14 Penn Plaza v. Pyett: Conflicts of Interest

Last Friday, we wrote about the latest U.S. Supreme Court case related to arbitration. As we re-read the lengthy opinion, one of the issues that caught our attention was the composition of the parties (fully described here) and the potential for conflicts of interest.

As Justice Stevens‘ dissenting opinion points out, the majority noted “the problem of entrusting a union with certain arbitration decisions given the potential conflict between the collective interest and the interests of an individual employee seeking to assert his rights.” Both opinions comment extensively on Congressional intent, reaching different results. Justice Thomas, writing for the majority, explains that Congress has accounted for the conflict in several ways and provides a list of alternative avenues available to union members. Justice Stevens, on the contrary, concluded that the holding of 14 Penn Plaza departs from Congressional intent and case law precedent.

The decision on 14 Penn Plaza might prompt Congress to pass “The Arbitration Fairness Act” (H.R. 1020) blogged here . This bill would ban mandatory arbitration of consumer and employment disputes. Can this opinion be added to the “series of United States Supreme Court decisions [that] have changed the meaning of the Act [FAA]” that H.R. 1020 is trying to address? See also a Wall Street Journal article here, Professor Ross Runkel’s analysis here, a Legal Times article here, and commentary from the ADR Prof Blog here.

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