The New York Times Company et al v. Newspaper and Mail Deliverers Union of New York and Vicinity et al

Filing 99

ORDER AND OPINION ON SUBJECT MATTER JURISDICTION: on re: 70 MOTION to Stay Proceedings, filed by National Labor Relations Board. For the reasons set forth below, I hold that the Court has subject matter jurisdiction over the dis pute before it. The Times, along with the Plan, the Plan Administrator, and the ERISA Management Committee, filed an interpleader suit in this Court, see 28 U.S.C. 2361, offering to deposit the funds remaining for six buy-outs ($600,000 plus and minus adjustments, totaling $368,451.40). The $368,451.40 reflected adjustments for interest, severance paid to Defendants, and withholding taxes. The suit named as defendants the NMDU and the eight individual persons who claimed an i nterest in these funds, and Plaintiffs eventually deposited these funds with the Court, see Dkt. No. 47. This suit lingered on my calendar for five years. Other than this interpleader deposit, the Court and parties have awaited final judgment in the NLRB proceedings. The Court has one final job: ruling who may be the eligible recipients, among the eight individual defendants, of the court-deposited funds for the final 6 buy-outs. Now, after five years, on August 17, 2017, see Dkt. Nos. 64, 65, the NLRB intervened to stay the Court from overseeing the distributions of these benefits, contending, among other things, that it has exclusive or primary jurisdiction. I held oral argument September 6, 2017, and denied the motion to stay. T he NLRB now argues that the Court lacks subject matter jurisdiction. The NMDU supports the NLRB's position. Plaintiffs and the individual defendants oppose. For the reasons set forth below, I find that the Court retains both statutory interplea der jurisdiction pursuant to 28 U.S.C. § 1335, and federal question jurisdiction pursuant to 28 U.S.C. § 1331. The distribution of those buy-outs, created pursuant to an employee welfare benefit plan, is properly within this Court's j urisdiction. A status conference shall be held December 13, 2017, at 3:00 P.M., to discuss procedures for determining the eligible participants, according to their seniority as employees at the Time and its wholly owned subsidiary C&S, and properly distributing the deposited funds to them, and as further set forth in this order. The Clerk shall terminate the NLRB's Motion to Stay Proceedings (Dkt. No. 70). (Status Conference set for 12/13/2017 at 03:00 PM before Judge Alvin K. Hellerstein.) Motions terminated: 70 MOTION to Stay Proceedings, filed by National Labor Relations Board. (Signed by Judge Alvin K. Hellerstein on 12/5/2017) (ap)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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THE NEW YORK TIMES COMPANY, CITY &
SUBURBAN DELIVERY SYSTEMS, INC.,
CITY AND SUBURBAN DELIVERY SYSTEMS,
INC. JANUARY 2009 SEVERANCE PAY PLAN
FOR COMPLAINT ELIGIBLE EMPLOYEES
REPRESENTED BY THE NEWSPAPER AND
MAIL DELIVERERS' UNION OF NEW YORK
AND VICINITY, PLAN ADMINISTRATOR
OF THE CITY AND SUBURBAN DELIVERY
SYSTEMS, INC. JANUARY 2009 SEVERANCE
PAY PLAN FOR ELIGIBLE EMPLOYEES
REPRESENTED BY THE NEWSPAPER AND
MAIL DELIVERERS' UNION OF NEW YORK
AND VICINITY, and ERISA MANAGEMENT
COMMITTEE OF THE NEW YORK TIMES
COMPANY,

ORDER AND OPINION ON
SUBJECT MATTER
JURISDICTION
12 Civ. 5430 (AKH)

Plaintiffs,
- against NEWSPAPER AND MAIL DELIVERERS'
UNION OF NEW YORK AND VICINITY,
ENRIQUE GRADOS, DJEV ALIN GOJANI,
CHRISTOPHER FABIANI, RICHARD ATKINS,
RAIMON MORAN, JOHN CASSARO, MUNIR
FAHREDDINE, and WILLIE MILES,
Defendants.

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ALVIN K. HELLERSTEIN, U.S.D.J.:
The National Labor Relations Board and the Newspaper and Mail Deliverers' Union
argue that the Court lacks subject matter jurisdiction to hear this case. For the reasons set forth
below, I hold that the Court has subject matter jurisdiction over the dispute before it.

