A&A Maintenance Enterprise, Inc. v. Ramnarain ( 2020 )

20-459
A&A Maintenance Enterprise, Inc. v. Ramnarain
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
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August Term, 2020
(Submitted: November 25, 2020 Decided: December 16, 2020)
Docket No. 20-459
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A&A MAINTENANCE ENTERPRISE, INC.,
Petitioner-Counter-Defendant-Appellant,
—v.—
ALVIN RAMNARAIN, as President of Local 1102, Retail, Wholesale and Department
Store Union, United Food and Commercial Workers,
Respondent-Counter-Claimant-Appellee.
_____________
Before: CALABRESI, KATZMANN, and SULLIVAN, Circuit Judges.
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Appeal from an order of the United States District Court for the Southern
District of New York (Briccetti, J.) denying the petition of employer A&A
Maintenance Enterprise, Inc. (“A&A”) to vacate an arbitration award and granting
the cross-petition of Alvin Ramnarain – President of Local 1102 of the Retail,
Wholesale and Department Store Union (the “Union”) – to confirm the award.
First, A&A argues that the arbitrator exceeded his authority by ruling on an issue
that was allegedly broader in scope than the issue that the Union described in its
grievance letter to A&A. We reject this argument because, albeit worded
differently, the issue that the arbitrator ruled on was substantially identical to the
issue in the grievance letter. In so ruling, we hold that a party that has previously
agreed to arbitrate a given dispute cannot frustrate the arbitration process simply
by refusing to agree on the form of the issue to be submitted to arbitration. Second,
A&A argues that the arbitrator exceeded his authority by ignoring the express
terms of the collective bargaining agreement. We find that the arbitrator’s
interpretation of the collective bargaining agreement was more than colorable and
therefore reject this argument. Accordingly, we AFFIRM.
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Perry Heidecker, Milman Labuda Law Group PLLC, Lake Success, NY, for
Petitioner-Counter-Defendant-Appellant.
Matthew P. Rocco, Rothman Rocco LaRuffa, LLP, Elmsford, NY, for Respondent-
Counter-Claimant-Appellee.
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PER CURIAM:
Petitioner-counter-defendant-appellant A&A Maintenance Enterprise, Inc.
(“A&A”) appeals from an order of the United States District Court for the Southern
District of New York (Briccetti, J.) denying A&A’s petition to vacate an arbitration
award and granting the counter-petition of respondent-counter-claimant-appellee
Alvin Ramnarain – President of Local 1102 of the Retail, Wholesale and
Department Store Union (the “Union”) – to confirm the award. For the reasons set
forth below, we affirm.
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I. Background
Unless otherwise indicated, the following factual background is undisputed
and drawn from the parties’ submissions in support of and in opposition to the
petition and the cross-petition at issue.
A&A is a corporation providing janitorial and maintenance services to
owners and operators of commercial real estate and educational institutions. The
Union is a labor organization that has historically represented the building service
workers, groundskeepers, and mechanics at the Old Brookville campus of Long
Island University (“LIU”) with respect to matters concerning wages, hours, and
other terms and conditions of their employment.
In 2016, LIU contracted out the janitorial, mechanical, and groundskeeping
work at its Old Brookville campus to A&A. Under this arrangement, A&A became
the employer of those workers and agreed to assume an existing collective
bargaining agreement between LIU and the Union set to expire on August 31,
2017. In the summer of 2017, A&A and the Union engaged in negotiations and
eventually entered into a successor collective bargaining agreement (the “CBA”).
As relevant here, Article 2 of the CBA, titled “Union Security,” requires that
“all employees covered by this Agreement and hired on or after its execution or
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effective date, shall after thirty days from the beginning of such employment . . .
become and remain members in good standing in the Union.” Joint App’x 45, Art.
2.
