Opinion
CIV. NO. 01-00653 DAE LEK
December 13, 2002
ORDER DENYING DEFENDANT OTAKA'S MOTION FOR SUMMARY JUDGMENT; ORDER GRANTING PLAINTIFF'S CROSS-MOTION FOR SUMMARY JUDGMENT
The court heard Plaintiff's and Defendant Otaka, Inc.'s Motions on December 9, 2002. Herbert R. Takahashi, Esq., Stanford H. Masui, Esq., Danny J. Vasconcellos, Esq., Rebecca, L. Covert, Esq., Fred H. Altshuler, Esq., Laura P. Juran, Esq., and Stacey M. Leyton, Esq., appeared on the briefs or at the hearing on behalf of Plaintiff; Anna M. Elento-Sneed, Esq., and Danielle N. Degele-Mathews, Esq., appeared on the briefs or at the hearing on behalf of Defendant Otaka, Inc. After reviewing the motion and the supporting and opposing memoranda, the court DENIES Defendant's Motion for Summary Judgment; and GRANTS Plaintiff's Cross-Motion for Summary Judgment.
BACKGROUND
In February 1985, Defendant Otaka, Inc. ("Defendant Otaka") purchased the Hawaiian Waikiki Beach Hotel (the "Hotel"). Defendant Otaka subsequently used the Hotel as collateral to obtain a $60 million loan from Mitsui Trust and Banking Co., Ltd. and Mitsui Leasing, Inc.
In 1989, Plaintiff, the International Longshore Warehouse Union, Local 142 ("Plaintiff"), began representing the Hotel's employees, and signed a collective bargaining agreement ("CBA") with Defendant Hawaiian Waikiki Beach, Inc. ("Defendant HWBI"), the employer of the bargaining unit employees employed at the Hawaiian Waikiki Beach Hotel (the "Hotel"). HWBI is a wholly-owned subsidiary of Defendant Otaka. The parties stipulate that Defendant Otaka was the "alter ego" of HWBI pursuant to Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185(a) from July 1, 1995 until August 24, 2000, and that Defendant Otaka was bound by the CBA during that time period.
The third CBA for the Hotel governed the period of June 1, 1995 to May 31, 2000, and was signed in 1997. This CBA was extended through January 31, 2001 by an agreement signed March 4, 1999, and then extended on a day-to-day basis, pursuant to an agreement signed February 2, 2001. The third CBA provides, in pertinent part:
SECTION 12. VACATIONS
12a. Vacation Schedule. Any regular full-time or regular part-time employee who has worked continuously on a weekly schedule during his previous anniversary year shall during the next anniversary year be eligible for a vacation in accordance with the schedule below based on his length of service.
* * *
12c. General Provisions
* * *
(3) Any regular full-time or regular part-time employee may accumulate one (1) week of vacation per year but at no time shall the accumulated vacation exceed five (5) weeks. Accumulated weeks will be paid at the current rate.
* * *
(6) Any regular full-time or regular part-time employee terminated by the Hotel prior to the end of his anniversary year for reasons other than discharge shall be entitled at termination to vacation pay on a pro rata basis. Any employee who resigns must give two (2) weeks' prior notice to the Hotel in order to be entitled to pro rata vacation pay.
* * *
SECTION 24. SEPARATION ALLOWANCE
24a. Any regular full-time or regular part-time employee who has completed one (1) or more years of continuous service and who is permanently terminated from service by the Hotel for reasons clearly beyond his own control, shall receive a separation allowance computed on the basis of eight (8) days' pay for each completed year of his continuous service. If the last year of service is incomplete, the employee shall receive severance for that year on a pro rata basis.
* * *
SECTION 26. GRIEVANCE PROCEDURE
26a. When any employee of the Union believes that the Hotel has violated the express terms of this agreement and that by reason of such violation his or its rights have been adversely affected, the employee or the Union must follow the steps set forth below in presenting the grievance.
* * *
26e. . . .
STEPS IN GRIEVANCE PROCEDURE:
* * *
[If the grievance is not disposed of in the steps described above], it may be arbitrated as hereinafter set forth. The complainant or designated representative shall . . . service written notice upon the Hotel of an intent to arbitrate the grievance, together with a written statement of the issues to be arbitrated. . . . Within thirty (30) days after receipt of such notice, the parties shall meet and select an arbitrator . . .
See CBA, attached to Complaint, filed Oct. 5, 2001 (emphasis added).
