14-3976-cv
Chelsea Grand, LLC v. New York Hotel & Motel Trades Council, AFL-CIO

                         UNITED STATES COURT OF APPEALS
                             FOR THE SECOND CIRCUIT

                                       SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED
BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY
MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE
NOTATION “SUMMARY ORDER”). A PARTY CITING TO A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
4th day of November, two thousand fifteen.

Present:

            DEBRA ANN LIVINGSTON ,
            CHRISTOPHER F. DRONEY,
                  Circuit Judges,
            SIDNEY H. STEIN*
                  District Judge.
_____________________________________

CHELSEA GRAND, LLC,

                        Petitioner-Appellant,

                v.                                                     14-3976-cv

NEW YORK HOTEL & MOTEL TRADES COUNCIL,
AFC-CIO,
                  Respondent-Appellee.
_____________________________________

For Petitioner-Appellant:                    David B. Rivkin, Jr., Mark W. DeLaquil, Washington,
                                             DC

For Respondent-Counter-Claimant-Appellee:
                                      Barry Neal Saltzman, Danya Ahmed, New York, NY

* The Honorable Sidney H. Stein, of the United States District Court for the Southern District of
New York, sitting by designation.


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       UPON      DUE     CONSIDERATION              WHEREOF      it   is   hereby     ORDERED,

ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED.

       Petitioner-Appellant Chelsea Grand, LLP (“Chelsea Grand”) appeals from the September

29, 2014 order in the Southern District of New York (Crotty, J.), following a bench trial

confirming the Impartial Chairman’s arbitral awards.         Chelsea Grand disputes whether

jurisdiction exists under § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and

whether the arbitral awards at issue accord with federal labor policy. We assume the parties’

familiarity with the underlying facts and procedural history of the case, and with the issues on

appeal, which we describe here only as necessary to explain our decision to affirm.

       I.      Background

       In 2003, Chelsea Grand entered into a Hotel Management Agreement with Interstate

Management Company, LLC (“Interstate”) to operate Chelsea Grand’s Hotel (“Hotel”), located

on West 25th Street in Manhattan. In 2004, Interstate signed a memorandum of agreement

(“2004 MOA”) with Respondent-Counterclaimant-Appellee New York Hotel & Motel Trades

Council, AFL-CIO (“Union”). By the terms of the 2004 MOA, Interstate “agree[d] to be bound

by the Accretion and Card Count/Neutrality provisions of the Memorandum of Understanding

dated June 15, 2000 between the Union and the Hotel Association of New York, Inc.” JA64.

The 2004 MOA took retroactive effect on July 1, 2001, but contained no expiration date.

       In January 2007, after an attempt to organize the employees of Chelsea Grand’s Hotel

pursuant to the card check and neutrality provisions adopted in the 2004 MOA, the Union

initiated an arbitration proceeding against Chelsea Grand and Interstate before the Impartial

Chairman. The Impartial Chairman initially adjourned the proceeding to allow the Union to




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correct a defect in notice. The Union supplied proper notice the next day, but Chelsea Grand

refused to comply with the terms of the 2001 IWA’s card check and neutrality provisions as

adopted by the 2004 MOA. Most notably, Chelsea Grand refused to provide the necessary list of

employees for the card check.

       The Union returned to the Impartial Chairman. In two successive awards, the Impartial

Chairman ruled in the Union’s favor, deeming Chelsea Grand in violation of its obligations

under the 2004 MOA and the substantive IWA provisions it incorporated.              The Impartial

Chairman reasoned that the 2004 MOA bound Chelsea Grand both as a joint employer and as

principal to Interstate. Accordingly, by refusing to comply with the card check and neutrality

procedures adopted by the 2004 MOA, and refusing to submit to arbitration proceedings

incorporated in the same agreement, Chelsea Grand had violated the 2004 MOA.1 Chelsea

Grand, while reserving the right to challenge the arbitral awards, provided the Union with the list

of Hotel employees. The Impartial Chairman verified a card count at the Hotel March 6, 2007.

