An arbitrator unfairly applied his version of "rough industrial judgment" when making a Hilton operator pay severance to workers laid off due to COVID-19, the company has told a New York federal court in a brief opposing a hotel union's motion to dismiss its suit.
Impartial Chairperson Elliott Shriftman's two arbitration awards in September and December favoring laid-off workers at the Hilton's Renwick Hotel in Manhattan suffers from substantive errors because it requires hotel operator MP Bedford Property LLC to make payments not authorized by an industrywide collective bargaining agreement with the New York Hotel and Motel Trades Council
AFL-CIO, the operator said Friday in a bid to vacate the award and to ditch the union's dismiss motion.
"The awards must be vacated because they amount to rough industrial justice divorced from contractual right," the hotel said.
The hotel then went on to argue that the words of an industrywide agreement must be the basis of any award, pointing to a 1986 Second Circuit decision in
Avis Rent A Car System Inc. v. Garage Employees Union Local 272 
. And an arbitrator for the Office of the Impartial Chairperson of the Hotel Industry of the City of New York, such as Shriftman, may not impose his own understanding of rough industrial justice, the operator added, citing a 1987
U.S. Supreme Court ruling in
United Paperworkers International Union AFLCIO v. Misco Inc.
"The union's only substantive response to Renwick's arguments on this point is that the impartial chairperson has been consistent in his interpretation of severance obligations, but a decision that makes up new legal obligations never contemplated by the parties in their contract does not draw its essence from that contract, and repeating that error does not remedy it," the hotel said.
Shriftman issued the first arbitration award on Sept. 11, and
the dispute landed in federal court on Oct. 28, when the Renwick Hotel petitioned to throw out his order to pay severance to workers who were laid off in March due to COVID-19, arguing that the award ignored the hotel's contract with the union.
The petition accused the arbitrator of unfairly favoring the union by awarding the laid-off workers severance pay despite what it described as a provision in the collective bargaining agreement with the New York Hotel and Motel Trades Council AFL-CIO that severance triggers only when a hotel permanently closes.
"The award is subject to vacatur because it does not, as required by the Labor Management Relations Act, 'draw its essence from the contract' but instead 'simply reflects the arbitrator's own notions of industrial justice,'" the hotel said.
Its suit pointed to the CBA's Article 52, which says that employees receive severance pay "in the event of termination resulting from the closing of a hotel or a restaurant therein or a department thereof, or a concession."
In the Sept. 11 arbitration proceedings, Shriftman agreed with hotel operators that severance is normally awarded for permanent hotel closures, according to the suit. But Shriftman said because layoffs would be long-term, "the circumstances of the COVID-19 crisis warrant severance pay for employees who have not yet been recalled" under the industrywide agreement, the suit said.
Renwick and other hotels in the city temporarily suspended hosting guests in March in response to government emergency declarations due to the novel coronavirus, leading to the layoffs. Under the September arbitration award, hotels must pay severance to laid-off employees in either a lump sum or a weekly bridge payment by Oct. 1 or soon after, according to the suit.
To date, the Renwick Hotel remains closed, the union said in its Jan. 8 motion to dismiss. The union argued that Shriftman's second arbitral award once again favoring the laid-off workers stemmed from his view that the hotel closure is effectively permanent.
"On Dec. 16, 2020, IC Shriftman issued Award 2020-100 finding that the 'hotel's layoff of its employees for an indeterminate period constitutes a termination from a closing' that triggers the hotel's obligation under Article 52 to pay severance pay," the union said. "He further held that Renwick had provided no reason why it, as distinguished from every other IWA hotel, should not comply with the industry award."
The hotel said Friday that Shriftman lacked the authority to issue the second award, which simply "rubberstamped" the original award.
"The union does not seriously attempt to justify these awards under the industry-wide agreement," the hotel said. "Rather, it seeks to rewrite the IWA and hold Renwick liable for severance liability never contemplated by the agreement."
A lawyer for the union, Barry N. Saltzman of
Pitta LLP, told Law360 on Tuesday that he was unable to comment on the pending matter except to say that the union will file a Feb. 3 brief in response to the hotel's Friday bid to vacate the award and preserve the suit.
Representatives for the Renwick Hotel did not immediately respond Tuesday to a request for comment.
The hotel is represented by Paul Rosenberg and Andrew M. Grossman of
BakerHostetler.
The union is represented by Barry N. Saltzman and Andrew D. Midgen of Pitta LLP.
The case is MP Bedford Property LLC v. New York Hotel & Motel Trades Council AFL-CIO, case number
1:20-cv-09050, in
U.S. District Court for the Southern District of New York.
--Additional reporting by Michael Joe. Editing by Jay Jackson Jr.
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