As to specific provisions governing A&A’s hiring of employees, Article 4,
titled “Probationary Period,” states in relevant part that “[t]here shall be a ninety
(90) day probationary period for permanent workers in which [A&A] has the
unrestricted right to discharge new employees with or without cause except that
there shall be no discrimination based on union activity.” Joint App’x 46, Art. 4.
Probationary employees are not entitled to certain benefits guaranteed by the
CBA, such as tuition remission and sick leave. In addition, Article 5, titled
“Substitute Employees,” allows A&A to hire “substitute employees” defined as
individuals “hired to fill in for employees who are out on disability or worker’s
compensation or approved extended leaves,” but provides that “[s]ubstitute
employees are subject to the union security clause.” Joint App’x 46, Art. 5.
Of particular note, during the 2017 negotiations over the CBA, A&A
proposed a new clause which would have permitted A&A to utilize non-union
“temporary employees” at will for up to 90 days. The Union rejected this proposal,
and it was excluded from the CBA.
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As to A&A’s rights as employer, Article 20, titled “New Employees,” allows
A&A to “hire employees from whatever source it desires.” Joint App’x 57, Art. 20.
Article 37, titled “Management Rights,” states in part that “[A&A] will determine
the size of the work force to be employed on any assignment” and that “all the
rights, prerogatives and powers of [A&A], which have not been specifically
provided for in a stated term of this Agreement, are retained in the sole discretion
of [A&A].” Joint App’x 64–65, Art. 37.
Finally, Article 30, titled “Grievance and Arbitration Procedure,” defines
“grievance” as “any dispute concerning the interpretation, application or claimed
violation of the stated terms or provisions of this Agreement” and provides that
disputes that the parties cannot resolve through the voluntary grievance
procedure shall be arbitrated. Joint App’x 61–62, Art. 30. This Article further
provides that “[d]isputes that do not involve the interpretation, application or
claimed violation of the stated terms o[r] provisions of this Agreement shall not be
considered grievable” or arbitrable. Id.
The instant dispute arose when Union members noticed a number of new,
non-union employees performing building service work on the campus in the fall
of 2017. When a Union representative attempted to ascertain the employment
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status of these new employees, A&A responded that they were substitute
employees, hired pursuant to Article 5 of the CBA, filling in for bargaining-unit
employees out on leaves of absence. But upon checking its records, the Union
observed that the number of claimed substitutes exceeded the number of members
out on disability, worker’s compensation, and other approved leaves of absence.
Therefore, on January 12, 2018, the Union sent a written grievance to A&A alleging
that A&A had “violated the collective bargaining agreement through its failure to
comply with the substitute employees article” and asked A&A to reduce the
number of new hires to comply with the provision. Joint App’x 68.
The parties could not resolve the dispute through the voluntary grievance
process, and, on January 26, 2018, the Union submitted a written demand for
arbitration. Based on its understanding that this excessive number of workers
were either impermissible substitute employees or non-union “temporary
employees,” the Union framed the issue in its request for arbitration as: “[A&A]
violated Articles 1, 2, 5, 6, 7, 10, 11, 12, 15 & 20 by improperly using ‘temporary
employees,’ . . . to perform bargaining unit work.” Joint App’x 70.
Shortly thereafter, the parties submitted their dispute to binding arbitration.
The Union framed the issue as whether A&A violated the CBA by utilizing
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temporary employees—a term undefined in the CBA and broader in scope than
substitute employees—to perform bargaining unit work. At the hearing on June
13, 2018, A&A objected to this broader formulation, arguing that the Arbitrator
was confined to the issue proposed by the Union in its original grievance, which
mentioned only “substitute employees.” Further, A&A denied the arbitrator’s
subsequent request that the parties grant him the authority to formulate the issue.
The arbitrator reserved his decision on A&A’s objection and proceeded to hear the
case on the merits.
