Charles J. Rounds Co. v. Joint Council of Teamsters No. 4

• Decision Date: 24 May 1971
• Citation: 484 P.2d 1397,4 Cal.3d 888,95 Cal.Rptr. 53
• Court: California Supreme Court
• Parties: , 484 P.2d 1397, 77 L.R.R.M. (BNA) 2386, 65 Lab.Cas. P 52,573 CHARLES J. ROUNDS CO., Plaintiff and Appellant, v. JOINT COUNCIL OF TEAMSTERS NO. 42 et al., Defendants and Respondents. L.A. 29805.

Page 53

95 Cal.Rptr. 53

4 Cal.3d 888, 484 P.2d 1397, 77 L.R.R.M. (BNA) 2386,

65 Lab.Cas. P 52,573

CHARLES J. ROUNDS CO., Plaintiff and Appellant, v. JOINT COUNCIL OF TEAMSTERS NO. 42 et al., Defendants and Respondents.

L.A. 29805.

Supreme Court of California,

In Bank.

May 24, 1971.

Findlay A. Carter and Robert P. Schifferman, Los Angeles, for plaintiff and appellant.

Brundage, Neyhart, Miller, Ross & Reich and Julius Reich, Los Angeles, for defendants and respondents.

PETERS, Justice.

Charles J. Rounds Co. (hereafter employer) appeals from the judgment of the trial court, which dismissed a complaint, charging breach of a collective bargaining agreement, on the grounds that the dispute which was the subject of the suit was covered by an arbitration clause in the agreement.

Employer is a general contractor operating in the Los Angeles area as a member of the Southern California Chapter of the Associated General Contractors of America (hereafter AGC). The AGC entered into a collective bargaining agreement with defendant unions in 1962, effective July 1962 through June 1965. The agreement included a 'no-strike' clause and detailed provisions for the arbitration of disputes.

The employer discharged a union member on June 28, 1963. On July 2, 3 and 5, the unions struck the employer at a job site where work was being done under contract for the Los Angeles County Flood Control District. During this period, the unions filed a grievance according to the requirements of the collective bargaining agreement. The disposition of this grievance does not appear in the record.

The employer filed a complaint against the unions seeking compensatory damages for breach of the 'no-strike' clause in the agreement. In their answer, the unions alleged, as an affirmative defense, that whether the strike was in violation of the agreement was an issue within the scope of the arbitration clause and that the employer's failure to arbitrate according to the agreement's procedures was a bar to an action for damages. The unions' motion for summary judgment on the same grounds was denied by the trial court.

Subsequently, the unions made three separate attempts to force the employer into arbitration over the strike. In January 1965, the unions filed an application in the same court wherein the employer's suit was filed, for a stay of proceedings pending arbitration. This application was denied. In April 1965 the unions again moved for summary judgment in the trial court, and the motion was denied. Finally, the unions brought suit in federal district court in 1968 to compel arbitration. After the employer answered, pleading laches and the statute of limitations, the unions voluntarily withdrew the action.

The cause came to trial finally in 1969. By stipulation, the parties agreed to try the special defense first. The trial court found that the arbitration procedure set up by the agreement was intended to cover all disputes, including whether the work stoppage in question was a violation of the 'nostrike' clause. The trial court ruled that the employer's suit was barred because it had failed to adhere to the requirements of the arbitration provisions of the agreement.

On appeal, the employer contends that the dispute is not covered by the arbitration clause of the agreement and, alternatively, that the appropriate remedy was not dismissal but a stay of the proceedings pending arbitration.

First, it is necessary to determine whether this dispute was arbitrable. To do so, we must interpret the language of the agreement according to the federal substantive law set down by the federal courts pursuant to section 301 of the Labor Management Relations Act (29 U.S.C. § 185(a) (1964).) The body of federal substantive law is applicable to the employer in the instant case, because he was involved in activities which affect interstate commerce. (Teamsters Union v. Lucas Flour Co. (1962) 369 U.S. 95, 102--103, 82 S.Ct. 571, 7 L.Ed.2d 593; Butchers Union Local 229 v. Cudahy Packing Co. (1967) 66 Cal.2d 925, 930--931, 59 Cal.Rptr. 713, 428 P.2d 849.) Also, state law, where 'compatible with the purpose of § 301, may be resorted to in order to find the rule that will best effectuate the federal policy.' (Textile Workers Union v. Lincoln Mills (1957) 353 U.S. 448, 457, 77 S.Ct. 912, 918, 1 L.Ed.2d 972.)

