Major League Baseball Players' Ass'n v. Garvey

OCTOBER TERM, 2000

															Syllabus

															MAJOR LEAGUE BASEBALL PLAYERS ASSOCIATION v. GARVEY

															ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT

															No. 00-1210. Decided May 14,2001

															After arbitrators found that the Major League Baseball Clubs
(Clubs) colluded in the market for free-agent services after the
1985, 1986, and 1987 baseball seasons, the Clubs and petitioner
agreed that the Clubs would establish a fund to be distributed to
injured players. The "Framework" that petitioner designed to
evaluate individual claims provided, inter alia, that
players could seek an arbitrator's review of a distribution plan,
but the arbitrator could determine only whether the Framework and
its criteria were properly applied. Respondent Garvey sought
arbitration after his damages claim was rejected. At his hearing,
he produced a letter from San Diego Padres president and CEO Smith,
stating that Smith had offered to extend Garvey's contract, but the
Padres refused to negotiate thereafter due to collusion. The
arbitrator denied the claim because the letter contradicted Smith's
testimony denying collusion in earlier arbitration proceedings. The
Federal District Court denied Garvey's motion to vacate the
arbitrator's award. In Garvey I, the Ninth Circuit reversed.
It found that review of the award's merits was warranted because
the arbitrator's refusal to credit Smith's letter was inexplicable
and bordered on irrational since arbitrators had previously
concluded that the owners' testimony denying collusion was false,
and that there was strong support for the letter's truthfulness. On
remand, the District Court remanded the case for further
arbitration, and Garvey appealed. Finding that Garvey I left
only one possible result, the Ninth Circuit in Garvey II reversed and directed the District Court to remand the case to
arbitration with instructions to enter an award for Garvey. Held: The Ninth Circuit's decision to resolve the dispute
and bar further proceedings is at odds with governing law. Judicial
review of a laborarbitration decision pursuant to a
collective-bargaining agreement is very limited. Courts are not
authorized to review an arbitrator's decision on the merits despite
allegations that the decision rests on factual errors or
misinterprets the parties' agreement. Paperworkers v. Misco, Inc., 484 U. S. 29 , 36. Only
when the arbitrator effectively dispenses his own brand of
industrial justice may his decision be unenforceable. Steelworkers v. Enterprise Wheel & Car
Corp., 363 U. S.
593 , 597. 505 When the judiciary weighs a particular claim's merits, it usurps
a nmction entrusted to the arbitrator. As a rule a court must not
foreclose further proceedings by settling the merits according to
its own judgment of the appropriate result. It should simply vacate
the award, leaving open the possibility of further proceedings if
the agreement permits them. The Ninth Circuit recited these
principles but erred in applying them. In Garvey I, it
overturned the arbitrator's decision because it disagreed with his
factual findings with respect to credibility, but even serious
error on the arbitrator's part does not justify overturning his
decision where, as here, he is construing a contract and acting
within the scope of his authority, Misco, supra, at 38. And
in Garvey II, the court resolved the dispute's merits based
on its assessment of the record before the arbitrator, which it
ordinarily cannot do, no matter how erroneous the arbitrator's
decision, Misco, supra, at 40, n. 10. Even when the
arbitrator's award may properly be vacated, the appropriate remedy
is to remand the case for further arbitration proceedings.

															Certiorari granted; 243 F.3d
547 , reversed and remanded.

															PER CURIAM.

															The Court of Appeals for the Ninth Circuit here rejected an
arbitrator's factual findings and then resolved the merits of the
parties' dispute instead of remanding the case for further
arbitration proceedings. Because the court's determination
conflicts with our cases limiting review of an arbitrator's award
entered pursuant to an agreement between an employer and a labor
organization and prescribing the appropriate remedy where vacation
of the award is warranted, we grant the petition for a writ of
certiorari and reverse. The motions for leave to file briefs amicus curiae of the National Academy of Arbitrators and the
Office of the Commissioner of Baseball are granted.

															In the late 1980's, petitioner Major League Baseball Players
Association (Association) filed grievances against the Major League
Baseball Clubs (Clubs), claiming the Clubs had colluded in the
market for free-agent services after the 1985, 1986, and 1987
baseball seasons, in violation of the industry's
collective-bargaining agreement. A free agent is a player who may
contract with any Club, rather than one whose right to contract is
restricted to a particular Club. In a 506 Per Curiam

															series of decisions, arbitrators found collusion by the Clubs
and damage to the players. The Association and Clubs subsequently
entered into a Global Settlement Agreement (Agreement), pursuant to
which the Clubs established a $280 million fund to be distributed
to injured players. The Association also designed a "Framework" to
evaluate the individual player's claims, and, applying that
Framework, recommended distribution plans for claims relating to a
particular season or seasons.

															The Framework provided that players could seek an arbitrator's
review of the distribution plan. The arbitrator would determine
"'only whether the approved Framework and the criteria set forth
therein have been properly applied in the proposed Distribution
Plan.'" Garvey v. Roberts, 203 F. 3d 580, 583 (CA9
2000) (Garvey I). The Framework set forth factors to be
considered in evaluating players' claims, as well as specific
requirements for lost contract-extension claims. Such claims were
cognizable "'only in those cases where evidence exists that a
specific offer of an extension was made by a club prior to
collusion only to thereafter be withdrawn when the collusion scheme
was initiated.'" Id., at 584.

															Respondent Steve Garvey, a retired, highly regarded first
baseman, submitted a claim for damages of approximately $3 million.
He alleged that his contract with the San Diego Padres was not
extended to the 1988 and 1989 seasons due to collusion. The
Association rejected Garvey's claim in February 1996, because he
presented no evidence that the Padres actually offered to extend
his contract. Garvey objected, and an arbitration hearing was held.
He testified that the Padres offered to extend his contract for the
1988 and 1989 seasons and then withdrew the offer after they began
colluding with other teams. He presented a June 1996 letter from
Ballard Smith, Padres' President and CEO from 1979 to 1987, stating
that, before the end of the 1985 season, Smith offered to extend
Garvey's contract through 507 the 1989 season, but that the Padres refused to negotiate with
Garvey thereafter due to collusion.

