Rite Aid of N.Y., Inc. v. 1199seiu United Healthcare Workers E.
Rite Aid of N.Y., Inc. v. 1199seiu United Healthcare Workers E.
Opinion of the Court
*570Before the Court is Respondent 1199SEIU United HealthCare Workers East's (the "Union") motion to dismiss Petitioner Rite Aid of New York, Inc.'s ("Rite Aid") petition to stay an arbitration. For the following reasons, the Court grants the Union's motion to dismiss.
I. Background
Respondent 1199SEIU United HealthCare Workers East is a labor organization as defined in the National Labor Relations Act ("NLRA"), and Petitioner Rite Aid is an employer within the meaning of that Act. See Mot. at 1 (Dkt No. 10); Belovin Decl. ¶¶ 4, 6, 9 (Dkt No. 11); Petition ¶ 3 (Dkt No. 1). The two parties have entered into three agreements that are relevant to the current dispute. The first agreement is the 2009-15 Memorandum of Agreement ("MOA"), which established the parties' most recent collective bargaining agreement ("CBA"). Belovin Decl. Ex. 4 (Dkt No. 11-4); Mot. at 2; Opp. at 4 (Dkt No. 12). That agreement expired in April 2015. Belovin Decl. Ex. 4 at 16; Hinkle Decl. ¶ 4 (Dkt No. 14). On May 5, 2015, the parties entered into an agreement extending the CBA (the "Extension Agreement"). Hinkle Decl. Ex. A (Dkt No. 14-1). The agreement had no specific duration, but it permitted either party to terminate the agreement with ten days' written notice. Hinkle Decl. Ex. A; Opp. at 4. In July 2016, Rite Aid gave the Union notice that it was terminating the extension agreement. Hinkle Decl. ¶ 7. The parties subsequently implemented a final bargaining proposal ("Final Offer") on September 14, 2016, which remains in effect today. Hinkle Decl. ¶ 8; Hinkle Ex. B (Dkt No. 14-2).
The 2009-15 MOA required Rite Aid to make certain contributions to the 1199SEIU/Employer Child Care Fund. Belovin Decl. ¶ 9; Petition ¶ 4. A dispute eventually arose regarding the amount Rite Aid was required to contribute to the Fund. From October 30, 2009 through September 17, 2014, Rite Aid remitted contributions to the Fund at a rate of 0.4% of the employer's gross payroll. Petition ¶¶ 4, 8; Hinkle Decl. ¶ 3, 11. The Union, however, contends that the contribution rate should have been 0.5%. Mot. at 2; Hinkle Decl. ¶ 11. In September 2014, the Union informed Rite Aid that the proper contribution rate was 0.5%. Hinkle Decl. ¶ 11. Starting in October 2014, Rite Aid began remitting contributions at that rate. Hinkle Decl. ¶ 11; Opp. at 1. For several years, the Union did not take any further action concerning these contributions, such as seeking reimbursement for the allegedly underfunded contributions that were made before October 2014. Hinkle Decl. ¶ 11; Opp. at 6-7.
In 2017, the Union served a "Notice of Intention to Arbitrate" on Rite Aid related to the 1199SEIU/Employer Child Care Fund contributions. The Notice is dated February 8, 2017. Belovin Decl. Ex. 5 (Dkt No. 11-5). The Union claims that it sent the Notice to Rite Aid on February 9, 2017, see Mot. at 2, but Rite Aid contends that it did not receive the Notice until February 10, 2017, see Opp. at 7. See also Belovin Decl. ¶¶ 13-14; Belovin Ex. 6 (Dkt No. 11-6). The Notice stated, in part:
Pursuant to the terms of the Collective Bargaining Agreement between 1199SEIU United Healthcare Workers East and Rite Aid, this is to notify Rite Aid of our intention to conduct an arbitration against Rite Aid for failure to remit contributions to the:
1199SEIU/Employer Child Care Fund *571due in February 2011 - August 2014 and November 2016 - January 2017, on behalf of employees at Rite Aid.
