Troshin v Stella Orton Home Care Agency, Inc.
Annotate this CaseDecided on September 11, 2020
Supreme Court, New York County
Ihor Troshin, and All Other Persons Similarly Situated Who Were Employed by the Stella Orton Home Care Agency, Inc., Plaintiffs,
against
The Stella Orton Home Care Agency, Inc., Defendant.
159312/2016
Virginia & Ambinder LLP (LaDonna Lusher, Michele A. Moreno, and Joel L. Goldenberg of counsel), for plaintiffs.
FordHarrison LLP (Philip K. Davidoff and Jeffrey A. Shooman of counsel), for defendant.
Gerald Lebovits, J.
The following e-filed documents, listed by NYSCEF document number (Motion 004) 63, 64, 65, 66, 67, 68, 69, 84, 85, 86, 87, 88, 89, 90, 91, 92, 93, 147, 161, 162 were read on this motion to COMPEL ARBITRATION.
The following e-filed documents, listed by NYSCEF document number (Motion 005) 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 125, 126, 127, 128, 143, 144, 145, 149, 150, 151, 152, 153, 154, 155, 156, 157, 158, 159 were read on this motion for INJUNCTION.
This is a wage-and-hour action—one of many currently pending wage-and-hour disputes involving home-care agencies. In motion sequence 005, named plaintiff Ihor Troshin moves here for preliminary and permanent injunctive relief precluding arbitration of his claims (and those of the prospective class) against defendant Stella Orton Home Care Agency, Inc. In motion sequence 004, Stella Orton moves to compel Troshin and the prospective class to arbitrate.
With respect to motion sequence 005, this court previously denied Troshin's request for a TRO barring arbitration of his claims; and a global home-care-agency arbitration that encompasses the claims of Troshin and the prospective class is pending before arbitrator Martin F. Scheinman, Esq. On fuller briefing and further consideration, however, this court concludes that Troshin's motion for injunctive relief should be granted, at least as to Troshin and those prospective class members who left Stella Orton employment before execution of the 2015 Memorandum of Agreement underlying the arbitration proceeding before Arbitrator Scheinman. Stella Orton's motion to compel arbitration is denied as academic.
BACKGROUND
[*2]A. The Relevant Employment Agreements
Named plaintiff Troshin is a home health aide. Defendant, Stella Orton Home Care Agency, provides residential nursing and home health aide services. Troshin worked for Stella Orton from some time in 2004 until January 2015. (See NYSCEF No. 1, at 16.) Troshin's employment with Stella Orton was governed by a collective bargaining agreement between Stella Orton and plaintiff's union, 1199SEIU United Healthcare Workers East. The most recent CBA was executed in 2012. (See 2012 CBA, NYSCEF No. 116.) That agreement contained detailed provisions governing wages, hours, and paid time off. (See id. at arts. X, XI, XII, XVII.)
The CBA also contained an arbitration clause (article XXVI). Article XXVI provides that the CBA governs "any dispute between the Union (on its behalf and/or on behalf of any employee) with the Employer involving the proper application, interpretation, or compliance with the specific written provisions of the Agreement based on facts and circumstances occurring during the term of this Agreement." (Id. at art. XXVI, § 1.) The arbitration provision creates a multi-step process for resolving these disputes. In the fourth and final step of this process, should a dispute remain unresolved, "the Union and/or Employer may within ten (10) days thereafter request that the matter be submitted for final and binding arbitration under the Labor Arbitration Rules of the American Arbitration Association." (Id. at art XXVI, § 2.)
In December 2015—i.e., after Troshin left his employment with Stella Orton—1199SEIU and Stella Orton executed a Memorandum of Agreement (MOA), which among other things created a new "Alternative Dispute Resolution" article of the existing CBA. This new CBA article provides that all union or employee claims asserting violations of the federal Fair Labor Standards Act, the New York Home Care Worker Wage Parity Law, or the New York Labor Law, would "be subject exclusively[ ] to the grievance and arbitration procedures described in this article." (NYSCEF No. 115 at 8 [emphasis added].) All such claims are subject to mandatory mediation before Martin Scheinman. (See id. at 9.) Should the mandatory mediation process prove unsuccessful, the new CBA article provides that 1199SEIU has four months in which to demand arbitration; that arbitration proceeding would be final and binding, and held before Scheinman as well. (See id. at 8, 9.)
