Lever Bros. Co. v. International Chemical Workers Union, Local 217

• Decision Date: 30 November 1976
• Docket Number: No. 76-1340,76-1340
• Citation: 554 F.2d 115
• Parties: 93 L.R.R.M. (BNA) 2961, 95 L.R.R.M. (BNA) 2438, 79 Lab.Cas. P 11,784, 81 Lab.Cas. P 13,207 LEVER BROTHERS COMPANY, Appellant, v. INTERNATIONAL CHEMICAL WORKERS UNION, LOCAL 217, Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 115

554 F.2d 115

93 L.R.R.M. (BNA) 2961, 95 L.R.R.M. (BNA) 2438,

79 Lab.Cas. P 11,784, 81 Lab.Cas. P 13,207

LEVER BROTHERS COMPANY, Appellant, v. INTERNATIONAL CHEMICAL WORKERS UNION, LOCAL 217, Appellee.

No. 76-1340.

United States Court of Appeals Fourth Circuit.

Argued Oct. 4, 1976.

Decided Nov. 30, 1976.

James P. Garland, Baltimore, Md. (David R. Owen and Lynne A. Battaglia, Semmes, Bowen & Semmes, Baltimore, Md., on brief), for appellant.

Charles Lee Nutt (John R. Francomano and Stuart Levine, Francomano, Clements & Park, Baltimore, Md., on brief), for appellee.

Before HAYNSWORTH, Chief Judge, and RUSSELL and HALL, Circuit Judges.

KENNETH K. HALL, Circuit Judge.

This civil action was brought under Section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185(a), by Local 217 of the International Chemical Workers Union ("Union") against Lever Brothers Company ("Company") seeking injunctive relief to prevent the Company from transferring its Baltimore, Maryland, soap production operation to Hammond, Indiana, until the Company complied with what the Union contended were certain specified contractual prerequisites to the move. The District Court granted a temporary restraining order and then a preliminary injunction enjoining the plant relocation pending the completion of arbitration to construe certain terms of the labor contract and conditioned recovery on the injunction bond upon a determination by the District Court, the Court of Appeals, or the Supreme Court of the United States that the Company had been wrongfully enjoined or restrained.

The Company unsuccessfully moved to dissolve the injunction, the Union initiated grievance was found to be arbitrable, and an award was rendered in favor of the Company. The preliminary injunction expired, as ordered, and the Company presumably has relocated its plant facility. The Company appeals seeking a determination that the preliminary injunction was wrongfully issued, and also seeks a determination that the injunction bond should have been conditioned on the outcome of the arbitration. We affirm.

Three issues are involved in this appeal. They are: (1) whether the grievance filed by the Union should have been submitted to the arbitrator in accordance with the terms of the collective bargaining agreement; (2) whether the District Court properly issued the preliminary injunction in order to maintain the status quo pending the completion of arbitration; and (3) whether the District Court properly conditioned the security required by F.R.C.P. 65(c) to be provided by the Union based upon whether or not the Company should be found to have been wrongfully enjoined or restrained, instead of conditioning it upon the Company's success or failure on the merits of the arbitration.

I ARBITRABILITY

The Company and the Union had entered into a collective bargaining agreement covering its plant located at Baltimore, Maryland. On October 28, 1975, the Company advised the Union that it was permanently closing its Baltimore plant and transferring that production to its Hammond, Indiana facility which was represented by the Oil, Chemical and Atomic Workers union.

The Union argued that since the Hammond plant was represented by a union other than the International Chemical Workers, then the Company action constituted "outside contracting" under the collective bargaining agreement, and the Union was entitled to "due consideration" before the actual assignment of work to the outside contractors (i. e. the transfer to Indiana) occurred. ¹

The Company argued that the transfer was an "elimination" under the collective bargaining agreement. ² requiring only two weeks written notice to the Union in advance of the move, which notice it had given. Thus, the release of "full information," necessary when there was a "contracting out," was not required.

Section 6.9, the grievance-arbitration clause, provided:

"Grievances within the meaning of the Grievance procedure and of this arbitration clause shall consist only of disputes about the interpretation or application of particular clauses of this Agreement and about alleged violations of the Agreement. The Arbitrator shall have no power to add to, or subtract from, or modify any of the terms of this Agreement, nor shall he substitute his discretion for that of the Company or the Union where such discretion has been retained by the Company or the Union, nor shall he exercise any responsibility or function of the company or the Union."