Also in 1995, HWBI and Defendant Otaka entered into a Management Agreement that provided:
Operator [HWBI] is acting as Owner's [Defendant Otaka] agent for all matters related to the operation of the Hotel. During the term of this Agreement, Operator agrees to supervise and direct the management and operation of the Hotel on behalf of Owner and for Owner's account, in strict accordance with the standards set forth herein . . .
Management Agreement at 2.1(b). The Management Agreement also provided that HWBI had
absolute control and discretion in the management, marketing, operation, maintenance and supervision of the Hotel, including without limitation the following:
(a) the right, authority and power, either by itself or as part of an association, to negotiate, enter into and administer such collective bargaining agreements or other labor contracts in the name of Operator as may be reasonably necessary or advisable in connection with the operation of the Hotel, it being agreed that all employees of the Hotel shall be employees of Operator and not of Owner . . .Id. at 3.1(a). Section 12.1 of the Management Agreement reflected Otaka's agreement to indemnify HWBI and hold it harmless "from any and all liability, loss, damage, cost or expense (including all attorneys' fees and expenses) arising from or relating to the management, marketing, operation, maintenance or supervision of the Hotel. . . ." Id. at 12.1. Also relevant is the provision of the Management Agreement that states,
In the performance of its duties as Operator of the Hotel, Operator shall act solely as agent of Owner. Nothing herein shall constitute a partnership or joint venture between Owner and Operator. All debts and liabilities to third persons incurred by Operator in the course of its operation and management of the Hotel shall be the debts and liabilities of the Owner, and Operator may so inform third parties with whom it deals on behalf of Owner.Id. at 22.1
On August 24, 2000, the Circuit Court of the First Circuit of the State of Hawaii ("State Court") placed the Hotel and all operations of HWBI into receivership, and appointed a Receiver. Pursuant to the State Court's order, the Receiver took "immediate legal and equitable possession of the [Hotel] to the exclusion of Otaka, HWB[I], and all other defendants named herein." See Order Granting Plaintiff's Ex Parte Motion for Appointment of Receiver Filed on August 10, 2000, filed Aug. 24, 2000, attached to Otaka Statement of Facts, Ex. 4 at 6. Additionally, the State Court ordered Otaka not to interfere "with the possession, operation, control and maintenance of the [Hotel]," or to divert or use any of the Hotel's revenues or property. Id. at 14.
On November 8, 2000, the State Court permitted Plaintiff "leave to intervene" in the foreclosure case "for the limited purpose of asserting or protecting any lien or similar property interest in the collateral which is the subject of this foreclosure action." See Order Granting, in Part, and Denying, in Part, ILWU Local 142's Motion for Leave to Intervene Filed August 15, 2000, filed Nov. 8, 2000, attached to Declaration of Rebecca L. Covert, filed Nov. 21, 2002, Ex. 5 at 3.
In April 2001, the State Court ordered the foreclosure of the Hotel. On April 25, 2001, the Hotel informed its employees that HWBI "will be terminating its operation of the Hotel," and that "your employment will terminate as of the end of your last work shift prior to Midnight, June 30, 2001."
On April 27, 2001, Plaintiff wrote to Defendant Otaka requesting that Defendant Otaka provide "written assurances" that Defendant Otaka acknowledge liability to pay severance and accrued vacation pay.
On May 15, 2001, Plaintiff filed in the State Court a Motion to Treat Severance and Vacation Pay Claims as Administrative Expenses ("ILWU Motion"). On September 28, 2001, the State Court granted in part and denied in part Plaintiff's May 15 Motion. See Order Granting in Part and Denying in Part Intervenor ILWU Local 142's Motion to Treat Severance and Vacation Pay as Administrative Expenses, Filed May 15, 2001 ("Order on ILWU Motion"), attached to Otaka's Statement of Facts, ex. 16. Specifically, the State Court approved the payment from the Receiver's Estate of unused vacation benefits and severance benefits attributable to the Receivership period, but denied the ILWU Motion with regard to the vacation and severance benefits of employees, payable upon such employees' termination on June 30, 2001, which were attributable to service performed prior to the date of the Receiver's appointment on August 24, 2000. See id. at 3.
After the sale of the Hotel was confirmed, approximately 200 Hotel employees were laid off on June 30, 2001. Many of these employees were entitled to severance and/or vacation pay under the CBA. In September 2002, the vacation and severance payments that accrued during the ten months of receivership were paid out, pursuant to the State Court's order. However, the Hotel employees have not yet received payment for severance or vacation that accrued prior to August 24, 2000.
