14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009), is a United States labor law case decided by the United States Supreme Court on the rights of unionized workers to sue their employer for age discrimination. In this 2009 decision, the Court decided that whenever a union contract "clearly and unmistakably" requires that all age discrimination claims under the Age Discrimination in Employment Act of 1967 (ADEA) be decided through arbitration, then employees subject to that contract cannot have those claims heard in court..
Pyett's lawyers, in addition to arguing that a union could not legally bargain away an employee's right to pursue an ADEA claim in court, also argued that "the facts... [show that the union] Local32BJ... has not done so in this case."14 Penn Plaza v. Pyett No. 07-581, Brief for Respondents, Page 2, available at: http://www.americanbar.org/content/dam/aba/publishing/preview/publiced_preview_briefs_pdfs_07_08_07_581_Respondent.authcheckdam.PDF However, because these arguments had not been raised in the lower courts, the Supreme Court chose not to consider them and decided that the Collective Bargaining Agreement in this case did mandate that the employees' ADEA claims had to be resolved through arbitration.14 Penn Plaza, 556 U.S. at 273-74.
Prior to the Supreme Court's decision in 14 Penn Plaza v. Pyett, employees who were covered under union contracts, often referred to as bargaining unit members, had been able to raise any claims of civil rights violations by their employer in court. This had been the case regardless of the language which was stated in their union contract, a document often referred to as a collective bargaining agreement, or CBA.
Facts Steven Pyett, Thomas O' Connell and Michael Phillips worked for Temco Service Industries, Inc., a maintenance service and cleaning contractor in New York City. Pyett and O'Connell were night watchmen and Phillips held a similar position as a night-starter at an office building owned by Pennsylvania Building Company and 14 Penn Plaza, LLC.
The men were members of the Service Employees International Union (SEIU) Local 32BJ. Their positions at Temco were covered under a collective bargaining agreement that their union Local 32BJ had signed with the Realty Advisory Board on Labor Relations (RAB). The RAB represented both Temco and 14 Penn Plaza in labor matters.14 Penn Plaza LLC v Pyett,(07-581), FACTS -https://www.law.cornell.edu/supct/cert/07-581
In August 2003, after receiving consent from the SEIU Local 32BJ, 14 Penn Plaza hired the unionized firm Spartan Security to provide licensed security guard services. Newly contracted security guards were assigned to the building where Pyett, O' Connell and Phillips worked, and Temco reassigned the men to other positions in the same building as night porters and light duty cleaners.
"As the only building employees over the age of 50,"Pyett, 498 F.3d at 90. Pyett, O' Connell and Phillips believed that their job reassignments to less desirable and less lucrative positions were the result of age discrimination and requested that their union file a grievance over the matter.
The workers' age discrimination claims progressed through four stages spanning five years on its way to the Supreme Court. Here is a summary of that path.
Grievance and arbitration The union filed grievances alleging that Pyett, O' Connell and Phillips' job reassignments had violated the collective bargaining agreement by: discriminating against Pyett, O' Connell and Phillips on account of their age, neglecting seniority rights by not promoting either Pyett or O'Connell to an assistant mechanic position, and negatively affecting each of the three worker's wages by rotating overtime inequitably.14 Penn Plaza, 556 U.S. at 253.
Arbitrator Earl Pfeffer held his initial hearing on the Pyett, O' Connell and Phillips grievances on February 2, 2004. A few weeks later, in a letter dated February 23, 2004, the union withdrew the charge of age discrimination from the grievances.Pyett v. Pennsylvania Building Co., 04 Civ. 7536 (NRB) US District Court For the Southern District of New York Having previously agreed to the hiring of the licensed security guards, the union believed it could not "legitimately object to [the workers'] reassignments as discriminatory."
After several hearings, the arbitrator rendered his opinion on August 10, 2005, denying the other grievance claims.14 Penn Plaza v. Pyett, No. 07-581,(4/1/09), page 3, available at https://www.supremecourt.gov/opinions/08pdf/07-581.pdf
Equal Employment Opportunity Commission On May 26, 2004, Pyett, O' Connell and Phillips each filed age discrimination charges with the Equal Employment Opportunity Commission. After reviewing the evidence, the EEOC dismissed each of the men's complaints. Per the agency's practice when its investigation does not substantiate a charge that has been made,"The Charge Handling Process," U.S. Equal Employment Opportunity Commission, available at: http://www.eeoc.gov/employees/process.cfm the EEOC issued each man a letter of Dismissal and Notice of Rights. The letters notified the men of their right to file a lawsuit in court.
District court On August 21, 2004, Pyett, O' Connell and Phillips sued SEIU Local 32BJ. Their lawsuit claimed that the union had breached its duty of fair representation when it withdrew their age discrimination grievance charges. The workers later dropped their lawsuit against the union after the arbitrator rendered his decision on their remaining grievances in August 2005.
Then, on September 23, 2004, the men filed a lawsuit against Pennsylvania Building Company,14 Penn Plaza, LLC and Temco in District Court. The lawsuit charged that their job reassignments were in violation of the Age Discrimination in Employment Act.
