Hoh v. Pepsico, Inc., 870 Docket 74-1151.

• Decision Date: 08 February 1974
• Docket Number: No. 870 Docket 74-1151.,870 Docket 74-1151.
• Parties: John HOH, as President of Brewery Workers Local 3, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America; and Neil Borra as President of Brewery Delivery Employees Local 46, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Appellants, v. PEPSICO, INC. and its wholly-owned subsidiaries Rheingold Corporation and Rheingold Breweries, Inc., Appellees.
• Court: U.S. Court of Appeals — Second Circuit

491 F.2d 556 (1974)

John HOH, as President of Brewery Workers Local 3, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America; and Neil Borra as President of Brewery Delivery Employees Local 46, International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Appellants, v. PEPSICO, INC. and its wholly-owned subsidiaries Rheingold Corporation and Rheingold Breweries, Inc., Appellees.

No. 870 Docket 74-1151.

United States Court of Appeals, Second Circuit.

Argued February 6, 1974.

Decided February 8, 1974.

I. Philip Sipser, New York City (Sipser, Weinstock, Harper & Dorn, New York City, of counsel), for appellants.

Herbert Prashker, New York City (Poletti Freidin Prashker Feldman & Gartner, and Robert Morris, Kim Ebb, Lawrence A. Katz, Roger Briton, New York City, Madeline Nesse, Edward Brill, and Kathryn J. Rodgers, New York City, of counsel), for appellees.

Before FRIENDLY, FEINBERG and MULLIGAN, Circuit Judges.

FRIENDLY, Circuit Judge:

This appeal, which we heard on an emergency basis, concerns the shutdown of the Rheingold Brewery in Brooklyn, N.Y. The action was begun on January 31, 1974 by petitioners (hereafter the unions) against Pepsico, Inc., Rheingold Corporation, and Rheingold Breweries, Inc. (hereafter the employer)¹ in a New York State court and was removed by the respondents to the District Court for the Eastern District of New York on the basis that the complaints, styled as a petition to compel arbitration under a collective bargaining agreement, stated a claim under § 301 of the Labor Management Relations Act.²

The collective bargaining contract, which, as renewed on April 30, 1973, runs until May 31, 1976, contains a broad provision that all complaints or disputes which cannot be settled by agreement shall be referred to an Adjustment Committee and, in the event of its inability to reach a decision by majority vote, to arbitration by a three-man board, one member of which shall be a member of the Brewers Board of Trade, Inc., another a member of the unions, and a third to be selected by them or, failing that, to be appointed through the procedures of the American Arbitration Association. The agreement also contains a provision, Part VI, Section 1(B) and (C), for much faster arbitration. If the Adjustment Committee fails to reach a decision within 36 hours after written notice of a request for adjustment and a party desires to proceed more speedily, or if a party alleges a violation of the contract clause prohibiting strikes, stoppages and lockouts, it can demand one-man arbitration by the American Arbitration Association, with the arbitration to begin within 24 hours after notice and with the award to be issued not later than 48 hours after conclusion of the hearing.³

In FTC v. PepsiCo, Inc., 477 F.2d 24, 29, 30 (2 Cir. 1973), denying a preliminary injunction against Pepsico's acquisition of control of Rheingold Corporation, we noted that Rheingold's share in the beer market was declining, that it projected a loss of between $2 million and $7 million in its 1973 beer operations, that it had developed no final budget for these, and that "PepsiCo very probably has no interest in the beer business." As early as mid-December, 1973, Pepsico and its labor counsel alerted the unions as to the probability of an early shutdown of the Rheingold brewery; on January 2, 1974, the unions were told it would have to close by the end of the month except in the unlikely event that a purchaser could be found. Five days later, on January 7, 1974, the employer notified the employees that for the economic reasons of which the unions had already been apprised, it had decided to suspend new brewing operations but that this would not significantly affect the employment level for the rest of the month, since the last brewing cycle commenced on January 4, 1974 would require another three and a half weeks. On January 25, the employer notified the employees that, in view of the large losses being incurred and the failure of its two-year search for a purchaser who could operate the brewery under conditions satisfactory to the unions,⁴ all operations would cease on February 1 and all employees (other than those needed for clean-up work) would then be terminated—unless before that date a suitable purchaser could be found.

