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Disclaimer: The case on which this summary is based may no longer be current law. Also, if the case was decided on summary judgment, the court recited the "facts" in the light most favorable to the non-movant, which may not be the true facts.


Shankle v. B-G Maintenance Management of Colorado, Inc., 163 F.3d 1230 (10th Cir. January 5, 1999)

Keywords: Arbitration agreement (unenforceable)

Introduction: Matthew Shankle sued B-G Maintenance for discrimination under several theories. The district court denied B-G Maintenance's motion to compel arbitration. The Tenth Circuit affirms.

Facts: During Shankle's employment, as a condition of his continued employment, he was required to sign an arbitration agreement which covered federal discrimination claims. The agreement also required the employee to be responsible for one-half of the arbitrator's fees. Shankle filed suit after he was terminated.


1.  Does Federal Arbitration Act govern?

A.  The FAA does not apply to arbitration agreements contained in contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.

B.  Shankle was a shift manager for B-G Maintenance, which is a janitorial company.

C.  Shankle argues that he falls within the class of persons exempt from the FAA.

D.  But as the Tenth Circuit explained in McWilliams v. Logicon, Inc., 143 F.3d 573 (10th Cir. May 1, 1998), this exemption should be construed narrowly to apply only to employees actually engaged in the channels of interstate commerce.

E.  Therefore, the FAA, which represents a liberal federal policy favoring arbitration, applies.

2.  Enforceability of this agreement

A.  In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), the Supreme Court held that agreements which require arbitration of statutory claims are enforceable under the FAA.

B.  As stated in Gilmer, arbitration of statutory claims works because potential litigants have an adequate forum in which to resolve their statutory claims and because the broader social purposes behind the statute are adhered to.

C.  But the Tenth Circuit holds that this agreement does not provide an adequate forum because employees will be required to pay several thousand dollars in fees just to have their cases heard.

D.  Therefore, the Court holds that this agreement is unenforceable under the FAA.

3.  Click here to see actual case.



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