Supreme Court Enforces Collective Bargaining Agreement Requiring Arbitration of Discrimination Claims

On April 1, 2009, the U.S. Supreme Court decided in 14 Penn Plaza LLC v. Pyett, No. 07-581, that union-represented employees can be required to submit claims of discrimination to a grievance-arbitration procedure if the collective bargaining agreement (CBA) contains clear language indicating that the union and the employer agreed to resolve discrimination claims in that manner. Many people (including the four justices who dissented) see this decision as a significant shift in the Supreme Court's attitude toward enforcing union agreements that limit an individual's right to pursue, in court, claims of unlawful discrimination.

The Supreme Court Decision

In 14 Penn Plaza the Supreme Court was presented with very clear language. The collective bargaining agreement prohibited unlawful discrimination, listed various federal and state anti-discrimination laws, and stated that "all such claims shall be subject to the grievance-arbitration procedure as the sole and exclusive remedy for such violations." When union employees brought an age discrimination lawsuit, the employer sought to compel the employees to submit their discrimination claim to the CBA's grievance-arbitration procedure.

The lower courts denied the employer's request, relying on the Supreme Court's decision in Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974). The lower courts ruled that, under the reasoning of Gardner-Denver, the union could not bargain away the employees' individual right to a judicial forum to seek relief for violations of federal anti-discrimination laws.

The Supreme Court disagreed. Writing for the majority, Justice Thomas concluded that the union and the employer had bargained in good faith when they agreed to submit all discrimination claims to the grievance-arbitration procedure and the Supreme Court was required to honor the clear language of the CBA. The Supreme Court stated that the CBA did not affect the employees' right to be free of discrimination, only the manner in which claims of discrimination would be resolved in the first instance.

The Supreme Court also distinguished its earlier decision in Gardner-Denver in several ways. The Court noted that the language of the CBA in Gardner-Denver was different. The Gardner-Denver CBA prohibited discrimination, but did not expressly require discrimination claims to be submitted to the grievance-arbitration procedure. The Court explained that Gardner-Denver had resolved a different issue: whether arbitration of contract claims (for example, whether an employee was discharged for "just cause") barred a later claim in court that an employee was discharged because of unlawful discrimination. The Supreme Court also stated that it had abandoned what it described as the "misconception" in early Supreme Court decisions that arbitration is not a suitable method for resolving claims of discrimination.

Other Issues Raised By the Decision

Although the 14 Penn Plaza decision resolved one issue, others are created. Are courts also required to honor the provision of the CBA that states that the arbitration decision regarding a discrimination claim is "final and binding"? Will the courts grant the same deference to arbitration awards regarding discrimination claims as is granted to awards interpreting the application of the language of the CBA? Can an employee proceed with an individual claim of discrimination in court if an arbitrator has already rejected that claim? Will the result be different if the grievance is denied because the employee did not file a timely grievance? And, does this decision indicate that the Supreme Court would also enforce a grievance-arbitration provision requiring arbitration of a state law claim (such as a claim that an employer retaliated against an employee for filing a claim for workers' compensation), even if the resolution of the claim did not require interpretation of the collective bargaining agreement?

These issues will be resolved through future litigation or legislation. In the meantime, employers that have a collective bargaining agreement should evaluate the potential benefits and costs of negotiating for a grievance-arbitration clause that specifically requires that statutory and common law claims be resolved, in the first instance, through the grievance-arbitration procedure.