Service Employees International Union Local 32bj v. Preeminent Protective Services Inc.

• Court: District Court, District of Columbia
• Decided: May 9, 2018
• Docket: Civil Action No. 2017-1679
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 32BJ,

Petitioner,

v. Case No. 1:17-cv-01679 (TNM)

PREEMINENT PROTECTIVE SERVICES, INC.,

Respondent.

MEMORANDUM OPINION

The Service Employees International Union Local 32BJ (the “Union”) petitions this

Court for an order compelling Preeminent Protective Services, Inc. (“Preeminent”) to arbitrate

employment disputes for two members of the Union. Pet. to Compel Arbitration (“Pet.”) ¶¶ 25-

29, ECF No. 1. Preeminent seeks to dismiss the petition, arguing that the Court lacks subject

matter jurisdiction and that the Union failed to state a claim because the two Union members

were not Preeminent employees. Def.’s Mem. of P. & A. in Supp. of Mot. to Dismiss (“Mot. to

Dismiss”) 5-7, ECF No. 5. The Union filed a cross-motion for summary judgment disputing

Preeminent’s contention that it did not employ the officers. Mem. of Law in Opp. to Resp’t’s

Mot. to Dismiss and in Supp. of Cross-Mot. to Compel Arbitration (“Opp. to Mot. to Dismiss”)

11-15, ECF No. 7. Upon consideration of the pleadings, relevant law, and related legal

memoranda in opposition and in support, I find that the Federal Arbitration Act and the Labor

Management Relations Act confers this Court with subject matter jurisdiction and that the matter

is appropriate for arbitration. Accordingly, Preeminent’s motion to dismiss will be denied and

the Union’s motion for summary judgment and to compel arbitration will be granted. I. Background

The Union represents over 16,000 property-service workers in the Washington, D.C.

area, including Security Officers Crystal Middleton and Renay Campbell. Pet. ¶¶ 1, 7. Both

officers worked at the Congress Heights Service Center, a D.C. public site covered by a

Collective Bargaining Agreement (“CBA”) between the Union and Preeminent. Id. ¶¶ 5-7.

Before February 2017, Business Resource and Security Services USA, Inc. (“BRSS”) was the

subcontractor that provided security officers to the Congress Heights Service Center and

employed Officers Middleton and Campbell. Id. ¶ 7. In February 2017, Preeminent took over

the subcontract from BRSS, including providing security officers to the Congress Heights

Service Center. Id. ¶ 9.

The Union claims that under the CBA, Preeminent was required to hire the BRSS

officers, including Officers Middleton and Campbell. Id. ¶ 10; see also id. Ex. 1 Art. 9 (“When

taking over or acquiring an account or location covered by a collective bargaining agreement

with the Union in Washington, DC or Maryland or Virginia, the Employer will offer

employment to and hire incumbent employees who have been employed at the account or

location for at least six (6) months and who accept the offer of employment”). The Union claims

that Preeminent recognized its obligation and began treating Officers Middleton and Campbell as

employees, including having them complete and sign employment documents, referring to the

officers as “transfers” from BRSS, and paying their wages from February 1, 2017 forward. Id.

¶ 12. Preeminent does not dispute that it disbursed payroll starting on February 1, 2017, but

claims that the money for that particular disbursement was provided by the prime contractor, and

that it did not take over the subcontract until February 10, 2017. Mot. to Dismiss ¶¶ 4-5.

2 Preeminent claims that it never employed Officers Middleton or Campbell because its

client, the District of Columbia, requested on February 8, 2017—two days prior to Preeminent

taking over the subcontract—that the officers be removed from the Congress Heights Service

Center. Id. ¶ 6. In Preeminent’s view, because the officers were dismissed by BRSS on

February 8, 2017, Preeminent was contractually barred from hiring the officers. Id. ¶ 7; see also

Contract No. DCAM-12-NC-0031 City-Wide Security Services § C.19.2, ECF No. 5-2 (“In

situations deemed appropriate by the [Contracting Officer’s Technical Representative], the

COTR, in his or her sole discretion, may summarily direct the Contractor to remove its employee

from a facility and the Contractor shall remove such employee immediately and supply a

replacement with no lapse in coverage.”); id. § C.19.4 (“The Contractor shall be required to

dismiss such employees within a timeframe ranging from ‘immediately’ to ‘within a week,’ as

specified by the COTR. Any employee so dismissed shall at no time be eligible to work under

this contract.”). The Union disagrees, citing a provision of the CBA that provides that, unless the

employee is discharged for cause, “the Employer will place the employee in a job at another

account or location covered by this Agreement.” Pet. ¶ 14; id. Ex. 1 Art. 7.3. Because the Union

believed that Officers Middleton and Campbell were obligated to be hired by Preeminent, were

