712 F. Supp. 346 | S.D.N.Y. | 1989
MEMORANDUM AND ORDER
Petitioner Peerless Importers, Inc., a New York corporation (“Peerless”), brings this action to stay an arbitration with respondent Wine Liquor & Distillery Workers Union Local One (“Local One”). Local One now moves for summary judgment, pursuant to Fed.R.Civ.P. 56, to dismiss Peerless’ application for a stay, and to compel Peerless to arbitrate. Peerless cross-moves for summary judgment on its petition to permanently stay the arbitration and moves for summary judgment against Local One on its motion to compel arbitration. Peerless also seeks a declaratory judgment that an “Agreement and Release” signed by a discharged Peerless employee is valid and enforceable. For the reasons stated below, Local One’s motions are granted and Peerless’ motions are denied.
I. BACKGROUND
A. The Underlying Dispute
Peerless, an importer and distributor of wine and liquor products, and Local One were parties to a collective bargaining agreement (the “old CBA”) which expired on October 31, 1987. Since the parties failed to reach a new agreement when the old CBA expired, Local One began an economic strike against Peerless on November 1, 1987. After the strike began, negotiations on a new CBA continued. Local One was represented by a negotiating committee which included John Schumacher, a long time Peerless employee.
On November 10, 1987, while Local One was still on strike without a CBA in effect, a temporary replacement truck driver for Peerless, Lawrence Butler, reported to the New York City Police Department that he had seen Schumacher steal invoices and other documents on that date from his truck. After November 11, 1987, Schu-macher made no further appearances on behalf of Local One at negotiating sessions with Peerless.
At a negotiating session held November 13,1987, members of the negotiating teams discussed Schumacher. Peerless alleges that it “confirmed to Local One representatives the Mr. Schumacher had been discharged effective November 10, 1987.”
On the evening of November 13, 1987, the parties reached a settlement on a new CBA. The membership of Local One ratified the new CBA on November 15, 1987, and ended their strike the same day. Peerless then reinstated striking workers on November 16.
Also on November 16, 1987, Frank Mini-chello, Vice-President of Local One, confirmed in a letter to Arbitrator Sabatella that both parties had approved his selection as arbitrator of the Schumacher dispute. That same day, Peerless mailed a letter to Schumacher “confirmpng] that [his] employment with Peerless ... terminated effective November 10, 1987.”
On the evening of November 16, 1987, New York City Police detectives appeared at Schumacher’s home and notified Schu-macher that he was required to report to a police precinct the following day. Al
The parties dispute exactly what happened after Schumacher was taken into custody. Peerless alleges that, on November 17,1987, Allen Roberts, Peerless’ counsel in the labor dispute with Local One, received a phone call from J. Kenneth O’Connor, whom Peerless describes as “counsel for Local One”.
Peerless further alleges that Roberts then prepared an Agreement and Release (the “release”), which Peerless’ in-house counsel Anthony Marsloe and a private investigator, John Wales, took to Central Booking, where Schumacher was then being held. After Butler, Marsloe and Wales met with an Assistant District Attorney, Butler withdrew his complaint. Peerless asserts that “immediately thereafter”,
In its complaint, Local One alleges that the release was signed by Schumacher under coercion and duress.
4. SCHUMACHER for himself and his heirs, legal representatives, estate and successors-in-interest, hereby release and forever discharges PEERLESS of and from any and all actions or causes of action, suits, debts, grievances, claims, complaints, contracts, controversies, agreements, promises, damages, claims for attorneys’ fees, judgments, and demands whatsoever, in law or in equity, he ever had, now has or shall have as of the date of this Agreement and Release, including, but not limited to any grievances or complaints alleging violation of any collective bargaining or any other employment agreement....7
On November 30, 1987, Minichello wrote to Peerless, “[r]e: Peerless Importers (discharge of John Schumacher)”,
On December 7, 1987, Local One submitted a formal Demand for Arbitration upon Peerless. On December 17, 1987, Peerless brought suit in New York State Supreme Court to stay the arbitration proceeding. Local One then removed the action to this Court.
