Sharon Floss v. Ryan ’s Family Steak Houses, Inc.

1
5RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0154P (6th Cir.)
File Name: 00a0154p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
99-5099
S HARON FLOSS,
Plaintiff-Appellant,
v.
R YAN ’S FAMILY S TEAK
HOUSES, INC., et al.,
Defendants-Appellees.
99-5187
KYLE DANIELS,
Plaintiff-Appellee,
v.
R YAN ’S FAMILY S TEAK
HOUSES, INC.,
Defendant-Appellant.
;>

1
Nos. 99-5099/5187
Appeal from the United States District Court
for the Eastern Districts of Kentucky at Covington
and Tennessee at Knoxville.
Nos. 98-00038; 98-00294—William O. Bertelsman
and R. Leon Jordan, District Judges.

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2 Floss v. Ryan’s Family
Steak Houses, et al.
Nos. 99-5099/5187
*The Honorable James S. Gwin, United States District Judge for the
Northern District of Ohio, sitting by designation.
Argued: March 9, 2000
Decided and Filed: May 1, 2000
Before: MARTIN, Chief Judge; SUHRHEINRICH, Circuit
Judge; GWIN, District Judge.*
_________________
COUNSEL
ARGUED: Steven L. Schiller, Newport, Kentucky, for
Appellant in 99-5099; Stephen F. Fisher, JACKSON, LEWIS,
SCHNITZLER & KRUPMAN, Greeneville, South Carolina,
for Appellant in 99-5187. Stephen F. Fisher, JACKSON,
LEWIS, SCHNITZLER & KRUPMAN, Greeneville, South
Carolina, for Appellees in 99-5099; April D. Carroll,
RIDENOUR, RIDENOUR & FOX, Clinton, Tennessee, for
Appellee in 99-5187. ON BRIEF: Steven L. Schiller,
Newport, Kentucky, for Appellant in 99-5099; Stephen F.
Fisher, JACKSON, LEWIS, SCHNITZLER & KRUPMAN,
Greeneville, South Carolina, Kelli L. Thompson, BAKER,
DONELSON, BEARMAN, ANDERSON & CALDWELL,
Knoxville, Tennessee, for Appellant in 99-5187. Stephen F.
Fisher, JACKSON, LEWIS, SCHNITZLER & KRUPMAN,
Greeneville, South Carolina, for Appellees in 99-5099; April
D. Carroll, Bruce D. Fox, RIDENOUR, RIDENOUR & FOX,
Clinton, Tennessee, for Appellee in 99-5187.
_________________
OPINION
_________________
GWIN, District Judge. With these appeals, consolidated
for purposes of decision, the Court reviews whether

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Nos. 99-5099/5187 Floss v. Ryan’s Family
Steak Houses, et al.
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employees effectively waived their rights to bring actions in
federal court under the Americans with Disabilities Act, 42
U.S.C. § 12101, et seq. (“ADA”), and the Fair Labor
Standards Act, 29 U.S.C. § 201, et seq. (“FLSA”). At the
district court, the plaintiffs attempted to sue their former
employer, Ryan’s Family Steak Houses, Inc. (“Ryan’s”).
However, when applying for employment at Ryan’s, both
plaintiffs had signed a form indicating they would arbitrate all
employment-related disputes. In both cases, Ryan’s filed a
motion to compel arbitration.
Finding no valid arbitration agreement, the United States
District Court for the Eastern District of Tennessee refused to
require Plaintiff-Appellee Kyle Daniels to arbitrate his claim
under the ADA. In contrast, the United States District Court
for the Eastern District of Kentucky found that Plaintiff-
Appellant Sharon Floss was required to arbitrate her dispute
and could thus not pursue her claim under the FLSA in
federal court.
Ryan’s now appeals the district court’s refusal to require
Daniels to arbitrate his ADA claim. Similarly, Floss appeals
the district court’s order requiring her to submit her FLSA
claim to arbitration. Because we find neither Daniels nor
Floss validly waived their right to bring an action in federal
court, we REVERSE the district court’s order requiring Floss
to arbitrate her claim, and AFFIRM the district court’s order
refusing to require Daniels to submit his claim to arbitration.
I.
