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No. 07-
,Supreme Court, U.S.FILED
~.-._�; ~ ’~ rL’T.a I) 2007
IN V.E OFFICE OF THE CLERK~pr~m~ ~m~ zff tl1~ t~nit~b z~tat~
14 PENN PLAZA LLC andTEMCO SERVICE INDUSTRIES, INC.,
Petitioners,v.
STEVEN PYETT, THOMAS O’CONNELL,and MICHAEL PHILLIPS,
Respondents.
ON PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
JAMES E BERGHOWARD ROTHSCHILDREALTY ADVISORY BOARD ON LABORRELATIONS, INC.
292 Madison AvenueNew York, NY 10017(212) 889-4100
Counsel for PetitionerTemco Service Industries, Inc.
PAUL SALVATORE*MARK D. HARRISBRIAN S. RAUCHIAN C. SCHAEFERPROSKAUER ROSE LLP
1585 BroadwayNew York, NY 10036(212) 969-3000
Counsel for Petitioner14 Penn Plaza LLC
* Counsel of Record
211272
COUNSEL PRESS
(800) 274-3321 " (800) 359-6859
QUESTION PRESENTED
Is an arbitration clause contained in a collectivebargaining agreement, freely negotiated by a union andan employer, which clearly and unmistakably waives theunion members’ right to a judicial forum for theirstatutory discrimination claims, enforceable?
ii
LIST OF PARTIES
Pursuant to Rule 14.1(b), the only party appeariagbefore the U.S. Court of Appeals for the Second Circuitwhose name does not appear in the caption of the Petitionfor a Writ of Certiorari is the Pennsylvania BuildingCompany.
CORPORATE DISCLOSURE STATEMENT
Pursuant to Rule 29.6, Petitioners state as follows:
14 Penn Plaza LLC has no parent corporation andno publicly-held corporation owns 10% or more of itsstock.
Temco Services Industries, Inc. is a publicly tradedcompany. It has no parent corporation and no publicly-held corporation owns 10% or more of its stock.
iii
TABLE OFCONTENTS
Page
Question Presented ..........................i
List of Parties ............................... ii
Corporate Disclosure Statement ...............ii
Table of Contents ............................iii
Table of Appendices .........................v
Table of Cited Authorities ....................vi
Opinions Below ..............................1
Statement of Jurisdiction ....................1
Constitutional and Statutory ProvisionsInvolved .................................. 1
Statement of the Case .......................2
A. Factual Background ...................2
B. Proceedings Below ....................6
Reasons for Granting the Petition .............9
I. There Is A Fundamental Conflict In TheLower Courts Over The Enforceability OfUnion-Negotiated Waivers Of A JudicialForum ................................ 10
iv
Contents
Ao This Court Has Acknowledged An"Obvious[] ... Tension" In ItsJurisprudence And Has Not ResolvedIt .................................
The Lower Federal Courts are inIrreconcilable and AcknowledgedConflict ...........................
C. State Courts Are In Conflict WithFederal Courts ....................
II. Uncertainty About The Enforceability OfArbitration Agreements Creates SeriousPolicy Concerns .......................
A. The Adverse Effect on Employers,Unions, and Unionized Employees ...
B. The Adverse Effect on Labor-Management Relations .............
Conclusion ..................................
Page
11
18
2.3
25
TABLE OF APPENDICES
Appendix A -- Opinion Of The United StatesCourt Of Appeals For The Second CircuitDecided August 1, 2007 ....................
Page
la
Appendix B -- Memorandum And Order Of TheUnited States District Court For The SouthernDistrict Of New York Filed June 1, 2006 .....13a
Appendix C -- Opinion Of The United StatesDistrict Court For The Southern District OfNew York Filed February 22, 2006 ..........23a
Appendix D -- Affidavit Of Larry EngelsteinDated November 21, 2005 ..................41a
Appendix E -- Excerpts From The 2005Contractors Agreement ....................43a
Appendix F -- 9 U.S.C. §§ 3 & 4 ..............49a
Appendix G -- 29 U.S.C. §§ 621,623(a),626, 630 ................................... 52a
vi
TABLE OF CITED AUTHORITIES
CASES
Page
Air Line Pilots Ass’n, Int’lv. Northwest Airlines, Inc.,211 F.3d 1312 (D.C. Cir.),cert. denied, 121 S. Ct. 565 (2000) ...........22
Air Line Pilots Ass’n, Int’lv. Northwest Airlines, Inc.,199 E3d 477 (D.C. Cir. 1999) ............22, 27, 28
Albertson’s, Inc. v. United Food& Commercial Workers Union,157 E3d 758 (9th Cir. 1998),cert. denied, 528 U.S. 809 (1999) ............22, ’,),5
Aleman v. Chugach Support Servs., Inc.,485 F.3d 206 (4th Cir. 2007) .................
Alexander v. Gardner-Denver Co.,415 U.S. 36 (1974) .......................passim
Austin v. Owens-Brockway Glass Container, Inc.,78 F.3d 875 (4th Cir.),cert. denied, 519 U.S. 980 (1996) ... 9, 18, 19, 20, 22
Barrentine v. Arkansas-Best Freight Sys., Inc.,450 U.S. 728 (1981) ........................~[2
vii
Cited A uthorities
Page
Bratten v. SSI Servs., Inc.,185 E3d 625 (6th Cir. 1999) .................22, 24
Brisentine v. Stone & Webster Eng’g Corp.,117 E3d 519 (11th Cir. 1997) ................22
Brotherhood of R.R. Trainmenv. Akron & Barberton Belt R.R. Co.,385 E2d 581 (D.C. Cir. 1967) ................27
Brown v. ABF Freight Sys., Inc.,183 E3d 319 (4th Cir. 1999) .................21
Carson v. Giant Food, Inc.,175 E3d 325 (4th Cir. 1999),cert. denied, 540 U.S. 1074 (2000) ...........2O
Circuit City Stores, Inc. v. Adams,532 U.S. 105 (2001) ........................15
Collins v. New York City Transit Auth.,305 E3d 113 (2d Cir. 2002) ..................16
E. Associated Coal Corp. v. Massey,373 E3d 530 (4th Cir. 2004) .................20
EEOC v. Waffle House, Inc.,534 U.S. 279 (2002) ........................16
Garcia v. Bellmarc Prop. Mgmt.,745 N.Y.S.2d 13 (App. Div. 2002) ............24
viii
C ite d A uthorities
Page
Gilmer v. Interstate~Johnson Lane Corp.,500 U.S. 20 (1991) .......................passim
Granados v. Harvard Maintenance, Inc.No. 05 Civ. 5489, 2006 U.S. Dist. LEXIS 6918(S.D.N.Y. Feb. 22, 2006) ....................