The unions responded by serving, on January 28, a copy of twelve Issues for Submission to the Adjustment Committee. Several of these related to the alleged impropriety of the February 1 termination. The claim of impropriety was based on two theories—"the representations made by it the employer to its employees and the Union concerning the continuance of its operations and/or its failure to disclose critical information concerning such continuance, at the time of the execution of the current collective bargaining agreement," and an obligation to continue operations until the contract's expiration date in 1976. Attempted resolution by the Adjustment Committee proved abortive and on January 30, the unions sent the American Arbitration Association a request for arbitration of the twelve issues. The request did not refer to the quick arbitration procedure of Part VI, Section 1(B) and (C), and the Association's response of January 31, enclosing a list of names from which the arbitrator would be appointed and requesting a return of the list not later than seven days thereafter, must have made it clear to the unions that the Association did not so understand it.

On the same day, without having received any indication from the employer that it would decline to submit to arbitration,⁵ the unions filed in the state courts the petition to compel arbitration to which we have already referred. The petition alleged that the unions had requested deferral of the shutdown pending the determination of the arbitration but that the employer had declined. Accordingly, the unions sought injunctive relief to that end.

After the removal the application came on before Judge Bartels on February 1, at the close of business on which the plant was to shut down. There was some debate whether the application should be regarded as one for a temporary restraining order, F.R.Civ.P. 65(b), or for a preliminary injunction, F.R. Civ.P. 65(a). Both sides seemed to prefer that the judge include consideration of the latter in order that his decision might result in an order appealable under 28 U.S.C. § 1292(a)(1). In the course of the presentation, counsel for the unions made some suggestion that the unions might be satisfied with an injunction requiring preservation of the plant in shape for future operation or sale and wage payments of not more than $100,000 per week, without a resumption of production. After reviewing such papers as were before him and a number of decisions, the judge concluded "that the petitioners have failed to make a clear showing of probable success on the merits which would justify the issuance of a temporary restraining order or, without a hearing, a preliminary injunction." Accordingly he denied the application, although granting a stay of the shutdown until midnight on February 4.⁶ He relied particularly on Part VII(B) of the collective bargaining agreement which read in relevant part:

(B) In the event that the Employer shall suspend or discontinue the operations of its plants in whole or in part, its obligations hereunder shall be correspondingly suspended or discontinued.

The unions appealed to this court and asked for a hearing on February 4. At that time the parties stipulated that until midnight on February 8, unless this court should determine the appeal earlier, the employer would conduct clean-up operations as previously planned and announced, keep on hand sufficient saleable beer to fill a million cases, and not dismantle the plant or sell it except to a person who would continue brewery operations.⁷ We agreed to hear the appeal on February 6. Since denial of a temporary restraining order is not appealable, Grant v. United States, 282 F.2d 165, 167 (2 Cir. 1960), save in the rare case, not here presented, where despite the label the effect is that of denial of a preliminary injunction, see C. Wright, Federal Courts 459 (2d ed. 1970), the sole question before us is whether the judge abused his discretion in refusing to issue a preliminary injunction.

Somewhat ironically, the unions attack the denial of a preliminary injunction on the ground that in the few hours which were all that he had available, the judge did not conduct an evidentiary hearing or make findings of fact and conclusions of law, F.R.Civ.P. 52(a) and 65(b). It would be a sufficient answer that if the judge should not have denied a temporary injunction under such circumstances, he still more clearly should not have granted one as the unions want, and the parties asked him to do one or the other. The judge made clear that a principal ground for his denial was that there had been no opportunity for a hearing; nothing prevented the unions' seeking one on February 4 or later. While this alone might suffice to dispose of the appeal, we think it preferable, in light of the human problems involved, to go into the matter somewhat more extensively.

Citing Detroit Newspaper Publishers Ass'n v. Detroit Typographical Union, 471 F.2d 872 (6 Cir. 1972), cert. denied, 411 U.S. 967, 93 S.Ct. 2149, 36 L.Ed.2d 687 (1973), and Emery Air Freight Corp. v. Local Union 295, 449 F.2d 586, 588-589 (2 Cir. 1971), cert. denied, 405 U.S. 1066, 92 S.Ct. 1500, 31 L.Ed.2d 796 (1972), the employer asserts that, despite Boys Markets, Inc. v. Retail Clerks Union, Local 770, 398 U.S. 235, 90 S.Ct. 1583, 26 L.Ed.2d 199 (1970), § 7 of the Norris-LaGuardia Act, 29 U.S.C. § 107, as distinguished from § 4, 29 U.S.C. § 104, remains applicable when an injunction is sought in a labor dispute, even in aid of arbitration. Perhaps this goes somewhat too...