Williams v. Pacific Elec. Ry. Co.

• Citation: 147 Cal.App.2d 1,304 P.2d 715
• Court: California Court of Appeals
• Decision Date: 17 December 1956
• Parties: , 31 Lab.Cas. P 70,429 Alberta WILLIAMS, Mary Boyd, Dakota Foster, Luberta Lang, Virginia Fairey, Plaintiffs and Appellants, v. PACIFIC ELECTRIC RAILWAY CO., a Corporation, Doe 1 Co., a Corporation, Doe 11, an unincorporated association, et al., Defendants, Pacific Electric Railway Co., a Corporation, Respondent. Civ. 22005.

Page 715

304 P.2d 715

147 Cal.App.2d 1, 31 Lab.Cas. P 70,429

Alberta WILLIAMS, Mary Boyd, Dakota Foster, Luberta Lang, Virginia Fairey, Plaintiffs and Appellants, v. PACIFIC ELECTRIC RAILWAY CO., a Corporation, Doe 1 Co., a Corporation, Doe 11, an unincorporated association, et al., Defendants, Pacific Electric Railway Co., a Corporation, Respondent.

Civ. 22005.

District Court of Appeal, Second District, Division 1, California.

Dec. 17, 1956.

Rehearing Denied Jan. 6, 1957.

Hearing Denied Feb. 13, 1957.

H. L. Richardson, Los Angeles, for appellants.

E. D. Yeomans, Walt A. Steiger, Los Angeles, for respondent.

FOURT, Justice.

This is an action for breach of contract. The demurrer of defendant Pacific Electric Railway Co. to the plaintiffs' third amended complaint having been sustained, and plaintiffs having failed to amend, judgment was entered in favor of said defendant upon its motion for judgment of dismissal under section 581, subd. 3, of the Code of Civil Procedure. Plaintiffs have appealed.

The contract in question was entered into by the union representatives of the appellants with the respondent, who was ceasing the operation of certain of its trains upon which the plaintiffs had been performing services in the capacity of car cleaners. Respondent had entered into an agreement with the Metropolitan Coach Lines for the transfer of its passenger services to the latter company.

It was provided in the agreement between respondent and the union of which plaintiffs were members, that '[i]f, as a result of the sale, any employe of the Pacific Electric Railway Company, hereinafter referred to as the 'company', is displaced, that is, placed in a worse position with respect to his compensation and rules governing his working conditions, and is unable, in the normal exercise of his seniority rights under existing agreements, rules and practices, to obtain a position in his craft or class with the Company or with the Metropolitan Coach Lines producing compensation equal to or exceeding the compensation he received in the position from which he was displaced, he shall be paid a monthly displacement allowance equal to the difference between the monthly compensation received by him in the position in which he is retained and monthly compensation received by him in the position from which he was displaced.'

The agreement further provided as follows:

'In the event that any dispute or controversy arises with respect to the protection afforded by the foregoing conditions which cannot be settled by the Company and the authorized representatives, of the employe or employes involved, within thirty (30) days after the controversy arises, it may be referred, by either party, to an arbitration committee selected in the following manner: One (1) to be selected by the representative of the employes and one (1) to be selected by the Company. These two shall endeavor by agreement within ten (10) days after their appointment to select the third arbitrator. In case they are unable to reach agreement within ten (10) days, the National Mediation Board will be requested to appoint such third arbitrator who shall be the Chairman of the Board. The decision of a majority of the Board shall be required and shall be final and binding on both parties. The salary and expenses of the third or neutral arbitrator shall be borne equally by the parties to the proceedings. All other expenses shall be paid by the party incurring them, including the compensation of the member of the board of arbitration selected by such party.' (Emphasis added.)

The present controversy arose because respondent refused to pay to the plaintiffs the displacement allowance which they contended was owing to them under the terms of the agreement. Plaintiffs did not allege in their third amended complaint that they had duly performed all of the conditions of the contract on their part to be performed, and failed to allege that the dispute had first been submitted to arbitration in accordance with the agreement.

The sole question for determination is whether plaintiffs were required to submit to arbitration as provided for in the agreement before resorting to the courts.

Appellants contend that the word 'may' as used in the arbitration provisions of the agreement is permissive only, and not mandatory, and that therefore they were not required to exhaust that remedy before instituting suit.

It has been held in cases involving collective bargaining agreements that when it is provided that a dispute may be referred to arbitration, either party has an option to arbitrate if he so desires but, should he desire to litigate, he must first submit to arbitration and exhaust that remedy.

In Thompson v. St. Louis-San Francisco Ry. Co., D.C., 113 F.Supp. 900, the court had under consideration a claim based on the so-called Washington Job Agreement wherein the railroad undertook to guarantee to its employees that they would not be displaced in a worse position with respect to their compensation and rules governing their working conditions as a result of the sale or consolidation, and if any were placed in a worse position or wholly deprived of employment, certain payments would be made to them by the railroad. The agreement provided, in part, as follows: 'In the event that any dispute or controversy arises * * * in connection with * * * application or enforcement of any of the provisions of this agreement * * * which is not composed by the parties thereto within thirty days after same arises, it may be referred by either party for consideration and determination to a Committee * * *.' (Emphasis added.) The court said, at page 903, in deciding the case, '* * * where contracting parties agree that either 'may' resort to a designated tribunal for an adjustment of grievances, they must exhaust such remedy before resorting to the courts for redress.'

In Transcontinental & Western Air, Inc., v. Koppal, 345 U.S. 653, 73 S.Ct. 906, 909, 97 L.Ed. 1325, the defendant discharged the plaintiff by compelling him to resign for the abuse of the sick leave provisions of...