Harrison v. Eddy Potash, Inc.,112 F.3d 1437 (10th Cir. 1997) ...............22
J.I. Case Co. v. NLRB,321 U.S. 332 (1944) ........................27
Lewandowski v. Collins Bldg. Servs., Inc.,Docket No. 104657/00(Sup. Ct. N.Y. Co. Dec. 6, 2000) .............24
Marquez v. Screen Actors Guild,525 U.S. 33 (1998) .........................
Martin v. Dana Corp.,114 F.3d 421 (3d Cir. 1997) ..................
Martin v. Dana Corp.,135 E3d 765 (3d Cir. 1997),reported in full at 156 L.R.R.M. (BNA) 3137(3d Cir. Dec. 16, 1997) ......................
Matthews v. Rollins Hudig Hall Co.,72 F.3d 50 (7th Cir. 1995) ...................
22
23
].7
C ited A uthoritie s
Page
McDonald v. West Branch,466 U.S. 284 (1984) ........................12
Metropolitan Edison Co. v. NLRB,460 U.S. 693 (1983) ........................17
Minnick v. City of Middleburg Heights,No. 81728, 2003 Ohio App. LEXIS 4569(Ct. App. Sept. 25, 2003 ) ...................24
Moses H. Cone Mem’l Hosp. v. Mercury Constr.,60 U.S. 1 (1983) ...........................13
NLRB v. Wooster Div. of Borg-Warner Corp.,356 U.S. 342 (1958) ........................27
Pryner v. Tractor Supply Co.,109 E3d 354 (7th Cir.),cert. denied, 522 U.S. (1997) ................22
Rodriguez de Quijasv. Shearson/American Express, Inc.,490 U.S. 477 (1989) ........................12
Rogers v. New York Univ.,220 E3d 73 (2d Cir.),cert. denied, 531 U.S. 1036 (2000) .......7, 8, 9, 20
Safrit v. Cone Mills Corp.,248 E3d 306 (4th Cir.),cert. denied, 534 U.S. 995 (2001) ............21
X
Cited A uthorities
Seus v. John Nuveen & Co.,146 E3d 175 (3d Cir. 1998) ..................
Page
Singletary v. Enersys, Inc.,57 E Appx. 161 (4th Cir. 2003) ..............2O
Sum v. Tishman Speyer Props., Inc.Docket No. 11079-2005(Sup. Ct. N.Y. Co. Dec. 2, 2005) .............24
Vaca v. Sipes,386 U.S. 171 (1967) ........................16
Wilko v. Swan,346 U.S. 427 (1953) ........................12
Wright v. Univ. Maritime Serv. Corp.,525 U.S. 70 (1998) .......................passim
Yellow Freight Sys., Inc. v. Donnelly,494 U.S. 820 (1990) ........................23-24
Zavala v. Scott Bros. Dairy, Inc.,49 Cal. Rptr. 3d 503 (Ct. App. 2006) .........24
xi
C ited A uthorities
Page
STATUTES AND OTHER AUTHORITIES
9 U.S.C. § 1 ................................. 1
9 U.S.C. § 3 ................................. 7
9 U.S.C. § 4 ................................. 7
28 U.S.C. §1254(1) ...........................1
29 U.S.C. §§ 621 .............................1
29 U.S.C. § 626(b) ...........................17
42 U.S.C. § 1983 .............................12
N.Y.C. Admin. Code § 8-107 ..................7
N.Y. Exec. Law § 290 ........................7
Civil Rights Act of 1991,Pub. L. 102-166, 105 Stat. 1071 .............17
OPINIONS BELOW
The opinion of the United States Court of Appealsfor the Second Circuit is reported at 498 E3d 88 (2d Cir.2007). App. la. The Second Circuit affirmed the decisionof the United States District Court for the SouthernDistrict of New York, which is reported at 04 Civ. 7536,2006 U.S. Dist. LEXIS 35952 (S.D.N.Y. June 1, 2006).App. 13a. The District Court explained its reasoning inits prior decision in Granados v. Harvard Maintenance,Inc., which is reported at No. 05 Civ. 5489 (NRB), 2006U.S. Dist. LEXIS 6918 (S.D.N.Y. Feb. 22, 2006).App. 23a.
STATEMENT OF JURISDICTION
The judgment of the Court of Appeals was enteredon August 1, 2007. App. l a. The jurisdiction of this Courtis invoked under 28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORYPROVISIONS INVOLVED
This case involves the application of the FederalArbitration Act ("FAA"), 9 U.S.C. § 1, et seq.Respondents filed this action pursuant to the AgeDiscrimination in Employment Act of 1967 ("ADEA"),29 U.S.C. §§ 621, et seq. The pertinent provisions of eachstatute are reproduced at 49a-51a and 52a-66a.
2
STATEMENT OF THE CASE
This case presents an issue of exceptionalimportance to organized labor, management, and unionmembers: whether, to achieve all the mutual benefits thatarbitration offers over litigation, a union can agree withan employer to the arbitration of its members’ clairasunder the ADEA and other statutes. This Court haspreviously acknowledged that this question is undecidedunder its precedents. See Wright v. Universal Mariti~eServ. Corp., 525 U.S. 70, 82 (1998).
In the decision below, the Second Circuit held thatno union-negotiated arbitration agreement - no matterhow clear and explicit - is ever enforceable. The FourthCircuit, however, has long held precisely the opposite,routinely enforcing such clear and unmistakableagreements. This conflict in the circuits - and betweenstate courts and federal courts - necessitates theintervention of this Court to resolve the question.
