Kaufman and Broad Home Systems, Inc. v. International Broth. of Firemen and Oilers, AFL-CIO

• Decision Date: 05 December 1979
• Docket Number: No. 77-2283,D,AFL-CI,77-2283
• Parties: 102 L.R.R.M. (BNA) 3033, 57 A.L.R.Fed. 381, 87 Lab.Cas. P 11,723 KAUFMAN AND BROAD HOME SYSTEMS, INC., Plaintiff-Appellee, v. INTERNATIONAL BROTHERHOOD OF FIREMEN AND OILERS,efendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1104

607 F.2d 1104

102 L.R.R.M. (BNA) 3033, 57 A.L.R.Fed. 381,

87 Lab.Cas. P 11,723

KAUFMAN AND BROAD HOME SYSTEMS, INC., Plaintiff-Appellee, v. INTERNATIONAL BROTHERHOOD OF FIREMEN AND OILERS, AFL-CIO Defendant-Appellant.

No. 77-2283.

United States Court of Appeals Fifth Circuit.

Dec. 5, 1979.

Clarence M. Mulholland, R. Jeffrey Bixler, Toledo, Ohio, Richard L. Stumm, Atlanta, Ga., for defendant-appellant.

Robert D. Hall, Jr., John-Edward Alley, Tampa, Fla., John M. Gayner, III, Brunswick, Ga., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before AINSWORTH, VANCE and ANDERSON, Circuit Judges.

AINSWORTH, Circuit Judge:

Kaufman and Broad Home Systems, Inc. ("Company") filed this suit for damages against International Brotherhood of Firemen and Oilers ("Union") under section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185, alleging numerous violations of a collective bargaining agreement between them. After a nonjury trial, the district court held the Union liable to the Company in damages for two separate work stoppages, and the Union brought this appeal. We affirm the finding of liability as to the first work stoppage, but reverse as to the second work stoppage.

In October 1969 Kaufman and Broad, Inc., purchased the capital stock of Biltmore Mobile Homes, Inc., a mobile home manufacturing concern with facilities located in California, Georgia, and Idaho. Subsequently, the name of the company was changed to Kaufman and Broad Home Systems, Inc. Prior to its acquisition, Biltmore made two labor agreements with the International Brotherhood of Firemen and Oilers, the exclusive collective bargaining representative for the production and maintenance employees at Biltmore's Douglas, Georgia plant. The first agreement was entered into on November 9, 1966 and provided for a one-year duration. After conducting further negotiations during October 1967, the Company and Union entered into a new three-year agreement commencing November 13, 1967.

Both the 1966 and 1967 collective bargaining agreements contained a clause prohibiting either a strike by the Union or a lockout by the Company during the term of the agreement. The 1967 pact had a three-year term with a provision for year-to-year extensions. The duration clause of the contract, the interpretation of which is crucial to the disposition of this case, provided that:

Section 1. This Agreement shall become effective as of November 13, 1967, and shall remain in effect until November 12, 1970, and from year to year thereafter with the provision that should either party desire to terminate this Agreement or to modify any part thereof, it shall notify the other party in writing no less than sixty (60) nor more than seventy-five (75) days prior to the end of said three-year period or the end of any subsequent one-year period that the party giving such notice desires either to terminate the Agreement at the end of such period or to negotiate amendments or changes of the terms or provisions thereof.

The above language is similar to that used in the 1966 agreement, although there are differences in the text which the Company asserts to be highly relevant to the clause's meaning. ¹ There was no discussion of the The specific series of events giving rise to the present litigation are as follows. In January 1970 Union representatives met with the employees to discuss various grievances, and subsequently requested that the Company open the agreement for modifications. The Company refused relying on a provision in the agreement stating that matters not expressly covered were waived for the life of the agreement. In response to the Company's refusal to negotiate, the employees struck the plant on February 11, 1970 despite the no-strike provision in the contract. A Union representative arrived in Douglas on February 12, but the strike continued until February 16 when production was restored. It was undisputed that the collective bargaining agreement was in full force and effect during the February strike.

change in language during the negotiations conducted during October 1967.

By letter dated September 4, 1970, the Union formally and timely notified the Company of its desire to open the agreement for modifications. The notice provided as follows:

In accordance with the provisions of the current agreement between Local 283, International Brotherhood of Firemen and Oilers, AFL-CIO, and Biltmore Mobile Homes, Douglas, Georgia, we wish to open the contract for the purpose of changes and modifications.

