Bobbie Brooks, Inc. v. International Ladies' Garment Workers Union

• Decision Date: 29 December 1987
• Docket Number: No. 86-3896,86-3896
• Citation: 835 F.2d 1164
• Parties: 127 L.R.R.M. (BNA) 2216, 108 Lab.Cas. P 10,315 BOBBIE BROOKS, INC., Plaintiff-Appellant, v. INTERNATIONAL LADIES' GARMENT WORKERS UNION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1164

835 F.2d 1164

127 L.R.R.M. (BNA) 2216, 108 Lab.Cas. P 10,315

BOBBIE BROOKS, INC., Plaintiff-Appellant, v. INTERNATIONAL LADIES' GARMENT WORKERS UNION, Defendant-Appellee.

No. 86-3896.

United States Court of Appeals Sixth Circuit.

Argued Oct. 6, 1987.

Decided Dec. 29, 1987.

Robert T. Rosenfeld (argued), Mary G. Balaza, Walter, Haverfield, Buescher & Chockley, Cleveland, Ohio, for plaintiff-appellant.

Melvin S. Schwarzwald (argued), David M. Fusco, Schwarzwald, Robiner, Wolf & Rock, Cleveland, Ohio, Max Zimny, New York City, for defendant-appellee.

Before LIVELY, Chief Judge, KEITH and MILBURN, Circuit Judges.

KEITH, Circuit Judge.

Bobbie Brooks, Inc. ("Company") brought this action in the Cuyahoga County Court of Common Pleas on June 27, 1986, seeking a declaratory judgment that no collective bargaining agreement existed between it and the International Ladies Garment Workers' Union ("Union"), and that it should not be required to arbitrate a grievance initiated by the Union concerning severance pay allegedly owed to employees of the Company. On July 9, 1986, the Union removed the action to the United States District Court for the Northern District of Ohio, Eastern Division, and counterclaimed against the Company, requesting a declaratory judgment that a collective bargaining agreement did exist, and seeking an order compelling arbitration.

On August 29, 1986, the district court issued a memorandum and order declaring that a collective bargaining agreement existed between the parties and ordering the parties to proceed to arbitration. ¹ For the reasons set forth below, we AFFIRM the judgment of the Honorable Ann Aldrich, United States District Court for the Northern District of Ohio.

I.

The Company is a manufacturer of women's apparel in the "junior" clothing market. At one time, the Company had numerous facilities throughout the United States and employed as many as 6,000 workers. During its best years, the Company's sales reached $200 million. During the 1970's, the Company experienced difficult financial times and in 1982, it filed for bankruptcy under Chapter 11. By 1985, the number of production and distribution facilities within the Company still under union contract had dwindled to three: sewing plants in Coosa River, Alabama and Ballaire, Ohio; and a distribution center in Cleveland, Ohio.

The Union has represented the Company's factory and distribution center employees since 1939. Since 1961, the collective bargaining agreements between the Union and the Company have consisted of a Master Agreement, Supplemental Agreements containing terms applicable to individual plants, and side letter agreements modifying the Master Agreement.

Restrictions on non-union production by the Company have consistently been included in the agreements between the parties. In their 1982-1985 agreement, these restrictions were contained in Article thirty-three of the Master Agreement. Article thirty-three limited domestic production by non-union workers, as well as imports of goods produced or partially produced abroad. Penalties for violation of the non-union production provisions were contained in Article thirty-five of the 1982-1985 Master Agreement, which provided for liquidated damages. Also, paragraph five of Article thirty-three provided for damages of one and one-half percent of the first cost of imported goods exceeding twelve and one-half percent of the Company's total annual sales volume.

These provisions of the 1982-1985 agreement, however, were modified by a side letter agreement dated November 29, 1983 effective during the 1983, 1984 and 1985 calendar years. This side letter agreement exempted certain types of garments from Article thirty-three, set numerical goals for production in Company facilities and created formulae for liquidated damages which substantially reduced the amount of liquidated damages specified in the Master Agreement. ²

The 1982 collective bargaining agreement between the parties terminated on June 30, 1985. Negotiations for a new contract began in early June, 1985 in New York. ³ The Union proposed that restrictions on the side letter not be renewed and that non-union production be prohibited entirely. The Company proposed that the restrictions on non-union production be stricken entirely to permit it complete freedom in choosing its sources of production. Despite these conflicting proposals, none of the union representatives admitted to having authority to discuss non-union production. Both original proposals, therefore, were abandoned early in the negotiations.

