Citi Connect v. Local Union No. 3

Background

CitiConnect and Local 3 were parties to an industry-wide collective bargaining agreement (CBA). The CBA covered CitiConnect’s employment of Local 3 members to install, service, and maintain cable, television, and security systems. Its grievance and arbitration provision required disputes involving the CBA’s interpretation or application to be filed within 15 working days and allowed either party to submit unresolved grievances to binding arbitration through the American Arbitration Association’s expedited procedure.

The CBA initially ran from August 28, 2014, through May 5, 2016, but included a provision stating that it would continue from year to year unless properly terminated. A separate provision required CitiConnect, after four years of employment, to pay the full amount of Social Security payments for employees who were on its payroll as of August 28, 2014.

On June 1, 2020, Local 3 filed a grievance alleging that CitiConnect had failed to make the required payments. On June 3, Local 3 sent CitiConnect a notice of intent to arbitrate. CitiConnect argued that the CBA had been terminated in 2016, that the arbitration clause did not survive termination, and that Local 3’s grievance was untimely. CitiConnect filed this action seeking a declaration that it had no obligation to arbitrate and an order stopping the arbitration. It also asserted claims involving the Social Security-payment provision, fraudulent inducement, and the duty of good faith and fair dealing.

Legal standard and timeliness of CitiConnect’s court filing

Although CitiConnect styled its request as an injunction, the court treated it as a motion to stay arbitration. The court applied the summary-judgment standard used for motions to stay arbitration: the movant must show that there is no genuine dispute about any material fact and that it is entitled to judgment as a matter of law.

Local 3 argued that CitiConnect’s application was filed too late under New York Civil Practice Law and Rules section 7503(c), which generally gives a party 20 days after receiving an arbitration demand to seek a stay. The court concluded that CitiConnect’s lawsuit was arguably timely because New York executive orders had tolled certain filing deadlines during the COVID-19 pandemic. The court noted that the issue was unsettled for a case filed in federal court, but decided to reach the merits of CitiConnect’s request because applying the toll would not harm Local 3 and CitiConnect would lose on the request to stop arbitration anyway.

Issues assigned to the arbitrator

The court held that the timeliness of Local 3’s grievance and arbitration demand was a question of procedural arbitrability. Because the CBA required grievances to be filed within 15 working days, the court concluded that the arbitrator, rather than the court, had exclusive authority to decide whether Local 3’s demand complied with that deadline.

The court also held that the arbitrator must decide whether the CBA was terminated, whether it continued under its year-to-year provision, and whether the arbitration clause survived any termination. The CBA’s arbitration language broadly covered all disputes involving the interpretation or application of the agreement and did not expressly exclude disputes about termination or continuation. The court therefore would not decide CitiConnect’s arguments about the alleged termination notice or the parties’ conduct during negotiations.

The court treated the question whether the arbitration clause would survive termination as premature because the arbitrator first had to determine whether the CBA was terminated. If the arbitrator found that the CBA was terminated and that the arbitration clause did not survive, a court could then decide the underlying Social Security-payment dispute.

Finally, the court held that the arbitrator must decide whether the underlying dispute was arbitrable if the parties remained subject to a valid and binding arbitration agreement. The CBA’s incorporation of the American Arbitration Association’s expedited procedure clearly and unmistakably assigned questions about arbitrability to the arbitrator.

Disposition

Judge Colleen McMahon denied CitiConnect’s motion to stay arbitration, which had been styled as a request for an injunction prohibiting arbitration. The court stayed the action pending the outcome of the arbitration and directed the clerk to close the motion at Docket Number 3. The court explained that it could address the underlying dispute later if the arbitrator determined that the parties lacked a valid and binding arbitration agreement or that the Social Security-payment dispute was not arbitrable.