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1199 SEIU, United Healthcare Workers East v. Rite Aid Corp.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


March 24, 2008

1199 SEIU, UNITED HEALTHCARE WORKERS EAST PLAINTIFF
v.
RITE AID CORPORATION, DEFENDANT.

The opinion of the court was delivered by: George B. Daniels, District Judge

MEMORANDUM DECISION AND ORDER

Plaintiff 1199 SEIU, United Healthcare Workers East, ("plaintiff" or "the Union"), brought this action, under Section 301 of the Labor Management Relations Act of 1947, as amended 29 U.S.C. § 185, seeking a preliminary injunction in aid of arbitration against defendant Rite Aid Corporation, ("defendant" or "Rite Aid"). This Court denied, without prejudice, the Union's motion for a preliminary injunction. Thereafter, defendant filed motions to dismiss this action and to stay arbitration proceedings. Plaintiff then filed an amended complaint and cross-moved to compel arbitration. Defendant contends this Court should dismiss plaintiff's amended complaint, and this entire action, with prejudice.

BACKGROUND

The plaintiff Union represents approximately 6,500 pharmacists, pharmacy technicians and interns, clerks, stock persons, shift supervisors, assistant managers, and other employees of Rite Aid in various counties and cities in New York and New Jersey ("Bargaining Unit"). The Union and Rite Aid have been parties to a number of successive collective bargaining agreements, the most recent of which was for the period beginning October 11, 1998 and continuing through October 10, 2002 ("CBA"). The CBA was extended, with certain modifications, by two subsequent Memoranda of Agreement. The CBA contains an after-acquired clause*fn1 , which both parties agree, requires Rite Aid to apply the terms of the CBA to all stores in which the company acquires an interest of 50% or more in certain counties in the Bargaining Unit, upon a showing of majority support for the Union. See Defendant's Memorandum of Law in Further Support of Rite Aid Corporation's Motion to Dismiss at 5. In June 1998, the parties also entered into a separate neutrality agreement, which, in relevant part, provides: "Rite Aid further agrees that it and its managers and supervisors shall remain entirely neutral with respect to unionization and 1199 as the union seeking to represent its employees. 1199 will not disparage Rite Aid or its management in the course of these efforts." Supplemental Affidavit of Laurianne D. Vallone, ("Vallone Supp. Aff."), Ex. A, p. 2. While the parties agree that the CBA remains in effect, the parties disagree about whether the 1998 Neutrality Agreement remains in force. Plaintiff contends that the 1998 Neutrality Agreement is currently binding on the parties, while defendant asserts that it, and Rite Aid's duty to remain neutral during the unionization process, expired on October 31, 1998.*fn2

This dispute arises out of the acquisition of Eckerd and Brooks drug stores, by Rite Aid, from the Jean Coutu Group, Inc., ("Coutu"), a former defendant voluntarily dismissed from this action. In August 2006, Rite Aid entered into an agreement with Coutu to acquire these additional drug stores within the Bargaining Unit area. Vallone Aff., Ex. B ¶¶ 17. According to plaintiff, before the acquisition was completed, a senior vice president in Rite Aid's human resources department told senior Union representatives that Rite Aid planned to operate the newly acquired stores "under a 'union-free' business model." Vallone Aff., ¶ 44. Plaintiff also alleges that in the early Spring of 2007, defendant in conjunction with Eckerd management launched a campaign, directed at Eckerd employees, designed to discourage employee support for the Union ("the Union Avoidance Campaign"). Plaintiff contends that Rite Aid's stated intention to operate the new stores according to a union-free business model, in conjunction with the Union Avoidance Campaign, violates the CBA and the 1998 Neutrality Agreement, documents to which both parties are signatories.

On May 31, 2007, the Union sent an arbitration demand to the American Arbitration Association, seeking "declaratory relief from an arbitrator that Rite Aid's stated intention of keeping the to-be-acquired Eckerd Stores union-free is a violation of Article 1 of the CBA," and "an order enjoining the Employer from further engaging in anti-union campaign activities..." Vallone Aff., ¶ 47; Ex. 12, at 1. On June 5, 2007, Rite Aid filed an unfair labor practice charge against the Union with the National Labor Relations Board ("NLRB"), alleging that the Union's efforts to automatically apply the CBA to new Rite Aid employees without regard to the wishes of those employees violates the National Labor Relations Act, 29 U.S.C. §158. On June 6, 2007, plaintiff filed the instant action seeking preliminary injunctive relief. On June 7, 2007, defendant filed a second unfair labor practice charge with the NLRB, protesting plaintiff's lawsuit. This Court denied, without prejudice, the Union's motion for a preliminary injunction*fn3 , finding that plaintiff had failed to satisfy its burden of showing irreparable injury or likelihood of success. On July 2, 2007, Defendant filed a motion to dismiss the claim and to stay arbitration proceedings. Plaintiff then filed an amended complaint and cross-moved to compel arbitration.

