Appeal from the United States District Courtfor the Northern District of CaliforniaEugene F. Lynch, District Judge, PresidingArgued and SubmittedMarch 9, 1998--San Francisco, CaliforniaFiled May 8, 1998Before: William C. Canby, Jr. and Stephen Reinhardt,Circuit Judges, and Jane A. Restani,Court of International Trade Judge.*Opinion by Judge ReinhardtSUMMARY
______________________COUNSEL Michael Rubin (argued), Jeffrey B. Demain, Altshuler, Ber-zon, Nussbaum, Berzon & Rubin, San Francisco, California;Cliff Palefsky, McGuinn, Hillsman & Palefsky, San Fran-cisco, California, for the plaintiff-appellant.Daniel H. Bookin, F. Curt Kirscner, Jr. (argued), David B.Newdorf, O'Melveny & Myers, San Francisco, California, forthe defendants-appellees.Robert M. Loeb (argued), C. Gregory Stewart, J. Ray Terry,Jr., Gwendolyn Young Reams, Vincent J. Blackwood, RobertJ. Gregory (on the brief), for amicus curiae Equal Employ-ment Opportunity Commission, Washington, D.C., in supportof the plaintiff-appellant.David E. Feller, Berkeley, California, David T. Weckstein,San Diego, California, for amicus curiae The National Acad-emy of Arbitrators, in support of the plaintiff-appellant.John M. True, III, Rudy, Exelrod, Zeiff & True, San Fran-cisco, California, for amicus curiae National EmploymentLawyers Association, in support of the plaintiff-appellant.Elaine R. Jones, NAACP Legal and Educational defenseFund, New York, New York; Judith L. Lichtman, Women'sLegal defense Fund, Washington, D.C.; Thomas J. Hender-son, Lawyers' Committee for Civil Rights Under the Law,Washington, D.C.; Eva Jefferson Paterson, Lawyers' Com-mittee for Civil Rights of the San Francisco Bay Area, SanFrancisco, California, for amicus curiae in support of theplaintiff-appellant.Paul D. Carrington, Duke University School of Law, Jean R.Sternlight, Florida State University College of Law, RichardC. Reuben, Stanford Center on Conflict and Negotiation,Katherine Van Wezel Stone, Cornell Law School, for amicuscuriae Concerned Legal Scholars, in support of the plaintiff-appellant.William J. Emanuel, Michael L. Wolfram, John S. Battenfeld,Morgan, Lewis & Brockius, Los Angeles, California, foramicus curiae The Employers Group, in support of thedefendants-appellees.Samuel Estreicher, New York University School of Law, foramicus curiae California Employment Law Council, in sup-port of the defendants-appellees.Robert E. Williams, Ann Elizabeth Reesman, Erin QuinnGery, McGuiness & Williams, Washington, D.C., for amicuscuriae Equal Employment Advisory Counsel, in support ofthe defendants-appellees.Gary R. Siniscalco, Lisa K. McClelland, Orrick, Herrington &Sutcliffe, San Francisco, California, for amicus curiaeSecurities Industry Association, in support of the defendants-appellees.
_____________________________OPINION REINHARDT, Circuit Judge:This case presents the issue whether employers may requireas a mandatory condition of employment in a certain profes-sion -- here, broker-dealer in the securities industry -- thatall employees waive their right to bring Title VII and otherstatutory and non-statutory claims in court and instead agreein advance to submit all employment-related disputes to bind-ing arbitration. We hold that, under the Civil Rights Act of1991, employers may not by such means compel individualsto waive their Title VII right to a judicial forum. At the sametime, we hold that because no state action is involved there isno constitutional bar to employers requiring employees toagree in advance to arbitrate state-law tort and contract claims(other than for violation of a state civil rights law).ILike every individual who wishes to work in the UnitedStates as a broker-dealer in the securities industry, TonyjaDuffield was required, as a condition of employment man-dated by the national securities exchanges, to waive her rightto a judicial forum to resolve all "employment related" dis-putes and to agree instead to arbitrate any such disputes underthe exchanges' rules. Prospective employees must satisfy thiscondition by signing the industry's Uniform Application forSecurities Industry Registration or Transfer, commonlyknown as Form U-4, which registers them with all of thesecurities exchanges with which their employers are mem-bers. Paragraph 5 of Form U-4, the arbitration clause, readsas follows: I agree to arbitrate any dispute, claim or controversy that may arise between me and my firm, or a cus- tomer, or any other person, that is required to be arbitrated under the rules, constitutions, or by-laws of the organizations with which I register, as indi- cated in item 10 as may be amended from time to time.Because Robertson Stephens & Co. is a member of the NewYork Stock Exchange ("NYSE") and the National Associa-tion of Securities Dealers ("NASD"), Duffield's "item 10"listed both of those organizations, and the form obligated herto abide by their rules, constitutions, and by-laws.Both the NYSE and the NASD have rules that compelemployees to arbitrate any employment-related dispute at therequest of their employers. NYSE Rule 347 provides: Any controversy between a registered representative and any member or member organization arising out of the employment or termination of employment of such registered representative by and with such member or member organization shall be settled by arbitration, at the instance of any such party, in accordance with the arbitration procedure prescribed elsewhere in these rules.The NASD Code of Arbitration Procedure, as amended in1993, provides: [A]ny dispute, claim, or controversy arising out of or in connection with the business of any member of the Association, or arising out of the employment or termination of associated person(s) with any mem- bers . . . shall be arbitrated.Id. at Part 1, S 1.1 After signing her Form U-4 in 1988, Duf-field began working as a broker-dealer for Robertson Ste-phens.In January, 1995, Duffield brought suit in federal court,alleging sexual discrimination and sexual harassment in viola-tion of Title VII of the Civil Rights Act of 1964, as amended,42 U.S.C. S 2000e et seq., and California's Fair Employmentand Housing Act (FEHA), breach of contract, deceit, inten-tional infliction of emotional distress, and negligent inflictionof emotional distress. As a threshold matter, she requested adeclaratory judgment stating that securities industry employ-ees cannot be compelled to arbitrate their employment dis-putes under the arbitration provision in Form U-4. She madefive specific arguments in this regard: (1) that the"compulsory" arbitration requirement mandated by Form U-4does not constitute a voluntary agreement to arbitrate withinthe meaning of Title VII; (2) that signing Form U-4 does notconstitute a "knowing" agreement to arbitrate within themeaning of Title VII; (3) that the NYSE's arbitration systemfails adequately to protect employees' substantive Title VIIrights; (4) that Form U-4 is an unconscionable contract ofadhesion because it forces her to arbitrate her Title VII claimsunder an inadequate arbitration system; and (5) that the indus-try's mandatory arbitration requirement constitutes an uncon-stitutional condition of employment. Only in connection withher final argument did Duffield contest the arbitrability of herstate law and contract claims.After allowing extensive discovery on the securities indus-try's arbitration system, the district court rejected each ofDuffield's arguments. It first denied her motion for summaryjudgment on her declaratory relief claim, and later grantedRobertson Stephens' motion to compel arbitration of all of hersubstantive claims. The court declined to enter final judgmentpursuant to Fed. R. Civ. P. 54(b) on Duffield's declaratoryjudgment claim, but certified both of its orders for immediateappeal pursuant to 28 U.S.C. S 1292(b).On appeal, Duffield renews all five of her argumentsbelow. We review de novo both the district court's denial ofDuffield's motion for summary judgment, Curnow v. Ridge-crest Police, 952 F.2d 321, 323 (9th Cir. 1991), and its ordercompelling arbitration. Zolezzi v. Dean Witter Reynolds, Inc.,789 F.2d 1447, 1449 (9th Cir. 1986). In Part II, we addressDuffield's contentions that are unique to her Title VII claims,and in Part III we consider her constitutional challenge toForm U-4.IIThe security industry's Form U-4 requires employees tosubmit to a system that is most fittingly described as"compulsory arbitration." Throughout this opinion when weuse the term "compulsory arbitration," we generally refer tothe system under which employers compel their prospectiveemployees as a condition of employment to waive their rightsto litigate future employment-related disputes in a judicialforum (although the term applies as well to employees sub-jected to such a requirement for the first time during thecourse of their employment); under Form U-4, as in manyother form or standard agreements, future employment-relateddisputes include, among others, all claims of discriminationthat may arise under civil rights or other statutes. By compul-sory arbitration, we do not, however, include systems underwhich employees agree, or otherwise elect, after disputes havearisen to submit them to arbitration. Nor do we include, forpurposes of this opinion, agreements in which at the time ofhiring employers give prospective employees the choice toopt in advance for arbitration of all future employment-relateddisputes or for retention of their statutory right to litigate suchdisputes. In short, we refer to an arbitration agreement as"compulsory" when individuals must sign an agreement waiv-ing their rights to litigate future claims in a judicial forum inorder to obtain employment with, or continue to work for, theemployer. The question of the enforceability of such agree-ments ordinarily arises when, during the course of employ-ment, an event then occurs that causes an employee to claimthat his rights have been violated, and the employer, relyingon the provisions of the waiver, seeks to compel the unwillingemployee to arbitrate the claim.2In this case, Duffield argues that she may not be compelledto arbitrate her statutory claims of sexual discrimination andsexual harassment under the waiver mandated by Form U-4.3We consider her argument in two steps. First, we describe thehistorical and statutory evolution of the arbitrability ofemployment discrimination claims. Second, in light of thatbackground, we evaluate Duffield's specific argument that theCivil Rights Act of 1991, Pub. L. No. 102-166, 105 Stat.1071, precludes compulsory arbitration of Title VII claims.AThe Supreme Court has long recognized that in enactingTitle VII Congress envisioned that decisions and remediesfrom the federal courts would play a unique and indispensablerole in advancing the social policy of deterring workplace dis-crimination on the basis of race, sex, and national origin. SeeMcKennon v. Nashville Banner-Publishing Co., 115 S. Ct.879, 884-85 (1995) ("[t]he private litigant who seeks redressfor his or her injuries vindicates both the deterrence and com-pensation objectives of the [anti-discrimination statutes]");Kremer v. Chemical Constr. Corp.,
456 U.S. 461, 468
