Trustees Of The New York City District Council Of Carpenters Pension Fund, Welfare Fund, Annuity Fund, and Apprenticeship, Journeyman Retraining, Educational and Industry Fund et al v. High Performance Floors, Inc.
OPINION AND ORDER re: 38 MOTION to Confirm Arbitration . filed by Trustees Of The New York City Carpenters Relief and Charity Fund, Trustees Of The New York City District Council Of Carpenters Pension Fund, Welfare Fund, Annuity F und, and Apprenticeship, Journeyman Retraining, Educational and Industry Fund, The New York City and Vicinity Carpenters Labor-Management Corporation, The New York City District Council Carpenters, 47 CROSS MOTION for Summary Judgment . filed by High Performance Floors, Inc..For the foregoing reasons, the motion to confirm the arbitration award is GRANTED, and Respondent's cross-motion is DENIED. The Clerk of Court is directed to enter judgment in favor of Petitioners of $15,863.43 plus 5.25% per annum interest beginning March 8, 2013, to the date of payment; and $12,925.22 as attorneys' fees and costs for the present action without interest. The Clerk is directed to close the motions at Docket Nos. 38 and 47 and to close the case. (As further set forth in this Order.) (Signed by Judge Lorna G. Schofield on 6/6/2016) (kgo)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
TRUSTEES OF THE NEW YORK CITY
DISTRICT COUNCIL OF CARPENTERS
PENSION FUND, et al.,
HIGH PERFORMANCE FLOORS INC.,
DATE FILED: 06/06/2016
15 Civ. 0781 (LGS)
OPINION AND ORDER
LORNA G. SCHOFIELD, District Judge:
Petitioners1 move to confirm a March 5, 2013, arbitration award in their favor against
Respondent High Performance Floors, Inc. and request attorneys’ fees in connection with this
proceeding. Respondent opposes the motion and cross-moves to vacate the award and obtain its
own attorneys’ fees and costs. For the reasons below, Petitioners’ motion is granted, and
Respondent’s cross-motion is denied.
Respondent is a New York corporation that sub-contracts to install epoxy flooring.
Respondent signed a Collective Bargaining Agreement (“CBA”) with the New York City District
Council Carpenters f/k/a District Council of New York City and Vicinity of the United
Brotherhood of Carpenters and Joiners of America on May 29, 2009. The CBA automatically
renewed each year in the absence of notice by either party of intent to renegotiate. At all relevant
times, the CBA was in effect. The CBA required Respondent to make certain payments to fringe
benefit trust funds on behalf of all its carpenter employees. It also allowed Petitioners to audit
Petitioners are the Trustees of the New York City District Council of Carpenters Pension Fund, Welfare Fund,
Annuity Fund, and Apprenticeship, Journeyman Retraining, Educational and Industry Fund, Trustees of the New
York City Carpenters Relief and Charity Fund, the New York City and Vicinity Carpenters Labor-Management
Corporation (a not-for-profit corporation), and the New York City District Council Carpenters (the “Union”).
Respondent’s books and records to ensure that the required contributions were made. Under the
CBA, any disputes are subject to final and binding arbitration as follows:
Should any dispute or disagreement arise between the parties hereto . . .
concerning any claim arising from payments to the Fund of principal and/or
interest which is allegedly due, either party may seek arbitration of the dispute
before the impartial arbitrator designated hereunder by filing a notice of intent to
arbitrate in writing . . . and serving a copy of said notice on the Employer . . . . The
arbitrator shall have full and complete authority to decide any and all issues raised
by the submission and to fashion an appropriate remedy including, but not limited
to, monetary damages. The arbitrator’s award in this regard shall be final and
binding upon the parties hereto and the individual Employer . . . and shall be
wholly enforceable in any court of competent jurisdiction.
Petitioners conducted an audit of Respondent, during which the auditor determined that
Respondent had failed to report and make contributions in the principal amount of $5,248.80.
Respondent disputed these findings and did not remit the contributions. On or around December
20, 2012, Petitioners sent notice of their intent to submit the matter for arbitration. The Office of
the Impartial Arbitrator sent a Notice of Hearing on December 27, 2012, to Petitioners and to
Respondent via regular and certified mail.
