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SERVICE EMPLOYEES INT'L UNION v. STONE PARK ASSOCIATES

July 22, 2004.

SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 32BJ, AFL-CIO, Plaintiff,
v.
STONE PARK ASSOCIATES, LLC and A.M. PROPERTY HOLDING CORP. Defendants.



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

OPINION AND ORDER

The plaintiff, Service Employees International Union, Local 32BJ, AFL-CIO ("SEIU" or "the Union"), brings this motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure to confirm and enforce a labor arbitration award pursuant to § 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a). The underlying arbitration arose out of a contractual dispute between the plaintiff and defendants Stone Park Associates, LLC ("Stone Park") and A.M. Property Holding Corp. ("A.M. Property") over a pre-existing collective bargaining agreement covering SEIU employees of a building purchased by Stone Park. The defendants argue that they are not bound by the award because they were not a party to the collective bargaining agreement and its arbitration clause.*fn1 In addition to moving for summary judgment to confirm the award, including interest at a rate of 9% per annum from the date of the arbitration decision, the plaintiff seeks attorneys' fees and costs for enforcing the award, as provided in the collective bargaining agreement.

I

  The standard for granting summary judgment is well established. Summary judgment may not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Gallo v. Prudential Residential Servs. Ltd. P'ship, 22 F.3d 1219, 1223 (2d Cir. 1994). "The trial court's task at the summary judgment motion stage of the litigation is carefully limited to discerning whether there are genuine issues in short, is confined at this point to issue-finding; it does not extend to issue-resolution." Gallo, 22 F.3d at 1224. The moving party bears the initial burden of "informing the district court of the basis for its motion" and identifying the matter that "it believes demonstrate[s] the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. The substantive law governing the case will identify those facts that are material and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

  In determining whether summary judgment is appropriate, a court must resolve all ambiguities and draw all reasonable inferences against the moving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)); see also Gallo, 22 F.3d at 1223. Summary judgment is improper if there is any evidence in the record from any source from which a reasonable inference could be drawn in favor of the nonmoving party. See Chambers v. TRM Copy Ctrs. Corp., 43 F.3d 29, 37 (2d Cir. 1994). If the moving party meets its burden, the burden shifts to the nonmoving party to come forward with "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). The nonmoving party must produce evidence in the record and "may not rely simply on conclusory statements or on contentions that the affidavits supporting the motion are not credible." Ying Jing Gan v. City of New York, 996 F.2d 522, 532 (2d Cir. 1993); see also Scotto v. Almenas, 143 F.3d 105, 114-15 (2d Cir. 1998) (collecting cases).

  II

  Unless otherwise noted, the following facts are not in dispute. On February 25, 2003 the defendant Stone Park purchased a commercial office building at 63 West 38 St. in New York City from Max Four N.Y. Holdings, LLC ("Max Four"). (Pl.'s Rule 56.1 So. ¶¶ 2, 10; Def.'s Rule 56.1 St. ¶¶ 2, 10.) The seller had retained four building employees who were members of SEIU Local 32BJ, a Union representing approximately 70,000 building-service workers in New York, New Jersey, and Connecticut. (Pl.'s Rule 56.1 St. ¶¶ 1, 3; Def.'s Rule 56.1 St. ¶¶ 1, 3.) The terms and conditions of their employment were established under a collective bargaining agreement, the 2002 Commercial Building Agreement ("CBA"), between the Union and the Realty Advisory Board on Labor Relations, Inc. ("RAB"), an association of building owners and managers that included Max Four. (Pl.'s Rule 56.1 St. ¶ 4; Def.'s Rule 56.1 St. ¶ 4; 2002 Commercial Building Agreement ("CBA") attached as Ex. A to Decl. of Judith I. Padow dated Jan. 27, 2004 ("Padow Decl.").) The defendants are not members of the RAB and did not sign the CBA. (Def.'s Rule 56.1 St. ¶ 4.)