(1982)(stating that "the federal courts were entrusted with the ulti-mate enforcement responsibility" under Title VII); Barrentinev. Arkansas-Best Freight Sys.,
450 U.S. 728, 750
(1981) (Bur-ger, C.J., dissenting) (stating that federal courts should notdefer to arbitration of Title VII claims "reached by the samecombination of forces that had long perpetuated invidiousdiscrimination"); Albermarle Paper Co. v. Moody, 422 U.S.405, 417-18 (1975) (stating that federal court relief underTitle VII not only compensates victims but vindicates broaderpublic interest in deterring future discrimination); Alexanderv. Gardner-Denver Co.,
415 U.S. 36
, 44-45, 49-50 (1974)(describing congressional intent to assign "federal courts [the]plenary powers to secure compliance with Title VII"). Mostnotably, in 1974, the Court unanimously held in Alexander v.Gardner-Denver that an arbitration clause contained in a col-lective bargaining agreement could not bar a plaintiff fromseeking Title VII remedies in federal court. "The purpose andprocedures of Title VII," the Court explained,"indicate thatCongress intended federal courts to exercise final responsibil-ity for enforcement of Title VII; deferral [under any standardof review] to arbitral decisions would be inconsistent withthat goal." Id. at 56. The Court unanimously reaffirmed thisreasoning two years later in Chandler v. Roudebush, 425 U.S.840 (1976), extending Gardner-Denver to cover federalemployees, and again in 1984 in McDonald v. City of WestBranch,
466 U.S. 284, 290
(1984), stating without qualifica-tion that Gardner-Denver established that arbitration "cannotprovide an adequate substitute for a judicial proceeding inprotecting the federal statutory" rights embodied in Title VII.Prior to 1991, therefore, "[Gardner-Denver ] was widelyinterpreted as prohibiting any form of compulsory arbitrationof Title VII claims." Prudential Ins. Co. v. Lai, 42 F.3d 1299,1303 (9th Cir. 1994) (collecting cases). Even as arbitrationbecame increasingly popular in the 1980's, every circuit courtto address the issue held firm in refusing to enforce any agree-ment -- in the collective bargaining context or otherwise --that required employees to resolve discrimination claimsthrough binding arbitration. See, e.g., Alford v. Dean WitterReynolds, Inc., 905 F.2d 104, 105-08 (5th Cir. 1990); Utley v.Goldman Sachs & Co., 883 F.2d 184, 185-87 (1st Cir. 1989);Swenson v. Management Recruiters Int'l, Inc., 858 F.2d 1304,1305-07 (8th Cir. 1988); Rosenfeld v. Department of Army,769 F.2d 237, 239 (4th Cir. 1985); EEOC v. Children's Hosp.Medical Ctr., 719 F.2d 1426, 1431 (9th Cir. 1983) (en banc)(Fletcher, J., concurring). The circuit courts read Gardner-Denver as sending a simple message: Title VII is different.Thus, while the Supreme Court espoused in other contexts a"liberal federal policy favoring arbitration, " Moses H. ConeMem'l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1
, 24(1983), the Eighth Circuit held, in an opinion typical of thoseissued by the federal courts: Although [Gardner-Denver] involves a collective bargaining agreement, and not commercial arbitra- tion under the FAA [Federal Arbitration Act, 9 U.S.C. SS 1-14], this fact should not change the Court's analysis. The [Gardner-Denver ] Court was well aware that federal policy favors arbitration. That decision turned not on the fact that a collective bargaining agreement was involved, but instead on the unique nature of Title VII claims. . . . . We conclude that in the passage of Title VII it was the congressional intent that arbitration is unable to pay sufficient attention to the transcendent public interest in the enforcement of Title VII.Swenson, 858 F.2d at 1306-07; see also Utley, 883 F.2d at187 (holding that in enacting Title VII Congress had "clearly"intended to preclude binding arbitration); Rosenfeld, 769 F.2dat 239 (stating that the "plain lesson" of Gardner-Denver isthat Congress entrusted the final resolution of Title VII claimsto the federal courts). As we succinctly put it a few years ago,Gardner-Denver simply "precluded Title VII cases frombeing subjected to compulsory arbitration." Nghiem v. NECElectronic, Inc., 25 F.3d 1437, 1441 (9th Cir. 1994).In 1991, however, the Supreme Court held in Gilmer v.Interstate/Johnson Lane Corp.,
500 U.S. 20
(1991), thatemployees could be required under Form U-4 and NYSE Rule347 to arbitrate age discrimination claims brought under theAge Discrimination in Employment Act of 1967 (ADEA), 29U.S.C. S 621 et seq. Without discussing the similarities or dif-ferences between the ADEA and Title VII, the Court distin-guished Gardner-Denver on the ground that it involved acollective bargaining agreement rather than an individualagreement to arbitrate. See
500 U.S. at 34
-35. The Court rea-soned that "[a]lthough all statutory claims may not be appro-priate for arbitration," individual agreements to arbitrate suchclaims should be placed on the same footing as other individ-ual arbitration agreements "unless Congress itself has evincedan intention [discoverable in a statute's text, legislative his-tory, or through an inherent conflict between arbitration andthe purpose of the statute] to preclude a waiver of judicialremedies for the statutory rights at issue." Id. at 24-26. Find-ing no such congressional intention evidenced by any inherentconflict between the ADEA's underlying purposes and arbi-tration, the Court upheld the enforceability of Form U-4 inthat circumstance.4The Court's decision in Gilmer made it plain that its previ-ous decisions finding arbitration generally inconsistent withthe purposes of Title VII are now insufficient to "show[ ] thatCongress in enacting Title VII intended to preclude arbitrationof claims under the Act." Mago v. Shearson Lehman HuttonInc., 956 F.2d 932, 934 (9th Cir. 1992). In the post-Gilmerera, if courts are to hold that an act precludes arbitration ofclaims to which it gives rise, a more concrete showing isrequired, including a scrupulous examination of Congress'actions and intent. Further, in examining congressional legis-lation, it is now incumbent upon courts to consider whetherCongress intended to preclude every form of arbitration ofclaims arising under a particular statute, or whether itintended to preclude only certain forms of arbitration agree-ments.[1] Almost simultaneously with the Court's issuance ofGilmer, Congress enacted the Civil Rights Act of 1991, and,fortuitously, for the first time spoke directly to the arbitrationof Title VII claims. While the Act was primarily designed to"overrule" hostile Supreme Court decisions in order to makediscrimination claims easier both to bring and to prove in fed-eral courts, and while it increased substantially the proceduralrights and remedies available to Title VII plaintiffs in federalcourts, it also stated that the parties could, " [w]here appropri-ate and to the extent authorized by law," opt to pursue alterna-tive dispute resolution, including arbitration, to resolve theirTitle VII disputes. Pub. L. 102-166, S 118, reprinted in notesto 42 U.S.C. S 1981 (emphasis added).In the wake of the 1991 Act, we have ruled that claimantswho do not "knowingly" agree to arbitrate Title VII claimscannot be required to submit to arbitration. See PrudentialIns. Co. v. Lai, 42 F.3d 1299 (9th Cir. 1994), cert. denied, 116S. Ct. 61 (1995). On the other hand, we also held in Nghiemthat plaintiffs who "voluntarily initiate[ ] binding arbitration"of their Title VII claims are "bound by the arbitrator'sdecision." 25 F.3d at 1439-40. "Once a claimant submits tothe authority of the arbitrator and pursues arbitration," weexplained, "he cannot suddenly change his mind and assertlack of authority." Id. at 1440. We therefore rejected the argu-ment that simply because the 1991 Act's amendments to TitleVII provide for the right to jury trial, that right evinces a con-gressional intent to allow claimants to escape the bindingeffect of arbitrations that they initiated. See 25 F.3d at 1441.However, neither in Nghiem nor in any other prior case havewe ever been required to consider the effect of the 1991 Acton the much more difficult question before us today: theenforceability of compulsory arbitration provisions that, as acondition of employment, compel persons to forego their stat-utory right to judicial relief with respect to future claims ofTitle VII discrimination, and to submit all such future claimsto binding arbitration.BDuffield argues that Congress' intent to preclude the com-pulsory arbitration of Title VII claims is conclusively demon-strated in the text and/or legislative history of the Civil RightsAct of 1991, as well as by an examination of its purposes.That express congressional intent, Duffield contends, clearlyserves to distinguish post-1991 Title VII claims from the pre-1990 ADEA claim that the Supreme Court found arbitrable inGilmer.5 The EEOC, in a Notice dated July 10, 1997 and inan amicus brief filed in this case, has adopted this same position.6We agree with Duffield and the EEOC and hold that under theCivil Rights Act of 1991 employees may not be required, asa condition of employment, to waive their right to bring futureTitle VII claims in court.7As Gilmer pointed out, the standard governing the enforce-ability of arbitration agreements under the FAA is well estab-lished. "Having made the bargain to arbitrate, the party shouldbe held to it unless Congress itself has evinced an intentionto preclude a waiver of judicial remedies for the statutoryrights at issue." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614, 628
