Trustees of the Laundry, Dry Cleaning Workers and Allied Industries Health Fund, Workers United v. FDR Services Corp. of New York

Filing 91

MEMORANDUM OPINION AND ORDER re: 85 MOTION to Amend/Correct the Third-Party Complaint filed by FDR Services Corp. of New York, 73 MOTION to Compel Arbitration and Motion to Dismiss filed by Alberto Arroyo, Wilfredo Larancuent, Laundry, Distribution and Food Service Joint Board. The Union defendants' motion to compel arbitration is GRANTED, and their motion to dismiss is DENIED AS MOOT. FDR's motion to amend is DENIED AS MOOT. The claims in the thi rd-party complaint are stayed pending arbitration. By November 27, 2019, and every ninety days thereafter, FDR and the Union defendants shall inform the Court by joint letter of the status of the arbitration. Additionally, within ten days of complet ion of the arbitration, the parties shall provide a status report to the Court. By September 11, 2019, the Funds and FDR shall submit a joint status update regarding both this case and the related case of Trustees of the Laundry, Dry Cleaning Worker s and Allied Industries Retirement Fund, Workers United et al. v. FDR Services Corp. of New York, No. 17 Civ. 8353 (S.D.N.Y.). The parties shall specifically address whether the two cases should be stayed pending the arbitration, and, if not, shall p ropose revised discovery deadlines and include any other information they think would be helpful to Magistrate Judge Smith in re-commencing discovery in the two actions. The Clerk is instructed to terminate the motions. (Docs. ##73, 85). SO ORDERED. (Signed by Judge Vincent L. Briccetti on 8/28/2019) (mml)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------------------------------x
TRUSTEES OF THE LAUNDRY, DRY
:
CLEANING WORKERS AND ALLIED
:
:
INDUSTRIES HEALTH FUND, WORKERS
UNITED; TRUSTEES OF THE LAUNDRY,
:
DRY CLEANING WORKERS AND ALLIED
:
INDUSTRIES RETIREMENT FUND,
:
WORKERS UNITED; and TRUSTEES OF
:
THE LAUNDRY AND DRY CLEANING
:
WORKERS EDUCATION AND LEGAL
:
ASSISTANCE FUND,
:
Plaintiffs,
:
:
v.
:
:
FDR SERVICES CORP. OF NEW YORK,
:
Defendant.
:
------------------------------------------------------------- x
FDR SERVICES CORP. OF NEW YORK,
:
Third-Party Plaintiff,
:
v.
:
:
:
LAUNDRY, DISTRIBUTION, AND FOOD
:
SERVICE JOINT BOARD; ALBERTO
:
ARROYO; and WILFREDO LARANCUENT,
:
as Union Trustees of the Laundry, Dry Cleaning
:
Workers and Allied Industries Health Fund,
:
Workers United and Officers of the Laundry,
:
Distribution and Food Service Joint Board,
:
Third-Party Defendants.
:
--------------------------------------------------------------x

MEMORANDUM OPINION
AND ORDER
17 CV 7145 (VB)

Briccetti, J.:
Plaintiffs Trustees of the Laundry, Dry Cleaning Workers and Allied Industries Health
Fund, Workers United (the “Health Fund”); Trustees of the Laundry, Dry Cleaning Workers and
Allied Industries Retirement Fund, Workers United; and Trustees of the Laundry and Dry
Cleaning Workers Education and Legal Assistance Fund (collectively, the “Funds”) bring this
action against defendant FDR Services Corp. of New York (“FDR”), seeking (i) to compel FDR
1

to submit to an audit, and (ii) to collect alleged unpaid contributions to the Funds, pursuant to the
Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq.
On October 10, 2018, the Court granted in part and denied in part FDR’s motion to join
additional parties. Trustees of the Laundry, Dry Cleaning Workers and Allied Indus. Health
Fund, Workers Utd. v. FDR Servs. Corp. of N.Y., 2018 WL 4931541, at *1 (S.D.N.Y. Oct. 10,
2018). The Court construed FDR’s motion as one for leave to file a third-party complaint under
Fed. R. Civ. P. 14 and permitted FDR to file a third-party complaint asserting claims for
contribution and breach of fiduciary duty against the Laundry, Distribution and Food Service
Joint Board (the “Union”), Alberto Arroyo, and Wilfredo Larancuent (collectively, the “Union
defendants”). Id. at *4.
FDR filed an amended answer and third-party complaint asserting claims against the
Union defendants on October 23, 2018. (Doc. #62). FDR alleges from October 1, 2013, to
September 30, 2016, the Union defendants failed to forward to the Health Fund signed employee
waivers worth approximately $150,000 of FDR’s allegedly delinquent contributions to the
Health Fund.
Now pending are (i) the Union defendants’ motion to compel arbitration and dismiss the
third-party complaint (Doc. #73), and (ii) FDR’s cross-motion to amend its third-party complaint
(Doc. #85).
For the reasons set forth below, the Union defendants’ motion to compel is GRANTED
and their motion to dismiss is DENIED AS MOOT. FDR’s cross-motion to amend is DENIED
AS MOOT.
The Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367.

