Bixby v. Wilson & Company

• Decision Date: 21 August 1961
• Docket Number: Civ. No. 701.
• Citation: 196 F. Supp. 889
• Court: U.S. District Court — Northern District of Iowa
• Parties: John L. BIXBY et al., Plaintiffs, v. WILSON & COMPANY, Inc., Defendant.

196 F. Supp. 889

John L. BIXBY et al., Plaintiffs, v. WILSON & COMPANY, Inc., Defendant.

Civ. No. 701.

United States District Court N. D. Iowa, Cedar Rapids Division.

August 21, 1961.

J. Newman Toomey and W. H. Bartley, Iowa City, Iowa, for plaintiffs.

V. Craven Shuttleworth and Charles A. Hastings, of Elliott, Shuttleworth & Ingersoll, Cedar Rapids, Iowa, for defendant.

GRAVEN, District Judge.

The plaintiffs in this case are numerous. They are all citizens and residents of the State of Iowa. The defendant is a corporation incorporated under the laws of the State of Delaware with its principal place of business in the State of Illinois. Each plaintiff seeks to recover the sum of $20,000 compensatory damages and $60,000 exemplary or punitive damages for breach of contract of employment. The action was originally instituted in the District Court of Iowa in and for Johnson County. Johnson County is in the Southern District of Iowa. The defendant removed the action to the United States District Court for the Southern District of Iowa. By agreement of the parties, the action was transferred to this District. The defendant filed a motion to dismiss. The Court suggested that the motion be treated by the Court as a motion for summary judgment and the parties agreed that it be so treated and it is so treated. Subsequent to the filing of the motion, the plaintiffs amended their complaint. It was agreed by the parties that the defendant's motion should be applicable to the amended complaint.

The plaintiffs assert that the facts in the case are as stated by them in their complaint and in their resistance. In their resistance they outlined at some length the evidence they would present at the trial in support of their claims. For the purpose of passing on the present motion, the Court will assume that the facts are as stated by the plaintiffs and that the evidence outlined by them is true and correct.

The defendant is engaged in the processing of meat products. It has a packing plant at Cedar Rapids, Iowa. It also has packing plants in the States of Minnesota, Nebraska, Kansas, Tennessee, and California. On or about September 19, 1959, many of the defendant's employees at its Cedar Rapids plant went on a strike. The strikers were members of the United Packinghouse Workers of America. After the strike commenced, the defendant proceeded to secure employees to take the places of those on strike. This was done by means of newspaper advertisements, radio and television broadcasts, and by personal interviews. In response thereto, the plaintiffs sought and obtained employment at the defendant's Cedar Rapids Plant. When employed they were informed by those acting for the defendant that their employment would be permanent. Some of the plaintiffs did not reside in Cedar Rapids and they made inquiry of those acting for the defendant as to the matter of moving their families to Cedar Rapids. Some made inquiry of those acting for the defendant as to the matter of purchasing a home in Cedar Rapids. Some of the plaintiffs were farm tenants. They made inquiry of those acting for the defendant as to giving up their farm leases. In response to their inquiries, those acting for the defendant assured the inquirers that their employment would be permanent. Those acting for the defendant called the plaintiffs together on several occasions and stated to them: "You may have been told that you are going to be laid off when the strike is ended. We are here to tell you you are going to be kept on regardless." In reliance upon the promise of the defendant of "permanent employment," some of the plaintiffs gave up other jobs; some moved to Cedar Rapids at heavy expense and others gave up farm leases.

On February 16, 1960, the defendant and the United Packinghouse Workers of America entered into what is known as an "Interim Agreement" for the settlement of the strike. Part "B" of the agreement is entitled "Arbitration Agreement." That agreement provided, in part, as follows:

"Whereas, the parties hereto have an existing controversy between them relating to the status of strikers and of employees hired as replacements since the strike by the union against the company; and

"Whereas, the company position is that:

"`All striking employees, except those who have engaged in unlawful or unprotected activities, shall be:

"`a. Returned to work in line with length of service and need in their former department to the extent that jobs are available at the time of settlement of the strike. Employees returned to work within two full calendar weeks after the settlement date of this strike shall be considered to be in this category; or

"`b. Placed on a preferential hiring list for a period of two years to be rehired in line with length of service and need in their former department. Such employees, when and if recalled for regular employment, will retain their previous continuous service rights and credits as of the date they went on strike for all purposes except seniority. For employees rehired under the provisions of this paragraph, seniority will date from the date such employee is rehired;' and

"Whereas, the union position is that:

"`All employees should be returned to work without discrimination and in accordance with their seniority rights, and with all rights restored.'"