In support of its argument that the plaintiffs agreed to waive
their right to bring an action in federal court and instead
agreed to arbitrate all employment disputes, Ryan’s relies
upon a document identified as the “Job Applicant Agreement
to Arbitration of Employment-Related Disputes.” Ryan’s
includes this purported agreement in its employment
application packet. Only those applicants who sign the

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4 Floss v. Ryan’s Family
Steak Houses, et al.
Nos. 99-5099/5187
1A notice on the inside cover of the packet informs applicants that
they must agree to the terms and conditions outlined in the agreement in
order to be considered for employment with Ryan’s.
2The agreement received by Daniels designated Employment Dispute
Resolution, Inc. (“EDR”) as the arbitration services provider. EDR is
now apparently referred to as Employment Dispute Services, Inc.
(“EDSI”).
agreement are considered for employment at Ryan’s.1 Both
Daniels and Floss acknowledge signing the agreement.
The employee’s agreement to arbitrate is not with Ryan’s.
Instead, the agreement runs between the employee and a third-
party arbitration services provider, Employment Dispute
Services, Inc. (“EDSI”). In the agreement, EDSI agrees to
provide an arbitration forum in exchange for the employee’s
agreement to submit any dispute with his potential employer
to arbitration with EDSI. Although Ryan’s is not explicitly
identified as a party to the agreement, the agreement says the
employee’s potential employer is a third-party beneficiary of
the employee’s agreement to waive a judicial forum and
arbitrate all employment-related disputes.
The agreement gives EDSI complete discretion over
arbitration rules and procedures. The agreement says that all
arbitration proceedings will be conducted under “EDSI Rules
and Procedures.” The agreement then gives EDSI the
unlimited right to modify the rules without the employee’s
consent.
In July 1994, Kyle Daniels applied for employment with
Ryan’s and received this agreement as part of the employment
application packet.2 Similarly, Ryan’s gave Sharon Floss the
agreement when she applied for employment in December
1997. Both Daniels and Floss signed the agreement and
began their employment at Ryan’s shortly thereafter.
Nos. 99-5099/5187 Floss v. Ryan’s Family
Steak Houses, et al.
17
disputes, including those involving federal statutory claims.
Yet an employer cannot seek to do so in such a way that
leaves employees with no consideration for their promise to
submit their disputes to arbitration. Here, we find that Floss
and Daniels did not receive any consideration for their
promise to arbitrate their disputes. We thus refuse to enforce
their promise in favor of Ryan’s.
The judgment of the United States District Court for the
Eastern District of Tennessee in case 99-5187 is
AFFIRMED, and the judgment of the United States District
Court for the Eastern District of Kentucky in case 99-5099 is
REVERSED.

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16 Floss v. Ryan’s Family
Steak Houses, et al.
Nos. 99-5099/5187
8Floss insists that the district court erred in determining as a matter
of law that she was not fraudulently induced to sign the agreement.
Because the agreement is unenforceable on other grounds, we do not
address this argument.
that EDSI’s promise did not create a binding obligation. We
agree.
EDSI’s promise to provide an arbitral forum is fatally
indefinite. Though obligated to provide some type of arbitral
forum, EDSI has unfettered discretion in choosing the nature
of that forum. Specifically, EDSI has reserved the right to
alter the applicable rules and procedures without any
obligation to notify, much less receive consent from, Floss
and Daniels. EDSI’s right to choose the nature of its
performance renders its promise illusory. As Professor
Williston has explained:
Where a promisor retains an unlimited right to decide
later the nature or extent of his performance, the promise
is too indefinite for legal enforcement. The unlimited
choice in effect destroys the promise and makes it merely
illusory.
1 S AMUEL W ILLISTON , C ONTRACTS § 43, at 140 (3d ed.
1957).
EDSI’s illusory promise does not create a binding
obligation. The purported arbitration agreement therefore
lacks a mutuality of obligation. Without a mutuality of
obligation, the agreement lacks consideration and,
accordingly, does not constitute an enforceable arbitration
agreement.8
V.
Ryan’s has pursued an acceptable objective in an
unacceptable manner. An employer may enter an agreement
with employees requiring the arbitration of all employment
Nos. 99-5099/5187 Floss v. Ryan’s Family
Steak Houses, et al.
5
3Floss also asserted state-law claims for false imprisonment and
intentional infliction of emotional distress, naming as codefendants the
two management employees involved in the alleged confrontation.
