Local No. 358, Bakery and Confectionery Workers Union, AFL-CIO v. Nolde Bros., Inc.

• Decision Date: 19 May 1976
• Docket Number: A,AFL-CI,No. 74--2285,74--2285
• Citation: 530 F.2d 548
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: 91 L.R.R.M. (BNA) 2570, 78 Lab.Cas. P 11,221 LOCAL NUMBER 358, BAKERY & CONFECTIONERY WORKERS UNION,ppellant, v. NOLDE BROTHERS, INCORPORATED, Appellee.

Page 548

530 F.2d 548

91 L.R.R.M. (BNA) 2570, 78 Lab.Cas. P 11,221

LOCAL NUMBER 358, BAKERY & CONFECTIONERY WORKERS UNION, AFL-CIO, Appellant, v. NOLDE BROTHERS, INCORPORATED, Appellee.

No. 74--2285.

United States Court of Appeals, Fourth Circuit.

Argued April 8, 1975.

Decided Oct. 23, 1975.

Certiorari Granted May 19, 1976.

See 96 S.Ct. 2165.

Ronald Rosenberg, Washington, D.C. (Henry Kaiser, Van Arkel, Kaiser, Gressman & Rosenberg, Jery D. Anker, Lawrence J. Sherman, Lichtman, Abeles, Anker & Nagle, Washington, D.C., Jay Levit, Stallard & Levit, Richmond, Va., on brief), for appellant.

Francis V. Lowden, Jr., Richmond, Va. (Abram W. Vandermeer, Jr., Hunton, Williams, Gay & Gibson, Richmond, Va., on brief), for appellee.

Before ALDRICH, Senior Circuit Judge, ^* and CRAVEN and WIDENER, Circuit Judges.

CRAVEN, Circuit Judge:

In 1970 Nolde Brothers, Inc. and Local No. 358 of the Bakery and Confectionery Workers International Union entered into a collective bargaining agreement covering the employees at the company's Norfolk bakery. The agreement provided for severance pay upon the closing of the bakery for each employee actively employed by Nolde for at least three years, ¹ and also contained an all-encompassing arbitration clause. ²

On August 21, 1973, following several months of fruitless negotiations over proposed changes in the contract, the Union gave the seven days written notice required to terminate the agreement. Negotiations continued for a few days after the termination, but on August 31, the company, faced with the Union's threats to strike over certain contract demands, permanently closed the bakery. Nolde subsequently paid wages and vacation pay accrued through the date of the contract termination, and in addition paid wages for the few days between contract termination and the August 31 closing. But the company rejected the Union's demand that it either give severance pay to all its employees or arbitrate its duty to do so.

The Union then instituted this suit under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, to compel arbitration of the severance pay issue or, in the alternative, for an award of the severance pay. The district court granted the company's motion for summary judgment on both counts, holding (1) that 'the union's voluntary termination of its collective bargaining agreement with the company . . . destroyed any right to severance pay created by the collective bargaining agreement for displaced employees;' (2) that there was thus no severance pay issue to arbitrate; and (3) that even if there had been an arbitrable issue there was no duty to arbitrate, for it had died with the contract that created it.

We disagree. In our view, the district court approached the issues backwards when it first determined whether the company's obligation for severance pay survived the contract. This is a question more suitable for arbitration than judicial decision, as we explain below. Thus, the first question for the district court was whether the company's duty to arbitrate this particular issue survived the expiration of the contract. We believe it did, and accordingly we reverse and remand with instructions that the district court order the company to arbitrate.

I.

The Union and the company apparently presented to the district court, as they have to us, contrasting views of the nature of severance pay. The Union argued that severance pay is an 'earned' or 'vested' right accruing to employees over a period of time, whose benefits cannot be denied them regardless when they come to fruition. The company, on the other hand, characterized severance pay as 'a creation of the collective bargaining agreement,' with the right to it contingent upon the occurrence of the triggering event--here the bakery closing--during the term of the contract.

