Opinion
00 CIV.7945 (DLC).
February 28, 2001.
Paul Galligan, Seyfarth Shaw, New York, NY., for Plaintiff.
Ira A. Sturm Raab, Sturm Goldman, New York, NY., for Defendant.
OPINION AND ORDER
Plaintiff Costco Wholesale Corporation ("Costco") brought this action on October 18, 2000, under Section 301 of the Labor Management Relations Act of 1947, as amended, 29 U.S.C. § 185 ("Section 301"), the Federal Arbitration Act, 9 U.S.C. § 1, et seq. ("FAA"), and the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq., seeking a stay of the arbitration proceedings demanded of it by defendant International Brotherhood of Teamsters, Local 210 ("Local 210"), and a declaration that its refusal to arbitrate does not violate its collective bargaining agreement with Local 210. Local 210 filed a counterclaim, seeking to compel Costco to arbitrate, and has now moved for summary judgment against Costco's causes of action and for its counterclaim. At bottom, the parties dispute whether it is for the Court or for an arbitrator to decide whether the termination clause in an arbitration agreement prevents arbitration of this labor dispute. For the following reasons, Local 210's motion for summary judgment is granted, and this dispute is referred to arbitration.
BACKGROUND
The following facts are undisputed, unless otherwise noted. Costco, a Washington State corporation that operates wholesale and retail stores in the New York City metropolitan area, and Local 210, a labor organization, entered into a collective bargaining agreement known as the 1997 Agreement between Costco d/b/a The Price Company and the Eastern Area Teamsters Price Club Negotiating Committee ("Agreement") on February 15, 1997. The Eastern Area Teamsters Price Club Negotiating Committee ("Committee") is made up of representatives of Locals 210, 311, and 592 of the United Brotherhood of Teamsters.
Article VI of the Agreement, entitled "Settlement of Disputes," provides a three-step procedure for the resolution of "grievances," defined as "any dispute or difference between the Employer and the Union concerning the application or interpretation of any provision of this Agreement." If the grievance is not resolved through the first two steps of the procedure, the third step provides for arbitration. A neutral arbitrator — selected through a process of elimination by the employer and the Union from a list of seven "disinterested persons" provided by the Federal Mediation and Conciliation Service ("FMCS") — hears the grievance and renders a "final" and "binding" award. Section (a), "Exclusive Remedy," provides that this three-step procedure, culminating in arbitration, is "the exclusive means, except as limited by law, for the disposition of all grievances."
The Agreement places certain limits on the power of the arbitrator. Article VI, Section (d) of the Agreement lists five limitations on the power of the arbitrator, including the limitation that the arbitrator has no power to "[d]etermine any provisions to be incorporated in a new Agreement or an extension or renewal of this Agreement."
The Agreement also includes a duration clause. Article XXXIV of the Agreement, entitled "Duration," provides that:
This Agreement shall be in full force and effect for the period to and until February 14, 2000, and thereafter from year to year, unless terminated by either party as hereinafter provided. Sixty (60) days prior to expiration, either party may notify the other party in writing of its desire to cancel the existing Agreement or to negotiate a new Agreement.
On November 22, 1999, Local 210 wrote Costco that "[p]ursuant to the collective bargaining agreement . . . which expires February 14, 2000, we are forwarding this sixty-day notice of our intention to renegotiate the contract, and would appreciate your setting an appointment with respect to this matter." The parties dispute to what extent Costco and Local 210 have negotiated for a renewal of the Agreement. On July 14, 2000, Costco advised a member of the Teamster Negotiating Committee that it understood that the Agreement expired on February 14, 2000, and "it would not agree to arbitrate disputes occurring after the expiration of the 1997 Agreement," though it would still resolve grievances through steps one and two of the grievance procedure, and would continue to arbitrate grievances that arose before February 14, 2000, grievances that arose after February 14, 2000 but concern rights that vested before that date, and grievances that concern "a disputed contractual provision which, under normal principles of contract interpretation, survives expiration of the remainder of the Agreement, if any."
In or about September 2000, Costco terminated Marcos Martinez, a bargaining unit member. Martinez submitted a grievance and the parties failed to resolve the grievance prior to the arbitral step. On September 29, 2000, Local 210 demanded that Costco enter into arbitration regarding Martinez's termination on the grounds that "there exists a duty to arbitrate for several reasons not the least of which is that the agreement was reopened and did not terminate." Local 210 also sent Costco a copy of its notice to FMCS seeking a panel of arbitrators.
On October 6, 2000, Costco wrote to FMCS asking that it reject Local 210's request for a panel of arbitrators or defer action on the request until Costco brought an action in court on the grounds that "[t]he last agreement to arbitrate expired on February 14, 2000," and "Mr. Martinez was discharged after the expiration of the collective bargaining agreement." FMCS responded, on October 17, 2000, that it would comply with Local 210's request for a panel of arbitrators, but was not, in so doing, deciding "that there is a contract in effect or that the parties are obligated to arbitrate the dispute in question," because a court or arbitrator should decide these issues. This action followed.
DISCUSSION
Summary judgment may not be granted unless the submissions of the parties, taken together, "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The substantive law governing the case will identify those issues that are material, and "only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1987). The moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination the Court must view all facts in the light most favorable to the nonmoving party. See Azrielli v. Cohen Law Offices, 21 F.3d 512, 517 (2d Cir. 1994). When the moving party has asserted facts showing that the nonmovant's claims cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on the "mere allegations or denials" of his pleadings. Rule 56(e), Fed.R.Civ.P. See also Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995).
