Supreme Court grants cert in arbitration case

The U.S. Supreme Court granted certiorari today in 14 Penn Plaza LLC v. Pyett, et al. (Feb. 19, 2008), from the Second Circuit, which addresses the question of whether a waiver of a judicial forum for employment discrimination claims in a union-negotiated collective bargaining agreement is enforceable, where the CBA provides for arbitration of such claims.É A. CABRANES, Circuit Judge:

In short, the Second Circuit held that union-negotiated waivers are unenforceable, which is contrary to the Fourth Circuit's decision in Austin v. Owens Brockway Glass Container, 78 F.3d 875 (4th Cir. 1996). This circuit conflict is presumably the reason the SCT granted cert, even though it denied cert to the Austin decision in 1996.

One wrinkle is that here, while the union initially submitted the members' age discrimination claims to arbitration, it then withdrew those claims. After the members obtained an EEOC right to sue letter and filed a lawsuit in federal district court, the union then ultimately agreed to allow the members to have the ADEA claims heard by the arbitrator, albeit at their own expense (which they declined to do). The plaintiffs were night watchmen at an office building, and the union is the SEIU.

Some language from the Second Circuit's opinion follows, so you can see what the dispute entails:

498 F.3d 88 (2d Cir. 2007)

Before: CABRANES and RAGGI, Circuit Judges, and KORMAN, District Judge.

Defendants in an employment discrimination suit appeal from an order of the United States District Court for the Southern District of New York (Naomi Reice Buchwald, Judge) denying their motion to compel arbitration to resolve plaintiffs' age discrimination claims in accordance with the collective bargaining agreement between plaintiffs' union and their employer. The District Court concluded that the arbitration clause in the collective bargaining agreement was unenforceable under Rogers v. New York University, 220 F.3d 73 (2d Cir. 2000).

Affirmed.

In this appeal, defendants challenge an order of the United States District Court for the Southern District of New York (Naomi Reice Buchwald, Judge) denying their motion to compel arbitration of plaintiffs' age discrimination claims in accordance with the collective bargaining agreement between plaintiffs' union and their employer. Defendants argue that the District Court, which relied on the Supreme Court's decision in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), and our Court's decision in Rogers v. New York University, 220 F.3d 73 (2d Cir. 2000), failed to take into account the Supreme Court's decisions in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), and Wright v. Universal Maritime Service Corp., 525 U.S. 70 (1998). We disagree, and reaffirm our decision in Rogers that mandatory arbitration clauses in collective bargaining agreements are unenforceable to the extent they waive the rights of covered workers to a judicial forum for federal statutory causes of action.

. . . While conceding that in Gilmer the Supreme Court dealt only with contracts signed by individuals and not CBAs, defendants claim, see Appellants' Br. 12, that in Wright the Supreme Court made clear its abandonment of Gardner-Denver's rule that a union may only "waive certain statutory rights related to collective activity, such as the right to strike," Gardner-Denver, 415 U.S. at 51. We disagree. Our Court in Rogers squarely decided that a union-negotiated mandatory arbitration agreement purporting to waive a covered worker's right to a federal forum with respect to statutory rights is unenforceable. We took full account of both Gilmer and Wright and concluded that the Supreme Court's decision in Gardner-Denver remains good law. Our conclusion in Rogers was an alternative holding, not dicta, and continues to bind our Court. In any event, none of the cases relied upon by defendants persuades us that this holding in Rogers was incorrect.

. . . None of the other Supreme Court cases on which defendants rely casts doubt on our holding in Rogers. For example, they draw our attention to Metropolitan Edison Co. v.. N.L.R.B., 460 U.S. 693 (1983), and Circuit City Stores, Inc. v. Adams, 532 U.S. 105 (2001). Metropolitan Edison held that union officials may be bound by union-negotiated agreements to enforce no-strike agreements, and thus waive their right, guaranteed by the National Labor Relations Act § 8(a)(3), 29 U.S.C. § 158(a)(3), to be free of anti-union discrimination. Metropolitan Edison, 460 U.S at 708. However, rather than supporting the notion that individual rights may be waived by CBAs, as defendants claim, that holding is in line with the Supreme Court's observation in Gardner-Denver that unions "may waive certain statutory rights related to collective activity, such as the right to strike." Gardner-Denver, 415 U.S. at 51 (emphasis added). Circuit City addressed an individual's employment contract, rather than a CBA, and therefore likewise does not address the issue before us now.

In short, there is nothing that has changed in the nine years since Wright or the seven years since Rogers that compels us to reverse our ruling in Rogers that arbitration provisions contained in a CBA, which purport to waive employees' rights to a federal forum with respect to statutory claims, are unenforceable.

(Alan R. Kabat / Bernabei & Wachtel, PLLC)