B. The Wage-and-Hour Disputes
In November 2016, Troshin brought this action on behalf of himself and a prospective class of more than 100 other individuals who were employed by Stella Orton at the time of filing or who previously had been so employed during the class period. (NYSCEF No. 1, at1, 10.) The complaint alleges, in brief, that beginning in 2010, and continuing through the time of filing, class members had been repeatedly forced to work extremely long hours without receiving wages and benefits to which they were statutorily and contractually entitled. (See id. at2-4.) It asserted (i) claims for violations of various wage and overtime provisions of the Labor Law and implementing regulations, and (ii) third-party-beneficiary claims for breach of the contract(s) between Stella Orton and various New York State and New York City agencies to pay wages consistent with the terms of the Health Care Worker Wage Parity Law and certain City ordinances. (See id. at57-101.)
The record reflects that Troshin (as named plaintiff) and Stella Orton then litigated this matter in the ordinary course—including production of discovery and conferences and motion practice before this court—for approximately three years. (See e.g. NYSCEF Nos. 22, 23, 32, 46, 50, 55, 57 [conference orders]; No. 57 [decision & order resolving motion to compel discovery].)
In January 2019, 1199SEIU brought a class grievance, by letter to Mediator Scheinman, pursuant to the terms of the new ADR article of the CBA. The letter stated that 1199SEIU asserted this grievance "on behalf of all its home care bargaining unit members employed by various agencies" (including Stella Orton). The grievance stated that it applied to, among other things, "any . . . outstanding wage and hour claims" by its members "arising under the Covered Statues" (i.e., FLSA, the Labor Law, and the Home Care Worker Wage Parity Law). (NYSCEF No. 68, at 1, 3.)
In November 2019, Stella Orton moved in this action to compel arbitration under the Federal Arbitration Act (motion sequence 004).[FN1] (See NYSCEF No. 63.) Stella Orton argued that article XXVI of the 2012 CBA requires mandatory arbitration of Troshin's wage-and-hour claims and that any question relating to arbitrability was for the arbitrator—not a court—to decide in the first instance. (See Mem. of Law in Supp. of Mot., NYSCEF No. 69, at 10-12.)
C. Judicial and Arbitral Rulings on Arbitrability of These Disputes
On December 24, 2019, Mediator Scheinman wrote to numerous attorneys representing parties involved in pending wage-and-hour cases against home health agencies (including counsel for both parties here) to notify them that mediation of the claims asserted by 1199SEIU had proven unsuccessful. (See NYSCEF No. 118.) He noted in particular that a number of counsel representing wage-and-hour plaintiffs had indicated that they were unwilling to follow the mediation process that he had hammered out with 1199SEIU and the agencies; he explained that those counsel "represented former employees that had left employment prior to the signing of the ADR protocol" governing the mediation process and therefore took the position that their clients "were not bound to follow the ADR protocol." (Id. at 1-2.)
Scheinman stated that 1199SEIU "has determined it represents all of the employees' claims and wishes to pursue those claims promptly in arbitration," and that the agencies "agree this is now the proper course." (Id. at 2 [emphasis added].) He therefore scheduled a global arbitration hearing regarding these claims, to begin on January 15, 2020.
Scheinman also stated that "on the first day of the hearing," he would hear argument on two threshold questions relevant here: (i) whether the claims involving former 1199 bargaining unit members were arbitrable; and (ii) whether he had jurisdiction to adjudicate these claims where the employees raising them had left their jobs prior to the effective date of the Memorandum of Agreement imposing the mediation/arbitration procedure under which he was operating. (Id.)
On January 13, 2020, Troshin brought on by order to show cause a motion for injunctive relief prohibiting arbitration of his claims and those of members of the prospective class (motion sequence 005). (See NYSCEF No. 113 [proposed OSC]; No. 114 [Aff. of LaDonna M. Lusher in Supp. of Mot.], at3, 16.) The OSC included a request for a TRO barring arbitration of the claims of Troshin and prospective class members pending adjudication of the requests for injunctive relief—and, in particular, barring Arbitrator Scheinman from considering those claims during the scheduled January 15 global arbitration hearing. (See NYSCEF No. 113, at 2.)
