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October 4, 1990


The opinion of the court was delivered by: Edelstein, District Judge:

Defendant Marriott Essex House objects to a settlement reached by the parties in the above-captioned consolidated class actions. For reasons to be discussed, defendant Marriott Essex House's objections to the settlement are denied in all respects. The Court adopts the settlement with respect to all the above captioned lawsuits as set out in the stipulation of settlement dated July 11, 1990.

I.  Background

On January 9, 1985, plaintiff New York Hotel and Motel Trades Council, AFL-CIO (the "union") brought all the instant consolidated class actions except 85 Civ. 9925 on behalf of its members against defendants Hotel Association of New York City (the "association") and certain member hotels: the Dorset Hotel, New York Helmsley Hotel, Helmsley Palace Hotel, Essex House Hotel or Marriott's Essex House Hotel (the "Essex House"), New York Hilton Hotel, Helmsley Park Lane Hotel, Sheraton Centre Hotel, St. Moritz Hotel, St. Regis Hotel, Waldorf-Astoria Hotel, and the Helmsley Windsor Hotel (the "hotels") alleging violations of the Equal Pay Act, 29 U.S.C. § 206(d). Plaintiffs filed separate suits against each listed hotel. The firms of Solomon & Rosenbaum, Dreschler & Leff, and Seyfarth, Shaw, Fairweather & Geraldson represented all of the defendants ("defendants' counsel").

On December 18, 1985, plaintiffs instituted the class action lawsuit 85 Civ. 9925 against the association and all the hotels alleging violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5 by virtue of the greater compensation paid housekeeping attendants. On September 10, 1986, this Court approved the stipulation of class certification for all the suits. In sum, the suits sought (1) to equalize the pay rate between housekeeping attendants and day or night room and bath attendants, (2) back pay, (3) a permanent injunction enjoining the hotels from requiring room attendants to clean up to three additional rooms per week above pre-established quotas without compensation, and (4) attorney's fees.

After years of litigation, possible settlement of the instant suits arose in connection with extending the then-existing industry-wide collective bargaining agreement between the union and the association on behalf of its member hotels (the "existing collective bargaining agreement"). The existing collective bargaining agreement, entered into on June 28, 1985, was due to expire on June 26, 1990, and the union sought an early opening of the new contract negotiations. At a meeting held on September 26, 1989, the association informed the union that settlement of the instant suits was a condition precedent to any such contract negotiations.

After negotiations during the fall and winter of 1989, the parties agreed on an extension and modification of the existing collective bargaining agreement (the "extended collective bargaining agreement"). The provisions of the extended collective bargaining agreement were detailed in a memorandum of understanding between the association and the union, executed on January 30, 1990 (the "memorandum of understanding"). Among its other provisions, the memorandum of understanding incorporated the terms of settlement of the instant actions. These terms are in substance and effect the settlement presented to this Court, which provide (1) that all employees supervised by the housekeeping department whose base wage is the same as the housekeeping attendants shall continue at that equal base wage rate; (2) that effective August 1, 1990, the base wage rates of night room attendants and bath attendants shall be the same base wage rate as housekeeping attendants; (3) that effective August 1, 1990, room attendants shall no longer be assigned to make up extra rooms above pre-established quotas without being compensated at specified extra room rates. The settlement does not award back pay to the class; rather, all its terms are prospective. The parties further agreed to pay their own attorney's fees.

On November 12, 1985, Marriott Corporation ("Marriott") sold the Essex House to

Hotel Nikko of New York, Inc. ("Nikko"). On December 31, 1989, Nikko closed Essex House for renovations and withdrew from the association. As a result, a dispute arose between the union and the association as to whether Essex House would be covered by the settlement set out in the memorandum of understanding.

The gist of this disagreement was that since Essex House was no longer a member of the association and would not sign the collective bargaining agreement, Essex House was not legally bound to adhere to the prospective terms of the settlement. Marriott and the association argued that Essex House was covered by the settlement; the union disagreed.

On March 28, 1990, parties submitted this dispute over the status of the settlement with respect to Essex House to arbitration. At the arbitration hearing held on May 3, 1990, defendants' counsel represented the association, and Marriott was also represented by separate counsel, Proskauer, Rose, Goetz & Mendelsohn. The association and Marriott's positions were both the same. The arbitrator's decision indicates that defendants' counsel argued that the memorandum of understanding contemplated settlement of all of the litigation, including the actions involving Essex House. On May 10, 1990, the arbitrator ruled that the settlement as set out in the memorandum of understanding did not cover the Essex House.

The arbitrator reasoned that the settlement specified in the memorandum of understanding provided for prospective relief incorporated into the extended collective bargaining agreement. The extended collective bargaining agreement would bind its signatories to the terms of the settlement. The plaintiffs agreed to settle these actions and forego their claims for back pay and attorney's fees in exchange for wage and job classification concessions made explicitly enforceable by a collective bargaining agreement. But because Essex House was not a signatory to the extended collective bargaining agreement, it was not bound to honor the prospective relief. As a result, the arbitrator reasoned that Essex House gave no consideration to the union for the settlement and was not covered by the memorandum of understanding.

After the arbitrator's decision, the parties petitioned this Court to approve the settlement, even without Essex House. This Court scheduled a hearing for July 19, 1990, pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, to (1) consider the terms of the proposed settlement, (2) discuss the sufficiency of the notice provisions to the plaintiff classes, and (3) set a date for hearing objections to the settlement. Fifteen minutes before the 3:00 p.m. hearing time, this Court received a letter from new counsel for Marriott, Proskauer, Rose, Goetz & Mendelsohn, by signature of Bettina Plevan, objecting to the settlement (the "Marriott letter"). The Marriott letter indicated that Marriott had retained the Proskauer firm just days before to represent Marriott in connection with the proceedings regarding the settlement before this Court. The basis of Marriott's objection was that defendants' counsel pursued the settlement even though it excluded Marriott, which it had represented up until Marriott retained the Proskauer firm. As a result, Marriott alleged that defendants' counsel had been in a conflict of interest with respect to the settlement. Marriott asked the Court not to approve the settlement, and for time to investigate their conflict of interest allegation.

At the July 19, 1990 hearing, the Court heard argument and colloquy on Marriott's allegations. Marriott represented that it only objected to its exclusion from the settlement, not to its terms. Marriott conceded they would settle on the exact same terms, except that since they no longer owned the Essex House, they could not sign the extended collective bargaining agreement. Nikko, the current owner of Essex House, refused to sign the collective bargaining agreement. The Court recessed the hearing until the next day for counsel to discuss settlement of Marriott's claims.

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