Unite Here Local 25 v. Madison Ownership, LLC , 850 F. Supp. 2d 219 ( 2012 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITE HERE LOCAL 25,
Plaintiff,
v. Civil Action No. 11-62 (JDB)
MADISON OWNERSHIP, LLC, ET AL.
Defendants.
MEMORANDUM OPINION
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 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
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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
1
The CBA, which was attached to previous submissions to this Court, is incorporated and
referred to in the amended complaint.
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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 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
2
The Union alleges that subsequent to these agreed-upon extensions, the relationship between
the Union and the defendants proceeded as before, and points to the Hotel's agreement to pay
additional health care costs effective November 1, 2010, and its continued payment of healthcare
costs thereafter. Am. Compl. ¶¶ 9-10.
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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
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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).
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 (1974); see
Leatherman v. Tarrant Cnty. Narcotics and Coordination Unit, 507 U.S. 163, 164 (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; 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.
3
Operating also moves to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), which the Court will
separately address.
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2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (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 US 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)). Additionally, a court may consider material other than the
allegations of the complaint in determining whether it has jurisdiction to hear the case, as long as
it still accepts the factual allegations in the complaint as true. See Jerome Stevens
Pharmaceuticals, Inc. v. FDA, 402 F.3d 1249, 1253-54 (D.C. Cir. 2005); EEOC v. St. Francis
Xavier Parochial Sch., 117 F.3d 621, 624-25 n.3 (D.C. Cir. 1997); Herbert v. Nat'l Acad. of
Scis., 974 F.2d 192, 197 (D.C. Cir.1992).
DISCUSSION
I. Mootness
Loews, Ownership, and Operating argue that the sale of the Madison Hotel has mooted
Local 25's claims, because there is no longer a "live" controversy and the Union now lacks any
available remedy given that sale. The Court disagrees.
Article III of the Constitution limits the jurisdiction of the federal courts to the
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consideration of cases or controversies. U.S. Const. art. III, § 2. Mootness is a justiciability
doctrine derived from this limitation. See, e.g., Al Najjar v. Ashcroft, 273 F.3d 1330, 1335 (11th
Cir. 2001); see also U.S. Parole Comm'n v. Geraghty, 445 U.S. 388, 395-96 (1980). Federal
courts have authority only to "adjudicate actual, ongoing controversies." Honig v. Doe, 484 U.S.
305, 317 (1988). "[A] a case is moot when the issues presented are no longer 'live' or the parties
lack a legally cognizable interest in the outcome." Powell v. McCormack, 395 U.S. 486, 496
(1969); accord Ass'n of Flight Attendants v. Delta Air Lines, Inc., 879 F.2d 906, 909 (D.C. Cir.
1989). However, "as long as some issues remain alive, 'the remaining live issues supply the
constitutional requirement of a case or controversy.'" Delta Air Lines, Inc., 879 F.2d at 909(quoting Powell, 395 U.S. at 496-97). The mootness doctrine "is not a legal concept with a fixed
content or susceptible of scientific verification." Geraghty, 445 U.S. at 400-01 (citing Poe v.
Ullman, 367 U.S. 497, 508-09 (1961)). Instead, the Supreme Court has described the mootness
doctrine as having a "flexible character." Id.Defendants have filed separate motions to dismiss, but each motion challenges the
amended complaint on the basis of mootness. While each defendant argues variations of why
Local 25's case is moot, all contend that because of the hotel's sale, the alleged violations of the
CBA will not recur, and no remedy would be available to the Union in arbitration. Specifically,
Operating argues that it no longer holds a leasehold interest in the Madison Hotel after the sale
and that the Union is foreclosed from seeking monetary damages due to an alleged breach of the
successorship clause, because its January 4, 2011 grievance only sought an injunction against the
sale. Operating's Mot. to Dismiss at 13-14. For its part, Ownership argues that, even assuming
that the Union incurred damages because of an alleged breach by defendants, those damages did
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not "arise under" the CBA, but were instead caused by Jamestown. Ownership's Mot. to Dismiss
at 6-8. Loews makes what can be characterized as a futility argument -- because Loews never
owned the Madison Hotel, nor had any influence over the terms and conditions of the hotel's
sale, an arbitrator could not possibly find that Loews had breached the successorship clause.
Loews' Mot. to Dismiss at 4-9.