(1985). The burden, there-fore, is on Duffield to demonstrate that "Congress intended topreclude a waiver of a judicial forum for [Title VII] claims"in the manner mandated by Form U-4. Gilmer,
500 U.S. at 26
."If such an intention exists, it will be discoverable in the textof [the act at issue], its legislative history, or an `inherent con-flict' between arbitration and the [act's] underlying purposes."Id. at 26 (emphasis added); accord Mitsubishi, 473 U.S. at628; see also Block v. Community Nutrition Inst., 467 U.S.340, 344 (1984) ("[A]ll presumptions used in interpretingstatutes[ ] may be overcome by specific language or specificlegislative history that is a reliable indicator of legislativeintent.").Congress declared as the 1990's dawned that "[n]ow --when more women and minorities are needed in the labormarket to maintain the health and vitality of our economy --is the time to restore the strength of federal equal employmentprotection." H.R. Rep. No. 40(I), 102d Cong., 1st Sess. 15-16(1991), reprinted in 1991 U.S.C.C.A.N. 549, 553-54. It there-fore drafted the legislation that became the Civil Rights Actof 1991. The Act had two primary goals: (1) to "restore . . .civil rights laws" by "overruling" a series of 1989 SupremeCourt decisions that Congress thought represented an undulynarrow and restrictive reading of Title VII, see id. at 30;Landgraf v. USI Film Prods.,
511 U.S. 244, 250
-51 (1994)(listing those decisions), and (2) to "strengthen " Title VII bymaking it easier to bring and to prove lawsuits, and byincreasing the available judicial remedies so that plaintiffscould be fully compensated for injuries resulting from dis-crimination. Among other things, the 1991 Act provided forthe first time a right to damages and to trial by jury andexpanded Title VII's fee-shifting provisions. See H.R. Rep.No. 40(I) at 30; H.R. Rep. No. 40(II) at 1-4, 102d Cong., 1stSess. 78 (1991), reprinted in 1991 U.S.C.C.A.N. 694, 694-96.In the context of the Act's significant enlargement of thesubstantive and procedural rights of victims of employmentdiscrimination, Congress also included what Chief Judge Pos-ner has termed "a polite bow to the popularity of`alternatedispute resolution.' " Pryner v. Tractor Supply Co., 109 F.3d354, 363 (7th Cir. 1997), cert. denied, 118 S. Ct. 294 (1998).Section 118 of the 1991 Act provides that: "Where appropri-ate and to the extent authorized by law, the use of alternativemeans of dispute resolutions including, . . . arbitration isencouraged to resolve disputes arising under the Acts or pro-visions of Federal law amended by this Title." Pub. L. 102-166, S 118, reprinted in notes to 42 U.S.C. S 1981 (emphasisadded). Notwithstanding the inclusion of this innocuous-appearing section in a statute providing for a vast strengthen-ing of employees' rights, Robertson Stephens argues that theplain language of the section evinces a congressional intent toallow -- indeed, to "encourage" -- the use of a processwhereby employers condition employment on their prospec-tive employees' agreeing to waive their rights to bring TitleVII claims in federal (and state) court. By the time Congresspassed the 1991 Act (but after it was drafted and reported outby the House Education and Labor Committee8), the argumentgoes, compulsory arbitration of all employment discrimina-tion claims, including Title VII claims, was "authorized bylaw" -- that is, by Gilmer -- because the ADEA is similar toTitle VII. Therefore, Robertson Stephens contends, compul-sory arbitration must be included among the procedures thatCongress intended to "encourage" in the 1991 Act.We are the first circuit court to consider the "plain text"argument that Robertson Stephens makes in the context of anindividual agreement that requires as a condition of employ-ment the arbitration of Title VII claims.9 District courts havesplit on the question. Compare Rosenberg v. Merrill Lynch,Pierce, Fenner & Smith, Inc., _______ F. Supp. _______, No. Civ.A.96-12267-NG, 1998 WL 81907 (D. Mass. Jan. 26, 1998)(holding that 1991 Act precludes compulsory arbitration ofTitle VII claims under Form U-4) with Johnson v. HubbardBroad., Inc., 940 F. Supp. 1447, 1457-58 (D. Minn. 1996)(reaching opposite conclusion despite noting indications tothe contrary in the Act's legislative history) and EEOC v.Frank's Nursery & Crafts, Inc., 966 F. Supp. 500, 504 (E.D.Mich. 1997) (holding that compulsory arbitration of Title VIIclaims, "notwithstanding the legislative history of [the 1991Act], do[es] not violate federal law or policy"). Two circuitshave accepted a version of Robertson Stephens' argument incases involving significantly different circumstances. Bothcases arose under the Americans with Disabilities Act (ADA),which has an arbitration section similar to the 1991 Act's.10The first case did not involve either an employment agree-ment or a compulsory waiver, see Bercovitch v. BaldwinSchool, Inc., 133 F.3d 141, 148-50 (1st Cir. 1998) (conclud-ing that plain language of the ADA allows enforcement ofvoluntary, prospective agreement to arbitrate ADA claimagainst school), and the second, while it involved an employ-ment contract, appears to have involved a voluntary agree-ment, see Miller v. Public Storage Mgmt., Inc., 121 F.3d 215(5th Cir. 1997) (enforcing arbitration clause to which theemployee agreed at a performance review, while holding thatthe plain text of the ADA refutes the contention that"Congress did not intend for arbitration clauses to preventindividuals from bringing suit for ADA violations"). Thosecases are readily distinguishable on their facts. There is a thirdand more troubling case, however -- a case that involves acollective bargaining agreement and that conflicts directlywith Gardner-Denver. See Austin v. Owens-Brockway GlassContainer, Inc., 78 F.3d 875, 880-82 (4th Cir.) (holding thatemployees can be compelled to submit ADA and Title VIIclaims to binding arbitration pursuant to collective bargainingagreement), cert. denied, 117 S. Ct. 432 (1996). In that case,a divided panel of the Fourth Circuit in fact flatly rejectedGardner-Denver, which in our view circuit courts are not freeto do. See Agostini v. Felton, 117 S. Ct. 1997, 2017 (1997)(reaffirming that circuit courts must always follow directlybinding Supreme Court decisions). The Fourth Circuit alsoignored the reasoning of eight Justices on the subject of statu-tory analysis, relied on a separate opinion by Justice Scalia,and partially on the basis of that reasoning decided to disre-gard the legislative history of the 1991 Civil Rights Act. Seeid. at 882 (quoting Thompson v. Thompson,
484 U.S. 174
, 188(1988) (Scalia, J., concurring)).11 We respectfully concludethat the Fourth Circuit simply misconstrued the controllinglaw.12[2] At the outset, we note that Robertson Stephens' con-struction of S 118 is at odds with Congress' directive to readTitle VII broadly so as to best effectuate its remedial pur-poses. In passing the 1991 Act, Congress explicitly directedcourts "that when the statutory terms in [Title VII] are suscep-tible to alternative interpretations, the courts are to select theconstruction which most effectively advances the underlyingcongressional purpose" of the Act. H.R. Rep. No. 40(I) at 88;accord Dennis v. Higgins,
498 U.S. 439, 443
(1991) (civilrights statutes should be construed broadly). The purpose ofthe Act was uniformly to expand employees' rights and "toincrease the possible remedies available to civil rightsplaintiffs." Lai, 42 F.3d at 1304 (emphasis added). It thuswould be "at least a mild paradox," Pryner, 109 F.3d at 363,to conclude that in the very Act of which the "primarypurpose" was "to strengthen existing protections and remediesavailable [to employees under Title VII]," H.R. Rep. No.40(II) at 1, Congress "encouraged" the use of a processwhereby employers condition employment on their prospec-tive employees' surrendering their rights to a judicial forumfor the resolution of all future claims of race or sex discrimi-nation and force those employees to submit all such claims tocompulsory arbitration.13 It seems far more plausible thatCongress meant to encourage voluntary agreements to arbi-trate -- agreements such as those that employers and employ-ees enter into after a dispute has arisen because both partiesconsider arbitration to be a more satisfactory or expeditiousmethod of resolving the disagreement.Upon a careful reading of S 118 in context, moreover, it isdifficult to escape the conclusion that the text of the sectionis, at a minimum, ambiguous -- and that, at a maximum, itstands for a proposition that differs significantly from the oneadvanced by Robertson Stephens. When "examin[ing] the lan-guage of the governing statute," we must not be guided by "asingle sentence or member of a sentence, but look[ ] to theprovisions of the whole law, and to its object and policy."John Hancock Mut. Life Ins. Co. v. Harris Trust & SavingsBank,
510 U.S. 86, 94
-95 (1993) (quoting Kelly v. Robinson,
479 U.S. 36, 43
(1986) (in turn quoting Offshore Logistics,Inc. v. Tallentire,
477 U.S. 207, 222
(1986) (other quotationmarks and citations omitted))); see also Bailey v. UnitedStates, 116 S. Ct. 501, 506 (1995) ("We consider not only thebare meaning of the word but also its placement and purposein the statutory scheme."). That arbitration is "encouraged"obviously means only that parties are encouraged to arbitratewithin the statutory boundaries Congress contemplated.Indeed, it would seem entirely disingenuous to fasten ontothat one word and conclude that Congress was boundlessly infavor of all forms of arbitration, regardless of the desires orinterests of the persons whose rights the Civil Rights Act of1991 was designed to protect.[3] The phrase "[w]here appropriate and to the extentauthorized by law" is the critical statutory language; it pro-vides the section's substantive limitations. While the phrase,if read out of context, is opaque, in the context of the statuteand its "object and policy," John Hancock,