4Daniels also asserted a claim under a state disability discrimination
statute.
Daniels ceased working at Ryan’s on August 13, 1997. On
that date, Daniels claims he attempted to resume his
employment with Ryan’s after taking a medical leave to treat
his viral hepatitis. However, Daniels says Ryan’s terminated
him upon his return to the restaurant.
Floss ceased working at Ryan’s on January 23, 1998. Floss
left her position with Ryan’s after a confrontation with two
management employees. According to Floss, these
management employees intimidated and harassed her after
learning that she had complained to the United States
Department of Labor regarding Ryan’s pay practices.
On February 17, 1998, Floss sued Ryan’s in the United
States District Court for the Eastern District of Kentucky for
violation of the Fair Labor Standards Act.3 Floss claimed that
Ryan’s (1) did not pay employees legally-required minimum
and overtime wages, (2) failed to pay employees for certain
hours worked, and (3) retaliated against her because she
complained of these practices to the United States Department
of Labor. Floss sued in both her individual capacity and on
behalf of similarly-situated Ryan’s employees.
On May 19, 1998, Daniels filed his action against Ryan’s
in the United States District Court for the Eastern District of
Tennessee. In this action, Daniels asserted a claim under the
ADA, alleging that Ryan’s terminated him on account of his
handicapped status despite his ability to perform the essential
functions of his job with or without reasonable
accommodation.4

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6 Floss v. Ryan’s Family
Steak Houses, et al.
Nos. 99-5099/5187
5The district court enforced the agreement under the Federal
Arbitration Act (“FAA”). See 9 U.S.C. § 2. The FAA authorizes federal
district courts to stay a proceeding if any matter raised therein is subject
to an arbitration agreement and to issue an order compelling arbitration if
a party has filed suit in contravention of an arbitration agreement. See 9
U.S.C. §§ 3 and 4.
In both actions, Ryan’s filed motions to compel arbitration.
In ruling on these motions, the respective district courts
reached different conclusions as to whether the agreements
were enforceable.
In Daniels’s action, the district court ruled that the
agreement was not enforceable. The court reasoned that
EDSI did not provide Daniels with any consideration for his
promise to arbitrate his dispute with Ryan’s. Though EDSI
promised to provide an arbitration forum, the court found that
only Ryan’s and EDSI, rather than Daniels, actually benefitted
from that promise. The court also found that the arbitration
document did not bind EDSI. Specifically, the court noted
that the agreement gave EDSI an unlimited right to
unilaterally modify or amend the rules and procedures of the
arbitration proceeding without providing notice to Daniels.
Finally, the court noted that even if enforceable, the
agreement was not sufficiently clear so as to represent a
knowing and intelligent waiver of Daniels’s right to pursue
his disability discrimination claim in federal court.
However, the district court in Floss’s case enforced the
agreement.5 The court rejected Floss’s argument that claims
under the FLSA could not be made subject to mandatory
arbitration.
Both Ryan’s and Floss now appeal the rulings adverse to
them.
Nos. 99-5099/5187 Floss v. Ryan’s Family
Steak Houses, et al.
15
mutuality of obligation, a contract based on reciprocal
promises lacks consideration. See Dobbs v. Guenther, 846
S.W.2d 270, 276 (Tenn. Ct. App. 1992); David Roth’s Sons,
Inc. v. Wright and Taylor, Inc., 343 S.W.2d 389, 390 (Ky. Ct.
App. 1961). Put more succinctly, such a contract “must be
binding on both or else it is binding on neither.” Morgan v.
Morgan, 218 S.W.2d 410, 412 (Ky. Ct. App. 1949).
Promises may fail to create legally binding obligations for
a variety of reasons. See 17A AM. J UR . 2 D Contracts § 139
(1991). Most notably, a promise may in effect promise
nothing at all. Such an illusory promise arises when a
promisor retains the right to decide whether or not to perform
the promised act. See Trumbull v. Century Marketing Corp.,
12 F. Supp.2d 683, 686 (N.D. Ohio 1998) (holding that
employer’s promise in employee handbook to arbitrate
disputes did not create binding obligation when employer
retains right to revoke arbitration provision); David Roth’s
Sons, Inc., 343 S.W.2d at 391 (noting that a promise absent
any fixed obligation to perform “is illusory in the sense that
[the promisor] has made no legally enforceable commitment,
and justice demands the other party should not be bound”).