A significant problem with defendants' mootness arguments is that the Union's amended
complaint does not seek to rescind or enjoin the sale of the Hotel. Instead, Local 25 seeks an
order to compel defendants to arbitrate its previously-submitted grievance. See generally Am.
Compl.; Pl.'s Opp'n to Ownership's Mot. at 2. As this Court expressed at the TRO hearing, if the
Court were to find that there was an extension of the CBA until March 2011, then the Court
would also necessarily find that any dispute over the successorship clause must go to arbitration.
This result would essentially grant the Union the relief it requests -- an opportunity to have its
grievance heard by an arbitrator. TRO Hr'g at 4:23-25. That the arbitrator, not this Court,
should decide the actual merits of any claimed breach to the successorship clause is not in
serious dispute. See Tr. Day One 6:16-7:15; 12:13-18-14:9 (parties agreeing that if there is no
CBA, then the Court has no jurisdiction to provide relief, and agreeing that any challenge on the
merits to a claimed breach of the successorship clause would be heard by an arbitrator).
Moreover, any further question as to what remedies the Union might be entitled to because of a
breach of the CBA is an issue for the arbitrator to resolve, not the Court.4 The same analysis
4
All three cases that Ownership relies upon involve challenges to judicial enforcement of
awards already imposed by an arbitrator -- not decisions over whether a dispute should be
submitted to arbitration in the first instance. See Kraft Foods, Inc. v. Office & Prof'l Emp. Int'l
Union, 203 F.3d 98, 103 (1st Cir. 2000) (upholding arbitration remedy when it "dr[ew] its
essence" from the CBA); S.D. Warren Co. v. United Paperworkers' Int'l Union, 845 F.2d 3, 7-8
(1st Cir. 1988) (declining to enforce arbitration award when arbitrator ignored "plain language of
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applies to Loews' and Ownership's arguments, which in essence claim that because the Union's
submitted grievance only sought one kind of remedy, it would be foreclosed from seeking other
kinds of remedies. These arguments essentially conflate mootness with futility. The Court need
not (and should not) decide what kinds of remedies, if any, an arbitrator could provide for breach
of the successorship clause, or any other breach arising under the CBA.3 It only needs to decide
whether arbitration should be compelled under the CBA, and with respect to which defendants.
And to decide that, the Court must resolve whether the CBA was extended to March 2011 and
who are "parties" to the CBA.
The parties place too much reliance on their generalized assertion that one-time
violations, as opposed to recurring violations of the CBA, could moot this action involving an
injunction to compel arbitration. The inquiry as to whether arbitration should be compelled is
not based on the nature, magnitude, or frequency of the breach, but whether the parties had
intended for that breach to be covered by the arbitration clause. At all times, the relevant focus
is on what the parties had agreed upon. See RDP Technologies, Inc. v. Cambi AS, 800 F. Supp.
2d 127, 139-40 (D.D.C. 2011) (describing the "established proposition" that 'arbitration is a
matter of contract and a party cannot be required to submit to arbitrate any dispute which he has
the contract"); Leed Architectural Prods, Inc. v. United Steelworkers of Am., Local 6674, 916
F.2d 63, 66-67 (2d Cir. 1990) (instructing district court to vacate arbitration award when
arbitrator violated well-established rule that arbitrators cannot derive authority from sources
outside the CBA).
3
Courts also recognize that there is a need for arbitrators to rely on their own judgment "when it
comes to formulating remedies" because of the need "for flexibility in meeting a wide variety of
situations." United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 597
(1960); accord Hall v. Treasure Bay Virgin Islands Corp., 371 F. App'x. 311, 313 (3d Cir. 2010);
Dexter Axle Co. v. Int'l Ass'n of Machinists & Aerospace Workers, 418 F.3d 762, 769 n.5 (7th
Cir. 2005); Chrysler Motors Corp. v. Int'l Union, 959 F.2d 685, 688 (7th Cir. 1992).
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not agreed so to submit'") (quoting AT & T Techs Inc. v. Commc'n Workers of Am., 475 U.S.
648, 648 (1986)).
