LOCAL 217 v. MHM, INC.

• Decision Date: 22 August 1991
• Docket Number: Civ. No. H-90-1038 (JAC).
• Court: U.S. District Court — District of Connecticut
• Parties: LOCAL 217 HOTEL & RESTAURANT EMPLOYEES UNION, et al. v. MHM, INC.

805 F. Supp. 93

LOCAL 217 HOTEL & RESTAURANT EMPLOYEES UNION, et al. v. MHM, INC.

Civ. No. H-90-1038 (JAC).

United States District Court, D. Connecticut.

August 22, 1991.

COPYRIGHT MATERIAL OMITTED

Ruth L. Pulda, Daniel E. Livingston, Gould, Livingston, Adler & Pulda, Hartford, Conn., for plaintiffs.

Emanuel N. Psarakis, Duncan R. MacKay, Robinson & Cole, Hartford, Conn., for MHM, Inc.

Glifford J. Grandjean, Sorokin, Sorokin, Gross, Hyde & Williams, P.C., Hartford, Conn., for Constitution Management Corp.

John P. Pavia, III, Taggart D. Adams, Kelley, Krye & Warren, Stamford, Conn., for Colonial Constitution East Ltd. Partnership.

Richard P. Weinstein, Pearson, Baum & Weinstein, P.C., Kerry M. Wisser, Weinstein & Wisser, West Hartford, Conn., for Colonial Realty/USA Corp.

ORDER

JOSÉ A. CABRANES, Chief Judge.

Following review of the record, plaintiffs' objections are OVERRULED, and the recommended ruling of the Magistrate Judge Margolis is APPROVED and ADOPTED as the ruling of the court. It is so ordered.

RECOMMENDED RULING ON PLAINTIFFS' MOTION FOR PRELIMINARY INJUNCTION

MARGOLIS, United States Magistrate Judge.

On December 18, 1990, plaintiffs Joseph Jean, Frederick Grilli, and Harry Parlee, who were formerly employed at the Summit Hotel until its precipitous closing on August 10, 1990, and plaintiff Local 217, the union to which the individual plaintiffs belong, commenced this action against defendant MHM, Inc. "defendant" or "MHM", claiming violation of their rights under the following four federal statutes — § 301 of the Labor Management Relations Act "LMRA", as amended, 29 U.S.C. § 185 (First Count); the Worker Adjustment and Retraining Notification Act of 1988 "WARN", 29 U.S.C. § 2102 (Second Count); the Consolidated Omnibus Budget Reconciliation Act of 1986 "COBRA", 29 U.S.C. § 1161 et seq. (Third Count); and § 404(a)(1)(A), (B), and (D) of the Employee Retirement Income Security Act of 1974 "ERISA", as amended, 29 U.S.C. § 1104(a)(1)(A), (B), and (D).¹ The next day, on December 19, 1990, plaintiffs filed an application for temporary restraining order "TRO", a motion for preliminary injunction, and brief in support of both.² (Dkt. ## 4-6).

On January 4, 1991, a hearing was held before U.S. District Judge Jose A. Cabranes (see Dkt. ## 7-8, 21), at the conclusion of which Judge Cabranes denied the TRO application (Dkt. # 21, at 24-26). Judge Cabranes scheduled the evidentiary hearing on plaintiffs' motion for preliminary injunction for January 17, 1991 (id. at 26-27, 34), permitted both sides to submit affidavits in lieu of direct examination (id. at 28-29, 30-31), and established deadlines for the filing of certain motions (id. at 5-8, 27, 29-30, 31-33).³ On January 10 and 11, 1991, plaintiffs submitted four affidavits. (Dkt. ## 13-15, 20). On January 16, 1991, Chief Judge Ellen Bree Burns referred the motion for preliminary injunction to this Magistrate Judge in light of Judge Cabranes' serious illness. (Dkt. # 23). On January 31, 1991, defendant filed its brief in opposition to plaintiffs' motion. (Dkt. ## 32-33).

Such evidentiary hearing was held before this Magistrate Judge on Friday, February 1, 1991 and on Monday, February 4, 1991, at which a joint stipulation of facts "Jt. Stip." was filed. (Dkt. ## 34-35).⁴ Four individuals testified for plaintiffs — Soula Bitsounis, Frederick Grilli, Harry Parlee, and Joseph Jean, and two individuals testified for defendant — Jerry Brophy and Michael Burke. In addition, two witnesses were called by both sides — Dennis Cahill and Connie Holt. With permission of the court, on February 19, 1991 and February 21, 1991, defendant and plaintiffs, respectively, filed lengthy post-hearing briefs. (Dkt. ## 46, 41, 42, 45). Supplementary letter-briefs were submitted by plaintiffs and defendant on March 4, 1991 and March 8, 1991, respectively.