BACKGROUND
This interpleader action, filed July 13, 2012, has long been under my purview. Filed by
The New York Times, and its wholly owned subsidiary, City and Suburban Delivery Systems
("C&S"), this action sought to resolve the claims of potentially eligible employees of benefits
and buy-outs consequent to C&S closing its business on January 4, 2009. These benefits were
created pursuant to an agreement signed November 24, 2008, between The Times and the
Newspaper and Mail Deliverers' Union ("NMDU"), a labor organization, see NLRA §2(5), and
were subsequently effectuated and administrated by Severance Pay Plan ("Plan"), an employee
welfare benefit plan, see ERIS A §3(1 ), 28 U.S.C. § 1002(1 ).
The Plan established 140 buy-outs, each in the amount of $100,000, offered to C&S
employees in the order of their seniority. See Plan at 4. Seniority was to be calculated according
to seniority based on an "industry-wide priority." NMDU created lists ranking employees in
accordance with industry-wide seniority, rather than seniority for employees of C&S. See
Complaint~

4, 5. Based on these lists, 134 of the 140 buy-outs had been processed and paid

before the filing o_f this suit.
Soon after the agreement and the establishment of the Plan, however, at various points
starting in November 2008, the individual defendants in this case filed charges with the National
Labor Relations Board ("NLRB"), alleging that the NMDU had unlawfully and unfairly
computed the seniority ranking. The General Counsel of NLRB subsequently filed a Complaint
alleging violations ofNLRA §8(b), 28 U.S.C. § 158(b), as the use of industry-wide priority
numbers created a union-based preference that unfairly discriminated against non-union
members. Administrative law judge Raymond Green issued a decision February 8, 2012,
directing NMDU to revise its list used for the buy-out provisions. See Case Nos. 2-CB-21740,
JD(NY)-04-12, 2012 WL 404822 (Feb. 8, 2012). ALJ Raymond's findings were affirmed by the
NLRB August 21, 2014, see Newspaper & Mail Deliverers' Union of New York & Vicinity et
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al., 361 NLRB No. 26 (Aug. 21, 2014), and upheld by the Second Circuit on March 22, 2016, see

NL.R.B. v. Newspaper & Mail Deliverers' Union o/New York& Vicinity, 644 F. App'x 16, 17
(2d Cir. 2016), cert. denied, 13 7 S. Ct. 1063, 197 L. Ed. 2d 175 (2017). During the course of
these proceedings, and while the appropriate "seniority" measure was litigated, the Plan
Administrator withheld payment of the 6 remaining buy-outs that had not been paid before the
NLRB proceedings began.
Thus, there remains only six unpaid buy-outs. The Times, along with the Plan, the Plan
Administrator, and the ERISA Management Committee, filed an interpleader suit in this Court,

see 28 U.S.C. 2361, offering to deposit the funds remaining for six buy-outs ($600,000 plus and
minus adjustments, totaling $368,451.40). The $368,451.40 reflected adjustments for interest,
severance paid to Defendants, and withholding taxes. The suit named as defendants the NMDU
and the eight individual persons who claimed an interest in these funds, and Plaintiffs eventually
deposited these funds with the Court, see Dkt. No. 47. This suit lingered on my calendar for five
years. Other than this interpleader deposit, the Court and parties have awaited final judgment in
the NLRB proceedings. The Court has one final job: ruling who may be the eligible recipients,
among the eight individual defendants, of the court-deposited funds for the final 6 buy-outs.
Now, after five years, on August 17, 2017, see Dkt. Nos. 64, 65, the NLRB intervened to
stay the Court from overseeing the distributions of these benefits, contending, among other
things, that it has exclusive or primary jurisdiction. I held oral argument September 6, 2017, and
denied the motion to stay.
The NLRB now argues that the Court lacks subject matter jurisdiction. The NMDU
supports the NLRB's position. Plaintiffs and the individual defendants oppose. For the reasons
set forth below, I find that the Court retains both statutory interpleader jurisdiction pursuant to 28
U.S.C. § 1335, and federal question jurisdiction pursuant to 28 U.S.C. § 1331.

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DISCUSSION

Jurisdiction under §1335
Under statutory interpleader jurisdiction, the Court has jurisdiction where: (a) a claim
involves $500 or more; (b) there are two or more adverse claimants of diverse citizenship who
claim to be entitled to the property at issue; and ( c) the plaintiff deposits the subject property into
the registry of the court. See 28 U.S.C. § 1335(a).
Here, the claims involve more than $500, and two or more adverse claimants are of
diverse citizenship. Of the 8 individual defendants, at least one is a citizen of New York and one
a citizen of Connecticut. See Dkt. No. 92, Ex. 4, 5. "Minimal diversity" suffices for §1335
jurisdiction. See State Farm Fire & Cas. Co v. Tashire, 386 U.S. 523, 530, 87 S. Ct. 1199, 1203,
18 L. Ed. 2d 270 (1967). Third, the Times has deposited the subject property into the registry of
the Court. I find that the Court has interpleader jurisdiction.

