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AСsea changeТ for collective bargaining as the U.S. Supreme Court permits unions to agree to arbitration for discrimination claims

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Alternatives
TO THE HIGH COST OF LITIGATION
INTERNATIONAL INSTITUTE FOR CONFLICT PREVENTION & RESOLUTION
Alternatives
TO THE HIGH COST OF LITIGATION
Publishers:
Kathleen A. Bryan
International Institute for
Conflict Prevention and Resolution
Susan E. Lewis
John Wiley & Sons, Inc.
VOL. 27 NO. 5 MAY 2009
Editor:
Russ Bleemer
Jossey-Bass Editor:
David Famiano
Production Editor:
Ross Horowitz
Alternatives to the High Cost of Litigation (Print ISSN 1549-4373, Online ISSN 1549-4381) is a newsletter published 11 times a year by the International Institute for
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vol. 27 no. 5
may 2009
Alternatives 85
None of these procedures is perfect.
But all are good in the sense that they have
the common purpose to provide a quick
solution, and because they may be challenged either through a request for court
review or by arbitration.
The choice among them depends on
the dispute and on the parties’ specific
needs.
For urgent measures, the Pre-Arbitral
Referee procedure seems to be quite effective. Court-ordered mediation also is
a good tool to settle a disagreement in a
not-litigious way.
As to disputes and decisions that go to
the contract’s substance, the DAB, and the
U.K. adjudication, are both good—close to
arbitration, subject to the enforcement con-
cern about the DAB, and which may not
always be much better than a quick award.
And voluntary or court-ordered mediation remains a very good tool to settle
a disagreement, international or otherwise,
in a not-litigious way. Q
DOI 10.1002/alt.20278
(For bulk reprints of this article,
please call (201) 748-8789.)
A ‘Sea Change’ for Collective Bargaining as the U.S. Supreme Court
Permits Unions to Agree to Arbitration for Discrimination Claims
BY CHRISTOPHER WALSH
The U.S. Supreme Court has departed
from a number of its earlier decisions by
holding that a collective bargaining agreement provision requiring arbitration of
claims arising under federal anti-discrimination laws is enforceable.
Some might say that the Court overruled its earlier decisions in derogation of
stare decisis last month when it decided 14
Penn Plaza LLC v. Pyett, 07-581 (April 1,
2009)(available at www.supremecourtus.
gov/opinions/08pdf/07-581.pdf). The decision holds that an employee asserting
discrimination claims in court may be
compelled to arbitrate them under Sections
3 and 4 of the Federal Arbitration Act, 9
U.S.C. 1, et seq.
Pyett will have little bearing on commercial arbitrations and employment
arbitrations involving nonunion employees, because previous Court decisions
already have established that claims arising under federal statutes are arbitrable
under the FAA.
But Pyett likely will have a substantial
effect on how labor arbitrations are conducted because the decision marks a sea
change in the Court’s view of the purpose
and proper procedure for labor arbitrations. The extent of the ultimate effect on
The author, a director at Newark, N.J.’s Gibbons
PC, wrote on current Supreme Court arbitration
law in “Stolt-Nielsen’s Comfort for the ‘Average
Arbitrator’: An Analysis of the Post-Hall Street
‘Manifest Disregard’ Award Review Standard,” 27
Alternatives 19 (February 2009).
labor arbitrations will depend on whether
and how employers and unions adopt
provisions in their collective bargaining
agreements seeking to compel arbitration
of statutory discrimination claims.
LABOR ADR
AVOIDING STOPPAGES
Since the 1960 Steelworkers’ case trilogy,
labor arbitration was viewed by the Court
as a way to avoid work stoppages by privately enforcing the terms of collective bargaining agreements. While run-of-the-mill
commercial arbitration was recognized as
a substitute for litigation, labor arbitration
was recognized as a “substitute for industrial strife.” United Steelworkers of America
v. Warrior & Gulf Navigation Co., 363
U.S. 574, 578 (1960).
Thus the purpose of labor arbitrations
was “to settle disputes at the plant level—
disputes that require for their solution
knowledge of the custom and practices of
a particular factory or of a particular industry. . . .” United Steelworkers of America
v. Enterprise Wheel & Car Corp., 363 U.S.
593, 596 (1960). In settling such disputes,
the arbitrator’s ultimate obligation was
to be faithful to the collective bargaining
agreement. While an arbitrator could “look
for guidance from many sources,” the arbitrator’s award was “legitimate only so long
as it draws its essence from the collective
bargaining agreement.” Id. at 597.
Indeed, as conceived by the Court
in the Steelworkers trilogy, labor arbitrators were charged with giving effect to
“a new common law—the common law
of a particular industry or of a particular
plant.” Warrior & Gulf Navigation, 363
U.S. at 579.
As the National Academy of Arbitrators noted in its amicus brief (the
Pyett briefs are available at Scotusblog’s
Wiki at www.scotuswiki.com/index.
php?title=14_Penn_Plaza_LLC_v._Pyett), the unique function ascribed to
labor arbitrations by the Steelworkers trilogy resulted in a style of arbitration that
differs in important and substantial ways
from arbitration styles prevailing in other
types of arbitrations.
Because labor arbitrators are beholden
to “the common law of a particular industry or of a particular plant,” a premium is
placed on labor arbitrators with an expertise in industrial relations—not necessarily
the law or traditional judicial procedures
for dispute resolution. In fact, according to
the National Academy of Arbitrators, “almost 40% of labor arbitrators are trained
in industrial relations, not law.” Brief
Amicus Curiae of the National Academy
of Arbitrators at 15.
