AFSCME Council 25 and its affiliated Locals 140, 181 and 3695 v. Sodexo Management, Inc. et al

Filing 27

MEMORANDUM AND ORDER DENYING PLAINTIFFS MOTION TO ENFORCE ARBITRATION AWARD (Doc. 22). Signed by District Judge Avern Cohn. (MVer)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

AFSCME COUNCIL 25, et al.,
Plaintiffs,
Case No. 15-12799
v.
HON. AVERN COHN
THE DETROIT MEDICAL CENTER, and
SODEXO MANAGEMENT, INC.,
Defendants.
_________________________________/
MEMORANDUM AND ORDER DENYING PLAINTIFFS’ MOTION TO ENFORCE
ARBITRATION AWARD (Doc. 22)1
I. Introduction
This is a labor case. As will be explained, the dispute began in 2014 when
plaintiffs, AFSCME Council 25 and its affiliated Locals 140, 180 and 3695 (collectively, the
Union) sued defendants the Detroit Medical Center and various hospitals within the
Detroit Medical Center (collectively, the DMC). See AFSCME v. The Detroit Medical
Center, 14-13770 (the 2014 case) which was assigned to the undersigned. The Union
claimed that the DMC’s decision to “outsource” housekeeping bargaining unit positions
within the DMC by entering an agreement with a third-party, Sodexo, to perform the
housekeeping functions violated the Joint Operating Agreement (JOA). Eventually, the
case proceeded to arbitration. The Union prevailed in that the arbitrator found that the
DMC’s decision to outsource violated the successorship provision of the JOA. The Court

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Upon review of the parties’ papers, the Court deems this matter appropriate for
decision without oral argument. See Fed. R. Civ. P. 78(b); E.D. Mich. LR 7.1(f)(2).

later dismissed the 2014 case without prejudice.
In 2015, the Union again sued the DMC2 and Sodexo, contending that they have
not complied with the arbitration decision. Before the Court is the Union’s motion to
enforce the arbitration decision. (Doc. 22). For the reasons that follow, the motion will be
denied.
II. Background
A.
In the 2014 case, the Union sued the DMC over the proposed outsourcing and
sought an injunction, commonly known as a reverse “Boys' Markets ”3 injunction. The
Union sought to preserve the status quo pending arbitration. The DMC agreed to
preserve the status quo, i.e. not take any action with respect to the housekeeping
positions and Sodexo, pending arbitration. Thus, no injunction was necessary. Following
the DMC’s agreement to preserve the status quo, the dispute proceeded to arbitration on
a expedited basis. On November 20, 2014, the arbitrator concluded that the DMC’s
proposed outsourcing violated the successorship provision in the JOA. The arbitrator also
agreed to “retain jurisdiction in the event there are questions with regard to the
interpretation or implementation of this award.” Although that would have seemingly
ended the matter, it did not.
After the arbitration decision, the Union filed a First Amended Complaint (Doc. 34).
The Union described the basis for seeking court intervention as follows:

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The Union later dismissed the DMC with prejudice. (Doc. 16).

3

The Boys Markets v. Retail Clerks Union, 398 U.S. 235 (1970).

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The Plaintiffs are seeking injunctive relief to enforce an arbitration decision
and to prevent the DMC from entering into a contract with third parties without
requiring that they abide by the successorship provisions of the collective
bargaining agreement between [the Union and the DMC]. The issue arises out of
a decision by DMC to transfer the custodial operations of the DMC hospitals to a
third party, without requiring the successor employer to abide by the [Joint
Operating Agreement].
. . . [The Union asks] that the arbitrator’s opinion be confirmed.
(Doc. 34 in the 2014 case at p. 2).
At some point thereafter, the DMC and Sodexo entered into an agreement in which
Sodexo agreed to be bound as a successor to the JOA.
The DMC moved the dismiss on the grounds that the First Amended Complaint
failed to raise plausible claims for relief because the DMC has complied with the
arbitration award and Sodexo has agreed to be bound by the Joint Operating Agreement.
Alternatively, the DMC argued says to the extent there is a viable dispute between the
parties, the matter should be brought before the arbitrator. The Court agreed with the
DMC and entered an order dismissing the case without prejudice “to the Union’s right to
move to reinstate the case for good cause shown.” (Doc. 41 in the 2014 case at p. 2).
B.
Instead of moving to reinstate the 2014 case, the Union filed this new action
against the DMC and Sodexo. The case was reassigned to the undersigned as a
companion to the 2014 case. The complaint seeks injunctive and monetary relief and is
in two counts, labeled by the Union as follows:
Count I - Action to Enforce Arbitration Award
Count II - Breach of Contract
The Union has now moved to enforce the arbitration decision. Essentially, the Union says
that Sodexo has not complied with the arbitration decision because it is not providing a

