MEMORANDUM AND ORDER OF COURT
AND NOW, this 30th day of July, 2001, upon consideration of
(a)the Complaint of Tenet HealthSystem Philadelphia, Inc. (hereafter “Tenet”), wherein Tenet seeks an order of the Court (i) vacating, setting aside, or modifying a labor arbitration award entered against Tenet on April 4, 2000, by Jeffrey B. Tener, the appointed arbitrator for the American Arbitration Association (hereafter “Arbitrator Tener”), in In the Matter of the Arbitration between District 1199C, National Union of Hospital and Health Care Employees, AFSCME, AFL— CIO and Tenet Health System, Case No. 14 390 02056 98Q (Sick Leave Benefits) (hereafter “the Arbitration Award”), and (ii) construing and enforcing this Court’s prior orders entered in the above-captioned bankruptcy case dated October 1, 1998, and October 30, 1998 (hereafter collectively “the Sales Orders”), which orders, broadly speaking, approved, inter alia, an agreement dated September 29, 1998, for the sale of assets of and by the instant debtor to Tenet and its affiliate (hereafter “the Asset Purchase Agreement” or “the APA”) on November 10, 1998 (hereafter also referred to as “the Closing Date”), as well as simultaneously the assumption by the debtor and the assignment to Tenet of certain executory contracts and unexpired leases in accordance with the APA, and which orders, Tenet contends in particular, preclude the Union from henceforth asserting against Tenet the claims that were brought before Arbitrator Tener and dealt with in the Arbitration Award;
(b) the First Amended Complaint of Tenet (hereafter “the First Amended Complaint”) — which pleading the Court deems to have been officially filed notwithstanding the absence of a court order granting leave to Tenet to amend its initial Complaint (hereafter “the Complaint”) given that the Court orally granted such leave at a hearing on the instant adversary proceeding on July 18, 2000, see Court Adv.Proc. Memo, Trustee’s Mot. to Dismiss, Docket No. 18 — wherein Tenet sets forth two separate counts, the first of which essentially seeks the relief formally sought in the Complaint (hereafter “Tenet’s 1st Count”), and the second of which seeks indemnification from the Chapter 11 Trustee for the above-captioned debtor (hereafter “the Trustee”) via an indemnity provision found in the APA to the extent that Tenet remains liable for any part of the Arbitration Award (hereafter “Tenet’s 2nd Count”);
(c) the Arbitration Award, wherein Arbitrator Tener determined that Tenet violated collective bargaining agreements to which District 1199C, National Union of Hospital and Health Care Employees, AFSCME, AFL — CIO (hereafter “the Union”) and the instant debtor were formally parties up to November 10, 1998 (hereafter “the Collective Bargaining Agreements” or “the CBAs”), because Tenet, subsequent to November 10, 1998, refused, with respect to the employees covered under the Collective Bargaining Agreements, either to (i) recognize or pay for sick leave that said employees had accumulated up to November 10, 1998, while
(d) the Union’s counterclaim against Tenet seeking to have the Arbitration Award enforced, as well as Tenet’s answer to said counterclaim;
(e) the summary judgment motions filed by Tenet, the Union, and the Trustee in the instant adversary proceeding, as well as the responses by each of the parties to each other’s summary judgment motion and the briefs submitted by each party in support of its respective positions; and
(f) the various other submissions by the parties in the instant adversary proceeding;
and subsequent to notice and several hearings on the instant matter, including a hearing on May 8, 2001, regarding each of the summary judgment motions referred to above;
it is hereby ORDERED, ADJUDGED, AND DECREED that:
(a) the Court possesses CORE SUBJECT MATTER JURISDICTION to construe and enforce its own sales orders and, thus, possesses core subject matter jurisdiction to determine whether, and to provide enforcement relief in the event of a determination that, (i) the Sales Orders and, by reference therein the APA, operate to preclude the Union from pursuing the Sick Leave Obligations against Tenet (part of Tenet’s 1st Count), and (ii) Tenet is entitled to any indemnification from the Trustee via the Sales Orders and, by reference the APA, in the event, and to the extent, that Tenet remains liable under the Arbitration Award (Tenet’s 2nd Count);
(b) the Sales Orders and the APA are construed such that they OPERATE TO PRECLUDE the Union from pursuing Tenet for payment of the Accumulated Sick Leave Obligation;
(c) the Sales Orders and the APA are construed such that they DO NOT OPERATE TO PRECLUDE the Union from pursuing Tenet for payment of the Prospective Sick Leave Obligation;
(d) the Court possesses CORE SUBJECT MATTER JURISDICTION to set aside the Arbitration Award, and the Arbitration Award is VACATED, to the extent that said award places upon Tenet liability to satisfy the Accumulated Sick Leave Obligation;
(e) the Court lacks SUBJECT MATTER JURISDICTION, and thus Tenet’s 1st Count and the Union’s counterclaim are DISMISSED WITH PREJUDICE for lack of subject matter jurisdiction to the extent that the same seek, to set aside or enforce the Arbitration Award as it relates to the Prospective Sick Leave Obligation;
(f) Tenet’s summary judgment motion with respect to the portions of Tenet’s 1st Count and the Union’s counterclaim that are not dismissed under the preceding ¶ (e) is GRANTED IN PART consistent with ¶¶ (b) and (d) above, and is DENIED WITH PREJUDICE IN PART consistent with ¶ (c) above;
(g) the Union’s summary judgment motion regarding the portions of Tenet’s 1st Count and the Union’s counterclaim that are not dismissed under the preceding ¶ (e) is GRANTED IN PART consistent with ¶ (c) above, and is DE
(h) the Trustee’s summary judgment motion with respect to Tenet’s 2nd Count is GRANTED, and Tenet’s summary judgment motion with respect to said count is DENIED WITH PREJUDICE, but only to the extent that Tenet seeks indemnification from the debtor’s bankruptcy estate for liability related to the Prospective Sick Leave Obligation; and
(i) Tenet’s 2nd Count is DISMISSED WITHOUT PREJUDICE as being moot to the extent that Tenet seeks indemnification from the debtor’s bankruptcy estate for liability related to the Accumulated Sick Leave Obligation.
The rationale for the Court’s above decision is set forth in some detail below.
I.
The parties hotly contest whether, and to what extent, the Court possesses subject matter jurisdiction over the claims and counterclaim pursued in the instant adversary proceeding, which contest the Court finds to be waged with good reason given the relative difficulty which the Court experiences in resolving such jurisdictional issues. However, and as set forth in the two ensuing paragraphs, the Court concludes with relative ease that it possesses core subject matter jurisdiction over that portion of Tenet’s 1st Count which seeks an interpretation and enforcement of the Sales Orders, as well as Tenet’s 2nd Count.
In Tenet’s 1st Count Tenet seeks, inter alia, the construction and enforcement of particular provisions of the Sales Orders and, in particular, the Court presumes, Sales Order dat. Oct. 1, 1998, at p. 8 ¶ S, p. 14 ¶ 8, p. 17 ¶ 21 & p. 19 ¶ 26, and Sales Order dat. Oct. 30, 1998, at p. 10 ¶ Q, p. 17 ¶ 6, p. 22 ¶ 19 & p. 25 ¶24. Tenet contends that the above provisions and, in particular, ¶¶ 8 and 21 of the Sales Order dat. Oct. 1, 1998 and ¶¶ 6 and 19 of the Sales Order dat. Oct. 30, 1998, operate, in conjunction with relevant portions of the APA, to bar and enjoin the Union from asserting against Tenet any of the Sick Leave Obligations. Tenet contends as much because (a) such provisions, Tenet argues and the Court agrees, bar and enjoin any party from, inter alia, asserting against Tenet liabilities which were not assumed by Tenet under the APA and for which the instant debtor thus remains liable, see, e.g., Sales Order dat. Oct. 1,1998, at ¶ 8 (“With the exception of any liabilities specifically assumed under the ... [APA], all persons and entities holding Liens or Claims of any kind and nature against any of the Debtors or with respect to the Assets are hereby barred and enjoined from asserting such Liens and Claims against the Assets or Tenet, its successors, desig-nees (including Restructured University) or assigns, or their respective affiliates, shareholders, members, officers, directors or trustees”), and (b) the Sick Leave Obligations, Tenet maintains, are obligations which were not assumed by Tenet via the APA and for which the debtor thus remains liable. In Tenet’s 2nd Count Tenet seeks the construction and enforcement of those provisions in the Sales Orders dealing with its right of indemnification against the instant debtor’s bankruptcy estate and, in particular, the Court presumes, Sales Order dat. Oct. 1, 1998, at p. 13 ¶ 7. Tenet contends that said indemnification provision, which references both the APA and a document labelled “the Indemnity Escrow Agreement,” entitles Tenet to indemnification from the Trustee to the extent that Tenet remains liable under the Arbitration Award.
