On April 1, 2009, a 5-4 majority of the U.S. Supreme Court held in 14 Penn Plaza LLC v. Pyett, No. 07-581, 2009 U.S. LEXIS 2497, that a collective bargaining agreement (“CBA”) that “clearly and unmistakably” requires union members to arbitrate statutory age discrimination claims is enforceable as a matter of federal law.
The 14 Penn Plaza was a member of a multi-employer bargaining association that had an industry-wide CBA with the union. It operated an office building where a contractor employed several union members as night lobby watchmen. 14 Penn Plaza engaged another unionized contractor to provide licensed security guards for the building and, with the approval of the union, reassigned the former watchmen to other positions in the building. The employees alleged that the reassignment violated several provisions of the CBA including the “No-Discrimination” clause which provided, in relevant part, as follows:
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 City Human Rights Code, . . . or any other similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures [of the CBA] as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination. (emphasis added).The union moved the grievance to arbitration, but, after the first day of hearing, withdrew the age discrimination claims on grounds that because it had approved the reassignment, it could not grieve it. The affected employees then filed charges with the EEOC alleging that 14 Penn Plaza’s actions violated the Age Discrimination in Employment Act (“ADEA”). The EEOC dismissed the charges and issued right-to-sue letters; and the employees filed suit alleging age discrimination in the U.S. District Court for the Southern District of New York. The District Court denied 14 Penn Plaza’s motion to compel arbitration pursuant to the terms of the CBA on grounds that the terms of a CBA cannot waive an individual’s right to litigate certain statutory claims in court. The U.S. Second Circuit Court of Appeals affirmed.
The U.S. Supreme Court reversed and noted that, under the National Labor Relations Act, unions have broad authority to negotiate a CBA pursuant to its duty to represent its members fairly. The Supreme Court held that the CBA’s requirement that employees arbitrate employment discrimination claims was a “condition of employment” and no different than making any other dispute subject to the grievance process. The Supreme Court explained that because the ADEA did not preclude the arbitration of claims brought under the statute, it had no legal ground to nullify the CBA arbitration provisions which were “freely negotiated” by the parties.
Distinguishing its prior decisions, the Supreme Court noted that where a CBA’s arbitration provision did not clearly and unmistakably require the arbitration of statutory discrimination claims, the arbitration of contractual discrimination claims did not preclude subsequent lawsuits. The Supreme Court further noted that because a CBA’s requirement that employees arbitrate statutory discrimination claims, it was not a waiver of future claims, but a waiver of the right to seek relief from a court in the first instance. Thus, it did not run afoul of the prohibition on waiving future statutory claims. The Court finally noted that employees were protected against union abuses of the CBA’s arbitration procedures to the detriment of their statutory rights through the unions’ statutorily enforceable duty of fair representation obligations and anti-discrimination statutes themselves.
This decision supports the inclusion of statutory claims within the scope of CBA arbitration provisions so that they can be defended in the less time consuming and expensive arbitral forum.
*Patrick Hoban has extensive experience in all aspects of labor and employment law, including collective bargaining agreements. If you have any questions about the impact of this decision or any other labor issue, please contact Patrick (pjh@zrlaw.com) at 216.696.4441.