Unions Can Require Their Members to Arbitrate Claims For Violation of Individual Statutory Rights -- 14 Penn Plaza v. Pyett

The National Labor Relations Act (NLRA) has always encouraged unions and management to contract for an exclusive grievance and arbitration procedure to resolve claims for violation of their collective bargaining agreements (CBAs).  Since at least 1991, the Supreme Court has also allowed individual employees to contract for mandatory arbitration of their individual claims for violation of statutory rights.  Until now, however, the Court had never squarely addressed the next logical question -- i.e., Can a union collectively bind its members to a CBA provision that requires them to arbitrate their own individual statutory claims such as claims for discrimination?     

The 5-4 majority opinion in 14 Penn Plaza v. Pyett, answers that question in the affirmative.  But the reasoning is so riddled with prerequisites, caveats, and reservations that few, if any, real-world CBAs could be read to actually require arbitration of individual statutory claims. 

First, the arbitration provision must "clearly and unmistakeably" cover such claims.  Most CBAs include a generic "non-discrimination" clause.  But virtually none go as far as the Penn Plaza agreement, which specifically listed various state and federal anti-discrimination statutes and provided that "All such claims shall be subject to the grievance and arbitration procedures [of the CBA] as the sole and exclusive remedy for violations."

Second, the Penn Plaza decision deliberately sidesteps the most important issue -- whether the procedural limitations of a union-controlled grievance and arbitration process amount to an unenforceable waiver of substantive rights.  For example, what if (as is usually the case) the grievance and arbitration process can be initiated only by the union and not the employee.  And what if (again, the usual case) the CBA imposes shortened limitations periods and no access to discovery.  

Under the substantial body of case law governing non-labor arbitration agreements, including the California Supreme Court's Armendariz decision, such limitations would render an arbitration agreement unconscionable and unenforceable.  Should a different result apply merely because an arbitration agreement is part of a collective bargaining agreement?   

The parties in Penn Plaza had a live dispute as to whether the procedural limitations of the arbitration clause amounted to a  de facto waiver of substantive anti-discrimination rights.  But the Supreme Court merely remanded these issues back to the lowers courts without any constructive guidance.  As a result, the main upshot of the Penn Plaza decision will be to spawn a wave of lower court litigation to determine whether CBA arbitration remedies can be stretched to include statutory claims for violation of Title VII, the FEHA, and wage and hour laws.     





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