Summary
granting motion to dismiss rendered other pending motions moot
Summary of this case from Coke v. KoeningsmanOpinion
02 Civ. 4265 (RWS)
November 8, 2002
Attorneys for Plaintiff: GLADSTEIN, REIF MEGINNISS, New York, N.Y. By: JAMES REIF, ESQ. Of Counsel. SEMEL, YOUNG NORUM New York, NY, By: GABRIELLE SEMEL, ESQ., Of Counsel.
Attorneys for Defendants: JONES, DAY, REAVIS POGUE, Washington, DC, By: WILLIS J. GOLDSMITH, ESQ. Of Counsel. JONES, DAY, REAVIS POGUE New York, NY, By: BONNIE L. HEMENWAY, ESQ. Of Counsel. JONES, DAY, REAVIS POGUE, Columbua, OH, By: G. ROGER KING, ESQ. Of Counsel.
OPINION
Defendants Verizon New York, Inc., Telesector Resources Group, Inc. and Empire City Subway Company (Limited) (collectively "Verizon") have moved to dismiss the amended complaint of plaintiff Communications Workers of America, AFL-CIO ("CWA") pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, or, in the alternative, pursuant to Fed.R.Civ.P. 56.
For the following reasons, Verizon's motion is granted.
Facts
As befits a motion to dismiss, the following facts are taken from CWA's First Amended Complaint.
Parties
CWA is an unincorporated labor organization within the meaning of 29 U.S.C. § 152 (5) and 185. It maintains a district office at 80 Pine Street, New York, New York. CWA represents approximately 740,000 employees throughout the United States and Canada, a majority of whom are in the telecommunications industry.
Defendant Verizon New York is an employer in an industry affecting commerce within the meaning of 29 U.S.C. § 152 (2) and 185. It maintains its principal place of business at 1095 Avenue of the Americas, New York, New York. Defendants Telesector Resources Group and Empire City Subway Company are subsidiaries of Verizon New York.
The Relationship Between CWA and Verizon
CWA and Verizon (and its predecessors) have maintained a collective bargaining relationship for decades. Currently, CWA is the exclusive collective bargaining representative of approximately 70,000 persons employed by Verizon. More than 30,000 of those employees are covered by eleven collective bargaining agreements between CWA and Verizon under which the dispute that is the subject of this action arises (the "Agreements"). The Agreements took effect on August 6, 2000, and will remain in effect through August 2, 2003. The Agreements govern the terms and conditions of employment of employees of Verizon represented by CWA.
Under the Agreements, Verizon may effect a reduction-in-force in a given title in a given geographical area (called a Force Adjustment Area) only if there in fact exists a surplus of employees in that title in the Force Adjustment Area. If such a surplus exists, a "surplus condition" in that title and Force Adjustment Area may be declared by Verizon. In the event of such a declaration, Verizon must inform CWA whether the declared surplus condition was caused by a "Process Change" or by an "External Event." Thereafter, Verizon may take various steps to attempt to relieve or eliminate the alleged surplus condition. In the absence of a surplus condition caused by an External Event, Verizon is prohibited by the Agreements from laying off employees (or from transferring employees) in that Force Adjustment Area and title.
Verizon's Reductions-in-Force
In 2001, Verizon decided to drastically reduce the size of its workforce by a series of reductions-in-force ("RIFs") continuing through the end of 2002. Verizon did not inform CWA of the size of the aggregated workforce reduction it planned. Instead, Verizon informed the CWA of each individual RIF and the size thereof at the time Verizon issued its corresponding declaration of surplus condition.
In July 2001, Verizon issued to CWA a declaration of surplus condition with respect to 123 employees in New York State represented by CWA. A reduction-in-force of approximately 123 employees resulted.
In November 2001, Verizon issued a declaration of surplus with respect to 2,643 employees in New York State represented by CWA. As a result, Verizon reduced its workforce in New York by more than 2,400 employees.
On May 6, 2002, Verizon issued to CWA a declaration of surplus condition with regard to 681 employees in New York represented by CWA, asserting that it was caused by an External Event. On May 20, 2002, Verizon issued to CWA a further declaration of surplus condition with respect to 1,260 employees in New York represented by CWA, also asserting that it was caused by an External Event. The numbers of employees subject to these declarations were subsequently increased to 684 and 1,352 employees, respectively. CWA claims that the surplus conditions that Verizon declared did not exist, and that there were no External Events.