After three days of hearing, followed by post-hearing briefing, the arbitrator
issued an opinion and award on December 22, 2018. He first rejected A&A’s
objection to the formulation of the issue, writing that “the Union’s demand for
arbitration was consistent with the grievance filed by the Union” and “is arbitrable
under the [CBA].” Joint App’x 88. The arbitrator then held that A&A had violated
the CBA by “utilizing non-union substitute/temporary and/or probationary
employees to perform bargaining unit work.” Id. at 91. Specifically, the arbitrator
found that A&A hired non-union temporary employees, discharged them within
90 days of employment, and rehired the same individuals after a short period of
time to keep them under the probationary status permanently. This was “for the
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purpose of displacing bargaining unit jobs, paying less than the contractual hourly
rate, avoiding the payment of Union dues and fringe benefits, circumventing the
intended use of probationary workers and limiting the overtime hours available
for regular, full-time employees.” Id. The arbitrator found that A&A was relying
on a bad-faith reading of the management rights and probationary period clauses
to effectively grant itself the right to hire temporary employees at will, a right
which was explicitly rejected during the negotiations of the CBA. Following this
decision, the arbitrator held a damages inquest and issued a relief award in the
amount of $1,702,263.81 to the Union, its affiliated benefit funds, and its affected
members.
On March 25, 2019, A&A filed a lawsuit in New York state court to vacate
the arbitration award, arguing that the arbitrator had exceeded his authority by
adopting the Union’s formulation of the issue and by misapplying the provisions
of the CBA. Subsequently, the Union removed the action to the United States
District Court for the Southern District of New York and brought a cross-petition
to confirm the arbitration award. On January 13, 2020, the district court (Briccetti,
J.) denied A&A’s petition to vacate the arbitration award and granted the Union’s
cross-petition to confirm the award. A&A timely appealed.
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II. Discussion
“We review a district court’s decision to confirm an arbitration award de
novo to the extent it turns on legal questions, and we review any findings of fact
for clear error.” Duferco Int’l Steel Trading v. T. Klaveness Shipping A/S, 333 F.3d 383,
388 (2d Cir. 2003). 1
“A federal court’s review of labor arbitration awards is narrowly
circumscribed and highly deferential—indeed, among the most deferential in the
law.” N.Y. City & Vicinity Dist. Council of the United Bhd. of Carpenters & Joiners of
Am. v. Ass’n of Wall-Ceiling & Carpentry Indus. of N.Y., Inc., 826 F.3d 611, 618 (2d
Cir. 2016). A party petitioning a federal court to vacate an arbitration award bears
a “very high” burden of showing that the award in question falls within one of a
small number of exceptions to this general rule, set forth in statute and case law.
D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 110 (2d Cir. 2006).
One such exception appears in the Federal Arbitration Act, which allows
courts to vacate an award if “the arbitrators exceeded their powers.” 9 U.S.C.
§ 10(a)(4); see also Jock v. Sterling Jewelers Inc., 646 F.3d 113, 121 (2d Cir. 2011).
Objections to an award on the grounds that the arbitrators exceeded their
1 Unless otherwise indicated, case quotations omit all internal quotation
marks, alterations, footnotes, and citations.
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authority are narrowly applied, and the focus of the judicial inquiry is “whether
the arbitrators had the power, based on the parties’ submissions or the arbitration
agreement, to reach a certain issue, not whether the arbitrators correctly decided that
issue.” Jock, 646 F.3d at 122 (emphasis in original). 2
A&A now asks us to vacate the arbitration award on the ground that the
arbitrator exceeded his authority in two ways: (1) by ruling on an issue that was
not properly before him and (2) by changing the CBA’s express terms without the
parties’ consent. We find both arguments to be meritless.
A. Whether the arbitrator exceeded his authority by ruling on an issue
that was not properly before him
A&A first contends that the arbitrator exceeded his authority by considering
issues beyond those that the parties had submitted for his consideration. In A&A’s
view, because the Union’s original grievance mentioned only the substitute
employee provision, the arbitrator should not have considered any issues beyond
2 Technically the arbitrations in the labor context are governed by the Taft-
Hartley Act rather than the FAA. But in this particular context, we have
substantially imported the analysis of the FAA. See Coca-Cola Bottling Co. of New
York v. Soft Drink & Brewery Workers Union Local 812 Int'l Bhd. of Teamsters, 242 F.3d
52, 53–54 (2d Cir. 2001) (“[I]n cases brought under Section 301 of the Labor
Management Relations Act of 1947 (‘Taft–Hartley Act’), 29 U.S.C. § 185, the FAA
does not apply. . . . [T]he body of law developed under Section 301 will at times
draw upon provisions of the FAA, but by way of guidance alone.”).
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substitute employees, such as temporary and probationary employees. When the
arbitrator expanded the scope of the issue at arbitration, the argument goes, he
deprived A&A of its contractual right to engage in the pre-arbitration steps of the
grievance procedure to resolve disputes concerning temporary and probationary
employees.
This argument, focusing unnecessarily on form over substance, is a red
herring. We agree with the district court that “[t]he real substance of the union’s
initial grievance was the contention that non-union workers were improperly
performing bargaining unit work,” a dispute which “clearly concerns A&A’s use
of temporary employees.” Joint App’x 237–38. Moreover, the Union’s grievance
was based on facts that were fully known to A&A at the time the grievance was
delivered, even though the grievance did not explicitly include the terms
“temporary employees” and “probationary employees” and other relevant
provisions of the CBA.
Furthermore, the arbitrator reasonably found that the Union’s reference to
the substitute employee provision in its original grievance was attributable to
A&A’s false statements that all of the new workers were substitute employees. We
will not allow A&A to constrain the scope of the arbitrator’s authority based on its
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prior misstatement regarding the status of these employees.
Alternatively, relying on a general principle that arbitration is a matter of
consent, A&A essentially argues that the arbitrator exceeded his authority by
ruling on a formulation of the issue to which it never consented. In support of this
argument, A&A emphasizes that it objected to the expanded formulation of the
issue submitted by the Union and that A&A declined the arbitrator’s request that
the parties allow him to formulate the issue.
Our prior holding in Socony Vacuum Tanker Men’s Ass’n v. Socony Mobile Oil
Co., 369 F.2d 480 (2d Cir. 1966) compels us to reject this consent-based argument
as well. Unlike here, the collective bargaining agreement in Socony contained an
arbitration provision that explicitly stated: “The statement of the question to be
arbitrated shall be mutually agreed upon.” Id. at 481. Like A&A here, the employer
in Socony asserted that, even if the dispute there were arbitrable, arbitration could
not be compelled unless the parties mutually agreed on the issue to be submitted,
relying on the quoted provision above. See id. at 483. We rejected that
interpretation as “emasculat[ing] the arbitration clause” and interpreted the
quoted provision as “requiring the parties to make a reasonable effort to agree on
the statement of the issue to be submitted.” Id. Because the CBA here does not even
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contain a provision requiring the statement of the issue be mutually agreed upon,
A&A’s argument here is even weaker than the employer’s argument in Socony.
Our holding in Socony thus compels us, a fortiori, to reject A&A’s argument here.
This conclusion is consistent with our sister circuit’s decision in Avon Prods.,
Inc. v. Int’l Union, United Auto Workers of Am., AFL-CIO, Local 710, 386 F.2d 651 (8th
Cir. 1967), which we find instructive. In that case, the employer asked the circuit
court to, inter alia, declare that the grievances at issue were not arbitrable based on
their view that the grievances did not correctly state the issues in dispute. See id.
