covered grievances did not clearly include FLSA or other
Construed broadly, the CBA provision at issue here is the
sort of generalized agreement to arbitrate an amorphously defined
group of disputes that Wright found inadequate to cover statutory
rights claims because "Gardner-Denver at least stands for the
proposition that the right to a federal judicial forum is of
sufficient importance to be protected against less-than-explicit
union waiver in a CBA." Id. at 396 (citing Alexander v.
Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147
(1974)). Construed less broadly, the CBA provision only
enumerates specific subjects that must be submitted to
arbitration in a list that does not include FLSA claims. Whether
construed broadly or narrowly, the CBA provision is not a "clear
and unmistakable waiver of the covered employees' rights to a
judicial forum" for claims of individual rights under statutes
such as the FLSA. Courts held similarly even before Wright. See,
e.g., Knight v. Southern New England Tel. Corp., No. 3:97CV1159
(WWE), 1998 WL 696014, at *3 (D.Conn. Sept. 18, 1998)
("[P]laintiff's failure to arbitrate her Title VII and ADA claims
is not a bar to her pursuing an action in this court . . . [where
CBA] does not specifically require arbitration of those
Although Wright did "not reach the question whether such a
waiver would be enforceable," id., the Second Circuit has. Tran
v. Tran, 54 F.3d 115 (2d Cir. 1995), held that CBA mandatory
arbitration provisions cannot bar union members from bringing
FLSA claims to court. A majority of circuits are in accord. See
Albertson's, Inc. v. United Food & Commer'l Workers Union,
AFL-CIO & CLC, et al., 157 F.3d 758, 761-62 (9th Cir. 1998)
(following Tran as to FLSA rights and noting that a majority of
circuits have done so for various statutory rights). Unions and
their members have relied on this rule for decades, since
Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39
L.Ed.2d 147 (1974), held that CBA mandatory arbitration
provisions do not preclude members' Title VII actions and
Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 101
S.Ct. 1437, 67 L.Ed.2d 641 (1981), and McDonald v. City of West
Branch, 466 U.S. 284, 104 S.Ct. 1799, 80 L.Ed.2d 302 (1984),
expanded that rule to FLSA and § 1983 claims, respectively. While
Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 111 S.Ct.
1647, 114 L.Ed.2d 26 (1991), allowed an individual employment
contract to require arbitration of ADEA claims, neither the
Supreme Court nor the Second Circuit has expanded Gilmer to cover
CBA mandatory arbitration nor to cover statutory claims under
statutes other than the ADEA. Accordingly, "[t]here is nothing in
Gilmer which appears to throw anything but favorable light upon
the continuing authority of Barrentine." Tran, 54 F.3d at 117.
The same is true for Wright, which explicitly declined to address
the issue. Wright, ___ U.S. at ___, 119 S.Ct. at 397.
Even if some CBA mandatory arbitration provisions could cover
statutory rights, this one cannot because the union, the only
party who can bring the claim, must pay half of the arbitration
fees. Pls. Ex. F, Art. VI, § 2. When individual rights under
statutes such as the FLSA are at issue, courts often refuse to
enforce arbitration agreements requiring fee-splitting.
"Requiring plaintiffs to pay for access `would surely deter the
bringing of arbitration,' running counter to Congressional
intent" underlying such statutory rights. Martens, et al. v.
Smith Barney, et al., 181 F.R.D. 243, 256 (S.D.N.Y. 1998)
(quoting Cole v. Burns Int'l Secur. Servs., 105 F.3d 1465, 1468
(D.C.Cir. 1997) (rejecting fee-splitting provision because "an
employee can never be required . . . to pay an arbitrator's
compensation in order to secure the resolution of statutory
claims under Title VII")). See also Shankle v. B-G Maintenance
Mgmt. of Colo., Inc., 163 F.3d 1230, 1235 (10th Cir. 1999)
(holding unenforceable an arbitration agreement
requiring plaintiff to split arbitrator fees because it
prescribed "mandatory arbitration as a term of continued
employment, yet failed to provide an accessible forum in which he
could resolve his statutory rights"). Courts differ on this
issue, sometimes based on the size of the financial burden. See,
e.g., Howard v. Anderson, et al., No. 96 Civ. 919(SWK), 1999 WL
79497 (S.D.N.Y. Feb. 17, 1999) (collecting divergent cases and
finding a $500 filing fee "not a barrier to the vindication of
Howard's statutory rights" but noting that higher fees could be).
