Botany Indus., Inc. v. NEW YORK JT. BD., AMAL. CLOTH. WKRS.

• Decision Date: 12 April 1974
• Docket Number: No. 71 Civ. 2381 (DNE).,71 Civ. 2381 (DNE).
• Citation: 375 F. Supp. 485
• Parties: BOTANY INDUSTRIES, INC., Plaintiff, v. NEW YORK JOINT BOARD, AMALGAMATED CLOTHING WORKERS OF AMERICA, Defendant.
• Court: U.S. District Court — Southern District of New York

375 F. Supp. 485

BOTANY INDUSTRIES, INC., Plaintiff, v. NEW YORK JOINT BOARD, AMALGAMATED CLOTHING WORKERS OF AMERICA, Defendant.

No. 71 Civ. 2381 (DNE).

United States District Court, S. D. New York, Civil Division.

April 12, 1974.

Weil, Gotshal & Manges, New York City (Carl A. Schwarz, Jr., New York City, of counsel), for plaintiff.

Jacob Sheinkman, New York City New York City, and Robert Bach, of counsel), for defendant.

OPINION

EDELSTEIN, Chief Judge:

This is an action in which plaintiff employer seeks to vacate a labor arbitration award and defendant union seeks to confirm and to enforce the award.

The relevant facts, which are not in dispute, are as follows. In 1963, plaintiff Botany Industries, Inc. (hereinafter referred to as "Botany") licensed Levinsohn Bros. & Co., Inc. (hereinafter referred to as "Levinsohn") to manufacture and sell boys', students' and junior clothing; and to use the trademark "Botany" on the manufactured clothing. At the time the licensing agreement was entered into, Levinsohn had a collective bargaining agreement with defendant New York Joint Board, Amalgamated Clothing Workers of America (hereinafter referred to as "Joint Board"). In 1966, Botany acquired all of the shares of Levinsohn and began operating it as a wholly-owned subsidiary, albeit as a separate corporation. The acquired corporation continued to be known as Levinsohn Bros. & Co., Inc. On November 1, 1966, in conjunction with the acquisition of Levinsohn stock, Botany entered into an agreement with the Joint Board which provided, inter alia:

1. Botany agrees to continue to manufacture boys', students' and junior clothing in a manufacturing facility operated by Botany or on its behalf, by its own subsidiary, or by a company owned or controlled by it pursuant to the terms of a collective bargaining agreement with the union.

2. Botany further agrees that any and all boys', students' and junior clothing manufactured for and on its behalf shall only be manufactured in production facilities which are in contractual relations with the union, and that Botany will not cause, directly or indirectly, any of such boys', students' and junior clothing to be manufactured in any other production facility which is not in contractual relations with the union without first obtaining the prior written consent of the Union.

Paragraph 3 of the Agreement further provides, in pertinent part, that "Any controversy or claim arising out of or relating, directly or indirectly, to the provisions of this Agreement, or the interpretation and performance thereof, shall be settled by arbitration." This Agreement was to remain in effect until June 1, 1981.

In December 1971, based upon a report that Botany intended to close down the Levinsohn operation, the Joint Board requested a hearing before an arbitrator for the purpose of determining the rights and obligations of the parties under the 1966 Agreement which, the arbitrator noted, was "in effect an application for a declaratory judgment." Although Botany questioned the reasons for the hearing,¹ it agreed to attend. After devoting two days to a hearing of the matter, Arbitrator Herman Gray rendered an award in favor of the Joint Board. The essence of the award, the text of which is reprinted in the margin,² is that (1) Botany agreed that it would continue to manufacture boys', students' and junior clothing in a manufacturing facility owned or controlled by Botany, by a subsidiary of Botany, or by a company owned or controlled by Botany until June 1, 1981; (2) Botany agreed that the above described clothing would only be manufactured in a manufacturing facility operated under a collective agreement with, and under the geographic jurisdiction of, the Joint Board; and (3) Botany agreed that the trademark "Botany" would be used on the above described clothing only if the clothing was manufactured in a facility operated under a collective agreement with the Joint Board. The arbitrator also forbade Botany from licensing or selling the trademark "Botany" for use in connection with the manufacture, sale or other disposition of the above described clothing unless the sale is to, or the license is with, a facility operated under a collective agreement with the Joint Board.