We stand ready to meet you at our earliest mutual convenience. Please contact us to set up a meeting date.

Negotiations ensued with the Union seeking increased wages and fringe benefits as well as modifications in the no-strike clause. The Company proposed some deletions in the agreement, but otherwise sought no changes. No agreement was reached on a new contract, and on November 13, the first day after the initial three-year term had expired, a strike occurred. The Union was fully aware of the strike action and provided financial support to the employees. The strike continued for approximately eight weeks until January 6, 1971 when the Company announced that it was permanently closing the Douglas, Georgia facility.

The Company's suit alleged four separate violations of the no-strike provision contained in the 1967 agreement. ² The Union moved for partial summary judgment with respect to the first three incidents, contending that the Company's claims were barred by the four-year Georgia statute of limitations. The district judge denied the motion holding that the claims were timely and not barred under Georgia law. The district court, after a nonjury trial, found that the Union failed to take the steps necessary to end the February strike, and awarded damages of $2,563 to the Company against the Union. With respect to the November strike, the district court held that the Union's notice to modify was not sufficient to effect a termination of the agreement pursuant to the duration clause. Thus, the collective bargaining agreement was in full force and effect on November 13, 1970 and therefore the strike violated the no-strike provision of the agreement. Damages in favor of the Company were awarded against the Union in the amount of $241,674.

The February Strike

The primary issue with respect to the February strike is whether the district The Union also claims that there was insufficient evidence of its involvement in the February strike, and that the computation of damages was clearly erroneous. Both contentions are without merit. The Union admits that the agreement was in full force and effect during the February strike, and that it had a contractual obligation to restore production. The evidence showed that even after arriving in Douglas, the Union representatives did not immediately order the employees back to work, but instead attempted to conduct negotiations with the Company concerning grievances. On the damages issue, it is undisputed that the Company suffered lost production as a result of the illegal strike and that it was forced to expend funds for legal services. In light of the supporting documentary evidence produced, the district court's award was not clearly erroneous.

court applied the proper Georgia statute of limitations in holding that the Company's claims were timely asserted. It is conceded that under section 301 of the Labor-Management Act the timeliness of the suit is governed by state law. International Union (UAW) v. Hoosier Cardinal Corp.,383 U.S. 696, 86 S.Ct. 1107, 16 L.Ed.2d 192 (1966). The district court ruled that the six-year period provided in Georgia Code Ann. § 3-705 was applicable since it covered "actions upon promissory notes, bills of exchange, or other simple contracts in writing . . . ." The Union, however, asserts that Georgia Code Ann. § 3-711 should control with its four-year period of limitations for all claims "upon contracts express or implied, not hereinbefore provided for . . . ." Since the present suit was filed more than four years after the February 1970 strike, resolution of the limitations issue is dispositive of the claim as an initial matter. The district court, acknowledging that the question was one of first impression, found that section 3-711 was residual in nature, and that the more specific provisions of section 3-705 should control. The Union argues that a complex collective bargaining agreement cannot be considered a "simple contract," and that the six-year period is thus inapplicable. A Georgia federal district judge's interpretation of Georgia law is entitled to deference, and we agree with his determination of this issue.

The November Strike

In considering the November strike, the district court properly reasoned that the issue of liability turned upon interpretation of the duration clause. Initially, the district court ruled that the clause was ambiguous, and as a result heard extrinsic evidence of the parties' intent. The district court held that the agreement was not terminated by the Union's notice to modify. One reason given was the effect of certain language differences between the 1966 and 1967 agreements. The district court found that the changes made in the 1966 version created the ambiguity in the 1967 provision, and since the Union proposed the changes, the ambiguity should be construed against the Union as drafter. See Alcoa Steamship Co. v. United States, 338 U.S. 421, 424-25, 70 S.Ct. 190, 192, 94 L.Ed. 225 (1949); Chevron Oil Co. v. E. D. Walton Construction Co., 5 Cir., 1975, 517 F.2d 1119, 1122. The district court also based its decision on the general federal labor policy favoring the preservation of uninterrupted business operations and the avoidance of industrial strife. See Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 454, 77 S.Ct. 912, 916, 1 L.Ed.2d 972 (1957). Given this concern, the...