75-07 Food Corp. v. Trs. of United Food & Commercial Workers Local 342 Health Care Fund

• Decision Date: 24 February 2014
• Docket Number: No 13-CV-5861 (JFB) (ARL),13-CV-5861 (JFB) (ARL)
• Court: United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
• Parties: 75-07 FOOD CORP., LOREEN FOOD CORP., KAMAL CORP., CORO FOOD CORP., ZIAD FOOD CORP., 89-02 FOOD CORP., 130-10 FOOD CORP., AND NADINE FOOD CORP. D/B/A/ TRADE FAIR SUPERMARKETS, Petitioners, v. TRUSTEES OF UNITED FOOD AND COMMERCIAL WORKERS LOCAL 342 HEALTH CARE FUND, UNITED FOOD AND COMMERCIAL WORKERS LOCAL 342 SAFETY, EDUCATION, CULTURAL AND ACTIVITIES FUND, UNITED FOOD AND COMMERCIAL WORKERS LOCAL 342 LEGAL FUND, AND UNITED FOOD AND COMMERCIAL WORKERS LOCAL 342 SAVINGS & 401(K) PLAN, Respondents.

75-07 FOOD CORP., LOREEN FOOD CORP.,KAMAL CORP., CORO FOOD CORP., ZIAD FOOD CORP.,89-02 FOOD CORP., 130-10 FOOD CORP.,AND NADINE FOOD CORP. D/B/A/ TRADE FAIR SUPERMARKETS, Petitioners, v. TRUSTEES OF UNITED FOODAND COMMERCIAL WORKERS LOCAL 342 HEALTH CARE FUND,

UNITED FOOD AND COMMERCIAL WORKERS LOCAL 342 SAFETY,

EDUCATION, CULTURAL AND ACTIVITIES FUND, UNITED FOOD

AND COMMERCIAL WORKERS LOCAL 342 LEGAL FUND, AND UNITED FOOD

AND COMMERCIAL WORKERS LOCAL 342 SAVINGS & 401(K) PLAN, Respondents.

No 13-CV-5861 (JFB) (ARL)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

Dated: February 24, 2014

MEMORANDUM AND ORDER

JOSEPH F. BIANCO, District Judge:

Petitioners 75-07 Food Corp., Loreen Food Corp., Kamal Corp., Coro Food Corp., Ziad Food Corp., 89-02 Food Corp., 130-10 Food Corp., and Nadine Food Corp. d/b/a Trade Fair Supermarkets (collectively, "Trade Fair" or "petitioners") filed an action in New York State Supreme Court seeking a stay of the arbitration that respondents Trustees of United Food and Commercial Workers Local 342 Health Care Fund ("Health Care Fund"), United Food and Commercial Workers Local 342 Safety, Education, Cultural and Activities Fund ("Safety-Educational-Cultural Fund"), United Food and Commercial Workers Local 342 Legal Fund ("Legal Fund"), and United Food and Commercial Workers Local 342 Savings & 401(k) Plan ("Annuity Fund") (collectively, the "Union Funds" or "respondents") requested to adjudicate a dispute over fringe benefit contributions that Trade Fair has allegedly failed to make to the Union Funds. On October 23, 2013, the New York State Supreme Court temporarily stayed the arbitration pending resolution of Trade Fair's petition to stay arbitration. The Union Funds removed this case to federal court on October 25, 2013.

Presently before the Court is the Union Funds' motion to dismiss the complaint, to vacate the stay ordered by the New YorkState Supreme Court, and to compel arbitration. For the reasons that follow, the Court concludes that this action should be stayed, and the parties should proceed to arbitration. Resolution of the present dispute concerns the circumstances under which parties to an expired collective bargaining agreement may be compelled to arbitrate a post-expiration dispute pursuant to an arbitration provision in that agreement. Specifically, Trade Fair and the Union Funds raise the following two issues concerning the scope of their agreement to arbitrate: (1) which of several arbitration clauses in their collective bargaining agreement covers disputes over delinquent fringe benefit contributions, generally, and (2) whether the governing arbitration clause applies to their dispute over missed contributions occurring in 2013, given that the collective bargaining agreement expired in 2012. As to the first issue, the Court interprets the various arbitration clauses according to their plain meaning and determines that the arbitration provision in the Union Funds' "Procedures for Collection of Delinquent Contributions"—incorporated by reference in the collective bargaining agreement—covers disputes over delinquent contributions. On the second issue, the Court concludes that this arbitration clause applies specifically to the present, underlying dispute over allegedly delinquent contributions in 2013. In reaching this outcome, the Court applies the test set forth by the Supreme Court in Litton Fin. Printing Div. v. NLRB, 501 U.S. 190 (1991), to determine whether the Union Funds had a right to fringe benefit contributions from Trade Fair in 2013, which arose under the collective bargaining agreement, even though the collective bargaining agreement expired in 2012. Under Litton, a post-expiration grievance arises under the collective bargaining agreement (1) "where it involves facts and occurrences that arose before expiration"; (2) "where an action taken after expiration infringes a right that accrued or vested under the agreement"; or (3) "where, under normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement." Id. at 205-06. Here, the Court applies normal principles of contract interpretation and concludes that the Union Funds' right to fringe benefit contributions from Trade Fair survives expiration of the remainder of the collective bargaining agreement. Specifically, a memorandum of agreement, which modified the collective bargaining agreement and extended it until 2012, references Trade Fair's contributions to the Union Funds in 2013. The Court discerns from the plain meaning of these provisions a clear intent to extend the Union Funds' right to such contributions beyond expiration of the remainder of the collective bargaining agreement. Accordingly, the Court concludes that the Union Funds' underlying grievance is arbitrable.

