Opinion
71 Civ. 2877 (RLC)
December 6, 2000
Carrie H. Cohen, Elisabeth C. Yap, Of Counsel, Eliot Spitzer, Attorney General of The State of New York, Attorney for Plaintiff the New York State Division of Human Rights, New York, New York.
Barbara Mehlman, Of Counsel, Michael D. Hess, Corporation Counsel of The City of New York, Attorney for Plaintiff the City of New York, New York.
Louis Graziano, Of Counsel, Katherine E. Bissell, Acting Regional Attorney, Equal Employment Opportunity Commission, New York District Office, Attorney for Plaintiff the Equal Employment Opportunity Commission, New York, New York.
Edmund P. D'Elia, Of Counsel, Edmund P. D'Elia, P.C., Attorneys for Defendant, New York, New York.
John O'B. Clarke, JR., Of Counsel, Highsaw, Mahoney Clarke, P.C., Attorneys for Defendant, Washington, D.C.
OPINION
The defendant Sheet Metal Workers' Local Union No. 28 ("Local 28") moves for a stay of the court's October 17, 2000 opinion and order pending appeal pursuant to Rule 62(c), F. R. Civ. P. The plaintiffs oppose this motion.
BACKGROUND
The background of this case has been documented in detail in previous opinions of this court, the Second Circuit and the United States Supreme Court with which familiarity is assumed. It is sufficient to note that the October 17, 2000 opinion was issued following an extensive hearing held during June, 2000, to determine Local 28's ability to pay the previously affirmed back pay award to nonwhite journeypersons who had been discriminated against by the union. The court directed the union to pay immediately $1 million into an escrow account. The union was also ordered to deposit an additional $1.6 million within six months and to contribute $900,000 per year, on the last day of each year. with the first payment being due on December 31, 2001. This annual deposit is to be made for a number of years which will be determined after the total amount of the back pay award is calculated through individual back pay hearings. These hearings will be conducted by the court.
DISCUSSION
"A party seeking a stay of a lower court's order bears a difficult burden." United States v. Private Sanitation Indus. Ass'n of Nassau/Suffolk, Inc., 44 F.3d 1082, 1084 (2d Cir. 1994). The factors a court is to consider in determining whether a stay under Rule 62(c) is appropriate are:
(1) whether the stay applicant has made a strong showing that he is likely to succeed on the merits;
(2) whether the applicant will be irreparably injured absent a stay;
(3) whether issuance of the stay will substantially injure the other parties interested in the proceeding; and
(4) where the public interest lies.
Hilton v. Braunskill, 481 U.S. 770, 776 (1987).
Analyzing the first factor, the court is unpersuaded that Local 28 is likely to succeed on the merits of its appeal. As a preliminary matter, the Second Circuit may dismiss the appeal as premature, since no final decision has been reached, see 28 U.S.C. § 1291, because the schedule of payments will be complete only after the back pay hearings are conducted. (Op. at 23). The court's determination is not likely to be appealable as an interlocutory order, see 28 U.S.C. § 1292, because such orders are generally only ripe for appeal where they will likely have "`serious, perhaps irreparable, consequences.'" Carson v. American Brands, Inc. 450 U.S. 79, 84 (1981) (citations omitted).See also H S Plumbing Supplies, Inc. v. BancAmerica Commercial Corp., 830 F.2d 4, 7 (2d Cir. 1987). The court's requirement that funds be placed in an escrow account (to preserve the money pending the final resolution of the back pay hearings) should not be subject to appeal under either § 1291 or § 1292 because the ultimate question of disbursement has not yet been resolved and the funds may still be transferred to either party. See Bailey v. Broder, 116 F.3d 465, 1997 WL 314732 (2d Cir. 1997) (holding that an order directing contested funds be placed in escrow pending the outcome of the litigation was not appealable under § 1292).Cf. General Motors Corp. v. Bigson Chemical Oil Corp., 786 F.2d 105, 108 (2d Cir. 1986) (holding that an order to seize property was unappealable because it might be modified by the district court and did not determine the parties' final rights but merely "sequestered [the property] pending trial").
Even assuming the Second Circuit does consider the merits of the union's appeal, it seems likely that the union will be unsuccessful. Local 28 complains that it was not on notice that the court was considering the creation of an escrow fund and that it should have been afforded a hearing on the appropriateness of such a remedy. (Def.'s Mem. Law In Supp. of Rule 62(c) Mot. at 3-5.) Although the court did not entertain debate on the propriety of an escrow account during the June, 2000 hearing, it explicitly indicated that the parties could raise the issue in their post-hearing memoranda. (Hr'g Tr. at 70.) Plaintiffs did raise this issue in their Post-hearing papers, and the union responded in kind to these arguments. (Def.'s Post-Hr'g Reply Mem. of Law at 13-15.) Local 28 cannot now argue that it had no opportunity to be heard on the matter. Furthermore, Local 28 waived this due process challenge by neglecting to raise it prior to the court's determination.
