Supreme Court Ruling on 14 Penn Plaza V. Pyett - Assignment Example

Supreme Court Ruling on 14 Penn Plaza V. Pyett This is a case on labor arbitration and dispute resolution, between employees who are members of the Service Employees International Union, Local 32BJ (Union), working in the building services industry in New York City; and employers who are members of the Realty Advisory Board on Labor Relations (RAB), a multiemployer bargaining association for the New York City real-estate industry. The Union is empowered by the National Labor Relations Act (NLRA) as the exclusive bargaining representative for employees in the building-services industry in New York City, while the RAB is the bargaining representative of all employers in New York City’s real-estate industry. The agreement between the Union and RAB is contained in a Collective Bargaining Agreement for Contractors and Building Owners. Under the present CBA, union members are required to submit all claims that involve employment discrimination to a binding arbitration following the procedure for grievance and dispute resolution embodied also in the CBA. Facts of the case The petitioners in this case are 14 Penn Plaza LLC and Temco Service Industries, Inc., both members of the RAB. The respondents, on the other hand, are workers in New York’s building service industry and are members of the Union. 114 Penn Plaza owns and operates the New York City office building where the respondents worked as night lobby watchmen and other similar capacities. The respondents were directly employed by petitioner Temco Service Industries, Inc., a maintenance service and cleaning contractor. 14 Penn Plaza, with the Union’s consent, engaged a unionized security contractor affiliated with Temco to provide licensed security guards for the building, Temco reassigned respondents to jobs as porters and cleaners. The respondents felt that these reassignments amounted to a loss in income and other damages, and were less desirable than their former positions. They therefore asked the Union to file grievances alleging that 14 Penn Plaza and Temco violated the CBA’s ban on workplace discrimination. They contended that they were discriminated against on the basis of their age, in violation of the Age Discrimination in Employment Act of 1967 (ADEA). At first, the Union requested for arbitration under the CBA, but withdrew after the initial hearing because it (the Union) consented to the new security contract, so it could not now claim that it objects to the respondents’ reassignments for being discriminatory. Because of this, the respondents filed on their own a complaint with the Equal Employment Opportunity Commission on the basis of ADEA violations, for which the EEOC issued them a right-to-sue notice. In the ensuing lawsuit, the petitioners filed a motion to compel the arbitration of the respondents’ age discrimination claims, pursuant to the provisions of the CBA between the RAB and the Union. The District Court denied this petition, therefore the petitioners raised the issue to the Second Circuit, which affirmed the decision of the District Court. The decision was thereafter appealed to the Supreme Court of the United States. The Issue The issue to be decided is whether or not a provision in a collective bargaining agreement that requires union members to arbitrate ADEA claims is enforceable as a matter of federal law. A side-issue that was raised on appeal is whether or not a claim based on statute could be decided in an arbitration proceeding, instead of in a court of law. The Decision of the Court The Supreme Court reversed the ruling of the Second Circuit and the District Court, and ruled in favor of the petitioner-employers, that a CBA agreement provision may be enforced requiring union members to arbitrate ADEA claims. Rationale of the Decision In arriving at its ruling, the Supreme Court reasoned as follows: The federal statutes involved – the ADEA and the NLRA – give a straightforward answer to the issue. The provision for arbitration, which is clearly included in the CBA, was freely negotiated upon between RAB (on behalf of the employers, including petitioner) and the Union (which is the exclusive bargaining representative of employees in the building-services industry in New York City). The provision is thus part of the terms of a contract freely arrived at between the two parties, and therefore stands as the law between them. On the basis of the NLRA, therefore, this condition must be honoured, except if the ADEA itself takes away this class of grievances (age discrimination) from the NLRA’s effectivity. However, it is the Supreme Court itself which, in previous rulings, upheld that the ADEA does not prohibit the arbitration of claims based on age discrimination (Cornell University, 2010). The effect of the decision on labor arbitration and dispute resolution Prior to going onto the various perspectives, it is important to first view the ruling from a general point of view. The decision of the Supreme Court made a straightforward case of resolving the issue as a matter of enforcing the terms of a legal contract. First, in an examination of the CBA, there appears to be no reason why the agreement itself should be considered unenforceable. It complied with all the legal requirements, with the full and free consent of the parties and arrived at in good faith. That the terms of the CBA are enforceable against not only the RAB and the Union, but all their members likewise, is undoubted, as each bargaining represent-ative is duly empowered by law and recognized by their members. Finally, as the Supreme Court itself noted, the provision to require all members to submit to arbitration proceedings is not prohibited by either the NLRA nor the ADEA itself Gagliardo, & Becker, 2009 . When the law does not, expressly nor implicitly, prohibit the terms of a valid and binding contract, then the terms of the contract freely agreed upon becomes the law as to the parties to the contract and those that they represent. In this case there is no doubt that all parties to the CBA acknowledge its validity and legality, as well as that of its provision mandating arbitration. Even the respondents did not raise this issue as a point of contention. By agreeing to mandatory arbitration, the worker-members could not directly resort to the courts for legal action before it has first filed its