Waialua Agr. Co. v. United Sugar Workers

• Decision Date: 17 July 1953
• Docket Number: Civ. No. 1332.
• Citation: 114 F. Supp. 243
• Parties: WAIALUA AGR. CO., Limited, v. UNITED SUGAR WORKERS, ILWU LOCAL 142 et al.
• Court: U.S. District Court — District of Hawaii

114 F. Supp. 243

WAIALUA AGR. CO., Limited, v. UNITED SUGAR WORKERS, ILWU LOCAL 142 et al.

Civ. No. 1332.

United States District Court D. Hawaii.

July 17, 1953.

Blaisdell & Moore and Livingston Jenks, Honolulu, Hawaii (E. C. Moore, Jr., and R. M. Torkildson, Honolulu, Hawaii, of counsel), for plaintiff.

Bouslog & Symonds, Honolulu, Hawaii (James A. King, Honolulu, Hawaii, of counsel), for defendants.

McLAUGHLIN, Chief Judge.

The defendants have moved to dismiss this action for damages for breach of a collective bargaining contract in an industry affecting interstate and foreign commerce. Their grounds are, first, that section 185(a) of 29 U.S.C.A., under which the action is brought, is unconstitutional in its delegation of jurisdiction to the courts of the United States, since Congress has removed the factor of diversity of citizenship. Next, the defendants contend that because the complaint indicates that some of the employees represented by the defendants are in an agricultural occupation, the defendant unions representing them are not amenable to this suit because agricultural workers are expressly excepted from the Labor Relations Act's definition of "employees". The third and final ground is that the complaint is vague, ambiguous, and defective under Rule 8 of the Federal Rules of Civil Procedure, 28 U.S.C.A., which requires a short and concise statement of the claim for relief.

1. Constitutionality of 29 U.S.C.A. § 185 (a).

The most pertinent portions of this section provide as follows:

"(a) Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.

"(b) Any labor organization which represents employees in an industry affecting commerce as defined in this chapter and any employer whose activities affect commerce as defined in this chapter shall be bound by the acts of its agents. Any such labor organization may sue or be sued as an entity and in behalf of the employees whom it represents in the courts of the United States. Any money judgment against a labor organization in a district court of the United States shall be enforceable only against the organization as an entity and against its assets, and shall not be enforceable against any individual member or his assets."

As we understand the defendants, they say that Congress did not create any substantive federal rights, nor rules to indicate under federal law when a contract would be found to exist, and under what conditions a breach thereof would have occurred, bringing about strictly federal liability; therefore, any alleged breach of contract arises out of the laws of this Territory, and no federal law is involved in this action.

A second argument is in effect that a finding of congressional intent to provide such substantive rights would mean that Congress intended to controvert the national policy as declared by the Supreme Court in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, and thereby require the development of two systems of law in labor contracts — one in federal jurisdictions, and one in the States, depending upon the jurisdiction in which the action may be brought. The dual system objection is illustrated in another aspect by the example of the individual employee who, having no cause of action in the federal courts under this section as a beneficiary of such a contract, must resort to the local courts to enforce any existing rights thereunder.

The omission by Congress of diversity of citizenship as a basis of jurisdiction has the effect of making irrelevant to this case the principles and policies declared in Erie R. Co. v. Tompkins, supra. The ruling in that case had the great object of securing, in federal courts, in diversity cases, the application of the same substantive law as would control if the suit were brought in the courts of the state where the federal court sits. See United States v. Standard Oil Co., 1947, 332 U.S. 301, 307, 67 S.Ct. 1604, 91 L.Ed. 2067.

It does not seem fatal to constitutionality that an individual employee may be relegated to the state courts for protection of his own individual rights as a beneficiary under such a contract. Congress in 29 U. S.C.A. § 185 has reached only the parties occupying the status of employers and labor organizations as defined in the Act. See Schatte v. International Alliance, etc., D.C., 84 F.Supp. 669, affirmed 9 Cir., 182 F.2d 158, rehearing denied, 9 Cir., 183 F. 2d 685, certiorari denied, 340 U.S. 827, 71 S.Ct. 64, 95 L.Ed. 608, rehearing denied, 340 U.S. 885, 71 S.Ct. 194, 95 L.Ed. 643; Zaleski v. Local 401, etc., D.C.1950, 91 F. Supp. 552; John Hancock Mut. Life Ins. Co. v. United Office and Professional Workers, D.C.1950, 93 F.Supp. 296, 306. Here we do not find dual systems of law on the same question, but rather an attempt to compare two different types of action, between parties of different identity and status.