The defendant's memorandum of law in support of its Rule 62(c) motion will hereinafter be referred to as "Def.'s Mem."
"Hr'g Tr." refers to the transcript from the June, 2000 hearing.
Local 28 claims in footnote 14 of its post-hearing reply memorandum that: "Plaintiffs assume, erroneously, that they may make their request for an escrow requirement in their Memorandum, thus bypassing the burden of a motion (to which Local 28 could respond without the space limitation present here) or the need to support their request with evidence." (Def's Post-Hr'g Reply Mem. Of Law, at 13-14, n. 14.) The court is unaware of the "space limitation" to which Local 28 refers which would limit its vigorous argument of the matter in its post-hearing reply memorandum. Furthermore, the court gave the plaintiffs license during the June, 2000 hearing to raise the issue of an escrow account in its Post-hearing memoranda, thus obviating the need for a formal motion. (Hr'g Tr. at 70.)
Local 28 argues that the court's requirement that the union immediately deposit funds in an escrow account is inappropriate where the exact amount of the back pay liability is unknown. (Local 28's precise back pay liability will be calculated following the individual back pay hearings which are slated to come before the court circa May, 2001. (Nov. 13, 2000 Conference Tr. at 36.)) Because the court does have a reasonable and informed estimate of Local 28's back pay liability, this argument should also fail.
In its 1996 opinion, the Second Circuit noted "that the total wages lost by [Local 28's] nonwhite workers could easily exceed $12 million." Equal Employment Opportunity Commission ("EEOC") v. Local 638, et al., 81 F.3d 1162, 1177 (2d Cir. 1996). In that same decision, however, the Court held that a procedure must be devised to determine who had suffered at the hand of the union's discrimination because only those individuals were entitled to be compensated by Local 28. Id. The Court of Appeals noted that there may have been legitimate reasons that nonwhite journeypersons were working less than white journeypersons, such as poor job performance by the particular nonwhite worker or discrimination on the part of individual contractors (and not the union). Id. In response to the Second Circuit's direction, the court established a more refined procedure for determining who was eligible for back pay from the union. EEOC v. Local 638 . . . Local 28, et. al., 13 F. Supp.2d 453, 465-66 (S.D.N.Y. 1998) (Carter, J.).
While this new procedure may lower the earlier estimate of the union's potential $12 million liability, it is unlikely that the figure will be drastically reduced. First, there is no basis for believing that a significant number of nonwhite journeypersons, all of whom have the same basic training and qualifications as their white counterparts, are less competent to such an extent that it would justify them being employed for substantially fewer hours than whites. Second, discrimination on the part of contractors also should have only a marginal effect on Local 28's back pay liability because the court previously indicated that the union would be held "liable for the disparity in hours unless it can show that it has made diligent efforts to ensure equal work opportunities for all of its members." EEOC v. Local 638 . . . Local 28, et. al., 889 F. Supp. 642, 663 (S.D.N.Y. 1995) (Carter, J.) (acknowledging that Local 28 could be liable even if it was "not solely responsible for the continuing failure of nonwhites to find work as journeypersons"). See also EEOC v. Local 638, 81 F.3d at 1175. In light of the well documented discrimination by Local 28, see City of New York v. Local 28, 170 F.3d 279, 284-85 (2d Cir., 1999), it is doubtful that there will be many cases where the union made every diligent effort to aid nonwhites in securing employment only to find those efforts thwarted by the discrimination of a contractor.
Therefore, the figure of $12 million still provides guidance as an estimate of the union's liability. Furthermore, even being conservative, and assuming that the actual liability is half of the original estimate (i.e. $6 million), under the schedule of payments outlined by the court, the union would not meet that obligation for another five years, well after the exact back pay liability will be set.
The court now turns to Local 28's contention that it was improper for the court to order the union to restore dues and assessments to fund the $900,000 annual payments. The union argues that this demand denies Local 28 due process of law and that it ignores the restraints imposed upon the union leadership by the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. § 411(a)(3)(A).
In 1997 and 1998 the union lowered dues and assessments. (Op. at 17.) The court notes that these actions likely reduced the amount available to fund the back pay award which was ordered by the court in 1995. (While it is true that in 1996 the Second Circuit reversed in part this court's 1995 decision, it did not hold that a back pay remedy was inappropriate; rather it disapproved of the way in which the court structured the back pay remedy. EEOC v. Local 28, 81 F.3d at 1176-77. The Second Circuit later affirmed a refined back pay award. City of New York v. Local 28, 170 F.3d at 284-85.))