A. Factual Background
1. For many decades, Local 32BJ of the ServiceEmployees International Union ("Local 32BJ" or the"Union"), which represents over 85,000 employeesnationwide in the building services industry, and theRealty Advisory Board on Labor Relations, Inc. (the"RAB"), the New York City real estate industry’s mull;i-employer bargaining association, have engaged inindustry-wide collective bargaining. Over this period, theparties have agreed to, and continually have revised,their Collective Bargaining Agreement for Contractors(the "CBA"). Among other provisions, the CBA prohibits
3
discrimination in employment - an important goal forlabor, management, and employees in the "melting pot"of the New York City labor market.
Beginning in 1999, the parties agreed to a CBAprovision that expressly requires employees to submitany claims of employment discrimination, includingclaims of age discrimination arising under federal, state,and city law, to binding arbitration under the CBA’sgrievance and dispute resolution procedures.The provision states:
There shall be no discrimination against anypresent or future employee by reason of race,creed, color, age, disability, national origin, sex,union membership, or any characteristicprotected by law, including, but not limited to,claims made pursuant to Title VII of the CivilRights Act, the Americans with DisabilitiesAct, the Age Discrimination in EmploymentAct, the New York State Human Rights Law,the New York City Human Rights Code, ...or any other similar laws, rules or regulations.All such claims shall be subject to thegrievance and arbitration procedure (ArticlesV and VI) as the sole and exclusive remedyfor violations. Arbitrators shall applyappropriate law in rendering decisions basedupon claims of discrimination.
App. 48a.1
1 In addition to the CBA, the RAB negotiates andadministers several other collective bargaining agreements withLocal 32BJ and other unions, covering approximately 65,000
(Cont’d)
4
The bargaining parties specifically crafted thislanguage to track this Court’s requirement, set forth inWright, that any waiver of rights to adjudicate statutoryclaims be "clear and unmistakable." It is undisputed thatthe CBA’s waiver is clear and unmistakable in itslanguage and intent. App. 6a, 21a, 37a-38a.
2. This arbitration provision was heavily negotiatedby Local 32BJ and the RAB. As part of the bargainingleading to this clause, the Union gained sizable wage andbenefit enhancements, as well as other favorableprovisions. Furthermore, the arbitration provision itselfwas advantageous to the Union and its members.Without it, many of the Union-represented buildingservice workers would be compelled to become pro sefederal court plaintiffs to bring their discriminationclaims. This would be a daunting task for any individual,but especially for the large percentage of immigrantbuilding service workers for whom English is theirsecond language. Similarly, those employees with themeans to retain an attorney would be required to payfees or a percentage of any award.
In contrast, under the arbitration provision, thesesame employees receive a skilled attorney from theUnion at no cost to them, and are not required to payany administrative fees (i.e., arbitrator or forum fee,,~),
(Cont’d)employees and approximately 4,000 commercial and residentialbuildings in the New York City area. Those agreements containarbitration provisions that are virtually identical to the provisionat issue here and similarly require the arbitration of statutorydiscrimination claims.
5
which are instead shared equally by the RAB and theUnion. If, for some reason, the employee would preferto retain private counsel, the Union permits theemployee to pursue the discrimination claims in thearbitral forum with his or her attorney. App. 42a.
Arbitration of discrimination disputes is alsoappealing to both Local 32BJ and New York City’s realestate employers because it minimizes duplication ofefforts, and resolves disputes quickly, inexpensively,fairly, and effectively. Most, if not all, discriminationclaims arise out of the same facts and circumstances ascontractual grievances alleging CBA violations.For example, an employee asserting a claim of adischarge without just cause (a contractual claim) canalso assert a claim of discriminatory discharge (astatutory claim). Consolidating the process allows onefact finder - an employment attorney serving asarbitrator - to consider the facts and circumstances thatencompass both claims, and make both determinations.The ability to consolidate the actions results in economiesof scale for all parties involved, and ensures consistentrulings on the related issues, while providing employeesand employers with the full scope of remedies anddefenses available under the anti-discrimination laws.
3. Respondents are employees and formeremployees of Temco Service Industries, Inc. ("Temco"),a building service and cleaning contractor. Prior toAugust 2003, they worked as night watchmen/porters in14 Penn Plaza LLC’s (the "Company") commercial officebuilding located at 225 West 34th Street in New YorkCity. They are all members of Local 32B J, covered underthe CBA with the RAB.
6
In or about August 2003, in an effort to improvebuilding security in response to post-9/ll securityconcerns, the Company engaged Spartan Security, aunionized security services contractor, to providetrained, licensed security guards to staff the front lobbydesk and the rear entrance of the building. As a result,Temco’s services were no longer needed in theselocations. In compliance with the CBA, Temco reassignedRespondents to equivalent duties in other locations inthe building. Respondents were unhappy with thesereassignments and alleged, among other things, thatthey violated the CBA and were based on agediscrimination.
B. Proceedings Below
Local 32BJ filed a grievance about thereassignments under the CBA’s dispute resolutionprocedures, raising both contractual and statutoryclaims. Prior to the arbitration hearing, the portion ofthe grievance alleging age discrimination waswithdrawn. Respondents (accompanied by their privateattorney, in addition to Union-provided counsel) did notraise their age discrimination claims at any time duringthe arbitration proceedings. After a four-day hearing,the arbitrator denied all their contractual claims in a 19-page opinion.
Despite the fact that their personal attorney waspresent for the entire arbitration hearing and could haveraised their age discrimination claims before thearbitrator, Respondents instead filed a lawsuit in federalcourt alleging that their transfers violated federal, state,
7
and city laws prohibiting age discrimination.2 TheCompany moved to dismiss Respondents’ lawsuit or,alternatively, to compel arbitration of their claimspursuant to Sections 3 and 4 of the FAA (9 U.S.C. §§ 3and 4), based on the clear agreement to arbitrate suchclaims contained in the CBA. The district court deniedthe motion to compel arbitration based on its own recentdecision in another case, where it recognized that "theSupreme Court has not spoken clearly on this issue,"but held that it was "constrained" to follow the SecondCircuit’s precedents and judicially void the arbitrationprovision. App. 39a n.7.