In the CBA context, however, the problem is worse because any
financial burden on the union only exacerbates the existing
problem that the union may have insufficient incentive to press
a member's individual statutory claim vigorously. Accordingly, a
CBA mandatory arbitration provision featuring fee-splitting is
unenforceable because it deprives individuals of the required
"reasonable right of access to a neutral forum." Cole, 105 F.3d
Finally, the requirement that union and member both waive
their rights to proceed in any other forum further confirms that
this provision does not aim to be a mere first step that
plaintiffs must exhaust. Rather, it aims to make arbitration an
exclusive forum, in contravention of Gardner-Denver, Tran, and
other precedents protecting a union member's right to press a
claim that the employer violated the member's individual
statutory rights. In sum, if utilized, arbitration does not
prevent an FLSA action; if (as here) not utilized, the
availability of arbitration does not preclude an FLSA action.
2. Issue Preclusion Based on the Arbitral Decision
The City argues that Local 371's arbitration precludes the
plaintiffs from pressing issues that the arbitrator decided in
the City's favor. It is issue preclusion, not claim preclusion,
that the City argues here. "[T]he City does not argue that
plaintiffs are precluded from bringing a claim that the terms of
the Equity Panel Report . . . violate their rights under the
FLSA. However, . . . an arbitration award has determined what the
terms of the Equity Panel Report are," precluding the plaintiffs
from asserting a contrary interpretation of those terms. Def.'s
Mem. Opp. Pls.' Motion Summ. J. at 7. Issue preclusion, also
known as collateral estoppel,
bars a party from raising a specific factual or
legal issue in a second action when the party had a
full and fair opportunity to litigate the issue in
a prior proceeding. . . . [C]ollateral estoppel
applies when (1) the issues in both proceedings are
identical, (2) the issue in the prior proceeding
was actually litigated and actually decided, (3)
there was full and fair opportunity to litigate in
the prior proceeding, and (4) the issue previously
litigated was necessary to support a valid and
final judgment on the merits.
Transaero, Inc. v. La Fuerza Aerea Boliviana, 162 F.3d 724, 731
(2d Cir. 1998).
Issue preclusion based on a prior arbitration is permissible,
but not mandatory, because "application of collateral estoppel
from arbitral findings is a matter within the broad discretion of
the district court." Universal Am. Barge Corp. v. J-Chem, Inc.,
946 F.2d 1131, 1137 (5th Cir. 1991). "Where the requirements are
not met, it would be error to apply collateral estoppel; where
the requirements are met, it would not be error (though it may
waste judicial resources) to decline to apply collateral
estoppel." Kroeger v. United States Postal Serv., 865 F.2d 235,
239 (Fed.Cir. 1988). (addressing preclusion from arbitration).
Accordingly, a post-arbitration proceeding is not "bound by the
arbitrator's factual conclusions. . . . `[T]he arbitral decision
may be admitted as evidence and accorded such weight as the court
deems appropriate.'" United States v. Int'l Bhd. of Teamsters,
Chauffeurs, Warehousemen & Helpers of Am., AFL-CIO, 954 F.2d 801,
809-810 (2d Cir. 1992) (quoting Alexander v. Gardner-Denver Co.,
415 U.S. 36, 60, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974) (also
citing McDonald v. City of West Branch, 466 U.S. 284, 292, 104
S.Ct. 1799, 80 L.Ed.2d 302 (1984))).
