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ALAMEDA ROOM, INC. v. PITTA

May 13, 1982

In the Matter of an Application by ALAMEDA ROOM, INC., Petitioner,
v.
VITO J. PITTA, as President of the New York Hotel and Motel Trades Council, AFL-CIO, Respondent



The opinion of the court was delivered by: WARD

This action was commenced in the Supreme Court of the State of New York, New York County, by service of the petition on November 10, 1981. It was removed to this Court by a petition for removal filed by respondent on December 10, 1981. Petitioner now moves, pursuant to 28 U.S.C. § 1447(c), for an order remanding this action to state court on the ground that it was improvidently removed to this Court. Respondent opposes this motion, and also moves, pursuant to Rule 56, Fed. R. Civ. P., for an order granting summary judgment in his favor. For the reasons hereinafter stated, both motions are denied.

Background

 Petitioner is Alameda Room, Inc. ("Alameda"), a New York corporation that owns and operates a restaurant, known as the Chateau Madrid, in space leased by Alameda from the Lexington Hotel, a hotel located in Manhattan at Lexington Avenue and East 48th Street. Respondent is Vito J. Pitta, President of the New York Hotel and Motel Trades Council ("the Trades Council"). Alameda's petition, which was filed pursuant to N.Y. Civ. Prac. Law § 7503(b), seeks an order either (1) staying an arbitration proceeding demanded by the Trades Council or (2) disqualifying a particular member of the three-person arbitral commission that has been constituted pursuant to the Trades Council's arbitration demand. The Trades Council is a labor organization that acts as the exclusive collective bargaining representative for a number of workers in the hotel and restaurant industry, including Alameda's kitchen and dining room employees at the Chateau Madrid. Alameda and the Trades Council are both signatories to an industry-wide collective bargaining agreement ("the Agreement"), which is due to expire on May 31, 1982.

 In late 1980, the Trades Council and Alameda became engaged in negotiations regarding the Trades Council's contention that Alameda's kitchen and dining room employees at the Chateau Madrid were, under the Agreement, entitled to a cost-of-living adjustment effective January 1, 1981. On March 6, 1981, after negotiations concerning this matter had broken down, the Trades Council formally demanded, pursuant to the Agreement, that the cost-of-living adjustment issue be arbitrated. Under the Agreement, arbitrations of cost-of-living adjustment issues are heard by a single arbitrator, who is referred to in the Agreement as the "Impartial Chairman."

 The Impartial Chairman scheduled the arbitration hearing for June 10, 1981. By a letter dated June 5, 1981, Alameda purported to withdraw from the Agreement. Shortly thereafter, on June 9, 1981, Alameda filed a petition, pursuant to N.Y. Civ. Prac. Law § 7503(b), in the Supreme Court of the State of New York, New York County, seeking an order either staying the arbitration proceeding demanded by the Trades Council or disqualifying, on the ground of bias, the Impartial Chairman from acting as the arbitrator. In its petition, Alameda argued that, in right of its June 5 renunciation of the Agreement, it was not subject to a binding arbitration provision with respect to the cost-of-living adjustment sought by the Trades Council.

 The state court granted Alameda's application for a temporary stay of the arbitration pending adjudication of Alameda's petition. Pitta, who was named as the respondent in Alameda's petition, did not seek to remove the action to federal court. Instead, he applied to the state court for a summary dismissal of Alameda's petition. By an opinion dated July 27, 1981, and a subsequent order filed on September 23, 1981, the state court denied Pitta's application and ordered that the action be prepared for a trial on the merits. Discovery in the action has now been completed, and the action is about to be placed on the state court's trial calendar. The state court's temporary stay of the arbitration remains in effect.

 During September 1981, Alameda and the Trades Council became involved in another dispute. This dispute concerned the Trades Council's contention that Alameda's kitchen and dining room employees at the Chateau Madrid were, under the Agreement, entitled to a wage-rate adjustment effective June 1, 1981.* On October 14, 1981, after negotiations between the Trades Council and Alameda regarding this matter had broken down in similar fashion to the earlier negotiations over the cost-of-living adjustment issue, the Trades Council formally demanded, pursuant to the Agreement, that the wage-rate adjustment issue be arbitrated. Under the Agreement, arbitrations of wage-rate adjustment issues are heard by a three-person arbitral commission composed of the Impartial Chairman and representatives of the two parties.

 Upon receiving the Trades Council's second arbitration demand, the Impartial Chairman informed the parties that he would not proceed with the second arbitration until Alameda's petition to stay the first arbitration had been adjudicated. Notwithstanding this decision, Alameda responded to the Trades Council's second arbitration demand by filing a second petition in state court. In similar fashion to its earlier petition, Alameda's second petition sought an order either staying the second arbitration proceeding demanded by the Trades Council or disqualifying for bias the Impartial Chairman as a member of the three-person arbitral commission. In its new petition, Alameda once again argued that, in light of its June 5 renunciation of the Agreement, it was not subject to a binding arbitration provision with respect to the issue raised by the Trades Council, Pitta responded to Alameda's second petition by filing a petition for removal, thereby bringing Alameda's second petition before this Court and triggering the motions that are the subjects of today's opinion.

