14 Penn Plaza v. Pyett

labor unions, collective bargaining, employment discriminationQuestions presented:

Paul SalvatoreProskauer Rose LLP(212) 969-3000Counsel of Record1585 BroadwayNew York, NY 10036Party name: 14 Penn Plaza LLC, et al.

Attorneys for Respondents:Jeffrey L. KreisbergKreisberg & Maitland LLP(212) 629-4970Counsel of Record116 John StreetSuite 1120New York, NY 10038Party name: Steven Pyett, Thomas O'Connell, and Michael Phillips

A Supreme Court divided along ideological lines ruled today that a union contract forfeiting members’ right to bring workplace discrimination claims is enforceable.

Three night watchmen working for New York-based Temco Service Industries Inc. filed suit following a job transfer they believed to be based on age discrimination. The employees filed a grievance with their local Service Employees International Union, including the age discrimination issues but also asserted 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.

On April 1, 2009, a divided Supreme Court overturned the lower court order.

“We hold that a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law,” Justice Clarence Thomas wrote for the 5-4 majority.

Justice John Paul Stevens filed a dissenting opinion and Justice David H. Souter filed a dissenting opinion joined by Justice Stevens and Justices Ruth Bader Ginsburg and Stephen G. Breyer.

“Today the majority’s preference for arbitration again leads it to disregard our precedent,” Stevens wrote, adding that the majority is “making policy choices not made by Congress.”

Question presented: Whether an arbitration clause in a collective bargaining agreement waiving employees’ right to file statutory discrimination claims is enforceable.