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New Jersey Carpenters Funds v. Engineered Framing Systems

January 25, 2008

NEW JERSEY CARPENTERS FUNDS, NEW JERSEY REGIONAL COUNCIL OF CARPENTERS, ZAZZALI, FAGELLA, NOWAK, KLEINBAUM & FRIEDMAN, P.C., PETITIONERS,
v.
ENGINEERED FRAMING SYSTEMS, EFS OF NEW JERSEY, RESPONDENTS.



The opinion of the court was delivered by: William J. Martini, U.S.D.J.

OPINION

HON. WILLIAM J. MARTINI

Petitioners move to confirm an arbitration award against Respondents, which an arbitrator entered after finding that Respondents breached a collective bargaining agreement with Petitioners by failing to make certain required employee benefit contributions. Respondents oppose this motion, arguing that Respondent Engineered Framing Systems Structures, Inc. was not a party to the collective bargaining agreement and thus not bound by its arbitration provisions. Respondents also argue that the arbitrator's procedures were not sufficient. Finally, Respondents argue that the arbitrator lacked sufficient evidence for its award. This Court agrees that Engineered Framing Systems Structures, Inc. was not a party to the collective bargaining agreement and holds that the arbitrator had no other basis to assert arbitration jurisdiction over that Respondent. However, this Court finds that the arbitrator's procedure was fair and that its award had a rational basis sufficient to warrant confirmation. Accordingly, this Court AFFIRMS the award in its entirety except as against Respondent Engineered Framing Systems Structures, Inc.

I. FACTS

At the heart of this case lies a collective bargaining agreement. The employer parties to this agreement are Respondents Engineered Framing Systems ("EFS") and Engineered Framing Systems of New Jersey ("EFSNJ"). (Cross Petition to Vacate, Modify or Remand an Arbitration Award ¶ 8.) Each employer entered into a collective bargaining agreement with Petitioner New Jersey Regional Council of Carpenters ("NJRCC"), a union. (Cross Petition ¶ 8.) Under the collective bargaining agreement, EFS and EFSNJ were obligated to make certain contributions to the New Jersey Carpenters Funds ("Funds") on behalf of NJRCC members whom EFS and EFSNJ employed. (Affidavit of Edward H. O'Hare, Ex. B, Article XXXI.)

The collective bargaining agreement provided for the arbitration of disputes that could not be settled by the parties. Specifically, it provided for the arbitration of "[a]ll questions or grievances involving the interpretation and application of this Agreement." (Ex. B, Article XVIII.) Also, the short form agreement between the parties accompanying the collective bargaining agreement provided that the arbitrator "shall herein decide . . . all matters concerning procedural or substantive arbitrability." (O'Hare Affidavit, Ex. A.)

This dispute arose when the Funds determined that EFS and EFSNJ were delinquent in their required contributions. (Letter Brief Opposing Cross Petition to Vacate 3.) Pursuant to the collective bargaining agreement, the Funds scheduled an arbitration for April 12, 2007, seeking to recover these delinquent contributions. (Letter Brief Opposing Cross Petition 3.)

But the Funds sought an award not only from EFS and EFSNJ, but also from a third entity, Engineered Framing Systems Structures, Inc. ("Structures"). (Petition to Confirm Arbitration Awards, Ex. B.) Although the relationship between Structures and the other two Respondents, EFS and EFSNJ, is not clear, the parties appear to agree that they have different shareholders and that Structures does not directly employ any union laborers. (Letter Brief in Support of Cross Petition 12; Letter Brief Opposing Cross Petition 2.)

At the arbitration, Petitioners produced evidence of Respondents' delinquency. Robert Laufenberg, a Funds collection representative, presented shop steward reports, paystubs, and remittance reports showing discrepancies between the contributions that Respondents were required to make and their actual contributions.*fn1 (Affidavit of Robert Laufenberg ¶¶ 2, 3.) He also prepared a summary of the owed contributions, showing that Respondents owed the Funds $361,852.90. ( Laufenberg Affidavit ¶ 3 & Ex. B.) Laufenberg testified during the arbitration hearing that when determining how much Respondents had contributed, Petitioners had considered contributions made on Respondents' behalf from two other sources: an escrow account held by Tobia & Sorger (the law firm representing Respondents) and AJD Construction, Inc. (a general contracting company).*fn2 (Laufenberg Affidavit ¶ 6.)

In contrast, the three Respondents participated in the arbitration less diligently. Before the arbitration began, Respondents' lawyer requested an adjournment to have additional time to prepare. (O'Hare Affidavit, Exs. C, D, E.) Over Petitioners' objection, the arbitrator granted Respondents' request and rescheduled the arbitration for May 31, 2007. (O'Hare Affidavit Ex. F.) At the arbitration, Respondents' lawyer did not produce any testimony or documentation. (Laufenberg Affidavit ¶ 8.) When the Funds submitted evidence supporting a $361,852.90 award, Respondents' lawyer again requested that Respondents be permitted more time to produce testimony and documents. (Laufenberg Affidavit ¶ 10; Letter Brief Opposing Cross Petition 3--4.) Again over Petitioners' objection, the arbitrator granted Respondents' request and held another arbitration, on June 21, 2007. (Laufenberg Affidavit ¶ 10; Letter Brief Opposing Cross Petition 3--4.) But yet again, Respondents failed to provide any testimony or documents disputing Petitioners' alleged award. (Laufenberg Affidavit ¶ 10.)

Ultimately, the arbitrator awarded Petitioners $316,852.90. (Petition Ex. B ¶ 1.) The arbitrator also awarded attorney's fees of $90,463 to Petitioners' law firm, Zazzali, Fagella, Nowak, Kleinbaum & Friedman. (Ex. B ¶ 2.)

II. MOTIONS BEFORE THIS COURT

Upon this arbitration award, the parties have filed the two motions now before this Court. Petitioners have moved to confirm the arbitration award, and Respondents have cross-moved to vacate the award.

Respondents make four arguments in support of their cross-motion to vacate. First, Respondents argue that this Court should vacate the award at least with respect to Respondent Structures because Structures was not a signatory to the collective bargaining agreement and thus not bound by its arbitration provision. (Letter Brief Supporting Cross Petition 4.) Second, Respondents argue that the arbitrator should have given them more time to present evidence that they were not delinquent in their contributions to the Funds. (Letter Brief Supporting Cross Petition 2.) Third, Respondents argue that the arbitrator based its award on shop steward reports, which was improper because, Respondents argue, these reports "were never entered into evidence at the Hearing." (Letter Brief Supporting Cross Petition 3.) ...


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