Chapman v. SOUTHEAST REGION ILGWUH & W. REC. FUND

• Decision Date: 02 March 1968
• Docket Number: Civ. A. No. 66-791-66-794.
• Citation: 280 F. Supp. 766
• Parties: Ruth C. CHAPMAN, Plaintiff, v. SOUTHEAST REGION I. L. G. W. U. HEALTH AND WELFARE RECREATION FUND et al., Defendants. Betty J. PETTY, Plaintiff, v. SOUTHEAST REGION I. L. G. W. U. HEALTH AND WELFARE RECREATION FUND et al., Defendants. Hazel S. MURRAY, Plaintiff, v. JONATHAN LOGAN, INC., et al., Defendants. Evelyn V. HYATT, Plaintiff, v. JONATHAN LOGAN, INC., et al., Defendants.
• Court: U.S. District Court — District of South Carolina

280 F. Supp. 766

Ruth C. CHAPMAN, Plaintiff, v. SOUTHEAST REGION I. L. G. W. U. HEALTH AND WELFARE RECREATION FUND et al., Defendants.

Betty J. PETTY, Plaintiff, v. SOUTHEAST REGION I. L. G. W. U. HEALTH AND WELFARE RECREATION FUND et al., Defendants.

Hazel S. MURRAY, Plaintiff, v. JONATHAN LOGAN, INC., et al., Defendants.

Evelyn V. HYATT, Plaintiff, v. JONATHAN LOGAN, INC., et al., Defendants.

Civ. A. Nos. 66-791-66-794.

United States District Court D. South Carolina, Spartanburg Division.

March 2, 1968.

Thomas A. Evins, Means, Evins, Browne & Hamilton, Thomas C. Bradley, Jr., Erwin & Bradley, Spartanburg, S. C., for plaintiffs.

E. W. Mullins, Nelson, Mullins, Grier & Scarborough, Columbia, S. C., for defendants International Ladies' Garment Workers' Union and International Ladies' Garment Workers' Union, Local 581.

J. Bratton Davis, Graydon & Davis, Columbia, S. C., for defendants Jonathan Logan, Inc. & Spartan Undies, Inc.

E. N. Zeigler, McEachin, Townsend & Zeigler, Florence, S. C., for defendant Southeast Region I.L.G.W.U. Health & Welfare Recreation Fund.

OPINION AND ORDER

DONALD RUSSELL, District Judge.

All four of these actions have been filed by nonunion employees of the defendant Spartan Undies, Inc. to recover vacation pay allegedly due them for the year ending December 31, 1965, and illegally withheld in contravention of the South Carolina Right-to-Work Law (Section 40-46, Code of Laws of South Carolina, 1962). In two of the actions (i. e., those filed by the plaintiffs Hazel S. Murray and Evelyn V. Hyatt) the defendants are Jonathan Logan, Inc. and its wholly owned subsidiary Spartan Undies, Inc. In the other actions, the defendants are Jonathan Logan, Inc., Spartan Undies, Inc., both the National Union and its Local, and the Health and Welfare Recreation Fund created under the collective bargaining agreement between the union and the employers.

In an earlier Order, this Court sustained federal jurisdiction herein under Section 301(a) of the Labor Management Relations Act. Chapman v. Southeast Region I.L.G.W.U. Health & Welfare Recreation Fund (D.C.S.C.1967) 265 F.Supp. 675.

The matter is now before me on the motion of the defendants either to dismiss or to stay the actions pending arbitration.

While the defendants are not identical in all actions, the legal issues and the pertinent allegations in the four cases are identical. I shall accordingly consider and dispose of the motions together in this Order.

The complaints, so far as relevant to the present motions, allege that the plaintiffs were originally employed by Spartan Undies. Inc., which at the time was an independent, non-union business. As such employees, they received vacation pay, calculated annually at the end of the calendar year on the basis of two (2%) per cent. of their annual wages and payable on June 1 thereafter.¹ In 1964, Spartan Undies, Inc. was acquired by Jonathan Logan, Inc., and was thereafter operated, as a wholly owned subsidiary of the latter. Jonathan Logan had a collective bargaining agreement with the defendant union, covering the employment rights of its employees, and this agreement embraced the employees of Spartan Undies, Inc., after the acquisition of the latter by Jonathan Logan. By the terms of this bargaining agreement, vacation pay of the plaintiffs was provided, to be paid through the Health and Welfare Recreation Fund of the defendant union on behalf of the employer. Pursuant to this provision, the plaintiffs were duly paid their vacation pay, calculated as formerly, for the calendar year 1964, in June, 1965. Prior to payment date for their vacation pay for the year 1965, however, a notice was posted on the employer's bulletin board that plaintiff and other non-union employees should apply "to one Joe Ferguson" as agent for the Fund and the union "for checks to cover wages due to her (them) as vacation pay". When the plaintiffs applied to Joe Ferguson for payment of their vacation pay, they received checks from which certain sums had been deducted as "a service charge applicable to non-union members only". In fact, in one case, it was alleged that the service charge made against the employee-plaintiff absorbed all her vacation pay and left her owing a balance to the Fund. Such deductions, which the plaintiffs state they never authorized, violated the terms of the South Carolina Right-to-Work Law. They seek judgment for the amount of such deductions and for punitive damages on account of such withholding under Section 40-46.8, Code of Laws of South Carolina (1962).

