14 Penn Plaza LLC v. Pyett

PETITIONER: 14 Penn Plaza LLC, et al.
RESPONDENT: Steven Pyett, et al.
LOCATION: Hastings College of Law

DOCKET NO.: 07-581
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 556 US 247 (2009)
GRANTED: Feb 19, 2008
ARGUED: Dec 01, 2008
DECIDED: Apr 01, 2009

ADVOCATES:
Curtis E. Gannon - Assistant to the Solicitor General, Department of Justice, argued the cause for the United States, as amicus curiae, supporting the respondent
David C. Frederick - argued the cause for the respondents
Paul Salvatore - argued the cause for the petitioner

Facts of the case

A group of employees brought this action following a job transfer they believed to be based on age discrimination. The employees filed a grievance with their union, including the age discrimination issues but also asserting that the transfer violated their collective bargaining agreement. The union pursued the employees' collective bargaining claim through Penn Plaza's arbitration system; however, the employees themselves pursued their age discrimination claim in federal court under the Age Discrimination in Employment Act (ADEA). Penn Plaza argued that the arbitration clause included in the employment contract, stating that all age discrimination claims must be pursued through arbitration, prevented the employees from bringing the claim in federal court. The district court ruled in favor of the employees, holding the arbitration clause unconscionable and therefore unenforceable.

The U.S. Court of Appeals for the Second Circuit affirmed the ruling, relying on its previous decisions holding that arbitration clauses with respect to statutory claims, such as the ADEA, are unenforceable.

Question

Are arbitration clauses in employment contracts -- waiving an employee's right to bring statutory claims in federal court -- enforceable?

Media for 14 Penn Plaza LLC v. Pyett

Audio Transcription for Oral Argument - December 01, 2008 in 14 Penn Plaza LLC v. Pyett

Audio Transcription for Opinion Announcement - April 01, 2009 in 14 Penn Plaza LLC v. Pyett

John G. Roberts, Jr.:

Justice Thomas has our opinion this morning in case 07-581, 14 Penn Plaza versus Pyett.

Clarence Thomas:

This case comes to us on a writ of certiorari to United States Court of Appeals for the Second Circuit.

Respondents are members of the Service Employees International Union who worked for petitioner Temco Service Industries as night lobby watchmen and in similar capacities in a building owned and operated by petitioner 14 Penn Plaza.

14 Penn Plaza is a member of the Realty Advisory Board on Labor Relations, a multiemployer bargaining association for the New York City Real Estate Industry.

The Union and the Board entered into a collective bargaining agreement.

I'll refer to that as a CBA that requires union members to submit all claims of employment discrimination to binding arbitration.

14 Penn Plaza, with the Union's consent engaged a contractor affiliated with Temco to provide licensed security guards for the building causing Temco to reassign respondents to jobs as porters and cleaners.

Contending at least reassignments violated the Age Discrimination in Employment Act of 1967, ADEA, respondents through the Union requested arbitration under the CBA.

After the initial hearing, however, the Union withdrew the age discrimination claims on the grounds that its consent to the new security contract precluded it from objecting to respondent's reassignments as discriminatory.

Respondents then filed a complaint with the Equal Employment Opportunity Commission which issued them a right to sue notice.

In the ensuing lawsuit, petitioners filed a motion to compel the arbitration of respondents' age discrimination claims in accordance with the CBA.

The District Court denied the motion and the Second Circuit affirmed holding that this Court's decision in Alexander-Gardner-Denver Company forbids enforcement of collective bargaining provisions that require arbitration of ADEA claims.

In an opinion filed with the clerk today, we reverse the judgment of the Court of Appeals.

A provision in a collective bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law.

The Union and the Board collectively bargained in good faith and agreed that employment-related discrimination claims including ADEA claims would be resolved in arbitration.

This freely negotiated contractual term easily qualifies as a condition of employment subject to mandatory bargaining under the National Labor Relations Act.

Thus the CBA's arbitration provision must be honored unless the ADEA itself requires this arbitration, this particular class of grievances from the -- whether the ADEA itself removes -- I'm sorry, the -- this particular class of grievances from the NLRA's broad sweep.

It does not.

This Court squarely held in Gilmer versus Interstate/Johnson Lane Corporation that the ADEA does not preclude arbitration of federal age discrimination claims.

The CBA's arbitration provision is also fully enforceable under the Gardner-Denver line of cases.

The facts underlying Gardner-Denver and its progeny revealed the narrow scope of the legal rule they engendered.

As the Court explained in Gilmore, these cases “did not involve the issue of the enforceability of an agreement to arbitrate statutory claims,” but “the quite different issue whether the arbitration of contract-based claims precluded subsequent judicial resolution of statutory claims.”

Gardner-Denver does not control the outcome whereas here, the CBA's arbitration provision expressly covers both statutory and contractual discrimination claims.

Even though the Gardner-Denver line of cases included broad dicta highly critical of using arbitration to vindicate statutory antidiscrimination rights, that skepticism rested on a misconceived view of arbitration that this Court has since abandoned.

Finally, this Court is not positioned to resolve the first -- in the first instance respondent's claims that the CBA allows a Union to prevent them from effectively vindicating their federal statutory rights in the arbitral form.

This question would require resolution of contested factual allegations.

It was not fully briefed here or below, and it is not fairly encompassed within the question presented.

We therefore reversed the judgment of the Court of Appeals and remand for further proceedings consistent with this judgment.

Justice Stevens has filed a dissenting opinion.

Justice Souter also has filed a dissenting opinion in which Justices Stevens, Ginsburg and Breyer have joined.