United States District Court, E.D. New York
October 8, 2004.
MICHAEL F. ADAMS, individually and in his capacity as President of the Sheriff Officers Association, Inc. and "JOHN DOE" and "JANE DOE" being persons in the Bargaining Unit represented by the Sheriff Officers Association, Inc. and whose names are too numerous to mention, Plaintiffs,
THOMAS SUOZZI, in his capacity as County Executive of the County of Nassau, HOWARD WEITZMAN, in his capacity as Comptroller of the County of Nassau and THE COUNTY OF NASSAU, Defendants.
The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF DECISION AND ORDER
This case involves an action brought by Michael F. Adams on
behalf of the Nassau County Sheriff Officers Association ("SHOA"
or the "Plaintiffs") against the County of Nassau (the "County"),
County Executive Thomas Suozzi, and Comptroller Howard Weitzman
(collectively, the "Defendants"), seeking an injunction to
prevent Nassau County from implementing a "lag payroll," namely,
a deferral of salary with regard to the members of SHOA.
Presently before the Court are motions by the Defendants,
pursuant to the Federal Arbitration Act, to stay the court
proceedings pending arbitration; to disqualify the Plaintiffs'
counsel; or in the alternative, to dismiss this action.
On December 29, 1999, the County enacted Resolution 574-1999
ratifying a memorandum of agreement between the County and
several law enforcement employee organizations, including SHOA
(collectively, the "Unions"). The memorandum of agreement ("Lag
Payroll Agreement") detailed the ability of the County to
institute a "lag payroll" during calendar year 2000. A "Lag
payroll," if implemented, would allow the County to defer ten
days of pay of each union member over the course of ten bi-weekly
pay periods. The deferred pay would be returned when the union
member separated from service with the County.
Although the Lag Payroll Agreement was signed by a SHOA
representative, the agreement stated that it would be inoperative
unless certain conditions were satisfied. First, it was subject
to ratification by union members, within 45 days, according to
SHOA's internal procedures. Second, it was subject to the
execution of a further memorandum of agreement for the terms and
conditions of an initial collective bargaining agreement between
SHOA and Nassau County.
Both conditions failed to materialize as contemplated in the
Lag Payroll Agreement. First, the Lag Payroll Agreement was never
submitted to the members of SHOA for ratification. Second, the
collective bargaining agreement was not executed until August
2001. Moreover, the collective bargaining agreement that was
executed in August of 2001 ("Collective Bargaining Agreement")
never mentions "lag payroll," deferral of pay, or the Lag Payroll
On August 27, 2003, the County's Office of Labor Relations
notified SHOA that it intended to implement the terms of the Lag
Payroll Agreement with regard to members of SHOA beginning
September 5, 2003. On September 4, 2003, the Plaintiffs filed an
order to show cause in the Supreme Court of the State of New York
seeking to enjoin the Defendants from implementing the Lag
Payroll Agreement. On September 5, 2003, the Defendants removed
this action to federal court based on federal question
On September 9, 2003 a hearing was held before United States
District Judge Denis Hurley on the Plaintiffs' request for a
temporary restraining order. Judge Hurley denied the application
and set the matter down for a hearing on the preliminary
injunction. On September 18, 2003, the case was reassigned to
this Court and the Plaintiffs withdrew their request for a
preliminary injunction in favor of proceeding to an adjudication
on the merits. The Defendants now seek to stay the action, on the
ground that the Lag Payroll Agreement requires this controversy
to be decided by arbitration.
A. As to the Motion to Stay
The Federal Arbitration Act requires a court to "stay the trial
of the action" until arbitration is held, when, in accordance
with the terms of an agreement, the parties have agreed to
arbitrate the dispute. 9 U.S.C. § 3 (2004). In enacting the
Federal Arbitration Act, Congress created national substantive
law governing all questions of the validity and enforceability of
arbitration agreements. See Genesco, Inc. v. T. Kakiuchi &
Co., Ltd., 815 F.2d 840, 845 (2d Cir. 1987) (citing Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614,
626, 105 S. Ct. 3346, 87 L. Ed.2d 444 (1985)). Therefore, this
Court may properly exercise federal question jurisdiction over
this dispute. See Genesco, 815 F.2d at 845.