The problem with applying collateral estoppel here is that
the plaintiffs were not parties to the arbitration; only their
union was a party. It is because preclusion rules target the
party who seeks to "relitigate identical claims or issues," a
party faces preclusion only if it had a sufficiently "full and
fair opportunity to litigate" the dispute in the prior
proceeding. Transaero, Inc., 162 F.3d at 731. Under the right
circumstances, a union's arbitration of an issue could give its
members a full and fair opportunity to press that issue. However,
a conflict of interest between two parties prevents one's
arbitration outcome from subjecting the other to issue
preclusion. See Universal Am. Barge Corp. v. J-Chem, Inc.,
946 F.2d 1131, 1139 (5th Cir. 1991) (holding that indemnitee's
arbitration would not collaterally estop indemnitor because
"conflict of interest between the indemnitor and the indemnitee
could interfere with full and fair litigation of issues");
Jamaica Commodity Trading Co. v. Connell Rice & Sugar Co.,
766 F. Supp. 138, 151 (S.D.N.Y. 1991) (holding same where indemnitee
could not fully argue indemnitor's position without risking
liability because "[a]n indemnitor is bound by the result of an
arbitration to which it was not a party only when its interests
have been adequately represented . . . by the indemnitee").
"[T]he Parklane requirement that the defendant in the first
action have incentive in that action to litigate the lawsuit
fully and vigorously also mandates conflict-free representation
of issues sought to be precluded." Universal Am. Barge Corp. v.
J-Chem, Inc., 946 F.2d 1131, 1140 (5th Cir. 1991) (citing
Parklane Hosiery Co. v. Shore, 439 U.S. 322, 332, 99 S.Ct. 645,
58 L.Ed.2d 552 (1979)).
In Barrentine v. Arkansas-Best Freight Sys., Inc.,
450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981), the Supreme Court
noted that a conflict of interest, between union and member may
make it inappropriate for union arbitration to have preclusive
effect in members' FLSA minimum wage lawsuits in federal court.
"[E]ven if the employee's claim were meritorious, his union
might, without breaching its duty of fair representation,
reasonably and in good faith decide not to support the claim
vigorously in arbitration." Id. at 742, 101 S.Ct. 1437. In
McDonald v. City of West Branch, 466 U.S. 284, 104 S.Ct. 1799, 80
L.Ed.2d 302 (1984), the Supreme Court similarly held that a union
arbitration would not lead to issue preclusion in a member's
Section 1983 action because "were an arbitration award accorded
preclusive effect, an employee's [claim] . . . might be lost
merely because it was not in the union's interest to press his
claim vigorously." McDonald v. City of West Branch, 466 U.S. 284,
291, 104 S.Ct. 1799, 80 L.Ed.2d 302 (1984). In the presence of
such a conflict of interests, a union arbitration is probative
but not preclusive, as it "may be admitted into evidence . . .
[with] weight to be accorded . . . in the court's discretion with
regard to the facts and circumstances of each case." Barrentine,
450 U.S. at 743 n. 22, 101 S.Ct. 1437; see also McDonald, 466
U.S. at 291, 104 S.Ct. 1799 (citing id.).
Union and member interests here were in sufficient conflict
that it would be inappropriate for the arbitration findings to
lead to issue preclusion against the plaintiffs in this action.
The City, which is the party arguing in favor of issue
preclusion, asserts that the plaintiffs' interpretation of their
salary entitlement "would result in Houseparents . . . receiving
about $9 million dollars out of the total $15 million allocated"
by the Equity Fund for DC 37 to split among its 120,000 members
"as DC 37 saw fit." Def.'s R. 56.1 Stmt. ¶¶ 13, 14, 33. Under the
version of the facts given by the City (the party supporting
issue preclusion), there is a serious union-member conflict of
interest: a few hundred Houseparents are seeking more than half
of a fund that DC 37 otherwise would
have discretion to split among 120,000 members.