The Court has previously held that a bankruptcy court has core subject
As for that part of Tenet’s 1st Count which seeks to have the Arbitration Award vacated, set aside, or modified, as well as the Union’s counterclaim to have the same enforced, the Court possesses at least noncore subject matter jurisdiction over both of those matters if
“... the outcome of th[ose] proceeding^] could conceivably have any effect on the estate being administered in bankruptcy.” “[T]he proceeding^] need not necessarily be against the debtor or against the debtor’s property.” “ A key word in [this test] is conceivable. Certainty, or even likelihood, is not a requirement. Bankruptcy jurisdiction will exist so long as it is possible that a proceeding may impact on the debtor’s rights, liabilities, options, or freedom of action or the handling and administration of the bankrupt estate.’ ”
Halper v. Halper,
As an initial matter, the Court holds that it lacks even noncore subject matter jurisdiction over that portion of Tenet’s 1st Count seeking to have the Arbitration Award set aside, as well as the Union’s counterclaim to have the same enforced, if, and to the extent that, the Sales Orders and the APA are construed such that (a) Tenet, in accordance with the same, assumed liability for the Sick Leave
First, the entry of a decision setting aside the Arbitration Award, in part or in its entirety, if also coupled with a determination that Tenet, pursuant to the Sales Orders and the APA, did not assume liability for any, or either of, the Sick Leave Obligations, could potentially result in either or both of the Sick Leave Obligations then being placed upon the Trustee and the instant debtor’s bankruptcy estate, thereby impacting said bankruptcy estate. Important to the Court’s preceding conclusion is the rule that, “ ‘if a federal court possesses subject matter jurisdiction over an action at the time it is commenced, a subsequent event cannot divest the court of that subject matter jurisdiction,’ ”
Philadelphia Health Care Trust v. Tenet HealthSystem Philadelphia, Inc. (Allegheny Health, Education and Research
Foundation), Bankr.No. 98-25773-MBM, Adv. No. 99-2468-MBM, at 5 (Feb. 5, 2001) (quoting
In re Celotex Corp.,
Second, the entry of a decision to the effect that the Arbitration Award not be set aside (i.e., a decision that said award should be enforced), if also coupled with a determination that Tenet, pursuant to the Sales Orders and the APA, did not assume liability for any, or either of, the Sick Leave Obligations, would form the basis for an unassailable claim by Tenet for indemnification against the instant debt- or’s bankruptcy estate, thereby also sufficiently impacting said bankruptcy estate such that noncore subject matter jurisdiction exists. The Union disagrees with the preceding conclusion by the Court and argues fervently that said conclusion is not supported by, and in fact is at odds with, the Third Circuit’s decision in
Pacor, Inc. v. Higgins,
the parties herein are “more intertwined” than were the parties in Pacor as evidenced by the fact that, unlike the debtor in Pacor (i.e., Johns Manville Corporation), the instant debtors (a) have agreed and contractually bound themselves to “indemnify, defend[,] and hold harmless” plaintiffs, and (b) could be affected by the outcome of plaintiffs’ remaining counts and, in particular, most likely would be bound by the principles of res judicata and collateral es-toppel from subsequently challenging any findings or conclusions rendered in the instant litigation over plaintiffs’ six remaining counts.
Kay Williams,
[t]he Court disagrees with defendants’ contention that, much like the debtor in Pacor, the instant debtors will not be bound by, and thus may subsequently challenge, any decision or part thereof rendered in plaintiffs’ instant litigation over its six remaining counts. The Court concludes that defendants’ position is likely incorrect because (a) the law in Pennsylvania is clear that “both [an] indemnitor and [an] indemnitee are bound[, in a subsequent action between themselves,] by the findings necessary to the judgment in ... [a prior] action” “where ... the indemnitor, with notice of the [prior] action and of the indemni-tee’s request that he defend it, does not participate in the defense but leaves it to the reasonable efforts of the indemni-tee,” Crawford v. Pope & Talbot, Inc.,206 F.2d 784 , 795 (3rd Cir.1953) (citing Builders Supply Co. v. McCabe,366 Pa. 322 ,77 A.2d 368 (1951)); see also Humble Oil & Refining Company v. Philadelphia Ship Maintenance Co., Inc.,444 F.2d 727 , 734 (3rd Cir.1971) (citing Crawford with approval); Frank v. McCafferty Ford Company,192 Pa.Super. 435 ,161 A.2d 896 , 898 (1960) (citing three cases prior to Crawford for the same proposition as set forth in Crawford but with respect to the particular form of indemnity obligation assumed by a seller of property who also warrants title thereto); Restatement (Second) of Judgments § 57 cmt. h (1980) (stating rule similar to that contained in Crawford and McCafferty Ford, as well as pointing out that “[n]otiee alone may be sufficient if the indemnitee shows that the indemnitor could have conducted no better defense of the title than that which was presented by the indemni-tee”); Restatement (Second) of Judgments § 43 cmt. e (1980) (referencing Restatement (Second) of Judgments § 57 if a property transfer is accompanied by an express warranty of title by the transferor in favor of the transferee), (b) the instant debtors, as indemnitor to plaintiffs via paragraph 9.01(a) of the Asset Purchase Agreement, were obviously notified of plaintiffs’ instantcomplaint against defendants herein, (c) the instant debtors, as set forth in said paragraph 9.01(a), agreed not only to indemnify and hold harmless plaintiffs from any pertinent loss but also to defend plaintiffs against any such loss, and (d) plaintiffs have clearly undertaken to defend their alleged interests offensively in the instant adversary proceeding against defendants.
Kay Williams,
Because the Court concludes, for the reasons just expressed, that the outcome of that portion of Tenet’s 1st Count which seeks to have the Arbitration Award vacated, set aside, or modified, as well as the corresponding outcome of the Union’s counterclaim to have the same enforced, could conceivably have an effect on the instant debtor’s bankruptcy estate — provided that the Sales Orders and the APA are construed such that Tenet, in accordance with the same, did not assume liability for the Sick Leave Obligations — the Court likewise holds that it possesses, subject to the aforesaid condition, at least noncore subject matter jurisdiction over both of those matters. 1
Having concluded that the Court, consistent with the preceding paragraph, conditionally possesses at least noncore subject matter jurisdiction over both that portion of Tenet’s 1st Count which seeks to have the Arbitration Award vacated, set aside, or modified, and the Union’s counterclaim to have the same enforced, the
II.
With respect to the merits of Tenet’s claims and the Union’s counterclaim, the Court concludes, as an initial matter, that it may finally rule at this time via the entry of summary judgment except to the extent that (a) dismissal of said claims and counterclaim is warranted for lack of subject matter jurisdiction, which result will ensue, consistent with the preceding discussion in part I., if, and to the extent that, the Sales Orders and the APA are construed such that Tenet, in accordance with the same, assumed liability for the Sick Leave Obligations, or (b) dismissal of Tenet’s 2nd Count is warranted on the grounds that the same is moot. The Court arrives at the preceding conclusion because (a) each of the three parties involved in the instant matter has moved for summary judgment, and (b) the only identifiable disputes between such parties appear to either be legal in nature (i.e., application of law to undisputed fact) or to pertain to the legal effect of provisions in the APA, which latter dispute (i) is for the Court to resolve given that the Court does not identify any relevant latent ambiguities in the APA, see 8 P.L.E. Contracts §§ 174-176 at 280-239 (West 1971), and (ii) thus may be resolved via the entry of summary judgment.
III.