Loews, in particular, greatly overstates the applicability of the Court's prior findings in
denying a TRO on the ultimate question whether a CBA (and hence, an arbitration clause) was in
existence at the time of the January 4, 2011 grievance. Loews focuses on the Court's prior
"ruling" that the CBA had expired in October 2010, and claims that the "Court effectively
addressed -- and denied -- the Union's requested relief." See Loews' Mot. to Dismiss at 4, 6. But
Loews' characterization of this Court's decision denying the TRO does not square with the TRO
standard that the Court actually applied. Indeed, the Court repeatedly emphasized both at the
hearing and in its Order that its findings were limited to considering the merits of the requested
TRO. See, e.g., Tr. Day One 6:4-8 ("[W]e're here on a TRO . . . "[the Court is] going to resolve
[whether there is a collective bargaining agreement] in this context of a TRO hearing."); Tr. Day
Two 458:3-6 ("For the purposes of the injunctive relief that is sought . . . plaintiff has not carried
that burden to establish that there was an extension."); id. at 14-19 ("I cannot grant the requested
TRO relief because I cannot conclude that plaintiff has succeeded or is likely to succeed on the
merits of [its] claim. It is only a likelihood of success standard in a [TRO] or preliminary
injunction context, when we're speaking of the merits."); see also Order Denying Pl.'s Mot. for a
TRO, ECF No. 7 (Jan. 18, 2011) ("[P]laintiff has not shown a likelihood of success on the merits
of its claim that the CBA was extended through March 15, 2011."). The Court did not resolve on
the merits either whether the CBA was extended until March 2011 or who was a party to the
CBA.
Accordingly, notwithstanding the hotel's sale, the question whether the Court is able to
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grant the Union's requested relief -- an order directing the parties to arbitrate the grievance --
remains a "live" issue that the Court must resolve. No defendant has persuasively argued that it
would be appropriate for the Court to consider what would occur during arbitration in deciding
whether the Union's grievance should be heard in that forum. Because a live issue remains with
respect to the extension of the CBA (and the arbitration clause), and the Union clearly continues
to have a "legally cognizable interest in the outcome" of the case, Powell, 395 U.S. at 496,
Local 25's claim is not moot.
II. Subject Matter Jursidiction under Labor Management Relations Act
As previously expressed, this case presents two options for the Court. If the CBA had
expired in October 2010, then pursuant to section 301 of the Labor Management Relations Act
("LMRA"), codified at 29 U.S.C. § 185(a), the case must be dismissed because the Court would
lack subject matter jurisdiction over Local 25's request to arbitrate a grievance under that CBA.
Hence, without a CBA, there would be nothing for the Court to compel. On the other hand, if
the Court determines that a CBA was in effect during the relevant time period, then any claims
regarding breach of the successorship clause -- or any other breach arising under the CBA --
would be decided by an arbitrator. See Tr. Day One 4:21-5:10. No defendant has discussed in
great length the Court's subject matter jurisdiction over this action as impacted by the CBA’s
expiration. However, the Court bears an affirmative obligation to ensure that it acts within its
jurisdictional authority. See, e.g., Gen. Motors Corp. v. EPA., 363 F.3d 442, 448 (D.C. Cir.
2004); Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C.
2001).
Section 301 of the LMRA confers jurisdiction on federal courts over "[s]uits for violation
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of contracts between an employer and a labor organization." See 29 U.S.C. § 185(a); Am.
Compl. ¶ 2; see also Lopez v. Commonwealth Oil Ref. Co., 833 F. Supp. 86, 88 (D.P.R. 1993),
aff'd, 29 F.3d 619 (1st Cir. 1994) (quoting United Paperworkers Int'l Union v. Int'l Paper Co.,
920 F.2d 852, 859 (11th Cir. 1991)). Accordingly, the central issue in this case is whether a
CBA existed during the January 2011 timeframe, such that the Court could compel the parties to
comply with the arbitration clause of the CBA with respect to Local 25's grievance. See Lopez,
833 F. Supp. at 88; Williams v. WCI Steel Co., 170 F.3d 598, 605 (6th Cir. 1999) (citing Litton
Fin. Printing Div. v. NLRB, 501 U.S. 190, 206 (1991)); Asbury v. Container Prods, Inc., Civ. A.
No. 90-1035, 1991 WL 229953 (E.D. La. Oct. 25, 1991), aff'd sub nom. Asbury v. Container
Prods, 968 F.2d 17 (5th Cir. 1992) (dismissing breach of contract claim under 301(a) for lack of
jurisdiction when CBA had expired by the relevant time).
The Court bears the responsibility of determining in the first instance whether a CBA was
in existence at the time of the parties' dispute. It is "well settled that where the dispute at issue
concerns contract formation, the dispute is generally for courts to decide." Granite Rock Co. v.