With such a potential for conflicting interests on the issue,
Local 371 could not represent the plaintiffs' position on the
issue sufficiently for issue preclusion. More specifically, the
court cannot rule that their union's arbitration gave the
plaintiffs a sufficiently "full and fair opportunity to litigate"
their interpretation of the CBA to deprive them of their day in
court now. Barrentine envisioned union-member conflicts of just
this sort in rejecting preclusion:
Since a union's objective is to maximize overall
compensation of its members, not to ensure that
each employee receives the best compensation
available, a union balancing individual and
collective interests might validly permit some
employees' statutorily granted wage and hour
benefits to be sacrificed if an alternative
expenditure of resources would result in increased
benefits for workers in the bargaining unit as a
450 U.S. at 742, 101 S.Ct. 1437. See also McDonald, 466 U.S. at
291, 104 S.Ct. 1799 ("The union's interests and those of the
individual employee are not always identical or even compatible.
. . . [T]he union may present the employee's grievance less
vigorously, or make different strategic choices, than would the
Under Barrentine and McDonald, the plaintiffs need not prove
that their representation was in fact inadequate for preclusion
to be inappropriate. See, e.g., Beason v. United Techs. Corp.,
No. Civ. A. 3:97CV2654CF, 1999 WL 79495 (D.Conn. Feb. 10, 1999)
(finding potential but unproven union-member conflict of interest
sufficient for arbitration not to preclude in plaintiff's ADA and
state civil rights action). Nevertheless, the plaintiffs'
assertion of conflict of interest draws support from their claim
that Local 371 inadequately pressed the contract issue by failing
to call witnesses from DC 37, its parent union, which negotiated
the relevant CBA provisions. See Def.'s Resp. to Pl.'s Objections
to Magistrate at 3-4 ("DC 37 did not participate in the
arbitration"). While it is not clear that this fact proves
inadequate representation, it evidences exactly the sort
"different strategic choices," and perhaps "less vigorous[ness],"
that McDonald, 466 U.S. at 291, 104 S.Ct. 1799, feared in
rejecting issue preclusion. The union's arbitration should not
preclude the plaintiffs from pressing in court an issue that the
arbitrator decided adversely to them. See Kulavic v. Chicago &
I.M. Ry., 1 F.3d 507, 511-17 (7th Cir. 1993) (finding issue
preclusion inappropriate because the limited arbitral proceedings
insufficiently protected plaintiff's right to press issue).
B. Summary Judgment in Disputes over Contract Interpretation
The basic summary judgment standard is that "[u]ncertainty as
to the true state of any material fact defeats the motion."
Gibson v. Am. Broad. Companies, 892 F.2d 1128, 1132 (2d Cir.
1989). The nonmoving party's burden is to produce concrete
evidence sufficient to establish a genuine unresolved material
issue of material fact. See Celotex Corp. v. Catrett,
477 U.S. 317, 322-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Dister v.
Continental Group, Inc., 859 F.2d 1108,1114 (2d Cir. 1988). The
court then must view the facts in the light most favorable to the
non-movant. See Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986);
Gallo v. Prudential Residential Servs., Ltd. Partnership,
22 F.3d 1219, 1224 (2d Cir. 1994). The court neither weighs evidence nor
resolves material factual issues, but only determines whether,
after adequate discovery, any such issues remain unresolved
because a reasonable fact finder could decide for either party.
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct.
2505, 91 L.Ed.2d 202 (1986); Gibson, 892 F.2d at 1132.
In a contract dispute, when the contractual language is
unambiguously in conformity with one side's interpretation,
summary judgment is appropriate, see Chock Full O'Nuts Corp. v.
Tetley, Inc., 152 F.3d 202, 204 (2d Cir. 1998), and extrinsic
evidence of the contracting parties' intentions cannot be
considered in interpreting the contract, see Consarc Corp. v.
Marine Midland Bank, N.A., 996 F.2d 568, 573 (2d Cir. 1993). When
the contractual language is ambiguous, extrinsic evidence of the
parties' intent is admissible, see id., including when the
contract is a collective bargaining agreement. See Amer. Fed. of
Grain Millers, AFL-CIO, et al. v. Int'l Multifoods Corp., et al.,
116 F.3d 976, 981 (2d Cir. 1997) ("extrinsic evidence can be used
to interpret ambiguous CBAs").
Despite contract ambiguity, summary judgment still may be
appropriate if the moving party would prevail under any
reasonable interpretation of the contract. See Chock Full O'Nuts
Corp., 152 F.3d at 204. Both the contract ambiguity and the
extrinsic evidence are construed against a summary judgment
movant, however. See Seiden Assocs., Inc. v. ANC Holdings, Inc.,
959 F.2d 425, 428 (2d Cir. 1992). In sum, while contract
ambiguity does not create a per se rule against summary judgment,
it does add extrinsic evidence to the pool of evidence that must
be sufficiently one-sided to make summary judgment appropriate.
C. FLSA Overtime Provisions
The FLSA embodies a Congressional intent to "give specific
minimum protections to individual workers." Barrentine v.
Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 739, 101 S.Ct.
1437, 67 L.Ed.2d 641 (1981) (emphasis in original). Its maximum
hours provisions, "like the other portions of the Fair Labor
Standards Act, are remedial and humanitarian in purpose. Such a
statute must not be interpreted or applied in a narrow, grudging
manner." Tenn. Coal, Iron & R.R. Co., et al. v. Muscoda Local No.
123, et al., 321 U.S. 590, 597, 64 S.Ct. 698, 88 L.Ed. 949
(1944). Specifically, the FLSA requires that an employer
compensate employees for hours in excess of 40 per week "at a
rate not less than one and one-half times the regular rate at
which he is employed." 29 U.S.C. § 207(a)(1). Though it
complicates overtime calculations, it is permissible for
compensation to be annual or weekly rather than hourly, see 29
C.F.R. § 778.109, because the Supreme Court has held that, for
FLSA purposes, "[e]very contract of employment, written or oral,
explicitly or implicitly includes a regular rate of pay for the
person employed. . . . [T]he regular rate of pay [is] to be found
by dividing the weekly compensation by the hours worked." Bay
Ridge Operating Co. v. Aaron, 334 U.S. 446, 461, 464, 68 S.Ct.
1186, 92 L.Ed. 1502 (1948).
For employees who work over 40 hours per week, it may be
difficult to determine an unstated regular hourly rate from a
stated weekly salary because the contract may not disclose how
many hours the weekly salary covers. The contracting parties may
have intended for the weekly salary either to cover only the 40
non-overtime hours or to cover anticipated overtime hours as
well. The City argues that the CBA-defined salary includes not
just regular 40-hour compensation but also overtime compensation
for 60 hours per week. "When employees regularly work more than
forty hours a week and receive a standard wage each week the
question arises whether the weekly payment genuinely represents
payment at a regular rate for the first forty hours plus time and
a half for the excess hours." Nunn's Battery & Electric Co. v.
Goldberg, 298 F.2d 516, 519 (5th Cir. 1962). The question is one
of intent: how many hours did the employer and employee
understand the salary to cover? See 29 C.F.R. § 778.113(a)
(calculating regular hourly rate from weekly salary "by dividing
the salary by the number of hours which the salary is intended to
The fact that an employee regularly works 60 or more hours
does not, without more, indicate that the employee's weekly
salary was intended to include the FLSA overtime premium for all
hours in excess of 40. See Adams, et al. v. Dep't of Juvenile
Justice, et al., 143 F.3d 61, 67 (2d Cir. 1998) (noting, in
addressing the regular hourly rate for Houseparents working 60 to
120 hours per week, that case "authorities do not resolve whether
the salary of an employee who regularly works more than forty
hours per week should or should not be presumed to include an
overtime premium"). Unless the contracting parties intend and
understand the weekly salary to include overtime hours at the
premium rate, courts do not deem weekly salaries to include the
overtime premium for workers regularly logging overtime, but
instead hold that weekly salary covers only the first 40 hours.
See, e.g., Brennan v. Elmer's Disposal Serv., Inc., et al.,
510 F.2d 84, 88 (9th Cir. 1975) (noting the lack of "explicit
agreement between the employer and the employees . . . as to the
designated rate"); Wirtz v. Leon's Auto Parts Co., et al.,
406 F.2d 1250, 1252 (5th Cir. 1969) ("[An] indispensable factor[ ]
for compliance with this statute . . . [is] an explicit
understanding between the parties as to the existence of a
regular wage rate that is stepped up for overtime."); Marshall v.
