Title: Circuit City v. Saint Clair Adams
Facts: In 1995 Adams, was hired as a sales counselor, signed an employment application with Circuit City. A provision in their application required all employment disputes to be settled by arbitration. In 1997, Adams filed an employment discrimination lawsuit against the company in state court. Circuit City then filed suit in Federal District Court, seeking to enjoin the state-court action and to compel arbitration of Adams' claims under the FAA. The District Court entered the requested order. The court concluded that Adams was obligated by the arbitration agreement. In reversing, the Court of Appeals found that the arbitration agreement between Adams and Circuit City was contained in a "contract of employment," and thus not subject to the FAA under section 1 of the Act.
Issue: The issue is whether an employee’s statutory rights can be subject to mandatory arbitration.
Rule: Section 1 of the Federal Arbitration Act
Analysis: Under Section 1 of the Federal Arbitration Act "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce" are excluded from the Act's coverage. However since he did not qualify for the exemption, the provision he had agreed to initially when he applied that he would enter arbitration for any disputes will be upheld. Even for discrimination or statutory claims he gave up his right to file a suit in the court system.
Conclusion: The U.S. Supreme Court stated that the employees’ claims based on statutes may be subject to mandatory arbitration.