CWA filed two grievances with Verizon challenging as violative of the Agreements the May 2002 declarations of surplus condition. The CWA contended that (a) there was no surplus condition within the meaning of the Agreements and (b) there was no External Event within the meaning of the Agreements that had caused a surplus condition.
CWA commenced this lawsuit on June 6, 2002, seeking injunctive relief against the layoffs threatened under the May declarations of surplus condition, pending the outcome of the arbitration of CWA's grievances. The arbitration of one grievance began on September 10 and continued on October 8, 9, and 16, 2002.
By September 17, 2002, Verizon had reduced its workforce in New York represented by CWA under color of the May declarations of surplus condition by another approximately 1,900 persons without layoffs. On that same date, Verizon announced that it would not lay off any employees pursuant to the May declarations. At the same time, it stated that it would issue another declaration of surplus condition or on before September 30, 2002.
On October 1, 2002, Verizon issued another declaration of surplus condition with respect to 3,887 employees in New York represented by CWA. The alleged surplus conditions were alleged to exist in the same Force Adjustment Areas and job titles in which the previous RIFs had been imposed by Verizon. Verizon has alleged that virtually all of this surplus was caused by the same alleged External Events that supposedly caused the surplus conditions declared in May 2002. Any resulting layoffs are set to occur in mid-November.
CWA again claims that the surplus condition declared by Verizon does not exist and that there is no External Event that caused the alleged surplus condition. It claims that Verizon's declaration was pretextual, in bad faith, and for the purpose of effectuating a larger cumulative workforce reduction.
On October 1, 2002, CWA delivered to Verizon amendments of its grievances previously filed with Verizon that challenged the May 2002 declarations of surplus conditions and the RIFs. The amendments seek to enlarge the previously filed grievances to include challenges to the October 1 declaration of surplus condition and the RIF being effectuated thereunder.
CWA has requested that its amended grievances be processed expeditiously. At the time of filing the Amended Complaint, Verizon had not agreed to that request. CWA has also asked that (1) there be no RIF under color of the October 1 declaration unless and until it is determined in arbitration that such RIF is authorized by the Agreements, and (2) there be no layoffs until it is determined in arbitration that such layoffs are permitted by the Agreements.
The underlying disputes between CWA and Verizon are subject to the mandatory grievance and arbitration procedures of the Agreements.
CWA claims that the surplus declarations are part of a plan to increase Verizon's profits at the expense of public safety and public service because any RIF under color of Verizon's October 1 declaration increases the risk of loss of telephonic communication.
CWA also claims that the declaration of surplus condition, if not enjoined, will frustrate the arbitration process agreed to by the parties in the Agreements and/or render it a hollow formality. Further, any actions by Verizon under color of the October 1 declaration will result in irreparable injury to the public and to CWA and its members for which injury there is no adequate remedy at law.
Verizon filed the instant motion on October 15, 2002. The motion was heard and considered fully submitted on November 6, 2002.
Discussion
As a preliminary matter, this case is at a different procedural posture than most of the case law on which Verizon relies. Those decisions involved a court's determination when faced with a plaintiff's motion for a preliminary injunction. CWA has not yet filed its motion for preliminary injunction. Instead, Verizon is seeking to dismiss CWA's complaint that seeks equitable relief. The standards of review pursuant to Rules 12(b)(6) and 56 will apply.
1. Verizon's Motion to Dismiss A. Standard of Review
In reviewing a motion to dismiss under Rule 12(b)(6), courts must "accept as true the factual allegations of the complaint, and draw all inferences in favor of the pleader." Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993) (citing IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1052 (2d Cir. 1993)). However, "legal conclusions, deductions, or opinions couched as factual allegations are not given a presumption of truthfulness" L'Eureopeenne de Banque v. La Republica de Venezuela, 700 F. Supp. 114, 122 (S.D.N.Y. 1988). A complaint may only be dismissed when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitled him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957).See also Allen v. WestPoint-Pepperell, Inc., 945 F.2d 40, 44 (2d Cir. 1991); Berheim v. Litt, 79 F.3d 318, 321 (2d Cir. 1996).
