Free Motion to Stay - District Court of Colorado - Colorado

Case 1:03-cv-01970-MSK-BNB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 03-cv-01970 MSK - BNB MOUNTAIN STATES SHEET METAL COMPANY, Plaintiff, v. SHEET METAL WORKERS, LOCAL NO. 9, Defendant.

PLAINTIFF'S MOTION FOR STAY PENDING APPEAL

COMES NOW Plaintiff Mountain States Sheet Metal Company ("Plaintiff" or "MSSM"), through its undersigned attorneys and pursuant to Fed.R.Civ.P. 62(c), and respectfully submits the following Motion for Stay Pending Appeal ("Motion"). In support of this Motion, Plaintiff states as follows: PROCEDURAL BACKGROUND On July 18, 2005, the Court entered an Opinion and Order Granting Summary Judgment (hereafter "Opinion and Order") in favor of Defendant Sheet Metal Workers, Local No. 9 ("Defendant," "Union" or "Local 9"). That same day, the Court entered an Order confirming the arbitration award that is the subject of this lawsuit.1 On August 3, 2005, Plaintiff filed in this

The Court's Order and Opinion and Order enforcing the award will be referred to collectively as "Orders." -1-

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Court a Notice of Appeal of these Orders to the Tenth Circuit Court of Appeals. The purpose of this Motion is to seek a stay of the Court's Orders pending resolution of this matter on appeal. ARGUMENT I. Plaintiff is entitled to a stay of the Court's decision pending appeal. A. Rule 62(c) of the Federal Rules of Civil Procedure controls.

When an appeal is taken from a judgment granting or denying an injunction, Rule 62(c) of the Federal Rules of Civil Procedure allows the Court, in its discretion, to "suspend modify, restore, or grant an injunction during the pendency of [an] appeal upon such terms as to bond or otherwise as it considers proper for the security or the rights of the adverse party." Because this case involves enforcement of an arbitration award, relief which is injunctive in nature, the provisions of Rule 62(c) apply. See K.C. Royals v. Maj. League Baseball Players Ass'n, 409 F. Supp. 233, 263-271 (W.D. Mo. 1976) (analyzing, under Rule 62(c), player association's motion to stay, pending appeal, of decision to enforce arbitration award), aff'd, 532 F.2d 615 (8th Cir. 1976).2 B. Plaintiff has established the necessity of a stay pending appeal.

When considering whether to issue a stay pending appeal, the Court should consider the following factors: (1) the likelihood of success on appeal; (2) the threat of irreparable harm if the stay or injunction is not granted; (3) the absence of harm to opposing parties if the stay or injunction is granted; and (4) any risk of harm to the public interest. The Court retains jurisdiction to stay enforcement of its judgment even though Plaintiff already has filed its appeal. See Natural Resources Defense Council, Inc. v. Southwest Marine Incorporated, 242 F.3d 1163, 1166 (9th Cir. 2001) ("The district court retains jurisdiction during the pendency of an appeal to act to preserve the status quo."). -22

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F.T.C. v. Mainstream Marketing Services, Inc., 345 F.3d 850, 852 (10th Cir. 2003) ("Mainstream Mktg. Servs."); see also U.S. v. RX Depot, Inc., 297 F.Supp.2d 1306, 1308 (N.D. Okla. 2003) (citing Mainstream Mktg. Servs.); Exxon Corp. v. Esso Worker's Union, Inc., 963 F.Supp. 58, 59 (D. Mass. 1997) (employing similar factors in granting motion for stay of order enforcing arbitration award); 10th Cir. R. 8.1. However, when the moving party establishes that the three "harm" factors "tip decidedly" in its favor, "the `probability of success' requirement is somewhat relaxed." Mainstream Mktg. Servs., 345 F.3d at 852. Here, Plaintiff can demonstrate that all four of these factors weigh in its favor and that a stay is appropriate. 1. Plaintiff faces irreparable harm if the stay is not granted.

The result of the Court's order enforcing the arbitration award is that Plaintiff must abide by an arbitral decision finding that Plaintiff violated the Collective Bargaining Agreement by continuing its historical practice of having unrepresented employees perform industrial manufacturing work. However, the Regional Director of Region 27 of the National Labor Relations Board ("NLRB") already has ruled that the Union's grievance gives rise to a representational issue that must be resolved through the representation case procedures of the Board. These procedures already have been invoked and an election has taken place. (See Opinion and Order at 2,5) As the Court itself noted: The Employer, understandably, finds itself caught on the horns of a dilemma: either it complies with the arbitration award, forcing the manufacturing workers to accept representation by the Union despite their desires, potentially violating 29 U.S.C. § 158(a)(1) and (5) of the Act, or it complies with the Regional Director's finding that the manufacturing employees are entitled to vote on representation, but risks a suit by the Union for damages resulting from the Employer's violation of the arbitration award. -3-

