Analysis of Oral Argument Transcript in Pyett Arbitration Case

As noted in the previous post, the U.S Supreme Court heard oral argument today in 14 Penn Plaza, Inc. v. Pyett, which poses the question whether the 2nd Circuit was correct that a union cannot waive the right of unionized employees to have their employment discrimination claims heard in a judicial forum in favor of arbitration.

Here are some highlights and my thoughts on the oral argument transcript:

1.   The argument of company's counsel gets bogged down from the beginning over whether an individual may arbitrate the claim without the union if the union doesn't want to arbitrate the claim itself:

[Penn Plaza's Counsel]: But what the New York courts have said is in interpreting this clause over the last nine years, that they compel the individual union member to go to arbitration when they have brought claims in court in violation of this clause.

Justices Souter and Ginsburg want to know from the company counsel why ceding control over the type of forum to the union is not tantamount to ceding control over the entire statutory claim to the union given the language of the CBA. Justice Scalia helps counsel argue that if the individual loses the right to arbitration because the union has control over whether to arbitrate, the parties can fight over that separate issue on remand:

Could we not simply decide that the Second Circuit was either correct, in which case the case would be over, or incorrect to say that you -- that you -- you cannot -- you cannot in a collective bargaining agreement have the union responsible for arbitration of Title VII claims? Why couldn't we just decide that?

And then if there is any issue of whether such concession to the union deprives an individual of even the right to arbitration, that can -- that can be decided on remand by the Second Circuit, couldn't it?

2.  Justice Breyer wants to know why the union should have the last say over whether the employee can bring their claim in court when the EEOC administrative process generally allows individuals to decide for themselves whether to proceed to court after receiving a right to sue letter:

It seems to me there is a parallel here that Congress then wouldn't want the union and the employer together to be able to cut that right to sue off, at least not very easily.

3.  Justice Ginsburg is skeptical that the labor laws giving unions the exclusive rights to bargain over term and conditions of employment alters the analysis:

But the union could not bargain about these anti-discrimination rights. These are rights given to individuals by Congress. The union couldn't bargain about them the way it bargains about collective rights, the way it bargains about wages and hours and -- and other things. This is, this is not a bargainable right. This is a right Congress says you as an individual have a right not to be discriminated against. This is nothing that the union can bargain about.

Company counsel argues in rebuttal that what Justice Ginsburg says is true with regard to substantive rights, but not to procedural ones.  It appears to me that really what this debate boils down to is whether the arbitration procedure provides the same protections for employees in employment discrimination case as the judicial forum does.  There are reasons to believe not, given such things as the repeat player problem, lack of elaborated reasons for most decisions, lack of publication for future precedent (which goes to transparency and accountabilty), and the fact that many employees engage in arbitration without counsel.  There is also a contention here between the parties about who pays for the abritration if the union bows out of the proceedings.

4.  If I were counsel for Pyett, I would also point out that the 2002 Waffle House decision recognizes the public and the private interests vindicated by Title VII and point out that employees are not merely seeking make whole relief for themselves, but are also seeking to vindicate the interests of society in having discrimination-free workplaces. It appears that the arbitration process undermines these goals where individuals have not themselves voluntarily entered into an agreement, but are forced into one by their union.

I wish Pyett's counsel would have used this line of argument in response to this questioning from Justice Breyer:

JUSTICE BREYER: . . . .So if I decide for you in this case, am I also saying that they can't arbitrate ordinary tort suits or contract suits or just whether or not the workplace which is made of wood is filled with termites? I mean, you know?
MR. FREDERICK: I think, Justice Breyer, that the discrimination cases do stand in a different category because of the inherent conflict [between union and worker].

5.  In response to a question by Justice Stevens, company counsel argues that Gardner-Denver does not necessarily decide this case because:

that case didn't involve the enforceability of an agreement to arbitrate. The Gardner-Denver line of cases, McDonald and Barrentine and Gardner-Denver, had the quite different issue as this Court said in Gilmer, of whether a contract-based claim precludes subsequent judicial resolution of a statutory claim; and so that distinguishes the rule.

6. Pyett's counsel contends there are three reasons why the 2nd Circuit decision denying enforceability to these abritration clauses should be affirmed:

First, a collective bargaining agreement gives the union exclusive control over workers' grievances. Second, unions have inherent conflicts of interest with respect to individual statutory anti-discrimination rights; and third, unions lack authority to serve as gatekeepers of individual workers' substantive ADEA rights.

Counsel further focuses his argument on whether "there is actual consent by the individual to the arbitration, whether the individual has control over the mechanisms of arbitration, and whether or not the structure of the arbitral forum effectively vindicates the individual's substantive rights."

7.  The inability of Pyett's Counsel to satisfactorily answer the line drawing exercise over what can be arbitrated and what cannot is seemingly exasperating the Justices.  This from Justice Scalia:

Why is it unthinkable that the -- that the employee would have to go through the union-prescribed arbitration for the fact that he wasn't paid for the last three months but does not have to do it for an economic injury that occurs because of discrimination? . . .

[Pyett's Counsel]: . . . [I]n the discrimination context, you're talking about more than just money. Here my clients are older workers who are forced into more physically strenuous positions that they had gotten away from by virtue of their growth in seniority at the building.

My sense is that this not convincing the Justices and that the public/private purpose distinction of Waffle House would have been more persuasive. The Solicitor General, supporting Pyett, makes this alternative argument:

I think that the -- the best line that we have is -- is stated in both Gardner-Denver and Barrentine as contrasting statutory rights that are related to collective activity, and especially economic activity, are the kinds of things that are normally delegated to the union. Those are the sorts of things that the union can actually engage in collective bargaining about. And when the union negotiates the underlying right, then it makes perfect sense that the labor arbitration framework that's set forth here would continue to resolve disputes that are arising under --out of that specific right.

8.  Here's something I didn't know and not sure I agree with what counsel for Pyett is peddling:

There is a study that is cited in a footnote in one of the amicus briefs that arbitration is more expensive than bringing civil litigation.

Really??!! And here I thought one of the traditional advantages of arbitration over litigation was the expense associated with litigation.  Maybe that's less the case in unionized workplaces?

In all, the case really comes down to whether unions can force workers to arbitrate their individual statutory rights under employment discrimination law.  I believe firmly then answer should be "no," but I definitely do not see Roberts, Scalia, and Thomas going that way.  On the other hand, Alito and Kennedy may be more amenable and so I am (hopefully) predicting 6-3 in favor of respondent.  (If I am wrong - it will be 5-4 in favor of petitioner with Kennedy or Alito writing an opinion that allows for such union-forced waivers at least in some circumstances).

PS