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GILES v. CITY OF NEW YORK

March 10, 1999

SHARLENE GILES, RUBY BELGROVE, AND MARY O'GARRO GREENE, ON BEHALF OF THEMSELVES AND ALL OTHER EMPLOYEES SIMILARLY SITUATED, PLAINTIFFS,
v.
CITY OF NEW YORK, DEFENDANT.



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

OPINION

The plaintiffs, a class of employees of the defendant, the City of New York ("City"), brought this action to recover unpaid overtime compensation under the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. Both parties moved for summary judgment and Magistrate Judge Ronald L. Ellis recommended that the plaintiffs' motion be granted in part and denied in part and that the defendant's motion be granted. For the following reasons, the court finds that the critical contractual language is ambiguous and therefore denies both parties' motions for summary judgment.

I. Background

The plaintiffs are approximately 225 City employees working in the Administration for Children's Services ("ACS"), the Human Resources Administration ("HRA"), and the Department of Juvenile Justice ("DJJ"). With the titles of "Houseparent" and "Senior Houseparent," the plaintiffs work and reside in City facilities that house juveniles who are in City custody for various reasons.*fn1 Houseparents are represented by Local 371 of District Council 37, American Federation of State, County, and Municipal Employees ("Local 371" and "DC 37"). DC 37 and the City entered into three collective bargaining agreements ("CBAs") covering Houseparents' terms of employment, see Compl. ¶¶ 18-21, 27-28:(1) the Citywide Agreement, which covers the majority of the City's civilian employees ("Citywide CBA"), see Pls.' Ex. G*fn2; (2) the 1992-1995 Social Services and Related Titles Agreement ("Social Services CBA"), which covers the bargaining unit that includes Houseparents, see Pls.' Ex. F; and (3) the 1992-1995 DC 37 Equity Panel Report of the Joint Panel ("Equity CBA"), see Pls.' Ex. E, which allocates funds to DC 37 to distribute among members for equity purposes.

The lack of an explicit hourly rate for the period before July 1, 1994 led to overtime pay disputes. More specifically, it was unclear how many hours the weekly salary covered. This left unclear what Houseparents' regular hourly rate was, making it equally unclear how to calculate their overtime rate of 1.5 times their regular rate. In Adams, et al. v. Dep't of Juvenile Justice, et al., 1996 WL 82404, No. 93 Civ. 8042(PKL) (S.D.N.Y. Feb. 26, 1996), rev'd in part, 143 F.3d 61 (2d Cir. 1998), a class of Houseparents challenged the City's practice of calculating regular hourly rate, for overtime purposes, by dividing the weekly salary by 70 hours. On April 21, 1995, the City began dividing by 60 hours, retroactively to July 1, 1994. See Pls.' R. 56.1 Stmt. ¶ 32; Pls.' Ex. M. The City has settled all claims regarding the period before July 1, 1994 in both Adams and this case.

The only remaining dispute is whether, for the period since July 1, 1994, Houseparents' regular hourly rate is their weekly salary divided by 40 hours or their weekly salary divided by 60 hours. The Social Services CBA listed these annual salaries as based on a 60 hour workweek:

                               Hired       Hired
                               After       Before
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. The Equity CBA of November 22, 1994 attempted to clarify the ambiguity that the other CBAs left by stating only a weekly salary. Unfortunately, the parties also assert varying interpretations of the Equity CBA, which in relevant part reads as follows:

    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
    (12) 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 (4) at time
    and one-half (1 1/2X) based on the hourly rates set
    forth below:
                               Hired         Hired
                               After         Before
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 plaintiffs contend that the rates listed in the Equity CBA are the non-overtime regular hourly rates, which would make the overtime rates one-half higher. The City counters that the Equity CBA's listed rates are not the regular rates but the time-and-a-half premium overtime rates, which would make the regular rates one-third lower. In August 1995, Local 371 filed a request for arbitration of this dispute, see Pls.' Ex. P, which went to a hearing in July 1996. Local 371 argued that the Equity CBA's plain language makes clear that its listed hourly rates are regular, non-overtime rates. The City asserted a contrary interpretation of the text and argued that DC 37 and the City, the two parties to the CBA, did not intend a reading that implausibly would allocate to a few hundred Houseparents $9 million of $15 million in equity funds that were available to 120,000 DC 37 members. See Def.'s Ex. B. On July 3, 1997 the arbitrator issued an opinion deciding the issue in favor of the City. See Def.'s Ex. A; Pls.' Ex. N.

The plaintiffs filed this action in April 1996, after Local 371 filed for arbitration but before the arbitration went to hearing. Both parties have moved for summary judgment. The City argues that the arbitrator's ruling that the Equity CBA's listed hourly rates were premium overtime rates merits adherence and binds this court under the doctrine of issue preclusion. The plaintiffs argue that the arbitrator's ruling does not lead to preclusion in this action and reflects an impermissible interpretation of how the relevant CBA language comports with the FLSA.

II. Analysis

A. Arbitration as Bar to Plaintiffs' Claims

The City presents two arguments that the CBA arbitration provisions are dispositive against the plaintiffs. First, it argues that because of a union agreement to arbitrate disputes with the employer, the proper forum for the plaintiffs' claim is arbitration, not federal court. Second, it argues that the outcome of Local 371's arbitration leads to issue preclusion, collaterally estopping the plaintiffs from ...


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