Pyett v. Pennsylvania Bldg. Co.

Decision Date01 August 2007
Docket NumberDocket No. 06-3106-CV(CON).,Docket No. 06-3047-CV(L).
PartiesSteven PYETT, Thomas O'Connell, and Michael Phillips, Plaintiffs-Appellees, v. PENNSYLVANIA BUILDING COMPANY, 14 Penn Plaza, LLC, and Temco Service Industries, Inc., Defendants-Appellants.
CourtU.S. Court of Appeals — Second Circuit

Jeffrey L. Kreisberg, Kreisberg & Maitland, LLP, New York, NY, for Plaintiffs-Appellees.

Paul Salvatore (Daniel Halem, Brian Rauch, on the brief), Proskauer Rose LLP, New York, NY, for Defendants-Appellants.

James F. Berg, Howard Rothschild, Realty Advisory Board on Labor Relations, Inc., New York, NY, for Amicus Curiae Realty Advisory Board on Labor Relations, Inc. in support of Defendants-Appellants.

Robin S. Conrad, Shane Brennan, National Chamber Litigation Center, Inc., Washington, DC, Samuel Estreicher, Todd Geremia, Jones Day, New York, NY, for Amicus Curiae Chamber of Commerce of the United States in support of Defendants-Appellants.

Before: CABRANES and RAGGI, Circuit Judges, and KORMAN,1 District Judge.

JOSÉ A. CABRANES, Circuit Judge.

In this appeal, defendants challenge an order of the United States District Court for the Southern District of New York (Naomi Reice Buchwald, Judge) denying their motion to compel arbitration of plaintiffs' age discrimination claims in accordance with the collective bargaining agreement between plaintiffs' union and their employer. Defendants argue that the District Court, which relied on the Supreme Court's decision in Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974), and our Court's decision in Rogers v. New York University, 220 F.3d 73 (2d Cir.2000), failed to take into account the Supreme Court's decisions in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), and Wright v. Universal Maritime Service Corp., 525 U.S. 70, 119 S.Ct. 391, 142 L.Ed.2d 361 (1998). We disagree, and reaffirm our decision in Rogers that mandatory arbitration clauses in collective bargaining agreements are unenforceable to the extent they waive the rights of covered workers to a judicial forum for federal statutory causes of action.

BACKGROUND

The following facts are not disputed by the parties.

Plaintiffs are employees of Temco Services Industries ("Temco"), a building service and cleaning contractor. Before August 2003, they worked as night watchmen in a commercial office building owned by Pennsylvania Building Company and 14 Penn Plaza LLC (jointly, the "Company"). Since that time, they have been working as night porters and light duty cleaners in the same building.

Plaintiffs are members of Local 32BJ of the Service Employees International Union ("Union"), and they are covered by the collective bargaining agreement ("CBA") between the Union and the Realty Advisory Board on Labor Relations, Inc. ("RAB"), the multi-employer bargaining association of the New York City real estate industry. The CBA contains a mandatory arbitration clause for discrimination claims, which provides as follows:2

There shall be no discrimination against any present or future employee by reason of race, creed, color, age, disability, national origin, sex, union membership, or any characteristic protected by law, including, but not limited to, claims made pursuant to Title VII of the Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the New York State Human Rights Law, the New York City Human Rights Code, New Jersey Law Against Discrimination, New Jersey Conscientious Employee Protection Act, Connecticut Fair Employer Practices Act, or any other similar laws, rules or regulations. All such claims shall be subject to the grievance and arbitration procedure (Articles V and VI [of the CBA]) as the sole and exclusive remedy for violations. Arbitrators shall apply appropriate law in rendering decisions based upon claims of discrimination.

In or about August 2003, the Company engaged Spartan Security, a security services contractor and affiliate of Temco, to provide certain security personnel, including night watchmen, for the building. Spartan brought in new employees, and plaintiffs, who had been employed as night watchmen, were reassigned to different locations and less desirable positions as night porters and light duty cleaners within the building.

