Blog Post

14 Penn Plaza LLC v. Pyatt, No. 07-581 (U.S. S. Ct. Apr. 1, 2009)

Posted by: Paul Mollica
April 01, 2009
Topic: Daily Developments in EEO Law

14 Penn Plaza LLC v. Pyatt, No. 07-581 (U.S. S. Ct. Apr. 1, 2009)

In what will be seen, for now, as a set back for employee civil rights, the Supreme Court in a 5-4 decision -- 14 Penn Plaza LLC v. Pyatt -- holds that where a collective bargaining agreement clearly and unmistakably assigns statutory discrimination claims to arbitration, the employee in the bargaining unit loses the right to proceed with an individual civil action.

The employees in this case worked as night watchmen at a Manhattan office building. SEIU, Local 32BJ represented the employees. When the building management decided to turn security duties over to a new company (with the union’s consent), the employees were demoted to night porter and light cleaning duties, which were less remunerative.

The employees grieved the demotions under the contract (seniority and overtime) and also added allegations of age discrimination. The union pursued the former claims into arbitration, but dropped the age bias claims. The employees then pursued their ADEA claims though EEOC charges and the filing of a civil action. The district court and the Second Circuit refused to compel arbitration of the age discrimination claims, based on Alexander v. Gardner-Denver, 415 U.S. 36 (1974), which (until now) was widely construed to allow employees to preserve their own right to bring a civil action, even if the claims alos fell within the ambit of collective bargaining agreement.

The Supreme Court reversed, with the ordinary 5-4 line-up of justices (Thomas, J., writing for the majority; Stevens, Breyer, Souter and Ginsburg, JJ., dissenting).

First, the majority finds that the union had the power under the NLRA § 159(a) to bargain with respect to statutory discrimination claims as “conditions of employment.” Correspondingly, it finds the ADEA silent about whether it supercedes the NLRA on this issue, citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).

The majority then struggles with lining this case up along the Gardner-Denver axis. Rather than to overrule the generation-old case outright (though suggesting in n.8 that it came within a wisker of doing so), the Court holds instead that the earlier precedent was limited to a narrower issue: whether arbitration of a contractual claim precluded an employee from later filing a private civil rights action, in a situation where the CBA did not clearly and unmistakably consign such claims to arbitration.

The majority nonetheless processes for nearly ten pages to demolish, sentence by sentence, whatever lingering influence Gardner-Denver might cast. (1) Although the Court continues to recognize that a union may not "prospective[ly] waive[]" statutory rights, an agreement to arbitrate (as the court previously held in Gilmer) does not waive substantive rights, but only shifts the forum from civil court to an arbitrator. (2) While the Court in Alexander once thought arbitration to be an inadequate vehicle for trying a discrimination case, since Gilmer it has presumed otherwise. (3) Any inherent tension between the employee's personal rights and the union's collective responsibility to the unit is a function of the NLRA, and is up to Congress to repair.

The case was remanded for the employees to present whatever defenses they might have against arbitration (including a challenge that the CBA did not clearly and unmistakably confer statutory claims to arbitration).

Two thoughts emerge from the wreckage. First, very few CBAs -- if any -- will retain employees' substantive rights (to a 180/300 day limitations period, rights to liquidated/punitive damages, etc.), and so will be routinely challenged as an invalid alternative to civil litigation. Second, Congress (now considering the Arbitration Fairness Act) can easily write around this decision. In short, I expect that this decision will be an island unto itself in short order.