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CAMPBELL v. KANE

United States District Court, S.D. New York


May 28, 2004.

TONIA CAMPBELL, Plaintiff, -against- KANE, KESSLER, P.C.; Versuslaw M. TRAUB; THE RIHGA ROYAL HOTEL/RIHGA INTERNATIONAL; JOHN QUIRKE; LISA LICHTENSTEIN; MARRIOTT INT'L, INC.; DONNA CABIBI; THE HOTEL AND RESTAURANT UNION, LOCAL 6, HOTEL, RESTAURANT, AND CLUB EMPLOYEES AND BARTENDERS UNION, AFL-CIO; HERRICK FEINSTEIN, LLP; JOSEPH FARELLI, Defendants

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

MEMORANDUM OPINION AND ORDER

Tonia Campbell originally filed this action in state Supreme Court, New York County, January 22, 2002 against the above-named defendants ("Defendants"). The case was removed to this Court on March 4, 2002. Plaintiff now moves to remand the case to state court; Defendants oppose the motion and move to dismiss the complaint in its entirety. For the reasons set forth below, the motion to remand is DENIED and the motions to dismiss are GRANTED.

I. BACKGROUND

  This dispute arises out of Plaintiff s employment with The Rihga Hotel and her union's representation of her with respect to a grievance against the hotel. In relation to this dispute, Plaintiff has brought suit against the following parties: Kane Kessler, P.C., the law firm that serves as labor counsel to the Hotel Association of New York City, Inc.; Lois M. Traub, an associate of Kane Kessler; Righa International ("Rihga"), doing business as The Rihga Hotel ("the Hotel"), the hotel at which Plaintiff was employed; John Quirke, Rihga's Comptroller until May 2002; Lisa Lichtenstein, Rihga's Assistant Director of Human Resources until February 2001; Marriott International ("Marriott"), a corporation that has owned and operated The Rihga Royal Hotel since about February 2001; Donna Cabibi, Marriott's Director of Human Resources at Hotel since February 2001; the Hotel and Restaurant Union, Local 6, Hotel Employees & Restaurant Employees International Union, AFL-CIO ("Local 6"), a labor union representing employees performing various trades in the New York City hotel and restaurant industry; Herrick Feinstein, LLP, a law firm retained as counsel to represent Local 6 and the New York Hotel & Motel Trades Counsel, AFL-CIO, in connection with the grievance challenging Plaintiff's discharge from the Hotel; and Joseph Farelli, an attorney associated with Herrick, Feinstein, LLP, who was assigned to handle Plaintiff's grievance and arbitration against the Hotel.

  Plaintiff was employed by the Rihga Hotel until her termination on November 15, 2000. During her employment at the Hotel, Plaintiff was a member of Local 6, an affiliated local of the New York Hotel & Motel Trades Council, AFL-CIO (collectively, "the Union"). The terms and conditions of her employment were governed by a collective bargaining agreement (the "Industry-Wide Agreement" or "IWA") between the Union and the Hotel Association of New York City, Inc. ("the Association"), a multi-employer trade association representing approximately 175 hotels in the New York City area. (Traub Aff ¶ 20).

  Article 26 of the IWA contains a grievance and arbitration clause, which provides, in part:

All complaints, disputes or grievances arising between the parties hereto involving questions or interpretation or application of any clause of this Agreement, or any acts, conduct or relations between the parties, directly or indirectly, which shall not have been adjusted by and between the parties involved shall be referred to a permanent umpire known as the Impartial Chairman, and his decision shall be final and binding upon the parties.
(Traub Aff, Ex. C.)

  Article 27 of the IWA provides that the employer may discharge any employee, but that the Union has the right to question whether such discharge was for just cause. (Id.) If the dispute is not adjusted pursuant to the grievance procedure, it shall be submitted for adjudication to the Impartial Chairman pursuant to Article 26. (Id.)

  Upon Plaintiff's termination on November 15, 2000, the Union filed a grievance on Plaintiff's behalf, claiming that her discharge was not for just cause. (Traub Aff. ¶¶ 23-24.) In February 2001, several months after Plaintiff was discharged but before the date of her arbitration, Rihga sold its interest in the Hotel to Marriott. (Id. at ¶ 25.)

