Opinion
02 CV 3374 (JG) (WP)
August 28, 2002
RONALD G. BLUM, SHAWN M. FRIEDMAN, Kalkines, Arky, Zall Bernstein, New York, NY, Attorneys for plaintiff
J. WARREN MANGAN, JAMES J. MURRAY O'Connor Mangan, P.C., Long Island City, NY, Attorneys for defendant
MEMORANDUM ORDER
Plaintiff MediSys Health Network, Inc. ("MediSys"), brought this action against defendant Local 248-S, United Food and Commercial Workers International Union ("Local 348-S" or "the Union") in New York Supreme Court, Queens County, seeking a permanent stay of arbitration pursuant to N.Y. CPLR § 7503. The Union removed the case to this court on June 10, 2002. Medysis now moves to remand the case back to state court, or, in the alternative, for an order permanently staying arbitration between MediSys and the Union. The Union has crossmoved to dismiss MediSys's petition, thereby allowing the arbitration to proceed. For the following reasons, MediSys's motion to remand is granted, and all other motions are denied as moot.
Facts
This case is about the Leben Home for Adults ("the Home"), an adult home licensed to provide treatment and care to mentally ill adults located in the Elmhurst neighborhood of Queens, New York. When the New York State Department of Health ("the Department") inspected the Home in the summer of 2000, it found numerous and severe violations of the regulations governing such facilities, violations that posed a threat to the physical and mental health of the residents. See Decl. of Ronald G. Blum, Ex. 1, at 2 (May 3, 2001, Stipulation and Order) ("Blum Decl., Ex. 1"). After negotiation with the operator, Jacob Rubin, the Department entered into an agreement by which Rubin would yield control over the facility, a temporary operator would be appointed, and the Department would locate a new operator to take over the Home. MediSys, a non-profit corporation that specializes in the management of medical facilities, was appointed as the temporary operator of the Home on May 3, 2001. It relinquished control on February 28, 2002, when the new operator, Hofgur LLC, took over. The Home was subsequently renamed Queens Adult Care Center.
On May 7, 2002, Local 348-S served MediSys with a Notice of Intention to Arbitrate. The Union, which represents many of the employees at the Home, is pursuing Rubin, MediSys, and the Queens Adult Care Center to recover amounts that should have been remitted to the Union's Health and Welfare Fund. These payments were mandated by the Collective Bargaining Agreement ("the Agreement"). The Agreement contains an arbitration clause, which the Union was seeking to enforce. This action followed.
The parties agree that MediSys, which continued to employ the union members when it was temporary operator, made all the required payments to the fund. However, Local 348-S asserts that MediSys, as a successor employer, is responsible for Rubin' s delinquent payments.
Discussion
The threshold question in this case is whether this court has jurisdiction to hear the dispute. "The requirement that jurisdiction be established as a threshold matter springs from the nature and limits of the judicial power of the United States and is inflexible and without exception." In re Rationis Enterprises. Inc. of Panama, 261 F.3d 264, 267 (2d Cir. 2001) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998) (internal quotation marks and brackets omitted)).
The parties agree that jurisdiction is absent if MediSys falls under the "political subdivision" exception of the Labor Management Relations Act of 1947, codified as amended at 29 U.S.C. § 185 et seq. ("LMRA" or "the Act"). Entities that are "political subdivisions" of the state are not "employers" within the meaning of the Act. See 29 U.S.C. § 152(2) ("The term 'employer'.., shall not include.., any State or political subdivision thereof."); NLRB v. Natural Gas Utility Dist. of Hawkins County. Tenn., 402 U.S. 600, 602 (1971). An entity falls under the "political subdivision" exception if it is "administered by individuals who are responsible to public officials or to the general electorate." Hawkins County, 402 U.S. at 605 (emphasis in original). Individuals appointed by elected public officials and are subject to removal by public officials are considered "individuals who are responsible to public officials or to the general electorate." Id. at 607-08.
In deciding whether MediSys fell within the political subdivision exception when it operated as the temporary operator of the Home, I am guided by Judge Armstrong's thoughtful opinion in East Bay Automotive Council v. Salidbury-Kilmer Corp., No. 92-Civ.-0392, 1992 U.S. Dist. LEXIS 8600 (N. D. Cal., May 4, 1992), which surveys the case law applying the exception. See id. at *5-*10; see also Ottlev v. Sheepshead Nursing Home, 784 F.2d 62, 65 (2d Cir. 1986); Weingarten v. Ottley, No. 85-Civ.-7361, 1986 WL 3348, at *3-*6 (S.D.N.Y., March 12, 1986); Greenblatt v. Ottley, 430 N.Y.S.2d 958, 962-65 (N.Y.Sup.Ct. 1980). East Bay Automotive then synthesizes a three-part test, which examines:
1. Whether the receiver was a temporary appointment or whether he ultimately intended to become the true and permanent owner of the business in receivership;
2. The identity of the person or entity designating the receiver for appointment as the receiver; and
3. The amount of direction or control exercised by the state court over the receiver.
Id. at *10- *11
Here, it is undisputed that MediSys was intended to be — and was — a temporary, short-term operator of the facility. As to the second prong, MediSys was appointed by order of the New York State Department of Health on May 3, 2001. See Blum Decl., Ex. 1, at ¶ 4. Both of these prongs weigh in favor of finding MediSys within the exception. Third, although the state did not exercise significant day to day control over the management of the facility, the order appointing MediSys provides that all of its significant decisions regarding the residents of the Home shall be made only "in consultation and subject to the direction of the Department." Id. In paragraph 11, the order states that MediSys exercises powers granted to it by the Department; paragraph 15 provides that the prior owners retain all liability; paragraph 18 expressly disclaims all liability for MediSys; and paragraph 21 envisions MediSys acting "in furtherance of Department orders and directives." Taking all of these together, I find that the Department exercised significant control over MediSys.
Taking all three factors together, they weigh decidedly in favor of MediSys. I therefore find that MediSys was appointed by, and is responsible to, public officials — namely, the New York State Department of Health — and thus falls within the "political subdivision" exception to the LMRA. Accordingly, I find that this court has no jurisdiction over this matter.
Conclusion
Plaintiffs motion to remand is granted, and all other motions are denied as moot. The case is hereby remanded to New York Supreme Court, Queens County. The Clerk is advised that this order closes the case.
So ordered