Monroe Sander Corporation v. Livingston

• Decision Date: 03 May 1967
• Docket Number: No. 352,353,31026.,Dockets 31025,352
• Parties: The MONROE SANDER CORPORATION, Plaintiff-Appellant, v. David LIVINGSTON, individually and as the President of District 65, Retail, Wholesale and Department Store Union, AFL-CIO, Defendant-Appellee. LACQUER SPECIALTIES, INC., Plaintiff-Appellant, v. David LIVINGSTON, individually and as the President of District 65, Retail, Wholesale and Department Store Union, AFL-CIO, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

377 F.2d 6 (1967)

The MONROE SANDER CORPORATION, Plaintiff-Appellant, v. David LIVINGSTON, individually and as the President of District 65, Retail, Wholesale and Department Store Union, AFL-CIO, Defendant-Appellee.

LACQUER SPECIALTIES, INC., Plaintiff-Appellant, v. David LIVINGSTON, individually and as the President of District 65, Retail, Wholesale and Department Store Union, AFL-CIO, Defendant-Appellee.

Nos. 352, 353, Dockets 31025, 31026.

United States Court of Appeals Second Circuit.

Argued February 10, 1967.

Decided May 3, 1967.

COPYRIGHT MATERIAL OMITTED

Irwin M. Rosenthal, New York City (Edward L. Skolnik, Stephen Lowey and Weiss, Bronston & Rosenthal, New York City, on the brief), for plaintiff-appellant Monroe Sander Corp.

George Moskowitz, New York City (Kirschenbaum, Moskowitz & Shapiro, New York City, on the brief), for plaintiff-appellant Lacquer Specialties, Inc.

Eugene G. Eisner, New York City, for defendant-appellee.

Before LUMBARD, Chief Judge, and SMITH and ANDERSON, Circuit Judges.

J. JOSEPH SMITH, Circuit Judge:

The Monroe Sander Corporation and Lacquer Specialties, Incorporated brought actions under § 301 of the Labor-Management Relations Act, 61 Stat. 156 (1947), 29 U.S.C. § 185, and the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, which sought to stay permanently arbitration proceedings which had been demanded by District 65, Retail, Wholesale and Department Store Union, AFL-CIO. The United States District Court for the Southern District of New York, Charles H. Tenney, Judge, granting the union's motions for summary judgment under Fed.R.Civ.P. 56, dismissed the actions, and, after reargument on the merits, refused to vacate the original summary judgments. 262 F. Supp. 129. Sander and Lacquer now appeal from the dismissal of their actions. We affirm as to Sander and reverse as to Lacquer.

Sander owned and operated a Long Island City, New York, plant which, starting in the 1920's, had manufactured paints, lacquers, varnishes and enamels. Since 1964, Sander has been a wholly-owned subsidiary of the American Petro-chemical Corporation. For over twenty-five years the union was the authorized bargaining representative of Sander's production employees. On June 15, 1964, Sander and the union executed a one year collective bargaining agreement, which, on October 11, 1965, was extended retroactively from June 15, 1965 to June 15, 1966.

On January 28, 1966, pleading continued inability to turn a profit even after the Petrochemical takeover, Sander informed the union that "we may find it necessary to close the company entirely, move to a different plant which lends itself to greater production efficiency or combine the products of this plant with another operation of the company either now in existence or which may be acquired in the future." Two months later, on March 30, in response to a letter of March 25 in which the union stated that it would seek modification of the collective agreement, Sander proposed to extend the existing contract to October 31, 1966, at which time it would expire in its entirety. Under the terms of this proposal, Sander would be allowed to transfer production to a new location at any time.

During early April, Sander met with the union as well as with its employees and explained its economic situation. The union demanded a new contract. At about the same time, Sander informed the union that Petrochemical was considering acquiring Lacquer, a modern, non-union manufacturer of paints and lacquers, located in Newark, New Jersey, which had the capacity to service all of Sander's customers. Sander also notified its customers of the intention to take over Lacquer. Then, on April 22, the union replied to the company's March 30 proposal with a counter proposal for a two year contract containing, among other matters, substantial wage increases.

On April 28, Petrochemical agreed to acquire the business and assets of Lacquer contingent upon several conditions which were fulfilled in July. Thereupon, although the record is not clear on this point, Lacquer apparently became a wholly owned subsidiary of Petrochemical and seems to continue to do business under its original name. During late May and early June more meetings occurred with the union raising questions concerning the Moving and Basic Crew Clauses of the collective agreement. On June 4 Sander repeated its March 30 offer. Provided Petrochemical took over Lacquer, Sander also promised its employees preferential hiring at the Newark plant for a four month period commencing on June 15, the expiration date of the contract. Sander made this preferential hiring promise contingent as well on the availability of jobs, the prospect of which was not very promising. No positions were then available; and, even if Lacquer were to service Sander's customers, the New Jersey plant was capable of increasing productivity without hiring new employees.