I. BACKGROUND

A. Facts

Trade Fair is in the business of operating supermarkets. (Pearl Aff ¶ 3.) On April 5, 2004, Trade Fair and United Food and Commercial Workers Local 342 (the "Union")—the Union representing Trade Fair employees—entered into a collective bargaining agreement that lasted from April 5, 2004 to November 1, 2008 (the "2004 CBA"). (See Lauletti Aff. Ex. C, 2004 CBA.) Pursuant to the 2004 CBA, Trade Fair agreed to make certain fringe benefit contributions to the Union Funds for the benefit of Trade Fair's employees. (Id. at 9-12.) Trade Fair also agreed to be bound by Union Funds' Declarations of Trust, along with their implementing documents and procedures,including the provisions for the collection of contributions. (See id.)

The 2004 CBA itself contains several different arbitration clauses. First, Article 22 of the 2004 CBA contains a broad arbitration clause covering disputes "between the Union or its members and [Trade Fair] as to the interpretation, application, or enforcement of any of the provisions of this Agreement, except differences which arise involving contributions to the [Union Funds]." (Id. at 14.) This arbitration clause provides that a "single arbitrator shall be selected on a rotating basis from a qualified panel jointly designated by the Employer and the Union. . . . Arbitrators selected from the panel shall be eligible to hear all grievances arising out of the interpretation, application, or enforcement of any of the provisions of this Agreement." (Id.) Second, Schedule B of the 2004 CBA is an old collective bargaining agreement between Trade Fair and the Union covering the period from October 23, 1999 to October 25, 2003 (the "1999 CBA"). (See id. at 27). The 2004 CBA adopts the provisions of the 1999 CBA "for all employees covered by the [1999 CBA]," whom the 2004 CBA identified as only seven Trade Fair employees. (See id.) Article 23 of the 1999 CBA contains a similar arbitration clause to that in Article 22 of the 2004 CBA; it covers all disputes "as to the interpretation, application or enforcement of any of the provisions of this Agreement, except differences which arise involving contributions to the [Union Funds]." (Id. at 51-52.) However, in addition, in a letter dated October 23, 1999 that is attached to the 1999 CBA, Trade Fair and the Union agreed "to add the following provisions to Article 23 of the Collective Bargaining Agreement between us, dated October 23, 1999." (Id. at 66.) Those provisions state, in relevant part, that

[a]ny dispute or controversy arising out of contributions to the [Union Funds], which the parties are unable to adjust, shall be submitted to John Kennedy, impartial Arbitrator, or his successor chosen by the parties, for his determination and award. His award shall be final and binding and subject to enforcement in any court of competent jurisdiction in the State of New York.

(Id.)

By Memorandum of Agreement dated August 6, 2009 (the "MOA"), Trade Fair and the Union agreed "that all terms and conditions of the April 5, 2004 through November 1, 2008 Collective Bargaining Agreement [would] remain in effect through and including November 1, 2012, except for the following modifications." (Lauletti Aff. Ex. D, MOA at 1.) Among those modifications, Trade Fair agreed to make increased monthly contributions to the Union Funds on behalf of Trade Fair employees. (See id. at 2-4.) Under the MOA, the amount of the monthly contribution was set to increase once per year. (See id.) With respect to the Annuity Fund, the Safety-Educational-Cultural Fund, and the Legal Fund, the last increase was set to occur on January 1, 2013—two months after the 2004 CBA's expiration. (See id. at 3-4.) For instance, Trade Fair agreed to make the following monthly contributions to the Annuity Fundfor each full-time employee hired on or before November 1, 2008:

Full-Time

Effective

January 1, 2010

$80.00

Effective

January 1, 2011

$90.00

Effective

January 1, 2012

$105.00

Effective

January 1, 2013

$120.00

(Id. at 3.)

The MOA also modified the arbitration procedures set forth in Article 22 of the 2004 CBA in the following way:

For the purpose of arbitration pertaining to matters other than suspensions or terminations, the language shall read that the arbitrator shall be selected from the American Arbitration Association listing (no panel).

For arbitrations regarding suspensions and terminations only, arbitrators shall be selected from a panel, and the panel will be made up of arbitrators that are currently in the industry practicing arbitration, and shall be selected as follows: . . .

All of the above language shall be placed in the proper paragraphs under the current Grievance/Arbitration language in the 2003 to 2007 contract. No other language will change as a result of the above items.

(Id. at 5.)

Finally, the MOA incorporated by reference "the Agreements and Declarations of Trust establishing the Benefit Funds . . . set forth in this Agreement [(the Union Funds)] and all rules, regulations and procedures adopted by the Trustees of the Benefit Funds, as they may be amended or modified from time to time, including...