Schneider v. Electric Auto-Lite Company

• Decision Date: 08 March 1972
• Docket Number: 71-1288.,No. 71-1287,71-1287
• Citation: 456 F.2d 366
• Parties: Frank P. SCHNEIDER et al., Plaintiffs-Appellees and Cross-Appellants, v. The ELECTRIC AUTO-LITE COMPANY, a Corporation, Defendant-Appellant and Cross-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

456 F.2d 366 (1972)

Frank P. SCHNEIDER et al., Plaintiffs-Appellees and Cross-Appellants, v. The ELECTRIC AUTO-LITE COMPANY, a Corporation, Defendant-Appellant and Cross-Appellee.

Nos. 71-1287, 71-1288.

United States Court of Appeals, Sixth Circuit.

March 8, 1972.

Eugene T. D'Ablemont, New York City, for Electric Auto-Lite Co.; Shumaker, Loop & Kendrick, John W. Hackett, Jr., Toledo, Ohio; Kelley, Drye, Warren, Clark, Carr & Ellis, New York City, on brief.

M. L. Okun, Toledo, Ohio, for Frank P. Schneider, and others; Gordon A. Holder, Toledo, Ohio, on brief.

Before WEICK, McCREE and BROOKS^*, Circuit Judges.

WEICK, Circuit Judge.

The suit in the District Court was a class action brought by employees of Auto-Lite under Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185(a), to recover damages against Auto-Lite arising out of the permanent shutdown of its plant in Toledo, Ohio, in August, 1962.

The case was tried only on the issues relating to liability. The determination of any damages which plaintiffs may be entitled to recover was reserved for a later hearing. The case involved claims for lost wages, vacation pay, pension rights and insurance benefits under a collective bargaining agreement between Auto-Lite and the employees' bargaining representative, Mechanics Education Society of America, Local 7 MESA.

The District Court denied the claims of employees for lost wages, and unjust enrichment due to Auto-Lite's control of the pension fund, and other claims, but it did hold that the employees were entitled to recover pro rata vacation pay based on 1962 earnings, the value of conversion rights on group term life insurance as of August 31, 1962, and the present value of pension rights as of March 1, 1963.

Auto-Lite manufactured electric automotive equipment, in Toledo, Ohio. Prior to 1962 it had several plants located there, and thousands of workers were employed in the area. More than 90% of its employees were members of Local 12, International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW). The skilled employees were members of MESA.

Chrysler Corporation was the largest customer of Auto-Lite's Toledo plants. Over 70% of the Toledo plants' production was devoted to the manufacture of automotive product lines for Chrysler. The source of Auto-Lite's labor difficulties began in 1957, when Chrysler notified Auto-Lite that it had decided to manufacture its own electrical parts because this would be more economical. A phase-out agreement was negotiated between the two companies and by September, 1960, Auto-Lite's production for Chrysler was terminated.

In 1959 when MESA's skilled Divisions Agreement (SDA) was about to terminate, a new collective bargaining agreement was entered into. It was to run for three years until March 1962, and would automatically renew for an additional year unless either party gave written notice of termination. During this negotiation, discussions took place concerning the combination of Auto-Lite's Model Shop and tool room. The consensus resulting from such discussions was not embodied in the contract proper, but was included in a letter signed by R. M. Thornton, an Auto-Lite executive in charge of labor relations. The District Court found that this letter was a part of the contract.

The Thornton letter confirmed an agreement arrived at during the negotiations, namely, that departments numbers 39 and 40 were to be combined, and that if the experimental section of department number 40 was moved from plant number 2 to another plant, then the oldest seniority employees in each needed classification would be given an opportunity to bid for the new experimental department.

In 1960 Auto-Lite began transferring product lines to a newly acquired plant in Decatur, Alabama. In August, 1962, Auto-Lite's remaining Toledo operations at the plant were closed down, and work was transferred to the Decatur and to the Bay City, Michigan, plants. During the phase-out, Auto-Lite set up a new machine shop in its Toledo Hamilton Street plant. Work which was formerly done in the closed Toledo plant's tool room was transferred to the Michigan and Alabama plants. Auto-Lite offered to transfer terminated employees (MESA) to the Bay City plant in needed classifications with full credit for service for purposes of fringe benefits, but not layoff. UAW was the bargaining agent at the Bay City plant.

