Opinion
No. 5:02-CV-1414 (HGM/DEP)
March 4, 2003
ALARIO ASSOCIATES, P.C., LINDA E. ALARIO, ESQ., Syracuse, New York, for Plaintiff.
SATTER ANDREWS, LLP, MIMI C. SATTER, ESQ., Syracuse, New York, for Defendant.
MEMORANDUM — DECISION AND ORDER
INTRODUCTION
Currently before the court is defendant's motion for the imposition of sanctions against plaintiff's former counsel pursuant to Rule 11 of the Federal Rules of Civil Procedure. Defendant seeks reimbursement of all its attorneys' fees and costs reasonably incurred as a result of alleged frivolous argument advanced by plaintiff's former counsel. Plaintiff's former counsel opposes the motion arguing that she supported the positions she advanced on behalf of her former client with cogent argument and valid case law. For the reasons that follow below, defendant's motion is DENIED.
BACKGROUND I. The Parties and the Procedural History
Plaintiff Sunrise Nursing Home, Inc. ("Sunrise") operates a nursing home at 17 Sunrise Drive, Oswego, New York. Defendant Service Employees International Union, Local 1199Upstate, AFL-CIO, CLC ("Local 1199Upstate") is an unincorporated labor organization with its principle office located in Syracuse, New York.
On October 31, 2002, Sunrise filed an Order to Show Cause on Motion to Stay Arbitration and for Temporary Restraining Order and a Verified Petition, with exhibits, in New York State Supreme Court, County of Onondaga, against Local 1199Upstate. Local 1199Upstate received the Order to Show Cause on November 1, 2002, and on November 8, 2002, removed the action to federal court pursuant to and in accordance with 28 U.S.C. § 1441 and 1446(b). At the time Local 1199Upstate removed the action to this court, the parties' dispute concerned three demands for arbitration submitted by Local 1199Upstate pursuant to the parties' most recent collective bargaining agreement ("CBA"). On November 18, 2002, the parties agreed by stipulation to lift the stay of arbitration previously ordered by the Honorable Edward D. Carni, New York State Supreme Court, County of Onondaga, pursuant to N.Y. C.P.L.R. § 7503(b). The parties agreed that any arbitration would not proceed unless and until the court issued a decision in this proceeding. That same day, Local 1199Upstate brought a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). On December 11, 2002, the court converted Local 1199Upstate's motion to dismiss into a Rule 56 motion for summary judgment in accordance with Fed.R.Civ.P. 12(b) because Local 1199Upstate had presented matters outside the pleadings in support of its motion to dismiss. On or about December 23, 2002, Sunrise substituted new counsel, Costello, Cooney Fearon, PLLC, to represent it in this matter, which the parties have since settled. Local 1199Upstate now moves for sanctions pursuant to Fed.R.Civ.P. 11 against Sunrise's former counsel, Linda E. Alario ("Alario").
Local 1199Upstate submitted a total of three demands for arbitration; however, with regard to Annette Ayotte, a member of Local 1199Upstate, it submitted two demands arising out of the same employment action, which will be further explained.
The parties also agreed as follows: "[n]either the fact of nor the terms of this Stipulation shall be used against a party hereto, either before this Court in the arbitration proceedings or in any proceedings to confirm, vacate or modify an arbitration award, should they occur. By entering into this Stipulation neither party waives any defenses it might have with respect to either this proceeding or the arbitration of an at-issue grievance. Neither party waives any grounds to vacate or modify any arbitration award."
On January 23, 2003, the parties filed a stipulation in accordance with Fed.R.Civ.P. 41 that the action be dismissed without costs to any of the parties as against the other. The dismissal notwithstanding, Local 1199Upstate retained the right to bring the instant motion pursuant to Fed.R.Civ.P. 11. See Dkt. No. 19, Stipulation and Order of Dismissal.
II. The Underlying Dispute
In order to assess Local 1199Upstate's motion for sanctions, the court must first examine and assess the parties' now-settled underlying dispute, the irony of which is not lost on the court. In its motion to dismiss, Local 1199Upstate respectfully argued that an arbitrator, rather than the court, was to rule upon the merits of the parties' underlying dispute. In bringing the instant motion for sanctions, however, Local 1199Upstate forces the court to confront and assess the merits of the parties' underlying dispute, even if only for the limited purpose of adjudicating its motion for the imposition of Rule 11 sanctions.
