Ottley v. Sheepshead Nursing Home

• Decision Date: 26 August 1982
• Docket Number: P,AFL-CI,No. 766,D,766
• Citation: 688 F.2d 883
• Parties: 111 L.R.R.M. (BNA) 2153, 95 Lab.Cas. P 13,775 Peter OTTLEY, as President of Local 144, Hotel, Hospital, Nursing Home & Allied Services Union, SEIU,etitioner-Appellee, v. SHEEPSHEAD NURSING HOME, Respondent-Appellant. ocket 81-7802.
• Court: U.S. Court of Appeals — Second Circuit

Page 883

688 F.2d 883

111 L.R.R.M. (BNA) 2153, 95 Lab.Cas. P 13,775

Peter OTTLEY, as President of Local 144, Hotel, Hospital, Nursing Home & Allied Services Union, SEIU, AFL-CIO, Petitioner-Appellee, v. SHEEPSHEAD NURSING HOME, Respondent-Appellant.

No. 766, Docket 81-7802.

United States Court of Appeals, Second Circuit.

Argued May 13, 1982.

Decided Aug. 26, 1982.

Robert B. Stulberg, New York City (Vladeck, Waldman, Elias & Engelhard, P.C., Robert A. Cantore, New York City, of counsel), for petitioner-appellee.

Morris Tuchman, New York City (Gluck & Tuchman, Rebecca A. Weiss, New York City, on the brief, of counsel), for respondent-appellant.

Before FEINBERG, Chief Judge, and LUMBARD and NEWMAN, Circuit Judges.

FEINBERG, Chief Judge:

Sheepshead Nursing Home (SNH) appeals from a judgment of the United States District Court for the Southern District of New York, John M. Cannella, J., confirming an arbitration award upon the motion of Peter Ottley, as President of Local 144, Hotel, Hospital, Nursing Home & Allied Services Union, SEIU, AFL-CIO (Local 144, the Union) pursuant to the Federal Arbitration Act, 9 U.S.C. § 9. The judgment, entered in October 1981, followed a June 1981 order of the same court denying appellant's motion to stay arbitration. The arbitration award, which was rendered in July 1981, ordered SNH to reinstate Trevor Bennett as a cook and to pay him $3,500 for the monetary loss sustained by his improper dismissal. On appeal, SNH claims that the arbitrator was without power to entertain this grievance; that the arbitrator improperly looked beyond the bargaining agreement to determine SNH's duties; and that the award on its merits conflicts with federal labor law. The Union in turn claims that this appeal is wholly without merit and frivolous, and demands that double costs and attorneys' fees be awarded pursuant to 28 U.S.C. § 1912 and Fed.R.App.P. 38 and 39(a). Contrary to the Union's assertions, we find the issues presented by this appeal substantial. While we affirm the judgment below, we deny appellee's request for double costs and fees.

I.

Effective April 1, 1978, the Greater New York Health Care Facilities Association, Inc. (the Association), a multi-employer nursing home association to which appellant belonged, entered into a collective bargaining agreement with Local 144 covering various aspects of the employment of its members. The agreement had a three-year term until March 31, 1981. On October 30, 1980, SNH withdrew its membership from the nursing home association. On January 7, 1981, it discharged Trevor Bennett, an employee for nine years and a shop steward. Five weeks later, on February 12, 1981, Local 144 demanded arbitration concerning this discharge. SNH refused to arbitrate, claiming that under the terms of the collective bargaining agreement its withdrawal from the Association released it from all obligations under the contract, including the obligation to arbitrate.

In early March 1981, SNH moved for a stay of arbitration. Its motion came before Judge Cannella, who denied it in a memorandum opinion. He appeared to assume that the agreement had terminated prior to Bennett's discharge, but held that under Nolde Brothers, Inc. v. Local 358, Bakery & Confectionery Workers, 430 U.S. 243, 255 n. 8, 97 S.Ct. 1067, 1074 n. 8, 51 L.Ed.2d 300 (1977) because of the broad arbitration clause in the labor contract, the duty to arbitrate employee grievances survived the termination of the contract, at least for a reasonable time. Three and one-half months (from October 30 to February 12) was held to be a reasonable time. SNH filed a timely notice of appeal, but withdrew it before the appeal was decided. ¹

The dispute then proceeded to arbitration before Sidney A. Wolff, the arbitrator named in the contract. He found that contrary to the apparent assumption of the district court, the contract had not terminated. He appeared to reason that since the employer failed to give the 60-days notice of termination to the Union that is required by § 8(d)(1) of the National Labor Relations Act (the Act), 29 U.S.C. § 158(d)(1), or the 30-days notice to the Federal Mediation and Conciliation Services per § 8(d)(3), 29 U.S.C. § 158(d) (3), the contract continued "in full force and effect" under § 8(d)(4), 29 U.S.C. § 158(d)(4). Wolff also noted, and appeared to agree with, Judge Cannella's broad construction of Nolde. On the merits of the grievance, Wolff found in favor of the Union, and directed that the discharged employee be reinstated and paid $3,500 "in full payment and settlement of his claim for monetary loss caused by his improper dismissal." The Union returned to the district court to have the arbitration award confirmed, and by order dated October 7, 1981, Judge Cannella did so.