Respondent claims that it was not properly informed of the arbitration hearing because
notice was sent to the wrong address. Although Respondent had moved to New Jersey,
Petitioner’s notice of intent to arbitrate and the arbitrator’s notice of hearing were sent to
Respondent’s former address in Briarcliff Manor, New York. Respondent did not appear at the
arbitration hearing on March 5, 2013. At the hearing, the arbitrator received testimony from the
auditor, reviewed the CBA, the auditor’s summary report and calculations of the proposed award.
The arbitrator found Respondent in default on March 8, 2013, and awarded Petitioners
$15,863.43, plus 5.25% interest from the date of the award.
On April 24, 2013, Petitioners initiated a prior suit in the Southern District of New York
to confirm the arbitration award. Before any answer or other response to the complaint,
Petitioners and Respondent filed a stipulation of dismissal without prejudice in that case on
March 31, 2014. The stipulation tolled any statute of limitations applicable to the claims of
Petitioners against Respondent to confirm the arbitration award from April 25, 2013, through
March 26, 2014. It is unclear from the record the circumstances that prompted the dismissal and
whether any settlement payment was made or agreed upon.
On February 3, 2015, Petitioners commenced this action to confirm the arbitration award
under the Federal Arbitration Act (“FAA”), 9 U.S.C. § 9; section 301 of the Labor Management
Relations Act of 1947 (“LMRA”) as amended, 29 U.S.C. § 185; and the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(3). On June 25, 2015,
Respondent, through new counsel, filed an answer and counterclaim, asserting that the arbitration
award should be vacated.
Enforcement of an arbitration award issued under a collective bargaining agreement “is
governed by section 301 of the LMRA.” Nat’l Football League Mgmt. Council v. Nat’l Football
League Players Ass’n, Nos. 15-2801, 15-2805, 2016 WL 1619883, *5 (2d Cir. Apr. 25, 2016)
(citing Major League Baseball Players Ass’n v. Garvey, 532 U.S. 504, 509 (2001)); see also
Coca–Cola Bottling Co. of N.Y. v. Soft Drink & Brewery Workers Union Loc. 812 Int’l Bhd. of
Teamsters, 242 F.3d 52, 53-55 (2d Cir. 2001) (holding that in cases brought under the LMRA, the
FAA does not apply). Section 301 “does more than confer jurisdiction,” serving as a source of
federal “substantive law . . . which the courts must fashion from the policy of our national labor
laws.” Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 455-456 (1957). This body of law
is “analytically distinct from” that of the FAA and may draw from the FAA “for guidance alone.”
Coca–Cola, 242 F.3d at 54. Federal courts will also look to applicable state law to fill the
interstices in federal law, borrowing no more from state law than necessary. Loc. 802, Associated
Musicians of Greater N.Y. v. Parker Meridien Hotel, 145 F.3d 85, 88 (2d Cir. 1998) (quoting
West v. Conrail, 481 U.S. 35, 39–40 (1987)).
Judicial review of an arbitration award under the LMRA is “very limited” to comport with
the federal policy promoting “industrial stabilization through the collective bargaining
agreement,” with an emphasis on private resolution of labor disputes. Nat’l Football League
Mgmt. Council, 2016 WL 1619883, at *5-*6 (internal citations and quotation marks omitted).
Courts will examine an arbitrator’s decision “only as to whether the arbitrator acted within the
scope of his authority as defined by the collective bargaining agreement.” Id. at 6. A reviewing
court is “not authorized to review the arbitrator’s decision on the merits . . . .” Id. The arbitrator
need only explain his reasoning “in terms that offer even a barely colorable justification.” Burns
Int’l Sec. Servs., Inc., v. United Plant Guard Workers of Am., 47 F.3d 14, 17 (2d Cir. 1995)
(quoting Andros Compania Maritima, S.A. v. Marc Rich & Co., 579 F.2d 691, 704 (2d Cir.
1978)). “[U]nless the award is procured through fraud or dishonesty, a reviewing court is bound
by the arbitrator’s factual findings, interpretation of the contract and suggested remedies.” Int’l
Bhd. of Elec. Workers v. Niagara Mohawk Power Corp., 196 F.3d 117, 124 (2d Cir. 1999) (citing
United Paperworkers Int’l Union v. Misco, Inc., 484 U.S. 29, 37–38 (1987)). “As long as the
award draws its essence from the collective bargaining agreement and is not merely the
arbitrator’s own brand of industrial justice, it must be confirmed.” Nat’l Football League Mgmt.
