Court strikes arbitration clause in Collective Bargaining Agreement

Collective bargaining agreements sometime contain language that says that any legal disputes between workers and management have to be handled in arbitration, not court. Assuming the employees even know the CBA says this, they probably give it little thought until they decide to file a discrimination lawsuit against the employer. When they make that decision, their lawyer will tell them that the CBA's arbitration agreement says they cannot go to court and have to proceed in arbitration. For various reasons, most plaintiffs' lawyers prefer court to arbitration, and defendants prefer arbitration, or they would not fight so hard to keep these claims out of court. But the arbitration language has to be done right, or else the employer has to defend the case in court. This arbitration clause was not good enough, and the plaintiffs win the appeal.

The case is Lawrence v. Sol G. Atlas Realty Co., decided on October 28. The courtroom guarantees certain procedures and protections that arbitration cannot provide. That's why arbitration agreements have to be exquisitely drafted, to ensure the employees know exactly what they're getting into when they ratify the CBA. The Supreme Court has therefore said that in order for a mandatory arbitration agreement in a CBA to prevent the employee to litigating her statutory claims in court (like Title VII or the ADEA), "the inclusion of such claims must be unmistakable, so that the wording is  not susceptible to a contrary reading." To put it in layman's terms, the arbitration provisions of the CBA must be as clear as the river stream on a winter's day and written so that normal people can understand it.

This CBA did not satisfy that standard. This is what it says:

There shall be no discrimination against any present or future employee by reason of race, creed, color, age, disability of an individual in accordance with applicable law, national origin, sex, sexual orientation, union membership, or any characteristic protected by law. Any disputes under this provision shall be subject to the grievance and arbitration procedure (Article V).

Article V is the mechanism of arbitration, which says the employee must first file a grievance with management, and that if the grievance cannot be settled, it goes to the Office of the Contract Administrator. It goes on to say that “[t]he procedure herein with respect to matters over which a Contract Arbitrator has jurisdiction shall be the sole and exclusive method for the determination of all such issues."

Since this arbitration clause is too general and does not say that claims that might be brought under Title VII, Section 1981 or the ADEA must be arbitrated, its language was not "clear and unmistakable" to deprive employees of their right to file a lawsuit. While the "No Discrimination" provision prohibits discrimination and compels arbitration of "any disputes under that provision," that only creates a contractual right of employees to be free from unlawful discrimination that is subject to arbitration. But "a contractual dispute is not the same thing as a statutory claim, even if the issues involved are coextensive." Indeed, the Second Circuit (Jacobs, Livingston and Rakoff [D.J.]) says, "the No Discrimination provision may plausibly be interpreted to require arbitration of contractual disputes only." But it says nothing about "claims" or "causes of action" and cites no statutes.