GARFIELD LOCAL 13-566, ETC. v. Heyden Newport Chem. Corp., Civ. A. No. 588-58.

• Decision Date: 09 April 1959
• Docket Number: Civ. A. No. 588-58.
• Citation: 172 F. Supp. 230
• Parties: GARFIELD LOCAL 13-566 OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, AFL-CIO, Emory A. Wenzel and Rudolph J. Wenzel, Plaintiffs, v. HEYDEN NEWPORT CHEMICAL CORPORATION and The Equitable Life Assurance Society of the United States, Defendants.
• Court: U.S. District Court — District of New Jersey

172 F. Supp. 230

GARFIELD LOCAL 13-566 OIL, CHEMICAL AND ATOMIC WORKERS INTERNATIONAL UNION, AFL-CIO, Emory A. Wenzel and Rudolph J. Wenzel, Plaintiffs, v. HEYDEN NEWPORT CHEMICAL CORPORATION and The Equitable Life Assurance Society of the United States, Defendants.

Civ. A. No. 588-58.

United States District Court D. New Jersey.

April 9, 1959.

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Bracken & Walsh, Newark, N. J., for plaintiffs.

Shanley & Fisher, Newark, N. J., for defendant Heyden Newport Chemical Corp.

Emory, Langan, Lamb & Blake, Jersey City, N. J., for Equitable Life Assur. Soc. of the United States.

MORRILL, District Judge.

This suit is by a union and by two certain officer members thereof in their individual capacities and as representatives of a class. The class consists of those members of the union who are participants in the pension plan in question.

The employer-defendant Heyden arranged a pension plan for its employees through the insurer-defendant Equitable. Concededly, this plan was voluntary, in the sense that employees of Heyden could subscribe to it or withdraw from it at their will. Subsequently, the Union and Heyden entered into a collective bargaining agreement which covered certain of Heyden's employees but did not cover other employees hereinafter designated as salaried employees. Prior to this agreement, some employees of both classes, salaried and non-salaried, were participants in the pension, numbered AC-512. The agreement provided that Heyden's "presently existing Pension Plan * * * shall be continued in force * * * during the life of this Agreement."

Later, 101 salaried employees withdrew from plan AC-512¹ and joined a newly formed pension plan through Equitable, AC-1399,¹ which covered salaried employees. Plan AC-512 provided that accumulated reserves attributable to withdrawing participants could be transferred.

In Count One, the Union, alleging that the creation of the new plan involved the removal of over $670,000 from the reserves held by Equitable for plan AC-512 and amounted to a breach of the collective bargaining agreement to keep AC-512 "in force," seeks specific performance of this agreement by compelling Heyden to restore "the said pension plan to its original form and content and to keep it in force," and for the restoration of the reserves.

In Count Two, the individual plaintiffs, alleging that they contributed to the original plan "under an agreement involving as consideration the making of similar contributions from Heyden Newport and all other employees of defendant Heyden Newport, over a period of years, by which the plan was made safer, more economical and potentially capable of further improvement," and that the creation of the new (and allegedly better) plan discriminated against the nonsalaried employees, seek the same relief but as against both defendants.

The defendants move for summary judgment on both counts.

Count One

This count is brought by the Union "under and by virtue of the provisions of 29 U.S.C.A. § 185(a)," being § 301 of the Labor-Management Relations Act (Taft-Hartley), which provides that "suits for violation of contracts between an employer and a labor organization * * * may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties." At the hearing, counsel for the Union confirmed that the action was rooted in § 301, with specific performance being an allowable remedy under that section as decided by Independent Petroleum Workers of New Jersey v. Esso Standard Oil Company, 3 Cir., 1956, 235 F.2d 401. Although the collective bargaining agreement called for an arbitration procedure for grievances, such relief was not sought. See Textile Workers Union v. Lincoln Mills, 353 U.S. 448, 77 S.Ct. 923, 1 L.Ed.2d 972.

In Association of Westinghouse Salaried Employees v. Westinghouse Electric Corp., 348 U.S. 437, 75 S.Ct. 489, 99 L.Ed. 510, which involved an interpretation of a collective bargaining agreement about payment of wages for a day of absence, the opinion of Justice Frankfurter, announcing the decision, stated that Congress did not intend by § 301 "to open the doors of the federal courts to a potential flood of grievances based upon an employer's failure to comply with the terms of a collective agreement relating to compensation, terms peculiar in the individual benefit which is their subject matter and which, when violated, give a cause of action to the individual employee." 348 U.S. at page 460, 75 S.Ct. at page 500. (Emphasis supplied.) He concluded that Congress did not confer on the federal courts jurisdiction over that type of suit.