claim, through the Union, for arbitration proceedings as described in the CBA. From the perspective of the Union. The way I see it, if there is any party most at fault in this course of events, it would be the Union which negotiated with the RAB on behalf of its members. The fault does not lie in agreeing to mandatory arbitration proceedings; as the Supreme Court suggested, it is possible that they did so in order to acquire other concessions from the RAB that would have likewise benefited the worker-members. The problem lies in the Union’s lack of caution in offhandedly agreeing to a proposal by the employer without careful study about how it could affect the employees concerned. There would have been no problem had the Union pursued, in the name of the respondents, the initial arbitration proceedings; however, because of public embarrassment at having to take back its word in consenting to the employer’s proposal to replace personnel in the first place, the Union decide that it will not pursue the arbitration proceeding. This left the respondents with no recourse to pursue their claim except to resort to legal proceedings, for which they secured the necessary EEOC go-ahead. As a result, the respondents endured damages in terms of substantial expenses, investment of time and effort, and the frustration of having to be told that they have to return to the step they were denied by the Union in the first place. It should therefore be contemplated that in instances when the labor arbitration and dispute resolution proceedings are unduly compromised because of the Union’s neglect, unjustifiable mistake, and moreso intentional act, the Union should be held liable to the employee-members whose rights have been compromised because of it. This would emphasize to unions in general the great weight of the responsibility with which they is straddled, not just the windfall of union dues they collect, so that they become more cautious and mindful of their accountability to their members for their official acts. From the perspective of the employees. The decision of the Supreme Court is a setback, as far as the immediate respondents to this case are concerned. The workers have gone through the whole legal process of lawsuit and two appeals, and just as relief would be likely, the Supreme Court decides that the case should be returned to the lower Court which is expected to rule in favor of arbitration. Thus after all the waiting, expenses, and emotional trauma of having to pursue one’s case in court, the Supreme Court decides that the matter should go back to Square One, which the employees pushed for in the first place: arbitration. Why this is a setback is in the nature of arbitration compared to the action in the courts. Arbitration is essentially an informal procedure, which although binding, is nevertheless prone to delays and machinations of the parties if not handled with prudence, competence and authority by the arbitrators (Gill, 2009). It is a forum that is open to inconsistencies and abuse in the worst case scenario (Baker, 2009). On the other hand, arbitration, when pursued as an initial step and where handled by an arbitrator with full competence in his knowledge of the circumstances of the parties and the application of the law, could be a benefit to the employees pursuing their claim. Most courts are clogged up with other cases that delays are also inevitable in the legal system, whereas arbitration may be seen as a way to expedite the matter and give relief to the claimants at the soonest possible time. The arbitration procedure is also less expensive, since such matters as cost of suit and filing fees, not to mention the mandatory profession fees that go to legal representation, are not present in arbitration. Finally, as long as good faith exists in arbitration proceedings, there is no reason that a successful claim would not be granted speedy relief by the employer, as most employers are truly well-intentioned. From the perspective of the employers (union and non-union). Contrary to popular sense, well-meaning employers are put at an advantage in having to decide labor matters when a union is present. A good employer wants only to improve the working conditions and terms of its employees, without undue disadvantage to the company, in order to keep its workforce engaged and productive. Dealing with a single entity in the form of a union is much simpler than dealing with several dozens (or hundreds) of employees; furthermore, the presence of a CBA simplifies the terms of employment so that resolution of disputes becomes more straightforward. This is true especially in this case, because the terms of the CBA explicitly provides for a specific procedure for arbitration, which should be a less costly method for the employer as it is for the employee-claimant. The case does not drag on, and good relations are maintained. The employer whose workforce is not unionized, and who therefore has no CBA to resort to, will have to be brought to court by the employee in his individual capacity in order to press his (the employee’s) claim (Keenan, 2010). This becomes a messy, time consuming, and costly procedure which would have been averted by arbitration proceedings had there been a CBA provision to that effect. Furthermore, it opens the employer to payment not only of actual but moral and exemplary damages, if the court sees the case in that respect, truth notwithstanding. As it stands, dispute resolution and labor arbitration would be as much a protection for the employer as it is the employee and most especially for the well-being of the business which is in the common interest of both parties. References Baker, K. G. 2009 Recent Developments. Ohio State Journal on Dispute Resolution, Vol. 24 Issue 3, p641-653 Cornell University. 2010. 14 Penn Plaza LLC v. Pyett (No. 07-581). Legal Information Institute, Cornell University Law School. Gagliardo, J. M. & Becker, H. R. M. 2009 Supreme Court Upholds CBA Provision Requiring Union Members to Arbitrate ADEA Claims. Employment & Labor Relations Law, Fall2009, Vol. 8 Issue 1, p16-18 Gill, Manjit S. 2009 ADR Alert: The Supreme Court Invigorates Arbitration in Labor Agreements. Conflict Management, Vol. 13 Issue 2, p9-15 Keenan, E. E. 2010 Collectively Bargained Employment Arbitration: 14 Penn Plaza LLC v. Pyett. Harvard Negotiation Law Review, Spring 2010, Vol. 15, p261-279 Read More