United States Gypsum Co. v. United Steelworkers of Amer.

• Citation: 384 F.2d 38
• Decision Date: 15 January 1968
• Docket Number: No. 23918.,23918.
• Parties: UNITED STATES GYPSUM COMPANY, Appellant, v. UNITED STEELWORKERS OF AMERICA, AFL-CIO, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

384 F.2d 38 (1967)

UNITED STATES GYPSUM COMPANY, Appellant, v. UNITED STEELWORKERS OF AMERICA, AFL-CIO, Appellee.

No. 23918.

United States Court of Appeals Fifth Circuit.

September 21, 1967.

Certiorari Denied January 15, 1968.

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John J. Coleman, Jr., T. W. Thagard, Jr., Birmingham, Ala., Harold D. Burgess, Charles B. Mahin, Chicago, Ill., Douglas Arant, Birmingham, Ala., for appellant, Bradley, Arant, Rose & White, Birmingham, Ala., and Spray, Price, Hough & Cushman, Chicago, Ill., of counsel.

Jerome A. Cooper, Birmingham, Ala., Michael Gottesman, Washington, D. C., Bernard Kleiman, Gen. Counsel, Pittsburgh, Pa., for appellee, Bredhoff & Gottesman, Washington, D. C., and Cooper, Mitch & Crawford, Birmingham, Ala., of counsel.

Before BROWN, Chief Judge, SIMPSON, Circuit Judge, and SUTTLE, District Judge.

Certiorari Denied January 15, 1968. See 88 S.Ct. 783.

JOHN R. BROWN, Chief Judge:

The basic question in this case is whether the purchaser of assets of the predecessor employer can be compelled to arbitrate grievances under the collective bargaining contract between the employer and the union certified as the bargaining representative. Subsidiary, but perhaps more vexing, questions concern the Union's right to assert the grievance, demand arbitration or secure arbitral relief with respect to post-expiration periods, and both substantively and in point of time, with respect to post-decertification periods. In a § 301, 29 U.S.C.A. § 185, suit the District Court ordered arbitration. The Successor-purchaser appeals. We affirm.

The facts are neither complex nor conflicting. On April 1, 1965, the Successor¹ purchased all property and assets of the Employer² at its lime plant in Montevallo, Alabama, not including cash and accounts receivable. The sales purchase agreement undertook to exclude from the purchase the bargaining contract between Employer and Union.³

This collective bargaining contract was for a term of three years, expiring March 30, 1967, two years subsequent to the asset acquisition by The Successor. The Union was not, of course, a party to the purchase contract. Indeed, actions of the Employer and The Successor reflected their judgment that the interest of the employees and the Union was none of their concern.⁴ As though for all purposes — and certainly for labor relations — the enterprise was completely new and divorced from the prior operations, the Successor processed applications for employment and on April 5 hired all of Employer's former employees (note 4 supra) except three. Except that the Successor did not check off union dues, determined seniority as of the date of employment with it, and by agreement installed a health insurance plan, the terms of employment were substantially the same as before the purchase. So too, was the physical operation — same work force, same plant, same process, same product (except for trade name), under the same supervisors.

In May, 1965, the Union, expressing "the desire * * * promptly to resolve the dispute about our contract, * * * so that the parties may continue to enjoy the collective bargaining relationship" existing since 1958, pursued the contract procedure including arbitration for settlement of grievances.⁵ The Successor, refusing to arbitrate, commenced action before the National Labor Relations Board. After a few set backs, this ended successfully in a formal decertification of the Union.⁶

The Successor attacks the decree on a number of fronts. First, it denies that the predecessor contract is binding on it. Second, even if it is, then the contract cannot impose obligations as to the future, or in any event after decertification. And, third, whatever the decision on first and second, none of these grievances (note 5 supra) is substantively arbitrable.

I

When all is said and done the Successor's attack on the binding force of the contract is a frontal, massive assault on Wiley.⁷ For while a diversionary thrust is made on the factual distinction that this is an asset acquisition, not a consensual merger, the Successor cannot escape from the Court's expressed unwillingness to cast its decision in terms of title, property or corporate niceties.