510 U.S. at 94
-95,it tells us much about what Congress actually intended. Forstarters, following the Supreme Court, we are "reluctan[t] totreat statutory terms as surplusage." Babbitt v. Sweet HomeChapter,
515 U.S. 687, 698
(1995); see also Mackey v. LanierCollection Agency & Serv.,
486 U.S. 825
, 837 & n.11 (1988)(citing cases holding same). We therefore presume that Con-gress' qualifiers of "where appropriate" and "to the extentauthorized by law," S 118, set forth separate and distinct limi-tations on the conditions and circumstances under which thearbitration process may be invoked to resolve Title VIIclaims. See Bailey, 116 S. Ct. at 507 ("assum[ing] that Con-gress used two terms because it intended each term to have aparticular, nonsuperfluous meaning"). The presence of thelimiting phrase "where appropriate" at the very least refutesthe argument that "to the extent authorized by law" meansthat Congress intended either to encourage all forms of arbi-tration or to encourage the use of arbitration under all condi-tions and circumstances that might otherwise be lawful.Rather, it seems clear that Congress intended to encouragearbitration only under circumstances or conditions it deemedto be both legally permissible and appropriate.[4] While the words "where appropriate," standing bythemselves, give us little clue as to the circumstances underwhich Congress deemed arbitration to be "appropriate," or, asthe dictionary defines the term, "proper, fitting " or "speciallysuitable," 1 The New Shorter Oxford English Dictionary 103,def'n 1 (4th ed. 1993), we can glean at least a reasonableunderstanding of Congress' intent from examining the pur-pose and objective of the 1991 Act, that purpose and objectivebeing to expand employees' rights and remedies under TitleVII. "Where appropriate," as used in the Act, would appearto mean where arbitration furthers the purpose and objectiveof the Act -- by affording victims of discrimination anopportunity to present their claims in an alternative forum, aforum that they find desirable -- not by forcing an unwantedforum upon them. See, e.g., John Hancock,
510 U.S. 86
, 94-95 (1993) (courts should construe statutes guided by the"object and policy" of the whole law); United States v.Qualls, _______ F.3d _______, No. 95-50378, 1998 WL 149393, at *2(9th Cir. Apr. 2, 1998) (en banc) (same).[5] Likewise, S 118's other qualifier, the phrase "to theextent authorized by law," does not automatically lend itselfto a fixed definition. It most likely codifies the "law" as Con-gress understood it at the time it either drafted or passed theprovision. As the Supreme Court has stated, we should"examine initially" the statute "with an eye toward determin-ing Congress' perception of the law that it was shaping orreshaping." Thompson v. Thompson,
484 U.S. 174
, 180(1988) (emphasis added); see also Brown v. GSA, 425 U.S.820, 828 (1976) (applying this principle to congressionalamendments to Title VII). The overwhelming weight of thelaw at the time Congress drafted S 118, and it was reportedout of the House Education and Labor Committee, was to theeffect that compulsory agreements to arbitrate Title VIIclaims were unenforceable. In other words, such agreementswere not "authorized by law." To the contrary, the law at thattime prohibited employers from compelling employees toarbitrate Title VII claims pursuant to collective bargainingagreements, "in large part" because of the Court's recognitionof the critical role that Congress envisioned for the indepen-dent federal judiciary in advancing Title VII's societal goal.See McDonald,
466 U.S. at 289
; Gardner-Denver, 415 U.S.at 56. Although the Supreme Court had adopted in contextsoutside of employment discrimination a "liberal federal policyfavoring arbitration agreements," Moses H. Cone, 460 U.S. at24, it had done even that only under the explicit assumptionthat these agreements constituted "freely negotiated choice-of-forum clauses." Mitsubishi,
473 U.S. at 628
, 631; see also,e.g., id. (stating that "nothing . . . prevents a party fromexcluding statutory claims from the scope of an agreement toarbitrate"); Rodriguez de Quijas v. Shearson/AmericanExpress, Inc.,
490 U.S. 477, 483
-84 (1989) (upholding agree-ment to arbitrate because it "broadened" plaintiff's right toselect a forum for resolving disputes); Volt Info. Sciences, Inc.v. Board of Trustees,
489 U.S. 468, 479
(1989) ("Arbitrationunder the [FAA] is a matter of consent, not coercion."). Per-haps most important, as of the time S 118 was drafted andreported out of the House Education and Labor Committee,the circuit courts, without exception, had "widely interpreted"Title VII as prohibiting "any form of compulsory arbitration,"including in individual employment cases. Lai, 42 F.3d at1303 (emphasis added); see also supra at 8-10 (gatheringcases). Certainly when Congress wrote the 1991 Act, it couldnot have been expected to be better able than the circuit courtsto predict the Supreme Court's narrowing of Gardner-Denver.Cf. Thompson,
484 U.S. at 180
(assuming Congress' view ofthe law to be the lower courts' consensus where the SupremeCourt had not spoken to the contrary).By the time the 1991 Act was actually passed, the law hadbecome less clear. The Court's decision in Gilmer was issuedjust before the 1991 Act was officially enacted, leaving roomfor the possible inference that S 118 intended to codify thatdecision also. Yet even if such an inference might have beenpermissible under other circumstances, at the time the 1991Act was enacted it was still at least an open question whetherGilmer applied to Title VII claims. The Gilmer opinion itselfis silent regarding any comparison between Title VII and theADEA. The ADEA shares many of the substantive provisionsof Title VII, but its remedial and procedural provisions wereoriginally modeled after the Fair Labor Standards Act(FLSA), 29 U.S.C. S 201 et seq., not Title VII. Lorillard v.Pons,
434 U.S. 575, 578
-84 (1978); see also McKennon, 513U.S. 352, 357 (1995) (noting that even after the ADEA'senforcement was transferred to the EEOC its procedural pro-visions follow the FLSA and are distinct from those of TitleVII). In fact, the Court had held that because of the "crucial"differences between the procedural provisions in the ADEAand Title VII, any attempt to divine congressional intent inthis area by comparing the two statutes "is misplaced."Lorillard,
434 U.S. at 584
-85. While, in the absence of furtherguidance from Congress itself, there could be room for doubtover its intent with respect to the effect of the phrase "to theextent authorized by law" on Title VII's procedural rules,when the phrase is read in light of the other qualifying phraseand in light of the objectives and purposes of the 1991 Act itseems far more likely that Congress was referring to theGardner-Denver line of cases than to Gilmer .[6] Any doubt on this point, however, is resolved by evena cursory glance at S 118's legislative history. That historymakes it clear that there is no need to hypothesize overwhether Congress intended to include Gilmer within its defi-nition of what was "authorized by law." It is evident from thelegislative history that the answer to that inquiry is a resound-ing "no." Congress in no way intended to incorporateGilmer's holding into Title VII, or to authorize compulsoryarbitration of Title VII claims. In fact, its clearly expressedintent was precisely the opposite.The legislative history of S 118 unambiguously confirmsthat Congress sought to codify the law as it stood at the timethe section was drafted, and eliminates any possibility thatCongress intended to write Gilmer into Title VII law or toleave the question of which forms of arbitration were permis-sible to the whims and presumptions of future court decisions.Specifically, the committee reports and the floor statementsdescribing S 118 -- which we have already held in Laidemonstrate Congress' intent in passing the 1991 Act, see 42F.3d at 1304-05 -- plainly demonstrate that in allowing arbi-tration only "[w]here appropriate and to the extent authorizedby law" Congress intended to adopt Gardner-Denver's firmrule precluding enforcement of compulsory agreements toarbitrate future Title VII claims, not Gilmer 's possible valida-tion of such agreements. In fact, given the possible ambiguityin the literal language of the statutory phrases that relate spe-cifically to arbitration, it is the unusual force and clarity of thestatute's legislative history that is ultimately dispositive inthis case.[7] "In surveying legislative history, [the Supreme Courthas] repeatedly stated that the authoritative source for findingthe Legislature's intent lies in the Committee Reports on thebill, which `represen[t] the considered and collective under-standing of those Congressmen involved in drafting andstudying the proposed legislation.' " Garcia v. United States,
469 U.S. 70, 76
(1984) (quoting Zuber v. Allen,
396 U.S. 168