A promise is also illusory when its indefinite nature defies
legal enforcement. See Kovacs v. Freeman, 957 S.W.2d 251,
254 (Ky. 1997) (“Under Kentucky law, an enforceable
contract must contain definite and certain terms setting forth
promises of performance to be rendered by each party.”);
Jamestowne On Signal, Inc. v. First Federal Savings & Loan
Ass’n, 807 S.W.2d 559, 564 (Tenn. Ct. App. 1990) (“‘Courts
will not uphold agreements which are indefinite and uncertain
as to the obligations imposed on the parties thereto.’”)
(quoting Union State Bank v. Woell, 434 N.W.2d 712 (N.D.
1989).
In the purported agreement at issue in this case, EDSI
offered its promise to provide an arbitral forum as
consideration for Floss and Daniels’s promise to submit any
dispute they may have with their employer to arbitration with
EDSI. In ruling in favor of Daniels, the district court found

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14 Floss v. Ryan’s Family
Steak Houses, et al.
Nos. 99-5099/5187
to arbitrate the dispute in a contract which evidences a
transaction in interstate commerce.” Hartford Lloyd’s Ins.
Co. v. Teachworth, 898 F.2d 1058, 1061 (5th Cir. 1990).
Floss and Daniels say the arbitration agreements they
signed as part of their employment applications with Ryan’s
are unenforceable. In deciding whether the agreements are
enforceable, we examine applicable state-law contract
principles. See Perry v. Thomas, 482 U.S. 483, 492 n.9, 107
S.Ct. 2520, 2527 n.9, 96 L.Ed.2d 426 (1987); Avedon
Engineering, Inc., 126 F.3d at 1287; Shulze and Burch Biscuit
Co. v. Tree Top, Inc., 831 F.2d 709, 715 (7th Cir. 1987);
Coastal Indus., Inc. v. Automatic Steam Products Corp., 654
F.2d 375, 377-78 (5th Cir. 1981). Thus, we review both
Kentucky and Tennessee law to decide if Floss and Daniels
have executed valid arbitration agreements.
Consideration is an essential element of every contract. See
Price v. Mercury Supply Co., 682 S.W.2d 924, 933 (Tenn. Ct.
App. 1984); Cuppy v. General Accident Fire & Life
Assurance Corp., 378 S.W.2d 629, 632 (Ky. Ct. App. 1964).
In other words, a promise is legally enforceable only if the
promisor receives in exchange for that promise some act or
forbearance, or the promise thereof. See Kozy v. Werle, 902
S.W.2d 404, 411 (Tenn. Ct. App. 1995) (“Consideration
consists when the promisee does something that he is under
no legal obligation to do or refrains from doing [that] which
he has a legal right to do.”); Sutton v. First Nat’l Bank of
Crossville, 620 S.W.2d 526, 531 (Tenn. Ct. App. 1981) (“‘It
is invariably held that the promise of one party is a valid
consideration for the promise of the other party.’”) (quoting
Dark Tobacco Growers' Co-op Assn. v. Mason, 263 S.W. 60,
67 (Tenn. 1924)); Phillips v. Phillips, 171 S.W.2d 458, 464
(Ky. Ct. App. 1943) (defining consideration as a legal right
given to the promisor the exercise of which he is otherwise
not entitled).
A promise constitutes consideration for another promise
only when it creates a binding obligation. Thus, absent a
Nos. 99-5099/5187 Floss v. Ryan’s Family
Steak Houses, et al.
7
6This Court has found that a stay order may constitute a final order
when the stay delays the enforcement of a judgment pending the
clarification of that judgment. See M&C Corp. v. Erwin Behr GmbH &
Co., 143 F.3d 1033, 1036-37 (6th Cir. 1998). Such is not the case here.
II.
Before turning to the merits of these appeals, we consider
whether Floss timely filed her notice of appeal. Ryan’s says
Floss failed to file her appeal within thirty days of the
issuance of the final order from which she appeals, as
required by Federal Rule of Appellate Procedure 4(a)(1)(A).
On October 20, 1998, the district court issued an order
staying Floss’s FLSA action pending arbitration. On
December 21, 1998, the court, at Floss’s request, issued a
final order dismissing her action. Floss filed her notice of
appeal on January 21, 1999.