"This Court has in the past recognized the central role of arbitration in effectuating national labor policy. * * * It would derogate from `the federal policy of settling labor disputes by arbitration' * * * if a change in the corporate structure or ownership of a business enterprise had the automatic consequence of removing a duty to arbitrate previously established; this is so as much in cases like the present, where the contracting employer disappears into another by merger, as in those in which one owner replaces another but the business entity remains the same." 376 U.S. at 549, 84 S.Ct. at 914. The important thing to the Court was the "substantial continuity of identity in the business enterprise before and after a change", 376 U.S. 543, 551, 84 S.Ct. 909, 915. The Court very frankly recognized that it was not dealing with traditional notions of contract law, assumption by successors, or the like.

"The preference of national labor policy for arbitration as a substitute for tests of strength between contending forces could be overcome only if other considerations compellingly so demanded. We find none. While the principles of law governing ordinary contracts would not bind to a contract an unconsenting successor to a contracting party, a collective bargaining agreement is not an ordinary contract. * * * Therefore, although the duty to arbitrate * * * must be founded on a contract, the impressive policy considerations favoring arbitration are not wholly overborne by the fact that Wiley did not sign the contract being construed." 376 U.S. at 550, 84 S.Ct. at 914. This is, of course, entirely in keeping with the trilogy⁸ opinions which cast the problem in terms of effective labor relations using the collective bargaining-compact as a sort of "common law" of the shop, Warrior & Gulf, supra, 363 U.S. 574, 578-579, 80 S. Ct. 1347, not a bond to be read and applied by judges under the usual contract principles.

The Successor's complaint is the bald one that Wiley and those cases specifically applying it to asset acquisitions⁹ are simply wrong.

We may grant that the assault is well constructed and formidable, resting primarily on the assertion that from deficiencies in advocacy, the Court was either led or pushed into error. The main thread has two strands. The first is that Wiley failed to reckon with the deeply ingrained, deliberate Congressional policy against compulsory arbitration which is brought forward as a part of the LMRA.¹⁰ The second is that through ineptness of the adversaries or self interest of the successor the Court had pressed on it the "continuity of identity"¹¹ test presumably in the hopes that factually the Court would find it not to have been satisfied. Out of self interest of a litigant this was to introduce a beguiling, though erroneous, concept. This, the argument runs, is so because it fails to reckon with the distinction between a successor employer's (a) duty to recognize and bargain with the collective bargaining representative of the predecessor employer,¹² and (b) the scope of such successors obligation actually to reach a contract.¹³ Apparently this leads the Successor to conclude that while it had (until decertification) the (a) duty to recognize and bargain in good faith, it had no duty to (b) conclude an agreement and since it could not be compelled to reach an agreement, it could not be forced to accept an agreement made by others.

We may grant also that the Court may, and sometimes does, repudiate even its very recent holdings¹⁴ and that under extraordinary circumstances a lower Federal Court may or should do so in advance.¹⁵ But without the slightest whisper of a possible suggestion that the Supreme Court ought to take such action under the importunities of these arguments, we find it enough to say that it is for the Supreme Court, perhaps in this very case, not us, to so declare.

The Trial Court was correct in holding that the predecessor contract bound the Successor to arbitrate claims under it.

II

Despite this holding the Successor maintains several additional contentions. One is that the arbitration cannot reach matters which occur subsequent to the acquisition of assets.

This argument is based essentially on the notion that Wiley dealt only with vested rights. But to talk in such terms is to introduce a new controversy, not solve the present one. For the critical thing is what is meant by "vested." The rights must, of course, be "vested" in the sense that the contract during its effective term accorded the rights. But it is a mistake to assume that they must have so far ripened into a grievance that they then represented a present claim for present relief. For as we have recently pointed out in Boeing,¹⁶ the subsequent reversal in Kimball Piano¹⁷ revealed clearly the Court's holding that arbiters could determine as a matter of contract law that it is entirely possible for a collective bargaining contract to accord rights and benefits which will come into play and be subject to appropriate enforcement — by arbitration or court action — even after the expiration of the contract.

III

Now we face the more difficult problem of decertification. In the ordinary course of events, a collective bargaining agreement entered into by the union and the employer will be binding on the employer, or his successor, until it expires. The Successor urges, however, that the formal decertification of the Union (see note 6 supra)¹⁸ obliterated any obligation on the part of the Successor to recognize the Union or to submit the grievances asserted by the Union under the contract to arbitration. This contention rests upon the bald assertion that the Union, subsequent to its decertification, has no right to enforce the agreement or any of its...