On appeal, the Second Circuit likewise acknowledgedthat this Court’s precedents left unresolved the centralquestion. Indeed, as it noted, those precedents arethemselves in "tension," and other circuits have reacheddifferent conclusions. App. 6a n.3, 10a n.4. But itconsidered itself bound by its earlier decision in Rogersv. New York Univ., 220 F.3d 73 (2d Cir.) (per curiam),cert. denied, 531 U.S. 1036 (2000), that held suchagreements unenforceable.
Rogers involved a collective bargaining agreementthat - unlike the CBA - did not clearly incorporatestatutory claims. The court found that it did not meetWright’s "clear and unmistakable" test, and was not
2 Respondents filed these claims under the ADEA, the NewYork State Human Rights Law, N.Y. Exec. Law § 290, et seq.,and the New York City Administrative Code, N.Y.C. Admin. Code§ 8-107. In a separate, related action, Respondents also allegeda violation of the duty of fair representation against the Union,inter alia, for failing to arbitrate the age discrimination claims,but subsequently withdrew that action with prejudice.
enforceable for that reason. But Rogers went on to hold,as an alternate ground, that even a clear arbitrationprovision was not "always enforceable." Id. at 75. InAlexander v. Gardner-Denver Co., 415 U.S. 36 (1974),another case in which the arbitration clause of thecollective bargaining agreement between a company anda union did not cover statutory anti-discriminationclaims, this Court held that the clause could not precludelater assertions of such claims in a judicial forum. FromGardner-Denver’s narrow holding (which Rogersrecognized was narrowed further in later cases, see 220F.3d at 75), Rogers inferred that any collectb~ebargaining agreement clause negotiated by a union couldnot bar the employees’ right to a judicial forum -whetherthe parties had deliberately negotiated such a waiver ,ornot.
Rogers acknowledged, as did the decision below, thatthis blanket negation of any and all arbitration clausesdid not square with later Supreme Court precedents,which "could be taken to suggest that, under certaincircumstances, a union negotiated waiver of anemployee’s statutory right to a judicial forum might beenforceable." App. 9a-lla (quotations omitted). B~tneither Second Circuit decision offered any account ofwhat those circumstances might be.
Indeed, it is clear that under the Second Circuit’sholdings, there is no situation - however clear thelanguage in the collective bargaining agreement - thatwould make such an arbitration agreement binding. Nordid either decision take serious account of this Court’sruling in Gilmer v. Interstate~Johnson Lane Corp., 500U.S. 20 (1991), which upheld an agreement to arbitrate
9
entered into by an individual employee, anddistinguished earlier cases that were not governed bythe FAA (as this one is), and where there was no "clearand unmistakable" arbitration provision (as there ishere).
Rogers noted that the Fourth Circuit had rejectedits conclusion - acknowledging the conflict between thecircuits. See 220 E3d at 75 (citing Austin v. Owens-Brockway Glass Container, 78 F.3d 875, 880-86 (4th Cir.),cert. denied, 519 U.S. 980 (1996)). The decision belowdid the same, see App. 10a n.4, but adhered to its ownview that "nothing had changed" in the law since Rogerswas decided. Id. at lla.
REASONS FOR GRANTING THE PETITION
This Court has recognized that there is anunresolved conflict in its own jurisprudence concerningthe enforceability of union-negotiated arbitrationagreements. An older line of precedent beginning withGardner-Denver viewed arbitration unfavorably andheld that an arbitration proceeding cannot preclude theassertion of statutory claims in a judicial forum. A morerecent line of precedent, typified by Gilmer, takes a farmore positive view of arbitration and holds thatarbitration provisions are enforceable so long as theirforum selection language is "clear and unmistakable."This uncertainty has generated a marked conflict in thefederal circuits, and between federal and state courts,leading some to hold that union-negotiated arbitrationclauses are never enforceable, and others to hold thatthey are enforceable if the waiver language is clear. Thatconflict provides a powerful reason for this Court togrant review.
10
The conflict also creates a host of public policyconcerns. First, neither employers nor unions are ableto know or predict whether their particular provision, isvalid, making both the bargaining and administration ofmulti-jurisdictional collective bargaining agreementsexceedingly difficult. Second, unionized employeesworking in jurisdictions that do not enforce unic, n-negotiated arbitration clauses may be induced to signindividual waivers as a condition of continuedemployment - effectively removing unions from thenegotiation of an important term and condition ofemployment. In sum, for effective employer and unionoperations, for productive collective bargaining, and toprotect the rights of employees who are union members,there must be a consistent rule of law for the entirecountry - and that rule only can come from this Court.
THERE IS A FUNDAMENTAL CONFLICT ]INTHE LOWER COURTS OVER THE ENFORCE-ABILITY OF UNION-NEGOTIATED WAIVERSOF A JUDICIAL FORUM.
There is a pressing need for this Court to clarify thecircumstances under which a union-negotiatedarbitration agreement may be enforced. Until now, thisCourt has expressly declined to answer that question.As a result, the lower federal and state courts have beenforced to rely on conflicting precedents, resulting indiametrically opposite conclusions.
11
Ao This Court Has Acknowledged An "Obvious[]... Tension" In Its Jurisprudence And Has NotResolved It.
The Second Circuit held that union-negotiatedarbitration agreements are not enforceable based on thisCourt’s 1974 decision in Gardner-Denver. The issue,Petitioners respectfully submit, cannot be so rotelyresolved - as this Court itself has acknowledged.
In Wright, the Court recognized that whether acollective bargaining agreement can waive employees’statutory rights to a judicial forum calls into question"two lines" of its own cases that are "obviously [in] sometension." Wright, 525 U.S. at 76. Wright deferredresolution of that question because it found the particularlanguage in the collective bargaining agreement theretoo vague and unspecific to constitute a waiver of rights.See id. at 77, 80. Since the instant CBA was specificallydrafted to track Wright’s "clear and unmistakable"requirement, and the district court found that it was clearand unmistakable, App. 21a, the issue is squarelypresented here.
