4/1/09: The US Supreme Court ruled that “pre-dispute arbitration agreements” in collective bargaining agreements (union contracts) are enforceable, in Penn Plaza PLLC v. Pyett, 129 S. Ct. 1456 (2009) (5–4 decision).
This was an age discrimination case under the Age Discrimination in Employment Act of 1967 (ADEA). The plaintiff was a member of a union, and the collective bargaining agreement (union contract) required submitting age discrimination claims to binding arbitration.
The US Supreme Court had previously ruled, but not in a labor union setting, that arbitration agreements for ADEA claims were enforceable under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26–33 (1991)). So the real issue in Penn Plaza was whether there would be a different result because of the union contract setting and the National Labor Relations Act.
The Supreme Court in Penn Plaza, in a divided decision (5–4), held that the arbitration agreement contained in the union contract was enforceable.
The enforceability of arbitration agreements for employment disputes has been a political hot potato, and The Arbitration Fairness Act of 2009 (H.R. 1020) was introduced in the US House on February 12, 2009. The bill has 36 co-sponsors, and has been referred to the House Committee on the Judiciary. If it passes, it would essentially overrule Penn Plaza and other cases which have held that employment pre-dispute arbitration agreements are enforceable.
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I am a CPA that specializes in economic damages and I find this site to be very useful. I look forward to future posts such as this one on arbitration.
Mike: Thank you very much for your comments.