Madison Aquisition Group, LLC v. Local 259, United Auto Workers, AFL-CIO et al

Filing 23

MEMORANDUM AND ORDER; Accordingly, Plaintiff's motion for a preliminary injunction (ECF No. 8) is DENIED. Further, within ten days of this Memorandum & Order, the parties shall advise the Court, in writing, how they intend to proceed in this action, including whether Defendants intend to renew their request to file a motion to dismiss this action. So Ordered by Judge Joanna Seybert on 11/18/2021. C/ECF (Valle, Christine)

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 1 of 13 PageID #: 199

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
----------------------------------X
MADISON ACQUISITION GROUP, LLC,
Plaintiff,
-againstLOCAL 259 UNITED AUTO WORKERS,
AFL-CIO and INTERNATIONAL UNION,
UNITED AUTOMOBILE, AEROSPACE, AND
AGRICULTURAL IMPLEMENT WORKERS OF
AMERICA, UAW,

MEMORANDUM & ORDER
21-CV-5685(JS)(JMW)

Defendants.
-----------------------------------X
APPEARANCES
For Plaintiff:
Christopher A. Smith, Esq.
Scott P Trivella, Esq.
Trivella Forte & Smith, LLP
1311 Mamaroneck Avenue, Suite 170
White Plains, New York 10605
For Defendants:

Jeremy E. Meyer, Esq.
Cleary, Josem & Trigiani LLP
325 Chestnut Street, Suite 200
Philadelphia, Pennsylvania 19106

SEYBERT, District Judge:
On October 20, 2021, to preserve the status quo, this
Court issued an Order temporarily restraining Defendants from
compelling arbitration under the parties’ collective bargaining
agreement and ordering Defendants to show cause why a preliminary
injunction should not enter.

Upon consideration of the parties’

submissions, and the arguments made at the show cause hearing held
on November 16, 2021, the Court finds that Plaintiff has failed to
meet its burden to obtain a preliminary injunction pursuant to
Rule 65 of the Federal Rules of Civil Procedure.
1

Accordingly, for

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 2 of 13 PageID #: 200

the reasons that follow, the Court DENIES Plaintiff’s motion for
a preliminary injunction.
BACKGROUND
I.

Factual Background
Madison Acquisition Group, LLC d/b/a BMW of Southampton

(“Plaintiff” or “MAG”) owns an auto dealership located at 35
Montauk

Highway,

Southampton,

New

York

11968-4122

(the

“Southampton Dealership”) that employs mechanics, technicians, and
service shop employees represented by Local 259 UAW, AFL-CIO
(“Local 259”). 1

(Smith Petition, Ex. D, ECF No. 8-4, ¶ 2, attached

to Mot. for Temporary Restraining Order, ECF No. 8.)

Local 259

also represents employees at two other dealerships -- the “Jaguar
Dealership” and the “Chrysler Dealership” -- that Local 259 claims,
together with the Southampton Dealership, “constitute a family of
companies” under the “common control” of Jonathan Sobel, although
it concedes that it “does not know the precise corporate structure
between the various entities and holding companies.” (Defs. Opp’n,
ECF No. 13, at 3; Schneck Aff., Ex. A, ECF No. 13-1, ¶ 4, attached
to Defs. Opp’n.)
at

the

Jaguar,

According to Defendants, the Local 259 employees
Chrysler,

and

Southampton

participate in the same 401(k) plan.

Dealerships

all

(Defs. Opp’n at 3; Schneck

Plaintiff also names as Defendant the International Union, United
Automobile, Aerospace, and Agricultural Implement Workers of
America, UAW.
1

2

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 3 of 13 PageID #: 201

Aff. ¶ 9.)
The
technicians

terms

and

and

mechanics

conditions
at

the

of

employment

Southampton

for

the

Dealership

are

governed by a collective bargaining agreement (“CBA”) between
Local 259 and MAG.
Opp’n.)

(CBA, Ex. A, ECF No. 13-2, attached to Defs.

Central to the parties’ dispute is Article 36 of the CBA,

which states as follows:
The Employer [MAG] shall provide a 401(k) Plan
on behalf of all unit employees.
Such plan
shall provide for unit employee contributions
only. Notwithstanding however, in the event
the Employer were to make contributions on
behalf of any non-bargaining unit employee or
any other employee in another bargaining unit
employed by the Employer equal contributions
shall be made on behalf of all Local 259
bargaining unit employees enrolled in the
plan. Upon written request by the Union, the
Employer shall provide any and all payroll
documentation (i.e., payroll register) for an
in-camera review by a party to be determined
by the Union, to determine compliance with
this Article.
(CBA, Ex. A, Art. 36.)

Thus, under Article 36, MAG must provide

each of its Local 259 employees with a 401(k) plan to which that
employee can make contributions.

However, in the event MAG “were

to make contributions” to its non-union employees or other union
employees, 2

it

would

be

obligated

to

make

equal

employer

contributions to its Local 259 employees.

According to the testimony of Jay Decker, General Manager of the
Southampton Dealership, MAG does not employ members of any other
union at the Southampton Dealership.
2

3

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 4 of 13 PageID #: 202

Further, Article 9 of the CBA contains a grievance and
arbitration procedure that applies to “[a]ny dispute concerning
the interpretation or application of the terms of the [CBA] or any
dispute between the parties.”

(Id. at Art. 9.A.)

Pursuant to

Article 9, in the event the parties are unable to resolve the
dispute

internally,

“the

dispute

shall

be

submitted

to

arbitration,” and if the parties cannot agree to an arbitrator,
then “the matter shall be submitted to the American Arbitration
Association,”

whose

“findings,

decisions

and

awards

shall

final, binding, and conclusive on both of the parties.”
Art. 9.B.1.)

be

(Id. at

Article 9 further provides that “[n]o arbitrator

shall have any power to add to, subtract from, alter, change, or
modify any term of this Agreement.”

(Id. at Art. 9.B.2.)

II. Procedural History
Sometime in August 2021, it came to the attention of
Brian Schneck, Local 259’s President, that the contracts governing
its members’ employment at the Jaguar and Chrysler Dealerships
committed those employers, not MAG, to make contributions to their
Local 259 employees’ 401(k) plans.

Local 259 conferred with

Plaintiff’s counsel and expressed its position that this fact
triggered

Plaintiff’s

contributions

to

the

obligation
Local

259

under

Article

employees

at

the

36

to

make

Southampton

Dealership. Unable to resolve the dispute internally, on September
21, 2021, Local 259 notified Plaintiff of its intent to schedule
4

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 5 of 13 PageID #: 203

an arbitration before the American Arbitration Association (the
“AAA”) to resolve the parties’ dispute regarding the scope of
Plaintiff’s obligations to contribute to the 401(k) plan pursuant
to the CBA.
to

Defs.

(Not. Intent to Arb., Ex. D, ECF No. 13-5, attached

Opp’n.)

In

response,

Plaintiff

sought

a

temporary

restraining order in New York State Court enjoining Defendants
from

compelling

arbitration

of

the

matter;

application was denied for insufficient notice.

however,

that

(See State Action

Order to Show Cause, Ex. E, ECF No. 8-5, attached to Mot. for
Temporary Restraining Order.)
After removal, 3 on October 20, 2021, this Court issued
a temporary restraining order and accompanying order to show cause,
which

temporarily

enjoined

Defendants

from

proceeding

to

arbitration “relating to the issues raised in the Notice of Intent
to Arbitrate or relating to any request for an arbitrator to
determine the bargaining unit issues or status of employment of
any individuals other than the workers located at the Southampton
Auto Dealership.”

(Order, ECF No. 11.)

Notably, the Court found

Plaintiff had shown likelihood of success on its claim that the
dispute involves bargaining unit composition issues over which the
National

Labor

Relations

Board

(“NLRB”)

has

exclusive

jurisdiction, rendering arbitration under the CBA inappropriate.
The Court has jurisdiction over this matter pursuant to 29 U.S.C.
§ 185.
3

5

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 6 of 13 PageID #: 204

(Order at 3.)
As directed, the parties submitted briefs and appeared
for an in-person hearing on Plaintiff’s motion for a preliminary
injunction.

