Arbitrator’s Award Confirmed by Federal Court
In a recent victory for our Union, the US District Court of the Southern District of New York upheld an arbitrators’ decision that confirmed the strength of our Union’s contract language.
The owners of the Wagner Hotel, a company called Urban Commons, filed a motion to overturn an arbitrator’s award which determined they had violated the Industry Wide Agreement. When Urban Commons bought the Wagner in 2018, they agreed to be bound by the IWA. One of the provisions of the IWA requires that any change in ownership or control include binding the new owner or operator to the contract, meaning who’s running the hotel might change but the contract has to stay the same.
Urban Commons received a mortgage loan which gave the bank a lien on the property, and allowed the bank to take over the hotel in the event the hotel owner defaulted on the loan, essentially creating a potential transfer of control. However, Urban Commons never executed an agreement with their lender that would bind them to the IWA. Our Union took them to arbitration over this contract violation. The arbitrator ruled in the Union’s favor and determined that mortgage agreements were covered by the broad successors and assigns language of the IWA.
Normally when an arbitrator’s award is issued, the parties comply and move on. But in this case Urban Commons decided to try and vacate the award in court, essentially asking the Court to overrule the arbitrator’s decision. Leading them in this foolhardy and legally dubious effort was Paul Rosenberg, a notorious anti-union lawyer with Baker Hostetler whose trademark has been to drain money from hotel owners and managers by pretending he has a shot at winning absurd legal cases.
It is well known in the legal world that very rarely does a district court vacate an arbitrator’s award, so without a really strong argument it is highly unlikely the attempt will be successful. Rosenberg, undoubtedly knew this as an experienced labor lawyer but still chose to proceed with a laughably weak case, wasting the resources of his client and the time of the court.
All of Rosenberg’s arguments for vacating the arbitrator’s award were dismissed by the court. Rosenberg argued that the arbitrator’s decision violated the Federal Arbitration Act however, the FAA does not apply to arbitrations conducted by unions under the Labor Management Relations Act. You would think a lawyer with as much experience as Rosenberg might know which laws apply to the cases he is arguing. Then, he tried to make the ridiculous argument that the arbitrator’s award somehow violates public policy which the court found to be without merit.
Without any reasonable arguments presented by Rosenberg, the court denied Urban Commons motion to vacate and upheld the arbitrator’s decision, in a win for the Union. While Rosenberg may have wasted his client’s time and money, his failure cemented the far-reaching impact of our successor and assigns contract language.