On July 10, 1985, Robert Rosenfeld, the chief Company negotiator, met privately with Joseph Good, associate general counsel for the Union, to discuss contract language in preparation for a meeting of the negotiating teams later in the month. They negotiated the issue of replacing the contract arbitrator, agreeing that a single arbitrator would be employed. They also discussed the last sentence of paragraph 1(k) of Article thirty-three, which restricted the Company's ability to move work between plants. Rosenfeld expressed the Company's interest in removing this arrangement from the new Master Agreement. The Union's quid pro quo for deleting this arrangement was a severance pay provision. Rosenfeld did not repeat the Company's original proposal to eliminate the restrictions on non-union production. The Union's proposal to eliminate the side letter was not raised.

The negotiators met again in Cleveland on July 17th and 18th. The non-union production issue was discussed; however, it was tabled because the Union negotiators stated that they had no authority to discuss it. Several other issues remained to be resolved on July 17th. Those issues were: 1) package of wage and fringe benefits; 2) severance pay; 3) the Company's concern that Union workers would honor picket lines by employees of Pubco, Inc. ("Pubco") ⁴ at the Cleveland distribution center; 4) the person to be designated as the arbitrator; and 5) the non-union production issue. On July 18th, the negotiators worked out the economic issues; they congratulated each other and reduced these terms to writing in a handwritten "Memorandum of Agreement" which was signed by both sides. The parties also agreed that the Pubco issues would be resolved in the Company's favor; the terms of this agreement were contained in a side letter to the Master Agreement.

The parties understood the Memorandum of Agreement to extend the 1982-85 agreement because management-labor activities continued as though a contract were in place. Employees at the three facilities covered by the Master Agreement subsequently ratified the terms negotiated on July 18th and the Company's management was informed of the ratification. The new economic terms of the July 18th Memorandum of Agreement were promptly implemented by the Company. A one-time bonus of ten percent of wages for the previous year was paid by the Company during the week of August 19, 1985, to approximately 500 employees who had been on the payroll on July 1, 1985. A four percent cost-of-living increase in holiday pay was also paid for holidays beginning with Labor Day, 1985. A sixteen dollar contribution toward Blue Cross/Blue Shield for Coosa River employees choosing such coverage was paid in October of 1985 for the three previous months, and monthly thereafter.

On November 11, 1985, Rosenfeld met with Wilbur Daniels, executive vice president of the Union, to discuss non-union production. Rosenfeld proposed to reduce the penalty in proportion with the Company's declining sales. Daniels requested that the Company supply updated information on its non-union production. No decision on this issue was made at this meeting.

On November 27, 1985, Good sent Rosenfeld drafts of the new Master Agreement, Supplemental Agreements concerning the facilities under Union contract and a supplementary letter on the Pubco issues. Rosenfeld suggested several changes, and on January 31, 1986, Good sent Rosenfeld a revised Master Agreement, three Supplemental Agreements and two side letter agreements. Rosenfeld stated that the revised language was acceptable. Thus, the parties had reached an agreement on all issues except non-union production.

On January 22, 1986, Rosenfeld met with Daniels in New York and supplied him with the updated information on the Company's non-union production. Rosenfeld proposed imposition of a $1,000 per month penalty. Daniels noted that he needed to gain the assent of the Union president before accepting the proposal. Thus, the meeting ended with the non-union production issue outstanding.

On February 10, 1986, the Union was notified that all production and distribution at the Company had ceased. Union, non-union and import activities would all be discontinued, and the sewing plants represented by the Union would close in approximately one month. The Union requested a meeting to negotiate the terms of the closing.

The meeting was held in New York on March 18, 1986. At the beginning of the meeting, Daniels stated that the issue of non-union production had been mooted by cessation of all production. Rosenfeld shrugged, but did not verbally respond. Rosenfeld made a severance pay proposal which the Union considered unreasonable, and Union officials indicated their intention to arbitrate the issue. Rosenfeld testified that he told the Union at this time that no collective bargaining agreement existed because the non-union production issue had not been resolved. Good and Daniels testified that no such statement was issued concerning the existence of the contract. Despite the conflicting testimony, the evidence is clear that later that day Daniels wrote a letter to Maurice Saltzman, the Company president, demanding that the documents sent by Good to Rosenfeld on January 31, 1986, be executed.

Also on March 18, 1986, Good sent a letter to the arbitrator requesting a date for arbitration of the severance pay...