In re US Truck Co., Inc.
| Decision Date | 09 June 1987 |
| Docket Number | Bankruptcy No. 82-03561-R. |
| Citation | 74 BR 515 |
| Parties | In re U.S. TRUCK COMPANY, INC., Debtor. |
| Court | U.S. Bankruptcy Court — Eastern District of Michigan |
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Thomas Radom, Birmingham, Mich., Charles Lincoln, Little Rock, Ark., for debtor.
George Peck, Grosse Pointe, Mich., for Creditor, Central Transport.
James Hoffa, Detroit, Mich., Gerry Miller, Milwaukee, Wis., for Teamsters Negotiating Committee.
On December 6, 1982, the Court granted U.S. Truck's motion to reject its collective bargaining agreement with the Teamsters Union. On August 7, 1984, the Teamsters National Freight Industry Negotiating Committee (the Committee) filed an amended proof of claim (the claim) for the resulting damages. On October 26, 1984, U.S. Truck filed objections to the claim. On January 15, 1985, Central Transport Corporation, a creditor related to the debtor, joined in the debtor's objections. After discovery, a lengthy hearing was held. This opinion constitutes the Court's findings of fact and conclusions of law pursuant to Bankruptcy Rules 9014 and 7052.
After the resolution of several legal issues both before and during the hearing,1 the following aspects of the Committee's claim are presently before the Court:
A. Damages for wage and benefit reductions for hourly employees and over-the-road drivers.
B. Damages for wage and benefit losses incurred by laid off office employees.
C. Damages for lost membership dues for several Teamsters Local Unions.
The Committee contends that in connection with its contract rejection claim, these damages are properly allowed under NLRB v. Bildisco and Bildisco, 465 U.S. 513, 104 S.Ct. 1188, 79 L.Ed.2d 482 (1984), 11 U.S.C. ? 502, and the applicable labor law.
U.S. Truck contends that a new agreement entered into between itself and the Union, implemented on January 11, 1983, bars the claim under theories of contract modification and waiver. It further contends that the claims of laid off employees should be denied because they would have been laid off even absent rejection as a result of proper management decisions, and because the employees did not exhaust the grievance and arbitration procedures of the rejected contract. The debtor further argues that the Committee has shown no damages resulting from the rejection of the agreement. Finally, it disputes several aspects of the Committee's damage calculations.
II. Findings of Fact
1. On June 18, 1982, U.S. Truck filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code.
2. As of the date of the petition, U.S. Truck was a signatory to the March 1, 1982 National Master Freight Agreement with the International Teamsters Union, and the various supplements thereto ?€” the Central States Area Local Cartage Supplemental Agreement (Plaintiff's Exhibit 1), Central States Area Over-the-Road Motor Freight Supplemental Agreement (Plaintiff's Exhibit 2), and Teamsters State of Michigan Office Workers Supplemental Agreement to the National Master Freight Agreement (Plaintiff's Exhibit 3). (All of these agreements are referred to as the rejected agreement). The rejected agreement would have expired by its terms on March 31, 1985.
3. The Teamsters National Freight Industry Negotiating Committee is a committee of local union representatives appointed by the president of the International Teamsters Union to negotiate and execute an industry-wide agreement. The authority of the committee to seek its enforcement is set forth in the constitution of the Teamsters Union and in the rejected agreement.
4. A grievance system was in place under the rejected agreement. U.S. Truck continued the grievance system until approximately April 15, 1983.
5. Shortly after filing its petition but before the agreement was rejected, U.S. Truck inaugurated various measures to reduce expenses, as stated in Findings 6 through 10.
6. The cashier's job was eliminated. This was accomplished by directing the debtor's customers to send payments for freight charges directly to its bank through a lockbox. The purpose for this change was to reduce labor costs and increase interest earnings. Betty Watkins, the cashier whose job was eliminated, was able to use her seniority to obtain a job in the accounts payable department, from which she was later laid off. (See Findings 22, 23, and 27, below.)
7. The switchboard operator's job was eliminated by instituting a direct dial system. As a result, Helen Suszek was laid off on July 31, 1982. She did not file a grievance over the layoff. If she had been actively employed by U.S. Truck for the duration of the rejected agreement, her additional wages and benefits would have been $69,536.48. In mitigation of her losses, she received outside earnings and unemployment benefits totalling $47,357.59.
