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OTTLEY v. SHEEPSHEAD NURSING HOME

March 26, 1985

PETER OTTLEY, JOHN KELLEY, AUSTIN CEDENO, FRANK PEREZ, BARTHOLOMEW J. LAWSON, NANCY LESTER, FRED WILKINS, and WILLIAM McCARTHY as Trustees of the New York City Nursing Home-Local 144 Welfare Fund and the Local 144 Nursing Home Pension Fund; and Local 144 Nursing Home Pension Fund; and LOCAL 144, HOTEL, HOSPITAL, NURSING HOME & ALLIED SERVICES UNION, SEIU, AFL-CIO, Plaintiffs-Petitioners, against SHEEPSHEAD NURSING HOME, Defendant-Respondent


The opinion of the court was delivered by: KEENAN

AMENDED OPINION and ORDER

JOHN F. KEENAN, United States District Judge:

Plaintiffs-petitioners move for a preliminary injunction and confirmation of a labor arbitrator's award. Defendant-respondent cross-moves for an order vacating the arbitration award and dismissing plaintiff's action. For the reasons stated below, defendant's motion to dismiss the complaint is granted.

 BACKGROUND

 Plaintiffs-petitioners Peter Ottley, John Kelley, Austin Cedeno, Frank Perez, Bartholomew J. Lawson, Nancy Lester, Fred Wilkins, and William McCarthy are trustees of the New York City Nursing Home-Local 144 Welfare Fund and the Local 144 Nursing Home Pension Fund. Together with Local 144, of the Hotel, Hospital, Nursing home & Allied Services Union, Service Employees International Union, AFL-CIO, the trustees initiated this action (collectively referred to as the "Union"). Defendant is the Sheepshead Nursing Home ("Sheepshead").

 On April 1, 1978 the Union entered into a contract with a multi-employer organization comprised of nursing homes. Sheepshead was a member of that organization and bound by a three-year contract providing for, among other things, the payment of pension funds by Sheepshead to the Union. In 1980, Sheepshead withdrew from the multi-employer organization; but in early 1981 an arbitrator ruled that despite Sheepshead's withdrawal from the organization, it was still bound by the contract through March 1981.

 In March 1981, the multi-employer organization entered into a contract, due to expire on March 31, 1984, providing for payment of pension funds and binding arbitration. On June 30, 1982, Sheepshead agreed to be bound by the agreement between the Union and the multi-employer group with some modifications. In return for Sheepshead's promise to bargain in good faith, the Union allowed defendant to seek relief from the contract's economic terms and declined to implement them in the interim.

 In a letter, dated July 28, 1982, Sheepshead requested relief from its obligation to pay contributions to the Union at a rate greater than 10%. Advisory arbitration proceedings then commenced on this matter, but no recommendation was ever issued. Sheepshead made contributions, based on a 10$ contribution rate, until November 1983, after which time all payment ceased.

 On April 19, 1983, the parties agreed that the contract terms from which Sheepshead sought relief, and were not otherwise resolved, would await resolution "by the fact finder."

 On April 2, 1984, Sheepshead gave twenty-four hours notice of its intention to terminate the agreement. Sheepshead acknowledge its legal obligation not to make unilateral changes in certain conditions of employment until an impasse in bargaining was reached, though defendant disaffirmed any intention to extend the expired agreement.

 In May 1984, Sheepshead received Demand for Arbitration over a dispute concerning the discharge of two employees. Sheepshead moved to stay the arbitration demanded by the Union. After oral argument on October 17, 1984, Judge Mary Johnson Lowe ruled that the contract was lawfully terminated on April 2, 1984 and that Sheepshead had no duty to submit post-termination discharge disputes to arbitration. Transcript at 26, Sheepshead v. Ottley, No. 84 Civ. 4279 ( S.D.N.Y. Oct. 17, 1984).

 Also on October 17, 1984, Justice Aronin of the New York State Supreme Court appointed Alan I. Chopp receiver of Sheepshead to avoid the closing of the facility by state and federal authorities. In re Parker, No. 23550/84 (Sup. Ct. Kings Cty. Oct. 17, 1984).

 In late 1984, the Union adopted a benefit termination procedure, designed to preserve the actuarial soundness and financial viability of the pension fund, under which employee benefits will be cut off when the employer fails to remit contributions for a four-month period. In December 1984, pursuant to this procedure, the Union notified Sheepshead and its employees that, as a result of Sheephead's delinquency in fund payments, benefits would be terminated on February 4, 1985. In addition, the Union at some point sought arbitration of the pension fund payments issue and, on January 30, 1985, the arbitrator notified counsel for Sheepshead of an arbitration hearing scheduled for February 1st. Sheepshead's counsel told the arbitrator that an adjournment was needed to gather records and await the return of the receiver, who was in Europe. No adjournment was granted and Sheepshead failed to appear at the hearing. An arbitration decision in the Union's favor was issued on February 1, 1985.

 The award direct Sheepshead to pay immediately to the Union delinquent contributions at the 10% rate, or $338,499.40, plus interest accrued at the rate of 12%, or $104,149.79. With regard to contributions owed over and above the 10%, the award directs Sheepshead to proceed immediately before the fact finder on its application for relief from the full contractual rates. It further directs the parties that, if no recommendation has issued by thirty (30) days from the date of the award, or if Sheepshead fails to comply with any recommendation that has issued, Sheepshead must return to contract arbitration before him for final resolution of whether it is entitled to relief from liability for contributions in excess of 10% or whether a ...


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