Howard E. Saari v. Smith Barney, Harris Upham & Co., Inc.

In the employer’s appeal of a district court order refusing to order arbitration of a discharged employee’s claims, we hold that the Federal Employee Polygraph Protection Act does not prohibit arbitration of claims where required by contract. We further hold that the state law claims for violation of the California Labor Code and slander are likewise subject to arbitration.

FACTS AND PROCEEDINGS BELOW

Howard Saari (Saari) was employed by Smith Barney, Harris Upham & Co., Inc. (Smith Barney) as an account executive beginning in July, 1988, and alleges that at all times his work was satisfactory. According to Saari’s complaint, on or about December 14, 1988, a “sum of money, supposedly belonging to a client of Smith Barney, was supposedly stolen from the desk of a Smith Barney employee.” Saari alleged he was questioned about the theft and was later asked to take a polygraph test concerning the incident, which he refused. Saari claims he was then terminated for his refusal to take the polygraph examination.

Saari filed an action in federal district court, alleging (1) a violation of the Em ployee Polygraph Protection Act (EPPA), 29 U.S.C. §§ 2001-2009 , (2) a violation of…