Butchers Union v. Farmers Markets

• Decision Date: 09 March 1977
• Citation: 67 Cal.App.3d 905,136 Cal.Rptr. 894
• Parties: , 95 L.R.R.M. (BNA) 2226, 82 Lab.Cas. P 55,104 BUTCHERS UNION LOCAL 532, Plaintiff and Appellant, v. FARMERS MARKETS, Defendant and Respondent. Civ. 39269.
• Court: California Court of Appeals Court of Appeals

Page 894

136 Cal.Rptr. 894

67 Cal.App.3d 905, 95 L.R.R.M. (BNA) 2226,

82 Lab.Cas. P 55,104

BUTCHERS UNION LOCAL 532, Plaintiff and Appellant, v. FARMERS MARKETS, Defendant and Respondent.

Civ. 39269.

Court of Appeal, First District, Division 1, California.

March 9, 1977.

Van Bourg, Allen, Weinberg & Roger, Victor J. Van Bourg, David A. Rosenfeld, San Francisco, for plaintiff and appellant.

Gale & Goldstein, Inc., Hayes H. Gable, III, Sacramento, for defendant and respondent.

MOLINARI, Presiding Justice.

Plaintiff Butchers Union Local 532 (hereinafter 'the Union') appeals from an order denying its petition to compel arbitration. The issues presented are whether the court erred in denying the petition on the grounds that the Union failed to request arbitration within the time specified in the collective bargaining agreement, that Joyce Ramsey, the member of the Union involved in the request for arbitration, had filed a complaint for damages arising out of the same occasion which led to the petition, and that the Union had waived arbitration by initiating proceedings before the National Labor Relations Board.

We have concluded that the question whether the Union filed a timely request for arbitration was a matter to be determined by the arbitrator and not by the court below and that therefore the court erred in denying the Union's petition to compel arbitration. As to the other issues we have concluded that they were properly before the trial court and that its decision with respect to such issues is not erroneous.

The Union, a labor organization, and defendant Farmers Markets, as an employer, are parties to a written collective bargaining agreement (hereinafter 'the agreement'). This agreement affects commerce within the meaning of section 301 of the Labor-Management Relations Act of 1947. (29 U.S.C. § 185.)

Since on or about December 2, 1974, a dispute has existed over the discharge of Joyce Ramsey. Article XV of the agreement provides for a written grievance and arbitration procedure, wherein the parties are bound to submit all disputes to an arbitrator empowered to make final and binding decisions on all parties to the agreement.

The Union filed a petition to compel arbitration under the provisions of section 1281 et seq. of the Code of Civil Procedure alleging that it is willing and has sought to refer the dispute to the arbitration procedure provided for in the agreement but that Farmers Markets has refused to submit the dispute to arbitration. Farmers Markets, by way of affirmative answer, alleged that the Union intentionally waived and relinquished any right to settle the controversy by arbitration on the basis that article XV of the agreement provides, inter alia, that the party presenting the dispute shall request arbitration in writing not more than 30 days after the dispute was first taken up with the other party or the dispute will be considered to have been withdrawn and waived.

As a second affirmative defense Farmers Markets alleged that since the controversy arose the Union has done acts which are inconsistent with its right to demand arbitration on the basis that such acts constitute a waiver of such right. It is alleged that Ramsey filed a complaint in the superior court which complaint seeks, inter alia, damages for loss of wages caused by the alleged wrongful termination of Ramsey's employment by Farmers Markets, an issue which was subject to arbitration under the agreement.

The trial court ordered the Union's motion for an order compelling arbitration be denied. The main basis for denial was that arbitration was waived because the Union did not demand or request arbitration within the time specified in the agreement. The court held that the question of waiver was a matter for the court and not the arbitrator. The court also found that the maintenance of Ramsey's action for damages and the unsuccessful initiation of proceedings before the National Labor Relations Board constitute evidence of waiver of arbitration and the election to seek other remedies.

Waiver is defined as the intentional relinquishment of a known right after knowledge of the facts. (Roberts v. Fortune Homes, Inc., 240 Cal.App.2d 238, 243, 49 Cal.Rptr. 429.) It is the well-established rule in California that 'where a contract provides that arbitration may be demanded within a stated time, failure to make demand within that time constitutes a waiver of the right to arbitrate.' (Freeman v. State Farm Mut. Auto. Ins. Co., 14 Cal.3d 473, 483, 121 Cal.Rptr. 477, 483, 535 P.2d 341, 347; Gunderson v. Superior Court, 46 Cal.App.3d 138, 144, 120 Cal.Rptr. 35; Jordan v. Friedman, 72 Cal.App.2d 726, 727, 165 P.2d 728.) It is also the rule in California that, as provided in Code of Civil Procedure section 1281.2, ¹ the question whether there ahs been a waiver of arbitration is one that must be determined by the court. (Freeman v. State Farm Mut. Auto. Ins. Co., supra, 14 Cal.3d at p. 483, 121 Cal.Rptr. 477, 535 P.2d 341.)