2

The Court assumes the parties’ familiarity with FDR’s allegations against the Union
defendants, which the Court summarized in its October 10 Opinion.
DISCUSSION
I.

Standard of Review 1
“In the context of motions to compel arbitration brought under the Federal Arbitration

Act . . . , the court applies a standard similar to that applicable for a motion for summary
judgment.” Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003) (internal citations
omitted). “A party to an arbitration agreement seeking to avoid arbitration generally bears the
burden of showing the agreement to be inapplicable or invalid.” Harrington v. Atl. Sounding
Co., 602 F.3d 113, 124 (2d Cir. 2010) (citing Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S.
79, 91–92 (2000)).
In deciding whether to compel arbitration, a court must determine (i) whether the parties
agreed to arbitrate; (ii) if so, the scope of the agreement to arbitrate; (iii) whether Congress
intended any federal statutory claims asserted to be nonarbitrable; and (iv) if some, but not all, of
the claims in the case are arbitrable, whether to stay the balance of the proceedings pending
arbitration. JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d 163, 169 (2d Cir. 2004).
At issue on the Union defendants’ motion to compel arbitration is the scope of the alleged
agreement to arbitrate. The federal policy favoring arbitration “requires [courts] to construe
arbitration clauses as broadly as possible.” In re Am. Exp. Fin. Advisors Sec. Litig., 672 F.3d

1

The Court does not reach the Union defendants’ argument that the Court lacks subject
matter jurisdiction to hear several of FDR’s claims. “[A] federal court has leeway to choose
among threshold grounds for denying audience to a case on the merits.” Sinochem Int’l Co. v.
Malaysia Int’l Shipping Corp., 549 U.S. 422, 431 (2007) (internal quotation omitted) (holding
courts can decide forum non conveniens before subject matter jurisdiction); see also In re
Residential Capital, LLC, 563 B.R. 756, 766 (Bankr. S.D.N.Y. 2016) (addressing motion to
compel arbitration before motions to dismiss for lack of subject matter or personal jurisdiction).
3

113, 128 (2d Cir. 2011) (internal quotation omitted). “In determining whether a particular claim
falls within the scope of the parties’ arbitration agreement, [courts] focus on the factual
allegations in the complaint rather than the legal causes of action asserted.” Genesco, Inc. v. T.
Kakiuchi & Co., 815 F.2d 840, 846 (2d Cir. 1987).
The Second Circuit has provided a roadmap for determining whether particular disputes
fall within the scope of an arbitration agreement. First, the court “should classify the particular
clause as either broad or narrow.” JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d at 172
(internal quotation omitted). If the clause is narrow, “the court must determine whether the
dispute is over an issue that is on its face within the purview of the clause, or over a collateral
issue that is somehow connected to the main agreement that contains the arbitration clause.”
Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc., 252 F.3d 218, 224 (2d Cir.
2001) (internal quotation and citation omitted). Notwithstanding these guidelines, courts are not
required “to make the nice determination of exactly where in the range between broad and
narrow [an arbitration] clause fits.” WorldCrisa Corp. v. Armstrong, 129 F.3d 71, 75 (2d Cir.
1997).
When “the arbitration clause is broad, there arises a presumption of arbitrability and
arbitration of even a collateral matter will be ordered if the claim alleged implicates issues of
contract construction or the parties’ rights and obligations under it.” Louis Dreyfus Negoce S.A.
v. Blystad Shipping & Trading Inc., 252 F.3d at 224 (internal quotation omitted). Indeed, if the
arbitration clause is broad, “it is presumptively applicable to disputes involving matters going
beyond the interpretation or enforcement of particular provisions of the contract which contains
the arbitration clause.” JLM Indus., Inc. v. Stolt-Nielsen SA, 387 F.3d at 172 (internal quotation
and alterations omitted).

4

II.