(See Min. Entry, ECF No. 22.)

Defendants also filed

a pre-motion conference request seeking leave to dismiss the case,
which remains pending.

(ECF No. 16.)

STANDARD FOR PRELIMINARY INJUNCTION
“A

plaintiff

seeking

a

preliminary

injunction

must

establish [1] that he is likely to succeed on the merits, [2] that
he

is

likely

to

suffer

irreparable

harm

in

the

absence

of

preliminary relief, [3] that the balance of equities tips in his
favor, and [4] that an injunction is in the public interest.”
Winter v. Nat’l Res. Def. Council, Inc., 555 U.S. 7, 20 (2008);
Louis Vuitton Malletier v. Dooney & Bourke, Inc., 454 F.3d 108,
114 (2d Cir. 2006); Jefferson v. Soe, No. 17-CV-3273, 2017 WL
2881138, at *2 (E.D.N.Y. July 6, 2017).
is

“an

extraordinary

routinely granted.”

and

drastic

A preliminary injunction

remedy

which

should

not

be

Jefferson, 2017 WL 2881138, at *2 (quoting

Buffalo Forge Co. v. Ampco-Pittsburgh Corp., 638 F.2d 568, 569 (2d
Cir. 1981)).

As a result, to obtain a preliminary injunction, the

movant must make carry its burden by a “clear showing.”

Id. at *3

(quoting Moore v. Consol. Edison Co. of N.Y., 408 F.3d 506, 510
(2d Cir. 2005) (citation omitted)).

6

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 7 of 13 PageID #: 205

APPLICATION
To begin, it is important to clarify what this case is
not about.

The issue in this case is not whether Plaintiff’s Local

259 employees are entitled to employer contributions to their
401(k) plans.

Rather, the only issue before the Court is whether

that question must be submitted to the AAA pursuant to Article 36
of the CBA.

AT&T Techs., Inc. v. Commc’ns Workers of Am., 475

U.S. 643, 649–50 (1986) (“[T]he union’s claim that the employer
has violated the collective-bargaining agreement is to be decided,
not by the court asked to order arbitration, but as the parties
have agreed, by the arbitrator.

The courts, therefore, have no

business weighing the merits of the grievance, considering whether
there is equity in a particular claim, or determining whether there
is particular language in the written instrument which will support
the

claim.

arbitration,

The

agreement

not

merely

is

those

to

submit

which

the

all

grievances

court

will

to

deem

meritorious.” (citation omitted)); see also Henry Schein, Inc. v.
Archer & White Sales, Inc., 139 S. Ct. 524, 529 (2019).
With this in mind, the Court turns to whether Plaintiff
makes

a

“clear

showing”

that

the

requirements

to

obtain

a

preliminary injunction have been established.
I.

Likelihood of Success on the Merits
Whether Plaintiff can demonstrate likelihood of success

on the merits of its claim that this dispute is not subject to
7

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 8 of 13 PageID #: 206

arbitration under the CBA must be resolved according to wellsettled principles regarding arbitration disputes.

The Court

first sets forth these principles before addressing the parties’
arguments.
A.

Applicable Law
First, under federal law, “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.”

Republic of

Ecuador v. Chevron Corp., 638 F.3d 384, 392 (2d Cir. 2011) (quoting
AT&T Techs., Inc., 475 U.S. at 648).

Thus, the Court first

“resolve[s] ‘the question of the very existence’ of the contract
embodying the arbitration clause.” Id. (quoting Specht v. Netscape
Commc’ns Corp., 306 F.3d 17, 26 (2d Cir. 2002)).
Second, absent a clear and unmistakable indication to
the contrary in the arbitration agreement, the Court, not the
arbitrator,
agreement

must

creates

resolve
a

particular grievance.”

duty

“whether
for

the

a

collective-bargaining

parties

to

arbitrate

AT&T Techs., Inc., 475 U.S. at 649.

gateway

however.

Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83
Under

controlling

of

arbitrability”

caselaw,

gateway

are

These

so-called

(2002).