The agreement provided for three arbitrators: one appointed by the Company, one appointed by the Union, and one selected by those two arbitrators. The agreement further provided that in the event those two arbitrators were unable to agree on a third arbitrator, the third one was to be appointed by the Chief Judge of the United States District Court for the Northern District of Illinois from among the Judges of that District.

The agreement further provided, in part:

"2. The Board of Arbitration shall have the power to decide, in the light of all the equities and all facts and considerations deemed by the Board to be relevant, the fair and proper disposition of all issues in respect to all employees affected by the controversy between the parties as above described * * *."

The arbitrators named by the Company and the Union were unable to agree upon a third arbitrator and, therefore, the Chief Judge of the United States District Court for the Northern District of Illinois designated The Honorable Joseph Samuel Perry, a Judge of that Court, as the third arbitrator.

On March 10, 1960, the Board of Arbitration rendered its decision. Two of the arbitrators, the arbitrator appointed by the Union and Judge Perry, concurred in the decision, the substance of which was that those of the defendant's employees who went on strike would have seniority over those employed by the defendant during the strike. The arbitrator appointed by the Company refused to concur in the award. He stated in a special statement that the effect of the award was to nullify the assurances given by the defendant to those who were employed during the strike.

On March 11, 1960, following the decision by the Board of Arbitration and pursuant to that decision, the defendant terminated the employment of the plaintiffs. The plaintiffs then instituted this action. They charge that the defendant wrongfully breached their contracts of employment.

All of the plaintiffs seek to recover damages (1) "By loss of future earnings from the Defendant"; (2) "By loss of seniority, promotions, retirement, vacations, sick leave, insurance protection and other benefits of employment at Defendant's plant." Some of the plaintiffs seek to recover as additional damages the expenses incurred by them in moving to Cedar Rapids. Others seek to recover as additional damages the damages suffered by them in giving up other employment and farm leases. In the plaintiffs' complaint they also charge the defendant with conspiracy. However, it is the well-settled Iowa law that a conspiracy does not give rise to a civil action, unless something is done pursuant to it which, without the conspiracy, would create a right of action. Shannon v. Gaar, 1942, 233 Iowa 38, 6 N.W.2d 304, 307. If the defendant in terminating the employment of the plaintiffs merely did what it had a legal right to do, it would not be liable to plaintiffs. Shannon v. Gaar, supra.

It is the contention of the defendant that the allegations in the complaint of the plaintiffs and the facts stated by them in their resistance show that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law under Rule 56(c) of the Federal Rules of Civil Procedure, 28 U.S.C.A.

In the present case the plaintiffs, as above noted, seek to recover damages for a breach of a contract of employment. The right of a plaintiff to damages is dependent on the contractual concepts of the state whose law is applicable. Tinnon v. Missouri Pacific R. Co., 8 Cir., 1960, 282 F.2d 773, 775. In the present case jurisdiction is based upon diversity of citizenship and the applicable law is that as declared or indicated by the Iowa Supreme Court. Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487.

In the case of Hablas v. Armour and Co., 8 Cir., 1959, 270 F.2d 71, the plaintiff sought to recover damages for the alleged wrongful termination of his contract of employment. The Court stated (270 F.2d at page 78):

"Plaintiff, to prevail, must plead and prove that defendant in terminating his employment has violated some duty defendant owed to plaintiff. Plaintiff's pleading is that defendant has discharged plaintiff without having good cause so to do. We look to the employment arrangements which existed to determine plaintiff's right to continued employment."

In order for a plaintiff to recover damages from a defendant for breach of contract, the situation must be such that a contract came into existence under which the defendant became bound to fulfill a definite obligation or definite obligations to the plaintiff and that there was a failure...