Preeminent employees, and were not placed at another site, it filed grievances with Preeminent

on behalf of both officers. Id. ¶¶ 10, 12, 15; see also id. Ex. 1 Art. 23 (setting forth grievance

and arbitration procedures for “[a]ll disputes or differences involving the interpretation or

application of this Agreement that arise between the Union and the Employer”).

The Grievance Initiation Letters, both filed on February 13, 2017, allege that the officers

were “unjustly discharged effective 2/10/2017.” Mot. to Dismiss Exs. 5-6, ECF Nos. 5-6, 5-7.

Between February and April 2017, the Union and Preeminent exchanged several

3 communications about the dispute, but the Union alleges that Preeminent never challenged

whether the dispute was arbitrable. See Pet. ¶¶ 19-23. On August 4, 2017, the parties appeared

before an arbitrator, and Preeminent contended that the arbitrator lacked jurisdiction over the

proceeding because the officers were not Preeminent employees. The arbitrator discontinued the

proceeding because of his view that “there is a question of whether there exists jurisdiction over

Preeminent as the Employer in this dispute under the Parties’ Collective Bargaining Agreement

which should be resolved in court.” Mot. to Dismiss Ex. 10, ECF No. 5-11. The Union then

filed its petition in this Court.

II. Legal Standards

A. Subject Matter Jurisdiction

Subject matter jurisdiction concerns a court’s power to hear a claim. Macharia v. United

States, 334 F.3d 61, 64 (D.C. Cir. 2003). The plaintiff bears the burden of proof to establish that

the court has subject matter jurisdiction. Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015). A

court may look beyond the complaint to consider “undisputed facts evidenced on the record” to

satisfy itself that it has subject matter jurisdiction. Coalition for Underground Expansion v.

Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003).

B. Failure to State a Claim

A party may move to dismiss a complaint because it “fail[s] to state a claim upon which

relief can be granted.” Fed. R. Civ. P. 12(b)(6). A complaint must contain sufficient factual

allegations that, if true, “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 570 (2007). A complaint is insufficient if it merely offers “‘labels and

conclusions’” or “‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v.

4 Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555, 546). Rather, “[a] claim has

facial plausibility when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at

678. In evaluating a motion to dismiss pursuant to Rule 12(b)(6), the Court must construe the

complaint in the light most favorable to the plaintiff and accept as true all reasonable factual

inferences drawn from well-pled factual allegations. See In re United Mine Workers of Am.

Emp. Benefit Plans Litig., 854 F. Supp. 914, 915 (D.D.C. 1994). The Court does not accept as

true legal conclusions or “[t]hreadbare recitals of the elements of a cause of action, supported by

mere conclusory statements.” Iqbal, 556 U.S. at 678.

C. Summary Judgment

A motion to compel arbitration is analyzed using the summary judgment framework of

Federal Rule of Civil Procedure 56. Aliron Int’l, Inc. v. Cherokee Nation Indus., Inc., 531 F.3d

863, 865 (D.C. Cir. 2008). To prevail on summary judgment, the movant must show that there is

“an enforceable agreement to arbitrate,” after which the non-movant must “raise a genuine issue

of material fact as to the making of the agreement.” Hill v. Wackenhut Servs. Int’l, 865 F. Supp.

2d 84, 89 (D.D.C. 2012) (internal quotation marks omitted). Summary judgment should be

granted if there is “no genuine issue of fact concerning the formation of the agreement to

arbitrate.” Id. (internal quotation marks omitted). In determining whether a fact is material or an

issue is genuine, the Court uses the familiar Rule 56 framework. See Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 247-48 (1986) (explaining a material fact as one capable of affecting the

substantive outcome of the litigation and a genuine issue as one where a reasonable jury could

find for the non-moving party). The Court views the evidence in the light most favorable to the

non-moving party. Johnson v. Perez, 823 F.3d 701, 705 (D.C. Cir. 2016).

