Pennington v. Whiting Tubular Products, Inc.

• Decision Date: 17 July 1963
• Docket Number: No. 1,1
• Citation: 122 N.W.2d 692,370 Mich. 590
• Parties: Opal PENNINGTON, Pauline Henson, and Joan Shore, individually and as joint assignees, Plaintiffs and Appellants, v. WHITING TUBULAR PRODUCTS, INCORPORATED, a Michigan Corporation, Novi Products Company, a Michigan Corporation, and Dover Products Company, a Michigan Corporation, Defendants and Appellees.
• Court: Michigan Supreme Court

Page 692

122 N.W.2d 692

370 Mich. 590

Opal PENNINGTON, Pauline Henson, and Joan Shore individually and as joint assignees, Plaintiffs and Appellants, v.WHITING TUBULAR PRODUCTS, INCORPORATED, a Michigan Corporation, Novi Products Company, a Michigan Corporation, and Dover Products Company a Michigan CorporationDefendants and Appellees.

No. 1.

Supreme Court of Michigan.

July 17, 1963.

Livingston, Ross & Van Lopik(formerly Livingston, Ross & Miller), Detroit, Attorneys for plaintiffs and appellants, Bruce A. Miller, Winston L. Livingston, Nancy Jean Van Lopik, Detroit, of counsel.

Bishop, Keller, Thoma & McManus, Detroit, Charles E. Keller, Detroit, of counsel, for appellee and cross-appellant, Whiting Tubular Products, Inc.

Charles W. Bishop, Detroit, for appellee.

Before the Entire Bench.

CARR, Chief Justice.

In 1953, and thereafter until June 30, 1955, defendant Whiting Tubular Products was engaged in a munufacturing business, including the fabrication of tubular products, in Melvindale.The plaintiffs in this case and their assignors were each for a portion of said period employed by said company, hereinafter referred to as Whiting.It appears that they were members of the International Union, United Automobile, Aircraft and Agricultural Implement Workers of America (UAW-CIO) and its affiliated Local 985, referred to in the record as the 'Union'.

Under date of June 2, 1953, Whiting entered into a written agreement with said Union acting on behalf of the company's employees, which set forth at some length the rights and obligations of the respective parties thereto.The Union was recognized as the exclusive bargaining agency for the employees, with certain named exceptions not applicable in the instant case.Said agreement, among other clauses, provided for seniority on the part of employees, subject to the following provisions found in Article VI, Section 2, of the contract:

'Section 2.Employees shall lose seniority and employment rights shall cease for the following reasons:

'(a) Employee quits.

'(b) Employee is discharged and not reinstated through the grievance procedure.

'(c) Employee is absent for two (2) days for any reason without notifying one of the members of the Management of the Company.Upon receipt of such notice, Management shall in turn notify the Chief Steward in writing.

'(d) Employees on layoff fail within three (3) calendar days to report for work after being notified to do so.Written notice by Registered Mail or Telegram to last-known address shall be considered notice.Employees shall notify the Company of any change in address and receive a recipt for same.This is to be applied to seniority employees.

'(e) After one (1) year of continuous layoff or length of service, whichever is greater.'

It was further provided that the company should keep a true copy of the seniority list.Provisions were also made in the agreement with reference to layoffs and the recall of employees thereafter.Article II, Section 1, of the agreement, involved in the present controversy, reads as follows:

'Section 1.The right to discharge or discipline for cause, maintain discipline and efficiency of employees, and establish standards of production is the sole responsibility of the Company, subject to the right of appeal through the Grievance Procedure herein.In addition, and insofar as it does not conflict with the terms of this Agreement, the right to hire, the work to be performed, the location of the plant, the schedules of production, the methods, processes and means of manufacturing and methods of control are solely and exclusively the responsibility of the Company.It is understood that if the Company changes the location of the present plant, employees on the seniority list shall be given the first opportunity to take a job at the new location.'