Federal policy favors the settlement of labor-management disputes by grievance and arbitration mechanisms; this has been expressed by Congress in section 203(d) of the Labor Management Relations Act: 'Final adjustment by a method agreed upon by the parties is declared to be the desirable method for settlement of grievance disputes arising over the application or interpretation of an existing collective-bargaining agreement * * *.' (29 U.S.C. § 173(d) (1964), quoted in Butchers' Union Local 229 v. Cudahy Packing Co., Supra, 66 Cal.2d at p. 931, 59 Cal.Rptr. 713, 428 P.2d 849.)

In the Cudahy Packing Co. case, we stated that 'the function of a court in deciding whether a dispute is subject to arbitration 'is confined to ascertaining whether the party seeking arbitration Is making a claim which on its face is governed by the contract.' (Italics added.) (United Steelworkers of America v. American Mfg. Co. (1960) 363 U.S. 564, 568 (80 S.Ct. 1343, 4 L.Ed.2d 1403, 1407).) 'An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.' (Italics added.) (United Steelworkers of America v. Warrior & Gulf Nav. Co., Supra, 363 U.S. 574, 582 (80 S.Ct. 1347, 4 L.Ed.2d 1409, at p. 1417).)' Applying these rules leads to the conclusion that the intention of the parties was to submit a strike dispute to arbitration.

In article IV of the agreement, the parties contracted that 'all grievances or disputes arising between them over the interpretation or application of the terms of this Agreement shall be settled by the procedure set forth in Article V * * *.' A system of grievance and arbitration procedures was formulated in article V, which also provides: 'All grievances, other than jurisdictional disputes, arising out of the interpretation or application of any of the terms or conditions of this agreement shall be submitted for determination and shall be determined by the procedure set forth in this Article, * * *'

The agreement in the instant case specified that both the employer and the union were required to refer grievances or disputes to the Joint Adjustment Board composed of an equal number of representatives from both management and labor. Article V(C) of the agreement provided: 'A Contractor shall refer a grievance or dispute to the Joint Adjustment Board through the appropriate employer Association. The Association shall then refer the grievance to the Joint Adjustment Board * * *.' If the board is unable to determine the matter, or if either party wishes to challenge a decision, the board is to select an impartial chairman from a Federal Mediation and Conciliation Service list.

These provisions clearly indicate that the parties intended to establish a system of dispute resolution, within which both the union and the employer could expect fair consideration of complaints which either might lodge against the other. The grievances which an employer might complain about are numerous. It is hard to believe that a strike would not be one of the things the employer would want to be able to 'grieve' about. At least, it is reasonable to believe that the parties would have specifically excluded a strike from coverage, given the obvious fact that the processing of other employer grievances is so clearly provided for. No such provisions appear in the instant agreement.

On the basis of broad arbitration provisions like those in the instant case, the Supreme Court of the United States held, in Drake Bakeries v. Bakery Workers (1961) 370 U.S. 254, 257, 82 S.Ct. 1346, 8 L.Ed.2d 474, that the parties intended to submit employer complaints of a strike to arbitration. There, the employer argued 'that the parties cannot have intended to arbitrate so fundamental a matter as a union strike in breach of contract, and that only express inclusion of a damage claim by the employer would suffice to require arbitration. But it appears more reasonable to us to expect such a matter, if it is so fundamental and so basic to the company under the contract, to have been excluded from the comprehensive language of (the arbitration clause) * * * if the parties so intended.' (370 U.S. 254, 259, 82 S.Ct. 1346, 1349; see also Don daRoza, Inc. v. Northern Cal. etc. Hod Carriers Union (1965) 233 Cal.App.2d 96, 43 Cal.Rptr. 264.)

Plaintiff relies upon McCarroll v. L.A. County etc. Carpenters, 49 Cal.2d 45, 66--68, 315 P.2d 322. However, McCarroll was decided prior to Drake Bakeries, and this court recognized in the opinion in McCarroll that some of the federal cases were in 'irreconcilable conflict.' (49 Cal.2d at p. 67.) The subsequent decision in Drake Bakeries has resolved the conflict in federal law, and McCarroll is no longer controlling. It may also be noted that in McCarroll, unlike the instant case, the procedure for reporting a grievance in order to initiate the grievance and arbitration procedure strongly indicated that the employer was not required to follow those steps in prosecuting his objection to a strike.

We conclude that it was the intention of the parties to include the instant strike within the coverage of the arbitration clause. The dispute should have been arbitrated.

We now turn to consider whether the relief granted was proper in this case--dismissal of the action--or whether a stay of judicial proceedings pending arbitration should have been granted.

Our courts for many years have held that, in the absence of waiver by the other party, an aggrieved party...