In considering whether to stay an action in favor of
arbitration, the Court must first decide whether the parties
agreed to arbitrate. See Chelsea Square Textiles, Inc. v.
Bombay Dyeing & Mfg. Co., 189 F.3d 289, 294 (2d Cir. 1999). It
is well settled that a court may not compel arbitration until it
has resolved "the question of the very existence" of the contract
embodying the arbitration clause. Specht v. Netscape
Communications Corp., 306 F.3d 17, 26 (2d Cir. 2002) (quoting
Interocean Shipping Co. v. Nat'l Shipping & Trading Corp.,
462 F.2d 673, 676 (2d Cir. 1972)). If a party claims that no
agreement at all exists, a trial is required on that issue before
the court can direct the parties to arbitration. Id.; see
also AT & T Techs., Inc. v. Communications Workers of Am.,
475 U.S. 643, 648, 106 S. Ct. 1415, 1418 (1986) ("[A]rbitration is a
matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed so to submit.")
(citing United Steelworkers v. Warrior & Gulf Navigation Co.,
363 U.S. 574, 582-83, 80 S. Ct. 1347, 1353 (1960)). Unless the
parties clearly provide otherwise, "the question of arbitrability
whether a[n] . . . agreement creates a duty for the parties to
arbitrate the particular grievance is undeniably an issue for
judicial determination." AT & T Techs., Inc., 475 U.S. at 649;
accord Specht, 306 F.3d 17, 26-27 (2d Cir. 2002). The
Plaintiffs in this case argue that no agreement exists because it
was never ratified by the members of SHOA as required by the
terms of the Lag Payroll Agreement.
In deciding whether parties agreed to arbitrate a certain
matter, a court should apply state law to the issue of contract
formation. Id., 306 F.3d at 27; Mehler v. Terminix Int'l Co.,
205 F.3d 44, 48 (2d Cir. 2000); see also Perry v. Thomas,
482 U.S. 483, 492 n. 9, 107 S. Ct. 2520, 2527 n. 9 (1987) ("[S]tate
law, whether of legislative or judicial origin, is applicable if
that law arose to govern issues concerning the validity,
revocability, and enforceability of contracts generally."). Thus,
the Court looks to New York state law regarding the issue of
whether the parties entered into the Lag Payroll Agreement.
New York law requires contracts "be construed to effectuate the
intent of the parties as derived from the plain meaning" of the
agreement. Andy Warhol Found. for the Visual Arts, Inc. v.
Federal Ins. Co., 189 F.3d 208, 215 (2d Cir. 1999). A review of
the Lag Payroll Agreement reveals that its validity is
conditioned on ratification by SHOA. The agreement states that
"[t]his Memorandum shall be inoperative as to any union which
fails to ratify within 45 days. . . ." Lag Payroll Agreement at ¶
9. Ratification is also contingent upon "the execution of a
further Memorandum of Agreement for the terms and conditions of
an initial County/SHOA Collective Bargaining Agreement." Id.
Although a Collective Bargaining Agreement was executed by the
parties in August 2001, it is undisputed that the members of SHOA
never ratified the 1999 Lag Payroll Agreement.
The Defendants argue that the execution of the August 2001
Collective Bargaining Agreement, in and of itself, constituted
ratification of the Lag Payroll Agreement. Alternatively, the
Defendants argue that the failure of SHOA to present the Lag
Payroll Agreement for ratification waived the provision requiring
Generally, parties may condition performance or the validity of
a contract on the occurrence of an event. A condition precedent
is "an act or event, other than a lapse of time, which, unless
the condition is excused, must occur before a duty to perform a
promise in the agreement arises." Oppenheimer & Co., Inc. v.
Oppenheim, Appel, Dixon & Co., 86 N.Y.2d 685, 690,
636 N.Y.S.2d 734, 737 (1995) (citing Calamari & Perillo, Contracts § 11-2, at
438 [3d ed.] and Restatement [Second] of Contracts § 224).
"However, not every condition in a contract is precedent to the
existence of a valid, enforceable contract." Catskill Dev.
