Unimart v. Superior Court

Decision Date21 November 1969
Docket NumberAFL-CIO
Citation82 Cal.Rptr. 249,1 Cal.App.3d 1039
CourtCalifornia Court of Appeals Court of Appeals
Parties, 73 L.R.R.M. (BNA) 2122 UNIMART, a division of Food Giant Markets, Inc., a California corporation, Petitioner, v. The SUPERIOR COURT of the State of California FOR the COUNTY OF LOS ANGELES, Respondent; RETAIL CLERKS UNION, LOCAL 770, an unincorporated association, Real-Party in Interest. Civ. 34813.

Tyre & Kamins by Peter M. Appleton, Beverly Hills, for petitioner.

No appearance for respondent.

Arnold, Smith & Schwartz, Kenneth M. Schwartz, and Laurence D. Steinsapir, Los Angeles, for real party in interest.

ALARCON, Associate Justice. *

In a proceeding instituted on behalf of Retail Clerks Union, Local 770, AFL--CIO (hereinafter referred to as Union) against Unimart for an order to compel arbitration under a collective bargaining agreement, pursuant to section 1281.2 of the Code of Civil Procedure, respondent court entered its minute order on May 29, 1969, directing arbitration. Petitioner filed in this court its petition for writ of certiorari or prohibition (treated herein as mandate) 1 to restrain further proceedings and to set aside said order.

Petitioner (hereinafter referred to as Unimart) is engaged in the retail department store business and owns and operates several stores within the geographical jurisdiction of the Union in the County of Los Angeles. The collective bargaining agreement between Union and Unimart applies to all retail store employees and office clerical employees (with certain exclusions not pertinent to the discussion herein) employed in said retail stores and offices. The agreement provides: 'B. ADDITIONAL LOCATIONS. The parties further agree that, should the Employer acquire, establish or operate an additional store or department within the present geographic jurisdiction of the Union, the Agreement shall apply to the retail store employees and office clerical employees as defined above employed in such store or department; * * *.'

Union alleged in its petition: 'A controversy or dispute has arisen out of said collective bargaining agreement. The Union contends that Unimart has opened a new discount store within the geographical jurisdiction of the Union using the name of its sister corporation, 'Two Guys', and has refused to apply the collective bargaining agreement between Unimart and the Union in accordance with its terms.'

Unimart filed a demurrer to the petition on grounds that it did not state a cause of action, and that there was a defect of parties in that Union failed to join an indispensable party. On May 16, 1969, the petition and the demurrer came on for hearing. The court took the matters under submission and granted both parties five days in which to file additional papers. On May 20, 1969, Unimart filed its Response to Petition to Order Arbitration, in which it denied that it was a corporation as alleged in the petition, and alleged that it 'is a division of Food Giant Markets, Inc., a California corporation.' It further denied that Unimart has opened a new store within the geographical jurisdiction of the Union, and alleged that the new store, referred to by Union 'is operated by Two Guys-San Bernardino, Inc., a California corporation'; that Unimart does not own any stock or other equity interest in Two Guys-San Bernardino, Inc., and that none of its employees are employed at said store. The new store will be referred to herein as 'Two Guys'.

On May 29, 1969, respondent court, by minute order made the following ruling: 'Petition to order Arbitration having heretofore been taken under submission by the Court is now granted. Respondent Unimart, Inc. is ordered to choose an Arbitrator and to proceed to arbitrate the dispute. Said respondent's demurrer to petition to order Arbitration is overruled. The fact that there may also be a trilateral dispute should not stay the arbitration of a bilateral dispute.'

The existence of the collective bargaining agreement between Union and Unimart, and Unimart's refusal to apply the agreement to the new store, as well as its refusal to arbitrate, are all undisputed. The issue in controversy is whether or not Unimart did 'acquire, establish or operate an additional store' to which the agreement must be applied. Since an award against Unimart will affect Two Guys, the issue necessarily involves inquiry into the relationship between Unimart and Two Guys and its employees. The question before us is whether this is a matter to be decided by the court or by arbitration.

Unimart, relying upon Retail Clerks Union Local 428, AFL--CIO v. L. Bloom Sons Co., 173 Cal.App.2d 701, 344 P.2d 51, contends that a court must find that Two Guys is the alter ego of Unimart before it is obligated to arbitrate the coverage issue with Union. It is also contended that Two Guys is an indispensable party to any litigation concerning coverage of the new store.