Belovin Decl. Ex. 5. The Notice also stated:
PLEASE TAKE NOTE that pursuant to Section 7503 of the CPLR, unless within twenty days after service of the Notice of Intention to Arbitrate Rite Aid moves to stay the arbitration, Rite Aid shall be barred from putting into issue the making of said agreement, the failure to comply with it, and from asserting in court the bar of a limitation of time.
Id. The Union later dropped its claim for the second time period, November 2016 to January 2017. Mot. at 3 n.3.
In a Notice of Hearing dated February 17, 2017, the Union notified Rite Aid that an arbitration hearing was scheduled for February 28, 2017. Mendelson Decl. Ex. B (Dkt No. 13). On February 23, Rite Aid asked the Union to adjourn the arbitration hearing, but the Union responded by telling Rite Aid to ask the arbitrator. Mendelson Decl. ¶ 5. Accordingly, counsel for Rite Aid emailed the arbitrator that same day to request an adjournment. Mendelson Decl. ¶ 6. In that email, counsel for Rite Aid represented that the reason for the adjournment was that counsel was going to be "out-of-town." Mendelson Decl. Ex. C; Belovin Decl. Ex. 7 (Dkt No. 11-7). Rite Aid's counsel also wrote that Rite Aid would "be raising a statute of limitations defense" and that the company recognized that "under CPRL 7503(c), which is referenced in the Union's Notice of Intention to Arbitrate ..., the Company must raise that defense by filing an action in court to enjoin the arbitration." Id. The arbitrator granted the request for an adjournment, and the hearing was rescheduled for March 30, 2017. Belovin Decl. Ex. 7.
According to Rite Aid, it engaged in settlement negotiations with the Union from February 23 through March 5. Opp. at 9; Mendelson Decl. ¶ 7. Rite Aid represents that these "discussions concluded unsuccessfully on March 5." Opp. at 9.
On March 6, 2017 - either twenty-four (Rite Aid's view) or twenty-five (the Union's view) days after Rite Aid received the Notice of Intention to Arbitrate - Rite Aid filed a petition with this Court to enjoin the March 30 arbitration hearing. Dkt No. 1. That petition contends that the Union's cause of action is barred by the statute of limitations and the doctrine of laches. Petition ¶¶ 34-36. Specifically, Rite Aid contends that the Union "seeks to arbitrate a claim that the Company failed to implement an increase in the contribution rate to the Union's Child Care Fund 7.5 years ago," see Opp. at 1, and that this claim is barred by a six year statute of limitations, Petition ¶ 34.
In response to the petition, the Court ordered the parties to meet and confer to submit a proposed briefing schedule on the petition and to discuss whether discovery was necessary. Dkt No. 4. The Court also ordered the Union to state whether it consented to a stay of arbitration. Id. On March 8, 2017, instead of providing a joint proposed briefing schedule, the parties provided competing letters. Dkt No. 5, 7. Rite Aid suggested adopting an "expedited discovery schedule" to resolve purported "material issues of fact in dispute that go to [Rite Aid's] laches defense," followed by a two to three week briefing schedule for the underlying petition. Dkt No. 5. The Union's letter contended that Rite Aid's petition to enjoin the arbitration was untimely, and the Union indicated its intent to file a motion to dismiss on that ground. Dkt No. 7. The Union therefore suggested bifurcating the case, with the Court first resolving the Union's motion to dismiss.
*572Id. If the Court denied the motion to dismiss, then the Union agreed with Rite Aid that discovery and further briefing were warranted. Id.
On March 9, 2017, the Court adopted the Union's proposal and set a briefing schedule for the Union's motion to dismiss, with the understanding that it would address the underlying petition if the motion to dismiss were denied. Dkt No. 8. The Court also stayed the March 30 arbitration pending resolution of the motion to dismiss. Id.