8. Joann Drew was laid off from her secretarial position on August 15, 1982, because her job was consolidated with that of a nonunion confidential secretary. Ms. Drew grieved her layoff and received an award of 2 weeks back pay. If she had remained actively employed by U.S. Truck until December 31, 1984, her additional wages and benefits would have been $67,101.82. In mitigation of these losses, she received outside earnings, the grievance award, and unemployment benefits totalling $52,726.14. Ms. Drew had no loss for 1985.
9. Hazel Long was laid off on August 27, 1982. She did data processing and miscellaneous office tasks. She had recently used her seniority to bid for a position in the accounts payable department. U.S. Truck gave her some training for that work, but after a time, laid her off as unqualified for the accounts payable position. She was later passed over for recall, when an employee with less seniority was recalled for 3 weeks, and Ms. Long was not. Ms. Long grieved U.S. Truck's failure to follow seniority in the recall and was awarded approximately $999. She did not grieve her layoff. If she had been actively employed by U.S. Truck until her retirement, her additional wages and benefits would have been $26,933.00. In mitigation of her losses, she received unemployment benefits and the grievance award totalling $10,638.00.
10. U.S. Truck rejected the lease of its computer system pursuant to 11 U.S.C. ? 365, and subcontracted the work to Computer on Line Data Services (COLDS), a facility operated by the holding company which owns U.S. Truck and other trucking operations. The purpose of this change was to reduce labor and equipment costs. Gloria Gonzalez was laid off from her job as a billing clerk on September 17, 1982, because the billing was transferred to COLDS. She did not grieve her layoff. If she had been actively employed by U.S. Truck through December 31, 1984, her additional wages and benefits would have been $62,517.44. In mitigation of her losses, she received other earnings and unemployment insurance totalling $18,401.05. Ms. Gonzalez failed to timely provide income tax information for 1985, pursuant to the Court's discovery order. (See footnote 1, paragraph 4, above.)
11. On July 15, 1982, approximately one month after the bankruptcy filing, the debtor filed a motion to reject the collective bargaining agreement under 11 U.S.C. ? 365.
12. On September 9, 1982, (then) Bankruptcy Judge George Woods denied U.S. Truck's motion to reject the collective bargaining agreement, and ordered the parties to negotiate further.
13. The parties did negotiate further, but did not reach an agreement.
14. On December 6, 1982, upon U.S. Truck's motion for reconsideration, the Bankruptcy Court approved the rejection of the collective bargaining agreement. In granting the motion, Judge Woods stated:
Testimony presented at the September 1 and 9, 1982 hearings established that the debtor is incurring staggering losses; that measures undertaken to reduce expenses have proven insufficient to reverse the loss trend; that the debtor cannot survive given the wage requirements of the collective bargaining contract currently in effect. The Court therefore finds that rejection of the labor contract is absolutely necessary to save the debtor from collapse.
In re U.S. Truck Company, Inc., No. 82-03561-R (Bankr.E.D.Mich. December 6, 1982) ()
15. After the agreement was rejected, U.S. Truck continued paying the wages and benefits required by the rejected agreement until January 11, 1983.
16. On December 8, 1982, U.S. Truck sent a telegram to Jack Yager, an employee of the Central Conference of Teamsters and a member of the Teamster National Freight Industry Negotiating Committee. The telegram set a date for immediate negotiations and indicated that if no agreement were reached within 30 days, U.S. Truck would be required to close down.
17. Representatives of U.S. Truck and the local unions did meet and negotiate. By January 10, 1983, they had drafted a document entitled "Addendum to the National Master Freight Agreement and Over-the-Road Supplement," and two other documents, reducing wages approximately ten percent. Each carried the preamble that it was a "rider" to the particular supplement to the National Master Freight Agreement. The provisions were phrased as deletions from or amendments to the particular supplement. These documents are referred to as "the new agreement."
18. On January 11, 1983, U.S. Truck's union employees voted to ratify the new agreement. The new agreement was then put before various other Teamsters bodies with varying results. The parties dispute the proper method for achieving official Teamsters approval of the new agreement. U.S. Truck maintains that the new agreement was a valid contract effective January 11, 1983. The Committee maintains that the new agreement never received the necessary approvals and that therefore...
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