Section 301 "provides without limitation that `[s]uits for violation of contracts between an employer and a labor organization . . . may be brought in any district court of the United States having jurisdiction of the parties.'" Aeronautical Indus. Dist. Lodge 91 of Intern. Ass'n of Machinists and Aerospace Workers, AFL-CIO v. United Technologies Corp., Pratt Whitney, 230 F.3d 569, 579 (2d Cir. 2000) (quoting 29 U.S.C. § 185(a)). This Court also has subject matter jurisdiction pursuant to Section 301 over cases, such as this one, in which the contract's existence or continued vitality is at issue. See Kozera v. Westchester-Fairfield Chapter of Nat. Elec. Contractors Ass'n, Inc., 909 F.2d 48, 52 (2d Cir. 1990); Messinger v. Building Contractors Ass'n, Inc., 703 F. Supp. 320, 322-23 (S.D.N.Y. 1989).
Under the FAA, a "written provision in any . . . contract . . . to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. A broad arbitration clause "creates a presumption of arbitrability, which is overcome only if `it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'" CPR (USA) Inc. v. Spray, 187 F.3d 245, 254 (2d Cir. 1999) (citation omitted). The presumption in favor of arbitration is particularly strong in the labor context. Abram Landau Real Estate v. Benova, 123 F.3d 69, 74 (2d Cir. 1999).
In deciding whether a dispute is subject to arbitration, a court must first determine whether the parties agreed to arbitrate and, if they did, whether the scope of the arbitration agreement includes the dispute at issue. Mehler v. The Terminix International Company, L.P., 205 F.3d 44, 47 (2d Cir. 2000). In this case, these issues are not contested: there is no dispute that the Agreement includes an arbitration clause that was valid before February 14, 2000, and that the termination of Marcos Martinez would constitute an arbitrable "grievance" under the terms of the Agreement had it arisen before February 14, 2000. The parties' dispute concerns, instead, whether the Agreement, and, thus, the arbitration clause, has expired. Costco asserts that Local 210's November 22, 1999 letter caused the Agreement to expire on February 14, 2000 and, therefore, Costco is under no obligation to arbitrate. Local 210 contends that the Agreement has not expired, but that, in any event, the issue of whether the Agreement expired should be decided by an arbitrator, not a court.
When parties dispute "whether an arbitration agreement has expired or been terminated," their dispute does not require an interpretation of the arbitration clause, but, instead, other clauses in the agreement. In these instances, whether a court or an arbitrator should interpret the clauses at issue depends upon "whether the parties have agreed that an arbitrator should decide that question." Abram Landau, 123 F.3d at 73. After considering this issue in depth, in Abram Landau, the Second Circuit concluded that:
[w]here the agreement contains a sweeping arbitration clause covering all disputes involving the meaning of terms and provisions of the agreement and where the arbitration clause does not expressly exclude disputes over the termination provision or the "evergreen" clause, disputes over these matters should be submitted to arbitration.
Id. See CPR, 187 F.3d at 256 (confirming applicability of Abram Landau test even after the Supreme Court decision in Litton Financial Printing v. NLRB, 501 U.S. 190 (1991)).
The arbitration clause in the Agreement is part of a grievance procedure used to resolve "any dispute or difference between the Employer and the Union concerning the application or interpretation of any provision in this Agreement." This definition is sufficiently "sweeping" to include the parties' dispute concerning the meaning of the Duration clause. See Mehler, 205 F.3d at 49; Abram Landau, 123 F.3d at 73. Although, as Costco points out, a provision in the Agreement provides that an arbitrator does not have the power to "[d]etermine any provisions to be incorporated in a new Agreement or an extension or renewal of this Agreement," this clause does not prevent an arbitrator from interpreting the existing Duration clause. The limitation applies instead to new provisions which may be incorporated into the Agreement at the time of an extension or renewal of the Agreement or when a new agreement is executed. Cf. Maryland Casualty Co. v. Realty Advisory Board, 107 F.3d 979, 983 (2d Cir. 1997) (because an agreement contained a specific provision excluding plaintiffs from coverage under the agreement, the court concluded plaintiffs' claims were not arbitrable).
The additional argument raised by Costco in opposition to Local 210's motion is similarly unavailing. Costco asserts that the holding in Abram Landau does not apply to this case because the Agreement does not have an "evergreen clause." The Agreement does, however, have a termination provision, and Abram Landau provides a standard for determining whether disputes concerning either a "termination provision" or an "evergreen clause" should be submitted to arbitration. Abram Landau, 123 F.3d at 73. See also Brotherhood of Teamsters and Auto Truck Drivers Local No. 70 v. Interstate Distributor Co., 832 F.2d 507, 508 (9th Cir. 1987) (language in a "standard termination clause" is similar to the Agreement's Duration clause). In light of the broad arbitration clause in the Agreement, and given the plaintiff's inability to identify any limitation on the arbitration clause that would prevent an arbitrator from interpreting the Duration clause, the issue of whether the Agreement has expired should be resolved by an arbitrator.
CONCLUSION
Defendant's motion for summary judgment against plaintiff's cause of action to stay arbitration and for its counterclaim compelling arbitration is granted. The Clerk of Court shall enter judgment for the defendant and close this case.
SO ORDERED: