Summary
interpreting the "broad" IWA arbitration clause to require arbitration of disputes involving any "relations between the parties"
Summary of this case from Neshgold LP v. N.Y. Hotel & Motel Trades CouncilOpinion
01 CV 0712 (RCC)
August 20, 2001
Opinion and Order
I. Introduction
Petitioner New York Hotel Motel Trades Council, AFL-CIO ("Union" or "Petitioner"), brings this action pursuant to Section 301 of the Labor Management Relations Act and Section 9 of the Federal Arbitration Act seeking to confirm an arbitration award ("Award") issued by the Office of the Impartial Chairman, Arbitrator Elliot Shriftman ("Impartial Chairman"). Petitioner also seeks to enjoin the Alphonse Hotel Corp d/b/a Hotel Carter d/b/a Carter Hotel ("Hotel") from pursuing a lawsuit seeking back rent and the dispossession of Xuan Nguyen ("Nguyen), a Union member and employee of the Hotel, and his family from their residence in the Hotel in the New York City Civil Court, Housing Part ("Housing Court") or any other forum. The Union also seeks costs and any other relief the Court deems appropriate.
The Hotel agreed by stipulation dated February 9, 2001 to adjourn the Housing Court proceeding until the Court issued a ruling on Petitioner's motion. Therefore, the question of the temporary restraining order and the preliminary injunction have been rendered moot. Before the Court is Petitioner's motion to confirm the Award. For the reasons set forth below, the Court grants the Union's motion to confirm.
II. Background
Nguyen is a Vietnamese immigrant who came to the United States in 1991 with the help of his brother-in-law, Tran Truong ("Truong"), who is also a Vietnamese immigrant and who is the owner of the Hotel. In 1992, Truong offered Nguyen and his family a residence in the Hotel. Nguyen accepted the offer and he and his family have maintained a residence at the Hotel since such time. (Pet'r Mem. at 3; Resp't Mem. at 3)
Nguyen began working for the Hotel as a bellboy at some point between 1993 and 1996. The Hotel claims that it has only employed Nguyen since 1996. (Resp't Mem. at 3). The Union claims that the Hotel has employed Nguyen since 1993, but paid him in cash up until 1996. (Pet'r Reply Mem. at 2).
As a bellboy, Nguyen was a Union member and was eligible for Union benefits. One of these benefits was Union representation in employer-employee grievances. At all relevant times, the Union and the Hotel were bound by the terms of a collective bargaining agreement between the Hotel and the Union (the "Agreement") entered into on June 26, and extended on January 30, 1990 and July 3, 1995. The Agreement includes an arbitration clause ("Arbitration Clause") which provides:
All complaints, disputes or grievances arising between the parties hereto involving questions or interpretation or application of any clause of this Agreement, or any acts conduct or relations between the parties, directly or indirectly, which shall not have been adjusted by and between the parties involved shall be referred to a permanent umpire known as the Impartial Chairman and his decision shall be final and binding upon the parties hereto.
In the event of a willful default by either party in appearing before the Impartial Chairman, after due written notice shall have been given to the said party, the Impartial Chairman is hereby authorized to render a decision upon the testimony of the party appearing.
(Agreement, § 26). The Agreement also includes a provision covering a situation in which the Hotel provides housing to its employees. Such section provides that "[i]n cases where the employer furnishes housing accommodations to its employees, it shall be allowed $2.50 per week for such housing accommodations." (Agreement, § 10).
On October 12, 1999, the Union demanded an arbitration hearing in accordance with Section 26 of the Agreement to resolve a dispute over wages and benefits the Hotel allegedly had not paid Nguyen and that the Union felt were mandated under the agreement. The Union alleged that the Hotel had forced Nguyen "to work twelve (12) hours a day, seven days a week, without paying him for all hours worked." (Pet'r Mem. at 3). The Hotel disputed the issue and the Union requested an arbitration hearing.
Several hearings were scheduled and adjourned because the Hotel "was allegedly not prepared to proceed." (Pet'r Mem. at 3). On December 27, 2000, the Hotel served upon Nguyen a Notice of Petition and Petition — Non — Payment Dwelling ("Petition"), made returnable to the Housing Court, seeking to evict him and his family from the Hotel and to recover $76,000 in back rent for the time period beginning with February 1993. The Union sent a letter to the Hotel's attorney's on January 3, 2001 informing them that if the Hotel did not cease and desist from attempting to evict Nguyen from the Hotel, the Union would request an emergency hearing pursuant to its rights under the Agreement. The Hotel responded by letter on January 5, 2001, indicating that it would not attend an emergency hearing on the eviction issue. In response, the Union requested an emergency hearing.
