Supreme Court Certs

As Paul Mollica just noted over at Daily Developments, the Supreme Court has granted certiorari in three more employment cases.  The first, 14 Penn Plaza v. Pyett et al., is on the issue of whether an arbitration clause, contained in a collective bargaining agreement but covering statutory issues as well as contract issues, is enforceable as to those statutory issues.   Recall that in Alexander v. Gardner-Denver, the Supreme Court held that arbitrating a contract claim does not preclude litigating a statutory claim on the same facts.  The Court said some very negative things about the arbitration of statutory employment claims, one of which was that unions couldn't be trusted to enforce the statutory rights of minority employees.  Another was that statutory claims generally were not suitable for arbitration.

But there's been a lot of water under the arbitral bridge since Gardner-Denver.  Beginning in the 1980s, the Supreme Court approved arbitration of statutory claims in RICO actions, then in the securities industry, and in the 1991 Gilmer case, ADEA actions.   The circuits have long been divided over what, if anything, is left of Gardner-Denver -- i.e., can a union, by including statutory claims as arbitrable under the collective bargaining agreement, waive its members' right to file a separate statutory claim?  We thought the Court was going to answer this question in the 1998 Wright case, but instead the Court just said that such waivers, if permissible at all, must be "clear and unmistakable."

In Pyett, the waiver is clear and unmistakable.  The Second Circuit, citing Gardner-Denver, refused to enforce it.  Thus, the issue now is squarely presented to the Court.

One minor quibble with Paul's post on the Penn Plaza cert grant.  Paul states that Penn Plaza "tees up the issue once and for all whether any part of Alexander remains good law."  I believe that, regardless of how the Court rules in Penn Plaza, the Court will not completely overrule the Gardner-Denver case.  One of the holdings in Gardner-Denver that has never been seriously challenged is that employees may not prospectively waive their substantive statutory employment rights.  An employer may not, for example, tell a prospective employee: I'll hire you, but only if you allow me to grope you on a regular basis and you agree not to sue me for sexual harassment.

In arbitration cases such as Gilmer, the Court has always been careful to point out that employees are not waiving their substantive rights, but merely consenting to their resolution in a different forum.  Reasonable minds can differ on whether this substantive/procedural distinction is a meaningful one, and on whether substantive rights have any meaning if enforcement procedures are inadequate.  Nonetheless, I have no reason to believe that the Court intends to abandon the distinction.  For this reason, I believe that even if the Court finds the union waiver enforceable, it will not overrule Gardner-Denver wholesale.

As Paul points out, the Supreme Court has granted cert in two other cases as well:

The Court will also consider whether a union may charge non-union members for litigation costs expended on behalf of the union members' rights generally (Locke v. Karass, 07-610), and how a divorcing spouse may waive rights to the other spouse's pension benefits under ERISA (Kennedy v. DuPont Plan Administrator, 07-636).

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