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EMPLOYMENT LAW: OVERVIEW OF THE U.S. SUPREME COURT’S DECISION IN 14 PENN PLAZA V. PYETT

EMPLOYMENT LAW: OVERVIEW OF THE U.S. SUPREME COURT’S DECISION IN 14 PENN PLAZA V. PYETT. NICHOLAS J. ENOCH, ESQ. www.lubinandenoch.com. Alexander v. Gardner-Denver Co. , 415 U.S. 36, 94 S. Ct. 1011, 39 L. Ed. 2d 147 (1974)

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EMPLOYMENT LAW: OVERVIEW OF THE U.S. SUPREME COURT’S DECISION IN 14 PENN PLAZA V. PYETT

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  1. EMPLOYMENT LAW: OVERVIEW OF THE U.S. SUPREME COURT’S DECISION IN 14 PENN PLAZA V. PYETT NICHOLAS J. ENOCH, ESQ. www.lubinandenoch.com

  2. Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S. Ct. 1011, 39 L. Ed. 2d 147 (1974) • holding that an employee not precluded from asserting his rights under Title VII merely because he had submitted his grievance to arbitration pursuant to a collective-bargaining agreement, and the federal courts were to hear such Title VII claims de novo without deference to the arbitrator).

  3. IN A PATH-BREAKING 5-4 DECISION, THE U.S. SUPREME COURT HELD THAT A COLLECTIVE BARGAINING AGREEMENT (“CBA”) PROVISION CLEARLY AND UNMISTAKABLY REQUIRING UNION MEMBERS TO ARBITRATE AGE DISCRIMINATION IN EMPLOYMENT ACT (“ADEA”) CLAIMS IS ENFORCEABLE.

  4. IN AN OPINION WRITTEN BY JUSTICE THOMAS,THE COURT FOUND THAT THE NATIONAL LABOR RELATIONS ACT (“NLRA”) PROVIDED THE UNION AND THE EMPLOYER WITH THE STATUTORY AUTHORITY TO COLLECTIVELY BARGAIN FOR ARBITRATION OF EMPLOYMENT DISCRIMINATION CLAIMS.

  5. THE COURT EXPRESSED CONFIDENCE THAT THE SUBSTANTIVE STATUTORY RIGHTS CONVEYED BY THE ADEA, i.e., THE RIGHT TO BE FREE FROM WORKPLACE DISCRIMINATION, COULD BE VINDICATED IN ARBITRATION AS WELL AS IN COURT.

  6. THE DISSENT ASSERTED THAT THE MAJORITY OPINION “MAY HAVE LITTLE EFFECT, FOR IT EXPLICITLY RESERVES THE QUESTION WHETHER THE CBA’S WAIVER OF A JUDICIAL FORUM IS ENFORCEABLE WHEN THE UNION CONTROLS ACCESS TO AND PRESENTATION OF EMPLOYEES’ CLAIMS IN ARBITRATION.”

  7. HOW DOES THIS IMPACT EMPLOYERS? UNIONS? • Employers • Arbitration agreements restricting the types of claims that can be brought (ie: class actions) • Some claims are better litigated in court • Unions • More claims for violation of duty of fair representation (DFR) • Arbitrary, discriminatory, bad faith decisions • Increased scrutiny of union’s decisions to arbitrate matters • Informed employees reluctance to join union

  8. WHAT QUESTIONS ARE LEFT UNANSWERED BY PYETT? • Exactly which types of claims will be covered under 14 Penn Plaza? • Is an employee entitled to their own legal representation in arbitration • If the union decides not to proceed with a statutory claim, may the employee bring a claim in court?

  9. HOW BIG OF AN EVENT IS THIS DECISION ON THE LABOR/EMPLOYMENT LANDSCAPE? • Provisions in existing CBA’s may not meet the standard (clear and unmistakable) in 14 Penn Plaza to force arbitrations. • ADEA claims specifically qualify under 14 Penn Plaza. • In the future other claims are expected to qualify as well.

