(CN) - Former owners of the Madison Hotel in Washington, D.C., must face claims that their property sale left the worker's union out in the cold, a federal judge ruled.
Unite Here Local 25 seeks an injunction compelling Madison Ownership LLC and its partners to arbitrate a grievance related to the 2011 sale of the hotel to nonparty Jamestown Properties.
The union claims that the former owners breached the successorship clause and other provisions of the collective bargaining agreement by not requiring the new buyer to adhere to the union contract.
The successorship clause state that, "in the event the employer sells or by other contractual arrangement transfers all or part of his business to another party, the employer shall require, as a condition of such transaction, that the other party be bound by the terms and provisions of this agreement with the union satisfactory to the union."
Madison Ownership, Madison Operating and Loews Madison each moved to dismiss, but U.S. District Judge John Bates refused Friday.
The court said it must determine which parties are bound by the CBA, and whether the hotel extended that contract to March 15, 2011, after it expired on Oct. 8, 2010.
Local 25 claims that it fought an unacceptable purchase-and-sale agreement for the Madison in October, but that the owners executed it anyway.
After the union filed a grievance over the successorship provision, hotel spokesman Peter Chatilovicz immediately announced a refusal to arbitrate, so the union filed suit.
Without a temporary restraining order, Jamestown bought the Madison in January 2011 for $123 million.
The union's amended complaint now seeks an injunction compelling arbitration.
Bates found Friday that the sale did not moot the union's claims.
"A significant problem with defendants' mootness arguments is that the union's amended complaint does not seek to rescind or enjoin the sale of hotel," he wrote. "Instead, Local 25 seeks an order to compel defendants to arbitrate its previously-submitted grievance."
If the court finds that that the extended CBA expired in March 2011, then any dispute over the successorship claims must go to arbitration.
"This result would essentially grant the union the relief it requests pp an opportunity to have its grievance heard by an arbitrator," Bates wrote. "Moreover, any further question as to what remedies the union might be entitled to because of a breach of the CBA is an issue for the arbitrator to resolve, not the court. ... The same analysis applies Loew's and Ownership's arguments, which in essence claim that because the unions submitted grievance only sought one kind of remedy, it would be foreclosed from seeking other kinds of remedies. These arguments essentially conflate mootness with futility."
Whether the union won that contract extension is "a live issu[e]," the decision states.
"It is the better course to allow the parties an opportunity to engage in discovery, which may ultimately lead this court to conclude that it lacks subject matter jurisdiction," Bates wrote.
Unite Here Local 25 represents approximately 8,000 hotel and food service workers in the Washington, D.C., area.
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