Case 3: Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (U.S. Sup. Ct. 2001) (Mallor, 15th Ed., p. 53). Adams, a worker at a Circuit City retail electronics store in California, signed an employment application that included an agreement to resolve all future employment disputes exclusively by binding arbitration, as follows: I agree that I will settle any and all previously unasserted claims, disputes or controversies arising out of or relating to my application or candidacy for employment, employment and/or cessation of employment with Circuit City, exclusively by final and binding arbitration before a neutral Arbitrator. Later, Adams filed an employment discrimination suit against Circuit City in a California state court, asserting claims under California's Fair Employment and Housing Act. Circuit City then filed suit in a federal district court, asking the court to enjoin the state court action and compel arbitration under the Federal Arbitration Act (FAA). The coverage provision of the FAA states that [a] written provision in a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract shall be valid, irrevocable, and enforceable. However, another section of the FAA excludes from the FAA's coverage contracts of employment of seamen, railroad employees, or any other class or workers engaged in foreign or interstate commerce. Concluding that the FAA applied to the AdamsCircuit City contract, the federal district court issued an order compelling arbitration of the dispute. Adams appealed, and the U.S. Court of Appeals for the Ninth Circuit reversed. The Ninth Circuit reasoned that in view of the above-quoted exclusion, the FAA does not apply to contracts of employment in interstate commerce. Circuit City appealed to the U.S. Supreme Court, which reversed the Ninth Circuit and ruled that arbitration clauses contained in employment contracts are covered by the FAAs command that an arbitration clause be considered valid and enforceable when it appears in a contract evidencing a transaction involving commerce. The U.S. Supreme Court also ruled the seaman and railroad employees exemption applies only to those employment contracts involving seamen, railroad employees, or other transportation workers (because other transportation workers are similar to the enumerated categories of seamen and railroad employees). The Court applied the ejusdem generis maxim to reach this conclusion. Ejusdem generis is Latin for "of the same kind." When a law lists classes of persons or things, this concept is used to clarify such a list. Under the Courts interpretation, the contracts of other employees--i.e., those who were not seamen, railroad employees, or transportation workers--do not fall within the exemption from the FAA.

Answer True or False

1. Adams complaint against Circuit City will be dismissed from federal district court and remanded to arbitration governed by the FAA.

2. If Adams complaint is not subject to arbitration under the FAA, the federal district court can require Adams and Circuit City to engage in nonbinding arbitration in an effort to encourage settlement.

3. If Adams is dissatisfied with the amount of the arbitration award obtained in the arbitration conducted under the FAA, Adams can obtain a reversal of that award in Federal District Court.

4. The FAA prohibits Adams from pursuing a class action arbitration action against Circuit City.

5. If the arbitration clause in Adams employment contract required the arbitration to be conducted before the London Court of International Arbitration and the cost of doing so exceeds the likely award he may get from the arbitration, the federal district court will likely rule the arbitration clause is unenforceable.