United States District Court, S.D. New York
OPINION & ORDER
HONORABLE PAUL A. CROTTY, United States District Judge
seek a declaratory judgment against defendant the New York
Hotel and Motel Trades Council, AFL-CIO (the “Hotel
Workers Union”), that Plaintiffs are not bound by the
provisions of a collective bargaining agreement-the Industry
Wide Agreement (“IWA”)-and that the IWA is not
enforceable as violative of the National Labor Relations Act
(“NLRA”) and public policy (the “Contract
Claims”). Plaintiffs also claim that the agreements,
including the IWA, and actions of defendants the Hotel
Workers Union and Interstate Hotels & Resorts, Inc.
(“Interstate, ” and together with the Hotel
Workers Union, “Defendants”) violate the Sherman
Act and the New York State Donnelly Act (the “Antitrust
Claims”). Each Defendant submitted a motion to dismiss
the Amended Complaint. The Court heard oral argument on the
motions on February 1, 2017.
reasons set forth below, the Court (1) grants Defendants'
motions to dismiss with respect to the Antitrust Claims, and
(2) denies the Hotel Workers Union's motion to dismiss
with respect to the Contract Claims.
are a web of 40 entities that own eight hotels in New York
City and have plans to open four more in the near future. Am.
Compl. ¶¶ 11-22. Plaintiffs' ultimate owners
are “a combination of members of the Lam family or
trusts whose beneficiaries are members of Lam family heirs
and others.” Id. ¶ 24.
Chelsea Grand LLC (“Chelsea”) owns the Four
Points by Sheraton hotel located on West 25th Street in
Manhattan (“Four Points Hotel”), and Chelsea, in
turn, is owned by members of the Lam family, including John
Lam. Id. ¶ 25 The Hotel Workers Union
represents approximately 32, 000 hotel workers in New York
City and elsewhere. Id. ¶ 26. It has contracts
with more than 300 hotels, including hotels in each of New
York City's five boroughs. Id.
provides management services for hotels and manages
approximately 450 hotels, and 83, 000 rooms worldwide.
Id. ¶ 27.
Hotel Association of New York City, Inc.
(“HANYC”) is an association whose “members
include more than 270 hotels in New York City, representing
more than 75, 000 rooms and approximately 50, 000 hotel
employees.” Id. ¶ 28.
Contract Claims here begin with the prior decisions in
Chelsea Grand, LLC v. New York Hotel & Motel Trades
Council, AFL-CIO (“Chelsea I”).
See 07 Civ. 2614 (PAC), 2014 WL 4813028 (S.D.N.Y.
Sept. 29, 2014), aff'd 629 F. App'x 152 (2d
Cir. 2015). At issue in Chelsea I was whether the
Hotel Workers Union could organize Chelsea's Four Points
Hotel based on agreements that the Hotel Workers Union had
entered into with Interstate, Chelsea's managing agent.
Chelsea argued that it had advised Interstate that it did not
want to be unionized, but Chelsea was ultimately held to be
bound to certain provisions of the IWA. The Court summarizes
below relevant facts from the Amended Complaint as well as
from the two decisions in Chelsea I.
are two provisions in the IWA-a collective bargaining
agreement (renewed most relevantly in 2001, 2006, and 2012),
between the Hotel Workers Union and HANYC-that are at the
heart of the parties' dispute. See Chelsea I,
2014 WL 4813028, at *2; Am. Compl. ¶¶ 1, 31, 37.
The first provision is a card check and neutrality clause,
set forth in Article 60 and Addendum IV of the IWA
(“CCN Clause”). Am. Compl. ¶ 31; Am Compl.
Ex. 1 at 71, 111-15. The CCN Clause in the 2001 IWA obligates
signatories that “acquire an ownership, management or
control interest” in a hotel “to provide the
Union access to employees, to permit the Union to organize
employees through a card check process, and to remain neutral
throughout the union organizing process.” See
Am. Compl. Ex. 1 at 111; Am. Compl. ¶ 31; Chelsea
I, 2014 WL 4813028, at *2.
second provision is an accretion clause (“Accretion
Clause”). As set forth in the 2001 IWA, the Accretion
Clause provides that IWA signatories
agree to the accretion of any and all hotel and
concessionaire properties which come to be owned and/or
managed in the New York City area to the bargaining unit(s)
presently or hereafter covered by the Industry Wide Agreement
or any successor collective bargaining agreement thereto, and
that all of the terms and conditions set forth in the
Industry Wide Agreement or its successor shall be immediately
applicable to the accreted bargaining unit(s).
Am. Compl. Ex. 1 at 70-71; see Am. Compl. ¶ 33.
In 2012, the IWA was renewed, and the Accretion Clause was
modified to extend to “affiliated and related
entities” of parties to the IWA. Am. Compl. ¶ 38;
Am. Compl. Ex. 3 at 48.
Chelsea I action began after John Lam decided to
pursue a new venture in the hotel industry. 2014 WL 4813028,
at *3. Mr. Lam headed the Lam Group, a closely held family
enterprise that owned Chelsea. Id. He sought a
franchise agreement with Sheraton Hotels, and as a condition
to obtaining a Sheraton franchise, Mr. Lam agreed to use
Interstate as its managing agent. Id. In February
2003, Chelsea entered into a Hotel Management Agreement (the
“HMA”) with Interstate for Interstate to be the
managing agent of Chelsea's hotel. Id.
2004, Interstate signed a memorandum of agreement with the
Hotel Workers Union (“2004 MOA”). Chelsea
I, 2014 WL 4813028, at *6. The 2004 MOA took retroactive
effect on July 1, 2001 but had no expiration date.
Id. at *6-7. In it, Interstate “agree[d] to be
bound by the Accretion and Card Count/Neutrality provisions
of the Memorandum of Understanding dated June 15, 2000
between the Union and the Hotel Association of New York
Inc.” Id. at *6. Chelsea has always
contended that Interstate entered into the 2004 MOA without
Chelsea's knowledge, and despite a provision in the HMA
stating Chelsea's desire to remain non-union.
See Am. Compl. ¶ 3.
early 2007, the Hotel Workers Union sought to organize the
Four Points Hotel pursuant to the CCN Clause provided for in
the 2004 MOA. Chelsea I, 629 F. App'x at 153.
Chelsea resisted, and the Hotel Workers Union commenced an
arbitration proceeding against Chelsea and Interstate before
the Impartial Chairman (“IC”). Id. The
IC issued two awards finding that Chelsea violated its
obligations under the 2004 MOA and the substantive IWA