According to Wright, the Gardner-Denver line ofcases concerns the preclusive effect of prior contractualarbitrations on an employee’s right to litigate certainrelated statutory claims. In Gardner-Denver, the Courtaddressed the question of whether an employee whosegrievance had been arbitrated pursuant to a generalgrievance and arbitration provision in a collectivebargaining agreement was subsequently barred frominstituting a Title VII court action. The Court held thata general contractual grievance arbitration proceeding
12
does not bar a subsequent related Title VII federal courtaction. In other words, a contract arbitration is not resjudicata to a Title VII litigation. The Court applied thisprinciple in later cases to permit similar post-arbitrationlitigation under other statutes. See Barrentine v.Arkansas-Best Freight Sys., Inc., 450 U.S. 728 (1981)(Fair Labor Standards Act); McDonald v. West Branch,466 U.S. 284 (1984) (42 U.S.C. § 1983).
Gardner-Denver dealt with a purely contractualarbitration process, where the arbitrator sat only as "theproctor of the bargain." 415 U.S. at 53. The arbitratorwas not able to rely on external law, and thereby wasforeclosed from adjudicating statutory employmentclaims. The Gardner-Denver Court expressed the no.w-rejected view that the arbitral fact-finding process is notcomparable to judicial fact-finding, and that the"informal" nature of arbitrations rendered theminappropriate for the resolution of Title VII claims.Id. at 57-58 (citing Wilko v. Swan, 346 U.S. 427 (1953)).But in the thirty years since, the Court has disavowedthis antiquated view of arbitral inferiority. See Rodriguezde Quijas v. Shearson/American Express, Inc., 490 U.S.477 (1989); Gilmer, 500 U.S. 20 (1991).
According to Wright, the other relevant line of casesinvolves individual agreements to arbitrate employmentdisputes. In Gilmer, the Court required an individualnon-unionized plaintiff to arbitrate his claim under theADEA because he had signed a securities industryregistration agreement consenting to arbitrate anyclaims arising out of his employment. Id. at 35. The Courtemphasized that "questions of arbitrability must beaddressed with a healthy regard for the federal policy
13
favoring arbitration." Id. at 26 (quoting Moses H. ConeMem’l Hosp. v. Mercury Constr., 60 U.S. 1 (1983)).It held that arbitration of, and hence waiver of the rightto proceed in court with respect to, statutorydiscrimination claims was not "inconsistent with thestatutory framework and purposes of the ADEA."Gilmer, 500 U.S. at 27. In so doing, it rejected old-fashioned notions that arbitration suffers from tribunalbias, insufficient discovery procedures, and inadequateremedies. Specifically, the Court stated that "[w]e arewell past the time when judicial suspicion of thedesirability of arbitration and of the competence ofarbitral tribunals inhibited the development ofarbitration as an alternative means of disputeresolution." Id. at 34.
In Wright itself, when this Court faced the questionwhether union-negotiated waivers of employees’ rightsto a judicial forum are enforceable, it acknowledged thatGardner-Denver and Gilmer are in tension - for Gilmerallowed waivers of rights under anti-discriminationstatutes that Gardner-Denver had stated wereunwaivable by anyone. Wright, 525 U.S. at 76-77.Moreover, the Court itself adverted to the change in itsown receptivity to arbitration, with Gilmer being aprominent example. Id. Nonetheless, the Wright Courtleft this conflict unresolved, and decided the case beforeit on a different, narrower ground. Id.
In the absence of further guidance from this Court,the Second Circuit plainly erred in relying on Gardner-Denver rather than Gilmer. Gilmer drew threedistinctions between itself and the Gardner-Denver line
14
of cases, all of which made it, not Gardner-Denver,controlling here. First and foremost, in Gardner-Denver,the union and the company could arbitrate onlycontractual grievances, as they had no agreement toarbitrate statutory claims. In fact, the arbitrator did noteven have the authority to resolve such claims, beingonly a "proctor of the [collective bargaining agreement]."Gardner-Denver, 415 U.S. at 53. Thus, the only questilonpresented in that case (and its progeny) was whetherarbitration of the employee’s contract-based claimswould be held to preclude later statutory discriminatiionactions arising out of the same facts. See Gilmer, 500U.S. at 43. Under those circumstances, Gardner-Den~’~ercorrectly held that there was no preclusion.
Here, in stark contrast, there is an agreement thatexpressly requires arbitration of any and all statutoryclaims, and the legally-trained arbitrators areempowered (and, indeed, obligated) to decide such claims"apply[ing] appropriate law." App. 48a. The question,therefore, is one of enforceability of forum selectionclauses, not preclusion.
Second, Gilmer emphasized the fact that unl:[keGardner-Denver, it was decided under the FlA.See Gilmer, 500 U.S. at 35. The FAAwas enacted to placearbitration agreements upon the same footing as othercommercial contacts. To that end, it provides for staysof proceedings in federal courts when an issue isreferable to arbitration, id. § 3, and for orders compellingarbitration when one party has failed, neglected, orrefused to comply with an arbitration agreement,id. § 4. In finding that the employee’s ADEA claimsshould be compelled to arbitration, Gilmer cited to alitany of decisions by this Court holding that by agreeing
15
to arbitrate a statutory claim, a party does not forgo anysubstantive rights afforded by the statute. Id. This Courthas since further bolstered support for arbitration ofstatutory discrimination claims in Circuit City Stores,Inc. v. Adams, 532 U.S. 105 (2001), holding thatagreements to arbitrate employment disputes are fullyenforceable pursuant to the FAA. After Circuit City, itis clear that clauses like the instant one are best treatedunder the FAA, as the decision below understood.
Finally, as a third distinction between itself andGardner-Denver, Gilmer explained that since thearbitration in Gardner-Denver arose in the context of acollective bargaining agreement, where the claimant wasrepresented by his union, that case presented a "tensionbetween collective represen~tation and individualstatutory rights." Gilmer, 500 U.S. at 35. The decisionbelow echoed the same concern, that if "the Unionrefused to submit the wrongful transfer claims toarbitration because the Union had agreed to the newcontract, the interests of the Union and the interests of[Respondents] are clearly in conflict." App. lla n.5.