As set forth above, Tenet, in its 1st Count, contends that certain of the provisions in the Sales Orders and, in particular, ¶¶ 8 and 21 of the Sales Order dat. Oct. 1, 1998 and ¶¶ 6 and 19 of the Sales Order dat. Oct. 30, 1998, operate, in conjunction with relevant portions of the APA, to bar and enjoin the Union from asserting against Tenet any of the Sick Leave Obligations. Tenet’s preceding position is predicated upon arguments, in turn, that (a) such provisions of the Sales Orders bar and enjoin any party from,
inter alia,
asserting against Tenet liabilities which were not assumed by Tenet under the APA and
First, the Court understands Tenet to argue that it did not assume liability under the APA for the payment of the Sick Leave Obligations because, according to Tenet, it (a) retained the right, pursuant to ¶ 5.03(a) of the APA, to unilaterally set the initial terms and conditions of employment after November 10, 1998, for employees covered under the Union, (b) only assumed, as set out in APA ¶ 5.03(a), an obligation, consistent with established law, to bargain in good faith the subsequent terms and conditions of employment after November 10,1998, for such employees, (c) thus did not become bound as of November 10, 1998, to honor any term or condition contained in the CBAs including, inter alia, the Sick Leave Obligations, and (d) did not affirmatively enter into an agreement with the Union, either as an initial or subsequent term or condition of employment vis-a-vis the Union employees, to undertake to pay either of the Sick Leave Obligations. With respect to the preceding argument by Tenet, Tenet further argues that the same is fully supported by established case precedent. The Union and the Trustee, however, disagree, in particular, with the first three predicates of Tenet’s preceding argument, to wit that Tenet (a) retained the right to unilaterally set the initial terms and conditions of employment after November 10, 1998, for the Union employees, (b) needed only to bargain with the Union over subsequent terms and conditions of employment after November 10, 1998, for the Union employees, and (c) did not become bound as of November 10, 1998, to honor any term or condition contained in the CBAs including, inter alia, the Sick Leave Obligations. Instead, argue the Union and the Trustee, Tenet, via the APA and the Sales Orders, voluntarily assumed the Collective Bargaining Agreements, which agreements covered all of the Union employees. Because of such assumption by Tenet of the CBAs, the Union and the Trustee contend that, in accordance with the same established case precedent relied upon by Tenet for its position, and consistent with other language in APA ¶ 5.03(a), Tenet (a) is bound to the terms and conditions set forth in the CBAs, among which are the obligations to satisfy the Sick Leave Obligations, (b) thus was not free to set the aforesaid initial terms and conditions of employment for the Union employees, and (c) thus was not free to simply bargain with the Union over the aforesaid subsequent employment terms and conditions for the Union employees.
Second, the Court understands Tenet to argue that the instant debtor and Tenet agreed within the APA that obligations such as the Sick Leave Obligations would not be assumed by Tenet presupposing that (a) the CBAs were assumed by the
A. Tenet’s Hallmark Argument Predicated Upon the Language in APA ¶ 5.03(a).
The Court will address first Tenet’s hallmark argument that, pursuant to APA ¶ 5.03(a), it is not liable for the Sick Leave Obligations because, according to Tenet, it (a) did not become bound as of November 10, 1998, to honor any term or condition contained in the CBAs including, inter alia, the Sick Leave Obligations, and (b) did not contractually agree with the Union, either as an initial or subsequent term or condition of employment vis-a-vis the Union, to undertake to pay either of the Sick Leave Obligations. The particular language that Tenet relies on in APA ¶ 5.03(a) as supportive of said hallmark argument is the following:
Subject to the foregoing and subject to the right of Buyer to set the initial terms and conditions of employment of union employees, Buyer will recognize all existing unions at the Hospitals and will bargain in good faith the subsequent terms and conditions of employment for employees in the bargaining units represented by those unions, to the extent required by law.
APA ¶ 5.03(a).
Unfortunately for Tenet, the Court concludes that the CBAs are “Assumed Contracts” within the meaning of the APA, which conclusion is dictated because (a) “Assumed Contracts” is defined in the APA as “the Contracts described in Schedule 2.01(e) as the same may be amended by Buyer [(i.e., Tenet)] as permitted by the Court,” APA ¶ 1.01, and (b) the CBAs are described as Assumed Contracts in the initial Schedule 2.01(e), the Amended Schedule 2.01(e), and the Second Amended Schedule 2.01(e).
See
APA Sch. 2.01(e) ¶ 1 (Assumed Contracts are “those described in Part 1 — Exhibit A of the Notice of Filing by Tenet ... of Schedule of Executory Contracts and Unexpired Leases to Be Assumed and Assigned Pursuant to ... [APA] filed on September 15, 1998”); Notice of Filing by Tenet, filed Sept. 15, 1998, Docket No. 625, Part 1— Ex. A, at pp. 14/131 (“Union Contract” with “Nat. Union of Hosp. And Health Care Empl.”), 17/131 (“collective bargaining agreement” with “AFSCME 1199C”) & 60/131 (2 “Collective Bargaining Agreement[s]” with “National Union of Hospital & Health Care E[mployers]”); Notice of Filing by Tenet, filed Nov. 6, 1998, Docket No. 1698 (attached thereto is Amended Schedule 2.01(e), see ¶ 1
&
Attachment 1 referenced therein, at pp. 17, 19
&
34, wherein the 4 CBAs are listed as Assumed Contracts); Notice of Filing by Tenet, filed Nov. 10, 1998, Docket No. 1757 (attached thereto is Second Amended Schedule 2.01(e), see ¶ 1, which references Attachment 1 filed with Docket No. 1698). A finding that the CBAs are Assumed Con
First, and as the Union and the Trustee point out, the sentence in APA ¶ 5.03(a) which immediately follows the language in said paragraph upon which Tenet relies explicitly restricts the applicability of said language upon which Tenet relies. In particular, said sentence reads as follows:
Employees employed under written Contracts will not be offered employment pursuant to this Section, but employment of such employees shall be governed by the terms of the Assumed Contracts, if any, relating to such employees.
APA ¶ 5.03(a). Because the CBAs are Assumed Contracts under the APA, and since the CBAs obviously relate to the Union employees who are covered under the same, the Court concludes that the debtor and Tenet intended for the Union employees’ employment to be governed by the terms of the CBAs, which means, in turn, that:
(a) the debtor and Tenet intended for the latter of the two sentences in APA ¶ 5.03(a) at issue herein to apply to the Union employees’ employment; 4 and
Second, the Court concludes that a construction of APA ¶ 5.03(a) in the fashion suggested by Tenet (i.e., a construction such that Tenet never assumed any of the obligations under the CBAs) would compel the Court to also conclude that the instant debtor, who bargained with Tenet over the terms of the APA, intended to remain liable on all of the obligations that would arise under the CBAs after November 10, 1998, notwithstanding the debtor’s assignment to Tenet of all of the benefits pertaining to the CBAs after such date. The preceding conclusion follows because (a) the CBAs.are Assumed Contracts under the APA, (b) the CBAs, as Assumed Contracts — the benefits of which were, under any scenario, assigned to Tenet — were necessarily first assumed by the debtor via 11 U.S.C. § 365,
see
11 U.S.C.A. § 365(f)(2)(A) (West 1993) (“The trusteed and thus a debtor-in-possession,] may assign an executory contract ... only if ... the trustee [or debtor-in-possession] assumes such contract”), (c) such assumption by the debtor under § 365 could only have been
cum onere,
which is to say that the debtor not only accepted the benefits of the CBAs but also' assumed all of the burdens (i.e., obligations) attendant thereto, be they past, present, or future,
see National Labor Relations Board v. Bildisco and Bildisco,
The above conclusions of the Court pertaining to the construction of APA ¶ 5.03(a) are consistent with the case precedent relied upon by all of the parties in support of their respective positions, which
If there is a genuine change of employers [i.e., one employer is not the alter ego of the other], but the “employing industry” remains substantially the same, the successor employer:
(a) is bound to recognize and bargain with the representative of his predecessor’s employees, ...;
(b) but is not bound by his predecessor’s bargaining agreement, unless he affirmatively assumes the obligation.
4 Theodore Kheel,
Labor Law
§ 17.01 [1] at 17-3 (Bender 2000) (citing
NLRB v. Bums International Security Services,
B. Tenet’s Fallback Argument to the Effect that It Assumed Less Than All of the Obligations Flowing from the CBAs.
Having concluded that the CBAs were assumed by the instant debtor and assigned to Tenet under 11 U.S.C. § 365 via the Sales Orders and the APA, and that Tenet generally assumed at least some of the obligations flowing from the CBAs, the Court next addresses Tenet’s fallback argument that Tenet did not assume the Sick Leave Obligations in particular because the instant debtor and Tenet agreed within the APA that Tenet would not assume such obligations.
As an initial matter, the Court cannot identify any provision in the APA that expressly, or for that matter that implicitly, qualifies Tenet’s general assumption of all obligations of the instant debtor under the CBAs which arose on or after, and which related to any period commencing on, November 10, 1998. As explained above, the Court, notwithstanding Tenet’s contrary pleas, does not construe APA ¶ 5.03(a) so that said provision qualifies Tenet’s assumption of obligations under the CBAs such that Tenet effectively never assumed any of such obligations. Moreover, and as mentioned above, the Court construes APA ¶ 5.03(a) such that said provision does not, in any way, relate or apply to the employment of the Union employees, which means that said provision also does not qualify Tenet’s general assumption of all obligations of the instant debtor under the CBAs which arose on or
Because Tenet assumed all obligations of the instant debtor under the CBAs which arose on or after, and which related to any period commencing on, November 10, 1998, the Court must immediately disagree with Tenet that the debtor and Tenet agreed within the APA that Tenet would not assume liability thereunder for the Prospective Sick Leave Obligation. The preceding conclusion follows because, and the Court does not understand Tenet to dispute that, the Prospective Sick Leave Obligation arose on or after, and relates to the period commencing on, November 10, 1998. Therefore, the Court holds that Tenet assumed liability under the APA for the Prospective Sick Leave Obligation.
