Abram Landau Real Estate v. Bevona

• Decision Date: 15 August 1997
• Docket Number: B-,D,B-J,AFL-CIO,S,No. 1728,1728
• Citation: 123 F.3d 69
• Parties: 156 L.R.R.M. (BNA) 2020, 134 Lab.Cas. P 10,062 ABRAM LANDAU REAL ESTATE and Woodland Realty Co., Plaintiffs-Appellants, v. Gus BENOVA, in his capacity as President of Local 32ervice Employees International Union, and in his capacity as Trustee of the Building Service 32Pension Fund, Annuity Fund & Health Fund, Defendant-Appellee. ocket 96-9696.
• Court: U.S. Court of Appeals — Second Circuit

Page 69

123 F.3d 69

156 L.R.R.M. (BNA) 2020, 134 Lab.Cas. P 10,062

ABRAM LANDAU REAL ESTATE and Woodland Realty Co., Plaintiffs-Appellants, v. Gus BENOVA, in his capacity as President of Local 32B-J,

Service Employees International Union AFL-CIO, and in his

capacity as Trustee of the Building Service 32B-J Pension

Fund, Annuity Fund & Health Fund, Defendant-Appellee.

No. 1728, Docket 96-9696.

United States Court of Appeals, Second Circuit.

Argued June 23, 1997.

Decided Aug. 15, 1997.

Laurent S. Drogin, The Law Offices of Ira Drogin, New York City, for Plaintiffs-Appellants.

Paul Galligan, Manning, Raab, Dealy & Sturm, New York City, for Defendant-Appellee.

Before: MESKILL, McLAUGHLIN, Circuit Judges, and LASKER, District Judge. ^*

McLAUGHLIN, Circuit Judge:

Plaintiffs appeal from an order entered in the United States District Court for the Southern District of New York (Jones, J.) confirming an arbitration award and denying a motion to vacate the award. The district court held that the dispute between the parties was arbitrable and that the arbitrator did not exceed the scope of his authority. We agree and, therefore, affirm.

BACKGROUND

Abram Landau Real Estate and Woodland Realty Co. ("Landau") own and manage a residential apartment building in Brooklyn, New York. Valentine Diaz was the building's superintendent. He was also a member of Local 32B-J, Service Employees International Union, AFL-CIO (the "Union"). The Union was Diaz's recognized bargaining representative, and the terms and conditions of Diaz's employment were governed by a collective bargaining agreement between the Union and Landau.

The collective bargaining agreement (the "Agreement") contained a broad arbitration clause providing that "[a] Contract Arbitrator shall have the power to decide all differences arising between the parties to this agreement as to interpretation, application or performance of any part of this agreement...." The Agreement stated that it would expire on April 20, 1994, but it also contained an "evergreen clause," providing that "upon the expiration date of this agreement ... this agreement shall thereafter continue in full force and effect for an extended period until a successor agreement shall have been executed. During the extended period, all terms and conditions hereof shall be in effect...."

In February 1994, about two months before the Agreement was to expire, the Union served a notice, in accordance with the Agreement, on the Federal Mediation and Conciliation Service indicating its intention to terminate the Agreement upon its expiration date and to seek negotiation of a new agreement. The termination date of the Agreement passed, and no new agreement was ever signed by the parties.

On June 22, 1994, about two months after the expiration, Landau warned Valentine Diaz that it was dissatisfied with his work performance. On August 8, 1994, Landau discharged Diaz. The Union then served a demand for arbitration upon Landau, seeking to arbitrate Diaz's discharge under the arbitration clause contained in the now-expired Agreement.

The Union contended that Diaz's firing violated the Agreement, which provided that a superintendent "shall not be discharged ... except for justifiable cause." In response, Landau commenced an action in the United States District Court for the Southern District of New York (Leisure, J.) seeking to enjoin the arbitration on the ground that the Agreement had expired and therefore, the controversy was no longer arbitrable. The Union replied that Diaz's discharge was arbitrable because the "evergreen clause" extended the life of the Agreement, including its arbitration clause. Landau contended that the "evergreen clause" was invalid, because it violated federal labor law and public policies against perpetual agreements and was also unconscionable. The Union maintained that it was for the arbitrator, not the court, to determine whether the "evergreen clause" was valid, while Landau asserted that the question was one for the court.

The district court agreed with the Union and dismissed Landau's complaint, finding that the arbitrator should determine whether Upon receipt of the award, Landau commenced another action in the United States District Court for the Southern District of New York (Jones, J.) seeking to vacate the award, and the Union cross-moved to confirm the award. The district court again rejected Landau's arguments and confirmed the award.

the "evergreen clause" was valid. The arbitrator eventually determined that: (1) the "evergreen clause" was valid and therefore, renewed the terms of the Agreement; and (2) Diaz's discharge violated the terms of the Agreement.

