## Facts

- Saint Clair Adams applied for employment with Circuit City Stores, Inc. and signed an application requiring arbitration of employment-related disputes.
- The arbitration clause required arbitration of claims arising out of the application, employment, or termination, before a neutral arbitrator, as the exclusive forum.
- Adams later sued Circuit City in California state court alleging employment discrimination under state law and related tort claims.
- Circuit City filed in federal district court seeking to compel arbitration and stay the state-court action under the Federal Arbitration Act (FAA).
- The federal district court compelled arbitration and stayed the state proceedings.
- The Ninth Circuit reversed, holding the FAA did not apply because the arbitration agreement was in a “contract of employment” allegedly exempt under FAA § 1.
- The Supreme Court granted review to resolve disagreement over whether FAA § 1 exempts all employment contracts or only those involving transportation workers.

## Issues

1. Whether FAA § 1’s exemption for “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce” excludes all employment contracts from the FAA.
2. Whether the exemption instead is limited to employment contracts of transportation workers, leaving the FAA generally applicable to employment arbitration agreements.

## Decision

- The Supreme Court reversed the Ninth Circuit in a 5–4 decision.
- The Court held that FAA § 1’s exemption is confined to transportation workers.
- Because Adams was a retail sales counselor and not a transportation worker, his agreement was not exempt under § 1.
- The case was remanded for further proceedings consistent with the Court’s interpretation (including any remaining contract-law challenges to enforcement).

## Legal Principles

- FAA § 1 exempts from the FAA only employment contracts of transportation workers; it does not categorically exempt employment contracts.
- The residual clause “any other class of workers engaged in foreign or interstate commerce” is read in light of the specific categories “seamen” and “railroad employees,” applying *ejusdem generis* to limit the exemption to similar transportation-related work.
- FAA § 2 broadly enforces arbitration agreements in contracts involving commerce; § 1 is construed narrowly to avoid undermining § 2’s broad scope.
- Even when the FAA applies, enforcement of a particular employment arbitration agreement may still be subject to generally applicable state contract defenses.

## Conclusion

The Court construed FAA § 1 narrowly to cover only transportation-worker employment contracts, thereby allowing the FAA to govern and generally enforce arbitration agreements in most employment relationships, including non-transportation jobs like retail sales.


Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001)