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April 16, 2009 |
Schiff Hardin Labor and Employment Alert On April 1, 2009, the Supreme Court issued its decision in 14 Penn Plaza v. Pyett. In a 5-4 decision with the majority decision authored by Justice Clarence Thomas, former chair of the Equal Employment Opportunity Commission, the Court held that individual union members were bound by a collective bargaining agreement (CBA) that required arbitration of claims under the Age Discrimination in Employment Act (ADEA). The particular CBA that the union negotiated with the association of owners of the buildings covered approximately 80,000 employees who worked at various skyscrapers and other buildings in New York City. In 1999, the association and the union agreed to an anti-discrimination provision in the CBA that specifically referred to the ADEA and other federal and state laws and city ordinances which banned discrimination in employment. The clause further provided that all discrimination claims shall be subject to the grievance and arbitration procedures of the CBA as the sole and exclusive remedy for violations. The attorney representing the employer association before the Supreme Court stated in his oral argument that the association employees arbitrated approximately 700 cases per year. The plaintiffs, who had been reassigned to lower paid jobs at the building at 14 Penn Plaza, claimed they had been discriminated against under the ADEA because of their ages. While the union initially pursued a grievance on their behalf, it was later withdrawn and the individual employees filed a charge with the EEOC. When they received their right-to-sue letter, they filed a lawsuit in federal district court and the building owner filed a motion to compel arbitration of the ADEA claims under the CBA's arbitration provision. The pivotal issue, which eventually made it to the Supreme Court, concerned whether the plaintiffs were required to arbitrate their ADEA claims. The Supreme Court held that a CBA that clearly and unmistakably requires union members to arbitrate ADEA claims, as was the case in 14 Penn Plaza, is enforceable as a matter of federal law. In reaching its holding, the Court distinguished its earlier decision in Alexander v. Gardner Denver, which held that a plaintiff could pursue a Title VII claim in court following the conclusion of an arbitration on the same issue where the CBA contained an anti-discrimination clause, but did not mention Title VII or any other anti-discrimination statute. The background of the Gardner Denver case is helpful in understanding the distinction made by the Supreme Court. Mr. Alexander, who had been terminated by Gardner Denver for poor performance, argued that his termination was because of his race. His case was arbitrated by his union. The arbitrator held that he was terminated for just cause under the CBA, but made no mention of the issue of race in his decision. Mr. Alexander then filed a claim for wrongful termination under Title VII. The Supreme Court held in Gardner Denver that the employee's statutory right to a trial was not foreclosed by the submission of his claim to final arbitration under the non-discrimination clause of a collective bargaining agreement, that made no mention of Title VII or any other statute. By contrast, the CBA in 14 Penn Plaza specifically mentioned that the ADEA and other discrimination statutes would fall under the mandatory arbitration clause contained therein. Since the Gardner Denver decision was rendered in 1974, the Supreme Court has made clear in many decisions that it is not opposed to mandatory arbitration. In the 14 Penn Plaza decision, the majority states that the CBA did not take away any substantive rights of the employees covered, it just required that the forum for the enforcement of the rights was transferred from the courts to an arbitrator. The 14 Penn Plaza decision raises the question for unionized employers whether it would be advantageous to negotiate a clause in the CBA that clearly provides for arbitration of statutory claims of discrimination. There are factors that weigh in favor and against arbitrating any employee claim of discrimination. To name a few:
Many large non-union employers have decided to utilize mandatory arbitration (often preceded by mandatory mediation) as the forum for all employment disputes, including statutory claims of discrimination. These employers believe that it is a cost savings in comparison to litigation and is often considered by employees to be a more efficient procedure and a positive benefit offered by the employer. Earlier Supreme Court cases, Gilmer v. Interstate/Johnson Lane Corp. and Circuit City Stores Inc. v. Adams, support a non-union employer's right to make such a binding agreement with its non-union employees. It is recognized, however, that each employer's situation is different, and before a decision is made to agree to mandatory arbitration in a union or non-union setting there must be a careful analysis of whether it would operate efficiently and be a wise choice. Also on the horizon is possible Congressional action. The Arbitration Fairness Act, which would make pre-dispute agreements to arbitrate employment issues non-binding in a non-union setting, was proposed in 2007. This bill never passed. Recently the legislation has again been introduced as the Arbitration Fairness Act of 2009. If you are interested in a more detailed discussion of the pros and cons of arbitrating or litigating a case, we would be pleased to send you a reprint of an article that was recently published in the Employment Law Strategist titled "Arbitrate or Litigate: Choose Your Poison," authored by Ralph Morris. If you email Mr. Morris, he will send you a copy. If you have any questions about this topic, please contact any of our Schiff Hardin attorneys listed in this article. ABOUT SCHIFF HARDIN LLP Schiff Hardin represents management in labor matters and employment-related litigation, and provides counsel to employers with respect to all legal aspects of employer-employee relations. Our firm's labor law practice encompasses both the private sector and the public sector for large and small employers in a broad range of markets and industries. For more information, please feel free to contact us. RECENT LABOR AND EMPLOYMENT PUBLICATIONS
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