VHS University Laboratories, Inc. v. Local 283 Teamsters

Filing 43

OPINION and ORDER Denying Plaintiff's 38 Motion to Remand to Arbitrators for Hearings on the Merits and Denying Motion for Stay of Enforcement Pending Appeal. Signed by District Judge Gerald E. Rosen. (JOwe)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
VHS UNIVERSITY LABORATORIES, INC.,
d/b/a DMC UNIVERSITY LABORATORIES,
Plaintiff,

No. 13-cv-13780

vs.

Hon. Gerald E. Rosen

LOCAL 283 OF THE INTERNATIONAL
BROTHERHOOD OF TEAMSTERS,
CHAUFFEURS, WAREHOUSEMEN, AND
HELPERS OF AMERICA,
Defendant.
____________________________________/
OPINION AND ORDER DENYING PLAINTIFF’S MOTION
TO REMAND TO ARBITRATORS FOR HEARINGS ON THE MERITS AND
DENYING MOTION FOR STAY OF ENFORCEMENT PENDING APPEAL
At a session of said Court, held in
the U.S. Courthouse, Detroit, Michigan
on February17, 2015
PRESENT: Honorable Gerald E. Rosen
United States District Chief Judge
I. INTRODUCTION
This matter is presently before the Court on the Plaintiff’s post-judgment “Motion
for Remand to Arbitrators for Hearings on the Merits and Motion for Stay of
Enforcement Pending Appeal and for Waiver of Supersedeas Bond.” Defendant has
responded and Plaintiff has replied. Having reviewed and considered Plaintiff’s Motion,

1

the parties’ briefs, and the entire record of this matter, the Court has determined that oral
argument is not necessary. Therefore, pursuant to Eastern District of Michigan Local
Rule 7.1(f)(2), this matter will be decided “on the briefs.”
II. BACKGROUND
This matter came before the Court on the Complaint of Plaintiff VHS University
Laboratories, Inc. d/b/a DMC University Laboratories (“DMC”) seeking an order to
vacate an arbitration award rendered by the Industrial Board Arbitration Committee (the
“Industrial Board”), the parties’ agreed-upon arbitrator to decide grievances at the third
step of their collectively-bargained grievance procedure. Specifically, DMC asked the
Court to vacate a decision rendered by the Industrial Board on August 19, 2013, with
respect to 24 grievances concerning holiday pay submitted by the Union on behalf of
DMC laboratory technicians, which stated:
Based upon the fact that the Company has failed to pay grievance fees re:
last month’s board hearing, and the Company further being notified per
said decisions as to when they had to pay, the grievance being read into the
record, the Company is held in default per Rule 10 of the Rules of
Procedure.
[Complaint, ¶ 6 and Ex. 2; see also First Amended Complaint, ¶ 6].1
1

In its First Amended Complaint. Plaintiff also asked the Court to vacate several
subsequent substantially similar arbitration awards. The subsequent awards at issue were
entered October 21, 2013, and January 13, 2014, and provided as follows:
Based on the Company’s non-payment of fees and dues, and their [sic]
continued refusal to pay said fees and dues for prior cases, the grievance
being read into the record, the Company is in default, and the grievance is
upheld for the relief requested.
2

On October 24, 2014, this Court entered an Order and Judgment enforcing the
default awards.
On November 5, 2014, Plaintiff filed the instant “Motion for Remand to
Arbitrators for Hearings on the Merits and Motion for Stay of Enforcement Pending
Appeal and for Waiver of Supersedeas Bond.”
III. DISCUSSION
A.

MOTION TO REMAND TO ARBITRATORS
In this motion, Plaintiff first asks the Court to issue an order remanding the

holiday pay dispute to “full and binding” arbitration, on the merits, as provided in Step 4
of the Grievance Procedure set forth in the CBA, and that it remand to arbitration before
the Industrial Board four individual non-holiday pay grievances that were never appealed
to the third step of the Grievance Procedure. DMC claims that because it has now paid
the arbitration fees for which it was defaulted by the Industrial Board, the Court should
order that the issues underlying the grievances now be decided by the arbitrators “on the
merits.” The Court lacks authority to grant the relief requested.
A court may only remand a case back to the arbitrator when the arbitration award

