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Miami Fontainebleau Sues Union, Health Fund After Virus Layoffs

June 29, 2020, 7:22 PM

Miami’s Fontainebleau Hotel filed a lawsuit in Florida federal court accusing a health fund covering its unionized workforce of improperly demanding millions of dollars in contributions on behalf of workers laid off in the wake of the Covid-19 health crisis.

Fontainebleau Florida Hotel LLC accuses the South Florida Hotel and Culinary Employees Welfare Fund, along with labor union UNITE HERE Local 355, of trying to collect as much as $5.5 million in health plan contributions tied to the 1,077 UNITE HERE workers laid off by the hotel in March. Fontainebleau says this demand is “contrary to the requirements” of its collective bargaining agreement with the union, which requires contributions only on behalf of working employees, according to the hotel.

The lawsuit, filed June 26 in the U.S. District Court for the Southern District of Florida, seeks a judicial declaration that it’s not required to make these contributions, along with an order pausing the union’s arbitration proceeding.

Fontainebleau says the health crisis created the “worst business conditions the American lodging and hospitality industry has ever known.” The hotel says its revenue “flat-lined virtually overnight,” forcing it to lay off 2,083 of its 2,151-person workforce, including all 1,077 workers represented by UNITE HERE.

This constitutes an “act of God” that relieves the hotel of its obligation to make health fund contributions, Fontainbleau said.

“Even if Fontainebleau could be found to continue to be obligated to make contributions to the Fund for its laid off workers, that obligation would be eliminated based on the catastrophic negative impact on the hotel caused by the forced closure of the hotel as a result of safety measures implemented to attempt to prevent the further spread of the COVID-19 pandemic,” the hotel said.

A union representative had sharp words for Fontainebleau.

“The Fontainebleau stopped paying health coverage for workers in the middle of a deadly pandemic, despite a requirement under their union contract to continue those payments—a requirement that every other hotel in South Florida is meeting,” Wendi Walsh, principal officer for UNITE HERE Local 355, told Bloomberg Law. “Now they’re cutting off the health benefits of housekeepers, dishwashers, and cooks who are losing access to lifesaving health care in the midst of a pandemic. Most of these workers are Black and brown workers who we know are dying from the virus at twice the rate of white people in this country, so it’s an incredibly mean-spirited position to take, and also a life-threatening one.”

Causes of Action: Breach of fiduciary duty and failure to monitor fiduciaries in violation of the Employee Retirement Income Security Act.

Relief: Declaratory judgment, injunction blocking collection actions, order staying union grievance proceeding, attorneys’ fees, and costs.

Attorneys: Fontainebleau is represented by Ogletree, Deakins, Nash, Smoak & Stewart PC.

The case is Fontainebleau Fla. Hotel, LLC v. S. Fla. Hotel & Culinary Emps. Welfare Fund, S.D. Fla., No. 1:20-cv-22667, complaint 6/26/20.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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