14 Penn Plaza LLC v. Pyett and Meyer v. United Parcel Serv., Inc. — The Trend Towards Arbitration Continues

14 Penn Plaza LLC v. Pyett and Meyer v. United Parcel Serv., Inc. — The Trend Towards Arbitration Continues


Henry A. Arnett

Livorno and Arnett Co., LPA

1335 Dublin Road, Suite 108-B

Columbus, Ohio 43215

Telephone: 614-224-7771

Can a union employee be forced to submit his/her discrimination claims to the grievance and arbitration article of the collective bargaining agreement (CBA), or is the employee allowed to bypass the CBA and assert his/her statutory discrimination claims directly with the Equal Employment Opportunity Commission or in a federal or state court? Until April, 2009, the choice as to which remedy to pursue belonged to the employee. Now, however, the United States Supreme Court and the Ohio Supreme Court have issued opinions that indicate an employee may be compelled to utilize his CBA. In fact, it is now quite possible that an employee covered by a union contract containing an anti-discrimination clause has lost his right to pursue a discrimination claim in court.

First, some background. Many times union employees who are victims of discrimination have alternative avenues to remedy that discrimination. Collective bargaining agreements often contain an article making discrimination a violation of the contract, thereby allowing a union member who has been the victim of discrimination to file a grievance and pursue that contractual claim to arbitration. State and federal statutes also prohibit discrimination and provide victims a mechanism for seeking redress in the state or federal courts for their statutory discrimination claims.

There are advantages and disadvantages to both avenues. Resolving a contractual claim through the grievance and arbitration process is often quicker (and less expensive) than filing a lawsuit and encountering the lengthy delays often prevalent in the judicial system.

But employees may prefer to skip the grievance and arbitration process and file a lawsuit instead. A lawsuit may be considered more attractive because arbitrators may not be as receptive to, or as comfortable with, discrimination claims as a judge or jury might be. In addition, arbitrators typically do not award punitive damages, compensatory damages and attorney fees, all of which can be awarded by the courts in discrimination cases. Because of these limitations in arbitration, employers often want to force employees into the arbitration process, thereby avoiding the expense of a lawsuit and the greater potential for large damage awards against them in the courts.

Since at least 1974, when the Supreme Court decided Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), it has been assumed that employees did not have to utilize the grievance and arbitration procedure set forth in their CBA�s. Instead, they could file directly with the EEOC or in the courts. In fact, employees who did utilize the grievance and arbitration procedure, but who lost in arbitration, often could still pursue their statutory remedies through the judicial system.

That has now changed. In April, 2009, the Supreme Court decided 14 Penn Plaza LLC v. Pyett, 556 U.S. (April 1, 2009), a case involving age discrimination. In that case the court held that an employer that had a CBA with a union, which contained a prohibition against discrimination, could compel its employees to arbitrate any alleged claims of discrimination. While the case involved age discrimination, there is no reason to believe its holding will not be applied to other types of discrimination, such as race, religion, gender, or disability.

The decision raises the question as to whether an employee covered by a CBA has “waived” his statutory rights (or, more precisely, has had those rights waived for him), with those rights being replaced by the contract. In other words, does the existence of a contractual prohibition on discrimination mean that the employee loses his statutory rights to remedy discrimination. Although the majority of the Court did not expressly state that employees covered by a CBA lose their statutory rights to file lawsuits, the dissenting justices clearly understood the Court�s decision as meaning that any employees, who are subject to a CBA which provides for the arbitration of grievances alleging discrimination, have lost their statutory rights to pursue a discrimination case in court.

In fact, it is hard to believe that courts in the future will give employees two bites of the apple, forcing them to arbitrate a claim of discrimination in the first instance, and then allowing them to file a lawsuit as if the arbitration had never happened. This is shown by an Ohio Supreme Court decision issued on June 2, 2009, just two months after 14 Penn Plaza LLC v. Pyett. In Meyer v. United Parcel Serv., Inc., Slip Opinion No. 2009-Ohio-2463, the Court ruled that a lawsuit asserting a state law age discrimination claim by a former employee was barred because the employee was subject to a collective bargaining agreement. In that case, the claim had not even been submitted to an impartial arbitrator, but because the union/management grievance panel had rejected the employee�s claim that he had been discharged without just cause, the Court ruled that the employee could not litigate his age discrimination claim in the courts.

The 14 Penn Plaza LLC v. Pyett and Meyer v. United Parcel Serv., Inc. decisions place unions in a dilemma. On one hand, they are expected to protect the rights of members and would often be criticized if they don�t negotiate a contractual provision prohibiting discrimination. On the other hand, if they do negotiate a provision on discrimination, they take a significant risk that they are causing their members to forfeit their statutory rights to address discrimination and to be adequately compensated for its effects.