 In short, the Trades Council has demanded two separate arbitrations, the first of which would concern whether the kitchen and dining room employees at the Chateau Madrid are entitled to a cost-of-living adjustment effective January 1, 1981, and the second of which would concern whether these employees are entitled to a wage-rate adjustment effective June 1, 1981. Alameda has filed separate petitions in state court seeking to stay each arbitration. The first arbitration has been temporarily stayed by the state court, and the second arbitration has been voluntarily stayed by the Impartial Chairman. Alameda's first petition is approaching trial before the state court, having been the subject of an unsuccessful summary dismissal application and all necessary discovery proceedings. The second petition is before this Court, having been removed from the state court by respondent Pitta. Each petition raises the following question: Did Alameda's purported withdrawal from the Agreement have the effect of relieving Alameda from the arbitration provisions contained in the Agreement, including any obligation to arbitrate the effectiveness of Alameda's purported withdrawal from the Agreement?

 Discussion

 With the foregoing background in mind, the Court turns to a discussion of the two pending motions. The Court deals first with Alameda's motion for an order remanding this action to state court, and then discusses respondent Pitta's motion for summary judgment.

 I

 Under 28 U.S.C. § 1447(c), "[if] at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, the district court shall remand the case, and may order the payment of just costs." The right of the defendant in a state court civil action to remove the action to federal court is governed by 28 U.S.C. § 1441(a), which provides as follows: "Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." Alameda contends that the instant action is not one over which the federal district courts have original subject matter jurisdiction, and consequently moves for an order remanding this case to state court. Pitta argues, on the other hand, that this action is one "arising under [an] Act of Congress regulating commerce" within the meaning of 28 U.S.C. § 1337, and thus is removable as an action "founded on a claim or right arising under the... laws of the United States" within the meaning of 28 U.S.C. § 1441(b). In support of this argument, Pitta contends that Alameda's action should be deemed to "aris[e] under" federal law because, although Alameda's petition is pleaded solely in terms of state law, it alleges facts that state a claim under section 301(a) of the Labor-Management Relations Act, 29 U.S.C. § 185(a). Alameda opposes Pitta's position by arguing that, since its petition nowhere mentions federal law, its action cannot possibly be deemed to "aris[e] under" federal law. See Phillips Petroleum Co. v. Texaco Inc., 415 U.S. 125, 127-28, 39 L. Ed. 2d 209, 94 S. Ct. 1002 (1974) (per curiam); Gully v. First National Bank, 299 U.S. 109, 113, 81 L. Ed. 70, 57 S. Ct. 96 (1936) (both holding that an action generally does not "aris[e] under" federal law for removal purposes unless the existence of a federal question appears on the face of the complaint).

 Alameda's argument is overbroad. The courts have frequently found removal proper, on an "arising under" theory, notwithstanding the fact that the complaint is devoid of any mention of federal law. To be sure, "arising under" removal is not proper simply because the factual allegations of the complaint could have formed the basis for reliance on federal law; where the facts of a case support both a federal and a state law claim, the "face-of-the-complaint rule" provides that "the party who brings [the] suit is master to decide what law he will rely upon," The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 57 L. Ed. 716, 33 S. Ct. 410 (1913), meaning that the plaintiff in such a case can confine its complaint to a state law theory and proceed in state court without fear of removal to federal court. 1A Moore's Federal Practice P0.160, at 185 (2d ed. 1981); see Great Northern Railway Co. v. Alexander, 246 U.S. 276, 282, 62 L. Ed. 713, 38 S. Ct. 237 (1918); Vitarroz Corp. v. Borden, Inc., 644 F.2d 960, 964 (2d Cir. 1981). However, where the allegations of the complaint support only a federal claim, and not a state law claim as well, "arising under" removal is always proper, even where the complaint relies, on its face, exclusively on state law. See Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 397, 69 L. Ed. 2d 103, 101 S. Ct. 2424 n.2 (1981).This exception to the "face-of-the-complaint rule" derives from the principle that removal should not be defeated merely because the plaintiff has inadvertently, mistakenly, or fraudulently concealed the federal question that would necessarily have appeared if the complaint had been well pleaded. 1A Moore's Federal Practice P0.160, at 185-87 (2d ed. 1981). One result of this exception is the rule that "arising under" removal is proper, even where the complaint relies solely on state law, if the state law relied upon by the plaintiff has been ...


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