Review must be limited to the complaint and documents attached or incorporated by reference thereto. Kramer v. Time Warner, Inc., 937 F.2d 767, 773 (2d Cir. 1991). In this context, the Second Circuit has held that a complaint is deemed to "include . . . documents that the plaintiffs either possessed or knew about and upon which they relied in bringing the suit." Rothman v. Gregor, 220 F.3d 81, 88 (2d Cir. 2000).
B. The Norris-LaGuardia Act
Under the Norris-LaGuardia Act, 29 U.S.C. § 101-114 (the "Act"), "no court of the United States . . . shall have jurisdiction to issue any restraining order or temporary or permanent injunction in a case growing out of a labor dispute, except in a strict conformity with the provisions of this chapter . . . ." 29 U.S.C. § 101. As a result, "it is normally inappropriate for federal courts to issue preliminary injunctions pending the arbitration of arbitrable disputes." Aeronautical Indus. Dist. Lodge 91 of the Int'l Assoc. of Machinists and Aerospace Workers, AFL-CIO v. United Tech. Corp., 230 F.3d 569, 580 (2d Cir. 2000) ("IAM"). The parties do not dispute that this action arose out of a labor dispute and that therefore the Act applies.
The Act was promulgated to "correct the abuses that had resulted from the interjection of the federal judiciary into union-management disputes . . . ." Boys Market Inc. v. Retail Clerks Union Local 770, 398 U.S. 235, 251 (1970). For this reason, the Supreme Court has consistently applied the Act expansively, "recognizing exceptions only in limited situations where necessary to accommodate the Act to specific federal legislation or paramount congressional policy." Jacksonville Bulk Terminals, Inc. v. Int'l Longshoremen's Ass'n, 457 U.S. 702, 708 (1982). See also Buffalo Forge Co. v. United Steelworkers of America, 428 U.S. 397 (1976) (refusing to recognize exception to Act for an injunction against empathy strike).
In accord with this policy, the Second Circuit recognizes only one exception to the Act that permits the entry of a status quo injunction if an employer's action has the effect of so frustrating the arbitral process that it becomes a "hollow formality." Niagara Hooker Employees Union v. Occidental Chem. Corp., 935 F.2d 1370, 1377 (2d Cir. 1991). See also IAM, 230 F.3d at 581. These injunctions, sometimes called "reverseBoys Market" injunctions, should only be rarely granted:
Implying a promise by an employer not to modify the status quo . . . would . . . unduly interfere with the prerogatives of management. Because labor disputes frequently arise out of common management actions involving, for example, discipline, work-place rules, and production targets, implying a promise to maintain the status quo would permit unions to embroil the judiciary in day-to-day disputes. Management initiatives would be stifled, economic costs on the employer would mount, and its ability to run the business would be impaired.Niagara Hooker, 935 F.2d at 1377. A Boys Market injunction requires that (1) the plaintiff's dispute with the defendant is subject to mandatory arbitration under the relevant collective bargaining agreement, (2) the arbitration process will be a hollow formality in the absence of an injunction, and (3) the traditional requirements for injunctive relief are satisfied. Id. Verizon challenges the sufficiency of CWA's complaint on the basis of the second and third prongs.
The second prong requires a showing that "any arbitral award in favor of the union would substantially fail to undo the harm occasioned by the lack of the status quo injunction." Id. at 1378. The Second Circuit has looked to Lever Bros. Co. v. Int'l Chem. Workers Union, Local 217, 554 F.2d 115 (4th Cir. 1976) to illustrate the type of situation that would satisfy this prong. American Postal Workers Union, 766 F.2d at 722. In Lever, the arbitrable issue was whether the company had the right to relocate its plant. Pending the outcome of the arbitration, the court enjoined the company from making the move. In the absence of the injunction, the company would have relocated, thus permanently depriving the employees of their employment. Id. The American Postal Workers Union Court was presented with a similar situation as the instant matter: the discharge of an employee. The Court concluded that the situation did not require similar aid to the arbitral process because if the employee's discharge was "ultimately deemed to have been without cause, he can be reinstated with full pay, thereby returning him to his former status with no difficulty." Id. at 723.