,186 (1969)). This is especially true when, as in this case, theCommittee reports were published before Congress' votes onthe bill. The House Committee on Education and Labor, in itsreport on H.R. 1, the bill that became the Civil Rights Act of1991, "explained that the purpose of [S 118] was to increasethe possible remedies available to civil rights plaintiffs." Lai,42 F.3d at 1304. The Committee report states: The Committee emphasizes . . . that the use of alter- native dispute mechanisms is . . . intended to supple- ment, not supplant, the remedies provided by Title VII. Thus, for example, the committee believes that any agreement to submit disputed issues to arbitra- tion, whether in the context of collective bargaining or in an employment contract, does not preclude the affected person from seeking relief under the enforcement provisions of Title VII. This view is consistent with the Supreme Court's interpretation of Title VII in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). The Committee does not intend this section to be used to preclude rights and remedies that would otherwise be available.H.R. Rep. No. 40(I) at 97 (emphasis added), quoted in Lai, 42F.3d at 1304. The Committee's explanation of S 118 echoedexactly the Conference Report's description of the same (ver-batim) section in the Civil Rights Act of 1990, which Presi-dent Bush vetoed for other reasons. In that report, theConference Committee explained that "any agreement to sub-mit disputed issues to arbitration . . ., in an employment con-tract, does not preclude the affected person from seekingrelief under the enforcement provisions of Title VII." H.R.Conf. Rep. No. 755, 101st Cong., 2d Sess. 26 (1990). Thesestatements make it clear that even though Gardner-Denver'sliteral holding applied only to collective bargaining agree-ments, Congress intended that the decision's rule againstcompulsory arbitration of Title VII claims be applicable to all"employment contract[s]." In other words, Congress con-cluded that all such mandatory agreements as conditions ofemployment were, at the very least, "inappropriate," and thusunenforceable.[8] Lest there be any doubt as to the intended meaning ofthe Act's arbitration provision, Congress in fact specificallyrejected a proposal that would have allowed employers toenforce "compulsory arbitration" agreements. It did so in themost emphatic terms, explaining that: H.R. 1 includes a provision encouraging the use of alternative means of dispute resolution to supple- ment, rather than supplant, the rights and remedies provided by Title VII. The Republican substitute, however, encourages the use of such mechanisms "in place of judicial resolution." Thus, under the latter proposal employers could refuse to hire workers unless they signed a binding statement waiving all rights to file Title VII complaints. Such a rule would fly in the face of Supreme Court decisions holding that workers have the right to go to court, rather than being forced into compulsory arbitration, to resolve important statutory and constitutional rights, including equal opportunity rights. See, e.g., Alexan- der v. Gardner-Denver Co.,
415 U.S. 36
(1974); McDonald v. City of West Branch,
466 U.S. 284
(1984). American workers should not be forced to choose between their jobs and their civil rights.H.R. Rep. No. 40(I) at 104 (emphasis added). This rejectionof the "Republican" proposal provides still further "strongevidence" of Congress' intent, Thompson,
484 U.S. at 185
, topreclude compulsory arbitration of civil rights claims and to"encourage" only voluntary agreements -- agreements that donot require potential employees to waive their right to litigatein a judicial forum as a mandatory condition of employment.This part of the Committee report also eliminates any possi-bility that S 118 was in any way a product of legislative com-promise that was not meant to advance the overall purposesof the Act.That Gilmer turned out to undermine some of Congress'preferred Supreme Court decisions, of course, in no wayalters Congress' expressed intent, in drafting S 118, to codifyits position that "compulsory arbitration" of Title VII claimswas not "authorized by law," and that compelling employeesto forego their rights to litigate future Title VII claims as acondition of employment was not "appropriate. " Indeed, Con-gress' reading of Gardner-Denver and McDonald was -- asthe Court remarked regarding Congress' understanding of adifferent facet of Title VII law that it amended-- entirely reasonable. Whether [Congress'] under- standing [of the law] was in some ultimate sense incorrect is not what is important in determining the legislative intent in amending the 1964 Civil Rights Act . . . . For the relevant inquiry is not whether Con- gress correctly perceived the state of the law, but rather what its perception of the law was.Brown,
425 U.S. at 828
(footnote omitted); see also Blan-chard v. Bergeron,
489 U.S. 87, 91
-93 (1989) (holding thatCongress codified the holdings of three cases when a Com-mittee report cited those cases and said that they "correctlyapplied" its view of the law). And, as we have said manytimes before, so long as there is no constitutional infirmity,Congress' intended meaning of terms reigns supreme in thestatutory arena. See, e.g., Arriaga-Barrientos v. INS, 937 F.2d411, 414-15 (9th Cir. 1991) (holding that even if courts are"sympathetic" to a policy argument contrary to a statute'srequirements, "we lack the legitimate authority to underminelegitimate congressional will"). When Congress codifies thepolicy of certain of the courts' holdings, we are bound to fol-low the dictates of those cases regardless of whether we thinkthey were correctly decided, and regardless of whether theyare subsequently limited or overruled.The Committee's view of S 118 was reiterated by key con-gressmen in the floor debates, who repeatedly stated thatS 118 encouraged arbitration only "where parties knowinglyand voluntarily elect to use those methods." 137 Cong. Rec.S15478 (daily ed. Oct. 30, 1991) (statement of Sen. Dole); seealso 137 Cong. Rec. H9548 (daily ed. Nov. 7, 1991) (state-ment of Rep. Hyde) (explaining that S 118 encourages arbitra-tion where "the parties knowingly and voluntarily elect" tosubmit to such procedures). The most informed and importantstatements were made by Representative Edwards, the Chair-man of the House Committee on Education and Labor. Repre-sentative Edwards unequivocally explained during the debateimmediately prior to the Act's passage that the provision was"intended to be consistent with . . . Gardner-Denver." 137Cong. Rec. H9530 (daily ed. Nov. 7, 1991) (statement of Rep.Edwards). The Chairman added, so as to make the point per-fectly clear: This section contemplates the use of voluntary arbi- tration to resolve specific disputes after they have arisen, not coercive attempts to force employees in advance to forego statutory rights. No approval whatsoever is intended of the Supreme Court's recent decision in Gilmer . . . , or any application or extension of it to Title VII.Id. (emphasis added).14 Finally, President Bush echoed Con-gress' understanding of the arbitration section in signing theAct, stating that "section 118 encourages voluntaryagreements between employers and employees to rely onalternative mechanisms such as mediation and arbitration."Statement of the President of the United States, Signing Cere-mony, Pub. L. No. 102-166 (Nov. 21, 1991), reprinted in1991 U.S.C.C.A.N. 768, 769 (emphasis added). No state-ments were made in reports, on the floor, or by the Presidentthat contradicted this basic understanding.15Robertson Stephens' principal response to the force of theAct's legislative history is that we should disregard entirelythe evidence of Congress' intent and hold instead that, eventhough Congress did not intend to adopt Gilmer, the languageof S 118 must be read as doing so.16 Under Robertson Ste-phens' reading of S 118, the phrase "to the extent authorizedby law" would be simply an elastic phrase, not expresslyadopting or rejecting any Supreme Court case, but expandingand contracting with the ebb and flow of court decisions.Thus, Robertson Stephens would have us conclude thatalthough S 118 was intended by its drafters, and understoodby both the Democratic and Republican members of bothCommittees that considered the bill, to preclude compulsoryarbitration of Title VII claims -- an intention unequivocallyreiterated throughout the floor debates -- the section, withouta single word being changed, nevertheless was instanta-neously transmogrified, and took on exactly the oppositemeaning, on the day the Court's decision in Gilmer wasannounced. Any such "through the looking glass " construc-tion would entail a gross perversion of the legislative process.In essence, confronted with the legislative history, Robert-son Stephens retreats to its "plain meaning" theory, urging usto construe the words "to the extent authorized by law" asencouraging the use of all lawful forms of arbitration at alltimes and under all circumstances. But "the meaning of statu-tory language, plain or not, depends on context. " Brown v.Gardner,
513 U.S. 115, 118
(1994) (quoting King v. St. Vin-cent's Hosp.,
502 U.S. 215, 221
(1991)). And, as weexplained previously, the phrase's actual meaning, whenviewed in the context of the remainder of the Act, is at theleast ambiguous, and at the most quite different from thatwhich Robertson Stephens urges. Robertson Stephens' argu-ment ignores not only the purposes and objectives of the 1991Act, but also the fact that the statute contains an express limi-tation in addition to the phrase "to the extent authorized bylaw" -- the limitation "where appropriate " -- which must beread along with it. Thus, even if an elastic interpretation of "tothe extent authorized by law" would otherwise be reasonable,Robertson Stephens' construction would deprive the phrase"where appropriate" of any content whatsoever. If we are togive those additional words of limitation meaning, as theSupreme Court tells us we must, see, e.g., Bailey, 116 S. Ct.at 507; Babbitt,
515 U.S. at 698
, they must be construed asincorporating Congress' purposes and objectives as expressedin the 1991 Act, see, e.g., John Hancock,
510 U.S. at 94
-95(collecting cases holding that courts must interpret terms ofstatute consistent with the act's "object and policy") --namely, as increasing the rights and remedies afforded to vic-tims of discrimination.In the end, what is perhaps the most compelling reason forrejecting Robertson Stephens' argument is the specificinstruction in Gilmer and several preceding arbitration casesto look to the statute's terms and to "its legislative history,"as well as its underlying purpose, in determining whetherCongress "evinced an intention to preclude a waiver of judi-cial remedies" in the particular circumstances. Gilmer, 500U.S. at 26 (quoting Mitsubishi,