But the Second Circuit ignored a critical distinctionbetween the agreement at issue in Gardner-Denver andthe CBA: under the CBA, Respondents retained at alltimes the right to bring their statutory claims toarbitration on their own - without the need for Unionconsent. App. 42a. Hence, Respondents enjoyed the sameaccess to the arbitration process as the non-unionemployees in Gilmer, in which arbitration was upheld.Moreover, in the thirty years since Gardner-Denver,other judicial protections of the individual union member
16
have developed. First, an employee who believes theunion acted unfairly (in not processing, or improperlyhandling, a discrimination claim) can bring a duty of fairrepresentation action against it. See Marquez v. ScreenActors Guild, 525 U.S. 33, 44 (1998); Vaca v. Sipes, 386U.S. 171, 190 (1967).3 Similarly, in those relatively rarecases where a union member may wish to challenge thefairness of the arbitration process, courts are empoweredto determine whether the process was in fact fair, andwhether the decision was rendered by a neutral,unbiased adjudicator. See Collins v. New York CityTransit Auth., 305 E3d 113, 119 (2d Cir. 2002). Finai[ly,under existing law, an agreement to arbitrate statutorydiscrimination claims by an employee does not waive anemployee’s right to file a charge of discrimination withthe Equal Employment Opportunity Cor~mission(EEOC), and does not prohibit the EEOC fromcommencing a lawsuit in response to the charge.See EEOC v. Waffle House, Inc., 534 U.S. 279 (2002)..
In addition to disregarding these critical distinctions,placing the instant case closer to Gilmer than toGardner-Denver, the Second Circuit simply failed toappreciate that Gilmer and its progeny have undermirLedGardner-Denver’s precedential weight. One of Gardner-Denver’s animating reasons for opposing arbitrati[onagreements was its view that "there can be noprospective waiver of an employee’s rights under TitleVII." Id. at 51. Gilmer flatly rejected this principle,holding that arbitration of (and hence waiver of a judicialforum regarding) statutory discrimination claims wasnot inconsistent with the framework and purposes of theanti-discrimination laws. See Gilmer, 500 U.S. at 27.
3 Indeed, Respondents brought such a claim here, but thenwithdrew it. See note 2 supra.
17
In particular, the ADEA directs the EEOC to pursue"informal methods of conciliation, conference, andpersuasion" in its enforcement procedures. 29 U.S.C.§ 626(b). Congress’ grant of concurrent jurisdiction overADEA claims to state and federal courts also evidencesan objective of allowing multiple fora for resolvingdisputes. Gilmer, 500 U.S. at 30. Finally, Congress hasnever explicitly precluded arbitration of ADEA claims.4
For all these reasons, arbitration of age discriminationclaims is not only permissible, but encouraged.
As to union-negotiated waivers in particular,Gardner-Denver stated that a union cannot waiveindividual employee rights, but only "certain statutoryrights related to collective activity," 415 U.S. at 51. Thatview was subsequently called into question by the Court’sdecision in Metropolitan Edison Co. v. NLRB, 460 U.S.693, 706-07 (1983), which held that a union can waive anindividual employee’s right under the National LaborRelations Act to be free of discrimination based on unionactivity. The Court decided that as long as the union-negotiated waiver is "clear and unmistakable," it wouldbe enforced. Not coincidentally, this is the same standardthe Wright Court used to evaluate union-negotiatedarbitration agreements.
4 Indeed, in further support of arbitration, Congress passedthe Civil Rights Act of 1991, which provided that "the use ofalternative dispute resolution, including ... arbitration, isencouraged to resolve disputes arising under [Title VII and theADEA]." Pub. L. 102-166, § 118, 105 Stat. 1071, 1081 (reprintedin notes to 42 U.S.C. § 1981). On its face, Section 118 evinces aclear Congressional intent to encourage arbitration of ADEAclaims, not to preclude such arbitration. See Seus v. John Nuveen& Co., 146 F.3d 175, 182 (3d Cir. 1998); Matthews v. Rollins HudigHall Co., 72 F.3d 50, 54 n.4 (7th Cir. 1995).
18
At a more fundamental level, decisions afterGardner-Denver rejected its idea that the right to ajudicial forum was a substantive right. As Gilmer held,"by agreeing to arbitrate a statutory claim, a party doesnot forgo the substantive rights afforded by the statute;it only submits to their resolution in an arbitral, ratherthan a judicial forum." Gilmer, 500 U.S. at 26. For thatreason, and the others expressed above, much of theunderlying motivation for Gardner-Denver’s hostility toarbitration has simply faded away as the law has evolvedover the last thirty years.
B. The Lower Federal Courts are inIrreconcilable and Acknowledged Conflict.
The decision below directly and irreconcilablyconflicts with the Fourth Circuit’s rulings that union-negotiated arbitration agreements are enforceable. TheFourth Circuit has been steadfast in its position, bothpre- and post-Wright, applying the rationale of Gilmerrather than Gardner-Denver to collective bargain
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arbitration of a statutory claim is not equal to giving upany right under a statute, [but] simply another forum inwhich to resolve the dispute," id¯, the Fourth Circuit heldthat Gilmer had rejected the principal basis of Gardner-Denver, that "arbitration is an inappropriate forum forthe resolution of [anti-discrimination] statutory [rights]¯¯.." Id. Following Gilmer, Austin noted that there wasno evidence of a Congressional intent to prohibitarbitration of these matters, and therefore no reason toblock enforcement of such an agreement. Id. at 880-81¯
The Fourth Circuit’s decision was grounded in therecognition that the mechanism for resolvingemployment disputes is a natural and appropriatesubject of collective bargaining, and one over which aunion - as the exclusive bargaining representative of itsmembership - has "the right and duty" to negotiate¯As the court observed, the right to arbitrate is as mucha term and condition of employment as any otherprotected by statute. Id. at 885. Waivers of such rightsare effective because they rest on the premise of fairrepresentation through the union¯
Accordingly, the Fourth Circuit drew no distinctionbetween the individual agreement to arbitrate upheldin Gilmer and the union-negotiated arbitrationagreement at issue in Austin¯ The court held:
Whether the dispute arises under a contractof employment growing out of securitiesregistration application, a simple employmentcontract, or a collective bargaining agreement,an agreement has yet been made to arbitrate
2O
the dispute. So long as the agreement isvoluntary, it is valid, and we are of the opinionit should be enforced.
