Clark v. Hein-Werner Corp.

• Decision Date: 03 November 1959
• Docket Number: A,AFL-CI,HEIN-WERNER
• Citation: 8 Wis.2d 264,99 N.W.2d 132
• Parties: , 45 L.R.R.M. (BNA) 2137, 38 Lab.Cas. P 65,899 Henry E. CLARK et al., Respondents, v.CORP., a Wis. corporation, Defendant, International Ass'n of Machinists, Local 1377,ppellant.
• Court: Wisconsin Supreme Court

Page 132

99 N.W.2d 132

8 Wis.2d 264, 45 L.R.R.M. (BNA) 2137,

38 Lab.Cas. P 65,899

Henry E. CLARK et al., Respondents, v. HEIN-WERNER CORP., a Wis. corporation, Defendant International Ass'n of Machinists, Local 1377, AFL-CIO, Appellant.

Supreme Court of Wisconsin.

Nov. 3, 1959.

Rehearing Denied Jan. 5, 1960.

See 100 N.W.2d 317.

Robert E. Gratz, Milwaukee, Daniel L. Shneidman, Milwaukee, of counsel, for appellant.

John H. Wessel, Milwaukee, for respondents.

Goldberg, Previant & Cooper, Milwaukee, David Previant, Hugh Hafer, Milwaukee, of counsel, Amicus Curiae.

CURRIE, Justice.

The seniority rights sought to be protected by the plaintiffs are grounded upon the collective-bargaining contract. Although the employer is engaged in interstate commerce the action does not involve an unfair labor practice under the Labor Management Relations Act of 1947, as amended, 29 U.S.C.A. § 141 et seq., and, therefore, the controversy does not fall within the jurisdiction of the National Labor Relations Board. It is a type of action over which state courts and federal courts have concurrent jurisdiction. McCarroll v. Los Angeles County District Council of Carpenters, 1957, 49 Cal.2d 45, 315 P.2d 322, certiorari denied 355 U.S. 932, 78 S.Ct. 413, 2 L.Ed.2d 415; Steinberg v. Mendel Rosenzweig Fine Furs, Inc., 1957, 9 Misc.2d 611, 167 N.Y.S.2d 685; Ingraham Co. v. Local 260, Intern. Union of Electric, Radio & Mach. Workers, D.C.Conn.1959, 171 F.Supp. 103.

The plaintiff employees were not parties to the collective-bargaining contract and under the grievance procedure set forth therein were given no right to initiate arbitration or to participate in the arbitration once it was set in motion. The instant appeal presents the problem of when, if ever, can judicial protection of the rights of individual employees through the arbitral process be invoked. This is a problem which has greatly troubled the courts and legal writers. ¹

So long as the union is fighting the battle of the employees through the arbitration proceeding the employees' interests are being represented and there is no need for courts to provide protection to the employees. Sound public policy dictates that a court should not interfere with or disturb the orderly working of the arbitration process unless a compelling reason for invoking the court's equitable powers is presented. One of the principal purposes of arbitration is to reach a speedy final result and to avoid protracted litigation.

However, as pointed out in a Comment in 6 U.C.L.A. Law Review (1959), 603, 628, 'Often the substantial interests of the individual employee and the union diverge. At this point it is difficult for the union to adequately represent the individual's interest. This may occur when he is a nonunion member of the collective-bargaining unit, or he belongs to a minority faction of the union, or he is the 'square peg in the round hole' type, or merely because the union officials do not believe in his claim.' It is in such a situation that some courts have extended judicial protection to the employees whose interests are actually not being represented by the union in the arbitral process. We fully agree with the conclusion of the New York Appellate Division that, 'The law upon this subject is still in a state of flux.' Donato v. American Locomotive Co., 1954, 283 App.Div 410, 127 N.Y.S.2d 709, 714, affirmed 306 N.Y. 966, 120 N.E.2d 227.

The New York courts by two recent decisions have made a notable contribution to the progress of the law in coping with this problem of protecting the rights of employees in labor arbitration proceedings whose interests are adverse to the union. In the Matter of Iroquois Beverage Corp., 1955, 14 Misc.2d 290, 159 N.Y.S.2d 256, and Soto v. Lenscraft Optical Corp., 1958, 7 A.D.2d 1, 180 N.Y.S.2d 388.

