Abbington v. Dayton Malleable, Inc.

• Decision Date: 15 March 1983
• Docket Number: C-2-81-713.,No. C-2-80-552,C-2-80-552
• Citation: 561 F. Supp. 1290
• Parties: Gilbert ABBINGTON, et al., Plaintiffs, v. DAYTON MALLEABLE, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

561 F. Supp. 1290

Gilbert ABBINGTON, et al., Plaintiffs, v. DAYTON MALLEABLE, INC., et al., Defendants.

Nos. C-2-80-552, C-2-81-713.

United States District Court, S.D. Ohio, E.D.

March 15, 1983.

Richard O. Wuerth, Bernard Bernard, Columbus, Ohio, Max Brittain, Chicago, Ill., Robert Karl Handelman, I.W. Barkan, Columbus, Ohio, for plaintiffs.

Robert J. Brown, Armistead W. Gilliam, Dayton, Ohio, Donald A. Antrim, Stewart R. Jaffy, Columbus, Ohio, Michael H. Gottesman, Washington, D.C., Carl B. Frankel, Pittsburgh, Pa., for defendants.

MEMORANDUM AND ORDER

DUNCAN, District Judge.

This matter is before the Court on the motions of defendant Dayton Malleable and defendant United Steelworkers of America for summary judgment pursuant to Fed.R. Civ.P. 56. Plaintiffs¹ filed a five-count complaint in this lawsuit asserting three claims against Dayton Malleable, Inc. (DMI) and asserting the remaining claims against United Steelworkers of America (union). Plaintiffs have brought this lawsuit pursuant to Section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, alleging that defendant DMI violated the collective bargaining agreement between the union and DMI when it closed its Columbus foundry. In addition, plaintiffs allege two pendent state claims against DMI. First, plaintiffs allege that defendant DMI made misrepresentations to the plaintiffs and fraudulently induced them to agree to the collective bargaining agreement at issue in this case. Second, plaintiffs allege that defendants DMI and the union "conspired ... to defraud and deceive the plaintiffs."

Plaintiffs' complaint also contains allegations against the union. Plaintiffs initially claim that the union breached its duty of fair representation by, among other things, misrepresenting the facts and circumstances surrounding the execution of the amendments to the collective bargaining agreement; by failing to take action against DMI for closing the Columbus foundry; and by negotiating a plant closing agreement that did not protect the interests of the members of Local 2654. In addition, plaintiffs allege that the union breached its contract with them by failing to protect their interests at all times relevant to this lawsuit. Finally, as has already been noted, plaintiffs allege that defendant union conspired with defendant DMI "to defraud and deceive the plaintiffs."

I. Statement of Facts

Both defendant DMI and defendant Steelworkers have filed motions for summary judgment claiming that based on the undisputed facts of this case, they are entitled to judgment as a matter of law. Based on the memoranda and supporting documents of the parties, as well as various statements of counsel during oral argument, a statement of the undisputed facts of this case follows.

DMI is in the business of manufacturing rough commercial castings for major equipment manufacturing companies in the United States. The Columbus Division of DMI (the foundry) produced malleable iron primarily for manufacturers of trucks and farm equipment. DMI and the union were parties to a collective bargaining agreement effective from December 26, 1977 until December 26, 1980, which covered the Foundry and DMI's Ironton Division.

During the three-year period ending June 1979, the Foundry lost approximately $13 million. As a result of these financial losses, DMI informed a union representative,² as was required by the 1977 collective bargaining agreement, that DMI was planning on closing the Columbus plant. Thereafter, the company postponed the plant closing until March or April of 1979. At that time, a new president of DMI, Mr. Ladehoff, was selected, and another meeting between representatives of the company and union was held. Once again the financial difficulties of the company were discussed, as well as the declining market for the malleable iron products produced at the Columbus plant.³ The union's research department confirmed these losses, and it is undisputed that DMI was suffering severe financial trouble during the period of time in question.⁴

A third meeting was held between management and union representatives at which time management made clear that the closing of the Columbus plant was inevitable unless certain changes were made. Among the changes proposed by the company were the following modifications of the collective bargaining agreement:

1. A twelve-month extension, until December 26, 1981, of the existing collective bargaining agreement as it applied to the Columbus plant;

2. A separation of the employees at the Columbus plant from employees at the Ironton plant into two bargaining units under separate agreements;

