Supreme Court Enforces Arbitration of Discrimination Claim in Union Setting
By Nancy Berner
In a 5-4 decision issued Wednesday, April 1, the U. S. Supreme Court overturned the district and appellate courts to hold that labor contracts may require union members to settle age discrimination claims via arbitration. The decision in 14 Penn Plaza LLC et al. v. Pyett et al., written by Justice Clarence Thomas, permits enforcement of an arbitration clause embodied in a collective bargaining agreement that waives employees rights to bring statutory claims in federal court. While the factual scenario dealt specifically with enforcement of a provision of a collective bargaining agreement, Justice Thomas’ decision is suggestive of a broader application.
Facts of the Case
The Plaintiffs in the underlying case were members of the Service Employees International Union (SEIU) who worked as night lobby watchmen at office buildings in New York City. Due to a change in the security guard provider, Plaintiffs were reassigned to jobs as porters and cleaner, jobs that they maintained were inferior and were assigned on the impermissible basis of age. The Plaintiffs received right-to-sue notices from the EEOC, and promptly brought claims asserting violation of the Age Discrimination in Employment Act (“ADEA”). In the ensuing lawsuit, both the District Court and the Second Circuit Court of Appeals agreed that the employer’s motion to compel arbitration should be denied because case law forbade enforcement of collective-bargaining provisions mandating arbitration of ADEA claims. (Alexander v. Gardner-Denver Co. 415 U.S. 36 (1974)).
Supreme Court Holding
The Supreme Court flatly disagreed, holding that the union and the employer “collectively bargained in good faith and agreed that employment-related discrimination claims, including claims brought under the ADEA, would be resolved in arbitration.” The Court noted that “[a]s in any contractual negotiation, a union may agree to the inclusion of an arbitration provision in a collective-bargaining agreement in return for other concessions from the employer.” In essence, the Court stated that if the union, representing the employees, and the employer reached an agreement both could live with, the courts should not interfere, in the absence of expressed legislative intent to preclude a waiver of judicial remedies, an intent that is absent from the ADEA.
Broader Implications?
In distinguishing 14 Penn Plaza from Gardner-Denver and its progeny, Justice Thomas opined that “the right to a judicial forum is not the nonwaivable ‘substantive right’ protected by the ADEA.” Additionally, and perhaps significantly, “[n]othing in the law suggests a distinction between the status of arbitration agreements signed by an individual employee and those agreed to by a union representative.” Individual agreements to arbitration have a murky past, as they are often characterized by those who wish to avoid them as unconscionable contracts of adhesion. Nonetheless, it now appears likely that a clear and unmistakable waiver of the right to pursue a discrimination claim in court will be upheld, if the arbitration agreement conforms to the admittedly stringent legal standards governing arbitration agreements. As always, employers are advised to seek a legal opinion on arbitration agreements presented to employees.