Int'l Brotherhood of Teamsters, 130 S. Ct. 2847, 2855-56 (2010); accord Nat'l R.R. Passenger
Corp. v. Boston & Me. Corp., 850 F.2d 756, 761 (D.C. Cir. 1988) ("[I]ssues of formation . . .
must always be decided by the courts . . . ."). In RDP Technologies, Inc. v. Cambi AS, this
Court noted that while the D.C. Circuit has not considered the propriety of district courts
adjudicating challenges to the formation of a contract containing an arbitration clause, the D.C.
Circuit has cited to cases from other circuits taking that approach. 800 F. Supp. 2d at 139 (citing
Nat'l R.R. Passenger Corp., 850 F. 2d at 761). Moreover, the Supreme Court in Granite Rock
instructs that, "[t]o satisfy itself that [an] agreement exists, the court must resolve any issue that
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calls into question the formation or applicability of the specific arbitration clause that a party
seeks to have the court enforce." 130 S. Ct. at 2856. Hence, "courts should order arbitration of a
dispute only where the court is satisfied that the formation of the parties' arbitration agreement
. . . is [not] in issue." Id. at 2857 (emphasis added).
In order for a dispute to “arise under” a CBA that triggers the parties' agreement to
resolve that dispute by arbitration, there must be a CBA to consider as a starting point for the
Court’s analysis. If no CBA was in place at the time of the alleged breach and the Union’s
submitted grievance, then it likely follows (at least based on the facts of this case) that the
arbitration clause within the CBA had also expired.4 Hence, the Court would lack any authority
to direct the parties to arbitration.
This analysis is consistent with the Court's observation at the TRO hearing , that its
jurisdiction to decide this case depends "on there being a violation of a contract between an
4
Whether an arbitration clause within an expired CBA extends beyond that CBA depends on
several considerations. Significantly, courts look to the intent of the parties, as manifested by
the language of the arbitration agreement. See, e.g., AT & T Techs Inc., 475 U.S. at 648; RDP
Technologies, Inc., 800 F. Supp. 2d at 139-40. Courts have not hesitated in enforcing broad
arbitration agreements over rights that "arise under" a CBA, even if the CBA thereafter expires
or terminates. See, e.g., Nolde Brothers Inc. v. Bakery Workers, 430 U.S. 243, 255 (1977);
Litton, 501 U.S. 190, 209 (1991) (post-expiration grievances are not arbitrable unless they "arise
under" the contract and describing circumstances where post-expiration grievances satisfy that
standard); Washington Mailers Union Local M-29 v. Washington Post, 699 F. Supp. 2d 130, 133
(D.D.C. 2010) (finding that parties intended for post-expiration arbitrability of contractual
lifetime employment guarantee, a right that had vested under the CBA prior to its expiration).
Here, assuming that a CBA existed at the time of the grievance, the parties do not seriously
dispute that a grievance based on a breach of the successorship clause falls under the CBA, even
though Ownership briefly argues that any "damages" as a result of a breach were caused by
Jamestown. See Ownership's Mot. to Dismiss at 7. The arbitration clause itself, as set forth in
the CBA, states that it extends to "grievances arising out of and during the term of this
Agreement." See CBA, art. 17.1 (emphasis added). Hence, if the CBA was extended until
March 2011, the alleged breach would have occurred while the CBA was in force, and may be
arbitrable.
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employer and a labor organization." See Tr. Day One 4:10-11. The Court also noted that the
relevant threshold question is whether the CBA was in effect during the operative time period,
Tr. Day One 4:12-20, and that a factual finding that there was no CBA in effect at the time of the
alleged breach of the CBA would be "the end of things for [the Court]" because such a finding
would be tantamount to a determination that "there's no jurisdiction." See id. at 5:4-10.
The parties have clearly disputed whether the CBA was extended through March 15,
2011, such that Local 25's January 4, 2011 grievance could be covered by the CBA's arbitration
clause. Although the Court concluded at the TRO hearing that the Union "has not carried [the]
burden to establish that there was an extension [of the CBA]," Tr. Day Two 458:4-6, it also
noted that it was conceivable that the Union might be able to demonstrate an extension of the
CBA with "some more time and depositions and further development of evidence," id., 458:7-9.
