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Supreme Court Strengthens Arbitration in Labor Case Ruling
Legal Times
April 02, 2009
The Supreme Court's growing embrace of the virtues of arbitration continued Wednesday with a 5-4 ruling endorsing labor contracts that send age discrimination claims to arbitration rather than to federal courts.
"We hold that a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law," Justice Clarence Thomas wrote in a ruling that may boost arbitration more broadly than just in age-discrimination cases.
The Court issued another pro-business decision Wednesday, ruling in Entergy Corp. v. Riverkeeper (pdf) that the Environmental Protection Agency may use cost-benefit analysis in setting performance standards for power plants under the Clean Water Act.
The rulings came a day after the Court dismissed a Philip Morris appeal of a $79 million smoking verdict, an action that led some commentators to wonder how pro-business the Roberts Court really is.
The arbitration ruling in 14 Penn Plaza v. Pyett (pdf) drew sharp dissents from Justices David Souter and John Paul Stevens, who accused the majority of abandoning a line of precedents that kept unions from waiving employees' rights to a court hearing on bias claims.
"Human ingenuity is not equal to the task" of reconciling the Court's new and old positions, said Souter, who was joined by Justices John Paul Stevens, Ruth Bader Ginsburg, and Stephen Breyer. Stevens wrote, "Today the majority's preference for arbitration again leads it to disregard our precedent." Stevens said that in favoring arbitration clauses in 14 Penn Plaza and other recent cases, the Court is "making policy choices not made by Congress."
Thomas, in the majority ruling, said the Court's prior skepticism about the merits of arbitration "rested on a misconceived view of arbitration that this Court has since abandoned."
The ruling overturned a decision by the 2nd U.S. Circuit Court of Appeals that said an arbitration clause in an agreement between a New York local of the Service Employees International Union and a coalition of employers in the real estate industry could not be enforced.
"Employees' access to arbitration and its proven benefits for fairly resolving workplace claims has been given the legal support it deserves," Proskauer Rose's Paul Salvatore, who won the case for the employers, said in an e-mailed statement. "This decision firmly enshrines in the law the important principle that collectively bargained arbitration agreements are every bit as valid and enforceable as nonunion-workplace arbitration agreements."
The ruling will likely also apply in the context of other anti-discrimination laws, says Mayer Brown's David Gossett, who adds that the decision is the latest of several that have marginalized earlier precedents that are "relics of an earlier era when the Supreme Court was pretty hostile to arbitration."
In the Clean Water Act case, Justice Antonin Scalia wrote for the majority that the statute's requirement that the "best technology available" be used to minimize environmental damage does not preclude a "cost-benefit" analysis in determining a solution.
In the case before the Court, Riverkeeper and other environmental groups challenged EPA guidelines that allowed power plants to consider cost compared to benefit as a factor in minimizing the impact on aquatic organisms of power-plant cooling water intake structures. The 2nd Circuit ruled that such considerations were not allowed under the law. Entergy, which owns the Indian Point nuclear power plant in New York, appealed the ruling to the Supreme Court.
Scalia, joined by Chief Justice John Roberts Jr. and Justices Anthony Kennedy, Clarence Thomas, and Samuel Alito Jr. ruled that nothing in the language of the law precludes taking cost into account.
Riverkeeper's president, Alex Matthiessen, was disappointed in the ruling but pleased that the Court did not make cost-benefit analysis mandatory. "We are looking forward to working with EPA's new administrator, whom we are confident will agree that the Bush EPA regulations failed to satisfy the Clean Water Act's mandate," Matthiessen said in a statement.
In a third ruling Wednesday, the Court said in Harbison v. Bell (pdf) that federally appointed counsel may represent death row inmates in state clemency proceedings.
