Rodriguez v. Bar-S Food Co.
| Decision Date | 11 July 1983 |
| Docket Number | Civ. A. No. 81-K-2153. |
| Citation | 567 F. Supp. 1241 |
| Parties | Joseph V. RODRIGUEZ, Frank J. Martinez, Clarence A. Weigand, Susie Reyes, Audrey R. McConnell and Eli Taylor, Plaintiffs, v. BAR-S FOOD COMPANY, Defendant. |
| Court | U.S. District Court — District of Colorado |
Martin D. Buckley, Hornbein, MacDonald, Fattor & Buckley, Denver, Colo., for plaintiffs.
William G. Imig, Owen C. Rouse, Ireland, Stapleton & Pryor, P.C., Denver, Colo., for defendant.
This case comes before me on defendant's motion for summary judgment and on plaintiffs' motion to maintain the class action. Plaintiffs have confessed Bar-S's motion to bifurcate the issues of liability and damages, should I decide that the plaintiffs may proceed with a class action. A summary of the factual and procedural background of this case is essential.
Plaintiffs are all members of Local P-85 of the United Food and Commercial Workers International Union. Before August, 1981, they were employed in the Denver meat packing plant of Cudahy Company, a wholly-owned subsidiary of General Host Corporation. A master agreement then in force governed the terms and conditions of the plaintiffs' employment by Cudahy. Bar-S is a Delaware corporation organized in 1981 to purchase substantially all the assets of Cudahy's Meat Division, which General Host decided to sell in the Fall of 1980.
This division included four meat packing plants in Atlanta, Phoenix, Seattle and Denver, as well as several related distribution centers. After some efforts, General Host was unable to locate an outside buyer. It then entered into negotiations with members of Cudahy's management who had expressed an interest in purchasing the meat division. The management group was headed by Timothy T. Day, then-president of Cudahy. In March, 1981, General Host announced an agreement in principal to sell the bulk of Cudahy's assets to Day's group. The group was subsequently incorporated as Bar-S Food Company, the defendant here.
On August 28, 1981, all of Cudahy's Denver employees were terminated, retired or transferred, and the Denver plant closed. The employees received severance pay and benefits under the master agreement. On the same day, Cudahy and Bar-S consummated the sale of Cudahy with the execution of an assets purchase agreement.
Under the terms of the agreement, the purchasers invested approximately $500,000 towards the sale price of 23.5 million dollars. They met the balance with a third party secured loan and issuance of preferred stock to General Host. Within a week, the Denver plant reopened under the new owners, with a non-union work force which received wages substantially lower than those which the union members had received.
Just before the sale to Bar-S, the union filed with the NLRB an unfair labor practices charge against Bar-S, Cudahy and General Host. The charge claimed, inter alia, that the three companies intended to repudiate the master agreement and abrogate the terms and conditions of employment at the Denver plant. The NLRB refused to act on the union's charges. NLRB's regional director found the sale to Bar-S to be bona fide. He also found that Bar-S was not a disguised continuance of Cudahy within the Board's traditional alter ego standards, since the only continuing relationship was that of a secured creditor and preferred stockholder of non-voting stock. On appeal and motion for reconsideration, the director's findings were upheld.
Next, in July, 1981, the union initiated a grievance procedure against Cudahy. At issue was whether Cudahy had violated the collective bargaining agreement between the parties when it closed its Denver plant and sold its assets to Bar-S. After a two day hearing, the arbitrator denied the grievance. He found that the agreement did not prohibit a bona fide sale and that the sale to Bar-S was legitimate.
Immediately before the sale, the Union also filed a complaint in this court against Cudahy seeking to enjoin the sale of the plant to Bar-S. Bar-S intervened. After a hearing, Judge Finesilver denied the injunction, finding that the transaction was not a "sham, a facade or pretext."
Local P-85 filed a second grievance in October, 1981, this time against Cudahy and Bar-S, claiming that both companies were operating the Denver plant in violation of the collective bargaining agreement. Bar-S refused to arbitrate on the grounds that it was not a party to any agreement obligating it to do so. When the union threatened suit to compel arbitration, Bar-S complained to the NLRB, seeking relief from the grievance and relief from the Union's picketing at its Brighton Boulevard plant. In its resolution of the grievance, the NLRB required the union to withdraw its grievance and cease picketing.
