The Prudential Insurance Co. Of America, a New Jersey Corporation v. Justine Lai Elvira Viernes

Opinion by Judge SCHROEDER,

Concurrence by Judge NORRIS.

This is an appeal from a district court order compelling arbitration, under the Federal Arbitration Act, of statutory sexual harassment and discrimination claims. The appellants filed their claims in state court, alleging that while employed by appellee Prudential Insurance Company in 1989 and 1990, they were the victims of serious sexual discrimination and abuse by their supervisor. Prudential then filed this independent action in federal court to compel arbitration.

The district court entered an order compelling arbitration and staying the state court proceedings, based upon the arbitration clause incorporated into the Standard Applications for Securities Industry Registration (“the U-4 forms”) appellants signed. We hold that the district court’s order is appeal-able, and we reverse because appellants did not knowingly enter into any agreement to arbitrate employment disputes.

I. BACKGROUND

Justine Lai and Elvira Viernes were employed as sales representatives by the Prudential Insurance Company of America. When applying for their positions, appellants were required to sign U-4 forms containing agreements “to arbitrate…

concurring.

In Farrand...., a case decided after the district court order in this case, the Seventh Circuit disposed of an appeal identical to the one before us on the narrow ground that the National Association of Securities Dealers (NASD) rules do not require the arbitration of employment disputes. I agree with Far-rand, as does the majority. See op. at 1305. I also agree with the Seventh Circuit that the inapplicability of the NASD arbitration rules to employment disputes is dispositive of the question of whether an employee governed by those rules may be required to arbitrate a discrimination claim.

*1306 The majority, however, for reasons that escape me, finds it necessary to go on to hold (1) that Congress intended that employees can only knowingly waive their right to adjudicate employment discrimination claims, and (2) that the particular employees in this case did not knowingly waive that right. I express no opinion on either of these issues because I see no need to reach them. I am concerned, however, that the majority engages in appellate fact-finding by holding that these particular employees did not knowingly waive their trial rights, even though the district court…

42 F.3d 1299 66 Fair Empl.Prac.Cas. (BNA) 933 , 65 Empl. Prac. Dec. P 43,365 , 63 USLW 2404 The PRUDENTIAL INSURANCE CO. OF AMERICA, a New Jersey Corporation, Petitioner-Appellee, v. Justine LAI; Elvira Viernes, Respondents-Appellants. No. 92-55902. United States Court of Appeals, Ninth Circuit. Argued and Submitted Dec. 10, 1993. Decided Dec. 20, 1994. John S. West and Michael Maroko, Carla D. Barboza, Allred, Maroko, Goldberg, & Ribakoff, Los Angeles, CA, for respondents-appellants. Kenwood C. Youmans, Seyfarth, Shaw, Fairweather & Geraldson, Los Angeles, CA, for petitioner-appellee. Jon W. Davidson, California Women's Law Center, Los Angeles, CA, for amicus curiae for respondents-appellants. Thomas G. Wood, Brown & Wood, San Francisco, CA, for Securities Industry Ass'n, Inc., for amicus curiae for petitioner-appellee. Appeal from the United States District Court for the Central District of California. Before: HUG, SCHROEDER, and WILLIAM A. NORRIS, * Circuit Judges. Opinion by Judge SCHROEDER, Concurrence by Judge NORRIS. SCHROEDER, Circuit Judge: 1 This is an appeal from a district court order compelling arbitration, under the Federal Arbitration Act, of statutory…