# Petition — Russom v. Sears

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1977
- **Citation:** 434 U.S. 955

## Text

Supreme Court, U. 5.
FILLED

SEP 22 1977

a JR., CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No. ..... 977455 "

ALFRED RUSSOM, et al.,
Petitioners,

VS.

SEARS, ROEBUCK AND CO., a Corporation, and LOCAL 610, INTER-
NATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSE:
MEN AND HELPERS OF AMERICA, and LOCAL 688, INTERNATIONAL
BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN - AND
HELPERS OF AMERICA,
Respondents.

PETITION FOR A WRIT OF CERTIORARI
To the United States Court of Appeals
for the Eighth Circuit

DANIEL P. REARDON, JR.
411 North Seventh—Suite 1401
St. Louis, Missouri 63101
Attorney for Petitioners

Of Counsel

KENNETH V. BYRNE
411 North Seventh Street
St. Louis, Missouri 63101

St. Louis Law Printing Co.. Inc., 812 Olive eae 63101 314-231-4477

TABLE OF CONTENTS

Page
EN oo Cua cu ek Cae eK dS) pores sku bay bes ewe l
Es ckua cts GeV SC SCAR EWE SR Oas AROS bR RE WS) 2
RP COP ee Ter eRe eer Teer 2
ey er ed Pi eb edu e cceweeaaVense 3
Reasons for Granting the Writ ...............00008. 7
Ne de uh bab none de 08S Cd ORE e ede 12
EEE oye i Shaded See aOR NA AON eee eee R ene A-1
EE iin @ po 6:kk Maes He ede awd eons Cketens A-2
PE ers See ee ere a er eee A-11
I es a ON ee A-13
Me Tot a cid Minin dakova A-20
EN 6 acn cs ua dw he SeNReee be 62 seseen neds A-21
Cases Cited

John Wiley & Sons v. Livingston, 376 U.S. 543, 84 S.Ct.
eee EF Ferree eee rerire 2,11

N.L.R.B. v. Burns In’t] Security Servs., Inc., 406 U.S. 272,
52 GAN. 1971, 3B L.E2e Gh (IS7Z ........-0.. 11

Vaca v. Sipes, 386 U.S. 171, 77 S. Ct. 903, 17 L.Ed.2d
Se ED, xc cpb Ac aus eee R Va Ree eu Rees kt ree OK 3,9

Statutes Cited

Se ee eee wi ehebeees cn ae es 2
Ns be eh nn eeadedaeseeecee sos 3

57 Minnesota Law Review 1051 .................... 11

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

re ios

ALFRED RUSSOM, et al.,
Petitioners,

VS.

SEARS, ROEBUCK AND CO., a Corporation, and LOCAL 610, INTER-

NATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSE-

MEN AND HELPERS OF AMERICA, and LOCAL 688, INTERNATIONAL

BROTHERHOOD OF TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN AND
HELPERS OF AMERICA,

Respondents.

PETITION FOR A WRIT OF CERTICRARI
To the United States Court of Appeals
for the Eighth Circuit

Petitioners, Alfred Russom, et al., pray that a writ of cer-
tiorari be granted to review the judgment of the United States
Court of Appeals for the Eighth Circuit entered in this case on
June 29, 1977.

OPINIONS BELOW

The opinion of the Court of Appeals for the Eighth Circuit is
not reported as of this date and is reprinted in the Appendix D.

os

The Eighth Circuit's Order of July 20, 1977 denying the Pe-
tition for Rehearing is reprinted as Appendix A. The other opin-
ions below are also reprinted in the Appendix and in addition,
petitioners have also set out in the Appendix a copy of their
Petition for a Rehearing and a Statement of Errors in the opin-
ions below.

JURISDICTION

The judgment of the Court of Appeals for the Eighth Circuit
was entered on June 29, 1977. Petition for rehearing was de-
nied by order of the Eighth Circuit on July 20, 1977. This
Court has jurisdiction under 28 U.S.C. 1254(1).

QUESTIONS PRESENTED

CAN EMPLOYEES BE FOREVER DEPRIVED OF
NEGOTIATED PENSION BENEFITS AND FOREVER
DEPRIVED OF OVER ONE MILLION DOLLARS
($1,000,000.00) CONTRIBUTED BY SAID EMPLOY-
EES THROUGH THE DEVICE OF CHANGE OF COR-
PORATE FORM?

CAN A UNION SIT IDLY, NOT ONLY FAILING TO
ENFORCE THE COLLECTIVE BARGAINING
AGREEMENT AND FAILING TO ADVISE ITS MEM-
BERS, BUT ALSO ABANDONING ITS MEMBERS
AND NOT BREACH ITS DUTY OF FAIR REPRESEN-
TATION BY ITS CONDUCT?

CAN EMPLOYEES BE DENIED AND DEPRIVED OF
THE REMEDY GIVEN THEM BY THE SUPREME
COURT IN “John Wiley & Sons v. Livingston, 376 U.S.
543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964) and subse-
quent cases,” BY THE REFUSAL OF THEIR UNION TO
ACT?

STATEMENT OF THE CASE

This case was brought by certain named plaintiffs as a class
action against their employer, Sears, Roebuck and Co., a cor-
poration, and against their unions, Locals 610 and 688, Inter-
national Brotherhood of Teamsters, Chauffeurs, Warehousemen
and Helpers of America; the suit was basically a “301” suit
against the employer for breach of contract and the unions for
breach of the duty of fair representation, the remedy granted to
employees by this Court in Vaca v. Sipes, 386 U.S. 171, 77 S.
Ct. 903, 17 L.Ed. 2d 842 (1967). Jurisdiction of the court was
invoked under Title 29 U.S.C. 185, et seq.; this particular case
was probably a case of first impression because it also involved
this Court’s decisions concerning co-employer or successor em-
ployer, as well as questions concerning interference with con-
tract and piercing the corporate veil. The trial court denied the
class action status and the case proceeded to trial with approxi-
mately forty-five (45) named plaintiffs.

The basic facts in this case are not seriously disputed and pe-
titioners will set forth a concise statement of the facts material
to the questions presented for review by this Court. In 1956,
Sears was having a labor problem with Local 1, International
Brotherhood of Electrical Workers over the contract which
covered employees of Sears performing service work on appli-
ances. In April, 1956, John Baumler (who had previously been
employed by Sears for approximately 16 years and who had
previously set up a company called “B Right” in 1952 which
company did 100% of its business with Sears, “B Right” hav-
ing been set up due to a strike situation in St. Louis) set up a
company called “Dependable Appliance Service”. Mr. Baum-
ler obtained space in a building, put an ad in the newspaper, in-
terviewing applicants who answered the ad and so on; about this
same time, a labor contract was secured with Local 610 of the
Teamsters although “Dependable” had no business and no em-

—_" om

ployees. (Although not directly an issue in this case, it should

be noted upon charges being filed with the NLRB in 1956, the

NLRB held that the “contract with Local 610” was void be-
cause “Dependable had no employees when it entered into such
contract” and ordered an election.) During the period from
1956 through October 1, 1974, Sears, through the “Dependable
operation” performed its “service work on appliances” in the
St. Louis area, “Dependable” having little or no other business.
The “Dependable” operation began in a building in the 1900
block of Locust (Sears parts department occupying part of the
same building); in about 1966, it was moved to the Sears ware-
house operation building at 1024 South Vandeventer in St.
Louis.

Alfred Russom and the other forty-four (44) or so petition-
ers were employed by the Dependable operation as appliance
servicemen and their employment was covered by a collective
bargaining agreement entered into between the Dependable
operation and Local 610 of the Teamsters; there had been nu-
merous contracts between 1956 and October, 1974, with the
contract in effect during that period having effective dates of
approximately May 8, 1972 to May 3, 1975. Although Sears
did not have its name on these labor contracts, did not sign the
contracts and did not have its own labor people present at the
bargaining table, the petitioners have contended throughout and
have produced substantial evidence that Sears was Dependable,
Dependable merely being a “name or shell” set up to get Sears
out of its labor problem with Local 1 of IBEW back in 1956.
The evidence produced showed that Sears trained the employees
without any cost; Sears sent the people for training at its Sears
Niles Training Center; Sears gave the people training courses
which were only available to employees of Sears; Sears accom-
panied the people on service calls; Sears provided all parts with-
out charge; Sears directed that trucks be taken home by the
people; Sears increased and decreased the work force; Sears
owned the equipment and tools used by the people; some of the

people worked in the Sears stores under direct supervision of
Sears employees; the people sold Sears’ maintenance agreements
on a commission basis; the people participated in Sears’ con-
tests; records of the production of these people were kept by
Sears on computer readouts; Sears supervisors gave out work
orders to the people on a regular basis and even put notes on his
work orders to contact a Sears employee and other abundant
evidence.

