Wednesday, April 1, 2009

Supreme Court Issues Pyett: CBA May Require Arbitration of Statutory Claims

CourtHere's the decision in 14 Penn Plaza v. Pyett, issued today.  Hat tip: Alexander Leonard.  The decision was 5-4.  Thomas wrote the majority opinion; Souter and Stevens wrote dissents.

14 Penn Plaza v. Pyett raised 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.   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.

14 Penn Plaza all but reverses this part of Alexander v. Gardner-Denver.  Here's my summary of the Court's reasoning:  The NLRA says that employers and unions may bargain for terms and conditions of employment.  The arbitration of discrimination claims is a term or condition of employment, so arbitration agreements covering discrimination claims are enforceable absent a specific provision in an antidiscrimination statute stating otherwise.  There is no such provision in the ADEA.  Therefore, arbitration agreements covering discrimination claims are enforceable.  Gardner-Denver is not on point because the employer and union in that case had not agreed to arbitrate their statutory claims; Gardner-Denver was decided "on the narrow ground that arbitration was not preclusive".  Language in Gardner-Denver critical of arbitration, and suggesting that majoritarian unions might not vigorously pursue minority rights, was dicta and is wrong.

The dissent argued that Gardner-Denver is directly on point, because it held squarely that the rights conferred by antidiscrimination statutes -- including the right to sue for enforcement -- cannot be waived by a union.  The majority's narrow reading of the case -- as holding only that arbitration was not preclusive because the arbitration clause did not cover statutory claims -- is wrong; it was only one of many reasons the Gardner-Denver Court gave for its holding, and the Pyett majority ignores those reasons. 

I suggested in an earlier post that

the Court should hold that a union-negotiated waiver will be effective only if the arbitration agreement provides employees with an adequate forum for resolving their statutory rights.  No forum, no waiver.  Unions could provide this forum in a variety of ways, such as by guaranteeing that that all statutory claims will go to an arbitrator, or by giving employees the right to pursue arbitration under the collective bargaining agreement at their own expense.

The Court, however, expressly declined to consider this issue, finding that it had been inadequately briefed.  The dissent pointed out that for this reason, the case may have little effect.

A couple of notes.  First, I think it's disingenuous of the majority to claim that its decision is based on a textualist reading of the statutes.  Of course the ADEA doesn't explicitly state that age discrimination claims are not subject to mandatory-arbitration agreements agreed to by unions on behalf of employees -- when Congress passed the ADEA, every federal court in the country had held predispute arbitration agreements were not enforceable as to any statutory claims whatever.  A true textualist would look to the enforcement provision of the ADEA, which states explicitly that aggrieved employees have the right to sue for enforcement.  Second, I think the dissent is right that Gardner-Denver stands for much more than the majority claims.  Finally, I am disappointed that the Court punted on the issue of what happens when union controls an individual's access to the arbitral forum.  This part of Gardner-Denver's analysis has gone, to my mind, unrefuted.

For additional commentary, see Michael Fox at Jottings by an Employment Lawyer (pointing out that Pyett may be a boon to the proponents of the Arbitration Fairness Act); Matt Bodie at Prawfsblawg; and Ross Runkel at LawMemo.

Comments are welcome.


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Perhaps the most unfortunate aspect of the Pyett decision is the diminution of the employees' civil rights which are impacted by the fact that some of the arbitration providers no longer require employment arbitrators to be neutrals. When Gardner Denver was decided arbitrators had to be neutrals. Now advocates are allowed to arbitrate employment and EEO related disputes; i.e., matters involving race, sex, religion, national origin, color, age or disability related statutory based claims. The grievant or EEO complainant who walks into the arbitration room will now find an arbitrator seated at the table who is the current or former general counsel of ABC or XYZ corporation. The arbitration providers are filling their arbtration rosters with people who can bring business to the table.

Posted by: Gloria Johnson | Oct 16, 2009 6:05:28 AM

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