Heat & Frost Insulators v. Insulation Quality Ent.

• Decision Date: 04 January 1988
• Docket Number: No. CV-87-3583.,CV-87-3583.
• Citation: 675 F. Supp. 1398
• Parties: INTERNATIONAL ASSOCIATION OF HEAT AND FROST INSULATORS, LOCAL NO. 12, Petitioner, v. INSULATION QUALITY ENTERPRISES, LTD., Respondent.
• Court: U.S. District Court — Eastern District of New York

675 F. Supp. 1398

INTERNATIONAL ASSOCIATION OF HEAT AND FROST INSULATORS, LOCAL NO. 12, Petitioner, v. INSULATION QUALITY ENTERPRISES, LTD., Respondent.

No. CV-87-3583.

United States District Court, E.D. New York.

January 4, 1988.

Edward J. Groarke, Colleran, O'Hara & Mills, Mineola, N.Y., for petitioner.

Thomas J. Bianco, Kaufman, Frank, Schneider & Rosensweig, Melville, N.Y., for respondent.

GLASSER, District Judge:

Petitioner International Association of Heat and Frost Insulators, Local No. 12 ("the union") brought this action to confirm an award of a Joint Trade Board finding that the respondent Insulation Quality Enterprises, Ltd. ("the employer") failed to make certain fringe benefit payments as required by the Collective Bargaining Agreement between the union and the employer. The action was originally filed in the Supreme Court of the State of New York, Queens County, and was removed by petition of the employer to this Court on October 22, 1987. The Petition for Removal asserts that the Court has subject matter jurisdiction over this action under § 301 of the Labor-Management Relations Act of 1947, 29 U.S.C. § 185, and the United States Arbitration Act, 9 U.S.C. § 10.

The union now moves to confirm the Joint Trade Board Award. The employer cross-moves to vacate the award and dismiss the union's petition.

Facts

The union and the employer entered into two collective bargaining agreements covering the periods July 1, 1981 through June 30, 1984 ("Agreement I") and July 1, 1984 through June 30, 1987 ("Agreement II"). Article VIII of the Agreements obligates the employer to make contributions to the Welfare, Pension, Holiday and Unemployment, Vacation, and Annuity Funds. Addenda to the Agreements require the employer to make industry promotional fund and dues check-off payments. Article X specifies which employees are covered under the Agreements.

Article V of the Agreements establishes a Joint Trade Board comprising five members of the Insulation Contractors Association and five members of the union. The Agreement provides:

Said Trade Board shall have the right to investigate all labor operations of the parties to this Agreement within its prescribed limits so far as any of the provisions of this Agreement are involved, in connection with which any question may arise, and for this purpose shall have the right to summon, question and examine any party to this Agreement, or their representatives or agents.

The Agreement further provides:

Trade disputes or grievances shall be settled without cessation of work and in cases where the parties to this Agreement fail to agree the matter in dispute shall be referred to the Joint Trade Board.

The Trade Board is to decide questions by majority vote. Article V empowers the Trade Board to "impose fines, interest where appropriate or other penalties where agreed by vote" and provides that, with respect to "any fines or penalties so imposed," the Trade Board shall decide the "charitable disposition of monies so collected." Finally, Article V provides:

6. If a deadlock occurs in the joint trade board arbitration may be requested. The cost of arbitration shall be as described by the American Arbitration Association.

Article XVII of Agreement II, a provision not contained in Agreement I, makes the terms of the Agreement applicable to all covered on-site construction work within the applicable territory performed by the employer under its own name or under the name of another entity. (Article XVII(a)) Article XVII provides:

(b) All charges of violations of paragraph (a) of this section shall be considered as a dispute and shall be processed in accordance with the provisions of this Agreement covering the procedure for the handling of grievances and the final and binding resolution of disputes.

The "arbitrator or arbitration body provided in this Agreement" (brackets in original) is authorized to require the employer to pay lost wages to employees and delinquent contributions to the union trust funds. Article XVII also requires the employer to pay any attorney's fees and costs incurred by the union in pursuing court action to enforce an award under Article XVII(b) or defending an action to vacate such an award.

