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

A group of workers employed as night watchmen for a New York City office building were reassigned as night porters and light duty cleaners when the building decided to hire licensed security guards to staff the building entrances. The reassigned workers, complaining that the transfer resulted in less income, less desirable duties and emotional distress, sued the building owner in federal court under the federal Age Discrimination in Employment Act of 1967 (ADEA). The building owner moved to compel arbitration pursuant to a collective bargaining agreement (CBA) with the Service Employees International Union (SEIU). Notably, the CBA included the following specific language mandating arbitration for statutory claims pursuant to the ADEA and similar employment discrimination statutes:

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 . . . or similar laws, rules, or regulations. All such claims shall be subject to the grievance and arbitration procedures (Article 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 case ultimately reached the United States Supreme Court, which held that a collective bargaining agreement which clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable. The opinion drew a stern dissent by opposing Justices, who stressed that the Court’s opinion conflicted with precedent, including Alexander v. Gardner-Denver Co., which the high court decided in 1974. In distinguishing the case from Gardner-Denver, the majority explained that the instant CBA expressly required arbitration of statutory anti-discrimination claims, whereas the CBA language at issue in Gardner-Denver did not compel statutory anti-discrimination claims to arbitration. The Court explained that Gardner-Denver does not control the outcome where the CBA arbitration provision expressly covers both statutory and contractual discrimination claims. Further, the Court dismissed as “an artificial limitation of the collective bargaining process” the argument that the union cannot waive an individual’s right to a judicial forum. The Court made clear that unless Congress acts to amend the ADEA and similar discrimination statutes to require those claims to be decided in a judicial forum, parties may negotiate mandatory arbitration for statutory claims raised pursuant to their respective bargaining scope under the National Labor Relations Act. This decision demonstrates the importance of carefully drafted CBA clauses.

Click here to view a copy of this opinion.

For further information, please contact V. Brette Bensinger or your regular Hinshaw attorney.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.