Lockport Memorial Hospital v. United Prof. Nurses Assoc

Full title: LOCKPORT MEMORIAL HOSPITAL, Plaintiff, v. UNITED PROFESSIONAL NURSES…

Court: United States District Court, W.D. New York

Date published: Jun 25, 2004

02-CV-0770A(Sr) (W.D.N.Y. Jun. 25, 2004)

Opinion

02-CV-0770A(Sr).

June 25, 2004

REPORT, RECOMMENDATION AND ORDER

KEN SCHROEDER, Magistrate Judge

This matter was referred to the undersigned by the Hon. Richard J. Arcara, in accordance with 28 U.S.C. § 636(b), for all pretrial matters and to hear and report upon dispositive motions. Dkt. #4. Currently before the Court is Lockport Memorial Hospital's ("Hospital's"), motion for summary judgment staying arbitration and dismissing the United Professional Nurses Association's ("UPNA's"), counterclaim to compel arbitration (Dkt. #10), and the UPNA's motion to: (1) dismiss the Hospital's complaint for declaratory judgment; and (2) compel arbitration. Dkt. #13.¹

1 UPNA also moved to amend its Answer to correct its admission that the CBA appended to the Hospital's Petition is accurate. Dkt. #13. Defense counsel averred that he "was not aware at the time of the answer that there was a dispute as to the actual contents of Section 9.03 of the CBA." Dkt. #15, ¶ 4. The Hospital opposed the motion to amend because the UPNA had not attached a proposed amended answer to its motion. Dkt. #19, ¶ 4. At oral argument of the pending motions, this Court denied the UPNA's motion to amend the answer without prejudice to the UPNA's right to renew.

BACKGROUND ²

2 Unless otherwise noted, the facts presented, which are generally not in dispute, are taken from the Hospital's Statement of Undisputed Material Facts and the Affidavit of UPNA's Staff and Program Director. Dkt. ##12,16.

On July 5, 2001, following unsuccessful negotiations on a collective bargaining agreement ("CBA"), for the period of April 1, 2001 through March 31, 2005, UPNA members engaged in a strike. On or about August 7-8, 2001, the parties reached agreement on a new CBA and a "Recall Procedure" agreement for recall of striking members based on seniority as the census of hospital patients reached certain levels.

The UPNA alleges that on or about August 15, 2001, the census on 2 North reached 25 patients, which, pursuant to the Recall Procedure, required the Hospital to open 2 Center and recall nurses to that unit. On or about August 17, 2001, the UPNA submitted a group grievance to the Director of Human Resources with respect to the Hospital's failure to open 2 Center. Pursuant to past practice with respect to group grievances, the parties commenced the grievance process at Step 2, which required a meeting between UPNA and the Hospital within 5 work days of the Hospital's receipt of the grievance. The parties extended this time period by written agreement and met with respect to the grievance on August 29, 2001. The Hospital denied the grievance on September 4, 2001.

By letter dated July 8, 2002, the UPNA advised the Hospital of its intent to submit this grievance to arbitration. By Notice of Petition verified October 3, 2002, the Hospital applied to the New York State Supreme Court, County of Niagara, for a Judgment, pursuant to section 7503(b) New York's Civil Practice Law Rules, staying the arbitration of the grievance between the Hospital and the UPNA on the grounds that there is no agreement to arbitrate the subject matter of UPNA's grievance and, alternatively, that the UPNA failed to comply with a condition precedent to arbitration and, as a result, no dispute remains to be arbitrated. Dkt. #1. The UPNA removed the action to this Court pursuant to section 301 of the Labor Management Relations Act of 1947. See 29 U.S.C. § 185(a); 28 U.S.C. § 1441(b).

DISCUSSION AND ANALYSIS

Arbitrability of Grievance

The Hospital argues that there is no agreement to arbitrate disputes arising from the Recall Procedure. Dkt. #11. Specifically, the Hospital argues that the Recall Procedure does not contain an arbitration provision, does not incorporate or reference the arbitration provision contained in the CBA, is not incorporated into the CBA either by reference or as an appendix, and does not amend or supplement the CBA. Dkt. ##11, 18.