B. The Present Action
Local One now moves for summary judgment dismissing Peerless’ petition and for an order compelling arbitration. Peerless cross-moves for summary judgment on its petition to stay the arbitration permanently and moves to deny Local One’s motion for an order compelling arbitration. Peerless also moves for a declaratory judgment that the release signed by Schumacher is valid and enforceable.
Local One asserts that only two issues are before the Court: first, whether an arbitration agreement existed at the time of the dispute and the discharge of Schu-macher, and second, whether the particular dispute is referable to arbitration under such agreement. While conceding that Schumacher’s discharge occurred when no CBA was in effect, Local One argues that Peerless refused to “reinstate” Schumacher, and that such refusal occurred after the new CBA took effect. Thus, Local One argues that an applicable arbitration clause existed at the time of the dispute.
II. DISCUSSION
The Federal Rules authorize summary judgment where “there is no genuine issue as to any material fact ...” Fed.R.Civ.P. 56(c). A genuine dispute exists if “a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). This Court’s responsibility in deciding a summary judgment motion is “to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party.” Knight v. U.S. Fire Insurance, 804 F.2d 9, 11 (2d Cir.1986). Applying this standard to the present case, the Court grants Local One’s motion for summary judgment dismissing Peerless’ application for a stay of arbitration.
1. Arbitration Under the Collective Bargaining Agreement
The Second Circuit recently summarized the principles applicable to a determination of whether a collective bargaining agreement creates a duty to arbitrate a specific dispute:
Parties to a contract must submit a dispute to arbitration only when they have contracted to do so_ The determination of whether a collective bargaining agreement creates a duty to arbitrate a specific dispute is a matter to be resolved by a court, not the arbitrator, in the first instance ... We note however, that our scope of review is quite limited because, in determining whether a contract contains a clause requiring the parties to submit to arbitration, all doubts must be resolved in favor of arbitrability_ Indeed, unless it can be said “with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute,” the dispute should be submitted to arbitration.
Concourse Village v. Local 32E Service Employees International, 822 F.2d 302, 304 (2d Cir.1987) (citations omitted). See also Assoc. Brick Mason Contractors v. Harrington, 820 F.2d 31, 35 (2d Cir.1987).
Moreover, in determining whether a dispute should be submitted to arbitration, a court must not rule on the potential merits of the underlying dispute. A.T. & T. Technologies v. Communications Workers of America, 475 U.S. 643, 645, 106 S.Ct. 1415, 1416, 89 L.Ed.2d 648 (1986). The Second Circuit in Emery Air Freight Corp. v. Local 295 I.B.T., 786 F.2d 93, 96-97 (2d Cir.1986) explained:
*350 The law has long been clear that where the parties have contracted to resolve their disputes by arbitration, a court asked to enforce that agreement should not weigh the merits of a claim that the agreement has been violated. The point has been driven home many times by the Supreme Court and by this court.... The parties have agreed that an arbitrator should determine the merits of such claims and it is national policy to encourage resolution of disputes between management and labor by such peaceful means. In this by now traditional analysis, a court should first examine the scope of the arbitration clause to see if it is the broad one generally in use governing “all disputes” as to the meaning, application or compliance with the collective bargaining agreement, or is a narrower version which may exclude particular subjects from arbitration....
While some words and phrases may indicate that a clause is narrow in scope, the tone of the clause as a whole may indicate otherwise. Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59 (2d Cir.1983). Individual words or phrases thus are not given undue weight.
In the present case, the parties’ collective bargaining agreement contains a broad arbitration clause providing, in pertinent part:
If the matter cannot be resolved as set forth at Step 1 [or Step 3], any complaint, dispute or grievance arising under this Agreement and during its term involving questions of interpretation or application of any provisions of this Agreement ... shall be submitted ... to arbitration.
The claim which Local One seeks to arbitrate is, on its face, governed by the new collective bargaining agreement. Article 8 of the new CBA provides that “no nonpro-bationary employee shall be discharged without good or just cause,”
Peerless argues, however, that Schu-macher’s discharge did not occur “during [the] term” of the new CBA and, therefore, that he cannot claim its protection. Peerless reasons that the dispute centers not upon a failure to reinstate Schumacher, but upon Schumacher’s discharge.