															The arbitrator denied Garvey's claim, after seeking additional
documentation from the parties. In his award, he explained that"
'[t]here exists ... substantial doubt as to the credibility of the
statements in the Smith letter.'" Id., at 586. He noted the
"stark contradictions" between the 1996 letter and Smith's
testimony in the earlier arbitration proceedings regarding
collusion, where Smith, like other owners, denied collusion and
stated that the Padres simply were not interested in extending
Garvey's contract. Ibid. The arbitrator determined that, due
to these contradictions, he "'must reject [Smith's] more recent
assertion that Garvey did not receive [a contract] extension'" due
to collusion, and found that Garvey had not shown a specific offer
of extension. Ibid. He concluded: "'The shadow cast over the credibility of the Smith testimony
coupled with the absence of any other corroboration of the claim
submitted by Garvey compels a finding that the Padres declined to
extend his contract not because of the constraints of the collusion
effort of the clubs but rather as a baseball judgment founded upon
[Garvey's] age and recent injury history.'" Ibid. Garvey moved in Federal District Court to vacate the
arbitrator's award, alleging that the arbitrator violated the
Framework by denying his claim. The District Court denied the
motion. The Court of Appeals for the Ninth Circuit reversed by a
divided vote. The court acknowledged that judicial review of an
arbitrator's decision in a labor dispute is extremely limited. But
it held that review of the merits of the arbitrator's award was
warranted in this case, because the arbitrator "'dispensed his own
brand of industrial justice.'" Id., at 589. The court
recognized that Smith's prior testimony with respect to collusion
conflicted with the statements in his 1996 letter. But in the
court's view, the arbitra- 508 Per Curiam

															tor's refusal to credit Smith's letter was "inexplicable" and
"border[ed] on the irrational," because a panel of arbitrators,
chaired by the arbitrator involved here, had previously concluded
that the owners' prior testimony was false. Id., at 590. The
court rejected the arbitrator's reliance on the absence of other
corroborating evidence, attributing that fact to Smith and Garvey's
direct negotiations. The court also found that the record provided
"strong support" for the truthfulness of Smith's 1996 letter. Id., at 591-592. The Court of Appeals reversed and remanded
with directions to vacate the award.

															The District Court then remanded the case to the arbitration
panel for further hearings, and Garvey appealed. The Court of
Appeals, again by a divided vote, explained that Garvey I established that "the conclusion that Smith made Garvey an offer
and subsequently withdrew it because of the collusion scheme was
the only conclusion that the arbitrator could draw from the record
in the proceedings." No. 00-56080, 2000 WL 1801383, *1 (CA9, Dec.
7, 2000) (unpublished), judgt. order reported at 243 F.3d
547 (Garvey II). Noting that its prior instructions
might have been unclear, the court clarified that Garvey I "left only one possible result-the result our holding
contemplated-an award in Garvey's favor." 2000 WL 1801383, at *1.
The Court of Appeals reversed the District Court and directed that
it remand the case to the arbitration panel with instructions to
enter an award for Garvey in the amount he claimed.1

															1 Garvey contends that, because the Association's petition was
filed more than 90 days after Garvey I, we cannot consider a
challenge raising issues resolved in that decision. But there is no
question that the Association's petition was filed in sufficient
time for us to review Garvey II, and we have authority to
consider questions determined in earlier stages of the litigation
where certiorari is sought from the most recent of the judgments of
the Court of Appeals. Mercer v. Theriot, 377 U. S. 152 (1964) (per curiam); Hamilton-Brown Shoe Co. v. Wolf
Brothers & Co., 240 U. S. 251 , 258
(1916). 509 The parties do not dispute that this case arises under § 301 of
the Labor Management Relations Act, 1947, 61 Stat. 156, 29 U. S. C.
§ 185(a), as the controversy involves an assertion of rights under
an agreement between an employer and a labor organization. Although
Garvey's specific allegation is that the arbitrator violated the
Framework for resolving players' claims for damages, that Framework
was designed to facilitate payments to remedy the Clubs' breach of
the collective-bargaining agreement. Garvey's right to be made
whole is founded on that agreement.

															Judicial review of a labor-arbitration decision pursuant to such
an agreement is very limited. Courts are not authorized to review
the arbitrator's decision on the merits despite allegations that
the decision rests on factual errors or misinterprets the parties'
agreement. Paperworkers v. Misco, Inc., 484 U. S. 29 , 36 (1987).
We recently reiterated that if an "'arbitrator is even arguably
construing or applying the contract and acting within the scope of
his authority,' the fact that 'a court is convinced he committed
serious error does not suffice to overturn his decision.'" Eastern Associated Coal Corp. v. Mine Workers, 531 U. S. 57 , 62
(2000) (quoting Misco, supra, at 38). It is only when the
arbitrator strays from interpretation and application of the
agreement and effectively "dispense[s] his own brand of industrial
justice" that his decision may be unenforceable. Steelworkers v. Enterprise Wheel & Car
Corp., 363 U. S.
593 , 597 (1960). When an arbitrator resolves disputes regarding
the application of a contract, and no dishonesty is alleged, the
arbitrator's "improvident, even silly, factfinding" does not
provide a basis for a reviewing court to refuse to enforce the
award. Misco, 484 U. S., at 39.