The union's argument that the court ignored the due process protections guaranteed by United Mine Workers of America v. Bagwell, 512 U.S. 821 (1994), is incorrect. The Bagwell Court explicitly limited its holding to a noncompensatory contempt context. Id. at 834 (noting that "[t]he issue before us accordingly is limited to whether these fines, despite their noncompensatory character, are coercive civil or criminal sanctions"). The Court observed that additional procedural protections are often appropriate in the context of a contempt order because of the fear that a judge may be vindictive and unfair when trying to coerce compliance with his orders. Id. at 831-32. Such concerns are not invoked to the same extent by a compensatory contempt order, however, because there, a judge is concerned with vindicating the interests of a third party rather than those of the court.
The court has already addressed Local 28's ability to restore dues and assessments. (Op. at 18-19). As for the union's LMRDA argument, an overriding purpose of the LMRDA is to curtail the power of union leadership to make unilateral decisions which substantially affect the membership. See Local No. 82, Furniture Piano Mov. v. Crowley, 467 U.S. 526, 536-37 (1984); King v. Randazzo, 346 F.2d 307, 309 (2d Cir. 1965). Restoring dues and assessments — as opposed to raising them — would not affect any obligation under the LMRDA because Local 28's membership is not being subjected to a burden to which it did not previously consent.
Contrary to Local 28's contention, the court is not required to find that the particular acts of lowering dues and assessments in 1997 and 1998 were contumacious before issuing an order which would lead to their restoration. All aspects of the court's requirement that funds be raised to finance the back pay award may incidentally affect conduct which was not found to be contumacious. The order is nevertheless permissible because once a party is found to be in contempt, a court has broad discretion in fashioning a remedy for that contempt. See Local 28 v. EEOC, 753 F.2d 1172, 1183 (2d Cir. 1985) (holding that "`[t]he measure of the court's power in civil contempt proceedings is determined by the requirements of full remedial relief'") (quoting McComb v. Jacksonville Paper Co., 336 U.S. 187, 193 (1949)).
The second factor to consider in determining if a stay is appropriate is whether the union will suffer irreparable harm if a stay is not issued. Toward this end, Local 28 focuses mostly on the economic harm which complying with the court's order will cause the union. The court has already analyzed at length the union's financial position and will not revisit that issue here except to address one point.
The union argues that the court's order is unreasonable because it fails to recognize that Local 28 will pay over $700,000 in the next year for a computer system which is necessary to comply with the court's prior orders. This argument, however, does not invalidate the court's analysis of Local 28's financial position. First, union officials previously admitted that the system would likely be paid for over time. (Op. at 9; Hr'g Tr. at 195, 494.) The affidavits filed along with this motion suggesting a different payment schedule are untimely because that evidence should have been raised during the hearing. Second, the court recognizes that despite Local 28's new desire to pay for the computer system at present, the union is equally free to purchase it on credit and thereby comply with the court's order.
The union now wishes to pay for the system in the next year to avoid "needless" financing costs. (Rule 62 Motion Ex. 2. Decl. of Fred Amato, ¶ 3.) This argument is suspicious considering the union's other financing decisions. In the past, Local 28, like most large businesses and organizations, has apparently sought financing for large purchases. Indeed, the union is currently carrying debt on its real estate holdings. (Hr'g Joint Ex. 2, ¶¶ 5-8).
The third factor to be considered before granting a stay is whether such a stay would substantially injure the other parties interested in the proceeding. The claimants to the back pay award have already waited far too long to be compensated for the union's discrimination. It will take time for the union to raise the funds necessary to honor its liability. As such, there is a very real interest in immediately beginning the process of raising money to pay the back pay award. Furthermore, all of the calculations regarding the union's ability to pay (e.g. current assets and real estate market conditions) were made based on variables as they presently exist. Delay may change those figures and invalidate the court's calculations.
It is also important that union leaders begin framing their business judgments (such as lowering dues and assessments in 1997 and 1998 and paying for the computer system in the next year) in a way which takes into account Local 28's back pay obligations.
The final factor which determines the appropriateness of a stay is where the public interest lies. The public interest in this case is in expeditiously compensating those against whom the union has discriminated while still taking every effort to ensure that the union remains viable so that it can represent all of its members. The court believes it has done this. A stay would only have the negative effect of delaying the relief which the court has carefully constructed, and perhaps making that relief impracticable because of changed circumstances.
CONCLUSION
For the foregoing reasons, Local 28's motion for a stay pursuant to Rule 62(c), F. R. Civ. P., is denied.
IT IS SO ORDERED.