L.L.C. v. Park Place Entertainment Corp., 154 F. Supp. 2d 696,
704 (S.D.N.Y. 2001). The language of the contract must expressly
condition the formation of an agreement on the performance of the
The Lag Payroll Agreement clearly conditions formation on two
distinct events, namely, the ratification of the agreement by
SHOA and the execution of a subsequent memorandum of agreement.
Without one or the other, the agreement, by its own terms is
"inoperative." The failure to present the agreement for
ratification does not waive the condition. A party may waive
performance of a condition inserted for its own benefit under an
agreement. However, a party cannot create an obligation by waiver
where no agreement previously existed. See Nat'l Util. Servs.,
Inc. v. Whirlpool Corp., 325 F.2d 779, 781 (2d Cir. 1963)
(explaining that "[o]ne cannot `waive' himself into a duty to
make a gift of money" (quoting Corbin on Contracts, Vol. 3A § 752
Assuming SHOA had ratified the agreement, the failure of the
second condition would also render it inoperative. The Lag
Payroll Agreement states that the County may institute a lag
payroll in calendar year 2000, which had lapsed by the time the
Collective Bargaining Agreement was executed in August 2001.
Moreover, the Collective Bargaining Agreement neither
incorporates the Lag Payroll Agreement by reference nor mentions
deferral of salary.
It appears from the plain meaning of the contract that, by
reason of the conditions precedent, no valid agreement was
reached among the parties. The Court cannot order a stay of the
case pending arbitration if the Plaintiffs never intended to
enter into an agreement to arbitrate in the first place. As such,
the Court denies the motion of the Defendants to stay the action.
B. As to the Disqualification of Plaintiffs' Attorney
The Defendants also seek to disqualify the Plaintiffs'
attorney, Michael C. Axelrod, Esq., and his law firm, Certilman
Balin Adler & Hyman, LLP, based on statements made by Mr. Axelrod
during the September 9, 2003 hearing. At the hearing, Mr. Axelrod
stated that he may be called as a fact witness in this matter due
to his participation as a negotiator of the agreement. Under
Disciplinary Rule 5-102 of the New York Rules of Professional
Conduct, N.Y. Comp. Codes R. & Reg. tit. 22 § 1200.21 (2004), an
attorney shall not act, or accept employment that contemplates
the attorney's acting, as an advocate "on issues of fact" before
any tribunal if the attorney knows or it is obvious that the
attorney ought to be called as a witness on behalf of the client.
The Plaintiffs assert that Mr. Axelrod is not appearing as a
litigator in this case, but rather, the advocacy role is being
performed by his partner, Wayne Schaefer, Esq., and an associate.
Under DR 5-102(a), "[A] law firm is permitted to continue
representation of a client even though one of the firm's
attorneys will be called as a witness on behalf of the client
before a tribunal." In re Owen & Mandolfo, Inc. v. Davidoff of
Geneva, 197 A.D.2d 370, 370, 602 N.Y.S.2d 369, 369 (1st Dep't
At this time, the Defendants have not rebutted Plaintiffs'
assertion that Mr. Axelrod will not appear as the litigator in
this matter. Defendants may renew their request at a later date
if it appears that Mr. Axelrod is serving as an advocate and will
likely be called as a witness in this case. Accordingly, the
motion of the Defendants to disqualify Michael C. Axelrod or his
law firm as counsel for the Plaintiffs is denied, without
prejudice to renewal.
Finally, as to the alternative request of the Defendants to
decide the case "via a dispositive motion on the basis of
documentary evidence," (Letter from Defendant of 9/18/03, at 2,
and 9/23/03, at 3), the Court is unclear as to what relief the
Defendants seek under the Federal Rules of Civil Procedure. As
such, that motion is denied.
Based on the foregoing, it is hereby
ORDERED, that the motion by the Defendants to stay this
action pending arbitration is DENIED; and it is further
ORDERED, the motion by the Defendants to disqualify counsel
for the Plaintiffs is DENIED without prejudice, and it is
ORDERED, that the motion by the Defendants for dismissal of
the action is DENIED, and it is further
ORDERED, the parties are directed to contact United States
Magistrate Judge Arlene R. Lindsay forthwith to schedule the
completion of discovery.
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