White Pearl Hospitality LLC d/b/a Hyatt Centric Wall Street New York v. Hotel &…

Background

White Pearl Hospitality LLC brought a labor contract action against the Hotel & Gaming Trades Council, AFL-CIO (the Union). White Pearl sought a declaration that it was not bound by two agreements with the Union and an injunction preventing the Union from enforcing them.

The agreements supplemented an Industry Wide Collective Bargaining Agreement (IWA) between the Union and the Hotel Association of New York City. The IWA covered employment terms at hotels, included an arbitration requirement, and required hotel employers to meet with the Union before implementing technological improvements. It also included a successor clause requiring a successor to assume the predecessor’s obligations.

The first supplemental agreement, from 2013, allowed the hotel then known as the Andaz Hotel to use an automatic answering feature for external calls, while requiring live hosts to answer internal and switchboard calls. The second, from 2019, allowed the hotel to implement a keyless-entry system and included a provision stating that the hotel could not rely on the IWA to implement technological changes that would cause layoffs, reduced work weeks, adverse effects, or a reduction in bargaining-unit positions without the Union’s consent.

White Pearl purchased the Andaz Hotel in December 2021 and later agreed to assume the Andaz Hotel’s obligations under the IWA and supplemental agreements. In February 2024, White Pearl notified the Union that it planned to implement a private branch exchange telephone system, known as a PBX. After the parties could not reach an agreement, White Pearl stated that it was terminating the 2013 and 2019 agreements because they had no specified end dates.

Arbitration Awards

The Union requested emergency arbitration. In the May 2024 Award, the arbitrator found that both agreements remained in effect. The arbitrator concluded that they implicitly shared the IWA’s expiration date of June 30, 2026, rather than being terminable at will.

After White Pearl laid off some customer service hosts, the Union requested another emergency hearing. The July 2024 Award again found that the agreements remained in force. It also concluded that the 2019 agreement applied to the PBX dispute and prevented White Pearl from unilaterally implementing technological changes covered by the agreement. The arbitrator ordered White Pearl to immediately reinstate the employees and pay back pay and penalties.

Motions and Legal Standard

The Union moved to confirm both arbitration awards and to dismiss White Pearl’s complaint. White Pearl filed a cross-motion to vacate, or cancel, both awards. The court explained that federal review of labor arbitration awards is highly deferential. A court generally may not reconsider the arbitrator’s contract interpretation or decide whether it agrees with the result. Instead, the court asks whether the arbitrator was at least arguably interpreting or applying the parties’ agreement and acted within the arbitrator’s authority.

White Pearl argued that the awards showed a “manifest disregard” of the law, meaning that the arbitrator knowingly disregarded a clearly applicable legal rule. The court rejected that argument.

May 2024 Award

The court held that the arbitrator had a reasonable basis for finding that the 2013 and 2019 agreements incorporated the IWA’s expiration date. Both agreements expressly referred to the IWA and modified obligations arising under it. The court also reasoned that it would make little sense for restrictions on White Pearl’s rights under the IWA to continue after the IWA expired. Because the arbitrator had interpreted the actual contract language rather than created a new obligation based on personal notions of fairness, the court denied White Pearl’s cross-motion to vacate the May 2024 Award.

July 2024 Award

The court also denied White Pearl’s cross-motion to vacate the July 2024 Award. It rejected White Pearl’s argument that the 2019 agreement applied only to the keyless-entry system. The court found that Paragraph 7’s reference to “any changes” naturally covered future technological changes, including the PBX system. Limiting the paragraph to the keyless-entry system would also make it redundant with another paragraph addressing that system.

The court further held that the arbitrator had a reasonable basis for concluding that White Pearl could not require the Union to renegotiate before implementing a technological change that would result in layoffs or other specified effects. The court stated that it did not need to decide whether the arbitrator’s interpretation was ultimately the best interpretation; the interpretation was reasonable enough to require enforcement under the deferential standard of review.

Disposition

Because the court denied White Pearl’s request to vacate the awards, it granted the Union’s motion to confirm both awards. The court also granted the Union’s motion to dismiss the complaint. It reasoned that confirmation of the awards prevented White Pearl from relitigating whether the 2013 and 2019 agreements remained in force, which was the central issue in White Pearl’s requests for a declaration and injunction. The Clerk of Court was directed to terminate pending motions and close the case.