E.E.O.C. v. MacMillan Bloedel Containers, Inc.

• Citation: 503 F.2d 1086
• Decision Date: 09 October 1974
• Docket Number: No. 74-1191,AFL-CI,D,74-1191
• Parties: 8 Fair Empl.Prac.Cas. 897, 8 Empl. Prac. Dec. P 9727 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. MacMILLAN BLOEDEL CONTAINERS, INC., and Local 544, United Paperworkers International Union,efendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1086

503 F.2d 1086

8 Fair Empl.Prac.Cas. 897, 8 Empl. Prac. Dec. P 9727

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. MacMILLAN BLOEDEL CONTAINERS, INC., and Local 544, United

Paperworkers International Union, AFL-CIO,

Defendants-Appellees.

No. 74-1191.

United States Court of Appeals, Sixth Circuit.

Argued June 4, 1974.

Decided Oct. 9, 1974.

Mary Helen Mautner, E.E.O.C., Washington, D.C., for plaintiff-appellant; William A. Carey, Gen. Counsel, Joseph T. Eddins, Associate Gen. Counsel, Beatrice Rosenberg, Charles L. Reischel, Attys., E.E.O.C., Washington, D.C., Richard Lieberman, Chicago Regional Litigation Center, Chicago, Ill., Howard Besser, E.E.O.C., Frederick M. Coleman, U.S. Atty., Cleveland, Ohio, on brief.

Thomas H. Barnard, Cleveland, Ohio, Robert I. Doggett, Cincinnati, Ohio, for defendants-appellees; Lowell L. Garrett, G. Christopher Meyer, Squires, Sanders & Dempsey, Norton N. Newborn, Gaines & Stern Co., LPA, Cleveland, Ohio, on brief.

Before PHILLIPS, Chief Judge, LIVELY, Circuit Judge, and GRAY, District Judge. ^*

PHILLIPS, Chief Judge.

This action was brought by the Equal Employment Opportunity Commission (EEOC) against MacMillan Bloedel Containers, Inc. (MacMillan) for alleged race and sex discrimination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000 et seq. Local 544, United Paperworkers International Union, AFL-CIO (the Union), was joined as a party-defendant under Rule 19(a), Fed.R.Civ.P., but was not charged with a Title VII violation. The District Court granted MacMillan's motion for summary judgment because it found that a condition precedent to suit, namely the filing of a charge with the EEOC, had not been fulfilled. The court, suasponte, entered summary judgment in favor of the Union because its position in the suit was derivative of MacMillan's. We reverse.

In 1969, a Mrs. Della Mercer filed charges of race and sex discrimination with the EEOC against the Flintkote Company, Hankins Container Division (Flintkote). The charges were directed at Flintkote's Cleveland, Ohio facility, located at 14801 Emery Avenue. The charges were investigated by the EEOC. On November 27, 1972, the EEOC notified Flintkote that it had reasonable cause to believe that Flintkote had engaged in unlawful employment practices. The EEOC invited the parties to join with it in a collective effort to resolve the matter. At some time, not apparent from the records, MacMillan took over operation of Flintkote's Cleveland facility. The nature of the transaction between Flintkote and MacMillan does not appear in the record.

On July 5, 1973, the EEOC filed suit against MacMillan who was then and is now operating the Cleveland facility. The complaint alleged, inter alia, that MacMillan maintained policies and practices which discriminated on the basis of sex and race. Additionally, paragraphs eight and nine of the complaint stated:

'8. More than thirty days prior to the institution of this action, a charge was filed with the Commission in which it was alleged that Defendant Corporation engaged in employment practices made unlawful by Title VII. '9. All conditions precedent to the institution of this action have been fulfilled.'

The Union, although named as a party-defendant, was not charged with a Title VII violation. Rather, it was joined under Rule 19(a), Fed.R.Civ.P., because the decree entered by the court might affect its collective bargaining agreement with MacMillan.

MacMillan moved in the alternative: 1) to dismiss under Rule 12, Fed.R.Civ.P. for failure to state a claim upon which relief could be granted and for lack of subject matter jurisdiction, 2) for a grant of summary judgment in its favor, or 3) to require a more definite statement of the allegations in paragraphs eight and nine of the complaint, supra. An affidavit of Douglas D. Thompson, the administrative officer of MacMillan, was submitted with these motions. The thrust of the motions and affidavit was that, prior to July 5, 1973, MacMillan had not been named in any charges alleging race and sex discrimination at its Cleveland facility.