Id., ¶ 16.
This case having been called, and the Company still refusing to pay prior
grievance fees for cases it adjourned, with the advice and consent of the
Board, and the grievance being accepted on its fact, held in favor of the
Union for the relief requested by virtue of the Company being defaulted.
Id., ¶ 18.
3

is ambiguous. NCR Corp. v. Sac-Co, Inc., 43 F.3d 1076, 1081 (6th Cir. 1995). To justify
remand, however, the ambiguity must be in the award itself. United Steelworkers of
America Local 4839 v. New Idea Farm Equipment Corp., 917 F.2d 964, 968 (6th Cir.
1990). Where the award is not ambiguous, a district court’s remand to arbitration is not
proper. M & C Corp. v. Erwin Behr GmbH & Co., 143 F.3d 1033, 1039 (6th Cir. 1998);
see also United Steelworkers of America, Dist. 36, Local 8249 v. Adbill Management
Corp., 754 F.2d 138, 142 (3rd Cir. 1985) (holding district court’s remand improper
because award was unambiguous); Ottley v. Schwartzberg, 819 F.2d 373, 376 (2nd Cir.
1987) (district court remand order reversed where there was nothing ambiguous or
improper in the arbitrator’s award).
There is no ambiguity in the Industrial Board’s awards here. The awards found
the DMC in default, which resulted in the grievances being decided in the grievants’
favor. DMC attempts to make out a right to an order for remand claiming that holding
DMC in “default” is somehow ambiguous. There is nothing ambiguous about the
“default” holding.
The principal award, i.e., the award of August 19, 2013, specifically states “the
Company is held in default per Rule 10 of the Rules of Procedure.” [Complaint, ¶ 6 and
Ex. 2; First Amended Complaint, ¶ 6 (emphasis added).]. Rule 10 of the Industrial
Board’s Rules of Procedure states: “All annual dues and grievance fees must be paid
when billed. Failure to do this will deprive the Board of the ability to hear the case.”
(Emphasis added.) “The parties bargained for arbitration to settle disputes and were free
4

to set procedural rules for the arbitrator to follow if they so chose.” United Paperworkers
Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 39 108 S.Ct. 364, 371 (1987). The

meaning of the award, thus, is clear: It meant that the DMC could not present its
arguments on the merits to the Board because it had not complied with the procedural
prerequisite for doing so. This is not changed by Plaintiff’s payment of $3,600.00 for the
past-due grievance fees on November 4, 2014, i.e., 15 months after the Board issued its
decision. Although it may well have cured any default on a going forward basis for
purposes of the arbitration of any grievances after November 4, 2014, Plaintiff points to
no provision in the contract or the Industrial Board’s Rules of Procedure which would
erase a decision made more than a year earlier. Simply stated, there is no basis for this
Court to now order the matter remanded to the arbitrators for a decision on the merits.
Indeed, for the Court to do so would frustrate federal labor policy and subvert the arbitral
process for which the parties collectively bargained. Accordingly, Plaintiff’s Motion to
Remand will be DENIED.
B.

MOTION FOR STAY OF ENFORCEMENT PENDING APPEAL AND
FOR WAIVER OF SUPERSEDEAS BOND REQUIREMENT
Plaintiff next asks the Court to stay enforcement of its October 24, 2014 Order and

Judgment pending appeal. In determining whether to grant a stay, the Court must
consider the same four factors considered in deciding a motion for preliminary
injunction:
(1) the likelihood that the party seeking the stay will prevail on the merits
5

of the appeal;
(2) the likelihood that the moving party will be irreparably harmed absent a stay;
(3) the prospect that others will be harmed if the court grants the stay; and,
(4) the public interest in granting the stay.
Grutter v. Bollinger, 247 F.3d 631, 632 (6th Cir. 2001)(citing Michigan Coalition of
Radioactive Material Users, Inc. v. Griepentrog, 945 F.2d 150, 153 (6th Cir.1991)).
“These factors are not prerequisites that must be met, but are interrelated considerations
that must be balanced together.” Griepentrog, 945 F.2d at 153. Although the factors to
be considered are the same for both a preliminary injunction and a stay pending appeal,
the balancing process is not identical due to the different procedural posture in which
each judicial determination arises. Id. Because a motion for a stay pending appeal is
generally made after the district court has considered fully the merits of the underlying
action and issued judgment, “a movant seeking a stay pending review on the merits of a
district court’s judgment will have greater difficulty in demonstrating a likelihood of
success on the merits. In essence, a party seeking a stay must ordinarily demonstrate to a
reviewing court that there is a likelihood of reversal.” Id.
To justify the granting of a stay, however, a movant need not always establish a
high probability of success on the merits. Ohio ex. rel. Celebrezze, 812 F.2d 288, 290
(6th Cir.1987) (citing Cuomo v. United States Nuclear Regul. Comm’n, 772 F.2d 972,
974 (D.C. Cir.1985)). The probability of success that must be demonstrated is inversely