Ryan’s says that the district court’s order granting a stay
constituted a final order with regard to the arbitrability of
Floss’s FLSA claim. The second order dismissing Floss’s
action was, according to Ryan’s, superfluous. Because Floss
did not file her notice of appeal within thirty days of the stay
order, Ryan’s argues that Floss’s appeal is untimely.
We disagree. Floss could not have filed a notice of appeal
based on the district court’s stay order. An interlocutory order
granting a stay pending arbitration is not appealable. See 9
U.S.C. § 16(b); Arnold v. Arnold Corp., 920 F.2d 1269, 1275
(6th Cir. 1990) (noting that interlocutory order directing
parties to arbitrate dispute is not appealable). And contrary to
Ryan’s suggestion, the district court’s stay order was
interlocutory rather than final.6 “[A] final order is one that
dismisses an action in deference to arbitration.” Arnold, 920
F.2d at 1275 (internal quotations omitted). The district
court’s stay order did no such thing.

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8 Floss v. Ryan’s Family
Steak Houses, et al.
Nos. 99-5099/5187
Floss filed her appeal within thirty days of the district
court’s final order dismissing her action; therefore, her appeal
is timely.
III.
We review de novo a district court’s decisions regarding
both the existence of a valid arbitration agreement and the
arbitrability of a particular dispute. See Bobbie Brooks, Inc. v.
Int’l Ladies’ Garment Workers Union, 835 F.2d 1164, 1170
(6th Cir. 1987) (stating that district court’s finding that a
contract exists is subject to de novo review); M&C Corp. v.
Erwin Behr GmbH & Co., 143 F.3d 1033, 1037 (6th Cir.
1998) (“A determination of the arbitrability of a dispute is
subject to de novo review.”).
IV.
In deciding whether to compel arbitration of a federal
statutory claim, we initially consider whether the statutory
claim is generally subject to compulsory arbitration. If the
statutory claim is not exempt from mandatory arbitration, we
next consider whether the parties have executed a valid
arbitration agreement and, if so, whether the statutory claim
falls within the scope of that agreement. See Mitsubishi
Motors Corp. v. Soler Chrysler Plymouth, Inc., 473 U.S. 614,
628, 105 S.Ct. 3346, 3355, 87 L.Ed.2d 444 (1985) (stating
that courts should consider both whether the parties have
agreed to arbitrate a federal statutory claim and whether that
claim is generally subject to compulsory arbitration).
A.
Mandatory arbitration of federal statutory claims continues
to generate considerable debate among courts and
commentators. At bottom, this debate centers on the efficacy
of resolving “public disputes in private fora.” Harry
Edwards, Where Are We Heading With Mandatory
Arbitration of Statutory Claims in Employment?, 16 GA . S T .
U. L. R EV . (forthcoming April 2000) (emphasis in original).
Nos. 99-5099/5187 Floss v. Ryan’s Family
Steak Houses, et al.
13
bias exists. In light of EDSI’s role in determining the pool of
potential arbitrators, any such bias would render the arbitral
forum fundamentally unfair. See Cole v. Burns Int’l Security
Services, 105 F.3d 1465, 1482 (D.C. Cir. 1997) (“At a
minimum, statutory rights include both a substantive
protection and access to a neutral forum in which to enforce
those protections.”).
Moreover, EDSI’s current rules require an employee to
generally pay one-half of the arbitrators’ fees as a condition
of pursuing a dispute. Such a fee structure could potentially
prevent an employee from prosecuting a federal statutory
claim against an employer. Recognizing as much, the District
of Columbia Circuit has refused to countenance an
employer’s requirement that employees submit their disputes
to arbitration as a condition of employment absent that
employer’s agreement to bear the full costs of the arbitrators’
fees. See Cole, 105 F.3d at 1484-85.
Though we have concerns with both the fee structure and
potential bias of EDSI’s arbitral forum, we need not decide
whether these deficits prevent the arbitration of Floss and
Daniels’s statutory claims. As explained below, Floss and
Daniels are not contractually obligated to submit their federal
statutory claims to arbitration in EDSI’s arbitral forum. Thus,
Floss and Daniels need not establish the unsuitability of
EDSI’s arbitral forum in order to litigate their statutory claims
in federal court.
