Local U. No. 186, Packinghouse F. & A. Wkrs. v. Armour & Co.

• Decision Date: 17 August 1971
• Docket Number: No. 71-1098.,71-1098.
• Citation: 446 F.2d 610
• Parties: LOCAL UNION NO. 186, UNITED PACKINGHOUSE FOOD AND ALLIED WORKERS, AFL-CIO, an Unincorporated Labor Corporation, Plaintiff-Appellant, v. ARMOUR AND COMPANY, a Foreign Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

446 F.2d 610 (1971)

LOCAL UNION NO. 186, UNITED PACKINGHOUSE FOOD AND ALLIED WORKERS, AFL-CIO, an Unincorporated Labor Corporation, Plaintiff-Appellant, v. ARMOUR AND COMPANY, a Foreign Corporation, Defendant-Appellee.

No. 71-1098.

United States Court of Appeals, Sixth Circuit.

August 17, 1971.

S. Del Fuston, Chattanooga, Tenn., for appellant.

R. Allan Edgar, Chattanooga, Tenn., Miller, Martin, Hitching, Tipton, Lenihan & Waterhouse, Chattanooga, Tenn., on the brief, for appellee.

Before EDWARDS, CELEBREZZE and PECK, Circuit Judges.

PECK, Circuit Judge.

This appeal from a summary judgment raises questions of interpretation of a collective bargaining agreement between Local Union No. 186, United Packinghouse, Food and Allied Workers AFL-CIO, the appellant, and Armour and Company, appellee, concerning the company's liability for vacation pay to its employees when it closed its plant in September, 1966. The union contends that all employees had "earned" vacation pay, to be disbursed in 1967, by the time the plant closed; the company contends, and the District Court agreed, that the employees would be eligible to receive vacation pay only if they were working on January 1, 1967, which they obviously were not, since the plant had closed.

The dispute centers on the following provisions in the agreement:

"49. Continuous Service and Anniversary Date. The Continuous Service Date of an employee shall be:

"(a) In the case of employes hired hereafter, the employes presently on the payroll who have not as yet established seniority, the date on which the employe first establishes departmental seniority on the plant payroll.

"(b) In the case of employes presently on the payroll who have established seniority, the plant service date heretofore in effect and use for determining vacation eligibility for each such employe.

"The Anniversary Date of an employe shall mean each anniversary of the employe\'s last established Continuous Service Date.

"50. Qualification for Vacation:

"(a) Vacations for all employes will be granted on a calendar year basis in accordance with the following eligibility requirements.

"(1) Employes who have one (1) or more years of continuous service as of January 1 (except for new employes provided for below) will be granted vacations during the calendar year January 1 to December 31, provided they have worked a minimum of one hundred fifty (150) days during the preceding calendar year."

* * * * * *

"92. (After providing for separation pay) * * *

"To the separation allowance computed as per above, add pay for the vacation, if any, for which the employe has qualified but not taken."

When the plant closed, separation pay, as provided in § 92, was paid, but the company refused to compensate the workers for what the union contended was already earned vacation pay. The company took the position that the employees had not yet "qualified" for the pay under § 92, and therefore were not due such wages. When arbitration of the dispute proved futile, the union filed a complaint in the District Court. After considering several affidavits filed by each side, the court determined that summary judgment was proper, and filed an opinion finding for the company. Thereafter, the union filed a supplemental affidavit, but the District Court declined to modify its ruling. The union then perfected this appeal.

The District Court relied heavily on the fact that section 59(a) of the agreement provided that employees mandatorily retired during the year would receive prorata vacation pay for each quarter worked, assuming they had worked 38 hours in that quarter. The Court noted correctly that under the union's interpretation this provision would be unnecessary to protect the retiree who had worked 150 days since he would then be entitled to full vacation pay. Indeed, as the Court and the company both observe, a retiree who had worked 150 days might be in worse position than one who had not, since the former may have worked in only two quarters, thus receiving only ½ his vacation pay, while the latter would receive his full pay. From this the Court concluded that, for the nonretiring worker, only working 150 days was insufficient to qualify for vacation pay. We conclude that the District Court misconstrued the purpose of § 59(a), which manifestly was to protect the retiree who had not worked 150 days to qualify for full vacation pay. Thus, while there is unquestionably some inconsistency between the literal wording of § 59(a) and the union's position, the common sense of inserting some provision in the contract to protect the mandatory retiree outweighs the literal construction for which the company contends.

Many tribunals have taken the view that vacation pay is simply an alternate form of wages, earned at the time of other wages, but whose receipt is delayed. So eminent a jurist as Judge Learned Hand declared, in 1940, that:

"A vacation with pay is in effect additional wages. It involves a reasonable arrangement to secure the well-being of the employees and the continuance of harmonious relations between employer and employee. The consideration for the contract to pay for a week\'s vacation had been furnished, that is to say, one year\'s service had been rendered prior to June 1, so that the week\'s vacation with pay was completely earned and only the time of receiving it was postponed." In re Wil-Low Cafeterias, Inc., 111 F. 2d 429, 432 (2d Cir. 1940).

Although in different contexts, this Court has recognized that concept. Smith v. Kingsport Press, Inc., 366 F.2d 416 (6th Cir. 1966); Hire v. E. I. DuPont DeNemours and Co., 324 F.2d 546 (6th Cir. 1963).

This view of vacation pay indicates that the company gains no substantive benefit per se from requiring employees to be "on the payroll" on January 1, but rather has gained the benefits from the work done in the previous year. Thus, there is no difference in terms of eligibility, between the worker who has worked only 150 days, and one who has worked 360. The company has derived in effect the same benefit from the work of both — and has agreed to pay additional wages to both. From this approach, then, we must ask whether, under contract doctrine, the January 1 date is a material part of the contract, rendering the failure to meet that condition fatal to the worker, or whether, on the other hand, it is something less than critical to the purpose of the parties.

The resolution of this issue requires consideration of the past negotiations and contracts of the parties. Such an inquiry reveals that, prior to the 1960 contract, there were two key dates for each employee: his "continuous service date," basically the day on which he originally began work, and his "anniversary date," which indicated an anniversary of the continuous service date. In the 1956 contract, an employee was eligible for vacation pay "after the Anniversary Date." While first year employees were required to work 185 days to qualify for vacation, other employees received vacation unless they had been absent for 60 continuous days.^* It thus appears that, in 1956, the critical point was the anniversary date. There were, however, two major exceptions: (1) Employees who had been employed between 2-5 years could, upon request, be allowed to take their vacations up to 3 months in advance of their anniversary date. This, however, was only allowed because "it is presumed he will continue in the employment of the plant up to his anniversary date." Thus, at least in this context, the requirement of working until the anniversary date was important. (2) Employees who had worked more than 5 years were allowed to request vacation up to 5 months in advance. Here, however, there was no express contractual assumption that these employees would work until the anniversary date.

The critical change came in 1960. In that year a new clause, "Qualification for Vacation," was added to the contract. Vacations were made available only on a...