Botany attacks the arbitration award on two levels. Its main argument is that paragraphs 1 and 2 of the 1966 Agreement constitute an illegal "hot cargo" provision within the meaning of section 8(e) of the Labor Management Relations Act of 1947, 29 U.S.C. § 158(e) hereinafter referred to as "L.M.R.A.", as amended by the Labor-Management Reporting and Disclosure Act of 1959 hereinafter referred to as "L.M.R. D.A."; that the Agreement cannot be enforced; that any attempt by the arbitrator to force compliance with these illegal provisions, thereby requiring the commission of an unlawful act, is in excess of the arbitrator's power; and that the award, therefore, cannot be enforced and must be vacated.³ Botany's second line of attack involves the arbitrator's interpretation and construction of the agreement. Succinctly stated, Botany contends that the portion of the arbitrator's award restricting the licensing of the "Botany" trademark is not founded upon the agreement; and, therefore, the granting of such an award is in excess of the arbitrator's power.

The Joint Board, on the other hand, maintains that the arbitrator properly construed the 1966 Agreement and that the award, therefore, is not subject to judicial review. However, should the court decide to review the arbitrator's award, the Joint Board contends that the Agreement does not fall within the strictures of section 8(e). In the alternative the Joint Board argues that even if the language of the Agreement does constitute an illegal "hot cargo" provision, the Agreement is saved by the so-called "garment industry exemption" contained in section 8(e).

JURISDICTION AND SCOPE OF REVIEW

The parties have moved to invoke the remedies available to them under the Arbitration Act, 9 U.S.C. §§ 1 et seq.: plaintiff seeks to have the award of Arbitrator Gray vacated pursuant to 9 U. S.C. § 10; and defendant seeks to have the award of Arbitrator Gray confirmed, and enforced, pursuant to 9 U. S.C. § 9. Jurisdiction is predicated upon section 301(a) of the L.M.R.A., 29 U.S.C. § 185(a).

The first problem to be considered is the proper role of the court in reviewing an arbitration award in the context of cross motions to confirm and to vacate the award. The Joint Board contends that the arbitrator properly construed the collective bargaining agreement; that, based upon the teachings of United Steelworkers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 80 S. Ct. 1358, 4 L.Ed.2d 1424 (1960), one of the Steelworker's Trilogy,⁴ the award is not subject to judicial review; and that the award should therefore be enforced. Botany, however, in its primary challenge to the award's validity, does not take issue with the arbitrator's construction or interpretation of the agreement. Instead, Botany maintains that the agreement violates section 8(e) of the L.M.R.A.; that the agreement is therefore void and unenforceable; that any attempt by the arbitrator to enforce a void and unenforceable agreement constitutes an excess of his authority; and that the award cannot be enforced and must be vacated.

Defendant's reliance upon the Enterprise decision for the proposition that a proper construction of a collective bargaining agreement by an arbitrator precludes judicial review is somewhat misplaced. To be sure, the Supreme Court did limit a court's review of the merits of an arbitration award by enunciating a national policy favoring the settlement of labor disputes by arbitration; and by indicating that reviewing courts, in keeping with this national policy, should be guided by the concept of judicial restraint so as not to undermine the arbitral process. However, a brief examination of the Enterprise case should make apparent the fact that the restrictions and guidelines the Supreme Court imposed upon reviewing courts are not applicable to the controversy before this court. In Enterprise, the employer refused to comply with the arbitrator's award. The union sought, and obtained, enforcement of the award in the district court. The court of appeals, to a limited extent, agreed with the district court; but, instead of enforcing the arbitrator's award, it fashioned its own award which significantly modified the arbitrator's award. The Supreme Court reversed the judgment of the court of appeals and sustained the district court's enforcement of the award,⁵ stating that "the refusal of courts to review the merits of an arbitration award is the proper approach to arbitration under collective bargaining agreements." 363 U.S. at 596, 80 S.Ct. at 1360 (emphasis added). In so ruling, the Supreme Court found that the basis for the court of appeals' decision was not that the arbitrator had exceeded his authority by failing to draw his award from the essence of the agreement, which would be a proper reason for refusing enforcement, but rather, that the court of appeals "merely disagreed with the arbitrator's construction of the award." 363 U.S. at 598, 80 S. Ct. at 1361. The Supreme Court specifically rejected the attempt by the court of appeals to substitute its own judgment and interpretation of the agreement for that of the arbitrator, stating:

the question of interpretation of the collective bargaining agreement is a question for the arbitrator. It is the arbitrator's construction which was bargained for; and so far as the arbitrator's decision concerns construction of the contract, the courts have no business overruling him because their interpretation of the contract is different from his.

363 U.S. at 599, 80 S.Ct. at 1362 (emphasis added).

Enterprise is clearly distinguishable from the case at bar. Enterprise involves only one of several grounds for vacating an arbitration award⁶ — an attack...