B.
The Federal Arbitration Act declares that arbitration
agreements “shall be valid, irrevocable, and enforceable, save
upon grounds that exist at law or in equity for the revocation
of any contract.” 9 U.S.C. § 2. However, “the FAA was not
enacted to force parties to arbitrate in the absence of an
agreement.” Avedon Engineering, Inc. v. Seatex, 126 F.3d
1279, 1286 (10th Cir. 1997). Indeed, “[t]he sine qua non of
the FAA’s applicability to a particular dispute is an agreement

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12 Floss v. Ryan’s Family
Steak Houses, et al.
Nos. 99-5099/5187
7Under EDSI’s current procedures, a panel of three “adjudicators”
preside over every arbitration proceeding. Each adjudicator is selected
from one of three “selection pools.” One pool consists of supervisors or
managers of an employer who has entered into an arbitration agreement
with EDSI. A second pool consists of nonsupervisory employees of an
employer who is a signatory to an EDSI arbitration agreement. A third
pool consists of attorneys, retired judges, and “other competent
professional persons” not associated with either party. If the dispute
involves more than $20,000, only licensed attorneys are included in this
third pool.
The selection process begins with EDSI furnishing both parties a list
of potential adjudicators organized according to each selection pool.
Information regarding each adjudicator’s recent employment history and
related biographical information is provided to the parties along with this
list. The parties may then move to strike any adjudicator for cause.
Following the removal of any adjudicators for cause, the parties each
strike a name from the list until only one name remains from each
selection pool.
continue to serve both its remedial and deterrent function.”)
(quoting Mitsubishi, 473 U.S. at 637).
Both Floss and Daniels argue that the specific arbitration
forum provided by the current version of the EDSI Rules and
Procedures does not allow them to effectively vindicate their
claims under the FLSA and the ADA. They say the
procedures allow for the appointment of a biased and
incompetent panel of arbitrators,7 as well as unduly limit the
participants’ discovery opportunities.
We have serious reservations as to whether the arbitral
forum provided under the current version of the EDSI Rules
and Procedures is suitable for the resolution of statutory
claims. Specifically, the neutrality of the forum is far from
clear in light of the uncertain relationship between Ryan’s and
EDSI. Floss and Daniels suggest that EDSI is biased in favor
of Ryan’s and other employers because it has a financial
interest in maintaining its arbitration service contracts with
employers. Though the record does not clearly reflect
whether EDSI, in contrast to the American Arbitration
Association, operates on a for-profit basis, the potential for
Nos. 99-5099/5187 Floss v. Ryan’s Family
Steak Houses, et al.
9
With its informal nature, arbitration is widely-accepted as
a sound method for resolving essentially private disputes,
such as those arising from collective bargaining agreements
and other contracts. Yet, for some, this informality renders
arbitration suspect as a forum for resolving statutory claims,
which typically implicate important public interests. As one
jurist and commentator has explained:
When public laws are enforced in private fora, however,
we have no assurance that the underlying public interests
are fully satisfied. This is not to say that private fora are
incapable of resolving disputes in a manner protective of
the public interest. However, conflicts that are resolved
through mediation and arbitration usually are not subject
to public scrutiny, so we do not know whether such
resolutions are consistent with prevailing interpretations
of public law or whether the procedures followed were
inequitable.
Id. (emphasis in original) (footnote omitted).
For a time, skepticism regarding the role of arbitration in
resolving statutory claims held sway. This skepticism is
perhaps best reflected in the Supreme Court’s approach to the
mandatory arbitration of statutory claims. The Court rejected
arbitration as the lone forum for vindicating claims under
Title VII of the 1964 Civil Rights Act and the Securities Act
of 1933. See Alexander v. Gardner-Denver Co., 415 U.S. 36,
47, 94 S.Ct. 1011, 1019, 39 L.Ed.2d 147 (1974); Wilko v.
Swan, 346 U.S. 427, 438, 74 S.Ct. 182, 188-89, 98 L.Ed. 168
(1953). In so holding, the Court explained that arbitrators’
inexperience with legal concepts coupled with the lack of
stringent procedural safeguards rendered an arbitral forum, in
the context of the statutory claims at issue, an unsuitable
replacement for a court of law. See Gardner-Denver, 415 U.S
at 57; Wilko, 346 U.S. at 435-36.