       March 23, 2007, Chelsea Grand filed a petition in New York state court to vacate the

arbitral awards. Thereafter, the Union removed the case to the Southern District of New York,

where Judge Crotty held a bench trial from July 28, 2008 to August 4, 2008. In an order and

opinion dated September 29, 2014, Judge Crotty confirmed the arbitral awards, finding Chelsea

Grand bound to, and in violation of, the 2001 IWA. Unlike the Impartial Chairman’s awards,

which looked to the 2004 MOA to bind Chelsea Grand, the district court relied principally on the

2001 IWA’s “accretion clause” to support its conclusion that Interstate bound Chelsea Grand to



1
  The Impartial Chairman also suggested that Chelsea Grand had violated the 2006 IWA,
pursuant to paragraph 2 of the 2004 MOA, which purports to bind Interstate to “any successor”
IWAs. Because the parties agreed before the district court that paragraph 2 did not bind Chelsea
Grand, operating instead only as to hotels that were already unionized at the time, we do not rely
on the 2006 IWA.


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the provisions of the 2001 IWA at issue, declining to reach the question whether the 2004 MOA

also operated to bind Chelsea Grand.2 In the district court’s view, Interstate, as operator of two

hotels under the 2001 IWA at the time of the IWA’s adoption, bound after-acquired properties to

the IWA through the “accretion clause.” The district court relied on theories of joint employer

and agency to bind Chelsea Grand to Interstate’s commitments. Chelsea Grand filed a notice of

appeal on October 20, 2014. In its briefs on appeal, Chelsea Grand does not contest the district

court’s determination that Interstate and Chelsea Grand were joint employers and that, by the law

of agency, it was Interstate’s principal, so we deem these issues waived. See Otero v. Bridgeport

Hous. Auth., 297 F.3d 142, 144 (2d Cir. 2002) (citation omitted).

       II.     Discussion

       We review questions of subject matter jurisdiction de novo. Bank of India v. Trendi

Sportswear, Inc., 239 F.3d 428, 436 (2d Cir. 2000). As to the question whether the Impartial

Chairman’s awards violate public policy, “[w]hen reviewing a district court’s confirmation of an

arbitral award, we review legal issues de novo and findings of fact for clear error. Local 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) (citing Pike v. Freeman, 266 F.3d 78, 86 (2d Cir. 2001)). We may affirm on any

ground found in the record. See In re Terrorist Attacks on Sept. 11, 2001, 714 F.3d 109, 117 (2d

Cir. 2013).

       Section 301 of the LMRA supplies jurisdiction for “[s]uits for violation of contracts

between an employer and a labor organization.” 29 U.S.C. § 185(a). It is well-established that

card check and neutrality agreements with arbitration provisions are contracts within the



2
 The “accretion clause” in the 2001 IWA states that an employer that becomes the owner or
manager of a hotel in New York City will be required to apply the IWA to that property on the
basis of the legal doctrine of accretion.


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meaning of § 301. For example, in Hotel & Restaurant Emps. Union Local 217 v. J.P. Morgan

Hotel, this Court affirmed jurisdiction over a dispute arising from an agreement between an

employer and a union with card check, neutrality, and arbitration provisions similar to those at

issue here. 996 F.2d 561, 563 (2d Cir. 1993); cf. Retail Clerks International Ass'n v. Lion Dry

Goods, Inc., 369 U.S. 17, 25–28 (1962) (holding that agreements other than full-fledged

collective bargaining agreements may be “contracts” within the meaning of § 301). Our sister

circuits have similarly understood § 301 to encompass card check neutrality agreements with

arbitration provisions. See, e.g., Hotel Emps., Restaurant Emps. Union, Local 2 v. Marriott

Corp., 961 F.2d 1464, 1468 (9th Cir. 1992); Georgetown Hotel v. NLRB, 835 F.2d 1467, 1470–

71 (D.C. Cir. 1987); Mo–Kan Teamsters Pension Fund v. Creason, 716 F.2d 772, 775 (10th Cir.

1983), cert. denied, 464 U.S. 1045 (1984).

       To be sure, we may exercise jurisdiction pursuant to § 301 only when a dispute “arises

under” a contract. In Litton Financial Printing Division of Litton Business Systems, Inc. v.