R & M Erectors, Inc., et al., 429 F. Supp. 771, 780 (D.Del. 1977)
("[F]ixed salary will not be deemed to include an overtime
component in the absence of an express agreement."); Dunlop v.
Vita-Mart of Cambridge, Inc., et al., No. 72-1222-M, 72-1223-S,
1975 WL 1209, *2 (D.Mass. Oct. 31, 1975) ("[A]greement for a
fixed weekly pay for more than forty hours of work per week only
complies with [the FLSA] . . . if there is an explicit
understanding between employer and employee as to regular and
overtime hourly rates."), aff'd 542 F.2d 1163 (1st Cir. 1976);
Wirtz v. Harper Buffing Mach. Co., et al., 280 F. Supp. 376, 380
(D.Conn. 1968) ("The employees were hired for a fixed weekly
salary and . . . never informed that that salary included
compensation at one and one-half times the regular rate.").
Accordingly, an employer asserting that an employee's weekly
salary includes FLSA-required overtime payments must prove not
just that the employee regularly works over 40 hours per week,
but also that the employer and employee contracted for the weekly
salary to include the overtime period. There is a rebuttable
presumption that a weekly salary covers 40 hours; the employer
can rebut the presumption by showing an employer-employee
agreement that the salary cover a different number of hours. This
rule follows from the need to construe the FLSA sufficiently
broadly merely to ensure compliance with its basic overtime pay
mandate. "The important objective is assurance that the employees
and the employer are aware that overtime compensation in a
specific amount is included in the contract. Unless both sides
clearly understand this to be so, it cannot be said . . . that
the purposes of the law in requiring additional pay for overtime
work are being achieved." Id. at 381. The Supreme Court instructs
more generally that courts must construe the FLSA overtime
provisions broadly; a finding that a salary included overtime, in
the absence of proof of an agreement so stating, would be the
sort of "narrow, grudging" FLSA application that the Court
rejected soon after enactment. Tenn. Coal, Iron & R.R. Co., et
al. v. Muscoda Local No. 123, et al., 321 U.S. 590, 597, 64 S.Ct.
698, 88 L.Ed. 949 (1944).
D. Interpretation of the Disputed CBA Terms
The Equity CBA provisions seem to support the plaintiffs'
interpretation that the listed rates are regular hourly rates,
not premium overtime rates:
Effective July 1, 1994, notwithstanding the current
provisions of the Social Services and Related
Titles Agreement, the annual salaries rates [sic]
for the titles of Houseparent and Senior
Houseparent shall be based on a work week of 40
(forty) hours (2088 hours per annum).
Effective July 1, 1994, employees hired to work on
a twelve hour basis on a twelve hour day on a per
diem basis shall continue to be paid for the first
eight (8) hours at straight time (1X) and for the
remaining four at time and one-half (1 1/2X) based
on the hourly rate set forth below:
TITLE 6/30/93 7/1/93 Maximum
----- -------- -------- --------
Houseparent $12.2174 $12.7107 $17.7222
Senior Houseparent $14.4698 $15.0541 $19.0967
Nothing set forth herein shall preclude the
employer from continuing to assign employees to a
work week in excess of 40 hours per week.
Pls.' Ex. E, Art. XVII, ¶ 6. The first of the above-listed
paragraphs changes the weekly basis of Houseparents' salary from
60 hours to 40 hours. The next paragraph introduces the hourly
rates that, over a year of 40-hour weeks, add up to the yearly
salaries listed in the Social Services CBA:
TITLE 6/30/93 7/1/93 Maximum
----- ------- ------- -------
Houseparent $25,510 $26,540 $37,004
Senior Houseparent $30,213 $31,433 $39,874
Pls.' Ex. F, pp. 13, 16. Thus, as Magistrate Judge Ellis noted,
"If the provisions in the Equity Panel Report in fact read, as
they appear to, that plaintiffs' salaries are now intended to
compensate only forty hours of their regular sixty hour workweek,
then plaintiffs must prevail." Report & Recommendation at 10.