A. Jurisdiction
Section 301(a) of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185(a), invests federal courts with jurisdiction to resolve actions for breach of contract between a labor organization and an employer: "suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties." 29 U.S.C. § 185(a). CBAs are contracts under 29 U.S.C. § 185(a) and are therefore subject to the court's jurisdiction. See United Assoc. of Journeymen Apprentices of the Plumbing and Pipefitting Indus. v. Local 334, 452 U.S. 615, 619-20, 101 S.Ct. 2546, 2449, 69 L.Ed.2d 280 (1980); McKee v. Transco Products, Inc., 874 F.2d 83, 85 (2d Cir. 1989). The parties meet the LMRA's respective definitions for employer and labor organization.
1. Employer
The LMRA defines employer as:
any person acting as an agent of an employer, directly or indirectly, but shall not include the United States or any wholly owned Government corporation, or any Federal Reserve Bank, or any State or political subdivision thereof, or any person subject to the Railway Labor Act [ 45 U.S.C. § 151 et seq.], as amended from time to time, or any labor organization (other than when acting as an employer), or anyone acting in the capacity of officer or agent of such labor organization.
Therefore, Sunrise is an employer within the meaning of § 2(2) of the LMRA, 29 U.S.C. § 152(2).
2. Labor Organization
The LMRA defines labor organization as:
any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.
Therefore, Local 1199Upstate is a labor organization within the meaning of § 2(5) of the LMRA, 29 U.S.C. § 152(5) and jurisdiction for the parties' now-settled dispute properly rested with the court.
B. The Parties' CBA and Agreement to Arbitrate
Both Sunrise and Local 1199Upstate agree that they have been parties to a series of CBAs, including one signed in February 2001, which has remained in effect heretofore. See Dkt. No. 6, Def.'s Mem. of Law in Supp. of Mot. to Dismiss at 2. Article 8 of the CBA pertains to grievances and arbitration. Section 8.1 provides a four-step process to address employee grievances:
Step 1: A grievance shall first be presented orally by the employee, with or without representation by the steward who shall be a member of the bargaining unit, to her immediate supervisor.
Step 2: A grievance unresolved in Step 1 shall be reduced to writing on a form provided by the Union . . . and submitted to the Department Head, or designee within seven (7) calendar days of the act or occurrence giving rise to the grievance or after the act or occurrence giving rise to the grievance should have become known. The Department Head, or designee shall respond to the written grievance within seven (7) calendar days of receipt of the document.
Step 3: If not resolved in Step 2, the written grievance shall be presented to the Office of the Administrator (the "Administrator") within seven (7) calendar days after receipt of the written Step 2 response. The Union, the employee and the Administrator, or his designee, shall meet within seven (7) calendar days after submission of the written grievance to Step 3. The Administrator, or his designee, shall respond in writing within seven (7) calendar days after the Step 3 meeting.
Step 4: If not resolved in Step 3, the Union or the Company may, within thirty (30) calendar days after receipt of the Step 3 response, submit the grievance in writing, with a copy to the other party, to a mutually agreed upon arbitrator or, if one is not agreed on, to the American Arbitration Association in accordance with its voluntary arbitration rules. See Dkt. No. 8, Am. Compl. Ex. "A."
Section 8.2 provides that the arbitration shall be final and binding. Id. Section 8.3 of the CBA provides that the time limitations in the above steps are exclusive of Saturdays, Sundays, and holidays. Id. Section 8.4 provides that the arbitrator shall have no power to add to, subtract from or modify any provisions of the CBA. Id. Section 8.7 of the CBA provides, in part, that all discharge grievances and all grievances involving employees whose immediate supervisor is the Department Head may be initiated at Step 3. Id. Section 8.10 of the CBA further provides that unless Local 1199Upstate raises the grievance, serves it in writing, and refers, appeals and submits the grievance to arbitration within the time limit set forth in each step, "it shall be deemed that the parties have waived the right to proceed further with the grievance and arbitration procedure and the matter shall be deemed closed." Dkt. No. 8, Am. Compl. Ex. "A." Similarly, where Sunrise fails to respond to a grievance within the specified time limits, the grievance proceeds to the next step. See id. In addition, Section 8.12 of the CBA requires each party to present "the facts, documents and witnesses known to the party at the time to support its position on the grievance" at each step of the grievance procedure. See id.
C. The Parties' Now-Settled Dispute
On September 13, 2002, Sunrise suspended Annette Ayotte ("Ayotte"), an employee in the Housekeeping and Laundry Department represented by Local 1199Upstate for collective bargaining purposes. See Dkt. No. 11, Def.'s Reply Mem. at 2. Local 1199Upstate understood, albeit erroneously, that Sunrise's employment action against Ayotte involved suspension or termination and responded on September 18, 2002, by initiating a grievance at "Step 3." See Dkt. No. 13, Ares Aff. at ¶ 3. On September 23, 2002, Sunrise rejected the grievance because: (1) Local 1199Upstate did not initiate the grievance at "Step 1"; (2) the grievance was not complete because it failed to include information required by Section 8.12; and, (3) Local 1199Upstate submitted the grievance at "Step 3" for invalid reasons. See Dkt. No. 1, Ex. "A." As reason for submitting the Ayotte grievance at "Step 3," Local 1199Upstate specifically invoked Section 8.7 of the CBA, stating that the grievance involved the suspension or termination of Ayotte. See Dkt. No. 15, Def.'s Local Rule 7.1 Statement at ¶ 9. Suspension, however, under Section 8.7 of the CBA, is not a valid reason to submit a grievance at "Step 3." See Dkt. No. 8, Am. Compl. Ex. "A." Section 8.7 of the CBA provides for grievance initiation at "Step 3" where it involves discharge, not merely suspension, and although Sunrise suspended Ayotte, it had not discharged her.
In its reply papers, Local 1199Upstate would later explain to the court that it submitted the grievance at "Step 3" not only because the grievance, as it understood it, involved suspension pending discharge, but also because Ayotte's immediate supervisor, Karen Galvin, was the Department Head. See Dkt. No. 15, Def.'s Local Rule 7.1 Statement at ¶¶ 6 and 9. Section 8.7 of the CBA also provides that all grievances involving employees whose immediate supervisor is the Department Head may be initiated at "Step 3." See Dkt. No. 8, Am. Compl. Ex. "A." Not having resolved the grievance at "Step 3," on October 11, 2002, Local 1199Upstate proceeded in accord with "Step 4" and submitted to Sunrise its demands: (1) to arbitrate the alleged wrongful suspension of Ayotte, and (2) Sunrise's alleged improper placement of a wage scale. See Dkt. No. 11, Def.'s Reply Mem. at 2-3.
Returning to September 19, 2002, the parties were unable to resolve the initial grievance at "Step 3." In a move prompted by "an abundance of caution," Local 1199Upstate initiated a second Ayotte grievance — this time at "Step 1." See Dkt. No. 11, Def.'s Reply Mem. at 2. Unable to resolve this grievance at "Step 1," Local 1199Upstate submitted a written grievance to the Department Head in accordance with "Step 2." See Dkt. No. 15, Def.'s Local Rule 7.1 Statement at ¶ 11. On September 30, 2002, Sunrise fulfilled its "Step 2" obligation and responded by denying the grievance and continuing Ayotte's suspension until completion of an investigation. See Dkt. No. 1, Ex. "A." At this point, the second grievance remained unresolved. No further action was taken until October 11, 2002, when Local 1199Upstate submitted the arbitration demands pursuant to the first grievance, as described above. On October 31, 2002, Sunrise moved to stay arbitration in New York State Supreme Court. Shortly thereafter, Local 1199Upstate removed the action to this court.
The two grievances filed by Local 1199Upstate regarding Ayotte apparently caused a great deal of confusion between the parties. Local 1199Upstate submitted its October 11, 2002, arbitration demands as the next procedural step in relation to the first grievance, which it had initiated at "Step 3." See Dkt. No. 11, Def.'s Reply Mem. at 2-3. Sunrise, however, responded to Local 1199Upstate's arbitration demands by attacking, in its motion to stay arbitration, the second grievance, which Local 1199Upstate had initiated at "Step 1." See Dkt. No. 1, Ex. "A." As defenses to Local 1199Upstate's demand for arbitration of Ayotte's second grievance, Sunrise initially alleged two procedural defects under the CBA's grievance and arbitration provisions: (1) Local 1199Upstate failed to serve the demands via certified/registered mail or personal delivery as required by N.Y. C.P.L.R. § 7503(c), and (2) Local 1199Upstate failed to request a "Step 3" grievance meeting. See Dkt. No. 1, Ex. "A." In its amended complaint, however, Sunrise no longer raised the first defense. See Dkt. No. 8, Am. Compl. at ¶ 16. With regard to the second defense, Sunrise maintained that Local 1199Upstate had failed to request a "Step 3" meeting within seven days of Sunrise's September 30, 2002, "Step 2" response prior to submitting its demand to arbitrate Ayotte's grievance. See Dkt. No. 8, Am. Compl. at ¶ 15. Therefore, under the CBA's grievance and arbitration provisions, Sunrise contended that Local 1199Upstate waived its right to further pursue its grievance at either the "Step 3" level or through arbitration. Id. at "wherefore" clause.
