Unite Here Local 25 v. Madison Ownership, LLC

• Citation: 850 F.Supp.2d 219
• Decision Date: 23 March 2012
• Docket Number: Civil Action No. 11–62 (JDB).
• Parties: UNITE HERE LOCAL 25, Plaintiff, v. MADISON OWNERSHIP, LLC, et al., Defendants.
• Court: U.S. District Court — District of Columbia

850 F.Supp.2d 219

UNITE HERE LOCAL 25, Plaintiff,
v.
MADISON OWNERSHIP, LLC, et al., Defendants.

Civil Action No. 11–62 (JDB).

United States District Court,
District of Columbia.

March 23, 2012.

[850 F.Supp.2d 221]

Devki Kaur Virk, Matthew Hirsch Clash–Drexler, Bredhoff & Kaiser, P.L.L.C., Washington, DC, for Plaintiff.

Peter Chatilovicz, Taron K. Murakami, Seyfarth Shaw, LLP, Gary L. Lieber, Ford & Harrison, LLP, Henry Adam Platt, Shannon Hadley Rutngamlug, Saul Ewing LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION
JOHN D. BATES, District Judge.

Plaintiff Unite Here Local 25 (“Union or Local 25”) brings this action against Madison Ownership LLC (“Ownership”), Madison Operating LLC (“Operating”), and Loews Madison Corp. (“Loews”) (collectively “defendants”), seeking an injunction under a collective bargaining agreement (“CBA”) compelling defendants to arbitrate

[850 F.Supp.2d 222]

a grievance related to the sale of the Madison Hotel. Specifically, the Union maintains that defendants breached provisions of the CBA, particularly its successorship clause, when they sold the Madison Hotel without requiring the purchaser to be bound by the CBA's terms and conditions. Currently before the Court are motions to dismiss by each defendant. For the reasons explained below, the Court will deny the motions.

BACKGROUND

The Madison Hotel is a 300–room property located at 1177 Fifteenth Street, N.W. in the District of Columbia. Am. Compl. ¶ 7. Local 25 represents approximately 8,000 hotel and food service workers in the Washington, D.C. area and has represented employees at the Madison Hotel since 1962. Id. ¶ 3. The Union and the Madison Hotel entered into a CBA, with a stated term of September 16, 2007 to September 15, 2010. Id. ¶ 9; CBA, art. 20.1.¹ The CBA sets forth the parties' mutual understanding regarding the usual aspects of the employment relationship, including working conditions, wages, benefits, and promotions. The CBA also contained a provision commonly known as a “successorship clause.” Article 1. 12, titled “Leases and Sales,” stated in relevant part:

In the event the Employer sells or by other contractual arrangement transfers all or part of his business to another party, the Employer shall require, as a condition of such transaction, that the other party be bound by the terms and provisions of this Agreement, or offer satisfactory proof ... that he has made an arrangement with the Union satisfactory to the Union.
CBA, art. 1.12(a). The CBA also contained a provision which established a grievance and arbitration procedure for resolving disputes:

17.1 Grievance Procedure: In the event a grievance or misunderstanding arises out of and during the term of this Agreement, such disputes shall be processed as described below. It is agreed that any differences arising incident to negotiation of terms of a new Agreement are not subject to this section, the sole purpose of which is to make subject to arbitration grievances arising out of and during the term of this Agreement.

CBA, art. 17.1 (“arbitration clause”).

It is hotly disputed which parties are bound by the CBA, as well as the period of time in which the CBA was in existence. Local 25 claims that Operating, Ownership, and Loews are all parties bound by the CBA. According to Local 25, Operating was the “leasehold owner” and Ownership was the “fee owner” of the hotel. Local 25 further claims that Loews, the manager of the hotel, was an “employer” as defined under 29 U.S.C. § 152(2). See Am. Compl. ¶¶ 4–6. Operating and Loews dispute Local 25's assertions. Ownership does not appear to contest that it was a party to the CBA.

The CBA itself states that it was entered into between the Union and “Madison LLC owners and Loews Hotels operators of The Madison, a Loews Hotel hereinafter referred to as the (‘Employer’).” See CBA, Ex. 1 to Boardman Declaration. While “Madison LLC” was originally named by Local 25 as a defendant in this suit, no party now claims that an entity named “Madison LLC” exists or ever existed. The amended complaint

[850 F.Supp.2d 223]

filed on March 22, 2011 contains no reference to “Madison LLC”. The CBA contained two signature lines. John Boardman, the Executive Secretary–Treasurer of Local 25, signed the Agreement on behalf of the Union. Under the signature line for “Loews Hotels t/a The Madison, a Loews Hotel,” the CBA was signed by “Larry Biederman, GM, The Madison, a Loews Hotel.” There are no signature lines or references to Madison Ownership LLC or Madison Operating LLC. See id. at 35.