															In discussing the courts' limited role in reviewing the merits
of arbitration awards, we have stated that" 'courts ... have no
business weighing the merits of the grievance [or] considering
whether there is equity in a particular claim.'" 510 Per Curiam Id., at 37 (quoting Steelworkers v. American
Mfg. Co., 363 U. S. 564, 568 (1960)). When the judiciary does
so, "it usurps a function which ... is entrusted to the arbitration
tribunal." Id., at 569; see also Enterprise Wheel & Car Corp., supra, at 599 ("It is the arbitrator's
construction [of the agreement] which was bargained for ... ").
Consistent with this limited role, we said in Misco that
"[e]ven in the very rare instances when an arbitrator's procedural
aberrations rise to the level of affirmative misconduct, as a rule
the court must not foreclose further proceedings by settling the
merits according to its own judgment of the appropriate result."
484 U. S., at 40-41, n. 10. That step, we explained, "would
improperly substitute a judicial determination for the arbitrator's
decision that the parties bargained for" in their agreement. Ibid. Instead, the court should "simply vacate the award,
thus leaving open the possibility of further proceedings if they
are permitted under the terms of the agreement." Ibid. To be sure, the Court of Appeals here recited these principles,
but its application of them is nothing short of baffling. The
substance of the court's discussion reveals that it overturned the
arbitrator's decision because it disagreed with the arbitrator's
factual findings, particularly those with respect to credibility.
The Court of Appeals, it appears, would have credited Smith's 1996
letter, and found the arbitrator's refusal to do so at worst
"irrational" and at best "bizarre." Garvey I, 203 F. 3d, at
590-591. But even "serious error" on the arbitrator's part does not
justify overturning his decision, where, as here, he is construing
a contract and acting within the scope of his authority. Misco,
supra, at 38.

															In Garvey II, the court clarified that Garvey I both rejected the arbitrator's findings and went further, resolving
the merits of the parties' dispute based on the court's assessment
of the record before the arbitrator. For that reason, the court
found further arbitration proceedings inappropri- 511 ate. But again, established law ordinarily precludes a court
from resolving the merits of the parties' dispute on the basis of
its own factual determinations, no matter how erroneous the
arbitrator's decision. Misco, supra, at 40, n. 10; see also American Mfg. Co., supra, at 568. Even when the arbitrator's
award may properly be vacated, the appropriate remedy is to remand
the case for further arbitration proceedings. Misco, supra, at 40, n. 10. The dissent suggests that the remedy described in Misco is limited to cases where the arbitrator's errors are
procedural. Post, at 512 (opinion of STEVENS, J.). Misco did involve procedural issues, but our discussion
regarding the appropriate remedy was not so limited. If a remand is
appropriate even when the arbitrator's award has been set
aside for "procedural aberrations" that constitute "affirmative
misconduct," it follows that a remand ordinarily will be
appropriate when the arbitrator simply made factual findings that
the reviewing court perceives as "irrational." The Court of Appeals
usurped the arbitrator's role by resolving the dispute and barring
further proceedings, a result at odds with this governing law.2

															For the foregoing reasons, the Court of Appeals erred in
reversing the order of the District Court denying the motion to
vacate the arbitrator's award, and it erred further in directing
that judgment be entered in Garvey's favor. The petition for a writ
of certiorari is granted, the judgment of

															2 In any event, no serious error on the arbitrator's part is
apparent in this case. The fact that an earlier panel of
arbitrators rejected the owners' testimony as a whole does not
compel the conclusion that the panel found Smith's specific
statements with respect to Garvey to be false. The arbitrator's
explanation for his decision indicates that he simply found Smith
an unreliable witness and that, in the absence of corroborating
evidence, he could only conclude that Garvey failed to show that
the Padres had offered to extend his contract. The arbitrator's
analysis may have been unpersuasive to the Court of Appeals, but
his decision hardly qualifies as serious error, let alone
irrational or inexplicable error. And, as we have said, any such
error would not justify the actions taken by the court. 512 STEVENS, J., dissenting

															the Court of Appeals is reversed, and the case is remanded for
further proceedings consistent with this opinion.

															It is so ordered.

															JUSTICE GINSBURG, concurring in part and concurring in the
judgment.

															I agree with the Court that in Garvey v. Roberts, 203 F. 3d 580 (CA9 2000), the Ninth Circuit should not have
disturbed the arbitrator's award. Correction of that error sets
this case straight. I see no need to say more.

															JUSTICE STEVENS, dissenting.

															It is well settled that an arbitrator "does not sit to dispense
his own brand of industrial justice." Steelworkers v. Enterprise Wheel & Car Corp., 363 U. S. 593 , 597
(1960). We have also said fairly definitively, albeit in dicta,
that a court should remedy an arbitrator's "procedural aberrations"
by vacating the award and remanding for further proceedings. Paperworkers v. Misco, Inc., 484 U. S. 29 , 40-41, n. 10
(1987). Our cases, however, do not provide significant guidance as
to what standards a federal court should use in assessing whether
an arbitrator's behavior is so untethered to either the agreement
of the parties or the factual record so as to constitute an attempt
to "dispense his own brand of industrial justice." Nor, more
importantly, do they tell us how, having made such a finding,
courts should deal with "the extraordinary circumstance in which
the arbitrator's own rulings make clear that, more than being
simply erroneous, his finding is completely inexplicable and
borders on the irrational." Garvey v. Roberts, 203 F.3d
580 , 590 (CA9 2000) (case below). Because our case law
is not sufficiently clear to allow me to conclude that the case
below was wrongly decided-let alone to conclude that the decision
was so wrong as to require the extraordinary remedy of a sum- 513 mary reversal-I dissent from the Court's disposition of this
petition.

															Without the benefit of briefing or argument, today the Court
resolves two difficult questions. First, it decides that even if
the Court of Appeals' appraisal of the merits is correct-that is to
say, even if the arbitrator did dispense his own brand of justice
untethered to the agreement of the parties, and even if the correct
disposition of the matter is perfectly clear-the only course open
to a reviewing court is to remand the matter for another
arbitration. That conclusion is not compelled by any of our cases,
nor by any analysis offered by the Court. As the issue is subject
to serious arguments on both sides, the Court should have set this
case for argument if it wanted to answer this remedial
question.