Id. The Fourth Circuit thus rejected the precise groundson which the Second Circuit rested its decision. To theSecond Circuit, the identity of the party negotiating thewaiver is determinative of whether the waiver is valid.Rogers, 220 E3d at 75. To the contrary, Austin announceda uniform policy - so long as the agreement to waiwe ajudicial forum was made voluntarily, individualagreements and collectively-bargained agreements areequally valid. Austin, 78 E3d at 885.
In later cases, the Fourth Circuit has fortified andelaborated on itsAustin holding, articulating the precisecircumstances under which union-negotiated arbitrat
21
Brown v. ABF Freight Sys., Inc., 183 E3d 319, 321 (4thCir. 1999) (Luttig, j.).5
In its most recent decision on point, Aleman v.Chugach Support Servs., Inc., 485 F.3d 206, 215 (4th Cir.2007) (Wilkinson, J.), the Fourth Circuit went so far asto describe the method of dispute resolution as a"preeminent" term and condition of employment as towhich unions were entitled to strike bargains. Id. at 216.It expressly rejected the idea that there was anystatutory basis or precedent for inventing a rule thatclear and unmistakable waivers require a "meeting ofthe minds" between the employer and individual unionmembers. Indeed, it commented that to hold thatCongress had placed the resolution of civil rights claimsbeyond the reach of arbitration "would be too much anexercise in judicial implication" - an exercise that would"change the nature of collective bargaining overconditions of employment and ... read judicialexceptions into the National Labor Relations Act." Id.at 216-217. See also Safrit v. Cone Mills Corp., 248 F.3d306, 308-09 (4th Cir.), cert. denied, 534 U.S. 995 (2001)("[A]n agreement to arbitrate statutory claims is partof the natural tradeoff that a union must make inexchange for other benefits .... To redact one clausefrom a CBA would in effect alter the agreement reachedduring the often-difficult collective bargainingprocess.").
Despite the sea change in this Court’s jurisprudencein the thirty years since Gardner-Denver, and the FourthCircuit’s insightful and practical holdings, most other
~ The CBA clause at issue here incorporates both conceptsin evincing its clear and unmistakable waiver. App. 43a-48a.
22
circuits that have addressed the issue have alignedthemselves with the Second Circuit - albeit whileexpressing uncertainty about the state of the law. SeeAir Line Pilots Ass’n, Int’l v. Northwest Airlines, Inc.,211 F.3d 1312 (D.C. Cir.) (en banc) (per curiara),reinstating 199 F.3d 477, 484 (D.C. Cir. 1999) ("Whateverthe Supreme Court said - or more precisely, refrainedfrom saying - in Wright, we do not understand the Courtin Gilmer to have overruled Gardner-Denver. Wetherefore leave to the Court itself the prerogative ofoverruling its own precedent (if it will); we apply thelaw as it stands."), cert. denied, 121 S. Ct. 565 (2000);Pryner v. Tractor Supply Co., 109 F.3d 354, 365 (7th Cir.)(Posner, J.) (acknowledging a "circuit split" and stati.ngthat "[o]n balance our case is closer to Alexander; but isenough left of Alexander to compel a decision in favor ofplaintiff?."), cert. denied, 522 U.S. (1997); Bratten v. SSIServs., Inc., 185 F.3d 625 (6th Cir. 1999) (holding,anomalously, that this Court’s decision in Wright"implicitly overruled" the Fourth Circuit’s holding inAustin); Albertson’s Inc. v. United Food & CommercialWorkers Union, 157 F.3d 758 (9th Cir. 1998), cert. denied,528 U.S. 809 (1999); Harrison v. Eddy Potash, Inc., 112E3d 1437, 1453-54 (10th Cir. 1997) (following Gardner-Denver); Brisentine v. Stone & We bster Eng’ g Corp., 117F.3d 519, 526 (11th Cir. 1997) (same).
The Third Circuit is a likely exception. In Martin v.Dana Corp., 114 F.3d 421 (3d Cir. 1997), a divided panelagreed with Austin that a union-negotiated arbitrationclause could supplant an individual worker’s right to ajudicial forum. The en banc court vacated that opinionand referred the case back to the panel to determinewhether the plaintiff could arbitrate without the
23
assistance of the union. After determining that theagreement in that case did not grant that right, theoriginal panel reversed its decision, ruling that thecollective bargaining agreement did not bar theplaintiff’s suit. See Martin v. Dana Corp., 135 E3d 765(3d Cir. 1997), reported in full at 156 L.R.R.M. (BNA)3137 (3d Cir. Dec. 16, 1997)..Because the issue of theclaimant’s right to arbitrate without the consent of theunion was "the sole issue ... upon which [the] appealturn[ed]," id. at *2, it appears that the Third Circuitwould uphold the CBA here, as Local 32BJ unionmembers have the right to bring their own attorneysinto the arbitral forum. App. 42a.
In sum, the lower federal courts are in irreconcilableconflict over whether a union-negotiated arbitrationclause may be enforceable. In addition to the sharp splitbetween the positions of the Second and Fourth Circuit,other circuits have expressed deep-seated confusionregarding the enforceability of these waivers. Evencourts that continue to apply Gardner-Denver do so whilequestioning its continued viability. This Court’s reviewis needed to resolve the conflict.
C. State Courts Are In Conflict With FederalCourts.
The unsettled nature of the law has produced notonly a federal circuit split, but also a split betweenseveral federal and state courts sitting in the samegeographic location. Since state courts have the authorityto decide federal discrimination claims, see Gilmer(holding that concurrent jurisdiction exists in state andfederal courts to decide ADEA claims); Yellow Freight
24
Sys., Inc. v. Donnelly, 494 U.S. 820 (1990) (same for TitleVII claims), this conflict raises the specter that the lawcould be applied in inconsistent ways - depending onwhether the claim was brought in federal or state court.
In reliance on this Court’s precedents, New YorkState courts have held under the FAA that clear andunmistakable union-negotiated agreements to arbitratestatutory discrimination claims are enforceable.See, e.g., Garcia v. Bellmarc Prop. Mgmt., 745 N.Y.S.2d113 (App. Div. 2002) (enforcing an arbitration agreementdrafted by the same parties to this action and containingwaiver language identical to the CBA because "Gardner-Denver ... was not decided under the FAA, and doesnot reflect modern Federal policy favoring arbitratio~a")(citing Gilmer); Sum v. Tish~ ~: Speyer Props., Inc.,Docket No. 11079-2005 (Sup. Ct. N.Y. Co. Dec. 2, 200’5);Lewandowski v. Collins Bldg. Servs. Inc., Docket No.104657/00 (Sup. Ct. N.Y. Co. Dec. 6, 2000). These holdingsplace New York State courts in direct conflict with theSecond Circuit.