The issue presented is whether the California rules apply or whether federal law is applicable. The Union contends that state courts must apply federal law in interpreting collective bargaining agreements which affect interstate commerce and that federal courts have determined that the issue of waiver must be submitted to the arbitrator for decision.

The parties agree that their agreements and activities affect interstate commerce. It is the rule that in the enforcement of the provisions of collective bargaining agreements obligating the parties to arbitrate disputes where the agreements and the activities of the parties affect interstate commerce, state courts exercise concurrent jurisdiction with federal courts. (Charles Dowd Box Co. v. Courtney, 368 U.S 502, 82 S.Ct. 519, 7 L.Ed.2d 483; O'Malley v. Wilshire Oil Co., 59 Cal.2d 482, 486, 30 Cal.Rptr. 452, 381 P.2d 188.) It is also the rule, however, that in so doing state courts must apply federal law in adjudicating an action which could have been brought in federal courts under section 301 of the Labor-Management Relations Act. ² (Textile Workers v. Lincoln Mills, 353 U.S. 448, 456, 77 S.Ct. 912, 1 L.Ed.2d 972; O'Malley v. Wilshire Oil Co., supra; see Charles J. Rounds Co. v. Joint Council of Teamsters No. 42, 4 Cal.3d 888, 892, 95 Cal.Rptr. 53, 484 P.2d 1397; Butchers' Union Local 229 v. Cudahy Packing Co., 66 Cal.2d 925, 930, 59 Cal.Rptr. 713, 428 P.2d 849.)

Federal court decisions have held that it is for the arbitrator to determine whether the party seeking arbitration has properly complied with the arbitration procedure including timely notice requirements set forth in the collective bargaining agreement. (See Local 12934 of Int. U., Dist. 50, U.M.W. v. Dow Corning Corp. (6th Cir. 1972) 459 F.2d 221, 223--224; Tobacco Wkrs. Int. U., Local 317 v. Lorillard Corporation (4th Cir. 1971) 448 F.2d 949, 953; Bealmer v. Texaco, Incorporated (9th Cir. 1970) 427 F.2d 885, 887, cert. den., 400 U.S. 926, 91 S.Ct. 187, 27 L.Ed.2d 185; Local 198, United Rubber, C., L. & P. Wkrs. v. Interco, Inc. (8th Cir. 1969) 415 F.2d 1208, 1210; Amalgamated Clothing Workers v. Ironall Factories Co. (6th Cir. 1967) 386 F.2d 586, 591; Palestine Tel. Co. v. Local U. 1506 of Int. Bro. of Elec. Wkrs. (5th Cir. 1967) 379 F.2d 234; Rochester Telephone Corp. v. Communications Wkrs. of Am. (2nd Cir. 1965) 340 F.2d 237; and see Cox, Reflections Upon Labor Arbitration, 72 Harv.L.Rev. 1482, 1511.)

It has been suggested that the distinction lies in the difference between 'substantive' and 'procedural' law under the general rule that 'Where an action founded on a federal statute is properly brought in the state courts, the law of the state, in the absence of the contrary provisions in the federal statute, is controlling in all matters of practice and procedure.' (Bohme v. Southern Pac. Co., 8 Cal.App.2d 291, 297, 87 Cal.Rptr. 286, 290.) It is also the rule, however, that a state rule of 'practice' may not be employed with the substantive effect of defeating a federal right. (Brown v. Western R. of Alabama, 338 U.S. 294, 296, 70 S.Ct. 105, 94 L.Ed. 100; and see Riess v. Murchison, 9 Cir., 384 F.2d 727, 735, where the court noted that Code of Civil Procedure section 1281.2 has 'considerable substantive as well as procedural significance.')

The question whether the court or the arbitrator is the appropriate body to decide whether the procedural requisites, which, under the bargaining agreement, condition the duty to arbitrate have been met was discussed in John Wiley & Sons v. Livingston, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898. It was there pointed out that labor disputes may not easily be broken down into their 'substantive' and 'procedural' aspects and that questions concerning the procedural prerequisites develop in the context of an actual dispute about the rights of the parties to the contract or those covered by it. (At pp. 556--557, 84 S.Ct. 909.) The Supreme Court stated as follows: 'Doubt whether grievance procedures or some part of them apply to a particular dispute, whether such procedures have been followed or excused, or whether the unexcused failure to follow them avoids the duty to arbitrate cannot ordinarily be answered without consideration of the merits of the dispute which is presented for arbitration.' (At pp. 556--557, 84 S.Ct. at p. 918.) ³

In the present case Farmers Markets contended that the Union did not make any demands on it to arbitrate the controversy and did not take any steps to exercise its rights to arbitration until on or about March 4, 1975, when for the first time the Union, through its attorney, by letter dated February 28, 1975, and postmarked March 3, 1975, demanded that the controversy be submitted to arbitration. It was urged that since the dispute existed since December 2, 1975, the request for arbitration was not timely filed.

The Union contended before the lower court that Farmers Markets itself waived any objection to the...