With respect to the Accumulated Sick Leave Obligation, whether the debtor and Tenet agreed within the APA that Tenet would not assume such obligation turns upon whether such obligation arose on or after, and relates to the period commencing on, November 10, 1998. If the Accumulated Sick Leave Obligation arose on or after, and relates to the period commencing on, November 10, 1998, then the Court must (a) find that the debtor and Tenet agreed within the APA that Tenet would assume such obligation, and (b) hold that Tenet assumed liability for such obligation. However, if the Accumulated Sick Leave Obligation either arose, or related to the period, prior to November 10, 1998, then the Court must (a) find that the debtor and Tenet agreed within the APA that Tenet would not assume such obligation, 6 and (b) hold that Tenet did not assume liability for such obligation. As is subsequently set forth below, the parties have raised a myriad of issues regarding when the Accumulated Sick Leave Obligation arose and to which period, pre- or post-Closing Date, said obligation relates.
(i) To which period, pre- or post-Closing Date, does the Accumulated Sick Leave Obligation relate?
The parties passionately dispute whether the Accumulated Sick Leave Obligation arose prior to November 10, 1998, with, and as one would expect, Tenet arguing for a resolution of the issue in the affirmative and the Union and the Trustee lobbying for a negative answer to such issue. Surprisingly, however, the Court observes that none of the parties appear to have focused, either in their written submissions to the Court or in oral hearings before the Court, on the issue of whether the Accumulated Sick Leave Obligation re
(ii) When did the Accumulated Sick Leave Obligation arise?
Since the Court can render the preceding ruling without resolving whether the Accumulated Sick Leave Obligation arose prior to November 10, 1998, the Court need not conclusively resolve such issue. Nevertheless, the Court concludes that the Accumulated Sick Leave Obligation arose prior to November 10, 1998, which conclusion also independently dictates holdings that (a) the debtor and Tenet agreed within the APA that Tenet would not assume such obligation, and (b) Tenet did not assume liability under the APA for such obligation. The Court, in
While the Court determines, in light of the preceding analysis, that it need not address further the issue of when the Accumulated Sick Leave Obligation arose, the Court nevertheless feels obliged to address another argument of the Union and the Trustee that may relate to such issue given that said argument may have been, although the Court is uncertain whether the same was, advanced in response to another issue bearing on whether Tenet assumed the Accumulated Sick Leave Obligation. The argument just referred to, which argument the Court finds to be incredibly strained but the essence of which the Court will attempt to capture and then analyze, seems to make much of the fact that Tenet assumed liability for pre-Clos-ing Date vacation and holiday accumulations of the Union employees specially— i.e., by specifically assuming liability for “the Hired Employee Benefits,” see APA ¶¶ 1.01 (definition of “Assumed Liabilities”) & 2.03, which term is defined as such vacation and holiday accumulations, see APA ¶ 1.01 (definition of “Hired Employee Benefits”) — rather than by reference to obligations that arose, and which related to a period, commencing on the Closing Date. In particular, the Union and the Trustee seem to argue that:
(a) Tenet assumed liability for the Hired Employee Benefits because, if Tenet had not done so, the debtor would have needed to pay the Union employees on the Closing Date for their pre-Closing Date vacation and holiday accumulations;
(b) the debtor, absent Tenet’s aforesaid assumption, would have needed to pay the Union employees on the Closing Date for their pre-Closing Date vacation and holiday accumulations because (i) said employees’ employment terminated under the CBAs on the Closing Date, and (ii) the CBAs require that vacation and holiday accumulations be paid upon the termination of said employees’ employment even if such termination occurs prior to the retirement of said employees;
(c) the fact that the debtor became obligated to pay the Union employees on the Closing Date for their pre-Closing Date vacation and holiday accumulations demonstrates that said obligation arose pre-Closing Date;
(d) the debtor, in contrast to the Union employees’ pre-Closing Date vacation and holiday accumulations, did not need to pay said employees on the Closing Date for their pre-Closing Date sick leave accumulations;
(e) the debtor did not need to pay the Union employees on the Closing Date for their pre-Closing Date sick leave accumulations notwithstanding the termination of said employees’ employment on the Closing Date because (i) the CBAs only require that sick leave accumulations be paid upon the termination of said employees’ employment if said termination takes the form of retirement, and (ii) the Union employees’ employment was terminated on
(i) the fact that the debtor did not need to pay the Union employees on the Closing Date for their pre-Closing Date sick leave accumulations demonstrates that the debtor’s obligation for such sick leave accumulations arose post-Closing Date rather than pre-Closing Date.
See Trustee’s Mot. Summ. J. (Docket No. 40), at 11; Union’s Br. in Opp. To Tenet’s Summ. J. Mot., filed May 1, 2001 (Docket No. 49), at 7-8.
As an initial matter, the Court rejects prong (f) of the preceding argument by the Union and the Trustee — which argument, for the sake of simplicity, the Court shall hereafter refer to as “the Six-Part Argument” — to wit that the fact that the debtor did not need to pay the Union employees on the Closing Date for their pre-Closing Date sick leave accumulations demonstrates that the debtor’s obligation for such sick leave accumulations arose post-Closing Date rather than pre-Closing Date. The Court rejects such prong because the fact that payment was not due on the Closing Date for sick leave that had accumulated up to that date can be, and as the Court has already held is, explained by a finding that (a) said employees’ rights to such accumulations, which rights arose pre-Closing Date albeit in contingent form, simply had not yet vested as of the Closing Date, and (b) the debtor’s corresponding obligation for such sick leave accumulations, which obligation also arose pre-Clos-ing Date albeit in contingent form, simply had not yet become fixed as of the Closing Date. Because said prong (f) appears to constitute the bottom line of the Six-Part Argument, and since the Court rejects the same, the Court can safely hold that said argument does not support the position of the Union and the Trustee that the Accumulated Sick Leave Obligation arose post-Closing Date. However, given the Court’s aforesaid uncertainty as to why the Six-Part Argument is advanced, the Court will proceed to address further some of the remaining prongs of said argument.
Particularly interesting to the Court is prong (a) of the Six-Part Argument, to wit that Tenet assumed the Hired Employee Benefits because, if Tenet had not done so, the debtor would have needed to pay the Union employees on the Closing Date for their pre-Closing Date vacation and holiday accumulations. The Court must disagree with said prong because of the following language found in the APA:
At the Closing and unless otherwise waived in writing by ... [the debtor, Tenet] shall deliver:
(d) to ... [the debtor] an assumption agreement, fully executed by ... [Tenet], in form and substance acceptable to ... [the debtor], pursuant to which ... [Tenet] shall assume the future payment and performance of the Assumed Liabilities!, among which are the Hired Employee Benefits]; provided however, that ... [Tenet] shall retain from the Purchase Price that sum necessary to pay the Hired Employees Benefits.
APA ¶ 8.08(d) (emphasis added);
see also
APA ¶ 2.05(b) (“At closing, Buyer shall deliver to Sellers the balance of the Purchase Price
minus
... the Hired Employees Benefits”). The preceding language from the APA prompts the Court to conclude instead that Tenet specially assumed the obligation for the Hired Employee Benefits, which obligation would have otherwise remained with the debtor, only because the debtor essentially gave Tenet the funds to satisfy such obligation; indeed, since said obligation obviously relates to the period pre-Closing Date during which the debtor operated the assets that
Also interesting to the Court is the contention by the Union and the Trustee that the Union employees’ employment terminated under the CBAs on the Closing Date, which contention appears in prongs (b) and (e) of the Six-Part Argument. The Court frankly is astonished that the Union, in particular, would contend as much because, if the Union employees’ employment terminated under the CBAs on the Closing Date, then said employees’ pre-Closing Date sick leave accumulations simply lapsed pursuant to the CBAs, see Henry Nicholas Aff., Ex’s. 1-5 (portions of CBAs describing Union employees’ sick leave benefits), which would mean that neither the debtor nor Tenet properly is liable for the Accumulated Sick Leave Obligation. Because it does not make any sense for the Union to advance an argument that essentially runs counter to the crux of the Union’s cause in the instant adversary proceeding, the Court could simply pass off prongs (b) and (e) and, for that matter, the entire Six-Part Argument that is, in part, predicated upon such prongs, as having been inadvertently advanced by the Union. However, the Court rejects the aforesaid prongs (b) and (e) as well because the Court has already determined in a prior part of the instant opinion that the debtor and Tenet intended for the Union employees’ contracts of employment to be, and thus such contracts were, assigned to Tenet, see supra note 4, which determination is irreconcilable with a determination that the Union employees’ employment actually terminated under the CBAs on the Closing Date.
