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S. Strauss, Inc. v. United Food and Commercial Workers Union

August 13, 2007


The opinion of the court was delivered by: Joseph F. Bianco, District Judge


Plaintiff S. Strauss, Inc. ("Strauss") seeks to stay an arbitration initiated by defendant United Food and Commercial Workers' Union, Local 342 (the "Union"). For the reasons that follow, the Court denies plaintiff's motion to stay arbitration.


The following facts are undisputed, unless otherwise noted.

A. The Instant Action

Strauss is a purveyor of meats and foodrelated products. (Pl.'s Pet. ¶ 1.) The Union purports to represent certain employees of Strauss pursuant to several collective bargaining agreements entered into by the parties. (Id. Ex. A.) Strauss entered into a collective bargaining agreement (the "CBA") with the Union on October 16, 2006, that covered the period from November 1, 2004 to October 31, 2008. (Pl.'s Pet. Ex. A.) Strauss does not dispute that it entered into the CBA or that it has entered into various other CBAs with the Union over the course of the last forty years.*fn1 (Id. ¶ 7-8.) Strauss asserts that it entered into the CBAs "so that its owners and possibly one or two critical employees . . . could participate in the [Union's] affiliated employee welfare plan." (Id. ¶ 5.) However, the Union asserts that the CBAs were intended to govern the employment relationships of a large number of Strauss employees. (Dft.'s Aff. in Opposition ¶ 14.)

On May 30, 2007, the Union served on Strauss a demand to arbitrate a dispute regarding Strauss' alleged violation of the CBA; specifically, the Union asserted that Strauss had "interfered with the Union's ability to represent its members and engaged in direct dealing by unilaterally attempting to change the working condition[s] of the employees and by discouraging and/or directing the employees not to sign Union authorization cards . . . and to forego Union wages and working conditions which were collectively bargained, in violation of the [CBA]." (Id. Ex. A.) According to the Union, it issued that demand after receiving complaints from certain Strauss employees, and after attempting to resolve the issues with Strauss management. (Dft.'s Aff. ¶ 5.) Subsequently, on May 31, 2007, the Union filed charges against Strauss regarding these issues with the National Labor Relations Board ("NLRB"). (Dft.'s ¶ 5.) Also on May 31, 2007, Strauss filed a Recognition Method Petition ("RM Petition") with the NLRB that, according to Strauss, sought to have the NLRB "determine the effect of the [CBA] and representational rights of the employees." (Pl.'s Mem. at 2.)

Strauss commenced this action on June 5, 2007, in the Supreme Court of the State of New York, Nassau County, by filing an Order to Show Cause and a petition to stay arbitration, wherein Strauss sought an "emergency" stay of the arbitration initiated by the Union.*fn2 Defendant removed the case to this Court on June 15, 2007. Strauss' petition seeks a stay of the arbitration pending the resolution of Strauss' RM Petition before the NLRB. Plaintiff argues that the arbitration should be stayed on the ground that the parties' CBA is a "sham," and, thus, the arbitration clause contained therein should not be enforced. (Pl.'s Pet. ¶ 8.) In support of that position, Strauss asserts that the Union "has ignored any and all of its purported obligations under the series of [CBAs] executed by the parties," (id. ¶ 8), has never filed a grievance against Strauss, and has never sought to arbitrate a dispute with Strauss pursuant to the CBA's arbitration clause (Dft.'s Aff. ¶ 19). As such, according to Strauss, "it was always understood [by the parties] that Strauss would not actually be bound by the CBA," notwithstanding the fact that the parties have entered into CBAs for at least the past twenty-one years. (Id. ¶ 14.)

B. The Action Filed in the Southern District of New York

In June 2007, certain funds affiliated with the Union (the "Funds") commenced an action against Strauss in the Southern District of New York (the "SDNY Action").*fn3 (Dft.'s Aff. Ex. A.) In an amended complaint dated June 14, 2007, the Funds sought an immediate audit of Strauss' books and records and an order compelling Strauss to proceed to arbitration regarding the alleged nonpayment by Strauss of money owed to the Funds under the same CBA at issue in this action.*fn4 (Id. ¶¶ 21-34.)

Subsequently, Strauss moved for a stay of an arbitration proceeding initiated by the Funds based on the same grounds asserted in this action - namely, that the CBA was a "sham," and that the parties to the CBA, including the Union and its Funds, "never intended to enter into a true collective bargaining relationship." (Dft.'s Aff. Ex. B.) In so moving, Strauss specifically argued that "[m]uch" of the substance of its filings in the SDNY Action was also submitted, without alteration, to this Court in relation to the instant action. (Id.) According to Strauss, there are "identical issues pending before the two [c]ourts" relating, inter alia, to the validity of the CBA. (Id.)

On July 3, 2007, the Honorable Alvin K. Hellerstein issued an order in the SDNY Action directing the parties to proceed to arbitration "[f]or the reasons stated on the record" at oral argument. (Dft.'s Aff. Ex. E.) During the oral argument, Strauss' counsel asserted that the issue before the court was "whether there was a true collective bargaining relationship ever established, [and] whether, if there was, it has been abandoned." (Dft.'s Aff. Ex. F.) Judge Hellerstein then asked Strauss' counsel if Strauss and the Union had, in fact, "signed a collective bargaining agreement and a supplement, which makes it effective for the period in question?" (Id.) Strauss' counsel responded: "No question about it, they [have] signed collective bargaining agreements for 40 years plus." (Id.) Nevertheless, Strauss' counsel proceeded to argue that, because the CBA was a "sham," "there is no effectiveness to that collective bargaining agreement." (Id.)

Ultimately, however, Judge Hellerstein rejected Strauss' argument, and concluded that, as to the "narrow issue" before him - namely, "whether under the grievance proceedings of a binding agreement, duly entered into according to its terms, arbitration should be had" - that the parties should proceed to arbitration. (Id. (emphasis added)) Judge Hellerstein then reiterated his ruling: "[t]he motion to stay the arbitration is denied on the ground that there is an, apparently, ...

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