The companies filed a motion to dismiss the charges as well as a motion to compel arbitration under sections 3 and 4 of the Federal Arbitration Act (FAA) [9 U. S. C. §§3]. On May 31, 2006, District Judge Naomi Reice Buchwald denied both motions. In denying the motion to compel arbitration, Judge Buchwald cited a phrase that would later be used by the Supreme Court in their decision to reverse the Court of Appeals ruling. She cited that it was "binding... precedent that even a clear and unmistakable union-negotiated waiver of a right to litigate certain... claims in a judicial forum is unenforceable."Pyett v. Pennsylvania Building Co., 04 Civ. 7536 (NRB) US District Court For the Southern District of New York, emphasis added
U.S. Court of Appeals On June 1, 2006, Pennsylvania Building Company,14 Penn Plaza, LLC and Temco appealed to the US Court of Appeals for the Second Circuit under section 16 of the Federal Arbitration Act. Their appeal again sought to compel the plaintiffs to resolve their claims of age discrimination through arbitration.
On August 1, 2007, Appeals Court Judge José Cabranes upheld the District Court's decision to deny the companies' motion to compel arbitration. In his decision he wrote that "mandatory arbitration clauses in collective bargaining agreements are unenforceable to the extent that they waive the rights of covered workers to a judicial forum for federal statutory causes of action."
The judge continued that "the District Court recognized... the distinction our Court has drawn between arbitration clauses in individual contracts... and arbitration clauses in [collective bargaining agreement]s." The former, he wrote, was "governed by a line of Supreme Court cases represented by Gilmer v. Interstate/Johnson Lane Corp.."Pyett, 498 F.3d at 92.. The later was governed "by a line of Supreme Court cases represented by Alexander v. Gardner-Denver Co.".
Judgment A sharply divided Supreme Court delivered a 5–4 decision in favor of 14 Penn Plaza and overturning the Second Circuit judge's decision. In doing so, the Court ruled that some collective bargaining agreements do require employees to pursue legal action under the Age Discrimination in Employment Act of 1967 through arbitration rather than in court. The Court also ruled that the CBA in this case did require ADEA claims to be arbitrated.
Justice Clarence Thomas authored the Court's opinion. He was joined in the majority by Chief Justice John Roberts, and Justices Antonin Scalia, Anthony Kennedy, and Samuel Alito.
In its decision, the Court flipped the Second Circuit's reasoning by rejecting the Gardner-Denver line of precedent and embracing that of its 1991 decision in Gilmer. In doing so, the Court eliminated the widely held legal distinction between mandatory arbitration agreements, like the one that had been upheld in Gilmer, and collective bargaining agreements, like the ones at issue in both Gardner-Denver and 14 Penn Plaza. This distinction, Justice Souter pointed out in his dissent, had consistently been observed by each of the U.S. Appeals Courts except the Fourth Circuit.14 Penn Plaza v. Pyett, No. 07-581 slip opinion (U.S. April 1, 2009), Souter, J., dissenting, Page 5, available at https://www.supremecourt.gov/opinions/08pdf/07-581.pdf
One major difference between the two types of agreements is that the former is signed directly by the individual effected by it, while the latter is signed by a union representative. Another difference is that the implementation of mandatory arbitration agreements is governed by a 1925 law called the Federal Arbitration Act (FAA). Union contracts, on the other hand, are governed by a different law passed in 1935 called the National Labor Relations Act (NLRA)NLRA 29 U.S.C. §§ 151-169, available at: http://www.nlrb.gov/national-labor-relations-act and enforced by an "independent federal agency""Who Are We," National Labor Relations Board, http://www.nlrb.gov/who-we-are called the National Labor Relations Board (NLRB).
Justice Thomas, writing for the majority, now concluded that "nothing in the law suggests a distinction" between the two types of agreements.14 Penn Plaza, 556 U.S. at 258.
The 14 Penn Plaza majority opinion discerned that Gardner-Denver was decided correctly "on the narrow ground... that the collective bargaining agreement did not cover statutory claims." However, the majority strongly disputed Gardner-Denver and its descendant cases',Cases decided upon Gardner-Denver include: ; and . "broad dicta" ("Judicial dictum is an opinion by a court on a question that is not essential to its decision even though it may be directly involved.") as based on a "misconceived view of arbitration that this Court has since abandoned."14 Penn Plaza, 556 U.S. at 265. The majority identified three such "misconceptions".14 Penn Plaza, 556 U.S. at 268.
The first misconception it identified was that to "submit statutory discrimination claims to arbitration was tantamount to a waiver of those rights". Rather, they concluded, "it waives only the right to seek relief from a court".
The second misconception was that arbitrators "competence... to decide legal issue[s]," as well the "informality" and "fact finding process" of arbitration make it an unsuitable venue to decide people's legal rights.14 Penn Plaza, 556 U.S. at 269. Justice Thomas added that "the informality of arbitration is one of the chief reasons that parties select" it, and that arbitration's "more streamlined" procedures did not render them "inadequate".