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Bakery & Confectionery Workers' International Union v. National Biscuit Co.

November 2, 1949


Author: O'connell

Before GOODRICH, MCLAUGHLIN, and O'CONNELL, Circuit Judges.


This suit is brought by plaintiff ("the union") on behalf of three employees of defendant ("the company") who have been compulsorily retired by the company under a retirement plan adopted by the company in 1946. Jurisdiction of the suit is asserted under Section 301 of the Labor-Management Relations Act, 1947, 29 U.S.C.A. ยง 185(a).*fn1 The action is bottomed upon alleged violations of employment contracts negotiated between the union and the company.

At the outset, we must stress that the instant suit is not one arising out of an unfair labor practice proceeding. The United States Court of Appeals for the Seventh Circuit, in Inland Steel Co. v. N.L.R.B., 170 F.2d 247 (C.A. 7, 1948), certiorari denied as to this issue 336 U.S. 960 (1949),*fn2 seems to us to point strongly to the conclusion that the union would have been on firmer ground if it had chosen to seek appropriate relief in the proper forum on the theory that the company had been guilty of an unfair labor practice in refusing to bargain collectively concerning the so-called pension plan unilaterally instituted. Indeed, defense by the company upon such charges would face additional obstacles of substance, in that the company, having reserved to itself the right to amend and even cancel the plan at any time without liability therefor, gave itself the prerogative of actually utilizing the plan for other than the stated ends.*fn3

Instead, the union has elected to assert, and here reiterates, that the compulsory retirement of the three employees was a kind of "lay-off" and consequently in violation of the "seniority and lay-offs" Article of the 1947 contracts. With this distinction in mind, we shall analyze the issue here presented.

The facts may be summarized as follows: There has been a continuous contractual relationship between the union and the company since May, 1939.*fn4 Effective May 1, 1946, the company voluntarily and unilaterally instituted a "Plan for Pensions," which included, inter alia, the following provisions: (1) the compulsory retirement of employees at the age of 65; (2) the payment, to those employees, of pensions determined according to their years of service and annual wages;*fn5 (3) "The company reserves the right to modify, cancel or terminate ... the plan or any part thereof at any time, which right shall include the right to cancel, terminate or decrease pensions already granted," and the plan gave nobody any enforceable right against the company; (4) all expenses of the plan were to be paid by the company; and (5) the plan was to receive prior approval by the stockholders of the company, as required by the laws of New Jersey.

One week prior to the effective date of the plan, one Soloner, the business agent of the union local, advised the company by letter that the employees of the Philadelphia plant at a regular meeting had unanimously protested against the compulsory retirement provision.*fn6 Four months later, on August 26, 1946, in preparation for negotiating a 1947 contract, a committee representing the union submitted to the company a written list of 19 demands, two of which were: "All promotions and lay-offs to be on a strict seniority basis," and "No employee may be compelled to retire on pension without his consent."*fn7 In the negotiations which ensued, the company took the position "that the establishment of a pension plan was an exercise of an inherent right of management" and "that the Pension Plan would be established, regardless of the wishes or approval" of the union.

In October and November of 1946, the company and union entered into collective bargaining agreements covering the two plants. In several respects, the 1946 contracts were at variance with the 19 demands submitted by the committee two months earlier.*fn8 Nothing is found in the contracts as to a retirement plan or retirement pay. The contracts*fn9 did contain this provision (hereinafter referred to as "the Article"):

"ARTICLE II. Section 1. SENIORITY AND LAY-OFFS: Rules of seniority shall prevail with respect to lay off and rehiring of employees and disputes concerning seniority rights shall be settled by the Company and the Union. In the event work becomes slack, employees shall be laid off in the inverse order in which they were hired; that is, employees last hired shall be the first laid off. When rehiring takes place, those employees laid off last shall be rehired first and no new employees shall be hired until all the employees on the list of former employees have been rehired."

The record does not disclose whether or not this section appeared in any of the previous contracts which the company and the union made.

On August 13, 1947, shortly before the 1946 contracts were due to expire, the negotiations committee representing the union presented another written list of demands. Two of these are of moment to the case at bar: paragraph 2(c), that "No break in seniority for vacation purposes (or any other purposes) as a result of a temporary lay-off if employee reports to work at request of the company," and paragraph 6, that "Compulsory retirement shall be discontinued by the company even if it means the elimination of the present Nabisco Pension Plan." Again the company insisted that the plan was an exercise of the inherent right of management. On August 21, 1947, the company and the union agreed upon new contracts which, like the 1946 contracts, (a) included no specific provision concerning compulsory retirement, (b) varied in important respects from the demands of the union,*fn10 and (c) did continue the same "seniority and lay-offs" Article.

The three employees of the more than 500 retired under the plan on behalf of whom the instant suit was brought were retired during the effective period of the August 21, 1947, contract. The union here, as in the court below, relies solely upon the argument that compulsory retirement of these employees was a "lay-off" within the meaning of the Article, quoted above, and that the company consequently committed a breach of contract as to each of these.

The district judge, granting a judgment on the pleadings in favor of defendant, found three cogent reasons for his conclusion: (1) the inconsistency of such interpretation with the assertion of the company throughout, that the plan was a prerogative of management,*fn11 (2) the lack of an explicit reference to the plan in the 1947 contract; and (3) "This phraseology [of the Article] would not ordinarily encompass this kind of permanent separation from the employ of the company." 78 F.Supp. 517 (D.C.E.D. Pa., 1948).

In construing the contract, we note first that it does not contain any provision as to how an employee's continuous service with the company shall be terminated, and secondly that the rules of seniority are limited and restricted to "lay off and rehiring." To be successful, therefore, the ...

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