Concerning the “labor function”, there was substantial evi-
dence that Local 610 both knew and considered Sears to be the
real person behind the Local 610-Dependable contracts; this
evidence was from the testimony of business agents of Local 610
and a specific example was a “dispute over the jurisdiction of
service work” in 1970. When this dispute arose, Local 610 went
to Sears’ labor people and had the jurisdictional problem straight-
ened out with the work being awarded to Local 610.

Having provided some of the necessary background, petition-
ers will now detail the occurrences which gave rise to the litiga-
tion. In August, 1974, the people employed in the Dependable
operation were notified that this operation was going to be closed
down as of September 30, 1974; on receiving this notice, the
people, including petitioners, immediately contacted their union,
Local 610 of the Teamsters to see what their rights were under
the collective bargaining agreement which was in effect and had
over a year left prior to its expiration date and which contract
had a successor clause. There can be no dispute that Local 610
was the duly elected bargaining agent for these people at least
up to and including September 30, 1974 which is the date on
which Dependable said that it was ceasing operations.

A meeting of member: of Local 610 was held on September
9, 1974, to “discuss” ine problems due to the announcement
made by the Dependable operation. Mr. Horn, the secretary-
treasurer and chief officer of this union, testified at the trial that

— we

he did not recall this meeting. Other evidence at trial proved
that at that meeting on September 9, 1974, Mr. Horn told the
people that the Dependable-Local 610 contract was non-existent
on that date, September 9, 1974; Mr. Horn refused to take a
grievance; Mr. Horn would not discuss the successor clause and
Mr. Horn said there was nothing he was going to do for the peo-
ple, closed his briefcase and left.

Another meeting was held on September 23, 1974. Mr.
Horn remembered this meeting and testified that he did not dis-
cuss the “successor clause” with the people. He further testified
that he told the people that Local 688 of the Teamsters had
jurisdiction over them and advised the people to sign authoriza-
tion cards for Local 688. Petitioners testified that they were told
that “they had to sign authorization cards for Local 688 that
evening” if they desired to work for Sears any longer.

As the result of this, the people were transferred to Local 688
of the Teamsters and lost their seniority, lost their pension con-
tributions, lost their pension rights, lost their cost of living
clause, lost vacation benefits, lost numerous other benefits and
basically lost their livelihoods.

Petitioners specifically call the attention of this Court to the
Statement of Errors in Opinions Below on page A-11 because
petitioners believe that the lower courts have not understood the
case, but have rendered decisions while “looking the other way”
at both the evidence and the law governing this case. Petition-
ers state that “their case” has not received fair consideration
which was apparent from the first day of trial when the trial
court stated that it had never seen a case like it.

REASONS FOR GRANTING THE WRIT

This case, being a case of first impression, and more par-
ticularly the questions presented involve a very important and
basic concept of the relation between employees, their unions
and their employers. Naturally, the petitioners, employees in
this case are extremely concerned about the loss out of their
pockets of over one million dollars ($1,000,000.00) which
they personally had paid in contributions to their pension;
however, it is imperative for this Court to grant the Writ for
the further and broader reason that if this judgment is allowed
to stand, the two very important remedies of employees, first,
breach of the duty of fair representation and second, responsi-
bility of successor employers, will be virtually eliminated
which in effect means that denial of a Writ in this case will
effectively overrule conflicting decisions of this Court.. Peti-
tioners state that allowing this lower court decision to stand
will be a signal to employers and unions that the Supreme
Court is no longer committed to protecting the rights of the
innocent employees from abuse by employers and/or unions
in the area of labor-management relations.

AS TO THE FIRST QUESTION RAISED BY PETITION-
ERS, both of the lower court opinions noted that the employees
lost pension and other benefits; neither of the opinions faced the
fact that the employees also lost “the monies which they had
contributed to the pension fund for over fifteen (15) years, not
to mention interest.” In other words, through this device of
change of form, the approximately one hundred twenty (120)
employees of Dependable each lost “out-of-pocket money” in
the approximate amount of $10,000.00 or a total loss to the
120 employees of over $1,200,000.00 not to mention the interest
on this money during the years.

This Court, as well as the lower courts, has steadfastly and
consistently protected the rights of individuals from this type

idan

of action over the years and has created such legal theories as
“unjust enrichment’, “estoppel”, “piercing the corporate veil”
and other equity theories to prevent the wholesale sellout of the
rights of individuals by other third parties. The facts in this case
cry out for such relief, but the lower court opinions have ignored
the equities, relying on technicality and form. Although the
equities in the case are the case, the lower courts concerned
themselves with whether the petitioners should have gone to
the forum of the N.L.R.B: and other collateral issues instead
of meeting the real issue ‘head on. When the petitioners went
to the N.L.R.B. prior to obtaining counsel, they were advised

to get private counsel and bring suit in court.

Petitioners state to this Court that the “sole basis for the de-
cisions of the lower courts” was the single fact that Sears “did
not sign any contract between “DAS and Local 610.” In making
the decision, the Eighth Circuit recognized that “there is an
indication that DAS may have been formed because of labor
relations problems experienced by Sears” and some of the other
overpowering evidence that Dependable was merely a front for
Sears. However, neither the trial court nor the Eighth Circuit
considered the 1970 occurrence when Sears tried to give this
“appliance service work” to Local 688 of the Teamsters under
a “secret addendum”; in 1970, Local 610 knew who the real
party in interest was because they went directly to Sears labor
relations people to enforce the contract. As a result, the contract
was enforced and Local 610 had jurisdiction over the appliance
service work; in other words, Local 610 enforced the DAS-Local
610 contract against Sears back in 1970, but the lower courts
State in their opinion that the contract cannot be enforced against
Sears.

In summary, petitioners state that the lower courts were so
concerned with the form that they missed the substance; it mat-
ters little whether relief is granted on the theory of co-employer,
successor employer (incidentally, the lower courts did find Sears

—

was a successor), unjust enrichment, estoppel, piercing the cor-
porate veil or another theory. As this Court stated in Vaca v.
Sipes, supra, “the court must fashion an appropriate remedy.”

AS TO THE SECOND QUESTION RAISED BY PETI-
TIONERS, the decision of the lower ccurts in this case is an
implied overruling of Vaca v. Sipes, supra, and the majority of
the subsequent case law in the area of “breach of the duty of
fair representation”. The decision of the lower courts repre-
sents a giant step backwards which the lower courts base on
the technical questions of “unfair labor practice preempted by
the N.L.R.B.” (it is interesting to note that this argument was
raised in the Vaca case, but rejected by this Court when it
stated “The employees’ suit against the employer, however,
remains a 301 suit, and the jurisdiction of the courts is no
more destroyed by the fact that the employee, as part and par-
cel of his 301 action, finds it necessary to prove an unfair
labor practice by the union, than it is by the fact that the suit
may involve an unfair labor practice by the employer himself”) ;
“conspiracy allegations over which courts do not have juris-
diction” (Petitioners argued strenuously in the Eighth Circuit
that “the evidence of conspiracy or whatever” was presented
to show a breach of the duty of fair representation, but the
Eighth Circuit opinion disposes of the evidence on the techni-
cal ground. Certainly Local 610 would be guilty of a breach
of the duty of fair representation if “it made an under the table
deal to force the employees into Local 688”, but the Eighth
Circuit Opinion holds this is not true since a conspiracy might
be involved); “the old, outdated argument of ‘non-feasance
versus malfeasance’ as to liability for breach of the duty of
fair representation” (Petitioners argued strenuously in this
case that Local 610 had a duty of fair representation to the
employees in the negotiation, administration and enforcement
of the contract between Dependable operation and Local 610;
but the Eighth Circuit held that Local 610’s contract was not
arbitrary, discrimine*ory or in bad faith because Harland Horn

ontitan

did not recall any discussion with Local 610 members con-
cerning the successor clause. The evidence in this case was
overwhelming and basically undisputed that Local 610, dur-
ing August and September, 1974 (during this period of time,
it cannot be disputed that the Dependable operation was in
existence, the petitioners were working every day for the De-
pendable operation, the petitioners were working under the De-
pendable-Local 610 contract which was in full force and effect,
Local 610 was the exclusive bargaining representative for peti-
tioners and owed them the statutory duty of fair representation
and Sears was in existence) not only failed and refused to rep-
resent petitioners by failing to enforce the contract, by failing
to advise the petitioners, by refusing to accept grievances and
generally by abjectly failing to protect the rights of petitioners;
but also affirmatively abandoned petitioners and coerced peti-
tioners into Local 688 by threats, lies and gross misrepresenta-
tion. The courts below virtually ignored this evidence by re-
verting to the problem of preemption and by referring to the
state of facts after “discontinuation of business by DAS and
employment by Sears of the former DAS employees”; the issue
in this case was whether Local 610 fulfilled its duty of fair
representation “prior to DAS ceasing operations” by exercising
complete good faith and honesty of purpose in protecting the
rights of petitioners, protecting their very livelihoods as well
as the over $1,000,000.00 in employee contributions to the
pension fund; unfortunately for petitioners, the lower courts
missed, sidestepped and refused to decide this issue) and other
questions of form, ignoring the substance.

