On April 1, 2009, in a 5-4 decision, the U.S. Supreme Court issued a much-anticipated ruling in 14 Penn Plaza LLC v. Pyett, U.S. No. 07-581 (April 1, 2009). The decision, which overturned a ruling by the Second Circuit Court of Appeals and resolved a long-standing controversy among the Circuit Courts, held "that a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law."
In the case, the Court ruled several individuals - members of a bargaining unit represented by the Service Employees International Union Local 32BJ at 14 Penn Plaza LLC - could not pursue discrimination claims in court because the Collective Bargaining Agreement had waived their right to a jury trial and required arbitration of those claims. According to the Court's analysis, arbitration was required because the CBA contained (1) a broad prohibition of discrimination; and (2) an arbitration provision that required "all such claims" to be subject to arbitration as a "sole and exclusive remedy."
The Court's holding centered on two principles: first, the "broad sweep" of the National Labor Relations Act makes such arbitration agreements enforceable; and second, the ADEA does nothing to prohibit the arbitration of age discrimination claims. In reaching its finding, the Court held its own prior precedent, which had frequently been relied on in support of preventing such waivers, had been misinterpreted. The Court drew a careful distinction between the waiver of a statutory discrimination claim itself, and the waiver of the right to pursue such claims in Court. Acknowledging that waiver of a substantive claim under ADEA would not be permitted in a collective bargaining agreement because it would be a prospective waiver, the Court noted the agreement to submit such claims to an arbitral forum was quite different. Any suggestion that resolution of such claims in arbitration would be tantamount to a substantive waiver was dismissed by the Court as based on a "misconceived view of arbitration" that the Court no longer holds.
The decision reinforces the Supreme Court's growing body of jurisprudence favoring resolution of claims in an arbitral forum, consistent with the Federal Arbitration Act and the judicial policy favoring alternate means of resolving disputes. Moreover, the case opens the door for employers to seek arbitration of discrimination claims for union-represented employees where the employer and the union have negotiated an arbitration provision that covers individual claims of discrimination.