United States District Court, D. New Jersey
MZM CONSTRUCTION COMPANY, INC., d/b/a MZM CONSTRUCTION MANAGEMENT & TRANSPORTATION, Plaintiff,
NEW JERSEY BUILDING LABORERS' STATEWIDE BENEFIT FUNDS, Defendants.
McNULTY UNITED STATES DISTRICT JUDGE
before the Court is a motion for an indicative ruling filed
by defendant New Jersey Building Laborers' Statewide
Benefit Funds ("Funds"). (DE 19). In this
declaratory judgment action, plaintiff MZM Construction
Company, Inc. ("MZM"), a subcontractor, seeks to
preclude arbitration and void a short form agreement
("SFA") that allegedly incorporated a statewide
collective bargaining agreement ("CBA") by
preliminary word about the backwards procedural posture of
this case: The cases governing arbitrability, cited herein,
are commonly decided in the context of a motion to compel
arbitration brought by the party who seeks it. This action,
however, seeks a preemptive declaratory judgment that
arbitration should not occur, and is brought by the party
opposing arbitration. Because arbitration had been scheduled,
MZM was thrown back on the expedient of seeking a preliminary
injunction against arbitration. The Court was thereby called
upon to assess the likelihood of success on the merits; the
"merits," however, related only to the likelihood
that the claims were arbitrable. The injunction application,
then, was the functional equivalent of an opposition to a
motion to compel arbitration by the Funds. The preliminary
injunction granted by the Court consists of little more than
obedience to the Third Circuit's command that arbitration
cannot be ordered unless and until antecedent questions of
fact are resolved. Guidotti v. Legal Helpers Debt Resolution,
L.L.C., 716 F.3d 764, 771 (3d Cir. 2013). In declaratory
judgment actions, it is sometimes helpful to notionally
realign the parties in their natural configuration. At any
rate, however, the standards governing arbitrability do not
depend on who sued first, and, mutatis mutandis, must be
applied in the same manner to a motion to compel or a
declaratory judgment action.
sought a preliminary injunction to stop an arbitration
hearing that had been unilaterally scheduled by the Funds.
The Funds argued that MZM was delinquent on contributions
that were due under a CBA, and that MZM had agreed to
arbitrate that issue based on an arbitration clause in that
CBA. In an oral ruling, I granted the preliminary injunction
staying the arbitration pending further factual development.
The Funds' appeal from that order is pending before the
U.S. Court of Appeals for the Third Circuit.
Funds request that this Court issue an order, pursuant to
Federal Rule of Civil Procedure 62.1, indicating that, if the
matter were remanded from the Court of Appeals, this Court
would provide relief from, or reconsider, its December 19,
2018 Order that (1) preliminarily enjoined arbitration; (2)
denied the Funds' motion to dismiss the complaint because
the arbitrability issue required further factual development;
and (3) ordered expedited discovery. (DE 16). The Funds seek
relief from a "final judgment or order" under
Federal Rule of Civil Procedure 60(b) and for reconsideration
under Rule 54(b). For the reasons provided below, the motion
will be denied.
1992, Marjorie Perry and two partners founded plaintiff MZM
Construction Company, Inc. ("MZM"), a subcontractor
headquartered in Newark, New Jersey. (Perry Decl.
¶¶1-4). MZM is a construction firm that specializes
in construction and construction management, waste management
and transportation, and renovations. (Perry Decl. ¶3).
MZM has performed work on the New Jersey Performing Arts
Center, MetLife Stadium, Newark International Airport, and
New Jersey Transit facilities. (Perry Decl. ¶4). In
1994, Perry became the sole shareholder of MZM. (Perry Decl.
the years, MZM has used union laborers when directed to do so
by a project owner or general contractor on a particular
project. (Perry Decl. ¶6). In such a case, Perry would
contact the representatives of the union and request the No.
of laborers needed for the project. (Perry Dec. ¶7). On
those projects, Perry would pay the union rates as well as
benefits. (Perry Decl. ¶7). This pattern of dealing
between Perry and the unions started in 1992 and continues to
the present day. (Id.).
though Perry used union laborers from time to time, she did
not execute a collective bargaining agreement with the
unions. (Id., ). In 2002, however, Perry signed a one-page
"Short Form Agreement" ("SFA"). (Perry
Decl. ¶9). MZM was working on Terminal C at Newark
Liberty Internal Airport and was utilizing union laborers for
the project. (Id.). That project began in 2001 and
was completed in 2004. (Id.). In 2002, Perry was
approached by a union representative, Joe Taylor.
(Id.). Perry had dealt with Taylor for many years.