  Relevant portions of the CBA provide that covered employees could be terminated only for just cause or by acceptable reductions-in-force, and that employers must maintain employees' existing wages and benefits and provide the Union with three weeks notice prior to subcontracting any "bargaining unit work." (Pl.'s Rule 56.1 St. ¶¶ 8-9; Def.'s Rule 56.1 St. ¶¶ 8-9.) The agreement stipulated that disputes were to be settled by arbitration and allowed for the recovery of counsel fees and court costs incurred in securing an arbitration award. (Pl.'s Rule 56.1 St. ¶ 5; Def.'s Rule 56.1 St. ¶ 5; CBA at Art. VIII(4).) The CBA also included a sale or transfer clause obligating the seller of the building to require the purchaser to hire the Union employees at existing wage and benefit schedules or confront liability for six months of severance payments as determined in the agreement. (Pl.'s Rule 56.1 St. ¶ 6; Def.'s Rule 56.1 St. ¶ 6.) This sale or transfer clause also provided in relevant part:
Nothing herein contained shall be deemed to limit or diminish in any way the Union's right to enforce this agreement against any transferee pursuant to applicable law concerning rules of successorship or otherwise; nor limit or diminish in any way the Union's or any employee's right to institute proceedings pursuant to the provisions of State or Federal labor relations laws, or any statutes, rules or regulations which may be applicable. (CBA at Art. XV.)
  Stone Park retained the defendant A.M. Property to manage the building. (Pl.'s Rule 56.1 St. ¶ 10; Def.'s Rule 56.1 St. ¶ 10.) A.M. Property hired an outside cleaning contractor without requisite notice to the Union, dismissed one of the four workers, and reduced the wages and benefits of two of the three remaining SEIU employees. (Pl.'s Rule 56.1 St. ¶¶ 15-16; Def.'s Rule 56.1 St. ¶¶ 15-16.) On April 24, 2003 the Union demanded arbitration to resolve the defendants' alleged repudiation of the CBA. (Union Letter of Demand for Arbitration dated Apr. 24, 2003 attached as Ex. D to Padow Decl.) The defendants filed suit in the Southern District of New York on May 9, 2003 to enjoin the arbitration proceedings, asserting that they were not bound by the terms of the CBA to which they were not a signatory. See AM Prop. Holding Corp. v. Local 32B-32J Serv. Employees Int'l, No. 03 Civ. 3261, 2003 WL 21277111, at *1-*2 (S.D.N.Y. June 2, 2003); (Pl.'s Rule 56.1 St. ¶ 18; Def.'s Rule 56.1 St. ¶ 18).
  With respect to the building's four Union employees and the CBA, Section 14.4 of the Contract of Sale between Max Four and Stone Park provided:
. . . Seller shall not terminate (or cause to be terminated) the employment contracts of those employees ("Senior Employees") listed on Exhibit "P-1" annexed hereto and made a part hereof; and Purchaser covenants and agrees that it shall retain all such Senior Employees on the terms and conditions of their current employment for a period of at least twelve (12) full calendar months following the Closing unless such termination is permitted under the Union Agreement (as hereinafter defined), and, upon Closing, any and all liabilities of Seller arising in connection with their employment or termination of their employment by Purchaser under the Commercial Building Agreement between Local 32B-32J Service Employees International Union, AFL-CIO and The Realty Advisory Board on Labor Relations, Inc., effective January 1, 2002, to December 31, 2004 (the "Union Agreement"), are automatically assumed by Purchaser. . . .
(Contract of Sale between MAX FOUR N.Y. HOLDINGS, L.L.C. and STONE PARK, LLC ("Contract of Sale") dated November 14, 2002 attached as Ex. B to Padow Decl. at § 14.4.)

  Stone Park argued that it had not agreed in Section 14.4 to the terms of the CBA but had instead only consented to pay damages resulting from the employment or termination of employment of the Union employees as specified in the CBA. AM Prop. Holding Corp., 2003 WL 21277111, at *2. Judge Batts held that under the terms of the purchase contract, Stone Park had assumed the liability for the CBA, including the arbitration provision, and thus denied the request to stay arbitration in a final order entered on June 10, 2003. Id. at *4; (Pl.'s Rule 56.1 St. ¶¶ 19-21; Def.'s Rule 56.1 St. ¶¶ 19-21). The defendants appealed on June 11, 2003, but, after a conference with the Staff Counsel for the Court of Appeals, they withdrew the appeal as moot because the arbitration had already proceeded on June 2 and June 11. (Def.'s Rule 56.1 St. ¶¶ 21, 27; Stipulation of Withdrawal of Appeal ("Withdrawal of Appeal") dated Sept. 10, 2003 attached as Ex. B to Def.'s Rule 56.1 St.) The stipulation of withdrawal stated that "all issues which could be raised on the appeal would be reserved for argument before the Court of Appeals on the confirmation of the award, if the award is confirmed." (Def.'s Rule 56.1 St. ¶ 27; Withdrawal of Appeal.)

  Following the district court's rationale that Stone Park had assumed the CBA upon execution of the Contract of Sale, arbitrator Robert Herzog ordered the defendants to cease subcontracting operations and reductions-in-force that were not in compliance with the CBA; to employ all four workers according to the terms of the agreement; and to pay back pay of $15,042.51 and benefit-fund contributions of $11,757.40 on behalf of the four workers. (Pl.'s Rule 56.1 St. ¶¶ 23-24; Def.'s Rule 56.1 So. ¶¶ 23-24; Opinion and Award of Arbitrator Robert Herzog ("Arbitration Award") dated July 21, 2003 attached as Ex. G to Padow Decl.) The defendants have paid $300.73 and have otherwise not complied with the provisions of the award. (Pl.'s Rule 56.1 St. ¶¶ 25-26; Def.'s Rule 56.1 St. ¶¶ 25-26.) The defendants assert that this payment comprised wages for work "actually performed" by two of the workers and did not manifest acceptance of liability under the CBA or the arbitration award. (Def.'s Rule 56.1 St. ¶¶ 25-26.)

  III

  The only disputed issue is whether the defendants were contractually bound by the terms of the CBA, particularly the arbitration clause. Cf. Prop. Advisory Group v. Bevona, 718 F. Supp. 209, 211 (S.D.N.Y. 1989) (the court cannot enforce an arbitration provision unless "the parties' agreement to arbitrate is not in issue" and the court "is satisfied that a valid arbitration agreement exists"). The arbitration award should be confirmed for the same reason that Judge Batts denied the defendants' prior motion to stay arbitration: in Section 14.4 of the Contract of Sale, Stone ...


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