Neither grievance filed by Local 1199Upstate referenced that Ayotte's immediate supervisor was also the Department Head.
As defenses to Local 1199Upstate's demand for arbitration of the alleged improper placement of a wage scale, Sunrise again alleged two procedural defects: (1) Local 1199Upstate failed to serve the demands via certified/registered mail or personal delivery as required by N.Y. C.P.L.R. § 7503(c), and (2) Local 1199Upstate failed to set forth its demands to arbitrate with specificity. See Dkt. No. 1, Ex. "A." In its amended complaint, however, Sunrise noted that the wage scale arbitration demand was no longer at issue in the action. See Dkt. No. 8, A. Comp. at ¶ 6. Thus, only the "Step 3" defense with respect to the Ayotte grievance remained at issue in this court.
Sunrise contended that authority properly rested with the court as to the merit of its one remaining asserted defense. Conversely, Local 1199Upstate contended that Sunrise's asserted arbitration defense was not properly before the court, arguing that arbitrators, rather than the courts, are to decide questions of procedural arbitrability. Consequently, Local 1199Upstate sought to dismiss the action for failure to state a claim upon which relief can be granted.
III. Arbitrability of Parties' Now-Settled Dispute
The Second Circuit does not treat agreements to arbitrate lightly and has cautioned against "the considerable temptation for the court to pass on the validity of [arbitration defenses] rather than to refer their resolution to an arbitrator." Conticommodity Serv. v. Philipp Lion, 613 F.2d 1222, 1224 (2d Cir. 1980). The Second Circuit further observed that:
[d]etermining the merits of [arbitration] defenses may often appear to be a simple task that should not be delayed or deferred, and judges are, by training and temperament prepared to decide the issues that come before them. Furthermore, there is inevitably some judicial hostility toward the view that a court is deprived of jurisdiction over procedural questions simply because the parties have agreed to arbitrate disputes. Id.
While such reactions are understandable, generally, arbitrators, rather than courts, are to decide questions of procedural arbitrability. See United Steelworkers v. American Mfg. Co., 363 U.S. 564, 569, 80 S.Ct. 1343, 1347, 4 L.Ed.2d 1403 (1960) ("When the judiciary undertakes to determine the merits of a grievance under the guise of interpreting the grievance procedure of collective bargaining agreements, it usurps a function which under that regime is entrusted to the arbitration tribunal."); John Wiley Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909, 918, 11 L.Ed. 898 (1964) ("Once it is determined . . . that the parties are obligated to submit the subject matter of a dispute to arbitration, 'procedural' questions which grow out of the dispute and bear on its final disposition should be left to the arbitrator."); Schweizer Aircraft Corp. v. Local 1752, 29 F.3d 83, 88 (2d Cir. 1994) ("The question of whether the time requirements in the CBA were met, as well as the substantive interpretation of the CBA, must be determined by the arbitrator."); Stotter Div. of Graduate Plastics Co., Inc. v. District 65, United Auto Workers, AFL-CIO, 991 F.2d 997, 1001 (2d Cir. 1993) ("Judgment upon . . . procedural aspects of . . . arbitration . . . is a matter for the arbitrator, not this (or any other) court."); but see Rochester Tel. Corp. v. Communication Workers of America, 340 F.2d 237, 238-39 (2d Cir. 1965). The Second Circuit's holding in Rochester Tel. Corp., however, bears further examination.
In Rochester Tel. Corp., the Second Circuit assumed that a court would not compel arbitration under a CBA "when the intended preclusive effect of a procedural provision and the fact of breach [were] both so plain that no rational mind could hurdle the barrier." Rochester Tel. Corp., 340 F.2d at 239. Although the plain language of the CBA there in question would seem to have had precluded arbitration, the Second Circuit, compelled arbitration because the fact of breach was in dispute and an "arbitrator might — or might not — find" that the grievance was timely filed. Rochester Tel. Corp., 340 F.2d at 239. Nevertheless, the Second Circuit's holding suggests that a court may decide questions of procedural arbitrability where the party seeking to stay arbitration satisfies the "severe test" by demonstrating: (1) that a contractual provision clearly precludes arbitration, and (2) that the party clearly breached the particular CBA provision. See id.