II. Discussion
Rite Aid has filed a petition to stay the arbitration noticed by the Union, arguing that the Union's claims are barred by the statute of limitations and laches. The Union's motion to dismiss this petition raises a single argument, that Rite Aid's petition to enjoin the arbitration should be dismissed as untimely under New York C.P.L.R. § 7503(c). Rite Aid concedes that it filed its petition outside the twenty-day window outlined in
A. Rite Aid's Petition is Untimely Under New York CPLR § 7503
"A party bringing an arbitration has the option under [N.Y. C.P.L.R.] section 7503(c) to ... serve a demand for arbitration or a notice of intent to arbitrate both of which trigger a time limit for bringing a proceeding to stay the arbitration." Pictet Funds (Europe) S.A. v. Emerging Managers Grp, L.P. , No. 14-cv-6854 (SAS),
(c) Notice of intention to arbitrate. A party may serve upon another party a demand for arbitration or a notice of intention to arbitrate, specifying the agreement pursuant to which arbitration is sought and the name and address of the party serving the notice, or of an officer or agent thereof if such party is an association or corporation, and stating that unless the party served applies to stay the arbitration within twenty days after such service he shall thereafter be precluded from objecting that a valid agreement was not made or has not been complied with and from asserting in court the bar of a limitation of time..... An application to stay arbitration must be made by the party served within twenty days after service upon him of the notice or demand, or he shall be so precluded.
This provision bars Rite Aid's petition. Rite Aid does not dispute that § 7503(c) applies in this case. The company asserts a statute of limitations defense in its petition to stay the arbitration hearing, and § 7503(c) expressly "applies to objections ... based on time limitations." LJL 33rd Street Assocs., LLC v. Pitcairn Props. Inc. ,
Because § 7503(c) applies to Rite Aid's objection to the arbitration, Rite Aid was required to file its petition "within twenty days" after being served with the Notice of Intention to Arbitrate.
*573
B. None of Rite Aid's Arguments as to Why § 7503 Should Not Apply Are Persuasive
Rite Aid does not dispute that it filed its petition more than twenty days after receiving the Notice of Intention to Arbitrate. See Opp. at 2. The company, however, raises five arguments as to why the Court nonetheless should consider its petition on its merits. The Court finds none of Rite Aid's arguments persuasive.
First, Rite Aid contends that § 7503 has been preempted by federal law. Opp. at 9, 21-22. In making this argument, Rite Aid relies on a statement from a footnote in a 1995 Second Circuit Court of Appeals opinion. See Opp. at 9 (citing Local 74, Serv. Emps. Int'l Union, AFL-CIO v. Ecclesiastical Maintenance Servs., Inc. ,
*574("Equally devoid of merit is petitioner's contention ... that the twenty-day limitations period set forth in CPLR 7503 (c) is pre-empted by the Federal Arbitration Act (the FAA). Federal law in the field of arbitration pre-empts State law only to the extent that the two bodies of law conflict... [and] no conflict exists."); see also Local 802, Assoc. Musicians of Greater New York v. The Parker Meridien Hotel ,
Second, Rite Aid contends that the Union cannot rely on § 7503(c)'s twenty-day bar because the Union itself violated § 7503(c). Opp. at 9-10. Under New York law, a failure to comply with § 7503(c), for example, by not specifying the agreement to which arbitration is sought or failing to provide a warning about the twenty-day limitation, renders the twenty-day limitation period inapplicable. See Cooper v. Bruckner ,
The Court rejects this argument. Rite Aid's contention ignores the nature of collective bargaining agreements. "[A] collective bargaining agreement is not limited solely to the specific provisions of the basic labor contract formally executed by the parties, but it may also include, among other things, written side agreements and oral understandings entered into by the parties to the collective bargaining relationship." Rollins v. Community Hosp. of San Bernardino ,
Third, Rite Aid urges the Court to treat the Notice of Hearing, which was dated February 17, as the relevant document that triggers § 7503(c)'s twenty-day limitations period, rather than the February 8 Notice of Intention to Arbitrate. Opp. at *57511-12. Rite Aid's argument proceeds as follows. According to Rite Aid, the February 17 Notice of Hearing materially altered the Union's claim because the original Notice of Intention to Arbitrate sought arbitration over contributions made from "February 2011 - August 2014" and "November 2016 - January 2017," while the Notice of Hearing sought arbitration only for contributions from February 2011 through August 2014.
