14 Penn Article
IN 14 PENN PLAZA THE SUPREME COURT SAID THAT A PROPOSAL TO WAIVE AN INDIVIDUALS RIGHT TO A FEDERAL FORUM FOR STATUTORY CLAIMS IS SUBJECT TO MANDATORY BARGAINING BUT DID IT REALLY MEAN MANDATORY?
On April 1, 2009, the Supreme Court of the United States issued its 5-4 decision in 14 Penn Plaza, LLC et. al. v. Pyett et. al., 129 S. Ct. 1456 (2009). Justice Clarence Thomas, in writing for the majority, held that collective bargaining agreements that clearly and unmistakably require union members to arbitrate federal anti-discrimination claims are enforceable and waive the members’ right to raise these claims in federal court. Most view this decision as anti-worker, anti-union and anti-civil rights. This decision significantly narrowed or overturned decades-old unanimous case law that held that a collective bargaining agreement could not waive an individual’s right to a federal judicial forum. Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011 (1974).
Surprisingly, the Court found that such provisions “easily qualif[y] as a ‘condition of employment’ that is subject to mandatory bargaining.” 14 Penn Plaza, 129 S.Ct. at 1464. Many who make a living by intelligently informing employers on matters related to reducing liability are suggesting that all unionized employers ought to demand bargaining on this issue. Some serious questions remain regarding whether proposals to waive an employee’s right to file a statutory claim in court require mandatory bargaining and suffer full effects of this designation.
This mandatory or permissive designation is crucial to the nature of the bargaining on the issue. If the subject is in regard to “wages, hours, and other terms and conditions of employment” it is a mandatory subject of bargaining and the parties are forced to bargain to impasse. Once impasse is reached, the employer may be able to unilaterally implement its last best offer. See NLRB v. Wooster Division of Borg Warner Corp., 356 U.S. 312, 319 (1958). All other legal subjects are permissive subjects of bargaining. The parties can agree to bargain or not bargain, to agree or not to agree. Id.
If bargaining over the waiver of an individual’s right to a federal forum is mandatory, an employer can and will demand such bargaining. If an employer bargains to impasse, it may attempt to unilaterally implement the waiver. To the unions and union members crying foul, I say, do not concede this point just yet.
If the subject of waiver is a permissive subject of bargaining a union may simply tell the employer ‘no thanks, next issue’ in the face of a proposal on the subject. So then, when the Court said “mandatory,” did it really mean “mandatory?”
First, this statement regarding mandatory bargaining is dicta because the parties in 14 Penn Plaza agreed to the provision, whether it was mandatory or permissive prior to agreement does not factor into the decision at all. The 14 Penn Plaza Court dismissed 95% of its prior decision in Gardner-Denver, supra, as dicta. Given the Court’s slicing and dicing of its prior decision to its narrowest possible reading, one would rely on dicta on this issue at their own peril.
Also, a fair reading of the decision suggests that the Court did not hold that a waiver of an employee’s right to sue is a mandatory subject. When it held that “[t]his freely negotiated term” is “subject to mandatory bargaining,” but it cited prior decisions that hold that arbitration clauses generally are mandatory subjects of bargaining, it cited no case that dealt with waiver. E.g. LBS Inc. v. NLRB 501 U.S. 190 (1991), Steelworkers v. Warrior & Gulf Nav. Co. 363 U.S. 574 (1960), and Textile Workers v. Lincoln Mills of Ala., 353 U.S. 448 (1957).
Perhaps more tellingly was the majority’s response to Justice Souter’s argument in dissent. Justice Souter argued that individual rights should not be collectively bargained away. The response indicates that such a waiver is a permissive subject. The Court held, [t]hus, although Title VII and ADEA rights may well stand on ‘different ground’ than statutory rights that protect ‘majoritarian processes,’ Gardner-Denver, supra at 51, the voluntary decision to collectively bargain for arbitration does not deny those statutory anti-discrimination rights the full protection they are due.” ( emphasis added) Id. at 1464 FN5. Thus, a waiver of Title VII and ADEA rights cannot be a mandatory subject of bargaining because if it were, no voluntary decision to collectively bargain is permitted because the law would mandate bargaining. Accordingly, the Court did not hold that a waiver of these individual rights is a mandatory subject of bargaining.
Further evidence rests with the word “easily.” The Court held that the parties’ contract clause, “easily qualifies” as a mandatory subject of bargaining. Such a holding is anything but easy. In fact it is contrary to every prior decision on the matter. Under the Railway Labor Act, such a waiver is a permissive subject of bargaining. Air Line Pilots Ass’n, Int’l v. Northwest Airlines, Inc. 199 F.3d 477 (D.C. Cir. 1999). Under National Labor Relations Board precedent, the issue is also not a mandatory subject of bargaining. Kolman/Athey Division of Athey Products Company, 303NLRB 92 (1991), see also Borden, Inc. 279 NLRB 396 (1986). However, finding that bargaining over an arbitration clause generally is a mandatory subject of bargaining is easy. Assuredly, the Court meant no more.
Many of my colleagues will undoubtedly argue that “mandatory” is “mandatory” and the Court said “mandatory.” In retort, mandatory-lite is all the court could mean, at most. Not all mandatory subjects of bargaining are created equal. An agreement to arbitrate requires consent; therefore an agreement to arbitrate cannot be unilaterally imposed, even if it is a mandatory subject of bargaining. Litton Fin. Printing Civ. v. NLRB, 501 U.S. 190 199-200 (1991). Similarly, a waiver requires consent and on this alternative but related theory, a waiver cannot be unilaterally imposed. McClatchy Newspapers v. NLRB, 131 F.3d 1026 (D.C. Cir. 1991). An actual agreement is necessary.
The 14 Penn Plaza decision is deeply troublesome to unions and their members that have agreed unknowingly to arbitrate statutory employment claims. For those unions that have not agreed to such provisions, the decision has little or no impact. Unions should not heed employers’ demands to join the ranks of the deeply troubled.