Seabury Const. v. Dist. Council N.Y. and Vicinity, 06 CIV. 2282(RWS).

• Decision Date: 10 November 2006
• Docket Number: No. 06 CIV. 2282(RWS).,06 CIV. 2282(RWS).
• Citation: 461 F.Supp.2d 193
• Parties: SEABURY CONSTRUCTION CORP., Petitioner, v. DISTRICT COUNCIL OF NEW YORK AND VICINITY OF THE UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, AFL-CIO, Respondent.
• Court: U.S. District Court — Southern District of New York

461 F.Supp.2d 193

SEABURY CONSTRUCTION CORP., Petitioner, v. DISTRICT COUNCIL OF NEW YORK AND VICINITY OF THE UNITED BROTHERHOOD OF CARPENTERS AND JOINERS OF AMERICA, AFL-CIO, Respondent.

No. 06 CIV. 2282(RWS).

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

November 10, 2006.

Greenberg, Trager & Herbst by Kalvin Kamien, of Counsel, New York, NY, for Petitioner.

O'Dwyer & Bernstein by Gary Silverman, of Counsel, New York, NY, for Respondent.

OPINION

SWEET, District Judge.

The respondent District Council of New York and Vicinity of the United Brotherhood of Carpenters and Joiners of America, AFLCIO ("District Council" or the "Respondent"), has moved to dismiss the petition of Seabury Construction Corp. ("Seabury" or the "Petitioner") to stay arbitration sought by the District Council pursuant to § 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185. Seabury has cross-moved to enjoin arbitration. For the reasons set forth below, the motion of the District Council is granted, the cross-motion of Seabury is denied, and arbitration will be compelled.

Prior Proceedings

On February 3, 2006, the District Council served upon Seabury a demand for arbitration and notice of hearing, pursuant to article IX section 3 of the Independent Millwright Agreement (the "2001 Agreement"), before Roger Maher, one of the arbitrators named in article IX section 3 of the 2001 Agreement.

On February 21, 2006, Seabury filed a petition and order to show cause in state court, seeking to permanently stay the arbitration. An ex parte preliminary injunction was granted, staying the arbitration until the motion could be heard. On March 23, 2006, the District Council removed the action to this Court. The preliminary injunction expired on April 2, 2006 pursuant to Fed.R.Civ.P. 65(b).

The instant motions were marked fully submitted on July 26, 2006.

The Facts

On June 3, 1997, Seabury executed a collective bargaining agreement ("CBA") with the District Council, known as the Independent Millwright Agreement (the "1996 Agreement").¹ The term of the 1996 Agreement was from July 1, 1996 to June 30, 2001, renewing for one-year terms thereafter, unless either party gave notice of its intention to terminate the agreement between 90 and 60 days prior to the contract expiration date. (1996 Agreement, art. XV.)

On August 30, 2001, Seabury and the District Council executed an Interim Compliance Agreement (the "Interim Agreement") which extended the 1996 Agreement until such time as the District Council negotiated a successor Millwright Agreement. The Interim Agreement also stated that "all the terms of the ... `New Agreement' ... including but not limited to, wages, fringe benefits, the arbitration provisions, and all other terms and conditions of employer ... shall be binding on our firm, retroactive to July 01, 2001." (Interim Agreement, art. II.)

The 2001 Agreement was sent to Seabury on September 24, 2001. Seabury did not sign the 2001 Agreement.

The 2001 Agreement supersedes the 1996 Agreement, and applies retroactively to July 1, 2001 (see 2001 Agreement art. XVI; Interim Agreement, art. II). The 2001 Agreement states that it expires on June 30, 2006, but will automatically renew for another year if neither party exercises its right to terminate the Agreement pursuant to the Renewal Clause. (2001 Agreement, art. XV.)

Article IV, section 4 of the 2001 Agreement requires that the employer use only subcontractors who are signatory to a CBA with the District Council for all work that is covered by the Agreement.

Article IX of the 2001 Agreement contains an arbitration provision encompassing all disputes "concerning the application, interpretation, effect, purpose or breach of any term or condition of this Agreement" or any "claim, demand dispute or controversy between the parties hereto ..." (2001 Agreement, art. IX, § 2.)

On November 16, 2005, the District Council concluded that Seabury had been engaged in covered work for approximately two days and that this work had been subcontracted to a company that was not a signatory to a CBA with the District Council, in violation of article IV section 4.

On November 18, 2005, the District Council filed a grievance pursuant to article IX of the Agreement.

