## Facts

- Clinton Cole accepted employment with Burns International Security Services subject to an agreement waiving a jury trial for employment-related disputes and permitting Burns, at its option, to require arbitration of such disputes, including statutory discrimination claims.
- Cole later filed a federal lawsuit alleging employment discrimination under Title VII of the Civil Rights Act of 1964.
- The district court dismissed the Title VII suit and compelled arbitration under the Federal Arbitration Act (FAA), concluding Cole was not within the FAA § 1 exemption for certain transportation workers.
- Cole challenged the order compelling arbitration, including the allocation of arbitration-related fees and whether arbitration procedures and limited judicial review adequately protect Title VII rights.

## Issues

1. Whether FAA § 1 exempts Cole’s employment contract from the FAA’s coverage, making the arbitration agreement unenforceable under the FAA.
2. Whether an employer may require, as a condition of employment, arbitration of Title VII claims, and under what conditions arbitration must operate to preserve effective enforcement of statutory rights.
3. Whether requiring an employee to bear arbitrator fees or other costs unique to arbitration is permissible when the employee seeks to vindicate federal statutory rights.

## Decision

- The D.C. Circuit held that FAA § 1 does not exempt all employment contracts; it is limited to seamen, railroad employees, and similarly situated transportation workers engaged in interstate or foreign commerce, and Cole was not within that class.
- The court held that mandatory arbitration of Title VII claims can be enforceable under the FAA so long as the agreement does not require waiver of substantive statutory rights and provides a forum adequate for enforcing those rights.
- The court held that an employee compelled to arbitrate federal statutory claims as a condition of employment may not be required to pay arbitrator fees or comparable costs that are distinctive to arbitration; the employer must bear such fees to avoid deterring statutory enforcement.
- The court accepted that judicial review under the FAA is limited but concluded it can be sufficient when combined with procedural fairness and an obligation for arbitrators to apply the relevant law.
- The court affirmed the order compelling arbitration but conditioned enforceability on fee allocation consistent with its holding; there was a concurrence in part and dissent in part.

## Legal Principles

- FAA § 1’s exemption for “contracts of employment” is construed narrowly and does not categorically exclude employment agreements from FAA enforcement.
- Statutory employment-discrimination claims, including Title VII claims, may be subject to compulsory arbitration if arbitration serves as a change of forum rather than a waiver of substantive statutory protections.
- Arbitration provisions covering federal statutory rights must allow “effective vindication” of those rights; terms that impose prohibitive or arbitration-specific costs on employees are invalid as applied to such claims.
- When arbitration is required as a condition of employment for federal statutory claims, the employer must pay the arbitrator’s fees to prevent cost-based deterrence of statutory enforcement.
- Limited judicial review under the FAA may be compatible with enforcement of statutory rights if the arbitral process is otherwise fair and requires application of the governing law.

## Conclusion

The D.C. Circuit upheld employer-mandated arbitration of Title VII claims under the FAA for non-exempt employees, but required that the arbitral forum permit effective vindication of statutory rights, including by placing arbitrator-fee burdens on the employer rather than the employee.


Cole v. Burns Int'l Sec. Servs., 105 F.3d 1465 (D.C. Cir. 1997)