With the union still demanding jobs at Lacquer, bargaining broke down. On June 7 the union served on Sander and Lacquer a demand for arbitration "concerning the Company's current breach and its threatened removal of its operations from Long Island City to Lacquer Specialties, Inc., in Newark, New Jersey, in derogation of the rights of the Union and the employees it represents." The actions at bar, to stay the demanded arbitration, ensued.

It should be mentioned initially that no unfair labor practice issues are presented on this appeal. The union did file charges of § 8(a) (3) and § 8(a) (5) violations, 29 U.S.C. §§ 158(a) (3), 158 (a) (5), with the Brooklyn Regional Office of the National Labor Relations Board. The Regional Director, however, refused to issue a complaint and dismissed the charges. Meanwhile, the union withdrew the charges. The Director approved this withdrawal and then withdrew his dismissal.

Accordingly, the questions for review are: whether there is an arbitrable dispute and, if so, what issues are to be arbitrated; who are the parties to the arbitration; whether our holding in McGuire v. Humble Oil & Ref. Co., 355 F.2d 352 (2d Cir.), cert. denied 384 U.S. 988, 86 S.Ct. 1889, 16 L.Ed.2d 1004 (1966), compels a stay of arbitration in this case.

I.

The Supreme Court has ruled that "whether or not the company was bound to arbitrate, as well as what issues it must arbitrate, is a matter to be determined by the Court on the basis of the contract entered into by the parties,"¹ Atkinson v. Sinclair Ref. Co., 370 U.S. 238, 241, 82 S.Ct. 1318, 1320, 8 L.Ed.2d 462 (1962). In making this determination, a court must be mindful of the high place that arbitration holds in the national labor policy. "The present federal policy is to promote industrial stabilization through the collective bargaining agreement * * * A major factor in achieving industrial peace is the inclusion of a provision for arbitration of grievances in the collective bargaining agreement." United Steelworkers of America v. Warrior & Gulf Nav. Co., 363 U.S. 574, 578, 80 S.Ct. 1347, 1350, 4 L. Ed.2d 1409 (1960) footnotes omitted. Thus, the rule is that unless the parties expressly exclude a matter, the court will conclude that they intended to submit it to arbitration. "An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage." Id. at 582-583, 80 S.Ct. at 1353. "In the absence of any express provision excluding a particular grievance from arbitration, we think only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail, particularly where, as here, the exclusion clause is vague and the arbitration clause quite broad." Id. at 584-585, 80 S.Ct. at 1354. See also Drake Bakeries Inc. v. Local 50, American Bakery & Confectionery Workers Int'l., 370 U.S. 254, 258-260, 82 S.Ct. 1346, 8 L.Ed.2d 474 (1962).

Here, the arbitration clause is as broad as any imaginable. It covers "Any controversy, claim or dispute or grievance of any nature whatsoever arising between the Employer and the Union or any employees, including but not being limited to questions of meaning, interpretation, operation, or application of any clause of this agreement, or concerning any breach or threatened breach of this agreement by either party or concerning any acts, conduct or relations of whatsoever nature between the Union and the Employer, directly or indirectly * * *." Moreover, there is no specific exclusionary clause. In fact, the parties did not even agree to the usual broadly-worded management functions clause.

After weeks of negotiations back and forth, the union demanded arbitration of the company's "current breach" and "threatened removal" during the term of the collective bargaining agreement.² Thus, contrary to appellants' assertion, this case is not controlled by Procter & Gamble Independent Union of Port Ivory, N. Y. v. Procter & Gamble Mfg. Co., 312 F.2d 181, 183 (2d Cir. 1962), cert. denied 374 U.S. 830, 83 S.Ct. 1872, 10 L.Ed.2d 1053 (1963), in which we refused to compel arbitration where "the activities on which the discipline was based, the disciplinary measures the propriety of which the union seeks to arbitrate, and the filing of the grievances all occurred in the interval between the termination date of the old agreement and the effective date of the new agreement." Also, insofar as the union demands arbitration of rights not limited to the duration of the collective agreement, whether or not the dispute and the demand for arbitration occurred after the expiration of the agreement is irrelevant. Piano & Musical Instrument Workers Union, etc. v. W. W. Kimball Co., 221 F.Supp. 461 (N.D.Ill.1963), rev'd 333 F.2d 761, rev'd per curiam 379 U.S. 357, 85 S.Ct. 441, 13 L.Ed.2d 541 (1964); Local Lodge No. 595, etc. v. Howe Sound Co., 350 F.2d 508 (3d Cir. 1965). Likewise immaterial is...