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ADAMS v. SUOZZI

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,
v.
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.

I. BACKGROUND

  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 Agreement.

  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 jurisdiction.

  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.

  II. DISCUSSION

  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." ...


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