The facts in OCAW are strikingly similar to the case at bar. As in the present case, in OCAW an employee was discharged after his union’s CBA expired and while a new CBA was being negotiated. The Fifth Circuit held that unless his discharge “was justified under the law, he was still an employee and subject to reinstatement and entitled to be treated as an employee by the company when the new contract was signed.” Id. at 751. The court narrowed its holding, stating that “[t]he ... issue before the arbitrator will be whether [the employee] was an employee on the day the contract went into effect and whether there was just cause to discharge him at that time.” Id. at 752.
This Court adopts the reasoning of the Fifth Circuit in OCAW. As that court stated: “there is a right guaranteed by the National Labor Relations Act — the right of an employee to reinstatement after a
2. Effect of Agreement and Release
Peerless contends that this Court should determine whether the release signed by Schumacher was the product of coercion and duress and should decide the release’s effect. The issue of agreement or release is an affirmative defense and, thus, must be decided by an arbitrator. As Judge Sweet of this Court noted in a similar case, “potential affirmative defenses or arguments on the merits which [the employer] might make in response to the [union’s] claim must be raised before an arbitrator, and cannot be the basis for an injunction by this Court to stay arbitration proceedings.” Broadcast Arts v. Screen Actors Guild, 673 F.Supp. 701, 707 (S.D.N.Y.1987).
This Court’s decision rests alternatively on its conclusion that, contrary to Peerless’ assertions, the release did not constitute a “collateral agreement” which rendered null the parties’ arbitration agreement. A “collateral” agreement is a separate agreement connected with the principal contract which contains the arbitration clause. A party resisting arbitration bears the burden of demonstrating that a disputed issue is collateral. If a dispute arises under a collateral agreement, arbitration of that dispute cannot be compelled merely based upon the arbitration clause in the main agreement. Rochdale Village v. Local No. 80, Intern. Broth. of Teamsters, 605 F.2d 1290, 1296-97 (2d Cir.1979).
Peerless’ argument that the release constituted a supervening collateral agreement is misplaced for three reasons. First, the plain words of the release indicate that it is general in nature and is not a complete cancellation of the arbitration provision in the collective bargaining agreement. See Schlaifer v. Sedlow, 73 A.D.2d 552, 423 N.Y.S.2d 32 (N.Y.App.Div.1979).
Third, an important difference exists between a dispute arising solely under a collateral agreement and a dispute arising under the main agreement but requiring determination of a sub-issue. The latter is “inextricably tied up with the merits of the underlying dispute, and is arbitrable.” Prudential Lines v. Exxon Corp., 704 F.2d 59, 64-65 (2nd Cir.1983) (quoting McAllister Bros., Inc. v. A & S Transportation Co., 621 F.2d 519, 523 (2nd Cir.1980)).
It follows that the Court cannot grant Peerless’ motion for declaratory judgment on the validity and effect of the release. This Court must “assiduously avoid usurping the functions of the arbitrator by deciding the merits of a grievance in the guise of determining the scope of the agreement to arbitrate.” United Steelworkers Of America v. American Mfg. Co., 363 U.S. 564, 80 S.Ct. 1343, 4 L.Ed.2d 1403 (1960). Peerless cannot avoid its obligation to arbitrate by bringing an anticipatory action for declaratory judgment. See Buffalo Forge Co. v. United Steelworkers of America, 428 U.S. 397, 96 S.Ct. 3141, 49 L.Ed.2d 1022 (1976).
III. CONCLUSION
For the reasons stated above, this Court grants Local One’s motion to compel arbitration and for summary judgment dismissing Peerless’ motion to stay arbitration. All issues surrounding the non-reinstatement of Schumacher are properly arbitra-ble including the effect, if any, of the release signed by Schumacher.
SO ORDERED.
. Statement pursuant to Local Civil Rule 3(g) by Peerless [hereinafter “Peerless’ 3(g)”] at ¶ 5.
. Statement pursuant to Local Civil Rule 3(g) of Local One [hereinafter "Local One’s 3(g)"] at ¶8.
