INTERNATIONAL BRO. OF EW, LU 308 v. Dave's Elec. Serv., Inc.

• Decision Date: 08 October 1974
• Docket Number: No. 74-45-Civ-T-H.,74-45-Civ-T-H.
• Citation: 382 F. Supp. 427
• Parties: INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 308 et al., Plaintiffs, v. DAVE'S ELECTRIC SERVICE, INC., Defendant.
• Court: U.S. District Court — Middle District of Florida

382 F. Supp. 427

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, LOCAL UNION NO. 308 et al., Plaintiffs, v. DAVE'S ELECTRIC SERVICE, INC., Defendant.

No. 74-45-Civ-T-H.

United States District Court, M. D. Florida, Tampa Division.

October 8, 1974.

Ronald G. Meyer of Law Offices of Richard H. Frank, P.A., Tampa, Fla., for plaintiffs.

Allen M. Blake, V. James Facciolo, Marion E. Williams, Jr., of Alley, Rock & Dinkel, Chartered, Tampa, Fla., for defendant.

OPINION

HODGES, District Judge.

On January 17, 1974, Plaintiffs initiated this action against the Defendant employer to recover delinquent contributions to the employees' health and welfare trust fund as required by the collective bargaining agreement between the union and the employer. Plaintiffs are Local 308 of the International Brotherhood of Electrical Workers (hereafter referred to as the Union) and the several trustees of that local's health and welfare fund (hereafter referred to as the Trustees). Jurisdiction in this Court is predicated on § 301(a) of the Labor Management Relations Act of 1947, as amended, 29 U.S.C. § 185(a).

On February 25, Defendant filed its answer asserting the affirmative defense of failure to exhaust the grievance procedure, including arbitration, established in the collective bargaining agreement. Defendant also counterclaimed against the Union seeking damages for alleged breaches of contract in connection with the employee referral system, the workmanship of employees, and the requirement that employees furnish personal tools and equipment. On March 6, Plaintiffs filed motions to dismiss the counterclaim, to strike portions of the counterclaim, and to strike the affirmative defense. A hearing on these motions was held on May 23.

I. THE COLLECTIVE BARGAINING AGREEMENT

Since the law compels a party to submit his claim to arbitration only if he has contracted to do so, this analysis must begin by examining the terms of the pertinent collective bargaining agreement. Gateway Coal Co. v. U.M. W., 414 U.S. 368, 374, 94 S.Ct. 629, 635, 38 L.Ed.2d 583 (1974). The contract involved in this dispute is in fact composed of two agreements between the Union and the Pinellas County Electrical Contractors Association, Inc., of which the Defendant is a member. The first, entitled "Residential Agreement," was effective from September 1, 1972, to September 1, 1974, and presumably related to electrical work performed in residences. The second, entitled "Inside Working Agreement," is effective from December 1, 1972, to November 30, 1975, and apparently governs electrical work performed on construction and industrial jobs. While the pleadings do not clearly disclose whether only one or both of these agreements is applicable to the claims here, the implication is that only the Residential Agreement is involved. In any event, the grievance and arbitration provisions of both contracts are substantially similar and, for the purposes of the present motions, produce the same result.

The grievance procedure in each agreement contemplates initial adjustment by individual representatives of the Union and the employer. If a resolution cannot be made within 48 hours, the dispute is referred to a Labor Management Committee composed of three Union representatives and three employer representatives. Should no decision be reached by the Committee, the dispute is referred for adjudication to the Council on Industrial Relations for the Electrical Contracting Industry. The Residential Agreement provides that this procedure shall apply to "all grievances or questions in dispute concerning the application, interpretation, or performance of the terms of this Agreement." Residential Agreement, Art. I, § 6. The Inside Working Agreement provides simply that "all grievances or questions in dispute shall be adjudged" in accordance with this procedure. Inside Working Agreement, Art. I, § 5. Both agreements contain no-strike clauses. Thus, the Court concludes that the grievance and arbitration procedures of both agreements are broad enough to include the claims made here, arising as they do from the provisions of the agreements themselves. Accordingly, the Court has no difficulty in holding that it was the intent of the parties, as evidenced by the agreements, to process the disputes described in the counterclaim in accordance with the grievance and arbitration procedure. The claim of Defendant that Plaintiff Union breached the referral, workmanship, and tools provisions of the collective bargaining agreement is subject to the grievance procedure of the agreements and is not to be litigated here.