															Second, without reviewing the record or soliciting briefing, the
Court concludes that, in any event, "no serious error on the
arbitrator's part is apparent in this case." Ante, at 511,
n. 2. At this stage in the proceedings, I simply cannot endorse
that conclusion. After examining the record, obtaining briefing,
and hearing oral argument, the Court of Appeals offered a reasoned
explanation of its conclusion. See 203 F. 3d, at 589-592; see also
id., at 593-594 (Hawkins, J., concurring). Whether or not I would
ultimately agree with the Ninth Circuit's analysis, I find the
Court's willingness to reverse a factbound determination of the
Court of Appeals without engaging that court's reasoning a
troubling departure from our normal practice. *

															Accordingly, I respectfully dissent.

															*The Court's opinion is somewhat ambiguous as to its reasons for
overturning the portion of the Court of Appeals' decision setting
aside the arbitration. It is unclear whether the majority is saying
that a court may never set aside an arbitration because of a
factual error, no matter how perverse, or whether the Court merely
holds that the error in this case was not sufficiently severe to
allow a court to take that step. If it is the latter, the Court
offers no explanation of what standards it is using or of its
reasons for reaching that conclusion.


Clackamas Gastroenterology Associates, P.C. v. Wells

OCTOBER TERM, 2002

															Syllabus

															CLACKAMAS GASTROENTEROLOGY ASSOCIATES, P. C. v. WELLS

															CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT

															No. 01-1435. Argued February 25, 2003-Decided April 22, 2003

															Respondent filed suit alleging that petitioner medical clinic
violated the Americans with Disabilities Act of 1990 (ADA or Act)
when it terminated her employment. Petitioner moved for summary
judgment, asserting that it was not covered by the Act because it
did not have 15 or more employees for the 20 weeks required by the
ADA. That assertion's accuracy depends on whether the four
physician-shareholders who own the professional corporation and
constitute its board of directors are counted as employees. In
granting the motion, the District Court concluded that the
physicians were more analogous to partners in a partnership than to
shareholders in a corporation and therefore were not employees
under the ADA. The Ninth Circuit reversed, finding no reason to
permit a professional corporation to reap the tax and civil
liability advantages of its corporate status and then argue that it
is like a partnership so as to avoid employment discrimination
liability.

															Held:

															1. The common-law element of control is the principal guidepost
to be followed in deciding whether the four director-shareholder
physicians in this case should be counted as "employees." Where, as
here, a statute does not helpfully define the term "employee," this
Court's cases construing similar language give guidance in how best
to fill the statutory text's gap. Nationwide Mut. Ins. Co. v. Darden, 503
U. S. 318 , 322, 323. The professional corporation is a new type
of business entity with no exact common-law precedent, but the
common law's definition of the master-servant relationship provides
helpful guidance: the focus on the master's control over the
servant. Accordingly, the Equal Employment Opportunity Commission
(EEOC) argues that a court should examine whether
shareholder-directors operate independently and manage the business
or instead are subject to the firm's control. Specific EEOC
guidelines discuss the broad question of who is an "employee" and
the narrower one of when partners, officers, board of directors'
members, and major shareholders qualify as employees. The Court is
persuaded by the EEOC's focus on the common-law touchstone of
control and specifically by its submission that each of six factors
are relevant to the inquiry whether a shareholder-director is an
employee. Pp. 444-451. 441 2. Because the District Court's findings appear to weigh in
favor of concluding that the four physicians are not clinic
employees, but evidence in the record may contradict those findings
or support a contrary conclusion under the EEOC's standard, the
case is remanded for further proceedings. P. 451. 271 F.3d
903 , reversed and remanded.

															STEVENS, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and O'CONNOR, SCALIA, KENNEDY, SOUTER, and
THOMAS, JJ., joined. GINSBURG, J., filed a dissenting opinion, in
which BREYER, J., joined, post, p. 451. Steven W Seymour argued the cause for petitioner. With
him on the briefs was Andria C. Kelly. Irving L. Gornstein argued the cause for the United States et
al. as amici curiae urging reversal. With him on the brief were
Solicitor General Olson, Deputy Solicitor General Clement, Philip
B. Sklover, Lorraine C. Davis, and Robert J. Gregory. Craig A. Crispin argued the cause and filed a brief for
respondent. *

															JUSTICE STEVENS delivered the opinion of the Court.

															The Americans with Disabilities Act of 1990 (ADA or Act), 104
Stat. 327, as amended, 42 U. S. C. § 12101 et seq., like
other federal antidiscrimination legislation,l is inapplicable to
very small businesses. Under the ADA an "em-

															*Briefs of amici curiae urging affirmance were filed for
the American Federation of Labor and Congress of Industrial
Organizations by Jonathan P. Hiatt, James B. Coppess, and Laurence Gold; for the Lawyers' Committee for Civil Rights
Under Law et al. by Barbara R. Arnwine, Thomas J. Henderson, Michael L. Foreman, Daniel B. Kohrman, Melvin
Radowitz, Vincent A. Eng, Dennis C. Hayes, and Judith
L. Lichtman; and for the National Employment Lawyers
Association et al. by Merl H. Wayman and Jenifer
Bosco. 1 See, e. g., 29 U. S. C. § 630(b) (setting forth
a 20-employee threshold for coverage under the Age Discrimination
in Employment Act of 1967 (ADEA)); 42 u. S. C. § 2000e(b)
(establishing a 15-employee threshold for coverage under Title VII
of the Civil Rights Act of 1964). 442 ployer" is not covered unless its work force includes "15 or
more employees for each working day in each of 20 or more calendar
weeks in the current or preceding calendar year." § 12111(5). The
question in this case is whether four physicians actively engaged
in medical practice as shareholders and directors of a professional
corporation should be counted as "employees."

															I

															Petitioner, Clackamas Gastroenterology Associates, P. C., is a medical clinic in Oregon. It employed respondent, Deborah Anne
Wells, as a bookkeeper from 1986 until 1997. After her termination,
she brought this action against the clinic alleging unlawful
discrimination on the basis of disability under Title I of the ADA.
Petitioner denied that it was covered by the Act and moved for
summary judgment, asserting that it did not have 15 or more
employees for the 20 weeks required by the statute. It is
undisputed that the accuracy of that assertion depends on whether
the four physician-shareholders who own the professional
corporation and constitute its board of directors are counted as
employees.