(iii) The issue of assumption cum on-ere and the instant applicability of the decision in American Flint Glass Workers Union.
In addition to the various arguments advanced by the Union and the Trustee in favor of their position that the Accumulated Sick Leave Obligation arose post-Closing Date — all of which the Court rejects as set forth above — the Court understands the Union and the Trustee to make a couple of additional arguments to the ulti
(a) Tenet assumed the CBAs under the APA but it could only have assumed the CBAs cum onere consistent with the decisions such as those in Italian Cook Oil Corp., Bildisco, Monsour Medical Center, and Maine, which is to say that Tenet was not free to assume the CBAs unless it did so completely (i.e., assumption of all benefits and all burdens pertaining to the CBAs, including the Accumulated Sick Leave Obligation); and
(b) Tenet assumed the CBAs under the APA but, consistent with the Third Circuit’s decision in American Flint Glass Workers Union, Tenet was not free to assume the CBAs less the Accumulated Sick Leave Obligation unless (i) Tenet expressly conditioned its purchase of assets from the debtor on Tenet’s ability to assume the CBAs less the Accumulated Sick Leave Obligation, and (ii) the Union consented or waived its objection to such incomplete assumption, which consent or waiver by the Union never occurred.
As an initial matter, the Court is constrained to reject outright any of these additional arguments to the extent that they are advanced as a ground for objection to what the Court has determined was an incomplete assumption by Tenet under the APA of each of the CBAs because (a) the Union, although it received notice of the APA and the hearings to approve the same, failed to object at such hearings to the Court’s approval of the APA and, in particular, to the Court’s approval of Tenet’s incomplete assumption thereunder of each of the CBAs, (b) the Sales Orders, which approved the APA and, in particular, Tenet’s incomplete assumption thereunder of each of the CBAs, are final orders, which fact, when coupled with the notice to the Union as just described, means that, by virtue of collateral estoppel if not
res judicata,
the Union can no longer press, and the Court is not now free to entertain, collateral attacks upon said orders via objections by the Union to that which was approved by the Court therein, and (c) the Trustee, since it stepped into the shoes of the debtor, most certainly is not free to object to the Sales Orders, which orders were consented, and thus could not have been objected, to by the debtor. Therefore, these additional arguments can only be effectively advanced by the Union and the Trustee at this time as a tool for the Court to consider when it construes the provisions of the APA relevant to whether Tenet assumed the Accumulated Sick Leave Obligation; put differently, the Court need only presume that the Union and the Trustee contend, for the reasons advanced in each of the aforesaid arguments, that Tenet could not, so it must not, have incompletely assumed each of the CBAs under the APA. Unfortunately for the Union and the Trustee, the Court holds that the relevant provisions of the APA — i.e., APA ¶¶ 1.01 (definitions of “Assumed Liabilities” and “Excluded Liabilities”), 2.03, 2.04(h), and 5.23(a) — are only susceptible of one particular construction as they relate to the Accumulated Sick Leave Obligation, to wit that Tenet did not assume liability under the APA for such obligation;
9
the Court holds as it does
First, with respect to the
cum onere
argument of the Union and the Trustee, the Court rejects the same because the Court holds, as a matter of law, that the assignee of a bankruptcy trustee or a debtor-in-possession, such as is Tenet in the instant matter, is free to assume less than all of the obligations that accompany a contract which is assigned to said assignee. The Court agrees with the Union and the Trustee that (a) if a bankruptcy trustee or a debtor-in-possession wishes to assume a contract under 11 U.S.C. § 365, then such assumption must be
cum onere,
and (b) cases such as
Italian Cook Oil Corp., Bildisco, Monsour Medical Center,
and
Maine
all hold as much. Unfortunately for the Union and the Trustee, the Court finds that neither the cases just referred to, nor others that the Court has read, apply the
cum onere
concept to the assumption of obligations by a subsequent assignee of a bankruptcy trustee or debt- or-in-possession; instead, said cases uniformly involve only the issue of whether a trustee or debtor-in-possession may incompletely assume a contract under § 365. Because the Court does not understand § 365, via the
cum onere
concept, to modify general state law regarding the assignment of contracts once they have been assumed under § 365 by a bankruptcy trustee or a debtor-in-possession, and since under state law an assignor and an assignee are free to agree that said as-signee will not assume any, or certain of, the obligations that accompany an assigned contract,
see
3 P.L.E.
Assignments
§ 76 at 202 (West 1957) (citing,
inter alia, Art Metal Const. Co., for Use of McCloskey & Co. v. Lehigh Structural Steel Co.,
Second, the Court disagrees with the Union and the Trustee that the decision in
American Flint Glass Workers Union
dictates that Tenet was not free to assume the CBAs less the Accumulated Sick Leave Obligation unless (a) Tenet expressly conditioned its purchase of assets from the debtor on Tenet’s ability to so incompletely assume the CBAs, and (b) the Union consented, or waived any objection that it might have had, to such incomplete assumption. The Court so disagrees because the Court concludes that the Union and the Trustee misinterpret
American Flint Glass Workers Union.
In particular, the Union and the Trustee contend that the Third Circuit held in
American Flint Glass Workers Union
that the as-signee of a collective bargaining agreement therein, who was also the purchaser of assets from the debtor/assignor therein, successfully assumed less than all of the obligations that accompanied said collective bargaining agreement only because (a) said purchaser/assignee expressly conditioned its purchase of assets from said debtor/assignor on said purchaser/assign-ee’s ability to so incompletely assume said collective bargaining agreement, and (b) the union who was a party to said collective bargaining agreement waived its rights as against said purchaser/assignee with respect to the obligation that said assignee did not wish to assume (i.e., said union consented to such incomplete assumption). Unfortunately for the Union and the Trustee, the Court understands the Third Circuit in
American Flint Glass Workers Union
to (a) broadly hold only that if, and to the extent that, a debtor/assignor and its assignee intend an incomplete assignment of all rights and obligations to a contract (i.e., something other than a “true assignment”), § 365(k) does not apply and said debtor/assignor remains liable for whatever obligation is not assumed by said assignee,
see American Flint Glass Workers Union,
Third, the Third Circuit in
American Flint Glass Workers Union
held that when a trustee or a debtor-in-possession incompletely assigns a collective bargaining agreement within the context of a sale of substantially all of the debtor’s assets such that the assignee of such agreement does not assume all of the obligations attached to said agreement, such incomplete assignment “constitutes an attempt to effect an alteration of the” collective bargaining agreement.
See
/<f. at 81-82. Such an attempt to alter a collective bargaining agreement, according to the Third Circuit, requires the debtor to comply with the procedures contained in 11 U.S.C. § 1113, failing which the debtor shall be deemed to
(iv) The meaning of APA ¶ 3.20(f).
Finally, the Union and the Trustee contend that a construction by the Court of relevant provisions in the APA such that Tenet did not assume liability for the Accumulated Sick Leave Obligation will be internally inconsistent with another provision of the APA, namely APA ¶ 3.20(f). APA ¶ 3.20(f) provides that “the assignment of the Contracts to and assumption of such Contracts by Buyer (or, in the case of University Assets, by the Restructured University) will not result in any penalty, premium or variation of the rights, remedies, benefits or obligations of any party thereunder.” APA ¶ 3.20(f). As explained above, the Court construes APA ¶¶ 1.01 (definitions of “Assumed Liabilities” and “Excluded Liabilities”), 2.03, 2.04(h), and 5.23(a) such that Tenet did not assume liability for the Accumulated Sick Leave Obligation. Unfortunately for the Union and the Trustee, however, the Court concludes that such construction does not conflict with APA ¶ 3.20(f). In fact, the Court can readily reconcile its aforesaid construction with APA ¶ 3.20(f) because such construction neither penalizes the Union nor varies the Union’s rights, remedies, or benefits with respect to the CBAs given that (a) the debtor retains liability for the Accumulated Sick Leave Obligation, and (b) the Union, if, and to the extent that, it has not stipulated away its pertinent rights against the debtor via the Sept. 12, 2000 Stipulation, may insist upon the timely satisfaction of the Accumulated Sick Leave Obligation before the Union must undertake to provide the benefits under the CBAs that were assigned by the debtor to Tenet.
See supra
pp. 114-15. Furthermore, that the APA, when construed such that Tenet did not assume liability for the Accumulated Sick Leave Obligation, may arguably operate to alter the CBAs for purposes of 11 U.S.C.
IV.
For the reasons set forth in part III. above, the Court holds that Tenet assumed liability under the APA for the Prospective Sick Leave Obligation, but that Tenet did not assume liability under the APA for the Accumulated Sick Leave Obligation.