6

proportional to the amount of irreparable injury plaintiffs will suffer absent the stay. Id.
“Simply stated, more of one excuses less of the other.” Griepentrog, 945 F.2d at 153.
But, as the court in Griepentrog cautioned, “[t]his relationship, however, is not without
its limits; the movant is always required to demonstrate more than the mere “possibility”
of success on the merits.” Id. (citation omitted). Thus, even if a movant demonstrates
irreparable harm that decidedly outweighs any potential harm to the defendant if a stay is
granted, he is still required to show, at a minimum, “serious questions going to the
merits.” Id. (citation omitted).
In evaluating the harm to the moving party and others depending on whether or
not the stay is granted, the court looks to three factors: “(1) the substantiality of the injury
alleged; (2) the likelihood of its occurrence; and (3) the adequacy of the proof provided.”
Griepentrog, 945 F.2d at 154 (citing Ohio ex rel. Celebrezze, 812 F.2d at 290). The harm
alleged must be irreparable. Id. (quoting Sampson v. Murray, 415 U.S. 61, 90, 94 S.Ct.
937, 39 L.Ed.2d 166 (1974)). In addition the harm must be “both certain and immediate,
rather than speculative or theoretical.” Id. (citing Wisconsin Gas Co. v. Fed. Energy
Regul. Comm’n, 758 F.2d 669, 674 (D.C. Cir.1985)).
In seeking a stay in this case, Plaintiff does not even mention the four factors let
alone endeavor to demonstrate a strong likelihood of reversal on appeal or irreparable
harm. Plaintiff, however, argues that it is entitled to a stay as of right pursuant to Fed. R.
Civ. P. 62(d), and, therefore, the four-factor test is irrelevant.

7

Fed. R. Civ. P. 62(d) grants a plaintiff an automatic stay of execution or
enforcement of a judgment pending appeal upon the posting of a sufficient supersedeas
bond. Arban v. West Publishing Corp., 345 F.3d 390, 409 (6th Cir.2003) (citations
omitted) (finding that Fed. R. Civ. P. 62(d) “entitles a party who files a satisfactory
supersedeas bond to a stay of money judgment as a matter of right.”) Rule 62(d)
provides:
If an appeal is taken, the appellant may obtain a stay by supersedeas bond,
except in an action described in Rule 62(a)(1) or (2). The bond may be
given upon or after filing the notice of appeal or after obtaining the order
allowing the appeal. The stay takes effect when the court approves the
bond.
Fed. R. Civ. P. 62(d).
Rule 62(d) gives an appellant a right to a stay pending appeal, provided the
appellant posts a “satisfactory supersedeas bond.” Arban v. West Pub. Corp., supra. That
is, in cases where appellant posts a bond, the district court does not have discretion to
deny the stay. Dubuc v. Green Oak Twp., No. 08–13727, 2010 WL 3908616, at *2 (E.D.
Mich. Oct.1, 2010). The rationale is that the appellant is insured by the stay against
inability to recover should he prevail on appeal, and in exchange the appellee receives the
bond as security so that the appellant may not otherwise dispose of funds that could
satisfy the judgment. Hamlin v. Charter Twp. of Flint, 181 F.R.D. 348, 351 (E.D.
Mich.1998). As this Court explained in Hamlin:
The framework of Rule 62(d) represents a balancing of both parties’
interests, in that it preserves the status quo while also protecting the
8