Union contends that, in refusing to apply the agreement to the new store, Unimart 'has created a controversy as to the application and/or interpretation of a provision of the agreement' within the meaning of Article XII, Section B, of the agreement, 2 and that the dispute is therefore one to be settled by arbitration. Union further states that 'it did not contend in the Court below that Unimart was operating its new store through an alter ego. The Union's contention was simply and narrowly that Unimart has opened a new store and was utilizing the name of another corporation in order to operate the Unimart store, with Unimart employees, and was refusing to apply the collective bargaining agreement to such store. The Union alleged only that the new store was merely an additional location as set forth in the collective bargaining agreement.'

In Retail Clerks Union etc. v. L. Bloom Sons Co., supra, 173 Cal.App.2d 701, 344 P.2d 51 (1959) the union sought to compel L. Bloom Sons to arbitrate whether their collective bargaining contract applied to 'Bloom's Salinas, Inc.' which the union claimed was being operated by L. Bloom Sons. The court states: 'The issue presented was, in the language of appellant's opening brief, this: 'Did L. Bloom Sons Co. Inc. operate the new store at Valley Fair Shopping Center, as it told the public of San Jose it did, and were its employees accordingly subject to the existing collective bargaining agreement? Or, was the new store controlled by a separate corporate entity sufficiently independent of L. Bloom Sons Co., Inc., to remove the operation and the employees at Valley Fair from the impact of the collective bargaining agreement?' Appellant contended in the court below, and it contends here, that this issue must be determined by arbitration. The trial court concluded that this issue was one for the court's determination but that Bloom's Salinas, Inc., would be an indispensable party to any such determination, and finally, that such determination should be made in an action for declaratory relief rather than in this proceeding under section 1282 of the Code of Civil Procedure. It thereupon, as we have already seen, dismissed this proceeding without prejudice.

'We are in accord with the conclusions of the trial court.

'Appellant contends that the issue must be determined by the arbitrator because it involves a controversy arising out of the contract. Were appellant and respondent the only parties interested in, and to be affected by, the determination of the issue, appellant's contention would be well founded. But the controversy involves more than that; it involves the rights and interests of Bloom's Salinas, Inc., as well. It is conceded that respondent and Bloom's Salinas, Inc. are separately incorporated. Bloom's Salinas, Inc., is not a party to the contract. It did not consent to have this issue decided by an arbitrator rather than by a court of competent jurisdiction. Appellant is, in effect, urging the patently absurd proposition that two parties can by contract effectively stipulate for the mode of determination of the rights of a third party who has not only not assented to such a mode of determination but who also is not even accorded an opportunity to participate in such determination. However, appellant maintains that Bloom's Salinas, Inc., is but the alter ego of respondent, that it has no identity apart from respondent, and that therefore the contract of respondent is, in reality, also the contract of Bloom's Salinas, Inc. Appellant begs the question. It must first be determined whether Bloom's Salinas, Inc., is in fact but the alter ego of respondent. * * * The proper forum for that determination is, of course, a court of law.'

The consensual nature of arbitration was again noted in Retail Clerks Union Local 770, AFL--CIO v. Thriftimart, Inc., 59 Cal.2d 421, 30 Cal.Rptr. 12, 380 P.2d 652 (1963). There, a dispute arose as to whether the collective bargaining contract between the Union and Thriftimart, Inc. covered the employees of a wholly owned corporate subsidiary known as MORE. Thriftimart agreed with the Union to submit to arbitration (1) the question of arbitrability and (2) the issue on the merits. The arbitrator found the issue arbitrable, and on the merits found that the parties to the contract intended it to apply to any new location and that MORE'S stores were such new locations within the meaning of the contract. The Union obtained a judgment confirming the award from which Thriftimart and MORE (which had intervened in the confirmation proceedings) appealed. The court states (pages 425--426, 30 Cal.Rptr., page 15, 380 P.2d page 655): 'The question is one of federal law. (Citations.) Local 770 contends that the Steelworkers cases * * * compel confirmation of the award and prohibit judicial review of both the issue of arbitrability and the merits of the award. This argument overlooks the premise upon which those cases rest: the consensual nature of arbitration. 'Arbitration is a matter of contract and a...

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