Joulé, Inc. v. Simmons and Massachusetts Commission Against Discrimination

(Massachusetts Supreme Judicial Court)

• Defending Arbitration Provisions in Employment Agreements

NELF’s concern in this case is that the Massachusetts Commission Against Discrimination (“MCAD” or “Commission”) claims, in effect, an absolute immunity from the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq.  In this case, a terminated employee alleges unlawful sex discrimination and retaliation under G. L. c. 151B.  Under that chapter, such claims must be filed initially with the MCAD for administrative investigation.  If the MCAD finds probable cause and the complainant so chooses administrative adjudication, the MCAD may then both prosecute and adjudicate the claims.  A complainant always has the right, however, to remove claims from the agency for adjudication in another forum.  In this case, the complainant refuses to exercise her right remove her claims from the MCAD so that they can be arbitrated pursuant to the binding arbitration provision in her employment agreement.  Instead, she insists on remaining in the MCAD and, without saying so expressly, obtaining an adjudication by the MCAD, thus violating the arbitration provision of her contract.  Her argument is largely couched in terms of the MCAD’s statutory power to prosecute claims, a power she contends is unaffected by any arbitration agreement.  After the employer brought an action in Superior Court to compel arbitration, the Commission intervened on the employee’s behalf, arguing that no private agreement can divest it of jurisdiction to prosecute claims of discrimination because it is charged by the Legislature with the public mission of eliminating discrimination.  The judge refused to order arbitration and the employer appealed.  The SJC granted direct appellate review and solicited amicus briefs.  If the complainant and the MCAD prevail, pre-dispute arbitration agreements in employment agreements will essentially be voidable in Massachusetts at the discretion of the employee and the MCAD with regard to discrimination claims.  To aid in preventing this result, NELF filed an amicus brief in the SJC in support of the employer.  NELF argued that the arguments of the complainant and the MCAD ignore the distinction between the MCAD’s prosecutorial role and its rule as adjudicator.  This distinction is crucial, as was recognized by the U.S. Supreme Court in Preston v. Ferrer, 552 U.S. 346 (2008), in which the Supreme Court, drawing a distinction between an agency’s role in prosecuting a case and its role as tribunal, held that, under the FAA, state agency adjudication must yield to a private arbitration agreement.  This means that the MCAD cannot displace the arbitration agreement here.  This point is further supported by an earlier Massachusetts discrimination case, Warfield v. Beth Israel Deaconess Medical Center, Inc., 454 Mass. 390 (2009), in which the SJC declared that an arbitration agreement waives both judicial and administrative remedies.  Moreover, the emphasis that the Commission and the complainant lay on the MCAD’s power to prosecute claims is doubly misguided.  Not only does it fail to address the issue of adjudication directly, but it also ignores that under c. 151B the MCAD cannot prosecute claims unless the complainant first chooses agency adjudication, a choice the arbitration agreement here precludes.  Finally, NELF argued that, as reflected in the Warfield decision and decisions of the Supreme Court, the position of the MCAD and the complainant in this case contravene the strong federal and state policies favoring arbitration.