By letter of November 29, 2005, Seabury, through counsel, stated that it would not attend the scheduled grievance hearing 'because it was no longer a signatory to any agreement with the District Council, maintaining that it was only signatory to the Agreement that expired on June 30, 1996.

Seabury Is Bound by the Interim Agreement

National labor policy favors arbitration as a form of dispute resolution. United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 596, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960). In the labor relations context, any doubt that a dispute is arbitrable must be resolved in favor of arbitrability so long as the arbitration clause in question is susceptible to an interpretation that it covers the dispute. AT & T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960)); see also New York's Health and Human Servs. Union v. NYU Hosps. Ctr., 343 F.3d 117, 119 (2d Cir.2003) (holding that an order to arbitrate should not be denied, and any doubt should be resolved in favor of arbitrability).

The Interim Agreement, which was signed and executed on behalf of Seabury on August 30, 2001, extended the 1996 Agreement until such point as a successor agreement was reached. By signing the Interim Agreement, Seabury agreed to be bound under the successor agreement. (See Interim Agreement, arts. I, II.) Seabury was furnished with a copy of the 2001 agreement on September 24, 2001. While Seabury did not sign and return a copy of that agreement to the District Council, it had already agreed to adopt that agreement by signing the Interim Agreement, which provided that "our firm shall be bound to the terms contained in the New Agreement(s) retroactive to July 1, 2001, by virtue of executing this agreement, regardless of whether it actually executes a successor agreement." (:Interim Agreement, art. V.)

Seabury has contended that arbitration agreements must be explicit, written, and "must not depend upon implication or subtlety." (Pet'r's Mem. at 2, citing In re Arbitration between Waldron and Goddess, 61 N.Y.2d 181, 473 N.Y.S.2d 136, 461 N.E.2d 273 (1984)). However, the arbitration provision contained in Article IX of the 2001 Agreement is set forth explicitly and in writing and does not depend on implication, subtlety, or construct.

The cases upon which Seabury has relied do not concern arbitration clauses contained in CBAs, or the compelling federal labor policy that favors the enforcement of such provisions under § 301 of the LMRA.

The CBA between Seabury and the District Council is governed by § 301 of the LMRA, and the federal labor policy developed thereunder which strongly favors arbitration as an alternative dispute resolution mechanism. See, Coca-Cola Bottling Co. of N. Y, Inc. v. Soft Drink and Brewery Workers Union Local 812, 242 F.3d 52, 53 (2d Cir.2001) (holding that Federal Arbitration Act does not apply to cases brought under the LMRA).

Seabury has asserted there is "no evidence of [sic] whatsoever that [it] intended to be bound by the arbitration provisions of the [2001 Agreement]." (Pet'r's Mem. at 4.) However, article II of the Interim Agreement specifically refers to the arbitration provisions of the successor contract as a term and condition of the "New Agreement" that will be binding on it retroactive to July 1, 2001. There is no dispute Seabury signed the Interim Agreement. By the terms of the Interim Agreement, Seabury agreed to the terms and conditions of the New Agreement, including arbitration.

The Interim Agreement must be viewed in light of the common practices of the construction trades industry. The construction industry typically engages in what is known as "pattern bargaining." The District Court for the District of South Dakota succinctly summarized this process and the policies behind it in John Morrell & Co. v. United Food and Commercial Workers Int'l Union, 825 F.Supp. 1440, 1443 (D.S.D.1993):

UFCW and the meat-packing employers (including Morrell) engaged in what is commonly known as "pattern bargaining." In each round of negotiations, one meat-packing company and UFCW would reach an agreement which would "set the pattern" for the meat-packing industry, and the other companies would then adopt the same provisions as a means of equalizing labor costs. This pattern bargaining resulted in the same wages and benefits and working conditions for all employees and retirees in the meat-packing industry.

As of the date that Seabury executed the Interim Agreement it had been a signatory for several years and knew the benefits and obligations of being a signatory contractor.

An agreement to be bound by the results of multi-employer pattern bargaining does not bind a party "to a set of contractual obligations that he never knowingly assumed." A contractor, like Seabury, that makes such an agreement has sufficient knowledge of obligations it has assumed, because it has obligated itself to conform to the industry standards that are required by the unionized construction contracts it seeks to be awarded.

Multi-employer pattern bargaining is not just an industry standard, it is Seabury's own past practice and course of dealing with the District Council. Like the 2001 Agreement, the 1993 and 1996 Agreements to which Seabury was a signatory were no different from the Independent Millwright Agreements between the District Council and other independent employers.

The 1996 Agreement, to which Seabury admits being party, and the 2001 Agreement are identical in every material respect. Virtually the only difference...