SW Legal studies in Business

Federal Agencies Not Bound By Arbitration Agreements Between Other Parties
Description Supreme Court held that an arbitration agreement between an employer and an employee did not bind a federal agency from seeking judicial relief on behalf of an employee. The agency was not a party to the arbitration agreement, so was free to litigate matters under its law enforcement authority.
Topic Alternate Dispute Resolution
Key Words Contracts; Litigation; Federal Law Enforcement; EEOC
C A S E   S U M M A R Y
Facts Baker worked for Waffle House. He signed an agreement that any employment dispute would be settled by binding arbitration. While working, he suffered a seizure and was fired. He filed a complaint against Waffle House with the Equal Employment Opportunity Commission (EEOC), contending that his rights under the Americans with Disabilities Act (ADA) had been violated. He did not file suit against Waffle House nor request arbitration. The EEOC sued Waffle House on behalf of Baker. The trial court allowed the suit to proceed, but the appeals court held that the matter had to be arbitrated. EEOC appealed.

Reversed. The arbitration agreement between Waffle House and Baker does not prevent a federal agency, such as the EEOC, from pursuing judicial relief on behalf of Baker. The ADA allows either an individual to seek a remedy or allows the EEOC to seek to enforce the law. The contract between an employer and employee does not bar the EEOC from seeking to enforce a statute by litigation. The EEOC was not a party to the contract between Waffle House and Baker, so it is not bound by the arbitration agreement.

Citation Equal Employment Opportunity Comm. v. Waffle House, Inc., 122 S.Ct. 754 (Sup. Ct., 2002)

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