In the Iroquois Beverage Corp. case certain employees sought a court judgment to permit them to intervene in a labor arbitration proceeding over the objections of both the union and the employer. The arbitration had been initiated by the union over seniority rights, as was the case in the instant appeal. In such arbitration the union was championing the cause of thirty-two employees whose interests were adverse to those employees who sought intervention. The court granted such right of intervention and quoted with approval the following dictum appearing in the opinion in Donato v. American Locomotive Co., supra, 127 N.Y.S.2d at page 715:

'Even if the interested employee has not intervened in the arbitration proceeding, it has been held that he has the right to intervene at a later stage, in the judicial proceeding, and to move to vacate the award, on the ground that he is a person interested in 'the controversy which was arbitrated', Busch Jewelry Co., Inc. v. United Retail Employees' Union, Local 830, 170 Misc. 482, 10 N.Y.S.2d 561; cf. Curtis v. New York World-Telegram Corp., 282 App.Div. 183, 121 N.Y.S.2d 825, supra; Estes v. Union Terminal Co., 5 Cir., 89 F.2d 768.'

The case of Soto v. Lenscraft Optical Corp., supra, involved an appeal by the union from a lower court judgment vacating a labor arbitration award because certain employees had been denied the right to appear in such arbitration proceeding by their own counsel. The arbitration had been instituted by the union because the employer had threatened discharge of one hundred twenty-two employees alleged to have engaged in a slowdown. The plaintiff employees who had been denied intervention had made a showing that the union and the employer were in collusion to discriminate against the plaintiffs because of the efforts of another union to organize the plant. The court affirmed the judgment below vacating the award. It held that, while the union has control over the grievance procedures, there must be implied a duty of fair representation. In its opinion the court declared (180 N.Y.S.2d 392):

'Whether petitioners be viewed in the nature of third party beneficiaries of a contract or in the position of beneficiaries of a trust, in which the union as a trustee owes them a fiduciary obligation of fair representation (the label is not important), they had cognizable standing to seek a vacatur of the award.'

The test of fair representation employed by the court in the Soto case is the one advocated by Prof. Cox in his article, 'Rights Under a Labor Agreement' in 69 Harvard Law Review (1956), 601, 638:

'The relationship between law and industrial relations will be improved, and collective-bargaining will work better, in my opinion, without any sacrifice of the interests of individual employees, if contracts which contemplate active administration through a grievance and arbitration procedure controlled by the union are held to vest the power to settle grievances in the collective-bargaining representative, subject to its fiduciary duty of fair representation.' (Emphasis supplied.)

We deem such test of fair representation, in determining when to grant court protection to the rights of an individual employee under the collective-bargaining contract, to be sound in principle and we adopt the same. In most situations whether the union is performing its fiduciary duty of fair representation in an arbitration proceeding presents a question of fact. However, where the interests of two groups of employees are diametrically opposed to each other and the union espouses the cause of one in the arbitration, it follows as a matter of law that there has been no fair representation of the other group. This is true even though, in choosing the cause of which group to espouse, the union acts completely objectively and with the best of motives. The old adage, that one cannot serve two masters, is particularly applicable to such a situation.

This court applied the test of fair representation in giving judicial relief to individual employees in Pattenge v. Wagner Iron Works, 1957, 275 Wis. 495, 82 N.W.2d 172. There the court entertained a suit by the employees to recover vacation pay due under a collective-bargaining contract without the union having invoked the grievance procedure, the end step of which was arbitration. The rationale of such holding is stated in the opinion as follows (275 Wis. at page 500, 82 N.W.2d at page 174):

'We do not construe the contract or the law as requiring an individual employee to invoke this grievance procedure to assert an accrued pecuniary claim in circumstances where it is reasonably apparent that the union is hostile to him and will not give him adequate representation. To do so would place the employee's accrued rights against his employer more or less at the mercy of an unfriendly union. Both congress and the Wisconsin legislature have shown solicitude to protect employees from such consequences, by the provisions of the 1947 Federal Labor Management Act, [61 U.S.Stats. at L., p. 143, sec, (a)], 29 U.S.C.A. § 159(a), and the Wisconsin Employment Peace Act, sec. 111.05(1), that any individual employee shall have the right at any time to present grievances to the employer. See discussion and authorities cited in Lenhoff, The Effect of Arbitration Clauses upon the Individual, 9 Arbitration Journal 3, and Elgin, J. & E. R. Co. v. Burley, 325 U.S. 711, 733, 736, 65 S.Ct. 1282, 89 L.Ed. 1886.'

Under the holding in Soto v. Lenscraft Optical Corp., supra, if the plaintiff employees in the instant case had applied to the arbitrator to intervene in the arbitration proceeding, it would have been his duty to have granted it. Such right of intervention would be valueless, however, if the plaintiffs were not given adequate notice of the arbitration hearing. In view of our holding that there was no fair representation of the plaintiffs by the union at such...