The UPNA responds that the arbitrator must determine whether the Recall Procedure is an amendment or supplement to the CBA which would be subject to arbitration as provided in the CBA. Dkt. #14, pp. 7-8. The UPNA states that the fact that the parties drafted the Recall Procedure during collective negotiations and ratified both the Recall Procedure and the CBA at the same time clearly indicates that the parties intended the Recall Procedure to be considered an amendment or supplement to the CBA. Dkt. #14, p. 8. The UPNA also notes that the Hospital followed the grievance procedure set forth in the CBA with respect to the UPNA's complaints about the implementation of the Recall Procedure. Dkt. #14, p. 9.

As the United States Supreme Court long ago ruled, a grievance-arbitration procedure in a collective bargaining agreement is enforceable pursuant to § 301 of the Labor Management Relations Act ( 29 U.S.C. § 185). Textile Workers Union v. Lincoln Mills, 353 U.S. 448 (1957). Moreover, there is no question that this Court has jurisdiction to decide the initial issue of arbitrability as raised by the parties herein.

The Congress . . . has by § 301 of the LMRA, assigned the courts the duty of determining whether the reluctant party has breached his promise to arbitrate. For arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit. Yet, to be consistent with congressional policy in favor of settlement of disputes by the parties through the machinery of arbitration, the judicial inquiry under § 301 must be strictly confined to the question whether the reluctant party did agree to arbitrate the grievance or did agree to give the arbitrator power to make the award he made. An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.

United Steelworkers v. Warrior Gulf Navigation Company, 363 U.S. 574, 582-83 (1960) (emphasis added). Thus,

The function of the court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator. In these circumstances the moving party should not be deprived of the arbitrator's judgment, when it was his judgment and all that it connotes that was bargained for.

United Steelworkers v. American Mfg. Co., 363 U.S. 564, 567-68 (1960). This principle was strongly reiterated by the United States Supreme Court in ATT Technologies, Inc. v. Communications Workers of America, wherein it stated:

It is the court's duty to interpret the agreement and to determine whether the parties intended to arbitrate grievances concerning [issues such as is presented herein.] If the court determines that the agreement so provides, then it is for the arbitrator to determine the relative merits of the parties' substantive interpretations of the agreement. It [is] for the court, not the arbitrator, to decide in the first instance whether the dispute was to be resolved through arbitration.

475 U.S. 643, 651 (1986). Since "arbitration is simply a matter of contract between the parties," courts "should apply ordinary state-law principles that govern formation of contracts" when deciding whether the parties agreed to arbitrate a certain matter. First Options of Chicago v. Kaplan, 514 U.S. 938, 943-44 (1995).

In the instant case, the Grievance Procedure contained within the CBA provides that "[g]reivances are limited to matters of interpretation or alleged violation of specific provisions of this Agreement." Dkt. #1, Exh. A, ¶ 13.01.

"Agreement" means this Agreement and each appendix, schedule amendment or supplement thereto.

Dkt. #1, Exh. A, ¶ 15.01(A). Although there are three appendices attached to the CBA: Appendix A (Wages); Appendix B (Census Monitoring); and Appendix C (Cross-Training Program Guidelines), the Recall Procedure was not denominated as an appendix to the CBA. Dkt. #1, Exh. A. Neither the CBA or the Recall Procedure references or incorporates the other. The Recall Procedure does not contain any language to suggest the availability of the CBA's grievance procedure for enforcement. Moreover, the Recall Procedure does not attempt to amend or supplement any terms of the CBA, but is a distinct agreement addressing a unique situation, to wit, the return of striking workers.

If a dispute arises under a collateral, or separate, side agreement connected with the principal contract which contains the arbitration clause, "arbitration of that dispute cannot be compelled merely based upon the existence of an arbitration clause in the main agreement." Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 64 (2d Cir. 1983). In Rochdale Village, Inc. v. Public Serv. Emps. Union, for example, the Court of Appeals for the Second Circuit determined that if the parties had entered into a separate agreement that the CBA would terminate as of October 31, that agreement would be collateral to the CBA and not subject to the CBA's arbitration provision, which required arbitration of "any and all disputes hereunder." 605 F.2d 1290, 1296-97 (2d Cir. 1979). Similarly, the Hospital's alleged failure to abide by the Recall Procedure for striking workers is not a violation of specific provisions of the CBA and should not, therefore, be subject to the Grievance Procedure contained within the CBA.