3. A suspension of cost-of-living adjustments after June 1979 and a wage freeze for the duration of the contract; and

4. Union and management cooperation in devising new production methods and in setting equitable incentive rates.

The management of DMI informed the union that if these concessions were made, DMI would make every effort to keep the Columbus plant open including making efforts to modernize the Foundry.⁵ The union believed that prior to making any decision on these matters, the employees were entitled to be consulted.⁶

Therefore, management and union representatives agreed to hold two meetings in a tent to be erected on a lot next to the plant. At the June 8, 1979 tent meeting, employees were informed by DMI officials of the company's financial plight.⁷ At that time, Mr. Ladehoff, DMI's president, informed employees that DMI had only two options — closing the plant or attempting to convert and modernize the plant. Ladehoff went on to explain that the later option would have to be approved by the board of directors. Thereafter, Ladehoff outlined the proposed modifications to the collective bargaining agreement which he considered "critical to convince our Board of Directors to allow us to invest 8 to 10 million new dollars into this plant."

At this tent meeting, a union representative also spoke to the employees. The proposed modifications to the collective bargaining agreement were reviewed and the union representative recommended that the concessions be approved. Thereafter, a question and answer session was held, and management gave employees an opportunity to consult with their union representatives privately.

The following day, Saturday, June 9, 1979, a secret ballot vote was conducted. Approximately 90% of the local union's membership turned out to vote. DMI's proposed modifications of the collective bargaining agreement were approved by a vote of 426 to 19. Thereafter, company and union officials met in an attempt to reduce these approved modifications to writing. After a series of meetings, the parties' differences were resolved and the modifications were formalized in a written memorandum of agreement.⁸ That memorandum of agreement expressly embodied the modifications to the collective bargaining agreement which had been approved the day following the tent meeting.⁹

Despite the poor performance of the Foundry in July 1979, in August 1979 DMI's Board of Directors voted an initial investment of $5 million to buy new equipment needed for the conversion to nodular iron production. Various press releases and letters from management confirmed the Board's approval of this initial expenditure for plant modernization.¹⁰

In the fall of 1979, the financial condition of DMI continued to deteriorate. Nonetheless, it appears from the evidence that attempts to save the Columbus Foundry were still being made. In October of 1979 new equipment necessary for the conversion was purchased and installed. During this time discussion between company and union representatives concerning the effects of modernization were ongoing.¹¹

By December of 1979 financial losses to DMI were so great that the company was forced to shut down for a period of time and lay off many employees. In January 1980 and February 1980 the company continued to experience severe financial problems. In addition, the company could foresee little relief in the future since marketing forecasts suggested a continued decrease in demand for both malleable and nodular iron.

Finally, the Board of Directors of DMI concluded that the Columbus Foundry should be closed. On March 13, 1980, DMI representatives notified union officials that the Board of Directors had recommended that the Columbus Foundry be closed permanently.¹² On March 20, 1980, the Board of DMI voted to shut down the Columbus plant as of May 31, 1980. The following day, the Foundry's general manager sent a letter to each employee notifying him or her of the decision to close the Foundry.¹³

Thereafter in April 1980, the union and DMI met to negotiate a plant closing agreement. The plant closing agreement provided for severance pay in amounts equal to vacation entitlements and guaranteed payment of pension benefit levels provided for in the pension agreement. Thereafter, the union met with employees on several occasions to explain the terms of the plant closing agreement.¹⁴

Thereafter in June 1980, plaintiffs commenced this action against DMI and the union. Both DMI and the union have filed motions for summary judgment. The Court will address the motions of each defendant separately.

II. Motion of Defendant DMI for Summary Judgment

A. Breach of the Collective Bargaining Agreement

Plaintiffs' first claim under Section 301 of the Labor Management Relations Act is that DMI "breached the amended collective bargaining agreement by shutting the Columbus Plant before December 26, 1981."

It is clear, however, that neither the collective bargaining agreement dated December 26, 1977, nor the Memorandum of Agreement required DMI to keep the Columbus Foundry open.¹⁵ The seminal case in this area is the Sixth Circuit's decision in Fraser v. Magic Chef-Food Giant Markets, Inc., 324 F.2d 853 (1963). The facts of the Magic Chef case parallel the facts of this case very closely. In Magic Chef the company and union entered...