  An arbitration was scheduled before the Office of the Impartial Chairman for May 1, 2001. (Id. at ¶ 26.) On that date, Traub and Cabibi appeared on behalf of Rihga and Marriott, respectively, and Farelli appeared on behalf of Plaintiff. (Id. at ¶ 27-28.) Prior to the commencement of arbitration proceedings, Traub and Farelli engaged in settlement negotiations. (Id. at ¶ 30.) Pursuant to these discussions, the parties entered into a Voluntary Settlement Agreement ("Settlement Agreement"), which provided, inter alia, that Rihga would pay Plaintiff the sum of $32,500, less usual statutory deductions and that the Hotel would provide Plaintiff with a neutral letter of reference upon request by a potential employer. (Id., Ex. D.) The Agreement further contained an acknowledgment by Plaintiff that the Union had represented her fully and fairly throughout the grievance procedure, arbitration and negotiation of the Settlement Agreement. (Id.) Plaintiff claims that the Settlement Agreement contains an illegal waiver of her right to unemployment and workers compensation benefits. (See Compl. ¶¶ 14, 36.)

  On October 25, 2001, Plaintiff traveled to Philadelphia to interview for a chef de partie position at the Ritz-Carlton. (Id. ¶ 21.) After four hours with the sous chef discussing the position, Plaintiff was confident of being hired for the position. (Id. ¶ 22.) While Plaintiff was completing an application for employment, she became aware that the Ritz-Carlton was owned by and/or affiliated with Marriott. (Id. ¶ 23.) The next business day, Plaintiff contacted the sous chef to inform him that she would be unable to accept the position. (Id. ¶ 24.) Upon identifying herself, Plaintiff was "immediately aware that the Sous Chef had knowledge of her termination and Settlement Agreement." (Id. ¶ 25.) Immediately after Plaintiff's conversation with the sous chef, Plaintiff contacted her sister and requested that she call the Marriott and request an employment reference for Plaintiff. (Id. ¶ 26.) Plaintiff was informed by her sister that she had spoken to a woman named "Donna" and was told that there was no record of employment pertaining to Plaintiff. (Id. ¶ 27.) Shortly thereafter, Plaintiff called Marriott, requested the same information, and received the same response. (Id. ¶ 28.)

  Upon contacting both Marriott and the Union about the situation, Plaintiff received a written verification of employment from Ms. Cabibi. (Id. ¶ 37.) After receiving the employment verification, Plaintiff informed Marriott and the Union that the verification was insufficient to remedy their breach of contract. (Id. ¶¶ 37-39.)

  Plaintiff filed this action on January 22, 2002. Her complaint sets forth three claims: Count One asserts a claim for breach of contract; Count Two asserts a claim of fraud and deceit; and Count Three asserts a claim for defamation.

  II. DISCUSSION

  A. Motion to Remand

  Plaintiff moves to remand the action to state court on the basis that this Court lacks subject matter jurisdiction. Defendants respond that Plaintiff's state law claims for breach of contract and for fraud and deceit are preempted by the federal Labor Management Relations Act ("LMRA"), thereby establishing federal jurisdiction under 28 U.S.C. § 1331.

  A defendant in an action filed in state court may remove that action to federal court under 28 U.S.C. § 1441(a) if the plaintiff's "well-pleaded complaint" includes a federal cause of action. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). When a claim purporting to be based on state law falls within an area that Congress has completely preempted, the complaint is considered from its inception a federal claim and therefore arises under federal law within the original jurisdiction of the federal court. Id. at 393. In deciding a question of subject matter jurisdiction, a district court can look to evidence outside the pleadings. Luckett v. Bure, 290 F.3d 493, 496-97 (2dCir. 2002).

  The facts set forth in the complaint allege that the Rihga Defendants breached the Settlement Agreement that had resolved Plaintiff's grievance when they declined to confirm Plaintiff's employment. The complaint further alleges that the Union, Herrick Feinstein, and Joseph Farelli (collectively, "Union Defendants") committed fraud and breached their "duty to act in good faith" while representing Plaintiff during her grievance proceedings. (Compl. ¶ 75.)

