When Congress enacts a civil rights law or other statute regulating employment decisions, it does so to set minimum terms that cannot be overridden or even modified by contracts between employers and employees, on the view that baseline rights must be statutorily established to protect employees or advance other polices. Arbitration agreements covered by the Federal Arbitration Act, 9 U.S.C. §1 et seq., are an exception, but only with respect to matters like the right to a jury trial which are considered incompatible with arbitration, a non-court process. The Supreme Court in 14 Penn Plaza v. Pyett, 556 U.S. 247, 259 (2009), stated a different rationale for sustaining such waivers—that the right to initially resort to a judicial forum was a procedural right, not a waiver of substantive protections which would remain preserved in arbitration. 14 Penn Plaza itself involved an arbitration clause in a collective-bargaining agreement (CBA), so it remained unclear whether statutory procedural rights are generally waivable by contract outside of arbitration. The Second Circuit's recent decision in Estle v. International Business Machines, No. 20-3372, 2022 U.S. App. LEXIS 1610 (Jan. 20, 2022) (Estle), treating the language in Pyett as holding, suggests they may be.

The plaintiffs in Estle were all above age 55 when IBM terminated their employment as part of a reduction in force in May of 2016. They each signed a separation agreement containing a mandatory arbitration clause and a collective action waiver as a condition of receiving post-termination benefits, including one month's salary and health insurance for up to twelve months. The collective action waiver stipulated that "no covered claims may be initiated, maintained, heard, or determined on a multiparty, class action basis or collective action basis either in court or in arbitration." Id. at *4. Under the agreement, the former employees were not "entitled to serve or participate as a class action member or representative, or collective action member or representative, or receive any recovery from a class or collective action involving covered claims either in court or arbitration."

After signing IBM's separation agreement, the plaintiffs claimed they learned of evidence that IBM was using reductions in force "to accomplish systemic age discrimination." On March 27, 2019, the plaintiffs filed an Age Discrimination in Employment Act (ADEA), 29 U.S.C. §621 et seq., collective action against IBM in the Southern District of New York seeking, inter alia, "a declaration that the collective action waiver is invalid under the ADEA and an injunction barring IBM from enforcing the waiver against the plaintiffs." Estle, at *4. Plaintiffs then amended their complaint to challenge the entire separation agreement on Aug. 9, 2019, to "be permitted to pursue their age discrimination claims collectively, either in arbitration or in court." Appellant's Br. 3. IBM moved to dismiss for failure to state a claim under Federal Rule 12(b)(6), arguing that its collective-action waiver was valid because the right to bring a collective action is a "procedural device to join claims," not a substantive right covered by the ADEA's waiver prohibition.