42nd and 10th Hotel, LLC v. New York Hotel & Motel Trades Council, AFL-CIO

Background

42nd and 10th Hotel, LLC, doing business as Yotel, and the New York Hotel & Motel Trades Council, AFL-CIO, entered agreements incorporating the terms of an industry-wide collective bargaining agreement. The agreements included arbitration provisions and addressed the duties and staffing of Yotel’s Ground Control employees.

The 2016 Baggage Storage Agreement stated that Yotel could eliminate the fifteenth Ground Control position but otherwise had to maintain 14 Ground Control employees on its payroll. After demand for Ground Control services decreased, Yotel stopped providing bell and door services, moved Mission Control employees to the ground floor, and laid off 10 of the 12 remaining Ground Control employees. Yotel later closed temporarily during the COVID-19 pandemic and did not recall any Ground Control employees when it fully reopened for transient guests in January 2021.

The Union filed grievances alleging that Yotel violated the 2016 Agreement by failing to employ or recall the required Ground Control employees. Independent Chairperson Aaron Shriftman issued a liability award finding that Yotel violated the agreement and ordering Yotel to honor it. After Yotel did not comply, the Chairperson issued a compliance award requiring backpay and benefit-fund contributions for the affected Ground Control employees and adding a 15% penalty for Yotel’s willful failure to comply with the liability award.

Yotel’s Motion to Vacate

Yotel asked the court to vacate, or cancel, the liability award. It argued that the Chairperson exceeded his authority, failed to base the award on the collective bargaining agreement, and reached a commercially unreasonable result. Yotel maintained that provisions giving it the right to lay off, promote, or transfer employees conflicted with the 2016 Agreement’s staffing requirement.

The court explained that the Labor Management Relations Act governed review of this labor arbitration award, although courts in the circuit use the Federal Arbitration Act’s vacatur provisions as guidance. Judicial review of labor arbitration is extremely limited. The court does not decide whether the arbitrator interpreted the contract correctly. Instead, it asks whether the arbitrator was at least arguably interpreting or applying the parties’ agreement and acted within the scope of the authority the agreement granted.

The court found that the Chairperson directly considered Yotel’s arguments and interpreted the 2016 Agreement as restricting the more general layoff language in the industry-wide agreement. Because that interpretation was at least minimally supported by the contract, the court would not revisit it. The court rejected Yotel’s arguments that the award failed to draw its essence from the agreement or produced a commercially unreasonable result.

Confirmation of the Awards

The Union cross-petitioned to confirm both the liability and compliance awards. Confirmation is a summary proceeding that turns a final arbitration award into a judgment of the court. The court stated that it was bound by the arbitrator’s factual findings, contract interpretation, and remedies unless the award was procured through fraud or dishonesty or the arbitrator acted outside the agreement’s authority.

The court found that the Chairperson applied the agreements and acted within his authority. The record did not indicate that the awards were obtained through fraud or dishonesty. Accordingly, Judge Vyskocil granted the Union’s cross-petition to confirm the liability and compliance awards, denied Yotel’s motion to vacate the liability award, and directed the clerk to close the motion and terminate the case.