The district court erred in choosing one characterization--the company's--over the other, for in fact severance pay has no immutable nature. It is indeed a creature of contract, but this means no more nor less than that it is in a given case exactly what the parties intended to make it when they bargained. In one case the parties may intend it to be available only if a triggering event occurs during the contract term. But as the Supreme Court has noted, there is 'no reason why parties could not if they so chose agree to the accrual of rights during the term of an agreement and their realization after the agreement had expired.' John Wiley & Sons v. Livingston, 376 U.S. 543, 555, 84 S.Ct. 909, 917, 11 L.Ed.2d 898 (1964). Thus the nature of the employees' right to severance pay in the circumstances here depends entirely upon the intent of the Union and the company when they wrote the relevant provision.

Any question of the intent behind a collective bargaining term must be referred to arbitration if it is available. This is in accord with the national labor policy expressed by Congress:

Final adjustment by a method agreed upon by the parties is declared to be the desirable method for settlement of grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement.

LMRA § 203(d), 29 U.S.C. § 173(d) (emphasis added). This is also the clear teaching of the Steelworkers Trilogy, ³ and is based on the sound principle that an arbitrator, familiar as he is with both the parties and the industry, is better positioned than a court to divine their intent:

The labor arbitrator's source of law is not confined to the express provisions of the contract, as the industrial common law--the practices of the industry and the shop--is equally a part of the collective bargaining agreement although not expressed in it. The labor arbitrator is usually chosen because of the parties' confidence in his knowledge of the common law of the shop and their trust in his personal judgment to bring to bear considerations which are not expressed in the contract as criteria for judgment.

United Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581--82, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409 (1960).

The arbitrator's absolute authority in such a matter, and a court's corresponding lack of power, was affirmed in another passage from the Steelworkers Trilogy:

(T)he question of interpretation of the collective bargaining agreement is a question for the arbitrator. It is the arbitrator's construction which was bargained for; and so far as the arbitrator's decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his.

United Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593, 599, 80 S.Ct. 1358, 1362, 4 L.Ed.2d 1424 (1960). The district court below pre-empted the arbitrator rather than overruling him. But he may do neither under the labor law.

II.

The company argues most strenuously, however, that it cannot be ordered to arbitrate the severance pay issue because the collective bargaining agreement containing its duty to arbitrate had been terminated before the instant dispute arose. In support of its position the company cites several Supreme Court statements to the effect that a party cannot be required to arbitrate any issue unless it has agreed to do so. ⁴ We think the statements do not support the company's contention that a duty to arbitrate cannot survive the termination or expiration of a contract.

First, the Supreme Court has itself undercut the apparent premise that arbitration must rest upon contract by holding that in some circumstances a new employer who takes over a unionized business can be compelled to arbitrate under the arbitration clause of its predecessor's agreement, even though the new employer--a stranger to the bargaining--never agreed to such arbitration. John Wiley & Sons, supra. Although the potential implications of the Wiley case have since been narrowed, see Howard Johnson Co. v. Hotel Employees, 417 U.S. 249, 94 S.Ct. 2236, 41 L.Ed.2d 46 (1974); NLRB v. Burns Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), the Court has not retreated from its recognition that in some instances the national labor policy can impose an arbitration duty upon an unconsenting party:

While the principles of law governing ordinary contracts would not bind to a contract an unconsenting successor to a contracting party, a collective bargaining agreement is not an ordinary contract. '. . . (I)t is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. . . . The collective agreement covers the whole employment relationship. It calls into being a new common law--the common law of a particular industry or of a particular plant.' . . . Central to the peculiar status and function of a collective bargaining agreement is the fact, dictated both by circumstance, . . . and by the requirements of the National Labor Relations Act, that it is not in any real sense the simple product of a consensual relationship.

John Wiley & Sons, supra, 376 U.S. at 550, 84 S.Ct. at 914 (citations omitted).

It is true that in Wiley there was a contract with an arbitration clause in existence when the union filed suit to compel arbitration, ⁵ whereas here there was none either when the dispute arose or when suit was filed. But we believe the Supreme Court has indicated that the principle of Wiley requires arbitration in the latter circumstance as well. In Piano & Musical Instrument Workers v. W. W. Kimball Co., 221 F.Supp. 461 (N.D.Ill.1963), the district court held that a union-employer dispute over rehiring of discharged employees, centering on the employees' seniority rights, was arbitrable even though the dispute arose several days after termination of the parties' collective bargaining agreement. The Seventh Circuit reversed, holding that arbitration could not be required in such circumstances. 333 F.2d 761, 765 (1964). The Supreme Court granted certiorari and...