The complaints, which have just been summarized, did not include by way of exhibit the applicable contract between the employer and the union, under which vacation pay for the plaintiffs, it was claimed, was provided. By stipulation, however, this contract, with its supplement, was incorporated in the record, and, upon hearing of these motions, both parties based their contentions, in whole or in part, on such agreement. Thus, the plaintiffs point to the agreement in support of their right to vacation pay. The defendants, on the other hand, rely on the arbitration provisions of the contract for their motion to stay proceedings herein pending arbitration.

The collective bargaining agreement consists of two parts. The first, described as the master contract, applied to all the plants operated by the defendant Jonathan Logan, whether directly or through a subsidiary. Such master contract contemplated and authorized "supplemental contracts", covering special terms applicable to a specific plant's employees. There was such a supplemental contract covering the employees at the plant where the plaintiffs were employed.

The plaintiffs rely (1) on Section 1, Article XIV of the master contract, which states that, "Provision for vacation shall be as set forth in the plant supplemental agreements" and (2) on Section 8 of the supplemental agreement applicable to employees at the Spartan Undies plant, which declares that, "To provide for vacation benefits to workers, the Employer shall pay weekly to the Southeastern Regional I.L.G.W.U. Health and Welfare Fund a like amount to two(2%) per cent of the same payroll".

The defendants, on the other hand, plant their motion on Article XL of the master contract, which provides that "all disputes, complaints, controversies, claims or grievances * * * which directly or indirectly arise under, out of, or in connection with" such agreement, "including the arbitrability of any dispute", shall be settled exclusively and finally by arbitration. The right to invoke and "process" any claim or dispute on behalf of any employee in such arbitration was vested solely in the union, and the individual employee was denied any right to invoke or "process" arbitration.

The defendants contend that, in seeking vacation pay under the terms of the collective bargaining agreement, the plaintiffs are bound by the exclusive arbitration procedures provided under such contract for the enforcement of rights thereunder and that the power of the Court in these actions is accordingly limited to directing arbitration in the manner provided by the master contract. This contention presents the issue before the Court.

Ordinarily, when an employee's claim derives from a collective bargaining agreement — as do the claims of the plaintiffs for vacation pay — he is, as the defendants argue, bound by the terms of the agreement establishing the procedure for the redress of such claim. If such agreements provide specifically for exclusive arbitration procedures in the settlement of claims thereunder, the Courts favor such procedures and require an attempt to use or invoke such procedures before application for judicial relief. Vaca v. Sipes (1967) 386 U.S. 171, 184, 87 S.Ct. 903, 17 L.Ed.2d 842; Republic Steel Co. v. Maddox (1965) 379 U.S.C. 650, 652-653, 85 S.Ct. 614, 13 L.Ed.2d 580; Local Union No. 24, International Brotherhood of Electrical Workers v. Hearst Corp. (C.C.A. 4, 1965) 352 F.2d 957, 958-959, cert. denied 383 U.S. 937, 86 S.Ct. 1067, 15 L.Ed.2d 853; United Textile Workers v. Newberry Mills, Inc. (C.C.A. 4, 1963) 315 F. 2d 217, 219, cert. denied 375 U.S. 818, 84 S.Ct. 54, 11 L.Ed.2d 53. But this is not an inflexible rule to be applied with mechanical rigidity. In the two leading cases, in which the general rule is authoritatively enunciated and upon which the defendants rely, the Supreme Court recognized that under certain circumstances exceptions to the rule were proper. Thus, in the Maddox case, supra, the Court, after stating the general rule, said that, "Once it is established that the federal rule discussed above applied to grievances in general, it should next be inquired whether the specific type of grievance here in question — one relating to severance pay — is so different in kind as to justify an exception." (379 U.S. at p. 654, 85 S.Ct. at p. 617). Implicit in that statement is the concept of exceptions to the general rule.² Later, in Vaca v. Sipes, supra, the Court, after restating the general rule set forth in the Maddox case, proceeded to define the circumstances under which an employee "may (might) bring an action against his employer in the face of a defense based upon the failure to exhaust contractual remedies." (386 U.S. at p. 186, 87 S.Ct. at p. 914).

The sound reason for such exceptions to the general rule was indicated by Mr. Justice White in the Vaca case, supra, in his comment that "because these contractual remedies have been devised and are often controlled by the union and the employer, they may well prove unsatisfactory or unworkable for the individual grievant. The problem then is to determine under what circumstances the individual employee may obtain judicial review of his breach-of-contract claim despite his failure to secure relief through the contractual remedial procedures." (386 U.S. at p. 185, 87 S.Ct. at p. 914).

Do the facts in these cases pose a situation "so different in kind as...