“questions

the

“limited,”

questions

of

arbitrability include “whether the parties are bound by a given
arbitration clause as well as disagreements about whether an
arbitration clause in a concededly binding contract applies to a
8

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 9 of 13 PageID #: 207

particular type of controversy.”
393

(quoting

Howsam,

537

Republic of Ecuador, 638 F.3d at

U.S.

at

84).

At

the

same

time,

“‘procedural’ questions which grow out of the dispute and bear on
its final disposition” are not questions of arbitrability. Howsam,
537

U.S.

at

84;

Republic

of

Ecuador,

638

F.3d

at

393-94.

Accordingly, procedural questions, such as “allegations of waiver,
delay, or a like defense to arbitrability,” are “presumptively not
for the judge, but for an arbitrator, to decide.”

Howsam, 537

U.S. at 84 (first quoting Moses H. Cone Memorial Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 24-25 (1983); and then quoting John
Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557 (2002)).
Last, the Court must address the arbitrability of this
dispute “with healthy regard for the federal policy favoring
arbitration.”

Republic of Ecuador, 638 F.3d at 393 (quoting Moses

H. Cone, 460 U.S. at 24.)

Such a presumption is particularly

applicable where the clause is as broad as the one employed in
this

case,

which

provides

for

arbitration

of

“any

dispute

concerning the interpretation or application of the terms of the
[CBA] or any dispute between the parties.”
475 U.S. at 650.
disputes

“This presumption of arbitrability for labor

recognizes

arbitrators

in

Cf. AT&T Techs. Inc.,

the

greater

interpreting

institutional

competence

collective-bargaining

of

agreements,

‘furthers the national labor policy of peaceful resolution of labor
disputes

and

thus

best

accords
9

with

the

parties’

presumed

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 10 of 13 PageID #: 208

objectives in pursuing collective bargaining.’”

Id. (citations

omitted).
B.

Application
Applying the foregoing principles, the Court finds that

Plaintiff cannot establish likelihood of success on the merits.
To begin, there can be no dispute that the parties signed
a CBA that contains a valid arbitration agreement.

MAG is a party

to the CBA with Local 259, and Article 9 of the CBA contains a
grievance and arbitration procedure that applies to “any dispute
concerning the interpretation or application of the terms of the
[CBA] or any dispute between the parties.”

The parties do not

raise any issue as to contract formation.

To the contrary,

according to the record, the CBA was the product of arms-length
negotiations between two sophisticated parties.
Plaintiff argues that “[t]here is a gateway question for
the Court to decide,” namely, “whether the parties agreed to submit
to arbitration the issue of whether employees at the Jaguar and
Chrysler dealerships are the Plaintiff’s employees.”
at 2.)

(Pl. Reply

Essentially, Plaintiff asks the Court to interpret Article

36 of the CBA -- according to Plaintiff’s interpretation, the fact
that Local 259’s employers at the Jaguar and Chrysler dealerships
make employer contributions does not trigger MAG’s contribution
obligations under Article 36.

(Id.)

Rather, MAG’s employer-

contribution obligations under Article 36 are triggered only where
10

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 11 of 13 PageID #: 209

MAG, and not a separate employer owned by a different corporate
entity, makes contributions to its non-union employees.

(Id.)

The Court disagrees that there are any gateway questions
of arbitrability for it to decide here.

In the first instance,

Plaintiff’s request would entangle the Court in the merits of this
dispute, where it “ha[s] no business.”

Henry Schein, Inc., 139

S. Ct. at 529; AT&T Techs., Inc., 475 U.S. at 650.

As noted supra,

“even if it appears to the court to be frivolous, the union’s claim
that the employer has violated the collective-bargaining agreement
is to be decided, not by the court asked to order arbitration, but
as the parties have agreed, by the arbitrator.” AT&T Techs., Inc.,
475 U.S. at 650-51.
Second, to the extent argued, there are no alter ego
issues before the Court.

