Sidney Wanzer & Sons, Inc. v. Milk Drivers U., Local 753

• Decision Date: 03 February 1966
• Docket Number: No. 65 C 1096.,65 C 1096.
• Citation: 249 F. Supp. 664
• Parties: SIDNEY WANZER & SONS, INC., a corporation. Plaintiff, v. MILK DRIVERS UNION, LOCAL 753, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS OF AMERICA., etc., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

249 F. Supp. 664

SIDNEY WANZER & SONS, INC., a corporation. Plaintiff, v. MILK DRIVERS UNION, LOCAL 753, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN & HELPERS OF AMERICA., etc., et al., Defendants.

No. 65 C 1096.

United States District Court N. D. Illinois, E. D.

February 3, 1966.

Edward R. Lev and Burton E. Glazov, Mayer, Friedlich, Spiess, Tierney, Brown & Platt, Chicago, Ill., for plaintiff.

William T. Kirby and Alan O. Amos, Hubachek, Kelly, Miller, Rauch & Kirby, Chicago, Ill., for defendants.

DECKER, District Judge.

Plaintiff dairy company, Sidney Wanzer & Sons, Inc. ("Wanzer") brings this suit under § 301 of the Labor Management Relations Act (29 U.S.C. § 185) against Milk Drivers' Union, Local 753 ("Local 753") and two officers of the Local. The suit grows out of an alleged demand by Local 753 for overtime wages in accordance with the wage scale of Article 41 of the parties' Collective Bargaining Agreement ("Agreement"). Wanzer has denied its liability for these overtime wages. The complaint alleges that Local 753 has refused to arbitrate this dispute under the Article 6 arbitration clause in the Agreement, and that Local 753 has attempted to compel payment of overtime wages by engaging in periodic work stoppages in violation of Article 6.

Wanzer seeks specific performance of the arbitration clause, and compensatory and exemplary damages for the alleged breaches of the Agreement. Local 753 moves to dismiss on the ground that this dispute is not arbitrable under the terms of Article 6, and that exemplary damages cannot be awarded under § 301. The individual defendants move to dismiss on the ground that they cannot be sued under § 301. The individual defendants' motion to dismiss is denied; Local 753's motion to dismiss is denied; treating the motion to dismiss on the ground that exemplary damages cannot be awarded under § 301 as a motion to strike portions of the complaint, Local 753's motion to strike is denied.

I.

The first question is whether this dispute is arbitrable under the terms of the Agreement. Article 6 reads as follows:

"ARTICLE 6. Any matter in dispute, between the Union and Employer excepting wages and hours as set forth in Articles 4, 37 and 41 and questions of jurisdictional matters, as decided by Teamsters Joint Council No. 25, which cannot be settled, shall be referred by either party to an Industry Labor Committee consisting of three 3 representatives of Employers, parties to this Agreement, and three 3 representatives of the Union. It shall be the duty of this Committee to hear and dispose of all complaints raised by either party to this Agreement concerning violations thereof that cannot be settled amicably between the parties. If this Committee is equally divided on any such complaint, the Chief Justice of the Municipal Court of Chicago or his nominee shall be called in to act as the impartial member of said Committee, and his decision shall be final. No action shall be taken by either party to the Agreement pending the decision of this Committee."

While Local 753 argues that this dispute concerns "wages and hours" and is therefore within the exception to Article 6, Wanzer claims that the dispute turns on Article 20 of the Agreement, the "most favored nation" clause, which reads as follows:

"ARTICLE 20. Should the Union hereafter enter into any agreement with any milk dealer upon terms and conditions more advantageous to such dealer than the terms and conditions of this Agreement, or should the Union sanction a course of conduct by any milk dealer who has signed this form of agreement enabling him to operate under more advantageous terms and conditions than those provided for in this Agreement, the Employer shall be entitled to adopt such terms and conditions in lieu of those contained in this Agreement."

Matters within the scope of Article 20 are, presumably, arbitrable. The question is whether this is a "wages and hours" dispute, or an Article 20 dispute.

Wanzer concedes that it would have to pay overtime wages under normal circumstances. Relief from this obligation is claimed solely on the ground that Article 20 permits Wanzer to avoid overtime payments when Local 753 permits Wanzer's competitors to avoid such payments. The central issue in this dispute is whether Article 20 excuses Wanzer from overtime payments under the circumstances of this case. Once the Article 20 issue is settled, the entire dispute is settled. Overtime wages may be the object of the dispute, but they are not its subject. This is an Article 20 dispute, and therefore within the scope of Article 6.