In summary, petitioners state that the lower courts in this
case have completely rejected Vaca AND HELD THAT
THERE IS NO SUCH THING AS A DUTY OF FAIR REP-
RESENTATION.

AS TO THE THIRD QUESTION RAISED BY PETI-
TIONERS, the decision of the lower courts in this case basi-

erewre nee

cally overrules the decisions of this Court in John Wiley &
Sons v. Livingston, 376 U.S. 543. 84 S.Ct. 909, 11 L.Ed.2d
898 (1964); N.L.R.B. v. Burns In'tl Security Servs., Inc.,
406 U.S. 272, 92 S.Ct 1571, 32 L.Ed.2d 61 (1972), and
other cases concerned with the question of successor employ-
ers. This Court stated that although a successor employer may
not be bound to all of the substantive terms of the predeces-
sor’s collective bargaining agreement, the successor is definitely
bound to the arbitration provisions. In reviewing the impact
of the successor doctrine of the Supreme Court, the writer of
the article stated that although the Supreme Court had limited
itself to committing the successor to “arbitrate under the prede-
cessor agreement” and to “bargain with the union”, this had
the practical effect of enforcing the predecessor contract since
the successor would rather negotiate than have an arbitrator
make his contract for him. 57 Minnesota Law Review 1051.

The case brought by petitioners, both as to the contract ques-
tion and the fair representation question, was based on pro-
nouncements and statements of this Court of what the national
labor policy was; for example, in Wiley, supra, this Court stated:

“employees, and the union which represents them, ordinar-
ily do not take part in negotiations leading to a change in
corporate ownership. The negotiations will ordinarily not
concern the well-being of the employees, whose advantage
or disadvantage, potentially great will inevitably be inci-
dental to the main considerations. The objectives of na-
tional labor policy, reflected in established principles of
federal law, require that the rightful prerogat've of owners
independently to rearrange their business and even elimi-
nate themselves as employers be balanced by some protec-
tion to the employees from a sudden change in the employ-
ment relationship.” (376 U.S. at 549)

The decision of the lower courts in this case, if permitted to
stand, overrules the Wiley decision because the lower court hold-

—_— io

ing is that petitioners must be denied the remedy against the suc-
cessor for the reason that the union did not request or demand
arbitration or bargaining. This Court enunciated a policy to
protect employees, such as petitioners, from potentially great
disadvantage; the remedy is thus for the employees. However,
the Eighth Circuit is holding that if the union breaches its duty
of fair representation and does not seek arbitration, does not seek
negotiation and does not bring suit, then the employees, for
whom the remedy was created, are barred from any relief. Pe-
titioners state that this Court cannot allow this type of frustra-
tion of national labor policy to exist.

In summary, petitioners state that the lower courts have used
the national labor policy of Wiley against employees for whom
the remedy was created.

CONCLUSION

By reason of the foregoing, petitioners respectfully submit that
this petition for a writ of certiorari should be granted due to this
being a case of first impression and due to the national labor
policy being frustrated and disregarded and the judgment of
the United States Court of Appeals for the Eighth Circuit be re-
versed.

DANIEL P. REARDON, JR.
411 North Seventh—Suite 1401

St. Louis, Missouri 63101

Attorney for Petitioners

OF COUNSEL:

KENNETH V. BYRNE
411 North Seventh Street
St. Louis, Missouri 63101

APPENDIX

—

APPENDIX A

United States Court of Appeals
For the Eighth Circuit

76-1702 September Term, 1976
Alfred Russon, et al.,
Appellants, Appeal from the
VS. United States Dis-
+ trict Court for the
Sears Roebuck and Company, etc., et. Eastern District of
al., Missouri
Appellees. |

The Court having considered petition for rehearing en banc
filed by counsel for appellants and, being fully advised in the
premises, it is ordered that the petition for rehearing en banc
be, and it is hereby, denied.

Considering the petition for rehearing en banc as a petition
for rehearing, it is ordered that the petition for rehearing also
be, and it is hereby, denied.

_ July 20, 1977

—_

APPENDIX B

United States Court of Appeals
For the Eighth Circuit

No. 76-1702

Alfred Russom, et al.,
Appellants,
v.

Sears, Roebuck and Co., a corpora- Appeal from the

tion, and Local 610, International United States Dis-
Brotherhood of Teamsters, Chauf- $ trict Court for the
feurs, Warehousemen and Helpers Eastern District of
of America, and Local 688, Inter- Missouri

national Brotherhood of Teamsters,
Chauffeurs, Warehousemen and
Helpers of America,

Appellees. J

Petition for Rehearing and Suggestions
for a Rehearing in Banc

Pursuant to Rules 35 and 40 of the Federal Rules of Ap-
pellate Procedure, appellants, Alfred Russom, et al., hereby
seek and pray a rehearing and suggest a rehearing in banc with
respect to the decision of the Court filed on June 29, 1977.

I

A rehearing in banc is sought and prayed because the de-
cision filed on June 29, 1977 is not in conformity with other
decisions of this circuit under Rules 35(a)(1) and for the fur-

= <

ther reason that the “question presented is of exceptional, if
not unique importance” in the sense of Rule 35(a)(2). If the
decision is not changed, this decision (a) will create a jurisdic-
tional anomally in labor-management relations law, (b) will
effectively abolish and emasculate the established doctrine of
“fair representation”, (c) will effectively abolish and emasculate
the established doctrine of “successor employer” and (d) will be
a signal to both unions and management that the courts will
not protect the helpless persons in these situations, the em-
ployees.

The cause of the infirmity in the decision is that the two
primary conclusions of the court must rest on states of the law
which are in contradiction to decisions of this circuit and de-
cisions of the Supreme Court.

Basically, the action was brought as a class action’ on behalf
of all employees of DAS-Sears and members of Local 610
against their employer and unions for wrongful breach of con-
tract and for wrongful breach of the duty of fair representation
pursuant to Section 301 of the amended National Labor Re-
lations Act, 29 U.S.C. 185. Following an “abbreviated non-
jury trial”,? the trial court found in favor of both defendants.
On appeal, this court affirmed the decision of the trial court
while “looking the other way” at both the evidence and the
law governing this case.

II

The Supreme Court in Vaca v. Sipes, 386 U.S. 171, 77 S.Ct.
903, 17 L.Ed. 2d 842 (1967), in establishing and broadening
the “fair representation theory” clearly mandated that the
remedy must be provided for an employee who suffers damage

1 The trial court denied the class action which was also affirmed.

2 The trial court severely limited testimony which was also af-
firmed.

— So

by actions of his employer and who is abandoned by his union.
In the decision, this court was faced with clear, cogent and un-
disputed evidence of capitulation and abandonment by defend-
ant Local 610, but somehow arrived at the erroneous conclusion
that this total abandonment was not a breach of the duty of fair
representation.

The Court cited an Eighth Circuit opinion in Emmanuel v.
Omaha Carpenters District Council, 535 F. 2d 420 (8th Cir.
1976). Appellants respectfully submit that the language used
by this circuit in that opinion is in direct conflict with the de-
cision in the instant case. In the Emmanuel decision, this Court
stated that the union’s duty of fair representation is a statutory
one, requiring the union to serve the interests of all the mem-
bers without hostility or discrimination both in the conduct of
collective bargaining and in the enforcement of the resulting
agreement. Going further concerning the possible waiving of
provisions of a collective bargaining agreement, this court stated
that on the face of it, such an agreement would lack good faith
and honesty of purpose.