															The District Court, adopting the Magistrate Judge's findings and
recommendation, granted the motion. Relying on an "economic
realities" test adopted by the Seventh Circuit in EEOC v. Dowd & Dowd, Ltd., 736 F.2d
1177 , 1178 (1984), the District Court concluded that the four
doctors were "more analogous to partners in a partnership than to
shareholders in a general corporation" and therefore were "not
employees for purposes of the federal antidiscrimination laws."
App. 89.

															A divided panel of the Court of Appeals for the Ninth Circuit
reversed. Noting that the Second Circuit had rejected the economic
realities approach, the majority held that the use of any
corporation, including a professional corporation, " 'precludes any
examination designed to determine whether the entity is in fact a
partnership.'" 271 F.3d
903 , 905 443 (2001) (quoting Hyland v. New Haven Radiology
Associates, p. c., 794 F.2d
793 , 798 (CA2 1986)). It saw "no reason to permit a
professional corporation to secure the 'best of both possible
worlds' by allowing it both to assert its corporate status in order
to reap the tax and civil liability advantages and to argue that it
is like a partnership in order to avoid liability for unlawful
employment discrimination." 271 F. 3d, at 905. The dissenting judge
stressed the differences between an Oregon physicians' professional
corporation and an ordinary business corporation,2 and argued that
Congress'

															2 The dissenting judge summarized Oregon's treatment of
professional corporations as follows:

															"In Oregon, a physicians' professional corporation, like this
one, preserves the professional relationship between the physicians
and their patients, as well as the standards of conduct that the
medical profession requires. Or. Rev. Stat. § 58.185(2). Further, 'a shareholder of the corporation is personally liable as
if the shareholder were rendering the service or services as an
individual' with respect to all claims of negligence, wrongful
acts or omissions, or misconduct committed in the rendering of
professional services. Or. Rev. Stat. § 58.185(3) (emphasis added).
A licensed professional also is jointly and severally liable for such claims, albeit with some dollar limitations. Or. Rev.
Stat. § 58.185(4)-(9). Ordinary business corporation rules apply
only to other aspects of the entity, apart from the provision of
professional services. Or. Rev. Stat. § 58.185(11). A professional
corporation's activities must remain consistent with the
requirements of the type of license in question, Or. Rev. Stat. §
58.205, and it may merge only with other professional corporations,
Or. Rev. Stat. § 58.196, so the provision of professional
services-with its attendant liabilities-must remain at the heart of
a P. C. like this defendant.

															"Additional special rules apply to professional corporations
that are organized to practice medicine, none of which apply to
ordinary business corporations. A majority of the directors, the
holders of the majority of shares, and all officers except the
secretary and treasurer must be Oregon-licensed physicians. Or.
Rev. Stat. § 58.375(1)(a)-(c). The Board of Medical Examiners is
given express statutory authority to require more than a majority
of shares, and more than a majority of director positions, to be
held by Oregon-licensed physicians. Or. Rev. Stat. § 58.375(1)(d)
& (e). The Board of Medical Examiners also may restrict the
corporate powers of a professional corporation organized for
the purpose of practicing medicine, beyond the restrictions imposed
on ordinary business corpora- 444 reasons for exempting small employers from the coverage of the
Act should apply to petitioner. Id., at 906-909 (opinion of
Graber, J.).

															We granted certiorari to resolve the conflict in the Circuits,
which extends beyond the Seventh and the Second Circuits.3 536 U.
S. 990 (2002).

															II

															"We have often been asked to construe the meaning of 'employee'
where the statute containing the term does not helpfully define
it." Nationwide Mut. Ins. Co. v. Darden, 503 U. S. 318 , 322
(1992). The definition of the term in the ADA simply states that an
"employee" is "an individual employed by an employer." 42 U. S. C.
§ 12111(4). That surely qualifies as a mere "nominal definition"
that is "completely circular and explains nothing." Darden, 503 U. S., at 323. As we explained in Darden, our cases
construing similar language give us guidance on how best to fill
the gap in the statutory text.

															In Darden we were faced with the question whether an
insurance salesman was an independent contractor or an "employee"
covered by the Employee Retirement Income Security Act of 1974
(ERISA). Because ERISA's definition of "employee" was "completely
circular," 503 U. S., at 323, we followed the same general approach
that we had previously used in deciding whether a sculptor was an
"employee" within the meaning of the Copyright Act of 1976, see Community for Creative Non-Violence v. Reid, 490 U.
S. 730

															tions. Or. Rev. Stat. § 58.379. Lastly, Or. Rev. Stat. §§ 58.375
through 58.389 contain impediments to the transfer of shares and
other corporate activities." 271 F. 3d, at 907-908 (opinion of
Graber, J.) (footnote omitted).

															3 The disagreement in the Circuits is not confined to the
particulars of the ADA. For example, the Seventh Circuit's decision
in EEOC v. Dowd & Dowd, Ltd., 736 F.2d
1177 (1984), concerned Title VII, and the Second Circuit's
opinion in Hyland v. New Haven Radiology Associates,
p. c., 794 F.2d
793 (1986), involved the ADEA. See also Devine v. Stone, Ley ton & Gershman, P. c., 100 F.3d
78 (CA8 1996) (Title VII case). 445 (1989),4 and we adopted a common-law test for determining who
qualifies as an "employee" under ERISA.5 Quoting Reid, 490
U. S., at 739-740, we explained that "'when Congress has used the
term "employee" without defining it, we have concluded that
Congress intended to describe the conventional master-servant
relationship as understood by common-law agency doctrine.'" Darden, 503 U. S., at 322-323.

