Supreme Court Finds Employee Right to Sue Under ADEA Can Be Bargained Away by Union

Dispute Resolution Journal, May-Jul 2009 by Kelly, Justin

U.S. SUPREME COURT DEVELOPMENTS

A divided U.S. Supreme Court (5:4) has ruled that an express agreement to arbitrate statutory claims in a collective bargaining agreement is enforceable absent an explicit ban on waivers of the right to bring an action in court in the statute under which a claim was being made.

In 14 Penn Plaza & Temco Service Industries v. Steven Pyett (No. 07-581, April 1, 2009), the Court found no explicit prohibition in the Age Discrimination in Employment Act (ADEA) on waivers of the right to sue. Accordingly, it ruled that "a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law."

The Court also concluded that the holding in Alexander v. Gardner-Denver Co. (415 U.S. 36, 1974) was not controlling because it addressed a separate issue not presented in this case.

Associate Justice Clarence Thomas wrote the majority opinion, in which Chief Justice John Roberts and Associate Justices Antonin Scalia, Anthony Kennedy and Samuel Alito joined. Associate Justice David Souter (who will shortly resign from the Court after 19 years of service) wrote a dissent in which Associate Justices Ruth Bader Ginsburg, Stephen Breyer and John Paul Stevens joined.

The Court's Reasoning

The Court found that the ADEA and the National Labor Relations Act (NLRA) clearly permitted the union and employer in this case to bargain for arbitration of workplace discrimination claims.

The NLRA did so by empowering unions to serve as the exclusive bargaining representative for workers over the conditions of employment. The ADEA did so by not explicitly forbidding enforcement of waivers of an individual employee's right to bring ADEA claims in court. In deciding that waivers were not prohibited, the Court relied on Gilmer v. Interstate/Johnson Lane Corp. (500 U.S. 20, 1991). The Court acknowledged that Gilmer involved an employment agreement negotiated by an individual employee, not a union agreement. But it found no reason to treat the two situations differently.

It also concluded that the waiver of the right to sue under the ADEA satisfied the requirement of Wright v. Universal Maritime Service Corp. (525 U.S. 70, 1998) because it was "explicitly stated" in the union agreement.

Next, the Court held that Gardner- Denver was distinguishable because the union agreement in Pyett expressly required arbitration of statutory and contractual discrimination claims, whereas the union agreement in Gardner- Denver did not cover statutory claims.

The Dissent

The dissent argued that the principle of stare decisis required the reasoning in Gardner-Denver to be applied in Pyett. It reasoned that the rule established in Gardner-Denver-that rights conferred on employees by Title VII cannot be waived by a union agreement-should apply to the ADEA because this statute has a purpose similar to Title VII. The dissent further argued that there was no "compelling justification" to depart from this rule. It criticized the majority's interpretation of Gardner-Denver, saying, "One need only read Gardner- Denver itself to know that it was not at all so narrowly reasoned...."

Commentary on the Case

The decision has already generated critical commentary on the Internet. Gregory B. Robertson and Laura M. Franze, of Hunton & Williams LLP, contend that the High Court's decision could have a negative effect on unions. Their commentary, posted on www.lexology.com (April 29, 2009), states, "This decision drastically modifies, if not overturns, more than 30 years of case law, suggesting that unions cannot negotiate away their members' rights to pursue individual discrimination claims in court." They further suggest that the decision will "potentially place unions at odds with some of their members by subordinating individual rights to collective rights, and perhaps could drive a wedge between proponents of union organizing and proponents of individual employee rights."

Prof. Richard Bales commented on Workplace Prof Blog that it was "disingenuous of the majority to claim that its decision is based on a textualist reading of the statutes," since when the ADEA was enacted, the case law uniformly held that predispute arbitration agreements did not apply to statutory claims. He wrote that "[a] true textualist would look to the enforcement provision of the ADEA, which states explicitly that aggrieved employees have the right to sue for enforcement."

Bales noted that the Court declined to decide what happens when the union (which normally controls the ability to arbitrate employee grievances) denies access to the employee. Ross Runkel, writing at www.lawmemo.com (April 1, 2009), noted that this "leaves a lot to be decided."

Earlier Proceedings

The Pyett case grew out of the reassignment of the respondents Steven Pyett, Thomas O'Connell, and Michael Phillips from night lobby watchmen to night porters at an office building owned by petitioner 14 Penn Plaza. The respondents were employed by petitioner Temco Industries and they belonged to a union that had a collective bargaining agreement with the Realty Advisory Board (RAB), of which 14 Penn Plaza was a member. The labor agreement contained a "no discrimination clause" and it required all ADEA and other discrimination claims to be arbitrated.