473 U.S. at 628
) (emphasisadded); accord Shearson/American Express, Inc. v.McMahon,
482 U.S. 220, 226
-27 (1987). Whatever role weshould generally assign to legislative history, our duty whenwe try to discern whether Congress intended to preclude awaiver of a judicial forum with respect to claims arising undera particular statute is clear. Such an intent, the Court hasexpressly and repeatedly held, may be discerned in the text ofthe relevant act or in its legislative history, as well as in anyinherent conflict between the statutory purposes and arbitra-tion. Id. Not a single word in the 1991 Act's legislative his-tory suggests that Congress intended to make the validity ofrequiring the arbitration of Title VII claims dependent onfuture court decisions. To the contrary, the legislative historyof the Act makes it absolutely clear that Congress intendedS 118 to codify the Gardner-Denver approach to compulsoryarbitration agreements and to preclude the enforceability ofsuch agreements with respect to Title VII claims. Congress"perce[ived] the state of the law," Brown,
425 U.S. at 828
, asforbidding such agreements and, at the very least, viewedthem as wholly "[in]appropriate." It specifically rejected aproposal that would have allowed them to be enforced. Itthought, mistakenly or not, that the use of compulsory arbitra-tion provisions would, in the House Committee's resoundingand unequivocal words, "force[ ] American workers to choosebetween their jobs and their civil rights." H.R. Rep. No. 40(I)at 104. To force such a choice was certainly not the purposeor intent of Congress in passing the Civil Rights Act of 1991.17[9] In view of the fact that "the context, language, and [leg-islative] history of" the 1991 Act "together make out a con-clusive case," Thompson,
484 U.S. at 187
, that Congressintended to preclude compulsory arbitration of Title VIIclaims, we think it inescapable that Form U-4 is unenforce-able as applied to such claims. Form U-4 compels preciselywhat Congress intended to prohibit in the 1991 Act: manda-tory requirements under which prospective employees agreeas a condition of employment to surrender their rights to liti-gate future Title VII claims in a judicial forum and acceptarbitration instead. Because every employer in the securitiesindustry requires its employees to sign Form U-4, the form isespecially violative of Congress' limitations. Form U-4 is atake-it-or-leave-it offer for anyone wishing to work anywherein the United States as a broker-dealer in that industry. Itforces individuals like Duffield to opt for one of two"choices": sign Form U-4 or seek another profession. Thissort of dilemma is fundamentally at odds with a provision ofthe Civil Rights Act of 1991, S 118, that was intended to helpdeter employment discrimination by increasing claimants'choice of fora. Cf. Bercovitch, 133 F.3d at 150 (enforcingarbitration agreement between parents and school as appliedto ADA claim because it was purely "voluntary, " but suggest-ing that "involuntary" agreements, or agreements that individ-uals had no "influence over," would be unenforceable).[10] In holding that Form U-4 is unenforceable as appliedto Title VII claims, we do not, of course, mean to suggest thatCongress sought in the 1991 Act to preclude employees fromagreeing after a claim has arisen to submit the dispute toarbitration.18 Indeed, employees in many instances maybelieve that arbitration is preferable to protracted and expen-sive litigation and will willingly make that choice. Because ofthe legal community's recently increased faith in arbitration,those plaintiffs are now "encouraged" to resolve their employ-ment disputes in that manner, and if they choose to do so, theyare bound by the arbitrator's decision. See Nghiem, 25 F.3dat 1440. The contract before us, however, requires compul-sory arbitration in every sense of the word, and it is contractsof that nature we are compelled to hold unenforceable underthe Civil Rights Act of 1991.We recognize that, as the Supreme Court has stated, agree-ments to arbitrate must generally be treated not as"forego[ing] the substantive rights afforded by [a] statute,"but rather as merely changing the forum in which they areprotected. Gilmer,
500 U.S. at 26
(quoting Mitsubishi, 473U.S. at 628). Yet even assuming that the general federal pol-icy in favor of arbitration would ordinarily apply to the com-pulsory arbitration of civil rights claims, we are not free toapply that policy here. Where Congress has manifested itsintent, with regard to arbitration questions and otherwise, theSupreme Court has made it abundantly clear that the judiciaryis not free to "legislate" its own contrary preferences. See,e.g., Brogan v. United States, 118 S. Ct. 805, 811-12 (1998)(stating that "[c]ourts may not create their own limitations onlegislation, no matter how alluring the policy arguments fordoing so"); Negonsott v. Samuels,
507 U.S. 99, 104
(1993)("[A court's] task is to give effect to the will of Congress[when] its will has been expressed in reasonably plainterms."); Gilmer,
500 U.S. at 26
(directing courts to followcongressional intent in arbitration context); Rodriguez de Qui-jas,
490 U.S. at 483
-84 (same). Whether or not permittingcompulsory arbitration of Title VII claims is "more desirablethan" the ban that Congress has imposed on such practice,"the proper venue for resolving that issue remains on the floorof Congress." Lexecon, Inc. v. Milberg Weiss Bershad Hynes& Lerach, 118 S. Ct. 956, 964 (1998). For now, at least, Con-gress has resolved the question in favor of preserving the rightof victims of employment discrimination to seek their remedyin the federal courts.IIIDuffield also argues that she cannot be required to arbitrateher claims because the arbitration agreement imposes anunconstitutional condition of employment. This argument,unlike the one we have just considered, is applicable to herstate tort and contract claims as well as to her claims that hercivil rights have been violated. The argument is, in essence,that Form U-4 requires Duffield to forfeit her Fifth Amend-ment right to due process, her Seventh Amendment right to ajury trial, and her right to an Article III judicial forum. Whilethis argument was not raised or addressed by the Court inGilmer, it would, if meritorious, render Form U-4 unenforce-able as applied to all of Duffield's underlying claims forrelief. The district court found it unmeritorious, holding thatthe essential prerequisite of state action was lacking. Weagree.[11] A threshold requirement of any constitutional claim isthe presence of state action. This requirement, however, doesnot restrict the application of the Constitution solely to gov-ernmental entities. Private entities like the NYSE and theNASD may be held to constitutional standards if their actionsare "fairly attributable" to the state. Lugar v. Edmonson OilCo.,
457 U.S. 922, 936
(1982). The Supreme Court has estab-lished three criteria for satisfying this standard: First, [t]he mere fact that a business is subject to state regulation does not by itself convert its action into that of the State . . . . The complaining party must also show that there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action may fairly be treated as that of the State itself. The purpose of this requirement is to assure that constitutional standards are invoked only when it can be said that the State is responsible for the specific conduct of which the plaintiff complains. . . . Second, . . . a State normally can be held responsi- ble for a private decision only when it has exercised coercive power or has provided such significant encouragement, either overt or covert, that the choice must in law be deemed that of the State. Mere approval or acquiescence in the initiatives or a pri- vate party is not sufficient to justify holding the State responsible for those initiatives . . . . Third, the required nexus may be present if the private party has exercised powers that are tradition- ally the exclusive prerogative of the State.Blum v. Yaretsky,
457 U.S. 991, 1004
-05 (1982) (internal quo-tations and citations omitted). Duffield asserts that state actionis independently present under each test. We do not agree.ADuffield's first argument is that state action is presentbecause "federal law requires all broker-dealers to registerwith a national securities exchange (i.e., the NYSE orNASD), and to abide by the rules of that exchange -- includ-ing its mandatory arbitration rules -- as a condition of theircontinued employment." Appellant's Brief at 43. RobertsonStephens counters this argument by pointing out that federallaw did not require broker-dealers to register with a nationalsecurities exchange until 1993, five years after Duffieldsigned her Form U-4. Therefore, it asserts, no federal law"required" Duffield to sign the form in 1988. Robertson Ste-phens is correct.[12] The rules of NASD and the NYSE are not fairly attrib-utable to the government unless they carry the force of federallaw. And prior to 1993, no federal statute or regulationrequired Duffield to register with the securities exchanges,much less to sign Form U-4 or to arbitrate employment dis-putes. See Association of Inv. Brokers v. SEC, 676 F.2d 857,861-62 (D.C. Cir. 1982). Thus, when Duffield signed herForm U-4 in 1988 and thereby waived her rights to litigateemployment-related disputes in a judicial forum, she did notdo so because of any state action.19[13] In 1993, however, the Securities and Exchange Com-mission (SEC) adopted a regulation that required all broker-dealers to be registered with at least one of the securities orga-nizations of which Duffield's firm was a member -- i.e., theNASD and the NYSE -- before effecting any securities trans-action. See 17 C.F.R. S 240.15b7-1 (adopted May 11, 1993).That registration regulation, like the SEC's registration regu-lation at issue in Blount v. SEC, 61 F.3d 938 (D.C. Cir. 1995),cert. denied, 116 S. Ct. 1351 (1996), "operates not as a privatecompact among brokers and dealers but as federal law." Id. at941. Hence, to borrow Blount's reasoning, as a government-mandated "condition to any participation in a . .. securitiescareer," the current requirement that new employees registerwith a national securities exchange "constitutes governmentaction of the purest sort." Id.[14] Duffield attempts to take advantage of this new regula-tion by arguing that its registration requirement was a govern-mentally imposed condition of her continuing employmentand that Robertson Stephens did not invoke the arbitrationclause until 1995 when it moved to compel arbitration. Stateaction can be present, however, only to the extent that thereis "a sufficiently close nexus between the State and thechallenged action," Jackson v. Edison Co.,