at 656. The Eighth Circuit denied this request, pointing out that the collective
bargaining agreement there – like the CBA here and unlike the agreement in
Socony – did not reserve to the parties the right to determine the precise language
to be used in submitting each dispute to arbitration. See id. The Eighth Circuit
reasoned that “the inclusion of such a clause would be an indication that they did
not intend to submit all [grievances subject to the arbitration clause in the
collective bargaining agreement] to arbitration, and would indicate that the parties
were reserving to themselves the right to determine the disputes, if any, that they
would arbitrate. To imply such a reservation here would be contrary to the federal
common law encouraging the arbitration of labor disputes and cannot be
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sustained.” Id. at 656–57. We adopt this reasoning in the present case: as the instant
dispute concerns “the interpretation, application or claimed violation of the stated
terms or provisions of [the CBA],” precisely the type of dispute that the parties
had previously agreed to submit to arbitration if not resolved through the
grievance process, Joint App’x 61, Art. 30, A&A “cannot frustrate the arbitration
process by refusing to agree on the form of the issue to be submitted to
arbitration,” Avon, 386 F.2d at 657.3
B. Whether the arbitrator exceeded his authority by altering the terms of
the collective bargaining agreement
A&A also argues that the award should be vacated because the arbitrator
essentially rewrote the CBA. Specifically, A&A argues that the arbitrator exceeded
3 In certain circumstances, parties that cannot agree on the framing of an issue
to submit to an arbitrator may petition a federal court to resolve the framing
dispute (e.g., through filing a petition to compel arbitration), after which the court
would frame the issue and remand the case to the arbitrator for further
proceeding. See Socony, 369 F.2d at 482–83. Based on this, A&A argues in effect that
the federal court, rather than the arbitrator, should have framed the issue.
However, as discussed above, the arbitrator correctly held that the various
formulations were essentially the same, and there was no need for the federal court
to get involved in formulating the issue. In any event, in this particular case, we
agree with the Eighth Circuit “that this matter is one to be resolved by the
arbitrator. In framing the disputes, the arbitrator will be limited by the language
of the contract. We presume that he will not frame the issue in such a way as to
decide matters beyond his authority. If he does so, the aggrieved party is not
without relief.” Avon, 386 F.2d at 657.
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his authority in ruling that A&A violated the CBA by using temporary employees,
because the CBA does not mention the term “temporary employees,” and because
the CBA provides that “[d]isputes that do not involve the interpretation,
application or claimed violation of the stated terms o[r] provisions of this
Agreement shall not be considered grievable.” Joint App’x 61, Art. 30 (emphasis
added).
While A&A is correct that the term “temporary employee” is not stated or
defined in the CBA, this argument is meritless. The instant dispute arose because
A&A attempted to hire non-union temporary workers by means of its strained
interpretation of the probationary period, new employees, substitute workers, and
management rights provisions of the CBA. Accordingly, this dispute over A&A’s
right to hire temporary workers “involve[d] the interpretation, application or
claimed violation” of these provisions of the CBA. Id.Finally, A&A asserts that the arbitrator flat out ignored the management
rights, new employee, and probationary period clauses of the CBA, despite the
CBA’s clear statement that “[t]he arbitrator shall not have the authority to add to,
subtract from, modify, or amend the provisions of the Agreement.” Joint App’x 62,
Art. 30 (emphasis added). We disagree. Here, the arbitrator squarely addressed
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the management rights clause when he wrote that A&A’s “overreaching
interpretation of the management rights clause” to hire temporary workers was a
bad faith attempt at achieving “what was not achieved in negotiations” leading up
to execution of the CBA. Joint App’x 89. Likewise, the arbitrator reasonably found
that A&A’s underhanded plan to hire new employees, fire them before the 90-day
probationary period had expired, and then re-hire them as new hires after a short
break could not be justified through the probationary period and new employee
clauses. A&A’s argument here is, in fact, nothing more than a backdoor attempt to
undermine the arbitrator’s reasonable interpretation of the CBA. See Jock, 646 F.3d
at 122 (“We will uphold an award so long as the arbitrator offers a barely colorable
justification for the outcome reached.”).
CONCLUSION
We have considered all of A&A’s remaining contentions on appeal and have
found in them no basis for reversal. Accordingly, we AFFIRM the district court’s
judgment.
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