On July 10, 2001, Plaintiff filed an Unfair Labor Practice ("ULP") Charge with the NLRB, naming the Receiver and HWBI as employers of the Hotel employees. The ULP charge alleged that the Receiver and HWBI refused to bargain with Plaintiff over the effects of the sale of the Hotel, including severance and accrued vacation pay. The Regional Director concluded there was insufficient evidence to support the ULP Charge concerning separation and vacation pay and refused to issue a formal complaint. Plaintiff subsequently appealed the Regional Director's decision, which the NLRB General Counsel denied on December 3, 2001. The General Counsel "assum[ed] that the Receiver was a successor employer'" for purposes of its ruling.
On October 5, 2001, Plaintiff filed its Complaint to Compel Arbitration and Demand for Jury Trial ("Complaint"). Plaintiff claimed that "HWBI's and Otaka's refusal to comply with the CBA's arbitration provision constitutes a `violation of [a] contract between an employer and a labor organization' within the meaning of Section 301." See Complaint at 23. Plaintiff prays for "[a] final judgment ordering HWBI and Otaka to arbitrate the severance and accrued vacation pay issues in an expeditious manner pursuant to the CBA." Complaint at 6.
On August 26, 2002, Defendant Otaka filed its Motion for Summary Judgment ("Motion"). Defendant Otaka essentially argues that Plaintiff "cannot establish and is barred from asserting its claim against Otaka." Motion at 2. On November 21, 2002, Plaintiff filed its Cross-Motion for Summary Judgment; Memorandum in Opposition to Defendant Otaka's Motion for Summary Judgment and in Support of Plaintiff's Cross-Motion for Summary Judgment ("Cross-Motion"). In its Cross-Motion, Plaintiff clarifies that it seeks to compel Defendant Otaka to "arbitrate any dispute regarding contractual rights that accrued or arguably accrued before the Receiver's appointment." Cross-Motion at 13. On November 26, 2002, Defendant Otaka filed its Reply Memorandum/Opposition to Cross-Motion ("Reply"), and on December 3, 2002, Plaintiff filed its Reply Brief in Support of Cross-Motion ("Plaintiff's Reply").
STANDARD OF REVIEW
Rule 56(c) provides that summary judgment shall be entered when:
[T]he pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(c). The moving party has the initial burden of demonstrating for the court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986) (citing Adickes v. S.H. Kress Co., 398 U.S. 144 (1970)). However, the moving party need not produce evidence negating the existence of an element for which the opposing party will bear the burden of proof at trial. Id. at 323.
Once the movant has met its burden, the opposing party has the affirmative burden of coming forward with specific facts evidencing a need for trial. Fed.R.Civ.P. 56(e). The opposing party cannot stand on its pleadings, nor simply assert that it will be able to discredit the movant's evidence at trial. See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987); Fed.R.Civ.P. 56(e). There is no genuine issue of fact "where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party."Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citation omitted)
A material fact is one that may affect the decision, so that the finding of that fact is relevant and necessary to the proceedings.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A genuine issue is shown to exist if sufficient evidence is presented such that a reasonable fact finder could decide the question in favor of the nonmoving party. Id. The evidence submitted by the nonmovant, in opposition to a motion for summary judgment, "is to be believed, and all justifiable inferences are to be drawn in [its] favor." Id. at 255. In ruling on a motion for summary judgment, the court must bear in mind the actual quantum and quality of proof necessary to support liability under the applicable law. Id. at 254. The court must assess the adequacy of the nonmovant's response and must determine whether the showing the nonmovant asserts it will make at trial would be sufficient to carry its burden of proof. See Celotex, 477 U.S. at 322.
At the summary judgment stage, this court may not make credibility determinations or weigh conflicting evidence. Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir. 1990). The standard for determining a motion for summary judgment is the same standard used to determine a motion for directed verdict: does the evidence present a sufficient disagreement to require submission to a jury or is it so one-sided that one party must prevail as a matter of law. Id. (citation omitted).
DISCUSSION
I. WHETHER THE ILWU CAN COMPEL OTAKA TO ARBITRATE A GRIEVANCE
"[W]here the contract contains an arbitration clause, there is a presumption of arbitrability in the sense that [a]n order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." ATT Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 650 (1986).
