Erica Goldberg discusses the Court’s decision in 14 Penn Plaza (07-581).  Additional information on the case is available on SCOTUSwiki, here.

Justice Thomas's majority opinion held that nothing in either the National Labor Relations Act, which controls collective bargaining agreements made on behalf of union members, or the ADEA forbids unions from mandating arbitration to resolve statutory discrimination claims.  The majority touted the importance of allowing parties to bargain contractually for exchanges of rights and responsibilities, and it noted that courts should generally not interfere in this process.  According to the majority, "[t]he decision to fashion a [collective bargaining agreement] to require arbitration of employment-discrimination claims is no different from the many other decisions made by parties in designing grievance machinery."

Justice Thomas then confronted the thorny relevant precedent.  Over three decades ago in Alexander v. Gardner-Denver Co., the Court held that unions cannot contractually waive an individual employee's substantive guarantees against workplace discrimination.  More recently, in Gilmer v. Interstate/Johnson Lane Corp., the Court held that individual employees who waive their right to a federal forum on their own behalf may be compelled to arbitrate employment discrimination claims.  As a result of these two rulings, the Second Circuit below in 14 Penn Plaza ruled that, while individuals may waive the right to a judicial forum for federal discrimination claims, the same provision in a collective bargaining agreement was unenforceable.

The Court overruled the Second Circuit's decision by distinguishing Gardner-Denver, which in the majority's view was narrower than depicted by either the Second Circuit or the dissents.  In Gardner-Denver, the Court held that despite a collective bargaining agreement requiring arbitration of all grievances, the employee was entitled to a federal forum to resolve statutory discrimination claims.  However, in that case, the collective bargaining agreement contractually prohibited certain types of employment discrimination and compelled arbitration for any disagreement between the company and its employees regarding the meaning and application of the contract.  Because the collective bargaining agreement did not explicitly mandate arbitration of statutory discrimination claims, but compelled arbitration of the established contractual guarantees against discrimination, the majority interpreted Gardner-Denver as involving only the doctrine of election of remedies.

Justice Thomas then elaborated upon the language in Gardner-Denver condemning collective bargaining agreements that waive an employee's federally guaranteed substantive rights.  According to Justice Thomas, the substantive right at issue is the right to a workplace free of age discrimination, not the right to litigate the age discrimination claim in a federal forum.  The majority explained that earlier decisions deriding the efficacy and fairness of arbitration in resolving federal claims have been since repudiated, and that arbitration is a perfectly acceptable, if not more efficient, forum for addressing grievances related to employment discrimination.

Justice Souter's dissent, joined by Justices Stevens, Ginsburg, and Breyer, faulted the majority for evading Gardner-Denver by ignoring its much broader holding that federal forum rights cannot be waived in union-negotiated contracts.  According to Justice Souter, the fact that the agreement in Gardner-Denver did not explicitly mention statutory claims was only one of many reasons for its holding.  "One need only read Gardner-Denver itself to know that it was not at all so narrowly reasoned," reprimanded Justice Souter.   The dissent also noted that, although flawed in its reasoning and approach, the majority opinion may be quite limited because it did not address whether a waiver of a judicial forum is enforceable when the union can block arbitration of employment discrimination claims.

Justice Stevens wrote a separate dissent to stress that, although the Court's recent decisions have retreated on its former suspicion of arbitration, a Court's newly embraced policy favoring arbitration cannot substitute for a genuine reading of the statutes and the precedent.

Posted in 14 Penn Plaza LLC v. Pyett, Uncategorized