Bartenders and Culinary Workers Union, Local 340 v. Howard Johnson Co.

• Decision Date: 30 April 1976
• Docket Number: Nos. 71-2854,71-2855,s. 71-2854
• Citation: 535 F.2d 1160
• Parties: 92 L.R.R.M. (BNA) 2525, 78 Lab.Cas. P 11,426 BARTENDERS AND CULINARY WORKERS UNION, LOCAL 340, Plaintiff-Appellant, v. HOWARD JOHNSON COMPANY et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1160

535 F.2d 1160

92 L.R.R.M. (BNA) 2525, 78 Lab.Cas. P 11,426

BARTENDERS AND CULINARY WORKERS UNION, LOCAL 340, Plaintiff-Appellant, v. HOWARD JOHNSON COMPANY et al., Defendants-Appellees.

Nos. 71-2854, 71-2855.

United States Court of Appeals Ninth Circuit.

April 30, 1976.

Rehearing Denied May 20, 1976.

Donald C. Carroll (argued), San Francisco, Cal., for plaintiff-appellant.

Nathan R. Berke (argued), San Francisco, Cal., for defendants-appellees.

OPINION

Before BROWNING, WALLACE and SNEED, Circuit Judges.

BROWNING, Circuit Judge:

The Union appeals from the dismissal of its action under section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, for specific performance and damages for breach of a collective bargaining agreement by Howard Johnson Company.

The Union and the San Mateo County Restaurant Hotel Owners Association, acting on behalf of its member employers, entered into the collective bargaining agreement on January 1, 1970. Among the members of the Association was the Pacific Gulf Development Corporation, which owned and operated the Howard Johnson's Motor Lodge in Redwood City, California, pursuant to a license agreement with the appellee Company. The collective bargaining agreement contained a "successorship clause," providing that during the life of the agreement all of its terms would be "binding upon the parties hereto and their successors, transferees, lessees, or assigns." The agreement was effective for a period of four years, until December 31, 1973.

In the fall of 1970 the Company and Pacific Gulf agreed to cancel the license arrangement for Motor Lodge. The Company subleased the lodge and purchased the furniture, fixtures, and equipment from Pacific Gulf and assumed control of operations effective November 1. The Company made no change in employees or supervisory personnel (except the manager), and continued to render the same services from the same facilities under the same name. The Company refused to recognize the union or to be bound by the collective bargaining agreement. The Union filed an unfair labor practice charge with the National Labor Relations Board. ¹

The Union also filed this action for specific performance of the collective bargaining agreement and for damages as a result of the Company's refusal to abide by the terms of the agreement. The Company moved to dismiss on three grounds: (1) the case was within the exclusive jurisdiction of the NLRB; (2) section 301 jurisdiction exists only when there is an undisputed contract between the parties; and (3) a court may not impose the substantive terms of a collective bargaining agreement upon a successor employer who has not assumed the agreement and was not a party to it. The district court granted the motion to dismiss without comment. ² We affirm. ³

The first two grounds are frivolous. District court jurisdiction to entertain a suit under section 301 to enforce a collective bargaining agreement is not preempted by the grant of jurisdiction over unfair labor practices to the Board. Lodge 1327, Machinists & Aerospace Workers v. Fraser & Johnston Co., 454 F.2d 88, 90-91 (9th Cir. 1971). Nor does the court lack jurisdiction under section 301 simply because the Company contends that it is not bound by the collective bargaining contract. See John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964). Orange Belt District Council of Painters v. W. E. Stubblefield & Sons, 437 F.2d 754 (9th Cir. 1971), is not in point. The court did not question its section 301 jurisdiction, but simply concluded, as a matter of contract interpretation, that the employer had not agreed to be bound by a separate agreement entered into between the Union and others.

The third ground, however, requires affirmance. NLRB v. Burns International Security Service, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), held that the Board may not order a successor employer to abide by the substantive provisions of a collective bargaining contract negotiated by its predecessor but not agreed to or assumed by the successor employer. Howard Johnson Co. v. Hotel Employees, 417 U.S. 249, 94 S.Ct. 2236, 41 L.Ed.2d 46 (1974), held that the fundamental policies outlined in Burns cannot be disregarded in a court proceeding under section 301. Courts and secondary authorities alike are virtually unanimous in the view that a court may not impose the substantive provisions of a collective bargaining contract, as distinguished from the obligation to arbitrate, upon a nonconsenting successor employer. See, e.g., Printing Specialties & Paper Products Union No. 477 v. Pride Papers Aaronson Bros. Paper Corp., 445 F.2d 361, 364 (2d Cir. 1971); Bath Iron Works Corp. v. Bath Marine Draftsmen's Ass'n, 393 F.2d 407, 410 n. 3 (1st Cir. 1968); United Steelworkers of America v. Reliance Universal, Inc., 335 F.2d 891, 894-95 (3d Cir. 1964); Retail Clerks Local 1552 v. Lynn Drug Co., 299 F.Supp. 1036, 1040-42 (S.D.Ohio 1969); Retail Store Employees Union v. Lane's of Findlay, Inc.,260 F.Supp. 665, 656-58 (N.D.Ohio 1966); Goldberg, The Labor Law Obligations of a Successor Employer, 63 Nw.L.Rev. 735, 773-75 (1969); Note, The Successor Employer's Duty to Arbitrate: A Reconsideration of John Wiley & Sons, Inc. v. Livingston, 82 Harv.L.Rev. 418, 422-28 (1968); Note, The Contractual Obligations of a Successor Employer under the Collective Bargaining Agreement of a Predecessor, 113 U.Pa.L.Rev. 914, 923-28 (1965). See also Swerdlow, Freedom of Contract in Labor Law : Burns, H. K. Porter, and Section 8(d), 51 Texas L.Rev. 1, 15 (1972); Note, Recent Developments in Labor Law of Successorship, 26 Syracuse L.Rev. 798 n. 4 (1975); Casenote, 51 Wash.L.Rev. 470 (1976); Contra, Feller, Status of the Collective Bargaining Agreement under Wiley v. Livingston: A Union Counsel's View in Proceedings of N.Y.U. 18th Annual Conference on Labor 277, 283 (T. Christensen ed. 1966).