Defendant Otaka stipulated that it was bound by the CBA until the State Court appointed the Receiver on August 24, 2000. Defendant Otaka, however, argues that, upon appointment of the Receiver, "the Receiver became the "successor employer' to Hotel employees thereby breaking any duties that Otaka may have had under the CBA." Reply at 12.
"[T]he general rule of law is that appointment of a receiver does not determine any rights nor destroy any liens." Maxl Sales Co. v. Critiques, Inc., 796 F.2d 1293, 1297 n. 2 (10th Cir. 1986). Contract obligations that arose prior to receivership may be asserted during the receivership. See United States v. Vanguard Investment Co., Inc., 6 F.3d 222, 227 (4th Cir. 1993); Western Drug Supply Specialty Co. of Kansas City, Mo. v. Board of Adm'n of Kansas, 187 P. 701, 704 (Kan. 1920). Moreover, a debtor is bound by its pre-receivership obligations even if the receivership rendered it impossible for the debtor to perform. See Western Drug Supply, 187 P. at 704.
In the case at bar, Defendant Otaka argues that the Receiver succeeded it as the employer of the Hotel's employees, and that it therefore cannot be held liable for Plaintiff's claims. Motion at 6. However, regardless of whether the Receiver succeeded Defendant Otaka as the employer, the State Court's appointment of the Receiver did not destroy any of Defendant Otaka's obligations that it had under the CBA. See Maxl Sales, 796 F.2d at 1297 n. 2. Additionally, the fact that the State Court enjoined Defendant Otaka from interfering "with the possession, operation, control and maintenance of the [Hotel]," does not relieve Defendant Otaka from its pre-receivership obligations, even if the State Court's order made the fulfillment of such obligations impossible. See Western Drug, 187 P. At 704. Accordingly, the court finds that there are no genuine issues of material fact that the appointment of the Receiver did not affect any rights or liens against Defendant Otaka, and therefore DENIES Defendant's Motion for Summary Judgment. Moreover, the court finds that, as a matter of law, Defendant Otaka is obligated to arbitrate this contractual dispute, and therefore GRANTS Plaintiff's Cross-Motion for Summary Judgment.
II. JUDICIAL ESTOPPEL
Judicial estoppel "precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position." Helfand v. Gerson, 105 F.3d 530, 534 (9th Cir. 1997). Courts may consider three factors in determining whether to apply judicial estoppel: (1) a party's later position must be "clearly inconsistent" with its earlier position; (2) whether the party has succeeded in persuading a court to accept that party's earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled; and (3) whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped. Hamilton v. State Farm Fire Casualty Co., 270 F.3d 778, 783-84 (9th Cir. 2001).
Defendant Otaka argues that the doctrine of judicial estoppel precludes Plaintiff from assuming the position it maintains in this action. Defendant Otaka argues that
the ILWU has taken the following inconsistent positions before the First Circuit Court:
(1) that the Receiver was the "successor employer" of the Hotel employees;
(2) that the Receiver assumed the CBA and was obligated under its terms; and
(3) that the Receiver was obligated to pay severance and accrued vacation pay.
Motion at 12. Defendant Otaka contends that Plaintiff's Complaint "is nothing more than an inappropriate attempt to gain a second advantage by reversing its previous positions taken before the NLRB and First Circuit Court and advancing new inconsistent positions." Id. at 13.
"A party is judicially estopped from asserting a position in the course of litigation only if that position is inconsistent or incompatible with an earlier position." O'Hara v. Teamsters Union Local No. 856, 151 F.3d 1152, 1157 (9th Cir. 1998). Plaintiff's position in the case at bar, however, is not inconsistent or incompatible" with its positions before the NLRB or the State Court. As Plaintiff correctly points out, "the Union has never argued that Otaka was not liable for severance and vacation pay claims, or that these claims were solely obligations of the Receiver." Cross-Motion at 34. See e.g., Stevens Technical Services, Inc. v. S.S. Brooklyn, 885 F.2d 584, 588-89 (9th Cir. 1989) (rejecting argument that plaintiff was judicially estopped from asserting its claim against a specific debtor because it earlier asserted that a different debtor was liable for the debt) Although Plaintiff argued to the NLRB and the State Court that the Receiver was the employer, it did not argue that the Receiver was the sole employer, nor did it argue that Defendant Otaka and HWBI ceased to be employers upon appointment of the receivership. Thus, Plaintiff's earlier position that the Receiver was obligated to pay all claims arising out of the CBA is not "clearly inconsistent" or incompatible with its current position that Defendant Otaka is also obligated to pay some of those claims. Accordingly, the court finds that, as a matter of law, the doctrine of judicial estoppel does not preclude Plaintiff's claim.