Application
The Union defendants argue FDR’s claims against them fall within the scope of the

arbitration agreement contained in a collective bargaining agreement (the “CBA”) between the
Union and FDR that ran from May 1, 2013, to April 30, 2016, and which FDR and the Union,
through two subsequent agreements, extended through July 31, 2017.
The Court agrees.
The CBA’s arbitration clause is broad. A CBA containing a clause that requires
arbitration of “any dispute, claim, grievance or difference arising out of or relating to this
Agreement which the Union and the Employer have not been able to settle” constitutes a broad
arbitration clause. Vera v. Saks & Co., 335 F.3d 109, 117 (2d Cir. 2003) (internal alterations and
citations omitted). The CBA at issue here contains just such language: “Procedures herein shall
be the exclusive means for the determination of all disputes, complaints, controversies, claims or
grievances whatsoever concerning the meaning, application, performance, or operation of any
provision of this Agreement.” (Doc. #75 (“Swearengen Decl.”) Ex. A (“CBA”) at 20). In
addition, the CBA also states:
The procedure established in this Agreement for the adjudication of disputes shall
be the exclusive means for determination of such disputes, including strikes,
stoppages, lockouts, and any and all claims, demands and actions arising there
from, except as expressly provided otherwise in this Agreement. No proceeding or
action in a court [of] law or equity or administrative tribunal shall be initiated other
than to compel arbitration and to enforce or vacate an award.
This Article shall constitute a complete defense and ground for a stay of any action
or proceeding instituted contrary thereto.
(Id. at 22–23). Thus, a presumption of arbitrability applies.
FDR has not offered any evidence to rebut the presumption of arbitrability. Rather, FDR
argues the Union’s alleged failure to forward signed employee waivers to the Health Fund
breached a practice beyond the scope of the CBA—i.e., was not a breach of the CBA itself.
5

Further, according to FDR, the CBA provides only for FDR’s obligation to make contributions to
the Health Fund and does not address the mechanics by which the Union and FDR ensured that
the Health Fund received the information necessary to enroll employees in the Fund.
Even if the presumption in favor of arbitration did not apply, FDR’s interpretation of the
arbitration clause is too narrow. Contrary to FDR’s contention, under the arbitration clause’s
plain language, the CBA need not address the specific mechanics by which FDR or the Union
was required to enroll employees in the Health Fund. A practice that the parties allegedly
evolved to fulfill FDR’s obligation under the CBA to contribute to the Health Fund necessarily
concerns the “meaning, application, performance, or operation” of the CBA. (CBA at 20).
Therefore, the CBA’s delineation of FDR’s obligation to contribute to the Health Fund suffices
to bring FDR’s claims within the scope of the arbitration clause.
Indeed, the parties dispute whether the CBA requires FDR to contribute to the Health
Fund on behalf of employees who waived coverage—a dispute that explicitly calls for
interpreting the CBA so as to define the scope of FDR’s obligation to contribute to the Health
Fund. Cf. Dodge Hyundai of Paramus v. United Welfare Fund, Welfare Div., 2011 WL
4356373, at *7 (E.D.N.Y. Sept. 16, 2011) (holding arbitrator must determine “[w]hether
employees are covered by the CBA, and therefore entitled to contributions . . . on their behalf”).
Accordingly, the Court compels arbitration of FDR’s claims against the Union
defendants, and stays the third-party claims. See Katz v. Cellco P’ship, 794 F.3d 341, 347 (2d
Cir. 2015) (holding courts must stay proceedings when all claims in an action have been referred
to arbitration and a stay requested). The Court thus does not reach the Union defendants’ motion
to dismiss or FDR’s motion to amend.

6

CONCLUSION
The Union defendants’ motion to compel arbitration is GRANTED, and their motion to
dismiss is DENIED AS MOOT. FDR’s motion to amend is DENIED AS MOOT. The claims in
the third-party complaint are stayed pending arbitration.
By November 27, 2019, and every ninety days thereafter, FDR and the Union defendants
shall inform the Court by joint letter of the status of the arbitration. Additionally, within ten days
of completion of the arbitration, the parties shall provide a status report to the Court.
By September 11, 2019, the Funds and FDR shall submit a joint status update regarding
both this case and the related case of Trustees of the Laundry, Dry Cleaning Workers and Allied
Industries Retirement Fund, Workers United et al. v. FDR Services Corp. of New York, No. 17
Civ. 8353 (S.D.N.Y.). The parties shall specifically address whether the two cases should be
stayed pending the arbitration, and, if not, shall propose revised discovery deadlines and include
any other information they think would be helpful to Magistrate Judge Smith in re-commencing
discovery in the two actions.
The Clerk is instructed to terminate the motions. (Docs. ##73, 85).
Dated: August 28, 2019
White Plains, NY

SO ORDERED:

____________________________
Vincent L. Briccetti
United States District Judge

7