Distinguishing between statutory and contractual rights, the Court finds that employees’ law-based civil rights exist independently of those derived by contract and holds that employees are entitled to judicial review even where claims of race discrimination have been pursued through final arbitration.

Relevant Facts: An employee covered by a collective bargaining agreement alleged that he was fired because of racial discrimination. After filing a grievance under the terms of the collective bargaining agreement and losing in arbitration, he filed a complaint with the EEOC. The EEOC agreed with the arbitrator, ruling against the employee. The plaintiff persisted by filing a claim in federal district court under Title VII, a law specifically designed to root out discrimination in the workplace. The district court, and then the appellate court, held the plaintiff had no right to sue under Title VII because he was bound by the arbitrator’s finding.

Question Before The Court: Whether an employee has the right to pursue statutory claims in federal court irrespective of a requirement to arbitrate, and whether arbitration is an appropriate forum for resolving statutory claims.

The Opinion: The Supreme Court found for the worker, holding that the federal policy favoring arbitration does not establish that an arbitrator’s resolution of a contractual claim is dispositive of a statutory claim under Title VII. Thus, an employee’s statutory right to a new trial under Title VII of the Civil Rights Act of 1964 is not foreclosed by prior submission of his claim to final arbitration under the non-discrimination clause of a collective bargaining agreement (CBA). Identifying that “federal courts have been assigned plenary powers to secure compliance with Title VII,” and contrasting those judicial powers with the powers of the EEOC, the Court noted, “There is no suggestion in the statutory scheme that a prior arbitral decision either forecloses an individual’s right to sue or divests federal courts of jurisdiction.”

The Court explained, “Title VII’s purpose and procedures strongly suggest[s] that an individual does not forfeit his private cause of action if he first pursues his grievance to final arbitration . . . In submitting his grievance to arbitration, an employee seeks to vindicate his contractual right under a CBA. By contrast, in filing a lawsuit under Title VII, an employee asserts independent statutory rights accorded by Congress. The distinctly separate nature of these contractual and statutory rights is not vitiated merely because both were violated as a result of the same factual occurrence. . .. [W]e think it clear there can be no prospective waiver of an employee’s rights under Title VII. . .. The private right of action remains an essential means of obtaining judicial enforcement of Title VII. In such cases, the private litigant not only redresses his own injury but also vindicates the important congressional policy against discriminatory employment practices.”

The Court’s opinion also spoke directly to whether a claim is actually “arbitrable” in the sense that the arbitrator is capable of fairly rendering a decision based on the law, when it provided, “The factfinding process in arbitration usually is not equivalent to judicial factfinding. The record of arbitral proceedings is not as complete; the usual rules of evidence do not apply; and rights and procedures common to civil trial, such as discovery . . . and compulsory testimony under oath, are often severely limited or unavailable. . .. It is the informality of arbitral procedure that enables it to function as an efficient, inexpensive, and expeditious means for dispute resolution. This same characteristic, however, makes arbitration a less appropriate forum for final resolution of Title VII issues than the federal courts.”

Unfortunately, this holding was diluted by a massive shift in the Court’s application of the FAA over the next decade. The Court later used its 1980’s jurisprudence to overturn it completely in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).