appellee’s rights. Poplar Grove Planting and Refining Co., Inc. v. Bache
Halsey Stuart, Inc., 600 F.2d 1189, 1190 (5th Cir.1979). Rule 62(d)
permits an appellant to obtain a stay “to avoid the risk of satisfying the
judgment only to find that restitution is impossible after reversal on
appeal.” Poplar Grove, 600 F.2d at 1191. However, to preserve this right,
the appellant must forego the use of the bond money during the appeal
period.
For the appellee, Rule 62(d) effectively deprives him of his right to
enforce a valid judgment immediately. Consequently, the appellant is
required to post the bond to provide both insurance and compensation to
the appellee. The supersedeas bond protects the non-appealing party “from
the risk of a later uncollectible judgment” and also “provides compensation
for those injuries which can be said to be the natural and proximate result of
the stay.” NLRB v. Westphal, 859 F.2d 818, 819 (9th Cir.1988), Moore v.
Townsend, 577 F.2d 424, 427 (7th Cir.1978) (citing Weiner v. 222 East
Chestnut St. Corp., 303 F.2d 630, 634 (7th Cir.1962)). Therefore, Rule
62(d) establishes not only the appellant’s right to a stay, but also the
appellee’s right to have a bond posted. Because of Rule 62(d)’s dual
protective role, a full supersedeas bond should almost always be required.
Poplar Grove Planting and Refining Co., Inc. v. Bache Halsey Stuart, Inc.,
600 F.2d 1189, 1190 (5th Cir. 1979).
181 F.R.D. at 351.
Notwithstanding the “mandatory language” of Rule 62(d), courts have construed
the bond requirement to be discretionary. Id. at 353. While,“[t]he courts generally
require that the amount of the bond include the full amount owed under the award, and
anticipated appeal costs, post-judgment interest, and damages for delay caused by the
appeal,” EB-Bran Prods., Inc. v. Warner Elektra Atlantic, Inc., No. 03–75149, 2006 WL
1851010, at *3 (E.D. Mich. July 5, 2006) (citation omitted), it is within the district
court’s discretion to reduce the amount of the bond, substitute an alternate form of
security for the bond, or dispose of the bond requirement entirely. Id.; Hopfinger v.
9

Kidder Int’l, Inc., 827 F. Supp. 1444, 1452-53 (W.D. Mo.1993); see also Federal
Prescription Serv., Inc. v. Am. Pharm. Ass’n, 636 F.2d 755, 758-59 (D.C. Cir.1980).
However, “[b]ecause of Rule 62(d)’s dual protective role, a full supersedeas bond should
almost always be required.” Hamlin, 181 F.R.D. at 351.
Plaintiff here, however, asks for a waiver of the bond requirement.
In Arban v. West Publishing Co., the Sixth Circuit found no abuse of discretion on
the part of the district court that waived the Rule 62(d) bond requirement where the
evidence of record made it clear that the appellant would be able to satisfy the judgment.
345 F.3d at 409. In reaching this conclusion, the Arban court was persuaded by the
Seventh Circuit’s decision in Olympia Equipment Leasing Co. v. Western Union Tel. Co.,
786 F.2d 784, 796 (7th Cir. 1986), in which the court held that “an inflexible requirement
of a bond would be inappropriate . . . where the defendant’s ability to pay the judgment is
so plain that the cost of the bond would be a waste of money.” Id.
In the Olympia case, the plaintiffs obtained a $36 million antitrust judgment
against Western Union Telegraph Company, the principal subsidiary of Western Union
Company. Western Union Telegraph wanted a stay of execution of judgment pending
appeal and, though it acknowledged that ordinarily to get a stay it would have had to post
a supersedeas bond for the full amount of the judgment, it urged the district judge to
allow alternative security, on the ground that it could not post a $36 million bond. The
district court noted that although Western Union Telegraph is a large company, with total

10

assets nominally worth $2 billion, it was financially distressed and illiquid. It could get a
bond only by persuading a bank to issue a letter of credit to the bonding company, and it
contended that no bank would do this. The district judge, therefore, allowed alternative
security to be posted, consisting of a pledge of $10 million in cash, $10 million in
accounts receivables, and a security interest, which Western Union Telegraph represented
to be worth about $70 million, in some of the company’s physical assets. The appellate
court found no abuse of discretion on the district court’s part in allowing this alternate
security in lieu of a bond under the “extraordinary circumstances” of the case.
Plaintiff contends that the Court should waive the bond requirement in this case
because the DMC is now owned by Tenet Healthcare, a publicly traded company that “is
profitable and has billions of dollars of revenue,”and this dispute involves only “small
amounts of money.” Therefore, Plaintiff argues that the cost of the bond would be a
“waste of money.” [See Plaintiff’s Motion pp. 9-10].
To be sure, a bond for the full amount “can in some circumstances be irrational,
unnecessary, and self-defeating.” Texaco Inc. v. Pennzoil Co., 784 F.2d 1133, 1154 (2d
Cir.1986), rev’d on other grounds, 481 U.S. 1, 107 S.Ct. 1519, 95 L.Ed.2d 1 (1987).
However, as the court observed in Dubuc v. Green Oak Twp., “Texaco is obviously a
unique case, as the $13 billion bond at issue there which when enforced would have had
severe financial and business implications for the company, dwarfs the $15,000 sanction
at issue in this case.” 2010 WL 3908616, at *1 (citing Texaco, 381 U.S. at 4-5.). There