Because Tenet assumed liability under the APA for the Prospective Sick Leave Obligation, and since the Sales Orders only preclude a party from asserting against Tenet liabilities which Tenet did not assume under the APA, the Sales Orders do not operate to bar and enjoin the Union from pursuing Tenet for payment of the Prospective Sick Leave Obligation. Therefore, the Union did not violate the Sales Orders by obtaining the Arbitration Award as it relates to the Prospective Sick Leave Obligation.
However, because Tenet did not assume liability under the APA for the Accumulated Sick Leave Obligation, and since the Sales Orders and, in particular, ¶¶ 8 and 21 of the Sales Order dat. Oct. 1, 1998 and ¶¶ 6 and 19 of the Sales Order dat. Oct. 30, 1998, operate to bar and enjoin any party from asserting against Tenet liabilities which Tenet did not assume under the APA, the Sales Orders operate to preclude the Union from pursuing Tenet for payment of the Accumulated Sick Leave Obligation. Therefore, the Union has violated the Sales Orders by obtaining the Arbitration Award as it relates to the Accumulated Sick Leave Obligation.
Consistent with a prior holding of the Court in part I. above, the Court holds that, because the Sales Orders do not operate to preclude the Union from pursuing Tenet for payment of the Prospective Sick Leave Obligation, the Court lacks even noncore subject matter jurisdiction over Tenet’s 1st Count and the Union’s counterclaim to the extent that the same seek to set aside or enforce the Arbitration Award as it pertains to the Prospective Sick Leave Obligation. Accordingly, Tenet’s 1st Count and the Union’s counterclaim, to
Because Tenet assumed liability under the APA for the Prospective Sick Leave Obligation, the debtor is consequently not liable for such obligation, which conclusion dictates that Tenet also may not recover on its claim for indemnification from the Trustee under Tenet’s 2nd Count to the extent that such claim pertains to the Prospective Sick Leave Obligation. Accordingly, the Trustee’s summary judgment motion with respect to Tenet’s 2nd Count is granted, and Tenet’s summary judgment motion with respect to said count is denied with prejudice, to the extent that Tenet seeks indemnification from the debtor’s bankruptcy estate for liability related to the Prospective Sick Leave Obligation.
However, and consistent with another prior holding of the Court in part I. above, the Court holds that, because the Sales Orders operate to preclude the Union from pursuing Tenet for payment of the Accumulated Sick Leave Obligation, the Court possesses core subject matter jurisdiction over Tenet’s 1st Count and the Union’s counterclaim to the extent that the same seek to set aside or enforce the Arbitration Award as it pertains to the Accumulated Sick Leave Obligation. For the reasons set forth in the ensuing section of the instant opinion, the Arbitration Award must be set aside to the extent that said award places upon Tenet liability to satisfy the Accumulated Sick Leave Obligation.
V.
Although “[c]ourts have a limited role in reviewing arbitration awards,”
International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Local 249 v. Western Pennsylvania Motor Carriers Association,
A. Arbitrator Tener Lacked Jurisdiction to Impose the Accumulated Sick Leave Obligation Upon Tenet.
As an initial matter, Arbitrator Tener, because he granted the Arbitration Award to the Union, necessarily, albeit implicitly, determined that he had jurisdiction over the disputes which he resolved via the Arbitration Award. “However, whether the arbitrator has jurisdiction over a particular disputef — ]i.e. whether the controversy is arbitrable[ — ]is a question for the court to decide,”
Western Pennsylvania Motor Carriers Association,
Whether an arbitrator has jurisdiction over a particular labor dispute— i.e., whether the controversy is arbitrable — is a twofold question that requires a resolution of the twin issues of whether (a) a particular party has agreed to arbitrate said dispute — i.e., is said party a party to a collective bargaining agreement such that it is bound by a particular arbitration provision in said agreement, and (b) said dispute is within the scope of an arbitration clause — i.e., is the subject of said dispute one that the parties have agreed to arbitrate.
See Sheet Metal Workers’ Association,
First, the Court concludes that, because the CBAs were assumed by the debtor and assigned to Tenet such that Tenet assumed liability for,
inter alia,
the Prospective Sick Leave Obligation, Tenet also assumed the duty contained in the CBAs to arbitrate disputes regarding the Prospective Sick Leave Obligation. However, because Tenet, via the aforesaid assumption and assignment of the CBAs, did not assume liability for the Accumulated Sick Leave Obligation, the Court must conclude that Tenet likewise did not assume the duty contained in the CBAs to arbitrate disputes regarding the Accumu
Second, the Court concludes, after examining pertinent provisions contained in the CBAs regarding arbitration, that such provisions do not include within their scope of disputes to be referred to arbitration disputes as to whether an entity is a party to the CBAs so that it can be considered “the Employer” thereunder. The Court concludes as it does because (a) the term “grievance” is “defined as a dispute or complaint arising between the parties hereto under or out of this Agreement [(i.e., the CBAs)] or by interpretation, application, performance, termination, or any alleged breach thereof,” see Tenet Br. in Support of SumJ.Mot., filed Apr. 2, 2001 (Docket No. 42) (copies of the relevant portions of the CBAs are attached to back of brief, see Section 1 of Article on “Grievance Procedure” in each), (b) a dispute as to whether an entity is a party to the CBAs does not have as its genesis the CBAs but rather arises under or out of, at least in the instant matter, the APA and the Sales Orders, which means that such a dispute does not constitute a “grievance” under the CBAs, and (c) grievances, in turn, constitute the universe of that which can be referred for arbitration under the CBAs. See Id. (copies of relevant portions of CBAs, see Article on “Arbitration”). Because a dispute as to whether an entity is a party to the CBAs so that it can be considered “the Employer” thereunder is not among those which can be referred for arbitration under the CBAs — i.e., is not a dispute within the scope of the CBAs’ arbitration clauses — the Court must hold that (a) Arbitrator Tener lacked jurisdiction over the dispute whether Tenet was a party to the CBAs so that Tenet could also be considered “the Employer” thereunder with consequent responsibility for the satisfaction of the Sick Leave Obligations, and (b) such dispute, stated differently, was not arbitrable.
Because Arbitrator Tener, for the two above stated reasons, lacked jurisdiction over the dispute whether Tenet, in particular, violated the CBAs by refusing to pay the Union employees the Accumulated Sick Leave Obligation, Arbitrator Tener also lacked jurisdiction to impose liability for said obligation upon Tenet, which conclusion, in turn, dictates that the Arbitration Award be vacated to the extent that it places upon Tenet liability to satisfy such obligation. 14
The Third Circuit has elaborated on whether an arbitration award draws its essence from a collective bargaining agreement as follows:
[A] labor arbitrator’s award does “draw its essence from the collective bargaining agreement” if the interpretation can in any rational way be derived from the agreement, viewed in the light of its language, its context, and any other indi-cia of the parties’ intention; only where there is a manifest disregard of the agreement, totally unsupported by principles of contract construction and the law of the shop, may a reviewing court disturb the award.
Ludwig Honold Mfg. Co. v. Fletcher,
Applying the preceding statements of the law to the instant matter, the Court holds that Arbitrator Tener’s determination, to wit that Tenet was a party under the CBAs and, in particular, the party thereunder responsible for the satisfaction of,
inter alia,
the Accumulated Sick Leave Obligation, does not draw its essence from the CBAs. The Court holds as it does because such determination by Arbitrator Tener cannot in any rational way be derived from the CBAs themselves; indeed, the only relevant rational derivation to be made from the CBAs as of the date of the arbitration is that the debtor or one of its affiliates was the sole non-Union party to each of the CBAs and, thus, the party thereunder responsible for the satisfaction of obligations such as the Sick Leave Obligations. In order for Arbitrator Tener to have rationally determined that Tenet was a party under the CBAs and, in particular, the party thereunder responsible for the satisfaction of,
inter alia,
the Sick Leave Obligations, Arbitrator Tener necessarily would have needed to resort to an examination and interpretation of documents other than the CBAs such as, in particular, the APA and the Sales Orders. Furthermore, that the APA and the Sales Orders were offered for inclusion in, and apparently were accepted into, the record before Arbitrator Tener, and that such documents are dispositive of whether, and to what extent, Tenet was a party to the CBAs, cannot serve to rationalize Arbitrator Tener’s determination visa-vis Tenet because (a) Arbitrator Tener lacked authority to consider such documents,
see Absolute Environmental Services,
Therefore, Arbitrator Tener’s determination, to wit that Tenet was a party under the CBAs and, in particular, the party thereunder responsible for the satisfaction of, inter alia, the Accumulated Sick Leave Obligation, does not draw its essence from the CBAs. Consequently, the Arbitration Award, at least to the extent that it places liability upon Tenet for the Accumulated Sick Leave Obligation, likewise fails to draw its essence from the CBAs, which means that said award must be vacated as it pertains to the Accumulated Sick Leave Obligation. 15
C. Arbitrator Tener’s Refusal to Consider the APA and the Sales Orders When Resolving the Dispute of Whether Tenet was a Party to the CBAs Resulted in Fundamental Unfairness to Tenet That Warrants Setting Aside the Arbitration Award.