III. PRIMARY JURISDICTION
Section 301(a) of the Labor Management Relations Act ("LMRA") confers jurisdiction over representation issues arising under a contract dispute. 29 U.S.C. § 185 (a) (2002). However, the NLRB "is vested with primary jurisdiction to determine what is or is not an unfair labor practice. As a general rule, federal courts do not have jurisdiction over activity which is arguably subject to § 7 or § 8 of the [NLRA], and they must defer to the exclusive competence of the National Labor Relations Board." Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 83 (1982) (internal quotations omitted).
However, Section 301 of the LMRA "gives district courts jurisdiction over contractual disputes, as an exception to the primary jurisdiction doctrine . . . designed to afford the courts jurisdiction to resolve labor disputes that focused on the interpretation of the terms of the collective bargaining agreement." Id. (internal citations omitted). Thus, questions of contract interpretation are properly heard in federal court rather than before the NLRB. Id. The Ninth Circuit cautioned, however, that "end runs" around NLRB's primary jurisdiction "under the guise of contract interpretation cannot be countenanced." Pace v. Honolulu Disposal Service, Inc., 227 F.3d 1150, 1157 (9th Cir. 2000).
If the Regional Director refuses to issue a formal complaint and dismisses a charge, the charging party has 14 days to appeal the Regional Director's refusal. NLRB Rules Regulations ¶ 102.19(b). The General Counsel may reverse the Regional Director and direct that an unfair labor practice complaint be issued, or it may affirm the Regional Director's refusal to proceed, thereby dismissing the case. Id. The General Counsel's decision is final and is not subject to court review.See Int'l Assoc. of Machinists Aerospace Workers, AFL-CIO v. Lubbers, 681 F.2d 598, 604-05 (9th Cir. 1982).
Here, Plaintiff's ULP named the Receiver and HWBI as employers, and sought to obligate the Receiver to separation and vacation pay. The Regional Counsel determined that there was insufficient evidence to support Plaintiff's charge and refused to issue a formal complaint. The General Counsel considered Plaintiff's appeal and declined to issue a formal complaint. Accordingly, Defendant Otaka contends that Plaintiff's "attempt to characterize this action as primarily contractual is merely a guise designed to make an `end run' around the NLRB's primary jurisdiction over unfair labor practices." Motion at 16. Defendant Otaka argues that Plaintiff's instant breach of contract claim is the same issue presented to the NLRB in Plaintiff's ULP charge. Motion at 16.
The court, however, does not find Defendant Otaka's arguments persuasive. First, Plaintiff's ULP was a claim against the Receiver and HWBI, not against Defendant Otaka. Thus, the instant lawsuit is not an appeal of the General Counsel's non-appealable decision. Second, the instant lawsuit alleges that Defendant Otaka breached the severance and vacation pay and mandatory arbitration provisions of the CBA, which is a contractual dispute, and not an "end run" around NLRB's primary jurisdiction over unfair labor practices. Since the court has jurisdiction to resolve labor disputes that focused on the interpretation of the terms of the collective bargaining agreement, the court need not defer to the NLRB's earlier decision.
IV. CONSTRUCTIVE WAIVER AND TIMELINESS
"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." Local Union No. 370 of the Int'l Union of Operating Engineers v. Morrison-Knudsen Co., Inc., 786 F.2d 1356, 1358 (9th Cir. 1986) (quoting John Wiley Sons v. Livingston, 376 U.S. 543, 557 (1964)). Thus, issues of timeliness and waiver must be submitted to an arbitrator once the court determines that the parties agreed to arbitrate a dispute. Id.; Beer, Soft Drink Drivers, et al. Local Union No. 744 v. Metropolitan Distributors, Inc., 763 F.2d 300, 304 (7th Cir. 1985).
Here, the court finds that the parties did, in fact, agree to arbitrate a dispute. Thus, the court must leave Defendant Otaka's procedural defenses of waiver and timeliness to the arbitrator. See Morrison-Knudsen, 786 F.2d at 1358.