N.L.R.B., the Supreme Court stated, in pertinent part, that “[a] postexpiration grievance can be

said to arise under the contract only where it involves facts and occurrences that arose before

expiration.” 501 U.S. 190, 205–06 (1991)). Although this Court has not had occasion to specify

what “facts and circumstances” satisfy the Litton standard, our sister circuits provide meaningful

guidance.   Although there are slight differences between circuits regarding whether only

“material facts and occurrences,” see South Cent. Power Co. v. Int’l Bhd. of Elec. Workers,

Local Union 2359, 186 F.3d 733, 740 (6th Cir. 1999) (emphasis in original), satisfy Litton, all

circuits to have reached this issue agree that the “facts and occurrences” must give rise to the

grievance at issue. See id.; Operating Engineers Local Union No. 3 v. Newmont Min. Corp., 476

F.3d 690, 693 (9th Cir. 2007); Trinidad Corp. v. Nat'l Mar. Union of Am., Dist. No. 4, Marine




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Eng’s Beneficial Ass’n, 81 F.3d 769, 773 (8th Cir. 1996); accord Local 807, Int’l Bhd. Of

Teamsters, Chauffeurs, Warehousemen & Helpers of Am. v. Brink’s, Inc., 744 F.2d 283, 286 (2d

Cir. 1984) (locating grievance “outside the scope of the collective bargaining agreements”

because it arose after their expiration). Lower courts in this Circuit have interpreted Litton

similarly. See, e.g., Queens Boulevard 40th Owners Corp. v. Figeroa, No. 15-cv-1433, 2015

WL 1938185, at *2 (S.D.N.Y. Apr. 22, 2015) (deeming Litton satisfied where Plaintiff sought

fees incurred during the term of the collective bargaining agreement).

        In this case, the events giving rise to the Union’s grievance, and forming the basis of the

Impartial Chairman’s awards, took place while the card check, neutrality, and arbitration

provisions adopted by the 2004 MOA were in effect. In January 2007, the Union properly gave

notice to Chelsea Grand’s Hotel Manager of its intent to organize, and requested the names of

Hotel employees for a card check. In refusing to respond to this request, Chelsea Grand violated

the card check and neutrality provisions of the 2001 IWA, applicable to Chelsea Grand through

the 2004 MOA.

        Chelsea Grand argues that the events of January 2007 did not “arise under” the 2001

IWA because the 2001 IWA had expired on June 30, 2006. To be sure, if the 2001 IWA itself

were the source of Chelsea Grand’s card check, neutrality, and arbitration obligations, then the

arbitral awards might fail the Litton test. But we agree with the Impartial Chairman that the 2004

MOA, not the 2001 IWA, is the source of these obligations.3 The 2004 MOA did not incorporate

the 2001 IWA, with its June 30, 2006 expiration date, wholesale. Instead, the parties agreed in

the 2004 MOA to adopt only particular provisions from the 2001 IWA, subject to no termination

date.

3
 We do not reach the question whether the 2001 IWA, by virtue of its “accretion” provision,
sufficed to bind Chelsea Grand.


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       In addition to its jurisdictional challenge, Chelsea Grand invokes the National Labor

Relation Act’s (NLRA) ban on pre-recognition bargaining to argue that the lower court’s

confirmation of the Impartial Chairman’s awards violates federal labor policy. Section 9 of the

NLRA requires that a majority of a bargaining unit select a representative before that

representative can bind the unit to substantive terms and conditions. 29 U.S.C. § 159; see also

29 U.S.C. §§ 157–158; Int’l Ladies’ Garment Workers’ Union, AFL-CIO v. N.L.R.B. (Bernhard-

Altmann), 366 U.S. 731, 734–38 (1961) (emphasizing NLRA requirement that the bargaining

union represent a majority of employees before reaching collective bargaining agreement).

       Chelsea Grand presses the argument that the card check, neutrality, and arbitration

provisions adopted by the 2004 MOA are “inseparable from” the substantive terms and

conditions of the 2001 IWA. Therefore, the argument goes, the arbitration award imposed

substantive terms and conditions on Chelsea Grand’s employees. But the procedural guarantees

embraced in the 2004 Memorandum of Agreement do not depend on the substantive terms and

conditions of the 2001 IWA for their meaning or effect. In addition, by the terms of the 2004

MOA, the 2001 IWA’s arbitration provision governs only “disputes regarding the interpretation

or application of this [2004 MOA].” JA65. Accordingly, Chelsea Grand fails to show “that a

clearly defined and dominant public policy militates specifically against the [arbitral] award in

question.” Local 97, Int’l Bhd. of Elec. Workers, A.F.L.-C.I.O. v. Niagara Mohawk Power

Corp., 196 F.3d 117, 125 (2d Cir. 1999).




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       For these reasons, we affirm the district court’s September 29, 2014 order. We have

considered Chelsea Grand’s remaining arguments and find them to be without merit.

Accordingly, we AFFIRM the judgment of the district court.



                                                  FOR THE COURT:
                                                  Catherine O’Hagan Wolfe, Clerk




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