Employment & Labor Publications

BINDING ARBITRATION NOT THE END OF THE ROAD

By Stuart M. Katz

            True or False?  An adverse arbitration decision precludes a Title VII action by a discharged employee?  According to a recent decision by the Second Circuit, the answer is "false."

            In Collins v. New York City Transit Authority, issued in September 2002, the U.S. Court of Appeals for the 2^nd Circuit considered what effect, if any, an arbitration decision has on a discharged employee's ability to pursue a claim in federal court.  In Collins, the arbitration decision was the culmination of a multi-step grievance procedure set forth in a collective bargaining agreement.

            In considering Collins' claim, the court re-examined the plaintiff's burden of proof in a Title VII case and the criteria for granting summary judgment.  It concluded that a negative arbitration decision does not preclude a Title VII suit by a discharged employee.  For the suit to survive summary judgment, however, the plaintiff must present "strong evidence" that the arbitration decision was "wrong as a matter of fact" or that "the impartiality of the proceeding was somehow compromised."

The Facts

            The plaintiff, James Collins, worked for the New York City Transit Authority from 1981 to 1991, during which time his employment was governed by the terms of a collective bargaining agreement.  Among other things, the CBA established a multi-level grievance procedure, culminating in binding arbitration.

            Throughout his employment, Collins, who is African-American, was no stranger to workplace strife.  Over the years, he alleged a pattern of discrimination against him involving, in particular, two of his supervisors, Peter Fazzi and Nabil Badr.

In March 1988, Collins filed a claim of racial discrimination with the New York Division of Human Rights and the Equal Employment Opportunities Commission, claiming that Fazzi was discriminating against him on the basis of race.  On September 6, 1988, the Transit Authority placed Collins on involuntary medical leave for a hearing problem.  He protested and was reinstated in November 1989.  He then claimed that he had been placed on leave in retaliation for filing the March 1988, discrimination claim.

            In June 1990, Collins was involved in an altercation with a co-worker.   Although he was suspended, an arbitration board, acting in accordance with the CBA grievance procedure, overruled the suspension.

            Badr took over as his supervisor in October 1990.  Within a couple of months, Collins' relationship with Badr deteriorated substantially.  In June 1991, Collins' employment was terminated following a physical altercation with Badr.

            Collins filed a grievance and was represented by his union at the arbitration hearing.  On October 22, 1991, the arbitration board issued an opinion finding that Collins had assaulted Badr and upholding Collins' termination.

            In December 1991, Collins filed a new claim with the state Division of Human Rights and the EEOC, alleging that his termination was discriminatory and retaliatory.  In April 1993, he initiated a federal suit against the Transit Authority, asserting, among other claims, violations of Title VII.  On October 30, 2000, the District Court granted summary judgment in favor of the defendant.  Collins then appealed. 

2^nd Circuit

            The Second Circuit affirmed the District Court's granting of summary judgment in favor of the defendant.  In doing so, the court reviewed the plaintiff's burden in a Title VII case, which is to prove "by the preponderance of the evidence a prima facie case of discrimination."

The Second Circuit recognized that the plaintiff's burden in an employment discrimination case is generally "minimal," but found that Collins had not even met this low threshold.  "[T]he circumstances of his termination," wrote the court, "do not give rise to or support an inference of discrimination or retaliation."

The court noted that he was only discharged after the arbitration board made an independent inquiry with an evidentiary hearing, from which it made a factual finding that Collins had assaulted Badr.  The plaintiff submitted no evidence and, in fact, never suggested, that the arbitration board was not a fully independent and unbiased decision maker.

            The court concluded that Collins was terminated only after a decision arrived at by an "undisputedly independent, neutral, and unbiased adjudicator that had the power to prevent the termination.  This fact is highly probative of the absence of discriminatory intent in that termination."

            The court further found that the plaintiff failed to offer sufficient evidence of causation linking his termination to motives of retaliation or discrimination to overcome the substantial evidence showing a legitimate reason for the termination and for the decision of the arbitration board.

            The Collins decision is a mixed bag.  On the one hand, it provides discharged employees with the hope of one final bite at the apple.  Even after a valid, binding arbitration ruling, the doors to federal court apparently remain open.

            On the other hand, this decision clearly tips the scale in favor of the employer once the federal suit is commenced.  The plaintiff's burden of proof becomes substantially more onerous, requiring a showing that the arbitration decision was wrong as a matter of fact, or that the impartiality of the arbitration panel was compromised, in order to survive a motion for summary judgment.

            The bottom line is that in the wake of Collins, we can expect to see more federal cases brought and, consequently, more work for defense lawyers seeking dismissal of these cases at the summary judgment stage.