In addition, even assuming that a CBA was in effect in January 2011, the parties have
disagreed over who is bound by the agreement. As this Court previously observed, it is
somewhat bewildering at this juncture how the identities of the parties bound by the agreement
could still remain unclear. Notwithstanding the claimed extensions, the CBA had already been
in place for a number of years. But in any event, the issue of which parties were bound by the
CBA remains a significant factual dispute. Operating claims that it was not a party to the CBA
and never has been, and that Larry Biederman did not act as Operating's agent when he signed
the CBA. Operating's Mot. at 8-10. Local 25 argues otherwise. Determining which parties are
bound by the CBA is a significant inquiry, for the Court would lack jurisdiction over any
defendant who was not a party to -- and hence, not bound by -- the CBA. See, e.g., Sheetmetal
Workers Union Local v. Pub. Serv. Co. of Ind., Inc., 771 F.2d 1071, 1073-74 (7th Cir. 1985)
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(dismissing complaint for lack of jurisdiction when the labor agreement did not bind the
defendant); Dist. 2 Marine Eng'rs Beneficial Ass'n-Assoc. Mar. Officers v. Grand Bassa Tankers,
Inc., 663 F.2d 392, 401 (2d Cir. 1981) (finding no jurisdiction under 301(a) when the defendant
was not the employer of the union workers).
These factually complicated questions -- when the CBA expired and which parties are
bound by it -- are not easily resolved. Tr. Day Two 454-55. At this juncture, based on the
record and the arguments before it, the Court remains unable to determine whether (and as to
which parties) the Court should direct arbitration. Accordingly, it is the better course to allow
the parties an opportunity to engage in discovery, which may ultimately lead this Court to
conclude that it lacks subject matter jurisdiction.
Finally, the Court is mindful that subject matter jurisdiction is ordinarily analyzed under
the standards governing a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(1), and that the
inquiry is usually a threshold question determined at the outset of the case. Here, however, the
inquiry into whether the Court has jurisdiction to compel arbitration under the CBA depends on
whether there was a CBA in effect at all when the alleged breach occurred and Local 25's
grievance was submitted in January 2011 Accordingly, where the jurisdictional question is
closely intertwined with the merits of the case, the D.C. Circuit has instructed that it is
appropriate for a court to allow discovery to proceed, and to consider the issue of subject matter
jurisdiction on a motion for summary judgment thereafter. See, e.g., Herbert v. Nat'l Acad. of
Scis., 974 F.2d 192, 198 (D.C. Cir. 1992) ("[T]hough the trial court may rule on disputed
jurisdictional facts at any time, if they are inextricably intertwined with the merits of the case it
should usually defer its jurisdictional decision until the merits are heard.") (citing Land v. Dollar,
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330 U.S. 731, 731 (1947)); Loughlin v. U.S., 230 F. Supp. 2d 26, 36-37 (D.D.C. 2002) ("When
the jurisdictional issues are inextricably intertwined with the merits of the cause of action, courts
have not dismissed federal claims on Rule 12(b)(1) motions unless they are clearly insubstantial
or immaterial. Instead, they are treated as motions for summary judgment."). Dismissal of the
case on the basis of Fed. R. Civ. P. 12(b)(1) "may be improper before the plaintiff has had a
chance to discover the facts necessary to establish jurisdiction." Herbert, 974 F.2d at 198 (citing
Collins v. New York Cent. Sys., 327 F.2d 880 (D.C. Cir. 1963)).5
CONCLUSION
For the foregoing reasons, the Court will deny defendants' motions to dismiss. A
separate Order accompanies this Memorandum Opinion.
/s/ p
JOHN D. BATES
United States District Judge
Dated: March 23, 2012
5
For similar reasons, the Court will deny Operating's motion to dismiss based on Fed. R. Civ.
P. 12(b)(6). Operating claims that the Union has failed to allege sufficient facts that Operating
was a party to the CBA, that it agreed to an extension, or that it failed to arbitrate the grievance.
See generally Operating's Mot. to Dismiss. However, the Union alleged that Operating was the
"leasehold owner" of the Hotel and a party to the CBA at all relevant times, that defendants
extended the CBA and continued their relationship with Local 25 "as before" and that the Hotel
"owner" notified the Union that it refused to arbitrate the grievance. Am. Compl. ¶¶ 4, 9-10 &
23. These allegations are sufficient to survive a 12(b)(6) motion to dismiss. See Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. ___, 129 S. Ct. 1937, 1949
(2009) (quoting Twombly, 550 U.S. at 570); Atherton v. District of Columbia Office of the
Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009). The fact-intensive issues as to whether Operating
was a party to the CBA and whether it -- or any defendant -- agreed to extend the CBA through
March 15, 2011 remain in dispute.
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