Motion to Dismiss — Chupka v. Lorenz-Schneider Co.

Supreme Court brief1963

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*., aes ra Cee

‘N

Office-Supreme Coun, US.

FILED

9 195),

“JOHN F. Davis, CLERK

\ > Pupreme Court af the Yuited States

October Term, 1962

| Sioa

ees ei Ae ge a ;

} ; : ry No. 65

ANTHONY CHP, A. WILLIAM FREELY, LLIAM

MoNALLY gry CHARLES: S SCHLOSSER:

pllant

. LGORENZS¢ HNEIDER 44) INC. and’ TOHN STRAUSS,

as President of INTERNATIONAL BROPHERHOOD

OF TEAMSTERS, CHAUFPFEURS, WAREHOUSE-

NEN AND HELPERA OF AME ] CA, LOCAL soz,

~ £ . Appellees.

J. ° :

In the Matter of, the Arbitration

° heliceen

WHELTAM PRE ELSTON TTONY CHUPKA WIELIAM

pa’ / N Ali Ba. “mad 4 WW ART 5 s Sf HLUSSE ie

4 : . fpype i] mits

"i eee

INPERNATIONAL B ROTHERHOODOF TE AMSTERS,

: CBA EES. 2 Oe ee, AXD HELP.

“ERS OF AMERICA, LOCAL s02,¢ang LORENZ-

SCHNETDER CO. INC.,: * ty

‘8 : AS : ’ ; ‘i Appellees

‘

> Ox Appeal From tik COotrr orf APPEALS OF THE

Stare of New York “

MOTION. TO DISMISS OR IN THE ALTFRNATIVE

TO: AF — dt

! i

SAMUEL J. Cones, :

Attorneu tor. Appr Ihe Local 802,

DO East 42nd Street,

New York 17,.N, Y.

a ee

Citations = .— wale.

ie Peete —_— . PAGE

. se at .

Cases: y ‘ : geet: ‘. .

“Brokaw -Brokaw, 99 Ind. “App. 385, 192 N: E. 728 : ‘2 17

~~ Bryan v, Kennetty113 U. 8. 179; 198 .2.........0. 6 16

( ‘entral Trust’ Co. \of New: York v. West India cd : :

Co., 169 N. Y. 314, 62 N. E. 387 pacnlne wees 50.0% 19

Commercial National Bank ,v. Canal- Louisiana

Bank & Trust Co. 239.U..8. 520... errr e ; 18

Conkey: v. Russell, 111. Fed, 417, Pepeeper Ae *. 35

Dembitzer v. eainats N. Y. 2d 851, 144 AK. =

EP a eieaecuscaneswel Mehhae ve ekC en Vén'slasess 13 -

pay?

Dgnato v. Auetionn pare e ede 283 App. Div. a

410; 127 N. Y. S. 2d 709, affirmed 306 1 N; ,, 966,

120°N: E. $d 297 ep Graney Sane + PRET Cae sa

- Harrisonville Vv. Dickey’ Clay. Co., 289 U. S.-334- . *

7 (1933) (Brandeis, We wichavupe can tos gue esate a 20

Hurd -v. Hodge, 334 UL. Sv 24 ( 1948) (concurring

opinion of Frankfurter, Me Givtekerssueee ates ~ * 20°

In re Lennon, 166 U. ‘8. 348 ..... ‘ Mee acce <i 16

Johnson wv. Muelberger, 340 U.S. 581 ees aa as 16

. Louisiana Vv. Missigsippi, 202 T. _ Saar een ae 18.

Martocello’ ¥. Martocello, 197 Ga. heme ” S. EK. 2d:

Ge? leas EE EOE ARSED. epg emp why eae arse 7 17

Matter of Soto, 7 N. Y. 2d 397, 165.N. E. 2d 855 . 12°

- Matter of Wilkins, 169 N. Y. 494, 62 N. E. 579 13

Niles v. Mathusa, 162 N . Y. 546, 57 N. E. 184 . 18

: Ee ee

Salem Trust Co. v. Manufacturers Finance Co., 264 4

‘U, 8. 182° seep eeseccccesen aeeeks Pryreee paces 18

. ° .

- ‘—. . ° te

. -*, - - ‘ »* .

“ ae 7 ues. a

. P . . er... .