The last work at the Toledo plant to be done by MESA members was performed on August 3, 1962. On that day, or the day before, some MESA members picketed the Toledo Champlin Street plant, first with "Unfair" signs, and later with "Strike" signs. Some members carried similar signs to the Bay City plant.

Auto-Lite claimed that these activities constituted a strike, in violation of the agreement with the union, and on August 27, 1962, it notified plaintiffs that it was canceling group term life insurance coverage effective August 31, and on August 28th it notified plaintiffs that it was terminating all agreements between MESA and Auto-Lite, including all rights and benefits thereunder. The SDA contained a no-strike clause and a conciliation clause.¹

On August 29, 1962, MESA filed an unfair labor practices charge with NLRB, and on November 20, 1962, the Labor Board's Regional Director held that the no-strike provision of the contract was violated and that the company therefore was privileged to cancel the contract. On November 9, 1962, MESA filed another charge with NLRB alleging that the company at its Hamilton Street building was performing, with non-union employees, work that MESA employees had previously done in department 40 under the SDA. The Regional Director refused to issue a complaint, finding that the Hamilton Street operation was an entirely new department. This ruling was affirmed by the General Counsel's office.

The District Court found that MESA's picketing was of short duration and caused only slight inconvenience. The Toledo plant had shut down. The Court also determined that the strike was not in violation of the SDA, but rather was an empty and meaningless protest. The picketing was the direct result of the shutdown. The Court also found that Auto-Lite earlier had committed a material breach of the contract because of its transfer of the model shop work to the Hamilton Street location without giving model shop employees the right to transfer, as agreed in the Thornton letter.

I CLASS ACTION

Auto-Lite contends that the present suit cannot be brought as a class action on behalf of either hourly-rate employees or salaried employees who are neither parties nor third-party beneficiaries to the SDA.

Certainly the liberal interpretation given by the Supreme Court to Section 301, relative to suits by individual employees, argues for allowing such an action. Smith v. Evening News Ass'n, 371 U.S. 195, 83 S.Ct. 267, 9 L.Ed.2d 246 (1962).

Such reasoning certainly would not preclude a class action on behalf of hourly-rate employees. Although plaintiffs sued on the SDA, they sued also for the "same typical breaches of contract," which claims related to the salaried employees' contracts. Consequently, and because we feel that the requisites of Rule 23(a) Fed.R.Civ.P. are met, MESA salaried employees are properly within the class².

The following factors compel our view that the class action is proper. Approximately three hundred individuals are in the class. Both the SDA and the salaried employees' contracts were automatically renewed for the same period. In a letter dated August 28, 1962, Auto-Lite treated these contracts as a unit by canceling all of its collective bargaining agreements with MESA. With respect to the issues of liability, the contracts are substantially the same. Group term life insurance was under one company-wide program. The rights to vacation pay were also subject to the same qualifying date. One pension plan covered all Auto-Lite employees. In addition, the same events and actions by Auto-Lite triggered the termination of rights held by both the hourly-rate and the salaried employees. The differences in the contracts do not affect the substance of the fringe benefit claims which the plaintiffs assert, and do not seem to justify separate suits.

Because of similarities in the claims presented, the District Court was correct in liberally interpreting Rule 23 in order to avoid burdensome litigation and to give efficient disposition to this action. Eisen v. Carlisle & Jacquelin, 391 F.2d 555 (2d Cir. 1968). In fact, since this action has already been in litigation in the District Court for more than four years, a dismissal of the class action would be injudicious and wasteful.

II GRIEVANCE PROCEDURE

The District Court held that the grievance procedure provided in Article IV of SDA did not apply in this case, which involved broad issues, but rather was concerned with individual problems between foreman and employee³.

The introduction to Article IV of the SDA, "Grievance Procedure" states the applicability of the clause:

"In the case of a dispute between the foreman and any employee, the steps in the Grievance Procedure are as follows: . . . ."

The controversy in the present case did not involve disputes between foremen and employees.

Auto-Lite contends that the "Grievance Procedure" must have been exhausted before a suit could be brought. We agree with the District Court that the agreement's grievance procedure is inapplicable to the type of dispute involved in this suit, and therefore that such procedures need not have been exhausted as a prerequisite to this suit⁴.

III VACATION PAY

The District Court granted the employees pro rata vacation pay for the time worked in 1962. Auto-Lite appeals this ruling, and plaintiffs cross-appeal, contending that vacation pay should have been awarded for the full year of 1962.

The wage supplement to SDA provides vacation pay according to a percentage formula. In relevant part SDA...