Council, 2016 WL 1619883, at *6 (internal quotation marks omitted) (citing Niagara Mohawk
Power Corp., 143 F.3d at 714).
Statute of Limitations
The main action to confirm the arbitration award is timely filed, but Respondent’s crossmotion to vacate is time-barred. “Under federal law, ‘a claim generally accrues once the plaintiff
knows or has reason to know of the injury which is the basis of his action.’” Wall v. Constr. &
Gen. Laborers’ Union, Loc. 230, 224 F.3d 168, 175-176 (2d Cir. 2000) (citing Cornwell v.
Robinson, 23 F.3d 694, 703 (2d Cir. 1994)).
“Because Congress did not provide a statute of limitations for suits brought under § 301,
this Court determines the statute of limitations for the federal cause of action by looking to the
most appropriate state statute of limitations.” Parker Meridien, 145 F.3d at 88. Under New York
law, a party must file suit to confirm an arbitration award “within one year after its delivery to
him.” N.Y. C.P.L.R. § 7510 (McKinney 2016); see also Loc. Union No. 1 of the United Ass’n of
Journeymen & Apprentices of the Plumbing & Pipe Fitting Indus. of the U.S. & Canada v. Bass,
No. 13 Civ. 3837, 2015 WL 1402884, at *4 (E.D.N.Y. Mar. 25, 2015) (“[S]ince the LMRA
borrows from state law for the applicable statute of limitations, a party has one year after delivery
of an arbitration award in which to seek confirmation . . . .”) (internal citations omitted).
The main action is timely. The record does not disclose the exact date on which
Petitioners received the award, but the arbitrator rendered the award on March 8, 2013. The
complaint in the first action to confirm the arbitration award was filed on April 24, 2013, 47 days
after the date of the arbitrator’s award. This action was filed on February 2, 2015. However, the
stipulation of dismissal in the first case seeking to confirm the award expressly tolled the statute
of limitations from April 25, 2013, through March 26, 2014. Petitioners filed this action 313 days
after March 27, 2014, and, accounting for the tolling, 360 days after the date of the award. As
Petitioners filed the action within one year after the award was delivered, the action is timely.
Claims brought under § 301 to vacate an award also use the period provided in the
relevant state law statute of limitations, which in this case is ninety days from the date of delivery
of the award. Parker Meridien, 145 F.3d at 88; see also N.Y. C.P.L.R. § 7511(a) (McKinney
2016). In employing the state statute of limitations, the court applies federal law, not state law,
and does not necessarily incorporate other portions of the state law. See Parker Meridien, 145
F.3d at 88. In deciding when it is necessary to borrow from state law, “it is the duty of the federal
courts to assure that the importation of state law will not frustrate or interfere with the
implementation of national policies.” Id. (quoting Occidental Life Ins. Co. v. EEOC, 432 U.S.
355, 367 (1977)).
Here, Respondent’s counterclaim to vacate the arbitration award is time barred. Because
Respondent presses this counterclaim long after the ninety-day statute of limitations lapsed and
could have filed a timely claim to vacate, his effort to vacate at this late date is foreclosed.
Although the record is unclear when Respondent received the award, it is undisputed that
Respondent was aware of the award by the time Respondent entered into the stipulation of
dismissal without prejudice in the first federal action on March 31, 2014. Even assuming
generously that Respondent did not know of the award until the date of the stipulation, the 90-day
statutory period in which it could have petitioned to vacate the award ended on June 29, 2014, at
the latest. After Petitioners commenced this case, Respondent filed its answer and counterclaim
to vacate on June 25, 2015, approximately one year after the period for filing had ended.
Respondent’s motion is therefore denied as untimely.
In Parker Meridien, the Second Circuit explicitly addressed whether the LMRA
incorporates the state law principle allowing defendants who have failed to timely challenge an
arbitration award nonetheless to “assert affirmative defenses challenging the award’s
enforceability.” Parker Meridien, 145 F.3d at 88; accord Loc. Union No. 38, Sheet Metal
Workers’ Int’l Ass’n AFL-CIO v. Custom Air Sys., Inc., 357 F.3d 266, 267 (2d Cir. 2004)
(internal citations omitted) (“In Parker Meridien, we held that the grounds for vacating an
arbitration award . . . may not be raised as an affirmative defense after the period of ninety days
as provided by N.Y. C.P.L.R. § 7511(a) has lapsed.”); Trustees of Int’l Union of Operating
Engineers Loc. 30 Benefits Funds v. Nyack Hosp., 975 F. Supp. 2d 365, 376 n.10 (S.D.N.Y.
