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Unite Here Local 1 v. Thor Equities

June 28, 2010

UNITE HERE LOCAL 1, PLAINTIFF,
v.
THOR EQUITIES, LLC, THOR PALMER HOUSE HOTEL & SHOPS, LLC, THOR PALMER HOUSE HOTEL, LLC, JOHN DOES 2 THROUGH 20, HILTON HOTELS CORPORATION, HILTON ILLINOIS CORPORATION, AND HLT PALMER, LLC COLLECTIVELY D/B/A "THE PALMER HOUSE HILTON," DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

OPINION AND ORDER

Unite Here Local 1 ("Unite Here") filed an amended complaint seeking to compel arbitration against Thor Equities, LLC, Thor Palmer House Hotel & Shops, LLC, Thor Palmer House Hotel, LLC, Thor Palmer House Retail, LLC ("the Thor defendants"), Hilton Hotels Corporation, LLC, Hilton Illinois Corporation, HLT Palmer LLC ("the Hilton defendants"), and a group of unidentified entities affiliated with the Thor defendants. Before the court is the Hilton defendants' motion for judgment on the pleadings. For the reasons stated below, the motion [#20] is granted.

BACKGROUND*fn1

Unite Here is a labor union based in Chicago, Illinois that represents employees in the hotel, restaurant, gaming, and related industries. Am. Compl. ¶ 4. At all relevant times, Unite Here has acted as the exclusive bargaining representative on behalf of the employees of the Palmer House Hotel ("the Hotel"), a well-known historic hotel located in Chicago. Id. ¶¶ 8-9.

Unite Here is party to a Collective Bargaining Agreement ("the Agreement") between the Hotel and the Chicago Joint Executive Board of Unite Here. Id. ¶ 9. The Agreement covers the terms and conditions of the Hotel employees' employment and sets forth an arbitration procedure for resolution of any grievance against the Hotel by any employee represented by Unite Here. Ex. 1 to Am. Compl. In addition, the Agreement stipulates that it remains binding upon the consolidation, merger, sale, transfer, or assignment of interest in the Hotel. Id. § 5.

Prior to August 2005, the Hilton defendants owned and operated the Hotel. Am. Compl. ¶ 15. In or about August 2005, the Thor defendants acquired the entire Hotel from the Hilton defendants and publicly announced that the Hilton defendants were simultaneously entering into a Management Agreement to continue to operate the Hotel. Id.; see also Ex. 2 to Am. Compl. Under this Management Agreement, the Thor and Hilton defendants treat the Hotel as a separate and distinct business enterprise organized and operated by all of them. Am. Compl. ¶ 17. They retain joint control and management of the Hotel and share the Hotel's profits and losses. Id.

Some time after August 2005, the Thor defendants renovated portions of the Hotel. Id. ¶ 19. During the renovation of the first floor retail concourse, the Thor defendants closed the Jacques Coffee Outlet that was staffed by Hotel employees in accordance with the Agreement.

Id. The Thor defendants subsequently leased space on the first floor retail concourse to a Starbucks Coffee Outlet ("Starbucks") and allowed Starbucks to hire and manage its own employees. Id. Unite Here contends that the leasing of space to Starbucks breaches the Agreement. Id.

On November 5, 2008, Unite Here filed a grievance concerning the Hotel's leasing of space to Starbucks in accordance with the Agreement, invoking its outlined arbitration procedure. Id. ¶ 21. After proceeding through the preliminary steps, Unite Here was informed that counsel represented only the Hilton defendants. Id. ¶¶ 21-23. Unite Here then notified the Thor defendants of the arbitration and demanded their participation. Id. ¶ 23. The Thor defendants refused to participate, leading Unite Here to file its one-count complaint on November 24, 2009, seeking to compel the Hilton and Thor defendants to arbitrate this grievance. Id. ¶¶ 1, 23. At all times, the Hilton defendants have agreed to arbitration. Id. ¶ 6. The Thor defendants refuse to arbitrate because they claim that they are not "Employers" subject to the Agreement. Thor Defs.' Ans. ¶¶ 29-30.

LEGAL STANDARD

A motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure is subject to the same standard of review as a motion to dismiss under Rule 12(b)(6). N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th Cir. 1998). A grant of judgment on the pleadings is appropriate where "it appears beyond doubt that the plaintiff cannot prove any facts that would support his claim for relief." Foreseth v. Vill. of Sussex, 199 F.3d 363, 368 (7th Cir. 2000) (quoting Thomason v. Nachtrieb, 888 F.2d 1202, 1204 (7th Cir. 1989)) (internal quotation marks omitted). In considering a Rule 12(c) motion, the court must accept all well-pleaded allegations in the complaint as true and must draw all reasonable inferences in the plaintiff's favor. Id.

ANALYSIS

I. Arbitration Provision

Courts must "enforce privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms." Sphere Drake Ins. Ltd. v. All Am. Life Ins. Co., 307 F.3d 617, 620 (7th Cir. 2002) (quoting Volt Info. Scis., Inc. v. Stanford Univ., 489 U.S. 468, 478, 109 S.Ct. 1248, 103 L.Ed. 2d 488 (1989)). To compel arbitration, a party need only show the existence of an agreement to arbitrate, a dispute within the scope of the arbitration agreement, and a refusal by ...


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