However, the tide soon turned. In a trio of cases decided in
the 1980s, the Supreme Court enforced arbitration agreements

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10 Floss v. Ryan’s Family
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covering claims under the Sherman Act, see Mitsubishi
Motors Corp., 473 U.S. at 640, the Securities Act of 1933, see
Rodriguez de Quijas v. Shearson/American Express, Inc., 490
U.S. 477, 483, 109 S.Ct. 1917, 1921, 104 L.Ed.2d 526 (1989),
the Securities Exchange Act of 1934, see Shearson/American
Express, Inc. v. McMahon, 482 U.S. 220, 238, 107 S.Ct.
2332, 2344, 96 L.Ed.2d 185 (1987), and the civil provisions
of the Racketeering Influenced Corrupt Organizations Act
(“RICO”), see McMahon, 473 U.S. at 242. These holdings
led the Court to declare in 1991 that “[i]t is now well settled
that statutory claims may be the subject of an arbitration
agreement, enforceable by the FAA.” Gilmer v.
Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S.Ct.
1647, 1652, 114 L.Ed.2d 26 (1991).
The Court addressed its growing acceptance of mandatory
arbitration for statutory claims in Gilmer v. Interstate/Johnson
Lane Corp., in which the Court upheld the mandatory
arbitration of claims under the Age Discrimination in
Employment Act, 29 U.S.C. § 621, et seq. See id. at 27. In
permitting the compulsory arbitration of statutory claims, the
Court recognized that by “‘agreeing to arbitrate a statutory
claim, a party does not forgo the substantive rights afforded
by the statute; it only submits to their resolution in an arbitral,
rather than a judicial, forum.’” Id. at 26 (quoting Mitsubishi,
473 U.S. at 628). And the Court dismissed generalized attacks
on the suitability of arbitral fora as arising from a “‘suspicion
of arbitration as a method of weakening the protections
afforded in the substantive law to would-be complainants.’”
Id. at 30 (quoting Rodriguez de Quijas, 490 U.S. at 481).
Such a suspicion, the Court observed, was “far out of step”
with the “current strong endorsement” of arbitration. Id.
Yet not all statutory claims are amenable to mandatory
arbitration. See Mitsubishi, 473 U.S. at 627-28. In creating
a statutory cause of action, Congress may choose to mandate
a judicial forum for its resolution. See id. at 628. Such an
intent is typically evidenced in the statutory text, legislative
history, or by an “inherent conflict” between arbitration and
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Steak Houses, et al.
11
the underlying purposes of the statute. McMahon, 482 U.S.
at 227.
Here, Floss argues that a conflict exists between arbitration
and her claim under the FLSA. Specifically, Floss insists that
an arbitral forum does not sufficiently allow for the
furtherance of the important social policies implicated by the
minimum wage provisions of the FLSA. Floss contends that
a claim under these provisions involves not only an attempt
to receive an individual remedy, but also an effort to promote
a minimum standard of living for the nation’s lowest paid
workers. According to Floss, requiring a party to seek
resolution of a minimum wage claim under the FLSA in an
arbitral forum will thwart the latter objective.
Floss’s argument does not persuade. Though a claim under
the FLSA certainly serves a purpose beyond providing relief
to an individual claimant, we fail to see how the broader
policies furthered by such a claim are hindered when that
claim is resolved through arbitration. As the Supreme Court
has held, both judicial and arbitral fora “can further broader
social purposes.” Gilmer, 500 U.S. at 28. Indeed, the Court
has upheld the compulsory arbitration of various statutory
claims that further both individual and societal interests,
including claims under the Sherman Act and RICO. Floss
offers no compelling reason for drawing a distinction between
these statutes and the FLSA.
However, even if arbitration is generally a suitable forum
for resolving a particular statutory claim, the specific arbitral
forum provided under an arbitration agreement must
nevertheless allow for the effective vindication of that claim.
Otherwise, arbitration of the claim conflicts with the statute’s
purpose of both providing individual relief and generally
deterring unlawful conduct through the enforcement of its
provisions. See Gilmer, 500 U.S. at 28 (“[S]o long as the
prospective litigant effectively may vindicate [his or her]
statutory cause of action in the arbitral forum, the statute will

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