Also on January 13, this court heard oral argument from the parties on Troshin's TRO request. Later that day, upon considering the parties' submissions at argument, Troshin's opening [*3]motion papers, and the opening and response papers on Stella Orton's motion to compel arbitration, this court notified the parties that it was going to deny the TRO request but sign the OSC and set a briefing schedule for the motion. The next day, January 14, this court issued a decision and order to explain more fully the reasoning underlying its ruling. (See Troshin v Stella Orton Home Care Agency, Inc., 2020 NY Slip Op 50036[U] [Sup Ct, NY County Jan. 14, 2020].)
In denying the TRO, this court declined to reach the merits of Troshin's arguments that (i) the arbitration clause in article XXVI of the CBA did not cover the statutory wage, hour, and overtime claims asserted in this action; and (ii) the arbitration clause in the ADR article added to the CBA by the 2015 MOA did not bind Troshin (or many other members of the proposed class) due to the fact that he had left Stella Orton before the MOA was executed. (See id. at *4-*5.)
This court held instead that article XXVI of the CBA was a broad arbitration provision that delegated threshold questions of arbitrability to the arbitrator, not the courts, to determine. The court distinguished two decisions of the Appellate Division, First Department, that had reached the arbitrability question themselves, on the ground that the rulings in those cases had been based solely on the terms of the new CBA ADR article, which did not delegate arbitrability to the arbitrator. (See id. at *6-*7.) And the court declined to find that Stella Orton's litigation conduct had waived the right of 1199SEIU to require its members to arbitrate their wage, hour, and overtime claims. (See id. at *7-*8.)
In April 2020, Arbitrator Scheinman issued his ruling on the arbitrability issues raised by various parties with an interest in the arbitration proceeding. (See NYSCEF No. 161 at Ex. A.) He concluded that under article XXVI of the CBA, he had jurisdiction to decide the threshold question of arbitrability, and that under the CBA's new ADR article, the various statutory claims at issue in the proceeding were arbitrable. (See id. at Ex. A 32-36.) Arbitrator Scheinman further concluded that the arbitration clause of the new ADR article bound all Stella Orton employees, past and present—whether or not they were still employed by Stella Orton when the 2015 MOA was executed. (See id. at Ex. A 37-39.) In reaching that conclusion, Scheinman did not address the First Department decisions (and a similar ruling of the U.S. Court of Appeals for the Second Circuit)[FN2] that had held the new ADR article to apply only to individuals who were employed by Stella Orton after the 2015 MOA's execution.
Troshin has continued to press his argument that neither he nor the prospective class is properly subject to having their claims against Stella Orton arbitrated in the proceeding before Arbitrator Scheinman. Stella Orton maintains that Troshin and the prospective class can and should be compelled to arbitrate.
Now before the court are Troshin's motion for an injunction against arbitration of his claims (motion sequence 005) and Stella Orton's motion to compel arbitration (motion sequence 004). Motion Sequences 004 and 005 are consolidated for disposition.[FN3]
[*4]DISCUSSION
I. Troshin's Motion for an Injunction (Motion Sequence 005)
Troshin moves for an injunction barring Stella Orton from arbitrating his claims and those of prospective class members.
The parties' motion papers focus their arguments on the merits questions of whether this court may properly determine arbitrability and whether the claims of Troshin and the prospective class are arbitrable. This court concludes that the threshold arbitrability issue is for this court, not Arbitrator Scheinman, to determine. On the merits of the arbitrability issue, this court concludes that the claims of Troshin, and members of the prospective class who left Stella Orton's employment before the execution date of the 2015 MOA, are not arbitrable. This court therefore grants to that extent the motion for an injunction barring arbitration. This court denies injunctive relief, however, with respect to members of the prospective class who are currently employed by Stella Orton, or who left Stella Orton's employment after execution of the 2015 MOA.