(Id.). Taylor told Perry that he needed her to sign
a one-page document for the ongoing Newark Airport job
because "the union had nothing on record for MZM for the
Newark Airport job." (Id.). Taylor understood
that MZM was an "open shop," and did not indicate
that he wanted Perry to sign an ongoing collective bargaining
agreement. (Id.). Taylor orally advised Perry that
the agreement was "a single project agreement" for
the Newark Airport job only. (Id.). Taylor also told
Perry that if Perry did not sign the agreement, "the
union would not provide any more laborers for the Newark
Airport job." (Id.).
2002 SFA, which makes no mention of arbitration, provides as
The undersigned Employer, desiring to employ laborers from
the New Jersey Building Laborer Local Unions and District
Councils affiliated with the Laborer's International
Union of North America, hereinafter the "Unions,"
and being further desirous of building, developing and
maintaining a harmonious working relationship between the
undersigned Employer and the said Unions in which the rights
of both parties are recognized and respected, and the work
accomplished with the efficiency, economy and quality that is
necessary in order to expand the work opportunities of both
parties, and the Unions desiring to fulfill the undersigned
Employer's requirements for such laborers, the
undersigned Employer and Unions hereby Agree to be bound by
the conditions as set forth in the 1999 Building, Site and
General Construction Agreement, which Agreement expires April
30, 2002, and the successor Agreement to the 1999 Building
Site and General Construction Agreement, herein referred to
as the 2002 Building, Site and General Construction
Agreement, which successor Agreement becomes effective May 1,
2002, both of which Agreements are incorporated herein as if
set forth in full.
(DE 1-4). MZM was identified as the employer in the
agreement, and Perry signed as MZM's authorized
on Taylor's representations, and to avoid any labor
interruptions on the Newark Airport project, Perry signed the
agreement. (Perry Decl. ¶9). Taylor did not provide
Perry with a copy of the 2002 SFA. Perry did not have any
further communications with the union regarding the 2002 SFA
until approximately sixteen years later, in 2018. (Perry
Decl. ¶¶11-12). Between 2002 and 2018, seventy
percent or more of MZM's projects in New Jersey were
non-union jobs for which no contributions were paid or sought
by the Funds. (Perry Decl. ¶15).
2018, the accountants for the Funds requested access to
MZM's "books and records," which Perry granted.
(Perry Decl. ¶12). On June 27, 2018, the Funds'
accountant told Perry that she owed "contributions on a
non-union job that was completed in 2016, which was a federal
prevailing wage project." [Id.). In response,
Perry requested a copy of the document that the Funds'
accountant relied upon in claiming that fringe benefits were
owed. (Perry Decl. ¶13).
Funds' accountant produced a copy of the 2002 SFA.
(Id.). Shortly thereafter, the Funds also provided
Perry with a copy of a Collective Bargaining Agreement
between the "Employer" and "the Building
Laborers' District Councils and Local Unions of the State
of New Jersey ('Union') That CBA says it covers a
term beginning May 1, 2002 and ending April 30, 2007, with
automatic renewal provisions. (DE 1-5 (hereinafter "2002
CBA"); see also Perry Decl. ¶16). This 2002 CBA is
not signed by anyone. It does not identify a contractor or
employer on the signature line. (2002 CBA at p.69). Prior to
receiving this copy of the 2002 CBA in 2018, Perry had never
before seen this or any other CBA to which MZM was a
signatory. (Perry Decl. ¶18). MZM essentially asserts
that no additional payment is due because it was not a
signatory to any CBA with the Funds.
2002 CBA requires the (unspecified) "Employer" to
"remit fringe and benefit contributions to the
Funds." (Kemple Decl. ¶5; 2002 CBA
§14.00-14.90). As part of its opposition to MZM's
motion before this Court, the Funds submitted a No. of
"Employer Contribution Reports," from May of 2012
and March through July of 2016. (Kemple Decl. ¶14, &
Ex. 7). Those reports, above Perry's signature on behalf
of MZM, provide the following:
THE UNDERSIGNED, an authorized representative of the above
Employer, hereby agrees, on behalf of the Employer, to bind
the Employer to all the provisions, terms and conditions of .
. . the Collective Bargaining Agreement by and between the
Building Construction Laborers' District Councils and
Local Unions of the State of New Jersey and the Building,
Site and General Construction Contractors and Employers,
which Agreements and Declarations of Trusts and Collective
Bargaining Agreements (the Agreements) are incorporated
herein by reference.