2013) (“[T]he general rule is that a defendant must bring a motion to vacate an arbitration award
for lack of jurisdiction within ninety days of the issuance of the award . . . .”).
While the mismatch between allowing a party one year to confirm an arbitration award
but another party only ninety days to vacate in some cases may seem inequitable, important
federal interests underpin this result. In Parker Meridien, the Second Circuit held that federal law
does not incorporate the state common law principle because doing so would “be at loggerheads
with the role of arbitration in the LMRA” to promote the resolution of labor conflicts “quickly
and effectively through arbitration.” Parker Meridien, 145 F.3d at 89. As the Eighth Circuit
explained, the principle that “failure to file a timely motion to vacate an award . . . typically bars a
party from later raising defenses to the confirmation of the award that could have been raised in
the vacation motion” is “intended to enhance the speed and effectiveness of arbitration, to provide
fair review of the arbitrator's decision, and to preclude the losing party from dragging out
proceedings in order to dilute the integrity of the arbitration award.” Turner v. United
Steelworkers of Am., Local 812, 581 F.3d 672, 675-676 (8th Cir. 2009) (internal citations and
quotation marks omitted) (quoting Teamsters Loc., No. 579 v. B & M Transit, Inc., 882 F.2d 274,
277 (7th Cir. 1989)); see also Parker Meridien, 145 F.3d at 89 (discussing and incorporating by
analogy the underlying interest of the arbitration mechanism in the FAA context, noting “[t]he
role of arbitration as a mechanism for speedy dispute resolution disfavors delayed challenges to
the validity of an award . . . . When the three month limitations period has run without vacation of
the arbitration award, the successful party has a right to assume the award is valid and untainted,
and to obtain its confirmation in a summary proceeding.” (quoting Florasynth, Inc. v. Pickholz,
750 F.2d 171, 177 (2d Cir. 1984))).
Respondent also specifically asserts that it has a meritorious claim and that Petitioners
should be “equitably estopped” from asserting the statute of limitations as a defense to its
counterclaim. While Respondent cites to state equitable estoppel doctrine, the substantive law
that applies is federal law. See Lincoln Mills, 353 U.S. at 455. “A defendant may be equitably
estopped from asserting the statute of limitations ‘in cases where the plaintiff knew of the
existence of his cause of action but the defendant’s conduct caused [the plaintiff] to delay in
bringing his lawsuit.’ . . . To invoke equitable estoppel, a plaintiff must show that: (1) the
defendant made a definite misrepresentation of fact, and had reason to believe that the plaintiff
would rely on it; and (2) the plaintiff reasonably relied on that misrepresentation to his
detriment.” Buttry v. Gen. Signal Corp., 68 F.3d 1488, 1493 (2d Cir. 1995) (discussing equitable
estoppel in a “hybrid” claim under the LMRA and National Labor Relations Act) (internal
Respondent argues that it is entitled to equitable estoppel because Petitioners allegedly
misled Respondent into thinking the matter was settled by agreeing to the stipulation of dismissal
without prejudice and then waiting almost one year after the stipulated tolling period ended to
reinstitute a suit to confirm. However, the record contains no evidence that Petitioner made
misrepresentations that caused Respondents’ failure to take timely action. Moreover, the
stipulation explicitly states that it is without prejudice and tolled the statute of limitations only
until March 26, 2014. Respondent’s equitable estoppel argument therefore fails.
