Livingston v. John Wiley & Sons, Inc.

• Decision Date: 11 January 1963
• Docket Number: Docket 27629.,No. 101,101
• Citation: 313 F.2d 52
• Parties: In the Matter of David LIVINGSTON, as President of District 65, Retail, Wholesale and Department Store Union, AFL-CIO, Plaintiff-Appellant, v. JOHN WILEY & SONS, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

313 F.2d 52 (1963)

In the Matter of David LIVINGSTON, as President of District 65, Retail, Wholesale and Department Store Union, AFL-CIO, Plaintiff-Appellant, v. JOHN WILEY & SONS, INC., Defendant-Appellee.

No. 101, Docket 27629.

United States Court of Appeals Second Circuit.

Argued November 5, 1962.

Decided January 11, 1963.

Irving Rozen, New York City (Myron Nadler and Weisman, Allan, Spett & Sheinberg, New York City, on the brief), for plaintiff-appellant.

Charles H. Lieb, New York City (Robert H. Bloom and Paskus, Gordon & Hyman, New York City, on the brief), for defendant-appellee.

Before MEDINA, SMITH and KAUFMAN, Circuit Judges.

MEDINA, Circuit Judge.

District 65, Retail, Wholesale and Department Store Union, AFL-CIO appeals from an order of the District Court for the Southern District of New York denying its motion to compel arbitration under a collective bargaining agreement. The opinion below is reported at 203 F. Supp. 171.

Beginning in 1949 the Union entered into collective bargaining agreements with Interscience Publishers, Inc., the last one dated February 1, 1960, for a term of two years ending January 31, 1962. None of these agreements was stated in terms to be binding on Interscience "and its successors." On October 2, 1961 Interscience effected a consolidation for bona fide business reasons with another publishing firm, John Wiley & Sons, Inc. A dispute arose with respect to the effect of the consolidation on the status of the collective bargaining contract and the Union. Interscience before the consolidation, and Wiley thereafter took the position that the agreement was automatically terminated for all purposes by the consolidation, and that all rights of the Union and the employees arising out of the agreement were at an end. The Union adhered throughout the discussions and correspondence both before and after the consolidation to the view that the agreement was not terminated by the consolidation and that certain rights had become "vested" which Wiley must recognize. The details of this controversy will be more fully described shortly. The upshot was that the Union demanded arbitration of the dispute, under Article XVI of the Agreement (set forth in full in the Appendix to this opinion), relating to "Grievances: Adjustment of Disputes: Arbitration," and on January 23, 1962, the Union commenced this action against Wiley to compel arbitration. The District Court assumed that the agreement survived the consolidation, but denied arbitration on two grounds: that the agreement should be so construed as "to exclude from arbitration matters involving the entire collective bargaining unit, as distinguished from the individuals comprising it"; and that, even if not so limited, the Union has failed to avail itself of the grievance procedure described in the agreement and had thus abandoned any rights it might have had to arbitration of the dispute.

We think it clear that the District Court had jurisdiction of the case under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and that the appeal by the Union is properly before us. Textile Workers Union v. Lincoln Mills, 1957, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972; General Electric Co. v. Local 205, United Electrical Workers, 1957, 353 U.S. 547, 77 S.Ct. 921, 1 L.Ed.2d 1028; Goodall-Sanford, Inc. v. United Textile Workers, AFL Local 1802, 1957, 353 U.S. 550, 77 S.Ct. 920, 1 L.Ed.2d 1031. We also hold, as matter of federal law, (1) that the agreement and rights arising therefrom were not necessarily terminated by the consolidation, and that Wiley and the Union are proper parties to the arbitration proceeding; (2) that the terms of the agreement contemplated the arbitration of just such a dispute or controversy as the one before us and that the attempt to arbitrate here is not an improper effort to secure status as collective bargaining agent for the negotiation of a new contract, nor is it an attempt to secure allegedly proscribed "quasi-legislative" arbitration; (3) that issues raised by Wiley arising out of the Union's alleged failure to comply with certain requirements of the agreement relative to so-called grievance procedure are matters to be decided by the arbitrator.

The facts, sketched above, may be stated more fully as follows:

On October 2, 1961 Interscience employed 80 persons, of whom 40 were covered by the 1960 contract; Wiley employed 300 persons. Interscience, with a single plant in New York City, did an annual business of $1,000,000; Wiley, an older company, had three substantially larger plants, and did an annual business of $9,000,000.