  Although Plaintiff sets forth these allegations in common law terms, Defendants are correct that such common law claims are preempted by the LMRA where, as here, they arise out of proceedings pursuant to a collective bargaining agreement. See United Steelworkers of America v. Rawson, 495 U.S. 362, 368 (1990); Local 300, Nat'l Postal Mail Handlers Union. AFL-CIO-CLC v. United States Postal Serv., 1994 U.S. Dist. LEXIS 16610, *5 (S.D.N.Y. Nov. 21, 1994). The preemptive power of Section 301 has been made imminently clear by the Supreme Court:

The preemptive force of Section 301 is so powerful as to displace entirely any state cause of action for violation of contracts between an employer and a labor organization. Any such suit is purely a creature of federal law, notwithstanding the fact that state law would provide a cause of action in the absence of Section 301.
Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 23 (1983).

  Claims that an employer has failed to comply with a grievance settlement agreement that was reached pursuant to the grievance and arbitration provisions of a collective bargaining agreement and that the union has allegedly mishandled the dispute constitute hybrid 301/duty of fair representation claims governed by section 301 of the LMRA. See DelCostello v. Int'l Brhd. of Teamsters, 462 U.S. 151, 165 (1983). Thus, Plaintiff's common law claims in this regard are preempted by federal law.

  Because Plaintiff's state law claims based on the her former employer's alleged failure to comply with the settlement agreement and the Union's failure to adequately represent her are preempted by federal law, Plaintiff's action could have properly been brought in this Court. Thus, Defendant's removal of the case from state court was proper, and Plaintiff's motion to remand is denied.

  B. Motions to Dismiss Defendants have submitted three separate motions to dismiss, together with accompanying affidavits and exhibits; Plaintiff's response also includes evidentiary submissions. Rule 12(b) states, "If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment. . . ." Fed.R.Civ.P. 12(b).

  Because the materials submitted to the Court lie outside the complaint, it is appropriate for the Court to treat Defendants' motions as a motion for summary judgment, as provided in Federal Rule of Civil Procedure 12(b). See Chambers v. Time Warner, Inc., 282 F.3d 147, 154 (2d Cir. 2002) ("This conversion [to a summary judgment motion] is `strictly enforced' whenever a district court considers extra-pleading material in ruling on a motion to dismiss."); Brass v. Am. Techs., Inc., 987 F.2d 142, 150 (2d Cir. 1993) (noting that courts deciding a motion to dismiss under Rule 12(b)(6) may only consider allegations in the complaint and documents incorporated in or attached to the complaint).

  1. Claims Arising Out of Plaintiff's Grievance Proceedings and the Resulting Settlement Agreement

  As explained above, section 301 of the LMRA governs Plaintiff's claims arising out of Plaintiff's grievance proceedings and compliance with the Settlement Agreement. Accordingly, the Court will evaluate the motions to dismiss these claims in light of this statute.

  a. Section 301 Action

  In order to maintain an action under Section 301, an employee must exhaust any arbitration procedures provided in the collective bargaining agreement. Dougherty v. AT&T, 902 F.2d 201, 203 (2d Cir. 1990). This requirement applies not only to grievance proceedings themselves, but also attempts to enforce settlements agreed to prior to the commencement of arbitration. Local 300, Nat'l Postal Mail Handlers Union, AFL-CIOCLC 1994 U.S. Dist. LEXIS 16610, *5 ("The parties' obligation to resort to the grievance-arbitration procedure does not change merely because the instant dispute involves a settlement agreement that concerns a prior grievance under the [collective bargaining agreement]").

  The IWA contains an arbitration provision requiring the parties to submit to arbitration "all complaints, disputes or grievances arising between the parties hereto involving questions or interpretation or application of any clause of this Agreement, or any acts, conduct or relations between the parties, directly or indirectly . . ." The Second Circuit has held an identical arbitration clause in a collective bargaining agreement to exclude "[n]o grievance — either specific or general" from its coverage. Pitta v. Hotel Ass'n of New York City, 806 F.2d 419, 422 (2d Cir. 1986).

  In view of the broad language of the IWA arbitration clause, the Court finds that Plaintiff's claim that the Marriott and Rihga Defendants breached their obligations under the Settlement Agreement must be submitted to arbitration prior to being resolved in federal court. Accordingly, Plaintiff's Section 301 claims are dismissed.

  b. Duty of Fair Representation Claim

  Plaintiff claims that the Union Defendants failed to adequately represent her by allowing her to waive workers compensation benefits in the Settlement Agreement. As discussed above, such claims fall under federal law as a claim for breach of a duty of fair representation. The Union Defendants argue that this claim must be dismissed as barred by the applicable statute of limitations.

  A union has a duty to fairly represent all employees subject to a collective bargaining agreement Spellacy v. Airline Pilots Assn. Int'l 156 F.3d 120, 126 (2dCir. 1998). A plaintiff alleging a duty of fair representation claim must establish that the union's actions were arbitrary, discriminatory, or in bad faith, and that such actions caused the plaintiff's injuries. Id.

  A claim that a union breached its duty of fair representation is governed by a six-month statute of limitations. DelCostello, 462 U.S. 151, 158. The limitations period accrues when the plaintiff knew or reasonably should have known that a breach occurred. Flanigan v. Int'l Bhd. of Teamsters, Truck Drivers Local 671, 942 F.2d 824, 827.

  Plaintiff's breach of duty claim against the Union Defendants is based on their representation of Plaintiff during her grievance proceedings, and particularly their actions with respect to the Settlement Agreement provisions waiving Plaintiff's right to unemployment compensation. According to the complaint, Plaintiff signed the Settlement Agreement on May 1, 2001. Therefore, the Court finds that Plaintiff knew or should have known of the waiver of her rights to unemployment compensation at that time. Because Plaintiff did not file this action until January 22, 2002, approximately nine months later, her breach of duty claim is dismissed for failure to file within the statutory period.

  2. Defamation Claim

  Plaintiff claims that Marriot and Cabibi "knowingly, willfully, maliciously and intentionally set out to defame [Plaintiff's] reputation in the industry by stating that they had no record of her employment." (Compl. ¶ 77). Marriott and Cabibi assert that the defamation claim must be dismissed because Plaintiff has failed to state a claim under Rule 12(b)(6). A claim for defamation requires a showing that the defendant committed either libel or slander. "Libel is defined as a `publication, expressed in printing or writing or by symbols or pictures, concerning a living person which is false and tends to injure his reputation and thereby expose him to public hatred, contempt, scorn, obloquy, or shame.'" Glendora v. Kofalt 162 Misc.2d 166, 175, 616 N.Y.S.2d 138, 144 (1994) (quoting 43 N.Y. Jur. 2, Defamation and Privacy § 1) Slander, on the other hand, constitutes an injury to a person's reputation or good name by malicious or scandalous words. Glendora, 162 Misc.2d at 175.

  In order to state a claim for defamation under New York law, a complaint must set forth facts showing: (1) a defamatory statement of fact concerning the plaintiff; (2) publication to a third party; (3) fault (either negligence or actual malice); (4) falsity of the defamatory statement; and (5) special damages or per se actionability (defamatory on face of statement). Celle v. Filipino Reporter Enterprises, 209 F.3d 163, 176 (2d Cir. 2000).

  Plaintiff alleges that her sister contacted Rihga/Marriott Human Resources and asked for an employment reference for Plaintiff. Plaintiff's sister was allegedly told by "Donna" that she had no records indicating that Plaintiff had been employed by Rihga/Marriott within the time frame indicated. Plaintiff further alleges that she thereafter called Human Resources herself, requested the same information, and received the same response.*fn1

  Plaintiff asserts that she was defamed "in her industry." (Compl. ¶¶ 77, 78). However, Plaintiff fails to allege that her sister works in the same industry as she, and thus fails to show how the statements regarding her employment caused damage to her integrity or credibility within her industry. Because Plaintiff has not alleged that this statement damaged her in any way, Plaintiff's defamation claim must be dismissed. See Rall v. Hellman, 284 A.D.2d 113, 113-14, 726 N.Y.S.2d 629, 63-32 (1st Dep't 2001) (dismissing defamation claim where there was no allegation that plaintiff suffered any damages as a result of the alleged defamatory statement).

  III. CONCLUSION

  For the reasons set forth above, Plaintiff has failed to state a claim on which relief may be granted. Therefore, Defendants' motions are GRANTED and Plaintiff's claims are dismissed in their entirety. The Clerk of the Court is directed to close the case and remove the file from the active docket.

  SO ORDERED.


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