Jurisdiction under §1331
I find also that the Court has federal questionjurisdiction pursuant to 28 U.S.C. §1331.
Under the procedural mechanism of F.R.C.P. Rule 22, in conjunction with §1331, a party can file
an interpleader action where there exists an independent basis for subject matter jurisdiction. I
find that such an independent basis for subject matter exists here under ERISA §502(a), 29
U.S.C § l 132(a).
Section 502 authorizes a "participant, beneficiary, or fiduciary" to bring a civil action "to
obtain[] appropriate equitable relief' to redress ERISA violations. See §I 132(a)(3)(B). In
particular, the Second Circuit has held that this provision provides jurisdiction for a court to
distribute plan benefits in an interpleader action brought by plan fiduciaries. See Metro. Life Ins.

Co. v. Bigelow, 283 F.3d 436, 439 (2d Cir. 2002). In the current case, plaintiffs are the grantors
and fiduciaries of the Plan, and may bring an interpleader action to resolve the competing claims
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of the plan beneficiaries. Thus, plaintiffs properly filed this interpleader suit under §1331 and
FRCP Rule 22.
The Plan, furthermore, and contrary to NMDU's argument, is properly considered an
employment welfare benefit plan with an "ongoing administrative program," see Fort Halifax
Packing Co. v. Coyne, 482 U.S. 1, 11, 107 S. Ct. 2211, 2217, 96 L. Ed. 2d 1 (1987), forthe
purposes of an ERISA suit, see ERISA §3( 1). The Second Circuit considers three factors in
determining whether a severance plan is an ERISA plan: (1) the employer's undertaking must
have a commitment requiring managerial discretion; (2) a reasonable employee would perceive
an ongoing commitment by the employer to provide employee benefits; and (3) the employer
was required to analyze the circumstances of each employee's termination separable in light of
defined criteria. See Schonholz v. Long Island Jewish Med. Ctr., 87 F.3d 72, 76 (2d Cir. 1996);
Kosakow v. New Rochelle Radiology Assocs., P.C., 274 F.3d 706, 737 (2d Cir. 2001). All three
factors are satisfied. Under the Plan, the Administrator has "absolute discretion ... to determine
the eligibility for, and the amount of, benefits due under the Plan to Participants," see Plan at
Article VI par. 2, and the Plan provides claims procedures for aggrieved parties, which includes
review of an ERISA Management Committee's determinations, see Article VII. I hold that the
current Plan is an ERISA plan, and properly the subject of the instant ERISA action.
Finally, no other federal statute deprives this Court of jurisdiction to hear this case. While
the Court lacks jurisdiction to adjudicate claims made pursuant to Sections 7 and 8 of the
National Labor Relations Act, 28 U.S.C. § 157, 158, which remain under the "exclusive
competence" of the NLRB, see Commc'ns Workers ofAm. v. Beck, 487 U.S. 735, 742, 108 S. Ct.
2641, 2647, 101 L. Ed. 2d 634 (1988), the Court here is not adjudicating such claims. The
NLRB, appropriately, has already adjudicated the labor-related claims, ruling on the illegality of
the "seniority" measure employed by the union and the Plan. The NLRB, further, provided
guidance and ordered "the Union to request that the New York Times revise the seniority of the
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former C&S employees it hired so that ... their relative seniority vis-a-vis each other reflects
their unit seniority as employees of C&S and not their union seniority as employees of other
union-signatory employers .... " 361 NLRB No. 26, 12. This leaves the Court with the
remaining job of overseeing, consistent with the decision and order of the NLRB, the distribution
of the six buy-outs. The distribution of those buy-outs, created pursuant to an employee welfare
benefit plan, is properly within this Court's jurisdiction.
A status conference shall be held December 13, 2017, at 3:00 P.M., to discuss procedures
for determining the eligible participants, according to their seniority as employees at the Time
and its wholly owned subsidiary C&S, and properly distributing the deposited funds to them.
The Clerk shall terminate the NLRB's Motion to Stay Proceedings (Dkt. No. 70).

SO ORDERED.
Dated:

Dec.£2017
New York, New York

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AL VIN K. HELLERSTEIN
United States District Judge

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