\ B be ae

Te |

ns PAGE |

‘C ASES- (C ovitinued) : ‘) ; ett

- Suiter'y, Suiter, 7 Qhio App. 44, 37 N _E. 2d 616 . fF,

ny 5 Tyler ¥; Aspinwall, 73 Conn. 493, 47, Atl. 765 5.4. 17,

' - United Steelworkers -of America’ v. Enterprise

_* Wheel & Car Corp., 363 U.S. 393 grtettae sss ‘a

“United Steelworkers of America v.W arrior & Gu

Navigation Co., 363 U.S. 574...... ae Lime o>. 19

“White v. Sparkill Realty Co., 280 U. S. si as 20

STATUTES :,

Civil Practice Act -of the ‘State of New York,

, $1462 . 2... t eee ed * Siceeueclee woe ee ets 5, 12, 13, ‘4, 15

MISCELLANEOUS : OG tee - = ad aun

‘19 Am. Jur. Equity § 486 (1938) . eeBes Peewee eee 2

Bispham’s ee, of Eqpity (sth ed., 1908), ; SN avis

S$ 45 error aa gr Pe yee Gre a ee ee 'sisie dads “49

. é . a

30 C.J. S. Equity 11 SO oe 505 vans Peas 19

Pomeroy’ s Equity Jurisprudence (5th ed., 1941), <

Di cn ua hey gal RT ee ee 19, 20

‘7 Restatements, Judgments, § 115,. note 1(d) (1938) 19

a Shulman, Reason, Contract, and Law’ ‘ir Labor

- Relations, 68 Harv. L. Rev. 999 ... .......... 16

\ Da Sa

oe”

; 7 : F <A

Statement ae See) Mere Cee Pee ‘. etait

The Arbitration Proceeding ees eben os ae

The Injunction Action igh oes : ; Re ee as EGR AS

. ‘ e

ere REG ER yi fee me ge A oe I ARE ee .

. SUMMARY OF ARG v MENT:

Poixt l- The appear in “thie: shaticasion

is y ise pre- ae, n

vents no substartial faderal-question (2.0... 9

Xo sifbstantial federal question is raised by"

the absence of the Individuale froni the pro-

ceedings before the ‘arbitrator «. 0.0.05... -

Na substantial” fede ral que stion ‘is riised by

the absence ‘of the Individuals - from the

judicial proéeadtings in whie h the vacatur: of

‘the: arbitration aw ard Was sought fe ea ee a

Pork 11—The ap pe ‘al ‘in the iequinction cnae pre-

ose nts" ne substant fal federal question o:.......

; gainst the Employe REOe Oe PRE Ne ee

aes Pere ire Said naaba th ak Kian cat's a okebtnes oe

. ° * . : 7 Q ‘ : .

” ‘ ‘e

A. Na substantial: federal que stion is raised hye:

the decisions of the New York Staté ( ‘ourts, -

holdin that the [nd lividuals are not entitled

to an injunction restraining the enforcement -

of the judyment. confirming the arbitration

yy Peay ay ee pie. senate Merete

. NoJsubstantial federal she is raised by

the decisions of the New York State Courts

holding that the Individuals’ - rights carpe -

sees ‘preserved by, an action, for damages’

- FEURS, -WAREHOU SEMEN AND Hevrrrs or Asesica, Loca:

802, i a ee, go mas ;

; : res : rae Mees,

Veer Sree eae ae es :

oon *) .* Tusthe Matter of the Arbitration’ ——

= IN THE

Supreme Court of the iuited States

‘nn , October. orm, 1962 .

nN eee No. ————

® 7 Cit ee:

. Pe a Chie. eae i Be!

Ax THONY Chern, W iLLIAM: Frege Ww wiiam McNaLy

and’ HARLES SCHLOSSER, a

Be ‘ Wea Si % ET ae a ae bepeliduts,

Par titers against igh cs xa,’

f Aone NZ ss Sicdiicatitia iets (eo. ‘INe, and: Jone ‘Sinav ss. ‘asi P vesilie mt

Of INTERNATIONAL ROTHER H GOD OF. TeAMSTERS; (Hie r-

between

(Winrar F KEELY, ANTONY CHUPKA, Witty M. Naty,

eel and ( ARLES y Sesto,

~¢

and

, =. : ey a

Inréexatios<sn Brorikkuoow of Teamsters, CHACEFERS,

“WarenovsemMen AND: HeLrers oF :\MeERucA, Locan “S02,

cand Lerenz-Scuxemer Coe Ixc., * , .

Se ; ‘Appellees.

Ox Appgau From tue Covrnr or APPEALS OF THE

: [> - STATE OF NOW TORK ~~... a

* , s

_ - — ———() ee oe

MOTION TO DISMISS OR IN THE AL ERNATIVE

-TOAFFIRM ss

Appellee, pursuant to Rule 16 of “the itevines Rules of

~ the Supretie Court of ‘the. United: States, moves: fa) to.