Given the Second Circuit's adherence to the holding in John Wiley Sons, Inc. v. Livingston, and the fact that no court has applied Rochester Tel. Corp. to preclude arbitration, it is important to note that the Second Circuit still approves of the "severe test" as stated in Rochester Tel. Corp. and expressed its willingness to apply it in CBS, Inc. v. Snyder, 989 F.2d 89, 91-92 (2d Cir. 1993) (explaining that if the arbitration question at issue were procedural, "we would be inclined to hold that the 'severe test' stated in Rochester Tel. Corp. was met.") (citation omitted). The various district courts that have applied the Rochester Tel. Corp. "severe test" have not precluded arbitration, but inasmuch as they have applied it, they recognize its validity. See, e.g., Peter Duchin Orchestras Inc. v. Associated Musicians of Greater N.Y., 1996 WL 514959 at *3 (S.D.N.Y. September 10, 1996) ("[B]efore a party to a collective bargaining agreement can avoid arbitration, Rochester Tel. requires both that a contract provision plainly preclude arbitration and that breach of the procedural requirement be clear."); DeWitt Nursing Home v. Local 144, Hotel Hosp., Nursing Home and Allied Serv. Union, 1997 WL 166485 at *2 (S.D.N.Y. April 9, 1997) (granting respondent's motion to dismiss where the fact of breach was not so plain under the Rochester Tel. Corp. "severe test" such that "no rationale mind could hurdle the barrier") (internal quotations omitted).
The parties' respective positions incorporated the preceding case law. Relying on John Wiley Sons, Inc. v. Livingston, and its progeny, Local 1199Upstate argued that the dispute was properly resolved by an arbitrator. Sunrise argued that the dispute was properly resolved before the court and cited Rochester Tel. Corp., in support of its position. Given the facts and circumstances of the case, both positions had some merit.
Local 1199Upstate filed two grievances with respect to Ayotte. The parties' conduct thereafter demonstrates their confusion as to which grievance was at issue. Sunrise proceeded to defend against the second grievance while Local 1199Upstate vigorously asserted its right to pursue arbitration stemming from the first grievance. The CBA provides no guidance as to which grievance should have taken precedence. Without any apparent communication by either party to rectify the confusion regarding which grievance was at issue, the present dispute developed.
Although the CBA provides no rule whereby the most recently filed grievance supercedes any prior grievance arising from the same employment action, given the fact that the second grievance similarly pertained to Ayotte's suspension, it seems reasonable that Sunrise would have directed its attention and responded to Local 1199Upstate's second and most recently filed grievance.
No doubt, Local 1199Upstate would disagree with this conclusion asserting as it does that because it filed the first grievance properly under Section 8.7 of the CBA, a debatable assertion as shown above, the second grievance filing was rendered "superfluous" thereby nullifying all of its effects. See Dkt. No. 12, Barrett Aff. at ¶ 7. Additional grievance filings pertaining to the same underlying employment action are well-beyond the scope of Section 8.7 of the CBA; therefore, Section 8.7 of the CBA most certainly did not render the second filed grievance superfluous as a matter of consequence.
Before Local 1199Upstate submitted its reply memorandum of law and accompanying affidavits, which incorporated the fact that Ayotte's immediate supervisor was also the Department Head, and considering the fact that Sunrise reasonably defended against the second, rather than the first filed grievance, Sunrise arguably met the "severe test" as stated in Rochester Tel. Corp. First, Section 8.10 clearly precludes arbitration or any further grievance procedures when the "moving" party fails to meet the time limits set forth at each step. Second, when Local 1199Upstate timely filed its "Step 2" written grievance on September 19, 2002, Sunrise had until September 30, 2002, (seven days later as calculated under Section 8.3 of the CBA), to respond to the grievance. Sunrise timely filed such response on September 30, 2002. As such, Local 1199Upstate had until October 9, 2002, (seven days later as calculated under Section 8.3 of the CBA), to present its written grievance to the Administrator. Local 1199Upstate did not present its written grievance to the Administrator by October 9, 2002. Instead, on October 10, 2002, Local 1199Upstate submitted its demands for arbitration. Under this set of circumstances, the CBA clearly precluded arbitration and there seemed precious little room for a rational mind to hurdle this barrier to arbitration. Local 1199Upstate's Reply Memorandum of Law and accompanying Affidavits, however, brought certain facts to the court's attention, which decidedly changed that outlook.