Article III of the Constitution provides, in part, that the judicial power of the United States shall extend to all cases in law and equity arising under the Constitution, the Laws of the United States, and to controversies between citizens of different States. Since Congress has seen fit to remove the jurisdictional basis of diversity of citizenship the resolution of the current problem must depend upon whether Congress has made valid use of some constitutional power creating a substantive law of the United States out of which this type of action can arise.

Congress has the power to regulate commerce with foreign nations and among the several States: Constitution, Art. 1, § 8. This power is plenary, and may be exerted to protect interstate commerce, no matter what the source of the dangers which threaten it. N.L.R.B. v. Jones and Laughlin Steel Co., 301 U.S. 1, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352. It may involve the regulation of activities within a state the criterion being the effect of those activities upon interstate commerce, or upon the exercise of the power to regulate it. United States v. Wrightwood Dairy Co., 1942, 315 U.S. 110, 62 S.Ct. 523, 86 L.Ed. 726. It therefore seems unquestionable that Congress, in carrying out its purpose expressed in 29 U.S.C.A. § 141 of promoting the full flow of commerce by encouraging the regularity of labor-management relations in businesses in or affecting interstate commerce, has the power to attach federal rights and liabilities to collective bargaining contracts made therein. It has subjected certain acts or practices found in collective bargaining negotiations to the exclusive control of an administrative board; some of these practices involve violations of existing contracts—such as the regulations against premature termination of existing contracts without complying with certain named conditions: 29 U.S.C.A. § 158(d). This control over contracts in this field has been upheld. International Union, etc. v. O'Brien, 1950, 339 U.S. 454, 70 S.Ct. 781, 94 L.Ed. 978.

Now, if the power exists to regulate contracts between parties having this status, the question remains, did Congress create federal substantive incidents to such contracts by section 185—alone or by implication therefrom, considering the Act in its entirety?

We think it did, for the following reasons:

Section 185 would be meaningless on any other hypothesis than that substantive rights were intended, and Congress will not be considered to have taken the anomalous action of providing a remedy and a forum in which to enforce it, without creating a right to which the remedy would attach. The existence of the power of Congress to create such liability, and the legislative history of the Act indicate that the intent did exist in Congress to create substantive rights, and that it chose the language used as being sufficient to do so. Wilson and Co. v. United Packinghouse Workers, D.C. 1949, 83 F.Supp. 162.

State laws requiring plaintiff in a contract action to show bad faith, and providing that the action could be maintained only if all the members of the union were jointly and severally liable do not apply; the substantive law to be applied would not be that of the State, and these provisions are irrelevant in the federal action. Subsection (b) of section 185, cited above, when it imposes liability on the union sued for money judgments as an entity (where such liability did not exist before), when it removes the common liability from the individual members (which liability did exist before, if members were properly served), and when it provides capacity in the union to sue or be sued, declares federal rights and liabilities in these circumstances. Shirley-Herman Co. v. International Hod-Carriers, etc., 2 Cir., 1950, 182 F.2d 806, 17 A.L.R.2d 609.

In general accord with these decisions are those in Textile Workers Union v. Aleo Mfg. Co., D.C.1950, 94 F.Supp. 626 and Colonial Hardwood Floor Co. v. International Union, D.C.1948, 76 F.Supp. 493.

The Court of Appeals for the Ninth Circuit has also considered this point; while it indicated its realization that the statement was not necessary for the decision before it, the Court said:

"Section 301 29 USC 185 was not enacted merely to provide a new forum for the enforcement of contracts theretofore enforceable solely in the state courts. Had such been its sole purpose the constitutionality of the section as to actions in which diversity of citizenship was lacking might well be questioned. But the wording of the section and its place in the Taft-Hartley Act demonstrates that the section was designed to protect interstate and foreign commerce by creating a new substantive liability, actionable in the federal courts, for the breach of a

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