» dismiss: the appeal herein on the ground that a substantial

federal question is “not: presented and that the judgment

“appealed from rests on an adequate non-féderal basis, or,

“in the alternative, (b) to affirm the final judgment of the

Court of Appeals of New “York State on the ground that

the question, presented jx so. ‘unsubstantial as‘not to need.

further argainient, xe daca a:

sib

—

Appe Mants,

Lyrenz-Schneider Co., Ine. (the ** Employer’’) and Local

S02, Intyrnational Brotherhood of Teamsters, Chauffeurs,

Warehousemen and Helpers af America (the ‘*Un ion’’)

are parties to a.colleetive bargaining agr>>ment ex xecuted

on Oc; ‘Ober 5, 1959, for a term of four year? ending October

4, 1963 (650)*, This agreemeht governs the wages, hours: -

and working conditions of route salesmen employed by the

Employer (02). These employees are engaged in the

distribution to,retail storekeepers of products merchandised

by the Employ er, intluding potatachips and similar snack '

items (676).

a The subject matter of ‘the collective | eee Oe agree-

°o

mept is the sales .romes Operated by these route salesmen.

Indeed, a route isa job under the agreement (597).

Commencing in May, 1969, the ‘Employer v@ongfully

eliminated four of the jobs éovered by the collective bargain-

ing agreememt by purporting to transfer four sales routes

to four individuals as independent entrepreneurs. These

four’ individuals had, until that time, been Union members

employed. by the Employer as,réhte salesmen under the

colleetive hargainingagreement etween the Employer and

the Union (678). These four individuals, ¢ ‘hupka, Freely,

MeNaltp and Schlosser by name, are the appellants herein

(** Individuagls’*).. )

The collective bargaining agreement contains an under-

taking b¢ the Employer that ‘the will not enter into any

‘agreement with any employee, verbally or in w rifting, which

may be inconsistent’ or in cofiilict with ‘this agreement

** *** (644). The ag ‘egment provides that a route may.

be eliminated only if it is Shown that the volume of sales

on the route has beeome uneconomic over aperiod of three

* Numbers in parentheses refer to folios’ of the printed record

on appeal, unless otherwise nacate.

months (4x). Neither the Employer nor ‘the individuals

claimed that the four routes ip question had become: uneco-

_nomie prior tothe ‘challenged transaction. (479, 596.

The Employer disposed of these four jobs by means of —

agreem@tits of conditional sale which it exceuted with eacti

of the Individuals (351, 395, 437, 485). No provision of

these ‘a agreements purports jo convey an ex¢lusive right

to sel to specified custonfers, ' or in a specified territory.

Actually transferred by these agreements of conditional

sale was the job of delivery of the Emfloy erts product to

a: fixe? number. of storekeepevs | in a given territory (351,

395, 437, 485). The four agreements of conditional sale

are Substantially identical. They provide that the Indi-

viduals may sell to storekeepers only fhe products fur-

" nished by the Employer (352, 396, 438, 485). Under these

agreements, the Indiyiduals are required to service each

of these customers at least twice’a week (354, 398, 441,

488). Display racks and stands are to ‘be sold. to the

Individuals by the Employer (358, 402, 445, 492). The -

Individuals must purchase all stock from the Employer,

and they may sell to each ‘customer only those items author-

ized for sale by the Emplover (355, 399; 441, 489). By

entering into these agreéments the Individuals have agreed

to avide by. an undisclosed set of rules and’ regulations

promulgated by’ the Employer to govern the defails of

the work performed. They must observe these rules find,

regulations which, according to express provision of the

contract, survive the closing (356, 400, 443, 490).

Each of the Individuals must, pursuant to these condi-

tional sales agreements, place their names on trucks andl

. On sales tickets where designated by the Employer (357,

402, 444, 491). Furthermore, -each- agreement. expressly

“ provides that in the event that the Employer récoups these

-routes, gurrent rates for repurchase will apply (3: a9, , 403,

ny are ni ; Ne it a eS San

Finally, no title to_1 these jobs or sales routes has yets'

vested in Chupka, Fre, ly, MeNally or Schlosser, and sitio

will not vest in them until May, 1967, or, in Freeky’s Cue:

September 1964 (361, 40, 449, 495) and. then only it the

specified installments have been paid.

‘Thus, the tasks which were formerly done by the four.

fnidividvals; as employees—are still, being performed by

‘+ them, The only majot change is that they now perform

the work not as employees gov erned by the collective har.

gaining agreement, but rather as- parties to’ individyal

conditional sales agreements with the Employer. The

merehandise is the same, the customers are ‘the same, and

the Individuals are the sume (O84)... Bhat teats ‘

Shortly after these transfers took pli we, the Unidn

> ativised the Employer of its objections, -on the grounds

that’ the transfer 6f jobs or sales routes ander. such cir

cumstances ¢was prohibited by the collective bargaining

‘agreement, Unable te resolve this matter amicably, the

_ parties followed the grievance procedures set forth in the

collective bargaining agreement ‘and ‘ultimately proceeded

* to arbitration (679). The Employer and the Union agrecd

upon (1) the selection of an arbitrator, and (2) the ixane

:.to be submitted to the arbifrator for decision ( WI). Pro-

tracted arbitration hearings followed on se®eral dates, w ith 2

hoth parties represented by counsel (679). The Individuals

wege not parties to. the arbitration proceedings.