A. The Claims of Troshin and Prospective Class Members Who Left Stella Orton Before the 2015 MOA Was Executed
In opposing Troshin's request for an injunction, Stella Orton relies heavily on the prior denial of Troshin's request for a temporary restraining order, and in particular this court's conclusion in its TRO ruling that article XXVI of the CBA delegates to the arbitrator the threshold question of arbitrability. (See NYSCEF No. 149 at 6-7.) And Stella Orton maintains that CBA article XXVI and the CBA's new ADR article created by the 2015 MOA must be treated together for delegation purposes: "The issue here is not, and cannot be, whether the ADR Provisions of the 2015 MOA clearly and unmistakably delegate to the Arbitrator the determination of gateway arbitrability questions, but rather whether the Collective Bargaining Agreement of which that 'new article' is a part—the 2012 CBA—does so." (Id. at 9 [emphasis and internal quotation marks omitted].) Upon considering this interpretive question anew upon full briefing, this court is not so sure that Stella Orton is correct.
Troshin's reply papers in support of the motion for injunctive relief raise a telling point this court did not fully appreciate when issuing its TRO ruling (see NYSCEF No. 159 at 6-7): the terms of the new CBA article governing arbitration provide that wage, hour, and overtime claims "shall be subject exclusively to the grievance and arbitration procedures described" by that article.[FN4] (NYSCEF No. 115 at 8.) As a result, this court concludes, it is this new article—not, as Stella Orton suggests, existing article XXVI—that governs the arbitrability of the wage, hour, and overtime claims brought in this action.
As the First Department has already held in an action raising this issue, the terms of the new CBA ADR article does not delegate the arbitrability issue to the arbitrator. (See Hichez v United Jewish Counsel of the E. Side, Home Attendant Serv. Corp., 179 AD3d 576, 577 [1st Dept 2020].) The text of the new CBA article does not incorporate the procedures of existing article XXVI. It does not itself expressly delegate arbitrability to the arbitrator. And—unlike [*5]article XXVI—it does not incorporate by reference the rules of any arbitration body (like the AAA) that place arbitrability questions in the hands of an arbitrator rather than the courts.[FN5] (See id. at 8-10.) Nothing in the 2015 MOA's arbitration provision, therefore, serves to contract around the default rule that threshold arbitrability questions are for the courts to decide.[FN6] (See Smith Barney Shearson Inc. v Sacharow, 91 NY2d 39, 45 [1997].)
To be sure, as Stella Orton emphasizes (see NYSCEF No. 149 at 7), Troshin is contending that he is "bound only by the CBA existing during his employment"—and thus, seemingly, by article XXVI of the CBA rather than the ADR provision added by the 2015 MOA. And as this court concluded in its TRO ruling and as Stella Orton points out now (see id. at 8), Stella Orton's motion to compel arbitration draws on article XXVI, as well as on the CBA's 2015 ADR article.
The arbitration at issue on Troshin's request for an injunction, however, has proceeded under the rules laid down in the 2015 ADR article, rather than article XXVI. The arbitration at issue was preceded by a class grievance filed by 1199SEIU with Arbitrator Scheinman, as "named mediator and arbitrator" throughout the "home care industry" for various statutory wage, hour, and overtime claims. (NYSCEF No. 119 at 1.) Arbitrator Scheinman is designated as the parties' chosen mediator and arbitrator by §§ 1 and 2 of the 2015 ADR article. (See NYSCEF No. 115 at 8-9.) The parties sought to mediate their dispute before Arbitrator Scheinman; when that mediation proved unsuccessful, the parties proceeded to binding arbitration before him. (See NYSCEF No. 161 Ex. A at 7.) Each of these steps follows the procedures of the new ADR article—not existing article XXVI. (Compare NYSCEF No. 116 at 28-29 [article XXVI], with NYSCEF No. 115 at 8-9 [2015 ADR article].)
Moreover, even if one were to conclude that the who-decides-arbitrability question must take into account the terms of both article XXVI and the new ADR article, these two provisions point in opposite directions—one delegates arbitrability to the arbitrator and the other does not. On further consideration, therefore, this court is thus hard-pressed to conclude that the parties to the CBA clearly and unmistakably agreed to delegate arbitrability to the arbitrator, as the caselaw requires. (See Sacharow, 91 NY2d at 46.)
