The Court of Appeals rejects an effort to vacate an adverse arbitration award that the aggrieved employee says violated the Lilly Ledbetter Act of 2008, which retroactively allows courts to consider what the Supreme Court used to deem stale allegations of pay discrimination.
The case is Schwartz v. Merrill Lynch, decided on November 1. In Ledbetter v. Goodyear Tire, 550 U.S. 618 (2007), the Court said that pay discrimination claims begin to accrue when management puts in place the discriminatory pay scheme, and that the statute of limitations is not revived each time the female employee gets another paycheck arising from that scheme. In other words, the female employee cannot challenge the unfair paychecks more than 300 days after management set the discriminatory pay scale. Congress overturned the Ledbetter decision in the Lilly Ledbetter Fair Pay Act of 2008, which says that an unlawful employment practice occurs each time the employee gets the paycheck tainted by the discriminatory scheme, even if that scheme happened a few years ago. Unlike many laws that overturn Supreme Court rulings, the Ledbetter Act has retroactive application.
In this case, the plaintiff sued Merrill Lynch for pay discrimination. Her case went to arbitration. The arbitrators ruled that Schwartz did not prove her claims of discrimination. One of the reasons she lost was that the arbitration panel for the most part would not consider events that predated her April 2, 2001 settlement and release from prior claims of discrimination (unless the evidence predated that date by six months).
Schwartz next asked the federal court to vacate the arbitration award as clearly contrary to the Ledbetter Act, which has retroactive application and, according to her, required the arbitrators to consider evidence of discrimination predating April 2001. The district court denied this motion, and the Court of Appeals (Kearse, Sack and Katzmann) affirms. Any employment lawyer will tell you that it is very, very hard to overturn an arbitration decision. You can do so if the decision is in manifest disregard of the law, but that is a tough hurdle to climb. Here, the arbitrators simply interpreted the April 2001 settlement in limiting the introduction of evidence, and they extended some flexibility into the process by considering evidence of discrimination predating that release by six months. The settlement contained the usual language saying that plaintiff was waiving any claims accruing through that date. While Congress amended Title VII through the Ledbettter Act, the arbitrators did not plainly ignore that law, as it had not been passed at the time of Schwartz's arbitration. In making its evidentiary rulings, the arbitrators did not exceed their broad discretion to decide her case.