The ret. er and the Union jointly framed the issue

for the arbitrator ( 503). The -issue submitted for arbitra-.

tion was: * : . °

' ‘*Were the Nemsgg @ s sales of routes, to W iia v

‘ =Freely, Anthony Chupka, . William MeNally ‘and

Charles Schlosser in violation of the contract be-,

- tween'the parties?) If so, what shall be the*remedy? "7

( wind 3 . : : s

The arbitrator issued his award on February 28, 1961

(680). In his award, he responded to 4he submission by

finding that the transfer of these jobs, or sales routes by the |

Employer tp the Individuals did, in fact, violate the collee-

tive bargaining agreement, As the remedy, he directed the

restofation of these routes to the ‘coverage of the collec-

tive bargaining -agreement from whieh they had “heen

. wrongfully removed. The arbityator’s Saward states:

_“* Phe Conipany’s sales of routes toe William Free ly,

Anthony Chupka, William’ MeNally and Charles

Schlosser were in violation of the agreement between

the parties. (These rontes shall be returned to the.

coverage of the’ agreement to be served by’ route

salesmen, within’ the scope of Article 1(A) of the

parties’ agreement.’? (571275). |

‘The cpllective bargaining agreement provides that an arbi- -

trator’s award shall be final and binding upon the Employer

and the. Union 1636). :

Following the ‘ixsnance. of this award, the litigation

“which has led to the appeals now before this Court was

Qemimenced. c

Fer ease of refe renee, it is necessary to distinguish be-

“tween the two cases which are the subject of ‘this appeal.

| The casé captioned

hy the Matter of the Arbitration es

eae, Between - |

Lorenz-Schneider Co., Ine. and William Freely,

Anthony Chupka, W iMiam’ MeNally, and Charles . .

Schlosser, . en

. Petitioners,

and . .

_Internatibnal Brotherhood of Teamsters, Chauffeurs,

. Warehousemen and Helpers of Amertea, Local 802, °

oe ‘, . Respondent,’

is a special proceeding Cent pursuant to Section 1462 6f

the Civil Practice, Act of the State of New York thy the

Employer and, the. Individuals, seeking an order vacating | 7

the arbitrator’s award. In this special proceeding, the . .

Union cross-mov ed.for an order and judgment confirming er

the arbitrator’s award. This special proceeding shall

henceforth be referred to as the ‘* Arbitration Proceeding’’. -

Following: a ‘decision by the Appellate Division of the

Supreme Court of the State of New York, Second Depart-

ment, holding that the Individuals had no standing to apply ~

,tor the relief sought in the Arbitration. Proceeding,. the

"Individuals commenced a new and separate action in the

Supreme Court of the State of New York for an injunction _ .

and deClaratory judgment. «In the latter action, both the z eae,

_ __-imployer and the Union were party defendants.* By oo

action, the Individuals’ sought a judgment declaring t

the arbitration aw ard and the judgment confirming it were -

not binding upon them, and restraining the Employer and

the, Union f irons (1,) enfareing the award and judgment

agate: the Indiv iduals, and (2) interfering with the opera-

tion of thesé jobs. or sales routes by these Indiv iduals, ‘This

aétion is captioned’ » eae :

Se ~ . “Anthony € ‘hupka, William Free ely, William MeNally °

_ & and C harles Schlosser,

Plaintifts, ol

against © 4 1

«. Lorenz Seknshiies Co., Ine., and John Strauss, as

” President of International Brotherhood of Team-

sters, Chajfffeurs, Warehousemen and Helpers of —

America, L 802, °

ears - Defendants.”’

» ‘and will hereinafter be referred to. as the “Injunction = *

_ Action’’. Each of the foregoing matters Will be considered

in greater detail bélow.

*In the Injunction, Action, thes defendant Employer fully sup-

ported the position of the plaintiff Individuals, and indeed joined with

them in several applications for various relief against the defenlant

Unior. (23, 209-13).

’ ° gs, I ad . 4

The Arbitration Proceeding i

’ . : : , i | ° ih

By notice of motion.dated March '16, 191, the Employer

and the Individuals jointly commenced, the Arbittation

Proceeding. by moving the Supreme € ourt of the State of

New York, Queens County for an order: vacating the award

_ of .the arbitrator (675). That relief was denied, and the

Union’s cross-motion for an order confirming the award

and for judgment thereupon was granted (675); A judg-

ment confirming the arbitration award and incorporating

the arbitrater’s. mandate of specific performance - was

entered on Jane 5, 1961 (717).* The text of this judgment

is found in the printed record at folios 310-15.

The Kpployer ‘and the Individuals jointly appeale “l

from this decision:to the Appellate Division af.the Supreme

Court, Second Department. By order dated November 27.

1961, that Court unanimously affirnied (715-17). The Ap-

pellate Division also deteMined that the Individuals had

no standing to move tdé:vacate the arbitrator’s, award since

- they-were not parties to the collective bargaining avrosment — -

or-to the arbitration (717). In its « opinion, the Appellate

‘Division declared that it was not passing upon the points

urged solely on behalf of the Individuals (717).

_ From the adverse decision of the Appe late Division,

the Employer apptied to the Court of Appeals of the State,

of New York for leave to appeal to that Court. Leave to

appeal was. denied on May 17, 1962°(828). The Individuals -

| _ a9)

* The emypdAoyer’s welations of its agreement with the Pinion began

_ in the Spring of 1900678). To date, although every tribunal wh ich ,

has riled’ upon the matter. has found-in the Union's faver, enforcement.

of the judgmept confirming the arbitrator's award has been impossible

hecause of asuecession of intéNocutory stays secured by the Employer

in Individuals. Since the collective bargaiming agreement

e s on October 4, 1963, the Union will be wholly denied the

benefit of an ultimate decision in its favor tf the Individuals and the

F:mplover succeed in delaying enforcement of the judgment beyond

that date.

ss ; 8

- appealed directly*to the Court of Appeals thereafter, and

their appeal was dismissed ‘ipon the Union’s motion, on

the ground that no substantial constitutional question’ was

presented (808). Following the dismissal of their appeal |

by the Court of Appeals, the Individuals appealed direc tly

to this Court.

_ 2B ’ iG. 78 8

- The Injunction Action

’

By complaint and order to show cause’ dated December ~

11, 1961 (shortly after the, Appellate Division, had, on No-

vember 27, 1961, determined that the Individualy had no -

standing to move to vacate the award)’ the Individuals

commenced the Injunction Action against the Employer

and the Union, asking for a judgnient-(1) declaring that

the arbitration award and the judgment confirming were

void as to, them and (2) enjoining the Employer and, the

“~~

Union from enforeing the award. “‘againetthemand trom

interfering eit operation of the jobs or sales routes

(109-10), Following the denial’ by the Supreme. Conr. of

a motion by, the Individuals for a temporary injunction

(82-29), tht Court partially granted. the Union's IBOtion

for summary judgment by dismissing the complaint insofar

- as it sought injunctive relief, while at the same time grant

me ao F : re.

ss t .

7 ‘ ° is .

. ‘ ’ ‘ -

: -

ing judgment to the Individuals t the extent of declaring’

that they were not personally bound by the judgment issued

in the Arbitration: Proceeding. In the exercise of its dix-

cretion, the Court held that the equities did’ not warrant:

the granting of injunctive relief-in fayor of the Individuals

because the. effect of such relief would. be to nullify thie

judgment rendered i in favor of the Union, aril would permit

‘er to continue in the breach of its contract

/nion = 272). The Court beld, however, that

the form - an iatia for damages against the EmpJover.-

Jweave to bring suit for damages was granted (373-75).

*«

~ The Individuafs appealed to. thé Appellate Division of —

the State of New York, Second Department, from both theg

order denying a temporary injunction and the -order «i-

missing their complaint tor -permanent ‘injunetive relief.

On June 11, 1962, the Appellate Divagion * unaAnimonsl ©.

affirmed each of the orde Ts appe sated gor, without opinion -

(718-20). An appeal taken direetly by the Individual. 14

the Court of Appeals of the ‘State of New York from the»

foregoing determination by the Appellate Division wa- he

‘dismissed by that+Court on October 25, 1962, upon the ae

sented (S08), Following the dis Miggal of. that. appeal, the

I yedivicduels appealed directly to this ‘ourt..

a ARGUMENT.

ee seven Ce POINT I

“

The appeal i in the arbiaration’ case e presents no sub- ;

stantial federal question. ea a

A. No quleshantil federal question is raised by the absence -

' of the Individuals from the wh stank fore the

arbitrator. fa

No. federil dination ie’ abcd by the absence of thie +.

Individuals from the arbitration proceeding itself. The

arbitration was held pursuant to the provision in the con-

tract, between the Union amd the Employer under. which.

_ only eyntroversies between the parties to thle agreement

are: stbitrable (636). The Uniog and the -Employer sub--

mitted to arbitration a dispute between’ then concerning

the interpretation of their contract (578). The Individuals

were not parties to the agreement, and any dispute which Pa

they may have had with either party to the agreement was

imctependent of and not arbitrable under. thatgagreement.

Grievances -of the Individuals are justiciable . elsewhere

‘'. + . than’ in a contractual ‘arbitration proceeding between the.

Employer and*the Union. This Court has said that:

“© ® © arbitration’ is a matter of contract, and a-

party cannot be required to: submit fo’ arbitration

any dispute which he has not agreed so to.submit.”’

(United Steelworkers ws “A therica ve W 7 “ntl

Nav igation C'o., 363 U. S. v4, 582

The arbitration wisions of the agreement certainly

do Piso amr with strangers arbitrable there-

-——~“under. Nor can it besaid that a stranger has a constitu-

‘tional right to be heard on the interpretation ‘of a contract

between thé ‘two contracting parties, before a tribunal

established by the contractitig parties for their own busi- -

ness purposes. In. the Warrior case; supra, this Court, |

quoting with approval from Shulman, Reason, Contract, -

and Law in’ Labor Relations, 68 Harv. L.. Rev. 999, 1016,

, stated :

3 oe

oa proper conception of the arbitrator’ s fune-

tion is basic. He is not a public tribunal imposed

upon ‘the parties by superior authority which the

parties are obliged to accept. He hay no general

charter to administer justice for a community: which

_ transcends theparties. He is father part of a systent

of self- government created by and- confin: vd to the

parties,”’ © (368.0. S. at OST. ) roe ’

‘THR -is not to say that the ‘stranger. is _ without a’ “remedy «

for the infringement of such rights as he may possess.

: There remains available to him in ‘an appropriate case

a Judicial rémedy for such infringement.

A stranger.’ s right to be heard on the issue of-the teinedy

to be awarded. by the ‘arMitrator is no greater than his

right to be heard with respect to the interpretation of .

the’ parties’ agreement. The, forniulation of a remedy | is

no less within the exclusive reflin of the arbitrator than

‘thesinterpretation of the contract itself: dn Unite d Steel-

workers of Amertea \. Po nterprise Wheel & Car Corp., 363 °

U.S. 593,597, Mr. Justice Douglas stated for the majority

-_of this C ourt:

° .

- ee .

s . . , ¢

ia. a*.

‘ .

> ° eg . .

‘

‘‘When an arbitrator is commissioned to inter-

pret and apply the collective bargaining agreement,

he is to bring his informed judgment to bear in order

to reach a fair solution of a problem.. This is espe-’

cially true when, it comes to formulating remedies.

There the need is for flexibility in meeting a wide

x variety of situations. The draftsmen may never have

thought of what specific remedy should he awarded

to meet a particular contingeney.’

The j issueg@ipintly subgpstted by the parties to the arbi:

trator’ required him to determine whether the collective bar-

gaining agreement was tokiet'y the Employer's removal:

of four route salesnien’s jobs from its coverage, and, if so,

what remedy should be awarded. The%arbitrator found that’

the Employer had indeed violated the ‘agreement. As a°

emedy,. the award directed the restoration of these four.

jobs to the cov erage of the agree ment. No remedy, it i¢ ,

submitted, could -be more appropriate under the cireum-

statices. No -federal’ question is raised by a’ stranger’s

assertion of the right. te be heard’ on the remedy to be

awarded in a contractual arbitration’ proceeding as hetw een

- thet two contracting parties.

The: Individuatfhaa no right, federal ‘or atherw! isk,

heard by the arbitrator. To the extent that they .

assumed the status of independent businessmen as of the

time the arbitration hearings were held, they were plainly

* hey ond the coverage of the agate of the.

agreement. To the. extent that Mev might have wished,

at that time, to continue to. be treited ' as members ef the

Union, they were bound by the conduct of ‘the arbitration

by the Union as their-<luly designated. collective bargain-

ing representative. -To the extent that they might have

wished at that time to be-heard to argue that they were

innocent victims of the ee er’s W rongdoing and should

not be made to suffer aS‘a result, they admittedly remained

free, as “the Courts below have repeatedly acknowledged,

to agsert a claim for damages against the Employer.

ths

"alee mg

In any event, under no body of law does a stranger’s

claim that he is an ‘innocent victim of the violation of a

contract to which he is not a party require | the injured party

to the contraét to surrender his’¢ontractual remedy of arbi-

tration. While the good faith and- innocence of the Indi-

viduals is opch to serious doubt,* these considerations were _

in fact irrelevant to the arbitration proceedings. Strangers..

