Discover Bank v. Vaden will have oral arguments today — this case will address:

1. Whether a suit seeking to enforce a state-law arbitration obligation brought under Section 4 of the Federal Arbitration Act, 9 U.S.C. § 4, “aris[es] under” federal law, when the petition to compel itself raises no federal question but the dispute sought to be arbitrated—a dispute that the federal court is not asked to and cannot reach—involves federal law.

2. If so, whether a “completely preempted” state law counterclaim in an underlying state-court dispute can supply subject matter jurisdiction.

For Penn Plaza, from the Daily Labor Report:

“On Dec. 1, the Supreme Court will hear oral argument in a case at the crossroads of labor law and EEO law. In 14 Penn Plaza LLC v. Pyett, U.S., No. 07-581, the justices will consider whether employees covered by a collective bargaining agreement providing that statutory employment discrimination claims must be pursued through the contractual grievance/arbitration procedures have a right for a court to decide their age discrimination claims.
The case involves three night watchmen employed by Temco Service Industries Inc. who worked in an office building in New York operated by 14 Penn Plaza LLC. They were represented by SEIU Local 32BJ and covered by a bargaining contract with a multiemployer bargaining association that includes Temco and 14 Penn Plaza. The contract prohibits employment discrimination on the various characteristics protected by law and provides that “[a]ll such claims shall be subject to the grievance and arbitration procedure … as the sole and exclusive remedy for violations.”

The three workers, who were the only building employees over age 50, were transferred in July 2003 to less-desirable positions as night porters and light-duty cleaners. Around that time, 14 Penn Plaza contracted with a Temco affiliate to provide security services and continued to use Temco for maintenance and cleaning services. The new night watchmen were much younger and had less seniority at the building.

SEIU filed grievances alleging that they were wrongfully transferred and denied overtime in violation of various contractual provisions, including the prohibition on discrimination. When the grievances proceeded to arbitration, the union decided not to pursue the claims of wrongful transfer and age discrimination and chose to arbitrate only the overtime claims and one worker’s claim for denial of a promotion. The arbitrator denied the claims.

Meanwhile, the three workers filed age discrimination charges with EEOC and sued Temco and 14 Penn Plaza under the ADEA, the New York State Human Rights Law, and New York City law. The companies moved to dismiss the suit or to compel arbitration of the claims. The district court denied the motions.

The Second Circuit affirmed, finding that “a union-mandated arbitration agreement purporting to waive a covered worker’s rights to a federal forum with respect to statutory rights is unenforceable” (498 F.3d 88, 182 LRRM 2359 (2d Cir. 2007); 155 DLR A-5, 8/13/07 ). The appeals court relied on Alexander v. Gardner-Denver Co., 415 U.S. 36, 7 FEP Cases 81 (1974), in which the Supreme Court held that an employee could litigate his Title VII discrimination claim despite being covered by a bargaining contract with an arbitration provision. The appeals court found that later Supreme Court decisions recognized a distinction between arbitration agreements entered into by an individual employee and those entered into by a union on behalf of covered employees.

The justices agreed last February to hear the case (33 DLR B-1, 2/20/08 ). Acting Solicitor General Gregory G. Garre July 21 filed an amicus brief, also signed by the EEOC general counsel, asserting that the Second Circuit correctly concluded that the employees are not required to arbitrate their discrimination claims under Gardner-Denver. The government argued that even if a bargaining contract could waive an employee’s right to a judicial forum for a statutory discrimination claim, the employee would need to be able to control the presentation of the claim in arbitration.

Two management groups–the U.S. Chamber of Commerce and the Equal Employment Advisory Council–filed amicus briefs asserting that arbitration should be required in this case, while SEIU, AFL-CIO, the National Academy of Arbitrators, the NRTW Legal Defense Foundation, and a number of employee, civil rights, and women’s rights groups filed amicus briefs supporting the employees’ right to litigate their discrimination claims.”