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Bieski v. Eastern Automobile Forwarding Co.

decided: May 29, 1968.


Hastie, Chief Judge, and Seitz and Van Dusen, Circuit Judges. Seitz, C. J., dissenting.

Author: Van Dusen


This appeal is from an order of the District Court granting the defendants-appellees' motion for summary judgment. The underlying controversy in this case concerns certain seniority rights under a collectively-bargained labor agreement. There being substantial allegations that the seniority rights, if any, arise from such a contract and that recourse may lie for an alleged breach of the contract, the court has jurisdiction under § 301(a) of the Labor Management Relations Act of 1947, 29 U.S.C. § 185(a), authorizing District Court jurisdiction of suits for "violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce." Humphrey v. Moore, 375 U.S. 335, 341-344, 11 L. Ed. 2d 370, 84 S. Ct. 363 (1964); Chasis v. Progress Manufacturing Company, 382 F.2d 773 (3rd Cir. 1967).

The 20 appellants, part of 24 plaintiffs below,*fn1 were formerly employed by Eastern Automobile Forwarding Company, Inc. (Eastern), a trucking company in the business of hauling new automobiles from the Chrysler Corporation assembly plant in Newark, Delaware. In January 1964, Eastern sold certain of its assets to M & G Convoy, Inc. (M & G), a similar company also hauling Chrysler's automobiles from the Delaware plant. The written agreement of sale provided for M & G to buy Eastern's real estate (two terminal properties) and substantially all of its operating equipment (mainly trucks). By the terms of this instrument, nothing else was transferred, neither goodwill, licenses, accounts receivable, liabilities, cash, nor I.C.C. operating certificate. After the sale, Eastern went out of business.

The appellants, Eastern drivers, finding themselves without employment, contend that they should have been hired by M & G on a basis that allowed them to keep their seniority gained while working for Eastern. They base this contention upon a multi-employer, multi-union, and multi-plant collective bargaining agreement: the Eastern Conference Area Truckaway and Driveaway Agreement (Agreement). The sections of this Agreement that possibly are relevant to this dispute concern seniority and grievance machinery. Article IV, "Seniority," provides in Section 1 that "terminal seniority will be maintained in accordance with the terms of this Agreement." Then, after the listing of seniority classifications, rules, and notice requirements, Section 3 concludes: "Any controversy over the seniority standing of any employee on the Seniority List shall be submitted to the Grievance procedure (Article 6)." Section 4, "Sale, Transfer, Etc.", provides that the Agreement would be binding on any successors or assigns of parties signing the Agreement and that any "purchaser, transferee, lessee, assignee, etc." of "an entire operation, or any part thereof," had to receive notice of the existence of the Agreement. Section 5, "Mergers, Etc.", provides:

"In the event that the Employer absorbs the business of another private contract or common carrier or is a party to a merger of lines the seniority of the employees absorbed or affected thereby shall be determined by mutual agreement between the Employer and the Unions involved. Any controversy with respect to such matter shall be submitted to the grievance procedure (Article 6)."

Article 6, the "Grievance Machinery," provides that if "disputes and grievances" could not be settled by shop stewards or between local Union business agents and the company, then the dispute should go before a Joint Committee. This Committee, composed of equal numbers of representatives of unions and employers who were parties to the Agreement, was empowered to hear evidence and investigate the facts of a dispute; a decision by a majority was declared "final and binding on all the parties involved" (Section 3). Section 5 of Article 6 provides for final and binding arbitration if the Joint Committee is deadlocked, and Section 6, "Disputes and Requests for Interpretation," concludes that Article:

"Unless otherwise expressly provided in this Agreement, any and all disputes, including interpretations of contract provisions, arising under, out, in connection with, or in relation to this collective bargaining agreement shall be subject to the grievance procedure of the Agreement."

Of the unions party to this Agreement, Local 107*fn2 represented both the Eastern drivers and those at M & G. Consequently, one group of Union members, appellants here, wanted to be hired at M & G without losing all of their seniority by means of some form of "dovetailing;"*fn3 the other group of members of the same Local, M & G drivers, did not want to be pushed down their own seniority ladder and insisted that any transferring Eastern drivers go to the "bottom of the board." All parties concerned with this dispute seemed to agree at the outset that Article 4, Section 5, of the Agreement controlled and that the best road to decision was appeal to the Joint Committee. In the interim, the two groups of drivers, Local 107's business agent, and M & G agreed on the temporary solution of separate seniority lists for deliveries to the remaining pre-sale Eastern and pre-sale M & G dealers.

