Unite Here! Local 2 v. Stix Holdings, LLC

Background

Unite Here! Local 2 and Pick Up Stix SFO LLC were parties to a Card Check Neutrality Agreement concerning the unionization of employees at the company’s SFO airport location. The union alleged that Pick Up Stix SFO LLC used tactics to discourage unionization, closed the location, and terminated its employees on February 7, 2023, the day after the union demanded recognition.

The arbitrator found for the union on March 6, 2023, and ordered Pick Up Stix SFO LLC to reopen the location, reinstate employees, and provide back pay. Pick Up Stix SFO LLC had refused to participate in the arbitration and did not comply with the award. The union therefore asked the court to confirm and enforce the award. The court granted that request on May 19, 2023.

The union then sought attorneys’ fees and costs from Pick Up Stix SFO LLC and Stix Holdings LLC under the court’s inherent power to sanction bad-faith conduct.

Legal standard

A court’s inherent power permits an award of attorneys’ fees and costs when the losing party acted in bad faith, vexatiously, wantonly, or for oppressive reasons. The court must expressly find that the sanctioned party’s conduct constituted or was equivalent to bad faith.

Stix Holdings LLC

The court denied the motion as to Stix Holdings LLC. That company was not a party to the Card Check Neutrality Agreement and therefore was not subject to its arbitration provisions. The union relied on alter-ego allegations, which seek to treat two legally separate companies as one, but it did not provide specific supporting facts or respond to evidence that the entities had different formation details, organizational documents, financial accounts, employees, and labor policies. The court found the union’s allegations too conclusory to disregard the companies’ separate legal identities.

Fees attributable to Pick Up Stix SFO LLC

The court had already found that Pick Up Stix SFO LLC acted in bad faith by knowingly refusing to participate in arbitration and by refusing to honor the arbitration award instead of seeking to vacate it. The court concluded that fees could cover conduct before and during the court case, including conduct that forced the union to seek judicial enforcement.

The court held that fees were recoverable for the union’s efforts after the arbitrator issued the award and also concluded that the circumstances justified recovering fees for the underlying arbitration. In reaching that conclusion, the court considered Pick Up Stix SFO LLC’s conduct before and after the arbitration, including the store’s abrupt closure, the refusal to participate in arbitration, and the opposition to the award only after the union filed suit.

Amount of fees

The union requested $94,391 in attorneys’ fees based on 208.3 hours of work. The court found the requested hourly rates reasonable: $600 for partner Emily M. Maglio, $585 for partner Amy Endo, and $400 for associate Micah Clatterbaugh.

The court deducted:

- $2,540 for 5.4 hours spent on settlement discussions; - $5,031 for 8.6 hours billed by Ms. Endo that the union did not adequately justify; and - $800 for two hours spent drafting a stipulation to extend time.

The court rejected an across-the-board reduction for alleged inefficiency and otherwise found the billed work sufficiently reasonable. The resulting fee award was $86,020.

Costs

The court concluded that costs were recoverable because judicial enforcement was necessary after Pick Up Stix SFO LLC unjustifiably refused to honor the arbitration award. The union requested $12,805.36 but its supporting chart totaled only $7,182.16, and the union did not explain the discrepancy. The court therefore awarded $7,182.16 in costs.

Disposition

Judge Richard Seeborg granted in part and denied in part the motion for attorneys’ fees and costs. The motion was granted as to Pick Up Stix SFO LLC with modifications, resulting in an award of $86,020 in fees and $7,182.16 in costs. The motion was denied as to Stix Holdings LLC.