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Does an arbitration decision under a CBA bar a later Title VII lawsuit?

published in Oklahoma Employment Law Letter | July 1, 2011

The Tenth Circuit recently addressed whether a union employee’s pursuit of an arbitration claim for discrimination and retaliation barred a later lawsuit raising the same allegations. In this particular case, the court held that the earlier arbitration claim did not bar a later lawsuit. Let’s take a closer look.

Facts

John Mathews, who is originally from India, filed a grievance against Denver Newspaper Agency under a collective bargaining agreement (CBA) alleging his demotion was motivated by national origin discrimination and in retaliation for his complaints about discrimination in violation of the CBA as well as state and federal laws. The CBA provided in pertinent part: “The Employer and the Union acknowledge continuation of their policies of no discrimination against employees and applicants on the basis of age, sex, race, religious beliefs, color, national origin or disability in accordance with and as required by applicable state and federal laws.”

After an arbitration proceeding under the CBA, the arbitrator denied Mathews’ grievance in its entirety. Shortly after the arbitrator’s ruling, Mathews filed an application for disability benefits with the Social Security Administration (SSA) alleging complete and total disability beginning on June 11, 2005, the date he allegedly made inappropriate comments to a female employee, which led to his demotion. He was awarded disability benefits based on a bulging disk of the cervical spine and an affective disorder. After losing in arbitration but prevailing in his administrative proceeding, he thought he’d try his luck in a third legal forum ? call it the Mathews trifecta.

The district court concluded that the parties “recognized that the CBA’s arbitration agreement covered [Mathews’] statutory claims” and that his submission to binding arbitration constituted a waiver of his right to seek a judicial remedy and barred him from litigating his statutory discrimination and retaliation claims. The district court nevertheless felt compelled to state that no reasonable fact finder could determine that Mathews was medically qualified for the position from which he was demoted. And to the extent that he claimed his disability arose after his demotion, his sworn statement to the SSA that he was totally disabled before his demotion served to bar him from taking that position in any subsequent litigation.

Therefore, Mathews was unable to establish a prima facie, or basic,case of discrimination, and the district court dismissed that claim as well as his retaliation claim. Undeterred, he appealed the lower court’s decision to the Tenth Circuit.

Decision on appeal

The Tenth Circuit held that the decision to arbitrate a discrimination claim, standing alone, doesn’t bar the subsequent litigation of the statutory claim arising out of the same underlying facts. The court reasoned that an individual employee and a union may prospectively agree with the employer to arbitrate all employment-related disputes, including statutory rights normally enforced through litigation, but only so long as that intention is clearly expressed.

The court reviewed the CBA in question and concluded that it (1) simply acknowledged the existence of federal and state laws prohibiting discrimination and retaliation and, (2) prohibited discrimination and retaliation in the course of the parties’ contractual relationship but (3) said nothing about limiting employment claims strictly to contractual arbitration. Therefore, Mathews wasn’t barred by the CBA from filing his discrimination and retaliation claims.

Next, the court held that Mathews’ national origin discrimination claim based on the demotion was barred because he told the SSA that his disability arose before his demotion, rendering him medically unable to perform his job. As a result, he was barred from arguing in his court case that his disability presented itself after his demotion. Because those two positions were inconsistent, they satisfied the test for judicial estoppel (the rule preventing someone from making contradictory arguments in different legal proceedings).

Finally, the court held that Mathews had established a prima facie case of retaliation because he engaged in protected activity (complaining to management about earlier personnel decisions), he suffered an adverse employment action (demotion), and there was a causal connection between the two (he complained about discrimination before he was demoted). His disability was immaterial to that finding because it didn’t affect whether retaliation had occurred.

The employer argued that Mathews should be held to a more stringent standard because the arbitrator had already found against him. The court disagreed, explaining that when a court evaluates a statutory discrimination claim arising out of the same facts as a previously arbitrated contract dispute, the arbitrator’s decision “may be admitted as evidence and accorded such weight as the court deems appropriate,” but the arbitrator’s decision will not bar the court from making a contrary conclusion. The court reversed the dismissal of Mathews’ retaliation claim and sent it back to the district court for trial. Mathews v. Denver Newspaper Agency LLP, ___ F.3d ___ (10th Cir., March 16, 2011).

Takeaway

Employers with CBAs can’t take for granted that their labor contracts bar discrimination and retaliation lawsuits ? even when the CBA specifically references those types of claims. Instead, the CBA must expressly state that discrimination and retaliation claims must be resolved exclusively through arbitration. The same principle applies to employers with nonunion private arbitration agreements ? those agreements must explicitly state that arbitration is the final, binding dispute-resolution process. Otherwise, you will be at risk of defending against employment claims twice, and once is bad enough.