As it turns out, Local 1199Upstate had in fact properly filed the first grievance at "Step 3" but not for the reasons it stated in either of the two grievances filed. Local 1199Upstate's Reply Memorandum of Law and accompanying Affidavits, filed on December 3, 2002, made clear that Ayotte's immediate supervisor, Karen Galvin, was also the Department Head. Pursuant to Section 8.7, the union may initiate such a grievance at "Step 3." Local 1199Upstate's arbitration demands, therefore, rightfully stemmed from the first Ayotte grievance. Local 1199Upstate apparently abandoned the second Ayotte grievance believing that Sunrise was unjustified in its rejection of the first Ayotte grievance filed at "Step 3." Therefore, it filed the arbitration demands that originated from the first grievance on October 11, 2002, within the thirty day period as provided for in "Step 4." That Sunrise was aware or was made aware of Local 1199Upstate's reasoning at any time prior to this filing with the court is not clear.
Under Section 8.1, "Step 4" and Section 8.3 of the CBA, Local 1199Upstate had until November 4th or 5th, 2002, depending on whether the CBA defines Columbus Day as a holiday, to file a demand for arbitration stemming from its first grievance.
DISCUSSION I. Sanctions Under Fed.R.Civ.P. 11
Local 1199Upstate moves the court to impose sanctions pursuant to Fed.R.Civ.P. 11; specifically, it requests the court to order Alario to reimburse it for all its attorneys' fees and costs reasonably incurred as a result of the alleged violation. Given that the parties have already settled the matter, it should be noted preliminarily that even after voluntary dismissal of a complaint, the presiding district court retains ancillary jurisdiction to adjudicate collateral matters including the imposition of Rule 11 sanctions. See Cooter Gell v. Hartmarx, 496 U.S. 384, 110 S.Ct. 2447, 110 L.Ed.2d 259 (1990). A party seeking attorneys' fees as a sanction under Rule 11 of the Federal Rules of Civil Procedure must comply with certain procedural requirements as well as establish that the opposing party's conduct warrants such sanctions.
A. Procedural Requirements
To comply with Rule 11's procedural requirements, a party must make its motion for sanctions separate from other motions or requests, provide notice to opposing counsel, and serve the motion at least twenty-one days prior to filing the motion with the Court. See Kron v. Moravia Central School Dist., 2001 WL 536274 at *1 (N.D.N.Y. May 3, 2001). Although Rule 11 does not specify what type of notice is required, the advisory committee notes provide that "[i]n most cases, . . . counsel should be expected to give informal notice to the other party, whether in person or by a telephone call or letter, of a potential violation before proceeding to prepare and serve a Rule 11 motion." Fed.R.Civ.P. 11 Advisory Committee Notes.
In the present case, Local 1199Upstate dedicated a separate motion for the imposition of Rule 11 sanctions. During discussions and the exchange of correspondence that preceded Sunrise filing its amended complaint, Local 1199Upstate provided informal notice to Alario that in its estimation her conduct was sanctionable. Moreover, Local 1199Upstate served Alario with its motion for sanctions on November 28, 2002. See Dkt. No. 21, Alario Aff. at ¶ 9. Local 1199Upstate filed the same with the court on December 27, 2002 and thereby complied with Rule 11's twenty-one day safe-harbor provision.
B. Substantive Issues Pertaining to Sanctions Under Rule 11
Rule 11(b) provides that an attorney filing a complaint thereby certifies to the Court that the attorney believes, after reasonable inquiry, that the claims asserted are warranted by existing law. Rule 11(c) permits the Court to impose sanctions for violations of Rule 11(b). While Rule 11(c) does not attempt to enumerate the factors a court should consider in deciding whether to impose a sanction, the Advisory Committee Notes suggest that the court consider:
Rule 11(b)(2) provides in pertinent part that:
(b) By presenting to the court . . . a pleading, written motion, or other paper, an attorney . . . is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, —
(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a non-frivolous argument for the extension, modification, or reversal of existing law or the establishment of new law.
whether the alleged improper conduct was willful or negligent; whether it reflected a pattern of behavior or an isolated event; whether it infected the whole proceeding or part of it; whether the individual has engaged in similar conduct in the past; whether it was intended to injure; the effect on the litigation in time or expense; whether the responsible person is legally trained; what amount, given the individual's financial resources, is necessary to deter that person from repetition; and, what amount is necessary to deter similar activity by others. Fed.R.Civ.P. 11 Advisory Committee Notes.