On November 14, 1975, the Union filed a grievance concerning the pending plant transfer, contended that it was "contracting out" rather than an "elimination" of work, and requested that the Company refrain from moving the plant until the "due consideration-full information" contractual prerequisites were met. The Company denied the grievance and this litigation ensued.

On appeal, the parties agree that the District Court initially had to determine whether the dispute was subject to arbitration under the collective bargaining agreement. International Union of Operating Engineers, Local 150 v. Flair Builders, Inc., 406 U.S. 487, 92 S.Ct. 1710, 32 L.Ed.2d 248 (1972), but they disagree that the issue presented was arbitrable.

The Union contends that its grievance concerned the interpretation of various clauses of the Agreement and was arbitrable. The Company contends that the District Court too readily found arbitrability and failed to determine first, what the dispute was, and second, whether the parties had contractually agreed to submit such a dispute to arbitration.

We hold that the District Court correctly determined, first, that a dispute

did exist between the Company and the Union regarding the characterization of the plant transfer as an "elimination" or as "contracting out." Second, we hold that the District Court properly analyzed the parallels which existed between the broad arbitration clause in United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960), ³ and the above-quoted arbitration clause in this case, between the management rights clause in Warrior & Gulf ⁴ and language of similar import in this case, ⁵ and correctly concluded that neither the contract in Warrior & Gulf, nor the contract in this case expressly excluded a particular grievance from arbitration. Thus, the District Court correctly held the grievance in this case to be a matter for consideration by the arbitrator. In this case, it cannot be said with positive assurance that the arbitration clause was not susceptible of an interpretation that covered the asserted dispute. United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582-3, 80 S.Ct. 1347. The question of the interpretation of the collective bargaining agreement was properly left to the arbitrator, and not predetermined by the Court on the ruling on the preliminary injunction. United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 599, 80 S.Ct. 1358, 4 L.Ed.2d 1424 (1960); Buffalo Forge Co. v. United Steelworkers of America, AFL-CIO, 428 U.S. 397, 96 S.Ct. 3141, 3148-3149, 49 L.Ed.2d 1022 (1976).

II THE INJUNCTION PENDING ARBITRATION

Before issuing the preliminary injunction, the court below analyzed the prerequisites to the issuance of injunctive relief and concluded that as to the first prerequisite, the Union had shown a "probable right," that is, a likelihood that the Union would prevail at a trial on the merits. ⁶ The court equated this with the likelihood that the Union would prevail in its contention that the dispute in issue was one for the arbitrator. Thus, the preliminary injunction was issued halting the transfer of the plant and insuring the maintenance of the status quo until the arbitration could be completed.

The Union contends that the injunction properly issued to protect its contractual right to arbitrate grievances and had it prevailed in the arbitration, it would have been provided with "full information" regarding the reasons for the transfer and would have marshalled economic evidence to attempt to persuade the Company not to make the transfer. Thus, the injunction preserved the status quo in order to save the arbitration clause. See: Amalgamated The Company contends that although injunctive relief may have appropriately issued to require arbitration, it was inappropriate to also enjoin the transfer of the plant, since the arbitrator could not halt the transfer and only could require compliance with the "Shorey" letter ⁸ relying upon Hoh v. Pepsico, Inc., 491 F.2d 556 (2nd Cir. 1974). ⁹

Transit Union, Division 1384 v. Greyhound Lines, Inc., 529 F.2d 1073 (9th Cir. 1976). ⁷

We find the reasoning in Greyhound Lines, supra, a case with similar facts to the case sub judice, more persuasive than that contained in Pepsico, and hold, as did the court in Greyhound Lines, that:

". . . a plaintiff, without regard to whether he is the employer or the union, seeking to maintain the status quo pending arbitration pursuant to the principles of Boys Markets (Inc., v. Retail Clerks Union, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970)) need only establish that the position he will espouse in arbitration is sufficiently sound to prevent the arbitration from being a futile endeavor. If there is a genuine dispute with respect to an arbitrable issue, the barrier (to the issuance of an injunction) we believe appropriate(ly sic) has been cleared." (529 F.2d 1073, 1077-1078).

The District Judge did not abuse his discretion by issuing the preliminary injunction preserving the status quo until the completion of the pending arbitration.

III THE CONDITIONS OF THE BOND

The District Court conditioned the issuance of the preliminary injunction upon the Union filing a bond in the amount of $60,000 as security for the payment of such costs and damages as may have been incurred or suffered by the Company should it later have been...