This court, in the case of Minnis v. Intern. U., United Auto.,
Aerospace, etc., 531 F. 2d 850 (8th Cir. 1975), stated that the
“utter failure by the unions to make even a minimal attempt
to investigate or process his grievance” would support an “in-
ference of bad faith and arbitrary and capricious conduct”, stat-
ing that a union must act with “complete good faith and honesty
of purpose”. This language again is in direct conflict with the
decision in the instant case and ironically, this court was willing
to insure that one employee received fair representation in Min-
nis while not being willing to apply that same duty in the in-
stant case where over one hundred twenty employees lost their
livelihoods.

This court, in the case of Butler v. Local 823, Int'l Brother-
hood of Teamsters, 514 F. 2d 442 (8th Cir. 1975), stated that
the duty of fair representation definitely included the duty to

—

“insist that the employer adhere to the contract” and further
stated that a breach of the duty could be found in the fact that
the “union acquiesced in an irrational interpretation.” This
language again is in direct conflict with the decision in the in-
stant case where this court had to hold that the union’s acquies-
cence and abandonment did not constitute a breach of the duty
of fair representation. Almost unbelievably, the court in the
instant case stated that “substantial evidence supporting the find-
ing of no breach of the duty of fair representation” consisted of
“an officer of Local 610 testifying that he did not recall any
discussion concerning the successor clause, that he did not re-
fuse to accept grievances, that he believed Local 688 had juris-
diction over the service employees after discontinuance of busi-
ness by DAS and employment by Sears of the former DAS em-
ployees” (Page 5 of Decision). First of all, there is a serious
error in the decision since the above statement and footnote 5
assume that Horn made this statement and decision “after the
employees accepted employment with Sears”; footnote 5 states
“A majority of the DAS employees signed Local 688 authoriza-
tion cards after they accepted employment with Sears”. This is
a misstatement since the undisputed evidence was that “the au-
thorization cards were signed at a meeting on September 23,
1974, at a time when the DAS-Local 610 agreement was still
in full force and effect and at a time when DAS was still in busi-
ness.” The other “evidence” which the decision referred to ig-
nored the undisputed evidence from Mr. Horn’s own mouth that
he did not “recall a meeting on September 9, 1974” which is
the meeting at which the employees testified that they asked
about the successor clause and at which time they stated they
desired to file grievances. It ignores the undisputed testimony of
Mr. Gamache, a Local 688 officer, that he did not feel that
“Local 688 had jurisdiction” and the stipulation filed in Court
prior to trial admitting that Local 610 had jurisdiction. It fur-
ther ignores the undisputed testimony of Mr. Vaughn, the busi-
ness representative of Local 610, who stated that “he recalled
that the people raised the question of the ‘successor’ clause at the

—_

meetings” and further stated that “he may have told ‘Toll and
others’ that they should not have signed the Local 688 authoriza-
tion cards while the Local 610-DAS contract was still in effect.”
Although Vaughn was the paid business agent of the appellants,
he did rot advise them because “Horn was there.”

This court, in the cases of Richardson v. Communications
Workers, 443 F. 2d 974 (8th Cir. 1971) and Bond v. Local
Un. 823, Int. Bro. of T., C., W. & H. of America, 521 F. 2d
(8th Cir. 1975), stated that the duty of fair representation was
in the nature of a “fiduciary duty” and required “complete good
faith, honesty of purpose and the avoidance of any semblance of
arbitrary conduct.” These decisions are in direct conflict with
the instant decision in that a “fiduciary” definitely could not
capitulate or abandon his trust and the action of Local 610 in
abandoning the Local 610-DAS contract without negotiation,
request to bargain, request for arbitration or without even filing
a grievance is definitely not only arbitrary, but apricious action
and inaction. This set of facts in the instant case definitely
represents the “utter failure” spoken of by this circuit in prior
decisions.

In summary, the decision of June 29, 1977 must be reexam-
inec and changed to comply with decisions of the Supreme Court
and with prior decisions of this circuit on the issue of fair repre-
sentation.

iil

An even more disturbing part of the decision concerns the
question of successor employer and the implications created by
the finding of the status of successor. In the instant case, this
court found that there was definitely the relation of successor;
although appellants raised the issues of co-employer, alter ego
and so on, there was no argument about the successor relation-
ship of defendant Sears.

—~ oe

The Supreme Court, in John Wiley & Sons v. Livingston,
376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964), and
N.L.R.B. v. Burns In'tl Security Servs., Inc., 406 U.S. 272, 92
S.Ct. 1571, 32 L.Ed.2d 61 (19/2), clearly established that
although a successor employer may not be bound to all the
substantive terms of the predecessor's collective bargaining
agreement, said employer is definitely bound to the predeces-
sor’s collective bargaining agreement's arbitration provisions.
In subsequent cases, this doctrine has not been changed or
modified to any great extent and there can be no doubt that
Wiley was held even though a non-signatory; the instant deci-
sion is directly in conflict with the Wiley case when the opinion
states on p. 8 that “Most significantly, the record reflects that
Sears did not sign any contract.” In the Wiley case, there was
no suggestion of any ulterior motives while in the instant case,
this court found that there “was an indication that DAS was
formed due to labor relations problems; Mr. Baumler, Owner
of DAS, was a 16 year employee of Sears; substantially all of
DAS business was with Sears” plus much other evidence set
out in appellants’ brief, but not mentioned in the dec‘sion.

As the Supreme Court stated in Wiley, the national labor
policy encompasses the following:

“employees, and the union which represents them, ordi-
narily do not take part in negotiations leading to a change
in corporate ownership. The negotiations will ordinarily
not concern the well-being of the employees, whose ad-
vantage or disadvantage, potentially great, will inevitably
be incidental to the main considerations. The objectives
of national labor policy, reflected in established principles
of federal law, require that the rightful prerogative of
owners independently to rearrange their business and even
eliminate themselves as employers be balanced by some
protection to the employees from a sudden change in the
employment relationship.”

yy?

In journal article stressing the importance of this doctrine and
examining it, 57 Minnesota Law Review 105]—the writer
reviewed the cases and stated that in his examination, he had
found that although the Supreme Court had limited itself to
committing the successor employer to “arbitrate under the pred-
ecessor agreement” and to “bargain with the union”, this had
the practical effect of enforcing the predecessor contract since
the successor was obligated to arbitrate and was obligated to
bargain.

With this precedent, the instant decision has nevertheless
been rendered which states in effect that the employer, Sears
had no responsibility and has no responsibility which is a frus-
tration of the national labor policy as set out in Wiley.

What is the real effect of this decision? The real effect is
to state the following theory for a situation of this type. First,
if the union sues for enforcement of the arbitration provision
of the predecessor agreement, for an order to bargain or for
other relief, the courts will give a remedy under Wiley, Burns
and other cases which hold that a successor is bound whether
he signed the contract or not.

However, in the second instance, if the union does nothing
and even if the union abandons its member-employees, the
court will not give the remedy to the employees under Wiley,
Burns and other cases. Appellants respectfully submit that
this “abandonment by the union” should not and cannot be
allowed by this court or any court to bar a remedy. Although
Wiley and Burns involved actions by unions for arbitration
and for order to bargain, the Supreme Court made it very
clear in the quoted section that the whole purpose of the “ob-
jectives of national labor policy” was to protect the “Well-
being of the employees” and to afford “some protection to the
employees” in cases involving successor employers. This deci-
sion cannot stand as this would effectively deny the employees
the protection afforded while giving it to the union.

— >

For Local 610 to capitulate and abandon the employees,
appellants, at a time when the DAS-Local 610 contract was
timely and in existence, knowing or charged with knowledge
of the Wiley and Burns decisions, Local 610 is not only guilty
of breach of duty of fair representation by using arbitrary and
capricious methods, but is also guilty of the “utter failure to
make even a minimal attempt” and is guilty of “waiving pro-
visions of collective bargaining agreement which on the face
of it, lacks good faith and honesty of purpose.” When you add
to this the “questionable motives”, involving two locals of
same international as well as the substantial monies to be
saved by the union, then any court must consider the question
of capriciousness and punitive damages.

IV

The decision of this court further must be reexamined since
this court applied the “limited scope of review” to its decision
even though the appellants made it clear that the scope of re-
view must necessarily have been broader in the instant case due
to the trial court’s severe limitation on “live testimony” (trial
court did not want testimony unless it was not in the depositions),
due to trial court’s severe limitation on number of witnesses and
due to trial court’s not having benefit of trial transcript because
trial court refused request of appellants to obtain transcript prior
to submission of written after-trial briefs.

Although a question concerning scope of review was asked
at oral argument and appellees had to admit that scope might
be broader due to above circumstances, the decision states that
“limited review” was used.