In its Amended Complaint, plaintiff petitioned this Court to "enter an order directing the Defendant to submit to arbitration the disputes between the parties involving Rite Aid's threatened refusal to apply the terms of the parties' CBA to drugstores acquired by Rite Aid and the Defendant's union avoidance campaign directed towards those employees at those stores..." Pl. Amend. Compl., Prayer for Relief. Plaintiff alleges that Rite Aid's alleged anti-Union behavior violates the parties contractual responsibilities under the both CBA and the 1998 Neutrality Agreement.

THE COLLECTIVE BARGAINING AGREEMENT

"The question of 'substantive arbitrability' is for the court not for the arbitrator to decide." Livingston v. John Wiley & Sons, Inc., 313 F.2d 52, 55 (2d Cir. 1963) (citing Atkinson v. Sinclair Refining Co., 370 U.S. 238, 241 (1962)). In determining whether a dispute is arbitrable, a court must decide "whether the parties agreed to arbitrate, and if so, whether the scope of that agreement encompasses the asserted claims." Progressive Cas. Ins. Co. v. C.A. Reaseguradora Nacional de Venezuela, 991 F.2d 42, 45 (2d Cir. 1993) (quoting David L. Threlkeld & Co. v. Metallgesellschafr Ltd., 923 F.2d 245, 249 (2d Cir. 1991)).

Since the Supreme Court's decision in the 1960 Steelworkers Trilogy*fn4 , federal courts have routinely held that arbitration should be compelled unless it is clear that the dispute is not arbitrable under any interpretation of the relevant contract. See, e.g., Transit Mix Concrete Corp. v. Local Union No. 282, 809 F.2d 963, 968 (2d Cir. 1987). Parties opposing arbitration must demonstrate "that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute." ITT World Communications, Inc. v. Communications Workers of America, 422 F.2d 77, 81 (2d Cir. 1970) (quoting Warrior & Gulf, 363 U.S. at 582-83).

The role of this Court in determining whether a particular arbitration clause covers the asserted dispute is limited, in that it "is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract." Bressette v. Int'l Talc Co., Inc., 527 F.2d 211 (2d Cir. 1991) (quoting American Mfg., 363 U.S. at 567-68). Clearly, a party cannot be compelled to arbitrate where it has not contracted to submit to arbitration. Truck Drivers Local Union No. 807, I.B.T. v. Regional Imp. & Exp. Trucking Co., Inc., 944 F.2d 1037, 1042 (2d Cir. 1991). However, disputes arising out of an agreement are properly put before an arbitrator where the relevant contract contains a broad arbitration clause, such as a clause referring to an arbitrator any and all disputes relating to the agreement. See e.g., Rochdale Vill., Inc. v. Public Serv. Employees Union, 605 F.2d 1290, 1295 (2d Cir. 1979).

On May 31, 2007, plaintiff "filed a demand for arbitration seeking a declaratory relief from an arbitrator that Rite Aid's stated intention of keeping the to-be-acquired Eckerd Stores union-free is a violation of Article 1 of the CBA,"and "an order enjoining the Employer from further engaging in anti-union campaign activities..." Vallone Aff., ¶ 47; Ex. 12, at 1. Plaintiff informed defendant of its demand by letter and requested that Rite Aid consent to expedited arbitration of the dispute. Id., ¶ 24. To date, defendant has not consented to arbitration. Defendant argues that it has not violated the CBA as plaintiff has neither produced any evidence that it has majority support in an appropriate bargaining unit, nor has it alleged that Rite Aid has refused to consider evidence of majority support and apply the CBA to such employees who have expressed support for the Union. It is Rite Aid's position that only after a majority of newly acquired employees embrace the Union, will Rite Aid be required to apply the terms of the CBA to those employees. Rite Aid also contends that neither the CBA nor the 1998 Neutrality Agreement impose upon defendant an obligation to remain neutral during the current unionization process.

The dispute over the requirements and possible violation of the CBA is a proper subject for arbitration.*fn5 The CBA's arbitration provision submits to arbitration, "[a]ll complaints or disputes arising between the Union and the Employer under or out of this Agreement, or any breach or threatened breach of this Agreement ("herein referred to as a "grievance")...". Vallone Aff. Ex. 1, p. 54. It is the "paradigm of a broad clause." Oldroyd v. Elmira Savings Bank, FSB, 143 F.3d 72, 76 (2d Cir. 1998)(quoting Collins & Aikman Prod. Co. V. Building Sys., Inc., 58 F.3d 16, 19 (2d Cir. 1995)(holding that such broad arbitration clauses warrant a presumption of arbitrability). The Union's claims that Rite Aid has refused to apply the terms of the CBA to its newly acquired drug stores and that Rite Aid is engaged in a Union Avoidance Campaign in violation of the terms of the CBA, give rise to a dispute that is arbitrable under the broad arbitration clause of the CBA. The parties are, therefore, ordered to submit to arbitration.

CONCLUSION

Plaintiff's motion to compel arbitration is GRANTED. Defendant's motions to dismiss and to stay arbitration proceedings are DENIED.

SO ORDERED.


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