5 III. Analysis

Preeminent’s two challenges to the petition are to the Court’s subject matter jurisdiction

over the matter and to the Union’s failure to state a claim because it alleges that BRSS, and not

Preeminent, terminated the employees. Mot. to Dismiss 5-7. Each is discussed in turn.

A. The Court Has Subject Matter Jurisdiction Under the Federal Arbitration Act

and Labor Management Relations Act

The Union brings this petition under the Federal Arbitration Act and/or the Labor

Management Relations Act. Pet. ¶ 29. The Federal Arbitration Act allows a “party aggrieved by

the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for

arbitration” to “petition any United States district court which, save for such agreement, would

have jurisdiction . . . of the subject matter of a suit arising out of the controversy between the

parties.” 9 U.S.C. § 4. As Preeminent points out, this text has been interpreted to not confer

jurisdiction on district courts, but permitting a district court to issue an order compelling

arbitration only when there is “diversity of citizenship or some other independent basis for

federal jurisdiction.” Mot. to Dismiss 5 (citing Kasap v. Folger Nolan Fleming & Douglas, Inc.,

166 F.3d 1243, 1245-46 (D.C. Cir. 1999)).

The Labor Management Relations Act, on the other hand, grants federal courts with

jurisdiction over “[s]uits for violation of contracts between an employer and a labor organization

representing employees in an industry affecting commerce as defined in this chapter.” 29 U.S.C.

§ 185. It is undisputed that the CBA is a valid and enforceable contract between the Union and

Preeminent. See Mot. to Dismiss 6 (citing the CBA). The Union’s petition seeks to redress

alleged violations of that contract, Pet. ¶¶ 27-28, and the Union is undoubtedly a labor

6 organization affecting commerce. See 29 U.S.C. § 142 (defining “industry affecting commerce”

as “any industry or activity in commerce or in which a labor dispute would burden or obstruct

commerce or tend to burden or obstruct commerce or the free flow of commerce.”). Subject

matter jurisdiction over this petition exists based on federal question jurisdiction. See 28 U.S.C.

§ 1331; see also District No. 1, Pac. Coast Dist., Marine Eng’r’s Benficial Ass’n, AFL-CIO v.

Liberty Mar. Corp., 70 F. Supp. 3d 327, 331 (D.D.C. 2014) (finding that the court had, under 29

U.S.C. § 185, subject matter jurisdiction over a petition seeking an order to compel arbitration).

Thus, I have subject matter jurisdiction under both Acts.

B. The Petitioner’s Grievances Should Be Decided by the Arbitrator

The Federal Arbitration Act and the Labor Management Relations Act intersect in at least

one other meaningful way. Federal courts may “fashion rules of federal common law” under the

Labor Management Relations Act and may look to the Federal Arbitration Act “for guidance in

labor arbitration cases.” United Paperworkers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29,

40 n.9 (1987); see also Am. Postal Workers Union, AFL-CIO v. U.S. Postal Serv., 52 F.3d 359,

362 (D.C. Cir. 1995). This body of case law reveals a few bedrock principles that guide the

resolution of the parties’ motions. First, “arbitration is a matter of contract and a party cannot be

required to submit to arbitration any dispute which he has not agreed so to submit.” AT&T

Tech., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986). Second, whether a CBA

requires the parties “to arbitrate the particular grievance-is undeniably an issue for judicial

determination.” Id. at 649 (punctuation in original).1 Third, the arbitrator, and not the court, is

1 For example, questions for courts to resolve include whether an arbitration provision bound a surviving corporation post-merger, id., whether arbitration was proper where a CBA had expired, Litton Fin. Printing Div., a Div. of Litton Bus. Sys., Inc. v. N.L.R.B., 501 U.S. 190, 209 (1991),

7 the proper party to “rule on the potential merits of the underlying claims.” AT&T Tech., 475

U.S. at 649. Fourth, “where the contract contains an arbitration clause, there is a presumption of

arbitrability in the sense that an order to arbitrate the particular grievance should not be denied

unless it may be said with positive assurance that the arbitration clause is not susceptible of an

interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.”

Id. at 650 (internal quotation marks and punctuation omitted). The Court has also noted that

“[s]uch a presumption is particularly applicable where the clause is [] broad.” Id.

