In today’s U.S. Supreme Court decision, 14 Penn Plaza LLC, et al. v. Pyett, et. al, No. 07-581 (April 1, 2009) (available here), Associate Justice Clarence Thomas, in a 5-4 majority opinion, ends more than three decades of caselaw interpreted to mean that unions can’t collectively bargain away the right to take statutory employment claims--like, in the case, the Age Discrimination in Employment Act of 1967 (29 U.S.C. Sec. 6221)--to court, in favor of arbitration.
Relying on Gilmer v. Interstate/Johnson Lane Corp., 500 U. S. 20 (1991)–in which the Court compelled arbitration where an individual had agreed to use the process to resolve his ADEA complaint but had sought to bring his claim in court–the majority opinion today held that the union employees in the case could be sent to arbitration.
“The Gilmer Court’s interpretation of the ADEA fully applies in the collective-bargaining context,” wrote Thomas, noting that agreeing to arbitration was not giving up a substantive right by foregoing court processes.
Here’s how the majority opinion analyzed Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974):
1) First, the Thomas opinion notes that the respondent union members’ collective bargaining agreement arbitration provision is fully enforceable under Gardner-Denver. The opinion “is not as broad as respondents suggest,” wrote Thomas.
The 14 Penn Plaza decision points out that the Gardner-Denver plaintiff had arbitrated his case, and lost, and late-added discrimination claims were ignored by the arbitrator. The Supreme Court reversed lower court award confirmations, according to the 14 Penn Plaza majority, because the Gardner-Denver collective bargaining agreement only covered contractual employment rights, not substantive rights under the Title VII of the Civil Rights Act of 1964.
The agreement’s failure to cover the claims trumped the employer’s Supreme Court defenses based on claims preclusion.
Moreover, subsequent cases similarly didn’t broaden Gardner-Denver because court actions were allowed where the collective bargaining agreement arbitration provisions didn’t address the statutory claims the employees wanted to bring.
On this point, Thomas concludes, “Gardner-Denver and its progeny thus do not control the outcome where, as is the case here, the collective-bargaining agreement’s arbitration provision expressly covers both statutory and contractual discrimination claims.”
2) The Gardner-Denver case line’s “broad dicta” criticizing arbitration for use in vindicating statutory anti-discrimination rights, wrote Justice Thomas, “rested on a misconceived view of arbitration that this Court has since abandoned.”
- First, the Gardner-Denver view incorrectly assumed that “an agreement to submit statutory discrimination claims to arbitration was tantamount to a waiver of those rights.” The Gardner-Denver view that arbitration involves a substantive waiver of rights “reveals a distorted understanding of the compromise made when an employee agrees to compulsory arbitration,” wrote Thomas. He explained that the result made the case “a direct descendant” of the seminal Wilko v. Swan, 346 U. S. 427 (1953) case, which held that arbitration agreements for Securities Act of 1933 claims were unenforceable. Wilko was overturned in 1989.
- Gardner-Denver was mistaken in suggesting that arbitration really only works for factfinding in contract disputes, and was ill-suited to deciding Title VII rights, which belonged in courts. “These misconceptions have been corrected,” wrote Justice Thomas, adding, “[O]bjections centered on the nature of arbitration do not offer a credible basis for discrediting the choice of that forum to resolve statutory antidiscrimination claims.”
- Gardner-Denver’s concern about union control of the grievance process.also is misguided. Calling the case presentation a judicial policy concern, Thomas wrote that it wouldn’t suffice as a “source of authority for introducing a qualification into the ADEA that is not found in the text.” Furthermore, the majority opinion points out the conflict-of-interest theory already is an acknowledged part of organized labor operations, and the National Labor Relations Act governing it. The opinion cites the NLRA’s duty of fair representation as a check on the inherent conflict; Thomas points out that the 14 Penn Plaza respondent union members had filed a fair representation claim against the union for withdrawing its support for its ADEA claims in the matter. “In sum, Congress has provided remedies for the situation where a labor union is less than vigorous in defense of its members’ claims of discrimination under the ADEA,” he concluded.
For full details on the case and the two strident dissents, go here.
--Russ Bleemer, Editor, Alternatives