On April 1, 2009, the Supreme Court of the United States ruled in the case of 14 Penn Plaza LLC v. Pyett (07-581) that provisions in a collective bargaining agreement (“CBA”) that require binding arbitration for statutory claims, including claims of employment discrimination, are enforceable as a matter of law. The Court ruled that as long as the statutory right is “clearly and unmistakably” included in the arbitration clause, union members who desire to pursue such claims must do so in an arbitration forum.
Background
In Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), the Supreme Court held that an employee who had pursued a claim of racial discrimination in arbitration pursuant to a CBA was not precluded from bringing a Title VII claim in federal court. Moreover, the Supreme Court held that federal courts should hear such claims de novo without giving any deference to the arbitration decision.
After Gardner-Denver, numerous circuit courts held that provisions contained within a CBA requiring binding arbitration of statutory claims, such as employment discrimination claims, were unenforceable. In fact, the First, Second, Sixth and Seventh Circuits all have allowed employees to file statutory claims in federal court, despite the fact that a CBA required arbitration of these claims. Only the Fourth Circuit found binding arbitration provisions enforceable if the CBA contained “clear and unmistakable” language referencing a waiver of statutory claims.
Facts of the Case
In 14 Penn Plaza LLC, the CBA contained the following provision:
“§30 NO DISCRIMINATION: There shall be no discrimination against any present or future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law, including, but not limited to, claims made pursuant to Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Code, … or any other similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.”
Respondents were directly employed by a maintenance service and cleaning contractor who engaged a unionized security contractor to provide licensed security guards. Respondents alleged that their jobs were reassigned by the Petitioners (which led to a loss in income and other damages) and that their new positions were otherwise less desirable than their former positions. The Union, at the behest of the Respondents, filed grievances alleging, among other things, that Petitioners violated §30 of the CBA, which prohibited workplace discrimination in violation of the Age Discrimination in Employment Act of 1967 (ADEA).
Although the Union did initially request arbitration, it subsequently withdrew the age-discrimination claims on the ground that its consent to the new security contract precluded it from objecting to Respondents’ reassignments as discriminatory. After the Union withdrew the claims, the Respondents then filed a complaint with the U.S. Equal Employment Opportunity Commission (EEOC), alleging that Petitioners had violated their ADEA rights. The EEOC subsequently issued each of the Respondents a right-to-sue letter.
After filing a lawsuit in the United States District Court for the Southern District of New York, the Petitioners moved to compel arbitration of Respondents’ ADEA claims based on the language in §30 of the CBA requiring arbitration. The District Court denied Petitioners’ motion, and the Second Circuit affirmed the District Court’s opinion, finding that Gardner-Denver Co. held that CBA provisions requiring arbitration of ADEA claims are unenforceable.
The Supreme Court’s Decision
The Supreme Court, in a 5-4 majority opinion written by Justice Thomas, held that a provision within a CBA that “clearly and unmistakably” requires arbitration of statutory claims is enforceable as a matter of law. Justice Thomas found that an examination of the two federal statutes at issue in this case, the National Labor Relations Act (NLRA) and the ADEA, provides a straightforward answer. Justice Thomas wrote that the NLRA gives unions and employers statutory authority to collectively bargain for workplace discrimination claims. Moreover, in the ADEA, Congress did nothing to terminate this authority. As a result, unless Congress specifically withheld the ability to arbitrate a statutory claim, where the union and employer agree in a CBA to arbitrate specific statutory claims, such provisions are enforceable.
In addressing Gardner-Denver and its progeny, Justice Thomas wrote that Gardner-Denver was being applied in an overbroad manner. Because the CBA in the Gardner-Denver case did not specifically mention Title VII, courts should not apply Gardner-Denver to situations where the CBA “clearly and unmistakably” refers to a specific statute. Instead, Gardner-Denver is only applicable where the CBA does not mention the specific statute at issue. Moreover, Justice Thomas wrote that Gardner-Denver’s reliance on the highly critical use of arbitration for the vindication of statutory antidiscrimination rights was no longer applicable. Instead, Justice Thomas found this skepticism to have rested on a misconceived view of arbitration that the Supreme Court has since abandoned as evidenced in cases such as Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985), Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989), and Circuit City Stores, Inc. v. Adams, 523 U.S. 105 (2001).
Finally, the Supreme Court refused to address the question of an employee’s remedy if the union refuses to bring a claim on behalf of an aggrieved employee. However, Justice Thomas, in dicta, did indicate that “[i]t was Congress’ verdict that the benefits of organized labor outweigh the sacrifice of individual liberty that this system necessarily demands. Respondents’ argument that they were deprived of the right to pursue their ADEA claims in federal court by a labor union with a conflict of interest is therefore unsustainable; it amounts to a collateral attack on the NLRA.”
Lessons Learned
When drafting CBAs, employers and unions must specifically state the name of any statutory claims they want resolved in the arbitration forum. Specifically stating the statute will provide the “clear and unmistakable” language necessary to require binding arbitration of an employee’s claim. Otherwise, employees will not be precluded from having such claims resolved in the courts.
For assistance in negotiating CBAs and resolving the proper forum of statutory discrimination claims brought by unions or employees covered by a CBA, please contact any member of McGuireWoods’ Labor & Employment team, including: