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Law School Case Brief

Circuit City Stores v. Adams - 532 U.S. 105, 121 S. Ct. 1302 (2001)

Rule:

In rejecting the contention that the meaning of the phrase "engaged in commerce" in 9 U.S.C.S. § 1 of the Federal Arbitration Act (FAA), 9 U.S.C.S. §§ 1 et seq., should be given a broader construction than justified by its evident language simply because it was enacted in 1925 rather than 1938, the court does not mean to suggest that statutory jurisdictional formulations necessarily have a uniform meaning whenever used by Congress. The judicial task in marking out the extent to which Congress has exercised its constitutional power over commerce is not that of devising an abstract formula. The court must, of course, construe the "engaged in commerce" language in the FAA with reference to the statutory context in which it is found and in a manner consistent with the FAA's purpose.

Facts:

Section 2 of the FAA of the Federal Arbitration Act (FAA), 9 U.S.C.S. § 2, generally provides for the enforceability of a written arbitration provision in any maritime transaction or a "contract evidencing a transaction involving commerce." However, an exemption clause in § 1 of the FAA, 9 U.S.C.S. § 1, provides that the FAA shall not apply to "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." When respondent Saint Clair Adams was hired for a job at petitioner Circuit City Stores, Inc., a California store of a national retailer of consumer electronics, Adams signed an application, which included an agreement to settle all future employment disputes exclusively by binding arbitration. Subsequently, Adams filed an employment discrimination suit against Circuit City in a California state court, asserting various claims under a state statute and the state's tort law. Circuit City then filed suit in the United States District Court for the Northern District of California seeking to enjoin the state-court action, and to compel arbitration, pursuant to the FAA, of Adams' claims. The District Court granted the requested order. However, the United States Court of Appeals for the Ninth Circuit, in reversing and in ordering a remand, expressed the view that the FAA did not apply to the case at hand, as, according to the Court of Appeals, the FAA did not apply to labor or employment contracts. Circuit City sought certiorari review.

Issue:

Did The Federal Arbitration Act apply to labor or employment contracts?

Answer:

Yes

Conclusion:

Applying the maxim "ejusdem generis," the Supreme Court concluded that the residual phrase "any other class of workers engaged in commerce" was to be read to give effect to the terms "seamen" and "railroad employees." Thus, the text of the Federal Arbitration Act (FAA), 9 U.S.C.S. § 1 et seq., foreclosed the construction adopted by the lower court. The better interpretation of § 1, therefore, confined the exemption to transportation workers. The Supreme Court rejected respondent's argument that the phrase "engaged in commerce" should be interpreted broadly in light of Congress' understanding of its power when the FAA was adopted because such a variable standard ignored the reason why the phrase became a term of art in the first place. Moreover, it would have been unwieldy to deconstruct statutory Commerce Clause phrases depending upon the year of a particular statutory enactment.

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