422 F.2d 546 (7th Cir. 1970), 17577, Associated Milk Dealers, Inc. v. Milk Drivers Union, Local 753, Intern. Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America

Docket Nº:17577.
Citation:422 F.2d 546
Party Name:ASSOCIATED MILK DEALERS, INC., et al., Plaintiffs-Appellees, v. MILK DRIVERS UNION, LOCAL 753, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS OF AMERICA, Defendant-Appellant.
Case Date:February 06, 1970
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 546

422 F.2d 546 (7th Cir. 1970)

ASSOCIATED MILK DEALERS, INC., et al., Plaintiffs-Appellees,

v.

MILK DRIVERS UNION, LOCAL 753, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS OF AMERICA, Defendant-Appellant.

No. 17577.

United States Court of Appeals, Seventh Circuit.

February 6, 1970

Page 547

[Copyrighted Material Omitted]

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Stephen A. Schiller, Solomon I. Hirsh, Joseph M. Jacobs, Albert Gore, Judith A. Lonnquist, Chicago, Ill., for defendant-appellant; Jacobs & Gore, Chicago, Ill., of counsel.

Robert E. Cronin, William B. Hanley, Chicago, Ill., for plaintiffs-appellees; MacDonald & Hanley, Chicago, Ill., of counsel.

Before DUFFY, Senior Circuit Judge, and SWYGERT and FAIRCHILD, Circuit judges.

SWYGERT, Circuit Judge.

This appeal concerns a suit brought under section 301(a) of the Labor-Management Relations Act, 29 U.S.C. § 185(a), by the Associated Milk Dealers, Inc., (AMDI), a trade association of milk dealers, against the Milk Drivers Union, Local 753, International Brotherhood of Teamsters, Chauffeurs, Warehousemen & Helpers of America. Various dairies, allegedly members of AMDI, intervened as plaintiffs. The suit alleged that the union breached its collective bargaining agreement, a standard Chicago area contract with individual dairies, by refusing to submit a dispute to arbitration. The district court granted plaintiffs' motion for summary judgment and ordered the union to comply with the grievance and arbitration provisions of the agreement. Because genuine issues of material fact exist concerning the duty of the union to arbitrate the dispute in question and concerning the legality of the agreement under the antitrust laws, we reverse the district court's grant of summary judgment and remand for trial.

The appellant union represents delivery men employed by dairies and milk dealers in the Chicago area. The appellee, AMDI, is a nonprofit corporation which represents independently owned milk dealers in negotiating collective bargaining agreements with labor organizations. When a standard area contract is arrived at by the union and ADMI, individual milk dealers and not AMDI sign the agreement.

In February 1967 the union entered into negotiations for a new standard area contract. AMDI and another employer association, Chicago Area Dairymen's Association, (CADA), as well as a number of individual employers participated in the discussions. On August 29, 1967 AMDI, CADA, and the union signed a memorandum evidencing agreement to changes in the former contract.

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Copies signed by the union were sent to each employer for signature. The contract, effective from May 1967 to May 1970, was signed by the individual dealer plaintiffs in this action.

The new contract, as set out in the memorandum, contained the following provision:

The Union shall furnish the Dealers a letter of understanding that if certain conditions come into the market which would create an inequitable situation relative to store operations, they would meet with the dealers for the purpose of negotiating an appropriate adjustment of the situation.

Pursuant to this provision, a memorandum of understanding was executed by AMDI, CADA, and the union on October 6, 1967. The memorandum reads in pertinent part:

If certain conditions come into the market, which would create an inequitous situation relative to the store operations, or a similar situation effecting retail, the Union will meet with the Dealers upon written request for the purpose of negotiating an appropriate adjustment of the situation.

Although the parties differ as to the effect to be given the contract provision and the memorandum of understanding, they seem to agree that both writings contemplated the entry of Jewel Food Stores into the milk processing market in Chicago.

On July 11, 1968 the union entered into an agreement with Hillfarm Dairy of the Jewel Food Stores Division, Jewel Companies, Inc. Hillfarm is a milk processor wholly owned by jewel and serves Jewel Food Stores exclusively. The union contract with Hillfarm differed substantially from the standard area contract entered into the year before with the independent milk dealers.