In the eyes of all parties, the seniority dispute turned on the application of Article IV to the terms of the business deal between Eastern and M & G.*fn4 Before the sale, M & G and Eastern (both common carriers with geographically coextensive I.C.C. operating rights) hauled cars from Delaware, each to its own group of dealers. Eastern hauled to New Jersey and parts of New York; M & G hauled to parts of Pennsylvania, parts of New England, and parts of New York not served by Eastern. This division of territory could not be subject to a written agreement under I.C.C. regulations; it was established and enforced by Chrysler on an oral basis. In 1963, Chrysler informed Eastern and M & G that increased railroad shipping would reduce the business available to the truckers. This prompted Eastern's president and sole shareholder to leave the business and, accordingly, he sought a deal with M & G -- one firm, but not two, could profitably survive in the face of the railroad competition. The record reveals that there was a meeting between Chrysler's Traffic Manager and the president of both M & G and Eastern. No one attending that meeting has testified or deposed that an explicit oral agreement was reached that when Eastern sold certain of its assets and went out of business, Chrysler would give to M & G the former Eastern customers. The president of Eastern said that Chrysler agreed to deliver cars to Eastern up until the day of the sale and that he "naturally supposed they would [get Eastern's former business] if they bought the Company [Eastern]." The District Court properly found that "as of January 15, 1964, all cars formerly transported by Eastern were handled by M & G . . . ." 231 F. Supp. 710 at 712.

At the hearing before the Joint Committee, various Eastern and M & G employees apparently*fn5 attempted to give their opinion of whether the sale of Eastern real estate and operating equipment was nonetheless an "absorption of business" within Article 4, Section 5, of the Agreement. Local 107's business agent apparently took no argumentative position on the absorption question and merely outlined factually the events of the sale and the M & G drivers' refusal to agree to any dovetailing. M & G's president pointed out that M & G did not buy any I.C.C. rights, capital stock, assets, or liabilities from Eastern other than two of three parcels of real estate and 99% of Eastern's tractors and trailers. He "reiterated that he did not buy any I.C.C. rights from Eastern . . ." No one pointed out that the purchase of such I.C.C. rights would have been illegal and, hence, such reiteration had no significance.*fn6

A unanimous decision of the Joint Committee followed, ruling that "there was no corporate acquisition, purchase, or merger within the meaning of Article 4, Section 4 and 5 " of the Agreement, and, therefore, M & G had no duty under the Agreement to recognize the seniority requests of former Eastern drivers. Dissatisfied with this ruling, certain of the present appellants instituted a class action in the District Court, seeking a preliminary injunction to prevent any effect being given to the Joint Committee's decision. They further asked for a court decision under § 301(a) of the L.M.R.A. that "dovetailing" should be required under the contract and that the Eastern employees currently denied such dovetailing were entitled to damages for lost wages. After a lengthy hearing, the District Court denied any preliminary injunction, Bieski v. Eastern Automobile Forwarding Company, 231 F. Supp. 710 (D. Del. 1964), and we affirmed his exercise of discretion, expressly refraining from giving any opinion on the merits, 354 F.2d 414 (3rd Cir. 1965). During the pendency of this earlier appeal, Local 107 changed its counsel and, also changing its "neutral" position taken before the Joint Committee, urged us to reverse the District Court.*fn7

On the hearing for a permanent injunction, the appellants introduced as additional evidence only an affidavit of the management lawyer who headed the Joint Committee the day of the hearing,*fn8 and the present appeal is from an order granting the defendants' cross-motion for summary judgment.*fn9

The precise question presented on the "merits" of this action is whether the Federal Courts can reverse the decision of a Joint Committee which has acted pursuant to a labor agreement, one section of which declared that the Joint Committee's decision would be "final and binding." On this record and in light of the recent Supreme Court decision in Vaca v. Sipes, 386 U.S. 171, 17 L. Ed. 2d 842, 87 S. Ct. 903 (1967), we affirm the conclusion of the District Court that the appellants failed to show a breach of the duty of fair representation sufficient to allow the courts to interfere on that basis with the agreed-upon private determination of a labor dispute. Such a conclusion, however, does not dispose of the matter.

The Supreme Court decision in Humphrey v. Moore, 375 U.S. 335, 11 L. Ed. 2d 370, 84 S. Ct. 363 (1964), dealt with a dispute closely analogous to the one at bar. In that case, the Joint Committee had determined a seniority "sandwiching" under a labor agreement almost identical to the Agreement in the present case. The Kentucky Court of Appeals, reversing the state court's denial of an injunction, granted a permanent injunction against giving any effect to the Joint Committee's decision and the Supreme Court reversed, holding that the dissatisfied employees seeking the restraint of the Joint Committee decision had not proved their case:

"The decision of the committee, reached after proceedings adequate under the agreement, is final and binding upon the parties, just as the contract says it is. General Drivers Union v. Riss & Co., 372 U.S. ...

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