States Supreme Court decisions “cast doubt as to whether Congress precluded compulsory arbitration of Title VII claims.”