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Second Circuit Refuses to Compel Employee to Arbitrate Statutory Claim

July 26, 2000

As the size of jury verdicts in employment cases – and especially employment discrimination cases – has continued to increase recent years (see What Damages Cap? Significant Jury Awards in Employment Cases in 1999), it is generally considered advantageous to employers to resolve such claims via arbitration rather than by litigating in court. In a setback to employer efforts to confine such claims to the arbitration arena, the United States Court of Appeals for the Second Circuit ruled on July 17, 2000 that an employee covered by a collective bargaining agreement containing arbitration and non-discrimination provisions retains the right to bring statutory claims in federal court, and is not required to arbitrate those claims. Rogers v. New York University, 2000 U.S. App. LEXIS 17370 (2d Cir., July 17, 2000).

In its landmark 1974 decision in Alexander v. Gardner-Denver, 415 U.S. 36 (1974), the U.S. Supreme Court ruled that an employee covered by a collective bargaining agreement who asserted a discrimination claim under the agreement's non-discrimination clause was not bound by the outcome of an arbitration proceeding under the agreement, but could still pursue his/her discrimination claims in federal court. More recently, in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991), a case not involving a collective bargaining agreement, the Supreme Court ruled that, in most circumstances, a provision contained in an individual employment agreement requiring arbitration of all claims, including discrimination claims, is fully enforceable, and precludes the signatory employee from bypassing arbitration and pursuing such claims in a court proceeding. In applying Gilmer, some courts adopted the view that the Supreme Court had effectively overruled Gardner-Denver. Two years ago, in Wright v. Universal Maritime Service Corp., 525 U.S. 70 (1998), the Supreme Court was presented with that question but declined to rule on whether Gardner-Denver survived Gilmer; on the facts before it, the Court simply ruled that the alleged waiver of federal statutory rights contained in the particular collective bargaining agreement at issue was not "clear and unmistakeable" and that the employee therefore could not be required to arbitrate those claims (see Supreme Court Rules on Union Waivers of Civil Rights Claims in Collective Bargaining Agreements).

In Rogers, the plaintiff was covered by a collective bargaining agreement containing a non-discrimination provision and a broad arbitration clause, requiring arbitration of "any dispute concerning the interpretation, application, or claimed violation of a specific term or provision" of the Agreement. Plaintiff requested and was granted leave under the Family and Medical Leave Act (the "FMLA") because of her medical conditions. Her employment was terminated following the expiration of her twelve weeks of FMLA leave entitlement. She brought suit in federal court, alleging violations of the Americans with Disabilities Act (the "ADA"), the FMLA, and state and city human rights laws. The employer moved to stay the action on the grounds that the plaintiff's claims were subject to resolution exclusively in arbitration under the collective bargaining agreement. The district court denied the employer's motion, and the Second Circuit affirmed that decision.

The Second Circuit relied upon two separate grounds in support of its decision. First, the court observed that the arbitration provision in question was contained in a collective bargaining agreement rather than an individual employment agreement. Under Gardner-Denver, the court ruled, such a provisions does not constitute an effective waiver of a covered employee's right to pursue discrimination and other statutory claims in court. Second, the court relied upon Wright as an independent basis for its decision. Like the Supreme Court in Wright, the court found that the arbitration provision in the collective bargaining agreement at issue did not constitute a "clear and unmistakeable" waiver of the employees' right to bring discrimination claims in federal court. In particular, the court observed that the arbitration provision at issue, while broad, was general in nature, and did not state that "all federal causes of action arising out of [the employees'] employment" must be arbitrated. The court also noted that while the agreement contained a non-discrimination and leave of absence provision, it did not specifically make compliance with the federal laws in these areas (i.e., the ADA and the FMLA) a contractual commitment subject to the arbitration clause. For these reasons, the court held, there was no "clear and unmistakeable" waiver of the plaintiff's statutory right to assert her claims in federal court.

The U.S. Court of Appeals for the Ninth Circuit in San Francisco, like most other federal courts, had previously reached the same result as the Rogers court. See Albertson's, Inc. v. United Food & Commercial Workers Union, 157 F.3d 758, 760-62 (9th Cir. 1998), cert. denied, 120 S. Ct. 39 (1999). However, it appears that the issue will not be definitively settled until it is decided by the Supreme Court. In the meantime, employers should consider alternative strategies for avoiding duplicative arbitration and court litigation of statutory claims. For example, some collective bargaining agreements contain provisions which, as a condition of the union's submission of an employee's discrimination claim to arbitration under the agreement, require the employee to sign a specific and explicit individual waiver of his/her right to pursue such a claim in court. Particularly in light of Rogers and similar cases, while the enforceability of such a provision has not been tested, it may be the employer's best option for confining litigation involving unionized employees to the arbitration forum.