(Id.). That provision is not contained in all the
reports, and it does not mention arbitration. Where it does
appear, the font size of the provision is much smaller as
compared to the other text in the reports. Additionally, each
report is for a specific time period,  identifies a
particular "jobsite," and provides contributions
for a particularly named employee. (Id.).
November 5, 2018, counsel for the Funds sent a demand letter
to MZM. (DE 1-7). That letter stated that MZM owed $231,
650.65 in contributions, including interest and audit fees,
and that the failure to submit payment would cause the Funds
to submit the matter to arbitration on Tuesday, November 27,
2018. [Id.). The Funds assert that the 2002 SFA
incorporated the 2002 CBA by reference and that therefore the
matter is arbitrable. (Kemple Decl. ¶3).
2002 CBA does not contain a single, broad arbitration clause,
but instead, provides two distinct arbitration provisions,
one for jurisdictional and the other for non-jurisdictional
CBA's first arbitration provision (§2.20), titled
"Jurisdictional Disputes," provides the following:
It is agreed between the Union and the Employer that this
Agreement is applicable to all construction work that is
described in this Agreement or the Manual of Jurisdiction of
the Laborers' International Union of North America, which
is incorporated herein by reference and any other work within
the recognized and traditional jurisdiction of the Union and
shall be performed in accordance with the terms of this
Agreement. If the Union is aggrieved over any assignment, the
matter shall be referred to the regional office of both
contesting Unions in an effort to seek a resolution. If the
matter fails to be satisfactorily resolved in this manner
within three business days, the parties agree to submit the
matter to the New Jersey State Board of Mediation for binding
arbitration on an expedited basis. Any party that fails to
abide by and cooperate with this expedited procedure shall be
deemed to be in default and an order shall be entered by the
Arbitrator in favor of the opposing party. Pending an orderly
resolution of the matter, there shall be no interruption of
work by a work stoppage, strike or refusal to refer men to
the project by the Union.
(2002 CBA, §2.20). This provision appears to cover
disputes between unions over the assignment of work. See
Office & Prof'I Emples. Int'l Union v. Sea-Land
Serv., Inc., 210 F.3d 117, 118 (2d Cir. 2000) ("a
jurisdictional labor dispute arises when two or more unions
claim, under their respective collective bargaining
agreements ... the right to perform the same work
assignment." (citing Transportation-Communication Emp.
Union u. Union Pac. Railroad, 385 U.S. 157, 161 (2000))).
CBA's second arbitration provision (2002 CBA,
§21.20), covering non-jurisdictional disputes, provides
for a three-step grievance procedure, the third step of which
is arbitration. This grievance procedure governs all
"questions or grievances" that involve the
"interpretation and application" of the 2002 CBA,
"or any grievance concerning any term or condition of
work." (2002 CBA, §21.20; see also 2002 CBA
§24.10 ("Any conflict in the interpretation of this
agreement not settled directly by the Employer and the local
Union shall be submitted to the Building Contractors
Association of New Jersey and the Laborers' International
Union of North America, Eastern Region office ... for
resolution. ... If the foregoing parties fail to agree as to
a resolution of the dispute, the dispute shall be subject to
the grievance and arbitration procedure herein.")).
states that it incorporates by reference the "Agreements
and Declarations of Trust for the Funds" ("Trust
Agreements"). (Kemple Decl. ¶6). The Trust
Agreements provide that if an employer is in default, the
Trustees "may take any action necessary or appropriate
to enforce payment of the contributions, interest, damages,
and expenses provided for herein, including, but not limited
to, proceedings at law or in equity." (Kemple Decl., Ex.
3, Article V, §4). The Trust Agreements further provide
that the "Fund and Trustees shall not be required to
exhaust any grievance or arbitration procedure provided by a
Collective Bargaining Agreement or otherwise with respect to
the enforcement of such Employer obligations, but rather
shall have immediate access to the courts, as provided under
applicable law, or to designate a permanent arbitrator to
hear and determine collection disputes." [Id.).
November 20, 2018, MZM filed suit in this Court and moved for
a temporary restraining order and preliminary injunction to
stay an arbitration hearing which the Funds had unilaterally
scheduled for November 27, 2018. [See Cplt.). MZM's
complaint alleges two causes of action. The first count,
under the Declaratory Judgment Act, 28 U.S.C. §§
2201 and 2202, asserts that MZM is not a party to or bound by
the 2002 CBA, and is not required to arbitrate under the 2002
CBA. (Cplt. ¶¶49-67). The second count alleges
fraud in the execution, in that Perry signed the 2002 SFA
without knowledge or a reasonable opportunity to obtain
knowledge of the agreement's essential terms (which were
incorporated from elsewhere). (Cplt. ¶¶68-89).