The motion to dismiss on the ground that the dispute is not arbitrable is denied.

II.

The individual defendants, officers of Local 753, move to dismiss as to them on the ground that individuals cannot be sued under § 301. In support of this argument, Local 753 points out that the language of the statute and its legislative history suggest that the primary focus of Congress was on suits involving labor organizations, not individuals.¹ The legislative history is conveniently reviewed in Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957).

The language of the statute was the basis for a holding by the Seventh Circuit that an individual could not sue under § 301. United Protective Workers of America v. Ford Motor Co., 194 F.2d 997 (7th Cir. 1952). In Red Ball Motor Freight, Inc. v. General Drivers Local 961, 202 F.Supp. 904 (D.Colo.1962), an employer's suit to enforce an arbitration clause, the District Court said:

"This legislative background shows plainly that Congress intended to create a remedy applicable to unions. It dispels any possible doubt as to whether it can be read so as to authorize a remedy by or against an individual." Id. at 906.

The conclusions of both United Protective Workers and Red Ball were undermined by the Supreme Court in Smith v. Evening News Association, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962). The Court held that individuals could sue under § 301 to enforce "individual" rights derived from collective bargaining agreements.² However, Smith says nothing about suits against individuals.

Atkinson v. Sinclair Refining Co., 370 U.S. 238, 82 S.Ct. 1318, 8 L.Ed.2d 462 (1962) does. Defendants cite Atkinson in support of their motion; the effect of the case is quite the opposite. Atkinson was a suit by an employer against a union and some individual union members for damages for breach of a "no-strike" clause. The Court held that the individual defendants could not be held liable:

"When Congress passed § 301, it declared its view that only the union was to be made to respond for union wrongs, and that the union members were not to be subject to levy." Id. at 247-248, 82 S.Ct. at 1324.

I reached the same conclusion in Gilmour v. Wood, Wire and Metal Lathers, 223 F.Supp. 236 (N.D.Ill.1963), relying on Atkinson. However, these results are based on the clear indications of Congressional intent found in § 301(b):

"Any money judgment against a labor organization in a district court of the United States shall be enforceable only against the organization as an entity and against its assets, and shall not be enforceable against any individual member or his assets."

The statute suggests that a suit for damages against individual union members for union breaches of contract cannot be successful under § 301.

Wanzer does not seek damages against the individual defendants. Consequently, the bar of § 301(b) and Atkinson is not applicable. Furthermore, the Court explicitly held that the suit against individuals in Atkinson was a § 301 suit:

"When a union breach of contract is alleged, that the plaintiff seeks to hold the agents liable instead of the principal does not bring the action outside the scope of § 301." 370 U.S. at 247, 82 S.Ct. at 1324.

At this point in the opinion, the Court added, in footnote 6:

"Our holding, however, is that the suit is a § 301 suit; whether there is a claim upon which relief can be granted is a separate question."³

Where relief other than damages is sought, the suit is likewise a § 301 suit. The "separate question" of whether there is a claim upon which relief can be granted can be answered affirmatively where, unlike in Atkinson, § 301(b) is not a barrier.

The lesson is clear. "Section 301 has been applied * * * to suits against individual union members for violation of a no-strike clause contained in a collective bargaining agreement. Atkinson v. Sinclair Refining Co." Smith v. Evening News Association, 371 U.S. 195, 199-200, 83 S.Ct. 267, 270, 9 L.Ed.2d 246 (1962). Section 301 can be applied similarly here.

The individual defendants further argue that even if they can be sued under § 301, plaintiff has otherwise failed to state a claim against them on which relief can be granted. While under normal circumstances in suits of this type relief against individuals is either unnecessary or inappropriate, I cannot say at this early stage of litigation that such relief could not be granted here. Since retention of these defendants will cause neither substantial added expense nor inconvenience, there is no harm in denying their motion to dismiss at this time.

The motion to dismiss of the individual defendants is denied.

III.

Plaintiff seeks exemplary damages from Local 753 as a deterrent to future breaches of the Agreement; Local 753 argues that such damages can never be awarded under § 301. Since the statute is silent on the question — it neither bars nor allows exemplary damages explicitly — the courts must determine the intent of Congress.

The statute is to be applied to obtain industrial peace. This controlling principle was set forth in Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 912, 1 L.Ed.2d 972 (1957), in which the Supreme Court reviewed the legislative history of § 301 and said:

"Thus collective bargaining contracts were made `equally

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