Supreme Court Issues Decision Finding Union Arbitration Clause Barred Claim of Discrimination in Court.

Recently, the Supreme Court of the United States issued its 5-4 decision in 14 Penn Plaza, LLC et. al. v. Pyett et. al., __ S. Ct. __ (2009) (Docket # 07-581). In writing for the majority, Justice Clarence Thomas held that collective bargaining agreements that clearly and unmistakably require union members to arbitrate federal anti-discrimination claims are enforceable and constitute a waiver of a member’s right to raise these claims in federal court. The Court reversed the decision of the Court of Appeals and the District Court. This decision is troubling for unions and their members. The AFL-CIO and the Change to Win Coalition submitted an amicus brief arguing contrary to the majority opinion. Every individual involved in negotiating or policing a collective bargaining agreement must be aware of its implications. This decision overturned decades of unanimous case law that had found that a collective bargaining agreement could not waive an individual’s right to a federal judicial forum. See
Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011 (1974).

Why Is This Decision Important To Unions?

Unions must understand this decision or they may unknowingly breach their duty of fair representation or unknowingly waive their members’ individual rights. Like the union in 14 Penn, a union may have unknowingly waived their members’ rights to bring a discrimination or harassment claim in federal court. Unions should review the contract language because what was not considered a waiver in the past may now constitute a waiver.

Furthermore, employers will attempt to negotiate waiver language into future agreements. An uneducated bargaining team may unknowingly negotiate a provision that will constitute a waiver of a member’s right to go to court.

Why Do Employers Like This Decision?

This decision has received near unanimous support in the business community. For many years, employers have attempted to coerce their employees into waiving certain rights associated with discrimination and harassment claims, including mandatory arbitration of such disputes. Employers have had a difficult time obtaining such agreements from unionized employees.

Employers prefer arbitration over going to court because it is cheaper and quicker but also for more questionable rationales. Often the evidence supporting a discrimination or harassment claim is in the possession of the employer. A plaintiff in court is entitled to broad discovery of information to attempt to prove a case. Discovery is not provided or limited in arbitration. Hiding damaging facts is much easier in arbitration. Also, when an employer avoids court, they avoid a jury trial. Jury trials are public and a jury of one’s peers will sometimes grant very large awards against egregious offenders. An arbitration hearing is much less public and an arbitrator is less likely to award large damage awards.

What Should A Union Do If An Employer Raises The Issue At The Table?

The Supreme Court of the United States, with little rationale, found that a waiver of a member’s right to bring discrimination and harassment claims in court is a mandatory subject of bargaining. Therefore, if a union represents private sector employees, it cannot refuse to bargain the issue.

However, a union should not unknowingly agree to waiver language because there are extra duties that arise out of this language. If the parties agree to a waiver, it should be explicit. Similarly, if the parties do not agree on a waiver, it should be explicit. Ambiguous language could be a problem because a union may recommend that a member take their claim to court but the court may find that the member is precluded from doing so. This will result in a dismissal and a likely claim that the union breached its duty of fair representation.

Protections of an individual’s ‘substantive’ rights under the discrimination statutes may become necessary in addressing a waiver. A union facing this issue at the bargaining table may consider discussing the issue with an experienced labor attorney.

One part of the 14 Penn decision is not binding on public sector units. The Michigan courts may not follow the Supreme Court’s faulty reasoning on this issue of whether a waiver is a mandatory subject of bargaining. Therefore, a public sector bargaining unit may continue to refuse to bargain the issue subject to the possibility of a future bargaining order from the Michigan Employment Relations Commission.

However, it is important to note that if a public sector union has agreed to such language, the 14 Penndecision applies equally.

What Constitutes A “clear And Unmistakable Waiver?”

According to prior Supreme Court precedent, a waiver of a judicial forum to raise discrimination claims must be ‘clear and unmistakable’ or ‘explicitly stated.’ See Wright v. Universal Maritime Service Corp., 525 U.S. 70, 119 S.Ct. 391 (1998). However, the application of this definition has not been as narrow as one would expect from its plain meaning.

