Sunday, August 6, 2017

Marriott challenges arbitrator's award on applicability of neutrality/card check agreement, impact of successorship language

Marriott International and Starwood Hotels & Resorts Worldwide were both members of a multi-employer Hotel Association and were  bound by an Industry-Wide Agreement (IWA) between the Association and the New York Hotel and Motel Trades Council.

During negotiations for the IWA effective July 1, 2012, the parties agreed to modify the impact of an earlier decision concerning the scope of the neutrality/card check provisions of the IWA. As set forth in a Stipulation of Facts:

During the negotiations for the 2012 IWA, the Union and the Hotel Assn. Bargaining Group Hotels  agreed that, in return for the Union not insisting on the unlimited temporal and geographic scope of the Parsippany Award, the Union and respective hotel chains would separately negotiate for certain hotels to be immediately covered by card check neutrality organizing under Article 60/Addendum IV even though the managerial, ownership and control interest preceded February 3rd 2012.

Both Marriott and Starwood reached agreements with the Union  identifying certain hotels that would be immediately subject to the card check/neutrality proven of the IWA. Per the Starwood side agreement, certain other of its hotels, including the W Hoboken and the Westin Jersey City Newport, would not be subject to neutrality/card check.

In September of 2016 Marriott completed its acquisition of Starwood. Thereafter, the Union sought to organize the W Hoboken and The Westin Jersey City under the card check/neutrality provisions of the IWA and the Marriott side agreement. The Union claimed that these hotels had been "acquired" by Marriott after February 3, 2012 and that they were therefore subject to neutrality/card check. In contrast, Marriott maintained that it acquired Starwood in a stock transfer, that Starwood continued to exist, albeit as an indirect wholly owned subsidiary of Marriott, and that all of Starwood's labor agreements remained in place. It pointed to the successorship  successorship language of the IWA which provided:

This Agreement shall be binding upon the successors and assigns of the parties hereto, and no provisions, terms, or obligations herein contained shall be affected, modified, altered, or changed in any respect whatsoever by the consolidation, merger, sale, transfer, or assignment of either party hereto or affected, modified, altered or changed in any respect whatsoever by any change any kind in the legal status, ownership, or management of either party hereto....

 and the related provision of the Starwood side agreement.

The dispute was submitted to Impartial  Chairperson Elliott Shriftman for resolution. Chairperson Shriftman concluded:

It is beyond,  or should be beyond, debate, that if the only agreements to be considered by the Chairperson are the 2012 IWA and the May 29, 2015 Side Agreement between Marriott and the Union, Marriott's acquisition of any hotel, not excluded from the latter, if falling within the geographic contemplated by the IWA, and occurring after February 3. 2012 would give the Union the absolute right to expect Marriott to comply with the card check neutrality provisions of the IWA as regards the W Hoboken and the Westin Jersey City Newport. This is made abundantly clear in Article 60(B0(1) of the IWA and Addendum IV.  Marriott, in fact, acquired those two hotels after February 3, 2012.

Responding to Marriott's argument regarding the successorship provision of the Starwood agreement, Chairperson Shriftman concluded:

The successors and assigns clause in the Starwood Agreement was plainly designed to benefit the Union and bind any purchaser of the named hotels subject to Article 60 and addendum IV should they be sold prior to the Union's invocation of those provisions. It was not intended to create an exclusion to the benefit of Starwood or any subsequent owner. These words, drawn from the Starwood Agreement, make plain that they were not to be enjoyed by a subsequent buyer. "...based on Starwood's ownership, management or control interest therein which predates February 3, 2012."

Accordingly, the  Chairperson directed Marriott to "promptly comply" with the Union's card check demands

Marriott has sought to vacate the award, claiming, inter alia, that the Chairperson has "evidenced a manifest disregard" for the terms if the Agreement, ignored its plain language, is contrary to public policy, and fails to draw its essence from the agreement.

Marriott's complaint, and the Award of Independent Chairperson Shriftman, can be found here.

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