This court therefore holds that in this case, whether Troshin (and similarly situated prospective class members) can be compelled to participate in the arbitration before Arbitrator Scheinman is a question for the court and not for the arbitrator. And under consistent First Department precedent, neither Troshin, nor any member of the prospective class who ceased working for Stella Orton before execution of the 2015 MOA, is bound by the arbitration clause in the CBA ADR article added in 2015.[FN7] (See Hichez, 179 AD3d at 577; Lorentti-Herrera v [*6]Alliance for Health, Inc., 173 AD3d 596 [1st Dept 2019]; Konstantynovska v Caring Professionals, Inc., 172 AD3d 486 [1st Dept 2019]; accord Agarunova v Stella Orton Home Care Agency, Inc., 794 F Appx 138, 140 [2d Cir 2020].)
This court does not agree with Stella Orton's contention that the conclusion of those cases is inconsistent with the decision of the U.S. Supreme Court in Henry Schein Inc. v Archer & White Sales, Inc. (139 S Ct 524 [2019]). (See NYSCEF No. 149 at 7-8.) Henry Schein holds only that where contracting parties have agreed to delegate arbitrability to the arbitrator, a court must respect that delegation even where the merits of the arbitrability issue seem to the court to be entirely one-sided. (See 139 S Ct at 529-530.) Here, the appellate decisions to which Stella Orton objects concluded simply that the parties did not delegate arbitrability determinations to the arbitrator. That Stella Orton disagrees with that conclusion does not make it contrary to U.S. Supreme Court precedent.[FN8]
B. The Claims of Prospective Class Members Who Were Employed at Stella Orton After the 2015 MOA Was Executed
This court's conclusion that employees who ceased working for Stella Orton before execution of the 2015 MOA may not be required to arbitrate their claims still leaves the question of how to treat employees who were employed by Stella Orton in December 2015 (or after).
The new ADR article added to the CBA by the 2015 MOA provides for mandatory, binding arbitration of wage, hour, and overtime claims. Troshin does not dispute that this agreement would govern the claims of plaintiffs in the prospective class who were employed by Stella Orton after execution of the MOA. Troshin argues that this court should nonetheless issue an injunction prohibiting arbitration of these plaintiffs' claims because Stella Orton assertedly waived its right to arbitrate. This court disagrees.
As this court noted in its TRO ruling, the arbitration that Troshin is now seeking to block was sought by 1199SEIU. (See Troshin, 2020 NY Slip Op 50036[U], at *7.) And 1199SEIU's right to arbitrate on behalf of its members (assuming their agreement to the arbitration in the applicable CBA) does not depend on whether the employer could separately force the employees to arbitrate. That is, this court does not see why a waiver by Stella Orton of the right to compel arbitration should oust the non-party union's right to decide to arbitrate on behalf of its members [*7]pursuant to the CBA. Relatedly, Troshin asserts that if "this Court finds waiver, an injunction prohibiting Defendant from arbitrating claims for Plaintiffs who continued working for Defendant after the 2015 MOA was executed is also proper." (NYSCEF No. 159 at 19-20.) But that conclusion does not follow. Even if Stella Orton were found to have waived its right to compel arbitration in lieu of litigating this action, Troshin does not explain why that waiver would also encompass Stella Orton's right to participate in arbitration sought by a third party (i.e., 1199SEIU).
This court therefore declines to enjoin Stella Orton from arbitrating the claims of prospective class members employed at Stella Orton after execution of the 2015 MOA.[FN9]
II. Stella Orton's Motion to Compel (Motion Sequence 004)
Stella Orton also moves to compel arbitration of Troshin's claims against it. Troshin opposes on waiver grounds. The motion to compel is denied as academic.
With respect to prospective class members who left employment at Stella Orton before the 2015 MOA was executed, this court has already held above that those individuals cannot be required to arbitrate their wage, hour, and overtime claims in the proceeding before Arbitrator Scheinman. With respect to prospective class members who were employed at Stella Orton after the 2015 MOA was executed, this court has already held above that those individuals can be required by 1199SEIU to arbitrate their claims—even if Stella Orton were deemed to have waived its own right to compel arbitration by actively litigating this action for more than two years before it first raised the possibility of moving to compel.
Given the court's resolution of these issues on motion sequence 005, Stella Orton's motion on motion sequence 004 is denied as academic.