Concurring, the Chief Justice stated there was no evidence of Congressional intent "to authorize a union to enforce in a federal court the uniquely personal right of an employee for whom it had bargained to receive compensation for services rendered his employer." 348 U.S. at page 461, 75 S.Ct. at page 501. (Emphasis supplied.)

It is to be noted that in Westinghouse, a motion to dismiss was made in the District Court on the merits and for lack of jurisdiction. The court denied the motion on the latter ground but granted it on the first ground. D.C., 107 F.Supp. 692. The Court of Appeals vacated the order and directed dismissal for lack of jurisdiction. 3 Cir., 210 F.2d 623.

The Westinghouse case was keenly analyzed by Judge Hastie in United Steelworkers v. Pullman-Standard Car Mfg. Co., 3 Cir., 1957, 241 F.2d 547. Involved there was interpretation of a collective bargaining agreement regarding a pension clause. It was held that pension provisions of a collective bargaining agreement come within the scope of the Westinghouse rule. "Certain undertakings of the employer are important because of their direct and primary effect upon the union as an organization. Undertakings to maintain a union shop and to check off union dues are typical of this category. Breaches of such undertakings so primarily concern the union that it may meaningfully be said that the resulting claims are not `uniquely personal' to the employees." At page 551.

It would seem, therefore, that I have no choice but to deny the motion for summary judgment on Count One and enter an order for dismissal for lack of jurisdiction insofar as Count One rests on § 301.

The Union now contends, however that even if dismissal is impelled by the above reasoning, the complaint also alleges the necessary diversity and amount in controversy to give this court jurisdiction under 28 U.S.C.A. § 1332, and that Count One should stand as an ordinary equity suit for specific performance without regard to § 301 of the Taft-Hartley Act. 29 U.S.C.A. § 185. This the court will allow, under F.R.Civ.P. 8(f), 28 U.S.C.A., but there still remains the problem of jurisdiction under § 1332. Of course, with jurisdiction assumed on the basis of diversity, the law of New Jersey governs, Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, and this court sits, in effect, only as another court of New Jersey, Guaranty Trust Co. of New York v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079. Thus, the following cases become applicable: Christiansen v. Local 680, Milk Drivers, etc., 1940, 126 N.J.Eq. 508, 10 A.2d 168, Dooley v. Lehigh Valley R. Co., 1941, 130 N.J.Eq. 75, 21 A.2d 334, and Milk Drivers & Dairy Employees, Local 680 v. Cream-O-Land Dairy, 1956, 39 N.J. Super. 163, 120 A.2d 640.

This court is not bound by the pleadings of the parties as to the amount in controversy. It may, on its own motion, if led to believe that its jurisdiction is not properly invoked, inquire into the facts as they really exist. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135; Ambassador East, Inc. v. Orsatti, Inc., 3 Cir., 1958, 257 F.2d 79.

The affidavits and briefs submitted by the parties provide sufficient facts for a proper determination. The Union argues that "plainly put, the union wanted to have a veto on any pension plan change to give it an advantage in bargaining," and that "this provided the union with a very important collective bargaining weapon which by negotiation of subsequent contracts could tie improvement of the whole insurance scheme of the company to a threat of strike or other economic reprisal." The Union conceded that if the 101 salaried workers withdrew from plan AC-512 and joined a new plan with a different insurance carrier there would be no cause for grievance; likewise, if they joined plan AC-1399 and the existing reserves remained intact. Furthermore, the Union admitted that "nobody will get less insurance as the result of the severance of union and non-union insurance contracts."

As to the reserves, a vice-president and associate actuary of Equitable deposed in part as follows:

"With respect to the statement that defendants removed $671,642.00 from the reserve held by defendant Equitable in Contract No. AC 512, what was done at that time was that the purchase payments made by the employer for the employees who were transferring to Contract No. AC 1399 were transferred as a credit to the purchase payment fund provided for under Contract No. AC 1399. While it is true that there are reserves for all insurance and annuity contracts issued by the Equitable, there is no specific reserve fund for any particular annuity contract or insurance policy. The general credit of the Equitable is pledged for all annuity contracts and insurance policies issued by the Equitable.

"The annuity benefits of the members of plaintiff local under Annuity Contract No. AC 512 have not been affected in the least by the transferring of certain employees to the deposit administration contract No. AC 1399."

This was not contradicted.

With the diversity statute to be strictly construed, Thomson v. Gaskill, 315 U.S. 442, 62 S.Ct. 673, 86 L.Ed. 951, it is difficult to find here a...