Vv

The decision of this court must be changed due to “errors in
the decision”.

—_<

The first serious “error” is very material to the whole de-
cision; the decision in discussing “the signing of cards au-
thorizing Local 688” does not consider the fact that the cards
were signed both when the DAS-610 contract was still in exist-
ence and when DAS was still in business.

The second serious error states that 688 was the “bargaining
agent of service employees of Sears”; this is not true as Sears had
no service employees.

In footnote 4, Local 688 had authorization cards prior to time
DAS ended its business.

VI

For the above reasons, as well as other points raised in the
briefs, it is respectfully urged and submitted that the court re-
consider its June 29, 1977 decision, and/or that rehearing in
banc be ordered. Appellants respectfully urge and submit this
action is necessary in this case because the decision as it now
stands is in direct conflict not only with prior decisions of this
circuit, but also in conflict with decisions of the Supreme Court.

Respectfully submitted,

/s/ KENNETH VY. BYRNE
Attorney for Appellants, Petitioners
411 North 7th—Suite 1401
314-421-0390
St. Louis, Missouri 63101

— A-ll —

APPENDIX C

Statement of Errors in Eighth Circuit Opinion

Petitioners point out the following errors in the Opinion for
the reason that petitioners feel these “serious errors” resulted in
the erroneous decision:

1) page 2 of Opinion—A majority of the former DAS em-
ployees signed cards authorizing representation by Local 688,
the bargaining agent of service employees of Sears”.

This statement is erroneous in that the evidence was that the
former DAS employees were told they had to sign the Local 688
authorization cards at a time, September 23, 1974 when they
were still DAS employees; further, Local 688 was not a bargain-
ing agent of service employees of Sears because Sears did not
have any service employees until they: hired the DAS em-
ployees.

2) page 5 of Opinion—Footnote 5 states “A majority of the
DAS employees signed Local 688 authorization cards after they
accepted employment with Sears.”

This statement is erroneous in that the evidence definitely
proved that “the Local 688 authorization cards” were signed
under duress and were signed on September 23, 1974 when the
people were still employed by DAS.

3) page 7 of Opinion—*“DAS was in total control of the
wages, hours, working conditions and fringe benefits of its em-
ployees. DAS hired and fired its own employees and maintained
its own personnel records.”

This statement is erroneous in that the evidence clearly showed
that DAS hired and fired at the request of Sears, worked over-

— A-12 —

time at the request of Seavs; additional examples of control
abound in the evidence.

4) page 8 of Opinion—“Most significantly, the record re-
flects that Sears did not sign any contract between DAS and
Local 610 and that Sears did not participate in any labor ne-
gotiations which preceded formation of such a contract.”

This statement is erroneous in that the evidence clearly showed
that although Sears labor people did not sit at the table, Sears
definitely did participate in labor negotiations and even griev-
ances.

— A-13 —

APPENDIX D

United States Court of Appeals
For the Eighth Circuit

No. 76-1702

Alfred Russom, et ai., 7
Appellants,

Sears, Roebuck and Co., a Corpora-| Appeal from the
tion, and Local 610, International United States Dis-
Brotherhood of Teamsters, Chauf- ¢ trict Court for the
feurs, Warehousemen and Helpers Eastern District of
of America, and Local 688, Inter- Missouri
national Brotherhood of Teamsters,
Chauffeurs, Warehousemen and
Helpers of America,

Appellees.

Submitted: May 17, 1977
Filed: June 29, 1977

Before Stephenson and Webster, Circuit Judges, and Benson,*
District Judge. |

Stephenson, Circuit Judge.

This appeal involves claims initiated by Alfred Russom and
other individuals against Teamsters Local 610, Teamsters Local
688 and Sears, Roebuck and Co. pursuant to section 301 of
the Labor Management Relations Act, 29 U.S.C. § 185(a). In

* The Honorable Paul Benson, Chief Judge, United States Dis-
trict Court for the District of North Dakota, sitting by designation.

— <' yo

general, the complaint alleges that Local 610 breached its duty
of fair representation, that Sears breached ‘4 collective bargain-
ing agreement, and that all three defendants engaged in a con-
spiracy to deprive union members of pension and seniority
benefits. The district court,’ sitting without a jury, entered judg-
ment in favor of the defendants, and we affirm.

The facts are detailed comprehensively in the district court’s
opinion and need only be briefly summarized. See Russom y.
Sears, Roebuck and Co., 415 F. Supp. 792 (E.D. Mo. 1976).
In 1956 Dependable Appliance Service, Inc. (DAS) was formed
for the purpose of providing service for home appliances. DAS
performed substantially all of its business for Sears. In 1974 the
president and owner of DAS, John Baumler, decided to retire
and cease business operation of DAS. Baumler’s retirement
was motivated by reasons attributable to his death and age.
Sears and Local 610, the representative of the DAS employees,
were informed of his decision. Sears subsequently determined
to establish its own appliance service department and offered
employment to the DAS employees. Sears purchased some of
the DAS assets.

When DAS terminated its business operation, the employees
recived severance pay. Substantially all of the employees then
accepted employment with Sears. A majority of the former
DAS employees signed cards authorizing representation by Local
688, the bargaining agent of service employees of Sears.

It is undisputed that the DAS employees lost important bene-
fits through their termination with DAS and subsequent employ-
ment with Sears. The DAS-Local 610 collective bargaining
agreement had required that DAS contribute to the Teamsters’
pension fund, but the employees’ rights in the fund would not
have vested until 1978. When DAS ceased operation the em-

! The Honorable John F. Nangle, United States District Judge
for the Eastern District of Missouri.

——

— A-15 —

ployees lost their pension rights. After employment with Sears,
the former DAS employees entered into negotiations through
Local 688 toward a new collective bargaining agreement, and a
contract was ultimately approved by a majority of the employ-
ees on February 13, 1975. This agreement, however, did not
provide for contribution by Sears to the Teamsters’ pension
fund,? and the former DAS employees were not given seniority
status from the date of their employment with DAS.

Alfred Russom and other former DAS employees filed their
claims under section 301 on the basis of these lost employment
benefits. They maintain that Sears was bound to the DAS-Local
610 collective bargaining agreement because it allegedly con-
trolled the operation of DAS as a co-employer, that Sears
breached the agreement, that Local 610 refused to enforce their
rights under the contract, and that Local 688 assisted Sears and
Local 610 in depriving the former DAS employees of their pen-
sion and seniority benefits.

The district court, sitting without a jury, found that Sears
and DAS wee not co-employers but that Sears was a successor
employer to DAS. The trial court concluded that Sears was
not bound by the provisions of the DAS-Local 610 collective
bargaining agreement. The district court further found that
Local 610 may have acted erroneously in failing to demand
bargaining or arbitration with Sears but that Local 610 did not
breach its duty of fair representation by acting arbitrarily or in
bad faith. The Court also concluded that it did not have juris-
diction over the conspiracy allegation.* This appeal followed.

2 Sears had never agreed to make contributions to the pension
fund.

% Courts are not vested with jurisdiction to review claims of con-
spiracy to violate either a labor contract or an individual’s rights
under the Labor Management Relations Act. See Abrams v. Car-
rier Corp., 434 F.2d 1234, 1253 (2d Cir. 1970), cert. denied, 401
U.S. 1009 (1971). Cf. Woody v. Sterling Aluminum Products, Inc.,
365 F.2d 448, 456 (8th Cir. 1966), cert. denied, 386 US. 957
(1967). In any event, we are satisfied there is insufficient evidence

of a conspiracy.

— A-16 —

Appellants contend the trial court's finding, that Local 610
did not breach its duty of fair representation, is clearly errone-
ous. More specifically, appellants emphasize that the DAS-
Local 610 collective bargaining agreement contained a suc-
cessor clause which bound Sears to the terms of the contract and
that Loca! 610 would not accept grievances on behalf of DAS
employees seeking to invoke the successor clause.*

A breach of the duty of fair representation occurs “only
when a union’s conduct toward a member of the collective bar-
gaining unit is arbitrary, discriminatory, or in bad faith.” Vaca
v. Sipes, 386 U.S. 171, 190 (1967). See Emmanuel v. Omaha
Carpenters District Council, 535 F.2d 420, 423 (8th Cir.
1976); Richardson v. Communications Workers, 443 F.2d 974,
978-85 (8th Cir. 1971). Moreover, our scope of review in
this appeal is limited. A trial court’s findings are clearly errone-
ous “only when the reviewing court on the entire evidence is left
with the definite and firm conviction that a mistake has been
committed.” St. Louis Typographical Union No. 8 v. Herald
Co., 402 F.2d 553, 557 (8th Cir. 1968).

The DAS employees lost valuable pension and seniority
rights when their employmerit with DAS was terminated and
they accepted employment with Sears under a new collective bar-
gaining agreement. Some evidence in the record also suggests
that DAS employees wanted to assert their rights under the
DAS-Local 610 contract against Sears under the successor
clause in the agreement. For example, Thomas Roach, a for-
mer DAS employee, testified that he attempted to file a grievance

4 Appellants also claim that Local 688 a ted in the depri-
vation of their pension and seniority benefits. inquiry in this
section 301 suit, however, necessarily focuses upon the conduct of
Local 610 and Sears. Local 688 was not the bargaining representa-
tive for appellants when DAS ended its business.

om ft? —

but that the Local 610 representative. Harland Horn, would not
accept any grievances.

The record reveals substantial evidence which supports the
trial court's finding that Local 610'’s conduct in failing to de-
mand collective bargaining with Sears when DAS went out of
business and in failing to rely upon the successor clause was not
arbitrary, discriminatory or in bad faith. Harland Horn, secre-
tary-treasurer of Local 610, testified that he did not recall any
discussion with Local 610 members concerning the successor
clause and that he did not refuse to accept grievances. Horn
also stated that he believed Local 688 had jurisdiction over the
service employees after discontinuation of business by DAS and
employment by Sears of the former DAS employees.”

Furthermore, Sears was not a signatory to the DAS-Local 610
collective bargaining agreement. A successor employer is not
bound by the substantive provisions of a collective bargaining
agreement negotiated by its predecessor but not agreed to or
assumed by the successor. See NLRB v. Burns International
Security Services, Inc., 406 U.S. 273, 281-91 (1972). Cf. John
Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 546-51 (1964).
The record supports the trial court’s finding that Sears was not
bound to the provisions of the contract entered into by DAS
and Local 610. See part II infra. Even assuming Sears were to
some extent bound under the collective bargaining agreement,
Local 610s failure to euiorce the contract would not constitute
ipso facto a breach of the duty of fair representation. Mere er-
rors in judgment are insufficient to support a claim of breach of
the duty of fair representation. See Hines v. Anchor Motor
Freight, Inc., 424 U.S. 554, 570-71 (1976).

* A majority of the DAS employees signed Local 688 authoriza-
tion cards after they accepted employment with Sears.

% The district court concluded that Local 610s failure to request
arbitration with Sears arguably constituted an unfair labor practice

— A-18 —

Il

Appellants also contend the trial court’s finding, that Sears
was not bound under the DAS-Local 610 contract, is clearly
erroneous. Emphasizing the interrelationship between the busi-
ness of Sears and DAS, appellants assert that Sears is liable under
the agreement as a co-employer. According to appellants, all
DAS functions were effectively controlled by Sears.?

Unquestionably, the business relationship between Sears and
DAS was close and to some extent interconnected. For ex-
ample, there is an indication that DAS may have been formed
because of labor relations problems experienced by Sears. Mr.
Baumler, the owner of DAS, had been employed previously by
Sears for over 16 years. Substantially all of the DAS business
was conducted with Sears. The initial employees of DAS were
trained by Sears, and additional training was provided by Sears
without charge. On service calls DAS employees wore Sears
patches on their uniforms and drove trucks bearing a Sears logo.
DAS employees received a 10% discount at Sears and par-
ticipated in numerous contests for Sears employees. Most re-
cently, DAS and Sears operated under a cost-plus arrangement;

but that such a claim was preempted by the National Labor Relations
Act, 29 U.S.C. §§ 157 and 158. We agree. Local 610 may have
refused to bargain collectively with an employer, which is violative of
section 8(b)(3), but the proper forum to litigate such a claim is a
proceeding before the National Labor Relations Board.

* The doctrine of co-employer status was developed by the Na-
tional Labor Relations Board to determine the existence of an em-
ployer-employee relationship. Sears asserted at trial that the juris-
diction of the NLRB preempts any determination of co-employer
Status in a section 301 suit. The district court stated that “jurisdic-
tion may exist to determine whether or not Sears and DAS were co-
employers” and proceeded to determine that there was no co-
employer relationship. 415 F. Supp. at 796. Because Sears was not
a Signatory to the DAS-Local 610 contract, we are concerned about
the viability of the section 301 claim brought in the instant case.
See Baker v. Fleet Maintenance, Inc., 409 F.2d 551, 554 (7th Cir.
1969). Nonetheless, in light of the close relationship between Sears
and DAS, we believe the district court did not act improperly in de-
ciding whether a co-employer relationship existed.

—_ ipl) —

Sears would reimburse DAS for its costs and ensure a profit
margin. Both the management and employees of Sears and DAS
maintained an interrelated working relationship.

The record contains substantial evidence, however, which
supports the district court's finding that Sears and DAS were
not co-employers. Neither company owned any stock in the
other. There were not any interlocking officers or directors. DAS
was in total control of the wages, hours, working conditions and
fringe benefits of its employees. DAS hired and fired its owe
employees and maintained its own personal personnel records.
DAS paid its own liability and workmen’s compensation insur-
ance and owned and operated its own trucks and equipment. Al-
though Sears may have made some suggestions concerning op-
eration of DAS, the DAS management made its own decisions.
Because DAS serviced appliances for Sears’ customers, coopera-
tion between the two companies was obviously necessary. Most
significantly, the record reflects that Sears did not sign any con-
tract between DAS and Local 610 and that Sears did not par-
ticipate in any labor negotiations which preceded formation of
such a contract. The evidence supports the trial court's finding
that Sears was not bound under the DAS-Local 610 collective
bargaining agreement as a co-employer.*

Affirmed.

A true copy.

Attest:
Clerk, U. S. Court of Appeals, Eighth Circuit

‘ Appellants also contend the trial court committed certain pro-
ee. errors including the denial of their motion for a class action,
denial of their request for a transcript prior to submission of Dayo
trial briefs, and restriction on the scope of testimony (particularly by
limiting testimony to matters not covered in depositions). If not en-
tirely proper, the trial court’s rulings on these matters either were not
an abuse of its discretion or were not inconsistent with substantial

justice.

— A-20 —

APPENDIX E

United States District Court
Eastern District of Missouri
Eastern Division

Alfred Russom, et al., )
Plaintiffs,

ais: | No. 75-524 C (4)
Sears, Roebuck & Company, et al.,
Defendants. |

Order
(Filed June 25, 1976)

Pursuant to the memorandum filed this date,

IT IS HEREBY ORDERED, ADJUDGED, and DECREED
that defendants shall have judgment against plaintiffs at plaintiffs’
costs.

/s/ John P. Nangle
United States District Judge

Dated: June 25, 1976.

ee

APPENDIX F

United States District Court
Eastern District of Missouri
Eastern Division

Alfred Russom, et al., .
Plaintiffs,

- | No. 75-524 C (4)

Sears, Roebuck & Company, et al.,
Defendants.

Memorandum
(Filed June 25, 1976).

Plaintiffs brought suit. pursuant to § 301 of the Labor Man-
agement Relations Act, 29 U.S.C. § 185, alleging that defendant
Sears, Roebuck & Company breached a collective bargaining
agreement; that defendant Local 610 refused to accept griev-
ances; and that all three defendants conspired to deprive plain-
tiffs of certain rights.

The case was tried before the Court without a jury. The Court
having considered the pleadings. the testimony of the witnesses.
the documents in evidence, the stipulations of the parties, and
being otherwise fully advised in the premises, hereby makes the
following findings of fact and conclusions of law as required by
Rule 52, Federal Rules of Civil Procedure:

Findings of Fact

1. Plaintiffs are all presently service employees of defendant
Sears, Roebuck & Company. Prior to October 1, 1974 plain-

— A-22 —

tiffs were all employees of Dependable Appliance Service, Inc.
[DAS].

2. Defendant Sears, Roebuck & Company is a corporation
engaged in a retail sales business which includes in part the sale
and service of home appliances.

3. Defendant Local 688, International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of America
is a labor organization within the meaning of the Labor Man-
agement Relations Act, 29 U.S.C. § 151 ef seq. and is the ex-
clusive bargaining agent of service employees of Sears, Roebuck
& Company.

4. Defendant Local 610, International Brotherhood of Team-
sters, Chauffeurs, Warehousemen and Helpers of America is a
labor organization within the meaning of the Labor Manage-
ment Relations Act, 29 U.S.C. § 151 ef seq. and was the ex-
clusive bargaining agent of the employees of DAS.

5. In 1956 DAS was formed for the purpose of providing
service work for existing companies. DAS was organized before
any service work was secured. Throughout its existence, DAS
did substantially all of its business with Sears, Roebuck & Com-
pany. Sears trained DAS’s initial workforce and from time to
time throughout DAS's existence, its employees received addi-
tional training from Sears. There was no charge to DAS for
this training.

6. Originally there was an hourly billing rate in existence be-
tween DAS and Sears. This changed, however, to a cost-plus
system in which all cost items were passed on to Sears.

7. DAS employees were not paid by a check from Sears.
Credible evidence established that Sears did not participate in
labor negotiations between DAS and Local 610, nor did Sears
ever sign any contract entered into by Local 610 and DAS.
The evidence fails to establish that any employee of Sears was

a

— A-23 —

an officer or director of DAS or that any employee of DAS was
an officer or director of Sears. Sears did not own stock in DAS,
nor did DAS own stock in Sears. DAS maintained its employee
records, which were never shown to Sears. DAS was in charge
of the wages, hours and fringe benefits of its employees. DAS
provided its employees liability and workmen’s compensation
insurance. DAS had control over the hiring and firing of its
employees.

8. DAS employees did receive a 10% discount at Sears and
in addition, were included in certain employee contests. DAS
employees, in response to service calls, went to the homes of
persons who had Sears appliances in need of repair. DAS em-
ployees greeted customers with “Sears Calling” and, if the cus-
tomers were not home, left a Sears “Not-Home” tag.

9. DAS employees wore a Sears “Authorized Service” patch
on their uniforms. DAS trucks bore a Sears Logo and slogan
and were painted in Sears “fleet colors”. The trucks also bore
the name of DAS.

10. In late 1970, Sears desired to hire two service employees
itself, to be assigned to in-house repairs. An agreement was
reached permitting Sears to hire the two employees, who were
represented by Local 688 and were covered by a supplemental
addendum to the collective bargaining agreement between Local
688 and Sears. After the two men were hired and the collective
bargaining agreement was supplemented, in early 1971, DAS
employees objected to Local 688 representing any service or
repair men. After the President of the Joint Council of Team-
sters No. 13 was contacted, it was determined that rightful
jurisdiction belonged to Local 610. Accordingly, Sears agreed
to terminate the employment of the two individuals. These two
individuals were subsequently hired by DAS. The addendum,
covering service employees, however, remained in effect.

11. On September 9, 1974 a meeting was held at which it
was announced that DAS would be going out of business. The

| aii il aia eal

—*

decision was reached solely by John O. Baumler, the president
of DAS, because of Mr. Baumler’s age and health. It was indi-
cated that Sears would offer employment to the DAS employees.
There is some evidence that the successor clause in the DAS-
Local 610 collective bargaining agreement was discussed, with
the union indicating that the addendum clause in the Sears-Local
688 agreement precluded application of the successor clause in
the DAS-Local 610 agreement. There was also evidence that
some DAS employees, specifically plaintiff Roach, tried to file
a grievance. Local 610, however, indicated that it could accept
no grievances.

12. At a subsequent meeting on September 23, 1974, repre-
sentatives from Local 688 were present. Local 688 informed the
DAS employees that they would have to join Local 688 if they
wanted to be represented by a union while employed at Sears.
A majority of the DAS employees signed Local 688 authoriza-
tion cards.

13. On October 1, 1974, Sears offered employment to sub-
stantially all of the ex-DAS employees. These offers were ac-
cepted nearly unanimously.

14. Sears purchased some, but not all, of DAS’s assets.

15. When DAS went out of business, the employees received
severance checks. None of the plaintiffs have offered to return
the same to Sears.

16. While DAS was in existence, and in accordance with the
DAS-Local 610 collective bargaining agreement, DAS made
payments on behalf of its employees to the Teamsters Pension
Fund. The DAS employees’ rights in said fund were not to vest
until 1978. Accordingly, when DAS terminated its business, the
DAS employees, and plaintiffs, lost their rights in said pension.

17. Local 688 and Sears had a number of bargaining sessions
concerning the newly hired DAS employees from October 3,

—i- ~~

1974 through February 13, 1975. The proposed contract was
presented to the service employees (ex-DAS employees) at a
meeting on February 13, 1975. The entire proposed contract
was read to the employees. A majority voted by secret ballot to
accept the contract, although there was testimony that some em-
ployees felt pressured into accepting the proposed contract. The
contract, which was approved, did not provide for continued
contributions by Sears to the Teamsters Pension Funds, (Sears
has never contributed to such a pension fund), nor were the ex-
DAS employees given seniority status from the date of their
employment with DAS for benefit purposes.

Conclusions of Law

This Court has serious reservations concerning its alleged
jurisdiction herein. Plaintiffs are proceeding on the basis of
§ 301 of the Labor Management Relations Act, 29 U.S.C. § 185.
In view of these concerns, the Court will analyze its jurisdiction
in relation to each of the theories on which plaintiffs have pro-
ceeded herein.

As to plaintiffs’ allegations of conspiracy, the Court concludes
the jurisdiction is clearly lacking. Abrams v. Carrier Corpora-
tion, 434 F.2d 1234 (2nd Cir. 1970), cert. denied, 401 U.S.
1009 (1971); Woody v. Sterling Aluminum Products, Incorpo-
rated, 365 F.2d 448, 456 (8th Cir. 1966), cert. denied, 386
U.S. 957 (1967). |

The Court, however concludes that jurisdiction may exist to
determine whether or not Sears and DAS were co-employees,
the theory upon which plaintiffs have proceeded. Cf., Baker v.
Fleet Maintenance, Incorporated, 409 F.2d 551 (7th Cir.
1969). But see, Morris, The Developing Labor Law 767
(1971) (“The Board has the duty of determining whether the
relationship between certain parties constitutes an employer-em-
ployee relationship . . .”); Motor Coach Employees v. Lock-

—_Y

ridge, 403 U.S. 274 (§ 301 jurisdiction exists as to claimed
breaches of the duty of fair representation and other breaches
grounded in the collective bargaining agreement itself). It is
plaintiffs’ contention that Sears, as a co-employer, should be
bound by the substantive terms of the DAS-Local 610 collective
bargaining agreement once DAS ceased doing business. The
evidence establishes, however, that Sears can not be considered
a co-employer with DAS.

The doctrine of co-employer originated with the National
Labor Relations Board in the context of determining whether
the Board would exercise jurisdiction over the particular dis-
pute. See Radio & Television Broadcast Technicians Local
Union 1264, International Brotherhood of Electrical Workers,
AFL-CIO v. Broadcast Service of Mobile, Inc., 380 U.S. 255,
256 (1965); Sakrete of Northern California, Inc. v. National
Labor Relations Board, 332 F.2d 902 (9th Cir. 1964), cert.
denied, 379 U.S. 961 (1965). The criteria employed to deter-
mine if two employers are in fact to be considered as co-em-
ployers include the following:

1. Interrelation of operations;

2. Centralized control of labor relations;
3. Common management; and

4. Common ownership or financial control.

No one of these factors has been held to be controlling
but the Board opinions have stressed the first three factors,
which go to show ‘operation integration’, particularly cen-
tralized control of labor relations. Sakrete of Northern
California, supra at 905, fn.4.

See also Radio & Television Broadcast Technicians, supra at
256; Local No. 627, International Union of Operating Engin-
eers, AFL-CIO v. National Labor Relations Board, 518 F.2d
1040 (D.C.App. 1975), app. filed, 44 U.S.L.W. 3502 (1976);

—

—_<

Cowles Communicatiens, Inc., 170 N.L.R.B. 1956 (1968);
National Labor Relations Board v. Greyhound Corporation,
368 F.2d 778 (Sth Cir. 1966); Miami Newspaper Pressmen's
Local No. 46 v. National Labor Relations Board, 322 F.2d 405
(D.C.App. 1963); Bachman Machine Company v. National
Labor Relations Board, 266 F.2d 599 (8th Cir. 1959).