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(Id. at 5). Plaintiff faces the harm of being permanently deprived of the administrative processes of the NLRB as the Union pursues its purported monetary remedies under the award. For instance, the Union, now that it has obtained enforcement of the award, likely will seek back "wages" and fund contributions from Plaintiff under the Collective Bargaining Agreement for the work done in the past by non-bargaining unit employees. Thus, the Union will subvert the Board's processes and the Decision of the Regional Director while this case is still pending before the NLRB if it seeks to force application of the Collective Bargaining Agreement to employees whose votes currently are impounded. The purpose of granting a stay in this situation is not unlike the rationale for granting injunctions under Section 10(j) of the National Labor Relations Act ("Act"), 29 U.S.C. § 160(j). Under that provision, the Board may petition the federal courts for temporary relief or a restraining order enjoining unfair labor practices. "Under section 10(j) it is contemplated that a district court grant injunctive relief if the Board establishes reasonable cause to believe that the Act has been violated, and it appears that the remedial purposes of the Act would be frustrated unless [temporary] relief . . . is granted." Sharp ex rel. N.L.R.B. v. Webco Industries, Inc., 225 F.3d 1130, 1133 (10th Cir. 2000) (citation and quotations omitted; emphasis added). Here, temporary relief from the Court's Orders is necessary to prevent frustration of the Act's purpose of promoting free choice among employees in terms of representation issues (see Section I.B.3, infra). In other words, if the Orders are not stayed, the Union will nullify the administrative

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process by seeking application of the CBA, and seek damages, while disingenuously claiming that it will ultimately abide by the NLRB ruling. As the Court recognized, "[w]hen finally determined by the Board, an election outcome favorable to the Employer might arguably conflict with the arbitral award . . . ." (Id. at 10). It is also undisputed that, as a matter of law, the decision of the Board will "trump[] any inconsistent arbitral award." (Opinion and Order at 7 [citing Carey v. Westinghouse Electric Corp., 375 U.S. 261, 272 (1964)]). Therefore, in order to avoid the harm Plaintiff faces in having its access to the benefit of the Board's administrative procedures nullified, a stay is appropriate. 2. The Union will suffer no harm if the Court's decision is stayed.

Nor will a stay of the Court's Orders harm or prejudice the Union. Local 9 has conceded that "the decision of the NLRB in the related representation case will have a significant impact, if not a dispositive one, on whether the award may be enforced as a matter of law." (Defendant Local 9's Motion for Administrative Stay of Proceedings, filed January 2, 2004, at ¶ 4). Therefore, because the Union acknowledges the potential dispositive impact of the Board's ultimate decision, it will not be harmed by a stay of this Court's Orders. 3. The potential risk of harm to the public militates in favor of a stay.

Considerations of public policy also favor a stay of the Court's decision pending a resolution of this matter in the Tenth Circuit. Congress has declared that it is the policy of the United States to "protect[] the exercise by workers of full freedom of association, selforganization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection." 29 -5-

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U.S.C. § 151. The goal of industrial stability and the right of workers to choose whether or not they wish to be represented is undermined when, as in this case, employers are subject to conflicting obligations vis-à-vis their relationship with their employees. In other words, if Plaintiff is forced to apply the terms of the collective bargaining agreement to shop employees who have never indicated a willingness to be represented by the Union, especially when the votes regarding such representation already have been cast, this policy is eroded. 4. Plaintiff's appeal is likely to succeed.

As noted above, when a party seeking a stay pending appeal establishes that the "harm" factors discussed above tip decidedly in its favor, "the `probability of success' requirement is somewhat relaxed." Mainstream Mktg. Servs., 345 F.3d at 852. In this case, because Plaintiff has established that such factors favor a stay of this matter, it need not conclusively demonstrate that there is a likelihood of success on appeal. Regardless, Plaintiff's appeal stands a strong chance of success. The Tenth Circuit has clearly indicated that it would reject a claim of arbitration coverage in cases where the employees in question historically have been excluded from the bargaining unit. Communication Workers of Am., AFL-CIO v. U.S. West Direct, 847 F.2d 1475, 1480 n.2 (10th Cir. 1988). Here, it is undisputed that the Collective Bargaining Agreement had not historically been applied to Plaintiff's industrial manufacturing employees. (See Plaintiff's Motion for Partial Summary Judgment, filed December 13, 2005, at 2). Therefore, arbitration over this dispute was improper. Because the Court did not address this authority, upon which the Tenth Circuit is likely to rely, Plaintiff is likely to succeed in its appeal. -6-

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II.

Security is not necessary. Rule 62(c) vests the Court with discretion to require an appellant to post security when a

stay pending appeal is entered "as it considers proper for the security of the rights of the adverse party." In this case, security is not necessary to secure the rights of Local 9. Because the judgment from which Plaintiff appeals is not monetary in nature, there is no payment to secure. However, should the Court find otherwise, Plaintiff is willing to post the necessary security. III. D.C.COLO.LCiv.R 7.1 Certification. The undersigned counsel certifies that he has conferred with counsel for Local 9 regarding this Motion. Counsel for Local 9 opposes this Motion.

WHEREFORE, Plaintiff respectfully requests that the Court grant the instant Motion and enter an Order staying its Opinion and Order, dated July 18, 2005, and Judgment, dated July 18, 2005, pending resolution of Plaintiff's appeal to the United States Court of Appeals for the Tenth Circuit.

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Respectfully submitted this 5th day of August, 2005. SHERMAN & HOWARD L.L.C.

/s Patrick J. Miller________________________ Patrick R. Scully Patrick J. Miller D.C. Box 12 633 Seventeenth Street, Suite 3000 Denver, CO 80202 Telephone: (303) 297-2900 Facsimile: (303) 298-0940 Raymond M. Deeny 90 South Cascade Avenue, Suite 1500 Colorado Springs, CO 80903 Telephone: (719) 475-2440 Facsimile: (719)635-4576 Attorneys for Plaintiff

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on August 5, 2005, I electronically filed the foregoing Motion for Stay Pending Appeal with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: [email protected]

and I hereby certify that I have mailed or served the document or paper to the following non CM/ECF participants in the manner (mail, hand delivery, etc.) indicated by the non participants name: n/a

s/ Cheryl D. Witt Assistant to Patrick J. Miller

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