In this case, Preeminent’s and the Union’s quarrel is not about whether the parties entered

into a valid, enforceable contract, or whether the arbitration clause in the contract applies to the

parties. Instead, Preeminent raises a threshold question of whether the officers were Preeminent

employees, and posits that they were not because they were dismissed by BRSS, making the

Union’s claim against Preeminent untenable. Def.’s Reply in Supp. of Mot. to Dismiss (“Def.’s

Reply”) 3, ECF No. 10. The Union maintains that the officers were not dismissed by BRSS and

that they were therefore Preeminent employees who were wrongly discharged by Preeminent.

Pet.’s Statement of Material Facts Not in Dispute and Resp. to Respt’s Statement of Material

Facts (“Pet.’s SOMF”) 8-9, ECF No. 7. Analysis of the principles summarized by the Supreme

Court in AT&T Technologies counsel that the question is properly for the arbitrator to decide.

While it is true that Preeminent has not consented to arbitrating matters not involving its

own employees, putting forth to the arbitrator whether the officers were Preeminent employees

does not force Preeminent to arbitrate a dispute to which it has not consented. The arbitrator

could either determine that the officers were not Preeminent employees—in which case the

and whether a particular CBA provision covered the dispute at issue, Air Line Pilots Ass’n v. Fed. Express Corp., 402 F.2d 1245, 1248-49 (D.C. Cir. 2005).

8 arbitration goes no further—or that the officers were Preeminent employees, after which the

arbitrator would continue onto evaluating the merits of the officers’ grievances. The parties do

not dispute that the arbitrator should be the adjudicator of the merits of a grievance properly

before him, or that a valid arbitration agreement exists between the parties. Thus, this matter is

in a distinct category from the cases that Preeminent cites to support its position: Stromberg

Sheet Metal Works, Inc. v. Washington Gas Energy Systems, Inc. involved the assignment of an

arbitration right to a non-party, which the court found to be valid, 484 F. Supp. 2d 64, 69-70

(D.D.C. 2006), and Hill v. Wackenhut Services International involved a challenge to the “very

existence of a contract containing an arbitration provision.” 865 F. Supp. 2d 84, 90 (D.D.C

2012). And of course, the facts in this case are different than other cases holding that the

question was for the court’s resolution. See supra Part III.B. note 1 (listing cases holding that the

judiciary should determine whether parties were bound to or by an arbitration clause and whether

the dispute at issue was within the scope of disputes covered by an arbitration clause). None of

those circumstances is at issue here.

More similar to the facts presented by this case are instances in which arbitration was

proper despite the respondent’s position that the grievant was a probationary employee excluded

from the application of an arbitration agreement. In United Steel Workers of America, AFL-CIO-

CLC v. Simcala, Inc., a district court found that “the question of whether the grievant was or was

not a probationary employee serves only as a defense to the merits of the grievance” and granted

a motion to submit the matter to arbitration. 111 F. Supp. 2d 1287, 1292, 1294 (M.D. Ala.

2000); see also U.S. Postal Serv. v. Am. Postal Workers Union, 553 F.3d 686, 688-89 (D.C. Cir.

2009) (reversing the district court’s vacatur of an arbitration award when the parties agreed that

the arbitrator could decide whether the grievance was arbitrable and he ruled that it was because

9 the grievant was not separated during her probationary period). Similarly, the arbitrator here,

after taking in the evidence presented by both sides, could determine whether and which entity

dismissed the officers.

This determination comports with the “presumption of arbitrability” and the preference to

resolve doubts in favor of coverage. See AT&T Tech., 475 U.S. at 650. It is certainly possible

for the arbitrator to determine that the officers were, or should have been, Preeminent employees,

in which case the grievance becomes a live fight. This counsels that the arbitrator should be the

one to resolve this dispute. See id. Leaving this determination to the arbitrator is all the more

appropriate because the Union and Preeminent agreed to a broad arbitration clause: “All disputes

or differences involving the interpretation or application of this Agreement that arise between the

Union and the Employer shall be resolved as provided for in this Article, except that the

Employer may obtain injunctive relief from a court to enforce Article 6 [No Strikes, Picketing or

Other Interruption of Work/No Lockouts].” Pet. Ex. 1 Art. 23.1(A) (emphasis added); see also

AT&T Tech., 475 U.S. at 650 (holding that “[s]uch a presumption [of arbitrability] is particularly

applicable where the clause is as broad as the one employed in this case, which provides for

arbitration of ‘any differences arising with respect to the interpretation of this contract or the

performance of any obligation hereunder’”). The present issue is a difference of opinion about

the application of the CBA to the two officers, and this should be determined by the parties’

arbitrator.