.Local One’s Notice of Motion, Ex. E.
. Peerless’ 3(g) at ¶ 6.
. Peerless' 3(g) at ¶ 11.
. Respondents’ Reply Brief at 1.
. Pet. Memorandum of Law at 5.
. Peerless' Cross-Motion, Ex. 3.
. Id.
. In its petition, Peerless also argues that Local One failed to follow time limits for grievance procedures established in the new CBA and that, consequently, arbitration is barred, pursuant to New York C.P.L.R. § 7502(b). Peerless, however, states that, for purposes of its cross-motion, it is not urging either of these arguments. Peerless’ Memorandum in Opposition at 2.
. Local One’s Notice of Motion, Ex. A.
. In support of its argument, Peerless points to Local One’s own characterization of the dispute as one concerning Schumacher’s discharge. Roberts Aff. ¶ 9, Ex. 1, 3.
. Peerless also argues that even if the dispute is arbitrable, "[s]o amorphous and ambulatory an issue as a failure to reinstate is not cognizable as a grievable dispute under the new CBA.” Memorandum in Opp. at 20. This argument also is without merit. Schumacher, though discharged, might have continued to be an employee of Peerless under the National Labor Relations Act and "the failure to reinstate him was a discharge under the new contract." OCAW, 820 F.2d at 821.
. See also Local 370, Operating Engineers v. Morrison-Knudsen Co., 786 F.2d 1356 (9th Cir.1986) (employer’s defense of arbitration based on doctrines of waiver, equitable estoppel and mootness are to be determined by arbitrator); Inner City Broadcasting Corp. v. American Federation of Television and Radio Artists, 586 F.Supp. 556 (S.D.N.Y.1984) (motion to stay arbitration denied and motion to compel arbitration granted because employer’s defense of waiver was to be raised before an arbitrator).
. The court of appeals in Rochdale noted that if a dispute over contract termination was based on the theory that the contract had expired by its own terms, then the dispute was arbitrable because it required an interpretation of the contract’s own terms. If, however, the contract had been terminated by a separate, collateral agreement, the dispute concerning termination would not be arbitrable because it could not reasonably be classified as an issue arising "under” the original contract.
. In Schlaifer, the court made an important distinction between a general release of claims form and an instrument of cancellation. The plaintiff in Schlaifer had signed "a boiler plate general release, releasing all claims from the beginning of the world to the date of the release" with no mention of any prior agreements. Plaintiff later sought arbitration under the prior agreements for a percentage of corporate profits and stock. In response to the corporation’s claims that such arbitration should be barred, the court held that:
*352 [u]nlike a cancellation, however, it falls short of a complete nullification of every provision of the prior agreement both substantive and procedural. Thus, in the absence of express provision to the contrary, where the differences between the parties relate only to the substantive terms of their agreement, they will be held in releasing claims to have dealt only with such substantive rights and obligations, not with the separate and distinct subject of choice of the arbitration forum for the resolution of disputes.
. In Prudential Lines, the main issue before the court was whether the district court erred in compelling arbitration between Prudential and Exxon to determine the parties' responsibilities for repairing a vessel. Resolution of the dispute, the court held, necessarily implicated resolution of what the court declared to be several sub-issues, including whether Prudential’s claim for damages was extinguished by certain provisions in the agreement, whether Prudential’ surveyor was authorized to "accept” the return of the vessel, and what acts would constitute an "acceptance” of the vessel. The appellate court held that the district court was correct in concluding that each of these issues is a sub-issue, “inextricably tied up with the merits of the underlying dispute,” and "wholly derivative of issues that fall within the scope of the arbitration clause, and therefore ... within the scope of the arbitration clauses of the charter party.” 704 F.2d at 64-65.
. Violations of collective bargaining agreements should not even be preliminarily enjoined pending the arbitrator’s decision on the merits because "this would involve the court in hearings, findings and interpretations of the agreement in derogation of the arbitrator’s task to decide the dispute." N. Y.S. Ass'n For Retarded Children v. Carey, 456 F.Supp. 85, 96 (E.D.N.Y.1978).