It is true that whether a party is an

“alter ego and therefore bound by the arbitration clause contained
in [its alter ego’s] CBA is exactly the type of ‘gateway’ issue
that is a ‘question of arbitrability’ for this Court to decide.”
Loc. Union No. 38, Sheet Metal Workers’ Int’l Ass’n, AFL-CIO v.
A&M Heating, Air Conditioning, Ventilation & Sheet Metal, Inc.,
314 F. Supp. 2d 332, 344 (S.D.N.Y. 2004) (citing Truck Drivers
Local 807, Int’l Bhd. of Teamsters, Chauffeurs, Warehousemen &
Helpers of Am. v. Carey Transp., Inc., 816 F.2d 82, 88 (2d Cir.
1987)).

However, unlike in A&M Heating, where the union sought to

arbitrate a dispute with a distinct company that was allegedly the
11

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 12 of 13 PageID #: 210

alter ego to the CBA signatory, here, MAG is a signatory to the
CBA. 4
Last,

consistent

with

the

federal

policy

favoring

arbitration, the Court must resolve “any doubts concerning the
scope of arbitrable issues . . . in favor of arbitration, whether
the problem at hand is the construction of the contract language
itself . . . .”

Moses H. Cone, 460 U.S. at 24-25; accord Hartford

Accident & Idem. Co. v. Swiss Reinsurance Am. Corp., 246 F.3d 219,
226 (2d Cir. 2001).

This is especially true here given (1) the

breadth of the arbitration provision at issue in this case, and
(2) the fact that it involves a labor dispute.

See AT&T Techs.

Inc., 475 U.S. at 650. 5
Plaintiff also points to the limiting language contained in
Article 9 of the CBA, which provides that “[n]o arbitrator shall
have any power to add to, subtract from, alter, change, or modify
any term of this Agreement.”
Although parties may, by clear
intention, “exclude[e] certain claims from the scope of their
arbitration agreement,” the cited language falls short of a
“positive assurance that the arbitration clause is not susceptible
of an interpretation that covers the asserted dispute.” Hartford
Accident & Idem. Co., 246 F.3d at 227 (quoting AT&T Techs. Inc.,
475 U.S. at 650). Whether this provision limits the arbitrator’s
authority to adopt Defendants’ interpretation of Article 36 is for
the arbitrator to decide.
4

Plaintiff also asserts that the NLRB has exclusive jurisdiction
over this dispute, arguing Defendants’ attempt to apply the CBA
between Local 259 and the owners of the Chrysler and Jaguar
Dealerships
to
MAG’s
Local
259
employees
constitutes
a
“representational matter.” (Pl. Reply at 4.) At this juncture,
the Court is unable to agree.
In support of this argument,
Plaintiff cites one case: Sheet Metal Workers’ Int’l Ass’n, 322
NLRB 877 (1997). But in that case, the employer attempted to apply
the parties’ CBA to two non-unit employees. Id. at 878. However,
5

12

Case 2:21-cv-05685-JS-JMW Document 23 Filed 11/18/21 Page 13 of 13 PageID #: 211

II.

Irreparable Harm & the Public Interest
Because

the

Court

has

concluded

that

Plaintiff

has

failed to establish likelihood of success on the merits, it finds
it unnecessary to reach the issue of irreparable harm or whether
an injunction is in the public interest.

Sadowsky v. City of New

York, 732 F.2d 312, 316 (2d Cir. 1984); see also Tait v. Accenture
PLC, No. 18-CV-10847, 2019 WL 2473837, at *3 (S.D.N.Y. June 13,
2019).
CONCLUSION
Accordingly,

Plaintiff’s

motion

for

a

preliminary

injunction (ECF No. 8) is DENIED.
Further, within ten days of this Memorandum & Order, the
parties shall advise the Court, in writing, how they intend to
proceed in this action, including whether Defendants intend to
renew their request to file a motion to dismiss this action.

SO ORDERED.
_/s/ JOANNA SEYBERT _____
Joanna Seybert, U.S.D.J.
Dated: November _18_, 2021
Central Islip, New York

here, all employees are Local 259 members, and Local 259 is not
endeavoring to extend its jurisdiction to represent some other
group of employees.
13