Respondent repeatedly returns to one central claim -- that it did not receive notice of the
arbitration, and that fairness necessitates that the matter should be remanded to the arbitrator to be
reheard. The FAA provides a narrow exception for vacating an award where "fundamental
fairness is violated.” Nat’l Football League Mgmt. Council, 2016 WL 1619883, at *14 (quoting
Tempo Shain Corp. v. Bertek, Inc., 120 F.3d 16, 20 (2d Cir. 1997)). Although the FAA does not
apply to this arbitration, which falls under the LMRA, federal courts often look to the FAA for
guidance. The Second Circuit has explicitly not decided whether “the free-floating procedural
fairness standard of the FAA ought to be imported to . . . review of arbitrations conducted
pursuant to the LMRA.” Nat’l Football League Mgmt. Council, 2016 WL 1619883, at *14 n.13
(internal quotation marks and citations omitted). To the extent that Respondent’s argument may
be construed as a “fundamental fairness” claim, this Court also does not decide whether
fundamental fairness standards should be incorporated into review of awards under the LMRA
because the result would be the same under the facts of this case.
Here, whether or not Respondent received adequate notice of the arbitration hearing,
Respondent had timely knowledge of the arbitration award and could have timely moved to
vacate it, but failed to do so. The LMRA “establishes a federal policy of promoting industrial
stabilization through the collective bargaining agreement, with particular emphasis on private
arbitration of grievances.” Nat’l Football League Mgmt. Council, 2016 WL 1619883, at *5
(internal citations and quotation marks omitted). The LMRA also evinces a federal interest in
resolving “labor conflicts quickly and effectively through arbitration,” Parker Meridien, 145 F.3d
at 89, and limiting the time in which to challenge an award with the intent to “preclude the losing
party from dragging out proceedings in order to dilute the integrity of the arbitration award.” Id.
(quoting Teamsters Loc. No. 579, 882 F.2d at 277). In this case and the prior federal action,
Respondent failed to act quickly to object to the arbitrator’s decision and is therefore barred from
now attempting to vacate the award. To find for Respondent on fairness standards borrowed
from the FAA on these facts would conflict with the federal interests underlying the LMRA.
Furthermore, the evidence does not support a finding of fundamental unfairness in this particular
case where the notice of the arbitration was sent to Respondent’s address as it appears on the
CBA, no evidence shows that Petitioner ever received an official notification of Respondent’s
change of address and Respondent failed to update its official service of process address with the
New York Department of State.
The federal courts are constrained by the LMRA and have limited ability to review
arbitration awards. “[O]ur task is simply to ensure that the arbitrator was even arguably
construing or applying the contract and acting within the scope of his authority and did not ignore
the plain language of the contract.” Nat’l Football League Mgmt. Council, 2016 WL 1619883, at
*6 (internal citations and quotation marks omitted). Here, where Respondent had at minimum
constructive notice of the arbitration award and failed to timely contest the award, the Court is
constrained from vacating the award.
The petition seeking confirmation of the arbitration award is granted. The arbitrator acted
within the scope of his authority and explains his reasoning. The CBA grants the arbitrator “full
and complete authority to decide any and all issues raised by the submission and to fashion an
appropriate remedy,” which may include monetary damages. The CBA also requires any
judgement include reasonable attorneys’ fees and the cost of the action. The award of damages
and arbitration costs is supported by the record and cannot be attributed to any bias or irrational
decision making on the part of the arbitrator. The arbitrator reviewed the CBA and heard
testimony from the auditor detailing the delinquencies in payments to fringe benefit funds
discovered during the audit, the accounting method used during the audit, and the computation of
the amount of each alleged delinquency. Because the arbitrator acted within the scope of his
authority and the award of $15,863.43 plus interest is supported with more than a “barely
colorable justification,” it is confirmed.
Attorneys’ Fees and Costs
Both the CBA and ERISA authorize reasonable attorneys’ fees and costs for actions
regarding delinquent funds. See 29 U.S.C. § 1132(g). Petitioners’ application for attorneys’ fees
and costs for the present action in the total amount of $12,925.27 is granted. Petitioners’ counsel
documents 51 hours of work at $225 and $300 per hour and 7.7 hours of work by paralegals at
$100 per hour, which amounts to $12,252.50. They also seek reasonable costs of $672.77 for
filing this action and for service.
For the foregoing reasons, the motion to confirm the arbitration award is GRANTED, and
Respondent’s cross-motion is DENIED. The Clerk of Court is directed to enter judgment in
favor of Petitioners of $15,863.43 plus 5.25% per annum interest beginning March 8, 2013, to the
date of payment; and $12,925.22 as attorneys’ fees and costs for the present action without
interest. The Clerk is directed to close the motions at Docket Nos. 38 and 47 and to close the
Dated: June 6, 2016
New York, New York
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