United States District Court, Southern District of New York
March 14, 2003
LOCAL 338, RWDSU, PETITIONER,
FARMLAND DAIRIES, INC., RESPONDENT.
The opinion of the court was delivered by: Laura Taylor Swain, United States District Judge
Local 338, RWDSU (the "Union") moves, pursuant to Rule 56 of the Federal Rules of Civil Procedure, for an order granting it summary judgment and confirming an arbitration award dated December 11, 2001 (the "Opinion and Award"). Farmland Dairies, Inc. ("Farmland Dairies") opposes the motion.
The Court has considered thoroughly the record and all written submissions made in connection with this motion. For the following reasons, the Union's motion for summary judgment is granted.
The Court has jurisdiction of this proceeding pursuant to 29 U.S.C. § 185, 9 U.S.C. § 9 and 28 U.S.C. § 1337.
The following facts are uncontested.
The Union represents employees in the dairy, retail supermarket and health care industries in New York and New Jersey. (Plaintiff's Rule 56.1 Statement, at I.A.1.) Farmland Dairies employs union members as drivers. (Plaintiff's Rule 56.1 Statement at I.A. 4 and Certification of Shelly Budhar.) The Union and Farmland Dairies are parties to a collective bargaining agreement effective March 20, 2001 (the "Collective Bargaining Agreement"), which provides that any disputes between the Union and Farmland Dairies concerning the application or interpretation of the Collective Bargaining Agreement must be resolved through arbitration. (See Collective Bargaining Agreement, 34-35, Ex. A to Declaration of William Anspach "Anspach Decl.") Article 28(b) of the Collective Bargaining Agreement provides that arbitration decisions are "final and binding and conclusive upon the Employer, the Union and the employees." (Id. at 34-35.) The Collective Bargaining Agreement further provides that attorneys' fees and costs shall be awarded to the prevailing party. (Id. at 35-36.)
Article 29 of the Collective Bargaining Agreement provides as follows:
The Employer [Farmland Dairies] may utilize a total
number of owner-operators and their employees in an
amount not to exceed 25% of the number of route
drivers in the bargaining unit. The Employer may
utilize an unlimited number of owner-operators to make
(Id. at 37.)
In April of 2001, a dispute arose concerning Farmland Dairies' use of owner-operators. The parties submitted the dispute to arbitration. (See Complaint, ¶¶ 8, 9.) The parties stipulated that the issue in question was whether Farmland Dairies had complied with the above-quoted Article 29. (See Opinion and Award, Ex. B to Anspach Decl., at 1-2.)
In the Opinion and Award, the arbitrator ruled that: "[t]he Company [Farmland Dairies] has violated Article 29 of the [Collective Bargaining Agreement] by failing to maintain the proper ratio of owner-operators to employee route drivers. The Company shall fully comply with the terms of Article 29 of the [Collective Bargaining Agreement.]" (Id. at 3.)
The Union contends that Farmland Dairies has failed to comply with the Opinion and Award and alleges that, as of July 2002, Farmland Dairies' ratio of owner-operators to union drivers was 57.5%. Farmland Dairies asserts that is had made good faith efforts to comply with the Opinion and Award but that, due to circumstances beyond its control, it could not achieve the ratio set forth in Article 29 of the Collective Bargaining Agreement.
Farmland Dairies asserts that, in its efforts to comply with Article 29, it ran 25 classified advertisements seeking drivers. (See Budhar Certification, ¶ 3.) In September of 2001, Farmland Dairies informed its employees that it was searching for qualified drivers and offered a bonus to employees who recommended a person who was subsequently employed as driver. (See id. ¶ 4.) Between December 11, 2001 and September 30, 2002, Farmland Dairies interviewed 49 applicants, but only 7 persons were hired because the remaining applicants were not qualified, not interested, or rejected or did not respond to offers of employment. (See id. ¶ 5.) Farmland Dairies also sought to employ drivers from a company that had gone out of business. None of the drivers of the defunct company who were contacted by Farmland Dairies' representatives were interested in being hired. (See id. ¶ 6.) Between December 11, 2001 and October 25, 2002, thirteen employee drivers left their jobs at Farmland Dairies. Eleven of these left voluntarily. (See id. ¶ 8.)
Summary judgment is appropriate where there is no triable issue of material fact and the movant is entitled to judgment as a matter of law. Slattery v. Swiss Reinsurance America Corp., 248 F.3d 87, 91 (2d Cir. 2001). On a motion for summary judgment, the court must resolve all ambiguities and draw all inferences in favor of the nonmoving party. Id.; Holt v. KMI-Continental, Inc., 95 F.3d 123, 128-29 (2d Cir. 1996).
Because arbitration is a matter of contract, an arbitrator's award "is legitimate only so long as it draws its essence from the collective bargaining agreement." United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597 (1960); Local 1199, Drug, Hospital and Health Care Employees Union, RWDSU, AFL-CIO v. Brooks Drug Company, 956 F.2d 22, 25 (2d Cir.1992). An award carries a strong presumption of enforceability, and substantial deference is granted to an arbitrator's decision. See In re Marine Pollution Service, Inc., 857 F.2d 91, 94 (2d Cir. 1988); Meyers v. Parex, Inc., 689 F.2d 17, 18 (2d Cir. 1982) (arbitrator's decision need only offer a barely colorable justification for the outcome reached). The Court's "function in confirming or vacating an arbitration award is severely limited." Amicizia Societa Navegazione v. Chilean Nitrate and Iodine Sales Corp., 274 F.2d 805, 808 (2d Cir.), cert. denied, 363 U.S. 843 (1960). Judicial review does not extend to the award's merits. "[A]s long as the arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed a serious error does not suffice to overturn his decision." Leed Architectural Prod., Inc. v. United Steelworkers Local 6674, 916 F.2d 63, 65 (2d Cir. 1990) (emphasis added) (citation and quotation marks omitted).
Under the Federal Arbitration Act (the "FAA"), a court must confirm an award upon proper application unless the award is vacated, modified or corrected on grounds specified in the statute. See 9 U.S.C.A. § 9.*fn1 Section 10(a) of the statute provides that an award may be vacated if: (1) the award was procured by corruption, fraud or undue means; (2) the arbitrators exhibited "evident partiality" or "corruption;" (3) the arbitrators were guilty of misconduct; or (4) the arbitrators exceeded their power. See 9 U.S.C.A. § 10(a) (West 1999 & Supp. 2002). In addition, the Second Circuit has recognized that an arbitration award may be vacated if it is in "manifest disregard of the law." Halligan v. Piper Jaffray, Inc., 148 F.3d 197, 202 (2d Cir. 1998); see Wilko v. Swan, 346 U.S. 427, 436-37, 74 (1953), overruled on other grounds in Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477 (1989). In this case, there is no argument that the Opinion and Award is in manifest disregard of the law.
Applying these principles here, there is no basis for overturning the Opinion and Award. There is no dispute that the arbitrator acted within the scope of his authority. The parties submitted the dispute according to the terms of the Collective Bargaining Agreement and stipulated to the issue to be arbitrated. There is no contention that the arbitrator's determination of the dispute did not arise from the framework of the Collective Bargaining Agreement. Further, Farmland Dairies has made no showing that the Opinion and Award was procured by corruption, fraud or undue means, that the arbitrator showed "evident partiality" or "corruption," that the arbitrator was guilty of misconduct; or that the arbitrator exceeded his power. See 9 U.S.C.A. § 10(a) (West 1999 & Supp. 2002).
Farmland Dairies argues that this case should be remanded to arbitrator because the Opinion and Award is not final or complete, that the Opinion and Award does not specify the remedy if Farmland Dairies does not comply with the award and because the arbitrator should decide whether Farmland Dairies' efforts to comply with the award have been sufficient.
Farmland Dairies' argument that, because the Opinion and Award does not address damages for violation of Article 29, confirmation of the award is premature is without merit. The Union does not seek damages, and expressly disavows any request for damages in its papers submitted in support of its motion. (See Union Reply Mem. at 8.)
As to whether the matter should be remanded because the Opinion and Award does not contain instructions concerning its enforcement, the Opinion and Award provides clearly that Farmland Dairies has violated Article 29 of the Collective Bargaining Agreement and requires Farmland Dairies to comply with provisions of Article 29 by a date certain, three months subsequent to the date of the order. The Court finds that there is nothing ambiguous or indeterminate about the scope of the Opinion and Award. Failure to comply with the confirmed award can be addressed through appropriate procedural mechanisms.
Farmland Dairies asserts that it has made good faith efforts to comply with the provisions of Article 29, but has been unable to do so because of circumstances beyond its control. Farmland Dairies further asserts that there are material issues of fact as to whether its attempt to cure its noncompliance was sufficient. The Court finds that these issues are immaterial to the issue of whether the arbitrator's determination that Farmland Dairies failed to comply with Article 29 of the Collective Bargaining Agreement should be confirmed. Indeed, there is no dispute on the issue of noncompliance. (See Opinion and Award at 2 ("the Company [Farmland Dairies] as it acknowledges, has failed to comply with this provision [Article 29] of the Agreement."))
The cases cited by Farmland Dairies in support of its argument that the case should be remanded are inapposite. In Americas Insurance Company v. Seagull Compania Naviera, S.A., 774 F.2d 64 (2d Cir. 1985), Olympia & York Florida Equity Corp. v. Gould, 776 F.2d 42 (1985) and New York Bus Tours, Inc. v. Kheel, 864 F.2d 9 (2d Cir. 1988), the Second Circuit directed the court to remand the case to the arbitrator because there were circumstances in those cases that the arbitrator did not foresee. Here, Farmland Dairies complains that it has made efforts to comply with the Opinion and Award, but has been unable to do so and that the case should be remanded to the arbitrator so that the arbitrator may decide the relief appropriate if Farmland Dairies did not comply with the provisions of Article 29. These circumstances were addressed by expressly by the arbitrator, who provided in the Opinion and Award additional time for Farmland Dairies to comply with the order. Attorneys Fees' and Costs The Union seeks attorneys' fees and costs, citing the Collective Bargaining Agreement, which provides that fees and costs shall be paid to the prevailing party in the event such party resorts to the courts to enforce an arbitration award. (See Collective Bargaining Agreement at 35-36, Ex. B to Anspach Decl.) Farmland Dairies argues that the award of fees and costs should be denied due to the asserted impossibility of performance of its Article 29 obligations.*fn2
The general rule is that each party in a federal litigation pays its own attorneys' fees. See In re Arbitration of Briamonte v. Liberty Brokerage, Inc., No. 99 Civ. 2735, 2000 WL 666350, at *2 (S.D.N.Y. May 19, 2000). There are three exceptions to this general rule: (1) where a statute or enforceable contract provides for an award of attorneys' fees; (2) where the prevailing plaintiff confers a common benefit upon a class or fund; and (3) where a party wilfully disobeys a court order or "when the losing party has acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Alyeska Pipeline Serv. Co. v. Wilderness Society, 421 U.S. 240, 257-60 (1975). Here, the Collective Bargaining Agreement provides: "Should the Employer or the Union be required to make resort to courts . . . to enforce an arbitration award, and should the courts . . . rule in favor of the party so making resort, the other party shall pay its attorneys' fees and costs." (Collective Bargaining Agreement at 35-36, Ex. A to Anspach Decl.) There is no dispute that the Collective Bargaining Agreement is an enforceable contract. Accordingly, because the Union was required to file the instant application in order to confirm and enforce the Opinion and Award and has prevailed on its application, Farmland Dairies shall pay reasonable attorneys fees and costs to the Union.
In addition, Farmland has not established impossibility of performance. Generally, "the excuse of impossibility of performance is limited to the destruction of the means of performance by an act of God, Vis major [a greater or superior force; an irresistible force], or by law." See Regency Holdings v. United States Department of Transportation, No. 00 Civ. 8115, 2001 WL 1033429 at *4 (S.D.N.Y. Sept. 7, 2001) (citations omitted). "[F]inancial difficulties or economic hardship . . . cannot constitute a defense of impossibility. Id. (citations omitted). "The party pleading impossibility as a defense must demonstrate that it took virtually every action within its powers to perform its duties under the contract." Id. (citations omitted). Although Farmland Dairies took substantial steps to perform its duties under the Collective Bargaining Agreement, it cannot claim that it took virtually every action within its power to perform its duties. Farmland Dairies has not, for instance, established that it could not have met its obligations by reducing owner-operator drivers or by addressing the reasons why it has had difficulty in hiring and retaining employee drivers. Under these circumstances, the Court finds that Farmland Dairies cannot assert successfully the defense of impossibility.
For all of the above reasons, the Union's motion for summary judgment is granted. The Opinion and Award dated December 11, 2001, is confirmed and judgment shall be entered thereon. The Court retains jurisdiction to make a determination and award of attorneys' fees and costs. The Union shall file with the Court and serve upon Farmland Dairies evidence of the legal fees and costs incurred in the filing of this proceeding within 20 days from the date hereof.