11

is no request for, nor is the Court contemplating, such an outrageously disparate bond in
this case.
When, as in this case, an appellant claims its ability to pay the judgment is so
obvious that posting a bond would simply be a waste of money, courts have generally
required the appellant to present “a financially secure plan for maintaining that same
degree of solvency during the period of an appeal.” Hamlin, supra, 181 F.R.D. at 353
(quoting Poplar Grove Planting and Refining, Co., v. Bache Halsey Stuart, Inc., 600 F.2d
1189, 1190 (5th Cir.1979)). However, because Rule 62(d) expressly dictates that a
supersedeas bond must be posted, only in “extraordinary circumstances” should anything
less be required. Hamlin, 181 F.R.D. at 353 (citing C. Albert Sauter Co. v. Richard S.
Sauter Co., 368 F. Supp. 501, 520 (E.D. Pa.1973)). Clearly, the “extraordinary
circumstances” that existed in the Texaco and Olympia cases are not present here.
As this Court observed in refusing to waive the bond requirement in Hamlin,
[E]ven if [the appellants] demonstrated the existence of funds in excess of
the judgment, waiving the bond on this factor alone ignores the dual
protections Rule 62(d) is designed to provide the appellee. Waiving the
bond requirement would deprive Mr. Hamlin of his right to execute the
judgment immediately, without providing him the protection to which he is
entitled. Rule 62(d)’s bond requirement serves a substantial function in
balancing the parties’ interest and is not a mere formality that should be
waived simply because the losing party has adequate funds to satisfy the
judgment. Ideally, losing parties will always have sufficient funds to pay
the award, but if this fact alone were enough to waive the bond
requirement, the bond requirement would essentially be a nullity. . . . In
light of the protection and compensation that the bond would provide to
Mr. Hamlin, the cost of the bond clearly would not be without benefits to
balance the cost of posting it.
12

Id. at 353-54.
For all of the foregoing reasons, the Court finds that Plaintiff here has not made a
sufficient showing of extraordinary circumstances that would justify waiver of the bond
requirement in this case.
Rule 62(d), however, in no way necessarily implies that filing a bond is the only
way to obtain a stay. “It speaks only to stays granted as a matter of right, it does not
speak to stays granted by the court in accordance with its discretion.” Dubuc v. Green
Oak Twp., 2010 WL 3908616 at *2 (citing Federal Prescription Serv., Inc. v. Am.
Pharm. Ass’n, 636 F.2d 755, 758-59 (D.C. Cir.1980)). However, as indicated above,
Plaintiff has made no effort whatsoever to demonstrate that the four-factor balancing test
for the granting of a discretionary stay without bond is met.
CONCLUSION
For all of the foregoing reasons,
IT IS ORDERED that Plaintiff’s Motion for Remand to Arbitrators for Hearings
on the Merits is DENIED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Stay of Enforcement
Pending Appeal and for Waiver of Supersedeas Bond is GRANTED, in part, and
DENIED, in part. The Motion is GRANTED in that the Court will issue a stay upon
approval of a supersedeas bond for the full amount owed under the award, and
anticipated appeal costs, post-judgment interest, and damages for delay caused by the

13

appeal. It is DENIED in that the Court will not waive the bond requirement.
SO ORDERED.

s/Gerald E. Rosen
Chief Judge, United States District Court
Dated: February 17, 2015
I hereby certify that a copy of the foregoing document was served upon the parties and/or
counsel of record on February 17, 2015, by electronic and/or ordinary mail.
s/Julie Owens
Case Manager, [phone]

14