															Rather than looking to the common law, petitioner argues that
courts should determine whether a shareholder-director of a
professional corporation is an "employee" by asking whether the
shareholder-director is, in reality, a "partner." Brief for
Petitioner 9, 15-16,21 (arguing that the four shareholders in the
clinic are more analogous to partners in a partnership than
shareholders in a corporation and that

															4 In Reid, 490 U. S., at 738, the ownership of a
copyright in a statue depended on whether it had been "'prepared by
an employee within the scope of his or her employment' " within the
meaning of the Copyright Act of 1976. 5 Darden described the common-law test for determining
whether a hired party is an employee as follows:

															"'[W]e consider the hiring party's right to control the manner
and means by which the product is accomplished. Among the other
factors relevant to this inquiry are the skill required; the source
of the instrumentalities and tools; the location of the work; the
duration of the relationship between the parties; whether the
hiring party has the right to assign additional projects to the
hired party; the extent of the hired party's discretion over when
and how long to work; the method of payment; the hired party's role
in hiring and paying assistants; whether the work is part of the
regular business of the hiring party; whether the hiring party is
in business; the provision of employee benefits; and the tax
treatment of the hired party.'" 503 U. S., at 323-324 (quoting Community for Creative Non-Violence v. Reid, 490 U. S. 730 , 751-752
(1989), and citing Restatement (Second) of Agency § 220(2)
(1958)).

															These particular factors are not directly applicable to this
case because we are not faced with drawing a line between
independent contractors and employees. Rather, our inquiry is
whether a shareholder-director is an employee or, alternatively,
the kind of person that the common law would consider an
employer. 446 "those who are properly classified as partners are not
'employees' for purposes of the anti-discrimination statutes"). The
question whether a shareholder-director is an employee, however,
cannot be answered by asking whether the shareholder-director
appears to be the functional equivalent of a partner. Today there
are partnerships that include hundreds of members, some of whom may
well qualify as "employees" because control is concentrated in a
small number of managing partners. Cf. Hishon v. King & Spalding, 467 U. S. 69 , 79, n. 2
(1984) (Powell, J., concurring) ("[A]n employer may not evade the
strictures of Title VII simply by labeling its employees as
'partners"'); EEOC v. Sidley Austin Brown & Wood, 315 F.3d
696 , 709 (CA72002) (Easterbrook, J., concurring in part and
concurring in judgment); Strother v. Southern California
Permanente Medical Group, 79 F.3d
859 (CA9 1996). Thus, asking whether
shareholder-directors are partners-rather than asking whether they
are employees-simply begs the question.

															Nor does the approach adopted by the Court of Appeals in this
case fare any better. The majority's approach, which paid
particular attention to "the broad purpose of the ADA," 271 F. 3d,
at 905, is consistent with the statutory purpose of ridding the
Nation of the evil of discrimination. See 42 U. S. C. § 12101(b).6
Nevertheless, two countervailing considerations must be weighed in
the balance. First, as the

															6 The meaning of the term "employee" comes into play when
determining whether an individual is an "employee" who may invoke
the ADA's protections against discrimination in "hiring,
advancement, or discharge," 42 U. S. C. § 12112(a), as well as when
determining whether an individual is an "employee" for purposes of
the 15-employee threshold. See § 12111(5)(A); see also Brief for
United States et al. as Amici Curiae 10-11; Schmidt v. Ottawa Medical Center, P. c., 322 F.3d
461 (CA72003). Consequently, a broad reading of the term
"employee" would-consistent with the statutory purpose of ridding
the Nation of discrimination-tend to expand the coverage of the ADA
by enlarging the number of employees entitled to protection and by
reducing the number of firms entitled to exemption. 447 dissenting judge noted below, the congressional decision to
limit the coverage of the legislation to firms with 15 or more
employees has its own justification that must be respectednamely,
easing entry into the market and preserving the competitive
position of smaller firms. See 271 F. 3d, at 908 (opinion of
Graber, J.) ("Congress decided 'to spare very small firms from the
potentially crushing expense of mastering the intricacies of the
antidiscrimination laws, establishing procedures to assure
compliance, and defending against suits when efforts at compliance
fail'" (quoting Papa v. Katy Industries, Inc., 166 F.3d
937 , 940 (CA7), cert. denied, 528 U. S. 1019 (1999))).
Second, as Darden reminds us, congressional silence often
reflects an expectation that courts will look to the common law to
fill gaps in statutory text, particularly when an undefined term
has a settled meaning at common law. Congress has overridden
judicial decisions that went beyond the common law in an effort to
correct "'the mischief'" at which a statute was aimed. See 503 U.
S., at 324-325.

															Perhaps the Court of Appeals' and the parties' failure to look
to the common law for guidance in this case stems from the fact
that we are dealing with a new type of business entity that has no
exact precedent in the common law. State statutes now permit
incorporation for the purpose of practicing a profession, but in
the past "the so-called learned professions were not permitted to
organize as corporate entities." lA W. Fletcher, Cyclopedia of the
Law of Private Corporations § 112.10 (rev. ed. 1997-2002). Thus,
professional corporations are relatively young participants in the
market, and their features vary from State to State. See generally
1 B. Bittker & J. Eustice, Federal Income Taxation of
Corporations and Shareholders ~ 2.06 (7th ed. 2002) (explaining
that States began to authorize the creation of professional
corporations in the late 1950's and that the momentum to form
professional corporations grew in the 1970's). 448 Nonetheless, the common law's definition of the masterservant
relationship does provide helpful guidance. At common law the
relevant factors defining the master-servant relationship focus on
the master's control over the servant. The general definition of
the term "servant" in the Restatement (Second) of Agency § 2(2)
(1957), for example, refers to a person whose work is "controlled
or is subject to the right to control by the master." See also id., § 220(1) ("A servant is a person employed to perform
services in the affairs of another and who with respect to the
physical conduct in the performance of the services is subject to
the other's control or right to control"). In addition, the
Restatement's more specific definition of the term "servant" lists
factors to be considered when distinguishing between servants and
independent contractors, the first of which is "the extent of
control" that one may exercise over the details of the work of the
other. Id., § 220(2)(a). We think that the common-law
element of control is the principal guidepost that should be
followed in this case.