It is a fair inference from the record before us that the operations of Whiting were not wholly satisfactory from a financial standpoint.Apparently its management concluded that the contract with the Union imposed obligations resulting in excessive costs in the conduct of the business.When the agreement came up for renewal in June, 1953, a strike occurred.However, the agreement under date of July 30, 1954, was extended to June 2, 1955, and subsequently to June 2, 1956.Beginning in the spring of 1954 the company laid off a number of employees, and on July 30th of that year posted a notice advising its employees that it was going out of the tube fabricating business.Its plant was offered for sale.However, operations on a somewhat limited scale continued there until June 30, 1955.Thereafter the plant was sold and possession given to the purchaser in September following.

In the summer of 1954the defendantNovi Products Company was incorporated and commenced operations on or about August 15th of that year.By agreement with Whiting, machinery was moved to the Novi plant from Whiting.DefendantDover Products Company was also organized, with its place of business located in the city of Detroit.Both of said corporations engaged in the business of fabricating tubular procucts.It was the claim of plaintiffs as set forth in their declaration that both were organized for the purpose of taking over the fabricating business previously conducted by Whiting, that each was wholly controlled by Whiting which acted as a sales representative, and that in effect the operations at Novi and Dover were merely a continuation of the fabricating business of Whiting.In other words, it was and is the theory of plaintiffs that the organizations of Novi and Dover merely effected a change in the location of Whiting's fabricating operations, and that, in consequence, employees laid off by Whiting were entitled to be employed at such new locations.The suit was instituted in circuit court on the theory that the agreement made with the Union with reference to continued employment of Whiting employees in the event to a change of location, above quoted, had been violated.It is conceded that such employment was not offered to plaintiffs, or any of their assignors, by Whiting or either of the other corporations.

Acting under the advice of counsel the employees selected three of their number, plaintiffs Pennington, Henson and Shore, to bring suit for damages against the defendant corporations.The declaration filed was based on the theory that as third party beneficiaries ¹the plaintiffs were entitled to maintain the action for damages due to alleged loss of employment that defendants were obligated to furnish.It was specifically claimed that the purpose in the organization of Novi and Dover was to avoid the obligation of the contract that had been made by the Union for the protection and benefit of employees of Whiting.An assignment was prepared by counsel, transferring to the three plaintiffs named the cause of action of a large number of employees so that the suit a filed actually consisted of many individual actions, each such claim, however, being based on the alleged breach of contract.It was provided in the form of assignment executed that any money collected as the result of a judgment, if obtained, would be distributed to the persons entitled thereto in proportion to the damages established by each, less attorney fees and costs.

On behalf of defendants it was denied that there was any breach of contract, it being claimed that Novi Products Company and Dover Products Company were organized in good faith and that they operated as independent corporations not subject to the control of Whiting.It was also claimed on behalf of defendants that the controversy involved an alleged unfair labor practice and as such was within the exclusive jurisdiction of the National Labor Relations Board.A motion to dismiss on the ground of lack of jurisdiction in the State court was submitted, taken under advisement, and denied following the conclusion of the trial.For purposes of convenience the parties in whose names the suit was brought, and their assignors, will be referred to herein as plaintiffs.

The case was tried before a jury and continued for approximately seven weeks.The trial judge submitted the issues involved to the jury, the members of which were furnished with writing materials to the end that they might make such notations as they desired as the proofs were submitted.The jury was directed, if it found the plaintiffs were entitled to recover, to return a verdict for the aggregate amount thereof.After the jury had deliberated for some time the trial judge recalled it to the courtroom and gave further instructions to pass separately on the claim of each plaintiff who had testified in the case.The result was a verdict against Whiting in the aggregate amount of $67,355.In connection with the rendition of such verdict the jury also reported its findings with reference to each plaintiff to whom damages were awarded, 49 in number.Counsel for plaintiffs moved that judgment be entered on the verdict, which motion was denied.Defendants had asked for a directed verdict at the conclusion of the proofs and renewed their request by motion for judgment notwithstanding the verdict, relying principally on the ground that the proofs were not sufficient to support the findings of the jury.Said motion was granted.The trial judge indicated his reasons for his ruling as follows:

'The defendant's second motion, for a judgment of no cause of action, filed by the defendant, will be granted, or to set aside the judgment, for the reason that the facts failed to show by a preponderance of the evidence the damages to which the individual plaintiffs were entitled.In this casethe court instructed the jury to bring back the...