II.

SNH claims that the award must be set aside under 9 U.S.C. § 10(d) because the arbitrator exceeded his powers in arbitrating this dispute. This is so, the employer argues, because the duty to arbitrate is purely a creature of contract, citing Procter & Gamble Independent Union v. Proctor & Gamble Manufacturing Co., 312 F.2d 181, 184 (2d Cir. 1962), cert. denied, 374 U.S. 830, 83 S.Ct. 1872, 10 L.Ed.2d 1053 (1963). The contract in issue here provided in section 32 that "(i)f the membership in the Association of any nursing home ... is terminated ..., this agreement shall become null and void to such Employer." ² SNH claims that Judge Cannella had found in his decision to deny the stay that the contract terminated when SNH withdrew from the Association, and that this determination is dispositive of the Union's rights. Citing International Union of Operating Engineers v. Flair Builders, Inc., 406 U.S. 487, 491, 92 S.Ct. 1710, 1712-1713, 32 L.Ed.2d 248 (1972), SNH argues that without a contract, it is under no obligation to settle grievances through the arbitral process.

We disagree with SNH's mode of analysis. By focusing initially only on section 32 of the contract, SNH places the cart before the horse. As we have made clear in recent decisions, see McAllister Brothers, Inc. v. A & S Transportation Co., 621 F.2d 519, 521-23 (2d Cir. 1980); Rochdale Village, Inc. v. Public Service Employees Union, Local No. 80, 605 F.2d 1290, 1294-97 (2d Cir. 1979), the arbitrability of any dispute turns in the first instance on the arbitration clause of the contract. This is so because our duty is to implement the intent of the parties. To determine their intent, we must first examine the terms of their contract. If its arbitration clause is broad, then we must find that the parties bargained to have any dispute that arguably falls within the scope of that clause settled through arbitration, absent compelling proof to the contrary. See United Steelworkers v. American Manufacturing Co., 363 U.S. 564, 571, 80 S.Ct. 1343, 1364, 4 L.Ed.2d 1403 (1960) (Brennan, J., concurring) ("the parties may have provided that any dispute as to whether a particular claim is within the arbitration clause is itself for the arbitrator .... (T)he court, without more, must send (the) dispute to the arbitrator, for the parties have agreed that the construction of the arbitration promise itself is for the arbitrator ...."); Nolde, 430 U.S. at 252-55, 97 S.Ct. at 1072-1074 (broad arbitration clause creates a presumption of arbitrability). In Nolde, it was conceded that the contract had terminated when the dispute arose, yet the Court required arbitration. A fortiori, these principles apply if one of the key contract issues in dispute before the court is whether, as was the case in McAllister and in Rochdale, and as SNH contends here, the contract has terminated. See also United Steelworkers v. American Smelting and Refining Co., 648 F.2d 863, 866-67 (3d Cir.), cert. denied, 454 U.S. 1031, 102 S.Ct. 567, 70 L.Ed.2d 474 (1981); Goetz, Arbitration After Termination of a Collective Bargaining Agreement, 63 Va.L.Rev. 693 (1977); Note, The Scope of Arbitration Agreements-The Arbitrability of Collective Bargaining Agreement Terminations and Expirations: Rochdale Village, Inc. v. Public Service Employees Local 80, 9 N.Y.U.Rev.L. & Soc. Change 337 (1971-1980). This does not mean that, in the face of a claim that a contract with a broad arbitration clause has terminated, a court must always order arbitration simply because the other party to the contract requests it. In such a situation, there must at least be a colorable claim under the contract that the contract has not terminated. As will be seen below, such a claim exists here.

The arbitration clause in this case, section 8 of the contract, provides in part that:

8. GRIEVANCE PROCEDURE

A. All complaints, disputes, controversies or grievances arising between the parties hereto involving questions of interpretation or application of any clause of this agreement, or any acts, conduct or relations between any of the parties hereto and/or between the Union and any Employer, directly or indirectly, which shall not have been adjusted by and between those involved shall be submitted to the Impartial Chairman hereinafter mentioned for arbitration and his decision shall be final and binding upon the parties hereto. (Emphasis supplied).

The first dispute between the Union and SNH is whether the contractual duty to arbitrate employee grievances terminated when SNH withdrew from the multi-employer association. That decision obviously involves the meaning of "null and void to such Employer" as used in section 32 of the contract, see note 2 supra. A question immediately arises whether, as SNH contends, its withdrawal from an association of employers could immediately terminate SNH's obligations to the Union under the contract without notice to it. The question becomes more pointed because of the Union's argument to us that under section 33 of the contract, ³ SNH could not terminate the contract before the "expiration date" of March 31, 1981, and 24 hours thereafter. The arbitration clause quoted above is a broad...