November 27, 2018 arbitration was adjourned on consent, and
the Court heard oral argument on the preliminary injunction
application on December 12, 2018. (DE 15). The Court issued
an Order, dated December 19, 2018, preliminarily enjoining
the arbitration and ordering expedited discovery as to
whether this matter is arbitrable. (DE 16).
preliminary injunction, as I say, was in the nature of a stay
pending resolution of factual issues. The Court determined
that a preliminary injunction would "preserve the status
quo" and that denial would have effectively
"grant[ed] the relief that one side wants."
(1T36:12-16). On the first factor for a preliminary
injunction, likelihood of success on the merits of the
arbitrability question, there was substantial evidence that
Perry was not informed as to "the scope of what she was
signing or realize that she was entering into a wide-ranging
agreement that would extend into the indefinite future and a
broad variety of jobs as opposed to just the one she was on
at the time of 2002." (1T36:19-25). The passage of time
since 2002, and a course of dealing that did not include
enforcement of the agreement, suggested that the parties did
not believe that they were entering into an ongoing CBA.
(1T37:1-5). Additionally, fraud in the execution, a
fact-dependent issue, required further development.
arbitration on a party who had not entered into an agreement
to do so made the second factor, irreparable harm, weigh in
favor of MZM. (1T37:13-18). In weighing the parties'
respective interests, the only harm to the Funds, in the
event that the claims were determined to be arbitrable, was
further delay. (1T37:17-23). The public interest factor did
not weigh in favor of either party. (1T38:3-7).
Court granted the preliminary injunction, temporarily halting
arbitration to allow development of a factual record so the
arbitrability issue could be decided on a complete record at
the summary judgment stage or tried, if necessary.
(1T38:8-39:13). The Court stressed that its decision on the
preliminary injunction was not a prejudgment of the merits.
December 20, 2018, the Funds filed a Notice of Appeal of this
Court's December 19, 2018 Order. (DE 17). On February 8,
2019, the Funds filed the motion for an indicative ruling
under Federal Rule of Civil Procedure 62.1, and for relief
under Rules 54(b) and 60(b), that is now before the Court.
The Funds essentially argue that the Court should reverse its
preliminary injunction ruling based on "newly
discovered" evidence, a ruling which would moot the
Funds' appeal. (DE 19-2). The alleged newly discovered
evidence is another SFA executed by Perry, dating from
October 1999. (Id.). In substance, this 1999 SFA is
similar to the 2002 SFA:
The Undersigned Contractor or Employer, desiring to employer
laborers from the Building Laborer Local Unions and District
Councils affiliated with the Laborers International Union of
North America and being further desirous of building,
developing and maintaining a harmonious working relationship
between the undersigned contractor and the Building Laborers
Local Unions and District Councils of New Jersey in which the
rights of both parties are recognized and respected, and the
work accomplished with the efficiency, economy and quality
that is necessary in order to expand the work opportunities
of both parties, and the Building Laborers Local Unions and
District Councils of New Jersey desiring to fulfill the
Undersigned Contractor's requirements for such laborers,
the Undersigned Contractor and the Building Laborers Local
Unions and District Councils of New Jersey hereby agree to be
bound by the terms and conditions as set forth in the
Building, Site and General Construction Agreement by and
between the Building Laborer Local Unions and District
Councils of New Jersey and various Building, Site and General
Construction Contractors and Employers which Agreement is
incorporated herein as if set forth in full.
(1999 SFA, DE 19-2). Perry signed this 1999 SFA as MZM's
principal. (See id.). The Funds contend that this 1999
SFA "substantially reduces" the likelihood of
success on MZM's claims. (DE 19-2, ¶7). The Funds
proffer that this evidence was not produced earlier because
records that predate 2001 are kept "off-site." (DE
Indicative ruling under Fed.R.Civ.P. 62.1
parties seem to agree, or assume, that the Funds' pending
appeal of the preliminary injunction deprives the Court of
all jurisdiction to dissolve the injunction until the Court
of Appeals returns jurisdiction to this Court. The situation
is not quite so straightforward.
speaking, "[t]he filing of a notice of appeal is an
event of jurisdictional significance - it confers
jurisdiction on the court of appeals and divests the district
court of its control over those aspects of the case involved
in the appeal." Griggs v. Provident Consumer Disc.
Co.,459 U.S. 56, 58 (1982); see also Kull v.
Kutztown Univ. of Pa.,543 Fed.Appx. 244, 248 (3d Cir.
2013). In such circumstances, the district court is
prohibited from taking any action that ...