The Union rests upon John Wiley & Sons, arguing that it remains good law despite the subsequent decisions in Burns International Security Service and Howard Johnson Co., and on the facts of this case, requires the court to impose the full collective bargaining agreement upon the Company. We need not decide whether Wiley survived Burns and Howard Johnson ; nor need we decide whether, if Wiley survived, it is distinguishable from the case before us. As the Supreme Court noted in Burns (406 U.S. at 286, 92 S.Ct. at 1581, 32 L.Ed.2d at 72), Wiley did not impose the full collective bargaining agreement upon the successor employer. On the contrary, the successor was compelled only to arbitrate. Whether any of the substantive terms of the agreement were binding upon the successor was left to the arbitrator to determine. 376 U.S. at 555, 84 S.Ct. at 917, 11 L.Ed.2d at 907. ⁴

The Union argues that an order requiring the successor to arbitrate presupposes a collective bargaining agreement binding upon the successor, both because the arbitration clause of the agreement is the source of the obligation to arbitrate (John Wiley & Sons, Inc. v. Livingston, supra, 376 U.S. at 547, 84 S.Ct. at 913, 11 L.Ed.2d at 903), and because an arbitrator is confined to interpreting and applying the agreement. United Steelworkers of America v. Warrior & Gulf Navigation Co., 363 U.S. 574, 581-82, 80 S.Ct. 1347, 1352, 4 L.Ed.2d 1409, 1417 (1960); United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 597, 80 S.Ct. 1358, 1361, 4 L.Ed.2d 1424, 1428 (1960). There is no incisive response, in purely conceptual terms, to this argument. The rule of Wiley that in some circumstances a duty to arbitrate may be imposed upon a successor-employer is an "accommodation between the legislative endorsement of freedom of contract and the judicial preference for peaceful arbitral settlement of labor disputes." NLRB v. Burns International Security Service, Inc., supra, 406 U.S. at 286, 92 S.Ct. at 1581, 32 L.Ed.2d at 72. The consensual element survives in the requirement that there be a contract "reasonably related to the party sought to be obligated." John Wiley & Sons, Inc. v. Livingston, supra, 376 U.S. at 550, 84 S.Ct. at 915, 11 L.Ed.2d at 905. This entails a "substantial continuity of identity in the business enterprise before and after a change (which) would make a duty to arbitrate something . . . reasonably to be found in the particular bargaining agreement and the acts of the parties involved," rather than something "imposed from without." Id. 376 U.S. at 551, 84 S.Ct. at 915, 11 L.Ed.2d at 905. This much being present, a meeting of the minds in a strictly contractual sense is foregone in furtherance of the public policy favoring industrial peace and in recognition of the efficacy of arbitration as a means of achieving it. It is precisely the superiority of arbitration over administrative and judicial remedies as a means of furthering the interests in peaceful settlement of disputes ⁵ that justifies a moderation of the insistence upon strict freedom of contract. Cf. Boeing Co. v. Machinists & Aerospace Workers, 504 F.2d 307, 322 & n. 29 (5th Cir. 1974); United Steelworkers of America v. United States Gypsum Co., 492 F.2d 713, 726-27, affirmed on rehearing, 498 F.2d 334 (5th Cir. 1974); United Steelworkers of America v. Reliance Universal, Inc., supra, 335 F.2d at 895. ⁶

The Union makes it unequivocally clear that it does not seek arbitration. "Only the imposition of the collective bargaining agreement for its term," the Union states, "will give the employees of Howard Johnson the rights and benefits to which they are entitled." The Union contends that the employer may not claim that arbitration under the contract is the only available remedy because the Company did not ask for arbitration but instead repudiated the contract. But cf. Drake Bakeries, Inc. v. Local 50, Bakery Workers, 370 U.S. 254, 261-64, 82 S.Ct. 1346, 1350, 8 L.Ed.2d 474, 479 (1962). However, the problem is not failure...