Board of Trustees of 1199/SEIU Greater New York Benefit Fund v. Manhattan View…

Background

The Board of Trustees of the 1199/SEIU Greater New York Benefit Fund and the Board of Trustees of the 1199/SEIU Greater New York Education Fund sued Manhattanview Nursing Home, also referred to in the opinion as Manhattanview Healthcare Center, to recover alleged unpaid contributions. The funds alleged that Manhattanview failed to make contributions required by collective-bargaining agreements with 1199/SEIU United Healthcare Workers East for the period October 1, 2015 through December 31, 2018.

The funds sought payment under section 515 of the Employee Retirement Income Security Act, which requires employers to make contributions to multi-employer benefit plans as required by a plan or collective-bargaining agreement, and section 301 of the Labor Management Relations Act, which permits lawsuits for violations of contracts between employers and labor organizations. The trustees alleged that an audit showed Manhattanview owed the Benefit Fund $404,375.38 and the Education Fund $11,523.54.

The collective-bargaining agreement contained a broad arbitration clause. It stated that unresolved complaints, disputes, and grievances between the union and the employer would be submitted to arbitration, that the arbitrator could decide questions about the arbitrator’s jurisdiction and whether a dispute was arbitrable, and that arbitration was the parties’ sole and exclusive remedy. The trustees were not signatories to the collective-bargaining agreement. The trust agreements authorized them to enforce payment of contributions and to bring proceedings in their own names to collect amounts owed by an employer.

Motion and analysis

Manhattanview moved under Federal Rule of Civil Procedure 12(b)(1), which concerns subject-matter jurisdiction, to dismiss the complaint and compel arbitration. It argued that the collective-bargaining agreement limited the funds’ remedy to arbitration.

The court explained that the usual presumption favoring arbitration in disputes between an employer and a union did not apply when a benefit fund or its trustees asserted their interests as third-party beneficiaries of a collective-bargaining agreement. Without that presumption, the court examined the agreement and the trust documents for evidence that the parties intended to require arbitration between the trustees and Manhattanview.

The court found no such evidence. The arbitration provisions focused on the union, the employer, and covered employees, and did not state that the funds’ trustees were bound by the grievance and arbitration procedure. The trust agreements authorized the trustees to proceed directly in court to recover delinquent contributions and did not condition that authority on first exhausting contractual arbitration procedures.

The court rejected Manhattanview’s argument that the collective-bargaining agreement’s delegation clause required an arbitrator to decide whether the trustees were bound by the arbitration provision. Even when an arbitration agreement delegates questions about arbitrability to an arbitrator, the court decides whether a non-signatory third-party beneficiary is bound by the arbitration clause in the first place.

The court also rejected Manhattanview’s argument that the trustees were bound as third-party beneficiaries through estoppel. Because the governing documents did not require the trustees to arbitrate with Manhattanview, the funds could not be prevented from denying the existence of an arbitration agreement to which they had not agreed.

Finally, the court held that it had subject-matter jurisdiction. The complaint asserted claims under federal law, including section 301 of the Labor Management Relations Act, and those claims were not merely frivolous or insubstantial. The arbitration dispute therefore did not eliminate federal-question jurisdiction.

Disposition

The court denied the defendant’s motion to dismiss and to compel arbitration. The order did not determine whether Manhattanview owed the contributions claimed by the funds; it decided only that the trustees were not required to arbitrate these claims under the collective-bargaining agreement and that the federal court had jurisdiction to hear the action.