Landau now appeals, arguing that the district court erred when it concluded that the arbitrator should decide the validity of the "evergreen clause." Alternatively, Landau argues that the arbitrator exceeded the scope of his authority by finding that Landau lacked "justifiable cause" to dismiss Diaz.

DISCUSSION

A. Validity of the "Evergreen Clause"

This Court reviews de novo a final district court order compelling arbitration. See National Union Fire Ins. Co. of Pittsburgh, Pa. v. Belco Petroleum Corp., 88 F.3d 129, 132 & n. 2 (2d Cir.1996); Collins & Aikman Prods. Co. v. Building Sys., Inc., 58 F.3d 16, 19 (2d Cir.1995).

Landau and the Union agree on two things: (1) the collective bargaining agreement was valid before April 20, 1994 and (2) the propriety of Diaz's termination would have been a proper subject for arbitration under the Agreement before that date. The dispute, therefore, narrows to whether the Agreement expired on April 20, 1994 or continued in effect as a result of the Agreement's "evergreen clause."

Landau maintains that whether the Agreement expired or continued under the "evergreen clause" was ultimately a question of the arbitrability of Diaz's termination, and questions of arbitrability are for the court, absent a clear and unmistakable grant of jurisdiction to the arbitrator by the parties. In Landau's view, the arbitration clause in the Agreement is not sufficiently specific to grant the arbitrator jurisdiction over the arbitrability question. Landau asserts that this result is mandated by the Supreme Court's recent decision in First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). The Union, on the other hand, contends that the question whether the Agreement expired should be decided by the arbitrator because the broad arbitration clause contained in the agreement is sufficient evidence of the parties' intent to submit that issue to arbitration.

Problems of arbitrability usually arise in two contexts. First, and most commonly, this question arises when the issue is whether an arbitration clause in an existing collective bargaining agreement covers a particular dispute between the parties. See Brotherhood of Teamsters and Auto Truck Drivers Local #70 v. Interstate Distrib. Co., 832 F.2d 507, 509 (9th Cir.1987). In these cases, "it is almost always the court which decides whether the arbitration agreement applies to the particular dispute. In doing so, however, the court resolves all doubtful questions in favor of coverage under the arbitration agreement." Id.

The second type of arbitrability question deals, not with the scope of the arbitration clause, but with whether there is even a valid agreement to arbitrate in effect at a particular time. See id. at 510. This question usually arises in one of two factual scenarios: (1) whether the parties ever entered into an arbitration agreement at all, and (2) whether an arbitration agreement has expired or been terminated. See id. When parties disagree about whether they ever entered into an arbitration agreement, a court decides that issue, absent a clear and unmistakable delegation of that authority to an arbitrator. See id.; First Options, 514 U.S. at 943, 115 S.Ct. at 1924; AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 649, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986). Under these circumstances, any silence or ambiguity about whether such a question is arbitrable reverses the usual presumption that issues should be resolved in favor of arbitration. See Brotherhood of Teamsters, 832 F.2d at 510; First Options, 514 U.S. at 943, 115 S.Ct.

at 1924; AT & T Techs., 475 U.S. at 649, 106 S.Ct. at 1418.

The question whether an otherwise valid collective bargaining agreement has expired or has been terminated is different. In these situations, the parties' dispute is not really over what an arbitration clause provides; rather, it is a dispute over the interpretation of other clauses of the collective bargaining agreement, e.g., termination clauses, or in Landau's case an "evergreen clause." See Brotherhood of Teamsters, 832 F.2d at 510; Rochdale Village, Inc. v. Public Serv. Employees Union, 605 F.2d 1290, 1294 (2d Cir.1979). In determining whether an arbitrator or a court gets to interpret a termination clause or "evergreen clause," the dispositive question is whether the parties have agreed that an arbitrator should decide that question. See Brotherhood of Teamsters, 832 F.2d at 510; Rochdale, 605 F.2d at 1296. Where the agreement contains a sweeping arbitration clause covering all disputes involving the meaning of terms and provisions of the agreement and where the arbitration clause does not expressly exclude disputes over the termination provision or the "evergreen" clause, disputes over these matters should be submitted to arbitration. See Brotherhood of Teamsters, 832 F.2d at 510; Rochdale, 605 F.2d at 1294.

Some courts have questioned whether disputes relating to expiration or termination of an agreement should even be considered questions of arbitrability, arguing that they are really disputes over the interpretation of the agreement and should go to the arbitrator. See National Union, 88 F.3d at 135. Cf. Brotherhood of Teamsters, 832 F.2d at 510 (finding dispute over...