Arbitration clauses can be the bane of a plaintiff lawyer's existance. The plaintiff is ready to go to court before she discovers that all discrimination claims against the employer will be decided by an arbitrator, not court, where a jury can hear the claims and presumably award higher damages. This usually happens when the plaintiff's employment agreement says that any claims will go to arbitration. But what happens when the collective bargaining agreement negotiated by a labor union contains a mandatory arbitration clause?
The Second Circuit Court of Appeals resolved this dilemma on August 1, 2007. In Pyett v. Pennsylvania Building Co., three plaintiffs tried to bring their discrimination claims to Federal court even though the union contract contained a mandatory arbitration clause. What result?
The Court of Appeals (Cabranes, Raggi and Korman) noted two lines of Supreme Court cases on the subject of mandatory arbitration. While individual employment agreements can require plaintiffs to arbitrate their claims, union contracts cannot waive the plaintiff's right to litigate her claims in court. In other words, the union cannot, through the collective bargaining agreement, waive the right to a jury trial, even though the union presumably represents the employee in contract negotiations. So the Court of Appeals agreed with the trial court in holding that the union contract in this case could not prevent the plaintiffs from proceeding in Federal court.
The Court of Appeals actually resolved this issue seven years ago in Rogers v. New York University, 220 F.3d 73 (2000), finding that the collective bargaining agreement cannot waive the right to a jury trial. Rogers cited Supreme Court authority (Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974)) which held as such. But the employer in the case decided yesterday argued that the Supreme Court had actually overruled Alexander in Wright v. Universal Maritime Service Corp., 525 U.S. 70 (1998). While I'm sure the Second Circuit appreciates this kind of advocacy, the Court of Appeals did not take the bait, holding that Alexander has always been good law. So the plaintiffs' age discrimination claims in Pyett v. Pennsylvania Building Co. head to Federal court, not arbitration.