On July 25, 1968, William B. Hanley, attorney for AMDI, stated in a letter to the union that many provisions of the Hillfarm contract were more advantageous than those in the standard area contract and that the milk dealers would adopt those terms pursuant to Article 20, the 'most favored nation' clause, in their contract. Article 20 reads as follows:

Should the Union hereafter enter into any agreement with any milk dealer upon terms and conditions more advantageous to such dealer than the terms and conditions of this Agreement, or should the Union sanction a course of conduct by any milk dealer who has signed this form of agreement enabling him to operate under more advantageous terms and conditions than those provided for in this agreement the Employer shall be entitled to adopt such terms and conditions in lieu of those contained in this Agreement.

At a meeting on July 30 the union refused to accede to this demand, maintaining among other things that the memorandum of understanding governed any inconsistencies between the standard area contract and the Hillfarm contract and that it was prepared to negotiate as required by the memorandum. On August 2, AMDI and CADA requested 1 that the union comply with Article 6 of the standard area contract which provides:

Any matter in dispute, between the Union and Employer (excepting wages and hours, as set forth in Articles 4, 37 and 41, and contributions to all existing Funds, as set forth in Articles

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45, 47 and 48 and questions of jurisdictional matters, as decided by Teamsters Joint Council No. 25, which cannot be settled), shall be referred by either party to an Industry Labor Committee consisting of three (3) representatives of Employers, parties to this Agreement, and three (3) representatives of the Union. It shall be the duty of this Committee to hear and dispose of all complaints raised by either party to this Agreement concerning violations thereof that cannot be settled amicably between the parties. If this Committee is equally divided on any such complaint the Chief Justice of the Circuit Court or his nominee shall be called in to act as the impartial member of sad Committee, and his decision shall be final. No action shall be taken by either party to the Agreement pending the decision of this Committee.

The union refused.

On August 20, AMDI filed this suit. 2 requesting that an arbitrator be appointed to determine whether Article 20 of the contract provided for adoption by its members of the more favorable terms contained in the Hillfarm contract. After various preliminary motions, the district court characterized the dispute between the parties as whether Hillfarm was a 'milk dealer' within the terms of Article 20 of the contract. At the court's suggestion AMDI moved for summary judgment. On February 24, 1969 the district court granted the motion and ordered the union to comply with Article 6.

We think the standard area contract and the memorandum of understanding issued pursuant to it present genuine issues of material fact concerning whether the parties agreed to arbitrate disputes arising out of the contract between Hillfarm and the union. The district court's findings in support of its order, announced from the bench, did not mention the memorandum of understanding and instead relied only upon the broad language of Article 6, the arbitration clause. The court's reliance upon Article 6 can be interpreted in two ways: (1) that under the broad language of Article 6, the question of arbitrability was for the arbitrator and not the court; or (2) that the memorandum of understanding and the similar contract clause were not sufficiently specific for the court to rule that these provisions were designed to exclude arbitration over the dispute concerning the contract between Hillfarm and the union.

The language of Article 6 is not so broad as to make arbitrability a question for the arbitrator. Though strongly favoring arbitration, the Supreme Court in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 547, 84 S.Ct. 909, 913, 11 L.Ed.2d 898 (1964), stated, 'the duty to arbitrate being of contractual origin, a compulsory submission to arbitration cannot precede judicial determination that the collective bargaining agreement does in fact create such a duty.' The district court must determine whether the dispute between the parties is arbitrable, United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960), unless the parties voluntarily submit arbitrability to the arbitrator. Metal Products Workers Union, Local 1645 v. Torrington Co., 358 F.2d 103, 105 (2d Cir.1966). The party claiming that arbitrability is for the arbitrator to decide bears the burden of proof and must show that the contract clearly manifests such an intention, United Steelworkers v. Warrior & Gulf Navigation Co., supra 363 U.S. at 583 n. 7, 80 S.Ct. 1347. AMDI has not satisfied this burden. The reference in Article 6 to 'any matter in dispute' is insufficient, without further evidence of intent or express mention of the question of arbitrability, to demonstrate that the parties intended the arbitrator to decide

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arbitrability. Strauss v. Silvercup Bakers, Inc., 353 F.2d 555, 557 (2d Cir.1965); Torrington Co. v. Metal Products Workers Union, Local 1645, 347 F.2d 93, 96 (2d Cir.1965). See also Drake Bakeries, Inc. v. Local 50, American Bakery & Confectionery Workers, 370 U.S. 254, 82 S.Ct. 1346, 8 L.Ed.2d 474 (1962).

The district court should have allowed the parties to submit evidence concerning the effect to be given to the memorandum of understanding and the similar contract provision. 3 The Supreme Court has recognized that a contract clause...

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