Accordingly, for the foregoing reasons it is hereby
ORDERED that the branch of Troshin's motion (motion sequence 005) seeking to enjoin arbitration of the claims of Troshin and prospective class members who ceased working for Stella Orton before December 16, 2015, is granted; and it is further
ORDERED that the branch of Troshin's motion (motion sequence 005) seeking to enjoin arbitration of the claims of Troshin and prospective class members who ceased working for Stella Orton on or after December 16, 2015, is denied; and it is further
ORDERED that Stella Orton's motion to compel arbitration (motion sequence 004) is denied as academic; and it is further
ORDERED that Troshin shall serve a copy of this order with notice of its entry on Stella Orton, 1199SEIU, and Arbitrator Martin F. Scheinman, Esq.
Dated: September 11, 2020
Hon. Gerald Lebovits
J.S.C. Footnotes
Footnote 1:Stella Orton had first indicated that it intended to move to compel at a status conference held by this court on February 27, 2019. (See NYSCEF No. 55.)
Footnote 2:See Hichez v United Jewish Counsel of the E. Side, Home Attendant Serv. Corp., 179 AD3d 576, 577 [1st Dept 2020]; Lorentti-Herrera v Alliance for Health, Inc., 173 AD3d 596 [1st Dept 2019]; Konstantynovska v Caring Professionals, Inc., 172 AD3d 486 [1st Dept 2019]; Agarunova v Stella Orton Home Care Agency, Inc., 794 F Appx 138 [2d Cir 2020].)
Footnote 3:Troshin has also moved to certify the prospective class (motion sequence 003). That motion will be addressed by separate order in due course.
Footnote 4:Although Troshin did not make this point in his initial motion papers, this court exercises its discretion to consider it here. The argument is based on the express terms of the 2015 ADR article, and is closely related to the parties' interpretive claims in Troshin's initial motion papers and Stella Orton's opposition papers. Moreover, Stella Orton has neither objected to Troshin's having first made this argument in his reply nor sought leave to file a responsive surreply.
Footnote 5:This court is thus not persuaded by Stella Orton's insistence that the First Department's "notion that the 2015 MOA does not incorporate the AAA Rules" fails to "pass even the 'red-face test.'" (NYSCEF No. 149 at 9 n 4 [internal quotation marks omitted], citing Hichez, 179 AD3d at 577.)
Footnote 6:Arbitrator Scheinman's contrary holding relies on CBA article XXVI. He does not address the exclusivity language of the 2015 ADR article of the CBA—or the absence of any delegation language in that article. (See NYSCEF No. 161 Ex. A at 32-36.)
Footnote 7:This court notes that Arbitrator Scheinman's conclusion in his April 2020 decision that all past and present Stella Orton employees are bound by the terms of the new CBA ADR article does not address, let alone distinguish, the holdings or reasoning of Hichez, Lorentti-Herrera, and Konstantynovska. Additionally, he does not explain why he could properly rely on a decision of the U.S. District Court for the Southern District of New York, holding that the 2015 MOA applied retroactively to require arbitration of pre-MOA claims, over the later Second Circuit decision in Agarunova holding that it did not. (See NYSCEF No. 161 Ex. A at 38-39, quoting Chan v Chinese-Am. Planning Council Home Attendant Program, Inc., 180 F Supp 3d 236, 241 [SD NY 2016].) As to Agarunova, Arbitrator Scheinman says only that the delegation-of-arbitrability argument was not before the court in that case. (See NYSCEF No. 161 Ex. A at 39 n 16.) That point is true (see 794 F Appx at 140), but irrelevant: the delegation argument addresses who decides arbitrability, not whether the claims are arbitrable.
Footnote 8:Regardless, even if this court were to think that the conclusion of those decisions was inconsistent with Henry Schein, that would not change the outcome here. This court is unpersuaded, to say the least, by Stella Orton's assertion that a trial court can simply disregard on-point Appellate Division precedent if the trial court believes that precedent to be contrary to a decision of the U.S. Supreme Court. (See NYSCEF No. 149 at 9-10.)
Footnote 9:Although as noted above this court has not yet adjudicated Troshin's pending motion for class certification, at a minimum any prospective class may only include employees who left employment at Stella Orton before execution of the 2015 MOA. (See NYSCEF No. 159 at 20 n 9 [acknowledging this point].)
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