Plaintiffs filed grievances with the Union under the CBA. They claimed that, as the only building employees over the age of 50, they were wrongfully transferred and denied overtime in violation of various provisions of the CBA, including the provision that prohibited discrimination on the basis of age. Plaintiffs' grievances were submitted to arbitration before the Contract Arbitrator, Earl Pfeffer, who held hearings on eight occasions between February 2, 2004 and March 7, 2005. Shortly after arbitration began, the Union declined to pursue plaintiffs' claims of wrongful transfer and age discrimination, electing to pursue only the claims regarding denial of overtime on behalf of all plaintiffs and wrongful denial of promotion on behalf of plaintiff Pyett. According to plaintiffs, the Union's counsel explained to them that "since the Union had consented to Spartan Security being brought into the building," the Union could not contest their replacement as night watchmen by personnel of Spartan Security. On August 10, 2005, the Contract Arbitrator issued his Opinion and Award, denying plaintiffs' arbitrated claims in their entirety.

On May 26, 2004, while the arbitration was ongoing, but after the Union declined to submit the age discrimination claims, plaintiffs filed charges of discrimination with the Equal Employment Opportunity Commission ("EEOC"). The EEOC issued a Dismissal and Notice of Rights on June 29, 2004 for plaintiffs Phillips and O'Connell and on September 14, 2004 for plaintiff Pyett. In each case, the EEOC determined that its "review of the evidence . . . fail[ed] to indicate that a violation ha[d] occurred," and notified each plaintiff of his right to sue. On September 23, 2004, plaintiffs commenced this action against the Company and Temco in the District Court, pursuing those claims that the Union did not submit to arbitration. Plaintiffs alleged that they had been transferred from their positions and replaced by younger security officers in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., the New York 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.

Defendants moved for dismissal for failure to state a claim upon which relief can be granted, pursuant to Fed.R.Civ.P. 12(b)(6), and, in the alternative, to compel arbitration, pursuant to 9 U.S.C. §§ 3 and 4. In an order dated May 31, 2006, the District Court denied both motions. With respect to defendants' motion to compel arbitration, the District Court referred to its decision in Granados v. Harvard Maintenance, Inc., No. 05 Civ. 5489, 2006 WL 435731, 2006 U.S. Dist. LEXIS 6918 (S.D.N.Y. Feb. 22, 2006), where it "concluded based largely on binding Second Circuit precedent that even a clear and unmistakable union-negotiated waiver of a right to litigate certain federal and state statutory claims in a judicial forum is unenforceable." Pyett v. Pennsylvania Building Co., 04 Civ. 7536, 2006 WL 1520517, *3, 2006 U.S. Dist. LEXIS 35952, *11 (S.D.N.Y. June 1, 2006). In Granados, the District Court relied principally on our Court's opinions in Fayer v. Town of Middlebury, 258 F.3d 117 (2d Cir.2001), and Rogers.3 The District Court recognized the distinction our Court has drawn between arbitration clauses in individual contracts, which are governed by a line of Supreme Court cases represented by Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991), and arbitration clauses in CBAs, which are governed by a line of Supreme Court cases represented by Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974). See Granados, 2006 WL 435731, at *4-5, 2006 U.S. Dist. LEXIS 6918, at *11-14 (citing Fayer, 258 F.3d at 122). The District Court, following Rogers, held that union-negotiated waivers of statutory rights in CBAs were unenforceable and denied defendants' motion to dismiss. Id. 2006 WL 435731, at *5-7, 2006 U.S. Dist. LEXIS 6918, at *15-22. Pursuant to 9 U.S.C. § 16(a)(1)(A) and (B), defendants timely appealed the District Court's May 31, 2006 order denying their motion to compel arbitration.

DISCUSSION

Defendants argue that Rogers left open the question of whether an arbitration clause in a CBA that clearly waives a covered worker's right to a judicial forum with respect to statutory claims is enforceable. They contend that such waivers are enforceable under Gilmer, which, they argue, overturned the holding in Gardner-Denver. While conceding that in Gilmer the Supreme Court dealt only with contracts signed by individuals and not CBAs, defendants claim, see Appellants' Br. 12, that in Wright the Supreme Court made clear its abandonment of Gardner-Denver's rule that a union may only "waive certain statutory rights related to collective activity, such as the right to strike," Gardner-Denver, 415 U.S. at 51, 94 S.Ct. 1011. We disagree. Our Court in Rogers squarely decided that a union-negotiated mandatory arbitration agreement purporting to waive a covered worker's right to a federal forum with respect to statutory rights is unenforceable. We took full account of both Gilmer and Wright and concluded that the Supreme Court's decision in Gardner-Denver remains good law. Our conclusion in Rogers was an alternative holding, not dicta, and continues to bind our Court. In any event, none of the cases relied upon by defendants persuades us that this holding in Rogers was incorrect.

In Rogers, we considered two issues: whether a mandatory arbitration clause in a...

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