For many years, individuals and employers have been able to enter into agreements to arbitrate discrimination claims so long as the agreement to arbitrate such claims are clear and unmistakable and Courts have found that language that is not rather general in nature is sufficient to waive an individual’s right to a judicial forum. For example, in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647 (1991), the Supreme Court found the following language a sufficiently explicit waiver, which stated generally that the parties agreed to arbitrate “[a]ny controversy between a registered representative and any member or member organization arising out of the employment or termination of employment of such registered representative.” This language is rather vague and does not contain any specific waiver of statutory rights.

There is support that a higher standard of specificity is necessary in collective bargaining agreements. In the future, Courts will address this argument and either adopt or reject this approach used for individual waivers.

How Do Unions Determine Whether An Existing Collective Bargaining Agreement Waives The Members’ Right To Go To Court?

The waiver language presented in the 14 Penn decision is more specific than most collective bargaining agreements. The individual employees raised the issue that this language was not sufficiently clear and unmistakable but the Court refused to address the issue. The pertinent provision stated:
§ 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.
A reasonable reading of the provision is that the citations to the particular statutes were merely a description of the types of protections under the clause, not a specific reference for waiver purposes. Ultimately, the Court did not address whether the language was sufficiently explicit because the argument was not raised below.

In reviewing a collective bargaining agreement, a union official should look for the following items (1) a specific reference to discrimination statutes, (2) a provision in an anti-discrimination clause that provides arbitration as an exclusive remedy, and (3) anti-discrimination language in the grievance/arbitration provisions. If the employer’s anti-discrimination policy is incorporated by reference, review that document because it is also pertinent.

If any of the above language appears in the agreement, a union should have an experienced labor attorney review the language for an opinion. The attorneys at Miller Cohen are available for such a review.

Certainly, if the current collective bargaining agreement is unclear, the union should attempt to bargain language that will clarify the previous intent of the provision that the members’ rights are not waived. Therefore, the following language, at least, should be bargained in the non-discrimination section; “[n]othing in this section is intended to waive any members’ statutory rights.”

How Should A Union Act When They Have Agreed To A Waiver?

One would expect that claims of a breach their duty of fair representation will increase against unions that have agreed to a waiver. In general, a union may properly treat discrimination and harassment grievances like other grievances alleging a violation of the agreement. It may refuse to arbitrate a case if the case has no merit or the collective interests of the unit are adversely affected. A union that has agreed to a waiver should never instruct a member to bring the action in court and drop the grievance.

The union ought to have the merits of each discrimination or harassment grievance analyzed by an individual with experience in such claims. The attorneys at Miller Cohen are available for such a review. The analysis of the merits should be properly and promptly communicated to the grievant.

If the union refuses to process the case through arbitration, the individual may have a right to pursue arbitration at his or her own cost. The dissent in 14 Penn suggested that in order to have a valid waiver, an employer must allow a grievant to continue to arbitration if the union refuses. The majority did not specifically address the issue.

How Should A Union Act When It Is Unsure Whether The Existing Agreement Constitutes A Waiver?

If the contract language is ambiguous, the union should not drop any discrimination or harassment grievance. The union should seek the employer’s position in writing. If the employer insists that the agreement constitutes a waiver, and the grievant or union disagree, the grievance should be held in abeyance pending a court resolution of the language. The employer may file a complaint to compel arbitration or more likely, the issue will arise in the member’s case alleging discrimination or harassment.

If the court finds a valid waiver, it will dismiss the case. Thereafter, the union should continue to process the grievance.

How Should A Union Act When The Agreement Does Not Provide For A Waiver?

In a situation where the agreement does not constitute a waiver, a union can act in the same manner that it has always treated discrimination and harassment grievances. It may refer an individual to the court system to seek relief. Also, as previously in individual cases, the union, the employer, and the grievant may still agree to arbitrate the particular discrimination or harassment claim.

How Do I Obtain More Information Regarding This Decision?

There are many other problems raised in the 14 Penn decision not discussed above. If you are interested in obtaining additional information contact attorney Robert D. Fetter .