Posner v. Grunwald-Marx, Inc.

• Decision Date: 29 June 1961
• Docket Number: INC,GRUNWALD-MAR
• Citation: 56 Cal.2d 169,363 P.2d 313,14 Cal.Rptr. 297
• Court: California Supreme Court
• Parties: , 363 P.2d 313, 43 Lab.Cas. P 50,306 Jerome POSNER, as Manager of Los Angeles Joint Board, Amalgamated Clothing Workers of America, Plaintiff and Appellant, v., (a Corporation), Defendant and Respondent. L. A. 26239

Page 297

14 Cal.Rptr. 297

56 Cal.2d 169, 363 P.2d 313, 43 Lab.Cas. P 50,306

Jerome POSNER, as Manager of Los Angeles Joint Board, Amalgamated Clothing Workers of America, Plaintiff and Appellant, v. GRUNWALD-MARX, INC., (a Corporation), Defendant and Respondent.

L. A. 26239.

June 29, 1961.

Wirin, Rissman, Okrand & Posner and Paul M. Posner, Los Angeles, for plaintiff and appellant.

Pauling Nightingale, Los Angeles, Effie Sparling, South Pasadena, William P. Nutter, Norwalk, Milford A. Maron, Bodle & Fogel, George E. Bodle, Daniel Fogel and Stephen Reinhardt, Los Angeles, as amici curiae on behalf of plaintiff and appellant.

Hill, Farrer & Burrill, Hyman Smith and Ray L. Johnson, Jr., Los Angeles, for defendant and respondent.

PETERS, Justice.

Petitioner union brought these proceedings to compel the defendant employer, Grunwald-Marx, Inc., to arbitrate the question of vacation pay for 1957 and holiday pay for May 30, 1957 (Decoration Day), which pay the union contends is owed to its members.

Both the union and the employer rely on a collective bargaining agreement entered into on October 1, 1953, and which, on October 23, 1956, was renewed and extended through September 30, 1959. Among other things, the agreement provided for a one-week vacation in each calendar year, based on hours and days worked during a period computed as ending with the last pay period in June of each year, which vacation was to be taken in the first week of July in the absence of a mutual agreement as to some other period. It also provided that, as a requirement of eligibility for the paid vacation, an employee must have been on the company pay roll nine months prior to the commencement of the vacation period and at the commencement of the vacation period; and that any employee who quit or was discharged for cause prior to the vacation period lost his rights to vacation pay. The agreement provided for May 30th (Decoration Day) as a paid holiday and required for eligibility that an employee must work the last working day before the holiday and the first working day after the holiday. Under the agreement an employee was entitled to holiday pay if he did not work any of these days due to illness or lay-off.

On or about May 29, 1957, defendant employer moved its plants from Los Angeles County to Phoenix, Arizona, and 'terminated' its employees. The collective bargaining agreement did not expressly provide for the contingency of the plaint's removal or the 'termination' of the employees.

The arbitration provision of the collective bargaining agreement provided, in part, that: 'A complaint, grievance or dispute arising between the parties relating directly or indirectly to the provision(s) of this agreement whether concerning discharges or any other terms thereof shall in the first instance be taken up for adjustment by a representative of the Union and a representative of the Company. In the event that they are unable to adjust the same then such matters shall be submitted to arbitration. * * *'

Upon the refusal of Grunwald-Marx, Inc., to pay vacation pay for 1957, or holiday pay for May 30, 1957, or to arbitrate these matters, the union pursuant to section 1282 of the Code of Civil Procedure, filed a petition for an order directing arbitration. The petition was then withdrawn because the employer voluntarily agreed to arbitrate, and then again filed when the employer refused to proceed with the arbitration.

The trial court denied the petition and ordered the proceedings dismissed. It concluded that Grunwald-Marx, Inc., was not in default under the arbitration provisions of the collective bargaining agreement because 'The wording of the collective bargaining agreement is without ambiguity as to vacation pay and holiday pay.'