															This is the position that is advocated by the Equal Employment
Opportunity Commission (EEOC), the agency that has special
enforcement responsibilities under the ADA and other federal
statutes containing similar threshold issues for determining
coverage. It argues that a court should examine "whether
shareholder-directors operate independently and manage the business
or instead are subject to the firm's control." Brief for United
States et al. as Amici Curiae 8. According to the EEOC's
view, "[i]f the shareholderdirectors operate independently and
manage the business, they are proprietors and not employees; if
they are subject to the firm's control, they are employees." Ibid. Specific EEOC guidelines discuss both the broad question of who
is an "employee" and the narrower question of when partners,
officers, members of boards of directors, and major shareholders
qualify as employees. See 2 Equal Employment Opportunity
Commission, Compliance Manual 449 §§ 605:0008-605:00010 (2000) (hereinafter EEOC Compliance
Manual).7 With respect to the broad question, the guidelines list
16 factors-taken from Darden, 503 U. S., at 323324-that may
be relevant to "whether the employer controls the means and manner
of the worker's work performance." EEOC Compliance Manual §
605:0008, and n. 71.8 The guidelines list six factors to be
considered in answering the narrower question, which they frame as
"whether the individual acts independently and participates in
managing the organization, or whether the individual is subject to
the organization's control." Id., § 605:0009.

															We are persuaded by the EEOC's focus on the commonlaw touchstone
of control, see Skidmore v. Swift & Co., 323 U. S. 134 ,
140 (1944),9 and specifically by its submission that each of the
following six factors is relevant to the inquiry whether a
shareholder-director is an employee: "Whether the organization can hire or fire the individual or set
the rules and regulations of the individual's work 7The EEOC's manual states that it applies across the board to
other federal antidiscrimination statutes. See EEOC Compliance
Manual § 605:0001 ("This Section discusses coverage, timeliness,
and other threshold issues to be considered when a charge is first
filed under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967 (ADEA), the Americans with
Disabilities Act of 1990 (ADA), or the Equal Pay Act of 1963 (EPA)"
(footnote omitted)).

															8 For example, the EEOC considers whether the work requires a
high level of skill or expertise, whether the employer furnishes
the tools, materials, and equipment, and whether the employer has
the right to control when, where, and how the worker performs the
job. Id., § 605:0008.

															9 As the Government has acknowledged, see Tr. of Oral Arg. 19,
the EEOC's Compliance Manual is not controlling-even though it may
constitute a "body of experience and informed judgment" to which we
may resort for guidance. Skidmore v. Swift & Co., 323 U. S., at 140; see also Christensen v. Harris County, 529 U. S. 576 , 587 (2000)
(holding that agency interpretations contained in "policy
statements, agency manuals, and enforcement guidelines, all of
which lack the force of law[,] do not warrant Chevron-style deference"). 450 "Whether and, if so, to what extent the organization supervises
the individual's work "Whether the individual reports to someone higher in the
organization "Whether and, if so, to what extent the individual is able to
influence the organization "Whether the parties intended that the individual be an
employee, as expressed in written agreements or contracts "Whether the individual shares in the profits, losses, and
liabilities of the organization." EEOC Compliance Manual §
605:0009.10 As the EEOC's standard reflects, an employer is the person, or
group of persons, who owns and manages the enterprise. The employer
can hire and fire employees, can assign tasks to employees and
supervise their performance, and can decide how the profits and
losses of the business are to be distributed. The mere fact that a
person has a particular title-such as partner, director, or vice
president-should not necessarily be used to determine whether he or
she is an employee or a proprietor. See ibid. ("An
individual's title ... does not determine whether the individual is
a partner, officer, member of a board of directors, or major
shareholder, as opposed to an employee"). Nor should the mere
existence of a document styled "employment agreement" lead
inexorably to the conclusion that either party is an employee. See ibid. (looking to whether "the parties intended that the
individual be an employee, as expressed in written

															10 The EEOC asserts that these six factors need not necessarily
be treated as "exhaustive." Brief for United States et al. as Amici Curiae 9. We agree. The answer to whether a
shareholder-director is an employee or an employer cannot be
decided in every case by a "'shorthand formula or magic phrase.''' Nationwide Mut. Ins. Co. v. Darden, 503 U. S. 318,
324 (1992) (quoting NLRB v. United Ins. Co. of America,
390 U. S. 254, 258 (1968)). 451 agreements or contracts"). Rather, as was true in applying
common-law rules to the independent-contractor-versusemployee issue
confronted in Darden, the answer to whether a
shareholder-director is an employee depends on "'all of the
incidents of the relationship ... with no one factor being
decisive.'" 503 U. S., at 324 (quoting NLRB v. United
Ins. Co. of America, 390 U. S. 254 , 258
(1968)).

															III

															Some of the District Court's findings-when considered in light
of the EEOC's standard-appear to weigh in favor of a conclusion
that the four director-shareholder physicians in this case are not
employees of the clinic. For example, they apparently control the
operation of their clinic, they share the profits, and they are
personally liable for malpractice claims. There may, however, be
evidence in the record that would contradict those findings or
support a contrary conclusion under the EEOC's standard that we
endorse today.u Accordingly, as we did in Darden, we reverse
the judgment of the Court of Appeals and remand the case to that
court for further proceedings consistent with this opinion.

															It is so ordered.

															JUSTICE GINSBURG, with whom JUSTICE BREYER joins,
dissenting.

															"There is nothing inherently inconsistent between the
coexistence of a proprietary and an employment relationship." Goldberg v. Whitaker House Cooperative, Inc., 366 U. S. 28 , 32
(1961). As doctors performing the everyday work of petitioner
Clackamas Gastroenterology Associates, P. C., the
physician-shareholders function in several respects as

															11 For example, the record indicates that the four
director-shareholders receive salaries, Tr. of Oral Arg. 8, that
they must comply with the standards established by the clinic, App.
66, and that they report to a personnel manager, ibid. 452 common-law employees, a designation they embrace for various
purposes under federal and state law. Classifying as employees all
doctors daily engaged as caregivers on Clackamas' premises,
moreover, serves the animating purpose of the Americans with
Disabilities Act of 1990 (ADA or Act). Seeing no cause to shelter
Clackamas from the governance of the ADA, I would affirm the
judgment of the Court of Appeals.