Similarly, the Ohio State courts are in conflictwith the Sixth Circuit. Compare Minnick v. City ofMiddleburg Heights, No. 81728, 2003 Ohio App. LEXIS4569 (Ohio Ct. App. Sept. 25, 2003) (holding, inaccordance with Wright, that clear and unmistakableunion-negotiated waivers of statutory claims areenforceable), with Bratten, 185 F.3d 625. In California,the state courts are in conflict with the Ninth Circuit.Compare Zavala v. Scott Bros. Dairy, Inc., 49 Cal. Rptr.3d 503, 511 n. 9 (Ct. App. 2006) (acknowledging that aunion may waive its members’ rights to a judicial forum
25
for employment discrimination claims pursuant toWright), with Albertson’s, 157 F.3d 758.
To have federal and state courts sitting in the samelocality apply the same law inconsistently underminesuniformity and raises the specter of forum shopping.These dangers reinforce the need for this Court’s review.
II. UNCERTAINTY ABOUT THE ENFORCE-ABILITY OF ARBITRATION AGREEMENTSCREATES SERIOUS POLICY CONCERNS.
A. The Adverse Effect on Employers, Unions, andUnionized Employees.
Continued conflict regarding the enforceability ofunion-negotiated arbitration agreements hampers theday-to-day operations of businesses and labororganizations. Many of this country’s industries, suchas the real estate and building services industry, operatein more than one federal circuit. In particular, many ofthe building service companies covered under the CBAoperate throughout the country, including in both NewYork City (Second Circuit) and Virginia (Fourth Circuit).These multi-circuit businesses must adhere to differentcollective bargaining obligations and employee policiesin circuits whose rulings are in conflict.
Labor organizations are also compelled to alterbargaining strategies and modify practices to administercollective bargaining agreements across jurisdictions.Following the lead of corporate America, unions are
26
consolidating. For example, New York City-based Local32BJ now has jurisdiction for building service employeesall along the East Coast. Absent this Court establishinga uniform position for all circuits to follow, the prospectof devising a standard dispute resolution procedure foran entire region is exceedingly remote.
Further, as many current collective bargainingagreements cover employees located in more than onejudicial circuit, an absence of uniformity among thecircuits causes confusion within bargaining relationships.For example, the CBA covers employees in New York(Second Circuit) and New Jersey (Third Circuit). Absentthis Court’s guidance, the clause presently might beenforceable with respect to employees working in thelatter but not the former, even though all theseemployees are working for the same employer and arerepresented by the same union.
Sound policy should support the ability of businessto apply consistent practices across federal judicialcircuits; the ability of labor organizations to advanceconsistent goals across federal judicial circuits; and 1;heability of labor and management to pursue maturerelationships, such as the one between Local 32BJ andthe RAB, whereby they can resolve employee disputeswithout disruption.
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B. The Adverse Effect on Labor-ManagementRelations.
The Second Circuit’s decision could prove highlydetrimental to labor-management relations. In circuitsthat do not enforce union-negotiated waivers, anemployer would seemingly be able to bypass the unionas the employees’ bargaining agent. Employers couldrequire unionized employees to sign individualarbitration agreements as a condition of employment -in the same manner that non-unionized employees canbe compelled to do under Gilmer and its progeny.
In particular, if a union cannot agree to an arbitrationclause relating to statutory discrimination claims, it iswell-established under labor law that such a term ofemployment becomes a non-mandatory subject ofbargaining. See Air Line Pilots Ass’n, Int’l v. NorthwestAirlines, Inc., 199 E3d 477, 485 (D.C. Cir. 1999) ("[A]proposal to trade that which is not one’s to give cannotbe a mandatory subject of bargaining.") (citingBrotherhood of R.R. Trainmen v. Akron & BarbertonBelt R.R. Co., 385 F.2d 581,603 (D.C. Cir. 1967) (holdingproposal to bargain over effects of job terminations,normally a mandatory subject, non-mandatory becauseunion "could not bargain away any part of the rights thataccrued to employees under the [arbitral] Award"));see also NLRB v. Wooster Div. of Berg-Warner Corp.,356 U.S. 342 (1958) (distinguishing between mandatoryand non-mandatory subjects of bargaining). As with allnon-mandatory subjects of bargaining, an employerwould be permitted to present the arbitration agreementdirectly to its employees - bypassing the union. J.I. CaseCo. v. NLRB, 321 U.S. 332 (1944). The employer,
28
therefore, may be able to require its employees to signthe arbitration agreement in exchange for continuedemployment. Gilmer, 500 U.S. 20.
Following the Second Circuit’s rule could stripunionized employees of their leverage that is ortlyavailable through collective bargaining. An individualagreement to arbitrate clearly would be lawful underGilmer, and the concept of bypassing the union toimplement such an agreement unilaterally already hasbeen approved by the District of Columbia Circuit in thecontext of the Railway Labor Act. Air Line Pilots Ass’n,Int’l, 199 F.3d at 486. Marginalizing the union wo~tldprove highly destabilizing to labor-managementrelations, and would in no way serve the ultimate endsof the ADEA or other ~.~ti-discrimination statutes.
29
CONCLUSION
For all the aforementioned reasons, the petition fora writ of certiorari should be granted.
Respectfully submitted,
JAMES F. BERg
HOWARD ROTHSCHILDREALTY ADVISORY BOARD ONLABOR RELATIONS, INC.292 Madison AvenueNew York, NY 10017(212) 889-4100
Counsel for PetitionerTemco Service Industries, Inc.
PAUL SALVATORE*MARK D. HARRISBRIAN S. RAUCHIAN C. SCHAEFERPROSKAUER ROSE LLP1585 BroadwayNew York, NY 10036(212) 969-3000
Counsel for Petitioner14 Penn Plaza LLC
* Counsel of Record
