In an important decision upholding the right of hotels to make pragmatic agreements with unions on hotel operations, the United States District Court for the Southern District of New York dismissed a claim brought by banquet servers at the St. Regis New York who had claimed that assigning certain banquet-like events to restaurant waitstaff and room service servers violated their contract rights. In granting dismissal, the court upheld the right of hotels and unions to reach private, special purpose agreements allocating work opportunities to different job classifications without fear that disfavored employee groups could sue for breach of the underlying labor agreement. For more information, please visit http://hlconverge.blogspot.com and follow along on Twitter at http://www.twitter.com/Hospitality_Law.

1. In an important decision upholding the right of hotels
to make pragmatic agreements with unions on ho-
tel operations, the United States District Court for the
Southern District of New York dismissed a claim brought
by banquet servers at the St. Regis New York who had
claimed that assigning certain banquet-like events to
restaurant waitstaff and room service servers violated
their contract rights. In granting dismissal, the court
upheld the right of hotels and unions to reach private,
special purpose agreements allocating work
opportunities to different job classifications without fear
that disfavored employee groups could sue for breach of
the underlying labor agreement.
BACKGROUND
The lawsuit arose from the hotel’s practice of using
room-service servers (rather than banquet servers) for
certain private meetings held in hotel guest rooms that
were temporarily converted to meeting room space. The
hotel had also previouslyreached an agreement with the
union that restaurant wait staff could serve all private
parties held in the hotel’s signature restaurant. A group
of union-represented banquet servers demanded that
the union file a grievance on their behalf against
both practices claiming that they, effectively, created
a separate, second banquet department and deprived
them of the right to work all banquet events — a right
they claimed had been granted by both the labor
agreement and by a prior settlement agreement
resolving certain past grievances.
After the union failed to file the grievance requested, the
banquet servers brought a claim against both the union
and the hotel under a provision for federal labor law
that allows individual unionrepresented employees to
sue in federal court over alleged violations of the labor
agreement governing their employment. The banquet
servers alleged that the hotel violated their rights under
the applicable labor agreements and conspired with the
union to deprive them of work opportunities.

2. THE DISTRICT COURT RULING
Judge J. Paul Oetken of the Southern District of New
York disagreed with the banquet servers on all counts.
In support of his decision granting the St. Regis’motion
to dismiss, the court ruled that the plaintiffs could not
bring a claim against the hotel because they had not
adequately pled that the union breached its duty of fair
representation, which is a precondition of any claim by
unionrepresented employees against their employer.
In language that will likely benefit both labor and
management in all cases governed by federal labor
law, the court accepted the hotel’s argument that unions
can enter into special arrangements with employers and
otherwise deal with management, even if that results in
economic benefits flowing to one group of workers
rather than others. It also ruled that conclusory allega-
tions of conspiracy based only on unions and companies
jointly agreeing to do things that disfavor the plaintiffs
do not properlyshow the bad faith needed to challenge
such agreements in federal court. The court also held
that the hotel had not violated any contract rights
granted to the banquet servers in the prior settlement
agreement, accepting the hotel’s argument that the
agreement, considered as a whole, could not
support the plaintiffs’interpretation.
This victory for hotel operators is noteworthy because
it underscores the broad rights that management and
unions have to reach pragmatic agreements affecting
hotel operations without fear of collateral attack from
disaffected workers who did not benefit from the special
agreement.
Holland & Knight represented the hotel in this matter.