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401(k) retirement plan equal to the plan that the employees enjoyed with the DMC and,
for over a year, the employees have not been able to make contributions to a 401(k) plan.
The Union asks that “custodian retirement benefits be fully restored to what existed under
the AFSCME-Sodexo [sic] contract.”
III. Discussion
Sodexo says that the Union’s motion should be denied because (1) the arbitration
decision did not relate to either Sodexo or any benefits issue, (2) the Union’s remedy lies
in the contractual grievance procedure, (3) the Union is not a party to the DMC-Sodexo
contract nor is it a third party beneficiary, (4) the motion is premature. Sodexo’s position
is well-taken.
A.
First, the relief the Union seeks is not within the confines of the arbitration award.
The Union says that the arbitration award requires Sodexo to immediately set up
“identical benefits.” (Doc. 1, p. 2). Not so. Sodexo was not a party in the arbitration, and
the only issue decided by the arbitrator was “whether the outsourcing planned by the
Employer [DMC] violated Article XXVII [successorship].” (Sodexo’s Ex. A, arbitration
decision, at p. 3). The arbitrator then concluded that “outsourcing of Environmental
Services work announced by DMC violates Article XXVII of the Joint Operating
Agreement.” (Ex. A at p. 4). Nothing in the arbitration decision mandates that Sodexo,
who was not a party, provide “identical” or any 401(k) benefits. The only issue decided
was whether the DMC could outsource. The arbitrator said no. The consequence of the
decision, however, was that Sodexo, in wanting to keep its relationship with the DMC,
subsequently entered into an agreement with the DMC in which Sodexo agreed to be

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bound by the JOA. The agreement between the DMC and Sodexo is separate from the
arbitration decision. The Union cannot rely on the arbitration decision to obtain the relief it
seeks on the 401(k) issue.
B.
Second, to the extent that the Union believes that Sodexo has violated the JOA by
not offering an equal 401(k) plan, they must follow the grievance procedure of the JOA. It
is well established that “where the contract provides grievance and arbitration procedures,
those procedures must first be exhausted and courts must order resort to the private
settlement mechanisms without dealing with the merits of the dispute.” United
Paperworkers Int'l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 37 (1987).
Here, the JOA’s grievance procedure broadly defines a grievance as follows: “A
grievance under this Agreement is a dispute, claim, or complaint arising during the term of
this Agreement. Grievances are limited to matters of interpretation and application of this
agreement.” (Doc. 22-5). The Union’s complaint alleges that “Defendants have
breached, and threaten to continue to breach, the collective bargaining agreement by
refusing to provide the benefits agreed to [Plaintiffs] . . .” (Doc. 1 at ¶ 25). Thus, the
Union’s claim that Sodexo has violated the JOA “to provide the benefit of certain
employment terms to its AFSCME-represented employees, which AFSCME is permitted
to enforce,” is a dispute, claim, or complaint that would first require the Union to file a
grievance under the JOA.4

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At the hearing on the DMC’s motion to dismiss the 2014 case, the Court echoed
this sentiment when it noted “Sodexo has agreed that it's bound by the contract, and if it’s
not fulfilling its obligations under the contract, you have a right to file a grievance.” (Doc.
12-11 Pg ID 232)..

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In fact, the Union filed a grievance relating to the 401(k) issue before it filed this
action.5 On March 9, 2015, the Union filed a grievance against Sodexo alleging that:
“Management is in violation of Article II, Section 2, Article XVII, Sect 1, Article XXVII and
all applicable Articles, rules and policies. Management is not contributing a ‘comparable’
match to the funds employees place in their 401K accounts.” The grievance sought the
following remedy: “Management must match employees’ 401k contributions at the same
rate as they were matched by DMC/Tenet.” (Doc. 26-1, grievance, Ex. A). The grievance
was processed, and the parties held a “third step” grievance meeting on April 30, 2015.
Sodexo denied the grievance. The Union then filed a notice of its intent to arbitrate on
May 19, 2015. Although the notice of intent transferred the matter to the Union’s
Arbitration Department, the Union did not appoint an arbitrator from the contractual panel
of arbitrators or schedule a hearing date.
On about May 2016, approximately a year after the notice of intent to arbitrate
issued, the Union appointed an arbitrator, and, on May 24, 2016, the arbitrator sent a
notice to Richard Mack, the Union’s counsel in this matter, stating that he was accepting
appointment of the 401(k) grievance arbitration. (Doc. 26-2, notice from arbitrator, Ex. B).
A hearing date has not yet been scheduled.
However, despite having already filed the 401(k) grievance and the intent to
arbitrate, the Union filed this lawsuit on August 7, 2015.
From the above, it is clear that the Union has been pursuing a grievance regarding
the 401(k) plan since March 2015 while, over a year later, simultaneously seeking the

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The grievance was provided by Sodexo in a supplemental filing. (Doc. 26).
Sodexo says it only recently learned that the grievance had been processed to arbitration
and was part of other grievances the Union filed after Sodexo took over the DMC account.

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same relief in this case. The Union’s dual track approach is not appropriate and
inconsistent. In this case, the Union asserts that the arbitrator’s outsourcing decision is
“final and binding” on the 401(k) issue and must be enforced. In the grievance, the Union
asserts that the issue is not settled and must be put before an arbitrator. The Union
cannot have it both ways. In the end, the Union must pursue the grievance remedy that it
began before it filed this case.
In light of this determination, it is not necessary for the Court to consider Sodexo’s
additional arguments, i.e. that the Union cannot claim that it is a third-party beneficiary to
the agreement between Sodexo and DMC, or that the motion is premature because there
has been no discovery.
IV. Conclusion
For the reasons stated above, the Union’s motion to enforce arbitration decision is
DENIED.6
SO ORDERED.
S/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: July 15, 2016
Detroit, Michigan

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Although Sodexo argues in its papers that summary judgment should be granted
in its favor and the case dismissed, it must separately move for such relief.

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