On January 8, 2001, the Impartial Chairman notified the Hotel's attorneys that he scheduled an emergency hearing requested by the Union to discuss the eviction issue. Both the emergency hearing and the wage issue hearing were scheduled for January 17, 2001. Upon being informed, the Hotel submitted a letter dated January 8, 2001 to the Impartial Chairman, indicating that it would not appear at the emergency hearing on the eviction issue.
On January 17, 2001, the Hotel's attorneys attended the wage issue hearing before the Impartial Chairman but declined to take part in the eviction issue hearing in accordance with their intention as expressed in their January 8, 2001 letter. The Impartial Chairman proceeded with the hearing pursuant to the power granted him in the Arbitration Clause, and issued the Award directing the Hotel to cease and desist from taking any action in the Housing Court pending the Impartial Chairman's decision on the underlying grievances.
The Union seeks to confirm the Award of the Impartial Chairman. The Hotel argues that the housing dispute does not fall within the scope of the Impartial Chairman's authority and that the Court should set aside the Award as unauthorized.
III. Discussion
The first issue the Court must decide is whether the Agreement requires the Hotel and the Union to arbitrate disputes of the kind at issue in this case. If so, the Supreme Court and the circuit courts have made clear that the federal judicial system is limited in its ability to intervene in an arbitrator's decision. "It is familiar law that the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (1994) (Arbitration Act), expresses `a liberal federal policy favoring arbitration agreements' and that `any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.'" Louis Dreyfus Negoce S.A. v. Blystad Shipping and Trading Inc., 252 F.3d 218, 223 (2d Cir. 2001) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25(1983)); see also Service Employees International Union v. Local 1199 N.E., 70 F.3d 647, 651 (1st Cir. 1995). In AT T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643 (1986) the Supreme Court established a four part test to determine whether parties are required to arbitrate their dispute and clarified the principles set forth in the Steelworkers Trilogy: Steelworkers v. Am. Mfg. Co., 363 U.S. 564(1960), Steelworkers v. Warrior Gulf Navigation Co., 363 U.S. 574(1960) and Steelworkers v. Enter. Wheel Car Corp., 363 U.S. 593(1960). First, even though arbitration is favored by federal policy, it is a contractual issue and a party cannot be compelled to arbitrate unless it has agreed to do so. AT T Techs., 475 U.S. at 648 (1986) ("[A] party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.") (quoting Steelworkers, 363 U.S. at 582); see Louis Dreyfus Negoce S.A., 252 F.3d at 223 ("While federal policy generally favors arbitration, the obligation to arbitrate nevertheless remains a creature of contract.").
Second, unless an agreement expressly states otherwise, the question of arbitrability is to be decided by the Court and not by the arbitrator. AT T Techs., 475 U.S. at 647. Third, when determining whether an agreement requires the parties to arbitrate, the Court may not consider or rule on the potential merits of the underlying claim. Id. at 649-650 ("[T]he union's claim that the employer has violated the collective-bargaining agreement is to be decided, not by the court asked to order arbitration, but as the parties have agreed, by the arbitrator."); Am. Mfg. Co., 363 U.S. at 568, (footnote omitted) ("The courts, therefore, have no business weighing the merits of the grievance . . . [T]he agreement is to submit all grievances to arbitration, not merely those which the court will deem meritorious."). Fourth, the presumption of arbitrability requires that a court confirm an arbitrator's award unless the court finds with "positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." Warrior Gulf, 363 U.S. at 582-583.
In order to determine arbitrability, the Court must first determine whether the arbitration clause is "broad" or "narrow." See Mehler v. Terminix Int'l Co., 205 F.3d 44, 49 (2d Cir. 2000); Peerless Imps., Inc. v. Wine, Liquor Distillery Workers Union Local One, 903 F.2d 924, 927 (2d Cir. 1990); McDonnell Dounlas Fin. Corp. v. Pa. Power Light Co., 858 F.2d 825, 832 (2d. Cir. 1988). If the clause is narrowly drawn, "the Court must determine whether the dispute is over an issue that `is on its face within the purview of the clause,' or over a collateral issue that contains the arbitration clause." Louis Dreyfus Negoce S.A., 252 F.3d at 223 (quoting Rochdale Vill., Inc. v. Pub. Serv. Employees Union, 605 f.2d 1290, 1295 (2d Cir. 1979)). However, "where the arbitration clause is broad, `there arises a presumption of arbitrability' and arbitration of even a collateral matter will be ordered if the claim alleged `implicates issues of contract construction or parties' rights and obligations under it.'" Louis Dreyfus Negoce S.A., 252 F.3d at 223 (quoting Collins Aikman Prods. Co. v. Bldg. Sys., Inc., 58 F.3d 16, 23 (2d Cir. 1995).