419 U.S. 345
, 351(1974) (emphasis added); the action that Duffield challengesin her constitutional claims is the requirement that she waiveher right to litigate employment-related disputes. Since agree-ments to arbitrate are "valid, irrevocable, and enforceable," 9U.S.C. S 2 (emphasis added), to the same extent as any othercontract, see Gilmer,
500 U.S. at 24
, it is immaterial that yearsafter Duffield signed her Form U-4 containing the arbitrationprovision, federal law required other employees like her toregister with securities exchanges or even that it compelledher to remain registered. No federal law required Duffield towaive her right to litigate employment-related disputes bysigning the Form U-4 in 1988, and no state action is presentin simply enforcing that agreement. Insofar as Duffield arguesthat the "challenged action" is the requirement that she actu-ally arbitrate her lawsuit, that requirement is found in her pri-vate contract, not in federal law.20B[15] Duffield next argues that because the NYSE andNASD are required to obtain SEC approval before their rulesmay go into effect, see 15 U.S.C. SS 78f(a), (b), 78o-3(a), (b),and because the SEC has exercised influence over such rules,the government may fairly be said to be encouraging the man-datory arbitration requirement. We previously have recog-nized that the [SEC] has virtually plenary authority over the arbitration procedures adopted by the national secur- ities exchanges and securities associations. See Shearson/American Express, Inc. v. McMahon, 107 S. Ct. 2332, 2341 (1987). This authority includes the power to "abrogate, add to, and delete from" the arbitration rules adopted by such bodies if necessary or appropriate to protect rights created by the Securi- ties Acts. Id.; 15 U.S.C. S 78s(c) (1982).Cohen v. Wedbush, Noble, Cooke, Inc., 841 F.2d 282, 286(9th Cir. 1988). We conclude here, however, that the SEC hasnot exercised sufficient influence over the compulsory arbitra-tion requirement in Form U-4, the NASD procedures, orNYSE rules to deem that requirement the choice of the state.[16] The touchstone of state action in the context of gov-ernmental oversight is whether the government has movedbeyond mere approval of private action into the realm of"encouragement, endorsement, and participation " of thataction. Skinner v. Railway Labor Executives' Ass'n, 489 U.S.602, 615-16 (1989); see also Blum,
457 U.S. at 1004
(statingthat state action is present when "the government has pro-vided such significant encouragement, either overt or covert,that the [private party's] choice must be deemed that of theState"). The SEC has thus far failed to cross that line withregard to the NASD's and NYSE's compulsory arbitrationrequirements. "To begin with the obvious, there is nothing inthe [Securities Exchange Act of 1934] and there is no Com-mission rule or regulation that specifies arbitration as thefavored means of resolving employer-employee disputes."Merrill Lynch, Pierce, Fenner & Smith v. Ware, 414 U.S.117, 135-36 (1973). No SEC rule or action that has been cal-led to our attention encourages the NASD or the NYSE tocompel arbitration. This puts the role of the SEC in a criticallydifferent light than that of the Federal Railroad Administra-tion in Skinner, which drafted regulations making plain its"strong preference for [drug] testing," explicitly conferred onrailroads the authority to conduct such tests, required railroadsand employees to perform such tests, and codified its right toreceive certain biological samples. See
498 U.S. at 615
.[17] The SEC's role to date of approving the exchanges'rules and conducting oversight of their procedures has beenno more aggressive than that of the Public Utilities Commis-sion in Jackson v. Metropolitan Edison Co.,
419 U.S. 345
(1974). In that case, a private utility was required by thestate's regulatory scheme to obtain approval of its businesspractices from the utility commission. When those practiceswere challenged, the Court declined to find state action, rea-soning that "where the commission has not put its weight onthe side of the proposed practice by ordering it, . . . [its] fail-ure to overturn this practice" does not make its action "stateaction" for purposes of constitutional inquiries. Id. at 357.Duffield has pointed to numerous instances of the SEC'soversight and development of the exchanges' arbitration rulesand procedures, but she has failed to put forth any example ofgovernmental encouragement or endorsement of the compul-sory arbitration requirement itself. Thus, the SEC's involve-ment is insufficient under Skinner, Blum, and Jackson torender the industry's overall requirement that its employeessubmit to arbitration in lieu of court proceedings fairly attrib-utable to the state.C[18] Duffield's last argument is that the NASD and NYSEare invoking governmental authority because through theirarbitration system they are "perform[ing] the governmentfunction of enforcing and adjudicating Title VII. " Appellant'sBrief at 53. This argument is contrary to the established lawof this circuit. We have long held that, since dispute resolu-tion is not an "exclusive" governmental function, neither pri-vate arbitration nor the judicial act of enforcing it under theFAA constitutes state action. See, e.g., FDIC v. Air FloridaSys., Inc., 822 F.2d 833, 842 n.9 (9th Cir. 1987). The 1991Civil Rights Act's allowance of voluntary, private arbitrationagreements forecloses the assertion that civil rights statutesshould be exempted from this general rule.IVDuffield has met her burden of showing that Congressintended in enacting the Civil Rights Act of 1991 to precludethe compulsory arbitration of Title VII disputes. Form U-4 is,therefore, unenforceable with respect to her Title VII andFEHA claims. Because no state action was involved in Duf-field's mandatory waiver, however, there is no constitutionalbar to enforcing Form U-4 with respect to her state tort andcontract claims. Accordingly, the district court's order com-pelling arbitration is AFFIRMED IN PART and REVERSEDIN PART. The district court's denial of Duffield's motion forsummary judgment on her declaratory relief claim isAFFIRMED IN PART and REVERSED IN PART. The caseis REMANDED for further proceedings consistent with thisopinion.AFFIRMED IN PART; REVERSED IN PART; ANDREMANDED. the end
___________________________FOOTNOTES *Honorable Jane A. Restani, Judge, United States Court of InternationalTrade, sitting by designation.1 After Duffield filed her opening brief in this case, the NASD voted toeliminate its mandatory arbitration requirement with regard to civil rightsclaims. The organization's proposal, which cannot be formally imple-mented until the Securities and Exchange Commission approves it, wouldmandate three basic changes in the current rule: (1) it would "permitemployees to choose between entering into private arbitration agreementswith their employers, or reserving the right to file a case in federal or statecourt for statutory discrimination claims"; (2) it would guarantee height-ened procedural protections in arbitration by requiring forums that satisfythe standards in the ABA's "Due Process Protocol"; and (3) it would pro-vide "enhanced disclosure [of the arbitration rules] to employees." NASDProposes Eliminating Mandatory Arbitration of Employment Discrimina-tion Claims for Registered Brokers, NASD Press Release, August 7, 1997;see also Deborah Lohse, NASD Votes to End Arbitration Rule in Cases ofBias, Wall St. J., August 8, 1997, at B14 (reporting NASD policy change,but noting that "mandatory arbitration is apt to continue, industry expertssay, because the NASD is not forbidding firms from including arbitrationrequirements in their employment contracts"). This probable change inNASD's rules in no way affects the dispute in this case, however. Further-more, nothing in the record suggests that the NYSE is reconsidering itsrule.2 We do not in this opinion consider the enforceability of an arbitrationaward in instances in which an employee has submitted the dispute to arbi-tration without challenging the enforceability of the arbitration agreement.See, e.g., Nghiem v. NEC Electronic, 25 F.3d 1437 (9th Cir. 1994).3 Duffield's sexual discrimination and sexual harassment claims underTitle VII appear to be identical to those she brings under the FEHA.Because "[p]arallel state anti-discrimination laws are explicitly made partof Title VII's enforcement scheme," FEHA claims are arbitrable to thesame extent as Title VII claims. Prudential Ins. Co. v. Lai, 42 F.3d 1299,1303 n.1 (9th Cir. 1994) (citing Kremer v. Chemical Constr. Corp., 456U.S. 461, 477 (1982); Salgado v. Atlantic Richfield, 823 F.2d 1322, 1326(9th Cir. 1987)).4 Gilmer argued only that there was an inherent conflict between theADEA and arbitration and did not contend that the text or legislative his-tory of the ADEA evinced a congressional intent to preclude arbitration.See
500 U.S. at 26