CWA has plead in its complaint all of the requisite elements to obtain relief under the Act. While Verizon quibbles with whether CWA will be able to obtain facts to sustain such pleading, this Court cannot dismiss as a matter of law the complaint under Rule 12(b)(6). Verizon has not presented any case law where a court has dismissed a similarly worded complaint under Rule 12(b)(6), and this Court will not dismiss CWA's complaint in the absence of any authority in support of such an action.
II. Verizon's Motion for Summary Judgment A. Standard of Review
Rule 56(e) of the Federal Rules of Civil Procedure provides that a court shall grant a motion for summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits . . . show that there is no genuine issue as to material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317 (1986);Silver v. City Univ., 947 F.2d 1021, 1022 (2d Cir. 1991). The party seeking summary judgment bears the burden of establishing that no genuine issue of material fact exists and that the undisputed facts establish her right to judgment as a matter of law." Rodriguez v. City of New York, 72 F.3d 1051, 1060-61 (2d Cir. 1995). In determining whether a genuine issue of material fact exists, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986);Ibbs-Alfano v. Burton, 281 F.3d 12, 18 (2d Cir. 2002).
B. Verizon's Motion is Granted
Verizon argues that based on the undisputed facts, CWA cannot sustain the second and third prongs of the reverse Boys Market test.
With regard to the second prong, requiring a showing that the arbitration would be a hollow formality in the absence of injunctive relief, CWA's complaint does not outline the specifics of its argument in support thereof. CWA has, however, argued in opposition to Verizon's motion that it is relying on three different facts to show that the arbitration would be futile if equitable relief is denied: (1) the impact on the union and the public in the absence of injunctive relief; (2) Verizon's refusal of discovery in one of the pending arbitrations; and (3) Verizon's refusal to arbitrate one of two grievances. Each is addressed in turn.
1. Impact on Union and the Public
CWA's primary argument asserts that, in the absence of equitable relief, the arbitration process will move so slowly that employees will be laid off, and the telephone systems of New York City will be in disarray. Assuming for the basis of this motion that CWA has presented sufficient facts to raise a material issue as to this claim, it has failed to cite any case law that stands for the proposition that an arbitration regarding a labor dispute will become a hollow formality if, as a result of the lack of timeliness of the labor dispute, public havoc occurs. As discussed above, the focus of the inquiry is whether thearbitration will become a futility, not what the results of the arbitration's potential lack of timeliness will have on the world outside that of the labor dispute. E.g., Niagara Hooker, 935 F.2d at 1377;American Postal Workers Union, 766 F.2d at 722.
The pertinent question regarding harm is therefore whether the arbitrator can remedy any damage done to the persons involved in the arbitration, i.e. union members who may be laid off, if it is determined that the employees should not have been laid off in the first place. The case law is clear that, because an arbitrator may order Verizon to honor the existing labor contract and reinstate workers with back pay, any potential lay off will not undermine the arbitral process nor result in an empty victory for CWA with regards to the union members. E.g., Sheet Metal Workers Int'l Ass'n v. Transp. Displays Inc., No. 00-9246, 2000 WL 1836760, at *1-2 (2d Cir. Dec. 13, 2000); American Postal Workers Union, 766 F.2d at 722-23. In addition, the mere fact that employees may be without jobs while the arbitration proceeds does not suffice. Id. As a result, to the extent that CWA relies on the laying off of as many as 3,887 employees as the rationale behind its request for extraordinary equitable relief, this Court has no power to afford it relief.
As a result, CWA may not rely on this argument to show that the arbitration will be a hollow formality in the absence of injunctive relief.
2. Discovery
CWA argues that because Verizon has not produced certain discovery, the arbitration process will be a hollow formality in the absence of injunctive relief. CWA fails to cite any case law for this proposition, however.
It does not make sense to expand the extremely rare exceptions to the Act in this situation. Arbitrators are authorized to compel the appearance of witnesses and production of documents pursuant to Section 7 of the Federal Arbitration Act. 9 U.S.C. § 7. Further, if a party refuses to comply with an arbitrator's order, redress may be had at the district court level. Id. As a result, Verizon's failure to comply with discovery requests does not make the arbitration a futile procedure because CWA may move the arbitrator to compel such production and, if that fails, has potential redress at the district court level.
