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Wednesday, April 01, 2009

NLRA Trumps ADEA in 14 Penn Plaza; Whither Gardner-Denver?

The Supreme Court has just handed down its decision in 14 Penn Plaza LLC v. Pyett.  In a 5-4 decision, lined up according to the traditional liberal/conservative split, the Court held that a union-negotiated collective bargaining agreement (CBA) can force individual employees to arbitrate their ADEA claims against the employer.  The CBA in 14 Penn Plaza was negotiated between Local 32BJ of the SEIU and NYC's Realty Advisory Board (RAB) -- a massive CBA covering thousands of workers.  The Court held: "The NLRA provided the Union and the RAB with statutory authority to collectively bargain for arbitration of workplace discrimination claims, and Congress did not terminate that authority with respect to federal age-discrimination claims in the ADEA."

A few notes:

  • The majority appears not to have overruled the holding in Gardner-Denver, but it admits it has overruled much of the "broad dicta" in the case that was "highly critical of the use of arbitration for the vindication of statutory antidiscrimination rights."  However, it claims that Gilmer, rather than the present case, did the overruling.
  • Justice Stevens and Justice Souter both dissent, focusing on the majority's abrupt rejection of prior precedent.  Both point to the fact that Congress chose not to overturn Gardner-Denver in the last 35 years, so this ruling is (in their view) contrary to Congressional intent.
  • The majority does leave a potentially huge hole in its holding, because it does not address the concern that a union may choose not to pursue an individual employee's claim through arbitration.  The majority states: "[A]lthough a substantive waiver of federally protected civil rights will not be upheld, we are not positioned to resolve in the first instance whether the CBA allows the Union to prevent respondents from 'effectively vindicating' their 'federal statutory rights in an arbitral forum'" (quoting Green Tree).  Justice Souter's dissent notes: "On one level, the majority's opinion may have little effect, for it explicitly reserves the question whether a CBA's waiver of a judicial forum is enforceable when the union controls access to and presentation of employees' claims in arbitration, which is usually the case."
  • What will unions and employers do with this new-found power?  In its amicus brief, SEIU claimed that the CBA did not cover the workers' claims, since both the union and the employer did not think the claims had merit, and under the CBA only disputes between the union and the employer were arbitrable.  The Court seemed to ignore this argument as not presented below.  I would guess that 14 Penn Plaza would be a double-edged sword for most unions.  Neverthless, the politics are interesting: a holding that provides more power to unions gets the five conservative justices to overrule fairly venerable precedent.

Posted by Matt Bodie on April 1, 2009 at 12:45 PM in Employment and Labor Law | Permalink


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Matt, I'm not sure unions will view this as a newfound power. All the union briefs in this case were arguing against this result. I agree with Sam and Joseph that the court did not think this through fully. Although one could read the Court's opinion very narrowly in that all it is really saying is that a clear and unmistakable waiver can occur. Given the actual language in the collective bargaining agreement in this case and the Court's prior ruling in Wright and its overall love of arbitration, the result should not be a big surprise. It is not unusual for the Court to sidestep other issues and leave that for the lower court and others to address the remaining issues on remand. This is essentially what Justice Souter says in his dissent by noting that the decision may ultimately have no impact because it did not address the issue of the union's ability to not pursue the case in arbitration under its duty of fair representation. However, I think the court does some mental gymnastics to say that it is not overruling Gardner-Denver and its progeny which has existed for 35 years. And to do these gymnastics, the decision makes some troubling statements (dicta) that may make it more difficult to adequately address the issues that the court sidestepped.

Posted by: Michael Green | Apr 2, 2009 3:14:25 PM

I think that the root of the problem with the decision is that they treated it - explicitly - as the intersection of two statutes, ADEA and NLRA. They forgot (or chose not to mention) a third statute that is integrally involved - sec. 301 of LMRA, under which we have developed fifty years of law about labor arbitration. So they ignore all sorts of 301-related questions - about who gets to decide various sorts of questions of arbitrability (substantive, procedural), about how the procedural parts of the grievance machinery will interact with such things as EEOC charge filing deadlines and right to sue letters, who gets to decide that sort of question (court or arbitrator), how we will review arbitrators' decisions in statutory cases, etc etc. It's really a whole new non-301 arbitration scheme imposed (by the court) on top of the traditional 301 arbitration scheme. How will that work? Who knows????

Posted by: Sam | Apr 2, 2009 3:09:57 PM

I haven't read this decision closely yet -- although I will, because I'm giving a paper on this topic at SEALS this year [please forward any good insights you have to me].

But it does seem to dodge the most important issue. Practically all union arbitration agreements give unions (as opposed to individal employees) broad discretion as to whether to take a case to arbitration. That's a very significant difference from individual employee agreements as in _Gilmer_, in which the individual employee can choose.

Are we really going to have to wait for another Supreme Court case to determine what happens when (i) the union makes a "clear and unmistakable waiver" of, say, ADEA rights; (ii) an employee thinks he has a good ADEA claim; but (iii) the union thinks the claim is meritless, and thus doesn't take it to arbitration?

A rule that the union can prevent the employee from getting to any forum to protect a federal statutory right (assuming the union hasn't violated its broad discretion under duty of fair representation rules) seems highly problematic (unfair to the employee)

Of course, unions will almost certainly not want to make such waivers, but employers might try to insist on them.

On the other hand, if the rule is that the waiver can only be effective if the employee has a right to go to arbitration no matter what the union thinks, that's another can of worms. Who will be paying for the arbitration? Most arbitration clauses in union contracts either require the union and employer to split the costs or require the "loser" to pay. Who would the "loser" be, the employee or the union? If the union, that seems unfair to the union.

But also, would employers really want a system in which employees can unilaterally invoke arbitration? Employers count on unions to be gatekeepers, with institutional interests to avoid arbitrating very weak or meritless cases. If employees have a unilateral right to go to arbitration over every discipline or discharge case, even under a "loser pays" system, it will be expensive for employers who at least will often have to pay for lawyers.

And ditto what Sam said about time limits. It appears at first blush the Court really didn't think this through.

Posted by: Joseph Slater | Apr 2, 2009 2:43:16 PM

In addition to the question whether the individual must have the authority to invoke arbitration if the union doesn't care to, there will be the question whether collectively-bargained time limits for grievances (which are typically very very short) can be applied to bar statutory discrimination claims. One more example of how the Court didn't really think through the problem fully, or at least wanted to pretend that it wasn't opening various cans of worms.

Posted by: Sam | Apr 1, 2009 3:52:57 PM

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