“are properly denied. the right to intervéne as parties to labor

arbitration cases, especially where such intervention would

frustrate the objectives intended to be :.cedmplished by the

agreement to arayrate. |

B. No ‘lila edna federal gnesthen | is raised by the absence

of the Individuals from ¢he judicial proceedings i in which

_ the vacatur of the arbitration award was sought.

“In Matter 6f Soto, 7N. Y. 24397, 399, 165 N. FE; 24:855,

‘the highest court of the State of New York held that dis- |

charged employees had. no standing.to move to vaedte an

award upholding their discharge, which was rendered in

an arbitration proceeding between their employer and their

union. The Court stated: ines

‘*The award, hav ae been rendered in a controversy

between the parties. to a valid collective agreement,

could be vacated only at the initiation of a party to-

. the. arbitration in the manner and for the’ reasons

_ provided by section 1462 of the Civil Practice Act.’’

It was the Soto principle which was applied by the G ‘ourts’

. of the State of New York when they rejected the argu- .

ments of the Individuals in the instant case.

No substantial federal question is raised by the ‘Indi

CTiduals’ claim that the Courts 6f the State of New York:

——

* Godfrey P, Schmidt, Esq. attorney for the Employer, also

represented the pa eget their application for an order vacating

the arbitration award (500). ‘Thereafter, representation of the

Individuals waX transferred to Kalman I. Nulman; Esq., an attorney”

with whom Mr. ‘Schmidt shares his offices ¢20, 21),

° 5 s s » a

er red i in denying to them standing to. vacate, the ar bitrator’ 8.0

award.* This i is tgue for essentially the same reasons that

they were. not entitled to be joined in the: arbitration pro-"

ceeding itsel&

In Court, the Indiv iduals might wish to argue that the. |

arbitrator erred in interpreting the agreement as he didy

or that he awarded the wrong remedy, But-such considera-

tions are .not_ appropriately argued to a court. In this

respect, Section. 1462 of the Civil Practice Act, as well as

“the decisions of this Court and of the New. York Court of

Appeals forbid reviewing courts to substitute their judg.”

nient on the merits, or concerning the remedy aw rarde dl, for’

that of the arbitrator. :

United Steelworkers: of America. Enterprise

Wheel & Car fet pe S. 593,596. * |.

Dembitzerv. Gutchen? 3 N. Y. 2d 851, jie N. Ks.

we 2d: 728. -

If it is\the claim ofthe Individuals that their constitu-

tional rights are infringed by the apphication to them of

the principle that Courts nfay not review the arbitrator's

exercise of judgment, then important’ principles governing:

labor arbitration ‘recently announced by this ‘Court demon-

strate the lack of merit in such a ‘claim.’ This Court, in the

Ente rprise Wheel éase, supra, stated: : |

“The refusal of courts to review the merits of

ar arbitration award is the proper approach té arbi- *

tration under collective bargaining agreements. The

;, aaa policy of settling labor disputes by arbitra-

tion would be undermined if courts had thé final say

on the merits of the awards.’’ *(363 U. S. at 506.)

° Indeed, the. Individuals were parties to and ‘were in 1 fact fully

heard in the proceeding in which the judgment confirnting the award

was entered. It was not until the decision on appeal that they were

found to have no standing to move to. vacate the award.

c)"

If the Individuals are here ‘aiming. that substantial

federal rights were violated insofar as the decisions’ below

hold that: they had no right to: ‘show, in the statutory pro-

ceeding t6 vacate the award, that they were innocent injured -

parties, or that they were improperly excluded from the

arbitration itself, such claims are equally without merit:

- Such claims could succeed only if the Indiv iduals' could es-_

tablish independently that their innocence.or their asserted *.

rights entitle them to joinder as parties to the arbitration

‘proceeding itself. As shown above, however, the contractu-

_ally private nature’ of the arbitration between Employer

and Union, together with the irrelevance of the innocence t

' or guilt’ of the Individuals as considerations for the arbi-

trator, required the New York Courts to reject their attegopt

‘to join in the motion to vacate. . .

Finally, if the Individtals claim "h substantial federal

right to argue in Court that the award in an arbitration to |

‘which they. were not parties should be set aside as invalid

for the reasons listed in Section. 1462 of the Civil Practice

Act,* that claim must also fail. The Employer has, in a the *

—

* Section 1462 of the -Civil Practice Act ‘of the State of New

"York provides : ;

“Motion to vacate. a@ard. Ta sithem of os following cases,

the court. must make an order vacating the award, upofi the. ~

_ application of any party to the controversy which was‘arbitrated.

