Labor & Employment Law — 12/19/08

High Court considers collectively bargained mandatory arbitration of statutory bias claims

Earlier this month, the US Supreme Court heard arguments on whether mandatory arbitration clauses found in collective bargaining agreements (CBA) that specifically waive a covered employee’s right to file statutory discrimination claims in court are enforceable. Oral arguments were presented on December 1, 2008. (14 Penn Plaza LLC v Pyett, Dkt No 07-581)

Background. The legal issues in Pyett stem from tensions between two lines of Supreme Court authority dealing with collective representation and individual statutory rights. In Alexander v Gardner-Denver Co (7 EPD ¶9148), the High Court held that union contracts cannot waive a plaintiff’s right to litigate claims in court. However, in a later decision, Gilmer v Interstate/Johnson Lane Corp (56 EPD ¶40,704), the Court held that individual employment agreements can require employees to arbitrate their claims.

In the underlying opinion (90 EPD ¶42,937) to which certiorari was granted, the Second Circuit Court of Appeals took the side of Alexander when it upheld its own precedent in Rogers v New York Univ (78 EPD ¶40,131), concluding that three employees who tried to bring age bias claims in federal court, despite being covered by a CBA’s mandatory arbitration clause, could pursue those claims in court. The employees were members of Local 32BJ of the Service Employees International Union and were covered under a CBA with the Realty Advisory Board on Labor Relations, a multi-employer bargaining association. They were employed by a building service and cleaning contractor. The CBA contained a mandatory arbitration clause for discrimination claims. In particular, the applicable clause provided: “All such claims shall be subject to the grievance and arbitration procedure [in the agreement] as the sole and exclusive remedy for violations.”

After the employees were reassigned to less desirable positions, they filed grievances with the union asserting, among other things, age discrimination. When the union did not pursue their grievances, the employees filed charges with the EEOC, claiming violations of the Age Discrimination in Employment Act of 1967 (ADEA). Their employer and the building’s operators moved to compel arbitration, but the motion was denied. The district court, following Rogers, held that union-negotiated waivers of statutory rights in CBAs were unenforceable and denied the employer’s motion to dismiss. The defendants appealed.

Reaffirming its ruling in Rogers, the Second Circuit held that the three employees could pursue their discrimination claims in federal court because “mandatory arbitration clauses in collective bargaining agreements are unenforceable if they waive the rights of covered workers to a judicial forum for federal statutory causes of action.” In so holding, the Second Circuit expressly affirmed the Supreme Court’s holding in Alexander.

Oral argument. In their petition for certiorari, the employer and the building (petitioners) want the Supreme Court to overturn the lower court decisions and compel arbitration. Paul Salvatore, who represented the petitioners, argued that the National Labor Relations Act gives unions the authority to bargain collectively over workplace issues, including methods to resolve workplace disputes. Without that authority, employers could bypass the unions and deal directly with their employees, contrary to congressional intent. The lower courts, Salvatore contended, also failed to recognize Congress’s “strong endorsement of workplace arbitration.”

Justice Ruth Bader Ginsburg questioned whether workers would have any individual rights at all after a union refuses to arbitrate their claims. “But the union could not bargain about these anti-discrimination rights. These are rights given to individuals by Congress. The union couldn’t bargain about them the way it bargains about collective rights, the way it bargains about wages and hours and - and other things. This is, this is not a bargainable right. This is a right Congress says you as an individual have a right not to be discriminated against. This is nothing that the union can bargain about.”

Justices to determine when mixed-motive instruction may be given in non-Title VII cases

The Supreme Court has agreed to examine the question of whether direct evidence of discrimination must be presented by plaintiffs seeking mixed-motive instructions in cases other than those brought under Title VII of the Civil Rights Act of 1964. On December 5, 2008, the High Court granted a petition for certiorari brought by an employee who had persuaded a jury that his employer demoted him because of his age, only to have the verdict overturned by an appeals court ruling that a mixed-motive instruction should not have been given in the absence of direct evidence of discrimination. (Gross v FBL Fin Group, Dkt 08-441)

Eighth Circuit holding. The employee hopes to overturn the Eight Circuit’s determination that the mixed-motive instruction given to the jury on his Age Discrimination in Employment Act (ADEA) claim erroneously shifted the burden of persuasion on the issue of causation from the employee to his employer upon proof by any evidence – direct or otherwise – that age was a ‘motivating factor’ in the employment decision (91 EPD ¶43,197). The appeals court reversed and remanded the case for a new trial because the erroneous instruction shifted the burden of persuasion on a central issue.

The Eight Circuit explained that in Price Waterhouse (49 EPD ¶38,936), a splintered opinion, the Supreme Court addressed the proper approach to causation when an employer is motivated by both permissible and impermissible considerations in making an employment decision. The rubric of Justice O’Connor’s concurring opinion requiring proof by direct evidence to shift the burden in Title VII mixed-motive cases has been applied to ADEA cases in the Eighth Circuit because of the similar language used in both statutes. Thus, upon the requisite showing of direct evidence that “‘an illegitimate factor played a substantial role’ in the employment decision,’ the burden rests with the employer to persuade the fact-finder that it is ‘more likely than not that the decision would have been the same absent consideration of the illegitimate factor.’

While section 2000e-2(m), added to Title VII of the Civil Rights Act of 1991, superseded Price Waterhouse, it did not change the heightened evidentiary burden in ADEA cases, the Eighth Circuit concluded, joining the Third, Fourth and Eleventh Circuits. Nor did the Supreme Court’s Desert Palace opinion (84 EPD ¶41,403), holding Price Waterhouse inapplicable to cases arising under Title VII and § 2000e-2(m), change the analysis since the Court did not address which Price Waterhouse opinion was controlling or the continuing vitality of that decision. Thus, the direct evidence requirement of Price Waterhouse remains controlling in ADEA cases, according to the Eighth Circuit.

Question presented. The precise question that Gross has presented to the Supreme Court for review is: “Must a plaintiff present direct evidence of discrimination in order to obtain a mixed-motive instruction in a non-Title VII discrimination case?” The National Employment Lawyers Association has been granted leave to file a brief as amicus curiae.

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