The Court has already determined that, although Arbitrator Tener lacked jurisdiction over the dispute whether Tenet was, as of the date of the arbitration hearing, a party to the CBAs, Arbitrator Tener nevertheless resolved such dispute, albeit perhaps unwittingly. Tenet argues, and the Court has also already found, that Arbitra
Indeed, “[v]acatur [of an arbitration award] is appropriate ... when the exclusion of relevant evidence [by an arbitrator] ‘so affects the rights of a party that it may be said that he was deprived of a fair hearing.’ ”
Hoteles Condado Beach,
The Court concludes that Arbitrator Tener, although he accepted into evidence, and thus did not technically exclude, the APA and the Sales Orders, nevertheless effectively excluded such documents by his refusal to consider the same. Furthermore, the Court concludes that such effective exclusion of such documents by Arbitrator Tener so negatively affected Tenet’s right to present its case regarding the dispute surrounding whether Tenet was a party to the CBAs that it can now be said that Tenet was deprived of a fair hearing with respect to such dispute. Because the resolution of such dispute was critical to Arbitrator Tener’s levying of the Arbitration Award against Tenet, Arbitrator Tener’s refusal to consider the APA and the Sales Orders dictates that the Arbitration Award be set aside, at least to the extent that the same imposes liability upon Tenet for the Accumulated Sick Leave Obligation.
The Court would be remiss if it did not address the position of the Union with respect to the treatment accorded the APA and the Sales Orders by Arbitrator Tener. The Union contends that (a) Arbitrator Tener accepted into evidence and, thus, did not exclude the APA and the Sales Orders, (b) Arbitrator Tener in his opinion even cited, as well as discussed Tenet’s arguments by referring, to such documents, and (c) the parties sparred at some length over the effect of the documents at the arbitration hearing. Unfortunately for the Union, none of the preceding points, even if true, serve to negate the Court’s conclusion that Arbitrator Tener effectively excluded the APA and the Sales Orders during the course of the arbitration proceeding. In particular, that Arbitrator Tener technically did not exclude the APA and the Sales Orders says nothing about whether he effectively excluded such documents. As well, Arbitra
The Court also holds that its prior conclusion, to wit that Arbitrator Tener lacked authority to consider, and thus erroneously admitted into the record, the APA and the Sales Orders, does not negatively impact, and in fact can be reconciled with, the Court’s instant conclusion that Arbitrator Tener’s refusal to consider such documents deprived Tenet of a fair hearing regarding the dispute whether Tenet was a party to the CBAs. The preceding holding follows because (a) Arbitrator Tener lacked authority to consider the APA and the Sales Orders only because he lacked, in turn, jurisdiction over disputes having their genesis in documents other than the CBAs, see supra pp. 123-24, (b) the dispute as to whether Tenet was a party to the CBAs is a dispute having its genesis in documents other than the CBAs, namely the APA and the Sales Orders, see supra p. 122, (c) the dispute as to whether Tenet was a party to the CBAs, since it had it genesis in the APA and the Sales Orders, necessarily required Arbitrator Tener to consider such documents, see supra pp. 123 & 124-25, failing which Arbitrator Tener would deprive Tenet of a fair hearing with respect to such dispute, see supra p. 125, and (d) Arbitrator Tener’s exercise of jurisdiction which he lacked — i.e., jurisdiction over the dispute whether Tenet was a party to the CBAs — thus placed Arbitrator Tener in the unenviable, if not impossible, position of having to consider documents that he lacked authority to consider' — i.e., the APA and the Sales Orders — failing which consideration he would prejudicially deprive Tenet of a fair hearing regarding such dispute.
VI.
In light of the foregoing, the Court disposes in the following manner of the summary judgment motions of Tenet and the Union as the same relate to the portions of Tenet’s 1st Count and the Union’s counterclaim that are not dismissed:
(a) to the extent of the relief which the Court provides to Tenet in the form of the declaration that the Sales Orders and the APA operate to preclude the Union from pursuing Tenet for payment of the Accumulated Sick Leave Obligation, the summary judgment motion of Tenet is granted and that of the Union is denied with prejudice;
(b) to the extent of the relief which the Court provides to the Union in the form of the declaration that the Sales Orders and the APA do not operate to preclude the Union from pursuing Tenet for payment of the Prospective Sick Leave Obligation, the summary judgment motion of the Union is granted and that of Tenet is denied with prejudice; and
(c) to the extent of the relief provided to Tenet via the Court’s vacation of the Arbitration Award as it pertains to the
As for Tenet’s 2nd Count as it relates to the Accumulated Sick Leave Obligation, the Court holds that Tenet, pursuant to Sales Order dat. Oct. 1, 1998, at p. 18 ¶ 7 and APA ¶ 9.01(c), would have been entitled to indemnification from the debtor’s bankruptcy estate if the Arbitration Award had not been vacated as it pertained to the Accumulated Sick Leave Obligation given that the debtor rather than Tenet remains liable under the APA for satisfaction of such obligation. However, because the Court vacates the Arbitration Award to the extent that it places upon Tenet liability to satisfy the Accumulated Sick Leave Obligation, Tenet correspondingly is not entitled to indemnification from the debt- or’s bankruptcy estate. Therefore, the Court will dismiss without prejudice as moot Tenet’s 2nd Count to the extent that Tenet seeks such indemnification for liability related to the Accumulated Sick Leave Obligation.
Because the only issues with respect to the Accumulated Sick Leave Obligation that are presently before the Court are whether Tenet is liable therefor under the APA and, thus, whether the Arbitration Award as it pertains to such obligation must be set aside, the Court need not, and thus does not, resolve the following issues at this time:
(a) whether the Sept. 12, 2000 Stipulation operates to relieve the debtor’s bankruptcy estate from liability for the pre-Closing Date sick leave accumulations that comprise the Accumulated Sick Leave Obligation;
(b) whether the Union can presently take advantage of a rule that it may insist upon the timely payment of the pre-Closing Date sick leave accumulations before it performs further under the CBAs, which issue turns upon the resolution of at least several additional issues including, inter alia, (i) the preceding issue of whether the Union has stipulated away its rights as against the debtor vis-a-vis the pre-Closing Date sick leave accumulations, and (ii) whether there presently exist any remaining benefits that Tenet is entitled to receive from the Union under the CBAs; and
(c)who shall resolve the issue of the debt- or’s liability under the CBAs for the pre-Closing Date sick leave accumulations if the Union has not stipulated away its rights as against the debtor for timely payment of the same — i.e., must such issue be submitted for arbitration anew or will the Court decide it?
VII.
IN SUMMARY, (a) the Court possesses core subject matter jurisdiction over the entirety of Tenet’s claims and the Union’s counterclaim except to the extent that Tenet and the Union seek therein to, respectively, set aside or enforce the Arbitration Award as it relates to the Prospective Sick Leave Obligation — to such limited extent, the Court lacks subject matter jurisdiction over Tenet’s 1st Count and the Union’s counterclaim, (b) the Sales Orders and the APA are construed such that they operate to preclude the Union from pursuing Tenet for payment of the Accumulated Sick Leave Obligation but they do not operate to preclude the Union from pursuing Tenet for payment of the Prospective Sick Leave Obligation, (c) the Arbitration Award is vacated to the extent that said award places upon Tenet liability to satisfy the Accumulated Sick Leave Obligation, (d) Tenet’s 1st Count and the Union’s counterclaim are dismissed with prejudice for lack of subject matter jurisdiction to the extent that the same seek to set aside or enforce the Arbitration
Notes
. The Court also rejects any argument that the Union may make, although the Court is admittedly uncertain whether the Union argues, that bankruptcy courts can never possess subject matter jurisdiction over actions to set aside or enforce labor arbitration awards because federal district courts are entrusted with exclusive jurisdiction regarding the same under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185. The Court holds as it does in the preceding sentence because, to the extent that a matter arises under title 11 of the United States Code or arises in or is related to a case under such title 11, such matter may be — and in this circuit has been— referred to bankruptcy courts by the district courts,
see
28 U.S.C.A. § 157(a) (West 1993); because of § 157(a), a bankruptcy court will possess subject matter jurisdiction with respect to any matter over which the district court would even otherwise possess exclusive jurisdiction if such matter is one that is also described in 28 U.S.C. § 157(a). The preceding conclusion by the Court is borne out by several decisions in which courts have implicitly found that bankruptcy courts have at least noncore subject matter jurisdiction to entertain actions to set aside or enforce labor arbitration awards.