The evidence was clear that there was no centralized control
of labor relations. DAS handled its own labor relations, entered
into negotiations and concluded its own agreements, without
the involvement of Sears. Furthermore there was no common
ownership or financial control. See Hychem Constructors, Inc.,
169 N.L.R.B. 274 (1968); Space Services International Cor-
poration, 156 N.L.R.B. 1227 (1966); Westinghouse Electric
Corporation, 163 N.L.R.B. 914 (1967) (all indicating that the
existence of a cost-plus pricing arrangement does not indicate a
co-employer status). The Court further concludes that the evi-
dence fails to establish common management and interrelation of
operations. The fact that DAS employees wore Sears patches,
greeted customers with “Sears Calling” and left Sears “Not-
Home” tags is not persuasive. The customers had called Sears
seeking repairs for their appliances. These customers could
not possibly know of the arrangements between Sears and DAS,
nor would the customers be likely to open their doors to DAS
servicemen after calling Sears. Accordingly, the Court con-
cludes that Sears and DAS were not co-employers of plaintiffs
herein.

Plaintiffs have failed to argue that Sears was a successor
employer. In John Wiley & Sons v. Livingston, 376 U.S. 542
(1964), the Court held that under certain circumstances a suc-
cessor employer might be required to arbitrate with the union
under the agreement entered into by the employer's predecessor.
Crucial to the determination of whether the duty to arbitrate
survives is whether there is “any substantial continuity of iden-
tity in the business enterprise before and after a change . .

— A-28 —

Id. at 551. See also National Labor Relations Board v. Wayne
Convalescent Center, Inc., 465 F.2d 1039 (6th Cir. 1972)
(“. . . the hiring of a large portion of the predecessor's em-
ployees is persuasive in finding a successor status”.) National
Labor Relations Board v. Interstate 65 Corporation, 453 F.2d
269 (6th Cir. 1971) (court “. . . must look to all the circum-
stances accompanying the transfer to determine whether the
nature of the employing industry has undergone such a basic
change that the collective bargaining unit . . . is no longer
appropriate”). The factors to be considered in reaching such
a determination include:

(1) whether there has been a substantial continuity of the
same business operations;

(2) whether the new employer uses the same plant;

(3) whether he has the same or substantially the same work
force;

(4) whether the same jobs exist under the same working
conditions;

(5) whether he employs the same supervisors:

(6) whether he uses the same machinery, equipment, and
methods of production; and

(7) whether he manufactures the same product or offers
the same services. Morrtris, supra at 368-69.

The evidence establishes that Sears was in fact a successor em-
ployer. When viewed from the employees’ position, General
Teamsters, Chauffeurs and Helpers, Local Union No. 249 vy.
Bill's Trucking, Inc., 493 F.2d 956 (3rd Cir. 1974), there was
substantial continuity of operations. The services rendered, the
work force, and the equipment used remained substantially the
same. While there were necessarily some changes, the Court
concludes that these were insufficient to overcome the conclusion
that Sears was a successor employer.

— A-29 —

Nonetheless, this status does not mean that Sears was bound
to the substantive provisions of the collective bargaining agree-
ment entered into by DAS and Local 610. The duty imposed
upon the successor employer is the duty to bargain or to arbitrate
with the existing union. National Labor Relations Board v.
Burns International Security Services, Inc., 406 U.S. 272
(1972); John Wiley & Sons, Inc., supra.

In John Wiley & Sons, Inc., supra, the Court noted that “a
union might abandon its right to arbitration [with the suc-
cessor] by failing to make its claims known . . .”. Accordingly,
the Court concludes that Sears can not be held at fault for fail-
ing to arbitrate with Local 610, absent a demand for the same
by the union. The evidence established herein indicates that
Local 610 did not request that Sears arbitrate under the DAS-
Local 610 agreement. The Court must therefore conclude
that the right to insist on arbitration has been abandoned. Plain-
tiffs, as members of the union, can not insist that this action
be taken. See Brown v. Sterling Aluminum Products Corpora-
tion, 365 F.2d 651 (8th Cir. 1966), cert. denied, 386 U.S. 957
(1967), holding that

. whenever the right sought to be enforced is not
uniquely personal to the individual but is a right possessed
by the bargaining unit as a whole, only the Union as the
sole representative of that unit would normally have the
standing to enforce the right. Thus the individual would
have no standing to compel discussion of broad collective
bargaining principles such as the re-negotiation of a new
contract. . . Id. at 657.

Were plaintiffs to urge that they have suffered damages as
a result of Local 610's failure to request arbitration, thus “aban-
doning” them to Local 688, the Court would be compelled to
conclude that § 301 jurisdiction would be lacking. In Amalga-
mated Association of Street, Electric Railway & Motor Coach

— A-30 —

Employees of America v. Lockridge, 403 U.S. 274 (1971); the
Court noted that jurisdiction existed under § 301 to determine
alleged “union interference with rights conferred on individual
employees by the employer's promises in the collective-bargain-
ing agreement, where it is proved that such interference consti-
tuted a breach of the duty of fair representation.” /d. at 298-99.
The Court further noted that a breach of the duty of fair repre-
sentation must be supported by proof of arbitrary or bad-faith
conduct, evidence of fraud, deceitful action or dishonest con-
duct.

In Gainey v. Brotherhood of Railway and Steamship Clerks,
Freight Handlers, Express and Station Employees, 313 F.2d 318
(3rd Cir. 1963), the court categorized unfair representation
suits as follows:

(1) racial discrimination . . .; (2) involving the arbi-
trary sacrifice of a group of employees’ rights in favor of
another stronger or more politically favored group, often
in direct violation of established union practice . . . and
(3) discriminatory measures taken against an individual
which sacrificed his rights for hostile and improper reasons.
Id. at 324.

Clearly, the facts presented in this suit fail to fall within one of
these categories. Evidence of bad faith, deceit, dishonesty,
fraud or arbitrary conduct is completely lacking herein. At best
it could be said that Local 610 acted erroneously in concluding
that there was nothing to arbitrate once DAS closed its business.
See Hines v. Anchor Motor Freight, Inc., 44 U.S.L.W. 4299
(March 3, 1976) holding that “mere errors in judgment” are
insufficient to support a claim of breach of the duty of fair repre-
sentation. Obviously Local 688 could not have breached its
duty of fair representation, since it was not plaintiffs’ bargaining
representative when DAS ended its business.

In Lockridge, supra, the Court noted that

— A-31 —

The legislative determination that courts are fully competent
to resolve labor relations disputes through focusing on the
terms of a collective-bargaining agreement cannot be said
to sweep within it the same conclusion with regard to the
terms of union-employee contracts that are said to be im-
plied in law. That is why the principle of Smith v. Evening
News [371 U.S. 195 (1962)] is applicable only to those
disputes that are governed by the terms of the collective-
bargaining agreement itself.

The Court's conclusion therein was that where the conduct
involved was arguably protected by § 7, or prohibited by § 8,
of the National Labor Relations Act, 29 U.S.C. $$ 157 and
158, the doctrine of pre-emption precluded § 301 jurisdiction.

Section 7 provides that

Employees shall have the right to self-organization, to form,
join, or assist labor organizations, to bargain collectively
through representatives of their own choosing, and to en-
gage in other concerted activities for the purpose of collec-
tive bargaining or other mutual aid or protection . . .

Section 8(b) of the Act provides, in part, that

It shall be an unfair labor practice for a labor organization
or its agents—

(1) to restrain or coerce (A) employees in the exercise of
the rights guaranteed in Section 157 [section 7 above] of
this title . .

(3) to refuse to bargain collectively with an employer, pro-
vided it is the representative of his employees . . .

Local 610’s failure to request arbitration with Sears in accord-
ance with John Wiley & Sons, supra, was arguably a refusal to

— A-32 —

bargain collectively with an employer. Plaintiffs’ claims that
Local 610 abandoned them in favor of Local 688 are arguably
an attempt to coerce. Accordingly, the Court lacks jurisdiction
over such ciaims.

The Court has concluded that while jurisdiction may con-
ceivably exist over plaintiffs’ claims that DAS and Sears were
co-employers, the evidence presented failed to establish the ex-
istence of a co-employer status. The Court has further con-
cluded that jurisdiction is lacking to determine the allegations of
conspiracy. Although not argued by plaintiffs, the Court has
considered the question of Sears’ status as a successor employer.
While finding that the facts established that Sears was a successor
employer, the Court has concluded that Local 610’s failure to
assert the right to arbitration waived that right. The Court has
further concluded that plaintiffs, as union members, can not
compel this arbitration, a request which plaintiffs have not made
herein, and that jurisdiction is lacking to determine whether
plaintiffs have suffered any damages as a result of Local 610’s
failure to request arbitration. Accordingly, judgment will be
entered for defendants.

/s/ JOHN F. NANGLE
United States District Judge

Dated: June 25, 1976.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385004_2587%3A1. Public record. Not legal advice.