															An "employee," the ADA provides, is "an individual employed by
an employer." 42 U. S. C. § 12111(4). Where, as here, a federal
statute uses the word "employee" without explaining the term's
intended scope, we ordinarily presume "Congress intended to
describe the conventional masterservant relationship as understood
by common-law agency doctrine." Nationwide Mut. Ins. Co. v. Darden, 503 U.
S. 318 , 322-323 (1992) (internal quotation marks omitted). The
Court today selects one of the common-law indicia of a
master-servant relationship-control over the work of others engaged
in the business of the enterprise-and accords that factor
overriding significance. Ante, at 448. I would not so shrink
the inquiry.

															Are the physician-shareholders "servants" of Clackamas for the
purpose relevant here? The Restatement defines "servant" to mean
"an agent employed by a master to perform service in his affairs
whose physical conduct in the performance of the service is
controlled or is subject to the right to control by the master."
Restatement (Second) of Agency § 2(2) (1957) (hereinafter
Restatement). When acting as clinic doctors, the
physician-shareholders appear to fit the Restatement definition.
The doctors provide services on behalf of the corporation, in whose
name the practice is conducted. See Ore. Rev. Stat. Ann. §
58.185(1)(a) (1998 Supp.) (shareholders of a professional
corporation "render the specified professional services of the
corporation" (emphasis added)). The doctors have employment
contracts with Clackamas, App. 71, under which they receive
salaries and 453 yearly bonuses, Tr. of Oral Arg. 8, and they work at facilities
owned or leased by the corporation, App. 29, 71. In performing
their duties, the doctors must "compl[y] with ... standards [the
organization has] established." Id., at 66; see Restatement,
ch. 7, tit. B, Introductory Note, p. 479 ("[F]ully employed but
highly placed employees of a corporation ... are not less servants
because they are not controlled in their day-to-day work by other
human beings. Their physical activities are controlled by their
sense of obligation to devote their time and energies to the
interests of the enterprise.").

															The physician-shareholders, it bears emphasis, invite the
designation "employee" for various purposes under federal and state
law. The Employee Retirement Income Security Act of 1974 (ERISA),
much like the ADA, defines "employee" as "any individual employed
by an employer." 29 U. S. C. § 1002(6). Clackamas readily
acknowledges that the physician-shareholders are "employees" for
ERISA purposes. Tr. of Oral Arg. 6-7. Indeed, gaining qualification
as "employees" under ERISA was the prime reason the
physician-shareholders chose the corporate form instead of a
partnership. See id., at 7. Further, Clackamas agrees, the
physician-shareholders are covered by Oregon's workers'
compensation law, ibid., a statute applicable to "person[s]
... who ... furnish services for a remuneration, subject to the
direction and control of an employer," Ore. Rev. Stat. Ann. §
656.005(30) (1996 Supp.). Finally, by electing to organize their
practice as a corporation, the physician-shareholders created an
entity separate and distinct from themselves, one that would afford
them limited liability for the debts of the enterprise. §§
58.185(4), (5), (10), (11) (1998 Supp.). I see no reason to allow
the doctors to escape from their choice of corporate form when the
question becomes whether they are employees for purposes of federal
antidiscrimination statutes.

															Nothing in or about the ADA counsels otherwise. As the Court
observes, the reason for exempting businesses with 454 fewer than 15 employees from the Act, was "to spare very small
firms from the potentially crushing expense of mastering the
intricacies of the antidiscrimination laws, establishing procedures
to assure compliance, and defending against suits when efforts at
compliance fail." Ante, at 447 (quotation from Papa v. Katy Industries, Inc., 166 F.3d
937 , 940 (CA7 1999)). The inquiry the Court endorses to
determine the physician-shareholders' qualification as employees
asks whether they "ac[t] independently and participat[e] in
managing the organization, or ... [are] subject to the
organization's control." Ante, at 449 (quoting 2 Equal
Employment Opportunity Commission, Compliance Manual § 605:0009
(2000)). Under the Court's approach, a firm's coverage by the ADA
might sometimes turn on variations in ownership structure unrelated
to the magnitude of the company's business or its capacity for
complying with federal prescriptions.

															This case is illustrative. In 1996, Clackamas had 4
physician-shareholders and at least 14 other employees for 28 full
weeks; in 1997, it had 4 physician-shareholders and at least 14
other employees for 37 full weeks. App. 55-62; see 42 U. s. C. §
12111(5) (to be covered by the Act, an employer must have the
requisite number of employees "for each working day in each of 20
or more calendar weeks in the current or preceding calendar year").
Beyond question, the corporation would have been covered by the ADA
had one of the physician-shareholders sold his stake in the
business and become a "mere" employee. Yet such a change in
ownership arrangements would not alter the magnitude of Clackamas'
operation: In both circumstances, the corporation would have had at
least 18 people on site doing the everyday work of the clinic for
the requisite number of weeks.

															The Equal Employment Opportunity Commission's approach, which
the Court endorses, it is true, "excludes from protection those who
are most able to control the firm's practices and who, as a
consequence, are least vulnerable to the discriminatory treatment
prohibited by the Act." Brief for 455 United States et al. as Amici Curiae 11; see 42 U. S. C.
§§ 12111(8), 12112(a) (only "employees" are protected by the ADA).
As this dispute demonstrates, however, the determination whether
the physician-shareholders are employees of Clackamas affects not
only whether they may sue under the ADA, but also-and of far
greater practical importwhether employees like bookkeeper Deborah
Anne Wells are covered by the Act. Because the character of the
relationship between Clackamas and the doctors supplies no
justification for withholding from clerical worker Wells federal
protection against discrimination in the workplace, I would affirm
the judgment of the Court of Appeals.