1,Where the’ award was ‘procured by “corruption, fraud or .

other undue means. ; Le

2. Where theré was evident _ partiality or corrupiin in the

arbitrators or. either of them. sik fed

3. Where the arbitrators were guilty of misconduct: in refusing

to postpone the hearing upon sufficient catise shown, or. in refus=

ing to hear evidence pertinent and material ‘to-the contfoversy ;

or of any other misbehavior by which the” rights of any party 2 <

have been prejudiced.

4, Where the arbitrators, or other persons Licking: the award

— their powers, or so imperfectly are ngate them, that a

5 ee

‘ fy

« Mees ne

- ‘ 5 . . ‘

instant case, * prosepiied: ‘etiaai: ihe. dourte of. New York,

up to and inclnding- -the Court of ‘Appeals, upon his claim

ga €¢ ‘that the arbitration award is invalid’ under Section 1462.

‘> , + Every court to which the Employgx has applied has. rejected

& this contention on, its merits. “Mist the Courts -hear the: |

4). ‘Same challenge again, and from" a stranger who supposes

himself damaged by the award, but who is neither a party

te the collective bargaining agreementsThe arbitration pro-

oes e ceeding, nor the dispute over contract interpretetion? Must

the State Courts, as a matter of substantial federal rights, -

7 ; hear attacks by stranger@fupon arbitration awards-which

resolve private: ‘business controversies? May strangers’

attack an award wich satisfies the parties to the arbi-

o °°. tration? Js any limit to -be placed upon the number «ff

_ strangers who may attack the award? .

wreitgeat chaos would be intréduced into collective bar-

vf on | gaining unléss arbitration is preserved as a speedy and

Py “effective method of finally resolving controversies between

We cae parties to, ‘a’ collective bargaining agreement. And the

exclusion of strangers f rom such controversies is grounded

- i a ee o-4-g——.- — he ee ee rey ——_

mutual, final and definite award upon aad supject- matter’ sub

mutted was not made.

rag : ~s. If there was no yalid eiisibadines or contract, and. the

a . * objection. has been raised under> the ‘conditions seg forth im

section fourteen’ hundred fifty-eight. aes sid

- &’ e%

Where an'award is vacated, thé court, in’ ity discretion, fnay

*. °°) direct a reheating either before the same arbitrators or béfére

new arbitrators to *be ‘chosen in the -manner provides d in the

. submission or contract for the se lection® of the origin: ul arbr-

trators may Hike a decision shall be deemed ‘applicable to thé new

arbitration and to: commerce from the date of the court’ s order,

Where: the court ‘vacates’ an award, costs, not exceeding,

| twenty- five dollars and disbursements may be awarded to’ the

prevailing party; and the payment the reat ntay be enforced im

** Jike manner as the payment of costs’upon % motion: in an action.”

Rg Beara S| .¥

‘ .

traturs and vany provision limiting ‘the time in which the arbi-.

an ' yy - . ¥ i

‘od

upon the Gesire to preserve the elitacy of this éalutaty .

procedure, and ‘upon the gecognition that strangers may,

in coart, exact a judicial‘remedy for any violation of fh cir

rights. - . ‘ ~é k

None y the claims whieh the: Individuals sought’ to ie

assert in the proceeding to vacate the aware we justiciable i

by the Individuals in, support of the. substantial federal”

“Fight-whiel’ they assert on the Airst of ‘these two pppeals. 2° =

“th judgiwem was rendered

They have thus established ne ri ight. federal or otherwise?

“upflidenite tir. justify ax appeal to this ¢ ‘ourt,

sd .

POINT 11

The appeal in the ‘<iiaaii case presents no sub-

stantial federal] question.

A. No sub «tantial federal question is rateod by the pee

of the New York State Courts holding that the Indi-

viduals are not entitled to an injunctior, restraining the

egforcement ¢ of the judgment confirming the ‘arbitration

award. ; oir he

The action to seta the enforcement éf the judgment

confirming the arbitration award is, on its facy, a collateral .

attiick upon the validity of that judgment by persons ir -

priv ity of contract, with a party, to the proceedings i in 7.

The judeane nt eoulinming the arbitration award was

afirmed py the Ap nrwellate Diviston (715-17). The Ccurt of

Appeals, nye n two Sepamate occasions, has refused to re view

the «de ‘cision of the Appellate Division (825, 828). Under

thesy cirg Sianees, the judgment confirming the aavard

uscepti ible te collateral attack either by the parties 4

“fo the action in whie h it wAs rendered, or by other interested

persons who were not partie =.

Z Mryan v. Agune it. 11} v. Ss. 178, 198:

In re Lennon, 166 U.S. 548; rp ;

Conktu ¥. Russell. 111 Feds ‘et 421,