In thus limiting the arbitration clause of the agreement, the trial court adopted the older of two conflicting rules for the interpretation of such provisions found in collective bargaining agreements. It purported to apply the so-called 'Cutler-Hammer' doctrine, which is that: 'While the contract provides for arbitration of disputes as to the 'meaning, performance, non-performance or application' of its provisions, the mere assertion by a party of a meaning of a provision which is clearly contrary to the plain meaning of the words cannot make an arbitrable issue. * * * If the meaning of the provision of the contract sought to be arbitrated is beyond dispute, there cannot be anything to arbitrate and the contract cannot be said to provide for arbitration.' International Ass'n of Machinists v. Cutler-Hammer, 271 A.D. 917, 67 N.Y.S.2d 317, 318, affirmed 297 N.Y. 519, 74 N.E.2d 464. This doctrine has never been affirmed by this court. It has received sharp academic criticism ¹ and little 'academic' support. ²

An entirely different rule was adopted by the United States Supreme Court in a series of three significant cases decided last June. ³ This rule is to the effect that, where the collective bargaining agreement provides for arbitration of all disputes pertaining to the meaning, interpretation and application of the collective bargaining agreement and its provisions, any dispute as to the meaning, interpretation and application of any specific matter covered by the collective bargaining agreement is a matter for arbitration. Doubts as to whether the arbitration clause applies are to be resolved in favor of coverage. The parties have contracted for an arbitrator's decision and not for that of the courts. The high court declared that 'The function of the court is very limited when the parties have agreed to submit all questions of contract interpretation to the arbitrator. It is confined to ascertaining whether the party seeking arbitration is making a claim which on its face is governed by the contract. Whether the moving party is right or wrong is a question of contract interpretation for the arbitrator. In these circumstances the moving party should not be deprived of the arbitrator's judgment, when it was his judgment and all that it connotes that was bargained for.' United Steelworkers of America v. American Mfg. Co., supra, 363 U.S. 564, 567-568, 80 S.Ct. 1343, 1346. The court also carefully pointed out that the parties may exclude a particular grievance from arbitration either in the collective bargaining agreement or in a written collateral agreement. United Steelworkers of America V. Warrior & Gulf Co., supra, 363 U.S. 574, 584-585, 80 S.Ct. 1347.

This federal rule is not binding on this court in the instant case because petitioner failed to allege that the employer was engaged in interstate commerce. Moreover, the trial court found the employer's allegation (in an affirmative defense) that it was engaged in interstate commerce to be false. See Textile Workers Union of America v. Lincoln Mills, 353 U.S. 448, 456, 77 S.Ct. 912, 1 L.Ed.2d 972; McCarroll v. Los Angeles County Dist. Council of Carpenters, 49 Cal.2d 45, 59-60, 315 P.2d 322. But there are strong policy reasons why the federal rule is preferable. Certainly, uniformity is desirable. In view of the complex state of industry in this country, the majority of the major collective bargaining agreements necessarily relate to interstate commerce, and so they, of course, are governed by the federal rules. And, as petitioner union pointed out at oral argument, most large unions utilize a standard contract which they seek to have signed by the various employers whether such employers are engaged in either intrastate or interstate commerce. Certainly it would seem that in reference to the interpretation, scope and application of such contracts, uniformity is to be desired. It must also not be forgotten that 'arbitration agreements in labor contracts are primarily designed to prevent strikes and other expressions of unrest by a prompt and equitable settlement of labor disputes, and not merely, as in the case with other arbitration agreements, to avoid the formalities, the delay, the expense, and vexation of ordinary litigation.' 31 Am.Jur., Labor, § 114, p. 479. Moreover, in favor of the federal rule it should be noted that the 'Cutler-Hammer' doctrine is based on strict and technical application of ordinary contract law, while the rule adopted by the United States Supreme Court properly takes into consideration the peculiar nature of the collective bargaining agreement. In this regard, the Supreme Court, in the American Manufacturing Company case noted that '(S)pecial heed should be given to the context in which collective bargaining agreements are negotiated and the purpose which they are intended to serve and that which they are intended to serve' and that of claims that courts might be unwilling to entertain. In the context of the plant or industry the grievance may assume proportions of which judges are ignorant. Yet, the agreement is to submit all grievances to arbitration, not merely those that a court may deem to be meritorious.' 363 U.S. at page 567, 80 S.Ct. at page 1346.

Solicitor General (formerly Harvard Law Professor) Archibald Cox in Reflections Upon Labor Arbitration (1959), 72 Harv.L.Rev. 1482, at page 1489, observed that 'there are as wide differences in the substantive rules and precepts of contract interpretation applicable to different kinds of commercial contracts as there are between 'ordinary contracts' and collective-bargaining agreements.' As unique characteristics of a collective bargaining agreement, Cox described the number of people affected and the complexity of their interests; the 'wide range of conduct' and 'enormous variety of problems' covered in a collective bargaining agreement which must 'be kept short and simple enough for the ordinary worker to read and understand,' and so results in an inevitable verbal incompleteness. He pointed out that a labor contract operates prospectively over substantial periods so that one can hardly foresee all the problems that will develop in an industrial...