In a 5 to 4 decision written by Justice Clarence Thomas, the US Supreme Court held that a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate Age Discrimination in Employment Act (ADEA) claims is enforceable as a matter of federal law. 14 Penn Plaza LLC v. Pyett, 2009 WL 838159 (U.S. April 1, 2009).

The respondents were members of the Service Employees International Union, Local 32BJ (Union). The Union is the exclusive bargaining representative of employees within the building-services industry in New York City, which includes building cleaners, porters, and doorpersons. Under the National Labor Relations Act (NLRA), the Union has exclusive authority to bargain on behalf of its members over their “rates of pay, wages, hours of employment, or other conditions of employment.” Since the 1930's, the Union has engaged in industry-wide collective bargaining with the Realty Advisory Board on Labor Relations, Inc. (RAB), a multiemployer bargaining association for the New York City real-estate industry. The agreement between the Union and the RAB is embodied in their Collective Bargaining Agreement for Contractors and Building Owners (CBA). The CBA requires Union members to submit all claims of employment discrimination to binding arbitration under the CBA's grievance and dispute resolution procedures:

§ 30 NO DISCRIMINATION. There shall be no discrimination against any present or future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any other characteristic protected by law, including, but not limited to, claims made pursuant to Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Code, ... or any other similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Articles V and VI) as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.

The petitioner, 14 Penn Plaza LLC, is a member of the RAB. It owns and operates the New York City office building where, prior to August 2003, the respondents worked as night lobby watchmen and in other similar capacities. Respondents were directly employed by Temco Service Industries, Inc. (Temco), a maintenance service and cleaning contractor. In August 2003, with the Union's consent, 14 Penn Plaza engaged Spartan Security, a unionized security services contractor and affiliate of Temco, to provide licensed security guards to staff the lobby and entrances of its building. Because this rendered respondents' lobby services unnecessary, Temco reassigned them to jobs as night porters and light duty cleaners in other locations in the building. The respondents contended that these reassignments led to a loss in income, caused them emotional distress, and were otherwise less desirable than their former positions.

At the respondents' request, the Union filed grievances challenging the reassignments. The grievances alleged that petitioners: (1) violated the CBA's ban on workplace discrimination by reassigning respondents on account of their age; (2) violated seniority rules by failing to promote one of the respondents to a handyman position; and (3) failed to equitably rotate overtime. After failing to obtain relief on any of these claims through the grievance process, the Union requested arbitration under the CBA.

After the initial arbitration hearing, the Union withdrew the first set of respondents' grievances-the age discrimination claims-from arbitration. Because it had consented to the contract for new security personnel at 14 Penn Plaza, the Union believed that it could not legitimately object to respondents' reassignments as discriminatory. But the Union continued to arbitrate the seniority and overtime claims, and, after several hearings, the claims were denied.

After filing charges with the EEOC, the respondents filed a lawsuit under the ADEA in the United States District Court for the Southern District of New York. The petitioners filed a motion to compel arbitration, but the court denied it, holding that under the Supreme Court’s decision in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), a collective bargaining agreement could not waive a right to a judicial forum for claims under statutes enacted by Congress. The U.S. Court of Appeals for the Second Circuit affirmed.

Citing precedent that enforces the agreement of employers and unions to arbitrate, the Supreme Court reasoned that “the CBA's arbitration provision must be honored unless the ADEA itself removes this particular class of grievances from the NLRA's broad sweep.” In Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), the Supreme Court held that a non-union employee who had agreed individually to waive his right to a federal forum could be compelled to arbitrate a federal age discrimination claim. The Gilmer Court determined that “nothing in the text of the ADEA or its legislative history explicitly precludes arbitration.” The Court also concluded that arbitrating ADEA disputes would not undermine the statute's “remedial and deterrent function.”

The Court in this case found that the Gilmer Court's interpretation of the ADEA fully applies in the collective-bargaining context. “Nothing in the law suggests a distinction between the status of arbitration agreements signed by an individual employee and those agreed to by a union representative. This Court has required only that an agreement to arbitrate statutory antidiscrimination claims be ‘explicitly stated’ in the collective-bargaining agreement. The CBA under review here meets that obligation.”

The respondents argued that the ADEA expressly prohibits the waiver of prospective rights, and therefore the CBA provision was invalid. The Court answered this argument by observing that the ADEA’s provision addressed prospective waivers of substantive rights to be protected from age discrimination, not agreements to resolve ADEA disputes through arbitration: “[t]he decision to resolve ADEA claims by way of arbitration instead of litigation does not waive the statutory right to be free from workplace age discrimination; it waives only the right to seek relief from a court in the first instance.” The Court also held that its ruling was not inconsistent with Gardner-Denver and its line of cases, which narrowly ruled that arbitration over whether there was just cause for a discharge was not preclusive in a subsequent discrimination lawsuit because the collective bargaining agreement at issue, unlike the one in this case, did not expressly cover statutory claims.

Finally, the respondents expressed concern about the union's exclusive control over the manner and extent to which an individual grievance is presented. For example, a union might decide not to proceed with an age discrimination grievance, or it may proceed only half-heartedly. The Court felt that this concern was already accounted for, because an employee can sue a union for breach of its duty of fair representation. Moreover, the ADEA itself prohibits unions from discriminating against employees.

Justices Stevens and Souter issued dissenting opinions. Justices Ginsberg and Breyer, along with Justice Stevens, joined Justice Souter’s dissent. The dissenting justices believe that the Gardner-Denver case was binding precedent that the Union could not waive employee rights to bring age discrimination suits under federal law.

The impact of 14 Penn Plaza is uncertain. Under those collective bargaining agreements that clearly and unmistakably require arbitration of statutory discrimination claims, employees clearly can now be prohibited from pursuing judicial relief, and Unions may feel increased pressure to pursue grievances through arbitration to minimize exposure to claims for breach of the duty of fair representation. In situations where the collective bargaining agreement does not currently address arbitration of statutory discrimination claims, more employers may attempt to negotiate such a provision into the contract.

The Arent Fox Labor and Employment Law Group has substantial experience negotiating collective bargaining agreements and arbitrating disputes that arise under them, including discrimination claims. If you have any questions about this decision, please feel free to contact us.

Michael L. Stevens
stevens.michael@arentfox.com
202.857.6382