United States District Court, S.D. New York
OPINION AND ORDER
KATHERINE POLK FAILLA, UNITED STATES DISTRICT JUDGE
Joseph & Kirschenbaum LLP moves to remand this petition
to confirm an arbitration award back to the New York State
Supreme Court from which it came. Plaintiff argues that
Defendants Jerald Tenenbaum and Josh Rosen (collectively,
“Defendants”) have improperly removed this action
to federal court on the basis that their company, Manhattan
River Group LLC (“MRG”), had earlier filed for
Chapter 11 bankruptcy. According to Plaintiff, however, the
petition is not a “core” bankruptcy proceeding
under 28 U.S.C. § 1334(c)(2) for various reasons, and
therefore both abstention and remand are required. Plaintiff
argues in the alternative that even if the Court were to find
that the action constituted a “core” bankruptcy
proceeding, permissive abstention and equitable remand would
nonetheless be appropriate under 28 U.S.C. §§
1334(c)(1), 1452(b). Defendants retort that this action is a
core proceeding, principally because recovery by Plaintiff
will affect MRG's bankruptcy estate. As detailed in the
remainder of this Opinion, the Court concludes that the
matter is not a core bankruptcy proceeding; that this case
was improperly removed; and thus that remand is required. In
the alternative, the Court concludes that permissive
abstention and equitable remand would be appropriate.
The Underlying Arbitration
about June 13, 2017, Connie Rodriguez hired Plaintiff to
represent her in a dispute with her employer, La Marina
Restaurant, which was owned and operated by MRG. (Petition
¶¶ 2, 6). The retainer agreement Plaintiff executed
with Rodriguez specified that Plaintiff would receive the
greater of one-third of the amount recovered by Rodriguez or
the Court's award of attorneys' fees. (Id.
at ¶ 4). On July 6, 2017, Plaintiff filed a suit on
Rodriguez's behalf in this District, alleging violations
of the Fair Labor Standards Act (the “FLSA”), the
New York Labor Law (the “NYLL”), and the New York
City Human Rights Law (the “NYCHRL”) against MRG;
its owners Rosen and Tenenbaum; and Andrew Walters,
Rodriguez's supervisor (collectively, the
“Arbitration Defendants”). See Rodriguez v.
Manhattan River Group, LLC, No. 17 Civ. 5070 (WHP)
(S.D.N.Y. 2017). (Id. at ¶ 6). In response, MRG
produced its arbitration agreement with Rodriguez, and on
August 14, 2017, Rodriguez voluntarily dismissed the case to
pursue an arbitration involving analogous claims before the
alternative dispute resolution organization JAMS.
(Id. at ¶¶ 7-8; 17 Civ. 5070 Dkt. #12)).
represented Rodriguez in the Arbitration as well. (Petition
¶ 9). On April 26, 2018, JAMS issued an interim arbitral
award in favor of Rodriguez on the NYLL claims and in favor
of the Arbitration Defendants on the NYCHRL claims.
(Id. at ¶ 10). The interim award provided for
Rodriguez to receive $9, 069.20, plus prejudgment interest,
and directed her to apply for attorneys' fees pursuant to
the NYLL's fee-shifting provisions. (Id. at
¶ 11). On June 28, 2019, MRG paid Rodriguez the total
amount owed to her of $9, 204.15. (Id. at ¶
The Attorneys' Fees Dispute, MRG's Bankruptcy, and
the Fee Action
the final arbitral award (the “Final Award”) had
not yet been released, the attorneys' fees owed to
Plaintiff remained uncertain. (Petition ¶ 17). After the
parties briefed the attorneys' fees issue before the
arbitrator, JAMS informed Plaintiff that the Final Award had
not been released due to the Arbitration Defendants'
failure to pay the outstanding balance owed to JAMS.
(Id. at ¶¶ 13-15). On November 16, 2018,
Plaintiff filed suit in this Court to require the Arbitration
Defendants to pay the outstanding balance. See
Joseph & Kirschenbaum LLP v. Manhattan River
Group, LLC, No. 18 Civ. 10283 (KPF) (S.D.N.Y. 2018) (the
December 20, 2018, MRG filed for bankruptcy, which stayed
litigation against it. See In re Manhattan River
Group, No. 18 Bankr. 14125 (SHL) (Bankr. S.D.N.Y. 2018)
(the “Bankruptcy Action”); see also 11
U.S.C. § 362(a) (automatic stay provision). Given the
filing of the Bankruptcy Action, Plaintiff agreed to (and
this Court ordered) a stay of the Fee Action against MRG. (18
Civ. 10283 Dkt. #12). After initially failing to appear,
Tenenbaum and Rosen appeared and requested that the stay be
extended to them as well. (18 Civ. 10283 Dkt. #13-19). The
Court denied this request. (18 Civ. 10283 Dkt. #20).
3, 2019, the Final Award was issued by JAMS. (Petition ¶
18; see also Award 1). Accordingly, on May 3, 2019,
Plaintiff filed a voluntary dismissal of the Fee Action, and
the Court ordered the case dismissed on May 7, 2019. (18 Civ.
10283 Dkt. #26, 27).
The Final Award and Plaintiff's Current Action
Final Award imposed attorneys' fees of $34, 844.25 and a
court reporter appearance fee of $185 on the Arbitration
Defendants. (Award 38-39). The attorneys' fees award was
imposed jointly and severally against all Arbitration
Defendants, and the $185 appearance fee was imposed jointly
on MRG and Rosen. (Id.).
20, 2019, Plaintiff filed a petition to confirm the Final
Award in New York State Supreme Court, New York County. (Dkt.
#1-3 (Petition)). Because of the automatic stay in place as
to MRG, Plaintiff sought confirmation solely with respect to
Tenenbaum and Rosen. (Id. at ¶ 23). On August
9, 2019, after the filing of the instant case, the Bankruptcy
Court issued an order confirming MRG's reorganization
plan in the Bankruptcy Action. (18 Bankr. 14125 Dkt. #80).
17, 2019, Defendants filed a Notice of Removal pursuant to 28
U.S.C. §§ 1452, 1334, and 157. (Notice ¶ 4).
Defendants argued that removal was proper under 28 U.S.C.
§ 1452(a), reasoning that this Court has original
jurisdiction pursuant to 28 U.S.C. § 1334(b), because
the case “is related to the Chapter 11 case of
[MRG].” (Id.). Defendants further contended
that the instant claims would have a direct impact on the
bankruptcy estate, ...