The instant situation is akin to that in Cendant Corp. v. Forbes, where the parties executed an agreement in which Forbes, the former Chairman of the Board of Cendant Corporation, would "remit to the Company any overcharge the Audit Committee determines exists with respect to my expense items as discussed at the Special Board Meeting on July 28, 1998," and then sought to arbitrate a dispute as to the overcharge determination pursuant to a provision in his Employment Agreement which required that "[a]ny controvery, dispute or claim arising out of or relating to this Agreement or the breach hereof which cannot be settled by mutual agreement . . . shall be finally settled by binding arbitration." 70 F. Supp.2d 339, 341 (S.D.N.Y. 1999), aff'd 205 F.3d 1322 (2d Cir. 2000). The district court determined that the dispute

does not arise under the Employment Agreement. Rather, it arises under the Audit Letter. That letter is an independently-negotiated, separately-executed contract that nowhere refers to the Employment Agreement and deals with a subject not directly covered by the Employment Agreement: the remittance of improperly reimbursed expenses. Consequently, it is not subject to the arbitration clause of the Employment Agreement.

Id. at 342. Similarly, the dispute at issue in the instant case does not emanate from the provisions of the CBA, but from "an independently-negotiated, separately-executed contract that nowhere refers to the [CBA] and deals with a subject not directly covered by the [CBA]." Id.

Accordingly, it is recommended that the Hospital's motion for summary judgment staying the arbitration and dismissing the UPNA's counterclaim to compel arbitration be granted and that the UPNA's motion to dismiss the Hospital's complaint and to compel arbitration be denied on the grounds that an alleged violation of the Recall Procedure is outside of the scope of the parties' agreement to arbitrate.

Timeliness of Notice of Arbitration

The Hospital argues that even if this Court finds that the Recall Procedure is subject to the grievance procedure contained in the CBA, the grievance is not arbitrable because the UPNA failed to demand arbitration in a timely fashion. Dkt. #11, pp. 7-12. The Hospital denies any past practice of excusing compliance with the deadlines contained in the greivance process. Dkt. #20, ¶ 2.

The UPNA responds that compliance with the procedural prerequisites to arbitration should be assessed by the arbitrator, not the court. Dkt. #14, pp. 10-12. Specifically, the UPNA argues that the arbitrator should decide whether the parties have waived strict enforcement of the time limitations contained in the grievance process through past practice. Dkt. #14, p. 12.

"Once it is determined . . . that the parties are obligated to submit the subject matter of a dispute to arbitration, `procedural' questions which grow out of the dispute and bear on its final disposition should be left to the arbitrator." John Wiley Sons, Inc. v. Livingston, 376 U.S. 543, 557 (1964). The rationale for this rule is that "[q]uestions concerning the procedural prerequisites to arbitration do not arise in a vacuum; they develop in the context of an actual dispute about the rights of the parties to the contract or those covered by it." Id. at 556.

"Doubt whether grievance procedures or some part of them apply to a particular dispute, whether such procedures have been followed or excused, or whether the unexcused failure to follow them avoids the duty to arbitrate cannot ordinarily be answered without consideration of the merits of the dispute which is presented for arbitration." Id. at 557. Thus, "an allegation of waiver, delay, or a like defense to arbitrability," absent express contractual language to the contrary, should be decided by the arbitrator. Moses H. Cone Hosp. v. Mercury Construction, 460 U.S. 1, 25 (1983). The Supreme Court of the United States has recently determined that the arbitrator, not the court, should interpret and apply an arbitration provision stating that no dispute shall be eligible for submission for arbitration where six years have elapsed from the occurrence or event giving rise to the dispute because "such a dispute seems an `aspec[t] of the [controversy] which called the grievance procedures into play.'" Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2000), quoting John Wiley, 376 U.S. at 559.