Moreover, in labor arbitrations, there
is rarely pre-hearing discovery, and custom and past practice at the employee’s
Published online in Wiley InterScience (www.interscience.wiley.com).
Alternatives DOI: 10.1002/alt
(continued on next page)
86 Alternatives
vol. 27 no. 5
Discrimination Claims
(continued from page 85)
work site “constitute one of the most
significant evidentiary considerations in
labor-management arbitration.” Elkouri
& Elkouri, “How Arbitration Works,”
605 (Alan Ruben ed., 6th ed. 2003).
Labor arbitrators also generally do not
award damages for emotional distress.
Instead, their awards are generally limited
to economic damages and equitable relief
relating to the employment relationship,
e.g., reinstatement or reassignment.
distress and other types of relief which
are not typically awarded in labor arbitrations as currently conducted. This, in
turn, will require consideration of expert
psychological witnesses and other evidence that is not typically seen in labor
arbitrations.
While only time will tell what becomes
of labor arbitrations, the essence of labor
arbitrations will have to change in order
to accommodate the types of claims that
now must be resolved by tribunals whose
RECASTING THE FUNCTION
Changing the Law
The Pyett decision, however, signals the
Court’s recasting of the function of labor
arbitrations. In its new form, labor arbitration will require new procedures and
arbitrators with new skills and areas of
expertise. Instead of being faithful only to
the collective bargaining agreement and a
particular plant’s or industry’s “common
law,” labor arbitrators now may be called
on to interpret and apply a broad array of
federal and state statutes and other laws
affecting employee rights.
This will require less expertise in industrial relations and more expertise in law
and traditional judicial procedures. This is
especially so in light of the complex burden-shifting protocol that typically prevails
in employment discrimination cases. See,
e.g., McDonnell Douglas Corp. v. Green,
411 U.S. 792 (1973).
As for discovery, Justice Clarence
Thomas, writing for the Pyett majority, clearly indicated that some discovery
should be permitted in labor arbitrations
involving employment discrimination
claims. Indeed, he seemed to acknowledge
that the arbitration of employment discrimination claims may sometimes require
as much discovery as is needed in antitrust
matters, which—as the Court noted in
Bell Atlantic Corp. v. Twombly, 550 U.S.
544 (2007)—are notorious for imposing
a heavy discovery burden on the litigants.
Pyett, slip op. at 20 (“it is unlikely that age
discrimination claims require more extensive discovery than other claims that we
have found to be arbitrable, such as RICO
and antitrust claims”)(internal quotations
and citations omitted).
Labor arbitrators also will have to be
ready to award damages for emotional
The question: Can unions bargain away their members’ ability to take discrimination cases
to court?
The old answer: No waiver of
rights under a collective bargaining agreement.
The new answer: In its second arbitration decision of the
2008-2009 term, the Supreme
Court reverses course and says
that there is no waiver of rights.
It’s a forum choice.
original purpose was to maintain industrial
harmony. Labor arbitrators will now have
to act more like—and have the competencies of—lawyers and judges. And labor
arbitrations will have to adopt new and
sometimes more cumbersome procedures.
In short, labor arbitrations will come to
look more like arbitrations we see outside
the union context.
ENSURING ARBITRABILITY
Employers with unionized workforces
should cheer the Pyett decision as it will
allow them to seek to include in their
collective bargaining agreements broad
grievance-arbitration provisions covering
statutory discrimination claims, a procedure which should be less expensive than
litigation. To ensure the arbitrablity of
may 2009
such claims, however, employers will need
to make sure the collective bargaining
agreement is properly crafted.
When drafting agreements, employers should keep the following two ideas
in mind:
• To be enforceable, the agreement to
arbitrate the statutory claim must be
“clear and unmistakable.” The best way
to ensure this is to list in the collective
bargaining agreement all of the statutes, ordinances, and regulations that
may be the source of an employee’s
claim. Care should be taken to cover
legislative enactments of all jurisdictions, even municipalities, which may
apply. State common-law causes of action also should be expressly included
in the arbitration provision.
• Second, and more important, the collective bargaining agreement should
give the employee a mechanism to
pursue statutory claims on his or her
own if the union decides not to pursue them.
Typically, the union decides what
grievances it will pursue, and controls the
grievance’s prosecution. For instance, the
collective bargaining agreement at issue in
Pyett provides that “[a]ll Union claims are
brought by the Union alone and no individual shall have the right to compromise
or settle any claim without the permission
of the Union.” Thus, a union may be able
to preclude an employee from vindicating
his or her statutory rights.
Justice Thomas appears to acknowledge that when the collective bargaining
agreement puts the union in a position
“to prevent [employees] from effectively
vindicating their federal statutory rights
in the arbitral forum,” the agreement to
arbitrate may not be enforceable. Slip
op. at 25 (internal quotations and citations omitted).
To avoid this potential problem, a collective bargaining agreement should provide that an employee may commence an
arbitration on his or her own to vindicate
statutory rights if the union refuses to do so
through the standard grievance-arbitration
process provided in the collective bargaining agreement. Q
Published online in Wiley InterScience (www.interscience.wiley.com).
Alternatives DOI: 10.1002/alt
DOI 10.1002/alt.20279
(For bulk reprints of this article,
please call (201) 748-8789.)
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