V. ROOKER-FELDMAN
The Rooker-Feldman doctrine provides that district courts "may not exercise appellate jurisdiction over state court decisions." Dubinka v Judges of the Superior Court, 23 F.3d 218, 221 (9th Cir. 1994). The Ninth Circuit recognizes that the doctrine "applies even when the state court judgment is not made by the highest state court, and when the challenge to the state court's actions involves federal constitutional issues."Id. If the plaintiff's federal court claims are "inexplicably intertwined" with a state court's rulings in a state case, then the federal district court does not have jurisdiction to hear the case. Id. "Courts have generally concluded that claims are inextricably intertwined when the district court must scrutinize both the challenged rule and the state court's application of that rule." Id. at 222.
Although the proceedings in the State Court and in this court will undoubtedly focus on similar issues and evidence, the issues raised in this case are not "inextricably intertwined" with Plaintiff's State Court claims. Plaintiff's claims against Defendant Otaka in the case at bar do not undercut the State Court's ruling regarding the Receiver's obligations. Additionally, Plaintiff's instant claims do not require this court to scrutinize the State Court's application of the CBA's arbitration obligation. Accordingly, the court finds that, as a matter of law, the Rooker-Feldman doctrine does not preclude Plaintiff from pursuing its claim against Defendant Otaka.
VI. WHETHER A STAY IS APPROPRIATE
"[A] district court has broad discretion to stay proceedings as an incident to its power to control its own docket." Malama Makua v. Rumsfeld, 136 F. Supp.2d 1155, 1165 (D. Haw. 2001) (internal quotations omitted). In determining whether it should stay a proceeding, a court must consider "the competing interests which will be affected," including "the possible damage which may result from the granting of a stay, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay." CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). The court must also "balance the length of the stay against the strength of the justification given for it." Yong v. INS, 208 F.3d 1116, 1119 (9th Cir. 2000). "If a stay is especially long or its term is indefinite, we require a greater showing to justify it." Id.
Defendant Otaka moves the court to stay Plaintiff's claim pending final judgment of the litigation in the State Court. Defendant Otaka argues, "Granting a stay will conserve judicial resources. In addition, a stay will avoid piecemeal litigation and inconsistent results between the Hawaii courts and the federal courts. Furthermore, a stay will avoid the possibility of windfall recovery." Motion at 25.
The court, however, finds that a stay will not result in the benefits proffered by Defendant Otaka. The federal court can decide Plaintiff's breach of contract claim against Defendant Otaka without risking an inconsistent result with the State Court since Plaintiff did not raise claims against Defendant Otaka in the State Court. Moreover, the State Court expressly limited Plaintiff's participation in its proceeding "for the limited purpose of asserting or protecting any lien or similar property interest in the collateral which is the subject of this foreclosure action." In the instant case, however, Plaintiff asserts its claim against Defendant Otaka as a corporation, which is clearly outside the scope of what the State Court permitted Plaintiff to seek in the State Court action.
Moreover, the Hotel's former employees may suffer if the court grants a stay. As Plaintiff describes, many employees were low-wage workers who are awaiting adjudication of their right to severance pay. It would clearly be a hardship for these employees, many of whom are elderly, to have the court order a stay pending the State Court's final judgment.
Additionally, the court finds that Defendant Otaka will suffer no prejudice if the court denies its request for a stay. Although Defendant Otaka argues that the prospect of windfall and double recovery will occur if this court permits Plaintiff "to pursue the same claim for severance and accrued vacation pay in state court and through arbitration," Motion at 25 n. 7, the court finds no such potential exists. The State Court has only approved the payment from the Receiver's Estate of unused vacation benefits and severance benefits attributable to the Receivership period, and Plaintiff "has made it clear that it will not seek such amounts from Otaka if arbitration is ordered by this Court." Cross-Motion at 47.
Accordingly, the court DENIES Defendant Otaka's request for a stay of proceedings.
CONCLUSION
For the reasons stated above, the court DENIES Defendant's Motion for Summary Judgment; and GRANTS Plaintiff's Cross-Motion for Summary Judgment.
IT IS SO ORDERED.
International Longshore Warehouse Union, Local 142 vs. Hawaiian Waikiki Beach, Inc., et al., Civil No. 01-00653 DAE-LEK; ORDER DENYING DEFENDANT OTAKA'S MOTION FOR SUMMARY JUDGMENT; ORDER GRANTING PLAINTIFF'S CROSS-MOTION FOR SUMMARY JUDGMENT