The Grievance Procedure set forth in the CBA provides that a "grievance must be filed within five (5) of grievant's workdays after the alleged violation has occurred." Dkt. #1, Exh. 1A, ¶ 13.01. The procedure further provides that the Director of Human Resources must respond to the grievance "within 5 work days after" either the receipt of the grievance or the meeting, if held, between the Director of Human Resources and the UPNA representative. Dkt. #1, Exh. 1A, ¶ 13.02.

If the grievance remains unresolved after the answer received from the Director of Human Resources, the [UPNA] will notify the Director of Human Resources in writing of an intent to arbitrate. Such written notice must be given within ten (10) workdays following receipt of the Step 2 Answer.

Dkt. #1, Exh. 1A, ¶ 13.02. "Disposition of a grievance in accordance with [these] provisions . . . will be final and binding upon the Hospital, the Association, and the employee(s) involved." Dkt. #1, Exh. 1A, ¶ 13.02. In addition, the grievance procedures provide as follows:

13.03 Limitations. Grievances which are not processed to the next step within the time limitations proceeded [sic] in Steps 1 or 2 will be deemed settled on the basis of the answer given in Step 1 or 2. . . .

At any Step, if either party cannot present the grievance to the next Step in accordance with the established time limitations, these limitations may be reasonably extended by written agreement.

Dkt. #1, Exh. 1A, ¶ 13.03.

The determination as to whether the grievance was deemed settled when the UPNA failed to commence its grievance within five work days of the lump sum payment or to demand arbitration within ten work days following the Hospital's written response the grievance; whether the parties' past practices waived these time limits; or whether the deadlines should be excused by any informal attempts to resolve these and other disputes requires interpretation of specific provisions of the CBA. The parties specifically contracted to permit an arbitrator to resolve "matters of interpretation or alleged violation of specific provisions." Thus, whether the procedures for advancing a grievance to arbitration have been complied with is a determination to be made by the arbitrator, not the court. Accordingly, in the event that the District Judge does not accept the recommendation to grant the Hospital's motion for summary judgment staying arbitration on the grounds that the Recall Procedure is not subject to an agreement to arbitrate, it is recommended that the Court decline to consider whether the procedural prerequisites to arbitration have been met or excused, as that question would be within the province of the arbitrator.

CONCLUSION

Based on the foregoing, it is hereby recommended that the Hospital's motion for summary judgment staying arbitration and dismissing the UPNA's counterclaim to compel arbitration (Dkt. #10), be GRANTED, and that the UPNA's motion to dismiss the Hospital's petition to stay arbitration and to compel arbitration (Dkt. #13), be DENIED.

Pursuant to 28 U.S.C. § 636(b)(1), it is hereby

ORDERED, that this Report, Recommendation and Order be filed with the Clerk of the Court.

ANY OBJECTIONS to this Report, Recommendation and Order must be filed with the Clerk of this Court within ten (10) days after receipt of a copy of this Report, Recommendation and Order in accordance with the above statute, Fed.R.Civ.P. 72(b) and Local Rule 72.3(a)(3).

The district judge will ordinarily refuse to consider de novo arguments, case law and/or evidentiary material which could have been, but were not presented to the magistrate judge in the first instance. See, e.g., Patterson-Leitch Co. v. Massachusetts Mun. Wholesale Electric Co., 840 F.2d 985 (1st Cir. 1988).

Failure to file objections within the specified time or to request an extension of such time waives the right to appeal the District Court's Order. Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L. Ed.2d 435 (1985); Wesolek v. Canadair Ltd., 838 F.2d 55 (2d Cir. 1988).

The parties are reminded that, pursuant to Rule 72.3(a)(3) of the Local Rules for the Western District of New York, "written objections shall specifically identify the portions of the proposed findings and recommendations to which objection is made and the basis for such objection and shall be supported by legal authority." Failure to comply with the provisions of Rule 72.3(a)(3), or with the similar provisions of Rule 72.3(a)(2) (concerning objections to a Magistrate Judge's Report, Recommendation and Order), may result in the District Judge's refusal to consider the objection.

The Clerk is hereby directed to send a copy of this Report, Recommendation and Order to the attorneys for the parties.