  10. WILL THERE BE A LEGISLATIVE RESPONSE TO THE DECISION, AND IF SO, WHAT FORM WILL IT TAKE? • Future Negotiations: • Employers should consider whether it is beneficial to mandate arbitration of all claims in Collective Bargaining Agreements vs. proceeding in court • Limit Arbitration to certain types of claims • Cost, delay, punitive damages • Damage caps, “pro-employee” climate, appeals • Summary Judgment

  11. POST 14 PENN PLAZA COURT DECISIONS • St. Aubin v. Unilever HPC NA, 2009 U.S. Dist. LEXIS 55626 (N.D. Ill. June 26, 2009). • Employers Rule 12 (b) (6) motion to dismiss employees claim was denied because the CBA did not contain a “clear and unmistakable” requirement to arbitrate employment discrimination claims.

  12. POST 14 PENN PLAZA COURT DECISIONS • Shipkevich v. Staten Island Univ. Hosp. & Aramark, 2009 U.S. Dist. LEXIS 51011 (E.D.N.Y. June 16, 2009). • CBA arbitration provision: “A grievance… which has not been resolved [under the grievance procedure] may… be referred for arbitration by the Employer or the Union[.]” • Court denied employer’s motion to dismiss employee’s Title VII claim because the CBA did not “clearly and unmistakably” require arbitration.

  13. POST 14 PENN PLAZA COURT DECISIONS • Johnson v. Tishman Speyer Props., LP, 2009 U.S. Dist. LEXIS 96464 (S.D.N.Y. October 16, 2009). • The CBA provides that employment discrimination claims made pursuant to, inter alia, Title VII, the NYSHRL, and the NYCHRL "shall be subject to the grievance and arbitration procedure . . . as the sole and exclusive remedy for violations." • Because the CBA evidences a clear intent to arbitrate, the statutory race discrimination claims are within the scope of the arbitration clause. Accordingly, Johnson's Title VII claim must be arbitrated as Congress has not precluded the waiver of judicial remedies for Title VII claims.

  14. POST 14 PENN PLAZA COURT DECISIONS • Kravar v. Triangle Services, 2009 U.S. Dist. LEXIS 42944 (S.D.N.Y. May 12, 2009). • Union declined to arbitrate employees discrimination claims.

  15. POST 14 PENN PLAZA COURT DECISIONS • Borrero v. Ruppert Housing Co., Inc., 2009 U.S. Dist. LEXIS 52174 (S.D.N.Y. June 19, 2009). • CBA expressly prohibits "discrimination against any present or future employee by reason of race, creed, color, age, disability, national origin, sex, sexual orientation, union membership, or any characteristic protected by law, including but not limited to claims made pursuant to Title VII . . . [and] the Americans with Disabilities Act." CBA at P XVII.23. The CBA further provides that "all such claims shall be subject to the grievance and arbitration procedure ([set forth in] Articles V and VI) as sole and exclusive remedy for violations.“ • [T]he [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed."

  16. POST 14 PENN PLAZA COURT DECISIONS • Mathews v. Denver Newspaper Agency, LLP, 2009 U.S. Dist. LEXIS 37697 (D. Colo. May 4, 2009). • Court granted defendant employers motion to dismiss because “Plaintiff voluntarily decided to submit his discrimination and retaliation claims to binding arbitration. He thus gave up his right to pursue his claims in a judicial forum.” • The court observed that the CBA was not a waiver of the plaintiff’s substantive rights because he had a choice of forum under the contract.

  17. POST 14 PENN PLAZA COURT DECISIONS • Tewolde v. Owens &b Minor Distrib., Inc., 2009 U.S. Dist. LEXIS 49098 (D. Minn. June 10, 2009). • Arbitrators decisions are given highly deferential treatment when interpreting and applying a CBA that expressly incorporates federal antidiscrimination law.

  18. POST 14 PENN PLAZA COURT DECISIONS • Beljakovic v. Melohn Properties, Inc., No. 04-03694 (S.D.N.Y. May 12, 2009). • “Claims for employment discrimination under Title VII are expressly covered by the collective bargaining agreement Mr. Beljakovic is subject to.” “In view of Pyett’s holding and the similarity between the arbitration agreement in that case and the one at issue here, there is no question that Mr. Beljakovic’s claim against Melohn is subject to mandatory arbitration.”

  19. Bolo Corp. v. Homes & Son Constr. Co., 105 Ariz. 343, 464 P.2d 788 (1970). • Meineke v. Twin City Fire Ins. Co., 181 Ariz. 576, 582, 892 P.2d 1365, 1371 (App. 1994) • ("In our view, a party’s filing of a lawsuit without invoking arbitration... would nearly always indicate a clear repudiation of the right to arbitrate..., and the filing of an answer normally has the same effect.")

  20. POST 14 PENN PLAZA COURT DECISIONS • Mendez v. Starwood Hotels & Resorts Worldwide, Inc., 2009 U.S. App. LEXIS 17113 (2d Cir. Aug. 3, 2009) • Denied arbitration. Employer wanted to compel arbitration based on a signed agreement with the employee to arbitrate claims. Court held the union is the designated collective bargaining representative with exclusive authority to negotiate agreements to arbitrate such claims.

  21. UNILATERAL CHANGES DURING NEGOTIATIONS--IMPASS • When there has been a complete breakdown in contract negotiations, the employer is free to implement its last, best, and final offer. • Does this include waiver of an employee’s statutory rights under 14 Penn Plaza?

  22. JUSTIFICATIONS FOR 14 PENN PLAZA • Giving employee’s the discretion to file a court case undermines the settlement mechanism provided in the CBA.

  23. CAUSES OF ACTIONS WHERE A 14 PENN PLAZA PROVISION MIGHT MAKE SENSE • NRC or FAA Retaliation cases • FLSA Collective Actions • OSHA Retaliation Complaints

  24. WILL THERE BE A LEGISLATIVE RESPONSE TO THE DECISION, AND IF SO, WHAT FORM WILL IT TAKE? • ADEA does not have a clause requiring arbitration of claims. • 14 Penn Plaza dissent: waiver of individual statutory rights must be explicitly reversed. • Employees unwittingly waive their rights • Should employers/unions be required to inform potential employees of the impact of 14 Penn Plaza? • Fairness of arbitration • Arbitration companies may favor repeat players to generate business. • Arbitration Fairness Act (AFA) • Prohibiting mandatory agreements that require binding arbitration.

  25. WILL THERE BE A LEGISLATIVE RESPONSE TO THE DECISION, AND IF SO, WHAT FORM WILL IT TAKE? • Lack of review of arbitration decisions • Whether arbitrators will follow the law • Unfair arbitration provisions • Strip substantive rights • Ban class actions • Arbitrations hearings at remote locations • Intended use of arbitration • Commercial entities with similar bargaining power

  26. LIMITATION ON 14 PENN PLAZA • Kravar v. Triangle Servs • Workers cannot be compelled to arbitrate where union controls access to arbitration and has failed or refused to arbitrate

  27. ARIZONA ARBITRATION LAWS • A.R.S. § 12-1517 • This article shall have no application to arbitration agreements between employers and employees or their respective representatives.

  28. ARIZONA ARBITRATION LAWS • N. Valley Emergency Specialists, L.L.C., v. Team Physicians of Arizona, P.C. 208 Ariz. 301, 93 P.3d 501 (Ariz. 2004) • Arizona Supreme Court held that although in Arizona there is a strong public policy favoring arbitration, the clear language of A.R.S. §12-1517 “leads us to conclude that an arbitration agreement between an employer and employee is not subject to provisions of the Act, whether the agreement is found in a contract between a single employer and a single employee or in a collectively bargained contract.”

  29. REMEDIES FOR UNION CONFLICT OF INTEREST • 1) Duty of Fair Representation • 2) Union liability under ADEA if the Union itself discriminates on the basis of age • 3) Union members may file age-discrimination claims with the EEOC and NLRB, which may intervene in the case.

  30. NICHOLAS J. ENOCH ESQ.LUBIN & ENOCH PC349 N. 4TH AVENUEPHOENIX, AZ 85003602.234.0008www.lubinandenoch.com

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