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United States Supreme Court Permits
Mandatory Arbitration Of Federal Age Claims In The Union Context
April 1, 2009
Summary
Today, in a significant shift from prior
precedent, the United States Supreme Court held that a
collective bargaining agreement provision that clearly and
unmistakably requires union members to arbitrate federal age
discrimination claims is enforceable under federal law. While
the Court was careful to avoid an outright reversal of its prior
decisions, the holding demonstrates the Court's shift over the last
twenty (20) years toward favoring the arbitration of
federal law-based claims.
Discussion
The collective bargaining agreement (CBA) at
issue in
Penn Plaza v. Pyett was negotiated between a union
representing building service employees and a multi-employer
bargaining association for the New York City real estate
industry. The CBA contained an arbitration provision that
required union employees to submit discrimination claims under a
number of federal and state anti-discrimination statutes to
binding arbitration. One of the laws expressly mentioned was
the federal Age Discrimination in Employment Act ("ADEA").
After the employer reorganized its workforce,
the union filed a grievance on behalf of security guards who
were reassigned to work as night porters and light duty
cleaners. The union's grievance referred to a number of
contract-based claims, and included an age discrimination
allegation. The union pursued the contract claims in a
grievance arbitration. While the arbitration was on-going, the
individual employees pursued their age-based claims in federal
court, under the ADEA.
In an attempt to enforce the CBA's mandatory
arbitration provision, the employer filed a motion in federal
District Court, asking the Court to compel arbitration of the
employees' age-based claims. Both the District Court and the
Second Circuit Court of Appeals rejected the employer's motion,
holding that, under Supreme Court precedent, a union could not
collectively waive individual employees' statutory rights.
The Supreme Court overturned the Second
Circuit, finding that a union was not precluded from
collectively agreeing to arbitration of any rights under the
ADEA. Justice Thomas, who authored the majority opinion, took
care to attempt to square this new position with the Court's
prior precedent. He reasoned that the ADEA itself does not
preclude arbitration of claims, and a labor union is empowered
to act as a collective representative for individual employees.
Since the arbitration provision was a freely-negotiated term of
the CBA, and the arbitration provision expressly referred to the
ADEA statute by name, the provision constituted a clear and
unmistakable waiver of employees' rights to seek relief from a
court.
Justice Thomas also corrected what he termed a
"key analytical mistake" in the Court's earlier decisions. He
noted that a voluntary decision to collectively bargain for
arbitration does not waive an employee's statutory right to be
free from workplace age discrimination. It simply waives an
employee's right to seek relief from a court. Justice Thomas
also highlighted the Supreme Court's shift toward favoring the
arbitration process by noting the "radical change, over two
decades, in the Court's receptivity to arbitration."
What This Means
Union employers who are covered by the National
Labor Relations Act should review any arbitration
provision contained in their CBAs to determine whether it
expressly refers to the ADEA by name. If its does, the employer
will likely be able to mandate arbitration of individual ADEA
claims. The Supreme Court's holding also leaves open the
possibility that employers may be able to require arbitration of
other federal anti-discrimination claims, such as those under
Title VII.
It is unclear, however, what impact this
decision will have under California law. The California Supreme
Court has held that in order to have a valid arbitration
agreement in the employment context, there must be a mechanism
that allows the full and fair adjudication of the claim. Unless
the arbitration mechanism under a CBA does so, it is unclear
whether a California court would enforce the arbitration
provision and/or follow the United States Supreme Court's
analysis in Penn Plaza v. Pyett.
This case also benefits non-union employers who
presently use, or who wish to use, arbitration to resolve
federal law employment-related disputes. In its decision, the
Supreme Court expressly recognized that arbitration was a forum
well-suited to resolve federal employment claims such as those
under Title VII and the ADEA.
Finally, it's possible that the Supreme Court's
decision will spur Congress to either amend the ADEA to prohibit
arbitration of claims, or to otherwise ban the arbitration of
all employment-related disputes. Indeed, such a bill, the
Arbitration Fairness Act of 2009, was introduced in the House of
Representatives on February 12, 2009. While the fate of the
Arbitration Fairness Act bill has yet to be determined, this
area of law may rapidly evolve.
This e-update was authored by
Brenda
Kasper and
Michael
Sullivan. For more information, or questions, please contact
Ms. Kasper, Mr. Sullivan or any Paul, Plevin attorney at (619)
237-5200.
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