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Arenson v. Administrative District Council 1 of Illinois of International Union of Bricklayers and Allied Craftworkers

United States District Court, Seventh Circuit

January 24, 2014

PETER T. ARENSON, PIERPORT CONSTRUCTION, INC., HALF DAY ROAD INVESTMENTS, LLC, HALF DAY ROAD DEVELOPMENT, LLC, TOLEDO 442 BUILDING CORP., ARENSON MANAGEMENT, INC., RESIDENCES ON SCHUBERT, LLC, 1546 N. MOHAWK, LLC, CHICAGO ENERGY INVESTMENTS, INC., AUSTIN 1900 BUILDING CORP., AUSTIN FLEET SERVICES, INC., CHICAGO CO-GEN ENERGY, LLC, 3416 N. GREENVIEW, LLC, Plaintiffs-Counter-Defendants,
v.
ADMINISTRATIVE DISTRICT COUNCIL 1 OF ILLINOIS OF THE INTERNATIONAL UNION OF BRICKLAYERS AND ALLIED CRAFTWORKERS, AFL-CIO, Defendant-Counter-Plaintiff.

MEMORANDUM OPINION AND ORDER

ROBERT W. GETTLEMAN, District Judge.

Plaintiffs/Counter-defendants Peter T. Arenson; Pierport Construction, Inc.; Half Day Road Investments, LLC; Half Day Road Development, LLC; Toledo 442 Building Corp.; Arenson Management, Inc.; Residences on Schubert, LLC; 1546 N. Mohawk, LLC; Chicago Energy Investments, Inc.; Austin 1900 Building Corp.; Austin Fleet Services, Inc.; Chicago Co-Gen Energy, LLC; and 416 N. Greenview, LLC (together, the "Arenson Entities") have brought a single count "Petition to Vacate Arbitration Award, " issued by a Joint Arbitration Board ("JAB") against them and in favor of defendant Administrative District Council 1 of Illinois of the International Union of Bricklayers (the "Union"). The Union has brought a three count counterclaim seeking to enforce the award (Count I) or, in the alternative, to compel the Arenson Entities to comply with the Collective Bargaining Agreement and participate in a new arbitration proceeding before the JAB (Count II). Count III is an action to pierce the corporate veil of Pierport Development and Realty, Inc. ("Pierport"). The Arenson Entities have moved to dismiss the counterclaim. For the reasons described below, that motion is granted in part and denied in part.

BACKGROUND

According to the counterclaim, Peter T. Arenson is an individual living in the Northern District of Illinois who qualifies as an employer within the meaning of 29 U.S.C. ยง 152(2). The other Arenson Entities are all either Illinois limited liability companies or corporations that also qualify as employers. In October 2009, the Union and Pierport entered into a CBA signed by Peter T. Arenson on behalf of Pierport as president. (The "CBA").

In or around June 2010 the JAB entered an award in favor of the Union and against Pierport after the Union had filed a grievance. The award ordered Pierport to pay the Union $178, 181.35 as well as granting the Union other relief.

Despite being served with the award, Pierport failed to comply. The Union filed suit in federal court to enforce the award and Pierport counterclaimed to vacate it. On September 27, 2011, Judge Kocoras, to whom that case had been assigned, entered judgment in favor of the Union and against Pierport in the amount of $238, 534.84 along with interest and other relief. Pierport again failed to comply and the Union began post-judgment collection proceedings. During the course of those proceedings the Union discovered evidence that in its view supports a determination that the other Arenson Entities (plaintiffs in the instant action) are responsible for the award and bound by the CBA. In a December 2, 2011, letter, the Union informed the Arenson Entities of its position that Peter T. Arenson and the Arenson Entities are bound to the CBA signed by Pierport and are responsible for all obligations under that CBA, including the obligations established by the JAB and the subsequent judgment entered by Judge Kocoras. The letter indicated that a hearing would be held before the JAB on December 14, 2011, to consider the Union's grievance against the Arenson Entities.

In a December 9, 2011, letter, the Arenson Entities' counsel informed the Union that none of the Arenson Entities were signatories to the CBA and had not agreed to submit any disputes to the JAB. The letter indicated the Arenson Entities' position that whether an agreement to arbitrate exists is a question to be decided by a court, not the JAB.

The JAB hearing took place on December 14, 2011, as scheduled. The Union's representatives presented its case in support of its grievance against the Arenson Entities. No one appeared on behalf of the Arenson Entities. Following the hearing, the JAB issued a written arbitration award ("Arenson Award") sustaining the grievance and finding that the Arenson Entities were bound to Pierport's CBA since the date it was signed on October 5, 2009, that the Arenson Entities and Pierport are one and the same for purposes of the CBA, and that the Arenson Entities are jointly responsible along with Pierport for violations of the CBA, including the violations covered by the previous Pierport award and judgment. The Union served copies of the Arenson Award on each of the Arenson Entities, urging them to comply. Rather than comply, the Arenson Entities filed the instant action seeking to vacate the Arenson Award. Complicating matters slightly, Pierport filed for protection under Chapter 7 of the Bankruptcy laws on March 12, 2012.

DISCUSSION

In Count I of the counterclaim, the Union seeks to enforce the Arenson Award. The Arenson Entities have moved to dismiss, arguing that the count fails to state a claim or, in the alternative, that the court lacks subject matter jurisdiction over the count.[1] Both arguments are based on the Arenson Entities' position that the JAB Arenson Award is void because it preceded any court determination that they were bound by a contract that required arbitration.

There is no dispute between the parties about the basic principle that arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which it has not agreed to submit. See AT&T Techs. Inc. v. Communication Workers of America , 475 U.S. 643, 648 (1986). Nor is there any dispute that the question of whether a company is bound to arbitrate, as well as what issues it must arbitrate, is a matter to be determined by a court on the basis of the contract entered into by the parties. Id. at 649. Finally, there is no dispute that none of the Arenson Entities are signatories to the CBA. Therefore, there is no dispute that before any JAB award against them can be enforced, a court must determine that they are bound to the arbitration provisions in the CBA by virtue of their relationship to Pierport.

Where the parties' positions diverge is with respect to the timing of the court decision. The Arenson Entities' position is that because they are not signatories and because they explicitly disputed the authority of the JAB over them and indicated that they would not participate in proceedings before the JAB, any decision by the JAB that preceded a court decision that they are bound by the CBA is void and cannot be enforced. Thus, they argue that even if this court concludes in the instant case that they are subject to the CBA, the Arenson Award is unenforceable and the Union must start the arbitration process over. And, according to the Arenson Entities, it is too late to do that.

In contrast, the Union argues that it does not matter when the court makes the determination, so long as it determines that the Arenson Entities were bound by the CBA at the time the Union asserted the grievance against them and presented its case to the JAB. If, according to the Union, the court rules that the Arenson Entities were so bound they necessarily would have been subject to the authority of the JAB at that time. Because the award would have been issued against them when they were subject to the JAB's authority, the award would be binding and enforceable.

Neither the parties nor the court has discovered a case involving identical circumstances. The Arenson Entities rely predominately on the Supreme Court's statement in John Wiley & Sons, Inc. v. Livingston , 376 U.S. 543, 546-47 (1964), that "[t]he duty to arbitrate being of contractual origin, a compulsory submission to arbitration cannot precede judicial determination that the Collective Bargaining Agreement does in fact create such a duty." As the Union points out, however, Wiley & Sons involved ...


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