The parties' views also differ regarding how many times the CBA was extended. Local 25 and the defendants agree that the CBA's expiration date was extended to October 8, 2010. However, the Union claims that the CBA was further extended to March 15, 2011. Am. Compl. ¶¶ 9–10.² The defendants disagree.

In October 2010, the Union learned that the Madison Hotel was on the market for sale. Am. Compl. ¶ 11. In the weeks that followed, the Union was in communication with various representatives of the Hotel regarding drafts of the purchase and sale agreement (“PSA”). During those discussions, the Union had expressed concerns that the proposed language of the PSA failed to comply with the CBA's successorship clause. Id. ¶¶ 11, 13–14. Local 25 alleges that John Parker, the hotel owner's representative, assured the Union that the owner understood that language in the PSA “was not acceptable and had to be fixed.” Id. ¶ 14. The Union claims that Parker promised that the purchase price would be reduced in exchange for the purchaser's assumption of the CBA. Id. ¶ 13–14. Boardman again inquired about the PSA's status around December 22, 2010 and discovered that the PSA had been executed and that closing of the sale would occur on January 19, 2011. Id. ¶ 15. Local 25 claims that the problematic language of the executed PSA remained unchanged.

After the purchaser failed to respond to requests to modify the executed PSA, the Union filed a grievance on January 4, 2011 alleging violation of the CBA's successorship provision. Id. ¶¶ 18, 20. The Union served the grievance on the hotel's general manager, the hotel's spokesman Peter Chatilovicz, and Stephen Lueke, labor counsel for the hotel. Id. ¶¶ 9, 13, 22. According to Local 25, Chatilovicz, acting on behalf of Loews, and Lueke, acting on behalf of the owner, gave notice that they were refusing arbitration. Id. ¶ 23.

On January 11, 2011, the Union initiated this action against Madison LLC and Loews. The Union sought a temporary restraining order (“TRO”) to compel arbitration of the January 4, 2011 grievance and to enjoin the January 19, 2011 sale of the hotel pending the conclusion of the arbitration proceedings. Compl. at 9. The Court held a two-day evidentiary hearing on January 13 and 14, 2011. See Tr. of TRO Hr'g, 1–181 (“Tr. Day One”), ECF No. 13; Tr. of TRO Hr'g, 182–465 (“Tr. Day Two”), ECF No. 14. After considering all the evidence, including both testimonial and documentary evidence, the Court denied the TRO. It concluded that the Union had failed to show a likelihood of success on the merits, specifically that the CBA was extended and in effect during the relevant time, such that arbitration could be compelled or the sale of the hotel enjoined. See Tr. Day Two 453–460; Order, ECF No. 18 (Jan. 18, 2011).

[850 F.Supp.2d 224]

Jamestown Properties (“Jamestown”) purchased the Hotel as planned on January 19, 2011. Ownership's Mot. at 2. On March 22, 2011, the Union filed its amended complaint, now naming as co-defendants Madison Ownership LLC, Madison Operating LLC, and Loews Madison Hotel Corp. See generally Am. Compl., ECF No. 21. Although Local 25 no longer seeks to enjoin the sale of the hotel, it continues to seek an injunction compelling defendants to arbitration. Am. Compl. ¶¶ 24–25. All three defendants have moved to dismiss Local 25's amended complaint pursuant to Fed.R.Civ.P. 12(b)(1), on the ground that Local 25's claims are now mooted by the hotel's sale.³

STANDARD OF REVIEW

“[I]n passing on a motion to dismiss, whether on the ground of lack of jurisdiction over the subject matter or for failure to state a cause of action, the allegations of the complaint should be construed favorably to the pleader.” Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974); see Leatherman v. Tarrant Cnty. Narcotics and Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 968 (D.C.Cir.1979). Therefore, the factual allegations must be presumed true, and plaintiff must be given every favorable inference that may be drawn from the allegations of fact. Scheuer, 416 U.S. at 236, 94 S.Ct. 1683;Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C.Cir.2000). However, the Court need not accept as true “a legal conclusion couched as a factual allegation,” nor inferences that are unsupported by the facts set out in the complaint. Trudeau v. Federal Trade Comm'n, 456 F.3d 178, 193 (D.C.Cir.2006) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)).

Under Rule 12(b)(1), the party seeking to invoke the jurisdiction of a federal court—plaintiff here—bears the burden of establishing that the court has jurisdiction. See U.S. Ecology, Inc. v. U.S. Dep't of Interior, 231 F.3d 20, 24 (D.C.Cir.2000); see also Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C.2001) (a court has an “affirmative obligation to ensure that it is acting within the scope of its jurisdictional authority.”); Pitney Bowes, Inc. v. United States Postal Serv., 27 F.Supp.2d 15, 19 (D.D.C.1998). “ ‘[P]laintiff's factual allegations in the complaint ... will bear closer scrutiny in resolving a 12(b)(1) motion’ than in resolving a 12(b)(6) motion for failure to state a claim.” Grand Lodge, 185 F.Supp.2d at 13–14 (quoting 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1350 (2d ed.1987))....