In AT T Techs., Inc., the Supreme Court analyzed an arbitration clause that covered "any differences arising with respect to the interpretation of this contract or the performance of any obligation hereunder . . .," and held that such clause was broad and that in such a case the presumption of arbitrability was warranted, recognizing that "the greater institutional competence of arbitrators in interpreting collective-bargaining agreements, `furthers the national policy of peaceful resolution of labor disputes and thus best accords with the parties' presumed objectives in pursuing collective bargaining.' AT T Techs. 475 U.S. at 649-651, (quoting Schneider Moving Storage Co. v. Robbins, 466 U.S. 364, 371-372 (1984) (citation omitted)). The Supreme Court further held that "in the absence of any express provision excluding a particular grievance from arbitration . . . only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail." Id. at 649 (quoting Warrior Gulf, 363 U.S. at 584-585). Here, the Arbitration Clause covers "[a]ll complaints, disputes or grievances arising between the parties . . . involving questions or interpretation or application of any clause of [the] Agreement, or any acts, conduct or relations between the parties. . . ." (Agreement, § 26). The Court finds that the Arbitration Clause in the instant action is broad.
Here, because Nguyen is an employee and the Hotel furnishes him with housing accommodations, Section 10 clearly applies to him. Furthermore, as the housing dispute arises out of the application and interpretation of Section 10 of the Agreement and clearly involves relations between the parties, the dispute at issue must be submitted to arbitration in accordance with the Arbitration Clause. Accordingly, the Court may only deny Petitioner's motion to confirm the Award if there is clear evidence that the arbitrator overstepped his bounds in its issuance.
With respect to an arbitrator's authority, Title IX of the United States Code Service Section 10(a)(4) provides that an arbitrators award may be vacated "[w]here the [arbitrator] exceeded [his] powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made." 9 U.S.C.S. § 10(a)(4)(2001). The Second Circuit has held that a court should "ask only `whether the arbitrator's award draws its essence from the collective bargaining agreement, since the arbitrator is not free merely to dispense his own brand of industrial justice.'" Local Union No. 38. Sheet Metal Workers' Int'l Ass'n, AFL-CIO v. Hollywood Heating Cooling. Inc., 242 F.3d 366, 366 (2d Cir. 2001) (quoting Wackenhut Corp. v. Amalgamated Local 515, 126 F.3d 29, 31 (2d Cir. 1997)) (quotation marks and citation omitted). A court should "uphold arbitration awards as long as they have `even barely colorable justification' . . . Courts must confirm even those awards it views as incorrect as long as they are `plausibly grounded' in the parties' contract." Local Union No. 38, 242 F.3d at 366 (quoting Local 97, Int'l Bhd. of Elec. Workers v. Niagara Mohawk Power Corp., 196 F.3d 117, 125 (2d. Cir. 1999) (quotation marks and citation omitted). Accordingly, the Court must defer to the arbitrator in favor of coverage, particularly in a case such as this, which involves a broad arbitration clause.
Applying this highly deferential standard to the facts of this case, the Court finds that the Impartial Chairman did not exceed his authority in issuing the Award. Here the collective-bargaining agreement leaves no room for ambiguity. The Arbitration Clause clearly provides that the Impartial Chairman is entitled to issue an award upon the testimony of the appearing party if the opposing party willfully defaults its appearance. (Agreement, § 26). The Hotel's January 8, 2001 letter to the Impartial Chairman and failure to appear at the eviction issue hearing certainly demonstrates its willful default on the eviction issue hearing.
Applying the Second Circuit's "barely colorable" rule to determine whether the Impartial Chairman overstepped his bounds in issuing the Award, Local Union No. 38, 242 F.3d at 366, the Court finds that the Arbitration Clause clearly authorizes the Impartial Chairman to issue the Award in this situation. Accordingly, the Court finds that the Impartial Chairman did not overextend his authority in issuing the Award, and therefore grants the Union's motion to confirm the Award.
Conclusion
For the reasons stated above, Petitioner's motion to confirm the Award is granted.