McDonald v. City of West Branch held that decisions by an arbitrator, unlike decisions by a state court, should not be given preclusive effect in subsequent § 1983 cases.   However, as discussed below, that holding has been drastically undermined by more recent decisions. 

McDonald completed a trilogy of cases that held that a collective bargaining agreement could not eliminate an individual employee's right to go to federal court to assert federal statutory rights.  In Alexander v. Gardner-Denver Co.,¹ the Court had held that arbitration awards would not have preclusive effect in subsequent Title VII actions; and in Barrentine v. Arkansas-Best Freight System, Inc.,² the Court had reached the same result as to subsequent FLSA minimum wage suits. 

This trilogy was generally understood to hold that arbitration awards should be given neither collateral estoppel nor res judicata effect.  (For a brief explanation of collateral estoppel and res judicata, click here.)  The trilogy decisions stressed various arguments against preclusion: that arbitrators' authority is limited to the contract and they may lack expertise on statutory issues, that arbitration may provide fewer procedural protections for the plaintiff, and that the union—which controls collectively bargained arbitrations—may have interests that conflict with the interests of the plaintiff.

However, the Alexander-Barrentine-McDonald trilogy has now been seriously undermined (if not effectively overruled) by a series of cases beginning with Gilmer v. Interstate/Johnson Lane Corp.,³  and culminating in 14 Penn Plaza LLC v. Pyett.⁴  The Pyett Court reinterpreted the three cases narrowly to hold that the particular federal court statutory suits could proceed only  because the language of the arbitration clauses did not specifically authorize resolution of statutory claims.  As a result, it now appears that, if a collectively bargained arbitration clause is sufficiently specific, it can require that employees pursue their § 1983 cases before an arbitrator rather than in federal court.   The Court explicitly suggested that Alexander (and by implication the rest of the trilogy) might be overruled.

As a result, McDonald now stands at most for two more limited principles:  First, a prior arbitration award will not be given res judicata effect (i.e., will not entirely bar a subsequent federal court suit) unless the arbitration agreement explicitly requires that statutory claims (such as ones under § 1983) be resolved through arbitration.  Second, if the federal suit is not entirely barred, a prior arbitration award will not be given collateral estoppel effect,  i.e., its factual findings may be considered, but will not be binding, in a subsequent § 1983 suit in federal court.   

¹ 415 U.S. 36 (1974)

² 450 U.S. 728 (1981)

³ 500 U.S. 20 (1991)

⁴ 556 U.S. 247 (2009)