.5 After the Supreme Court granted certiorari in Gilmer, Congressamended the ADEA to provide that all waivers of rights under the Act,apparently including the right to a jury trial, 29 U.S.C. S 626(c), must be"knowing and voluntary." See Older Workers Benefit Protection Act of1990, Pub. L. 101-433, 104 Stat. 983 (1990); 29 U.S.C. S 626(f)(1); Oubrev. Entergy Operations, Inc., 118 S. Ct. 838, 841 (1998). A waiver is notconsidered knowing and voluntary if the individual waives "rights orclaims that may arise after the date the waiver is executed." 29 U.S.C.S 626(f)(1)(C). The Supreme Court did not, however, consider this newstatutory language in Gilmer. Thus, current ADEA claims may require dif-ferent treatment.6 We have never stated what level of deference is due a "notice," asopposed to a guideline or a policy statement, by the EEOC. The SupremeCourt has generally advised that "the level of deference afforded willdepend on the thoroughness evident in [the EEOC's ] consideration, thevalidity of its reasoning, its consistency with earlier and later pronounce-ments, and all those factors which give it power to persuade, if notcontrol." EEOC v. Arabian American Oil Co.,
499 U.S. 244, 257
(1991)(internal quotations omitted). The import of the Court's statement seemsto be that we should defer to "notices" insofar as they represent reasonableinterpretations of Title VII. See EEOC v. Commercial Office Prods. Co.,
486 U.S. 107, 115
(1988) (deferring to EEOC's position on issue thatapparently was not formalized in any document outside of the litigation atissue because it represented a reasonable interpretation of Title VII). Thatis the procedure we have adopted regarding other agency's notices inter-preting statutes under their jurisdiction, see Alexander v. Glickman, _______F.3d _______, _______, No. 96-17054, 1998 WL 125109, at *3-*4 (9th Cir. Mar.23, 1998), and that is the course we follow here.7 Because we hold that the 1991 Act precludes compulsory arbitration,we do not reach Duffield's claims that she did not knowingly agree toarbitrate her Title VII claims and that the NYSE arbitration system failsadequately to protect her statutory rights. While we have spoken previ-ously in Lai and Renteria v. Prudential Ins. Co., 113 F.3d 1104 (9th Cir.1997), regarding the 1991 Act's "knowing" requirement, the parties in thiscase have emphasized the importance of the compulsory arbitration issuein se, and have vigorously contested that question throughout this proceed-ing. Likewise, several amici and the EEOC have urged that we determinethe validity of compulsory arbitration provisions as applied to Title VIIclaims. Every amici, in fact, has addressed that issue, and we agree thatthe case is more appropriately resolved on that ground. Lastly, we neednot consider Duffield's claim that Form U-4 is a contract of adhesion thatis either unconscionable or beyond her reasonable expectations, see Doc-tor's Assocs., Inc. v. Casarotto, 116 S. Ct. 1652, 1656 (1996); Graham v.Scissor-Tail, Inc., 28 Cal. 3d 807, 817 (1981), because she makes thatargument also only with respect to her Title VII (and FEHA) claims.8 There was no Senate Committee Report, although another House Com-mittee subsequently approved the identical bill without change. See H.R.Rep. No. 40(II) at 1, 102d Cong., 1st Sess. 78 (1991), reprinted in 1991U.S.C.C.A.N. 694, 694 (Judiciary Committee).9 The only other circuit opinions to address the enforceability of individ-ual employment agreements containing prospective waivers of the right tobring Title VII claims in court since the 1991 Act became effective, donot, for various reasons, consider the effect of the Act. See Paladino v.Avnet Computer Techs., Inc., 134 F.3d 1054 (11th Cir. 1998); Cole v.Burns Int'l Security Servs., 105 F.3d 1465 (D.C. Cir. 1997); Rojas v. TKCommunications, Inc., 87 F.3d 745 (5th Cir. 1996).10 Section 12212 of the ADA, which was passed in 1990, tracks almostverbatim S 118 of the 1991 Civil Rights Act. See 42 U.S.C. S 12212. Italso has a legislative history similar to S 118 of the 1991 Civil Rights Act,indicating that Congress intended to codify in the ADA the protections ofthe Court's holding in Gardner-Denver. See, e.g., H.R. Conf. Rep. No.596, 101st Cong., 2d Sess. 89 (1990), reprinted in 1990 U.S.C.C.A.N.565, 598 ("It is the intent of the conferees that the use of these alternativedispute resolution procedures is completely voluntary."); H.R. Rep. No.101-485(III) (1990), reprinted in 1990 U.S.C.C.A.N. 445, 499 (explainingthat arbitration provision is intended to be consistent with Gardner-Denver); see also infra at 26-31 (describing the 1991 Act's legislative his-tory). It is also noteworthy that the Court had not yet even decided Gilmerwhen the ADA was enacted.11 Interestingly, when the District of Minnesota held that the 1991 Actdid not prevent employers from compelling the arbitration of Title VIIclaims under Form U-4, it used the same approach as the Fourth Circuit-- that is, it ignored an opinion signed by eight Justices and relied solelyon a lone concurrence by Justice Scalia to disregard the 1991 Act's Com-mittee Reports. See Johnson, 940 F. Supp. at 1458 (citing Blanchard v.Bergeron,
489 U.S. 87, 98
-99 (1989) (Scalia, J., concurring)).12 The Supreme Court recently granted certiorari in Wright v. UniversalMaritime Serv. Corp., 121 F.3d 702 (4th Cir. 1997) (table), cert. granted,118 S. Ct. 1162 (1998), to consider whether the Fourth Circuit was correctin holding, in line with Austin but contrary to seven other circuits, thatGardner-Denver is no longer the law. See 66 U.S.L.W. 3571 (March 3,1998); Coleman v. Houston Lighting & Power Co., 984 F. Supp. 576, 582(S.D. Tex. 1997) (listing circuits that disagree with the Fourth Circuit).13 It would also be at least a mild paradox to interpret S 118 as encourag-ing compulsory arbitration, when the section's other "encouraged" typesof alternative dispute resolution -- "settlement negotiations, conciliation,facilitation, mediation, factfinding, [and] minitrials" -- are all consensual.Section 118; see Babbitt v. Sweet Home Chapter,
515 U.S. 687
, 698 n.11(1995) (stating that courts should, if possible, read a string of terms in astatute consistently so that they "reflect[ ] the broad purpose of the Act").14 In view of Congress' repeated and unyielding pronouncements in thelegislative histories of the ADA and the Civil Rights Act of 1991 that itsought to codify the Court's decision in Gardner-Denver, not Gilmer, wehave some difficulty in understanding the Fourth Circuit's conclusion,after quickly discussing the Acts' legislative histories, that it "[does] notthink that Congress intended to return to [Gardner-Denver]." Austin, 78F.3d at 882. That conclusion is contrary to the import of every statementcongressional committees and members of Congress made during theActs' legislative processes and overlooks the fact that Gilmer was noteven decided when the ADA was enacted.15 In fact, that Congress declined to allow agreements to arbitrate TitleVII claims as a condition of employment is made even more clear by thedissenting views on the bill expressed in the Committee minority report(authored by Rep. Hyde). In discussing the arbitration provision, the dis-sent lamented that, because S 118 encouraged only "voluntary" agree-ments, it was "nothing more than an empty promise " to those who wishedto encourage arbitration of more Title VII claims. H.R. Rep. No. 40(II) at78. If the arbitration provision had been thought to allow ex ante waiversas a condition of employment, there would have been absolutely no basisfor the dissent's vigorous complaints.16 Robertson Stephens' other response to the legislative history is thateven if it demonstrates that Congress intended to allow the enforcementonly of "voluntary" agreements to arbitrate Title VII claims, Duffield'sdecision to sign Form U-4 was purely voluntary as that term is commonlyunderstood. Whatever the merit of this dubious assertion, it is irrelevanthere because our task is not to divine a literal meaning of the word"voluntary." Rather, it is to discover congressional intent. And, as we haveexplained in the text, Congress' intent was to preclude the enforceabilityof arbitration agreements imposed as a condition of employment.17 We recognize that an argument can be made that by its preference forGardner-Denver, Congress intended only to preclude the use of adversearbitration awards as a bar to the prosecution of Title VII actions. We con-clude, however, for the reasons set forth in the text, that Congress did notwish to force victims of discrimination to submit to compulsory arbitrationif they preferred to assert their Title VII claims directly in a judicial forum.To the contrary, we believe it clear that Congress intended that Title VIIclaimants have the right to go straight to court. See Pryner, 107 F.3d at364-65; Varner v. National Super Markets, Inc., 94 F.3d 1209, 1213 (8thCir. 1996), cert. denied, 117 S. Ct. 946 (1997). Moreover, in this circuitwe are precluded from adopting such a construction by Nghiem, in whichwe held that a Title VII claimant who voluntarily initiates arbitration pro-ceedings is bound by an unfavorable award and may not thereafter seekto litigate his claim. See 25 F.3d at 1439-41.18 Furthermore, as we noted earlier, we express no view on the alterna-tive procedure suggested in the proposed NASD rule change wherebyindividuals would be given the option at the time of employment to choosearbitration or litigation as the method of resolving future discriminationclaims. See supra at 6 & n.1.19 Duffield's attempt to skirt this fact by asserting that prior to 1993 shewas required by NYSE Rule 345(a) to register with an exchange and thatfederal law obligated each exchange to enforce its own rules, see 15U.S.C. S 78(g)(1), is unavailing. That a NYSE rule, rather than any federalmandate, required Duffield to register with the exchange, removes thegovernment's "responsibility" for the imposition of the arbitration require-ment. See Blum,
457 U.S. at 1004
.20 As described supra in note 1, the NASD recently has voted to abolishits mandatory arbitration requirement with regard to employment discrimi-nation claims. If the SEC refuses to approve this change for some reason,then state action might be present, because the government would be exer-cising at the least "significant encouragement " over the private entity'sactions. Blum,
457 U.S. at 1004
-05. To date, however, the SEC has onlyacquiesced to NASD's and NYSE's mandatory arbitration rules. See infrasection III.B.