This suit was filed against General Host, Cudahy and Bar-S on November 25, 1981 in state court, then removed to this court. Jurisdiction is based solely on diversity of citizenship, 28 U.S.C. § 1332. In an earlier opinion and order, I granted Cudahy's motion to dismiss for lack of subject matter jurisdiction. Rodriguez v. Bar-S Food Co., 539 F.Supp. 710 (1982). I did so because I found the "dispute between the plaintiffs and defendant Cudahy was arguably within the scope of the NLRB's exclusive jurisdiction...." 539 F.Supp. at 716. Following that opinion, plaintiffs conceded that the parent corporation, General Host, should be dismissed for the same reason. I refused to dismiss Bar-S, explaining that "the cause of action is only peripherally related to matters within the NLRB's exclusive jurisdiction and therefore may be heard by this court." 539 F.Supp. at 717.
Bar-S advances three arguments in support of its motion for summary judgment. First it claims that the plaintiffs are collaterally estopped by the arbitrator's awards in the initial grievance filed by the union. Second, it reasserts its earlier argument that this action is preempted by federal labor law, the recent U.S. Supreme Court opinion in Local 926, International Union of Operating Engineers v. Jones, ___ U.S. ___, 103 S.Ct. 1453, 75 L.Ed.2d 368 (1983). Finally, it argues on the merits that summary judgment is appropriate because the plaintiffs' termination was not caused by Bar-S.
The plaintiffs, in response, deny they are collaterally estopped. They say the issues are different in this proceeding than in the arbitration and that they did not have a full and fair opportunity to litigate in the earlier proceeding. They next argue that I was correct in my earlier determination that this case has not been preempted by federal law. Finally, they suggest there are numerous factual issues remaining which cannot be resolved by summary judgment.
This is a diversity case. As such, I must turn to Colorado law to resolve Bar-S's collateral estoppel argument. Peffer v. Bennett, 523 F.2d 1323 (10th Cir.1975). Two issues must be resolved. First, I must decide if Colorado law permits an arbitration award to be given preclusive effect. Next, I must decide if the four requirements of Pomeroy v. Waitkus1 were satisfied in the earlier proceeding.
Whether an arbitration award can be given preclusive effect is an issue little litigated in Colorado. I am able to find only one case on point. Smith v. Piercy, 71 Colo. 187, 205 P. 275 (1922), arose initially over a dispute about the purchase and sale of land. Following an arbitrator's award against Smith, he brought suit for damages and breach of contract, against which Piercy set up the arbitration award. After an adverse directed verdict, Smith appealed. The Colorado Supreme Court held that every issue involving the transaction was properly before the arbitrators, "and were in fact and law settled by their findings." 71 Colo. at 190, 205 P. 275.
The Colorado courts' treatment of estoppel in the context of former administrative proceedings is also instructive. Following the Supreme Court's lead in United States v. Utah Construction and Mining Company, 384 U.S. 394, 421, 422, 86 S.Ct. 1545, 1559, 1560, 16 L.Ed.2d 642 (1966), the Colorado Supreme Court has recognized that the doctrines of res judicata and collateral estoppel may be applied to administrative hearings as long as the Pomeroy requirements are met. Umberfield v. School District No. 11, 185 Colo. 165, 522 P.2d 730 (1974). Accordingly, I hold that an arbitration award may be given preclusive effect against a subsequent judicial proceeding.
The parties are in agreement that there was a final judgment in the arbitration hearing and that all the plaintiffs were in privity with their union in the earlier proceeding. I do not need to reach the very difficult question of identicality of issues, because I conclude that the plaintiffs did not have a fair and full opportunity to litigate in the earlier forum. Rawson v. Sears Roebuck & Co., 530 F.Supp. 776 (D.C. Colo.1982) (Kane, J.).
The Colorado courts have not specifically addressed what factors I should consider in assessing the plaintiffs' full-opportunity-to-litigate claims.2 The Restatement (Second) Judgments supplies the following rule.
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