Reference no: EM131625972

LEGAL & HISTORICAL SIGNIFICANCE
• This case establishes firmly that when Congress passed the Federal Arbitration Act, it meant that act to apply to employment contracts also. Indeed, the Supreme Court determined that the Federal Arbitration Act applies to most employment contracts, except those involving interstate transportation workers.

• Saint Clair Adams applied for a job at Circuit City Stores, Inc. Adams signed an employment application that contained a clause requiring the arbitration of any employment-related disputes, including claims under federal and state law.

Adams was hired as a sales counselor in a Circuit City store in Santa Rosa, California. Two years later, Adams filed a suit in a California state court against Circuit City, alleging employment discrimination in violation of state law. Circuit City immediately filed a suit against Adams in a federal district court, asking the court to compel arbitration of Adams' claim. Adams argued that Section 1 of the Federal Arbitration Act (FAA), which excludes from coverage "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce," excluded all employment contracts. Circuit City prevailed at trial and on appeal. The case went to the United States Supreme Court.

• Because the Federal Arbitration Act excludes contracts of employment of certain classes of worker engaged in foreign or interstate commerce, does this mean that the FAA excludes all employment contracts?

1. Had the Supreme Court ruled in the opposite, what might have happened to arbitration clauses that are standard in most employment contracts?

2. Why do you think the Supreme Court agreed to hear this appeal?