A more difficult question is posed with respect to the affirmative defense of failure to arbitrate the basic claim asserted in the complaint. Do the agreements require that the Trustees, as third party beneficiaries of the collective bargaining agreement, submit to arbitration their claim for delinquent health and welfare contributions?

II. THE LAW OF COMMERCIAL THIRD PARTY BENEFICIARY CONTRACTS

The law with respect to the defenses available against a third party beneficiary of an ordinary commercial contract seems to be that the beneficiary's rights are subject to any defenses that would be available to the promisor were he being sued on the same contract by his promisee. Restatement, Contracts § 140 (1932). That this is so seems clear since the claim of a beneficiary is dependent upon the relationship among the promisor, promisee, and beneficiary as established in the contract itself. Accordingly, the defenses of fraud, breach of condition whether express or constructive, mistake, or failure of consideration are valid against the beneficiary. His rights are no higher in this respect than those of the promisee since he has sacrificed nothing to secure those rights. Grismore, Contracts § 243 (Murray rev. ed. 1965). On the other hand, after the contract is made and that relationship is established, the rights of the promisee and those of the beneficiary follow separate paths so that intervening defenses may be good against one but not against the other. 4 Corbin, Contracts § 818 (1951). As a consequence, the defenses of discharge by the promisee and wrongful acts by the promisee subsequent to the making of the contract, for example, may not be asserted against the beneficiary. Id. The key to determining which defenses may be available against the beneficiary is the relationship among the parties as initially defined in the contract itself. It would seem, therefore, that the defense of failure to arbitrate raised by a promisor in a commercial third party beneficiary contract containing, at its inception, a broad arbitration clause would be good against the beneficiary. If an arbitration clause does not exclude the beneficiary, it must be concluded that, like the promisee, he takes subject to it. Cf. Lewis v. Benedict Coal Corp., 361 U.S. 459, 468, 80 S.Ct. 489, 494-495, 4 L.Ed.2d 442 (1960).

III. ARBITRATION AND THE NATIONAL LABOR LAW

The state of the law with respect to commercial third party beneficiary contracts is not necessarily controlling here, however, because of the command by Congress that the courts fashion from the policy of our national labor laws a body of federal law applicable to § 301 cases. Textile Workers Union v. Lincoln Mills of Ala., 353 U.S. 448, 456, 77 S.Ct. 912, 918, 1 L.Ed.2d 972 (1957). Insofar as arbitration is concerned, however, the Supreme Court, beginning with the Steelworkers Trilogy¹ and continuing through its recent decision in Gateway Coal Co. v. U. M.W., 414 U.S. 368, 94 S.Ct. 629, 38 L. Ed.2d 583 (1974), has time and again declared that federal policy encourages arbitrability of labor disputes, and that arbitrability is to be presumed.² In Gateway Coal, the Court emphasized that the national goal of industrial peace is the basis of this policy. Since a collective bargaining agreement cannot define every detail of a complex and ongoing labor-management relationship, arbitration is peculiarly suited to the establishment of a private common-law-of-the-shop while also providing the most efficient and expeditious means of resolving individual disputes by selection of impartial arbitrators having accumulated expertise related to the particular industry or issue involved. Accordingly, the Court in Gateway Coal applied the presumption of arbitrability to labor disputes touching the safety of employees. Gateway Coal, supra, at 378-379, 94 S.Ct. at 637.

While this rationale for arbitration — industrial peace — would seem to have greater applicability to the traditional two party union-employer dispute than to the three party union-employer-trustees dispute involved here, the Supreme Court's explicit recognition of the expertise of the arbitrator would appear to be equally applicable. Disputes of the present variety typically require resolution of issues involving union or job jurisdiction and conducting an accounting. Obviously, a thorough knowledge of industry practices in these areas would be a benefit an arbitrator could bring to the parties that this Court could not. That expertise alone, as approved and recognized in the authorities, is sufficient to tip the scales in favor of arbitration insofar as the national labor policy is concerned.

In addition, the other considerations of expedition and efficiency suggest that arbitration is the more sensible method of dispute resolution in this context. In this Court the parties must comply with the Federal Rules of Civil Procedure and the local rules of the Court. Among other formal requirements of these rules, supporting and opposing legal memoranda are required with motions.³ The parties must labor, as well, under the handicap of a crowded docket.⁴ Hearings are difficult to obtain, and trials, even when scheduled far in advance, are frequently continued as a matter of court necessity.⁵ This case itself is an excellent illustration of the delays caused by crowded docket conditions....