The Second Circuit holds that "Rule 11 is violated when it is clear under existing precedents that there is no chance of success and no reasonable argument to extend, modify or reverse the law as it stands." Gurary v. Winehouse, 235 F.3d 792, 798 (2d Cir. 2000); see W.K. Webster Co. v. American President Lines, Ltd., 32 F.3d 665, 670 (2d Cir. 1994) (quoting Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 254 (2d Cir. 1985)) ("A pleading, motion or other paper violates Rule 11 . . . 'where, after reasonable inquiry, a competent attorney could not form a reasonable belief that the pleading is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law.'"). "[T]he extent, [however], to which a litigant has researched the issues and found some support for its theories even in minority opinions, in law review articles, or through consultation with other attorneys should certainly be taken into account in determining whether paragraph [(b)](2) has been violated." Gurary, 235 F.3d 797-98 (citing 1993 Advisory Committee Notes, Fed.R.Civ.P. 11).
II. Sanctions Are Inappropriate
Applying these principles to Alario's conduct, the court declines to impose sanctions. Had the parties not subsequently stipulated to dismiss the action, it appears from the record that summary judgment would have been appropriate in Local 1199Upstate's favor. After Local 1199Upstate revealed that Ayotte's immediate supervisor was also the Department Head, it was not clear: (1) that a contractual provision clearly precluded arbitration, and (2) that the party clearly breached the particular CBA provision under the "severe test" as stated in Rochester Tel. Corp. Absent the court's application of this lone exception to the rule that arbitrators, rather than courts, are to decide questions of procedural arbitrability, Local 1199Upstate and Sunrise should have presented their respective grievances and defenses to an arbitrator. It should be emphasized, however, that this conclusion was not necessarily so clear from the outset.
Rochester Tel. Corp. provides a tenable defense to arbitration under certain circumstances, a defense which Alario reasonably advanced and advocated given the circumstances present in this case. Alario made her arguments in good faith and although her efforts would have been ultimately unsuccessful, "not all unsuccessful arguments are frivolous or warrant sanctions." Pierce v. F.R. Tripler Co., 955 F.2d 820, 830 (2d Cir. 1992) (quoting Mareno v. Rowe, 910 F.2d 1043, 1047 (2d Cir. 1990)).
If the court is to find any fault with Alario, it is that she apparently did not inquire as to whether Ayotte's immediate supervisor was also the Department Head. Alario states that she prepared the pleading in Sunrise's New York State Supreme Court proceeding after having interviewed her client and reviewing the CBA's arbitration clause, the grievances and pertinent correspondence exchanged between the parties in regard to them. See Dkt. No. 21, Alario Aff. at ¶ 4. Apparently, this inquiry did not reveal that Ayotte's immediate supervisor was also her Department Head, the fact that rendered the case unfit for the court's consideration. Absent the parties' stipulation, this is the fact that would have sent the parties to arbitration, grievances and defenses in tow. Given that Local 1199Upstate's stated reason for initiating the first Ayotte grievance was that it involved suspension or termination, the court might excuse the fact that Alario apparently did not inquire as to whether Ayotte's immediate supervisor was also the Department Head. An employer need not do a union's "homework" and find, for the union's benefit, the proper reasoning to justify the filing of a grievance under a CBA.
When Alario filed the motion to stay arbitration in New York State Court, as well as when she submitted to this court her opposition to Local 1199Upstate's motion to dismiss, she acted in good faith: she did not distort the meaning of the CBA's arbitration provision and she supported her opposition to Local 1199Upstate's motion to dismiss with cogent argument and valid case law. The record demonstrates that both parties misapprehended the circumstances and Rule 11 sanctions are inappropriate in this matter.
CONCLUSION
WHEREFORE, for the foregoing reasons, it is hereby
ORDERED, that defendant's motion for Rule 11 sanctions is DENIED. It is further
ORDERED, that the Clerk of the Court serve a copy of this Memorandum — Decision and Order upon the parties by regular mail.
IT IS SO ORDERED.