Throughout the entire proceedings in the District Court, the EEOC relied solely upon its allegations in the complaint. At no time did it submit evidence in support of or amplify upon the allegations in paragraphs eight and nine of the complaint.

The District Court granted summary judgment in favor of MacMillan because no charges had been filed against MacMillan for its Cleveland facility prior to institution of the suit and, sua sponte, in favor of the Union because its position in the suit was derivative of MacMillan's.

I.

The EEOC, while not denying that MacMillan was not charged, contends that MacMillan is, nevertheless, liable as a successor employer to remedy the discriminatory practices of Flintkote. This liability, it is alleged, rests upon the same considerations which govern liability as a successor employer under the National Labor Relations Act (Labor Act), 29 U.S.C. 151 et seq.

The issue has two aspects: 1) Can a successor company be held liable for the unlawful employment practices of its predecessor? and 2) When a successor company has notice of an EEOC charge naming its corporate predecessor, is it necessary for the discriminatee to refile the charge and additionally name the successor company?

The Supreme Court has considered the obligations of a successor company under the Labor Act, supra. In John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 548, 84 S.Ct. 909, 914, 11 L.Ed.2d 898 (1964), the Supreme Court held:

'The disappearance by merger of a corporate employer which has entered into a collective bargaining agreement with a union does not authomatically terminate all rights of the employees covered by the agreement, and that, in appropriate circumstances . . . the successor employer may be required to arbitrate with the union under the agreement.'

Substantial continuity of identity in the business enterprise before and after the change was set forth as the key factor in the determination. Id. at 551, 84 S.Ct. 909.

The holding rested on considerations of national labor policy:

'Employees, and the union which represents them, ordinarily do not take part in negotiations leading to a change in corporate ownership. The negotiations will ordinarily not concern the well-being of the employees, whose advantage or disadvantage, potentially great, will inevitably be incidental to the main considerations. The objectives of national labor policy, reflected in established principles of federal law, require that the rightful prerogative of owners independently to rearrange their businesses and even eliminate themselves as employers be balanced by some protection to the employees from a sudden change in the employment relationship.' Id. at 549, 84 S.Ct. at 914.

In National Labor Relations Board v. Burns International Security Services, Inc., 406 U.S. 272, 281-291, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), the Supreme Court recognized that the decision in Wiley, supra, was not without its limitations. The Court held that while successor employers may be bound to bargain with an incumbent union, they would not be bound by the substantive provisions of a collective bargaining agreement negotiated by their predecessors but not agreed to or assumed by them. This holding was based on the importance attached to private bargaining without official compulsion over the actual terms of the contract. The Court also observed that requiring a new employer to be bound by the substantive terms of a pre-existing collective bargaining agreement might inhibit the free transfer of capital and restrict him from making substantial changes in the business. Id. at 287-288, 92 S.Ct. 1571.

In Golden State Bottling Co., Inc. v. N.L.R.B., 414 U.S. 168, 171-174, 94 S.Ct. 414, 38 L.Ed.2d 388 (1973), the Supreme Court, after noting that the successor company acquired the predecessor with notice of unfair labor practice litigation and continued the business without substantial interruption or change in operations, employee or supervisory personnel, upheld the N.L.R.B.'s order requiring the successor to reinstate with back-pay an employee discharged by the predecessor company. Both companies were held jointly and severally liable for the back-pay award.

Quoting with approval from Perma Vinyl Corp., 164 N.L.R.B. 968, 969 (1967), enforced sub nom. United States Pipe & Foundry Co. v. N.L.R.B., 398 F.2d 544 (5th Cir. 1968), the Court stated:

'To further the public interest involved in effectuating the policies of the Act and achieve the 'objectives of national labor policy, reflected in established principles of federal law,' we are persuaded that one who acquires and operates a business of an employer found guilty of unfair labor practices in basically unchanged form under circumstances which charge him with notice of unfair labor practice charges against his predecessor should be held responsible for remedying his predecessor's unlawful conduct.

'In imposing this responsibility upon a bona fide purchaser, we are not unmindful of the fact that he was not a party to the unfair labor practices and continues to operate the business without any connection with his predecessor. However, in balancing the equities involved there are other significant factors which must be taken into account. Thus, 'It is the employing industry that is sought to be regulated and brought within the corrective and remedial provisions of the Act in the interest of industrial peace.' When a new employer is substituted in the employing industry there has been no real change in the employing industry insofar as the victims of past unfair labor practices are concerned, or the need for remedying those unfair labor practices. Appropriate steps must still be taken if the effects of the unfair labor practices are to be erased and all employees reassured of their statutory rights. And it is the successor...