For the reasons stated herein, plaintiffs' motion for preliminary injunction is denied.⁵

I. FACTUAL BACKGROUND

Prior to December 1988, the 287-room Summit Hotel in Hartford, Connecticut was owned by the Travelers Indemnity Co. "Travelers", through Constitution Plaza, Inc. (Jt. Exh. 58, ¶ 2). On January 1, 1983, Constitution Plaza, Inc. entered into a twenty-eight page "Management Contract" with defendant MHM, Inc., a Delaware corporation with its principal place of business in Dallas, Texas,⁶ under which MHM was "... to supervise and administrate ... the management and operation ..." of the Summit Hotel. (Jt. Exh. 9, ¶ 1(a)). Paragraph 2(b) of this Management Contract provided in pertinent part as follows:

Employees; Independent Contractor. ... All matters pertaining to the employment, supervision, compensation, promotion and discharge of such employees are the responsibility of ... M.H.M., which is in all respects the employer of such employees. M.H.M. will negotiate with any union lawfully entitled to represent such employees and may execute in the name of the hotel, sic collective bargaining agreements or labor contracts resulting therefrom. M.H.H. sic shall fully comply with all applicable laws and regulations having to do with worker's compensation, social security, unemployment insurances, hours of labor, wages, working conditions, and other employer-employee related subjects.... This Agreement is not one of agency by ... M.H.M. for Constitution Plaza, Inc. but one with ... M.H.M. engaged independently in the business of managing properties on its own behalf as an independent contractor. All employment arrangements are therefore solely its concern and Constitution Plaza, Inc. shall have no liability with respect thereto.

Paragraph 18 further provided that Constitution Plaza, Inc. retained the right to assign this agreement to any purchaser of the Summit Hotel, provided such purchaser expressly assumed same in writing. The Management Contract was to remain in effect until December 31, 1985, with automatic renewal, if not terminated by either party, for two independent successive terms of three years each. (Id. ¶ 9 & 9(a)).

While this Management Contract was in force, on October 1, 1987, the forty-four page Collective Bargaining Agreement at issue in this litigation was executed between plaintiff union Local 217 and MHM. (Jt. Exh. 1, at 44). Like many of the documents discussed in this recommended ruling, the Collective Bargaining Agreement contains inconsistencies as to its parties. Like the signatory section, the first definitional section on page 1 indicates that MHM is the "Employer." However, the cover page reflects that the agreement is between Local 217 and "The Summit Hotel." Travelers is not mentioned in the entire agreement, and had no involvement in its negotiation. (Tr. 82; Tr. 177).

Under this agreement, plaintiffs were entitled to a wide variety of benefits, including sick leave (§ 8), vacations (§ 23), group health insurance, group dental insurance, life insurance, and disability insurance (§ 30), and pension benefits (§ 31). Section 45.1 further provided that the agreement was to remain in full force and effect through September 30, 1990, and would be automatically renewed from year to year unless terminated in writing by either party.

In December 1988, the Summit Hotel was purchased by Colonial Constitution East Limited Partnership "CCELP", a Connecticut limited partnership, the purpose of which was to acquire the Summit Hotel.⁷ (Jt. Exh. 58, ¶ 5; Jt. Exh. 62B, ¶ B; Jt. Stip. ¶¶ 5 & 9). MHM had no involvement in the transfer of the hotel from Travelers to CCELP. (Tr. 91). MHM has no common ownership interest, general or limited partners, shareholders, officers or directors with CCELP, or in the Summit Hotel. (Jt. Stip. ¶¶ 7-8; Jt. Exh. 58, ¶ 6). On December 8, 1988, CMC and MHM entered into a letter-agreement, under which the 1983 Management Contract was terminated, a new basis for compensation was established, and the parties agreed to use all reasonable efforts to negotiate a new agreement. (Jt. Exh. 10). Five days later, however, CMC (as agent for CCELP) and MHM entered into a supplemental letter-agreement which reinstated the 1983 Management Contract during the term of negotiations, except for the compensation provisions set forth in the December 8th letter-agreement. (Jt. Exh. 11). A third letter-agreement was signed by CMC (again as agent for CCELP) and MHM on March 15, 1989, which provided that the 1983 Management Contract would continue on a month-to-month basis, except for the compensation provisions found in the December 8th letter-agreement. (Jt. Exh. 12). The next day, MHM forwarded a letter to Colonial Realty Co., the third paragraph of which stated: "The employees of the Summit Hotel became employees of CCELP at the time of the ownership change, per our agreements and as stated in the proposed management contract." (Jt. Exh. 13). Local 217 neither received a copy of this letter nor was advised of its contents. (Tr. 89-90, 91, 124-25). Both sides agreed, however, Local 217's relationship with MHM was not altered by the purchase of the Summit Hotel by CCELP, in that MHM continued to remain in charge of the hotel in its day-to-day operations, including hiring of employees, firing of employees, discipline of employees, processing of wages, and grievance procedures. (Tr. 76-78, 80-86, 120-21, 122-24).

Like the documents discussed above, there are also inconsistencies in the submissions to governmental agencies with respect to the wages of the employees of the Summit Hotel. For example, plaintiff Grilli's Wage and Tax Statements (IRS Form W-2) for the tax years 1988 and 1989 list the employer as "MHM, INC. C/SUMMIT HOTEL-HARTFORD." (Ps' Exh. 2; Jt. Exh. 4). Michael Burke, who was the General Manager of the Summit Hotel from February 4, 1985 until August 1988 and a Vice President of MHM thereafter (Tr. 75-76), characterized this as a "data processing mistake," in that the federal employer identification number belongs to CCELP. (Tr. 48-49). The Employer's Annual Federal...