See In re Leslie Fay Cos., Inc.,
. The CBAs could not have been,, and were not, assumed by the Trustee via the Sales Orders and the APA because, as of the date upon which said documents originated, the instant debtor was operating as a debtor-in-possession and a Chapter 11 trustee had not yet been appointed.
. The Court rejects outright any possible notion by Tenet that, because all of the assets that Tenet purchased from the debtor were purchased "free and clear of all Encumbrances,” APA ¶2.01, Tenet purchased all of the debtor’s interests in the Assumed Contracts, and thus the CBAs, free and clear of any obligations that arose pre-Closing Date, or which might arise, out of the same. For such a notion to have any merit the obligations that arose pre-Closing Date, or which might arise, out of the CBAs would need to have constituted encumbrances upon the CBAs themselves as of the Closing Date. Unfortunately for Tenet, such a proposition is untenable because (a) an encumbrance is something — a claim, lien, charge, or liability — that attaches to and binds property, see Black's Law Dictionary 527 (6th ed.1990), (b) the obligations flowing out of a contract do not attach to and bind the very same contract when said contract is considered as an asset unless, given that a contract interest constitutes personalty rather than realty, separate action is taken by the obligee, and (c) the Union (i) never took action prior to the Closing Date to attach or bind the CBAs with respect to obligations that existed as of the Closing Date, and (ii) could not possibly have taken action as of the Closing Date to attach or bind the CBAs with respect to obligations that had not arisen prior to the Closing Date.
. Because the Court concludes that the debtor and Tenet intended for the latter of the two sentences in APA ¶ 5.03(a) at issue herein to apply to the Union employees’ employment, the Court also concludes necessarily that (a) the debtor and Tenet operated under the presumption — whether or not well-founded as a matter of law — that the Union employees were employed under written Contracts, per
. For the sake of convenience and because the Court believes that it also makes more sense logically, the Court deals with and rejects at footnote 10 infra another basis by Tenet for its hallmark position that it did not become bound as of November 10, 1998, to honor, and thus was free thereafter to deviate from, any term or condition contained in the CBAs including, inter alia, either of the Sick Leave Obligations.
. That the debtor and Tenet agreed within the APA that Tenet would not assume liability for obligations which arose, or which related to a period, prior to November 10, 1998 — particularly if such obligations involved the subject matter at issue with respect to the Accumulated Sick Leave Obligation — follows not only from APA ¶¶ 1.01 (definition of "Assumed Liabilities”), 2.03, and 5.23(a), but also from the definition of "Excluded Liabilities” in APA ¶ 1.01 ("any and all liabilities of ... [the debt- or] other than the Assumed Liabilities, whether known or unknown, fixed or contingent, recorded or unrecorded”) and APA ¶ 2.04(h) ("Under no circumstance shall ... [Tenet] assume or be obligated to pay ... any of the Excluded Liabilities, including but not limited to the following liabilities, which shall be and remain liabilities of ... [the debtor]: (h) except with respect to the Hired Employee Benefits, liabilities or obligations to ... [the debt- or's] employees ... arising from or relating to periods prior to Closing (whether or not triggered by the transactions contemplated by this Agreement)”).
. Although the Court recognizes that the terms "obligation” and "liability” are not defined in the APA, and that such terms as they appear within the APA may not be synonymous, the Court, because it views it as frankly preposterous, shall give short shrift to and summarily reject any possible suggestion by the Union and the Trustee that, regardless of what the term "liability” means under the APA, the term “obligation” should be construed for purposes of the APA such that the date upon which the same arises is necessarily determined by reference to the date upon which the same is due to be paid.
. That the debtor did not agree in the APA to give Tenet the funds to satisfy the Accumulated Sick Leave Obligation also fuels the Court’s holding that Tenet did not assume such obligation under the APA. The preceding conclusion follows because, and as is the case with respect to the Hired Employee Benefits, the Court cannot conjure up any reason why Tenet, absent an advance of funds to satisfy the Accumulated Sick Leave Obligation, would have wished to assume liability for the same given that, and as the Court has already concluded, such obligation relates to the period pre-Closing Date during which the debtor operated the assets that were ultimately sold to Tenet.
. Because the Court finds that, with respect to the Accumulated Sick Leave Obligation,
. Because the Court concludes that the debt- or and Tenet were free to, and did, agree to an incomplete assignment of the CBAs such that Tenet did not assume liability for the Accumulated Sick Leave Obligation, the Court dismisses another fallback strategy of Tenet wherein Tenet (a) agrees with the Union and the Trustee that the CBAs could only have been completely assigned to Tenet (i.e., Tenet could only have assumed the CBAs' attendant obligations cum onere), (b) argues consequently that no part of the CBAs was ever effectively assigned to Tenet given that the APA memorializes only an incomplete assignment of the CBAs, (c) maintains consequently that it did not become bound as of November 10, 1998, to honor any term or condition contained in the CBAs including, inter alia, either of the Sick Leave Obligations, and (d) contends consequently that, pursuant to APA V 5.03(a), it was free to set initial, and needed only to bargain with respect to subsequent, terms and conditions of employment post-Closing Date with respect to the Union employees. See Tenet Br. in Opp. To Summ.J.Mot. of Union & Trustee, filed May 1, 2001 (Docket No. 51), at 23.
. Interpreting American Flint Glass Workers Union in this fashion is also desirable, in the Court's view, because (a) such an interpretation can readily be reconciled with general state contract law regarding the transfer of contracts (i.e., assignment of rights, delegation of performance, and assumption by an assignee of an assignor's duties) given that such law does not require, as a necessary condition of an assignee's incomplete assumption of duties, either that (i) such assignee expressly condition an assignment of a contract to itself upon its ability to incompletely assume said contract, or (ii) the obligee to an assigned contract consent or waive its objection to an incomplete assignment of said contract, and (b) "collective bargaining agreements[, which were at issue in American Flint Glass Workers Union,] are contracts that remain subject to the general principles of contract and agency law.” Kheel, supra p. 27, § 26.04[3] at 26-86 to 26-88 ("Despite its uniqueness, the collective bargaining agreement is intended to be a contract between the union and the employer; it is negotiated as a contract, is designated a contract, and is made enforceable as a contract by Section 301 oftheLMRA”).
. Although not necessary to the Court’s ruling given the text of the instant opinion that precedes this footnote, the Court nevertheless also finds that (a) Tenet expressly conditioned its purchase of assets from the debtor on Tenet's ability to, inter alia, incompletely assume the CBAs (i.e., assume the CBAs less the obligation for Excluded Liabilities such as the Accumulated Sick Leave Obligation), see Sales Order dat. Oct. 1, 1998, at p. 8 ¶ S, and Sales Order dat. Oct. 30, 1998, at p. 10 ¶ Q, and (b) the Union at least arguably consented, or waived any objection that it might have had, to Tenet's incomplete assumption of the CBAs by virtue of the Union's failure to object to the Court's approval of the APA coupled with the Union's notice of the hearings to approve the same.
. 11 U.S.C. § 1113(f) provides that "[n]o provision of this title shall be construed to permit a trustee to unilaterally terminate or alter any provisions of a collective bargaining agreement prior to compliance with the provisions of this section.” 11U.S.C.A. § 1113(f) (West 1993).
. Although the Court does not understand the Union and the Trustee to contend that Tenet, by participating in the arbitration hearing before Arbitrator Tener, waived its right to judicial review of Arbitrator Tener's jurisdiction over the dispute between Tenet and the Union vis-a-vis the Accumulated Sick Leave Obligation, the Court holds that Tenet
. In order to make the award of the Accumulated Sick Leave Obligation to the Union, Arbitrator Tener implicitly determined that the Union employees' employment did not terminate under the CBAs on the Closing Date. Tenet not only disagrees with the aforesaid implicit determination by Arbitrator Ten-er but contends as well that such determination results in the Arbitration Award not drawing its essence from the CBAs, thereby constituting another independent ground upon which the Arbitration Award should be set aside.
See
Tenet Br. in Opp. To Summ. J.Mot. of Union & Trustee, filed May 1, 2001 (Docket No. 51), at 21. The Court rejects such a position by Tenet, however, and not just because the Court has already determined in a prior part of the instant opinion that the Union employees’ employment did not, in fact, terminate under the CBAs on the Closing Date.
See supra
p. 111. The Court concludes that it could not vacate the Arbitration Award on the basis of Arbitrator Tener’s implicit determination that the Union employees’ employment did not terminate under the CBAs on the Closing Date — even were the Court to disagree with such determination — because (a) Arbitrator Tener could have rationally predicated the aforesaid determination upon the undisputed fact that there was not a practical lapse in the employment of the Union employees after the Closing Date — i.e., said employees were continuously employed, albeit first with the debtor and then with Tenet,
cf. Shawver v. R.H. Macy & Co., Inc.,