There are two problems with Rite Aid's argument. First, Rite Aid cites no authority for the proposition that a subsequent notice of hearing can supersede the prior notice of intention to arbitrate for purposes of triggering § 7503(c)'s limitations period. See Opp. at 11-12. And contrary to Rite Aid's argument, the text of § 7503(c) applies to a "Notice of intention to arbitrate," not a notice of hearing. Second, Rite Aid is simply incorrect in asserting that the February 17 Notice of Hearing "changed the claim that the Union asserted in the February 8 Notice." Opp. at 11. The Notice of Intention to Arbitrate stated that it was seeking "arbitration against Rite Aid for failure to remit contributions" to a particular fund for the time periods of "February 2011 - August 2014 and November 2016 - January 2017." Belovin Decl. Ex. 5. The Union subsequently decided to drop the claim for the second time period. Mot. at 3 n.3; Opp. at 12. But the fact that the Union decided to drop one of the two time periods does not fundamentally alter the claim. The basic elements of the dispute remained the same: the Union sought to arbitrate the same contributions, to the same Fund, under the same collective bargaining agreement, but simply for a shorter time period than originally identified. In fact, the Union's decision to drop the second time period actually worked in Rite Aid's favor, as it reduced the company's potential liability. Because no new claims or additional time periods were added to the Notice of Hearing, Rite Aid's contention that the Notice of Hearing somehow fundamentally changed the underlying claim is unavailing.
Fourth, Rite Aid contends that § 7503(c)'s twenty-day deadline should be equitably tolled. Opp. at 12-21. But this argument suffers from multiple flaws. As an initial matter, it is not clear that equitable tolling is even permitted under § 7503(c). The New York Court of Appeals has stated that "courts have no discretion to extend" § 7503(c)'s twenty-day time period. Matarasso ,
Even assuming the Court had discretion to apply the doctrine of equitable tolling, it would find tolling unwarranted under the facts of this case. The thrust of Rite Aid's *576equitable tolling argument is that it would be unfair to penalize them for failing to abide by § 7503(c)'s twenty-day deadline when the Union itself was derelict in bringing its claim in the first place. See Opp. at 18 ("There is an incredible irony in the Union alleging that the Company is time-barred from raising the Union's nearly 5 year delay in notifying the Company of an increased contribution rate and its 7.5 year delay before filing for arbitration ..."). But Rite Aid's argument ignores that the text of § 7503(c) itself contemplates this "irony." Under § 7503(c), a failure to file a petition to stay an arbitration does not bar all court challenges to an arbitration, but rather only precludes a party "from objecting that a valid agreement was not made or has not been complied with and from asserting in court the bar of a limitation of time ."
Rite Aid's other arguments for equitable tolling are unavailing. "[E]quitable tolling is only appropriate in rare and exceptional circumstances, in which a party is prevented in some extraordinary way from exercising his rights." Zerilli-Edelglass v. New York City Transit Auth. ,
The only explanation for Rite Aid's failure to file a timely petition that the Court could discern from the company's briefing is that Rite Aid was attempting to settle the case. According to Rite Aid, settlement negotiations with the Union concluded unsuccessfully on March 5, so Rite Aid filed the petition to stay the arbitration the next day. Opp. at 2, 9. However, "settlement discussions are not the sort of extraordinary circumstance that would trigger the application of equitable tolling," Hooper v. Berryhill , No. 15-CV-6646 (JLC),
Fifth, and finally, Rite Aid contends that § 7503(c) does not apply because there is no agreement to arbitrate. Opp. at 20. Under New York law, the twenty-day limitations period of § 7503(c) does not apply to challenges premised on the nonexistence of an arbitration agreement between the parties. Matarasso ,
This argument is unpersuasive. "A party's obligation under an arbitration clause survives the expiration of an agreement when the post-expiration action 'infringes a right that accrued or vested under the agreement.' " Kuklachev v. Gelfman ,
III. Conclusion
For the aforementioned reasons, the Court agrees with the Union that Rite Aid's petition to stay the arbitration is untimely under
This resolves Docket Number 9. The Court respectfully requests that the Clerk of the Court close this case.
SO ORDERED.
Reference
- Full Case Name
- RITE AID OF NEW YORK, INC. v. 1199SEIU UNITED HEALTHCARE WORKERS EAST
- Cited By
- 2 cases
- Status
- Published