On February 13, 1987, the union filed a request for arbitration with the Joint Trade Board, and served the employer with a demand for arbitration of the union's claim that the employer had failed to make required contributions to various union funds for the period January 1, 1983 through June 30, 1986. (Sore Affidavit, Ex. F)¹ After notice (Jackson Affidavit ¶ 11; Sore Affidavit ¶ 3), the Joint Trade Board convened on April 28, 1987 to hear the dispute. (Sore Affidavit ¶ 3) The union was represented by counsel at the hearing; the union's auditor Mr. Stern was present; Mr. Jackson, the president of the employer, appeared without counsel. (Sore Affidavit ¶ 3, Ex. B, p. 2) Mr. Jackson had previously received a copy of Mr. Stern's "Incomplete Audit Report" (Jackson Affidavit Ex. A) setting forth the union's initial calculations of the amounts due under its claim. (Jackson Affidavit ¶ 10)

Mr. Jackson maintains that he attended the April 28 hearing expecting it to be an informal discussion session, discovered that four of the employer's competitors were members of the Board, participated in the hearing, but then left the proceedings when his requests for an adjournment to obtain counsel were denied. (Jackson Aff. ¶¶ 12-15) Mr. Sore, a member of the Joint Trade Board, maintains that Mr. Jackson was given a full opportunity to participate in the hearing before the Board. (Sore Affidavit ¶¶ 3, 9)

The Joint Trade Board's unanimous award of June 18, 1987 (Sore Affidavit, Ex. B) was served on Mr. Jackson on July 6, 1987. (Jackson Affidavit ¶ 18; Sore Affidavit Ex. G) The findings of the Joint Trade Board's award included the following:

4. Insulation Quality Enterprises violated the terms of the Collective Bargaining Agreement by failing to make proper fringe benefit payments on wages paid to its employees.

5. The following funds were affected by the contractor's failure to make proper payments under the Collective Bargaining Agreement: Welfare Fund, Vacation Fund, Pension Fund, Annuity Fund, Industry Promotion Fund and Dues Check-Off Fund.

6. Insulation Quality Enterprises, LTD violated the Contract by making cash payments to men who were members of Local # 12 who were performing covered work, which payments were not shown on the books, and therefore, did not include contributions to the various Funds.

7. Insulation Quality Enterprises, LTD violated the terms of the Contract by making additional payments to men on its payroll during the period 01/01/83 through 12/31/84 and not making appropriate fringe benefits on these amounts.

8. Insulation Quality Enterprises, LTD violated the terms of the Contract by making payments to wives of members of Local # 12 which were payments on behalf of the men performing covered work and which payments did not include payments to the Funds.

The Joint Trade Board found that the employer owed $56,910.43 to various union funds, $11,626.84 in interest on such amount, $3,113.00 in audit fees, and $3,500.00 in legal fees incurred by the union in connection with the Joint Trade Board hearings. The amounts due the Funds and interest were based upon a final audit report (Sore Affidavit, Ex. E) prepared by Mr. Stern after the hearing at the request of the Joint Trade Board. (Sore Affidavit ¶ 8; Stern Affidavit ¶ 8)

The union now seeks an order confirming the Joint Trade Board's award as a final, binding, and enforceable arbitral award. The employer cross-moves to vacate the award, arguing that the Joint Trade Board had no power to issue a binding arbitral award, that the award fails "to draw its essence" from the Agreement and exceeded the Board's authority, and that the employer did not receive adequate notice or a fair hearing.

For the reasons set forth below, the award of the Joint Trade Board is confirmed except insofar as it grants attorney's fees. The award is modified to eliminate the granting of such fees.

The Timeliness of the Employer's Motion to Vacate

The union contends that the employer's counterclaim and motion to vacate the arbitral award are untimely under the United States Arbitration Act, 9 U.S.C. § 12 as interpreted by the United States Court of Appeals for the Second Circuit in Florasynth, Inc. v. Pickholz, 750 F.2d 171 (2d Cir.1984). The Court in Florasynth held that the three month statute of limitations contained in 9 U.S.C. § 12 applies to a motion to vacate an arbitral award "even when raised as a defense to a motion to confirm." Id. at 175.

The employer was served with the Joint Trade Board's June 18, 1987 award on July 7, 1987. The employer filed a counterclaim and a cross-motion to vacate the award on October 27, 1987, more than three months later. Thus, if Florasynth were applicable, the employer would be precluded from raising the grounds for vacatur listed in 9 U.S.C. § 10, e.g., partiality, improper refusal of an adjournment, other misbehavior prejudicing the rights of a party, the arbitral tribunal's exceeding its powers.

The Court, however, is persuaded that Florasynth is not applicable to an action brought pursuant to § 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185. As recently noted by the United States Supreme Court in another context, the United States Arbitration Act does not control a court's disposition of an action based upon § 301 of the LMRA but merely serves as a source for guidance in the fashioning of governing rules of federal common law. United Paperworkers International Union v. Misco, Inc., ___ U.S. ___, 108 S.Ct. 364, 98 L.Ed.2d 286 (1987).

While the United States Court of Appeals for the Second Circuit has not yet addressed whether the statute of limitations set forth in 9 U.S.C. § 12 is applicable to actions to vacate arbitral awards under § 301 of the...