The Union learned of the proposed consolidation in June of 1961 and on June 27 wrote Interscience, stating its position that the contract would remain in force notwithstanding the consolidation. On September 19, 1961 Interscience initiated conversations with the Union, in the course of which Interscience insisted that the contract would end upon consolidation. On September 21, 1961 Interscience wrote its employees, stating its views on termination and offering jobs at the Wiley plant in New York City. On October 2, 1961, the effective date of the consolidation, Wiley wrote the Union stating that the contract was terminated.

All of Interscience's 80 employees were subsequently employed by Wiley, but 11 later resigned and received severance pay voluntarily granted by Wiley. The Union does not allege discrimination against these persons, but attributes their resignation to worsened working conditions. Wiley has placed the Interscience employees under its own pension plan, crediting them for past service with Interscience, but it does not recognize their seniority or other rights under the Interscience contract, nor does it recognize the appellant Union or any other union.

The Interscience contract obliged Interscience to make quarterly payments into an employee pension fund. The Union contends that Interscience's payment for the third quarter of 1961 was inadequate, and that Wiley is obliged and has failed to make up this deficit and also to make the payment due for the fourth quarter. The total claim amounts to $8,000. The contract also contains provisions according to the Interscience employees rights regarding seniority, job security, grievance procedure, and vacation and severance pay.

On January 23, 1962 the Union commenced this action in the District Court to compel Wiley to arbitrate the dispute between the parties concerning the effect of the consolidation upon the contract and the so-called "vested" rights of the Union and the employees to continued payments by Wiley to the Interscience employee pension fund and to seniority, job security, grievance procedure, and vacation and severance pay, "now and after January 30, 1962."

I

The question of "substantive arbitrability" is for the court not for the arbitrator to decide. Atkinson v. Sinclair Refining Co., 1962, 370 U.S. 238, 241, 82 S.Ct. 1318, 8 L.Ed.2d 462. The controlling law is not New York law but federal law. Textile Workers Union v. Lincoln Mills, supra, 353 U.S. at 456, 77 S.Ct. 912, 1 L.Ed.2d 972. The sources of that law, to be fashioned by judicial inventiveness, are the express provisions of the national labor laws, the basic policies underlying these laws, "state law, if compatible with the purpose of Section 301" and which "will best effectuate the federal policy," and accepted principles of traditional contract law. Id. at 457, 77 S.Ct. at 918; Local 174, Teamsters, etc. v. Lucas Flour Co., 1962, 369 U.S. 95, 105, 82 S.Ct. 571, 7 L.Ed. 593. See Jay, Arbitration and the Federal Common Law of Collective Bargaining Agreements, 37 N. Y.U.L.Rev. 448 (May, 1962); Comment, The Emergent Federal Common Law of Labor Contracts: A Survey of The Law under Section 301, 28 Univ.Chi.L.Rev. 707 (1961).

The Union tells us that under Section 90 of the New York Stock Corporation Law, McKinney's Consol.Laws, c. 59,¹ the contract did not automatically terminate because the provisions of this statute are to the effect that the consolidated corporation is "deemed to have assumed" and "shall be liable" for "all liabilities and obligations" of the constituent corporation just as if it "had itself incurred such liabilities or obligations." But this legislation is clearly not binding upon us, and we may or may not find that the rule thus formulated, with or without qualifications or in some modified form, "will best effectuate the federal policy." We have found no case formulating a rule of federal law on the point at issue here, and none has been called to our attention. We must accordingly, to the best of our competence, and giving due weight to the legislation of the Congress in the area of labor-management relations and other sources relevant to the task, including the provisions of Section 90 of the New York Stock Corporation Law, fashion for the first time the rule of federal law that is to govern the decision of the first and preliminary question presented for our consideration: Did the consolidation abruptly terminate the collective bargaining agreement and the rights of the Union and the employees created or arising thereunder?

We think it clear and we decide and hold that the federal policy of promoting industrial peace and stability, especially with reference to arbitration procedures set up in collective bargaining agreements (Textile Workers Union v. Lincoln Mills, supra, 353 U.S. at 453-454, 77 S.Ct. 914, 1 L.Ed.2d 972; United Steelworkers of America v. Warrior & Gulf Navigation Co., 1960, 363 U.S. 574, 578, 80 S.Ct. 1347, 4 L.Ed.2d 1409; Local 174, Teamsters, etc. v. Lucas Flour Co., supra, 369 U.S. at 105, 82 S.Ct. 571, 7 L.Ed. 593; Drake Bakeries Inc. v. Local 50, 1962, 370 U.S. 254, 263, 82 S.Ct. 1346, 8 L.Ed.2d 474) can be fostered and sustained only by answering this question in the negative. And we reach this conclusion despite the fact that the agreement contains no statement that its terms are...