Section 7 provides:
The arbitrators selected either as prescribed in this title or otherwise, or a majority of them, may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as evidence in the case. The fees for such attendance shall be the same as the fees of witnesses before masters of the United States courts. Said summons shall issue in the name of the arbitrator or arbitrators, or a majority of them, and shall be signed by the arbitrators, or a majority of them, and shall be directed to the said person and shall be served in the same manner as subpoenas to appear and testify before the court; if any person or persons so summoned to testify shall refuse or neglect to obey said summons, upon petition the United States district court for the district in which such arbitrators, or a majority of them, are sitting may compel the attendance of such person or persons before said arbitrator or arbitrators, or punish said person or persons for contempt in the same manner provided by law for securing the attendance of witnesses or their punishment for neglect or refusal to attend in the courts of the United States.9 U.S.C. § 7.
CWA has pointed out that the National Labor Relations Board has issued a complaint alleging that the refusal to produce such documents and information constitutes an unfair labor practice in violation of Sections 8(a)(1) and (a)(5) of the National Labor Relations Act, as amended, 29 U.S.C. § 158 (a)(1) and (a)(5). This situation does not change the fact that CWA has failed to cite case law supporting its contentions that a reverse Boys Markets injunction may be entered as a result of failure to produce discovery.
Therefore, CWA's attempt to expand the Niagara Hooker exception to include instances where discovery is not produced also fails.
C. Refusal to Arbitrate Grievance
CWA finally asserts that Verizon has refused to arbitrate one of its grievances, relating to what it deems a fraudulent declaration of a surplus. It is true that an employer's refusal to arbitrate a grievance may be deemed frustration of the arbitral process to the extent that an injunction should issue. E.g., Local 217 Hotel Rest. Employees Union v. MHM, Inc., 805 F. Supp. 93, 109 (D. Conn. 1991) (denying injunction where defendant employer had refused to expedite arbitration but had not refused to arbitrate nor took any steps to interfere with or frustrate the process); Int'l Union, United Auto., Aerospace and Agr. Implement Workers of America, UAW v. Exide Corp., 688 F. Supp. 174, 186 (E.D. Pa. 1988) (granting injunction where employer refused to arbitrate).
This case presents a different issue, however, because CWA seeks as relief an injunction of potential layoffs until such time as the pending arbitration can be decided. But here there is no pending arbitration, as Verizon claims "an unfettered and unarbitrable right" to declare a surplus under the Agreements.
CWA therefore must seek to compel arbitration — a request that this Court would be empowered to grant if meritorious. Emery Air Freight Corp. v. Int'l Broth. of Teamsters, Local 295, 185 F.3d 85 (2d Cir. 1999) ("Suits seeking specific performance of contractual arbitration provisions are not barred by the Norris-LaGuardia Act.") (citing Textile Workers Union of Am. v. Lincoln Mills of Ala., 353 U.S. 448, 458-59 (1957); Local 1814, Int'l Longshoremen's Ass'n v. New York Shipping Ass'n, 965 F.2d 1224, 1236 (2d Cir. 1992).
If an action to compel arbitration were successful and if, after such motion is granted, Verizon were to continue to refuse to participate in arbitration, then CWA may have an argument that a reverse Boys Markets injunction should ensue. At this time, however, the argument is premature.
CWA also argues that summary judgment is inappropriate at this time because it has not had adequate time for discovery. E.g., Meloff v. New York Life Ins. Co., 51 F.3d 372, 375 (2d Cir. 1995). Because CWA has given this Court no basis to conclude that further discovery would result in a genuine issue of material fact, however, such argument is unavailing. Id. (citing Trebor Sportswear Co. v. Limited Stores, Inc., 865 F.2d 506, 512 (2d Cir. 1989) (affirming grant of summary judgment when appellants had given the district court no basis to conclude that further discovery would be fruitful)).
Because CWA has failed to allege any material issue of fact with regard to the requirement that it prove that the arbitration is a "hollow formality" in the absence of injunctive relief and because any additional discovery would be futile, Verizon's motion therefore is granted.
Conclusion
For the foregoing reasons, Verizon's motion is granted. Further, any pending motions shall be dismissed as moot.
It is so ordered.